The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS
History
Carbon Credits International Inc. (“CCII”), which was formed on October 15, 2007 as a Nevada corporation, was the result of a spin off from Carbon Credits Industries, Inc. (“CCI”), its former parent issuer, on October 17, 2007. On December 23, 2011, CCII entered into a merger agreement with Lifestyle Wireless, Inc. (“LWI”), a Washington Corporation, with CCII remaining as the surviving company. The effective date of the merger was January 10, 2012. On July 1, 2013, CCII changed its name to Singlepoint Inc. (“Singlepoint” or “the Company”).
On May 17, 2017, the Company acquired a 90% interest in Discount Garden Supply, Inc. (“DIGS”) for cash and common stock.
On October 11, 2017, the Company acquired a 51% interest in Jiffy Auto Glass, LLC (“JAG”) for cash and common stock. On July 26, 2019, a Statement of Dissolution was filed with the Colorado Secretary of State dissolving JAG (See Note 10).
On August 31, 2018, the Company acquired a 51% interest in ShieldSaver, LLC (“ShieldSaver”) for cash and common stock.
On May 14, 2019, the Company established a subsidiary, Singlepoint Direct Solar LLC (“SDS”), completing the acquisition of certain assets of Direct Solar LLC and AI Live Transfers LLC (See Note 3). The Company owns Fifty One Percent (51%) of the membership interests of SDS.
Going Concern
The financial statements have been prepared assuming that the Company will continue as a going concern. As of September 30, 2019, the Company has yet to achieve profitable operations and is dependent on its ability to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company’s ability to continue in existence is dependent on the Company’s ability to develop the Company’s businesses and to achieve profitable operations. Since the Company does not anticipate achieving profitable operations and/or adequate cash flows in the near term, management will continue to pursue additional equity financing through private placements of the Company’s common stock.
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission including Form 10-Q and Regulation S-X. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly state the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been omitted pursuant to such rules and regulations. These financial statements and the information included under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the audited financial statements and explanatory notes for the year ended December 31, 2018 as disclosed in our Form 10-K filed with the Securities and Exchange Commission on April 5, 2019. The results of the nine months ended September 30, 2019 (unaudited) are not necessarily indicative of the results to be expected for the pending full year ending December 31, 2019.
Principles of Consolidation
The consolidated financial statements include the accounts of Singlepoint, DIGS and JAG as of September 30, 2019 and December 31, 2018 and for the nine months ended September 30, 2019 and 2018 (with JAG dissolved on July 26, 2019), the accounts of ShieldSaver as of September 30, 2019 and December 31, 2018 and for the nine months ended September 30, 2019 and the period from August 31, 2018 (acquisition date) through September 30, 2018, and the accounts of SDS as of September 30, 2019 and the period from May 14, 2019 through September 30, 2019. All significant intercompany transactions have been eliminated in consolidation.
Revenues
It is the Company’s policy that revenue from product sales or services will be recognized in accordance with ASC 606 “Revenue from Contracts with Customers”. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In applying the new revenue recognition model to contracts with customers, an entity: (1) identifies the contract(s) with a customer; (2) identifies the performance obligations in the contract(s); (3) determines the transaction price; (4) allocates the transaction price to the performance obligations in the contract(s); and (5) recognizes revenue when (or as) the entity satisfies a performance obligation. The accounting standards update applies to all contracts with customers except those that are within the scope of other topics in the FASB Accounting Standards Codification.
The Company incurs costs associated with product distribution, such as freight and handling costs. The Company has elected to treat these costs as fulfillment activities and recognizes these costs at the same time that it recognizes the underlying product revenue. As this policy election is in line with the Company’s previous accounting practices, the treatment of shipping and handling activities under Topic 606 did not have any impact on the Company’s results of operations, financial condition and/or financial statement disclosures. In accordance with the new guidance, the Company recognizes revenue at an amount that reflects the consideration that the Company expects to be entitled to receive in exchange for transferring goods or services to its customers. The Company’s policy is to record revenue when control of the goods transfers to the customer.
Revenue Sharing
In addition to selling the Company’s products to customers, the Company recognizes revenues by sharing commissions with Independent Sales Organizations as an agent on a net basis.
These revenues do not comprise a material amount of the Company’s net sales.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of ninety days or less at the time of purchase to be cash equivalents. The Company maintains deposits in financial institutions which are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company had no deposits in excess of amounts insured by the FDIC as of September 30, 2019.
