2019-12-13no071 Monitor's Report.pdf - Zurixx

Doyle S. Byers, #11440 Cory A. Talbot, #11477 Engels J. Tejeda, #11427 Chelsea J. Davis, #16436 HOLLAND & HART LLP 222 S. Main Street, Suite 2200 Salt Lake City, UT 84101 Telephone: (801) 799-5800 Facsimile: (801) 799-5700 Attorneys for David K. Broadbent as Court- Appointed Receiver

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

FEDERAL TRADE COMMISSION, and UTAH DIVISION OF CONSUMER PROTECTION, Plaintiffs, vs. ZURIXX, LLC, a Utah limited liability company, CARLSON DEVELOPMENT GROUP, LLC, a Utah limited liability company, CJ SEMINAR HOLDINGS, LLC, a Utah limited liability company, ZURIXX FINANCIAL, LLC, a Utah limited liability company, CRISTOPHER A. CANNON, individually and as an officer of ZURIXX, LLC, JAMES M. CARLSON, individually and as an officer of ZURIXX, LLC, and JEFFREY D. SPANGLER, individually and as an officer of ZURIXX, LLC, Defendants.

MONITOR’S REPORT Case Number 2:19-cv-00713

Case 2:19-cv-00713-DAK-EJF Document 71 Filed 12/13/19 of 21

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On October 1, 2019, the Court entered its Ex Parte Temporary Restraining Order with

Asset Preservation, Appointment of a Temporary Monitor over Corporate Defendants, and Other

Equitable Relief, and Order to Show Cause Why a Preliminary Injunction Should Not Issue (Dkt.

No. 24) (the “Order”). The Order appointed David K. Broadbent as the “temporary monitor for

the Monitored Entities and any of their affiliates, subsidiaries, successors, and assigns, wherever

located,”1 (Order § X), and directed him to submit this Report “prior to the preliminary

injunction show cause hearing set by Section XXII of this Order” with “the Monitor’s findings,

including” the following:

A. The Monitored Entities’ compliance with this Order;

B. An accounting of the Monitored Entities’ financial transactions as they relate to the practices charged in the Complaint or Defendants’ Products;

C. A description of the Monitored Entities’ corporate structures including all parents, subsidiaries (whether wholly or partially owned), divisions (whether incorporated or not), affiliates, branches, charters, joint ventures, partnerships, franchises, operations under assumed names, and all ownership interests of the Monitored Entities.

(Order § XII at 20.)

However, before the Report was submitted, the parties agreed to a Stipulated Preliminary

Injunction (Dkt. No. 54) (the “Injunction”). In light of that stipulation, the Court vacated the

preliminary injunction show cause hearing, (see Dkt. No. 53), thereby eliminating the

1 The Order defined the “Monitored Entities” as the “Corporate Defendants and any other entity that has conducted any business related to the marketing or sale of Defendants’ Products, including receipt of Assets derived from any activity that is subject of the Complaint in this matter, and that the Monitor determines is controlled or owned by any Defendant.” (Order at 7.) The “Corporate Defendants,” in turn, were defined as “Zurixx, LLC, Carlson Development Group, LLC, CJ Seminar Holdings, LLC, and Zurixx Financial, LLC, and each of their subsidiaries, affiliates, successors, and assigns.” (Id. at 6.)


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requirement to file the report discussed above. The Injunction also did away with the role of

temporary monitor and, instead, appointed “David K. Broadbent . . . as receiver over the

Receivership Entities with full powers of an equity receiver.” (Injunction at 17 § XIV.)

Following that appointment, the Court requested that Mr. Broadbent (the “Monitor” or the

“Receiver”)2 submit this Report.

REPORT

I. Summary of the Monitor’s work

The Court entered its Order appointing the Monitor on October 1, 2019. That same day,

the Monitor met with personnel from the FTC and Division to discuss gathering information and

documents from Defendants consistent with the terms of the Order. The next day, the Monitor

and his team went to the headquarters of Zurixx, LLC in Cottonwood Heights, Utah, with law

enforcement and personnel from the FTC and Division. Investigators from the FTC obtained

documents, including electronic documents, and the Monitor and his team obtained documents

and began interviews with personnel from the Monitored Entities.

The Monitor’s team interviewed each of the Individual Defendants, as well as the heads

of Zurixx’s departments and various members of those departments. The Monitor’s team

requested and reviewed a significant number of documents, although many document requests

were unfulfilled at the time the Court appointed Mr. Broadbent as the Receiver. The Monitor’s

team also listened to many recorded sales events put on by the Monitored Entities and to many

2 Unless otherwise noted, defined terms are taken from the Injunction.


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recorded sales calls put on by the Monitored Entities from both before and during the time of the

Monitor’s appointment.

II. The Monitor’s findings

A. Description of the Monitored Entities’ corporate structures

The Court ordered the Monitor to provide “[a] description of the Monitored Entities’

corporate structures including all parents, subsidiaries (whether wholly or partially owned),

divisions (whether incorporated or not), affiliates, branches, charters, joint ventures, partnerships,

franchises, operations under assumed names, and all ownership interests of the Monitored

Entities.” (Order § XII(C) at 20.)

Defendants develop, market, sell, and fulfill “financial education programs” throughout

the United States and Canada. (Zurixx, LLC. United States Transfer Pricing Documentation for

the 2017 Tax Year, attached as Ex. 1, at 8.) These programs start with free two-to-three hour

preview meetings, characterized by the Monitored Entities as “comprehensive educational

seminars,” which are, in fact, events designed to sell consumers, or “students,” access to paid

three-day workshops. Following the workshops, Defendants sell students additional services:

advanced training camps, coaching services, mentoring services, and summits. Defendant Jim

Carlson confirmed that the following generally represents Defendants’ product funnel:


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(Ex. 1 at 13.) Defendants’ programs are tied to, and promoted by, various “celebrities” to provide

real estate, business strategy, entrepreneurship, and coaching and mentoring programs.

The Monitored Entities are comprised of four groups of entities: (1) Zurixx, LLC; (2)

Dorado Marketing & Management, LLC; (3) Brand Management Holdings, LLC and

subsidiaries; and (4) Global Learning Alliance, LLC. As of October 2, 2019, there were

approximately 100 employees of Zurixx, LLC and 20 employees of Dorado Marketing &

Management, LLC. Beyond that, Zurixx, LLC paid several hundred “independent contractors”

over the course of a normal calendar year, which made up about 80% of the Monitored Entities’

payroll.

Turning to the organizational structure, the available ownership information for these

entities was incomplete and, in some instances, inconsistent. That said, the Monitor believes that

these entities are structured as follows:

Preview Workshop

1111 111

Coaching

Mentorship

Advanced camps

Backend support


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Zurixx, LLC3

Zurixx, LLC operates events – preview seminars, workshops, summits, etc. – and

fulfillment in the United States and Canada. It does business under multiple names, including

Flipping Formula Education, Success Path Education, Advanced Real Estate Education, Shark

Academy, Advanced Financial Training, Daymond John Success Formula, Financial Education,

In-Source Connection LLC, Premium Corporate Services, Rules of Renovation, USA Loan

Processing, Premium Financial Training, and Launch Academy.

Zurixx, LLC offered a number of educational programs, which it described as follows:

3 The Receiver is not confident that this chart accurately reflects the corporate structure. The articles of organization for Zurixx Financial, LLC say that Carlson and Carlson Development Group, LLC are the members. Also, there are many missing organizational documents. For instance, the Receiver has no corporate documents for CJ Seminar Holdings, LLC, CAC Investment Holdings, LLC, JSS Investment Holdings, or Carlson Development Group, LLC. Also, according to Carlson, the Sofia Reyes Descendants Trust provided an initial cash investment in the business and is now only a “silent partner.” The Receiver continues to investigate this.

James M. Carlson

Carlson Development Group, LLC (UT)

Sofia Reyes Descendants Trust

Zurixx Financial, LLC (UT)

Jeffrey D. Spangler

JSS Investment Holdings, LLC

Zurixx, LLC (UT)

Cristopher A. Cannon

CAC Investment Holdings, LLC

CJ Seminar Holdings, LLC


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Success Path Education: This real estate training “workshop teaches participants how to

successfully renovate and ‘flip’ houses by focusing on topics like business planning and goal

setting, asset protection, acquisition funding, and legal entity formation.” (Ex. 1 at 11.) The

program is built around celebrities Tarek El Mousa and Christina Anstead from HGTV’s “Flip or

Flop.”

Daymond John’s Launch Academy: This entrepreneurial workshop is designed to “help[]

prospective entrepreneurs make the transition from an idea to the actual launch of a business,”

and to “teach participants strategies to manage money, position the business, and creat[e] a

legacy.” (Id. at 12.) Daymond John appears as an investor on the ABC reality television show

“Shark Tank.”

The Flipping Formula: This program is similar to Success Path Education in that

“participants learn how to find unlisted properties, which are below market value, obtain

financing, create cash flow, and complete a wholesale real estate transaction in 60 to 90-days.”

The program is a “partnership” with Pete Souhleris and Dave Seymour of the A&E reality TV

show “Flipping Boston.”

Winning the Property War: This educational program provides “flipping and wholesaling

strategies” from Doug Hopkins (of the Discovery Channel series “Property Wars”) and Damon

Line.

Property Bank: Another real estate educational program, Property Bank “teaches

participants how to find growth and wealth opportunities.” The program was created by Mike

Baird (Spike TV’s “Flip Men”) and Greg Herlean (author of “Bank on This”).


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Additional educational programs are associated with other celebrities, such as author and

sales trainer Grant Cardone (10X), Robert Herjabec (“Shark Tank”), and Hillary Farr (HGTV’s

“Love It or List It”).

Dorado Group

By agreement, Dorado Marketing & Management, LLC (“Dorado”) provides services to

Zurixx, LLC, primarily marketing, event management, and celebrity contract management.

Dorado also provides administrative executive support for marketing and events.4

4 Dorado is based in Dorado, Puerto Rico. It appears that the tie to Puerto Rico is based on tax incentives related to Puerto Rico’s Act No. 20 of 2012, as amended, known as the “Export Services Act,” “the Act,” or “Act 20,” which established incentives designed to stimulate the development of a wide variety of ventures in Puerto Rico, including the export of services.

James M. Carlson

Carlson Development Group, LLC(PR)

Sofia Reyes Descendants Trust

Jeffrey D. Spangler


Zurixx Financial, LLC(PR)

SO%

Dorado Marketing & Management, LLC


CAC Investment Holdings, LLC(PR)


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Brand Management Group

Via its network of wholly-owned limited liability companies, Brand Management

Holdings, LLC (“Brand Management”) contracts with the various celebrities who partner with

Zurixx to put on financial education programs. Brand Management’s network is structured such

that the bottom-level company contracts with celebrities and customers. Because the chart is

difficult to read, below is the ownership structure in bullet-point format:

• Brand Management Holdings LLC (DE)5

o Advanced Education (CA) MGMT, LLC (DE)

Advanced Education (CA), LLC (UT)

o Attainable Events MGMT LLC (DE)

Attainable Events LLC (WY)

o Breakthrough Events MGMT LLC (DE)

5 Indicates state of entity organization.

Attalnable EventsllC

James M.Carlson

Carlson Development Group, LLC (UT)

.,,.

Fast Track Flips MGMTLLC

Fast Track Flips LLC

SO%

JeffreyO.Spangler

NV Wealth Corporation MGMTLLC

NV Wealth Corporation LLC

SO%



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o Entrepreneur MGMT LLC (DE)

Success Formula LLC (NV)6

o Fast Track Flips MGMT LLC (DE)

Fast Track Flips LLC (NV)

o High Point Training MGMT LLC (DE)7

High Point Training LLC (WY)

o NV Wealth Corporation MGMT LLC (DE)

NV Wealth Corporation LLC (NV)

o Omni Wealth MGMT LLC (DE)

Omni Wealth LLC (NV)

o Premium Education (CAL) MGMT, LLC (DE)

Premium Education (CAL) LLC (CA)

o Professional Education MGMT LLC (DE)

Professional Education LLC (NV)

o Real Estate MGMT LLC (DE)

Real Estate Education LLC (NV)

o Will to Win MGMT, LLC (DE)

Will to Win, LLC (NV)8

6 This entity contracts with Daymond John and promotes programs ostensibly developed by him. 7 High Point Training MGMT LLC was formerly known as High Point Education MGMT LLC. 8 This entity contracts with Robert Herjabec and promotes programs ostensibly developed by him.


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Defendants’ documents reflect that the following Monitored Entities are “inactive or not

needed”:

• Breakthrough Events Mgmt LLC (DE)

• Breakthrough Events LLC (TX)

• Education Annex MGMT LLC (DE)9

• Education Annex LLC (NV)10

• Misc Real Estate MGMT LLC (DE)

• Zurixx Marketing, LLC (WY)

• Continuing Real Estate Education (WY)11

o According to Carlson, this entity was initially created for contracting with

celebrities Tarek and Christina El Mousa, but is dormant and was never used.

Finally, RE Cash Source is a wholly-owned subsidiary of Zurixx Financial, LLC. It was

created to provide bridge loans for students to purchase rental properties from vendors associated

with Zurixx, LLC’s Las Vegas Summit event. According to Carlson, RE Cash Source generated

significant losses and ceased lending in or about 2014. RE Cash Source does still have some

outstanding loans, but does not function otherwise.

9 This entity appears to have been dissolved as of February 12, 2019. 10 This entity appears to have been dissolved as of February 12, 2019. 11 Continuing Real Estate Education was formerly known as Success Path Education.


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Global Learning Alliance Group

Global Learning Alliance, LLC was purchased to put on large-scale events attended by

celebrities and customers. Citing lack of profitability, Carlson stated that this business was being

shut down at the time of the Monitor’s appointment.

B. Accounting of the Monitored Entities’ financial transactions as they relate to the practices charged in the Complaint or Defendants’ Products

The Receiver retained Rocky Mountain Advisory (“RMA”) as accounting professionals.

RMA prepared an Accounting Status Report as of October 31, 2019. The Accounting Status

Report is submitted with this Report at Exhibit 2.12

C. The Monitored Entities’ compliance with the Order

The Order imposed a variety of restrictions on the Monitored Entities.

1. Compliance with Section I of the Order

The Court enjoined the Monitored Entities and others from engaging in a variety of

business activities in Section One of the Order:

IT IS THEREFORE ORDERED that Defendants, Defendants’ officers, agents, employees, and attorneys, and all other Persons in active concert or participation

12 Several exhibits to the Accounting Status Report contain confidential information, which is redacted for purposes of this filing. However, the Receiver will provide unredacted copies of the Accounting Status Report to the Court and parties.

James M. Carlson Jeffrey D. Spangler

Global Learning Alliance, LLC



CJ Seminar Holdings, LLC


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with them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or indirectly, in connection with the advertising, marketing, promoting, or offering for sale of any goods or services, are temporarily restrained and enjoined from:

A. Making any Earnings Claim, unless the Earnings Claim is truthful and not misleading, and, at the time such claim is made, Defendants: (1) have a reasonable basis for the claim; (2) have in their possession written materials that substantiate the claim; and (3) make the written substantiation available upon request to the consumer, potential purchaser or investor, the Monitor, and Plaintiffs;

B. Misrepresenting or assisting others in misrepresenting, expressly or by implication, that:

1. Consumers who purchase any of Defendants’ Products will receive 100% funding to do real estate deals regardless of their credit;

2. Defendants’ Products allow consumers to make thousands of dollars in profit through real estate investing with little time and effort;

3. Consumers will learn everything they need to know at Defendants’ 3-day workshops to make thousands of dollars in profit through real estate investing;

C. Misrepresenting or assisting others in misrepresenting, expressly or by implication, any other fact material to consumers concerning any good or service, such as: the total costs; any material restrictions, limitations, or conditions; or any material aspect of its performance, efficacy, nature, or central characteristics;

D. Failing to disclose, or disclose adequately, to consumers material aspects of Defendants’ refund policy; and

E. Offering Defendants’ Products for sale without complying with BODA, including filing required information annually with the Division, providing a disclosure statement or prospectus to any prospective purchaser at least 10 business days prior to a purchase, and providing the required warning to purchasers following an earnings representation that: Defendants cannot guarantee earnings or ranges of earning; identifying the number of purchasers who had earned an amount in excess of the amount of their payment; and clarifying what percentage of total purchasers had earned an amount in excess of the amount of their payment.


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(Order § 1 at 8-9.)

The Individual Defendants and employees cooperated with the Monitor in interviews.

Responses to requests for documents, computers, and other materials were frequently delayed,

and numerous requests from the Monitor were outstanding upon appointment of the Receiver.

The Monitor had significant concerns regarding the Monitored Entities’ consumer

protection compliance program. Based on interviews with the Monitored Entities’ personnel, the

Monitor understands that the program uncovered violations of consumer protection laws on a

weekly basis from preview events, workshops, and other consumer presentations. While the

Monitored Entities’ personnel indicated that violators were subject to discipline up to

termination, no information was provided to substantiate the use of the disciplinary system.

Moreover, the compliance program did not, apparently, cover tele-sales, a significant source of

business for the Monitored Entities. The Monitor was not able to ascertain further details

regarding the compliance program because Defendants took the position that the content was

protected by the attorney-client privilege.

The Monitor’s team listened to many recorded preview events, workshops, and telephone

conversations that pre-dated and post-dated the Monitor’s appointment. In multiple recordings,

Defendants’ personnel touted their programs as leading to “tons of profits, “excellent profits,”

and similar success. Many customer reviews complained that they were not sold the information

promised, but rather sold other products offered by defendants. For instance, one customer

complained that he paid $2,000 to attend a workshop just to be sold another $20,000 product.

Based on the Monitor’s review, it appears that these types of representations were widespread

and consistent.


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2. Compliance with Section II of the Order

The Court enjoined the Monitored Entities and others “from offering, attempting to

enforce, or asserting the validity of, any Review-Limiting Contract Term.” (Order § 2 at 9-10.)

The Monitor is not aware that any of the Monitored Entities have “offer[ed], attempt[ed] to

enforce, or assert[ed] the validity of, any Review-Limiting Contract Term” in violation of the

Order. (Id.) Ongoing litigation regarding Review-Limiting Contract Terms has been stayed as a

result of the Receiver’s appointment.

3. Compliance with Section III of the Order

The Court enjoined the Monitored Entities and others from releasing or benefitting from

certain customer information. (Order § III at 10.) The Monitor is not aware that the Monitored

Entities have released customer information in violation of this Section of the Order. However,

several coaches have reached out to customers for ongoing training, and the Receiver has issued

cease-and-desist letters in response.

4. Compliance with Section IV of the Order

The Court ordered the Monitored Entities and others to preserve records and assets.

(Order § IV at 11-12.) The Monitor is not aware that the Monitored Entities have violated this

Section of the Order.

5. Compliance with Section VI of the Order

The Court ordered Defendants to “prepare and deliver to Plaintiffs’ counsel and the

Monitor” the following financial information “within three (3) business days of service of this

Order upon them”:

A. Completed financial statements on the forms attached to this Order as Attachment A (Financial Statement of Individual Defendant) for each


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Individual Defendant, and Attachment B (Financial Statement of Corporate Defendant) for each Corporate Defendant; and

B. Completed Attachment C (IRS Form 4506, Request for Copy of a Tax Return) for each Corporate Defendant.

(Order § VI at 14.)

The Individual Defendants provided the Monitor with financial statements in the form of

Attachment A to the Order. Defendant Zurixx, LLC provided the Monitor with a financial

statement in the form of Attachment B to the Order. The remaining Corporate Defendants did not

provide this information to the Monitor. Defendants also provided several years of tax returns,

although the Monitor was not provided with 2018 returns for defendants Carlson Development

Group, LLC or CJ Seminar Holdings, LLC.

6. Compliance with Section VII of the Order

The Court ordered Defendants to do the following “within three (3) business days of

service of this Order”:

A. Provide Plaintiffs’ counsel and the Monitor with a full accounting, verified under oath and accurate as of the date of this Order, of all Assets, Documents, and accounts outside of the United States which are: (1) titled in the name, individually or jointly, of any Defendant; (2) held by any Person for the benefit of any Defendant or for the benefit of any corporation, partnership, asset protection trust, or other entity that is directly or indirectly owned, managed, or controlled by any Defendant; or (3) under the direct or indirect control, whether jointly or singly, of any Defendant; [and]

B. Take all steps necessary to provide Plaintiffs’ counsel and the Monitor with access to all Documents and records relating to the Corporate Defendants that may be held by third parties located outside of the territorial United States of America, including signing the Consent to Release of Financial Records appended to this Order as Attachment D[.]

(Order § VII at 14-15.)


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Defendants have not complied with Section VII.A. As to Section VII.B, Carlson executed

a Consent to Release Financial Records form, as well as bank statements from a bank in Puerto

Rico. Other than the asset lists and attachments with the other disclosures, no documentation of

assets, documents, and accounts outside of the United States are verified under oath or appear to

be included in the productions that the Receiver has received.

7. Compliance with Section IX of the Order

The Court enjoined the Monitored Entities and others “from creating, operating, or

exercising any control over any business entity, whether newly formed or previously inactive,

including any partnership, limited partnership, joint venture, sole proprietorship, or corporation”

unless the Monitored Entities or others subject to the injunction “first provid[e] Plaintiffs’

counsel and the Monitor with a written statement disclosing: (1) the name of the business entity;

(2) the address and telephone number of the business entity; (3) the names of the business

entity’s officers, directors, principals, managers, and employees; and (4) a detailed description of

the business entity’s intended activities.” (Order § IX at 15.) The Monitor is not aware that the

Monitored Entities have engaged in any activities that would fall within the scope of this Section

of the Order.

8. Compliance with Section XIII of the Order

The Court ordered the Monitored Entities and others to “provide to the Monitor,

immediately upon request, without need of a subpoena or further order, the following” materials:

A. A list of all Assets and accounts of the Monitored Entities, including Assets of the Monitored Entities that are held in any name other than the name of a Monitored Entity, or by any Person other than a Monitored Entity;


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B. A list of all Assets and Documents belonging to other Persons whose interests are under the direction, custody, or control, or in the possession, of the Monitored Entities;

C. A list of all locations where Documents of the Monitored Entities are located, and the means to access such Documents within five (5) hours of the Monitor’s request;

D. Access to all Documents of the Monitored Entities including, but not limited to, books and records of accounts, all financial and accounting records, balance sheets, income statements, bank records (including monthly statements, canceled checks, records of wire transfers, and check registers), client lists, title Documents and other papers that relate to the practices charged in the Complaint or Defendants’ Products;

E. Access to all computers, electronic devices, mobile devices, and machines (onsite or remotely) and any cloud account (including specific method to access account), electronic file in any medium, or other data in whatever form used to conduct the business of the Monitored Entities;

F. Copies of all keys, codes, user names and passwords necessary to gain or to secure access to any Assets or Documents of the Monitored Entities including, but not limited to, access to their business premises, means of communication, accounts, computer systems, or other property; and

G. A list of all agents, employees, independent contractors, officers, attorneys, servants, and those Persons in active concert and participation with the Monitored Entities, or who have been associated or done business with the Monitored Entities since January 1, 2013.

(Order § XIII at 20-21.) The Receiver is not aware that Defendants violated this Section of the

Order.

9. Compliance with Section XIV of the Order

The Court ordered the Monitored Entities and others to cooperate with the Monitor.

(Order § XIV at 21-22.) As stated above, the Individual Defendants and employees cooperated

freely with the Monitor in interviews. Responses to requests for documents, computers, and other

materials were frequently delayed, and numerous requests from the Monitor were outstanding

upon appointment of the Receiver.


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10. Compliance with Section XV of the Order

The Court enjoined the Monitored Entities and others from interfering with the Monitor.

(Order § XV at 22-23.) The Receiver is not aware that Defendants violated this Section of the

Order.

11. Compliance with Section XIV of the Order

The Court ordered the Monitored Entities and others to provide the Monitor with access

to the business premises and records. (Order § XVII at 23-25.) The Receiver is not aware that

Defendants violated this Section of the Order. As stated above, the Individual Defendants and

employees cooperated with the Monitor in interviews. Responses to requests for documents,

computers, and other materials were frequently delayed, and numerous requests from the

Monitor were outstanding upon appointment of the Receiver.

12. Compliance with Section XVIII of the Order

The Court ordered the Monitored Entities and others to distribute copies of the Order as

follows:

Defendants shall immediately provide a copy of this Order to each affiliate, telemarketer, marketer, sales entity, successor, assign, member, officer, director, employee, agent, independent contractor, client, attorney, spouse, subsidiary, division, and representative of any Defendant, and shall, within ten (10) days from the date of entry of this Order, provide Plaintiffs and the Monitor with a sworn statement that this provision of the Order has been satisfied, which statement shall include the names, physical addresses, phone numbers, and email addresses of each such Person who received a copy of the Order.

(Order § XVIII at 25.) On October 11, 2019, counsel for Defendants provided the Monitor with

the Declaration of James M. Carlson, which, in part, provided, “Section XVIII of the [Order] has

been satisfied. A list of the names, physical addresses, phone numbers, and e-mail addresses of

each person or entity to whom the [Order], to the extent reasonably ascertainable, is attached


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hereto as Exhibit A.” (Ex. 3 at 2.) 13 The Monitor does not dispute the assertions in the

Declaration.

Section XVIII of the Order further provides, “Defendants shall not take any action that

would encourage officers, agents, members, directors, employees, salespersons, independent

contractors, attorneys, subsidiaries, affiliates, successors, assigns, or other Persons or entities in

active concert or participation with them to disregard this Order or believe that they are not

bound by its provisions.” (Order § XVIII at 25.) The Monitor is not aware that Defendants have

taken any action in violation of this portion of Section XVIII.

III. Conclusion

The Receiver continues to review information from the Receivership Entities and will

update the Court as his investigation continues.

RESPECTFULLY SUBMITTED this 13th day of December, 2019.

HOLLAND & HART LLP /s/ Cory A. Talbot Doyle S. Byers Cory A. Talbot Engels J. Tejeda Chelsea J. Davis

Attorneys for David K. Broadbent as the Court-appointed Receiver

13 The referenced Exhibit A has not been filed due to privacy concerns.


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INDEX OF EXHIBITS 1 - Transfer Pricing Study, etc. 2 - Accounting Report.

2A1 - Bank Account and Merchant Summary.

2A2 - Org. Chart Zurixx.

2A3 - Owner Distributions.

2A4 - Zurixx UT Office Payroll 10-25-19.

2A5 - Zurixx Weekly AP to Pay 10-18-19 JC Final.

2A6 - Daily Financial Monitoring.

2A7 - AMEXCC.

2A8 - 2019 Staff Payroll – Layoffs.

2A9 - Pro Forma showing new pricing model.

2A10 - Zurixx Employee and Vendor Payment Summary.

2A11 - Summary of Financial Statements.

2A12 - 2018-2017 Zurixx Audit.

2A13 - Carlson Signed Financial Disclosure – Redacted.

2A14 - Cannon Signed Financial Disclosure – Redacted.

2A15 - Spangler Signed Financial Disclosure – Redacted.

2A16 - Zurixx Signed Financial Disclosure – Redacted.

2A17 - Transfer Pricing Study, etc. 3 - Declaration of James M. Carlson.

13639836_v2


EXHIBIT “1”

Case 2:19-cv-00713-DAK-EJF Document 71-1 Filed 12/13/19 Page 1 of 85

Zurixx, LLC.

United States Transfer Pricing Documentation

for the 2017 Tax Year

October 2018

ECONOMICS PARTNERS ----LLC ----


Economics Partners, LLC

www.econpartners.com

Table of Contents

I. Introduction ................................................................................................................................... 5

A. Scope......................................................................................................................................... 5

B. Summary of Analysis and Conclusions .............................................................................. 5

1. Overview of Transaction ................................................................................................. 5

2. Summary of Findings ...................................................................................................... 5

C. Report Structure...................................................................................................................... 6

D. Disclaimers .............................................................................................................................. 7

II. Company Overview ..................................................................................................................... 8

A. Zurixx History......................................................................................................................... 8

B. Zurixx Legal Entity Structure ............................................................................................... 8

C. Zurixx Entities ......................................................................................................................... 9

1. Zurixx, LLC (“Zurixx US”) ............................................................................................. 9

2. Dorado Marketing & Management, LLC (“Dorado”) .............................................. 10

D. Products ................................................................................................................................. 11

1. Success Path Education ................................................................................................. 11

2. Daymond John’s Launch Academy ............................................................................ 12

3. The Flipping Formula .................................................................................................... 12

4. Winning the Property War ........................................................................................... 13

5. Property Bank ................................................................................................................. 13

6. Conclusion ...................................................................................................................... 13

E. Value Chain ........................................................................................................................... 14

F. Competitors ........................................................................................................................... 14

G. Functions, Risks, and Intellectual Property ...................................................................... 15

1. Functions ......................................................................................................................... 15

2. Risks ................................................................................................................................. 19

3. Intellectual Property ...................................................................................................... 19

III. Industry Background .................................................................................................................. 20

A. Education and Training Services Industry ....................................................................... 20

1. Industry Overview ......................................................................................................... 20

2. Performance .................................................................................................................... 20

3. Competition .................................................................................................................... 21

B. Sales and Marketing Industry Overview .......................................................................... 21


2. Performance .................................................................................................................... 21

3. Competition .................................................................................................................... 21

IV. Functional Analysis .................................................................................................................... 23

A. Introduction ........................................................................................................................... 23

B. Overview of Transaction ..................................................................................................... 24

C. Functions Performed ............................................................................................................ 24




1. Accounting and Finance ............................................................................................... 24

2. Celebrity Relationships ................................................................................................. 25

3. Marketing ........................................................................................................................ 26

4. Event Planning and Management ............................................................................... 26

5. Sales Support .................................................................................................................. 27

6. Information Technology ............................................................................................... 28

7. Customer Support .......................................................................................................... 30

8. Sales.................................................................................................................................. 32

9. Coaching and Educational Content............................................................................. 33

10. Intercompany Agreements and Financing ................................................................. 34

D. Conclusion ............................................................................................................................. 35

V. Regulatory Overview ................................................................................................................. 36

A. U.S. Transfer Pricing Regulations ...................................................................................... 36

B. The Arm’s Length Principle ................................................................................................ 36

C. Best Method Rule ................................................................................................................. 37

D. Choice of Methodology ....................................................................................................... 38

E. Methods Available and Additional Considerations for Services Transactions ........... 38

1. Overview ......................................................................................................................... 38

2. Benefit Test ...................................................................................................................... 39

3. Methods Available for Services Transactions ............................................................ 40

F. Methods Available for Tangible Goods Transactions ..................................................... 42

1. Comparable Uncontrolled Price Method ................................................................... 42

2. Cost Plus Method ........................................................................................................... 42

3. Resale Price Method ...................................................................................................... 43

4. Comparable Profits Method ......................................................................................... 43

5. Profit Split Method ........................................................................................................ 44

6. Unspecified Methods ..................................................................................................... 44

VI. Economic Analysis ...................................................................................................................... 45

A. Executive Management Fees – North America Search ................................................... 45

1. Selection of the Tested Party ........................................................................................ 45

2. Selection of Years for Comparison .............................................................................. 45

3. Selection of Profit Level Indicator ............................................................................... 46

4. Selection of North American Comparable Companies ............................................ 46

5. Results of the CPM Analysis ........................................................................................ 47

6. Implementation .............................................................................................................. 47

B. Registration Fees ................................................................................................................... 47

1. Summary of Findings .................................................................................................... 48

C. Legal Fees .............................................................................................................................. 49


D. Workshop Recruitment Fees ............................................................................................... 51


E. Celebrity Management Fees ................................................................................................ 52





VII. Conclusion ................................................................................................................................... 54

A. Overview of Transaction ..................................................................................................... 54

B. Summary of Findings........................................................................................................... 54

1. Executive Management Fees ........................................................................................ 54

2. Registration Fees ............................................................................................................ 54

3. Legal Fees ........................................................................................................................ 54

4. Workshop Recruitment Fees ........................................................................................ 54

5. Celebrity Management Fees ......................................................................................... 55

6. Total Fees ......................................................................................................................... 55

Appendix A: Comparable Company Business Descriptions ............................................................. 56

A. North American Comparable Company Business Descriptions ................................... 56

Appendix B: Comparable Company Financials .................................................................................. 60

A. North American Comparable Company Financials ........................................................ 60

Appendix C: Accept / Reject Matrices ................................................................................................... 61

A. North American Comparables – Qualitative Rejections ................................................. 61

Appendix D: Construction of Executive Management Fees to Zurixx US ...................................... 79

Appendix E: Construction of Registration Fees to Zurixx US ........................................................... 80

Appendix F: Construction of Legal Fees to Zurixx US ....................................................................... 81

Appendix G: Construction of Workshop Recruitment Fees to Zurixx US ...................................... 82

Appendix H: Construction of Celebrity Management Fees to Zurixx US ....................................... 83

Appendix I: Construction of Total Fees to Zurixx US ........................................................................ 84


Page | 5



I. Introduction

A. Scope

Zurixx, LLC (“Zurixx” or “Company”) engaged Economics Partners, LLC (“Economics

Partners” or “EP”) to analyze certain intercompany transactions and prepare a US transfer

pricing planning study for the fiscal year ended December 31, 2017.

Zurixx develops, promotes, sells, and fulfills financial education programs throughout the

United States and Canada by partnering with well-known financial celebrities to provide real

estate, business, entrepreneurship, and coaching and mentoring programs to consumers.

The analyses described in this report have been conducted in accordance with Section 482 of the

U.S. Internal Revenue Code1 and the Regulations2 thereunder (“Section 482” or the “US

Regulations”). The underlying principle of the Regulations is the arm’s length standard. In

general, a controlled transaction meets the arm’s length standard if the results of the transaction

are consistent with the results that would have been realized had uncontrolled taxpayers

engaged in a comparable transaction under comparable, but uncontrolled, circumstances.

B. Summary of Analysis and Conclusions

1. Overview of Transaction

The intercompany transaction at issue in this report is the provision of certain sales and

executive management services from Dorado Marketing & Management, LLC (“Dorado”) to

Zurixx, LLC (“Zurixx US”). As described in the Functional Analysis section, Dorado provides

sales and executive management services for Zurixx US. During FY 2017, Dorado charged sales

and executive management services fees of $21.14 million to Zurixx US in consideration of these

services.

2. Summary of Findings

a) Selected Method

The Unspecified Method, as described in the US Transfer Pricing Regulations, was applied to

the tested transaction. From the standpoint of Section 482, a method that is unspecified in that it

is not the CUP method, the cost-plus method, the resale price method, the CPM method, or the

1 References in this report to the “Code,” or to particular provisions of the “Code,” refer to the Internal Revenue Code of 1986 (26 U.S.C. § 1 et seq.), as amended, as in effect for the fiscal year ended December 31, 2014. 2 References in this report to the “Regulations,” or to particular provisions of the “Regulations,” refer to the Treasury Regulations (Title 26, Code of Federal Regulations), as amended, as in effect for the fiscal year ended December 31, 2014.


Page | 6



profit split method and can be applied if it provides the most reliable measure of an arm’s

length result under the principles of the best method rule. Unspecified methods take into

account the general principle that “information be provided on the prices or profits that the

controlled taxpayer could have realized by choosing a realistic alternative to the controlled

transaction.”3

b) Application of the Unspecified Method

Using an unspecified method, EP benchmarked the covered transaction against a combination

of similar internal comparable transactions and comparable external uncontrolled prices and

transactions. These comparable prices and transactions were used to derive a benchmark of fees

representative of arm’s length compensation.

c) Unspecified Method Result

• Using the unspecified method described above, EP calculated Dorado’s median

estimated service fees to total approximately $46.32 million in FY 2017.

d) Intercompany Results

• In FY 2017, Dorado charged approximately $21.14 million in sales and executive

management fees. This result falls outside the benchmarked fee calculation because of a

stressed celebrity brand, specifically Tarek and Christina El Moussa. During FY 2017,

Tarek and Christina announced plans to divorce which negatively impacted their public

image and brand. Zurixx’s Success Path Education seminar is aggressively promoted by

Tarek and Christina and suffered substantial losses as a result. Due to these unforeseen

economic hardships, Zurixx US was only charged $21.14 million. The fee charged is

below the estimated median fee of $46.32 million and is considered arm’s-length.

C. Report Structure

The remainder of this report proceeds as follows.

Section II provides a high-level overview of Zurixx International LLC.

Section III provides an overview of the industry in which Zurixx operates.

Section IV provides a functional analysis of the intercompany transaction.

Section V provides an overview of the relevant transfer pricing regulations applicable to the

intercompany transaction under review.

Section VI describes the transaction and puts forth our analysis.

3 Treas. Reg. §1.482-3(e)(1)


Page | 7



Section VII summarizes our conclusions.

D. Disclaimers

In preparing this report, we have relied on the information and data provided by Zurixx

personnel, including both written documents and information obtained orally in meetings and

interviews. We have also relied on information available from public, financial, and industry

sources.

We have not independently validated or audited this information. Accordingly, we do not

express an opinion or any other form of assurance thereon. The conclusions set forth in this

report are dependent upon such information being complete and accurate in all material

respects. If the actual facts were to be different from the facts set forth in this report, our

analysis and conclusions might be different.

The applicable law and regulations upon which this report is based is subject to change and re-

interpretation from time to time, and some or all such changes and re-interpretations may have

retroactive effect. In addition, the application of the applicable law and regulations to the facts

and circumstances of the inter-company transactions reviewed in this report may be subject to

examination and adjustment by the local taxing authorities, which are generally empowered to

exercise significant discretion in conducting examinations and proposing adjustments to

transfer pricing results, which may include the assertion of penalties. The conclusions set forth

in this report are not binding on the local taxing authorities, and there can be no assurance that

upon examination the local taxing authorities will accept, in whole or in part, such conclusions.


Page | 8



II. Company Overview4



estate, business strategy, entrepreneurship, and coaching and mentoring programs to

consumers. The Company utilizes a multi-phase educational process to equip students with

tools, knowledge and resources that help them be financially successful.

A. Zurixx History

In 2012 Jeff Spangler (President, U.S.) and Chris Cannon (President, P.R.) formed Zurixx with

Jim Carlson (CEO). All three founders had previous experience in the industry and were able to

leverage previous celebrity relationships, employees, and industry “know-how” to launch the

Zurixx business. Since founding the business, Zurixx’s management team has focused on

managing business fundamentals including detailed weekly financial statement reports, weekly

cash-flow forecast as well as other Key Performance Indicators (“KPI”). The Zurixx

management team recognizes that many of its competitors, both current and former, lack a

similar focus which frequently leads liquidation issues that often end up in bankruptcy. This

data-driven approach has become a competitive advantage for Zurixx and is one of the most

important factors in the Company’s on-going success.

B. Zurixx Legal Entity Structure

Figure 1 below shows the Zurixx legal structure as of December 31, 2017.

4 This section was adapted from the Zurixx website and discussions with Zurixx management.


Page | 9



Figure 1: Zurixx Legal Entity Structure

C. Zurixx Entities

1. Zurixx, LLC (“Zurixx US”)

Zurixx US is a Utah limited liability company, which began operations in February 2012.

Zurixx US’s main operations are located in Cottonwood Heights, Utah. Zurixx US follows a

calendar year and keeps it books and records in U.S. dollars as its functional currency. Zurixx

US is treated as a partnership for U.S. federal income tax purposes.


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2. Dorado Marketing & Management, LLC (“Dorado”)

a) Overview

Dorado’s primary function is marketing, event management, and celebrity contract

management celebrity management. However, Dorado also provides administrative executive

support for marketing and events (see the Marketing and Events Management sections). All

Dorado employees are residents of Puerto Rico. The Zurixx Group management headquarters

are located in Dorado, Puerto Rico. Operations for Dorado began in January 2015. Dorado

follows a calendar year and keeps its books and records in U.S. dollars as its functional

currency.

Dorado has elected to be treated as a corporation for both U.S. federal and Puerto Rican tax

purposes. The Commonwealth of Puerto Rico is a United States territory, not a state.

Consequently, U.S. federal income taxes do not apply generally to income generated by Puerto

Rico corporations as they are treated as foreign corporations not generally subject to U.S. federal

corporate tax rates.

On January 17, 2012, Puerto Rico enacted Act No. 20 of 2012, as amended, known as the “Export

Services Act,” “the Act,” or “Act 20,” to offer the necessary elements for the creation of a world-

class international service center. The Act establishes a legal framework of incentives designed

to stimulate the development of a wide variety of ventures, including the export of services.

Additionally, this law promotes investments in research and development and initiatives from

the academic and private sectors by granting credits and exemptions for these activities.

Further, the Act helps to decrease operational and energy spending for companies moving to

the island to help their operations remain profitable and efficient.

The Act provides tax exemptions and tax credits to businesses engaged in eligible activities in

Puerto Rico. To qualify for Act 20 benefits, a business prepares an application that includes

details about the services it will provide at its Puerto Rican entity including details regarding

employee headcount, wages, projected revenues from providing the services and other similar

financial information required on the Act 20 application.5

5 The Act provides benefits for services provided from Puerto Rico to outside markets. Eligible activities to receive benefits under the Act are services in the following areas: i) research and development; ii) advertising and public relations; iii) economic, scientific, environmental, technological, managerial, marketing, human resources, engineering, information systems, auditing, and consulting services; iv) consulting services for any trade or business; v) commercial art and graphic services; vi) production of engineering and architectural plans and designs, and related services; vii) professional services such as legal, tax, and accounting services; viii) centralized managerial services, including, but no limited to, strategic direction, planning and budgeting, provided by regional headquarters or a headquarters company engaged in the business of providing such services; ix) services performed by electronic data processing centers; x) development of licensee computer software; xi) telecommunications voice and data


Page | 11



The business submits its completed application to the Office of Industrial Tax Exemption of

Puerto Rico. The decree issued by the Puerto Rican government provides full detail of tax rates

and conditions mandated by the Act and is considered a contract between the Government of

Puerto Rico and the service provider. Dorado filed its application in August 2014 and obtained

its tax exemption decree in January 20156.

Dorado is not subject to any taxes (e.g., dividend tax, tollgate tax etc.) with exception to local

corporate and municipal taxes on its income from its eligible activities in Puerto Rico. Dorado is

also subject to Puerto Rico’s fixed income tax rate established in the tax decree.

D. Products

Zurixx markets and sells workshops and events, online content as well as coaching sessions

focused on teaching students how to invest in real estate and how to become a successful

entrepreneur. The Zurixx target customer is between 35 and 55 years old and is looking for a

way to earn extra money apart from a typical full-time job. Zurixx plans to launch a stock

market education program in 2018 to further expand its educational offerings. While product

lines (i.e., real estate and entrepreneurship) don’t change very often, the brands (i.e., celebrity

endorsements) under the product line umbrellas frequently change to align with market

preferences and interests.

Zurixx has developed certain educational programs branded as the following:

1. Success Path Education

Success Path Education is a real estate training workshop that is built around the “know-how”

and persona of Tarek and Christina El Mousa. This workshop teaches participants how to

successfully renovate and “flip” houses by focusing on topics like business planning and goal

setting, asset protection, acquisition funding, and legal entity formation. Specifically, the

Success Path workshops teach participants the following subjects:

• How to launch a real estate business and generate a profit by flipping, buying

and holding, and wholesaling homes;

• How to find unlisted properties using nontraditional techniques;

• How to utilize participants credit, retirement savings, hard money lenders,

gap funding, and traditional mortgages to fund real estate transactions; and,

between persons located outside of Puerto Rico; xii) call centers; xiii) shared service centers; xiv) medical, hospital, and laboratories services; xv) investment banking and other financial services, including but not limited to asset management, alternative investments, management of activities related to private capital investment, management of coverage funds or high-risk funds, management of pools of capital, trust management that serves to convert different groups of assets into securities, and escrow account management services; and xvi) any other service designated by the Secretary of the Department of Economic Development and Commerce of Puerto Rico.

6 A copies of Zurixx’s Act 20 application and decree are available upon request.


Page | 12



• How to generate income through wholesale real estate transactions and,

connecting with real estate investors for a finder’s fee.

Participants receive a starter kit including an MP3 player and a compact disc featuring 50 Ways

to Find Your Next Flip.

2. Daymond John’s Launch Academy

The Launch Academy helps participants achieve their goals of becoming a successful

entrepreneur. This workshop focuses on helping prospective entrepreneurs make the transition

from an idea to the actual launch of a business. Further, the workshops teach participants

strategies to manage money, position the business, and creating a legacy. Launch Academy

was introduced to the market during the third quarter of 2015. The topics covered during the

training include the following:

• Validating the business concept;

• Moving toward a product launch with greater speed;

• Engaging with potential customers and transforming them into buyers; and,

• Positioning leaders to efficiently build the business.

The skills obtained during the workshop include mastering the components of a business

presentation, business planning and goal setting, marketing strategy and research, social media

and networking tools, funding acquisitions, and advertising and media. All attendees receive a

starter kit including an MP3 player and Daymond John’s eBooks, Stepping Up for Success and

Perfecting Your Pitch.

3. The Flipping Formula

Pete Souhleris and Dave Seymour built a successful house-flipping business on a formula they

created. Pete and Dave, in partnership with Zurixx, have turned their formula into an

educational program that has helped people start their own successful real estate businesses.

Similar to Success Path, participants learn how to find unlisted properties, which are below

market value, obtain financing, create cash flow, and complete a wholesale real estate

transaction in 60 to 90-days. Participants receive a starter kit including the Ripe or Rotten? DVD

on how to evaluate properties, the Zero to Hero DVD, the Flipping Formula eBook, and the 24

Ways to Profit eBook.

The Flipping Formula helps participants determine the profitability of their prospective

purchases. The formula starts with surveying three months of sales data for comparable

properties within a mile and a two-and-a-half-mile radius. Once a probable post-flip listing

price is determined, the program employs a Maximum Offer for Ownership (“MOFO”)

formula. The formula starts with the post-flip listing price and subtracts an ideal profit

(generally 20 percent to account for the unexpected), an allotment for fees like commissions and

closing costs, and the cost of construction, which is carefully determined after reviewing bids


Page | 13



from multiple contractors. The formula also incorporates what design trends and products are

important to adding value.

4. Winning the Property War

Doug Hopkins and Damon Line have decades of professional real estate experience and have

put together their flipping and wholesaling strategies into an educational program called

Winning the Property War. This seminar trains real estate agents and investors to: 1) learn to

flip, renovate, and wholesale houses; 2) obtain key real estate information; and, 3) position the

participants to become full-time real estate investors.

5. Property Bank

Mike Baird from Spike TV’s Flip Men and Greg Herlean, best-selling author of Bank on This,

have created the Property Bank real estate training system. This educational system teaches

participants how to find growth and wealth opportunities.

6. Conclusion

Many of the previously described products follow a “product funnel” that seek to steadily

engage customers with additional advanced trainings and products. Figure 2 below illustrates

the product sale funnel that customers typically engage in.

Figure 2: Zurixx Product Funnel

Preview Workshop

Coaching

Mentorship

Advanced camps

Backend supportFree Paid


Page | 14



E. Value Chain7

Figure 3 below illustrates the value chain executed by Zurixx:

Figure 3: Zurixx Value Chain

F. Competitors

Zurixx competes with other educational programs designed to empower customers with trade

knowledge and capabilities. These programs target individuals seeking a career change or

supplementary knowledge. Table 1 below lists the primary competitors that Zurixx directly

competes against.

Table 1: Zurixx Primary Competitors

Competitors

Evtech Media

Than Merrill & FortuneBuilders

Robert Allen

Rich Dad Poor Dad

FBA

Investools by Ameritrade

MIT Financial/Net Marketing Alliance

Prosper

7 Bullet points with a post note “PR” indicate that it is an activity executed by Dorado. Bullets with a post note “US” indicate an activity executed by Zurixx US.

Brand Development

•Identify celebrity personalities around whom to build a new brand (PR)

•Negotiate legal/contractual relationship with celebrity (PR)

•Perform initial market research – collect and analyze data (US)

Content Development

•Collect information from celebrity, including content, photographs and related information (US)

•Prepare workshop materials and related media for seminars (US)

•Work with stakeholder to refine workshop materials and finalize seminar content (US)

Seminar Delivery

•Initiate sales and marketing campaign in selected markets (US)

•Schedule seminars and deploy field team (PR)

•Conduct seminars and sign-up participants for coaching and mentoring assistance (US)

Coaching & Mentoring

•Develop and deploy multi-media content used in coaching process (US)

•Schedule coaching and mentoring sessions with individual participants (US/PR)

•Execute coaching and mentoring activities including additional services (e.g., accounting and legal) (US)


Page | 15



Competitors

Armando Montelongo

The Learning Annex

Scott McGileray

Grant Cardone

G. Functions, Risks, and Intellectual Property

1. Functions

Table Two illustrates the division of functions between Zurixx US and Dorado. Differing levels

of functional involvement between Zurixx US and Dorado are determined and represented

using stars in the table below. For example, Accounting & Finance functions are primarily

controlled and performed by Zurixx US through financial statement preparation, cash

management, etc. Dorado performs limited Accounting & Finance functions, such as payroll

processing, which merit an overall weighting of four to one stars. Weightings between Zurixx

US and Dorado sum to equal five stars. A detailed analysis of Company functions and

responsibilities will be described further in succeeding sections within the report.

Table 2 – Division of Functions Between US and Puerto Rico

Business

Function

Function

Description

Zurixx

US

Dorado Functions

Performed by US

Employees

Functions

Performed by PR

Employees

Accounting &

Finance

Corporate finances,

financial statement

preparation, cash

management, payroll,

financial planning

and analysis, and

corporate

expenditures.

★★★★ ★ Corporate finances,

financial statement

preparation, cash

management,

payroll, FP&A, and

corporate

expenditures.

