U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For
the quarter ended: March 31, 2020
Or
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For
the Transition Period from ___________ to____________
Commission File Number: 000-52490
Beyond Commerce, Inc.
(Exact
name of registrant as specified in its charter)
Nevada
|
|
98-0512515
|
(State
or Other Jurisdiction of
|
|
(I.R.S. Employer
|
Incorporation or Organization)
|
|
Identification No.)
|
|
|
|
3773 Howard Hughes Pkwy, Suite 500
Las
Vegas, Nevada 89169
(Address of Principal Executive Offices)
|
(702) 675-8022
(Registrant’s telephone number, including area code)
Securities registered
pursuant to Section 12(b) of the Act:
Title of each class
|
|
Trading
Symbol(s)
|
|
Name of each exchange on which registered
|
None
|
|
None
|
|
None
|
Indicate by check
mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirement for the past 90 days.
Yes ☒ No ☐
Indicate by check
mark whether the registrant has submitted electronically a every
Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☒ No ☐
Indicate by check
mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
1
Large accelerated
filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated
filer
|
☒
|
Smaller reporting
company
|
☒
|
|
Emerging growth
company
|
☐
|
If an emerging growth
company, indicate by check mark if the registrant has elected not
to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section
13(a) of the Exchange Act. ☐
Indicate by check
mark whether the registrant is a shell company (as defined in Rule
12(b)-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number
of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date. At May 14, 2019, the
registrant had outstanding 1,627,914,678 shares of common
stock.
2
Table of
Contents
Contents
PART 1. FINANCIAL INFORMATION4
ITEM 1. FINANCIAL STATEMENTS
(UNAUDITED)4
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS34
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.39
ITEM 4. CONTROLS AND PROCEDURES39
PART II – OTHER INFORMATION41
ITEM 1. LEGAL PROCEEDINGS.41
ITEM 1A. RISK FACTORS.41
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.41
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES.42
ITEM 4. MINE SAFETY DISCLOSURES.42
ITEM 5. OTHER INFORMATION.42
ITEM 6. EXHIBITS.42
SIGNATURES44
3
Table of Contents
PART 1.
FINANCIAL INFORMATION
ITEM
1.
FINANCIAL STATEMENTS
(UNAUDITED)
Beyond Commerce, Inc.
UNAUDITED
CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS
FOR THE
THREE-MONTH PERIODS ENDED
March 31,
2020 & 2019
4
Table of Contents
BEYOND
COMMERCE, INC.
TABLE OF
CONTENTS
|
Page
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2020 &
DECEMBER 31, 2019 (Unaudited)
|
6
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
THREE-MONTH PERIODS ENDED MARCH 31, 2020 & 2019
(Unaudited)
|
7
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
THREE-MONTH PERIODS ENDED MARCH 31, 2020 & 2019
(Unaudited)
|
8
|
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
DEFICIT FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2020 & 2019
(Unaudited)
|
9
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
10
|
5
Table of Contents
BEYOND
COMMERCE, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
March
31,
|
|
|
December
31,
|
|
|
2020
|
|
|
2019
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash
& cash equivalents
|
|
$
|
222,412
|
|
|
$
|
585,339
|
Accounts receivable, net
|
|
|
1,373,402
|
|
|
|
1,347,813
|
Assets
held for sale, current
|
|
|
2,652,502
|
|
|
|
113,470
|
Other
current assets
|
|
|
104,875
|
|
|
|
24,229
|
Total current assets
|
|
|
4,353,191
|
|
|
|
2,070,851
|
|
|
|
|
|
|
|
|
Assets held for sale, long-term
|
|
|
-
|
|
|
|
2,695,085
|
Property, equipment, and software - net
|
|
|
34,464
|
|
|
|
37,468
|
Intangible asset- net
|
|
|
3,018,768
|
|
|
|
3,137,083
|
Goodwill
|
|
|
1,299,144
|
|
|
|
1,299,144
|
|
|
|
|
|
|
|
|
|
|
$
|
8,705,567
|
|
|
$
|
9,239,631
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
758,276
|
|
|
$
|
597,777
|
Other
current liabilities
|
|
|
361,310
|
|
|
|
149,873
|
Accrued
payroll & related items
|
|
|
1,023,166
|
|
|
|
1,015,180
|
Derivative liability
|
|
|
1,019,089
|
|
|
|
1,433,403
|
Short-term borrowings – net of discount
|
|
|
2,874,540
|
|
|
|
2,714,762
|
Liabilities of assets held for sale, current
|
|
|
2,652,502
|
|
|
|
2,109,850
|
Short-term borrowings- related party
|
|
|
54,000
|
|
|
|
54,000
|
Total current liabilities
|
|
|
8,742,883
|
|
|
|
8,074,845
|
|
|
|
|
|
|
|
|
Long-term borrowings – net of discount
|
|
|
3,146,347
|
|
|
|
3,119,785
|
Liabilities of assets held for sale, long-term
|
|
|
-
|
|
|
|
1,048,795
|
Total
liabilities
|
|
|
11,889,230
|
|
|
|
12,243,425
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mezzanine Equity:
|
|
|
|
|
|
|
|
Preferred stock series A, $0.001 par value of 249,999,900 shares
authorized and 249,999,900 and 249,999,900 shares issued and
outstanding, respectively.
|
|
|
250,000
|
|
|
|
250,000
|
Preferred stock series B, $0.001 par value of 49 shares authorized
and 20 and no shares issued and outstanding, respectively.
|
|
|
-
|
|
|
|
-
|
Stockholders Equity:
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value, 3,000,000,000 shares authorized,
1,627,914,678 and 1,495,004,678 issued and outstanding as of March
31, 2020 and at December 31, 2019, respectively.
