NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September
30, 2019
(Unaudited)
NOTE
1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Nature
of Business
Meso
Numismatics, Inc. (the “Company”) was originally organized under the laws of the state of Washington in 1999, as Spectrum
Ventures, LLC to develop, market and sell VOIP (Voice Over Internet Protocol) services. In 2002, the Company changed its name
to Nxtech Wireless Cable Systems, Inc. In August 2007, the Company changed its name to Oriens Travel and Hotel Management Corp.
In November 2014, the Company changed its name to Pure Hospitality Solutions, Inc.
On
November 16, 2016, the Company entered into an Agreement and Plan of Merger between the Company and Meso Numismatics Corp. (“Meso”).
The acquisition of Meso is to support the Company’s overall mission of specializing in ventures related to Central America
and the Latin countries of the Caribbean, not limited to tourism. Meso is a small but scalable numismatics operation that the
Company can leverage for low cost revenues and product marketing.
Meso
Numismatics maintains an online store with eBay (www.mesocoins.com) and participates in live auctions with major companies
such as Heritage Auctions, Stacks Bowers Auctions and Lyn Knight Auctions.
The
acquisition was completed on August 4, 2017 following the Company issuance of 25,000 shares of Series BB preferred stock to Meso
to acquire one hundred (100%) percent of Meso’s common stock. The Company accounted for the acquisition as common control,
as Melvin Pereira, the CEO and principal shareholder of the Company, controls, operates and owns both companies. On November 16,
2016, the date of the Merger Agreement, and June 30, 2017, the date of the Debt Settlement Agreement, Melvin Pereira, CEO of Pure
Hospitality Solutions, owned 100% of the stock of Meso Numismatics. Pure Hospitality Solutions, Inc. and Meso Numismatics first
came under common control on June 30, 2017.
On
September 4, 2017, the Company decided to suspend its booking operations, Oveedia, to focus on continuing to build its numismatic
business, Meso Numismatics. The Company did, however, use its footprint within the Latin American region to expand Meso Numismatics
quickly.
In
September 2018, the Company changed its name to Meso Numismatics, Inc. which was approved by FINRA, and on September 26, 2018,
the new ticker symbol MSSV became effective as of October 16, 2018.
On
July 2, 2018, the Board of Directors authorized and shareholders approved a 1-for-1,000 reverse stock split of its issued and
outstanding shares of common stock held by the holders of record. The prior year financials have been changed to reflect the 1-for-1,000
reverse stock split.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles
of Consolidation and Basis of Presentation
The
condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, E-Network de
Costa Rica MA SA and Meso Numismatics Corp. All intercompany transactions have been eliminated.
Use
of Estimates in Financial Statement Presentation
The
preparation of these 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 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.
Reclassifications
Certain
amounts for the prior year have been revised or reclassified to conform to the current year presentation.
Cash
and Cash Equivalents
The Company considers all highly liquid
accounts with original maturities of three months or less to be cash equivalents. At September 30, 2019 and December 31, 2018,
all of the Company’s cash was deposited in major banking institutions. There were no cash equivalents as of September 30,
2019 and December 31, 2018.
Inventory
The
Company’s inventory is comprised of roughly 50% coins and medals and 50% paper money. The Company has a meticulous process
for the acquisition and sales process for each coin item. The Company specializes in coins from the Meso region, but also acquires
coins and medals from elsewhere around the world
As
of September 30, 2019, the Company is working on an inventory tracking system by serial number. Until such time as an inventory
tracking system exists, the inventory costs cannot be properly confirmed. Any inventory balances are therefore expensed during
each reporting period.
Derivative
Instruments
The
derivative instruments are accounted for as liabilities. The derivative instrument is initially recorded at its fair market value
and is then re-valued at each reporting date, with changes in fair value recognized in operations for each reporting period. The
Company uses the Binomial option pricing model to value the derivative instruments.
Revenue
Recognition
Effective
January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes
revenue from the commercial sales of products by applying the following steps: (1) identifying the contract with a customer; (2)
identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction
price to each performance obligation in the contract; and (5) recognizing revenue when each performance obligation is satisfied.
For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition.
Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2)
the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer
is fixed and determinable; and (4) the collectability of the fee is reasonably assured. The Company recognizes revenues and the
related costs when persuasive evidence of an arrangement exists; delivery and acceptance has occurred; or service has been rendered,
the price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Amounts invoiced or collected
in advance of product delivery or providing services are recorded as deferred revenue. The Company accrues for sales returns,
bad debts, and other allowances based on its historical experience.
The
Company acquires rare coins and banknotes from Latin America at reduced costs, which it then sends to Numismatic Guaranty Corporation
and Paper Money Guaranty for authentication and grading. Once graded, the inventory is transferred to Meso’s Florida-based
location and then sent around the world to the Company’s many customers, with sales recorded net of fees.
Income
Taxes
The
Company uses the liability method to record income tax activity. Deferred taxes are determined based upon the estimated future
tax effects of differences between the financial reporting and tax reporting bases of assets and liabilities, given the provisions
of currently enacted tax laws.
The
accounting for uncertainty in income taxes recognized in an enterprise’s financial statements uses the threshold of more-likely-than-not
to be sustained upon examination for inclusion or exclusion. Measurement of the tax uncertainty occurs if the recognition threshold
has been met.
Net
Earnings (Losses) Per Common Share
The
Company computes earnings (loss) per share by dividing net earnings (loss) by the weighted average number of shares of common
stock and dilutive common stock equivalents outstanding during the year. Dilutive common stock equivalents may consist of
shares issuable upon conversion of convertible preferred shares and the exercise of the Company’s stock options (calculated
using the treasury stock method). Common stock issuable is considered outstanding as of the original approval date for purposes
of earnings per share computations.
Fair
Value of Financial Instruments
The
fair value of financial instruments, which include cash, accounts payable and accrued expenses and advances from related parties
were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments.
Management is of the opinion that the Company is not exposed to significant interest, currency or credit risks arising from financial
instruments.
Fair
value is defined as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. A three-tier fair value hierarchy which prioritizes the inputs used in the
valuation methodologies is as follows:
Level
1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability
to access at the measurement date.
Level
2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset
or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally
from or corroborated by market data by correlation or other means.
Level
3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions
about the assumptions that market participants would use in pricing the assets or liabilities.
At
September 30, 2019 and December 31, 2018, the carrying amounts of the Company’s financial instruments, including cash, accounts
payable, and accrued expenses, approximate their respective fair value due to the short-term nature of these instruments.
At
September 30, 2019 and December 31, 2018, the Company does not have any assets or liabilities except for derivative liabilities
and convertible notes payable required to be measured at fair value in accordance with FASB ASC Topic 820, Fair Value Measurement.
The
following presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on non-recurring
basis as of September 30, 2019 and December 31, 2018:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Notes Payable, net of discount
|
|
$
|
1,063,401
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,063,401
|
|
Derivative Liability
|
|
|
4,026,778
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,026,778
|
|
Total
|
|
$
|
5,090,179
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,090,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Notes Payable, net of discount
|
|
$
|
812,827
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
812,827
|
|
Derivative Liability
|
|
|
2,938,317
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,938,317
|
|
Total
|
|
$
|
3,751,144
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,751,144
|
|
Comprehensive
Income
The
Company records comprehensive income as the change in equity of a business during a period from transactions and other events
and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments
by owners and distributions to owners. Other comprehensive income (loss) includes foreign currency translation adjustments and
unrealized gains and losses on available-for-sale securities. As of September 30, 2019 and December 31, 2018, the Company had
no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial
statements.
Stock-Based
Compensation
Stock-based
compensation costs are measured at fair value on the date of grant and recognition of compensation over the service period for
awards expected to vest. The Company determines the fair value of awards using the Black-Scholes valuation model.
New
Accounting Pronouncements
In
May 2014, ASU 2014-09 was issued, relating to revenue from contracts with customers. The ASU was further amended in August 2015,
March 2016, April 2016, and May 2016 by ASU 2015-14, 2016-08, 2016-10 and 2016-12.
In
August 2015, the effective date was deferred to reporting periods, including interim periods, beginning after December 31, 2017,
and will be applied retrospectively. Early adoption is not permitted.