Limited assistance

in payroll

processing.

Celebrity

Management

Identify and manage

up and coming

celebrities who have

developed a brand to

promote company

products and services

- ★★★★★ None. PR performs initial

acquisition of

celebrity

relationships as

well as maintains

oversight of

relationships

management.


Page | 16



Business

Function

Function

Description

Zurixx

US

Dorado Functions

Performed by US

Employees

Functions

Performed by PR

Employees

Coaching &

Mentoring

Manage the coaching

relationship and the

material provided on

the online educational

platform

★★★★★ - Manage coaching

relationships and

develop

educational

material and online

content.

None. (see legal

functions for some

functions

associated with

educational

material)

Customer Service Inbound

communication from

seminar participants

and attendee

registrants. Outbound

communication with

attendees and

registrants who did

not attend.

★★★ ★★ Functions shared

equally between

the US and PR.

Functions include

inbound, outbound

and ad hoc

customer support.

Exceptions for US-

only functions

include contract

compliance and

high-level direction

and approval.

Functions shared

equally between

the US and PR.

Functions include

inbound, outbound

and ad hoc

customer support.

Content &

Graphic Design

Creates designs and

scopes the market in

order to incorporate

Celebrity image into

the developing brand.

★★ ★★★ Marketing team

performs routine

functions to design

content around

brands. US

executes CEO

strategy and how

seminar materials

relate to products

High level

direction from CEO

who resides in PR.

Strategy and

content execution is

performed in PR

and strategy is

disseminated to the

US.

IT Infrastructure

& Software

Development

Manages both

hardware and

software technology

solutions for the

Company

★★★★★ - Hardware and

software

infrastructure,

software

development, help

desk support, and

data storage.

None.

Event Planning Book events, arrange

venues, schedule

- ★★★★★ None. PR organizes,

books all events,

schedule venues


Page | 17



Business

Function

Function

Description

Zurixx

US

Dorado Functions

Performed by US

Employees

Functions

Performed by PR

Employees

presenters, and

coordinate with the

Marketing team for

current and future

events

and speakers, and

coordinates with

marketing team to

plan future events.

PR Makes the

decision on event

locations as well.

Event Execution Follows up with any

issues after event

planning. Additional

materials, needs, etc.

- ★★★★★ None. Manage event staff,

ensure that each

event has needed

supplies and

equipment, and

provides technical

support.

Coordinate event

supplies logistics

with Turnkey.

Executive

Leadership

The CEO and

President, both reside

in Puerto Rico, work

to identify up and

coming celebrities ,

capital allocations,

marketing strategy,

customer acquisition,

etc.

★ ★★★★ The GM of the US

office directs the

day-to-day

activities of the US

employees under

the direction of the

CEO who resides

in PR. Performs

routine services

functions for day-

to-day

management

Ultimate executive

leadership comes

from the CEO in

PR. The President

of the PR office

provides direction

relating to day-to-

day activities in

Puerto Rico as well

as celebrity

relationships.

Legal &

Compliance

Compliance review

and litigation

preventative

measures.

★ ★★★★ The US leadership

will occasionally

work with outside

legal counsel on ad

hoc issues.

In-house counsel

provides advice on

coaching and

mentoring content

for compliance and

regulatory issues.

Legal team reviews

training materials

and seminars for

legal compliance


Page | 18



Business

Function

Function

Description

Zurixx

US

Dorado Functions

Performed by US

Employees

Functions

Performed by PR

Employees

Marketing Coordinating drafting

and production of

printed material.

Manages and creates

graphic design, video

promotions, and

associated marketing

materials.

★ ★★★★

Under the direction

of the CEO in

Dorado, the US

performs routine

checks on

marketing

message, copy, and

construction.

Registrant

marketing, event

promotion, event

execution, and

customer sourcing.

Builds the

marketing brand,

content,

promotions and

materials for

customer sourcing

initiatives..

Sales Inbound/Outbound

sale, Roadcrew;

Educational Programs

Telesales; and,

Backend Services

Telesales.

★★★★★ - Roadcrew,

educational

program sales and

back-end sales

support. These

employees are

mostly contractors.

Although sales are

generated in Puerto

Rico, there are very

minimal, if any,

sales functions

performed in

Puerto Rico.

Sales Team

Recruiting

Identify and recruit

trained presenters for

its workshops, events

and coaching sessions

- ★★★★★ None. Recruitment center

where Dorado

contacts and

contracts with

qualified speakers

for specified

engagements.

Supply Chain Supply chain ensures

all materials are

available for seminars

and products

★ ★★★★ Coordinating

marketing

materials with

Turnkey.

Heavy

coordination with

Turnkey on events.

Formulates strategy

for supply chain

functions.


Page | 19



2. Risks

Table Three illustrates the division of risks between Zurixx US and Dorado.

Table 3 – Enterprise Risk Matrix

Risk Type Risk Description Zurixx US Dorado

Product-Related

Risks

Customer returns ★★★★★ -

Product liability ★★ ★★★

Market Risks Cyclical demand ★ ★★★★

Celebrity PR / Image - ★★★★★

Competitive risks ★ ★★★★

General Business

Risk

Operations Risk ★★½ ★★½

3. Intellectual Property

Table Four illustrates Intellectual Property that has been developed and maintained by Zurixx

US..

Table 4 – Enterprise IP Matrix

IP Description

Seminar Content Videos and other content on Moodle.

All content that is printed by Turnkey

Trademarks/Tradenames All real estate and entrepreneurship brands;

Zurixx trademarks/tradenames


Page | 20



III. Industry Background8

Zurixx operates in two broad industry categories: Education and training services industry;

and, sales and marketing industry. Though Zurixx operates in each industry simultaneously,

each industry has unique characteristics and is analyzed separately in this section.

A. Education and Training Services Industry

1. Industry Overview

Companies in the education and training services industry include business and secretarial

schools; technical and trade schools; and providers of tutoring, exam preparation, and other

workshops and seminars. Educational services are typically marketed to both businesses and

individual consumers.

Industry demand is driven by several factors, but employment trends, changes in disposable

income and demographic trends are the primary drivers of industry performance. It is

estimated that the educational services sector will grow at an annualized rate of 1.3 percent over

the five years through 2023.

The primary disciplines and schools that attract students include technical and trade schools,

business schools and information technology training. Technical and trade schools include

cosmetology, flight, real estate, bartending, apprenticeship, and professional development

institutions. Business and computer training programs offer secretarial, court reporting,

software programming, and computer networking courses. Other services include fine arts

schools, sports and recreation instruction, language schools, exam preparation and tutoring,

and driving schools.

2. Performance

Part of the educational and training services industry includes trade schools and primary

educational institutions which are subsidized by government programs. Increased government

funding is expected to drive some of the growth in the industry. However, increased access to

the internet and online programs will tighten competition and may constrain revenue growth.

Finally, disposable income is expected to increase at an annualized rate of 1.9 percent between

2018 and 2023. As a result, consumers will be more likely to spend discretionary income on

additional services and goods, including educational services. Steady unemployment rates will

likely push individuals to seek education and other sources of income to supplement their

needs.

8 Industry information obtained in conversations with management as well as from the following sources: • IBISWorld Industry Reports - 61 – Educational Services in the US • IBISWorld Industry Reports – OD5848 – Marketing in the US


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3. Competition

Postsecondary and other educational programs are subject to intense competition due to the

variability and multitude of substitute products. Because of web platforms and software

programs, this competition has increased as consumers are no longer limited to educational

programs that are within their physical or geographic proximity. Success in this sector is driven

by reputable brand name and image, access to skilled instructors, and economics (e.g., cost of

training, potential return on investment etc.). Some sectors within the industry are subject to

additional government regulations and therefore require additional investments and costs to

comply with these requirements.

B. Sales and Marketing Industry Overview


Companies in the sales and marketing industry create advertising campaigns, implement public

relations campaigns, and engage in media buying, among other advertising services. Major

services are advertising for print, broadcast, and online media, direct marketing, and public

relations. Other services include display advertising, media buying, and media representation.

The primary goal of sales and marketing consultants is to provide assistance to strategy,

planning, pricing, market evaluation, customer analysis, competitive analysis, product

development and forecasting.

2. Performance

Demand for advertising and marketing services comes largely from individual and corporate

businesses that sell consumer products, entertainment, financial services, technology, and

telecommunications services. Demand for industry services is linked to the availability of

financial resources and other discretionary expenditures by businesses and individuals. The

profitability of individual companies depends on creative skills and maintaining client

relationships. Increased broadband connectivity has driven the availability of products and

therefore increased competition. This has translated to strong demand for advertising and sales

services that has increased revenue growth to 1.9 percent in 2016. Overall, the marketing and

sales industry has grown due to a bolstered economic recovery and increased levels of excess

cash to spend on consultancy services. Level of demand for marketing and sales consultants is

typically linked to the economic cycle.

3. Competition

The marketing and sales consulting industry is fragmented and consists of numerous small

firms that tend to service niche markets. However, the industry still contains several larger

companies such as advertising multinationals and large consulting firms that are responsible for

a large portion of industry revenue. Larger businesses include Accenture Ltd., McKinsey &

Company, Publicis Groupe and WPP PLC. Good consulting firms operative effectively when

they have access to a highly skilled workforce and establish a well-known brand name.


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Consultants are valuable due to their distinguished experience and expertise. Companies that

can recruit and manage talented employees and industry experts will likely see better customer

results. As companies become more globalized, product offerings will expand into other areas

of consultancy and expertise. Smaller firms and businesses will have to set apart their services

by offering enhanced knowledge and greater customer service.


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IV. Functional Analysis

A. Introduction

A functional analysis is an analysis of a company’s operations and business processes that

identifies the key sources of economic value that pertain to each intercompany transaction. A

meaningful functional analysis focuses primarily on the contributions to economic value on

each side of an intercompany transaction, rather than simply cataloging the functions

performed by each entity that participates in a given transaction. As such, a functional analysis

is essential to the development and documentation of intercompany transfer prices, because it

provides the information necessary to evaluate how economic value is created, and how a

transfer pricing structure should distribute that value.

In general, a firm’s stock of assets, or flow of functions performed over time, can be

characterized as either “routine,” or “non-routine.” Routine assets and functions are typically

fairly standard, re-deployable, and general in nature. These are assets or activities that have a

clear opportunity cost in the open market, and which in equilibrium would earn a competitive

rate of return (also referred to as a “routine” rate of return, or a “normal” rate of return).

Routine assets and functions are, as the name implies, amenable to benchmarking.

Often, the activities and assets associated with distribution or standard manufacturing are

viewed as routine. To the extent that these assets and functions can be redeployed to a higher

valued use if they are unable to generate an adequate rate of return when used within the

related party system, the assets are likely to be routine in nature. Distribution companies

typically realize a measurable, and somewhat predictable, level of profitability because they

operate in a competitive market – made so by the non-unique nature of the distribution

function. Many routine manufacturing companies operate in a similar environment, for similar

reasons. Other activities that are typically thought of as routine include administrative

functions, certain routine marketing functions, and accounting functions.

By contrast, non-routine assets and functions are in some way non-standard, usually non-re-

deployable, and relatively unique. Non-routine assets and functions create a barrier to entry or

market niche for a company. Essentially, these functions represent strategic investments by a

company. Should the investments succeed, the company earns economic rents (profit in excess

of the competitive rate of return). Should the investments fail, the investment cost is not

reimbursed, and the company typically earns a routine rate of return, or less. In short, non-

routine assets and functions represent investments by a company in an attempt to garner a

competitive advantage over its rivals.

The fact that non-routine intangibles are, by definition, unique or non-replicable in some way,

makes it difficult to provide a list of general “classes” of assets that are non-routine. However, a

somewhat ad hoc list of specific examples of non-routine assets is certainly possible. Often,

research and development activities directed at the creation of a competitive advantage are non-

routine. Similarly, marketing activities that create strong brand name identity, or consistently


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profitable customer relationships, can be thought of as non-routine. In many cases, brand

intangibles, whether in-licensed or self-developed, contribute to economic profit. So-called

“asset specificity,” whereby a firm creates a production process, design set (for example,

through engineering), or physical asset base, that is tailored to a long run economic relationship

with a specific customer or set of customers, is also non-routine. Finally, activities that create a

strong position in a niche market, such as market identification, product design, and specialized

sales activities, can be non-routine in nature.

A key purpose of the functional analysis process, then, is to draw a relation between a

company’s activities and assets, and economic value. In many cases, this mapping is greatly

facilitated by classifying activities and assets as routine and non-routine. In short, drawing on

the results of the functional analysis, the final conclusions of a transfer pricing analysis should

be roughly consistent with the identification of the two categories of functions, assets, and risks.

Transfer prices should reward routine activities at a level that is roughly consistent with, or

commensurate with, their opportunity cost. Consequently, any residual profit or loss should

flow, or accrue, to non-routine activities and assets.

B. Overview of Transaction

The intercompany transaction at issue in this report is the provision of certain services,

including marketing, public relations, consulting, event management, celebrity management

and administrative support for marketing and events (“covered services”) from Dorado to

Zurixx US. Details are given in the “Master Services Agreement”9 effective January 1, 2015 and

is available upon request. During a given fiscal year, Dorado charges Zurixx US for its covered

services.

C. Functions Performed

This section provides a summary of the functions performed by the parties to the controlled

transactions. These functions are classified in nine categories: (1) Accounting and Finance; (2)

Celebrity Relationships; (3) Marketing; (4) Event Planning and Management; (5) Events

Support; (6) Information Technology; (7) Customer Support; (8) Sales; and, (9) Coaching and

Education.

1. Accounting and Finance

The accounting and finance team manages all corporate finances, including financial statement

preparation, cash management, payroll, financial planning and analysis, and corporate

expenditures. This includes the accounting and finance functions for both Zurixx US and

Dorado. The team consists of the CFO, Controller, and five staff accountants, all based in the

US.

9 Additional details regarding the “Master Services Agreement” can be found in Table 6 of this report.


Page | 25



a) Payroll

Payroll for the entire company is processed weekly by the accounting team. The payroll and

commissions are calculated in the US. Zurixx US holds a bank account for US payroll and a

separate account for Puerto Rico payroll. The Controller works with the Puerto Rico Office

Manager and an outsourced payroll company to coordinate payroll for the Puerto Rico

employees. A different third-party payroll company is used to process payroll for all US

employees.

2. Celebrity Relationships

Celebrity relationships are maintained by executives who reside in Puerto Rico.

The executives spend about 60 percent of their time maintaining existing celebrity relationships

and the remaining 40 percent identifying and negotiating new celebrity contracts. The CEO and

President, both reside in Puerto Rico, work to identify up and coming celebrities who have

developed a brand and following through television programs and other social media channels.

Ideally, entering into contracts with new and up-and-coming celebrities as they are just starting

to gain popularity is the most effective and cost-efficient approach to developing a new

celebrity brand. The process for signing a new celebrity involves several steps:

• The President makes initial contact with the celebrity, either directly or through his/her

agent by phone

• The President presents the proposed arrangement and discusses the contractual terms.

• The celebrity or his/her agent will meet in-person with the President to finalize

contractual terms and conditions.

• The celebrity will attend a Zurixx-sponsored event to better understand the business

model and how his/her product offering will be packaged and presented to the public.

• The final contract is signed and the content for the program is developed, tested and

finalized.

Zurixx US pays celebrities a commission based on the sales made of their respective brands.

Celebrities earn, on average, a five percent commission on sales related to his/her training

program. Most celebrity contracts have three-year terms, with an additional auto-renew at the

fourth year. Celebrity contracts are entered between the celebrities themselves and Zurixx US.

A considerable amount of time is spent by the executive team in Puerto Rico maintaining

celebrity contracts. Celebrities often request information about how their brand is performing as

well as how his/her brand is perceived in the marketplace.

Zurixx maintains a reserve for legal costs and sales declines as a result of celebrity relationships

that deteriorate.


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3. Marketing

There are 12 members of the marketing team, including a Marketing Director. The Marketing

Director oversees the day-to-day activities of the marketing team as well as the events team,

which is headquartered in Puerto Rico. Ultimately, the CEO provides oversight and direction to

the marketing team. The CEO, who physically resides in Puerto Rico, has developed the

marketing models and associated business processes that help guide the overall marketing

strategy of Zurixx.

a) Marketing Activities

The marketing team spends a considerable portion of its time coordinating the drafting and

production of printed material with an external vendor. Additionally, the team manages and

creates graphic design, video promotions, and associated marketing materials.

The marketing team utilizes a mix of both targeted direct mail and digital marketing campaigns

to promote its educational seminars in the US and Canada. The team also tracks and analyzes

demographic and lifestyle data for key North American markets where the Company will offer

its training seminars. The data analytics helps the Company to better identify and message its

offering to target attendees.

In addition to its customer analytics, the marketing team also performs ongoing studies

regarding the use of celebrities to help attract participants to the Company’s seminars. These

studies show that sales increase by 10-15 percent as a result of using a celebrity brand as

compared to a non-branded, non-celebrity event. The majority of market research work is

organized and led by the CEO in Puerto Rico.

b) Public Relations

Zurixx outsources most of its public relations efforts to external vendors, including Big Leap for

online reputation, Avalaunch Media for digital public relations and content writing, Venable for

Federal Trade Commission (“FTC”) consulting, and Levick for public relations legal advice. The

Marketing team also employs an in-house Public Relations Director.

c) Marketing Intellectual Property

Zurixx US owns all images and photos that are generated by the Marketing team. However, if a

celebrity provides his/her image and allows the Company to use it to market training seminars,

the celebrity retains ownership of these photos and images. To date, the Company hasn’t taken

any legal action on trademark or tradename infringements.

4. Event Planning and Management

The Events team is in located in Puerto Rico and is comprised of six team members. The

Department’s primary roles are to book events, arrange the venues, schedule presenters, and


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coordinate with the Marketing team for both current and future events. The Company uses a

third-party travel agency to book travel for the roadcrew and presenters.

Events in the same geographic region are spaced out according to the type of event and brand.

For example, Daymond John entrepreneurship events occur in the same geographic region

about every three months. The real estate events, however, only occur every six months in any

given region.

a) Events Intellectual Property

The events team in Puerto Rico owns all intellectual property related to the calendar of future

events and approved vendor lists. The events team takes precautions to protect this IP from

competitors (i.e. the Company does not want its competitors to schedule a competing event at

the same time and in the same geographical location). Additionally, the Company receives bulk

venue discounts with large hotel chains. While price is important when selecting venues, the

quality of the venue for a particular event is more important to the events team. All

relationships with large hotel and venue chains are managed from Puerto Rico. Given the

highly competitive nature of the industry, the events team also encourages venues to sign non-

compete and non-disclosure agreements.

b) Dorado

The Dorado events team works closely with the marketing, equipment, and sales teams to

ensure all necessary materials and equipment (e.g., audio and video equipment, Point of Sale

terminals etc.) arrive at an event site according to schedule. Additionally, all events team

members are required to attend at least one event (e.g., preview, workshop, etc.) in the US as

part of their initial and ongoing training.

c) Canada

During a given year, the events team will schedule and conduct multiple events in several

Canadian cities, including Toronto, Montreal, Ottawa, Calgary and Edmonton. The process for

booking events in Canada is similar to the process for booking events in the US, with a few

minor differences. For example, due to delays in crossing the Canadian border with AV

equipment, the Company will rent this equipment directly from the venue. Dorado is

responsible for scheduling and booking events in Canada.

5. Sales Support

The sales support and management team manage the roadcrew, event directors, and speakers,

and ensures that each event has the needed supplies, equipment, AV equipment and provides

ongoing technical support. Although Zurixx US interacts with hotels and venue staff

occasionally, the relationship with venues is owned and managed by the events team. The

exceptions to this are specialized events when more technical support and coordination with


Page | 28



venue staff is needed, including the annual Vegas event and various advanced camps held

throughout the year.

a) Turnkey and Printed Materials

The sales support team works closely with Turnkey Inc., a third-party printing and logistics

company, to manage the printing and shipping of educational materials for each event. Preview

kits, brochures, bound books, handouts and order forms are distributed at preview and

workshop events. Each item includes the brand and logo of the event.

The sales support team does not maintain an inventory of printed materials at its office or a

warehouse, this is done to help manage printing and storage costs. Dorado works closely with

the marketing team to determine the amount of printed materials needed for each event based

on projected attendee counts. Turnkey maintains sufficient inventories of the various printed

materials and will ship these items directly to the venue site when notified by Dorado to do so.

Turnkey holds title to and risk of loss of the printed materials until the material is distributed to

students at events. After each event, any excess materials that are reusable are mailed back to a

Turnkey location for use at a future event and all unusable materials are discarded.

b) Dorado

The support team is highly integrated with the Puerto Rico-based events team in coordinating

and planning events. The two teams communicate regularly. While the events team plans and

authorizes events, the support team carries out the events.

6. Information Technology

All IT functions and software infrastructure development efforts are managed by the IT team,

which is in the US. The IT team manages both hardware and software technology solutions for

the Company. There are two IT employees, a director of IT and a help desk specialist.

a) Computer Hardware

Most hardware components are managed and maintained by the Zurixx IT team. The

Company’s primary data server is in Utah with an additional server located at its Puerto Rico

office. The Company integrates call center phones with various software systems to track

customer interactions.

The team outsources all hardware installation, configuration and maintenance related to CISCO

products.

b) Software

Zurixx employees use both off-the-shelf and customized software in conducting the day-to-day

operations of the business. All the software customizations are performed by the IT Director,


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except for the custom EMS software, which was outsourced to an independent software

developer. The outsourced developer has also spent a small amount of time integrating the EMS

with Moodle and Sugar CRM.

Table Five lists the software applications used in the business.

Table 5: Zurixx Software

Name Third-party

vs in-house

software

Level of

customization

Purpose Internal vs

Customer-

facing

Windows Third party Off the shelf Operating system Internal

Office Third party Off the shelf Productivity, email,

etc.

Internal

Linux Third party Off the shelf Operating system Internal

VMware Third party Off the shelf Data Infrastructure

& storage

Internal

Lansweeper Third party Off the shelf Help desk and asset

management

Internal

Infusionsoft Third party Off the shelf Marketing Internal

Sugar CRM Third party Highly customized CRM and central

database

Internal

Microsoft

Dynamics GP

Third party Customized Accounting Internal

Access & SQL

server


Moodle Third party Customized Online learning

content

management

Customer-

facing

Asterisk Third party Customized Phone system

management

Internal

Zpay In-house Highly customized Payment processing Internal


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Name Third-party

vs in-house

software

Level of

customization

Purpose Internal vs

Customer-

facing

Event

Management

Systems (“EMS”)

In-house

(outsourced)

Highly customized Event management Internal

c) Dorado

Zurixx US provides IT support and infrastructure to Dorado. When Dorado was formed, the IT

Director traveled to Puerto Rico to setup and configure the network and server located there.

The IT team periodically travels to Puerto Rico to perform network maintenance and hardware

upgrades. The US help desk provides support for all Puerto Rico employees and manages data

storage and hardware for Dorado. When new hardware is needed in the Puerto Rico office, the

IT team purchases and configures the hardware in the US and then ships the hardware to

Puerto Rico. The Puerto Rico office has its own server.

Dorado is highly integrated with all the software systems managed by Zurixx US. They access

all company data through Sugar CRM and a private VPN portal.

7. Customer Support

The customer service department performs two primary functions: 1) Inbound communication

from seminar participants and attendee registrants; and, 2) outbound communication with

attendees and no-shows. Currently, 75 percent of customer communications are phone calls

with the remaining 25 percent of customer interactions occurring via email. Each inbound and

outbound call is tracked in the Company’s highly-customized Sugar CRM platform.

Additionally, for legal and training purposes, each inbound and outbound call is recorded on

Asterisk, a third-party phone management system, to ensure quality and compliance with all

government rules.

Between the US and Puerto Rico, there are 18 full-time employees in the customer service

department, including a US director, a US supervisor and a Puerto Rico supervisor. The

customer service team expanded its operations to Puerto Rico in January 2016 and the team is

now highly integrated between both locations. Both teams have access to the same customer

information and software tools. The Customer Service Director manages and oversees the

department’s operations in both locations and works closely with supervisors in each location.

Although the two supervisors reside in different geographies, each is responsible for overseeing

the work done by team members in both the US and Puerto Rico.


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a) Inbound Communications

When current or prospective customers contact the Company they are directed first to the

customer support team. There are various reasons that people contact the company, but most of

the calls and emails are questions from current customers about products and events they have

already purchased.

Because the customer support team has employees in both the US and Puerto Rico, the hours of

operation for the department are extended past normal business hours. Between 7:00 and 9:00

AM Mountain Time, all calls are routed by the company’s phone system, Asterisk, to the

customer support team in Puerto Rico. Between 9:00 AM and 4:00 PM Mountain Time, calls or

emails are routed to either the US team or the Puerto Rico team, depending on availability. All

customer emails are placed in a queue that either team can answer at any time.

b) Outbound Communications

Shortly after a customer purchases a product, the support team will contact the individual to

welcome the customer and verify that all the contact information is correct. Additionally, the

support team will contact all event attendees to ensure that the attendees are satisfied with their

participation and purchase of training materials. It is important to note that these follow-up

calls are not sales calls. While the sales department also calls event participants as part of the

sales process, the customer service employees do not sell additional products to customers.

Rather, the customer service department uses outbound calls to ensure quality and customer

satisfaction.

Another function performed by the customer service group is contract compliance. When a

customer purchases additional training or materials, he is placed in an online queue in Sugar

CRM for a follow up discussion to review the online contract. As soon as a customer signs the

online contract, the sale is finalized, and the customer’s credit card or bank account is charged

for the seminar or product. Because it is more complex than normal communication, contract

compliance is primarily performed by the US team.

c) AD Hoc Requests and Refunds

The customer support team is also involved in various ad hoc inbound and outbound

communications as needs arise, such as changes in venues or refunds. Every time a customer

calls in for a refund, a “case” is created. For smaller cases, the refund is immediately paid. For

larger refunds, the case goes to a “Saves” team, which tries to dissuade people from canceling

and seeking a refund. The “Saves” team is comprised of four US employees. Although most

refunds can be issued without approval, large refunds must be approved by the director.


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d) Team Management

When a new employee joins the customer service department, there is no formal training; most

of the training occurs on the job. On average, it takes about two weeks for a customer service

representative to be fully onboarded and trained.

The entire department (both the US and PR teams) have weekly meetings via Skype where they

receive training on best practices and talk about company and department updates. Although

there is minimal turnover in the department, hiring and firing decisions are made jointly by the

director and respective supervisor in each jurisdiction. The director travels to Puerto Rico at

least once a quarter to train employees, manage logistics, and interview new hires. Given the

strict labor laws in Puerto Rico, the director works closely with in-house counsel to ensure that

the company remains compliant with all Puerto Rican employment laws. Additionally, each

customer service employee will visit the other team’s location, respectively, on a frequent basis.

On average, there is one employee per week visiting the other team’s location. During these

visits, employees are trained and mentored by their co-workers..

8. Sales

The sales team is divided into three groups: Roadcrew; Educational Programs Telesales; and,

Backend Services Telesales. Like other Zurixx departments, there is very little, if any, employee

turnover in the Sales team.

a) Road Crew

The Road Crew team is composed of independent contractors who help run events at venues

across the US and Canada. The team sets up equipment, registers attendees, and processes

payments for products that customers purchase at events through a third-party payment

processing platform called, Zpay.

b) Educational Programs

The Educational Programs Telesales team calls prospects after they have attended a preview

event or three-day workshop to sell them additional Zurixx products and services. This team

primarily focuses on cross-selling one-on-one coaching sessions and individual mentoring

packages.

c) Back-End Services

Many of the Zurixx customers are new to entrepreneurship and real estate investing. The Back-

End Services Telesales team offers post-event support service packages to help these customers

set-up and operate their new businesses. Specifically, the team helps existing customers form

legal entities, prepare tax filings and other similar legal and compliance work. Most of these

sales occur over the telephone; however, these services are also sold at live events in advanced

seminars in places like Las Vegas.


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When a customer purchases the backend services, the sales team will connect the customer with

various third-party accountants and lawyers who perform the services. The agreements with

these vendors are with Zurixx US. Zurixx bills the customer directly and simultaneously pays

the vendors. The client never interacts with the legal advisor – the sales team collects all the

needed information in Sugar CRM and passes it on to the legal advisor for processing.

However, the client does interact directly with the accounting vendor. Zurixx US has a fixed fee

arrangement with the accounting vendor and a commission-based arrangement with the legal

vendor.

Canadian students that are making investments in the US face additional backend nuances.

Although the Zurixx sales team will assist its Canadian customers on making investments in the

US, the team does not provide backend services for real estate or business investments in

Canada.

d) Dorado

The sales department works closely with the customer service department, including the

customer service team in Puerto Rico. Several times per day the customer service

representatives will pass on referrals to the sales teams.

9. Coaching and Educational Content

Coaching is Zurixx’s highest margin product and comprises between 20 and 30 percent of the

Company’s revenues. Students pay for one-on-one phone coaching sessions on real estate

investing and small business entrepreneurship. Additionally, customers who purchase

professional coaching packages obtain access to an online database of educational videos taught

by the various coaches. The coaching team, headquartered in the US, manages the coaching

relationships and the material provided on the online educational platform.

The coaching team has experienced very little turnover since the inception of the Company. The

customer support team also receives very few refund requests related to coaching services.

Coaching and mentoring materials are modified and customized for the Canadian market.

All video production and script writing is performed internally at the Zurixx Utah office.

Currently, the Company has more than 100 videos in its online training library.

a) Coaching

The twelve coaches, who are all full-time Zurixx US employees, have all personally been

successful real estate investors and entrepreneurs. Most coaches work from home, although

their coaching schedules are managed by the coaching team. The coaches are trained on a

proprietary Zurixx “accountability” model that focuses on personal goal setting and

mentorship. Coaches have an opportunity to obtain external certifications to help grow their

credentials. Most coaches teach both real estate investing and entrepreneurship principles. All


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coaches working for Zurixx are required to sign a non-disclosure agreement. Coaches meet

weekly with Zurixx executives to receive training and to help coordinate brand alignment,

scheduling, and discuss new market initiatives.

Zurixx owners are very involved in the coaching function. Each of the three owners interacts on

a regular basis with all of the coaches/mentors.

b) Online Educational Platform

The educational videos and other training materials are stored and managed on a third-party

platform called Moodle. The content is all created and produced internally by the coaching

team and is owned by Zurixx US. Each video is refreshed every two to three years or when a

new coach joins the team. The goal is to provide relevant and timely content to students.

c) Mentoring

In addition to coaching, Zurixx offers mentoring services to its students. Mentoring includes in-

person meetings and training between the student and the mentor. An example of a common

mentoring activity is when a mentor travels to the student’s place of business and will jointly to

identify and visit investment properties to help in student select and purchase a property.

Mentoring makes up a small portion of the Company’s revenues and is managed by the

coaching team. Zurixx provides in-house entrepreneurship mentoring, but contracts with a

third-party for all real estate mentoring.

d) Dorado

The sales team is required to coordinate with the Company’s in-house legal counsel located in

Puerto Rico. The legal team reviews sales session transcripts and presentations to ensure

everything that is said is compliant with government regulations. In addition, the coaching

team receives direction and approval from Dorado executives on how to conduct training and

manage the workload.

10. Intercompany Agreements and Financing

a) Intercompany Agreements

Table Six details the intercompany agreement between Zurixx US and Dorado:


Page | 35



Table 6: Zurixx Intercompany Agreements

Parent Affiliate Effective Date

/ Term

Description

Zurixx LLC Dorado Marketing

& Management,

LLC

January 1, 2015

Renewable 1-

Year term

Master Services Agreement where Dorado

agrees to perform certain services, including:

marketing, public relations, consulting, event

management, celebrity management and

administrative support for marketing and

events for Zurixx’s benefit in the United States

and Canada. Dorado shall invoice Zurixx

monthly, unless otherwise agreed upon by the

parties but in no case less frequently than

quarterly, for the amount of the Service Fee

then due, which amount shall be due and

payable by Zurixx to Dorado within 30 days of

the date of the delivery of the invoice to

Zurixx.

b) External Financing Activities

As of December 31, 2017, Zurixx US did not have outstanding debt with external lenders or

financing organizations.

c) Internal Financing Activities

As of December 31, 2017, the Company did not have any internal financing arrangements.

D. Conclusion

EP’s interviews of Company representatives along with an analysis of the Zurixx operating

structure suggests the following:

• Zurixx US operates as the entrepreneur with responsibilities for developing and

investing in intellectual property, making capital investments to grow the business and

assuming the primary enterprise risks associated with operating this type of business.

• Dorado performs functions that are consistent with those of a value-added service

provider that performs high-value services involving marketing, customer

identification, celebrity contract management, event planning and strategic operations of

the business.

In constructing this functional analysis, EP interviewed various Zurixx employees to

understand the nature and structure of the Zurixx organization.


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V. Regulatory Overview

A. U.S. Transfer Pricing Regulations

As was noted previously in this report, the US Regulations concerning transfer pricing are

provided largely by Section 482 of the Internal Revenue Code. In the sections that follow, we

provide an overview of the US Regulations relevant to the transactions covered by this report,

including available methods and additional considerations for transactions involving tangible

goods, services, intangible property and intercompany loans.

B. The Arm’s Length Principle

The arm’s length standard is common to most transfer pricing regulations around the world,

including the US Regulations. In general, a controlled transaction meets the arm’s length

standard if the results of the transaction are consistent with the results that would have been

realized if uncontrolled taxpayers had engaged in comparable transactions under comparable

circumstances. In order to be “comparable” to a controlled transaction, an uncontrolled

transaction need not be identical to the controlled transaction but must only be sufficiently

similar that it provides a reliable measure of an arm’s length result. To meet the arm’s length

standard, a controlled taxpayer’s results need only be within the range of results determined by

the results of two or more comparable uncontrolled transactions.

The US Regulations give the Internal Revenue Service (“IRS”) broad authority to reallocate

income or deductions between related entities if the Service determines that such allocation “is

necessary in order to prevent evasion of taxes or clearly to reflect the income” of such related

entities. The IRS states in the final Section 482 regulations that “[t]he purpose of section 482 is

to ensure that taxpayers clearly reflect income attributable to controlled transactions, and to

prevent the avoidance of taxes with respect to such transactions” by placing “a controlled

taxpayer on a tax parity with an uncontrolled taxpayer by determining the true taxable income

of the controlled taxpayer.”

The US Regulations reiterate the IRS’ support of the arm’s length standard, stating that:

the standard to be applied in every case is that of a taxpayer dealing at arm's length with

an uncontrolled taxpayer. A controlled transaction meets the arm’s length standard if

the results of the transaction are consistent with the results that would have been realized

if uncontrolled taxpayers had engaged in the same transaction under the same

circumstances...10

The key concept underlying application of the arm’s length standard is comparability; the

related party transaction in question should be assessed relative to comparable transactions

between uncontrolled parties under comparable circumstances. In view of the validity

10 Treas. Reg. §1.482-1(b)(1)


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attributed to the arm’s length standard, prudence dictates that the arm’s length standard be

given a great deal of respect in analyzing any transfer pricing issue. The analysis in this report

is based exclusively on that standard.

Depending on the nature of the items transferred, the US Regulations require that slightly

different methods be employed to determine arm’s length prices. In every case, however, the

standard applied is that of an uncontrolled taxpayer dealing at arm’s length with an unrelated

party.

C. Best Method Rule

The US Regulations provide several methods for determining intercompany prices and require

that the “best” method be employed to determine arm’s length pricing for each intercompany

transaction. The best method is defined as the method that produces the most reliable measure

of an arm’s length result for the controlled transaction, considering all the facts and

circumstances of that transaction.

There are two primary factors that must be considered in order to determine which method is

best. The first is the degree of comparability between the controlled transaction and the

uncontrolled transaction. The five factors that must be considered when determining the

degree of comparability are:11

• Functions performed;

• Contractual terms;

• Risks borne;

• Economic conditions experienced; and,

• Nature of the property or services.

The functional analysis is critical in determining these five factors as they relate to the entities

under review. The functional analysis is the method of finding and organizing facts about the

businesses in terms of functions, risks, and intangibles in order to identify how these

characteristics are divided between the entities involved for the transactions under review. The

purpose of the functional analysis is to describe the activities undertaken by the entities in order

to identify comparable transactions that established an arm’s length range of prices. Thus, the

functional analysis provides a factual foundation for establishing a transfer pricing

methodology consistent with the arm’s length standard set forth in Section 482.

11 Treas. Reg. §1.482-1(d)(1)


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The second consideration in determining the best method is the quality of the data and

assumptions used in the analysis. Again, there are several factors to consider in assessing the

quality of the data and assumptions. They are:

• Completeness and accuracy of data;

• Reliability of assumptions; and,

• Sensitivity of the results to deficiencies in data and assumptions.12

D. Choice of Methodology

As a general matter, one can classify transfer pricing methods into three categories:

transactional methods, profitability benchmarking methods, and profit split methods.

Transactional methods are based upon uncontrolled transactions considered comparable to a

given controlled transaction. When closely comparable transactions exist, the data related to

these uncontrolled transactions are considered to provide the most objective basis for

determining arm’s length pricing.

Profitability benchmarking methods examine the profitability of companies considered to be

comparable to one party in the controlled transaction. The idea behind these methods is that

transfer prices should be set in a manner that leaves one party to the transaction with

profitability that is consistent with the profitability observed in comparable, or “benchmark”

companies. These methods can be reliable when transactional data is not available, and when

one of the two entities in the related party transaction performs only routine functions that can

easily be benchmarked.

Profit split methods are distinguishable from profitability methods in that they are applied by

considering the contributions of both parties in the controlled transaction rather than focusing

only on one party. This method is appropriate for evaluating transactions where economic

profit, or residual profit, is attributable to the contributions of both parties.

E. Methods Available and Additional Considerations for Services

Transactions

1. Overview

In July 2006, the IRS issued temporary and proposed regulations that referenced the services

cost method (recall, the SCM), a new transfer pricing method applicable to certain controlled

services transactions. Such controlled services include back office services that are common

across many industry sectors and typically bear low arm’s length markups on total services

costs. These regulations were made final in 2009.13

12 Treas. Reg. §1.482-1(c)(2)(ii) 13 Refer to Treas. Reg. §1.482-9


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Under specified circumstances, the SCM allows the arm's length charge for a controlled services

transaction to be determined by reference to total services costs, without a markup. Two

categories of covered services are potentially eligible for this method: “specified” covered

services and “low-margin” covered services.

To demonstrate that a particular controlled service qualifies for the SCM, the taxpayer, in its

business judgment, must reasonably conclude that the service does not contribute significantly

to key competitive advantages, core capabilities, or fundamental risks of success or failure in

one or more trades or businesses of the renderer, the recipient or both (the “business judgment

rule”). The IRS provides a “white list” of “specified” covered services which can be charged at

cost. These services include payroll, premiums for unemployment, disability, and workers

compensation, accounts receivable, accounts payable, general administrative, corporate and

public relations, meeting coordination and travel planning, accounting and auditing, tax, health,

safety, environment, and regulatory affairs, budgeting, treasury activities, statistical assistance,

staffing and recruiting, training and employee development, benefits, IT services, legal services,

insurance claims management, and purchasing.

Although specified covered services cover a wide range of support activities, the US Treasury

Department and the IRS recognize that the listing may not include the entire universe of low

margin services. In the case of other low margin services, taxpayers may seek to demonstrate

that the services qualify under the alternative mechanism in § 1.482-9(b)(3)(ii), as controlled

services transactions or services for which the median comparable arm’s length markup on total

services costs is less than or equal to seven percent.

Both specified covered services and low margin covered services must also meet the

requirements of the business judgment rule and must not be identified in § 1.482-9(b)(4) as

excluded transactions. The following nine categories of transactions, in whole or in part (the

"Excluded Transactions"), are not covered services (and thus the services are ineligible for the

SCM):

• Manufacturing;

• Production;

• Extraction, exploration or processing of natural resources;

• Construction;

• Reselling, distribution, acting as a sales or purchasing agent, or acting under a

commission or other similar arrangement;

• Research, development, or experimentation;

• Engineering or scientific; and,

• Insurance or reinsurance.

2. Benefit Test

The benefit test is used to determine whether the services being provided should be

compensated. An activity is considered to provide a benefit to the recipient if


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the activity directly results in a reasonably identifiable increment of economic or

commercial value that enhances the recipient's commercial position, or that may

reasonably be anticipated to do so. An activity is generally considered to confer a benefit

if, taking into account the facts and circumstances, an uncontrolled taxpayer in

circumstances comparable to those of the recipient would be willing to pay an

uncontrolled party to perform the same or similar activity on either a fixed or contingent-

payment basis, or if the recipient otherwise would have performed for itself the same

activity or a similar activity.14

An activity is not considered to provide a benefit, if the anticipated benefit is so indirect or

remote that the recipient would not be willing to pay an uncontrolled party for the activity.

Second, an activity does not confer a benefit if it is duplicative with an activity performed by the

recipient on its own behalf. Third, an activity does not provide a benefit if the sole effect of that

activity is either to protect the renderer’s capital investment in the recipient or other members of

the controlled group or to facilitate compliance by the renderer with reporting, legal, or

regulatory requirements specifically applicable to the renderer. The activities are also referred

to as shareholder activities. Fourth, a controlled taxpayer generally will not be considered to

obtain a benefit where that benefit results from the controlled taxpayer's status as a member of a

controlled group. This is also referred to as “passive association.”

3. Methods Available for Services Transactions

a) Services Cost Method

The SCM evaluates whether the amount charged for covered services or low margin services is

arm’s length by reference to the total services costs with no markup. In other words, the arm’s

length price of the service is determined by calculating the total costs to provide the service.

The SCM was not applied in the given services transaction in this report due to the nature of the

services being provided. The services did not meet the applicability standards of being a

“covered” service or being a “low-margin” service. . If the SCM method is not applicable for a

given services transaction, then the comparable uncontrolled services price method, gross

services margin method, cost of services plus method, comparable profits method, profit split

method, or an unspecified method may be considered.

b) Comparable Uncontrolled Services Price (“CUSP”) Method

The CUSP method evaluates whether the amount charged in a controlled services transaction is

arm's length by reference to the amount charged in a comparable uncontrolled services

transaction. The comparable uncontrolled services price method is ordinarily used where the

14 Treas. Reg. §1.482-9(l)(3)(i).


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controlled services either are identical to or have a high degree of similarity to the services in

the uncontrolled transaction.

c) Gross Services Margin (“GSM”) Method

The GSM method evaluates whether the amount charged in a controlled services transaction is

arm's length by reference to the gross profit margin realized in comparable uncontrolled

transactions. This method ordinarily is used in cases where a controlled taxpayer performs

services or functions in connection with an uncontrolled transaction between a member of the

controlled group and an uncontrolled taxpayer. This method may be used where a controlled

taxpayer renders services (agent services) to another member of the controlled group in

connection with a transaction between that other member and an uncontrolled taxpayer. This

method also may be used in cases where a controlled taxpayer contracts to provide services to

an uncontrolled taxpayer (intermediary function) and another member of the controlled group

actually performs a portion of the services provided.

d) Cost of Services Plus (“CSPL”) Method

The CSPL method evaluates whether the amount charged in a controlled services transaction is

arm's length by reference to the gross services profit markup realized in comparable

uncontrolled transactions. The cost of services plus method is ordinarily used in cases where

the controlled service renderer provides the same or similar services to both controlled and

uncontrolled parties. This method is ordinarily not used in cases where the controlled services

transaction involves a contingent payment arrangement.

e) Comparable Profits Method

The CPM evaluates whether the amount charged in a controlled transaction is arm's length,

based on objective measures of profitability derived from uncontrolled taxpayers that engage in

similar business activities under similar circumstances.

f) Profit Split Method

The PSM evaluates whether the allocation of the combined operating profit or loss attributable

to one or more controlled transactions is arm's length by reference to the relative value of each

controlled taxpayer's contribution to that combined operating profit or loss. The relative value

of each controlled taxpayer's contribution is determined in a manner that reflects the functions

performed, risks assumed, and resources employed by such controlled taxpayer in the relevant

business activity.

g) Unspecified Methods

Finally, an unspecified method should take into account the general principle that uncontrolled

taxpayers evaluate the terms of a transaction by considering the realistic alternatives to that

transaction, including economically similar transactions structured as other than services


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transactions, and only enter into a particular transaction if none of the alternatives is preferable

to it.

F. Methods Available for Tangible Goods Transactions

The US Regulations provide specific methods for testing the arm’s length nature of transfers of

tangible property between related parties. These methods include the Comparable

Uncontrolled Price (“CUP”) Method, the Resale Price Method (“RPM”), the Cost Plus (“CP”)

Method, the Comparable Profits Method (recall, CPM), and the Profit Split Method (“PSM”). A

taxpayer may also elect a method that is not specified in the regulations, where none of the

specified methods can reasonably be applied under the facts and circumstances of a particular

case. Each of the methods under the Section 482 regulations is summarized below.

1. Comparable Uncontrolled Price Method

The CUP method refers to the price paid for same or similar property in a transaction between

unrelated parties to determine arm’s length consideration for controlled transactions.15 The

standard of comparability under the CUP method is very high, and a transaction is only

considered comparable if both the tangible property and circumstances surrounding the

controlled transaction are substantially the same as those of the uncontrolled transaction.

Additional factors for determining comparability include the quality of the product, the volume

of sales, the level of the market, the geographic market in which the transaction takes place, the

date the transaction takes place, and alternative commercial arrangements realistically available

to both parties. The US Regulations state that the CUP method, when it can be reasonably

applied on the basis of available data, will ordinarily provide the most accurate measure of an

arm’s length transfer price.

2. Cost Plus Method16

The CP method is applicable when transactions involve manufacturing, assembly or the

production of goods that are sold to related parties. Under this method, an arm’s length price is

equal to the controlled party’s cost of producing the property plus a gross profit markup. The

gross profit markup equals the gross profit in comparable uncontrolled transactions, expressed

as a percentage of cost.

Comparability factors that are relevant to the application of this method are complexity of

manufacturing or assembly; engineering; purchasing and inventory controls; testing; selling,

general and administrative expenses; currency risks; and credit terms. Appropriate

adjustments must be made to the gross profit in uncontrolled transactions to reflect differences

between the uncontrolled and controlled transactions.

15 Treas. Reg. §1.482-3(b)(1)

16 Treas. Reg. §1.482-3(d)(1)


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3. Resale Price Method17

The RPM measures the value of distribution functions and therefore ordinarily applies when a

distributor purchases and resells tangible property without adding substantial value to the

property by altering it or by using intangible property. This method determines an arm’s

length price for goods by allocating to the controlled party an amount of income on its

distribution function equal to the gross profit margin (gross profit/sales) of a distributor

performing roughly similar functions with respect to purchases and sales with unrelated

parties.

Close physical similarity of the tangible property in the controlled and uncontrolled sales is

desirable but not required. Adjustments to the arm’s length price ultimately obtained after

applying an appropriate gross profit margin may be appropriate to account for differences in

the functions performed and the risks assumed in the controlled and uncontrolled transactions.

4. Comparable Profits Method18

The CPM establishes an arm’s length price for a controlled transfer of tangible or intangible

property by examining the profitability of uncontrolled taxpayers that engage in activities that

are similar to the tested party under comparable circumstances. An arm’s length range of

results is then determined based upon the amount of profit that the tested party would have

earned if the relevant profit level indicator (“PLI”) were equivalent to those of the uncontrolled

taxpayers.

Since the CPM measures the total return on business activities, comparable parties should be

broadly similar; significant product diversity and some functional diversity between controlled

and uncontrolled transactions are acceptable. A reasonable number of adjustments may be

made to the PLIs of the comparable parties to improve consistency and to achieve greater

similarity between comparable companies and the tested party.

As indicated, application of the CPM method requires selection of a “tested party.” The tested

party is the participant in the controlled transaction whose operating profit attributable to the

controlled transactions can be validated using the most reliable data, requiring the fewest and

most reliable adjustments. In addition, the availability of reliable data regarding uncontrolled

comparables affects the determination of the tested party. “Consequently, in most cases the

tested party will be the least complex of the controlled taxpayers and will not own valuable

17 Treas. Reg. §1.482-3(c) 18 Treas. Reg. §1.482-5


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intangible property or unique assets that distinguish it from potential uncontrolled

comparables.”19

5. Profit Split Method

The PSM “evaluates whether the allocation of the combined operating profit or loss attributable

to one or more controlled transactions is arm’s length by reference to the relative value of each

controlled taxpayer’s contribution to the combined operating profit or loss.”20 The most

narrowly defined business activity of the controlled taxpayer is used to derive the combined

operating profit. To determine the relative value of each party’s contribution to the success of

the relevant business activity, the functions performed, risks assumed, and resources employed

by each must be considered. Under this method, profit is divided among controlled taxpayers

either on the basis of a comparable profit split allocation or a residual profit split allocation.

6. Unspecified Methods

From the standpoint of Section 482, a method that is unspecified in that it is not the CUP

method, the cost-plus method, the resale price method, the CPM method, or the profit split

method can be applied if it provides the most reliable measure of an arm’s length result under

the principles of the best method rule. Unspecified methods are to take into account the general

principle that “information be provided on the prices or profits that the controlled taxpayer

could have realized by choosing a realistic alternative to the controlled transaction.”21

A summary of our analysis and selection of best method is provided in the Economic Analysis

section.

19 Treas. Reg. §1.482-5(a)(2)(i) 20 Treas. Reg. §1.482-6(a) 21 Treas. Reg. §1.482-3(e)(1)


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VI. Economic Analysis

EP has elected to use an “Unspecified” method to evaluate the arm’s length nature of Dorado’s

intercompany sales and executive management fees charged to Zurixx US. As such, EP has

employed the use of several methods to build up a final fee charge to benchmark the arm’s

length nature of the transaction in this report. This section will assess and describe the methods

employed and the conclusion of appropriate fees.