|
|
|
1,627,914
|
|
|
|
1,495,004
|
Additional paid in capital
|
|
|
43,479,157
|
|
|
|
43,347,152
|
Accumulated deficit
|
|
|
(48,651,784)
|
|
|
|
(48,227,200)
|
Deficit attributable to Beyond Commerce, Inc stockholder
|
|
|
(3,294,713)
|
|
|
|
(3,135,044)
|
Equity attributable to noncontrolling interest
|
|
|
111,050
|
|
|
|
131,250
|
Total stockholders' deficit
|
|
|
(3,183,663)
|
|
|
|
(3,003,794)
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit
|
|
$
|
8,705,567
|
|
|
$
|
9,239,631
|
The
accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
6
Table of Contents
BEYOND
COMMERCE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE
MONTH PERIODS ENDED MARCH 31,
UNAUDITED
|
|
For
the three months ended
March 31,
2020
|
|
|
For
the three months ended March 31,
2019
|
Revenues
|
|
$
|
1,247,590
|
|
|
|
463,914
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
422,420
|
|
|
|
112,054
|
Selling, general and
administrative
|
|
|
304,035
|
|
|
|
121,043
|
Payroll expense
|
|
|
669,109
|
|
|
|
276,721
|
Professional Fees
|
|
|
250,159
|
|
|
|
129,291
|
Depreciation and
amortization
|
|
|
123,440
|
|
|
|
53,591
|
Total operating
expenses
|
|
|
1,769,163
|
|
|
|
692,700
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
(521,573)
|
|
|
|
(228,786)
|
|
|
|
|
|
|
|
|
Non-operating
income (expense)
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(257,393)
|
|
|
|
(215,411)
|
Amortization of debt
discount
|
|
|
(298,828)
|
|
|
|
(569,457)
|
Derivative related
expenses
|
|
|
(121,599)
|
|
|
|
(1,121,999)
|
Change in derivative
liability
|
|
|
403,909
|
|
|
|
(1,618,349)
|
Total non-operating
income (expense)
|
|
|
(273,911)
|
|
|
|
(3,525,216)
|
|
|
|
|
|
|
|
|
Loss from continuing
operations before income tax
|
|
|
(795,484)
|
|
|
|
(3,754,002)
|
|
|
|
|
|
|
|
|
Income from
discontinued operation, net of tax
|
|
|
350,700
|
|
|
|
-
|
Provision for income
tax
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
Consolidated net
loss
|
|
$
|
(444,784)
|
|
|
|
(3,754,002)
|
Consolidated net
income (loss) attributable to:
Noncontrolling
interest
|
$
|
|
(20,200)
|
|
|
|
-
|
Consolidated net
loss, controlling interest
|
$
|
|
(424,584)
|
|
|
|
(3,754,002)
|
|
|
|
|
|
|
|
|
Net income (loss)
per common share-basic and diluted
|
|
$
|
(0.00)
|
|
|
|
(0.00)
|
|
|
|
|
|
|
|
|
Weighted average shares of capital outstanding – basic and
diluted
|
|
|
1,544,555,667
|
|
|
|
1,043,248,193
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of these unaudited condensed
consolidated financial statements.
7
Table of Contents
BEYOND
COMMERCE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE
THREE-MONTH PERIODS ENDED MARCH 31,
(Unaudited)
|
|
2020
|
|
|
2019
|
Net
loss
|
$
|
(795,484)
|
|
|
(3,754,002)
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
Loss on
derivative at note inception
|
|
121,599
|
|
|
178,332
|
Amortization of debt discount
|
|
298,828
|
|
|
569,457
|
Depreciation and amortization
|
|
123,441
|
|
|
53,591
|
Change
in derivative liability
|
|
(403,909)
|
|
|
2,767,005
|
Changes in assets and liabilities:
|
|
|
|
|
|
(Increase) decrease in accounts receivable
|
|
(25,589)
|
|
|
(98,007)
|
(Increase) decrease in other current assets
|
|
(82,768)
|
|
|
-
|
Increase (decrease) in accounts payable
|
|
161,111
|
|
|
(256,644)
|
Increase (decrease) in payroll liabilities
|
|
-
|
|
|
381,903
|
Increase (decrease) in other current liabilities
|
|
245,146
|
|
|
215,314
|
Net
cash provided by (used in) in operating activities.
|
$
|
(357,625)
|
|
|
56,949
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
Acquisition of property and equipment
|
|
-
|
|
|
(2,218,201)
|
Cash
acquired in acquisition
|
|
-
|
|
|
195,039
|
Net
cash used in investing activities
|
$
|
-
|
|
|
(2,023,162)
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
Repayment of Convertible Notes
|
|
(15,000)
|
|
|
-
|
Cash
receipts from notes payable
|
|
9,698
|
|
|
2,000,000
|
Net
cash provided (used in)by financing activities
|
|
(5,302)
|
|
|
2,000,000
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
(362,927)
|
|
|
33,787
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning balance
|
|
585,339
|
|
|
79,890
|
Cash
and cash equivalents, ending balance
|
$
|
222,412
|
|
|
113,678
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
Cash
Paid For:
|
|
|
|
|
|
Interest
|
$
|
-
|
|
|
-
|
Income
taxes
|
$
|
-
|
|
|
-
|
Summary of Non-Cash Investing and Financing Information:
|
|
|
|
|
|
Stock
issued for conversion of debt
|
$
|
132,910
|
|
|
1,060,486
|
Notes
issued in relation to Service 800 acquisition
|
$
|
-
|
|
|
2,100,000
|
Purchase Price holdback note on Service 800 acquisition
|
$
|
-
|
|
|
210,000
|
Purchase price allocation note on Service 800 acquisition
|
$
|
-
|
|
|
541,889
|
The accompanying
notes are an integral part of these unaudited condensed
consolidated financial statements.
8
Table of Contents
BEYOND
COMMERCE, INC.