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with the Accounting Standards Committee (“ASC”) 815 “Derivatives and Hedging”. It provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or other expense. Upon conversion or exercise of a derivative financial instrument, the instrument is marked to fair value at the conversion date and is reclassified to equity. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of notes redemption
Income Taxes
The Company accounts for its income taxes in accordance with ASC 740 “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. 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 tax rates is recognized in operations in the period that includes the enactment date. The Company has a net operating loss carryforward, however, due to the uncertainty of realization, the Company has provided a full valuation allowance for deferred tax assets resulting from this net operating loss carryforward.
Earnings (loss) Per Common Share
Basic loss per common share has been calculated based upon the weighted average number of common shares outstanding during the period in accordance with the ASC 260-10, “Earnings per Share”. Common stock equivalents are not used in the computation of loss per share, as their effect would be antidilutive. Diluted EPS includes the effect from potential issuance of common stock, including stock issuable pursuant to the assumed exercise of warrants and conversion of convertible notes and Class A Preferred Stock. Dilutive EPS is computed by dividing net income (loss) by the sum of the weighted average number of common stock outstanding, and the dilutive shares.
The following table summarizes the number of shares of common stock issuable pursuant to our convertible securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive even though the exercise price could be less than the average market price of the common shares:
|
|
Nine Months
Ended
|
|
|
|
September 30,
|
|
|
|
2019
|
|
|
|
|
|
Series A Preferred Stock
|
|
|
1,355,000,000
|
|
Convertible notes
|
|
|
398,295,673
|
|
Warrants
|
|
|
10,000,000
|
|
Potentially dilutive securities
|
|
|
1,763,295,673
|
|
Use of Estimates in the Preparation of Financial Statements
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, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.
Fair Value Measurements
On January 1, 2011, the Company adopted guidance which defines fair value, establishes a framework for using fair value to measure financial assets and liabilities on a recurring basis, and expands disclosures about fair value measurements. Beginning on January 1, 2011, the Company also applied the guidance to non-financial assets and liabilities measured at fair value on a non-recurring basis, which includes goodwill and intangible assets. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:
Level 1 - Valuation is based upon unadjusted quoted market prices for identical assets or liabilities in accessible active markets.
Level 2 - Valuation is based upon quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable in the market.
Level 3 - Valuation is based on models where significant inputs are not observable. The unobservable inputs reflect a company’s own assumptions about the inputs that market participants would use.
The Company’s financial instruments consist of cash, accounts receivable, investments, accounts payable, convertible notes payable, advances from related parties, and derivative liabilities. The estimated fair value of cash, accounts receivable, investments, accounts payable, convertible notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments.
Certain non-financial assets are measured at fair value on a nonrecurring basis. Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic impairment tests.
The Company’s derivative liabilities have been valued as Level 3 instruments.
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of convertible notes derivative liability – December 31, 2018
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
2,215,376
|
|
|
$
|
2,215,376
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of convertible notes derivative liability – September 30, 2019
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
3,836,085
|
|
|
$
|
3,836,085
|
|
The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of December 31, 2018 and September 30, 2019:
|
|
Derivative
Liability
|
|
Balance, December 31, 2018
|
|
|
2,215,376
|
|
Additions recognized as debt discount
|
|
|
1,250,000
|
|
Derivative liability settlements
|
|
|
(1,246,365
|
)
|
Mark-to-market at September 30, 2019
|
|
|
1,617,074
|
|
Balance, September 30, 2019
|
|
$
|
3,836,085
|
|
|
|
|
|
|
Net loss for the year included in earnings relating to the liabilities held at September 30, 2019
|
|
$
|
1,617,074
|
|
Recently Issued Accounting Pronouncements
Leases
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019 and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. We adopted this standard on January 1, 2019. The adoption of this standard did not have a material impact on our financial position or results of operations.
There were various other accounting standards and interpretations issued recently, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows. Management has evaluated these new pronouncements through September 30, 2019.
NOTE 3 – INVESTMENTS, ACQUISITIONS AND GOODWILL
Investments
The Company records its investments using the cost method. If cost exceeds fair value, an impairment loss is recognized unless the impairment is considered temporary.
The Company had total investments of $60,000 as of September 30, 2019 and December 31, 2018, respectively.
2019 Asset Acquisition – Direct Solar LLC/ AI Live Transfers LLC
On May 14, 2019, the Company, via the formation of SDS, completed the acquisition of certain assets of Direct Solar LLC and AI Live Transfers LLC (the “Acquired Assets”). The Company owns Fifty One Percent (51%) of the membership interests of SDS. In connection with the acquisition of these assets the Company issued an aggregate of 156,058,751 shares of common stock. The Company agreed that it shall reinvest into SDS its portion of distributions of Net Cash Flow (as defined in the Operating Agreement of SDS), if any, up to Two Hundred and Fifty Thousand ($250,000) Dollars per quarter, up to a total of Seven Hundred and Fifty Thousand ($750,000) Dollars.
