SPINDLE, INC.

In June 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-07 Compensation - Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The amendments in ASU 2018-07 are effective for fiscal years beginning after December 15, 2018, including interim periods therein. We are evaluating the impact adopting this guidance will have on our financial statements.

On October 16, 2018 (the “Issuance Date”), the Company closed a convertible promissory note (the “Convertible Note”) with Power Up Lending Group LTD (“Holder”). The principal amount of the Convertible Note is $75,000 and matures on October 9, 2019 (the “Maturity Date”). The Convertible Note bears interest at the rate of 10% per annum. Upon an event of default, the interest rate shall increase to 18% for as the event of default is continuing (“Default Interest”). The Convertible Note may be converted, at the Holder’s discretion, into the Company’s common stock at any time after 180 days (the “Prepayment Date”) at a 35% discount to the average of the lowest two closing bid prices during the 15 trading days prior to the date of a conversion notice. Until the 30th day after the Issuance Date, the Company may pay the principal at a cash redemption premium of 110%, in addition to outstanding interest, without the Holder’s consent; from the 31st day to the 60th day after the Issuance Date, the Company may pay the principal at a cash redemption premium of 115%, in addition to outstanding interest, without the Holder’s consent; from the 61st day after the Issuance Date to the 90th day, the Company may pay the principal at a cash redemption premium of 120%, in addition to outstanding interest, without the Holder’s consent; from the 91st day after the Issuance Date to the 120th day, the Company may pay the principal at a cash redemption premium of 125%, in addition to outstanding interest, without the Holder’s consent; from the 121st day after the Issuance Date to the 150th day, the Company may pay the principal at a cash redemption premium of 130%, in addition to outstanding interest, without the Holder’s consent; from the 151st day after the Issuance Date to the 180th day, the Company may pay the principal at a cash redemption premium of 135%, in addition to outstanding interest, without the Holder’s consent. After the expiration of 180 days following the Issuance Date, the Company shall have no right of repayment. At any time on or after the Maturity Date, the Company may repay the then outstanding principal plus accrued interest and Default Interest, if any, to the Holder.

Between October 16 and November 12, 2018, a Holder of one of the Company’s convertible notes elected to convert a total of $63,857 in Company debt, fees and interest due to shares of Spindle common stock.  Per the terms of the note, the conversion prices were calculated to between $.00325 and $.0078 per share, resulting in a total issuance of 15,866,882 shares to the Holder.

During the Third Quarter of 2018, Spindle refocused its business on providing marketing services and customers to large payment processors.  The Company is currently building the partnerships and infrastructure to allow it to derive residual revenues from large payment processors by monetizing Spindle’s existing pipeline of merchants, monetizing the pipeline of merchants found within Spindle’s strategic partners, and monetizing merchants identified through Spindle’s distributed referral application, which is currently under construction.

Sales Agent Partnership:  In order to expedite Spindle’s re-entry into the market, Management identified the need for certain marketing infrastructure, including online and digital marketing properties, digital intake / landing forms and the like.  During the Third Quarter, Spindle entered into a strategic partnership with Newtek (Nasdaq: NEWT), a large, publicly-traded ISO of several payment processors.  Mr. Wesser previously had a long professional relationship as one of Newtek’s largest customers, and Management believes the Newtek relationship will provide Spindle with multiple advantages, including:

Diversity of processors, as Newtek supports several world-class processors which accept merchants from diverse industries, risk levels, etc., which allows Spindle to find a “home” for each of its leads, which it may not be able to do working with only one processor as an ISO

During the Third Quarter, Management worked with Newtek to acquire and begin the process of white-labeling Newtek’s marketing and digital materials.  Management expects, in mid to late Fourth Quarter, to be able to launch a full business services website which will reflect the Company’s ability to deliver all services Newtek provides, but with Spindle branding.  This will allow Spindle to leapfrog development time and expense necessary to build such a suite of services on its own.  Management believes this suite of services, along with accompanying marketing materials and web properties, will allow the Company to better approach, sell and close its existing pipeline described below.