RECONCILIATION OF STOCKHOLDERS’ DEFICIT
(Unaudited)
|
|
Common
Stock
|
|
Series A
Preferred Stock
|
Additional
|
Accumulated
|
Stockholders'
|
|
|
Shares
|
Par
Value
|
Shares
|
Par
Value
|
Paid in
Capital
|
Deficit
|
Deficit
|
Balance, December 31, 2018
|
1,017,450,000
|
$ 1,017,450
|
250,000,000
|
$ 250,000
|
$ 27,599,349
|
$ (42,762,680)
|
$ (13,895,881)
|
Extinguishment of derivative liabilities on conversion
|
-
|
-
|
-
|
-
|
3,872,545
|
-
|
3,872,545
|
Warrants
Issued with debt
|
-
|
-
|
-
|
-
|
696,850
|
-
|
696,850
|
Common
stock issues for debt conversion
|
62,472,003
|
62,472
|
-
|
-
|
998,014
|
-
|
1,060,486
|
Common
stock issued for interest conversion
|
5,507,873
|
5,508
|
-
|
-
|
90,399
|
-
|
95,907
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(424,583)
|
(444,783)
|
Balance, March 31, 2020
|
1,085,429,876
|
$ 1,085,430
|
250,000,000
|
$ 250,000
|
$ 33,257,157
|
$ (46,516,682)
|
$( 11,924,095)
|
|
|
Common
Stock
|
|
Series A &
B Preferred Stock
|
Non
Controlling
|
|
Additional
|
Accumulated
|
Stockholders'
|
|
|
Shares
|
Par
Value
|
Shares
|
Par
Value
|
Interest
|
|
Paid in
Capital
|
Deficit
|
Deficit
|
Balance, December 31, 2019
|
1,495,004,678
|
$ 1,495,004
|
249,999,920
|
$ 250,000
|
$
131,250
|
|
$ 43,347,152
|
$ (48,227,200)
|
$ (3,003,794)
|
Common
stock issued for debt conversion
|
132,910,000
|
132,910
|
-
|
-
|
|
|
-
|
-
|
132,910
|
Extinguishment of derivative liabilities on conversion
|
-
|
-
|
-
|
-
|
|
|
132,005
|
-
|
132,005
|
Net
loss
|
-
|
-
|
-
|
-
|
(20,200)
|
|
-
|
(424,584)
|
(444,784)
|
Balance, March 31, 2020
|
1,627,914,678
|
$ 1,627,914
|
249,999,920
|
$ 250,000
|
$111,050
|
|
$ 43,479,157
|
$ (48,651,784)
|
$( 3,183,663)
|
The accompanying
notes are an integral part of these unaudited condensed
consolidated financial statements.
9
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF
PRESENTATION
Beyond Commerce, Inc. (the “Company”,”BCI” and “we”), has a planned
business objective to develop, acquire, and deploy disruptive
strategic software technology and market-changing business models
through selling our own products and the acquisitions of existing
companies. We plan to offer a cohesive digital product and services
platform to provide our future clients with a single point of
contact for all their internet marketing technology and services
(IMT&S) and information management (IM) initiatives.
Basis of
Presentation
The
condensed consolidated financial statements and the notes thereto
for the periods ended March 31, 2020 and 2019 included herein
include the accounts of the Company, its wholly-owned subsidiaries
Service 800 Inc., Path UX and IDriveYourCar which have been
discontinued and Customer Centered Strategies, LLC., which the
Company has an 80% investment interest. These financial statements
have been prepared by management and are unaudited.
Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with accounting
principles generally accepted in the United States have been
condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission (the “SEC”). These
condensed consolidated financial statements should be read in
conjunction with the financial statements and the notes thereto for
the fiscal year ended December 31, 2019.
NOTE
2. SELECTED ACCOUNTING POLICIES
Interim Financial
Statements
These unaudited
condensed consolidated financial statements as of and for the three
(3) months ended March 31, 2020 and 2019, respectively, reflect all
adjustments including normal recurring adjustments, which, in the
opinion of management, are necessary to present fairly the
financial position, results of operations and cash flows for the
periods presented in accordance with the accounting principles
generally accepted in the United States of America.
These interim
unaudited condensed consolidated financial statements should be
read in conjunction with the Company’s consolidated financial
statements and notes thereto for the years ended December 31, 2019
and 2018, respectively, which are included in the Company’s
December 31, 2019 Annual Report on Form 10-K filed with the United
States Securities and Exchange Commission on April 14 , 2020. The
Company assumes that the users of the interim financial information
herein have read, or have access to, the audited consolidated
financial statements for the preceding period, and that the
adequacy of additional disclosure needed for a fair presentation
may be determined in that context. The results of operations for
the three (3) months ended March 31, 2020 are not necessarily
indicative of results for the entire year ending December 31,
2020.
We may
make certain reclassifications to prior period amounts to conform
with the current year’s presentation. These reclassifications did
not have a material effect on our condensed consolidated statement
of financial position, results of operations or cash flows.
Use
of Estimates
The preparation of consolidated financial statements and
accompanying notes in conformity with GAAP 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 consolidated financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
10
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
Estimates are used in the determination of depreciation and
amortization and the valuation for non-cash issuances of equity
instruments, web site, income taxes, and contingencies, among
others. Actual results could differ materially from these
estimates.
Cash
and Cash Equivalents
The Company classifies as cash and cash equivalents amounts on
deposit in banks and cash temporarily in various instruments with
original maturities of three months or less at the time of
purchase. The Company’s cash management system is currently
integrated within several banking institution.
Fair
Value of Financial Instruments
The carrying value of the current assets and liabilities
approximate fair value due to their relatively short
maturities.
Fair Value
Measurements
Statement of financial accounting standard FASB Topic 820,
Disclosures about Fair Value of Financial Instruments, requires
that the Company disclose estimated fair values of financial
instruments. The carrying amounts reported in the statements of
financial position for assets and liabilities qualifying as
financial instruments are a reasonable estimate of fair value.
The
Company applies the fair value hierarchy as established by GAAP.
Assets and liabilities recorded at fair value in the
consolidated balance sheets are categorized based upon the level of
judgment associated with the inputs used to measure the fair value
as follows.
•
Level 1 – quoted prices in active markets for identical assets
or liabilities.
•
Level 2 – other significant observable inputs for the assets
or liabilities through corroboration with market data at the
measurement date.