The total value of common stock issued for the purchase of the Acquired Assets was $1,966,340 on the issuance date and was allocated to goodwill based on the workforce acquired. The total purchase price for the Acquired Assets was allocated as follows:
Goodwill
|
|
$
|
1,966,340
|
|
Current assets
|
|
|
-
|
|
Current liabilities
|
|
|
-
|
|
Total net assets acquired
|
|
$
|
1,966,340
|
|
The purchase price consists of the following:
|
|
|
|
|
Cash
|
|
|
-
|
|
Common Stock
|
|
|
1,966,340
|
|
Total purchase price
|
|
$
|
1,966,340
|
|
Total revenue of $951,430, net loss of $94,852, and contributed net loss of $48,375 after non-controlling interest related to SDS from the acquisition date of May 14, 2019 through September 30, 2019 is included in the Company’s accompanying condensed consolidated statement of operations.
Goodwill
The following table presents details of the Company’s goodwill as of September 30, 2018 and December 31, 2018:
|
|
Direct Solar/AI Live Assets
|
|
Balance at December 31, 2018:
|
|
|
-
|
|
Aggregate goodwill acquired
|
|
|
1,966,340
|
|
Impairment losses
|
|
|
-
|
|
Balance at September 30, 2019:
|
|
$
|
1,966,340
|
|
The Company periodically reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Specifically, a goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units.
Proforma Information (unaudited)
SDS
The following unaudited pro forma information presents the consolidated results of the Company’s operations and the results of the acquisition of the Acquired Assets as if the May 14, 2019 acquisition had been consummated on January 1, 2019. Such unaudited pro forma information is based on historical unaudited financial information with respect to the Acquired Assets acquisition and does not include operational or other charges which might have been affected by the Company. The unaudited pro forma information for the nine months ended September 30, 2019 presented below is for illustrative purposes only and is not necessarily indicative of the results which would have been achieved or results which may be achieved in the future:
|
|
Nine Months
Ended
September 30,
|
|
|
|
2019
|
|
Net revenue
|
|
$
|
2,924,672
|
|
Net loss
|
|
$
|
(8,216,037
|
)
|
NOTE 4 - CONVERTIBLE NOTES PAYABLE
Convertible notes payable consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
Convertible note payable with an accredited investor dated October 31, 2017, with interest at 0%, due October 31, 2017, convertible at $0.007 per share. This note is currently in default.
|
|
|
10,500
|
|
|
|
10,500
|
|
|
|
|
|
|
|
|
|
|
Convertible note payable to investor (the “CVP Note”) dated October 10, 2017, with interest at 10%, an Original Issue Discount (“OID”) of $70,000, due October 6, 2019, convertible into shares of the Company’s common stock at a discount of 60% of the average of the three lowest closing bid prices of the Company’s common stock during the 20 trading days prior to conversion. The CVP Note provides for additional tranches of a maximum of $3,970,000, which includes OID of 10%. The note includes a warrant to purchase 5,000,000 shares of the Company’s common stock at a price of $0.10 per share. The CVP Note is secured by substantially all assets of the Company. The investor converted a total of $294,500 of principal and accrued interest of this note into 67,924,982 shares of the Company’s common stock during the nine months ended September 30, 2019. Additionally, the Company repaid $40,000 of this note during the nine months ended September 30, 2019. This note is currently in default.
|
|
|
244,426
|
|
|
|
547,749
|
|
|
|
|
|
|
|
|
|
|
Convertible note payable to investor (the “UAHC Note”) dated October 10, 2017, with interest at 10%, an OID of $70,000, due October 6, 2019, convertible into shares of the Company’s common stock at a discount of 60% of the average of the three lowest closing bid prices of the Company’s common stock during the 20 trading days prior to conversion. The UAHC Note includes a warrant to purchase 5,000,000 shares of the Company’s common stock at a price of $0.10 per share. The UAHC Note is secured by substantially all assets of the Company. The investor converted a total of $125,000 of principal and accrued interest of this note into 29,543,067 shares of the Company’s common stock during the nine months ended September 30, 2019. Additionally, the Company repaid $50,000 of this note during the nine months ended September 30, 2019. This note is currently in default.