Since
ASU 2014-09 was issued, several additional ASUs have been issued to clarify various elements of the guidance. These standards
provide guidance on recognized revenue, including a five-step model to determine when revenue recognition is appropriate. The
standard requires that an entity recognize revenue to depict the transfer of control of promised goods or services to customer
in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Effective January 1, 2018, the Company has adopted ASU 2014-09, “Revenue from Contracts with Customers”. The results
of operations for the reported periods after January 1, 2018 will be presented under this amended guidance, while prior period
amounts are reported in accordance with ASC 605-Revenue Recognition.
The
Company has completed its assessment of the impact of the new revenue standard on the Company’s financial position, results
of operations, or cash flows and believes the new standard will not have a material impact. The Company has adopted the
standard using the modified retrospective method of adoption. The Company’s revenue arises from contracts with customers
in which the sale of coins is the single performance obligation under the customer contract. Accordingly, revenue will continue
to be recognized at a point in time when control of the asset is transferred to the customer, which is generally consistent with
the Company’s current accounting policies. No material changes have been noted for use in implementation of this standard.
ASU
2014-09 provides presentation and disclosure requirements which are more detailed than under current GAAP.
In
February 2016, FASB issued ASC 842 that requires lessees to recognize lease assets and corresponding lease liabilities on the
balance sheet for all leases with terms of more than 12 months. The update, which supersedes existing lease guidance, will continue
to classify leases as either finance or operating, with the classification determining the pattern of expense recognition in the
income statement.
The ASU will be effective for annual and
interim periods beginning January 1, 2019, with early adoption permitted, and is applicable on a modified retrospective basis
with various optional practical expedients. The Company has already adopted.
The
Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The
accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management
were evaluated for the potential effect on these consolidated financial statements. Management does not believe any of the subsequent
pronouncements will have a material effect on these consolidated financial statements as presented and does not anticipate the
need for any future restatement of these consolidated financial statements because of the retroactive application of any accounting
pronouncements issued subsequent to September 30, 2019 through the date these financial statements were issued.
Going
Concern
The financial statements have been prepared
assuming the Company will continue as a going concern. The Company has incurred losses since inception, resulting in an accumulated
deficit of approximately $26,857,053 and negative working capital of $5,976,737 as of September 30, 2019 and future losses are
anticipated. These factors, among others, generally tend to raise substantial doubt to continue as a going concern as to its ability
to obtain additional long-term debt or equity financing in order to have the necessary resources to further design, develop and
launch the website and market the Company’s new service.
In
order to continue as a going concern, the Company needs to develop a reliable source of revenues, and achieve a profitable level
of operations in the future and/or to obtain the necessary financing to meet its obligations arising from normal business operations
when they come due.
Accordingly,
the condensed consolidated financial statements account for the Company as if it is a going concern and do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities or
other adjustments that might be necessary should the Company be unable to continue as a going concern.
To
fund basic operations for the next twelve months, the Company projects a need for $750,000 that will have to be raised through
debt or equity. In addition to the estimated $300,000 for operating expenses, the Company is budgeting $180,000 for advertising
and marketing and $90,000 for new technology. To attract more customers to Meso Numismatics, the Company plans on hiring an advertising
firm and placing more ads on sites such as those of NGC and PMG. Along with the advertising program, the Company plans on investing
in upgrading and expanding the Meso App. To continue expanding sales, the Company plans to invest $90,000 to acquire additional
inventory, along with exploring possible acquisitions, which the Company estimates will require approximately $100,000.
Business
Combinations
In
the third quarter of 2017, the Company issued 25,000 Series BB Preferred Stock per the terms of the June 30, 2017 Debt Settlement
Agreement to complete the acquisition of Meso Numismatics, fully satisfying the Merger Agreement, which was first entered into
on November 16, 2016. The Company accounted for the acquisition as common control, as Melvin Pereira, the CEO and principal shareholder
of the Company, controls, operates and owns both companies. On November 16, 2016, the date of the Merger Agreement and June 30,
2017, the date of the Debt Settlement Agreement, Melvin Pereira, CEO of Pure Hospitality Solutions, owned 100% of the stock of
Meso Numismatics. Pure Hospitality Solutions, Inc. and Meso Numismatics first came under common control on June 30, 2017.