•
Level 3 – significant unobservable inputs that reflect
management’s best estimate of what market participants would use to
price the assets or liabilities at the measurement date.
|
|
March 31, 2020 Fair Value Measurements
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total Fair
Value
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
Liabilities
|
|
$
|
-
|
|
|
|
-
|
|
|
|
1,019,089
|
|
|
|
1,019,089
|
|
Total
|
|
$
|
-
|
|
|
|
-
|
|
|
|
1,019,089
|
|
|
|
1,019,089
|
|
11
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
|
|
December 31, 2019 Fair Value Measurements
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total Fair
Value
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
Total
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
Liabilities
|
|
$
|
-
|
|
|
|
-
|
|
|
|
1,433,403
|
|
|
|
1,433,403
|
Total
|
|
$
|
-
|
|
|
|
-
|
|
|
|
1,433,403
|
|
|
|
1,433,403
|
Derivative liability as of December 31, 2019
|
$1,433,403
|
Change in derivative liability during the period
|
(414,314)
|
Balance
at March 31, 2020
|
$1,019,089
|
Revenue
Recognition
The
Company recognize revenue in accordance with FASB ASC Subtopic
606-10, Revenue Recognition. We recognize revenue as we transfer
control of deliverables (products, solutions and services) to our
customers in an amount reflecting the consideration to which we
expect to be entitled. To recognize revenue, we apply the following
five step approach: (1) identify the contract with a customer, (2)
identify the performance obligations in the contract, (3) determine
the transaction price, (4) allocate the transaction price to the
performance obligations in the contract, and (5) recognize revenue
when a performance obligation is satisfied. We account for a
contract based on the terms and conditions the parties agree to,
the contract has commercial substance and collectability of
consideration is probable. The Company applies judgment in
determining the customer’s ability and intention to pay, which is
based on a variety of factors including the customer’s historical
payment experience.
The
majority of the Company’s revenue is generated by the completion of
a survey. Revenue is recognized and customers are billed at the
point in time a survey occurs or when a related service is
complete. The Company may require a deposit from new customers for
set up costs or as down payments. These amounts are not significant
to the financial statements. Revenue is no longer reflected from
PathUX’s and iDriveYourCar subsidiaries, which matches professional
chauffeurs with passengers who want to be driven in their own car
within the New York City area as this these entities are in the
process of being sold. The Company maintains an exclusive network
independent drivers. Revenue is complete when the services are
provided traditionally through credit card payments.
Accounts receivable
The Company’s
accounts receivable arise primarily from the sale of the Company’s
products. On a periodic basis, the Company evaluates each customer
account and based on the days outstanding of the receivable,
history of past write-offs, collections, and current credit
conditions, writes off accounts it considers uncollectible. With
most of our retail and distribution partners, invoices will
typically be due in 30 or 45 days. The Company does not accrue
interest on past due accounts and the Company does not require
collateral. Accounts become past due on an account-by-account
basis. Determination that an account is uncollectible is made after
all reasonable collection efforts have been exhausted. The Company
has not provided any sales allowances for March 31, 2020 and
December 31, 2019, respectively.
12
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
Property and Equipment
Property and equipment are carried at
cost, and are being depreciated using the straight-line over the
estimated useful lives as follows:
Equipment, Furniture
and fixtures
|
5-7
years
|
Software
|
16-60
months
|
Vehicles
|
7
years
|
When retired or otherwise disposed, the
carrying value and accumulated depreciation of the property and
equipment is removed from its respective accounts and the net
difference less any amount realized from disposition, is reflected
in earnings. Expenditures for maintenance and repairs which do not
extend the useful lives of the related assets are expensed as
incurred.
Valuation of Derivative Instruments
ASC 815 “Derivatives and Hedging” requires that embedded derivative
instruments be bifurcated and assessed, along with free-standing
derivative instruments such as warrants, on their issuance date and
measured at their fair value for accounting purposes. In
determining the appropriate fair value, the Company uses the
Black-Scholes option pricing formula. Upon conversion of a note
where the embedded conversion option has been bifurcated and
accounted for as a derivative liability, the Company records the
shares at fair value, relieves all related notes, derivatives and
debt discounts and recognizes a net gain or loss on debt
extinguishment.
Management used the following inputs to value the Derivative
Liabilities for the three months ended March 31, 2020:
|
March 31,
2020
Derivative Liability
|
Expected term
|
4 months to 1
year
|
Exercise price
|
$ 0.00054-$0.001
|
Expected volatility
|
135%-213 %
|
Expected dividends
|
None
|
Risk-free rate
|
0.17% to
1.48 %
|
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures
to cash flow, market or foreign currency risks. The Company
evaluates all of its financial instruments to determine if such
instruments are derivatives or contain features that qualify as
embedded derivatives. For derivative financial instruments that are
accounted for as liabilities, the derivative instrument is
initially recorded at its fair value and then is revalued at each
reporting date, with changes in fair value reported in the
consolidated statement of operations. For stock based derivative
financial instruments, Fair value accounting requires bifurcation
of embedded derivative instruments such as conversion features in
convertible debt or equity instruments, and measurement of their
fair value for accounting purposes. In determining the appropriate
fair value, the Company uses the Black-Scholes option-pricing
model. In assessing the convertible debt instruments, management
determines if the convertible debt host instrument is conventional
convertible debt and further if there is a beneficial conversion
feature requiring measurement. If the instrument is not considered
conventional convertible debt, the Company will continue its
evaluation process of these instruments as derivative financial
instruments.
13
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
Once determined, derivative liabilities are adjusted to reflect
fair value at the end of each reporting period. Any increase or
decrease in the fair value from inception is made quarterly and
appears in results of operations as a change in fair market value
of derivative liabilities.
Purchase Price
Allocation
In accordance with
ASC 805, Business Combinations, the Company recorded the
assets acquired and liabilities assumed at their respective
estimated fair values as of their respective acquisition dates,
based on internal company and independent evaluations. The total
estimated purchase prices were allocated to the assets acquired and
liabilities assumed based on their estimated fair values.