A. Executive Management Fees – North America Search

The CPM evaluates whether the amount charged in a controlled transaction is arm’s length by

reference to a measure of profitability (a profit level indicator, or “PLI”) derived from

uncontrolled parties engaged in similar business activities under similar circumstances. For

example, the reported operating profit of a controlled tested party would be compared to the

operating profit it would have earned if its PLI were equal to that of the uncontrolled

comparable companies. The tested party should be the party to the transaction for which

reliable data on the most closely comparable transactions can be identified. It should also be the

party that is the least complex of those involved in the controlled transaction, and that does not

own valuable intangible property or unique assets.

Our application of the CPM to the executive management functions performed by Dorado

comprises the following five steps:

• Selection of the tested party for the analysis;

• Selection of the number of years for comparison;

• Choice of PLI;

• Selection of comparable companies; and,

• Determination of an arm’s length range of results, and comparison to the results of the

controlled transaction under review.

1. Selection of the Tested Party

The tested party should be the participant in the related transactions with the most reliable data,

requiring the fewest and most reliable adjustments, and for which reliable data regarding

uncontrolled comparable companies can be located. Thus, generally the tested party is the

party that is simplest in terms of functions performed and risks assumed. As Dorado is best

characterized as a provider of services to Zurixx US and doesn’t own “non-routine” assets, it is

best characterized as the tested party for this analysis.

2. Selection of Years for Comparison

When applying the CPM, it must be decided whether to compare the financial results of only

the tax year in question or to analyze several years (e.g., using an average over several years).

Multiple year analysis is the appropriate comparison when factors such as business or product


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life cycles, foreign exchange risks, other business risk factors or other influences might have an

effect on the profitability of the comparable company financial results.

Generally, three years of data is used, unless the specific facts of the case warrant a longer

period. Therefore, we have obtained the financial results of comparable companies over a

three-year period corresponding to Zurixx fiscal years 2015-2017.

3. Selection of Profit Level Indicator

In this case, we determined that the operating margin (defined as operating income over net

revenue) provides the most reliable PLI to test the financial results of an entity that provides

routine functions, like executive management services. In light of these considerations, we have

selected the operating margin to evaluate the arm’s length nature of this transaction.

4. Selection of North American Comparable Companies

The CPM was applied to search for and identify North American companies that perform

similar executive management services. As part of the search process, Standard Poor’s Capital

IQ (“Capital IQ”)22 was examined for North American companies that are engaged in broadly

the same industry.

Capital IQ was screened to identify public companies using standard industrial classification

(“SIC”) codes. This system is structured on an industry basis and is used to promote the

comparability of data describing various industries in the economy. Major industry groups are

categorized under two-digit SIC codes. Extensions of these codes to three or four digits indicate

a narrower industry definition. The following wide range of SIC codes were searched in the

database to help identify the largest number of potentially comparable benchmark companies.23

• 73*: Business Services; and,

• 874*: Management and Public Relations services.

This search methodology identified 286,391 companies. Next, the initial set of 286,391

companies was filtered to include only actively operating companies in the United States and

Canada, which returned 54,824 companies. The next filter was applied to include only public

companies, identifying 1,480. Finally, a quantitative screen was applied to the remaining 1,480

companies. The quantitative screen led to the elimination of companies for reasons including:

• No revenue the last three years.

The quantitative screening led to the elimination of 736 companies, leaving 744 companies to be

reviewed qualitatively. For each of these companies, short business descriptions were reviewed,

leading to the elimination of companies for reasons including:

22 Capital IQ Disc Date: September 2018 23 SIC Codes with an asterisk reference all narrower SIC codes containing the previous digits


Page | 47



• The company performs significantly different functions than those of the tested party

(e.g., the company performs manufacturing); and,

• The company has a brand name or other intangibles associated.

The screening criteria led to the elimination of 737 companies, leaving 7 remaining comparable

companies.

5. Results of the CPM Analysis

Table 7: Operating Margin for North American Comparable Companies

6. Implementation

As shown in the table above, the three-year weighted average interquartile range of the

operating margin for comparable executive management companies extends from 5.3 percent to

12.9 percent with a median of 9.4 percent. As part of the determination of total applicable fees

charged to Zurixx US, Zurixx opted to use a 10.0 percent operating margin metric to calculate

applicable executive management fees. The applied operating margin of 10.0 percent is within

the arm’s length range of the identified comparable companies. The applied operating margin

of 10.0 percent resulted in an executive management fee of $1.34 million in FY2017. Details

regarding the executive management fee calculation can be found in Appendix D.

B. Registration Fees

Dorado employs local teams to generate sales leads through searches for potential buyers of

Zurixx training programs. Efforts to find sales leads takes place through advertised online

banners and physical mailings. The search process goes through several stages and ultimately

Row Company 2015 2016 2017

3-Year

Avg.

1 CRA International, Inc. 5.6% 5.8% 4.5% 5.3%

2 Edgewater Technology, Inc. 3.2% 3.7% -3.3% 1.3%

3 FTI Consulting, Inc. 9.8% 9.3% 9.0% 9.4%

4 Harris Corporation 17.9% 19.2% 19.0% 18.7%

5 Huron Consulting Group Inc. 16.5% 13.4% 9.0% 12.9%

6 Navigant Consulting, Inc. 11.6% 12.2% 10.3% 11.4%

7 Resources Connection, Inc. 9.0% 6.8% 7.2% 7.6%

Maximum 17.9% 19.2% 19.0% 18.7%

Upper Quartile 16.5% 13.4% 10.3% 12.9%

Median 9.8% 9.3% 9.0% 9.4%

Lower Quartile 5.6% 5.8% 4.5% 5.3%

Minimum 3.2% 3.7% -3.3% 1.3%


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leads to a consumer registering for a Zurixx product. In many cases, it takes several thousand

contacts with a consumer to lead to a product registrant.

In the advertising industry, the cost to acquire customers through qualifying actions (i.e.,

registrations, subscriptions) is referred to as a Cost Per Action (“CPA”) metric. The CPA for any

given product varies by the difficulty of the target market and qualifying action required. This

metric is used to assess the success and cost of acquiring new customers as part of an

advertising campaign. We believe that Dorado performs sales and marketing services that

would be compensated under arrangements if it were to offer these services to external

customers.


a) Selected Method

The Comparable Uncontrolled Price (“CUP”) as described in the US Transfer Pricing

Regulations was applied to the registration fees of the tested transaction. The CUP method

evaluates the arm’s length price for the Cost Per Actions between Zurixx US and Dorado by

comparing it with the price paid for the same or similar CPA’s in an uncontrolled transaction

with or between unrelated parties.

b) Application of CUP

Employing the CUP methodology, EP benchmarked the covered transaction using a set of

external transactions. Economics Partners searched multiple databases and websites to identify

transactions that affix a cost for actionable items (i.e., registrations, subscriptions) in an

advertising campaign that is broadly similar to Dorado’s services in this transaction.

c) Arm’s Length Results

After performing an extensive search, EP found sufficiently comparable CPA metrics that

closely resembled that of Dorado. The various CPA metrics were then analyzed to create a

range of possible prices per registrants. Table Nine below lists the CPA sources as well as the

construction of pricing ranges.


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Table 8: CPA Metrics for Comparable Sales and Marketing Services

a) Implementation

As shown in the table above, the interquartile range of CPA metrics for comparable sales and

marketing services extends from $22.10 to $86.45 per CPA with a median of $50.60. As part of

the determination of total applicable fees charged to Zurixx US, Zurixx selected the median

CPA metric to calculate applicable registration fees. The applied CPA of $50.60 resulted in a

total registration fee of $42.41 million in FY2017. In calculating the total built up applicable fees

to Zurixx US, Zurixx elected to use the range of possible registration fees to show a range of

charges that could be applied to Zurixx US. This presentation will be discussed in the final

buildup of applicable fees at the end of this section. Details regarding the calculation of

registration fees can be found in Appendix E.

C. Legal Fees

Dorado employs a small legal team to review workshops, events, online content and coaching

sessions that teach students how to invest in real estate and entrepreneurship opportunities.

The Dorado legal team reviews workshop transcripts and documents to protect Zurixx from

any legal action and to ensure legal compliance. The PR legal team also reviews telephone

transcripts from coaching sessions and the customer service teams. These legal fees are charged

to Zurixx US as a legal assessment fee.

Row Source CPA

1 Facebook - Real Estate CPA 16.92$

2 Facebook - Employment & Training CPA 23.24$

3 Facebook - Average Site CPA 18.68$

4 Google - Average Site Search CPA 59.18$

5 Google - Real Estate Search CPA 59.06$

6 Google - Real Estate Display CPA 41.44$

7 Google - Education Search CPA 80.00$

8 Google - Education Display CPA 42.13$

9 Google - Employment Search CPA 129.69$

10 Google - Employment Display CPA 105.79$

Maximum 129.69$

Upper Quartile 86.45$

Median 50.60$

Lower Quartile 22.10$

Minimum 16.92$


Page | 50




a) Selected Method


Regulations was applied to the legal fees of the tested transaction. The CUP method evaluates

the arm’s length price for legal fees between Zurixx US and Dorado by comparing it with the

prices paid for the same or similar legal services in uncontrolled transactions with or between

unrelated parties.




transactions that publish legal rates for services that are broadly similar to Dorado’s legal

department in this transaction.


After performing an extensive search, EP found sufficiently comparable legal rates that

compensate and closely resemble the functions of Dorado. The various legal rates were then

analyzed to create a range of possible legal fee rates. Table 9en below lists the sources as well as

the range of legal rates.

Table 9: Legal Rates

Row Position Hourly Rate

1 Paralegal - NALA Report 129.00$

2 Paralegal - NALA Salary 79.75$

3 Paralegal - NCLC Report 84.00$

4 Associate - NALP Report 196.09$


6 Attorney -NCLC Avg. 350.00$

7 Attorney -NCLC Median 365.00$

Maximum 365.00$


Median 162.24$


Minimum 79.75$


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d) Implementation

As shown in the table above, the interquartile range of legal rates for comparable legal services

extends from $79.75 per hour to $365.00 per hour with a median of $162.24. As part of the

determination of total applicable fees charged to Zurixx US, Zurixx selected the average

attorney legal rate to calculate applicable legal fees. The legal counsel employed at Dorado

holds a JD designation and regularly works on complex issues related to compliance, contracts

and legal defense. Due to the nature and complexity of the work involved, Zurixx felt it

appropriate to charge a rate that is commensurate with an attorney’s experience and expertise.

The applied rate of $357.50 resulted in a total legal fee of $.50 million in FY2017. Details

regarding this calculation can be found in Appendix F.

D. Workshop Recruitment Fees

Dorado employs a recruitment team to actively identify and recruit trained presenters for its

workshops, events and coaching sessions. The search process is comprehensive and requires a

great deal of effort to identify individuals with a unique combination of interpersonal and

business skills to successfully present and engage with students. Dorado functions as a

recruitment center where they contact and contract with qualified speakers for specified

engagements. The recruitment industry is typically compensated as a percentage of gross

earnings of the recruited individual. Zurixx charges a recruitment fee to Zurixx US for its

recruitment services.


a) Selected Method


Regulations was applied to the recruitment fees of the tested transaction. The CUP method

evaluates the arm’s length price for recruitment fees between Zurixx US and Dorado by

comparing it with the prices paid for the same or similar recruitment services in uncontrolled

transactions with or between unrelated parties.


Employing the CUP methodology, EP benchmarked the covered transaction using a set of third-

party transactions. Economics Partners searched multiple databases and websites to identify

transactions that publish recruitment rates for services that are broadly similar to Dorado’s

recruitment team in this transaction.


After performing an extensive search, EP found sufficiently comparable recruitment rates that

compensate and closely resemble the functions of Dorado. The various recruitment rates were

then analyzed to create a range of possible recruitment or headhunter fee arrangements typical


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for the industry. The recruitment rates identified define compensation rates as a percentage of

the gross annual salary of the recruited individual. Recruitment fees are assessed as a one-time

charge upon the successful hire of the job candidate. Table 10Eleven below lists the sources as

well as the range of recruitment rates.

Table 10: Recruitment Rates

d) Implementation

As shown in the table above, the interquartile range of recruitment rates for comparable

recruiting services extends from 22.0 percent to 25.3 percent with a median of 25.1 percent. As

part of the determination of total applicable fees charged to Zurixx US, Zurixx selected the

median recruitment rate to calculate applicable recruiter fees. The applied rate of 25.1 percent

resulted in a total recruitment fee of $1.26 million in FY2017. Details regarding this calculation

can be found in Appendix G.

E. Celebrity Management Fees

Dorado manages celebrity speakers for workshops, events and coaching sessions. Dorado is

responsible for managing the celebrity relationships, much like an agent does for athletes or a

musician, which demands a great deal of time and effort. Dorado is in frequent contact with the

signed celebrities and is responsible for addressing matters of compensation, contractual

obligations and how the celebrities’ brand is being used to market seminars. The celebrity

agency industry is typically compensated as a percentage of gross earnings of the celebrity in

question. Dorado charges a celebrity agent or management fee to Zurixx US for its services. In

addition, Zurixx US maintains a reserve for legal costs and sales declines in the event of

deteriorating celebrity image and relationships. Zurixx US is responsible for compensating

Row Source Fee

1 Top Echelon Recruiting Report - average 22.1%

2 Forbes - Recruitment Report 25.0%

3 Top Echelon Recruiting Report - sales 22.0%

4 Bounty Jobs - 2017 Average Fee 21.3%

5 Third-Party Recruiting Benchmark Report - Non-Manager 25.2%

6 Third-Party Recruiting Benchmark Report - Manager 25.3%

7 Third-Party Recruiting Benchmark Report - Director 25.3%

8 Third-Party Recruiting Benchmark Report - VP & C-Suite 26.0%

Maximum 26.0%

Upper Quartile 25.3%

Median 25.1%

Lower Quartile 22.0%

Minimum 21.3%


Page | 53



celebrity management fees regardless of the potential efficacy of the celebrity endorsements. To

that effect, Zurixx US manages considerable celebrity management risk.


a) Selected Method

The Comparable Uncontrolled Transaction (“CUT”) as described in the US Transfer Pricing

Regulations was applied to the recruitment fees of the tested transaction. The CUT method

evaluates the arm’s length rate for management fees between Zurixx US and Dorado by

comparing it with the rates paid for the same or similar agency services in uncontrolled


b) Application of CUT

Employing the CUT methodology, EP benchmarked the covered transaction using third-party

transactions. Economics Partners searched multiple databases and websites to identify

transactions that publish agency rates for services that are broadly similar to Dorado’s celebrity

management activities addressed in this transaction.


After performing an extensive search, EP found a sufficiently comparable agency rate that

compensates for celebrity management functions that Dorado performs. Within the performing

arts and celebrity industries, it is common for artists’ interests to be protected and represented

through workers unions or guilds. In particular, the Screen Actors Guild - American Federation

of Television and Radio Artists (“SAG-AFTRA”) was formed in the 1930’s to accomplish this

task. As part of its mission statement and membership, SAG-AFTRA established a celebrity

agency rate cap of 10.0 percent of gross proceeds to govern agents and management agencies.

The celebrities that Zurixx contracts with are performers and artists that would adhere to this

code to protect their interests.

d) Implementation

As part of the determination of total applicable fees charged to Zurixx US, Zurixx selected a 10.0

percent agency rate to calculate applicable management fees. The applied rate of 10.0 percent to

total celebrity income resulted in a total agent management fee of $.81 million in FY2017. Details

regarding this calculation can be found in Appendix H.


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VII. Conclusion

A. Overview of Transaction


executive management services from Dorado Marketing & Management, LLC Puerto Rico

(“Dorado”) to Zurixx, LLC (“Zurixx US”). During FY 2017, Dorado charged sales and executive

management services fees to Zurixx US in consideration of these services.

B. Summary of Findings

1. Executive Management Fees

As part of the determination of total applicable fees charged to Zurixx US, Zurixx opted to use a

10.0 percent operating margin metric to calculate applicable executive management fees. The

three-year weighted average interquartile range of the operating margin for comparable

executive management companies extends from 5.3 percent to 12.9 percent with a median of 9.4

percent. The applied operating margin of 10.0 percent is within the arm’s length range of the

identified comparable companies. The applied operating margin of 10.0 percent resulted in an

executive management fee of $1.34 million in FY2017. Details regarding the executive

management fee calculation can be found in Appendix D.

2. Registration Fees

As part of the determination of total applicable fees charged to Zurixx US, Zurixx selected the

median CPA metric to calculate applicable registration fees. The applied CPA of $50.60 resulted

in a total registration fee of $42.41 million in FY2017. Details regarding the calculation of


3. Legal Fees


average attorney legal rate to calculate applicable legal fees. The applied rate of $350.00 resulted

in a total legal fee of $.50 million in FY2017. Details regarding this calculation can be found in

Appendix F.

4. Workshop Recruitment Fees






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5. Celebrity Management Fees


percent agency rate to calculate applicable management fees. The applied rate of 10.0 percent

resulted in a total agent management fee of $.81 million in FY2017. Details regarding this

calculation can be found in Appendix H.

6. Total Fees

The fees previously described all constitute applicable fees from Dorado to Zurixx US for the

provision of certain sales and executive management services. The methodologies employed

and rate have determined a total median charge of $46.32 million in FY2017. Using the range of

applicable registration fees, the range of total charges extends from $20.74 million to $76.37

million. Actual charges billed by Zurixx in FY2017 totaled $21.14 million. This result is below

the benchmarked fee calculation of $47.19 million and is considered arm’s-length. Details

regarding this calculation can be found in Appendix I.


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Appendix A: Comparable Company Business Descriptions

A. North American Comparable Company Business Descriptions

CRA International, Inc., a consulting company, provides economic, financial, and management

consulting services in the United States, the United Kingdom, and internationally. The company

advises clients on economic and financial matters pertaining to litigation and regulatory

proceedings; and guides corporations through critical business strategy and performance-

related issues. The company’s consulting services include research and analysis, expert

testimony, and support in litigation and regulatory proceedings in the areas of finance,

accounting, economics, insurance, and forensic accounting and investigations to corporate

clients and attorneys. In addition, its management consulting services comprise strategy

development, performance enhancement, corporate strategy and portfolio analysis, estimation

of market demand, new product pricing strategies, valuation of intellectual property and other

assets, assessment of competitors' actions, and analysis of new sources of supply. It serves

various industries, including agriculture; banking and capital markets; chemicals;

communications and media; consumer products; energy; entertainment; financial services;

health care; insurance; life sciences; manufacturing; metals, mining, and materials; oil and gas;

real estate; retail; sports; telecommunications; transportation; and technology. Further, it

develops and markets neural network software tools, as well as provides complementary

application consulting services primarily for electric utilities. CRA International, Inc. was

founded in 1965 and is headquartered in Boston, Massachusetts.

Edgewater Technology, Inc. provides business and technology services, and channel-based

solutions in the United States, Canada, and internationally. It offers digital transformation;

CFO/CIO advisory; business improvement roadmaps; organizational change management;

program/project management; business process rejuvenation and integrated social media

practices; specialized operational, due diligence, and technology management services to

mergers and acquisitions, private equity, and venture capital; and strategic advice, costing,

estimates to complete, and failing or failed programs or project initiatives. The company also

provides independent package selection and request for information or proposal process design

and implementation; domain; technical architecture, roadmaps, and design; strategic

technology selections; data analytics and reporting; custom component design and

implementation; customer intelligence solutions using Web/mobile analytics; cloud

architecture, integration, and phasing solutions; on-going support; and infrastructure

optimization and redesign, disaster recovery, and business continuity specialized design and

assistance services. In addition, it offers product-based consulting services, such as business

transformation through packaged software solutions; enterprise performance management with

Oracle budgeting, planning, consolidation, and strategic finance; big data; enterprise resource

planning with Microsoft Dynamics AX in process and discrete manufacturing verticals;

customer relationship management with Microsoft Dynamics CRM; industry specific platform

and solutions; Microsoft CRM/XRM and specialized custom, as well as blended solutions;

business intelligence analytics; design, development, and introduction of IP; and support and


Page | 57



training services. Further, the company provides enterprise information management and

analytics services. Edgewater Technology, Inc. was founded in 1992 and is headquartered in

Wakefield, Massachusetts.

FTI Consulting, Inc. provides business advisory services to manage change, mitigate risk, and

resolve disputes worldwide. The company’s Corporate Finance & Restructuring segment

provides turnaround and restructuring, business transformation, interim management,

valuation and financial advisory, transaction, dispute advisory, and tax services, as well as

mergers and acquisitions (M&A), and M&A integration services. Its Forensic and Litigation

Consulting segment offers anti-corruption investigations and compliance, and data and

analytics, as well as compliance, monitoring, and receivership services; cybersecurity, forensic

accounting and advisory, and global risk and investigations practice; and construction

solutions, dispute advisory, intellectual property, trial, business insurance claims, and health

solutions. The company’s Economic Consulting segment provides financial, economic, and

econometric consulting services; business and expert valuation, and expert testimony services;

intellectual property and international arbitration services; economic and statistical analyses

services; services related to public policy and regulated industries, and healthcare economics

and policy; and network and economic impact analysis, and securities litigation and risk

management services. Its Technology segment offers e-discovery management, managed

document review, collections and digital forensics, information governance and compliance,

investigations, and contract intelligence services, as well as e-discovery software. The

company’s Strategic Communications segment provides advice services relating to public

affairs and government relations, M&A crisis communications and special situations, corporate

reputation, people and change, digital and creative communications, capital markets

communications, and strategy consulting and research. FTI Consulting, Inc. was founded in

1982 and is headquartered in Washington, District of Columbia.

Harris Corporation provides technology-based solutions that solve government and

commercial customers’ mission-critical challenges in the United States and internationally. The

company operates in three segments: Communication Systems, Electronic Systems, and Space

and Intelligence Systems. It designs, develops, and manufactures radio communications

products and systems, including single channel ground and airborne radio systems, multiband

manpack and handheld radios, multi-channel manpack and airborne radios, and single-channel

airborne radios, as well as wideband rifleman team, ground, and high frequency manpack

radios. The company also offers vision-enhancing products; wireless communications systems;

and Internet protocol based voice and data communications systems, as well as single-band

land mobile radio terminals and multiband radios comprising a handheld radio and a full-

spectrum mobile radio for vehicles. In addition, it provides electronic warfare, avionics,

command, control, communications, computers, intelligence, surveillance, and reconnaissance

solutions for defense and classified customers; and mission-critical communication systems for

civil and military aviation and other customers. Further, the company offers intelligence, space

protection, geospatial, earth observation, exploration, positioning, navigation and timing, and

environmental solutions using advanced sensors, antennas, and payloads, as well as ground

processing and information analytics for national security, defense, civil and commercial


Page | 58



customers. Harris Corporation was founded in 1895 and is headquartered in Melbourne,

Florida.

Huron Consulting Group Inc., a professional services firm, provides advisory, technology, and

analytic solutions in the United States and internationally. Its Healthcare segment provides

advisory services in the areas of strategy, care transformation, financial and operational

performance, technology and analytics, and leadership development to national and regional

hospitals, integrated health systems, academic medical centers, community hospitals, and

medical groups. The company’s Education segment offers management consulting and

technology solutions related to business and technology strategy, financial management,

operational and organizational effectiveness, research administration, and regulatory

compliance for higher education institutions and academic medical centers. Its Business

Advisory segment provides enterprise performance management, enterprise resource planning,

business intelligence and analytics, customer relationship management, and data management

services; and capital advisory, transaction advisory, operational improvement, restructuring

and turnaround, valuation, and dispute advisory services. This segment also provides strategic

solutions in the areas of R&D and product strategy commercial segmentation, corporate and

financial strategy, compliance and operations, reimbursement and access strategy, commercial

contracting strategy, fair market value analysis, lifecycle management, litigation and

investigations, government pricing and transparency reporting, auditing and monitoring, and

business process improvement. The company serves healthcare, education, pharmaceutical and

medical device, financial services, energy and utilities, retail, aerospace, automotive,

technology, telecommunications, consumer products, governmental, metals and mining,

engineering and construction, hospitality and gaming, logistics, and manufacturing industries.

Huron Consulting Group Inc. was founded in 2002 and is headquartered in Chicago, Illinois.

Navigant Consulting, Inc. provides professional services to corporate executives and senior

management, corporate counsel, law firms, corporate boards, special committees, and

governmental agencies worldwide. It operates through four segments: Healthcare; Energy;

Financial Services Advisory and Compliance; and Disputes, Forensics and Legal Technology.

The Healthcare segment offers consulting and business process management services to

healthcare providers, payers, and life sciences companies. This segment helps clients respond to

market legislative changes, such as the shift to an outcome and value-based reimbursements

model, ongoing industry consolidation and reorganization, Medicaid expansion, the

implementation of a new electronic health records system, and product planning and

commercialization expertise. The Energy segment provides advisory services to utilities,

governmental agencies, manufacturers, and investors. This segment offers its clients with

advisory solutions in business strategy and planning, distributed energy resources and

renewables, energy efficiency and demand response, and grid modernization, as well as various

benchmarking and research services. The Financial Services Advisory and Compliance segment

provides strategic, operational, valuation, risk management, investigative, and compliance

advisory services to clients primarily in the financial services industry, including financial and

insurance institutions. This segment also offers anti-corruption solutions and anti-money

laundering consulting, litigation support, and tax compliance and valuation services. The


Page | 59



Disputes, Forensics and Legal Technology segment provides professional services, including

accounting, regulatory, construction, and computer forensic, as well as valuation and economic

analysis. Navigant Consulting, Inc. was founded in 1983 and is headquartered in Chicago,

Illinois.

Resources Connection, Inc. provides business consulting services under the Resources Global

Professionals name in North America, Europe, and the Asia Pacific. The company offers process

transformation and optimization, financial reporting and analysis, technical and operational

accounting, and merger and acquisition due diligence and integration services; new accounting

standards implementation and remediation support services; and audit readiness, and

preparation and response services. It also provides information management services

comprising program and project management, business and technology integration, data

strategy, and business performance management. In addition, the company offers corporate

advisory, strategic and crisis communications, and restructuring services; and governance, risk,

and compliance (GRC) management services that include governance, assessments, auditing

and automation of programs managing regulatory compliance, enterprise risk management,

internal audits, operational risk management, and data security and privacy services. Further, it

provides strategy development, procurement and supplier management, logistics and materials

management, supply chain planning and forecasting, and unique device identification

compliance; and change management, organization development and effectiveness,

employment engagement, compensation and incentive plan strategies and design, and

optimization of human resources technology and operations. Additionally, the company offers

legal and regulatory supporting services for commercial transactions, global compliance

initiatives, law department operations, and law department business strategy and analytics. It

also provides policyIQ, a cloud-based GRC software application. The company was formerly

known as RC Transaction Corp. and changed its name to Resources Connection, Inc. in August

2000. Resources Connection, Inc. was founded in 1996 and is headquartered in Irvine,

California.


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Appendix B: Comparable Company Financials

A. North American Comparable Company Financials

CRA International, Inc. 5 Sheet5!Huron Consulting Group Inc.

Millions USD Millions USD

Description 2015 2016 2017 Description 2015 2016 2017

Revenue 303.6 324.8 370.1 # Revenue 699.0 726.3 732.6

Cost of Goods Sold 207.7 227.4 258.8 # Cost of Goods Sold 401.9 437.6 454.8

Gross Profit 95.9 97.4 111.2 # Gross Profit 297.1 288.7 277.8

Operating Expenses 79.0 78.5 94.6 # Operating Expenses 181.8 191.7 212.1

Operating Profit 16.9 18.9 16.7 # Operating Profit 115.3 97.0 65.6

Operating Margin 5.6% 5.8% 4.5% # Operating Margin 16.5% 13.4% 9.0%

N O P N O P

Edgewater Technology, Inc. 6 Sheet6!Navigant Consulting, Inc.



Revenue 109.7 119.9 106.2 # Revenue 833.8 938.7 939.6




Operating Profit 3.5 4.4 -3.5 # Operating Profit 96.7 114.6 97.0

Operating Margin 3.2% 3.7% -3.3% # Operating Margin 11.6% 12.2% 10.3%

N O P N O P

FTI Consulting, Inc. 7 Sheet7!Resources Connection, Inc.



Revenue 1,779.1 1,810.4 1,807.7 # Revenue 598.5 583.4 654.1

Cost of Goods Sold 1,171.4 1,207.0 1,215.6 # Cost of Goods Sold 366.4 362.1 408.1





N O P

Harris Corporation

Millions USD

Description 2015 2016 2017

Revenue 5,992.0 5,900.0 6,182.0

Cost of Goods Sold 3,818.0 3,734.0 3,931.0

Gross Profit 2,174.0 2,166.0 2,251.0

Operating Expenses 1,099.0 1,035.0 1,079.0

Operating Profit 1,075.0 1,131.0 1,172.0

Operating Margin 17.9% 19.2% 19.0%


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Appendix C: Accept / Reject Matrices