|
|
|
619,490
|
|
|
|
670,000
|
|
|
|
|
|
|
|
|
|
|
Convertible note payable, to investor (the “Iliad Note”) dated November 5, 2018 totaling $500,000, plus OID of $50,000 and legal fees of $20,000. The Iliad Note bears interest at 10% and matures on November 5, 2020. Total available under note is $5,520,000, including $500,000 OID (and $20,000 in legal fees taken on first $500,000 tranche). The Iliad Note is convertible into shares of the Company’s common stock after 180 days at a discount of 35% of the average of the three lowest closing bid prices of the Company’s common stock during the 20 trading days prior to conversion. The Company borrowed an additional $1,650,000 (including OID of $150,000) under this note during the nine months ended September 30, 2019. The Iliad Note is secured by substantially all assets of the Company.
|
|
|
2,220,000
|
|
|
|
570,000
|
|
|
|
|
|
|
|
|
|
|
Total convertible notes payable
|
|
|
3,094,416
|
|
|
|
1,798,249
|
|
Less debt discounts
|
|
|
(1,219,098
|
)
|
|
|
(1,141,396
|
)
|
Convertible notes payable, net
|
|
|
1,875,318
|
|
|
|
656,853
|
|
Less current portion of convertible notes, net
|
|
|
(836,658
|
)
|
|
|
(156,853
|
)
|
Long-term convertible notes payable, net
|
|
$
|
1,038,660
|
|
|
$
|
500,000
|
|
Aggregate maturities of long-term debt as of September 30, 2019 are due in future years as follows:
2019
|
|
$
|
836,658
|
|
2020
|
|
|
1,038,660
|
|
|
|
|
|
|
|
|
$
|
1,875,318
|
|
JAG entered into a Funding Purchase Agreement on August 25, 2017, whereby JAG received proceeds of $100,000 with loan costs of $37,000, for a total loan of $137,000. This debt was refinanced in April 2018 for $65,000 under a credit agreement with another third-party, payable in weekly payments of approximately $800 through July 2019. The balance under this credit agreement was $39,499 and $52,989 as of September 30, 2019 and December 31, 2018 and is included in accrued expenses on the accompanying balance sheet. This note is currently in default.
Total amortization of debt discounts was $1,322,297 and $311,626 for the nine months ended September 30, 2019 and 2018, respectively. Accrued interest on the above notes payable totaled $148,822 and $96,100 as of September 30, 2019 and December 31, 2018, respectively. Interest expense for the above notes payable for the nine months ended September 30, 2019 and 2018 was $274,711 and $93,204, respectively.
NOTE 5 - DERIVATIVE LIABILITY
Derivative Liability- Debt
The fair value of the described embedded derivative on all convertible debt was valued at $3,836,085 and $2,215,376 at September 30, 2019 and December 31, 2018, respectively, which was determined using the Black Scholes Pricing Model with the following assumptions:
Dividend yield:
|
|
|
0
|
%
|
Term
|
|
0.5 – 1.0 year
|
|
Volatility
|
|
114.3%–132.8
|
%
|
Risk free rate:
|
|
1.75–2.63
|
%
|
For the nine months ended September 30, 2019 and 2018, the Company adjusted the recorded fair value of the derivative liability on debt to market resulting in non-cash, non-operating loss of $1,617,074 and $31,236 for the nine months ended September 30, 2019 and 2018, respectively.
Note 2 contains a summary of changes in fair value of the Company’s Level 3 financial liabilities as of September 30, 2019.
NOTE 6 - STOCKHOLDERS’ DEFICIT
Class A Convertible Preferred Shares
As of September 30, 2019 and December 31, 2018, the Company had authorized 60,000,000 shares of Series A Convertible Preferred Stock (“Class A Stock”) with $0.0001 par value per share, of which 54,200,000 and 50,950,000 shares were issued and outstanding as of September 30, 2019 and December 31, 2018, respectively.
Each share of Class A Stock is convertible at any time into 25 shares of common stock, totaling 1,355,000,000 shares of common stock assuming full conversion of all outstanding shares. No dividends are payable unless declared by the Board of Directors. Each share of Class A Stock votes with the shares of Common Stock and is entitled to 50 votes per share and ranks senior to all other classes of stock in liquidation in the amount of $1 per share.
On January 3, 2019, the Company issued 10,500,000, shares of common stock to a former director for the conversion of 1,750,000 shares of Class A Stock.
On May 23, 2019, the Company issued 100,000,000 shares of common stock to the Company’s CEO for the conversion of 4,000,000 shares of Class A Stock.
On May 31, 2019, the Company issued a total of 10,000,000 shares of Class A Stock to directors for compensation resulting in compensation expense of $3,100,000.
On July 22, 2019 and August 2, 2019, the Company issued an aggregate of 25,000,000 shares of common stock to a director of the Company for the conversion of an aggregate of 1,000,000 shares of Class A Stock.