Intangible Assets
Intangible
assets with a finite life consist of Technology/Intellectual
Property; Customer Base; Tradename/Trademarks; Assembled Workforce;
and Non–Compete Agreements, and are carried at cost less
accumulated amortization. The Company amortizes the cost of
identified intangible assets on a straight-line basis over the expected
period of benefit, which is generally three years for customer
relationships and the contractual term for covenants not to
compete, which range
from five to ten years.
These
intangible assets of Technology/Intellectual Property; Customer
Base; Tradename/Trademarks; Assembled Workforce; and Non–Compete
Agreements were valued based on the appropriate application of the
Income, Market, and Cost Approaches. Accordingly, the Company
believes that these intangible assets will contribute to its cash
flows between two and ten years, with any excess carrying value
over the fair value being recognized as an impairment loss. The
Company performs its annual impairment test as of
December 31st of each year.
Goodwill
Goodwill is recognized and initially measured as any excess of the
acquisition-date consideration transferred in a business
combination over the acquisition-date amounts recognized for the
net identifiable assets acquired. Goodwill is not
amortized but is tested for impairment annually, or more frequently
if an event occurs or circumstances change that would more likely
than not result in an impairment of goodwill. Impairment testing is
performed at the reporting unit level. A reporting unit is defined
as an operating segment or one level below an operating segment,
referred to as a component. A component of an operating segment is
a reporting unit if the component constitutes a business for which
discrete financial information is available and segment management
regularly reviews the operating results of that component. The
goodwill impairment analysis is a single-step quantitative
assessment that identifies both the existence of impairment and the
amount of impairment loss by comparing the estimated fair value of
a reporting unit to its carrying value, with any excess carrying
value over the fair value being recognized as an impairment loss,
limited to the total amount of goodwill allocated to that reporting
unit. The Company performs its annual goodwill impairment test as
of December 31st of each year and has identified one reporting unit
that currently carries a goodwill balance.
Impairment of Long-lived Assets
The Company accounts for long-lived assets in accordance with the
provisions of ASC 360-10-35-21, Accounting for the Impairment of
Long-Lived Assets. This statement requires that long-lived
assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash
flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is
measured by the amount by which the
14
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. Fair values are determined
based on quoted market value, discounted cash flows or internal and
external appraisals, as applicable. During the three month periods
ended March 31, 2020 and 2019, the Company did not recognize any
impairment charges.
Reclassifications
We
may make certain reclassifications to prior period amounts to
conform with the current year’s presentation. These
reclassifications did not have a material effect on our condensed
consolidated statement of financial position, results of operations
or cash flows.
Income Taxes
The Company accounts for income taxes under ASC 740-10-30.
Deferred income tax assets and liabilities are determined
based upon differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted
tax rates and laws that will be in effect when the differences are
expected to reverse. Deferred tax assets are reduced by a
valuation allowance to the extent management concludes it is more
likely than not that the assets will not be realized.
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 income of the consolidated
statements of operations in the period that includes the enactment
date. A valuation allowance is provided when it is more likely than
not that some or all of the deferred tax assets may not be
realized.
The Company follows the guidance of ASC 740-10-25 in
determining whether tax benefits claimed or expected to be claimed
on a tax return should be recorded in the financial
statements. The Company may recognize the tax benefit
from an uncertain tax position only if it is more likely than not
that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position.
The tax benefits recognized in the financial statements from
such a position should be measured based on the largest benefit
that has a greater than fifty percent (50%) likelihood of being
realized upon ultimate settlement. The Company recognizes
interest and penalties related to uncertain tax positions in income
tax expense. The Company had no material adjustments to its
liabilities for unrecognized income tax benefits.
Stock Based Compensation
During the three months ended March 31, 2020 and 2019, the Company
did not issue any stock options for employee compensation. The
former stock based compensation plan expired on September 11,
2018. There is $303,925 of stock issued for
services.
Recent Accounting Pronouncements
The Company reviews all of the Financial Accounting Standard
Board’s updates periodically to ensure the Company’s compliance of
its accounting policies and disclosure requirements to the
Codification Topics.
In
August 2018, the FASB issued ASU 2018-13, Fair Value Measurement
(Topic 820): Disclosure Framework - Changes to the Disclosure
Requirements for Fair Value Measurement, which eliminates certain
disclosure requirements for fair value measurements for all
entities, requires public entities to disclose certain new
information and modifies some disclosure requirements. The new
guidance is effective for fiscal years beginning after December 15,
2019 and for interim periods within those fiscal years. Early
adoption is permitted in interim periods, including periods for
which financial statements have not been issued or financial
statements have not been made available for
15
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
issuance. The adoption of this standard did not have a material
effect on the Company’s consolidated financial
statements.
The Company will continue to monitor these emerging issues to
assess any potential future impact on its financial statements. The
Company has taken the position that any future standards will not
be disclosed to the extent they are not material to our
operations.
NOTE
3. GOING CONCERN
The
Company's financial statements are prepared using generally
accepted accounting principles, which contemplate the realization
of assets and liquidation of liabilities in the normal course of
business. Because of recent events, the Company cannot state
with certainty of its ability to continue. The accompanying
consolidated financial statements for March 31, 2020 and 2019 have
been prepared assuming that we will continue as a going concern,
which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business.
The Company has
suffered losses from operations and has a working capital deficit,
which raise substantial doubt about its ability to continue as a
going concern. Management is taking steps to raise additional funds
to address its operating and financial cash requirements to
continue operations in the next twelve months. Management has
devoted a significant amount of time in attempting to raise capital
from additional debt and equity financing. Due to its nominal
revenues, the Company’s ability to continue as a going concern is
dependent upon raising additional funds through debt and equity
financing and generating revenue, including through the recent
acquisition of Service 800 or through a merger transaction with a
well-capitalized entity. There are no assurances the Company will
receive the necessary funding or generate revenue necessary to fund
operations. If we are unable to obtain additional funds, or if the
funds cannot be obtained on terms favorable to us, we will be
required to delay, scale back or eliminate our plans to continue to
develop and expand our operations or in the extreme situation,
cease operations altogether.