A. North American Comparables – Qualitative Rejections

# Company Name

Accept /

Reject Accept / Reject Reason

1 CRA International, Inc. Accept

2 Edgewater Technology, Inc. Accept

3 FTI Consulting, Inc. Accept

4 Harris Corporation Accept

5 Huron Consulting Group Inc. Accept

6 Navigant Consulting, Inc. Accept

7 Resources Connection, Inc. Accept

8 1-800-FLOWERS.COM, Inc. Reject Qualitative

9 2U, Inc. Reject Qualitative

10 3D Systems Corporation Reject Qualitative

11 3Pea International, Inc. Reject Qualitative

12 A10 Networks, Inc. Reject Qualitative

13 Aaron's, Inc. Reject Qualitative

14 ABM Industries Incorporated Reject Qualitative

15 Absolute Software Corporation Reject Qualitative

16 Acadian Timber Corp. Reject Qualitative

17 Accelerize Inc. Reject Qualitative

18 Acceleware Ltd. Reject Qualitative

19 ACI Worldwide, Inc. Reject Qualitative

20 Ackroo Inc. Reject Qualitative

21 Acorn Energy, Inc. Reject Qualitative

22 Activision Blizzard, Inc. Reject Qualitative

23 AcuityAds Holdings Inc. Reject Qualitative

24 Acxiom Corporation Reject Qualitative

25 Adobe Systems Incorporated Reject Qualitative

26 ADT Inc. Reject Qualitative

27 Advanced Micro Devices, Inc. Reject Qualitative

28 Advantex Marketing International Inc. Reject Qualitative

29 AECOM Reject Qualitative

30 AEON Global Health Corp. Reject Qualitative

31 AeroCentury Corp. Reject Qualitative

32 Aerohive Networks, Inc. Reject Qualitative

33 AFA Protective Systems, Inc. Reject Qualitative

34 Affinion Group Holdings, Inc. Reject Qualitative

35 Agent Information Software, Inc. Reject Qualitative

36 Agilysys, Inc. Reject Qualitative

37 AgJunction Inc. Reject Qualitative

38 Aimia Inc. Reject Qualitative

39 Air Lease Corporation Reject Qualitative


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# Company Name

Accept /


40 Aircastle Limited Reject Qualitative

41 AirIQ Inc. Reject Qualitative

42 Akamai Technologies, Inc. Reject Qualitative

43 Alarm.com Holdings, Inc. Reject Qualitative

44 ALJ Regional Holdings, Inc. Reject Qualitative

45 Alliance Creative Group, Inc. Reject Qualitative

46 Alliance Data Systems Corporation Reject Qualitative

47 Allscripts Healthcare Solutions, Inc. Reject Qualitative

48 Alphabet Inc. Reject Qualitative

49 Alphinat Inc. Reject Qualitative

50 Altair Engineering Inc. Reject Qualitative

51 Alteryx, Inc. Reject Qualitative

52 Altice USA, Inc. Reject Qualitative

53 Altium Limited Reject Qualitative

54 Altus Group Limited Reject Qualitative

55 Aly Energy Services, Inc. Reject Qualitative

56 Amber Road, Inc. Reject Qualitative

57 Amdocs Limited Reject Qualitative

58 AMERI Holdings, Inc. Reject Qualitative

59 American Electric Technologies, Inc Reject Qualitative

60 American Riviera Bank Reject Qualitative

61 American Shared Hospital Services Reject Qualitative

62 American Software, Inc. Reject Qualitative

63 AMN Healthcare Services, Inc. Reject Qualitative

64 AMREP Corporation Reject Qualitative

65 AmTrust Financial Services, Inc. Reject Qualitative

66 ANSYS, Inc. Reject Qualitative

67 Apollo Medical Holdings, Inc. Reject Qualitative

68 AppFolio, Inc. Reject Qualitative

69 Appian Corporation Reject Qualitative

70 Applied DNA Sciences, Inc. Reject Qualitative

71 Applied Industrial Technologies, Inc. Reject Qualitative

72 Apptio, Inc. Reject Qualitative

73 Aquantia Corp. Reject Qualitative

74 ARC Document Solutions, Inc. Reject Qualitative

75 Array Networks, Inc. Reject Qualitative

76 Ascent Capital Group, Inc. Reject Qualitative

77 ASGN Incorporated Reject Qualitative

78 Aspen Technology, Inc. Reject Qualitative

79 Astea International Inc. Reject Qualitative

80 Asure Software, Inc. Reject Qualitative

81 athenahealth, Inc. Reject Qualitative

82 Autodesk, Inc. Reject Qualitative

83 Automatic Data Processing, Inc. Reject Qualitative


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# Company Name

Accept /


84 AutoWeb, Inc. Reject Qualitative

85 Avalara, Inc. Reject Qualitative

86 Avante Logixx Inc. Reject Qualitative

87 Avaya Holdings Corp. Reject Qualitative

88 Avinger, Inc. Reject Qualitative

89 Avnet, Inc. Reject Qualitative

90 Aware, Inc. Reject Qualitative

91 Axway Software SA Reject Qualitative

92 B. Riley Financial, Inc. Reject Qualitative

93 Bandwidth Inc. Reject Qualitative

94 Barrett Business Services, Inc. Reject Qualitative

95 Benefitfocus, Inc. Reject Qualitative

96 BG Staffing, Inc. Reject Qualitative

97 BGC Partners, Inc. Reject Qualitative

98 Billing Services Group Limited Reject Qualitative

99 BIO-key International, Inc. Reject Qualitative

100 BIOREM Inc. Reject Qualitative

101 Black Box Corporation Reject Qualitative

102 Black Diamond Group Limited Reject Qualitative

103 Black Knight, Inc. Reject Qualitative

104 Blackbaud, Inc. Reject Qualitative

105 BlackBerry Limited Reject Qualitative

106 BlackLine, Inc. Reject Qualitative

107 Blancco Technology Group plc Reject Qualitative

108 Blucora, Inc. Reject Qualitative

109 Blue Line Protection Group, Inc. Reject Qualitative

110 Bluedrop Performance Learning Inc. Reject Qualitative

111 BlueRush Inc. Reject Qualitative

112 BluMetric Environmental Inc. Reject Qualitative

113 Boingo Wireless, Inc. Reject Qualitative

114 Boku, Inc. Reject Qualitative

115 Booking Holdings Inc. Reject Qualitative

116 Booz Allen Hamilton Holding Corporation Reject Qualitative

117 Bottomline Technologies Reject Qualitative

118 Box, Inc. Reject Qualitative

119 Breaking Data Corp. Reject Qualitative

120 Bri-Chem Corp. Reject Qualitative

121 Bridgeline Digital, Inc. Reject Qualitative

122 Brightcove Inc. Reject Qualitative

123 Broadridge Financial Solutions, Inc. Reject Qualitative

124 BroadVision, Inc. Reject Qualitative

125 BSM Technologies Inc. Reject Qualitative

126 BSQUARE Corporation Reject Qualitative

127 BuildingIQ, Inc. Reject Qualitative


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# Company Name

Accept /


128 Bulova Technologies Group, Inc. Reject Qualitative

129 Butler National Corporation Reject Qualitative

130 BWX Technologies, Inc. Reject Qualitative

131 CA, Inc. Reject Qualitative

132 CACI International Inc Reject Qualitative

133 Cadence Design Systems, Inc. Reject Qualitative

134 CafePress Inc. Reject Qualitative

135 CAI International, Inc. Reject Qualitative

136 Calian Group Ltd. Reject Qualitative

137 Cambium Learning Group, Inc. Reject Qualitative

138 Carbon Black, Inc. Reject Qualitative

139 Carbonite, Inc. Reject Qualitative

140 CardioComm Solutions, Inc. Reject Qualitative

141 Cardlytics, Inc. Reject Qualitative

142 Cardtronics plc Reject Qualitative

143 Care.com, Inc. Reject Qualitative

144 CareView Communications, Inc. Reject Qualitative

145 CarGurus, Inc. Reject Qualitative

146 Cars.com Inc. Reject Qualitative

147 Cass Information Systems, Inc. Reject Qualitative

148 Castlight Health, Inc. Reject Qualitative

149 CB Financial Services, Inc. Reject Qualitative

150 CBIZ, Inc. Reject Qualitative

151 CCL Industries Inc. Reject Qualitative

152 CCUR Holdings, Inc. Reject Qualitative

153 CDK Global, Inc. Reject Qualitative

154 Centric Health Corporation Reject Qualitative

155 Century Next Financial Corporation Reject Qualitative

156 Cerner Corporation Reject Qualitative

157 Certive Solutions Inc. Reject Qualitative

158 CGI Group Inc. Reject Qualitative

159 ChannelAdvisor Corporation Reject Qualitative

160 Chegg, Inc. Reject Qualitative

161 Chesswood Group Limited Reject Qualitative

162 China Education Resources Inc. Reject Qualitative

163 Cicero Inc. Reject Qualitative

164 Cinedigm Corp. Reject Qualitative

165 Cision Ltd. Reject Qualitative

166 Citrix Systems, Inc. Reject Qualitative

167 Clarocity Corporation Reject Qualitative

168 ClearStar, Inc. Reject Qualitative

169 ClearStream Energy Services Inc. Reject Qualitative

170 CNB Financial Services, Inc. Reject Qualitative

171 Cognizant Technology Solutions Corporation Reject Qualitative


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# Company Name

Accept /


172 Collectors Universe Inc. Reject Qualitative

173 Comcast Corporation Reject Qualitative

174 Command Center, Inc. Reject Qualitative

175 Command Security Corporation Reject Qualitative

176 Commvault Systems, Inc. Reject Qualitative

177 Computer Modelling Group Ltd. Reject Qualitative

178 Computer Programs and Systems, Inc. Reject Qualitative

179 Computer Services, Inc. Reject Qualitative

180 Computer Task Group, Incorporated Reject Qualitative

181 comScore, Inc. Reject Qualitative

182 Conduent Incorporated Reject Qualitative

183 Constellation Software Inc. Reject Qualitative

184 Control4 Corporation Reject Qualitative

185 ConvergeOne Holdings, Inc. Reject Qualitative

186 Convergys Corporation Reject Qualitative

187 CoreLogic, Inc. Reject Qualitative

188 Corero Network Security plc Reject Qualitative

189 Cornerstone OnDemand, Inc. Reject Qualitative

190 Cortex Business Solutions Inc. Reject Qualitative

191 CorVel Corporation Reject Qualitative

192 CoStar Group, Inc. Reject Qualitative

193 Coty Inc. Reject Qualitative

194 CounterPath Corporation Reject Qualitative

195 Coupa Software Incorporated Reject Qualitative

196 Credible Labs Inc. Reject Qualitative

197 CreditRiskMonitor.com, Inc. Reject Qualitative

198 Crexendo, Inc. Reject Qualitative

199 Critical Control Energy Services Corp. Reject Qualitative

200 Cross Country Healthcare, Inc. Reject Qualitative

201 CSG Systems International, Inc. Reject Qualitative

202 CSP Inc. Reject Qualitative

203 CVD Equipment Corporation Reject Qualitative

204 Cynergistek, Inc. Reject Qualitative

205 Daily Journal Corporation Reject Qualitative

206 Data Deposit Box Inc. Reject Qualitative

207 Data Storage Corporation Reject Qualitative

208 DATATRAK International, Inc. Reject Qualitative

209 Datawatch Corporation Reject Qualitative

210 DataWind Inc. Reject Qualitative

211 Dealnet Capital Corp. Reject Qualitative

212 Deep Down, Inc. Reject Qualitative

213 Deere & Company Reject Qualitative

214 Destiny Media Technologies Inc. Reject Qualitative

215 Determine, Inc. Reject Qualitative


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# Company Name

Accept /


216 Dex Media Holdings, Inc. Reject Qualitative

217 DHI Group, Inc. Reject Qualitative

218 Digimarc Corporation Reject Qualitative

219 Digital Turbine, Inc. Reject Qualitative

220 Discover Financial Services Reject Qualitative

221 Divestco Inc. Reject Qualitative

222 DLH Holdings Corp. Reject Qualitative

223 DMD Digital Health Connections Group Inc. Reject Qualitative

224 Document Security Systems, Inc. Reject Qualitative

225 Dolphin Entertainment, Inc. Reject Qualitative

226 Donnelley Financial Solutions, Inc. Reject Qualitative

227 Dougherty's Pharmacy, Inc. Reject Qualitative

228 Dropbox, Inc. Reject Qualitative

229 Duo World, Inc. Reject Qualitative

230 DXC Technology Company Reject Qualitative

231 DynTek, Inc. Reject Qualitative

232 eBay Inc. Reject Qualitative

233 Ebix, Inc. Reject Qualitative

234 Ecology & Environment, Inc. Reject Qualitative

235 Eco-Stim Energy Solutions, Inc. Reject Qualitative

236 eGain Corporation Reject Qualitative

237 Electronic Arts Inc. Reject Qualitative

238 Elevate Credit, Inc. Reject Qualitative

239 Ellie Mae, Inc. Reject Qualitative

240 Emerald Expositions Events, Inc. Reject Qualitative

241 Endurance International Group Holdings, Inc. Reject Qualitative

242 EnerCare Inc. Reject Qualitative

243 Engagement Labs Inc. Reject Qualitative

244 Enghouse Systems Limited Reject Qualitative

245 Engility Holdings, Inc. Reject Qualitative

246 Enova International, Inc. Reject Qualitative

247 Entravision Communications Corporation Reject Qualitative

248 Envestnet, Inc. Reject Qualitative

249 EPAM Systems, Inc. Reject Qualitative

250 ePlus inc. Reject Qualitative

251 EQ Inc. Reject Qualitative

252 Equifax Inc. Reject Qualitative

253 Espial Group Inc. Reject Qualitative

254 Etsy, Inc. Reject Qualitative

255 Everbridge, Inc. Reject Qualitative

256 Everi Holdings Inc. Reject Qualitative

257 EVERTEC, Inc. Reject Qualitative

258 EVO Payments, Inc. Reject Qualitative

259 Evolent Health, Inc. Reject Qualitative


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# Company Name

Accept /


260 Evolving Systems, Inc. Reject Qualitative

261 Evoqua Water Technologies Corp. Reject Qualitative

262 Exantas Capital Corp. Reject Qualitative

263 Exelon Corporation Reject Qualitative

264 ExlService Holdings, Inc. Reject Qualitative

265 Exponent, Inc. Reject Qualitative

266 Exterran Corporation Reject Qualitative

267 F5 Networks, Inc. Reject Qualitative

268 Facebook, Inc. Reject Qualitative

269 FactSet Research Systems Inc. Reject Qualitative

270 Fair Isaac Corporation Reject Qualitative

271 Fairfax Financial Holdings Limited Reject Qualitative

272 FalconStor Software, Inc. Reject Qualitative

273 Fidelity National Information Services, Inc. Reject Qualitative

274 Fiesta Restaurant Group, Inc. Reject Qualitative

275 Finjan Holdings, Inc. Reject Qualitative

276 FireEye, Inc. Reject Qualitative

277 Fiserv, Inc. Reject Qualitative

278 Five9, Inc. Reject Qualitative

279 FleetCor Technologies, Inc. Reject Qualitative

280 FlexShopper, Inc. Reject Qualitative

281 Fluent, Inc. Reject Qualitative

282 FLYHT Aerospace Solutions Ltd. Reject Qualitative

283 ForeScout Technologies, Inc. Reject Qualitative

284 Fortinet, Inc. Reject Qualitative

285 Fortress Transportation and Infrastructure Investors LLC Reject Qualitative

286 Franklin Covey Co. Reject Qualitative

287 Frankly Inc. Reject Qualitative

288 Frontier Communications Corporation Reject Qualitative

289 Gaia, Inc. Reject Qualitative

290 GDI Integrated Facility Services Inc. Reject Qualitative

291 General Cannabis Corp Reject Qualitative

292 General Electric Company Reject Qualitative

293 General Finance Corporation Reject Qualitative

294 Global Eagle Entertainment Inc. Reject Qualitative

295 Global Payments Inc. Reject Qualitative

296 GlobalSCAPE, Inc. Reject Qualitative

297 Glowpoint, Inc. Reject Qualitative

298 Glu Mobile Inc. Reject Qualitative

299 GoDaddy Inc. Reject Qualitative

300 goeasy Ltd. Reject Qualitative

301 GP Strategies Corporation Reject Qualitative

302 Green Dot Corporation Reject Qualitative

303 GreenSky, Inc. Reject Qualitative


Page | 68



# Company Name

Accept /


304 GrubHub Inc. Reject Qualitative

305 GSE Systems, Inc. Reject Qualitative

306 GTT Communications, Inc. Reject Qualitative

307 Guidewire Software, Inc. Reject Qualitative

308 H&E Equipment Services, Inc. Reject Qualitative

309 Harsco Corporation Reject Qualitative

310 Harte Hanks, Inc. Reject Qualitative

311 Healthcare Services Group, Inc. Reject Qualitative

312 HealthEquity, Inc. Reject Qualitative

313 HealthLynked Corp. Reject Qualitative

314 HealthSpace Data Systems Ltd. Reject Qualitative

315 HealthStream, Inc. Reject Qualitative

316 Heidrick & Struggles International, Inc. Reject Qualitative

317 Helios and Matheson Analytics Inc. Reject Qualitative

318 Her Imports Reject Qualitative

319 Herc Holdings Inc. Reject Qualitative

320 Hertz Global Holdings, Inc. Reject Qualitative

321 Hewlett Packard Enterprise Company Reject Qualitative

322 Hill International, Inc. Reject Qualitative

323 HMS Holdings Corp. Reject Qualitative

324 Home Capital Group Inc. Reject Qualitative

325 hopTo Inc. Reject Qualitative

326 Hortonworks, Inc. Reject Qualitative

327 Houlihan Lokey, Inc. Reject Qualitative

328 HP Inc. Reject Qualitative

329 HubSpot, Inc. Reject Qualitative

330 Hudson Global, Inc Reject Qualitative

331 I.D. Systems, Inc. Reject Qualitative

332 IAC/InterActiveCorp Reject Qualitative

333 IBI Group Inc. Reject Qualitative

334 iCAD, Inc. Reject Qualitative

335 ICF International, Inc. Reject Qualitative

336 IDW Media Holdings, Inc. Reject Qualitative

337 IGEN Networks Corp. Reject Qualitative

338 iLOOKABOUT Corp. Reject Qualitative

339 ImageWare Systems, Inc. Reject Qualitative

340 Imex Systems Inc. Reject Qualitative

341 Immersion Corporation Reject Qualitative

342 Imperva, Inc. Reject Qualitative

343 Indivior PLC Reject Qualitative

344 Information Analysis Incorporated Reject Qualitative

345 Information Services Group, Inc. Reject Qualitative

346 InnerWorkings, Inc. Reject Qualitative

347 Innodata Inc. Reject Qualitative


Page | 69



# Company Name

Accept /


348 Inogen, Inc. Reject Qualitative

349 Inovalon Holdings, Inc. Reject Qualitative

350 Inpixon Reject Qualitative

351 Inseego Corp. Reject Qualitative

352 Insight Enterprises, Inc. Reject Qualitative

353 Insignia Systems, Inc. Reject Qualitative

354 Insperity, Inc. Reject Qualitative

355 InsPro Technologies Corporation Reject Qualitative

356 Instructure, Inc. Reject Qualitative

357 Integrity Gaming Corp. Reject Qualitative

358 Intellicheck, Inc. Reject Qualitative

359 Intelligent Systems Corporation Reject Qualitative

360 Intellinetics, Inc. Reject Qualitative

361 InterCloud Systems, Inc. Reject Qualitative

362 Intermap Technologies Corporation Reject Qualitative

363 Internap Corporation Reject Qualitative

364 International Business Machines Corporation Reject Qualitative

365 International Paper Company Reject Qualitative

366 Interpace Diagnostics Group, Inc. Reject Qualitative

367 Intersections Inc. Reject Qualitative

368 Intouch Insight Ltd. Reject Qualitative

369 Intrinsyc Technologies Corporation Reject Qualitative

370 Intrusion Inc. Reject Qualitative

371 Intuit Inc. Reject Qualitative

372 Inuvo, Inc. Reject Qualitative

373 ION Geophysical Corporation Reject Qualitative

374 iPass Inc. Reject Qualitative

375 Iridium Communications Inc. Reject Qualitative

376 iSign Solutions Inc. Reject Qualitative

377 Issuer Direct Corporation Reject Qualitative

378 ITEX Corporation Reject Qualitative

379 ITT Inc. Reject Qualitative

380 IZEA Worldwide, Inc. Reject Qualitative

381 j2 Global, Inc. Reject Qualitative

382 Jack Henry & Associates, Inc. Reject Qualitative

383 Jamba, Inc. Reject Qualitative

384 Jefferies Financial Group Inc. Reject Qualitative

385 JetPay Corporation Reject Qualitative

386 John Bean Technologies Corporation Reject Qualitative

387 Johnson & Johnson Reject Qualitative

388 KAR Auction Services, Inc. Reject Qualitative

389 Kelly Services, Inc. Reject Qualitative

390 Kforce Inc. Reject Qualitative

391 Kinaxis Inc. Reject Qualitative


Page | 70



# Company Name

Accept /


392 Kinsale Capital Group, Inc. Reject Qualitative

393 Korn/Ferry International Reject Qualitative

394 Kratos Defense & Security Solutions, Inc. Reject Qualitative

395 Leaf Group Ltd. Reject Qualitative

396 Leidos Holdings, Inc. Reject Qualitative

397 Liberated Syndication Inc. Reject Qualitative

398 Liberty Broadband Corporation Reject Qualitative

399 Liberty TripAdvisor Holdings, Inc. Reject Qualitative

400 Limelight Networks, Inc. Reject Qualitative

401 Liquidity Services, Inc. Reject Qualitative

402 Live Nation Entertainment, Inc. Reject Qualitative

403 Live Ventures Incorporated Reject Qualitative

404 LivePerson, Inc. Reject Qualitative

405 LiveWorld, Inc. Reject Qualitative

406 LogMeIn, Inc. Reject Qualitative

407 Louisiana-Pacific Corporation Reject Qualitative

408 LSC Communications, Inc. Reject Qualitative

409 Madison County Financial, Inc. Reject Qualitative

410 Magellan Health, Inc. Reject Qualitative

411 Majesco Reject Qualitative

412 MAM Software Group, Inc. Reject Qualitative

413 Manhattan Associates, Inc. Reject Qualitative

414 ManpowerGroup Inc. Reject Qualitative

415 ManTech International Corporation Reject Qualitative

416 Marchex, Inc. Reject Qualitative

417 Marin Software Incorporated Reject Qualitative

418 Marlin Business Services Corp. Reject Qualitative

419 Mastech Digital, Inc. Reject Qualitative

420 Mastercard Incorporated Reject Qualitative

421 Maxar Technologies Ltd. Reject Qualitative

422 MAXIMUS, Inc. Reject Qualitative

423 McGrath RentCorp Reject Qualitative

424 MDC Partners Inc. Reject Qualitative

425 Mediagrif Interactive Technologies Inc. Reject Qualitative

426 Medical Facilities Corporation Reject Qualitative

427 Medical Marijuana, Inc. Reject Qualitative

428 Medical Transcription Billing, Corp. Reject Qualitative

429 Medidata Solutions, Inc. Reject Qualitative

430 Memex Inc. Reject Qualitative

431 Microsoft Corporation Reject Qualitative

432 MicroStrategy Incorporated Reject Qualitative

433 Midwest Holding Inc. Reject Qualitative

434 MINDBODY, Inc. Reject Qualitative

435 Mission Ready Solutions Inc. Reject Qualitative


Page | 71



# Company Name

Accept /


436 Mitcham Industries, Inc. Reject Qualitative

437 Mitek Systems, Inc. Reject Qualitative

438 Mobile Mini, Inc. Reject Qualitative

439 MobileIron, Inc. Reject Qualitative

440 MobileSmith, Inc. Reject Qualitative

441 Mobivity Holdings Corp. Reject Qualitative

442 Model N, Inc. Reject Qualitative

443 MoneyOnMobile, Inc. Reject Qualitative

444 Monotype Imaging Holdings Inc. Reject Qualitative

445 Moody's Corporation Reject Qualitative

446 Morneau Shepell Inc. Reject Qualitative

447 Morningstar, Inc. Reject Qualitative

448 MSCI Inc. Reject Qualitative

449 Nasdaq, Inc. Reject Qualitative

450 National CineMedia, Inc. Reject Qualitative

451 National Instruments Corporation Reject Qualitative

452 National Oilwell Varco, Inc. Reject Qualitative

453 Natural Gas Services Group, Inc. Reject Qualitative

454 NatureBank Asset Management Inc. Reject Qualitative

455 NCR Corporation Reject Qualitative

456 Net Element, Inc. Reject Qualitative

457 NetApp, Inc. Reject Qualitative

458 Netlist, Inc. Reject Qualitative

459 NetScout Systems, Inc. Reject Qualitative

460 NetSol Technologies, Inc. Reject Qualitative

461 New Relic, Inc. Reject Qualitative

462 NexJ Systems Inc. Reject Qualitative

463 NIC Inc. Reject Qualitative

464 Noble Iron Inc. Reject Qualitative

465 NTG Clarity Networks Inc. Reject Qualitative

466 Nuance Communications, Inc. Reject Qualitative

467 Nutanix, Inc. Reject Qualitative

468 Okta, Inc. Reject Qualitative

469 Omnicell, Inc. Reject Qualitative

470 Omnicom Group Inc. Reject Qualitative

471 OmniComm Systems, Inc. Reject Qualitative

472 On Deck Capital, Inc. Reject Qualitative

473 ONEnergy Inc. Reject Qualitative

474 ONEOK, Inc. Reject Qualitative

475 OneSpan Inc. Reject Qualitative

476 OneView Group plc Reject Qualitative

477 Open Text Corporation Reject Qualitative

478 OptimizeRx Corporation Reject Qualitative

479 Optiva Inc. Reject Qualitative


Page | 72



# Company Name

Accept /


480 Oracle Corporation Reject Qualitative

481 Orion Group Holdings, Inc. Reject Qualitative

482 Palo Alto Networks, Inc. Reject Qualitative

483 Pandora Media, Inc. Reject Qualitative

484 PAR Technology Corporation Reject Qualitative

485 Pareteum Corporation Reject Qualitative

486 Park City Group, Inc. Reject Qualitative

487 PASSUR Aerospace, Inc. Reject Qualitative

488 Paycom Software, Inc. Reject Qualitative

489 Paylocity Holding Corporation Reject Qualitative

490 PayPal Holdings, Inc. Reject Qualitative

491 PDF Solutions, Inc. Reject Qualitative

492 pdvWireless, Inc. Reject Qualitative

493 PeerStream, Inc. Reject Qualitative

494 Pegasystems Inc. Reject Qualitative

495 PennyMac Financial Services, Inc. Reject Qualitative

496 People Corporation Reject Qualitative

497 People's Utah Bancorp Reject Qualitative

498 Perceptron, Inc. Reject Qualitative

499 Perficient, Inc. Reject Qualitative

500 Performant Financial Corporation Reject Qualitative

501 Perspecta Inc. Reject Qualitative

502 PFSweb, Inc. Reject Qualitative

503 Pharma-Bio Serv, Inc. Reject Qualitative

504 Pinnacle Bank Reject Qualitative

505 Pivot Technology Solutions, Inc. Reject Qualitative

506 Points International Ltd. Reject Qualitative

507 Posera Ltd. Reject Qualitative

508 PRA Group, Inc. Reject Qualitative

509 Precipio, Inc. Reject Qualitative

510 Premier, Inc. Reject Qualitative

511 Presidio, Inc. Reject Qualitative

512 Priority Technology Holdings, Inc. Reject Qualitative

513 Professional Diversity Network, Inc. Reject Qualitative

514 Progress Software Corporation Reject Qualitative

515 ProMetic Life Sciences Inc. Reject Qualitative

516 ProntoForms Corporation Reject Qualitative

517 Proofpoint, Inc. Reject Qualitative

518 Propel Media, Inc. Reject Qualitative

519 PROS Holdings, Inc. Reject Qualitative

520 PTC Inc. Reject Qualitative

521 Q2 Holdings, Inc. Reject Qualitative

522 QAD Inc. Reject Qualitative

523 Quality Systems, Inc. Reject Qualitative


Page | 73



# Company Name

Accept /


524 Qualys, Inc. Reject Qualitative

525 Quest Solution, Inc. Reject Qualitative

526 QuinStreet, Inc. Reject Qualitative

527 Qumu Corporation Reject Qualitative

528 Quorum Health Corporation Reject Qualitative

529 Quorum Information Technologies Inc. Reject Qualitative

530 QuoteMedia, Inc. Reject Qualitative

531 Quotient Technology Inc. Reject Qualitative

532 R1 RCM Inc. Reject Qualitative

533 Radisys Corporation Reject Qualitative

534 Rapid7, Inc. Reject Qualitative

535 Razer Inc. Reject Qualitative

536 RCM Technologies, Inc. Reject Qualitative

537 Real Matters Inc. Reject Qualitative

538 RealNetworks, Inc. Reject Qualitative

539 RealPage, Inc. Reject Qualitative

540 Red Hat, Inc. Reject Qualitative

541 Red Violet, Inc. Reject Qualitative

542 Regional Management Corp. Reject Qualitative

543 Reis, Inc. Reject Qualitative

544 Remark Holdings, Inc. Reject Qualitative

545 Rennova Health, Inc. Reject Qualitative

546 RenoWorks Software Inc. Reject Qualitative

547 Rent-A-Center, Inc. Reject Qualitative

548 Research Solutions, Inc. Reject Qualitative

549 RewardStream Solutions Inc. Reject Qualitative

550 RhythmOne plc Reject Qualitative

551 Ribbon Communications Inc. Reject Qualitative

552 Rimini Street, Inc. Reject Qualitative

553 RingCentral, Inc. Reject Qualitative

554 Ritchie Bros. Auctioneers Incorporated Reject Qualitative

555 Robert Half International Inc. Reject Qualitative

556 Rocky Mountain Dealerships Inc. Reject Qualitative

557 Rollins, Inc. Reject Qualitative

558 Rosetta Stone Inc. Reject Qualitative

559 Route1 Inc. Reject Qualitative

560 RSI International Systems Inc. Reject Qualitative

561 Rubicon Technology, Inc. Reject Qualitative

562 S&P Global Inc. Reject Qualitative

563 Sabre Corporation Reject Qualitative

564 SailPoint Technologies Holdings, Inc. Reject Qualitative

565 salesforce.com, inc. Reject Qualitative

566 Salon Media Group, Inc. Reject Qualitative

567 Sandstorm Gold Ltd. Reject Qualitative


Page | 74



# Company Name

Accept /


568 Sangoma Technologies Corporation Reject Qualitative

569 SBT Bancorp, Inc. Reject Qualitative

570 Schneider National, Inc. Reject Qualitative

571 Science Applications International Corporation Reject Qualitative

572 SeaChange International, Inc. Reject Qualitative

573 SendGrid, Inc. Reject Qualitative

574 Sequential Brands Group, Inc. Reject Qualitative

575 ServiceMaster Global Holdings, Inc. Reject Qualitative

576 ServiceNow, Inc. Reject Qualitative

577 ServiceSource International, Inc. Reject Qualitative

578 SharpSpring, Inc. Reject Qualitative

579 Shopify Inc. Reject Qualitative

580 ShotSpotter, Inc. Reject Qualitative

581 Shutterfly, Inc. Reject Qualitative

582 Shutterstock, Inc. Reject Qualitative

583 Sienna Senior Living Inc. Reject Qualitative

584 SilverSun Technologies, Inc. Reject Qualitative

585 Simulations Plus, Inc. Reject Qualitative

586 SITO Mobile, Ltd. Reject Qualitative

587 Skkynet Cloud Systems, Inc. Reject Qualitative

588 SLM Corporation Reject Qualitative

589 Smart Employee Benefits Inc. Reject Qualitative

590 SMG Industries Inc. Reject Qualitative

591 Smith Micro Software, Inc. Reject Qualitative

592 Snap Inc. Reject Qualitative

593 Snipp Interactive Inc. Reject Qualitative

594 Social Reality, Inc. Reject Qualitative

595 Solaris Oilfield Infrastructure, Inc. Reject Qualitative

596 Solium Capital Inc. Reject Qualitative

597 Sonic Foundry, Inc. Reject Qualitative

598 Sonoco Products Company Reject Qualitative

599 Sonos, Inc. Reject Qualitative

600 Sotheby's Reject Qualitative

601 SPAR Group, Inc. Reject Qualitative

602 Spectra Systems Corporation Reject Qualitative

603 Sphere 3D Corp. Reject Qualitative

604 Spindletop Oil & Gas Co. Reject Qualitative

605 Spine Injury Solutions, Inc. Reject Qualitative

606 Splunk Inc. Reject Qualitative

607 SPS Commerce, Inc. Reject Qualitative

608 Square, Inc. Reject Qualitative

609 SS&C Technologies Holdings, Inc. Reject Qualitative

610 Staffing 360 Solutions, Inc. Reject Qualitative

611 Stamps.com Inc. Reject Qualitative


Page | 75



# Company Name

Accept /


612 Stantec Inc. Reject Qualitative

613 StarTek, Inc. Reject Qualitative

614 Steel Connect, Inc. Reject Qualitative

615 Stericycle, Inc. Reject Qualitative

616 Strad Energy Services Ltd. Reject Qualitative

617 Streamline Health Solutions, Inc. Reject Qualitative

618 Superior Energy Services, Inc. Reject Qualitative

619 Support.com, Inc. Reject Qualitative

620 Switch, Inc. Reject Qualitative

621 SWK Holdings Corporation Reject Qualitative

622 Sykes Enterprises, Incorporated Reject Qualitative

623 Sylogist Ltd. Reject Qualitative

624 Symantec Corporation Reject Qualitative

625 Symbility Solutions Inc. Reject Qualitative

626 Synacor, Inc. Reject Qualitative

627 Synchronoss Technologies, Inc. Reject Qualitative

628 SYNNEX Corporation Reject Qualitative

629 Synopsys, Inc. Reject Qualitative

630 Syntel, Inc. Reject Qualitative

631 Table Trac, Inc. Reject Qualitative

632 Tableau Software, Inc. Reject Qualitative

633 Tabula Rasa HealthCare, Inc. Reject Qualitative

634 Take-Two Interactive Software, Inc. Reject Qualitative

635 Talos Energy Inc. Reject Qualitative

636 Tangelo Games Corp. Reject Qualitative

637 Tapinator, Inc. Reject Qualitative

638 Team, Inc. Reject Qualitative

639 TechTarget, Inc. Reject Qualitative

640 Tecsys Inc. Reject Qualitative

641 Teladoc Health, Inc. Reject Qualitative

642 Telaria, Inc. Reject Qualitative

643 Telenav, Inc. Reject Qualitative

644 Teradata Corporation Reject Qualitative

645 Tervita Corporation Reject Qualitative

646 Tetra Tech, Inc. Reject Qualitative

647 The Boeing Company Reject Qualitative

648 The Brink's Company Reject Qualitative

649 The Caldwell Partners International Inc. Reject Qualitative

650 The Castle Group, Inc. Reject Qualitative

651 The Descartes Systems Group Inc Reject Qualitative

652 The Dun & Bradstreet Corporation Reject Qualitative

653 The Hackett Group, Inc. Reject Qualitative

654 The Hain Celestial Group, Inc. Reject Qualitative

655 The Interpublic Group of Companies, Inc. Reject Qualitative


Page | 76



# Company Name

Accept /


656 The KeyW Holding Corporation Reject Qualitative

657 The Meet Group, Inc. Reject Qualitative

658 The Pulse Network, Inc. Reject Qualitative

659 The RMR Group Inc. Reject Qualitative

660 The Rubicon Project, Inc. Reject Qualitative

661 The Trade Desk, Inc. Reject Qualitative

662 The Ultimate Software Group, Inc. Reject Qualitative

663 theScore, Inc. Reject Qualitative

664 TheStreet, Inc. Reject Qualitative

665 TiVo Corporation Reject Qualitative

666 TOMI Environmental Solutions, Inc. Reject Qualitative

667 Total Energy Services Inc. Reject Qualitative

668 Total System Services, Inc. Reject Qualitative

669 Track Group, Inc. Reject Qualitative

670 TrackX Holdings Inc. Reject Qualitative

671 Trakopolis IoT Corp. Reject Qualitative

672 TransUnion Reject Qualitative

673 Travelzoo Reject Qualitative

674 Trilogy International Partners Inc. Reject Qualitative

675 TriNet Group, Inc. Reject Qualitative

676 TripAdvisor, Inc. Reject Qualitative

677 TrueBlue, Inc. Reject Qualitative

678 TrueCar, Inc. Reject Qualitative

679 Trxade Group, Inc. Reject Qualitative

680 TSR, Inc. Reject Qualitative

681 TSS, Inc. Reject Qualitative

682 TTEC Holdings, Inc. Reject Qualitative

683 Tucows Inc. Reject Qualitative

684 Twilio Inc. Reject Qualitative

685 Twitter, Inc. Reject Qualitative

686 Two Rivers Financial Group, Inc. Reject Qualitative

687 Tyler Technologies, Inc. Reject Qualitative

688 Ubiquiti Networks, Inc. Reject Qualitative

689 Uniserve Communications Corporation Reject Qualitative

690 Unisys Corporation Reject Qualitative

691 United Parcel Service, Inc. Reject Qualitative

692 United Rentals, Inc. Reject Qualitative

693 UpSnap, Inc. Reject Qualitative

694 UrtheCast Corp. Reject Qualitative

695 US Metro Bank Reject Qualitative

696 USA Technologies, Inc. Reject Qualitative

697 usell.com, Inc. Reject Qualitative

698 Varonis Systems, Inc. Reject Qualitative

699 Vectrus, Inc. Reject Qualitative


Page | 77



# Company Name

Accept /


700 Veeva Systems Inc. Reject Qualitative

701 Verint Systems Inc. Reject Qualitative

702 VeriSign, Inc. Reject Qualitative

703 Verisk Analytics, Inc. Reject Qualitative

704 Veritone, Inc. Reject Qualitative

705 Vertical Computer Systems, Inc. Reject Qualitative

706 Viad Corp Reject Qualitative

707 Vigil Health Solutions Inc. Reject Qualitative

708 VIQ Solutions Inc. Reject Qualitative

709 VirnetX Holding Corp Reject Qualitative

710 VirTra, Inc. Reject Qualitative

711 Virtusa Corporation Reject Qualitative

712 Visa Inc. Reject Qualitative

713 Vobile Group Limited Reject Qualitative

714 Volt Information Sciences, Inc. Reject Qualitative

715 Walker & Dunlop, Inc. Reject Qualitative

716 Web.com Group, Inc. Reject Qualitative

717 Wesco Aircraft Holdings, Inc. Reject Qualitative

718 WesternOne Inc. Reject Qualitative

719 WEX Inc. Reject Qualitative

720 Where Food Comes From, Inc. Reject Qualitative

721 WidePoint Corporation Reject Qualitative

722 Wilhelmina International, Inc. Reject Qualitative

723 Willis Lease Finance Corporation Reject Qualitative

724 Winmark Corporation Reject Qualitative

725 Wistron Information Technology & Services Corporation Reject Qualitative

726 Wizard World, Inc. Reject Qualitative

727 Woodlands Financial Services Company Reject Qualitative

728 Workday, Inc. Reject Qualitative

729 Workiva Inc. Reject Qualitative

730 Worldpay, Inc. Reject Qualitative

731 WSP Global Inc. Reject Qualitative

732 Xebec Adsorption Inc. Reject Qualitative

733 XO Group Inc. Reject Qualitative

734 Yelp Inc. Reject Qualitative

735 Yew Bio-Pharm Group, Inc. Reject Qualitative

736 Yext, Inc. Reject Qualitative

737 Zedcor Energy Inc. Reject Qualitative

738 Zedge, Inc. Reject Qualitative

739 Zendesk, Inc. Reject Qualitative

740 Zillow Group, Inc. Reject Qualitative

741 Zix Corporation Reject Qualitative

742 ZoomerMedia Limited Reject Qualitative

743 Zscaler, Inc. Reject Qualitative


Page | 78



# Company Name

Accept /


744 Zynga Inc. Reject Qualitative


Page | 79



Appendix D: Construction of Executive Management Fees to Zurixx US

Executive Management Fees Charge Notes FY2017

FY2017 Operating Costs:

Payroll & Related Benefits 1,216,524$

Total Operating Costs: (a) 1,216,524$

Exectuive Management Markup: (b) 10.0%

Markup Amount (c)=(a)*(b) 121,652$

FY 2017 Charge with Markup: (d)=(a)+(c) 1,338,176$

FY 2017 Monthly Charge with Markup: (e)=(d)/12 111,515$


Page | 80



Appendix E: Construction of Registration Fees to Zurixx US

Zurixx, LLC.Registration Fees Calculation

Assumptions:

LQ Cust. Acquisition Rate/Head: 22.10$ (a)

Median Cust. Acquisition Rate/Head: 50.60$ (b)

UQ Cust. Acquisition Rate/Head: 86.45$ (c)

Data Schedule Notes 1/31/2017 2/28/2017 3/31/2017 4/30/2017 5/31/2017 6/30/2017 7/31/2017 8/31/2017 9/30/2017 10/31/2017 11/30/2017 12/31/2017 FY2017

Preview Event Registrants

RE Registrants 41,491 28,596 25,776 37,506 33,855 30,527 44,780 35,568 34,977 30,737 23,386 19,063 386,262

DJ Registrants 21,990 29,662 38,362 29,548 40,749 35,257 48,452 39,921 52,377 54,679 22,846 38,203 452,046

Total Registrants (d) 63,481 58,258 64,138 67,054 74,604 65,784 93,232 75,489 87,354 85,416 46,232 57,266 838,308

Fee Schedule Notes 1/31/2017 2/28/2017 3/31/2017 4/30/2017 5/31/2017 6/30/2017 7/31/2017 8/31/2017 9/30/2017 10/31/2017 11/30/2017 12/31/2017 FY2017

Lower Quartile Registration Fees (a)*(d) 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 16,835,161

Median Registration Fees (b)*(d) 3,211,821 2,947,564 3,245,062 3,392,597 3,774,589 3,328,341 4,717,073 3,819,366 4,419,676 4,321,623 2,339,108 2,897,373 42,414,193

Upper Quartile Registration Fees (c)*(d) 5,487,774 5,036,258 5,544,570 5,796,651 6,449,329 5,686,862 8,059,673 6,525,835 7,551,535 7,384,000 3,996,641 4,950,503 72,469,631


Page | 81



Appendix F: Construction of Legal Fees to Zurixx US

Zurixx, LLC.Legal Fees Calculation

Assumptions:

Average Legal Attorney Hourly Rate: 357.50$ (a)

Legal Hours per Series/Brand: 5 (b)


Series Counts (1)

RE Count 18 19 16 17 15 15 20 18 21 14 13 17 203

DJ Count 2 5 5 6 6 6 10 8 10 9 6 5 78

Total Series (c) 20 24 21 23 21 21 30 26 31 23 19 22 281


Total Series Hours (d)=(b)*(c) 100 120 105 115 105 105 150 130 155 115 95 110 1,405

Total Legal Fees (a)*(d) 35,750$ 42,900$ 37,538$ 41,113$ 37,538$ 37,538$ 53,625$ 46,475$ 55,413$ 41,113$ 33,963$ 39,325$ 502,288$

Notes

(1) A series consists of multiple events held during a given week at particular geographic locations


Page | 82



Appendix G: Construction of Workshop Recruitment Fees to Zurixx US

Recruitment Fee Calculation (1) Notes FY2017

Average Headhunter Salary (Annual) (a) 250,000$

Annual Recruitment Speakers Employed (b) 20

Total Headhunter Annual Cost (c)=(a)*(b) 5,000,000$

Headhunter Rate (d) 25.1%

Total Annual Recruitment Fee (e)=(c)*(d) 1,255,000$

Total Monthly Recruitment Fee (f)=(e)/12 104,583$

Notes

(1) Avg. Headhunter Salary and Speakers Employed estimates provided by Zurixx Management


Page | 83



Appendix H: Construction of Celebrity Management Fees to Zurixx US

Zurixx, LLC.Celebrity Management Fees Calculation

Assumptions:

Celebrity Commission Rates (FE Rate) (1) 5.0% (a)

Celebrity Commission Rates (ME Rate) (1) 5.0% (b)

Celebrity Commission Rates (BE Rate) (1) 2.5% (c)

Celebrity Management Rate: 10.0% (d)

Celebrity Fixed Fee / Event (1) 10,000$ (e)


FE - Front End

RE Gross Sales (f) 1,212,501 841,268 1,003,500 1,091,670 1,050,810 1,248,294 907,904 1,171,028 1,073,074 1,117,219 1,075,392 733,883 12,526,542

DJ Gross Sales (g) 279,540 601,958 764,926 999,403 994,914 1,028,527 1,508,456 1,200,558 1,224,034 1,112,418 1,049,100 475,596 11,239,430

FE Celebrity Compensation (h)={(f)+(g)}*(a) 74,602$ 72,161$ 88,421$ 104,554$ 102,286$ 113,841$ 120,818$ 118,579$ 114,855$ 111,482$ 106,225$ 60,474$ 1,188,299$

ME - 2nd Event - Middle End

RE Gross Sales (f) 4,023,365 4,007,792 2,244,571 3,092,012 2,915,073 3,557,119 3,880,904 3,791,334 2,584,019 4,134,059 2,592,748 2,945,106 39,768,102

DJ Gross Sales (g) 626,722 985,871 1,351,877 2,848,966 2,634,218 2,610,715 4,158,603 3,388,915 2,529,570 3,556,570 2,930,704 1,616,351 29,239,082

ME Celebrity Compensation (i)={(f)+(g)}*(b) 232,504$ 249,683$ 179,822$ 297,049$ 277,465$ 308,392$ 401,975$ 359,012$ 255,679$ 384,531$ 276,173$ 228,073$ 3,450,359$

BE - Backend - Telesales

RE Gross Sales (f) 1,260,087 1,704,942 1,684,214 1,677,909 1,913,959 1,292,695 1,299,200 1,525,613 1,263,100 1,097,028 1,669,128 1,755,406 18,143,280

DJ Gross Sales (g) 44,327 133,384 444,947 309,997 549,101 796,568 724,416 721,374 756,826 757,332 745,125 625,267 6,608,664$

BE Celebrity Compensation (j)={(f)+(g)}*(c) 32,610$ 45,958$ 53,229$ 49,698$ 61,577$ 52,232$ 50,590$ 56,175$ 50,498$ 46,359$ 60,356$ 59,517$ 618,799$

Series Counts (2)

RE Count 18 19 16 17 15 15 20 18 21 14 13 17 203

DJ Count 2 5 5 6 6 6 10 8 10 9 6 5 78

Total Series (k) 20 24 21 23 21 21 30 26 31 23 19 22 281


Total FE, ME & BE Compensation (l)=(h)+(i)+(j) 339,717$ 367,803 321,473 451,300 441,327 474,464 573,384 533,766 421,033 542,372 442,754 348,064 5,257,456$

Total Celebrity Series Compensation (m)=(k)*(e) 200,000$ 240,000 210,000 230,000 210,000 210,000 300,000 260,000 310,000 230,000 190,000 220,000 2,810,000$

Total Celebrity Compensation (n)=(l)+(m) 539,717$ 607,803$ 531,473$ 681,300$ 651,327$ 684,464$ 873,384$ 793,766$ 731,033$ 772,372$ 632,754$ 568,064$ 8,067,456$

Total Celebrity Management Fee (o)=(n)*(d) 53,972$ 60,780$ 53,147$ 68,130$ 65,133$ 68,446$ 87,338$ 79,377$ 73,103$ 77,237$ 63,275$ 56,806$ 806,746$

Notes

(1) Celebrity commission rates and fixed fees provided by Zurixx management based on internal agreements with celebrities

(2) A series consists of multiple events held during a given week at particular geographic locations. A celebrity will typically visit once per series.


Page | 84



Appendix I: Construction of Total Fees to Zurixx US

Zurixx, LLC.Total Fees Calculation

Fee Schedule 1/31/2017 2/28/2017 3/31/2017 4/30/2017 5/31/2017 6/30/2017 7/31/2017 8/31/2017 9/30/2017 10/31/2017 11/30/2017 12/31/2017 FY2017

Total Gross Sales 7,664,542$ 8,790,507$ 7,846,035$ 10,616,203$ 10,244,622$ 11,304,791$ 12,709,483$ 11,917,822$ 9,819,812$ 11,836,625$ 10,562,373$ 8,331,609$ 121,644,423$

Total Net Sales 5,403,619$ 6,404,068$ 5,592,774$ 7,610,516$ 6,948,553$ 7,502,447$ 8,072,335$ 7,905,564$ 6,361,745$ 7,451,010$ 7,099,838$ 6,000,600$ 82,353,070$

Lower Quartile Registration Fees 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 1,402,930 16,835,161

Median Registration Fees 3,211,821 2,947,564 3,245,062 3,392,597 3,774,589 3,328,341 4,717,073 3,819,366 4,419,676 4,321,623 2,339,108 2,897,373 42,414,193

Upper Quartile Registration Fees 5,487,774 5,036,258 5,544,570 5,796,651 6,449,329 5,686,862 8,059,673 6,525,835 7,551,535 7,384,000 3,996,641 4,950,503 72,469,631

Total Legal Fees 35,750 42,900 37,538 41,113 37,538 37,538 53,625 46,475 55,413 41,113 33,963 39,325 502,288

Headhunter Recruitment Fee 104,583 104,583 104,583 104,583 104,583 104,583 104,583 104,583 104,583 104,583 104,583 104,583 1,255,000

Total Celebrity Management Fee 53,972 60,780 53,147 68,130 65,133 68,446 87,338 79,377 73,103 77,237 63,275 56,806 806,746

Executive Management Fee 111,515 111,515 111,515 111,515 111,515 111,515 111,515 111,515 111,515 111,515 111,515 111,515 1,338,176

LQ Total Fees 1,708,750$ 1,722,708$ 1,709,713$ 1,728,271$ 1,721,698$ 1,725,012$ 1,759,991$ 1,744,880$ 1,747,544$ 1,737,378$ 1,716,266$ 1,715,159$ 20,737,370$

Median Total Fees 3,517,641$ 3,267,342$ 3,551,845$ 3,717,938$ 4,093,358$ 3,650,423$ 5,074,134$ 4,161,316$ 4,764,289$ 4,656,070$ 2,652,444$ 3,209,603$ 46,316,402$

UQ Total Fees 5,793,593$ 5,356,037$ 5,851,353$ 6,121,991$ 6,768,098$ 6,008,944$ 8,416,735$ 6,867,785$ 7,896,149$ 7,718,447$ 4,309,977$ 5,262,732$ 76,371,840$


EXHIBIT “2”


Zurixx LLC Accounting Status Report “First Day” Accounting Issues

As noted earlier in this report, On Wednesday, October 2, 2019, the Monitor and his professionals visited the offices of Zurixx. The Monitor’s accounting professionals, Gil Miller and John Curtis from the firm of Rocky Mountain Advisory (“RMA”), were present that day and met with various individuals to gain an understanding of the various accounting and financial aspects of the business. This section of the Report will discuss, from an accounting prospective, the “First Day” (October 2-4) issues which were addressed.

a. Interview of the Chief Financial Officer. The Monitor and Gil Miller interviewed Matt Magistro (“Magistro”) within one hour of entering the Zurixx facility. Magistro has worked for Zurixx for seven years since its inception. He has a BS in accounting from Utah Valley University. Magistro reports directly to Jim Carlson, CEO of Zurixx (“Carlson”). Magistro indicated that Zurixx spends approximately $2 million per week in operating cash, which we confirmed. He further indicated that the primary bank accounts used by Zurixx are Bank of America and Chase Bank and that there are numerous merchant accounts (to take in credit card receipts) that “point” to these Zurixx bank accounts. Magistro said that approximately $2 million per week in customer sales come in through the various merchant accounts and that the company is basically breaking even at its current levels of receipt and expense activity, which we also confirmed. Many of the merchant account vendors also maintain significant cash reserve balances to protect them against Zurixx customer chargebacks. A complete listing of Zurixx bank accounts, corporate defendant bank accounts and other and merchant accounts, as well as their estimated current cash and reserve balances, is included as Exhibit A1.1 Magistro further explained that Zurixx maintains operations in Puerto Rico, using the name Dorado Marketing & Management, LLC (“Dorado”), formerly known as Zurixx, LLC (a Puerto Rico entity). Magistro said, and RMA has confirmed, that Dorado uses First Bank as its financial institution in Puerto Rico. He also

1 On October 3, Zurixx was informed that one of their financial institutions, Chase Bank, had frozen the Zurixx accounts. Nearly two-thirds of Zurixx’s cash was frozen (approximately $3 million), which left Zurixx with very low cash reserves to pay continuing operating expenses. The Chase accounts remained frozen for nearly a week until the FTC and Monitor’s staff were able to convince the bank that the Order did not freeze any bank accounts.


indicated that there are approximately 20-30 employees of Dorado, including Carlson and Cris Cannon (“Cannon”), both who reside in Puerto Rico a majority of the time. According to Magistro, Dorado invoices Zurixx for its services, which primarily includes event management and marketing. A more detailed discussion of the services provided by Dorado is included below in the “Operational Issues” section of this report. Magistro explained that Squire & Company performs the audit of Zurixx, which is a consolidated audit that includes the operations of both Zurixx and Dorado. Dorado also has an independent audit performed by LLM&D, PSC. Kamdar & Co. prepare the tax returns for Zurixx and U.S. affiliates, while LLM&D prepares the tax returns for Dorado. Magistro explained that Carlson was the CEO of Zurixx, Cannon was over sales and Jeff Spangler (“Spangler”) over operations. Magistro explained the basic ownership percentages of the owners, which is explained elsewhere in this report in greater detail. An organizational chart of the business was later provided by Zurixx (see Exhibit A2). According to Magistro, the three owners are paid annual salaries of $250,000. The salaries of Carlson and Cannon are paid by Dorado, while the salary of Spangler is paid by Zurixx. Since the appointment of the Monitor, no salary payments have been made to these defendants. All three owners are paid owner distributions by Dorado. Magistro said that during good years, total distributions were in the $10-15 million range and that during bad years in the $5-7 million range. Since meeting with Magistro, RMA has prepared a summary of owner distributions from 2014-2018. Total distributions range from a low of $6.2 million in 2017 to a high of $31.5 million in 2015 (Exhibit A3). As discussed in greater detail below in the Personnel section of this report, Magistro said that Zurixx has both W2 employees and contract laborers (together, “Payroll”). Magistro stated that contract laborers make up about 80% of the Payroll.

b. Interview of the Controller. John Curtis from RMA met separately with Denise Easter (“Easter”), the financial controller of Zurixx and subsidiaries. Easter provided information about the accounting system, which is maintained in Microsoft Dynamics Great Plains 2015. Easter allowed RMA to see her computer, access and review her files and obtain information contained therein. Easter provided substantial data, files and other financial information from her computer and the Zurixx network. Files obtained from Ms. Easter included financial statement audit files, Payroll reports and files, sales reports, weekly financial packages, deposits reports, commission templates, commission rates


and current trial balance information. Zurixx’s controller and CFO have provided anything requested and been willing to assist with generating reports and data exports to assist with RMA’s analysis of Zurixx’s operations and financial transactions.

Easter provided information on the Payroll process, which is paid on a weekly basis to Zurixx’s employees and vendors or subcontractors, which are 1099 contractors rather than W2 employees. The Payroll historically has been around $450,000 per week.2 Zurixx has historically had 80 – 90 employees with around 300 subcontractors. Historically, the Puerto Rico office’s Payroll was around $20,000.

Easter confirmed that Zurixx’s financial statement audit is conducted by Squire & Company, PC. The audited consolidated financial statements of Zurixx also include Brand Management Holdings, LLC (“Brand Management”), which has the same ownership structure as Zurixx.3 The consolidated financial statements also include the financial statements of Dorado, which was originally organized in 2014 as Zurixx, LLC Puerto Rico.4 As noted, Dorado is audited by LLM&D, PSC, an accounting firm in Puerto Rico.

c. Download of General Ledger. After meeting with the financial controller, John Curtis met with Magistro to review in detail the accounting reports, data and files available from him and to review Zurixx’s operations and processes.

In addition to providing various files and data requested, Magistro exported the entire general ledger from August 2012 to September 2019, and provided the data to RMA. Magistro also provided information about the various general ledger accounts, revenue codes and abbreviations and other aspects of the data. This data has allowed RMA to analyze sales and transactions, historical trends and patterns.

d. Additional Financial Information Obtained. Magistro also provided a variety of reports, including weekly financial packages and versions of financial statement providing greater detail and breakdown of revenue and expenses. He also provided the detail of all Payroll transactions for W2 employees and 1099 contractors going back to 2012, with explanations of the same.

2 That figure has dropped considerably to between $250,000 and $300,000 per week as Zurixx has reduced its workforce in light of working under a new model attempting to comply with the temporary restraining order. 3 Zurixx, LLC and Consolidated Entities, Consolidated Financial Statements, Years Ended December 31, 2018 and 2017, at page 7. 4 Id.


Magistro also provided detailed information on RE Cash Source, LLC (“RE Cash”), an entity under Zurixx Financial, LLC, that provided real estate lending to various customers over the years. RE Cash currently has accounts receivable outstanding of approximately $1.4 million and associated liabilities of approximately $750,000 to investors. RE Cash also has a bank account at Chase bank with a balance of approximately $295,000.

e. Electronic Access to Bank Accounts. Magistro provided RMA with electronic access to the bank accounts of Zurixx and corporate defendants. In total, RMA obtained access to 19 accounts in the names of Zurixx, Brand Management, Richardson Law Group, Global Learning Alliance, RE Cash, CJ Seminar Holdings, Carlson Development Group and Zurixx Finanial. These accounts are held at Chase, First Bank of Puerto Rico and Bank of America.

Given the Monitor’s charge regarding monitoring the transactions of the defendants, as described further below, RMA has reviewed and tracked the daily account activity of the above bank accounts to determine trends that may require urgent action to preserve the assets of Zurixx.

f. Payroll. In consultations with the Monitor, CFO and Controller, certain procedures were immediately deployed to monitor and approve the Payroll process. Zurixx and Dorado pay weekly Payrolls, which needed to be approved within 24 hours of the Monitor gaining access to the facility. Overall, total weekly Payroll for both Zurixx and Dorado at this time was approximately $500,000.

RMA worked with the finance department of Zurixx to prepare a listing of persons receiving Payroll, including each employee’s department and area of involvement. On Thursday, October 3, the Monitor, RMA and members of the Zurixx finance department went through every name on the Payroll schedule to better understand their duties, compensation structure, and whether the person was a W2 employee or contract laborer. The Monitor was also able to confirm that no payroll was being paid to any of the three owners, as expressly prohibited in the Order. Payroll was subsequently approved to be paid by the Monitor. It was determined that future Payroll would be reviewed first by RMA and then the Monitor for final approval. An example Payroll report is included as Exhibit A4.

g. Credit Card Spend. It was quickly determined that a significant amount of operational expenditures were being made on credit cards, primarily American Express (“AMEX”) cards. RMA was told by the finance department that


approximately $500,000-$850,000 per week in total was charged by approximately 35 different cardholders. The practice by Zurixx was to make multiple payoffs every week of the AMEX account to insure credit limits were not exceeded. At the time of the Monitor’s appointment, the AMEX balance had nearly reached its credit limit and an immediate paydown was necessary to maintain operations. This was in large part to Zurixx’s largest event in San Mateo followed closely by another significant event in Las Vegas. AMEX spend has declined considerably since these events and also as a result of significant reductions in employees, expenses and operational changes.

RMA and the Monitor established a procedure to review charges made on credit cards and then authorize payment. Due to the frozen Chase bank accounts noted above, only a partial paydown during the Day 1 period was possible using funds in the unfrozen Bank of America accounts. While the balance on the AMEX account was over $800,000 when the Monitor was appointed, a paydown of $200,000 was authorized by the Monitor on October 3. The AMEX crisis was averted when Chase unfroze the Zurixx bank accounts later the next week. Since then, RMA has reviewed all credit card charges and the Monitor has approved payment.5

h. Accounts Payable. During the Day 1 period, a process was put in place for the Monitor to review and approve all cash disbursements related to accounts payable (obligations other than payroll and credit cards). At the request of the Monitor and RMA, Zurixx provides a weekly summary of all accounts payable by vendor and management’s recommendation as to who and how much to pay. The Monitor has taken strict precautions to make sure no entity owned or controlled by the owners are paid.

An example accounts payable summary schedule is included as Exhibit A5. Not only does it show the payables to be paid that week, but also the approximate bank account book balances after such payments are made.

i. Refunds and Chargebacks. Magistro explained that the typical refund rate was approximately 15% of sales. He further explained that the chargeback rate, or the rate in which a merchant account “charges back” Zurixx for customer disputes, is 1.03%. We requested data from Magistro to determine the accuracy

5 After the initial cash management crisis was over, the Monitor instigated credit card approval procedures that require Zurixx to prepare a weekly budget for credit card charges. If the weekly budget is approved, payment can be made for the budgeted amount or less, once RMA has reviewed the actual charges.


of the refund and chargeback rate. Data from August 2016 to September 2019 was provided, showing a refund rate of 16.2% and chargebacks of .6%.

j. Merchant Accounts. On Day 1 it became apparent that several merchant accounts had received the Order and several became concerned as a result. One merchant account stopped sending collected funds to the Zurixx operating accounts. Another merchant account reached out to the Monitor’s office with questions and expressions of concern. As a result, the Zurixx financial department began an internal process to route sales through merchant accounts that were considered less risky. At present, we understand that only one merchant bank is releasing deposits to Zurixx. Should that merchant bank stop releasing funds, Zurixx will likely be unable to continue operating. As discussed below in the “Financial Monitoring” section of this report, daily monitoring of merchant reserve accounts is ongoing.

k. Computer and Server Imaging. During much of Day 1, the FTC computer specialists spent significant time imaging many of the standalone computers at the Zurixx facility and server contents located remotely. An effort was made to image the computers of the finance department first since having those computers non-functional for a significant period of time would have made the day-to-day financial business of Zurixx difficult to manage. Except when their personal computer was being imaged, finance department employees were allowed to continue to use their computers to make sure business operations from an accounting point of view were not interrupted.

Ongoing Financial Monitoring

a. Daily Financial Summary Report. After the initial Day 1 financial interviews were complete and certain procedures put in place, RMA created a Daily Financial Summary Report to aid the Monitor in his efforts (See Exhibit A6). The Daily Financial Summary Report shows, both on a daily and historical basis, the following information:

1. Cash Flow: Total cash deposits and cash disbursements from the various bank accounts being monitored.

2. Refunds: Credit card and check refunds issued. 3. Bank Account Ending Balances: For each monitored entity, the ending

bank balances as shown online with the financial institutions. 4. Merchant Reserve Account Balances: The ending daily balance of cash

reserves being withheld by the 12 merchant accounts.


As of October 29, the bank account balances available for use by Zurixx and Dorado total $2,862,217, while the merchant account reserve balances total $4,519,191.

b. Credit Card Usage. Recently, a new monitor policy was established for credit

card usage. On a weekly basis the Monitor is to receive a budget for the next week’s credit card usage (See Exhibit A7). RMA and the Monitor then review the budget for reasonableness and compare the budget to the actual requests for credit card funding to determine if spending is in accordance with approved budgeted amounts. Discrepancies, if any, are discussed and resolved. As of the date of this report, Zurixx has provided one credit card budget to the monitor to facilitate one payment on credit cards.

c. Refunds. On a regular basis, the Monitor is asked to approve refunds being requested by Zurixx customers. The Monitor believes the TRO authorizes him to approve reasonable payments to fulfill contractual obligations to third parties. As such, each refund is fact specific and the Monitor has approved and denied refunds depending on the facts of the situation. Since the date of the Order, the refund rate has increased.

d. Changes to Company Operating Procedures. In mid-October, Zurixx

management determined that certain cost cutting measures should be employed as a result of potential reductions in company revenue. In addition to negotiating with certain vendors to reduce overhead, management reduced staff headcount at both Zurixx and Dorado. According to management’s summary, W2 employee headcount reductions equate to an approximate weekly cost savings of $47,000, representing a 47% Zurixx payroll cost reduction and 52% Dorado payroll cost reduction. See Exhibit A8 for management’s payroll summary highlighting this downsizing. In addition to the measures taken above, On October 23 Zurixx informed the Monitor that it had implemented a new compliance and pricing model (See Exhibit A9). Due to the model being only recently enacted, it is difficult to ascertain how these model changes, along with its inherent assumptions, will affect the ongoing operations of Zurixx.

Personnel As of October 2, there were approximately 100 Zurixx W2 employees and 20 Dorado W2 employees. There are, however, several hundred contract laborers paid by Zurixx over the course of a normal calendar year. The first weekly payroll approved by the Monitor was over $500,000, and included W2 wages paid to Zurixx and Dorado employees as well as contract labor payments.


a. W2 Employees. As mentioned above, there were approximately 120 W2 employees of both Zurixx and Dorado as of October 2. With the headcount reductions noted above, that number has dropped to approximately 85.

Zurixx employees primarily work at the Zurixx facility in Utah. In addition to telemarketers, there are customer support and company administration personnel. Telemarketers are generally paid on a commission basis (typically 20% of sales), while customer service and administration personnel are generally either paid a salary plus annual bonus or an hourly rate. During 2018, according to Zurixx’s Form W3, $10,303,193 in W2 wages were paid to its 108 employees.

There are presently less than ten W2 employees at Dorado. All of these employees are paid on a salary or hourly rate basis. The Dorado employees oversee the event management and marketing.

b. 1099 Contract Laborers. A significant part of the Zurixx team includes contract laborers who perform services for Zurixx, primarily related to the sale of their products. In 2018, the Zurixx Form 1096, which reports the total amounts paid to contract labors to the IRS, showed 183 contract laborers were paid $13,472,113. On a recent payroll report, Zurixx reported 1099 wages being paid to approximately 100 entities or individuals.

Attached as Exhibit A10 is a summary of employee and contract labor payments from the inception of Zurixx to October 2019, sorted by total amount paid. The report shows $61.6 million paid to employees and $97 million paid to contract laborers during this time period.

c. Owners Compensation and Distributions. As noted earlier, each of the three Zurixx owners current compensation level is $250,000 annually. Two of the three owners (Cannon and Carlson) are paid by Dorado while one owner (Spangler) is paid by Zurixx. All three owners receive periodic owner distributions from Dorado. A summary of owner distributions by year is included as Exhibit A3. Since 2014, owner distributions total $78.4 million. Dorado funds these distributions as a result of the invoices for services it provides to Zurixx. A more detailed discussion of the services provided by Dorado is included below in the “Operational Issues” section of this report.

Company Financial Statements and Tax Returns

The consolidated financial statements include the accounts of Zurixx, LLC and Dorado Marketing and Management LLC. The consolidated financial statements are audited by Squire, a Utah based accounting firm. In the audit report, Squire notes that it does not conduct the audit of Dorado and relies on its audit conducted by other auditors.


Zurixx includes the combined financial statements of Brand Management. Brand Management has the same ownership structure as Zurixx. According to notes in the financial statements, Brand Management was created “to help mitigate and minimize the risk from the different brands Zurixx contracts with to present potential brand image issues affecting other brands.” Dorado is engaged in “expert services associated to advertising and public relations; consulting centralized management services; and educational and training services.”

Exhibit A11 summarizes the income statements of Zurixx and Consolidated Entities from 2014 through 2018. Zurixx’s revenue has fluctuated dramatically from $54.2 million to $167.3 million in 2016. Magistro indicated that this fluctuation is largely caused by the fluctuation in the fame and notoriety of the celebrities utilized by Zurixx to promote its programs, most notably Tarek and Christina El Moussa. This is most evident in 2016, when Zurixx’s revenue increased to $167.3 million from $85.3 million the year before.

Zurixx’s consolidated net income ranged from a loss of $4.0 million in 2014 to net income of $45.8 million in 2016. Zurixx had positive net income from 2015 through 2018, most of which was reported under Dorado. Zurixx reported positive operating cash flow in every year from 2014 to 2018, ranging from $8.7 million to $35.0 million. This positive cash flow allowed Zurixx to make over $78.4 million in distributions to its owners, all of which was paid out of Dorado after 2014. Dorado distributed $67.2 million and Zurixx distributed $11.3 million. We understand the reason for the transfer of revenue and distributions to Dorado and Puerto Rico was based on favorable tax treatment.

Zurixx’s balance sheet as of December 31, 2018, reported a members’ deficit of $12.3 million, based on assets of $20.7 million and liabilities of $33.0 million. The vast majority of Zurixx’s debts were deferred revenue, related to collecting fees from customers with unfulfilled obligations to provide future services. As of December 31, 2018, Zurixx’s deferred revenue was $22.1 million. Reserves for refunds and chargebacks were $6.6 million and loss contingency was $2.3 million. Zurixx’s debts to vendors and financial institutions were very small, relative to its other liabilities.

Zurixx’s reported assets with monetizable value were comprised of its cash balance, fixed assets and restricted cash, which are reserves held by merchant banks. As of December 31, 2018, Zurixx reported cash of $4.7 million, restricted cash of $4.3 million and fixed assets, net of depreciation, of $609,000. Since October 2, 2019, cash has dropped from $4.8 million to $2.8 million on October 29, 2019. Merchant reserves have remained relatively steady at around $4.5 million. Zurixx’s cash flow was dropping precipitously in early October but has begun to stabilize as Zurixx has reduced overhead and operating expenses. Exhibit 12A contains the 2018 Zurixx audited financial statements.