Common Shares
As of September 30, 2019, the Company’s authorized common stock is 2,000,000,000 shares at $0.0001 par value per share. 1,656,829,156 and 1,236,319,023 shares were issued and outstanding as of September 30, 2019 and December 31, 2018, respectively.
Shares issued during the nine months ended September 30, 2019
During the nine months ended September 30, 2019, the Company issued an aggregate of 97,468,049 shares of common stock to two investors for the conversion of a total of $419,500 of convertible debt and accrued interest.
On March 1, 2019, the Company issued an aggregate of 8,000,000 shares of common stock to a consultant for consulting services at a price of $0.10 per share. The fair value of these shares of $800,000 was included in accrued expenses as of December 31, 2018.
On May 16, 2019, the Company issued an aggregate of 156,058,751 shares related the acquisition of the Acquired Assets at a price of $0.0145 per share (See Note 3).
In August and September 2019, the Company issued an aggregate of 23,483,333 shares of common stock to consultants for services at prices ranging from $0.0130 to $0.0184 per share with an aggregate value of $324,050.
NOTE 7 - RELATED PARTY TRANSACTIONS
Accrued Officer Compensation
As of September 30, 2019 and December 31, 2018, a total of $525,411 and $349,000, respectively, was accrued for unpaid officer wages due the Company’s CEO and President under their respective employment agreements.
Other
As of September 30, 2019 and December 31, 2018, a total of $16,619 and $22,574 was due our CEO and our President and is included in accounts payable.
As of September 30, 2019 and December 31, 2018, a total of $2,892 was due the founder of DIGS and is included in accounts payable.
The Company’s CEO advanced the Company funds during 2019 and 2018, with a balance due of $705,000 and $585,000 respectfully, plus accrued interest of $74,910 and $18,030 as of September 30, 2019 and December 31, 2018, respectively. These balances accrue interest at 12% beginning on October 1, 2018, are unsecured and due on demand.
As of September 30, 2019 and December 31, 2018, a total of $18,222 and $10,738, respectively, was due to the founder of DIGS for advances to DIGS.
As of September 30, 2019 and December 31, 2018, a total of $32,020 was due to an entity owned by the founder of ShieldSaver for advances to ShieldSaver prior to the Company’s acquisition of ShieldSaver on August 31, 2018. The founder of ShieldSaver is also the founder of JAG and is a related party.
DIGS previously sub-leased space on a month-to-month basis from an entity controlled by the founder of DIGS. Total payments related to this sub-lease for the nine months ended September 30, 2019 and 2018 were $0 and $11,375, respectively.
See Note 6 for related party share issuances to a former director of the Company.
NOTE 8 – COMMITMENTS AND CONTINGENCIES
The Company leases approximately 1,400 square feet of office space at 2999 North 44th St, Phoenix, AZ 85018 at a monthly rent of $3,375.97. The lease term expired September 2019. The Company is currently renegotiating the terms of a new lease.
On July 2, 2019, the Company executed a lease agreement for an industrial building space in California for 24 months at base rent of $2,400 per month through June 30, 2021.
See the Company’s Form 10-K for the year ended December 31, 2018 for details on our executive’s employment agreements. There have been no changes to these agreements.
NOTE 9 - REVENUE CLASSES
Selected financial information for the Company’s operating revenue for disaggregated revenue purposes are as follows:
|
|
Nine Months
Ended
September 30,
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Retail
|
|
$
|
124,067
|
|
|
$
|
136,317
|
|
Distribution
|
|
|
475,776
|
|
|
|
-
|
|
Services
|
|
|
1,570,280
|
|
|
|
744,840
|
|
Total
|
|
$
|
2,170,123
|
|
|
$
|
881,157
|
|
NOTE 10 – DISPOSAL OF SUBSIDIARY
On July 26, 2019 a Statement of Dissolution was filed with the Colorado Secretary of State dissolving JAG as a result of the Company’s strategic shift away from the glass installation services market. The dissolution resulted in a loss on disposal of subsidiary $54,798 and the elimination of JAG’s 49% non-controlling interest of $109,153 during the three months ended September 30, 2019.
NOTE 11 - SUBSEQUENT EVENTS
On October 7, 2019, the Company issued 12,254,902 shares of common stock to an investor for the conversion of $50,000 of convertible debt and accrued interest.
On October 9, 2019, the Company issued 3,500,000 shares of common stock to a consultant for consulting services at a price of $0.0143 per share. The value of these shares of $50,000 was included in accrued expenses as of September 30, 2019.