NOTE
4. DISCONTINUED OPERATIONS
PathUX,
LLC
On April 24, 2020 the Company entered
into a Settlement and Release Agreement whereas the transaction on
May 31, 2019 between the former shareholders of PathUX and its
IDriveYourCar subsidiary was unwound effective April 1, 2020 and
all assets and liabilities were returned back to these former
shareholders, without any further recourse to the Company.
Furthermore, the shares issued on June 4, 2019, to Robert Bisson,
of 31,500,000 shares of Beyond Commerce’s restricted common stock,
Christian Schine of 31,500,000 shares of Beyond Commerce’s
restricted common stock, and Ryan Rich, of 7,000,000 shares of
Beyond Commerce’s restricted common stock were released from any
further claims. Since, Beyond Commerce had not paid any additional
funds to the previous owners of PathUX and the extension period had
expired, the Company has forfeited the 70,000,000 shares valued at
$427,000 which were reflected in the December 31, 2019 financial
statements.
The
carrying amount of the PathUX Assets that meet the held for sale
criteria will be adjusted in future periods based on changes in
fair value. The results of the PathUX assets are presented as
discontinued operations in the Consolidated Condensed Statements of
Operations and Cash Flows.
16
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
Income (loss) from discontinued operations, net of tax and the loss
on sale of discontinued operations, net of tax, of the PathUX
business which is presented in total as discontinued operations,
net of tax in the Company’s Consolidated Statements of Operations
for the three months ended March 31, 2020 and 2019, are as
follows:
|
|
Three months
ended March 31,
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
Total
net sales
|
|
$
|
219,867
|
|
|
$
|
-
|
Cost of
sales
|
|
|
147,829
|
|
|
|
-
|
Operating, selling, general and administrative expenses
|
|
|
91,133
|
|
|
|
-
|
Amortization of software
|
|
|
134,686
|
|
|
|
-
|
Income
(loss) from discontinued operations
|
|
|
(153,781)
|
|
|
|
-
|
Gain on
sale of discontinued operations
|
|
|
504,481
|
|
|
|
-
|
Income
tax provision
|
|
|
-
|
|
|
|
-
|
Discontinued operations, net of tax
|
|
$
|
350,700
|
|
|
$
|
-
|
The
following table presents the amounts reported in the Consolidated
Condensed Balance Sheets as held for sale related to the PathUX
Assets as of March 31, 2020 and December 31, 2019. As the sale was
finalized shortly after close of the interim period, current period
assets are shown as current on the balance sheet.
|
|
March
31,
|
|
|
December
31,
|
|
|
2020
|
|
|
2019
|
Current assets
|
|
|
|
|
|
Cash
& cash equivalents
|
|
$
|
74,103
|
|
|
$
|
95,470
|
Accounts receivable - net
|
|
|
18,000
|
|
|
|
18,000
|
Total
current assets
|
|
|
92,103
|
|
|
|
113,470
|
Proprietary Software, net
|
|
|
926,712
|
|
|
|
972,289
|
Intangible asset
|
|
|
1,633,687
|
|
|
|
1,722,796
|
Assets
held for sale
|
|
$
|
2,652,502
|
|
|
$
|
2,808,555
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
$
|
156,983
|
|
|
$
|
159,255
|
Contingent
acquisition liability - short term
|
|
|
1,951,205
|
|
|
|
1,951,205
|
Total current
liabilities
|
|
|
2,108,188
|
|
|
|
2,110,460
|
Contingent acquisition liability - long term
|
|
|
1,048,795
|
|
|
|
1,048,795
|
Liabilities of assets
held for sale
|
|
$
|
3,156,983
|
|
|
$
|
3,159,255
|
Net
Gain on assets held for sale
|
|
$
|
504,481
|
|
|
$
|
-
|
Net liabilities of assets held for
sale
|
|
$
|
2,652,502
|
|
|
$
|
3,159,255
|
17
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE
5. PROPERTY, SOFTWARE AND COMPUTER EQUIPMENT
Property and equipment at March 31, 2020 and December 31, 2019
consisted of the following:
|
|
2020
|
|
|
2019
|
Office
and computer equipment
|
$
|
22,214
|
|
$
|
22,214
|
Furniture and fixtures
|
|
4,448
|
|
|
4,448
|
Software
|
|
20,822
|
|
|
20,822
|
Total
property, software and computer equipment
|
|
47,484
|
|
|
47,484
|
Less:
accumulated depreciation
|
|
(13,020)
|
|
|
(10,016)
|
|
$
|
34,464
|
|
$
|
37,468
|
Depreciation expense for the three ended March 31, 2020 was $3,005,
compared to $1,002 for the same period in 2019.
NOTE
6. INTANGIBLE ASSETS
Intangible net assets of the Company at March 31, 2020 and December
31, 2019 are summarized as follows:
|
|
March 31,
December 31,
|
|
|
2020
|
|
|
2019
|
Tradename-Trademarks
|
|
$
|
488,009
|
|
|
$
|
501,692
|
Assembled Workforce
|
|
|
361,612
|
|
|
|
371,751
|
IP/Technology
|
|
|
137,867
|
|
|
|
146,667
|
Customer Base
|
|
|
1,408,866
|
|
|
|
1,449,205
|
Non-Competition agreements
|
|
|
103,629
|
|
|
|
131,892
|
Customer Relationships - CCS
|
|
|
518,785
|
|
|
|
535,876
|
Total intangible assets
|
|
$
|
3,018,768
|
|
|
$
|
3,137,083
|
Amortization expense for the three months ended March 31, 2020 was
$120,436, compared to $34,616 for the same period in 2019.