NOTE
3 – NOTES PAYABLE
Convertible
Notes Payable
During
2003 through 2016, the Company entered into a series of convertible debentures, which bear interest at a rate varying from 0 to
10 percent, due on an annual basis. Any amount of interest which is not paid when due shall bear interest at 0 to 10 percent until
paid in full.
Throughout
2014 and 2015, these particular convertible notes payable have been partitioned and sold in portions to multiple third parties
in a combined amount totaling in excess of $450,000. In the majority of cases, these convertible notes payable, because they were
in default, were subject to term adjustments at the note holders’ request. Thus, when the convertible notes payable were
purchased, the new debt holders (generally) negotiated new terms with the Company. To this end, the Company would issue new notes,
referred to as “replacement notes,” which often resulted in slightly better terms.
These
debentures are convertible, at the investors’ sole option, into shares of common stock at the following terms:
|
●
|
a 50 percent discount
to the lowest closing bid price during the 10 days immediately preceding the conversion date as reported on the National Quotations
Bureau OTCQB exchange;
|
|
●
|
a 50 percent discount
to the average of the three lowest traded prices during the 20 days immediately preceding the conversion date as quoted by
Bloomberg LP;
|
|
●
|
either (i) a 50
percent discount to the lowest closing bid price during the 10 days immediately preceding the conversion date as reported
on the National Quotations Bureau OTCQB exchange, or (ii) a fixed conversion price of $0.00005 per share during any time whereby
the current day market price is at or greater than $0.01;
|
|
●
|
a 40 percent discount
to the average of the three lowest traded prices during the 20 days immediately preceding the conversion date as quoted by
Bloomberg LP; or
|
|
●
|
either (i) a 40
percent discount to the 10 days average daily trading price immediately preceding the conversion date, or (ii) at a fixed
conversion price of $0.001 per share during any time whereby the current day market price is at or less than $0.075.
|
During
the periods ending September 30, 2019 and December 31, 2018 the Company received $0 and $63,000, respectively, in advances on
existing convertible notes and $297,850 and $208,724, respectively, from funding on new convertible notes.
From
2016 to present, the Company has entered into Convertible Debentures with Union Capital LLC. The promissory note agreements bear
interest at eight (8%) percent and have a one (1) year maturity date. The notes may be repaid in whole or in part at any time
prior to maturity. There are no shares of common stock issuable upon the execution of the promissory notes. The notes are convertible,
at the investors’ sole discretion, into shares of common stock at variable conversion prices. As of September 30, 2019,
Union Capital LLC had advanced a total of $1,156,281 to the Company.
During
the periods ending September 30, 2019 and December 31, 2018, the Company made no payments on the outstanding convertible notes,
and converted $12,443 and $30,251, respectively, into 400,731 and 1,154,394 shares of common stock. As of September 30, 2019 and
December 31, 2018, the balance of outstanding principal notes payable was $1,288,009 and $997,502, respectively.
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Ajene Watson, LLC
|
|
$
|
3,182
|
|
|
$
|
3,182
|
|
Digital Asset Monetary Network (fka Digital Arts Media Network)
|
|
|
128,546
|
|
|
|
128,546
|
|
Union Capital, LLC
|
|
|
1,156,281
|
|
|
|
865,774
|
|
Current note payable
|
|
|
1,288,009
|
|
|
|
997,502
|
|
Less: Discount
|
|
|
224,608
|
|
|
|
184,675
|
|
Current note payable, net
|
|
$
|
1,063,401
|
|
|
$
|
812,827
|
|
Derivative
Liabilities
The
Company determined that the convertible notes outstanding as of September 30, 2019 and December 31, 2018 contained an embedded
derivative instrument as the conversion price was based on a variable that was not an input to the fair value of a “fixed-for-fixed”
option as defined under FASB ASC Topic No. 815 – 40.
The
Company determined the fair values of the embedded convertible notes derivatives and tainted convertible notes using the lattice
valuation model.