RMA has seen the tax returns for calendar years 2017 and 2018. Zurixx prepares and files three tax returns, one for Zurixx, LLC, one for Brand Management Holding, LLC, and one for Dorado Marketing & Management LLC. The 2018 tax returns were prepared in August and September of 2019.

a. Zurixx, LLC. The 2018 Form 1065 for Zurixx, LLC reports ordinary business income of $1,641,208. This income is passed through to the owners of Zurixx, LLC on Forms K1. For tax purposes, the Zurixx, LLC income is passed through to the following partners: Zurixx Financial, LLC (38.461%) and C J Seminar, LLC (61.539%).

b. Brand Management Holding, LLC. The 2018 Form 1065 for Brand Management Holding, LLC reports ordinary business income of $2,384,415. This income is passed through to the owners of Brand Management Holding LLC on Forms K1. For tax purposes, the Brand Management Holding, LLC income is passed through to the following partners: Zurixx Financial, LLC (38.461%) and C J Seminar, LLC (61.539%).

c. Dorado Marketing and Management LLC. While Dorado is a limited liability company, it is taxed as a C Corp in Puerto Rico. In 2018, Dorado reports net operating income of $13,268,212. This income is taxed at a very low rate (4%) compared to a top U.S. C Corp rate (21%). The 2018 tax payable is $530,728, which appears to have been paid throughout 2018 with estimated payments. It does not appear that any additional 2018 tax is payable at this time. However, there will likely be tax owing for the 2019 calendar year.

Financial Disclosures

As required by the Order, Zurixx and its owners have each provided financial disclosures to the FTC and Monitor. This section contains a summary of the financial aspects of those disclosures.

a. Jim Carlson. Carlson self-reports $7.4 million in assets and no liabilities (See Exhibit A13). He reports monthly expenses totaling $24,953, primarily made up of storage fees, property taxes, vehicle leases, food, clothing, utilities, insurance, transportation, HOA dues and home maintenance.

Carlson’s assets are made up of the following items according to the disclosure:


Carlson’s publicly traded securities are held in a Merrill Lynch account. Carlson’s non-public business and financial interests include a 10% interest in Cache LLC and 5,000 shares in an entity known as Work Hard Play Hard Train Hard, a Delaware corporation. Carlson’s deferred income arrangement is James Carlson IRA.

Carson reports that all tax payments are up to date.

b. Cris Cannon. Cannon self-reports $5.6 million in assets and $5.4 million in liabilities (See Exhibit A14). Cannon reports monthly expenses totaling just over $71,000, primarily made up of mortgage expense, property taxes, car lease, food, clothing, utilities, medical and insurance, parent’s rent, child support and alimony.

Cannon’s assets are made up of the following items according to the disclosure:

Cannon’s liabilities are made up of the following items according to the disclosure:

Cannon’s publicly traded securities are held in a UBS Financial account. Cannon’s non-public business and financial interests include a 50% interest in CJ

Cash on Hand (including gold) $251,245Funds Held in Financial Institutions $745,546Publically Traded Securities $542,659Non-Public Business and Financial Interests $575,000Amounts Owed to Carlson $790,769Deferred Income Arrangements $217,432Vehicles $205,598Other Personal Property $262,250Real Property $3,800,000Total Assets $7,390,499

Cash on Hand $37,187Funds Held in Financial Institutions $71,075Publically Traded Securities $3,679,320Life Insurance Policies $49,645Vehicles $396,000Other Personal Property $196,250Real Property $1,200,000Total Assets $5,629,476

Real Property Loans $5,170,401Credit Cards $242,054Property Taxes Payable $7,942Total Liabilities $5,420,397

I I

I I


Seminar Holdings, a 25% interest in Caballo Grande, and 5000 membership units in an entity known as Work Hard Play Hard Train Hard, a Delaware corporation. Cannon assigns no value to these non-public business and financial assets.

Cannon reports a surrender value of a Lincoln National Life insurance policy valued at $49,645.He further reports five vehicles with an estimated value of $396,000 and other personal property totaling $196,350, made up of art work, watches and furniture.

Cannon reports two trusts in his disclosure, The Christopher A & Jennifer L. Cannon Family Charitable Trust and The Cannon Nevada Trust. It is not clear why Cannon elects to report one Cannon Nevada Trust asset on his schedule of assets (life insurance surrender value), while not reporting the real property asset in that trust nor the “Sundance property” value of the charitable trust.

Although Cannon reports value of $1.2 million in one real property asset, he indicates three separate property mortgages as liabilities. The real property asset he values at $1.2 million has a current mortgage of $950,000. Two other real properties are reported as being owned by an ex-spouse and The Cannon Nevada Trust. Cannon reports an estimated values of $1.1 million for the Trust home, with debt of $583,555. He further reports no value for the ex-spouse home and associated debt of $1.5 million.

c. Jeff Spangler. Spangler self-reports $6 million in assets and $323,000 in liabilities (See Exhibit A15). Spangler reports monthly expenses totaling just over $16,000, primarily made up of property taxes, rental property expenses, food, clothing, utilities, medical and insurance, other transportation, kid’s sports, and country club dues.

Spangler’s assets are made up of the following items according to the disclosure:

Cash on Hand $37,187Funds Held in Financial Institutions $786,664Publically Traded Securities $310,033US Government Securities $2,079,959Amounts Owed to Spangler $490,600Life Insurance Policies $676,085Deferred Income Arrangements $825,409Vehicles $137,250Other Personal Property $22,579Real Property $620,000Total Assets $5,985,766I I


Cannon’s liabilities are made up of the following items according to the disclosure:

Spangler’s publicly traded securities are held in broker accounts at Brinker Capital, Fidelity Investments, and Northwestern Mutual. Spangler’s non-public business and financial interests include a 50% interest in R&J St. George Vacations, LLC, a 50% interest in J&R real Estate, LLC, a 33.33% interest in DCS Investments, LLC, a 5.2755% interest in Ecoloop Energy, Inc, a 5% interest in Walkerhaven Equities LP, a 10% interest in Harmony LLC, a 10% interst in Crypto Technologies LLC, and a 79% interest in Commerce Ridge LLC. Spangler assigns no value to these non-public business and financial assets.

Spangler reports a current loan receivable with Macey Jepson in the amount of $490,600. Jepson is reported as a daughter’s friend. The note originated in December 2018 in the amount of $600,000.

Spangler reports four life insurance policies as having surrender values totaling $676,085. He further reports deferred income arrangements of two IRAs and one variable annuity with values totaling $825,409. Spangler also reports four vehicles with total value of $137,250, personal property of a ring and watch totaling $22,579 and three pieces of real property with total value of $620,000. Two of the real properties are located in Mexico and the third in Texas. One Mexico property has associated debt of $261,913, one Mexico property has no debt, and the Texas property has debt of $53,422.

Not included in the assets noted above are assets held in the JSS Trust valued at approximately $5.3 million.6 The JSS Trust assets consist primarily of ownership interests held in a variety of private entities, several note receivables, cash, and a residence located at 13502 S Tuscalee Way.

The Monitor’s professionals have not had access to the books and records of the owners to determine how Zurixx owner salaries and distributions of over $80 million from 2014-2018 were spent or invested.

d. Zurixx. The Monitor’s professionals received one corporate defendant financial disclosure for Zurixx. It appears to cover the consolidated entities that are controlled and managed by Zurixx. While the disclosure may be more detailed for certain aspects of financial disclosure, the audited financial statements discussed above are more useful in determining the financial picture of this

6 Spangler also reports trusts in the names of two law firms, Venable and Kirton McConkie, each established on October 8, 2019, and each in the amount of $300,000.

Real Property Loans $315,335Credit Cards $7,978Total Liabilities $323,313


corporate defendant. As such, we have attached the disclosure but will not discuss it in more detail in this section of the report (See Exhibit A16).

It should be noted that the Monitor’s professionals are not aware of financial disclosures being produced by the other three corporate defendants: Carlson Development Group, LLC, CJ Seminar Holdings, LLC, and Zurixx Financial, LLC.

Operational Issues

This section of the report will discuss a variety of financial issues as it relates to Zurixx operations. The intent is not to give a complete overview of Zurixx operations, but to report on financial aspects of the operation that may not be covered in other areas of the report.

a. Summary of U.S./Puerto Rico Financial Oversight. Both the U.S entity Zurixx and the Puerto Rico (“PR”) entity Dorado use the same accounting staff for their day-to-day operations and reporting. This staff resides in the Utah office and consists of the CFO, controller, and other staff members. The CFO generally takes direction from the CEO, Carlson, with input from other owners as well. All payroll, payables, and other obligations of Zurixx and Dorado are accounted for, booked and paid by U.S. personnel. The Utah staff also has visibility into the bank accounts of Zurixx, Dorado and their affiliates. As mentioned earlier, the audited financial statements of Zurixx are presented in a consolidated fashion, which includes the financial activity of Dorado and other affiliated entities.

b. Brand Management. As described elsewhere in this report, there are various Brand Management entities that have been used by Zurixx in an effort to help mitigate and minimize the risk from the different brands Zurixx contracts with to present potential brand image issues affecting other brands. All accounting functions of the Brand Management entities are done by the same Zurixx personnel in the Utah office.

c. Sales by Type of Revenue. Customer revenues are generated at the Zurixx

level. The vast majority of customer revenue is received by credit card payments. Zurixx has several different types of customer revenue programs. The table below illustrates the general revenue types and historical amounts.


As shown above, Real Estate programs have consistently been Zurixx’s highest revenue type. Entrepreneurship programs have increased since 2015 to make up nearly 46% of Zurixx’s revenue in 2019.

d. Dorado Services and Transfer Pricing. As discussed earlier, Dorado invoices Zurixx for a variety of services. In 2018, Dorado invoices totaling $26.3 million were paid by Zurixx. These services included legal services ($525,000), headhunter recruitment ($1.255 million), celebrity management fees ($700,325), executive management fees ($549,991), and registration fees ($23,268,553).

Because Dorado is a foreign affiliate of Zurixx and taxed at a much lower rate, the IRS can scrutinize the amounts paid to foreign affiliates to make sure the invoiced services are reasonable and customary. The pricing of services between a U.S. entity and its foreign affiliate is referred to as transfer pricing. Magistro provided a detailed explanation of the transfer pricing model, explained the methodology, and provided the most recent transfer pricing study (see Exhibit A17) and calculations that support the accounting entries. Magistro was very clear that Zurixx and Dorado operate as one entity under common control and ownership.

It is clear that the vast majority of invoiced services from Dorado relate to registration fees. According to Magistro, the transfer pricing model allows Dorado to charge Zurixx an amount between $25 and $85 per customer registrations for paid events. According to Zurixx, Dorado provides the event management and marketing for the Zurixx customer events. That said, it appears that the annual payments to Dorado for registration fees are very dependent on the net income level of Zurixx. Magistro explained that Zurixx attempts to manage its net income to be between zero and five percent of revenue.

The primary mechanism to reach that net income goal is the fluctuating amount charged by Dorado to Zurixx for its registration per customer fee. To reduce Zurixx net income, the Dorado registration fee per customer can increase. According to Magistro, as long as the registration fee is in the acceptable range established by the transfer pricing model (prepared by outside professionals), it can fluctuate as needed. Whether the IRS deems

Sales Type Grand Total 2012 2013 2014 2015 2016 2017 2018 YTD 10/3/2019Real Estate Total $494,291,555 $2,072,149 $27,931,815 $53,979,215 $76,923,773 $155,678,060 $59,717,306 $67,262,523 $50,726,714Tax Lien Total $25,643,583 $197,782 $2,559,178 $4,224,439 $6,220,113 $6,593,395 $2,467,645 $2,803,298 $577,733Third Product Total $1,456,072 $1,535 $177,807 $814,917 $451,287 $3,985 $6,541 $0 $0Stock Sales Total $1,252,918 $0 $70,838 $93,371 $0 $0 $0 $0 $1,088,709Asset Protection and Tax Total $6,447,221 $0 $0 $827,814 $1,644,916 $1,526,680 $1,064,830 $728,534 $654,448Entrepreneurship Total $134,337,022 $0 $0 $0 $2,115,742 $25,219,246 $27,460,285 $42,021,855 $37,519,894Other Total $43,015,543 $0 $7,769,042 $8,153,309 $6,225,087 $1,621,085 $11,792,297 $5,959,172 $1,495,551Bad Debt Reserve Total ($89,979,428) $0 ($6,618,012) ($8,480,135) ($7,971,173) ($23,350,000) ($13,571,227) ($19,833,697) ($10,155,183)

Total Sales $616,464,486 $2,271,466 $31,890,668 $59,612,930 $85,609,745 $167,292,451 $88,937,676 $98,941,683 $81,907,866


the registration fee range to be acceptable is only known should they chose to audit and review the transfer pricing policies of Zurixx.

As noted earlier, all owner distributions and two owner salaries are paid by Dorado. Dorado’s only source of income is Zurixx. Below is a summary of amounts paid by Zurixx to Dorado by year.

Year Paid to Dorado

2015 $45,960,554 2016 $45,246,609 2017 $21,141,609 2018 $26,298,869

As a going concern, Zurixx has historically been able to successfully compensate its employees, contract laborers and owners, as well as pay its other ongoing costs of operation. Prior to the Order, both the financial data and management discussion suggest that 2019 was not going to be a banner year. Year to date owner distributions are down significantly from prior years. Immediately after the Order, sales staff were uncertain as to how to proceed in terms of their sales scripts. While Zurixx has attempted to change certain policies and practices, it is unclear as to whether those changes will be successful or acceptable under the Order. As noted above, Zurixx’s cash balances have been declining since the Order. All but one Merchant processor has declined to release credit card deposits to Zurixx. The financial condition of Zurixx is precarious and could disintegrate rapidly under a variety of scenarios.


EXHIBIT “2A1”


Zurixx, LLC, et al.

Summary of Zurixx And Corporate Defendant Bank Accounts and Merchant Accounts

As of October 29, 2019

Bank Account Ending Balances

Entity Bank

Zurixx, LLC Chase $1,493,274.79

Zurixx, LLC Chase $101,522.28




Brand Management Holdings LLC Chase $129,165.52

Richardson Law Group Chase $6,605.62

Zurixx LLC First Bank PR $88,370.30

Zurixx LLC First Bank PR $793.66

Zurixx, LLC Bank of America $650,949.29

Global Learning Alliance LLC Bank of America $203,105.74

M22-Qualpay Bank of America $29,307.95

M4A-Meritus Bank of America $4,903.00

DBA Premier Fin. Training Bank of America $97,229.74

Success Formula Bank of America $0.00Operating Accounts $2,836,366.75

RE Cash Source, LLC Chase $294,568.56

CJ Seminar Holdings, LLC Chase $42,914.08

Carlson Development Group LLC First Bank PR $133,775.09

Zurixx Financial LLC First Bank PR $81,624.13$552,881.86

Total Balances $3,389,248.61

Merchant Reserve Account Balances

M4A-Meritus-AdvancedREE $1,000,000.00

M14-EMS-Success Path $1,839,395.19

M51-EMS-Chuckanut $602,303.60

M52-AMEX-Chuckanut (not being used) $0.00

M71-Cynergy (RLG/AMEX) (not being used) $0.00

M71-Cynergy (RLG) $444,715.18

M22-Qualpay-Launch Academy $15,000.00

M23-Qualpay-Flipping Formula $10,000.00

M24-Qualpay-Success Path $20,000.00

M81-EMS-Education Services $639,404.87

M91-Paysafe (not being used) $0.00

M91-Paysafe (AMEX) (not being used) $0.00Total Reserve Account Balances $4,570,818.84

I

I I


EXHIBIT “ A2”


Andrew Way COO

Executive Assistant Janis Kershaw Executive Assistant Janis Kershaw Executive Assistant Janis Kershaw

Accounting & Systems Preview Events

Matt Magistro CFO COO Chad Olson Telesales Manager Sales Training & Management FE Seminar Directors 6 ME Seminar Directors 10

Uriel Cantarero IT Manager Tony Dixon Ann Alleman Lead Sales Coordinator ME Speakers 11

David Pecoraro

lead dist, merchant accts,

misc accounting projects

Director of Digital Marketing

Telesales Sean Mangold Sales Events Dir Front End Road Crew 14 ME Road Crew 30

Desktop Support Erin Spainhower Assistant / scheduler Chris Young Sales rep

Denise Easter Controller Suzie Campbell Brand Manager Taylor Rodriquez Assistant / scheduler Mike Grow Sales rep Sara Satterfield Sales Admin

Hannah Fedor Accounts payable Rachel Bowen Public Relations Jocelin Hyatt Assistant / scheduler Scott Orison Sales rep

Liz Sharp

Cust billing refunds backup

misc.Shay Magana Media & Content Editor

Tony Mortezazadeh Coach Ben Olson Sales rep

Eliza Gymushian

Customer refunds,

chargebacksBrand Manager

Mark Sanderson Product Development Dan Altamirano Sales rep

Customer billing-telesales,

depositsBrand Manager

Timothy Bell Real Estate Coach Genny Hayward Sales rep

Jackson Hedges IT and data input Alan Healey Graphic Designer Bret Ehlers Real Estate Coach Mike Clasen Sales rep

John Obinyan Database reporting admin Bud McCluskey Real Estate Coach Todd Shinsel Sales rep

Dan Christiansen Real Estate Coach Jared Johnson Sales rep

Randy Cochrane Real Estate Coach

Larry McKinstry Real Estate Coach Jeremy Hymas A-Team Manager

Director of Operations Puerto Rico Jon Miller Real Estate Coach Ed Chehanovich Sales rep

John Benson Real Estate Coach Greg Ahleen Sales rep

Rob Greenland Eric Rivera Office Manager Deborah Price Real Estate Coach Waren Ipson Sales rep

Events Puerto Rico Eric Lloyd Real Estate Coach Larry Lee Sales rep

Shane Andrus Events Manager Michael Hilkey Real Estate Coach Matt Simmons Sales rep

Darrell Walker Daymond John Coach

Asset Protection

Advanced Camps Marta Varela Customer Service Rex Berry Asset Sales Mgr

Erin Spainhower Nikki Calvert Markeing Craig Shane Andrus Director of Customer Ser

Tany Padro Event Coordinator Kevin York Save the Sale Lance Phillips Sales rep

Catiely Soto Event Coordinator Amanda Neilson Save the Sale Mark Records Sales rep

Noah Howell Marketing Tyler Greenwell Save the Sale Darren Rolf Sales rep

Sarah Velilla In House council James Canterbury Save the Sale Curtis Harward Sales rep

Emily Mopica Direct Mail Melissa Labrum Customer Service

Miyra Alanis Customer Service Miranda Nelson scheduler/assist

Customer Service

Charity Malae Customer Service

Wendy Almaguer Customer Service

Robert Medina - PR CS supervisor

Zadora Lopez - PR Customer Service

Catiely Soto - PR Customer Service

Nicole Lopez PR Customer Service

Migdaly Nieves - PR Customer Service

Alyssa Harris - PR Customer Service

Emily Robison

Maggie Saemann

Chelsea Sayeth

Cris Cannon, President Zurixx Puerto Rico

Marketing

Andrew Way

Workshop EventsTelesales

James Carlson CEO Jeff Spangler President Zurixx Utah

Coaching & Customer Service

Carter Brown - Head Coach

Alyssa Love

Front End Speakers 11

Daymond John Brand Manager

Customer Service

Coaching

I I

• - D I I


EXHIBIT “ A3”


Zurixx, LLC and Consolidated EntitiesSummary of Owner Distributions for the Years 2014 to 2018

2014 2015 2016 2017 2018 Total

Member Distributions - Zurixx, LLC $11,262,830 $0 $0 $0 $0 $11,262,830Member Distributions - Dorado $0 $31,526,508 $14,153,191 $6,179,793 $15,352,550 $67,212,042Total Member Distributions $11,262,830 $31,526,508 $14,153,191 $6,179,793 $15,352,550 $78,474,872


EXHIBIT “ A4”


Sum of PAY Column Labels

Row Labels name vendorname chkdate Base Commissions Other Overtime Perdiem Receivables Reserve Salaries Saves Session Pay Withholdings Grand Total

100

58 Bryce Chamberlain Chamberlain Marketing Inc 10/25/2019 1,500.00 1,500.00

61 Ann Alleman (blank) 10/25/2019 1,500.00 1,500.00

193 Mark Chapman Mark A Chapman 10/25/2019 225.00 225.00

219 Sean Mangold Sean Mangold 10/25/2019 2,769.23 2,769.23

358 Keith Sperry KD Sperry Corp 10/25/2019 667.35 150.00 817.35

385 Frank Murphy FX Investments LLC 10/25/2019 800.00 114.43 140.00 1,054.43

438 Lisa Davis Lisa M Davis 10/25/2019 1,500.00 1,500.00

461 Billy Batson William Michael Batson 10/25/2019 1,144.28 300.00 1,444.28

468 Eric Brown American Ex-Press LLC 10/25/2019 1,500.00 70.82 250.00 1,820.82

470 Bradley Biggerstaff Bradley Biggerstaff 10/25/2019 1,000.00 238.35 175.00 1,413.35

523 Steve Goff Steve Goff 10/25/2019 3,529.18 300.00 3,829.18

529 Maurice Wright Maurice Wright 10/25/2019 1,500.00 357.52 250.00 2,107.52

537 Trace Turley Kendall Trace Turley 10/25/2019 1,000.00 238.35 175.00 1,413.35

605 Richard Davis Richard Davis 10/25/2019 1,500.00 1,500.00

610 Daniel Pett Daniel Grant Pett 10/25/2019 1,500.00 1,500.00

688 Alberto Molina Texas General Solutions, Inc. 10/25/2019 1,000.00 238.35 175.00 -23.83 1,389.51

691 Alisha Pace Alisha Pace 10/25/2019 1,440.00 1,440.00

727 Karl Carter Karl J Carter 10/25/2019 1,200.00 143.08 200.00 1,543.08

731 David Jensen Chamonix Enterprises Inc. 10/25/2019 1,000.00 28.15 175.00 1,203.15

734 Clint Wakefield (blank) 10/25/2019 800.00 233.57 140.00 -23.36 1,150.22

746 Amanda Rollins Rolliam LLC 10/25/2019 572.14 375.00 947.14

763 Jeanne Jones (blank) 10/25/2019 1,530.00 1,530.00

765 Nicole Jensen Nicole M Jensen 10/25/2019 1,690.00 1,690.00

767 Kim Crowther K.K.C. LLC 10/25/2019 1,000.00 -22.77 175.00 1,152.23

768 Natasha Johnson Natasha Paulien Johnson 10/25/2019 1,630.00 1,630.00

778 Robert Lett Modern Yankee LLC 10/25/2019 1,716.14 375.00 2,091.14

786 Sam DelCanto SDC Productions LLC 10/25/2019 5,000.00 5,000.00

811 Jennifer Knapp Jennifer Knapp 10/25/2019 3,400.00 3,400.00

812 Josephine Locke Josephine Locke 10/25/2019 3,400.00 3,400.00

815 Curtis Cannon Curtis Andrew Cannon DBA CHC6 10/25/2019 -190.71 190.71 0.00

821 Jeffrey Cadavid Jeffrey Cadavid 10/25/2019 3,140.00 3,140.00

823 Erica Robins Erica Robins 10/25/2019 1,690.00 1,690.00

825 Frederick Johnson Frederick Johnson 10/25/2019 1,950.00 1,950.00

826 Joacquin Stevens Joacquin Stevens 10/25/2019 2,030.00 2,030.00

831 Miranda Harrison Miranda Harrison 10/25/2019 2,200.00 2,200.00

837 Chantal Anderson Chantal Dominique Anderson 10/25/2019 1,870.00 1,870.00

838 Naomi Gibson Naomi Gibson 10/25/2019 2,740.00 2,740.00

839 Nina Villalvazo (blank) 10/25/2019 1,731.00 1,731.00

852 Bradford How (blank) 10/25/2019 1,650.00 120.00 1,770.00

857 Patrick Manning (blank) 10/25/2019 1,500.00 120.00 1,620.00

859 Tracey Wise (blank) 10/25/2019 2,280.00 2,280.00

863 Terri Lawrenz (blank) 10/25/2019 1,540.00 1,540.00

865 Tamara Jones (blank) 10/25/2019 1,530.00 1,530.00

866 Sherri DeLaura (blank) 10/25/2019 1,530.00 1,530.00

868 Musah Earle (blank) 10/25/2019 1,860.00 1,860.00

869 Michelle Koenig (blank) 10/25/2019 1,000.00 1,000.00

886 Ariba Joubert Jou Jou Bee's Creations LLC 10/25/2019 1,440.00 1,440.00

917 Meredith Swedo (blank) 10/25/2019 1,430.00 1,430.00

918 Cindy Saavedra (blank) 10/25/2019 1,115.00 1,115.00

919 Clive Salmon (blank) 10/25/2019 1,360.00 1,360.00

920 Debra Wheeler (blank) 10/25/2019 1,025.00 1,025.00

110

39 Amber Guzman Paragon Investments LLC 10/25/2019 3,704.23 3,704.23

58 Bryce Chamberlain Chamberlain Marketing Inc 10/25/2019 3,867.15 3,867.15

205 Greg Kazimer Sales Pro 360, Inc. 10/25/2019 5,923.14 225.00 6,148.14

224 Mike Vogel Swish Inc 10/25/2019 458.11 225.00 683.11

246 Clay Eschrich Clay Eschrich LLC 10/25/2019 1,952.93 -195.29 1,757.63

248 Shelley Hughes Investor Friendly Property Management & Realty Services 10/25/2019 3,112.61 3,112.61

257 Michele Cooper Profitable Investment Solutions 10/25/2019 2,527.30 2,527.30

259 David Freier New Vision Financial, Inc 10/25/2019 3,509.10 225.00 3,734.10

286 Tom Shields TE Shields Consulting 10/25/2019 2,389.32 2,389.32




293 Angel Rolon Rolon Enterprises, LLC 10/25/2019 3,044.19 3,044.19

296 Claude Alan Swails Claude Alan Swails 10/25/2019 9,415.11 225.00 9,640.11

303 Randy Cochrane (blank) 10/25/2019 620.75 225.00 845.75

334 Jed Johnson Tailormade Consulting LLC 10/25/2019 4,025.05 4,025.05

362 Bryan Twitchell Paradigm Consulting Inc 10/25/2019 2,275.81 2,275.81

367 Joshua Zieglowsky Gilbert Management LLC 10/25/2019 3,112.61 3,112.61

402 Rick Watkins Preferred Properties Tennessee LLC 10/25/2019 1,704.41 1,704.41

429 Les Hill Autonomic Investments Inc 10/25/2019 1,889.95 1,889.95

430 Lisa Toland L&S Inc. 10/25/2019 3,038.35 3,038.35

433 Anders Swenson Swenson Sales and Marketing Inc 10/25/2019 3,724.45 3,724.45

479 Boyd Hoffmann Boyd Hoffman 10/25/2019 3,043.65 3,043.65

509 Scott Lamm Scott Lamm 10/25/2019 8,272.70 8,272.70

514 Garth Satiu Garth Satiu 10/25/2019 3,428.39 3,428.39

526 Bernard Lawson B Real Property Investors LLC 10/25/2019 770.26 770.26

537 Trace Turley Kendall Trace Turley 10/25/2019 297.77 297.77

543 Chad Lawson Chad Lawson 10/25/2019 5,732.21 5,732.21

549 Scott Alger Loan Peak Enterprises Inc. 10/25/2019 4,080.18 4,080.18

553 Matt Davis MReese Enterprises 10/25/2019 6,230.66 -44.75 6,185.91

624 Nicole Packer Tree Line Investments LLC 10/25/2019 3,112.61 3,112.61

647 Ashley Woods Ashley Woods 10/25/2019 794.14 794.14

649 Alex Ituma SJL LLC 10/25/2019 1,160.78 1,160.78

666 Daniel Bird Danny Bird 10/25/2019 3,112.61 3,112.61

675 Kenneth Bishop Kenneth E Bishop 10/25/2019 2,321.12 2,321.12

688 Alberto Molina Texas General Solutions, Inc. 10/25/2019 1,807.08 1,807.08

694 Tyler Jackson S & T Capital 10/25/2019 1,808.86 1,808.86

720 Damon Parker (blank) 10/25/2019 1,305.53 1,305.53

732 Joe Appleton Vanus Enterprises LLC 10/25/2019 5,977.73 225.00 6,202.73

751 Ryan Lotman R.A.L. Services LLC 10/25/2019 6,331.36 225.00 6,556.36

752 David Jenkins David Jenkins 10/25/2019 1,807.08 1,807.08

761 Brian Voeller New Illusions Marketing 10/25/2019 3,112.61 3,112.61

772 Matthew Davis MJA31-PR, LLC 10/25/2019 18,691.98 -134.25 18,557.73

781 Eric Nielson Eric B Nielson 10/25/2019 1,998.42 1,998.42

827 John Wagner (blank) 10/25/2019 273.87 -27.39 246.49

889 Alma Dubon (blank) 10/25/2019 102.66 -10.27 92.40

895 Scott Hoffmann (blank) 10/25/2019 608.10 -60.81 547.29

120

30 Genevieve Hayward (blank) 10/25/2019 1,169.15 1,169.15

81 Michael Clasen (blank) 10/25/2019 1,169.15 -249.92 919.23

146 Chad Olson (blank) 10/25/2019 2,369.89 9,058.50 -326.93 11,101.46

147 Christopher Young (blank) 10/25/2019 9,058.50 -370.76 8,687.74

149 Edward Chahanovich (blank) 10/25/2019 90.00 90.00

151 Gregory Ahleen (blank) 10/25/2019 89.73 -52.85 36.88

152 Jeremy Hymas (blank) 10/25/2019 1,354.59 -264.14 1,090.45

158 Steven Willey (blank) 10/25/2019 270.00 -27.00 243.00

304 Daniel Altamirano (blank) 10/25/2019 9,999.00 -334.30 9,664.70

353 Warren Ipson (blank) 10/25/2019 630.00 -122.78 507.22

538 Ben Olson (blank) 10/25/2019 9,999.00 -376.70 9,622.30

579 Jared Johnson (blank) 10/25/2019 7,146.61 -286.30 6,860.31

150

655 Carl Thurgood Carl Thurgood PC 10/25/2019 10,095.26 10,095.26

755 Lance Phillips Purple Unicorn LLC 10/25/2019 1,500.00 1,500.00

220

228 Anthony Dixon (blank) 10/25/2019 1,538.46 3,677.70 -182.69 5,033.47

369 Lance Phillips (blank) 10/25/2019 601.65 -55.07 546.58

375 Jacob "Rex" Berry (blank) 10/25/2019 64.46 937.31 -49.39 952.38

488 Mark Records (blank) 10/25/2019 171.90 -119.92 51.98

615 Miranda Nelson (blank) 10/25/2019 765.41 765.41

739 Meghan Johnson (blank) 10/25/2019 417.75 -44.08 373.67

842 Carl Thurgood Corp Advantage Inc. 10/25/2019 3,300.00 3,300.00

250

126 Carter Brown (blank) 10/25/2019 2,776.44 2,776.44

132 Mark Sanderson (blank) 10/25/2019 2,120.19 2,120.19




133 Timothy Bell (blank) 10/25/2019 594.00 594.00

145 Bret Ehlers (blank) 10/25/2019 2,570.00 -101.31 2,468.69

264 Erin Spainhower (blank) 10/25/2019 1,009.62 1,009.62

295 Joseph (Bud) McCluskey (blank) 10/25/2019 1,266.00 1,266.00

303 Randy Cochrane (blank) 10/25/2019 1,679.00 -343.07 1,335.93

316 Taylor Rodriquez (blank) 10/25/2019 -50.00 657.61 607.61

427 Bradley Sanderson (blank) 10/25/2019 1,215.00 -20.77 1,194.23

445 Larry McKinstry (blank) 10/25/2019 626.00 626.00

463 John Benson (blank) 10/25/2019 2,234.00 -156.38 2,077.62

469 Deborah Price (blank) 10/25/2019 1,365.00 -108.01 1,256.99

485 Eric Lloyd (blank) 10/25/2019 2,329.00 -176.22 2,152.78

494 Darrell Walker (blank) 10/25/2019 300.00 3,330.00 3,630.00

569 Daniel Christiansen (blank) 10/25/2019 1,835.00 -22.76 1,812.24

578 Paul McGraw (blank) 10/25/2019 1,495.00 1,495.00

596 Tony Mortezazadeh (blank) 10/25/2019 2,156.00 2,156.00

714 Jonathan Miller (blank) 10/25/2019 1,496.00 1,496.00

715 Michael Hilkey (blank) 10/25/2019 1,815.00 1,815.00

802 Lorin Hardy (blank) 10/25/2019 1,200.00 1,200.00

808 Kayla Kobayashi (blank) 10/25/2019 600.00 600.00

900 Alden Sparks (blank) 10/25/2019 225.00 720.00 945.00

901 Jackson Kade Lucero (blank) 10/25/2019 225.00 720.00 945.00

300

6 Robert Greenland (blank) 10/25/2019 1,312.06 -339.39 972.67

9 Matthew Magistro (blank) 10/25/2019 3,384.62 -28.08 3,356.54

61 Ann Alleman (blank) 10/25/2019 1,009.62 -145.08 864.54

68 Denise Easter (blank) 10/25/2019 2,000.00 -220.53 1,779.47

105 David Pecoraro (blank) 10/25/2019 1,384.62 1,384.62

112 Eliza Gyumushyan (blank) 10/25/2019 895.48 -60.38 835.10

134 Elizabeth Sharp (blank) 10/25/2019 927.00 -129.77 797.23

135 Janis Kershaw (blank) 10/25/2019 848.08 -6.70 841.38

142 Emily Sorensen (blank) 10/25/2019 752.67 752.67

240 Uriel Cantarero (blank) 10/25/2019 2,433.38 -243.62 2,189.76

363 Shay Magana (blank) 10/25/2019 1,153.85 -17.54 1,136.31

642 Andrew Way (blank) 10/25/2019 3,053.08 3,053.08

707 Emily Robison (blank) 10/25/2019 1,538.46 1,538.46

716 Rachel Bowen (blank) 10/25/2019 1,057.69 1,057.69

728 Michael Nay (blank) 10/25/2019 1,346.15 -44.69 1,301.46

744 Balaji Mudlair (blank) 10/25/2019 3,461.54 3,461.54

766 Chelsea Sayegh (blank) 10/25/2019 1,250.00 1,250.00

769 Suzanne Campbell Suzanne Michelle Campbell 10/25/2019 688.44 688.44

800 Rider Jensen (blank) 10/25/2019 1,346.15 1,346.15

400

137 Craig Shane Andrus (blank) 10/25/2019 1,461.54 -38.08 1,423.46

139 Amanda Nielson (blank) 10/25/2019 514.54 870.06 1,384.60

143 Kevin York (blank) 10/25/2019 534.33 1,398.56 1,932.89

320 Tyler Greenwell (blank) 10/25/2019 300.00 300.00

405 Alyssa Korologos (blank) 10/25/2019 200.00 161.59 605.20 -10.53 956.26

607 Wendy Almaguer (blank) 10/25/2019 200.00 -50.00 554.94 -42.47 662.47

650 Hailey Clark (blank) 10/25/2019 28.39 615.60 643.99

912 Tyler Greenwell (blank) 10/25/2019 90.90 90.90

913 James Canterbury (blank) 10/25/2019 91.05 91.05

914 Bailee James (blank) 10/25/2019 92.55 92.55

915 Carmen Valez Oliver (blank) 10/25/2019 90.00 90.00

916 Catiely Soto (blank) 10/25/2019 82.50 82.50

Grand Total 81,660.79 225,985.64 -279.00 189.98 6,145.00 688.44 -177.23 40,604.46 2,568.62 28,645.00 -5,091.21 380,940.49


EXHIBIT “ A5”


10/18/2019

Chase Savings XX9922 5,740 5,740

Chase Operating XX6538 1,507,610 (6,685) 1,500,925

Chase DBA XX6553 51,933 51,933

Chase Merchant XX3915 32,735 32,735

Chase Merchant XX6385 27,261 27,261

Chase Brand Mgt Hold XX2179 129,166 129,166

Chase Richardson Law XX3955 6,606 6,606

BofA DBA XX9789 163,687 (8,960) 154,727

BofA Merchant XX9802 (17,451) (17,451)

BofA Merchant XX9857 - -

BofA Merchant XX9860 (19,665) (19,665)

BofA Operating XX9873 283,105 (49,942) 233,163

BofA GLA XX2938 620,748 (532) 620,216

1st PR Operating XX4681 22,897 (983) 21,914

1st PR Savings XX4681 794 794

Account Totals 2,815,164 (67,101) 2,748,063

(326,101)

(36,677)

2,385,284 170,465

AP Authorized 587,096

Accounts Payable Cash After AP 1,798,188

Company Vendor ID Vendor Name Class Voucher Reference Invoice Invoice Date Due Date Days Out Amount AP to Pay

GLOBAL LEARNING ALLIANCE 331G01 331G Corp LLC GLACOMMON 000350 10/6 Commision 10/6 COMMISION 10/18/2019 10/18/2019 1 10,998.38

GLOBAL LEARNING ALLIANCE 331G01 331G Corp LLC GLACOMMON 000307 WK OF 9/29 COMMISSIONS 9/29 COMMISSIONS 9/29/2019 9/29/2019 20 14,435.01

331G01 Total 25,433.39

GLOBAL LEARNING ALLIANCE AANDRUS01 Alan Andrus GLACOMMON 000017 SAN MATEO FINAL SPEAKER PMT SAN MAT SPKR FEE 2 10/18/2019 10/18/2019 1 15,000.00

AANDRUS01 Total 15,000.00

GLOBAL LEARNING ALLIANCE BARLOW01 Barlow Printing GLACOMMON 000320 SAN MATEO SHOWGUIDES FINAL DUE SHOWGUIDES 10/9/2019 10/9/2019 10 1,262.00 1,262.00

BARLOW01 Total 1,262.00

GLOBAL LEARNING ALLIANCE EROBINS01 Erica Robins GLACOMMON 000304 NJ WORKSHOP EXPENSE REIMBURSE NJ WS TRAVEL EXPENSE 10/7/2019 10/7/2019 12 208.99 208.99

EROBINS01 Total 208.99

GLOBAL LEARNING ALLIANCE FDILLIOTT01 Frederick Dilliot Jr GLACOMMON 000323 CODING SVCS/5 LIVE EVENTS 1908 9/30/2019 10/10/2019 9 525.00 525.00

FDILLIOTT01 Total 525.00

GLOBAL LEARNING ALLIANCE JBIOLSI01 Jennifer Biolsi GLACOMMON 000305 OTTAWA WS EXPENSES REIMBURSE OTTAWA WS EXPENSES 10/7/2019 10/7/2019 12 217.75 217.75

JBIOLSI01 Total 217.75

GLOBAL LEARNING ALLIANCE JLOUGH01 Jason Loughridge DBA Project 8 FilmsGLACOMMON 000315 LIVE EVENT VIDEO EDITS AUG-OCT 10/4 EDITING INVOICE 10/4/2019 10/4/2019 15 8,985.00

JLOUGH01 Total 8,985.00

GLOBAL LEARNING ALLIANCE PROSHOLT01 Peter Rosholt GLACOMMON 000308 SAN MATEO STAGE PROD+FLIGHT 115 10/4/2019 10/4/2019 15 7,857.60 7,857.60

PROSHOLT01 Total 7,857.60

GLOBAL LEARNING ALLIANCE PROTEUS01 Proteus Productions GLACOMMON 000300 W PALM BEACH A/V PRODUCTION 14267 9/9/2019 10/7/2019 12 10,417.00 10,417.00

GLOBAL LEARNING ALLIANCE PROTEUS01 Proteus Productions GLACOMMON 000301 SAN MATEO A/V PRODUCTIONS 14276 10/4/2019 10/4/2019 15 23,120.00

GLOBAL LEARNING ALLIANCE PROTEUS01 Proteus Productions GLACOMMON 000299 VEGAS RH LIVE A/V PRODUCTION 14277 10/6/2019 10/6/2019 13 15,791.66

GLOBAL LEARNING ALLIANCE PROTEUS01 Proteus Productions GLACOMMON 000303 LAS VEGAS LIVE STAGE/VIDEO SVC 14278 10/7/2019 10/17/2019 2 17,535.00

PROTEUS01 Total 66,863.66

GLOBAL LEARNING ALLIANCE PULSE01 Pulse Staging & Events GLACOMMON 000311 SAN MATEO LIGHTING FINAL BILL 190092 FINAL 10/7/2019 10/7/2019 12 13,514.02 13,514.02

GLOBAL LEARNING ALLIANCE PULSE01 Pulse Staging & Events GLACOMMON 000312 SAN MATEO AUDIO FINAL BILL 190093 FINAL 10/7/2019 10/7/2019 12 29,640.60

GLOBAL LEARNING ALLIANCE PULSE01 Pulse Staging & Events GLACOMMON 000313 SAN MATEO BREAKOUT FINAL 190094 FINAL 10/7/2019 10/7/2019 12 13,362.19

GLOBAL LEARNING ALLIANCE PULSE01 Pulse Staging & Events GLACOMMON 000314 SAN MATEO VIDEO FINAL BILL 190095 FINAL 10/7/2019 10/7/2019 12 28,652.85

PULSE01 Total 85,169.66

GLOBAL LEARNING ALLIANCE SDCPROD01 SDC Productions LLC GLACOMMON 000309 LA OFFICE CLEANING SVC MAY-OCT OFFICE CLEANING REIM 10/8/2019 10/8/2019 11 1,200.00

Zurixx

-Weekly AP to Pay-

Transactions

Pending Available Cash Cash Account

Total Available Cash

Check & Wire Deposits - Thur/ Fri

Merchant Deposits - Thur/Fri

Outstanding AMEX

Outstanding Chase Ink

I

I I I

.I .I I .I .I .I .I .I .I .I



SDCPROD01 Total 1,200.00

GLOBAL LEARNING ALLIANCE TWISE01 Tracey Wise GLACOMMON 000310 SAN MATEO SCRIPTWRITING SVCS SAN MATEO SCRIPTS 10/5/2019 10/5/2019 14 2,000.00

TWISE01 Total 2,000.00

GLOBAL LEARNING ALLIANCE MGREF Samantha Roberts CUSTOMER 000335 RM REFUND: DEBIT000000000206 RFND0000000000205 10/11/2019 10/11/2019 8 11,100.00 11,100.00

GLOBAL LEARNING ALLIANCE MGREF Karon White CUSTOMER 000349 RM REFUND: DEBIT000000000220 RFND0000000000219 10/17/2019 10/17/2019 2 1,000.00 1,000.00

ZURIXX LLC : US MGREF Brandon Young CUSTOMER 054520 RM REFUND: DEBIT000000032628 RFND0000000032397 10/17/2019 10/17/2019 2 997.00 997.00

ZURIXX LLC : US MGREF Jurga Bandza CUSTOMER 054524 RM REFUND: DEBIT000000032629 RFND0000000032398 10/17/2019 10/17/2019 2 1,998.00 1,998.00

ZURIXX LLC : US MGREF Jace Harris CUSTOMER 054502 RM REFUND: DEBIT000000032619 RFND0000000032388 10/16/2019 10/16/2019 3 27,291.00 27,291.00

MGREF Total 42,386.00

ZURIXX LLC : US VENUE GREEN VALLEY RANCH RESORT VENUE 043632 MARCH 2020 SUMMIT DEPOSIT B MAR'20 SUMMIT DEPO B 4/26/2018 1/17/2020 -90 42,000.00

ZURIXX LLC : US VENUE GREEN VALLEY RANCH RESORT VENUE 054538 OCT SUMMIT FINAL OCT SUMMIT FINAL 10/17/2019 10/17/2019 2 43,332.73 43,332.73

ZURIXX LLC : US VENUE GREEN VALLEY RANCH RESORT VENUE 043630 OCTOBER 2020 SUMMIT DEPOSIT B OCT'20 SUMMIT DEPO B 4/26/2018 7/31/2020 -286 42,000.00

VENUE Total 127,332.73

ZURIXX LLC : US A&K001 Anderson & Karrenberg 054465 SEPT LEGAL RE: JEANNIE KELLER 16 JEANNIE KELLER 9/30/2019 9/30/2019 19 20,184.35 20,184.35

ZURIXX LLC : US A&K001 Anderson & Karrenberg 054464 SEPT LEGAL RE: MARIA WINDHAM 22 MARIA WINDHAM 9/30/2019 9/30/2019 19 16,345.87

ZURIXX LLC : US A&K001 Anderson & Karrenberg 054466 SEPT LEGAL RE: JIMINIAN 8 JIMINIAN 9/30/2019 9/30/2019 19 15,428.04

A&K001 Total 51,958.26

ZURIXX LLC : US ACG001 Advanced Communications Group, Inc 054349 FIBER OPTICS INSTALL/IT DEPT 3777 10/8/2019 10/8/2019 11 2,214.35

ACG001 Total 2,214.35

ZURIXX LLC : US RSHE001 Robert Shemin Worldwide LLC 054533 VEGAS SUMMIT SPKR FEE 500 10/15/2019 10/18/2019 1 7,500.00 7,500.00

RSHE001 Total 7,500.00

ZURIXX LLC : US ALANA01 Alana LeBLanc COMMON 046190 ROYALTY ADVANCE CM ROYALTY ADVANCE CM 8/10/2018 1/2/1900 43755 (18,447.18)

ZURIXX LLC : US ALANA01 Alana LeBLanc COMMON 047774 SEPT SUMMIT APPEARANCE REVERSE SEPT SUMMIT FEE CM 10/18/2018 1/2/1900 43755 (1,587.89)

ALANA01 Total (20,035.07)

ZURIXX LLC : US ALEXYA01 Alexya LeBlanc COMMON 046191 ROYALTY ADVANCE CM ROYALTY ADVANCE CM 8/10/2018 1/2/1900 43755 (18,447.18)

ZURIXX LLC : US ALEXYA01 Alexya LeBlanc COMMON 047775 SEPT SUMMIT APPEARANCE REVERSE SEPT SUMMIT FEE CM 10/18/2018 1/2/1900 43755 (1,587.89)

ALEXYA01 Total (20,035.07)

ZURIXX LLC : US ALLIED01 Allied COMMON 054347 SEPT SHREDDING SERVICES 0053192 9/30/2019 9/30/2019 19 90.00 90.00

ALLIED01 Total 90.00

ZURIXX LLC : US ATT01 AT&T Mobility COMMON 054528 OCT HOT SPOTS 287280883737 10/4/19 10/4/2019 10/25/2019 -6 445.61

ATT01 Total 445.61

ZURIXX LLC : US AWAY01 Andrew Way COMMON 054544 SAN MATEO REIMBURSEMENT SAN MATEO REIMBURSE 10/14/2019 10/14/2019 5 2,124.54 2,124.54

AWAY01 Total 2,124.54

ZURIXX LLC : US BLOMQ01 Blomquist Hale Consulting Inc. COMMON 054422 OCT EMPLOYEE ASSISTANCE OCT19240 10/1/2019 10/1/2019 18 328.50

ZURIXX LLC : US BLOMQ01 Blomquist Hale Consulting Inc. COMMON 054345 SEPT EMPLOYEE ASSISTANCE SEP19231 9/2/2019 9/2/2019 47 328.50 328.50

BLOMQ01 Total 657.00

ZURIXX LLC : US BMUDLIAR01 Balaji Mudliar COMMON 054467 DETROIT PREVIEW EXPENSES REIMB DETROIT PREV EXPNSES 10/14/2019 10/14/2019 5 1,093.39 1,093.39

BMUDLIAR01 Total 1,093.39

ZURIXX LLC : US BWHITE01 Brandon White COMMON 054350 AUG SUBSCPTN/7 DJ 21 HERJ 8 GC 1831 10/8/2019 10/8/2019 11 10,575.00 10,575.00

BWHITE01 Total 10,575.00

ZURIXX LLC : US BYOUNG01 Blake Young COMMON 054542 TACOMA REIMBURS AUTO/HOTEL TACOMA AUTO/HOTEL 10/14/2019 10/14/2019 5 794.67 794.67

BYOUNG01 Total 794.67

ZURIXX LLC : US CACT001 Cactus & Tropicals COMMON 054463 SEPT PLANT MAINTENANCE 0334081 9/30/2019 9/30/2019 19 165.00 165.00

CACT001 Total 165.00

ZURIXX LLC : US CARDONE01 Cardone Training Technologies COMMON 054517 10/6 Commissions 10/6 COMMISSIONS 10/17/2019 10/17/2019 2 15,906.33 15,906.33

ZURIXX LLC : US CARDONE01 Cardone Training Technologies COMMON 054344 OCT SUMMIT+ ENT SPEAKER FEES 42769B 10/18/2019 10/18/2019 1 50,000.00 50,000.00

ZURIXX LLC : US CARDONE01 Cardone Training Technologies COMMON 054343 SAN MATEO SPKR FEE FINAL PMT 42770B 10/24/2019 10/24/2019 -5 37,500.00

CARDONE01 Total 103,406.33

ZURIXX LLC : US CHRISTINA01 Christina Entertainment, Inc. COMMON 054521 10/6 Commissions 10/6 COMMISSIONS 10/17/2019 10/17/2019 2 148.03 148.03

ZURIXX LLC : US CHRISTINA01 Christina Entertainment, Inc. COMMON 054320 3RD QTR MINIMUM GUARANTEE 3RD QTR MINIMUM GUAR 9/30/2019 12/31/2019 -73 210,187.38



CHRISTINA01 Total 210,335.41

ZURIXX LLC : US CNA001 CNA Insurance COMMON 054531 INSURANCE COVERAGE PMT 3023280042 093019 9/30/2019 10/25/2019 -6 10,538.00

CNA001 Total 10,538.00

ZURIXX LLC : US CUMU001 Cumulus Nine, LLC COMMON 054540 OCT WEB HOSTING/SERVER UPGRADE 3826 10/1/2019 10/1/2019 18 972.00 972.00

CUMU001 Total 972.00

ZURIXX LLC : US DAMUZ01 DAMIAN MUZIANI COMMON 054529 SAN JOSE GAS REIMBURSEMENT SAN JOSE MGJ098939 10/14/2019 10/18/2019 1 71.20 71.20