NOTE
7. OTHER CURRENT LIABILITIES
Other current
liabilities consist of the following:
|
|
March
31,
|
|
|
December
31,
|
|
|
|
2020
|
|
|
2019
|
|
Accrued
interest - notes
|
|
$
|
361,310
|
|
|
$
|
149,873
|
|
Total
other current liabilities
|
|
$
|
361,310
|
|
|
$
|
149,873
|
|
18
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE
8. SHORT AND LONG TERM BORROWINGS
Short-term and Long-term borrowings, consist of the following:
|
|
March 31,
|
|
|
December
31,
|
Short term debt
|
|
2020
|
|
|
2019
|
Convertible Promissory Notes, bearing an annual interest rate of
15% secured, due 02/14/2019
|
|
$
|
35,000
|
|
|
$
|
50,000
|
Convertible Promissory Notes, bearing an annual interest rate of
12% secured, due 08/27/2019
|
|
|
199,181
|
|
|
|
199,181
|
Convertible Promissory Notes, bearing an annual interest rate of 8%
secured, due 08/07/2020
|
|
|
1,360,683
|
|
|
|
1,467,869
|
Short
term note – Jean Mork Bredeson Cash deficit holdback
|
|
|
210,000
|
|
|
|
210,000
|
Short
Term note – Jean Mork Bredeson Purchase allocation
|
|
|
1,391,612
|
|
|
|
1,381,914
|
Total
short term debt
|
|
|
3,196,476
|
|
|
|
3,308,964
|
|
|
|
|
|
|
|
|
Long
term debt;
|
|
|
|
|
|
|
|
Convertible Promissory Notes, bearing an annual interest rate of
5.0%, due 12/31/22
|
|
|
350,000
|
|
|
|
350,000
|
Senior
Secured Redeemable Debenture, bearing an annual interest rate of
16%, due 12/31/2021
|
|
|
900,000
|
|
|
|
900,000
|
Promissory Note – Jean Mork Bredeson, interest rate of 5.5%,
due 2/28/2022
|
|
|
2,100,000
|
|
|
|
2,100,000
|
Total
short-term and long-term borrowings, before debt discount
|
|
|
6,546,476
|
|
|
|
6,658,964
|
Less
debt discount
|
|
|
(525,589)
|
|
|
|
(824,417)
|
Total
short-term and long-term borrowings, net
|
|
$
|
6,020,887
|
|
|
$
|
5,834,547
|
|
|
|
|
|
|
|
|
Total
short-term borrowings – net of discount
|
|
|
2,874,540
|
|
|
|
2,714,762
|
Total
long-term borrowings – net of discount
|
|
|
3,146,347
|
|
|
|
3,119,785
|
Total
short-term and long-term borrowings – net of discount
|
|
$
|
6,020,887
|
|
|
$
|
5,834,547
|
On
August 7, 2018, we entered into a securities purchase agreement
(“SPA”) with Discover Growth Fund, LLC (“Discover”), pursuant to
which we issued a senior secured redeemable convertible debenture
in the principal amount of $2,717,391 (of which $217,391 was
retained by Discover as an original issue discount) (the
“Debenture”), in exchange for $500,000 cash consideration and a
promissory note issued to BYOC in the amount of $2,000,000 (the
“Note”).
Pursuant to the terms of the SPA, we
issued to Discover a warrant to purchase up to 16,666,667 shares of
our common stock, exercisable beginning on the six (6) month
anniversary from the date of issuance for a period of three (3)
years at an exercise price of $0.15 per share (the “Warrant”).
The
Debenture is subject to interest at a rate of 8.0% per annum and
can be converted into shares of the Company’s common stock at a
price equal to the lower of (i) $0.15 per share of common stock,
and (ii) if there has never been a trigger event (as defined in the
Debenture), (A) the average of the 5 lowest individual trades of
the shares of common stock, less $0.01 per share, or following any
such trigger event, (B) 60% of the foregoing. However, at no time
can the debenture be converted at a price below $0.001 per
share.
19
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
During the first quarter 2019 Discover Growth Fund LLC issued the
additional $2,000,000 to the Company and converted $1,060,486 of
the aggregate debt. During the current quarter Discover Growth Fund
LLC converted $61,000 of their outstanding debt and interest.
On September 14, 2018, the Company issued a short-term convertible
note payable for $50,000. The note was originally due on
February 14, 2019 and bears interest at a rate of 15% per annum.
The note is convertible into shares of common stock at $0.10
per share. The company is currently negotiating an extension with
the noteholder, and has paid $5,000 for accrued interest during the
third quarter 2019. This note is currently past due and is being
negotiated to cure, nevertheless this note has no default
provisions.
On
November 27, 2018, the Company received funding in conjunction with
a convertible promissory note and a security purchase agreement
dated November 27, 2018, in the amount of $250,000. The lender was
Auctus Fund LLC. The notes have a maturity of August 27, 2019 and
interest rate of 12% per annum and are convertible at a price of
60% of the lowest trading price on the primary trading market on
which the Company’s Common Stock is then listed for the twenty-five
(25) trading days immediately prior to conversion. The note may be
prepaid, but carries a penalty in association with the remittance
amount, as there is an accretion component to satisfy the note with
cash. The Company is currently negotiating an extension with the
noteholder as it is currently past due. As a result of a default
provision, the interest rate has increased to 24%. The Company
during 2019 issued 112,829,802 shares of its common stock which
reduced the principal by $50,819 and paid interest of $25,035.
Effective February 28, 2019 as a component of the closing of the
business combination between Beyond Commerce, Inc. and Service 800,
Jean Mork Bredeson, Founder and President of Service 800, the
Company issued a $2,100,000 three year 5.5% promissory note.
Interest only payments are required during the first year of the
note. The $2,100,000 promissory note is personally guaranteed by
George Pursglove which in turn will be Geordan Pursglove since the
passing of the former CEO.
As a component of the Service 800 transaction, in lieu of the
entire cash payment of $2,100,000 being made to Ms. Bredeson, a
$210,000 amount was held out until May 30, 2019 and continues to be
outstanding. This note does not carry any interest obligations.