The
balance of the fair value of the derivative liability as of December 31, 2018 and September 30, 2019 is as follows:
Balance at December 31, 2017
|
|
$
|
1,449,389
|
|
Additions
|
|
|
263,503
|
|
Fair value gain
|
|
|
1,270,683
|
|
Conversions
|
|
|
(45,258
|
)
|
Balance at December 31, 2018
|
|
|
2,938,317
|
|
Additions
|
|
|
283,069
|
|
Fair value gain
|
|
|
820,884
|
|
Conversions
|
|
|
(15,492
|
)
|
Balance at September 30, 2019
|
|
$
|
4,026,778
|
|
During the periods ending September 30,
2019 and September 30, 2018, the Company recorded $67,286 and $50,237, respectively, of interest expense and $257,916 and $387,897,
respectively, of debt discount amortization expense. As of September 30, 2019 and December 31, 2018, the Company had approximately
$499,636 and $437,458, respectively, of accrued interest.
NOTE
4 – STOCKHOLDERS EQUITY
Shares
of Common Stock
The
Board of Directors was required to increase the number of authorized shares of common stock from (a) 200,000,000 to 500,000,000
during June 2015, (b) 500,000,000 to 1,500,000,000 during July 2015, and (c) 1,500,000,000 to 6,500,000,000 during March 2016,
to adhere to the Company’s contractual obligation to maintain the required reserve share amount for debtholders.
On
July 2, 2018, the Board of Directors authorized and shareholders approved a 1-for-1,000 reverse stock split of its issued and
outstanding shares of common stock held by the holders of record. The below transactions have been changed to reflect the 1-for-1,000
reverse stock split.
As
of September 30, 2019 and December 31, 2018, the Company has 5,336,177 and 4,901,024 shares of common stock issued and outstanding,
respectively.
2019
Transactions
On
April 22, 2019, 3,010 shares of the Company’s Series BB preferred stock were converted to 34,422 shares of the Company’s
common stock during the quarter ended June 30, 2019. The shares were converted within the terms of their original issue terms
or agreement; a loss of $2,513 was recorded.
On
August 27, 2019, the Company issued 400,731 shares of common stock in conversion of $12,443 convertible notes payable at conversion
price of $0.03105: a loss of $8,099 was recorded.
Designation
of Series AA Super Voting Preferred Stock
On
June 30, 2014, the Company filed with the Secretary of State with Nevada an amendment to the Company’s Articles of Incorporation,
as amended (the “Articles of Incorporation”), authorizing the issuance of up to eleven million (11,000,000) of preferred
stock with a par value $0.001 per share.
On
May 2, 2014, the Company filed with the Secretary of State with Nevada in the form of a Certificate of Designation that authorized
the issuance of up to one million (1,000,000) shares of a new series of preferred stock with a par value $0.001 per share, designated
“Series AA Super Voting Preferred Stock,” for which the board of directors established the rights, preferences and
limitations thereof.
Each
holder of outstanding shares of Series AA Super Voting Preferred Stock shall be entitled to ten thousand (10,000) votes for each
share of Series AA Super Voting Preferred Stock held on the record date for the determination of stockholders entitled to vote
at each meeting of stockholders of the Company.
The
holders of the Series AA Super Voting Preferred Stock shall not be entitled to receive dividends paid on the Company’s common
stock.
Upon
liquidation, dissolution and winding up of the affairs of the Company, whether voluntary or involuntary, the holders of the Series
AA Super Voting Preferred Stock shall not be entitled to receive out of the assets of the Company, whether from capital or earnings
available for distribution, any amounts which will be otherwise available to and distributed to the common shareholders.
The
shares of the Series AA Super Voting Preferred Stock will not be convertible into the shares of the Company’s common stock.
During
2014, the Company and S & M Chuah Enterprises Ltd. agreed to an exchange of 900,000,000 shares of common stock previously
issued to S & M Chuah Enterprises Ltd., an entity controlled by Ken Chua, CEO and board member for 500,000 shares of Series
AA Preferred Stock of the Company with a par value of $0.001 per share. The 900,000,000 shares of common stock were returned to
the Company’s transfer agent for cancellation. The shares were valued on the date of the agreement using the par value of
$0.001, since the shares were non-convertible and non-tradable with super voting rights only.