DAMUZ01 Total 71.20

ZURIXX LLC : US DATA01 DataBank COMMON 054340 OCT SERVER STORAGE/IP ADDS 66309 10/1/2019 10/1/2019 18 1,099.07 1,099.07

ZURIXX LLC : US DATA01 DataBank COMMON 054341 SEPT CROSS CONNECTION/SWITCH 66736 10/1/2019 10/1/2019 18 80.00 80.00

DATA01 Total 1,179.07

ZURIXX LLC : US EQUI001 EQUIMINE COMMON 054513 10/6 Commissions 10/6 COMMISSIONS 10/17/2019 10/17/2019 2 4,100.00

ZURIXX LLC : US EQUI001 EQUIMINE COMMON 054353 WK OF 9/29 PROPFINDER SALES 9/29 PROPFINDER 9/29/2019 9/29/2019 20 2,400.00 2,400.00

EQUI001 Total 6,500.00

ZURIXX LLC : US HAVAS01 Havas Edge LLC COMMON 053632 HOUSTON RADIO CREDIT GLAL-RF0006 8/19/2019 1/2/1900 43755 (250.00)

HAVAS01 Total (250.00)

ZURIXX LLC : US HERJAVEC01 Herjavec Entertainment Corp COMMON 053681 DENVER COMMISSIONS GUARANTEE DENVER GUARANTEE 11/28/2019 11/28/2019 -40 25,000.00

ZURIXX LLC : US HERJAVEC01 Herjavec Entertainment Corp COMMON 053680 DENVER SPKR FEE FINAL PMT DENVER SPKR FEE 2 11/28/2019 11/28/2019 -40 25,000.00

ZURIXX LLC : US HERJAVEC01 Herjavec Entertainment Corp COMMON 053679 DENVER SPEAKER FEE DEPOSIT DENVER SPKR FEE DEPO 10/30/2019 10/30/2019 -11 30,000.00

ZURIXX LLC : US HERJAVEC01 Herjavec Entertainment Corp COMMON 049812 OCT ENT SUMMT ROYALTY GUARNTEE OCT SUMMIT GUARANTEE 10/25/2019 10/25/2019 -6 25,000.00

ZURIXX LLC : US HERJAVEC01 Herjavec Entertainment Corp COMMON 049811 OCT ENT SUMMIT SPKR FEE PMT 2 OCT SUMMIT SPKR FEE2 10/25/2019 10/25/2019 -6 25,000.00

ZURIXX LLC : US HERJAVEC01 Herjavec Entertainment Corp COMMON 053513 SAN DIEGO COMMISSION GUARANTEE SAN DIEGO GUARANTEE 11/14/2019 11/14/2019 -26 25,000.00

ZURIXX LLC : US HERJAVEC01 Herjavec Entertainment Corp COMMON 053511 SAN DIEGO SPEAKER DEPOSIT SAN DIEGO SPKR DEPO. 10/17/2019 10/17/2019 2 30,000.00 30,000.00

ZURIXX LLC : US HERJAVEC01 Herjavec Entertainment Corp COMMON 053512 SAN DIEGO SPEAKER FEE #2 SAN DIEGO SPKR FEE 2 11/14/2019 11/14/2019 -26 25,000.00

ZURIXX LLC : US HERJAVEC01 Herjavec Entertainment Corp COMMON 053144 LAS VEGAS COMMISSION GUARANTEE VEGAS GUARANTEE 10/30/2019 10/30/2019 -11 25,000.00

ZURIXX LLC : US HERJAVEC01 Herjavec Entertainment Corp COMMON 053143 LAS VEGAS SPKR FEE FINAL PMT VEGAS SPKR FEE 2 10/30/2019 10/30/2019 -11 25,000.00

ZURIXX LLC : US HERJAVEC01 Herjavec Entertainment Corp COMMON 053678 W PALM BCH COMMISSN GUARANTEE WPALM BCH GUARANTEE 10/17/2019 10/17/2019 2 25,000.00 25,000.00

ZURIXX LLC : US HERJAVEC01 Herjavec Entertainment Corp COMMON 053677 W PALM BEACH SPKR FEE PMT 2 WPALM BCH SPKR FEE 2 10/17/2019 10/17/2019 2 25,000.00 25,000.00

HERJAVEC01 Total 310,000.00

ZURIXX LLC : US HFARR01 Hilary Farr Entertainment Inc. COMMON 054518 10/6 Commissions 10/6 COMMISSIONS 10/17/2019 10/17/2019 2 7,973.09 7,973.09

HFARR01 Total 7,973.09

ZURIXX LLC : US INFINI01 InfiniSource Benefit Services COMMON 054339 SEPT FEE MYHRCOUNSEL SVC 90775361 9/25/2019 9/25/2019 24 80.00 80.00

INFINI01 Total 80.00

ZURIXX LLC : US KIRTON01 Kirton McConkie COMMON 054351 CLIENT MATTER 30101-2 1574347 9/10/2019 9/10/2019 39 3,915.00 3,915.00

KIRTON01 Total 3,915.00

ZURIXX LLC : US L5A001 L5 Advisors COMMON 054526 FAST START MENTORING L51108FSBC-101419 10/14/2019 10/18/2019 1 39,500.00 31,600.00

ZURIXX LLC : US L5A001 L5 Advisors COMMON 054525 ONE ON ONE MENTORING L54110 1:1 10/14/2019 10/18/2019 1 12,000.00 9,600.00

ZURIXX LLC : US L5A001 L5 Advisors COMMON 054527 SPKR FEE SUCCESS ACCELERATOR L55009 10/14/2019 10/18/2019 1 5,000.00 5,000.00

L5A001 Total 56,500.00

ZURIXX LLC : US LEARN01 Learning Markets LLC COMMON 054543 SEPT/OCT LMS LICENSE DATA TOOL 942 10/18/2019 10/18/2019 1 19,175.00

LEARN01 Total 19,175.00

ZURIXX LLC : US LEVEL3001 Level 3 Communications LLC COMMON 054407 OCT PHONE BILL/ADVANCED REE 85189643 10/1/2019 10/31/2019 -12 2,271.22

LEVEL3001 Total 2,271.22

ZURIXX LLC : US MAGEN01 Magensa LLC COMMON 054541 MAGENSA ANNUAL SERVICE 950000905 9/25/2019 10/25/2019 -6 30.00

MAGEN01 Total 30.00

ZURIXX LLC : US MEDIABANDIT01 MediaBandit COMMON 054537 SEPT MEDIA COACH19 DJ18 RH3GC 4853 10/15/2019 10/15/2019 4 16,000.00 16,000.00

MEDIABANDIT01 Total 16,000.00

ZURIXX LLC : US NATURES01 Nature's Harvests COMMON 054338 OCT FRUIT BASKETS 580 10/3/2019 10/3/2019 16 103.00 103.00

NATURES01 Total 103.00

ZURIXX LLC : US NHOLZA01 Nate Holzapfel LLC COMMON 054515 10/6 Commissions 10/6 COMMISSIONS 10/17/2019 10/17/2019 2 997.46

ZURIXX LLC : US NHOLZA01 Nate Holzapfel LLC COMMON 054356 WK OF 9/29 COMMISSIONS 9/29 COMMISSIONS 10/8/2019 10/8/2019 11 1,260.72 1,260.72

NHOLZA01 Total 2,258.18



ZURIXX LLC : US PREPG01 PREMIUM PROTECTION GROUP COMMON 054512 10/6 Commissions 10/6 COMMISSIONS 10/17/2019 10/17/2019 2 2,555.00

ZURIXX LLC : US PREPG01 PREMIUM PROTECTION GROUP COMMON 054352 WK 9/29 PREMIUM WEALTH 9/29 PREMIUM WEALTH 9/29/2019 9/29/2019 20 4,270.00 4,270.00

PREPG01 Total 6,825.00

ZURIXX LLC : US PROP001 PROPERTY FARM COMMON 054514 10/6 Commissions 10/6 COMMISSIONS 10/17/2019 10/17/2019 2 1,800.00 1,800.00

ZURIXX LLC : US PROP001 PROPERTY FARM COMMON 054355 WK OF 9/29 PROPFARM FULFILMT 9/29 PROP FARM 9/29/2019 9/29/2019 20 7,800.00 7,800.00

PROP001 Total 9,600.00

ZURIXX LLC : US RNICH01 Rich Nicholes Entertainment COMMON 054532 LV SUMMIT AV/PRODUCTION LABOR 20191009VEGAS 10/8/2019 10/18/2019 1 17,987.50 17,987.50

RNICH01 Total 17,987.50

ZURIXX LLC : US SAFEH01 Safe Harbor Advantage LLC COMMON 054342 WK 9/28 TAX SETUPS/7 STUDENTS 504 9/28/2019 9/28/2019 21 3,125.00 3,125.00

ZURIXX LLC : US SAFEH01 Safe Harbor Advantage LLC COMMON 054536 WK 10/5 TAX SETUPS/6 STUDENTS 507 10/5/2019 10/5/2019 14 2,625.00

ZURIXX LLC : US SAFEH01 Safe Harbor Advantage LLC COMMON 054535 WK 10/12 TAX SETUPS/3 STUDENTS 508 10/12/2019 10/12/2019 7 1,125.00

SAFEH01 Total 6,875.00

ZURIXX LLC : US SHARK01 Shark Branding Corp COMMON 054334 VEGAS ENT SUMMIT SPKR FEE 10-7-19 ZU 10/18/2019 10/18/2019 1 15,000.00 15,000.00

ZURIXX LLC : US SHARK01 Shark Branding Corp COMMON 054516 10/6 Commissions 10/6 COMMISSIONS 10/17/2019 10/17/2019 2 16,972.82 16,972.82

ZURIXX LLC : US SHARK01 Shark Branding Corp COMMON 054511 10/6 Fulfillment 10/6 FULFILLMENT 10/17/2019 10/17/2019 2 50.00 50.00

ZURIXX LLC : US SHARK01 Shark Branding Corp COMMON 054530 NOV SOCIAL MEDIA SVCS NOV 2019 ZU 10/15/2019 11/1/2019 -13 5,000.00

SHARK01 Total 37,022.82

ZURIXX LLC : US SHRED001 SHRED-IT USA COMMON 054539 SHREDDER SVCS PREMIER PURGE 8128346639 10/15/2019 11/8/2019 -20 117.60

SHRED001 Total 117.60

ZURIXX LLC : US TAREK01 T&B Seminars COMMON 054522 10/6 Commissions 10/6 COMMISSIONS 10/17/2019 10/17/2019 2 148.03 148.03

ZURIXX LLC : US TAREK01 T&B Seminars COMMON 054319 3RD QTR MINIMUM GUARANTEE 3RD QTR MINIMUM GUAR 9/30/2019 12/31/2019 -73 210,187.38

TAREK01 Total 210,335.41

ZURIXX LLC : US TWOCHI01 Two Chicks and a Hammer, Inc. COMMON 054519 10/6 Commissions 10/6 COMMISSIONS 10/17/2019 10/17/2019 2 469.77 469.77

TWOCHI01 Total 469.77

ZURIXX LLC : US VERTICAL01 Vertical Info Connection LLC COMMON 054062 FULFILLMENT SOFTWARE FINAL 50% 7892 FINAL 50% 10/18/2019 11/8/2019 -20 3,750.00

VERTICAL01 Total 3,750.00

ZURIXX LLC : US XOCOM01 XO Communications/Verizon COMMON 054534 OCT INTERNET BILL 0329649901 10/8/19 10/8/2019 11/1/2019 -13 3,363.29

XOCOM01 Total 3,363.29

ZURIXX LLC : US YOUR001 Your Entity Solution LLC COMMON 054328 STANDARD COST 2ND HALF OCT 18904 10/1/2019 10/18/2019 1 14,186.00 14,186.00

YOUR001 Total 14,186.00

ZURIXX LLC : US MEETING01 The Meeting House VENUE 054337 PREVIEW VENUE RENTAL 7760 10/6/2019 10/6/2019 13 1,800.00 1,800.00

MEETING01 Total 1,800.00

ZURIXX LLC : US SAVOY01 1847549 Ontario Limited T/A SavoyVENUE 054414 11/20 VENUE DEPOSIT 11/10 VENUE DEPOSIT 10/10/2019 10/10/2019 9 2,296.18 2,296.18

SAVOY01 Total 2,296.18

ZURIXX LLC : PR AMER01 American Name Services MKTG 013591 WK 47 TORO WIND 74103 10/15/2019 10/15/2019 4 6,614.57 6,614.57

ZURIXX LLC : PR AMER01 American Name Services MKTG 013548 WK 46 PORTLD/FRES/ONTAR/FTMYER 74209C 9/24/2019 9/24/2019 25 34,118.87 34,118.87

ZURIXX LLC : PR AMER01 American Name Services MKTG 013549 WK 47 TULSA/HARRISBURG 74209D 9/24/2019 9/24/2019 25 15,083.44

ZURIXX LLC : PR AMER01 American Name Services MKTG 013590 WK 48 KNOXVILLE/ALBUQUERQUE 74363A 10/8/2019 11/6/2019 -18 11,124.62

ZURIXX LLC : PR AMER01 American Name Services MKTG 013547 DENVER FINAL NUMBERS 74492 10/2/2019 10/2/2019 17 12,816.91

ZURIXX LLC : PR AMER01 American Name Services MKTG 013546 WKS 36-39 FILE INPUT/ANALYSIS 74653 10/7/2019 10/7/2019 12 3,398.94

AMER01 Total 83,157.35

ZURIXX LLC : PR CONSULT01 ConsultNet MKTG 013553 WK 9/28 MKTG HRS JACKSON LUND 302197 9/28/2019 9/28/2019 21 2,781.80 2,781.80

ZURIXX LLC : PR CONSULT01 ConsultNet MKTG 013592 WK 10/5 MKGT HRS JACKSON LUND 302594 10/5/2019 11/5/2019 -17 2,598.06

CONSULT01 Total 5,379.86

ZURIXX LLC : PR DIGITAL01 Digital Target Marketing LLC MKTG 013544 DC/NO VA DIGITAL MARKETING ADS ZUR-103 10/11/2019 10/11/2019 8 57,500.00

ZURIXX LLC : PR DIGITAL01 Digital Target Marketing LLC MKTG 013545 TACOMA DIGITAL MARKETING ADS ZUR-104 10/11/2019 10/11/2019 8 11,500.00 11,500.00

DIGITAL01 Total 69,000.00

ZURIXX LLC : PR HOGAN01 Hogan Lovells MKTG 013551 SEPT CRISIS MGMT SVC/DJ ISSUE 22200077672 10/3/2019 10/24/2019 -5 3,600.00

HOGAN01 Total 3,600.00

ZURIXX LLC : PR MELTWATER01 Meltwater News US Inc MKTG 013552 REP MGMT ALL BRANDS/1 YR LICNS IN-S151-493149. 9/30/2019 10/30/2019 -11 11,500.00



MELTWATER01 Total 11,500.00

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013635 SAN MATEO PRINT/SHIP CREDIT 403043417750 10/14/2019 1/2/1900 43755 (817.50)

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013624 DJ EMAIL CAMPAIGNS 61244 10/16/2019 10/16/2019 3 1,084.47

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013326 OKLAHOMA INVITES FINAL 50% 61305 FINAL 50% 10/18/2019 10/18/2019 1 10,366.22

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013317 PITTSBURGH INVITES FINAL 50% 61306 FINAL 50% 10/18/2019 10/18/2019 1 5,537.24

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013324 DOVER INVITES FINAL 50% 61307 FINAL 50% 10/18/2019 10/18/2019 1 9,866.89

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013315 LONG BEACH INVITES FINAL 50% 61308 FINAL 50% 10/18/2019 10/18/2019 1 4,946.17

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013321 W PALM BEACH INVITES FINAL 50% 61309 FINAL 50% 10/18/2019 10/18/2019 1 4,583.63

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013380 TACOMA INVITES FINAL 50% 61311 FINAL 50% 10/31/2019 10/31/2019 -12 2,312.04

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013384 DETROIT INVITATIONS FINAL 50% 61312 FINAL 50% 10/31/2019 10/31/2019 -12 4,571.68

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013377 ATLANTA INVITES FINAL 50% 61313 FINAL 50% 10/31/2019 10/31/2019 -12 7,983.03

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013372 SAN MATEO INVITES FINAL 50% 61314 FINAL 50% 10/31/2019 10/31/2019 -12 827.03

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013414 COLUMBIA INVITES FINAL 50% 61316 FINAL 50% 11/8/2019 11/8/2019 -20 4,298.61

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013417 DC/NO VA INVITATIONS FINAL 50% 61317 FINAL 50% 11/8/2019 11/8/2019 -20 4,268.65

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013412 PHOENIX INVITES FINAL 50% 61318 FINAL 50% 11/8/2019 11/8/2019 -20 4,386.54

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013421 LAS VEGAS INVITES FINAL 50% 61319 FINAL 50% 11/8/2019 11/8/2019 -20 4,279.62

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013466 RALEIGH INVITATIONS FINAL 50% 61321 FINAL 50% 11/15/2019 11/15/2019 -27 3,473.75

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013459 LONG ISLAND INVITES FINAL 50% 61322 FINAL 50% 11/15/2019 11/15/2019 -27 8,172.72

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013453 NORFOLK INVITATIONS FINAL 50% 61323 FINAL 50% 11/15/2019 11/15/2019 -27 4,460.03

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013462 WHITE PLAINS INVITES FINAL 50% 61324 FINAL 50% 11/15/2019 11/15/2019 -27 6,667.48

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013374 BROWNSVILLE INVITES FINAL 50% 61420 FINAL 50% 10/31/2019 10/31/2019 -12 1,569.70

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013625 HF EMAIL SMS CAMPAIGNS 61426 10/16/2019 10/16/2019 3 621.72

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013609 WILL TO WIN REMINDERS 61427 10/8/2019 10/8/2019 11 495.01 495.01

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013611 FLIP IT FORWARD REMINDERS 61428 10/8/2019 10/8/2019 11 108.00 108.00

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013605 TAREK/CHRISTINA ONLY CAMPAIGN 61429 10/8/2019 10/8/2019 11 294.35 294.35

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013626 WK 36 SMS REMINDERS 61430 10/14/2019 10/14/2019 5 306.90

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013627 ANAHEIM LIVE MATCH UP 61434 10/14/2019 10/14/2019 5 233.50

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013628 GC EMAIL CAMPAIGNS 61437 10/14/2019 10/14/2019 5 514.08

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013456 LUBBOCK INVITATIONS FINAL 50% 61441 FINAL 50% 11/15/2019 11/15/2019 -27 3,227.85

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013502 INDIANAPOLIS INVITES FINAL 50% 61442 FINAL 50% 11/22/2019 11/22/2019 -34 2,571.62

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013499 BALTIMORE INVITATIONS FINAL50% 61443 FINAL 50% 11/22/2019 11/22/2019 -34 2,691.44

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013505 ORLANDO INVITATIONS FINAL 50% 61444 FINAL 50% 11/22/2019 11/22/2019 -34 5,683.61

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013508 SAN DIEGO INVITATIONS FINAL50% 61445 FINAL 50% 11/22/2019 11/22/2019 -34 3,761.33

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013559 SLC/ORLAND/INDIE/BALT ARTWORK 61446 10/9/2019 10/9/2019 10 502.20 502.20

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013571 COLUMBUS INVITES FINAL 50% 61447 FINAL 50% 11/29/2019 11/29/2019 -41 3,081.75

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013565 TAMPA/ST PETE INVITES FINAL50% 61448 FINAL 50% 11/29/2019 11/29/2019 -41 2,847.67

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013567 SAN ANTONIO INVITES FINAL 50% 61449 FINAL 50% 11/29/2019 11/29/2019 -41 3,015.73

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013569 PHILADELPHIA INVITES FINAL 50% 61450 FINAL 50% 11/29/2019 11/29/2019 -41 5,147.71

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013598 WK45 ARTWORK 61451 10/10/2019 10/10/2019 9 761.67

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013597 WK 46 ARTWORK 61457 10/10/2019 10/10/2019 9 460.35


ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013629 WK 40 WORKSHOP EMAILS 61489 10/14/2019 10/14/2019 5 1,055.84



ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013586 PREVIEW SHIPPING 4 MKTS 61549 10/7/2019 10/7/2019 12 721.09 721.09

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013561 W PALM BEACH SHIPPING 61564 10/9/2019 10/9/2019 10 7,575.34 7,575.34

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013576 RETURN SHIPPING ANAHEIM PREV 61567 10/7/2019 10/7/2019 12 274.19 274.19

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013583 BROWNSVILLE CONFIRMATIONS 61569 10/7/2019 10/7/2019 12 444.79 444.79

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013585 BROWNSVILLE CONFIRMS POSTAGE 61569P 10/7/2019 10/7/2019 12 69.85 69.85

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013581 ATLANTA CONFIRMATIONS 61570 10/7/2019 10/7/2019 12 666.95 666.95

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013587 ATLANTA CONFIRMS POSTAGE 61570P 10/7/2019 10/7/2019 12 272.80 272.80

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013588 DETROIT CONFIRMATIONS 61571 10/7/2019 10/7/2019 12 370.30 370.30

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013589 DETROIT CONFIRMATIONS POSTAGE 61571P 10/7/2019 10/7/2019 12 133.10 133.10

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013578 TACOMA CONFIRMATIONS 61572 10/7/2019 10/7/2019 12 151.84 151.84

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013584 TACOMA CONFIRMS POSTAGE 61572P 10/7/2019 10/7/2019 12 29.15 29.15

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013577 WK 38 INVESTOR SUMMIT EMAILS 61573 10/7/2019 10/7/2019 12 581.63 581.63

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013582 NEXT LEVEL MATERIALS+1OX/W2S 61580 10/7/2019 10/7/2019 12 4,771.60 4,771.60

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013572 10X/NEXT/W2W/MISC MATERIALS 61582 10/7/2019 10/7/2019 12 18,769.13 18,769.13

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013562 OMNIW/W2W ORDER FORMS+ARTWK 61585 10/9/2019 10/9/2019 10 1,297.62 1,297.62

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013580 WORKSHOP SHIPPING 9 MKTS 61590 10/7/2019 10/7/2019 12 1,806.10 1,806.10

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013603 PREVIEW SHIPPING CHARGES 61591 10/9/2019 10/9/2019 10 754.30 754.30

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013579 SAN MATEO EXPO SHIPPING 61595 10/7/2019 10/7/2019 12 1,180.60 1,180.60

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013560 INVESTOR SUMMIT CARDS/BADGES 61596 10/9/2019 10/9/2019 10 551.61 551.61

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013607 WORKSHOP RETURNS 61603 10/9/2019 10/9/2019 10 208.19 208.19

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013630 PREVIEW RETURNS 61604 10/16/2019 10/16/2019 3 85.87

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013610 WK 34 REMINDERS 61605 10/8/2019 10/8/2019 11 349.49 349.49

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013631 LAS VEGAS LIVE CONFIRMATIONS 61606 10/14/2019 10/14/2019 5 448.15



ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013632 LAS VEGAS LIVE CONFIRM POSTAGE 61606P 10/14/2019 10/14/2019 5 150.70

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013633 COLUMBIA CONFIRMATIONS 61607 10/14/2019 10/14/2019 5 414.14

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013634 COLUMBIA CONFIRM POSTAGE 61607P 10/14/2019 10/14/2019 5 144.65

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013613 DC/VA WEEKLY CONFIRMATIONS 61608 10/14/2019 10/14/2019 5 93.49

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013614 PHOENIX CONFIRMATIONS 61609 10/14/2019 10/14/2019 5 262.87

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013615 PHOENIX POSTAGE CONFIRMATIONS 61609P 10/14/2019 10/14/2019 5 67.65

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013602 WK 35 SMS REMINDERS 61610 10/9/2019 10/9/2019 10 348.93 348.93

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013616 SAN MATEO RETURN SHIPPING 61618 10/16/2019 10/16/2019 3 420.97

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013604 OCT VEGAS SUMMIT SHIPPING 61619 10/9/2019 10/9/2019 10 6,534.15 6,534.15

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013617 WORKSHOP SHIPPING 61620 10/16/2019 10/16/2019 3 2,757.55

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013618 PREVIEW SHIPPING 61621 10/16/2019 10/16/2019 3 392.97

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013563 SHIPPING OF REAL ESTATE KITS 61624 10/9/2019 10/9/2019 10 170.15 170.15

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013606 WK 39 WORKSHOP REMINDERS 61630 10/8/2019 10/8/2019 11 1,152.68 1,152.68

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013608 WK 40 PREVIEW REMINDERS 61631 10/8/2019 10/8/2019 11 1,700.29 1,700.29

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013619 WK 36-39 WORKSHOP CAMPAIGNS 61632 10/14/2019 10/14/2019 5 2,745.00

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013620 WK 35-38 EMAIL CONFIRMATIONS 61633 10/14/2019 10/14/2019 5 306.00

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013621 WK 41 EMAIL REMINDERS 61634 10/14/2019 10/14/2019 5 1,028.92

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013622 WORKSHOP RETURNS 61653 10/14/2019 10/14/2019 5 112.71

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013623 VEGAS LIVE SHIPPING 61655 10/16/2019 10/16/2019 3 1,044.75

ZURIXX LLC : PR PECZUH01 Peczuh Printing MKTG 013612 SAN MATEO VIP SHIPPING 61656 10/16/2019 10/16/2019 3 1,225.61

PECZUH01 Total 194,105.55

ZURIXX LLC : PR WEB01 Web Builder Pro MKTG 013593 LOGOS AND 1 YR MEMBERSHIPS 1287 10/14/2019 10/14/2019 5 11,025.00

WEB01 Total 11,025.00

ZURIXX LLC : PR ATTPR01 AT&T Mobility Puerto Rico PR COMMON 013594 OCT 10 PHONE BILL 11943581 10/10/2019 11/8/2019 -20 2,198.64

ATTPR01 Total 2,198.64

ZURIXX LLC : PR CAC01 CAC Investment Ventures LLC PR COMMON 012933 PERSONAL TAX SVC LLM&D #4150 CM FOR LLM&D #4150 6/26/2019 1/2/1900 43755 (1,125.00)

CAC01 Total (1,125.00)

ZURIXX LLC : PR MOREXT01 MORALES EXTERMINATING PR COMMON 013596 PR OFFICE EXTERMINATION 5862 10/10/2019 10/10/2019 9 50.00 50.00

MOREXT01 Total 50.00

ZURIXX LLC : PR PARR01 Parr Brown Gee & Loveless PR COMMON 013595 CANADA REGISTRATION/SETUP 871727 10/11/2019 10/11/2019 8 4,192.77 4,192.77

PARR01 Total 4,192.77

ZURIXX LLC : PR RICOH001 Ricoh PR COMMON 013555 3RD QUARTER COPY CHARGES 2000458073 9/26/2019 9/26/2019 23 862.72 862.72

RICOH001 Total 862.72

ZURIXX LLC : PR ZURI003 Zurixx Financial PR COMMON 012934 PERSONAL TAX SVC LLM&D #4150 CM FOR LLM&D #4150 6/26/2019 1/2/1900 43755 (1,500.00)

ZURI003 Total (1,500.00)

Grand Total 1,870,122.42


EXHIBIT “ A6”


Zurixx, LLC, et al.Daily Financial Summary Report

Holiday- No Activity

10/2/2019 10/7/2019 10/8/2019 10/9/2019 10/10/2019 10/11/2019 10/14/2019 10/15/2019 10/16/2019

Cash Flow

Total Deposits (includes credit card refunds shown below) $236,708.29 $44,180.04 $235,280.55 $357,629.64 $185,589.00 $0.00 $793,088.49 $328,918.09Total Disbursements (includes cash refunds shown below) ($959,781.69) ($120,476.45) ($698,193.06) ($556,023.63) ($744,951.13) $0.00 ($626,529.59) ($66,590.03)Net Cash Flow ($723,073.40) ($76,296.41) ($462,912.51) ($198,393.99) ($559,362.13) $0.00 $166,558.90 $262,328.06

Refunds

Credit Card Refunds $0.00 $0.00 ($51,953.00) ($109,229.93) ($32,762.21) $0.00 ($1,000.00) ($107,983.50)Check refunds $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Total Refunds $0.00 $0.00 ($51,953.00) ($109,229.93) ($32,762.21) $0.00 ($1,000.00) ($107,983.50)


Entity Bank Account #

Zurixx, LLC Chase X6538 $2,348,290.12 $2,071,193.67 $2,120,863.67 $1,519,662.56 $1,107,041.38 $1,273,059.78 $1,273,059.78 $1,432,839.78 $1,662,644.97Zurixx, LLC Chase X6553 $58,575.00 $93,926.50 $93,926.50 $90,158.00 $121,635.97 $46,635.97 $46,635.97 $46,635.97 $46,635.97Zurixx, LLC Chase X3915 $78,351.05 $81,212.97 $44,855.66 $50,399.87 $22,536.46 $13,328.75 $13,328.75 $28,412.94 $28,287.16Zurixx, LLC Chase X6385 $59,707.70 $27,757.70 $39,154.85 $39,154.85 $39,154.85 $19,154.85 $19,154.85 $29,351.50 $25,561.87Zurixx, LLC Chase X9922 $5,740.04 $5,740.04 $5,740.04 $5,740.04 $5,740.04 $5,740.04 $5,740.04 $5,740.04 $5,740.04Brand Management Holdings LLC Chase X2179 $129,235.52 $129,165.52 $129,165.52 $129,165.52 $129,165.52 $129,165.52 $129,165.52 $129,165.52 $129,165.52Richardson Law Group Chase X3955 $8,660.44 $8,660.44 $8,602.64 $8,602.64 $8,602.64 $8,602.64 $8,602.64 $6,605.62 $6,605.62Zurixx LLC First Bank PR X4681C $4,429.06 $176,519.79 $94,844.10 $33,928.23 $22,003.47 $16,898.38 $16,898.38 $81,322.38 $38,425.21Zurixx LLC First Bank PR X4681S $1,662.80 $793.66 $793.66 $793.66 $793.66 $793.66 $793.66 $793.66 $793.66Zurixx, LLC Bank of America X9873 $1,537,951.86 $447,965.31 $431,217.94 $618,250.34 $933,492.96 $264,243.73 $264,243.73 $261,272.79 $176,256.81Global Learning Alliance LLC Bank of America X2938 $388,992.97 $452,708.84 $456,809.40 $456,273.93 $456,273.93 $482,273.93 $482,273.93 $514,439.46 $551,450.88M22-Qualpay Bank of America X9860 $39,214.01 $43,188.98 $43,188.98 $42,191.98 $5,000.00 $5,000.00 $5,000.00 ($66,968.51) $3,871.50M4A-Meritus Bank of America X9802 $32,828.37 $19,713.37 $33,087.42 $18,719.25 $13,406.00 $5,000.00 $5,000.00 ($16,152.00) $7,500.00DBA Premier Fin. Training Bank of America X9789 $78,019.24 $57,066.24 $35,566.24 $61,863.24 $61,663.24 $97,250.74 $97,250.74 $80,247.74 $113,095.74Success Formula Bank of America X9857 $50,000.00 $48,500.00 $50,000.00 $50,000.00 $0.00 $0.00 $0.00 $0.00 $0.00Operating Accounts Subtotal $4,821,658.18 $3,664,113.03 $3,587,816.62 $3,124,904.11 $2,926,510.12 $2,367,147.99 $2,367,147.99 $2,533,706.89 $2,796,034.95

RE Cash Source, LLC Chase X6561 $294,568.56 $294,568.56 $294,568.56 $294,568.56 $294,568.56 $294,568.56 $294,568.56 $294,568.56 $294,568.56CJ Seminar Holdings, LLC Chase X8388 $42,914.08 $42,914.08 $42,914.08 $42,914.08 $42,914.08 $42,914.08 $42,914.08 $42,914.08 $42,914.08Carlson Development Group LLC First Bank PR X1597 $133,775.09 $133,775.09 $133,775.09 $133,775.09 $133,775.09 $133,775.09 $133,775.09 $133,775.09 $133,775.09Zurixx Financial LLC First Bank PR X1608 $81,624.13 $81,624.13 $81,624.13 $81,624.13 $81,624.13 $81,624.13 $81,624.13 $81,624.13 $81,624.13

Subtotal $552,881.86 $552,881.86 $552,881.86 $552,881.86 $552,881.86 $552,881.86 $552,881.86 $552,881.86 $552,881.86Total Balances $5,374,540.04 $4,216,994.89 $4,140,698.48 $3,677,785.97 $3,479,391.98 $2,920,029.85 $2,920,029.85 $3,086,588.75 $3,348,916.81


M4A-Meritus-AdvancedREE $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00M14-EMS-Success Path $1,774,415.11 $1,775,112.96 $1,775,112.96 $1,780,186.46 $1,785,074.11 $1,790,106.09 $1,795,385.79M51-EMS-Chuckanut $573,609.37 $573,609.37 $573,609.37 $575,461.72 $588,619.72 $591,051.85 $594,635.60M52-AMEX-Chuckanut (not being used) * $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00M71-Cynergy (RLG/AMEX) (not being used) * $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00M71-Cynergy (RLG) $418,419.47 $418,419.47 $418,419.47 $418,419.47 $418,419.47 $444,715.18 $444,715.18M22-Qualpay-Launch Academy $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00M23-Qualpay-Flipping Formula $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00M24-Qualpay-Success Path $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00M81-EMS-Education Services $599,333.68 $603,587.11 $603,587.11 $610,852.87 $615,814.15 $621,017.07 $625,453.97

M91-Paysafe (not being used) * $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00M91-Paysafe (AMEX) (not being used) * $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Total Reserve Account Balances $4,410,777.63 $4,415,728.91 $4,415,728.91 $4,429,920.52 $4,452,927.45 $4,491,890.19 $4,505,190.54

*Awaiting verification information from Zurixx CFO

1-


Zurixx, LLC, et al.Daily Financial Summary Report

Cash Flow

Total Deposits (includes credit card refunds shown below)Total Disbursements (includes cash refunds shown below)Net Cash Flow

Refunds

Credit Card RefundsCheck refundsTotal Refunds


Entity Bank Account #

Zurixx, LLC Chase X6538Zurixx, LLC Chase X6553Zurixx, LLC Chase X3915Zurixx, LLC Chase X6385Zurixx, LLC Chase X9922Brand Management Holdings LLC Chase X2179Richardson Law Group Chase X3955Zurixx LLC First Bank PR X4681CZurixx LLC First Bank PR X4681SZurixx, LLC Bank of America X9873Global Learning Alliance LLC Bank of America X2938M22-Qualpay Bank of America X9860M4A-Meritus Bank of America X9802DBA Premier Fin. Training Bank of America X9789Success Formula Bank of America X9857Operating Accounts Subtotal

RE Cash Source, LLC Chase X6561CJ Seminar Holdings, LLC Chase X8388Carlson Development Group LLC First Bank PR X1597Zurixx Financial LLC First Bank PR X1608

SubtotalTotal Balances


M4A-Meritus-AdvancedREEM14-EMS-Success PathM51-EMS-ChuckanutM52-AMEX-Chuckanut (not being used)M71-Cynergy (RLG/AMEX) (not being used)M71-Cynergy (RLG)M22-Qualpay-Launch AcademyM23-Qualpay-Flipping FormulaM24-Qualpay-Success PathM81-EMS-Education Services

M91-Paysafe (not being used)M91-Paysafe (AMEX) (not being used)Total Reserve Account Balances

*Awaiting verification information from Zurixx CFO

10/17/2019 10/18/2019 10/21/2019 10/22/2019 10/23/2019 10/24/2019 10/25/2019 10/28/2019 10/29/2019

$375,657.87 $163,846.55 $229,673.24 $414,034.43 $53,971.31 $79,163.42 $358,297.18 $168,111.47 $129,599.38($29,289.06) ($443,605.41) ($37,206.01) ($95,496.41) ($545,926.01) ($131,550.42) ($349,335.07) ($41,951.18) ($243,985.93)$346,368.81 ($279,758.86) $192,467.23 $318,538.02 ($491,954.70) ($52,387.00) $8,962.11 $126,160.29 ($114,386.55)

($35,192.50) $0.00 ($41,625.85) ($42,668.50) ($1,978.38) $0.00 ($797.00) $0.00 ($9,891.00)$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

($35,192.50) $0.00 ($41,625.85) ($42,668.50) ($1,978.38) $0.00 ($797.00) $0.00 ($9,891.00)

$1,419,606.97 $1,545,603.97 $1,729,074.97 $2,010,902.68 $1,553,944.48 $1,603,944.48 $1,325,694.48 $1,462,194.48 $1,493,274.79$51,932.97 $70,229.97 $70,229.97 $93,481.97 $102,322.28 $102,322.28 $102,322.28 $101,522.28 $101,522.28$28,671.78 $32,734.82 $32,613.38 $45,829.51 $45,249.51 $38,115.93 $43,771.16 $39,925.63 $19,344.70$18,653.12 $27,260.92 $29,345.12 $29,345.12 $29,345.12 $10,048.12 $6,054.12 $6,054.12 $6,054.12$5,740.04 $5,740.04 $5,740.04 $5,740.04 $5,740.04 $5,740.04 $5,740.04 $5,740.04 $5,740.04

$129,165.52 $129,165.52 $129,165.52 $129,165.52 $129,165.52 $129,165.52 $129,165.52 $129,165.52 $129,165.52$6,605.62 $6,605.62 $6,605.62 $6,605.62 $6,605.62 $6,605.62 $6,605.62 $6,605.62 $6,605.62

$22,896.62 $22,496.77 $22,496.77 $21,996.77 $146,996.77 $81,252.41 $81,078.31 $81,078.31 $88,370.30$793.66 $793.66 $793.66 $793.66 $793.66 $793.66 $793.66 $793.66 $793.66

$669,179.34 $278,227.48 $212,510.15 $702,752.33 $509,844.52 $546,276.46 $802,139.49 $783,083.25 $650,949.29$620,747.88 $620,747.88 $641,092.68 $151,592.68 $184,889.68 $184,889.68 $184,889.68 $203,105.74 $203,105.74

$2,871.50 ($19,665.00) $6,335.00 $6,335.00 $1,644.00 $5,000.00 $35,061.95 $30,104.95 $29,307.95$1,852.00 ($17,451.00) $8,955.00 $8,955.00 $5,000.00 $5,000.00 $4,800.00 $4,903.00 $4,903.00

$163,686.74 $159,726.74 $159,726.74 $148,226.74 $148,226.74 $98,226.74 $98,226.74 $98,226.74 $97,229.74$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$3,142,403.76 $2,862,217.39 $3,054,684.62 $3,361,722.64 $2,869,767.94 $2,817,380.94 $2,826,343.05 $2,952,503.34 $2,836,366.75

$294,568.56 $294,568.56 $294,568.56 $294,568.56 $294,568.56 $294,568.56 $294,568.56 $294,568.56 $294,568.56$42,914.08 $42,914.08 $42,914.08 $42,914.08 $42,914.08 $42,914.08 $42,914.08 $42,914.08 $42,914.08

$133,775.09 $133,775.09 $133,775.09 $133,775.09 $133,775.09 $133,775.09 $133,775.09 $133,775.09 $133,775.09$81,624.13 $81,624.13 $81,624.13 $81,624.13 $81,624.13 $81,624.13 $81,624.13 $81,624.13 $81,624.13

$552,881.86 $552,881.86 $552,881.86 $552,881.86 $552,881.86 $552,881.86 $552,881.86 $552,881.86 $552,881.86$3,695,285.62 $3,415,099.25 $3,607,566.48 $3,914,604.50 $3,422,649.80 $3,370,262.80 $3,379,224.91 $3,505,385.20 $3,389,248.61

$1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00$1,795,385.79 $1,795,385.79 $1,816,083.29 $1,816,083.29 $1,818,845.64 $1,828,088.69 $1,834,990.64 $1,837,780.34 $1,839,395.19

$600,351.80 $602,303.60 $602,303.60 $602,303.60 $602,303.60 $602,303.60 $602,303.60 $602,303.60 $602,303.60$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$444,715.18 $444,715.18 $444,715.18 $444,715.18 $444,715.18 $444,715.18 $444,715.18 $444,715.18 $444,715.18$15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00$10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00$20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00

$625,453.97 $631,786.77 $631,786.77 $632,286.77 $632,286.77 $635,110.02 $636,989.87 $638,600.12 $639,404.87

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$4,510,906.74 $4,519,191.34 $4,539,888.84 $4,540,388.84 $4,543,151.19 $4,555,217.49 $4,563,999.29 $4,568,399.24 $4,570,818.84

1-


EXHIBIT “ A7”


Weekly AMEX Budget By Activity Weekly Buget by Cardholder

Weekly Team Count 3 Individual Amount Interval Who pays Sub Total Weekly Total Card Holders Weekly Budget

Preview Teams Count Preview SD*

Flights 5 600 Per Week Hess 3,000 9,000 Brad Biggerstaff 5,830

Hotel 5 200 Per night SD 5,000 15,000 Rich Davis 5,830

Rental Car 1 400 Per week SD 400 1,200 Maurice Right 5,830

Fuel 1 80 Per week SD 80 240 John Bukely 5,830

Office Supplies 1 50 Per week SD 50 150 Eric Brown 5,830

Baggage 1 300 Per week SD 300 900

Venue 5 2500 Per week Venue Card 12,500 37,500 Workshop SD*

Chad Lawson 700

Workshops Teams Count Scott Alger 700

Flights 6 600 Per Week Hess 3,600 10,800 Garth Satui 700

Hotel 6 200 Per night Venue Card 3,600 10,800 Boyd Hoffman 700

Venue 2 10000 Per Week Venue Card 20,000 60,000

Office Supplies 2 50 Per week SD 100 300 Managers

Baggage 2 300 Per week SD 600 1,800 Sean Mangold 3,000

Balaji Mudliar 3,000

Manager Budget 2 3000 6,000 6,000

Hess (Travel)

Marketing Budget 1 180000 Per week Marketing 180,000 180,000 Matthew Magistro 19,800

Rob Greenland 1 5000 Per Week Office 5,000 5,000 Venues

Shane Adrus (2 Cards) 108,300

Matthew Magistro 1 2000 Per Week Office 2,000 2,000

Marketing

Total Weekly AMEX Budget 340,690 Andrew Way (5 Cards) 180,000

Office/Logistics

Rob Greenland 5,000

Software/Communications

Matthew Magistro 2,000

Total Weekly Budget 340,690

*3 SD per week spend


EXHIBIT “ A8”


Emp # Name Dept Type Dept Title Job Title Start Date Total Total Total Total Total Total Total Weekly Rate After 10-14-19 Hourly Rate

146 Chad Olson 120 EmployeeBack End (Tele Sales) Telesales Director 9/1/2013 106,325.99$ 715,204.99$ 1,065,833.06$ 1,057,962.55$ 707,084.86$ 1,054,080.57$ 771,068.29$ Commission

29 Michael Grow 120 EmployeeBack End (Tele Sales) Telesales Rep 11/19/2012 218,281.83$ 267,058.04$ 552,885.43$ 583,937.04$ 341,899.98$ 520,833.08$ 424,754.09$ Commission

30 Genevieve Hayward 120 EmployeeBack End (Tele Sales) Telesales Rep 11/19/2012 278,538.01$ 306,807.97$ 361,583.38$ 255,143.39$ 155,471.57$ 224,351.61$ 120,673.07$ Commission

81 Michael Clasen 120 EmployeeBack End (Tele Sales) Telesales Rep 7/1/2013 1,134.00$ -$ -$ -$ -$ 224,627.76$ 120,673.07$ Commission

116 Todd Shinsel 120 EmployeeBack End (Tele Sales) Telesales Rep 7/15/2013 37,138.38$ 168,614.29$ 239,450.00$ 182,975.97$ 116,414.53$ 121,227.34$ 96,107.15$ Commission

147 Christopher Young 120 EmployeeBack End (Tele Sales) Telesales Rep 9/1/2013 75,460.50$ 556,635.49$ 749,093.91$ 720,067.17$ 487,282.44$ 759,444.67$ 550,006.63$ Commission

304 Daniel Altamirano 120 EmployeeBack End (Tele Sales) Telesales Rep 9/1/2014 -$ 73,880.89$ 523,769.12$ 576,261.50$ 342,549.98$ 502,285.59$ 356,980.98$ Commission

370 Scott Orison 120 EmployeeBack End (Tele Sales) Telesales Rep 2/9/2015 -$ -$ 505,578.10$ 577,661.50$ 342,499.98$ 519,001.59$ 423,021.59$ Commission

538 Ben Olson 120 EmployeeBack End (Tele Sales) Telesales Rep 3/28/2016 -$ -$ -$ 330,811.09$ 281,608.62$ 384,506.87$ 372,940.92$ Commission

579 Jared Johnson 120 EmployeeBack End (Tele Sales) Telesales Rep 7/25/2016 -$ -$ -$ 81,243.16$ 153,779.16$ 210,179.01$ 166,215.75$ Commission

152 Jeremy Hymas 120 EmployeeBack End (Tele Sales) Telesales Team Lead 9/1/2013 1,977.40$ 80,829.77$ 198,647.99$ 269,966.80$ 196,511.52$ 233,268.27$ 181,351.44$ Commission

149 Edward Chahanovich 120 EmployeeBack End (Tele Sales) Telesales Rep 9/1/2013 1,775.00$ -$ -$ 68,854.26$ 54,725.99$ 70,229.48$ 29,929.70$ Commission

151 Gregory Ahleen 120 EmployeeBack End (Tele Sales) Telesales Rep 9/1/2013 1,364.00$ 27,510.34$ 52,973.04$ 40,301.94$ 44,215.88$ 37,905.77$ 26,762.53$ Commission

158 Steven Willey 220 EmployeeAP telesales Telesales Rep 4/30/2018 -$ -$ -$ -$ -$ -$ 3,847.50$ Commission

353 Warren Ipson 120 EmployeeBack End (Tele Sales) Telesales Rep 1/26/2015 -$ -$ 35,986.19$ 51,048.20$ 39,268.20$ 65,280.13$ 30,444.23$ Commission

770 Rocky Sheffield 120 EmployeeBack End (Tele Sales) Telesales Rep 1/2/2019 -$ -$ -$ -$ -$ -$ 31,745.03$ Commission

375 Jacob "Rex" Berry 220 EmployeeAP telesales Telesales Team Lead 2/23/2015 -$ -$ 84,640.79$ 156,105.30$ 108,585.21$ 106,408.99$ 126,142.79$ Commission

739 Meghan Johnson 220 EmployeeAP telesales Appt Setter 7/31/2018 -$ -$ -$ -$ -$ 7,985.00$ 15,791.54$ Commission

369 Lance Phillips 220 EmployeeAP telesales Telesales Rep 2/16/2015 -$ -$ 90,367.52$ 118,685.39$ 58,523.02$ 60,911.45$ 17,641.55$ Commission

488 Mark Records 220 EmployeeAP telesales Telesales Rep 11/30/2015 -$ -$ 2,922.63$ 112,869.60$ 72,204.55$ 59,921.56$ 52,085.86$ Commission

126 Carter Brown 250 EmployeeCoaching Coaching Director 9/1/2013 26,288.00$ 83,649.00$ 100,011.81$ 121,417.61$ 146,009.70$ 151,499.96$ 127,701.85$ 2,776.44$ 2,776.44$

132 Mark Sanderson 250 EmployeeCoaching Coaching Curriculum 9/1/2013 23,076.96$ 80,769.42$ 92,952.48$ 95,570.13$ 99,746.20$ 113,711.51$ 95,826.85$ 2,120.19$ 2,120.19$

264 Erin Spainhower 250 EmployeeCoaching Administrative Assistant 6/9/2014 -$ 16,900.00$ 35,085.83$ 39,229.80$ 46,622.31$ 54,075.08$ 45,396.31$ 1,009.62$ 1,009.62$

316 Taylor Rodriquez 250 EmployeeCoaching Administrative Assistant 10/20/2014 -$ 4,928.00$ 36,363.24$ 35,560.00$ 36,150.00$ 34,177.62$ 28,792.90$ 657.61$ 657.61$

615 Miranda Nelson 220 EmployeeCoaching Administrative Assistant 4/3/2017 -$ -$ -$ -$ 24,907.66$ 41,285.24$ 33,728.72$ 693.00$

726 Jocelin Hyatt 250 EmployeeCoaching Administrative Assistant 5/2/2018 -$ -$ -$ -$ -$ 20,185.00$ 26,620.00$ 618.00$

808 Kayla Kobayshi 250 EmployeeCoaching Administrative Assistant 6/11/2019 -$ -$ -$ -$ -$ -$ 9,888.00$ 600.00$ 600.00$

133 Timothy Bell 250 EmployeeCoaching Coach 9/1/2013 24,764.00$ 83,556.00$ 89,418.10$ 70,747.10$ 53,408.00$ 44,355.00$ 31,463.00$ Commission

145 Bret Ehlers 250 EmployeeCoaching Coach 9/1/2013 26,564.00$ 105,672.00$ 127,956.51$ 140,043.80$ 123,723.00$ 126,405.00$ 97,845.00$ Commission

295 Joseph (Bud) McCluskey 250 EmployeeCoaching Coach 8/4/2014 -$ 22,653.00$ 83,982.08$ 99,636.43$ 89,754.00$ 94,994.00$ 68,660.00$ Commission

303 Randy Cochrane 250 EmployeeCoaching Coach 9/1/2014 -$ 24,943.00$ 97,182.82$ 112,089.50$ 111,852.00$ 119,238.00$ 92,601.00$ Commission

427 Bradley Sanderson 250 EmployeeCoaching Coach 6/23/2015 -$ -$ 14,221.42$ 16,892.00$ -$ 2,035.00$ 52,369.00$ Commission

445 Larry McKinstry 250 EmployeeCoaching Coach 8/31/2015 -$ -$ 17,953.42$ 51,700.60$ 63,116.00$ 59,134.00$ 33,618.00$ Commission

463 John Benson 250 EmployeeCoaching Coach 10/5/2015 -$ -$ 17,042.42$ 117,921.58$ 127,195.00$ 118,651.00$ 94,311.00$ Commission

469 Deborah Price 250 EmployeeCoaching Coach 10/12/2015 -$ -$ 12,372.41$ 64,680.00$ 67,677.00$ 78,867.00$ 59,062.00$ Commission

485 Eric Lloyd 250 EmployeeCoaching Coach 11/30/2015 -$ -$ 5,113.00$ 107,818.00$ 118,772.00$ 135,610.00$ 103,548.00$ Commission

494 Darrell Walker 250 EmployeeCoaching Coach 1/4/2016 -$ -$ -$ 103,427.00$ 124,192.00$ 136,019.00$ 118,303.00$ Commission

569 Daniel Christiansen 250 EmployeeCoaching Coach 6/20/2016 -$ -$ -$ 39,784.00$ 103,841.00$ 105,300.00$ 78,651.00$ Commission

578 Paul McGraw 250 EmployeeCoaching Coach 8/1/2016 -$ -$ -$ 32,825.00$ 89,538.00$ 100,487.00$ 76,182.00$ Commission

596 Tony Mortezazadeh 250 EmployeeCoaching Coach 11/14/2016 -$ -$ -$ 7,467.00$ 94,348.00$ 118,303.00$ 97,367.00$ Commission

714 Jonathan Miller 250 EmployeeCoaching Coach 4/2/2018 -$ -$ -$ -$ -$ 51,208.60$ 71,770.00$ Commission

715 Michael Hilkey 250 EmployeeCoaching Coach 4/6/2018 -$ -$ -$ -$ -$ 50,412.00$ 63,248.00$ Commission

802 Lorin Hardy 250 EmployeeCoaching Coach 6/1/2019 -$ -$ -$ -$ -$ -$ 22,425.00$ Commission

900 Alden Sparks 250 EmployeeCoaching Coach 9/23/2019 -$ -$ -$ -$ -$ -$ 1,440.00$ Commission

901 Jackson Kade Luucero 250 EmployeeCoaching Coach 9/23/2019 -$ -$ -$ -$ -$ -$ 1,440.00$ Commission

137 Craig Shane Andrus 400 EmployeeCustomer service/saves Customer Service Director 9/1/2013 20,541.41$ 65,800.00$ 75,939.93$ 74,560.00$ 77,315.20$ 79,432.61$ 74,791.70$ 1,826.92$ 1,461.54$

139 Amanda Nielson 400 EmployeeCustomer service/saves Retention & Saves 9/1/2013 13,144.58$ 50,920.50$ 74,482.22$ 89,124.82$ 63,075.78$ 63,201.07$ 56,446.90$ 520.00$ 520.00$ 13.00$

143 Kevin York 400 EmployeeCustomer service/saves Retention & Saves 9/1/2013 13,196.59$ 56,398.38$ 67,746.61$ 86,076.08$ 84,738.01$ 81,177.05$ 65,970.13$ 540.00$ 540.00$ 13.50$

320 Tyler Greenwell 400 EmployeeCustomer service/saves Retention & Saves 10/20/2014 -$ 7,353.47$ 66,519.43$ 73,947.15$ 59,348.80$ 64,123.28$ 48,392.40$ 520.00$ 13.00$

435 James Canterbury 400 EmployeeCustomer service/saves Retention & Saves 7/6/2015 -$ -$ 12,490.24$ 47,294.06$ 68,397.18$ 71,163.35$ 55,302.95$ 520.00$ 13.00$

405 Alyssa Korologos 400 EmployeeCustomer service/saves Customer Service 4/20/2015 -$ -$ 18,270.39$ 16,901.45$ -$ 18,610.02$ 35,703.68$ 605.20$ 605.20$ 15.13$

607 Wendy Almaguer 400 EmployeeCustomer service/saves Customer Service 2/27/2017 -$ -$ -$ -$ 25,952.36$ 37,347.92$ 30,574.58$ 636.40$ 636.40$ 15.91$

650 Hailey Clark 400 EmployeeCustomer service/saves Customer Service 7/24/2017 -$ -$ -$ -$ 11,565.10$ 31,933.32$ 28,409.68$ 615.60$ 615.60$ 15.39$

777 Arianna Baggett 400 EmployeeCustomer service/saves Customer Service -$ -$ -$ -$ -$ -$ 16,119.84$ 500.00$ 12.50$

796 Bailee James 400 EmployeeCustomer service/saves Customer Service -$ -$ -$ -$ -$ -$ 10,396.74$ 480.00$ 12.00$

9 Matthew Magistro 300 EmployeeGeneral administrative CFO 8/20/2012 85,375.13$ 147,841.44$ 176,929.12$ 216,027.26$ 212,500.32$ 219,807.62$ 184,769.26$ 4,230.77$ 3,384.62$

68 Denise Easter 300 EmployeeGeneral administrative Controller 3/11/2013 53,624.67$ 72,237.52$ 84,083.15$ 124,322.45$ 131,000.40$ 135,884.78$ 113,923.08$ 2,500.00$ 2,000.00$

43 Hannah Fedor 300 EmployeeGeneral administrative Accounting 1/21/2013 34,275.32$ 36,722.40$ 40,728.02$ 45,545.78$ 54,064.00$ 55,816.87$ 45,890.78$ 1,046.86$

112 Eliza Gyumushyan 300 EmployeeGeneral administrative Accounting 9/1/2013 18,846.12$ 42,265.26$ 44,530.10$ 45,896.00$ 46,344.00$ 48,179.40$ 39,509.52$ 895.48$ 895.48$

134 Elizabeth Sharp 300 EmployeeGeneral administrative Accounting 9/1/2013 10,562.50$ 34,875.00$ 38,909.15$ 40,616.62$ 40,384.44$ 46,336.98$ 45,480.00$ 927.00$ 927.00$

142 Emily Sorensen 300 EmployeeGeneral administrative Accounting 9/1/2013 8,356.68$ 30,184.79$ 32,961.30$ 34,980.14$ 38,384.52$ 39,882.62$ 34,823.65$ 752.67$ 752.67$

201920182013 2014 2015 2016 2017 I

I

I

I

I

I



201920182013 2014 2015 2016 2017

783 Rosanna Ferrone 300 EmployeeGeneral administrative Accounting 3/18/2019 -$ -$ -$ -$ -$ -$ 29,000.00$ 1,000.00$

105 David Pecoraro 300 EmployeeGeneral administrative Systems Analyst 6/10/2013 25,403.72$ 50,249.84$ 58,232.64$ 65,569.40$ 65,769.32$ 69,539.66$ 61,769.42$ 1,384.62$ 1,384.62$

566 John Obinyan 300 EmployeeGeneral administrative Systems Analyst 6/6/2016 -$ -$ -$ 47,603.98$ 86,500.24$ 90,917.95$ 74,395.08$ 1,742.58$

240 Uriel Cantarero 300 EmployeeGeneral administrative Systems Analyst 4/7/2014 -$ 78,026.04$ 121,207.40$ 127,893.57$ 119,789.76$ 126,737.50$ 106,197.65$ 2,433.38$ 2,433.38$

313 Amy Murphy 300 EmployeeGeneral administrative Web Design 10/13/2014 -$ 7,884.60$ 49,458.45$ 46,138.00$ 8,124.25$ 12,986.98$ 48,057.85$ 1,153.85$

769 Suzie Campbell 300 VendorGeneral administrative Web Design -$ -$ -$ -$ -$ -$ 27,960.35$ 625.00$ 625.00$ 31.25$

737 Jackson Hedges 300 EmployeeGeneral administrative Help Desk 8/1/2018 -$ -$ -$ -$ -$ 12,503.50$ 28,240.00$ 640.00$

800 Rider Jensen 300 EmployeeGeneral administrative Systems Analyst 5/20/2019 -$ -$ -$ -$ -$ -$ 26,923.00$ 1,346.15$ 1,346.15$

6 Robert Greenland 300 EmployeeGeneral administrative Operations Manager 8/6/2012 72,741.34$ 79,615.59$ 88,828.30$ 83,449.92$ 83,449.92$ 86,246.27$ 70,695.50$ 1,640.08$ 1,312.06$

135 Janis Kershaw 300 EmployeeGeneral administrative Administrative Assistant 9/1/2013 14,846.08$ 48,249.76$ 53,301.89$ 53,274.74$ 54,865.44$ 57,452.16$ 48,413.63$ 1,060.10$ 848.08$

219 Sean Mangold 100 VendorGeneral administrative Previews Director 2/3/2014 -$ 82,733.04$ 146,849.53$ 134,663.85$ 143,999.92$ 187,702.00$ 160,346.31$ 3,461.54$ 2,769.23$

744 Balaji Mudlair 300 EmployeeGeneral administrative Training & Recruiting 9/18/2018 -$ -$ -$ -$ -$ 48,461.56$ 146,923.14$ 3,461.54$ 3,461.54$

61 Ann Allman Pett 300 EmployeeGeneral administrative Administrative Assistant 2/18/2013 24,055.10$ 34,333.95$ 42,870.50$ 61,776.91$ 83,029.39$ 62,336.77$ 46,394.42$ 1,009.62$ 1,009.62$

390 Sara Satterfield 300 EmployeeGeneral administrative Administrative Assistant 3/9/2015 -$ -$ 22,772.57$ 30,625.43$ 34,999.76$ 42,846.11$ 36,076.85$ 807.69$

642 Andrew Way 300 EmployeeGeneral administrative COO 6/30/2017 -$ -$ -$ -$ 135,814.78$ 376,977.16$ 227,038.63$ 3,816.35$ 3,053.08$

190/691 Alisha Pace 100 VendorGeneral administrative Brand Manager 10/14/2013 4,695.88$ 39,438.32$ 46,413.66$ 60,524.16$ 63,653.70$ 12,000.00$ 76,200.00$ 1,800.00$ 1,440.00$

228 Anthony Dixon 220 EmployeeAP telesales Brand Manager 3/3/2014 -$ 129,477.03$ 292,702.19$ 315,179.82$ 423,281.44$ 317,977.02$ 165,063.00$ 1,923.08$ 1,538.46$

700 Raymond Blake Young 700 EmployeeCoaching Brand Manager 1/22/2018 -$ -$ -$ -$ -$ 120,181.93$ 40,192.22$ 2,115.38$

328 Mary Easter 300 EmployeeGeneral administrative Marketing Analyst 10/30/2014 -$ 4,975.97$ 41,996.52$ 51,416.50$ 47,640.00$ 35,900.55$ 41,228.16$ 1,076.80$

707 Emily Robinson 300 EmployeeGeneral administrative Marketing Director 2/19/2018 -$ -$ -$ -$ -$ 68,707.01$ 85,387.70$ 1,923.08$ 1,538.46$

716 Rachel Bowen 300 EmployeeGeneral administrative Digital Marketing 4/16/2018 -$ -$ -$ -$ -$ 33,576.84$ 46,240.29$ 1,057.69$ 1,057.69$

728 Michael Nay 300 EmployeeGeneral administrative Digital Marketing 5/21/2018 -$ -$ -$ -$ -$ 32,259.74$ 58,096.00$ 1,346.15$ 1,346.15$

797 Tucker Evans 300 EmployeeGeneral administrative Digital Marketing 5/13/2019 22,211.49$ 1,057.69$

756 Margaret Saemann 300 EmployeeGeneral administrative Digital Marketing 11/6/2018 -$ -$ -$ -$ -$ 6,538.47$ 42,346.31$ 1,009.62$

766 Chelsea Sayegh 300 EmployeeGeneral administrative Digital Marketing 12/10/2018 -$ -$ -$ -$ -$ 2,115.38$ 46,211.49$ 1,250.00$ 1,250.00$

Jackson Lund 300 ConsultNetGeneral administrative Digital Marketing 2,843.04$

801 Ava Lewin 300 VendorGeneral administrative Marketing Intern 6/17/2019 -$ -$ -$ -$ -$ -$ 1,810.00$ 200.00$ 10.00$

363 Shay Magana 300 EmployeeGeneral administrative Graphic Design 2/2/2015 -$ -$ 53,204.22$ 45,949.76$ 51,069.36$ 59,192.50$ 49,307.85$ 1,153.85$ 1,153.85$

532 Alan Healey 300 EmployeeGeneral administrative Graphic Design 3/14/2016 -$ -$ -$ 33,904.12$ 47,915.16$ 49,265.38$ 49,554.00$ 1,153.85$

284 Scott Brown 300 VendorGeneral administrative Vendor 2,307.69$

302 David Larsen 300 VendorGeneral administrative Vendor 750.00$

698 David Porter 300 VendorGeneral administrative Vendor 500.00$

786 Sam DelCanto 100 VendorPreview Events Vendor 4,807.69$

811 Jennifer Knapp 100 VendorPreview Events Vendor 1,400.00$

812 Josephine Locke 100 VendorPreview Events Vendor 1,400.00$

831 Miranda Harrison 100 VendorPreview Events Vendor 1,200.00$

839 Nina Villalvazo 100 VendorPreview Events Vendor 1,731.00$

819 Quinn McLaughlin 100 VendorPreview Events Vendor 461.53$

806 Oliver Waller 100 VendorPreview Events Vendor 1,153.84$

886 Ariba Joubert 100 VendorPreview Events Vendor 1,000.00$

816 Kirsten Ehrnriter 100 VendorPreview Events Vendor 500.00$

100007 Eric "Javier" Rivera 500 PR General Administrative Office Manager 4/6/2015 -$ -$ 27,328.38$ 43,899.96$ 45,446.04$ 47,659.77$ 39,467.32$ 890.48$ 890.48$

100027 Sarah Velilla 500 PR General Administrative Legal 5/16/2016 -$ -$ -$ 43,869.27$ 75,600.12$ 81,624.64$ 67,466.94$ 1,590.14$ 1,590.14$

100016 Ruben Diaz 500 PR General Administrative 1/1/2016 -$ -$ -$ 6,580.00$ 7,368.00$ 8,006.85$ 6,025.05$ 148.05$

100015 Roberto Medina 500 PR General Administrative Customer Service 7/27/2015 -$ -$ 8,529.10$ 33,342.84$ 42,407.52$ 43,311.48$ 41,000.00$ 961.54$

100018 Zadora Lopez 500 PR General Administrative Customer Service 3/7/2016 -$ -$ -$ 21,448.00$ 28,100.00$ 29,745.00$ 26,475.00$ 551.25$ 551.25$

100024 Nicole Lopez 500 PR General Administrative Customer Service 4/18/2016 -$ -$ -$ 17,880.00$ 27,310.00$ 28,884.00$ 24,272.00$ 529.20$ 529.20$

100030 Roxanna Garcia 500 PR General Administrative Customer Service 8/8/2016 -$ -$ -$ 8,154.55$ 28,860.00$ 28,884.00$ 24,672.00$ 529.20$ 529.20$

100033 Migdaly Neives Santiago 500 PR General Administrative Customer Service 3/19/2018 -$ -$ -$ -$ -$ 23,068.00$ 22,640.00$ 504.00$

100035 Catiely Soto 500 PR General Administrative Customer Service 3/19/2018 -$ -$ -$ -$ -$ 25,818.00$ 25,440.00$ 504.00$

100048 Carmen Velez Oliver 500 PR General Administrative Customer Service 6/24/2019 -$ -$ -$ -$ -$ -$ 6,730.78$ 480.77$

100017 Tanairi Padro 500 PR General Administrative Marketing & Events 3/7/2016 -$ -$ -$ 21,600.00$ 28,100.00$ 33,130.43$ 34,171.11$ 788.46$ 788.46$

100031 Marta Varela Rosado 500 PR General Administrative Marketing & Events 5/1/2017 -$ -$ -$ -$ 16,228.00$ 26,308.00$ 24,000.00$ 525.00$

100043 Natalie Laboy Flores 500 PR General Administrative Marketing & Events 3/12/2019 -$ -$ -$ -$ -$ -$ 13,753.89$ 461.54$

100047 Leticia Torrens Vazquez 500 PR General Administrative Marketing & Events 6/17/2019 -$ -$ -$ -$ -$ -$ 7,692.32$ 480.77$

100050 Leah Gonzalez 500 PR General Administrative Marketing & Events 8/1/2019 -$ -$ -$ -$ -$ -$ 1,185.75$ 500.00$ 500.00$

100032 Noah Howell 500 PR General Administrative Marketing & Events 8/21/2017 -$ -$ -$ -$ 10,153.80$ 30,790.42$ 26,814.67$ 623.94$

100038 Yeimly Medina 500 PR General Administrative Marketing & Events 10/1/2018 -$ -$ -$ -$ -$ 4,846.14$ 34,177.62$ 1,057.69$

I

I

'

I I



201920182013 2014 2015 2016 2017

Utah Office 88,296.24$ 47,069.75$

47% Payroll Reduced

PR Office 11,126.03$ 5,378.73$

52% Payroll Reduced


EXHIBIT “ A9”


PRO FORMA COMPARIING PRE-TRO MODEL TO POST TRO-MODEL WITH NEW PRICING

Pre-TRO Average NumbersSeries total for

Real Estate

Product

Weekly Attendees Preview Sales % Preview Buyers Price Gross Revenue Weekly attendees

Average Sales Per

Head Gross Revenue

% of workshop

buyers

# of workshop

buyer leads

Average Sales Per

WS Buyer Gross Revenue Gross Revenue

400 4.50% 18 1,997.00 35,946.00 18 8,400.00 151,200.00 30% 5.4 10,000.00 54,000.00 241,146.00

Post-TRO Average Numbers Once Price Change at Preview Events ImplementedSeries total for

Real Estate

Product

Weekly Attendees Preview Sales % Preview Buyers Price Gross Revenue Weekly attendees

Average Sales Per

Head Gross Revenue

% of workshop

buyers

# of workshop

buyer leads

Average Sales Per

WS Buyer Gross Revenue Gross Revenue

400 18.00% 72 300.00 21,600.00 72 4,800.00 345,600.00 30% 21.6 5,000.00 108,000.00 475,200.00

Notes and Assumptions

Pricing has been changed at the preview events.

Real estate education product is sold at $300, which has increased sales with the new compliant script much beyond those of our prior sales.

Assumptions for workshop sales has been reduced from 50% Sales Per Head from prior to new pricing. We actually expect this to be higher.

Telesales have also been reduced by 50%, although the experience of the past week with the new compliant pitch is that our sales per buyer have actually increased.

Preview Sales Workshop Sales Telesales

Preview Sales Workshop Sales Telesales


EXHIBIT “ A10”


Zurixx LLC

Summary of Employee and Vendor (Subcontractor) Payments

For the Period September 2012 to October 2019

Employee/Vendor Employee Vendor Grand Total

David Freier $5,747,833 $5,747,833

Chad Olson $5,386,577 $5,386,577

Marc Hrisko $5,270,020 $5,270,020

Claude Alan Swails $4,671,083 $4,671,083

Christopher Young $3,797,622 $3,797,622

Matt Davis $3,276,258 $3,276,258

Michael Grow $2,867,810 $2,867,810

Greg Kazimer $2,670,757 $2,670,757

Robert Shemin $2,302,438 $2,302,438

Daniel Altamirano $2,291,542 $2,291,542

Scott Orison $2,285,242 $2,285,242

Erik Rash $2,196,356 $2,196,356

Jeff Spangler $1,296,030 $507,258 $1,803,287

Genevieve Hayward $1,703,388 $1,703,388

Scott Lamm $1,631,836 $1,631,836

Anthony Dixon $1,606,715 $1,606,715

Mark Stone $72,078 $1,473,210 $1,545,289

Michael Clasen $325,289 $1,201,499 $1,526,788

Bryce Chamberlain $754,756 $669,885 $1,424,642

Steve Wyman $1,397,428 $1,397,428

James Carlson $1,373,669 $1,373,669

Mike Vogel $1,366,039 $1,366,039

Ben Olson $1,304,698 $1,304,698

Matthew Magistro $1,207,282 $1,207,282

Keith Sperry $1,140,761 $1,140,761

Jeremy Hymas $1,121,443 $1,121,443

Joe Appleton $1,100,538 $1,100,538

Mark Chapman $1,086,806 $1,086,806

Cristopher Cannon $1,047,423 $1,047,423

Lisa Anderson $1,045,413 $1,045,413

Rick Watkins $985,428 $985,428

Chad Lawson $962,120 $962,120

Pamela Moore $946,508 $946,508

Michael Schreiner $887,945 $887,945

Todd Shinsel $882,993 $882,993

Maurice Wright $385,485 $479,090 $864,575

Trey Stinnett $860,144 $860,144

Sean Mangold $853,147 $853,147

Brian Allen Briggs $832,010 $832,010

Andrew Way $820,886 $820,886

Greg Martin $794,941 $794,941

Tim Payne $793,382 $793,382

Garth Satiu $790,122 $790,122

Page 1 of 20


Zurixx LLC




Richard Davis $446,655 $330,951 $777,606

Randolph Judd $764,628 $764,628

Terry Elsner $729,120 $729,120

Carter Brown $723,683 $723,683

Bret Ehlers $718,657 $718,657

Gerald Martin $717,530 $717,530

Michael Weber $682,385 $682,385

Tom Shields $682,282 $682,282

Scott Alger $677,894 $677,894

Bradley Biggerstaff $155,353 $519,096 $674,449

Denise Easter $667,353 $667,353

Matt Williams $657,693 $657,693

Terry Granahan $639,614 $639,614

Boyd Hoffmann $628,535 $628,535

Uriel Cantarero $623,619 $622,619

Scott Brown $619,692 $619,692

Mark Sanderson $595,671 $595,671

Les Hill $591,128 $591,128

Matthew Davis $590,612 $590,612

Anders Swenson $590,363 $590,363

Steve Goff $588,848 $588,848

April Critchfield $581,257 $4,229 $585,485

Jeff Havemann $576,193 $576,193

Jacob "Rex" Berry $561,241 $561,241

Jared Johnson $560,129 $560,129

Jason Kennedy $553,688 $553,688

Trevor Woolf $536,009 $536,009

Jose Berrios $257,167 $272,605 $529,772

Richard Alvarez $514,170 $514,170

Juan Mercado $14,850 $492,690 $507,539

Amber Guzman $505,695 $505,695

Darrell Walker $502,989 $502,989

Luis Carpio $190,428 $309,213 $499,641

David Jensen $250,746 $246,263 $497,008

Michele Simones $494,672 $494,672

Randy Cochrane $492,068 $492,068

Robert Greenland $487,838 $487,838

Dina Buchanan $480,293 $480,293

Jon Eborn $477,000 $477,000

Thomas Mietzel $467,127 $467,127

Aundra Johnson $462,011 $462,011

Craig Shane Andrus $461,035 $461,035

John Benson $456,012 $456,012

Page 2 of 20


Zurixx LLC




Mark Gonsalves $455,435 $455,435

Kevin York $453,183 $453,183

Steve Ahlander $427,337 $25,000 $452,337

Todd Marshall $449,488 $449,488

Joseph (Bud) McCluskey $439,794 $439,794

Eric Lloyd $436,382 $436,382

Brooke Capra $430,669 $430,669

Christopher Sanchez $12,065 $417,881 $429,946

Xenia Murphy $423,268 $423,268

Lance Phillips $339,148 $77,718 $416,866

Karen Fitz-Patrick $414,432 $414,432

Jed Johnson $411,258 $411,258

Dallas Hall $405,922 $405,922

Ross Weber $401,890 $401,890

Amanda Nielson $397,762 $397,762

Timothy Bell $397,036 $397,036

Bryan Segal $396,055 $396,055

David Pecoraro $394,860 $394,860

T. Grant Walton $386,780 $386,780

Nicole Jakobeit $375,812 $375,812

Jeremy Clawson $1,928 $367,294 $369,221

Taylor Peterson $355,886 $355,886

Robert Lett $348,471 $348,471

Michael Ethington $330,223 $330,223

Janis Kershaw $327,421 $327,421

Joel Cozzens $325,260 $325,260

Vince Dowd $324,866 $324,866

Lisa Toland $323,523 $323,523

Lisa Bass $322,687 $322,687

Ron Hayes $321,068 $321,068

Clay Eschrich $319,805 $319,805

Tony Mortezazadeh $315,021 $315,021

Daniel Christiansen $314,757 $314,757

Daniel Bird $262,683 $50,839 $313,522

Kathleen DiCiaccio $311,593 $311,593

Bernard Lawson $309,622 $309,622

Kevin Capra $309,120 $309,120

Tyler Greenwell $308,516 $308,516

Eric Brown $302,196 $302,196

Hannah Fedor $300,697 $300,697

Paul McGraw $299,739 $299,739

John Obinyan $297,455 $297,455

Scott Leitzell $295,466 $295,466

Page 3 of 20


Zurixx LLC




Rich Layton $294,920 $294,920

Bridgitte Sierra-Carias $294,628 $294,628

Leigh Anne Smith $294,433 $294,433

Alisha Pace $205,473 $86,456 $291,929

Mark Samuels $290,336 $290,336

Scott Hutchins $287,253 $287,253

Mark Stevens $282,583 $282,583

Scott Zuckman $280,271 $280,271

James Franckowiak $279,318 $279,318

Greg McCluskey $277,935 $277,935

Leah Gonzalez $277,764 $277,764

Karl Noons $276,078 $276,078

Kevin Moland $275,492 $275,492

Brenda Mangold $273,684 $273,684

Christopher Craig $120,442 $152,873 $273,315

Eliza Gyumushyan $271,019 $271,019

John Buechele $270,948 $270,948

Mitchell Johnson $269,085 $269,085

Mark Records $267,688 $267,688

Robbie Duncan $266,168 $266,168

Deborah Price $264,863 $264,863

Sarah Velilla $261,118 $261,118

Donna Marie Cason $261,104 $261,104

Angel Rolon $260,141 $260,141

Lance Robinson $258,918 $258,918

James Canterbury $253,390 $253,390

Tony Merenda $252,760 $252,760

Stephen Libman $251,728 $251,728

Danny Humphrey $249,800 $249,800

David Alexander $249,481 $249,481

Terry Wilson $246,580 $246,580

Stephanie Weed $236,358 $236,358

Erin Spainhower $236,189 $236,189

Elizabeth Sharp $234,578 $234,578

Dennis Frey $229,242 $229,242

Amy Barnhisel $223,971 $1,765 $225,736

Edward Chahanovich $225,429 $225,429

Larry McKinstry $224,794 $224,794

Bryan Twitchell $223,494 $223,494

Joshua Zieglowsky $222,643 $222,643

Shay Magana $222,570 $222,570

Gregory Ahleen $218,626 $218,626

Chelsey Chapman $218,554 $218,554

Page 4 of 20


Zurixx LLC




John Gifford $217,793 $217,793

Emily Sorensen $216,349 $216,349

Jason Leek $214,340 $214,340

Warren Ipson $211,865 $211,865

Ben Ashby $207,661 $207,661

Ann Alleman $203,622 $203,622

Michael Wytiaz $10,279 $189,565 $199,844

David Larsen $197,500 $197,500

Blake Young $160,239 $35,595 $195,833

Mary Easter $195,157 $195,157

Olga Lilly Navarro $195,063 $195,063

Gilberto Cruz $193,665 $193,665

Tyler Allred $192,956 $192,956

Steve Wollaston $192,063 $192,063

Balaji Mudlair $191,923 $191,923

James Richard Marshall $189,778 $189,778

Sierra Schubach $169,541 $19,500 $189,041

Billy Batson $185,393 $185,393

Jim Bohn $185,105 $185,105

Thomas Grant Walton $185,044 $185,044

Melissa Miller $182,372 $182,372

Kim Sumner $181,533 $181,533

Alan Healey $179,485 $179,485

Corey Herrera $159,462 $18,608 $178,070

Rick Moore $177,861 $177,861

Taylor Rodriquez $174,354 $174,354

Kevin Warmack $172,032 $172,032

Laura Summerhays $169,456 $169,456

Eric "Javier" Rivera $168,492 $168,492

Elise Snedeker $167,602 $167,602

Roberto Medina $166,691 $166,691

Elizabeth Higbee $166,276 $166,276

Adam Sachs $165,728 $165,728

Ben Coffman $165,600 $165,600

Curtis Harward $165,374 $165,374

Kenneth Bishop $165,135 $165,135

Helen Smith $164,888 $164,888

Michael Ciuffetelli $163,058 $163,058

Erin Hayes $161,486 $161,486

Francois Rodriques $161,486 $161,486

Davina Burns $160,740 $160,740

Robbie Buss $156,555 $156,555

Jeff Petersen $155,966 $155,966

Page 5 of 20


Zurixx LLC




Richard Layton $155,087 $155,087

Beau Horrocks $154,432 $154,432

Gregory Martin $153,500 $153,500

Sara Satterfield $152,847 $152,847

Kyle Sowell $152,015 $152,015

Timothy Hellbusch $151,277 $151,277

Kate Yuoska $151,272 $151,272

Trevor Mecham $151,119 $151,119

Samuel Ashby $149,932 $149,932

Tyler Hansen $147,503 $147,503

Frank Murphy $142,812 $142,812

Trace Turley $139,663 $139,663

Emily Robison $139,633 $139,633

Skyler Tolman $137,166 $137,166

Alyssa Fedel $136,868 $136,868

Dominic Larkin $133,964 $133,964

Jacob Underhill $130,887 $130,887

Justin Hayes $130,723 $130,723

Jill Rasmussen $121,713 $5,966 $127,679

Carmen Martinez $125,984 $125,984

Brittany Lisonbee $125,887 $125,887

Brandon Horrocks $125,429 $125,429

Chris Lombardo $125,383 $125,383

Curtis Allen $124,778 $124,778

Chris Peterson $123,492 $123,492

Darin Rolfe $116,524 $6,142 $122,666

Jonathan Miller $122,656 $122,656

Jenna Roman $122,421 $122,421

Rob Riley $121,240 $121,240

Sam DelCanto $120,192 $120,192

Michael Anthony $119,302 $119,302

Ann Rebentisch $118,958 $118,958

Shelley Hughes $118,285 $118,285

Janine Halversen $117,941 $117,941

Tanairi Padro $117,572 $117,572

Ryan Lotman $116,329 $116,329

Madison Jacobo $114,522 $114,522

Samuel Jensen $67,526 $46,414 $113,940

Gary Harris $113,408 $113,408

James Pelletier $113,287 $113,287

Melissa Labrum $112,105 $112,105

Michael Hilkey $112,060 $112,060

Nicole Packer $110,369 $110,369

Page 6 of 20


Zurixx LLC




Karl Carter $110,261 $110,261

Lori Santarelli $109,604 $109,604

Victoria Linder $109,534 $109,534

Tyler Deveraux $108,232 $108,232

Cris Cannon $105,000 $105,000

Kimberly Christopherson $104,459 $104,459

Nancy Johnson $104,021 $104,021

Alex Ituma $103,286 $103,286

Mataya Maxfield $101,183 $101,183

Kathryn Messina $101,107 $101,107

Adam Ruse $100,479 $100,479

Garrett Fuller $100,416 $100,416

Zadora Lopez $100,129 $100,129

Brinley Christison Janson $99,844 $99,844

Daryl Johnson $98,691 $98,691

Luc Gehring $98,631 $98,631

Denise DeVoe $98,020 $98,020

Nicole Lopez Salgado $97,817 $97,817

Isandra Rodriquez $97,244 $97,244

Brad Russell $97,052 $97,052

Alyssa McWhirter $97,010 $97,010

Brinley Christison $94,634 $94,634

Natasha England $94,379 $94,379

Jessie Conners $94,231 $94,231

Scott Bryson $94,029 $94,029

Andrew Meyer $93,099 $93,099

Amanda Rollins $92,784 $92,784

Andrew Renfro $92,507 $92,507

Ashley Amundsen $91,757 $91,757

Wendy Almaguer $91,749 $91,749

Michael Deveraux $91,187 $91,187

Cody Cannon $90,972 $90,972

Amy Carroll $90,582 $90,582

Brandon Veyna $1,871 $88,164 $90,036

Miranda Nelson $85,405 $3,750 $89,155

Alyssa Korologos $87,768 $87,768

Tyler Jackson $87,605 $87,605

Roxanna Garcia $87,252 $87,252

Michael Walker $87,074 $87,074

Alberto Molina $86,965 $86,965

Ashley Woods $86,878 $86,878

Michael Nay $86,204 $86,204

Dustin Bailey $86,191 $86,191

Page 7 of 20


Zurixx LLC




Samantha Castro $85,704 $85,704

Melvin Jackson $85,182 $85,182

Bradley Sanderson $84,176 $84,176

Eric Roundtree $82,899 $82,899

Kelly Brown $82,850 $82,850

Robert Justesen $82,557 $82,557

Clint Wakefield $82,391 $82,391

Michael (Jessie) Wheeler $82,217 $82,217

Kailee Gilbert $81,591 $81,591

Jill Jones $81,456 $81,456

Logan West $81,090 $81,090

Craig Cornforth $80,826 $80,826

Carl Thurgood $80,456 $80,456

John Tamblyn $80,384 $80,384

Brandon Day $80,175 $80,175

James Slagle $78,949 $78,949

Rachel Bowen $78,759 $78,759

Amy Murphy $77,999 $77,999

Laura Johnson $77,343 $77,343

Justin Spencer $76,597 $76,597

Selva Robles $76,429 $76,429

William Kimberling $3,796 $71,934 $75,729

Nicholas Nielsen $75,124 $75,124

Brian Voeller $74,876 $74,876

Michele Cooper $73,678 $73,678

Jennifer Edwards $72,489 $72,489

Lynda Jensen $72,348 $72,348

Clint Bean $19,198 $52,281 $71,479

Delbert Denney $71,479 $71,479

Hailey Clark $71,435 $71,435

Ryann Rasmussen $71,095 $71,095

Scott Stewart $70,228 $70,228

Christy Roberts $69,552 $69,552

Dean Redd $69,131 $69,131

Madaleine Martins $68,514 $68,514

Marta Varela Rosado $68,080 $68,080

Mayra Alanis $67,420 $67,420

Alex Villarreal $67,063 $67,063

Kim Crowther $65,110 $65,110

Erika Rebentisch $64,989 $64,989

Nathan Barton $64,545 $64,545

Brandon McBride $64,311 $64,311

Heldys Pabon-Rios $63,715 $63,715

Page 8 of 20


Zurixx LLC




Jamal Allen $63,501 $63,501

Jayden Wiece $63,449 $63,449

Richard Ordonez $62,807 $62,807

Karina Centeno $62,606 $62,606

Andrew Sherman $62,212 $62,212

Kenneth Frye $62,105 $62,105

Nate Holzapfel $61,220 $61,220

Anthony Barker $60,734 $60,734

Peter Cotton $60,321 $60,321

Eddmon Mark Hodge $59,523 $59,523

Doug Simpson $58,584 $58,584

Jazey Drecksel $58,486 $58,486

Dave Seymour $57,418 $57,418

Boyd Hoffman $56,731 $56,731

Brian Briggs $55,889 $55,889

Jon Melton $53,196 $53,196

Andrew Radman $51,968 $893 $52,860

Levi Stonehocker $52,569 $52,569

Eric Nielson $52,118 $52,118

Natasha England $51,808 $51,808

Peter Souhleris $51,454 $51,454

Connor Young $50,963 $50,963

Tamisha Chloe Phaylevhat-Carling $50,710 $50,710

Justin Smith $50,577 $50,577

Jack Matsuura $49,567 $49,567

Michael Dearinger $49,238 $49,238

Michael Hinson $48,435 $48,435

Lindsay Chandler $48,054 $48,054

Chelsea Sayegh $47,077 $47,077

Arthur Gyumushyan $46,939 $46,939

Margaret Saemann $46,809 $46,809

Jeffrey Garfield $46,496 $46,496

Clinton Trujillo $46,379 $46,379

Raina Hall $46,308 $46,308

David Porter $46,000 $46,000

Rocio Burgos $45,809 $45,809

Jack Daniels $45,744 $45,744

Rodney Huffman $45,556 $45,556

Catiely Soto $44,657 $44,657

James Miller $44,378 $44,378

Danny Allen $44,221 $44,221

Marcus Alexander $43,368 $43,368

Jocelin Hyatt $43,231 $43,231

Page 9 of 20


Zurixx LLC




Kati Leigh Peterman $43,210 $43,210

Migdaly Neives Santiago $42,324 $42,324

Lee van Deventer $42,157 $42,157

Ashlie Barnett $41,760 $41,760

Felix Garcia $41,272 $41,272

Bonita Fieser $40,625 $40,625

Scott Hurley $40,591 $40,591

Jackson Hedges $40,104 $40,104

Jackie Totaro $39,842 $39,842

Yeimly Medina $39,450 $39,450

Alek Gilmore $39,334 $39,334

Derrick Serbin $38,615 $38,615

Charles Noah Howell $38,466 $38,466

Larry Lee $38,383 $38,383

Melissa Wight $38,140 $38,140

Ron Fisher $38,057 $38,057

Justin Anderson $37,045 $37,045

Marcus D'Ort $36,709 $36,709

Krista Miller $36,210 $36,210

Natalie Iongi Fiztgerald $36,088 $36,088

Matthew Burbacher $36,010 $36,010

James McCabe $35,811 $35,811

Caitlin Lamborn $35,389 $35,389

Joanna Diaz $34,639 $34,639

Yvonne Colvin $34,430 $34,430

Lawrence Wolff $33,213 $33,213

Kevin Delvie $32,915 $32,915

Abdiel Ibarra $31,999 $31,999

Beth Martin $31,776 $31,776

Jennifer Knapp $31,050 $31,050

Zachary Richardson $30,865 $30,865

Rocky Sheffield $30,713 $30,713

Angie Coats $30,673 $30,673

Charles Noah $30,361 $30,361

Russell Anderson $30,176 $30,176

Brady Thurgood $30,091 $30,091

Oliver Waller $30,000 $30,000

Don Cote $28,912 $28,912

Morgan Wiece $28,893 $28,893

Angelica Ibarra-Carpio $27,950 $27,950

Kurt Bolinder $27,931 $27,931

Suzanne Campbell $27,763 $27,763

Andriu Lobendahn $27,633 $27,633

Page 10 of 20


Zurixx LLC




Brian Check $27,415 $27,415

Rosanna Ferrone $27,178 $27,178

Stephen Edwards $27,136 $27,136

Jessamee Dorigatti $26,828 $26,828

Scott Kahn $26,639 $26,639

Maria Gonzalez $26,498 $26,498

Jasmine Tello $26,204 $26,204

Derek Fout $26,108 $26,108

Bradley Campbell $25,949 $25,949

Michael Briggs $25,939 $25,939

Maira Segal $25,892 $25,892

Whitney Coffman $25,682 $25,682

Rider Jensen $25,577 $25,577

Candice Pope $25,522 $25,522

Jared Hunt $25,334 $25,334

John Young $25,247 $25,247

Mark Gaines $25,033 $25,033

Rick Brown $24,996 $24,996

David Scott Kimberling $24,770 $24,770

Jerry Bohn $24,729 $24,729

Charity Malae $24,689 $24,689

Peter Asumus $24,683 $24,683

Ashley Blackwell $24,409 $24,409

Don Wilson $24,235 $24,235

Susan Pilkenton $24,229 $24,229

Josephine Locke $24,050 $24,050

Alexis Jensen $23,772 $23,772

Carl Benson $23,500 $23,500

Sara Chevere $1,201 $21,965 $23,166

Shawn Ronson $23,092 $23,092

Matthew Arlofski $23,054 $23,054

Tiani Shoemaker $22,525 $500 $23,025

Dillon Green $22,821 $22,821

Jeff Haveman $22,721 $22,721

Leslie Lund $22,700 $22,700

Leone Lobendahn $22,673 $22,673

Damian Pell $22,051 $22,051

Chad Luke $21,985 $21,985

Ryan Woolley $21,696 $21,696

Lorin Hardy $21,225 $21,225

Juan Crespin $21,151 $21,151

Meghan Johnson $20,910 $20,910

Eric Martinez $20,846 $20,846

Page 11 of 20


Zurixx LLC




Zachary Wood $20,831 $20,831

Ricky Todd Florence $20,761 $20,761

Timothy Roberts $20,686 $20,686

Tucker Evans $20,511 $20,511

Jared Almond $20,249 $20,249

Donald Chandler $20,187 $20,187

Cory Lignell $20,009 $20,009

Roger LaFleur $19,798 $19,798

Joseph Irons $19,735 $19,735

Michael "Jessie" Wheeler $19,601 $19,601

Alexander Shemin $19,559 $19,559

Cyle Johnson $19,362 $19,362

Reemah Alkhairy $19,297 $19,297

Carlos Muniz $19,170 $19,170

Brianna Midas $19,115 $19,115

Anne King $19,052 $19,052

Tanya Price $18,984 $18,984

Manuel Ferreiros $18,915 $18,915

Joel Carpio $18,237 $18,237

Joseph (Bud) McClouskey $18,177 $18,177

John Wagner $17,968 $17,968

Douglas Simpson $17,738 $17,738

Jamie Gilleland $17,643 $17,643

Dominique Parker $17,624 $17,624

Jed Baadsgaard $17,171 $17,171

Reese Dansie $17,169 $17,169

Lucus Kevan $17,132 $17,132

Amber Smith $17,008 $17,008

Jared Kaufman $16,915 $16,915

Derek Olsen $16,883 $16,883

Kelly Allman $16,849 $16,849

Telly Boyle $16,430 $16,430

Sebastian Rosa Centeno $16,412 $16,412

Thera Smith $16,258 $16,258

James Cottrell $16,214 $16,214

Ruth Carreras $15,890 $15,890

Arianna Baggett $15,641 $15,641

Daniel Clark $15,619 $15,619

Miranda Harrison $15,616 $15,616

Jessica Eckert $15,596 $15,596

Nina Villalvazo $15,579 $15,579

Lance Phillips $15,535 $15,535

Curtis Cannon $15,530 $15,530

Page 12 of 20


Zurixx LLC




Brandon Mair $15,461 $15,461

Cheyenne Hall $15,436 $15,436

Nathan Rossi $15,111 $15,111

Shad Withers $14,896 $14,896

Adam Baadsgaard $14,746 $14,746

Scott Grayko $14,713 $14,713

Garo Topdjian $14,642 $14,642

Rose Guangorena $14,640 $14,640

Mandy Zuckman $14,486 $14,486

Darlene Nelson-Hill $14,242 $14,242

Kendal Blunck $14,130 $14,130

Michael (Jesse) Wheeler $14,127 $14,127

Eric Dahl $14,060 $14,060

David Cummins $13,795 $13,795

Biagio Sciacca $13,720 $13,720

Courtney Brown $13,693 $13,693

Logan Schenk $13,408 $13,408

Philip Jessee $13,296 $13,296

Amy Jenkins $13,285 $13,285

Kerry Austin $13,260 $13,260

Natalie Laboy $13,222 $13,222

Quinn McLaughlin $13,000 $13,000

Bradley Burnett $12,958 $12,958

Chris Briggs $12,900 $12,900

Nikki Calvert $12,743 $12,743

Jerry Foster $12,548 $12,548

Emily Robinson $12,538 $12,538

Brock Cannon $12,104 $12,104

Alex Gonzalez $12,102 $12,102

Greg Warr $12,055 $12,055

Melvin Rich $12,039 $12,039

Maria Borgos $11,950 $11,950

Mark Fultz $11,621 $11,621

Cory Russell $11,490 $11,490

Stephanie Noble $11,339 $11,339

Hamed Sadeghi $11,303 $11,303

Caleb Steil $11,124 $11,124

Jeff King $11,032 $11,032

Mark Pitts $10,933 $10,933

Garilynn Rapp $10,857 $10,857

Anthony Joseph $10,855 $10,855

Dixie Davis $10,850 $10,850

Julie Taggart $10,668 $10,668

Page 13 of 20


Zurixx LLC




Danica Moran $10,646 $10,646

Charlie Andrews $10,574 $10,574

Gary Fowkes $10,446 $10,446

Linzi Peleschka $10,286 $10,286

Steve Martin $10,267 $10,267

Jesse Martinez $10,232 $10,232

Bailee James $10,001 $10,001

Todd Ashton $10,000 $10,000

Clifford Townsend $9,840 $9,840

Cameron Rowe $9,840 $9,840

Jordan Roman $9,818 $9,818

David Schnepf $9,800 $9,800

Brienne Herrera $9,739 $9,739

Jeri Palmer $2,240 $7,390 $9,630

Joseph Jackson $9,596 $9,596

Irving Moya $9,453 $9,453

Alan Pratt $9,330 $9,330

Kayla Kobayashi $9,288 $9,288

Robert Ratliff $9,287 $9,287

James Guarino $9,253 $9,253

Josh Lance $9,244 $9,244

Peter Brown $9,244 $9,244

Kathryn Wakefield $9,188 $9,188

Danielle Klein $9,144 $9,144

Daniel Pett $9,000 $9,000

Brian Bourgeis $8,989 $8,989

Amanda Peterson $8,876 $8,876

Sophia Ormiston $8,652 $8,652

Damian Muziani $8,580 $8,580

Erica Robins $8,573 $8,573

Jolinda Carlson $8,459 $8,459

Adrienne Graeber $8,302 $8,302

Michael Webb $8,273 $8,273

Scott Skare $8,174 $8,174

Eric Thomas $8,165 $8,165

Deidra Savage $7,985 $7,985

Dora Siler $7,913 $7,913

Taylore Elton $7,892 $7,892

Makayla Tuft $7,820 $7,820

Sabrina Sauer $7,800 $7,800

Kayla Worth $7,733 $7,733

Robert Oborn $7,706 $7,706

Jack Cisneros $7,597 $7,597

Page 14 of 20


Zurixx LLC




Michael Wade $7,571 $7,571

Michael Burnett $7,548 $7,548

George Fuchs $7,508 $7,508

Jabari Gray $7,440 $7,440

Bradford How $7,440 $7,440

Francois Rodiques $7,334 $7,334

Chanel Laws $7,262 $7,262

Leticia Torrens $7,212 $7,212

Michelle Bombalier $7,200 $7,200

Roger Avery Marshall $7,194 $7,194

Earl Cline $7,178 $7,178

Kelly Moore $7,128 $7,128

David Jenkins $7,047 $7,047

Lance King $6,947 $6,947

Sarah Ricci $6,931 $6,931

Emily Martinson $6,923 $6,923

Naomi Gibson $6,870 $6,870

Patrick Manning $6,840 $6,840

Todd King $6,811 $6,811

Leah Gonzalez $6,721 $6,721

Eric Johnson $6,650 $6,650

Mikal Sage $6,490 $6,490

Phillip Cook $6,261 $6,261

Carmen Velez Oliver $6,250 $6,250

Ashley Twiner $6,240 $6,240

Paul Johnson $6,232 $6,232

Terry Brown $6,200 $6,200

Rafael Palomino $6,193 $6,193

Mark Walter $6,110 $6,110

Charles Newsome $6,022 $6,022

Jason Myles $5,977 $5,977

Jessica Pangos $5,955 $5,955

Timothy Mathews $5,930 $5,930

John Nguyen $2,781 $3,120 $5,901

Cassandra Valente $5,884 $5,884

Katherine Prevatt $5,846 $5,846

Jeffrey Cadavid $5,780 $5,780

Frances Perez Julia $5,760 $5,760

Marilyn Anderson $5,666 $5,666

Abby Anderson $5,654 $5,654

Lisa Davis $5,441 $5,441

Cody Barlow $5,385 $5,385

Troy Sperry $5,346 $5,346

Page 15 of 20


Zurixx LLC




Alyssa Harris $5,280 $5,280

Denise DeVoe-Hazelett $5,250 $5,250

Scott Hoffmann $5,249 $5,249

Hunter Cannon $5,177 $5,177

Dan Swanson $5,098 $5,098

Patricia Weber $5,042 $5,042

Maya Savic $4,985 $4,985

Kimberly Pruitt $4,927 $4,927

Paul Finck $4,874 $4,874

Don Jorgensen $4,780 $4,780

Alexis Ellis $4,777 $4,777

Megan Peterson $4,741 $4,741

Linda Birnie $4,708 $4,708

Jenny Rose $4,686 $4,686

Meagan Carpio $4,538 $4,538

Brett Williams $4,533 $4,533

Daniel Simsiman $4,522 $4,522

Kiley Christensen $4,514 $4,514

Christina Gayheart $4,459 $4,459

Robert Thornton $4,375 $4,375

Ryan Bloxham $4,372 $4,372

Lynn Randall Singer $4,308 $4,308

David Gilmore $4,265 $4,265

Patricia Thomas $4,250 $4,250

Whitney Pratt $4,235 $4,235

Jacob Denver $4,159 $4,159

Jason Clifford $1,781 $2,370 $4,152

Alma Dubon $4,122 $4,122

Ruben Estrada $3,957 $3,957

Juan Clark $3,945 $3,945

Mike Vullo $3,942 $3,942

Matthew Gillman $3,898 $3,898

Michael Meinzer $3,863 $3,863

Isaac Rodriquez $3,840 $3,840

Robert Hutchins $3,776 $3,776

Timothy McGaffin $3,675 $3,675

Robert DeMott $3,665 $3,665

Jason Loughridge $3,640 $3,640

Cassandra Weis $3,604 $3,604

Chantal Anderson $3,560 $3,560

Tyler Briggs $3,550 $3,550

Mario Calderon $3,540 $3,540

Angel Martinez $3,445 $3,445

Page 16 of 20


Zurixx LLC




Kasia Palmaka $3,445 $3,445

Jon Moss $3,436 $3,436

Kirby Griffiths $3,429 $3,429

Marcos Orozco $3,420 $3,420

Carlos Garcia $3,420 $3,420

Steven Willey $3,393 $3,393

Mark Trujillo $3,393 $3,393

Travis Sallenback $3,388 $3,388

Charles Brooks $3,354 $3,354

Meagan Martin $3,344 $3,344

Mitch Schoenman $3,315 $3,315

Cassie Sigler $3,280 $3,280

Yovanna Martinez $3,277 $3,277

Frederick Johnson $3,240 $3,240

Nicole Jensen $3,170 $3,170

Natasha Johnson $3,170 $3,170

Jeanne Jones $3,170 $3,170

Erik Berrios $3,138 $3,138

Brett Monson $3,096 $3,096

Jazmine Cruz $3,082 $3,082

Richard Tyson Ellis $3,055 $3,055

Katie Lawson $3,027 $3,027

Estephania Guerrero $3,024 $3,024

Pamela Gorrie $3,000 $3,000

Ariba Joubert $3,000 $3,000

Chris Swart $3,000 $3,000

Dan Beckerman $2,995 $2,995

David Elton $2,922 $2,922

Jessica Moreno $2,919 $2,919

Todd Shuman $2,851 $2,851

Colin Archuleta $2,839 $2,839

Damon Parker $2,820 $2,820

Mark Ferrell $2,792 $2,792

Dennis Thomas $2,684 $2,684

Joacquin Stevens $2,680 $2,680

Lance Richards $2,639 $2,639

Musah Earle $2,610 $2,610

Christian Jensen $2,610 $2,610

Omar Olsen $834 $1,738 $2,572

Carlos Orozco $2,512 $2,512

Adam Giles $2,507 $2,507

Marley Chamberlain $2,500 $2,500

Shantel Chester $2,406 $2,406

Page 17 of 20


Zurixx LLC




Michael Myers $2,400 $2,400

Danielle Tamblyn $2,370 $2,370

Cheri Robbins $2,370 $2,370

Adalburto Arroyo $2,351 $2,351

Nicole Gonzalez $2,308 $2,308

William Vaultz $2,300 $2,300

Andrea Forero $2,287 $2,287

Claribel Martinez $2,262 $2,262

Stephanie Appleton $2,250 $2,250

Luis Santiago $2,250 $2,250

Timothy Papa $2,249 $2,249

Mabel Anderson $2,209 $2,209

Russell Baughman $2,181 $2,181

Tracey Wise $2,140 $2,140

Chiricahau Wolff $2,108 $2,108

Michael Kevin Moore $2,100 $2,100

Rich Davis $2,082 $2,082

Kyle Handy $2,077 $2,077

Cheryl Quell $2,040 $2,040

Tamisha Chloe Phayleuhat-Carling $2,019 $2,019

Camille Thomas $2,000 $2,000

Peter Massihi $1,976 $1,976

Nik Piscitello $1,963 $1,963

Eric Baertsch $1,936 $1,936

Brian Zimmerman $1,934 $1,934

Rebecca Garcia $1,923 $1,923

Deborah Finck $1,913 $1,913

JJ Childers $1,912 $1,912

Cameron McCracken $1,870 $1,870

Raquel Calderon $1,859 $1,859

Ava Lewin $1,785 $1,785

Hannah Lee $1,779 $1,779

Erin Fitzgerald $1,750 $1,750

Virgina Bostrom $1,725 $1,725

Lisa Williams $1,711 $1,711

Terri Lawrenz $1,700 $1,700

Mike Syme $1,682 $1,682

Mikel Sage $1,675 $1,675

Richard Evans $1,637 $1,637

Sherri DeLaura $1,590 $1,590

Kizzi Murdock $1,544 $1,544

Tanyoka Williams $1,540 $1,540

Kim Christopherson $1,535 $1,535

Page 18 of 20


Zurixx LLC




Robert Kralovetz $1,500 $1,500

Myra Morris $1,480 $1,480

Jeanne Hayes $1,475 $1,475

Jacob Cannon $1,454 $1,454

Nathan Lowe $1,431 $1,431

Will Brunner $1,424 $1,424

Paul Winn $1,385 $1,385

Matthew Simmons $1,302 $1,302

Jennifer Biolsi $1,250 $1,250

Steve Olpin $1,224 $1,224

Tad Lignell $1,189 $1,189

Penny Chen $1,160 $1,160

Warren Manwill $1,160 $1,160

Marquise Joubert $1,156 $1,156

Robert Martin $1,125 $1,125

Justin Pearce $1,125 $1,125

Jose Jarquin $1,099 $1,099

Cortney Comstock $1,012 $1,012

Rebecca Segar $1,000 $1,000

Michael Horne $1,000 $1,000

Katie Gall $1,000 $1,000

Kirsten Ehrnriter $1,000 $1,000

Glen Alexander Alleman $1,000 $1,000

Jackson Kade Lucero $945 $945

Alden Sparks $945 $945

Ellen Knapp $900 $900

Maynard Scribner $870 $870

Kenneth Merkel $850 $850

Andrew Mathis $838 $838

Aaron Shilling $825 $825

Nicholas Welch $764 $764

Tamara Jones $763 $763

Melanie Belonis $763 $763

Kevin Canty $763 $763

Ayana Lindsey $763 $763

Paul Jeppsen $720 $720

Aaron Wilson $700 $700

Lisa Long $691 $691

James Wheeler $650 $650

Monique Overbey $638 $638

Fong Lin $625 $625

Matthew Marshall $625 $625

Larry Reymore $625 $625

Page 19 of 20


Zurixx LLC




Sean Falker $575 $575

Tasha Bethea $575 $575

Patricia Delaney $575 $575

Veerja Mehta $575 $575

Sean Castaneda $575 $575

Nicol Diaz $575 $575

Christopher Dickerson $575 $575

Amaris McCargo $575 $575

Tipton Carlson $540 $540

Pauline Tyas $538 $538

James Sahady $500 $500

Eric Stone $500 $500

Dustin Fitch $500 $500

Alyssa Love $500 $500

Jade Cancel $488 $488

Chris Norman $486 $486

Amiya McCargo $475 $475

Ilona Brown $474 $474

Kellie Wilson $469 $469

Zont'l Smith $457 $457

Josh Taylor $0 $453 $453

Kaylee Haro $416 $416

0 Stephanie Weed $401 $401

Ross Meredith $315 $315

Seville Michelle $300 $300

Eugenia Edwards $300 $300

Erica Richardson $300 $300

Daisy Felix $300 $300

Ricky Florence $296 $296

R D Woodland $290 $290

Jason Marin $276 $276

Annalisa Rinetti $240 $240

Matt Thompson $237 $237

Brianna Munger $208 $208

Jeslyn Sundquist $192 $192

Anthony Castillo $122 $122

(blank) $56 $56

Lui

Anthony Ehrnriter $0 $0

Andria Finau ($0) ($0)