During
2014, the Company and E-Network de Costa Rica S.A., an entity controlled by Melvin Pereira, mutually agreed to issue an amount
of 500,000 shares of Series AA Preferred Stock of the Company with a par value $0.001 per share as a compensation for becoming
the new CEO of Pure Hospitality Solutions Inc. The shares were valued on the date of the agreement and are non-convertible and
non-tradable with super voting rights only.
As
of September 30, 2019 and December 31, 2018, the Company had 1,000,000 preferred shares of Series AA Preferred Stock issued and
outstanding.
Designation
of Series BB Preferred Stock
On
March 29, 2017, the Company filed with the Secretary of State with Nevada a Certificate of Designation that authorized the issuance
of up to one million (1,000,000) shares of a new series of preferred stock, par value $0.001 per share, designated “Series
BB Preferred Stock,” for which the board of directors established the rights, preferences and limitations thereof.
Each
holder of outstanding shares of Series BB Preferred Stock shall be entitled to convert on a 1-for-1 basis into shares of the Company’s
common stock, any or all of their shares of Series BB Preferred Stock after a minimum of six (6) months have elapsed from the
issuance of the preferred stock to the holder. The Series BB Preferred Stock has no voting rights until the Holder redeems the
preferred stock into the Company’s common stock. The Series BB Preferred Stock shall not be adjusted by the Company.
The
holders of the Series BB Preferred Stock shall not be entitled to receive dividends paid on the Company’s common stock.
The
Series BB Preferred Stock has a liquidation value of $1.00. Upon liquidation, dissolution and winding up of the affairs of the
Company, whether voluntary or involuntary, the holders of the Series BB Preferred Stock shall be entitled to share equally and
ratably in proportion to the preferred stock owned by the holder to receive out of the assets of the Company, whether from capital
or earnings available for distribution, any amounts which will be otherwise available to and distributed to the common shareholders.
As of September 30, 2019 and December
31, 2018, the Company has 441,125 and 444,135 shares of Series BB Preferred Stock issued and outstanding, respectively.
NOTE
5 – RELATED PARTY TRANSACTIONS
On
March 31, 2018, the Company changed its corporate registered offices to 433 Plaza Real, Suite 275, Boca Raton, Florida 33432.
The lease is for a year-to-year term at $53.10 per month. Prior to March 31, 2019, the Company shares its corporate registered
offices with Ajene Watson LLC at 3265 Johnson Avenue, Suite 213, Riverdale, NY 10463. The lease is for a year-to-year term. During
the nine months ended September 30, 2019 and the year ended December 31, 2018, the Company incurred no material rent expenses.
The Company has no leases that required implementation of ASU 842 in the period ending September 30, 2019 to assets and liabilities.
NOTE
6 – COMMITMENTS AND CONTINGENCIES
On
May 12, 2015, the Company issued a convertible promissory Note (the “Note”) in the principal amount of $25,000 to
Tarpon Bay Partners, LLC (“Tarpon Bay”), whose principal at the time is now known as a “Bad Actor” under
SEC rules. On or about January 23, 2017, Tarpon Bay elected to convert principal and interest under the Note into shares of the
Company’s common stock. On or about June 6, 2017 the Note was assigned to J.P. Carey Enterprises, Inc. (“J.P.”).
On or about June 7, 2017, J.P. elected to convert principal and interest under the Note into shares of the Company’s common
stock. Joseph Canouse, a principal at J.P., initiated a lawsuit against the Company in Fulton County Court, in Georgia for, among
other things, breach of contract. A default judgment was entered into against the Company for failure to response to these claims.
The court then issued an Order of Judgement against the Company in the amount of $282,500 which was recorded in accounts payable
as of December 31, 2017. The Company appealed the Courts’ decision and in November 2018, while the Court of Appeals affirmed
liability under the judgment, the Court of Appeals vacated the award of the entire judgment amount and remanded the case back
to the trial court with instructions.
NOTE
7 – PROPERTY AND EQUIPMENT, NET
Property
and equipment, net consisted of the following:
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
Computer and office equipment
|
|
$
|
4,000
|
|
|
$
|
4,000
|
|
Less: accumulated depreciation
|
|
|
(800
|
)
|
|
|
(200
|
)
|
Total property and equipment, net
|
|
$
|
3,200
|
|
|
$
|
3,800
|
|
NOTE
8 – SUBSEQUENT EVENTS
NONE