Grand Total $61,565,685 $96,944,949 $158,509,633

Page 20 of 20


EXHIBIT “ A11”


Zurixx, LLC and Consolidated Entities (Brand Management Holdings, LLC and Dorado Marketing and Management LLC)Financial Statement Summary

2014 2015 2016 2017 2018 Total

Revenues $54,188,360 $85,301,223 $167,309,147 $88,900,083 $95,339,167 $491,037,980

Cost of Revenues $47,066,917 $61,062,781 $7,182,277 $6,462,949 $6,699,025 $128,473,949

Gross Margin $7,121,443 $24,238,442 $160,126,870 $82,437,134 $88,640,142 $362,564,031

Operating Expenses

Selling and Marketing $96,977,145 $63,968,755 $61,515,367 $222,461,267Payroll and related benefits $2,986,540 $4,909,030 $6,391,714 $5,814,941 $5,693,720 $25,795,945Professional services $1,901,272 $301,898 $1,606,038 $892,202 $624,788 $5,326,198Merchant and bank fees $1,739,666 $2,743,323 $3,190,638 $2,444,863 $2,607,518 $12,726,008Sales expense $902,375 $1,018,816 $1,034,838 $648,504 $746,763 $4,351,296Occupancy and rent $594,772 $1,043,684 $1,717,863 $1,261,896 $1,418,381 $6,036,596Travel and entertainment $234,001 $431,381 $862,748 $565,859 $374,726 $2,468,715Office expenses $200,132 $514,511 $778,063 $291,741 $376,157 $2,160,604General and administration $187,838 $1,421,983 $496,896 $445,837 $417,456 $2,970,010Depreciation $35,315 $162,719 $353,119 $372,439 $284,814 $1,208,406

Total Operating Expenses $8,781,911 $12,547,345 $113,409,062 $76,707,037 $74,059,690 $285,505,045

Other income (expense) and income tax ($2,365,076) ($1,361,075) ($872,807) ($169,563) ($484,495) ($5,253,016)

Consolidated Net Income ($4,025,544) $10,330,022 $45,845,001 $5,560,534 $14,095,957 $71,805,970

Operating Cash Flow $13,052,115 $35,035,401 $13,708,162 $8,697,315 $14,369,365 $84,862,358

Net Income Attributable to Dorado N/A $32,343,354 $20,906,537 $5,875,470 $12,756,680 $71,882,041Net Income (Loss) Attributable to Zurixx, LLC ($20,930,295) ($4,838,613) $12,679,395 ($314,936) $1,339,277 ($12,065,172)

Members' Deficit - Zurixx, LLC ($20,930,295) ($26,148,831) ($13,469,436) ($18,320,099) ($16,950,803)Members' Equity (Deficit) - Dorado N/A $816,846 $7,570,192 $7,266,169 $4,670,299

Total Consolidated Members' Deficit ($20,930,295) ($42,126,781) ($10,434,971) ($11,053,930) ($12,280,504)

Member Distributions - Zurixx, LLC $11,262,830 $0 $0 $0 $0 $11,262,830Member Distributions - Dorado N/A $31,526,508 $14,153,191 $6,179,793 $15,352,550 $67,212,042Total Member Distributions $11,262,830 $31,526,508 $14,153,191 $6,179,793 $15,352,550 $78,474,872


EXHIBIT “ A12”


ZURIXX, LLC AND CONSOLIDATED ENTITIES

CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2018 and 2017


TABLE OF CONTENTS

INDEPENDENT AUDITOR'S REPORT

CONSOLIDATED FINANCIAL STATEMENTS:

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Members' Deficit

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

SUPPLEMENTARY INFORMATION:

2018 Consolidating Balance Sheet

2018 Consolidating Statement of Income

2018 Consolidating Statement of Members' Equity (Deficit)

2018 Consolidating Statement of Cash Flows

2017 Consolidating Balance Sheet

2017 Consolidating Statement of Operations

2017 Consolidating Statement of Members' Equity (Deficit)

2017 Consolidating Statement of Cash Flows

Pae

1

3

4

5

6

7

15

16

17

18

19

20

21

22


S~IRE HIGHER PERSPECTIVE

To the Members of Zurixx, LLC and Consolidated Entities

Report on Consolidated Financial Statements

We have audited the accompanying financial statements ofZurixx, LLC and Consolidated Entities, which comprise the consolidated balance sheets as of December 31, 2018 and 2017, and the related consolidated statements of income, members' equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements of Dorado Marketing and Management LLC, an entity consolidated under Financial Accounting Standards Board ASC 810, whose statements reflect total assets constituting 26% and 40% of consolidated total assets at December 31, 2018 and 2017, respectively, and total revenues constituting 0%, after eliminations, of consolidated total revenues for each of the years then ended. Those statements were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Dorado Marketing and Management LLC, is based solely on the report of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

o 1329 South Boo East, Orem, UT 84097 II p 801.225.6900 II w squire.com

Sqt1irr is a dba 1cgi:-tc1cd to Squire & Com?any, l'C, a ccrcificd puhlic accoun ting f.m1


Opinion

In our opinion, based on our audits and the reports of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Zurixx, LLC and Consolidated Entities as of December 31, 2018 and 2017, and the consolidated results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Report on Supplementary Information

Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The consolidating supplementary information is presented for purposes of additional analysis of the consolidated financial statements rather than to present the financial position, results of operations, and cash flows of the individual companies, and it is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The consolidating information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, which insofar as it relates to Dorado Marketing and Management LLC is based on the report of other auditors, the consolidating information is fairly stated in all material respects in relation to the consolidated financial statements as a whole.

~ +~, Pc Orem, Utah June 11, 2019


ZURIXX, LLC AND CONSOLIDATED ENTITIES CONSOLIDATED BALANCE SHEETS December 31, 2018 and 2017

2018 2017

ASSETS

Current Assets: Cash $ 4,685,993 $ 5,808,490 Capitalized advertising costs 2,824,979 2,073,101 Deferred costs 8,236,434 7,148,912 Prepaid expenses 77,837 79,437

Total current assets 15,825,243 15,109,940

Restricted Cash 4,272,215 4,301,113

Fixed Assets, net 608,852 724,335

Total assets $ 20,706,310 $ 20,135,388

LIABILITIES AND MEMBERS' DEFICIT

Current Liabilities: Accounts payable $ 658,506 $ 3,267,735 Due to related parties 2,000 2,000 Reserves for refunds and chargebacks 6,607,648 7,067,290 Deferred revenue 22,057,167 17,579,705 Accrued payroll and related benefits 440,259 390,051 Accrued expenses 274,664 Accrued loss contingency 2,276,639 2,500,639 Deferred rent 139,203 129,766 Income tax payable 530,728 252,132

Total current liabilities 32,986,814 31,189,318

Members' Equity (Deficit): Zurixx, LLC and Combined Entity Deficit (16,950,803) (18,320,099) Interest in Dorado Marketing and Management LLC 4,670,299 7,266,169

Total member's deficit (12,280,504} (11,053,930}

Total liabilities and members' deficit $ 20,706,310 $ 20,135,388

The accompanying notes are an integral part of these consolidated financial statements.

-3-


ZURIXX, LLC AND CONSOLIDATED ENTITIES CONSOLIDATED STATEMENTS OF INCOME Years Ended December 31, 2018 and 2017

2018 2017

Revenues $ 95,339,167 $ 88,900,083

Cost of Revenues 6,699,025 6,462,949

Gross Margin 88,640,142 82,437,134

Operating Expenses: Selling and marketing 61,515,367 63,968,755 Payroll and related benefits 5,693,720 5,814,941 Professional services 624,788 892,202 Merchant and bank fees 2,607,518 2,444,863 Sales expense 746,763 648,504 Occupancy and rent 1,418,381 1,261,896 Travel and entertainment 374,726 565,859 Office expenses 376,157 291,741 General and administration 417,456 445,837 Depreciation 284,814 372,439

Total operating expenses 74,059,690 76,707,037

Operating Income 14,580,452 5,730,097

Other Income (Expense): Other income 27,312 73,802 Interest income 1,838 1,969 Other expense {1 O}

Total other income 29,150 75,761

Income before Income Taxes 14,609,602 5,805,858

Income Tax Expense (513,645) (245,324)

Net Income 14,095,957 5,560,534

Net Income Attributable to Interest in Dorado Marketing and Management LLC 12,756,680 5,875,470

Net Income (Loss) Attributable to Zurixx, LLC $ 1,339,277 $ (314,936)


-4-


ZURIXX, LLC AND CONSOLIDATED ENTITIES CONSOLIDATED STATEMENTS OF MEMBERS' DEFICIT Years Ended December 31, 2018 and 2017

Zurixx, LLC Dorado Marketing and and

Combined Entit~ Man9a9ement LLC

Members' Deficit at January 1, 2017 $ (18,005,163) $ 7,570,192

Member distributions (6, 179,493)

Net income (314,936} 5,875,470

Members' Deficit at December 31, 2017 (18,320,099) 7,266,169

Member contributions 30,019

Member distributions (15,352,550)

Net income 1,339,277 12,756,680

Members' Deficit at December 31, 2018 $ (16,950,803) $ 4,670,299


-5-

Total

$ (10,434,971)

(6,179,493)

5,560,534

(11,053,930)

30,019

(15,352,550)

14,095,957

$ {12,280,504)


ZURIXX, LLC AND CONSOLIDATED ENTITIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2018 and 2017

Cash Flows from Operating Activities: Net income Adjustments to reconcile net income to net

cash provided by operating activities: Depreciation Change in operating assets and liabilities:

Prepaid expenses Restricted cash Capitalized advertising costs Deferred costs Due from related parties Accounts payable Due to related parties Accrued payroll and related benefits Reserve for refunds and chargebacks Deferred revenue Accrued loss contingency Deferred rent Income tax payable Accrued expenses

Total adjustments

Net cash provided by operating activities

Cash Flows from Investing Activity: Purchase of fixed assets

Cash Flows from Financing Activities: Member contributions Member distributions

Net cash used by financing activities

Net Change in Cash and Cash Equivalents

Beginning Cash and Cash Equivalents

Ending Cash and Cash Equivalents

2018

$ 14,095,957

284,814

1,600 28,898

(751,878) (1,087,522)

(2,609,229)

50,208 (459,642)

4,477,462 (224,000)

9,437 278,596 274,664

273,408

14,369,365

(169,331)

30,019 {15,352,550}

{15,322,531}

(1,122,497)

5,808,490

$ 4,685,993


-6-

2017

$ 5,560,534

372,439

38,548 6,754,305 (771,846)

1,575,145 49,840

1,532,637 (1,500,000)

68,686 (626,155)

(3,539,868) (226,000)

52,097 (643,047)

3,136,781

8,697,315

(56,239)

{6,179,493}

{6,179,493}

2,461,583

3,346,907

$ 5,808,490


ZURIXX, LLC AND CONSOLIDATED ENTITIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.

Note 2.

The Company

Financial Statements and Presentation - The consolidated financial statements include the accounts of Zurixx, LLC, and an entity consolidated under Financial Accounting Standards Board (FASB) ASC 810, Dorado Marketing and Management LLC (collectively referred to as "the Company"). All significant intercompany transactions and balances have been eliminated in the preparation of the consolidated financial statements.

Business Activity - Zurixx, LLC (Zurixx) includes the combined financial statements of Brand Management Holdings, LLC. Zurixx was organized in the state of Utah on February 23, 2012. Zurixx has an original life of99 years and will terminate in February 2111. Zurixx develops, promotes, sells and fulfills financial education programs throughout the United States and Canada by partnering with well-known and trusted financial celebrities to cater, market and sell impactful programs that are easy to learn and effective. Brand Management Holdings, LLC (BMH) has the same ownership structure as Zurixx and is combined to present a more meaningful presentation of the operations ofBMH and Zurixx. All significant intercompany balances and transactions have been eliminated in combination. BMH was organized in the state of Delaware on October 13, 2016. BMH has an original life of 99 years and will terminate in October 2115. BMH was created to help mitigate and minimize the risk from the different brands Zurixx contracts with to prevent potential brand image issues affecting other brands.

Dorado Marketing and Management LLC, a Puerto Rican limited liability company, was originally organized on August 8, 2014 as Zurixx, LLC Puerto Rico. The Company commenced operations in January 2015 and is engaged in export services associated to advertising and public relations; consulting centralized management services; and educational and training services. All of the revenues of Dorado Marketing and Management LLC are earned from Zurixx and eliminated in the consolidating financial statements.

Summary of Significant Accounting Policies

This summary of significant accounting policies of the Company is presented to assist in understanding the Company's consolidated financial statements. The consolidated financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the United States of America and have been consistently applied in the preparation of the consolidated financial statements.

Cash - For purposes of the statement of cash flows, cash includes all regular checking, savings, money market accounts with original maturities of90 days or less.

Restricted Cash - Restricted cash consists of monies held by merchant account providers for chargebacks on credit card sales. As of December 31, 2018 and 2017, a maximum amount had not been established that could be withheld on sales.

Prepaid Expenses - Prepaid expenses consist primarily of deposits on lease agreements and deposits for goods and services.

-7-



Note 2. Summary of Significant Accounting Policies (Continued)

Deferred Costs - Deferred costs consist of expenses incurred relating to deferred revenue and will be expensed when the related revenue is recognized.

Use ofEstimates -The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amount of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances in making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Depreciation - Fixed assets are stated at cost less accumulated depreciation. Depreciation is determined using the straight-line method over the estimated useful lives of individual assets. The useful life used for computing depreciation for asset classes is described below:

Leasehold improvements Furniture and fixtures Office and computer equipment Software

3-10 years 5-7 years 3-5 years

3 years

Depreciation expense for the years ended December 31, 2018 and 2017, was $284,814 and $372,439, respectively. Maintenance and repairs are expensed when incurred, and betterments which extend the economic useful life of an asset are capitalized. Gains and losses on the disposal of fixed assets are reflected in operations.

Revenue Recognition - Revenues are recognized when access to resources are provided to customers and when the services are provided to the customer. If the customer does not attend the scheduled event, revenue is recognized in accordance with the sales contract within 30 days of when the services were scheduled to be provided. The Company sells packages that include separate elements. Revenue is allocated to the separate elements based on their relative fair values. The fair value of an undelivered element is based on the sales price of the item on a standalone basis. If an undelivered element exists, its proportionate fair value is subtracted from the total consideration under the arrangement and recorded as deferred revenue. Revenues are derived from the sale of workshops, oneon-one consulting, coaching, and other educational products. Revenue from workshops are recognized upon completion of the workshop or within 30 days of when the workshop was scheduled. Consulting services and coaching are recognized after the services and coaching are provided or within 30 days of when the services were scheduled to be provided. Revenue from the other educational products are recognized once the products have been provided to the customers.

-8-




As of January I, 2019, the Company is required to adopt the Financial Accounting Standards Board (the "F ASB") Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606). Under the update, revenue will be recognized based on a five-step model. The core principle of the model is that revenue will be recognized when the transfer of promised goods or services to customers is made in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company currently plans to use the modified retrospective method which requires that the Company not adjust historical reported revenue amounts. The Company is evaluating the effect of this new standard but does not expect it to have a material impact on the revenue recognition process of the Company.

Reserve for Refunds or Chargebacks - In the normal course of business, the Company records a reserve obligation for estimated refunds and chargebacks. The reserve amounts at December 31, 2018 and 2017, were $6,607,648 and $7,067,290, respectively, and are estimates made by management based upon historical trends of actual refunds and chargebacks.

Deferred Rents - The Company evaluates each property lease, including escalation clauses rent holidays, and renewal options, to determine whether a straight-line adjustment to rent expense is required. The difference between the straight-line rent expense and the amount paid in cash for rent is recorded to deferred rents on the consolidated balance sheet.

Income Taxes -The members of Zurixx and BMH are taxed on their proportionate share of the individual entity's income. Therefore, no provision or liability for income taxes related to income taxes for Zurixx and BMH is included in the accompanying consolidated financial statements.

Zurixx and BMH file income tax returns in the U.S. federal jurisdiction and various state jurisdictions and are no longer subject to U.S. federal or state and local income tax examinations by tax authorities for years before 2015.

In accordance with accounting standards, the Company repmis a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in other expense in the statement of operations. The Company has not recognized any tax benefits from unce1iain tax positions.

Because of Dorado Marketing and Management LLC's tax status as a C Corporation (see Note 11 ), income tax is accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in expected tax rates is recognized in income in the period that includes the enactment date.

-9-




Note 3.

Dorado Marketing and Management LLC is subject to income tax audits by the Commonwealth of Puerto Rico for its taxable years 2015 to 2018, until the applicable statute of limitations expire. Tax audits by their nature are often complex and can require several years to complete. Management has not been notified of any such audits.

Concentrations

At December 31, 2018, the carrying amount of cash and cash equivalents was $4,685,993, and the bank balance was $4,879,794, of which $500,000 was covered by federal depository insurance.

Note 4. Sales Contracts

Total sales contracts entered into were $99,050,159 and $85,359,698 for the years ended December 31, 2018 and 2017, respectively. Revenue recognized on sales contracts are recognized using the principles described in Note 2.

Below is a schedule showing sales by year and the year the sales were earned in revenue:

2012

Earned revenue prior to 2014 $ 1,850,794 Earned revenue in 2014 Earned revenue in 2015 Earned revenue in 2016 Earned revenue in 2017 Earned revenue in 2018 Total sales contracts

Sales Year

2013

$ 27,202,974 2,647,911

52,085 2,069,453

$

2014

51,540,449 2,825,840

14,366,279

$

2015

82,423,298 45,729,121

Total Sales

(Continued) ...

$ 1,850,794 $ 31,972,423 $ 68,732,568 $128,152,419

2016

Earned revenue prior to 2014 $ $ Earned revenue in 2014 Earned revenue in 2015 Earned revenue in 2016 105,144,294 Earned revenue in 2017 Earned revenue in 2018 Total sales contracts

21,113,073

Sales Year

2017

67,787,010 17,576,705

2018

77,762,462 22,057,167

Totals

$ 29,053,768 54,188,360 85,301,223

167,309,147 88,900,083 95,339,167 22,057,167

Total Sales $126,257,367 $ 85,363,715 $ 99,819,629 $542,148,915

-10-



Note 5.

Note 6.

Note 7.

Commitments and Contingencies

Accrued Loss Contingency - During the year ended December 31, 2014, a third party sold homes at the Company's workshops to the Company's students. The Company has discovered that many of these homes did not have clear title, and certain representations made by the third party also were not true. Because the homes were sold at the Company's workshops, the Company has decided to refund a portion of the sales price to students if refunds are requested by students. At December 31, 2018 and 2017, management has estimated that the Company will pay $2,276,639 in refunds, this amount has been recorded as accrued loss contingency on the balance sheet.

In addition, the Company has accrued $224,000 at December 31, 2017, for settlements reached with customers for disputes relating to services provided to the customers. During the year ended December 31, 2018, the balance was paid in full.

Venue Contracts - During the year ended December 31, 2018, the Company entered into contracts for venues to hold summit events. At December 31, 2018 and 20 I 7, the Company is obligated to pay $84,000 and $856,926 for events to be held in 2018 and 2017, respectively.

Transfer Price - The Company performed a Comparable Profits Method (CPM) and Comparable Uncontrolled Transactions (CUT) analysis to determine the arm's length nature of intra-group compensating transactions. These transactions impact the tax exposure of the jurisdiction whereby the affiliate services are billed. Management performed a transfer price evaluation and found no significant exposure.

Related Party Transactions

At December 31, 2018 and 2017, the Company owed members of the Company $2,000.

Capitalized Advertising Costs

The Company expenses adve1iising costs as incurred, except for direct-response advertising, which is capitalized and amortized over the expected period of future benefits.

Direct-response advertising consists primarily of direct mail, radio, and online advertisements that promote the Company's free events and encourages people to attend the events. The capitalized costs of the advertising are amortized as the services sold at the events are fulfilled by the Company.

At December 31, 2018 and 2017, capitalized direct-response advertising costs of $2,824,979 and $2,073,101, respectively, were included in the accompanying balance sheets. For the years ended December 31, 20 I 8 and 20 I 7, advertising expense was $11,606,846 and $9,242,718, respectively, which consists of amortization of directresponse advertising.

-11-



Note 8. Fixed Assets

Note 9.

Fixed assets consist of the following at December 31, 2018 and 2017:

2018 2017

Leasehold improvements $ 828,703 $ 828,703

Furniture and fixtures 583,101 583,101

Equipment 378,088 208,757 Software 40,454 40,454

Total 1,830,346 1,661,015 Less accumulated depreciation (1,221,494) (936,680)

Fixed assets, net $ 608,852 $ 724,335

Operating Leases

The Company has entered into two non-cancelable operating leases for office space in Utah expiring in July 2019 and January 202 l. These leases require monthly payments totaling $90,749, which increases 3% each year. Also, the Company has leased administrative faci Ii ties located in Dorado, Puerto Rico expiring October 2021, requiring monthly payments of $10,795, which increase 3% each year. Lease expense was $1,192,095 and $1,077,013 for the years ended December 31, 2018 and 2017, respectively.

Future minimum payments due under these leases are as follows :

Year Ending December 31,

2019

2020 2021

Total

$ 1,141,608

1,126,885 228,267

$ 2,496,760

Note 10. Supplementary Cash Flow Information

The Company paid $0 in interest during the years ended December 31, 2018 and 2017. The Company paid $235,049 and $888,371 in incomes taxes during the years ended December 31, 2018 and 2017, respectively.

-12-



Note 11. Income Tax - Puerto Rico

Dorado Marketing and Management LLC operates for tax purposes as a C corporation. The maximum tax rate for a C corporation is 39% under the laws of the Commonwealth of Puerto Rico, but on January 30, 2015, the Company received a grant from the Depmtment of Economic Development and Commerce in order to operate with a tax exemption under the Act No. 20 of January 17, 2012, as amended ("the Act"). The Act provides for certain tax benefits for local companies that provide eligible service activities outside of Puerto Rico.

Under the Act, Dorado Marketing and Management LLC is subject to income tax on its export services income on a preferential tax rate of 4% based on the grant received under the Act. In order to maintain the exemption status under the Act, the Company must comply with an employment commitment of three direct employees within six months of commencement of operations and for the remaining of the exempt period of twenty years. The term "direct employees" under the grant condition includes "full-time" and "part-time" employees residing in Puerto Rico.

Income tax expense attributable to income from continuing operations for the years ended December 31, 2018 and 2017, is as follows:

Expected tax expense (39%) Less: Tax relief under the Act

Income tax expense under the Act (4%)

Note 12. Limited Liability Company

2018

$ 5,174,603 (4,660,958)

$ 513,645

2017

$ 2,391,907 (2,146,583)

$ 245,324

Certain entities of the Company are limited liability companies (see Note 1). In a limited liability company (LLC), no member, manager, agent, or employee of the LLC is personally liable for debts, obligations, or liabilities of the LLC, whether arising from contract, tort, or otherwise, or for the acts of omission of any member, director, manager, agent or employee of the LLC, unless the individual has signed a specific personal guarantee.

-13-



Note 13. Principles of Consolidation

Accounting standards for consolidation requires that a company that holds variable interests in an entity consolidate the entity if the company's interest in the variable interest entity (VIE) is such that the company will absorb a majority of the VIE's expected losses and/or receive a majority of the VIE's expected residual returns, if they occur. In such case, the company is the primary beneficiary of the VIE. It also requires additional disclosures by primary beneficiaries and other significant variable interest holders.

Zurixx, LLC has a significant implicit variable interest in Dorado Marketing and Management LLC. Accordingly, Zurixx, LLC is considered the primary beneficiary in that Zurixx, LLC would be more than likely expected to absorb a majority of Dorado Marketing and Management LLC's losses and/or receive residual returns, if they occur.

Note 14. Reclassification

Certain amounts in the 2017 consolidated financial statements have been reclassified to conform to the presentation in the 2018 consolidated financial statements. These reclassifications have no effect on net income.

Note 15. Subsequent Events

The Company has evaluated subsequent events through June 11, 2019, the date the financial statements were available to be issued.

-14-


SUPPLEMENTARY INFORMATION


ZURIXX, LLC AND CONSOLIDATED ENTITIES CONSOLIDATING BALANCE SHEET December 31 , 2018


Combined Entity Mangagement LLC Eliminations Total

ASSETS

Current Assets: Cash $ 4,246,203 $ 439,790 $ - $ 4,685,993 Capitalized advertising costs 2,824,979 - - 2,824,979 Deferred costs 12,167,262 - (3,930,828) 8,236,434 Due from related parties 4,827,505 (4,827,505) Prepaid expenses 77,837 - 77,837

Total current assets 19,316,281 5,267,295 (8,758,333) 15,825,243


Fixed Assets, net 545,610 63,242 - 608,852

Total assets $ 24,134,106 $ 5,330,537 $ (8,758,333) $ 20,706,310

LIABILITIES AND MEMBERS' EQUITY (DEFICIT)

Current Liabilities: Accounts payable $ 542,825 $ 115,681 $ $ 658,506 Due to related parties 4,829,505 - (4,827,505) 2,000 Reserves for refunds and chargebacks 6,607,648 - 6,607,648 Deferred revenue 22,057,167 - 22,057,167 Accrued payroll and related benefits 440,259 - 440,259 Accrued expenses 260,835 13,829 274,664 Accrued loss contingency 2,276,639 - - 2,276,639 Deferred rent 139,203 139,203 Income tax payable 530,728 - 530,728

Total current liabilities 37,154,081 660,238 (4,827,505) 32,986,814

Members' Equity (Deficit): Zurixx, LLC and Combined Entity Deficit (13,019,975) (3,930,828) (16,950,803) Interest in Dorado Marketing and Management LLC 4,670,299 4,670,299

Total member's equity (deficit) (13,019,975) 4,670,299 (3,930,828) (12,280,504)

Total liabilities and members' equity (deficit) $ 24,134,106 $ 5,330,537 ...!.___J8,758,333) _$ _ 20,70_6,310

-15-


ZURIXX, LLC AND CONSOLIDATED ENTITIES CONSOLIDATING STATEMENT OF INCOME Year Ended December 31, 2018



Revenues $ 95,339,167 $ 26,304,394 $ (26,304,394) $ 95,339,167

Cost of Revenues 6,699,025 - 6,699,025

Gross Margin 88,640,142 26,304,394 (26,304,394) 88,640,142

Operating Expenses: Selling and marketing 74,849,753 11,231,170 (24,565,556) 61,515,367 Payroll and related benefits 4,144,268 1,549,452 5,693,720 Professional services 624,788 - 624,788 Merchant and bank fees 2,607,518 2,607,518 Sales expense 746,763 746,763 Occupancy and rent 1,288,836 129,545 1,418,381 Travel and entertainment 374,726 374,726 Office expenses 376,157 - 376,157 General and administration 417,456 417,456 Depreciation 133,600 151 ,214 - 284,.814

Total operating expenses 85,563,865 13,061,381 (24,565,556) 74,059,690

Operating Income 3,076,277 13,243,013 (1,738,838) 14,580,452

Other Income: Other Income 27,312 27,312 Interest income 1,838 - - 1,838

Total other income 1,838 27,312 - 29,150

Income before Income Taxes 3,078,115 13,270,325 (1,738,838) 14,609,602

Income Tax Expense (513,645) - (513,645)

Net Income 3,078,115 12,756,680 (1,738,838) 14,095,957

Net Income Attributable to Interest in Dorado Marketing and Management LLC - 12,756,680 12,756,680

Net Income Attributable to Zurixx, LLC $ 3,078~ $ - $ (1,738,838) $ 1,339,277

-16-


ZURIXX, LLC AND CONSOLIDATED ENTITIES CONSOLIDATING ST A TEMENT OF MEMBERS' EQUITY (DEFICIT) Year Ended December 31 r 2018


Combined Enti!Y_ Mangagement LLC

Members' Equity (Deficit) at January 1, 2018 $ (16 ,128,109) $ 7,266,169

Member contributions 30,019 -

Member distributions - (15,352,550)

Net income 3,078,115 12,756,680

Members' Equity (Deficit) at December 31, 2018 $ (13,019,975} $ 4,670,299

-17-

Eliminations Total

$ (2,191,990) $ (11,053,930)

- 30,019

- (15,352,550)

(1 ,738,838) 14,095,957

$ (3,930,828) $ (12,280,~Q4)


ZURIXX, LLC AND CONSOLIDATED ENTITIES CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31, 2018



Cash Flows from Operating Activities: Net income $ 3,078,115 $ 12,756,680 $ (1,738,838) $ 14,095,957 Adjustments to reconcile net income to net

cash provided by operating activities: Depreciation 133,600 151,214 284,814 Change in operating assets and liabilities:

Prepaid expenses 1,600 - 1,600 Restricted cash 28,898 - 28,898 Capitalized advertising costs (751,878) - - (751,878) Deferred costs (2,826,360) - 1,738,838 (1,087,522) Accounts payable (2,164,973) (444,256) (2,609,229) Accrued payroll and related benefits 63,256 (13,048) - 50,208 Reserve for refunds and chargebacks (459,642) - (459,642) lntercompany accounts (2,576,833) 2,576,833 Deferred revenue 4,477,462 - 4,477,462 Accrued loss contingency (224,000) (224,000) Deferred rent 9,437 - 9,437 Income tax payable 278,596 278,596 Accrued expenses 274,664 - - 274,664

Total adjustments (4,014,769) 2,549,339 1,738,838 273,408

Net cash provided by operating activities (936,654) 15,306,019 14,369,365

Cash Flows from Investing Activity: Purchase of fixed assets (169,331) - (169,331)

Cash Flows from Financing Activities: Member contributions 30,019 - - 30,019 Member distributions (15,352,550) - (15,352,550)

Net cash used by financing activities 30,019 (15,352,550) - (15,322,531)

Net Change in Cash and Cash Equivalents (1,075,966) (46,531) (1,122,497)

Beginning Cash and Cash Equivalents 5,322,169 486,321 5,808,490

Ending Cash and Cash Equivalents $ 4,246,203 $ 439,790 $ - $ 4,685,993

-18-


ZURIXX, LLC AND CONSOLIDATED ENTITIES CONSOLIDATING BALANCE SHEET December 31, 2017



ASSETS

Current Assets: Cash $ 5,322,169 $ 486,321 $ $ 5,808,490 Capitalized advertising costs 2,073,101 2,073,101 Deferred costs 9,340,902 (2,191,990) 7,148,912 Due from related parties 7,414,836 (7,414,836) Prepaid expenses 79,437 79,437

Total current assets 16,815,609 7,901,157 (9,606,826) 15,109,940


Fixed Assets, net 509,879 214,456 724,335

Total assets $ 21 ,626,601 $ 8,115,613 $ (9,606,826) $ 20,135,388

LIABILITIES AND MEMBERS' EQUITY (DEFICIT)

Current Liabilities: Accounts payable $ 2,707,798 $ 559,937 $ $ 3,267,735 Due to related parties 7,406,338 10,498 (7,414,836) 2,000 Reserves for refunds and chargebacks 7,067,290 7,067,290 Deferred revenue 17,579,705 17,579,705 Accrued payroll and related benefits 363,174 26,877 390,051 Accrued loss contingency 2,500,639 2,500,639 Deferred rent 129,766 129,766 Income tax payable 252,132 252,132

Total current liabilities 37,754,710 849,444 (7,414,836) 31,189,318

Members' Equity (Deficit): Zurixx, LLC and Combined Entity Deficit (16,128,109) (2,191,990) (18,320,099) Interest in Dorado Marketing and Management LLC 7,266,169 7,266,169

Total member's equity (deficit) (16,128,109) 7,266,169 (2,191,990) (11,053,930)

Total liabilities and members' equity (deficit) $ 21,626,6_01 $ 8,115,613 $ (9,606,826) $ 20, 135,388

-19-


ZURIXX, LLC AND CONSOLIDATED ENTITIES CONSOLIDATING STATEMENT OF OPERATIONS Year Ended December 31, 2017



Revenues $ 88,900,083 $ 21 ,139,762 $ (21 ,139,762) $ 88,900,083

Cost of Revenues 6,462,949 6,462,949

Gross Margin 82,437,134 21 ,139,762 (21,139,762) 82,437,134

Operating Expenses: Selling and marketing 74,284,644 13,167,610 (23,483,499) 63,968,755 Payroll and related benefits 4,267,310 1,547,631 5,814,941 Professional services 892,202 - 892,202 Merchant and bank fees 2,444,863 - 2,444,863 Sales expense 648,504 648,504 Occupancy and rent 1,134,927 126,969 1,261 ,896 Travel and entertainment 565,859 565,859 Office expenses 291 ,741 291,741 General and administration 445,837 - 445,837 Depreciation 121 ,879 250,560 372.439

Total operating expenses 85,097,766 15.092.770 (23.483.499) 76.707,037

Operating Income (Loss) (2,660,632) 6,046,992 2,343,737 5,730,097

Other Income (Expense): Other Income 73,802 73,802 Interest income 1,969 1,969 Other expense (10) (1 O}

Total other income 1,959 73,802 75,761

Income (Loss) before Income Taxes (2,658,673) 6,120,794 2,343,737 5,805,858

Income Tax Expense (245,324) (245,324)

Net Income (Loss) (2 ,658,673) 5,875,470 2,343,737 5,560,534

Net Income Attributable to Interest in Dorado Marketing and Management LLC 5,875,470 5,875.470

Net Loss Attributable to Zurixx, LLC $ {2,658,673) $ $ 2,343,737 $ (314,936)

-20-


ZURIXX, LLC AND CONSOLIDATED ENTITIES CONSOLIDATING STATEMENT OF MEMBERS' EQUITY (DEFICIT) Year Ended December 31 , 2017

Members' Equity (Deficit) at January 1, 2017

Member distributions

Net income (loss)

Members' Equity (Deficit) at December 31, 2017

$

$

-21-

Zurixx, LLC and

Combined Enti!Y_

(13,469,436)

(2,658,673)

(16,128,109)

Dorado Marketing and

Mangagement LLC Eliminations Total

$ 7,570,192 $ (4,535,727) $ (10,434,971)

(6,179,493) (6,179,493)

5,875.470 2,343,737 5.560.534

$ 7,266.169 $ (2,191,990) $ (11.053.930)


ZURIXX, LLC AND CONSOLIDATED ENTITIES CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31 , 2017



Cash Flows from Operating Activities: Net income (loss) $ (2,658,673) $ 5,875,470 $ 2,343,737 $ 5,560,534 Adjustments to reconcile net income (loss) to net

cash provided by operating activities: Depreciation 121,879 250,560 372,439 Change in operating assets and liabilities:

Prepaid expenses 38,548 38,548 Restricted cash 6,754,305 6,754,305 Capitalized advertising costs (771,846) (771,846) Deferred costs 3,918,882 (2,343,737) 1,575,145 Due from related parties 49,840 49,840 Accounts payable 1,692,379 (159,742) 1,532,637 Due to related parties (1,500,000) (1,500,000) Accrued payroll and related benefits 47,173 21,513 68,686 Reserve for refunds and chargebacks (626,155) (626,155) lntercompany accounts (2,120,736) 2,120,736 Deferred revenue (3,539,868) (3,539,868) Accrued loss contingency (226,000) (226,000) Deferred rent 52,097 52,097 Income tax payable (643,047) (643,047)

Total adjustments 5,340,658 139 .. 860 (2,343,737) 3,136,781

Net cash provided by operating activities 2,681,985 6,015,330 8,697,315

Cash Flows from Investing Activity: Purchase of fixed assets (47,482) (8,757) (56,239)

Cash Flows from Financing Activity : Member distributions (6,179.493) (6 ,179,493)

Net Change in Cash and Cash Equivalents 2,634,503 (172,920) 2.461,583

Beginning Cash and Cash Equivalents 2,687,666 659,241 3,346,907

Ending Cash and Cash Equivalents $ 5,322,169 $ 486,321 $ $ 5,808,490

-22-


EXHIBIT “ A13”


EXHIBIT “ A14”


EXHIBIT “ A15”


EXHIBIT “ A16”


~


EXHIBIT “ A17”


Zurixx, LLC.

United States Transfer Pricing Documentation

for the 2017 Tax Year

October 2018

ECONOMICS PARTNERS ----LLC ----




Table of Contents

I. Introduction ................................................................................................................................... 5

A. Scope......................................................................................................................................... 5

B. Summary of Analysis and Conclusions .............................................................................. 5

1. Overview of Transaction ................................................................................................. 5

2. Summary of Findings ...................................................................................................... 5

C. Report Structure...................................................................................................................... 6

D. Disclaimers .............................................................................................................................. 7

II. Company Overview ..................................................................................................................... 8

A. Zurixx History......................................................................................................................... 8

B. Zurixx Legal Entity Structure ............................................................................................... 8

C. Zurixx Entities ......................................................................................................................... 9

1. Zurixx, LLC (“Zurixx US”) ............................................................................................. 9

2. Dorado Marketing & Management, LLC (“Dorado”) .............................................. 10

D. Products ................................................................................................................................. 11

1. Success Path Education ................................................................................................. 11

2. Daymond John’s Launch Academy ............................................................................ 12

3. The Flipping Formula .................................................................................................... 12

4. Winning the Property War ........................................................................................... 13

5. Property Bank ................................................................................................................. 13

6. Conclusion ...................................................................................................................... 13

E. Value Chain ........................................................................................................................... 14

F. Competitors ........................................................................................................................... 14

G. Functions, Risks, and Intellectual Property ...................................................................... 15

1. Functions ......................................................................................................................... 15

2. Risks ................................................................................................................................. 19

3. Intellectual Property ...................................................................................................... 19

III. Industry Background .................................................................................................................. 20

A. Education and Training Services Industry ....................................................................... 20


2. Performance .................................................................................................................... 20

3. Competition .................................................................................................................... 21

B. Sales and Marketing Industry Overview .......................................................................... 21


2. Performance .................................................................................................................... 21

3. Competition .................................................................................................................... 21

IV. Functional Analysis .................................................................................................................... 23

A. Introduction ........................................................................................................................... 23

B. Overview of Transaction ..................................................................................................... 24

C. Functions Performed ............................................................................................................ 24




1. Accounting and Finance ............................................................................................... 24

2. Celebrity Relationships ................................................................................................. 25

3. Marketing ........................................................................................................................ 26

4. Event Planning and Management ............................................................................... 26

5. Sales Support .................................................................................................................. 27

6. Information Technology ............................................................................................... 28

7. Customer Support .......................................................................................................... 30

8. Sales.................................................................................................................................. 32

9. Coaching and Educational Content............................................................................. 33

10. Intercompany Agreements and Financing ................................................................. 34

D. Conclusion ............................................................................................................................. 35

V. Regulatory Overview ................................................................................................................. 36

A. U.S. Transfer Pricing Regulations ...................................................................................... 36

B. The Arm’s Length Principle ................................................................................................ 36

C. Best Method Rule ................................................................................................................. 37

D. Choice of Methodology ....................................................................................................... 38

E. Methods Available and Additional Considerations for Services Transactions ........... 38

1. Overview ......................................................................................................................... 38

2. Benefit Test ...................................................................................................................... 39

3. Methods Available for Services Transactions ............................................................ 40

F. Methods Available for Tangible Goods Transactions ..................................................... 42

1. Comparable Uncontrolled Price Method ................................................................... 42

2. Cost Plus Method ........................................................................................................... 42

3. Resale Price Method ...................................................................................................... 43

4. Comparable Profits Method ......................................................................................... 43

5. Profit Split Method ........................................................................................................ 44

6. Unspecified Methods ..................................................................................................... 44

VI. Economic Analysis ...................................................................................................................... 45

A. Executive Management Fees – North America Search ................................................... 45

1. Selection of the Tested Party ........................................................................................ 45

2. Selection of Years for Comparison .............................................................................. 45

3. Selection of Profit Level Indicator ............................................................................... 46

4. Selection of North American Comparable Companies ............................................ 46

5. Results of the CPM Analysis ........................................................................................ 47

6. Implementation .............................................................................................................. 47

B. Registration Fees ................................................................................................................... 47


C. Legal Fees .............................................................................................................................. 49


D. Workshop Recruitment Fees ............................................................................................... 51


E. Celebrity Management Fees ................................................................................................ 52





VII. Conclusion ................................................................................................................................... 54

A. Overview of Transaction ..................................................................................................... 54

B. Summary of Findings........................................................................................................... 54

1. Executive Management Fees ........................................................................................ 54

2. Registration Fees ............................................................................................................ 54

3. Legal Fees ........................................................................................................................ 54

4. Workshop Recruitment Fees ........................................................................................ 54

5. Celebrity Management Fees ......................................................................................... 55

6. Total Fees ......................................................................................................................... 55

Appendix A: Comparable Company Business Descriptions ............................................................. 56

A. North American Comparable Company Business Descriptions ................................... 56

Appendix B: Comparable Company Financials .................................................................................. 60

A. North American Comparable Company Financials ........................................................ 60

Appendix C: Accept / Reject Matrices ................................................................................................... 61

A. North American Comparables – Qualitative Rejections ................................................. 61

Appendix D: Construction of Executive Management Fees to Zurixx US ...................................... 79

Appendix E: Construction of Registration Fees to Zurixx US ........................................................... 80

Appendix F: Construction of Legal Fees to Zurixx US ....................................................................... 81

Appendix G: Construction of Workshop Recruitment Fees to Zurixx US ...................................... 82

Appendix H: Construction of Celebrity Management Fees to Zurixx US ....................................... 83

Appendix I: Construction of Total Fees to Zurixx US ........................................................................ 84


Page | 5



I. Introduction

A. Scope

Zurixx, LLC (“Zurixx” or “Company”) engaged Economics Partners, LLC (“Economics

Partners” or “EP”) to analyze certain intercompany transactions and prepare a US transfer

pricing planning study for the fiscal year ended December 31, 2017.



estate, business, entrepreneurship, and coaching and mentoring programs to consumers.

The analyses described in this report have been conducted in accordance with Section 482 of the

U.S. Internal Revenue Code1 and the Regulations2 thereunder (“Section 482” or the “US

Regulations”). The underlying principle of the Regulations is the arm’s length standard. In

general, a controlled transaction meets the arm’s length standard if the results of the transaction

are consistent with the results that would have been realized had uncontrolled taxpayers

engaged in a comparable transaction under comparable, but uncontrolled, circumstances.

B. Summary of Analysis and Conclusions

1. Overview of Transaction


executive management services from Dorado Marketing & Management, LLC (“Dorado”) to

Zurixx, LLC (“Zurixx US”). As described in the Functional Analysis section, Dorado provides

sales and executive management services for Zurixx US. During FY 2017, Dorado charged sales

and executive management services fees of $21.14 million to Zurixx US in consideration of these

services.


a) Selected Method

The Unspecified Method, as described in the US Transfer Pricing Regulations, was applied to

the tested transaction. From the standpoint of Section 482, a method that is unspecified in that it

is not the CUP method, the cost-plus method, the resale price method, the CPM method, or the

1 References in this report to the “Code,” or to particular provisions of the “Code,” refer to the Internal Revenue Code of 1986 (26 U.S.C. § 1 et seq.), as amended, as in effect for the fiscal year ended December 31, 2014. 2 References in this report to the “Regulations,” or to particular provisions of the “Regulations,” refer to the Treasury Regulations (Title 26, Code of Federal Regulations), as amended, as in effect for the fiscal year ended December 31, 2014.