Also, as all cash and accounts receivables at the effective date of
the closing were to be retained by Ms. Bredeson this allocation of
cash is to be distributed quarterly on a non interest basis as
true-ups are derived, which amounted to $1,391,612 as of March 31,
2020.
On
December 31, 2019, Beyond Commerce, Inc., a Nevada corporation (the
“Company”), entered into a securities purchase agreement (the
“Securities Purchase Agreement”) with TCA Special Situations Credit
Strategies ICAV, an Irish collective asset vehicle (the “Buyer” or
“TCA ICAV”), and TCA Beyond Commerce, LLC, a Wyoming limited
liability company (“TCA Beyond Commerce”), pursuant to which the
Buyer purchased from the Company a senior secured redeemable
debenture having an initial principal amount of $900,000 and an
interest rate of 16% per annum (the “Initial Debenture”). The
Initial Debenture, and any future debentures that may be purchased
by Buyer pursuant to the Securities Purchase Agreement (the
“Additional Debentures”), is secured through an unconditional and
continuing security interest in all of the assets and properties,
including after acquired assets, of the Company and each of its
subsidiaries, which are acting as guarantors with respect to the
Company’s obligations under the Initial Debenture and any
Additional Debentures, pursuant to that certain Security Agreement,
dated December 31, 2019, entered into by the Company and TCA Beyond
Commerce in favor of the Buyer (the “Security Agreement”).In
addition, Geordan Pursglove, the Company’s CEO, delivered a
personal guaranty with respect to the Company’s obligations under
the Securities Purchase Agreement. The maturity date on this
security is December 31, 2021.
TCA
Beyond Commerce entered into a Membership Interest Purchase
Agreement (the “Membership Interest Purchase Agreement”), whereby
TCA Beyond Commerce acquired 100% of the authorized and issued
membership interests of CCS from its sole member (the “CCS
Seller”). TCA Beyond Commerce acquired the
20
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
membership interests
for a purchase price $525,000 (the “CCS Purchase Price”), with
$175,000 to be paid in cash and the remaining $350,000 to be paid
through TCA Beyond Commerce’s issuance of a convertible promissory
note with an original principal of $350,000 and a conversion
feature that provides the CCS Seller with the right to convert
outstanding principal and accrued interest into shares of the
Company’s common stock at a price based on the 10-day trailing
average price of the Company’s stock. The cash maturity date is
December 31, 2022.
NOTE
9. COMMON STOCK, WARRANTS AND PAID IN
CAPITAL
Common Stock
As of March 31, 2020, our authorized
capital stock consisted of 2,030,000,000 shares of common stock,
par value $0.001 per share. As of March 31, 2020, there were
1,627,914,678 issued and outstanding shares of common stock.
During the three months ended March 31, 2020 the Company issued
132,910,000 shares valued at $132,910 for the conversion of certain
debt and accrued interest into shares of our stock.
On March 27, 2020, the Company submitted for filing an amendment to
its Articles of Incorporation to increase the number of shares of
authorized Common Stock to 3,000,000,000, which was approved on
April 21, 2020.
Holders of common stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders, including the
election of directors. Except as otherwise required by law, the
holders of our common stock possess all voting power. Generally,
all matters to be voted on by stockholders must be approved by a
majority (or, in the case of election of directors, by a plurality)
of the votes entitled to be cast by all shares of our common stock
that are present in person or represented by proxy. A vote by
the holders of a majority of our outstanding shares is required to
effectuate certain fundamental corporate changes such as
liquidation, merger or an amendment to our Articles of
Incorporation. Our Articles of Incorporation do not provide for
cumulative voting in the election of directors. Holders of our
common stock have no pre-emptive rights, no conversion rights and
there are no redemption provisions applicable to our common
stock.
Preferred Stock
We are authorized to issue up to 250,000,000 shares of our
“blank check” preferred stock, par value of $0.001. Effective July
27, 2017, we designated 250,000,000 of our “blank check” preferred
shares as Series A Preferred Stock, all of which are issued and
outstanding. Each share of Series A Preferred Stock entitles its
holder to (i) cumulative, non-participating dividends in preference
and priority to any declaration or payment of a dividend on any of
the Company’s common stock, at a rate of 12% per annum, and (ii)
three times (3x) voting preference over common stock. As of
March 31, 2020 and December 31, 2019, there were 249,999,900 and
249,999,900 issued and outstanding shares of Series A preferred
stock.
Following cancellation of 100 shares of Series A preferred stock,
such 100 shares of preferred stock were returned to treasury,
increasing the number of shares of authorized undesignated
preferred stock from 0 to 100. The Board designated 51 of such 100
shares as Series B Preferred. Each share of Series B Preferred
carries approximately 1% of the voting power, but these shares do
not have any economic rights. The Board issued 20 shares of the
Series B Preferred to Geordan Pursglove; the remaining 31 shares of
Series B Preferred are authorized but unused. There are 49 shares
of authorized but undesignated preferred stock. The value of this
transaction was $293,000 based on an independent valuation of the
transaction.
21
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
Warrants
The Company entered into an agreement in 2018 in conjunction with
convertible notes payable to issue seven (7) warrants to purchase
shares of the Company’s common stock which have an exercise price
of $0.15 or 65% of the three lowest trading days within a 20-day
market price timeframe, whichever is lower. The warrants also
contain certain cashless exercise features. The issuance of these
warrants is predicated on the completion of the funding
requirements within the terms of the security agreement, however,
these funding requirements were never met. The Company is currently
negotiating a settlement with respect to any warrants.
Pursuant to the terms of the Discover Growth Fund SPA, we issued to
Discover warrant to purchase up to 16,666,667 shares of our common
stock upon the subsequent funding of the remaining $2,000,000 which
occurred on February 28, 2019, exercisable beginning on the nine
(9) month anniversary from the date of issuance for a period of
three (3) years at an exercise price of $0.15 per share (the
“Warrant”). In determining the appropriate fair value, the Company
uses the Black-Scholes option-pricing model, and based on the
relative fair value of the warrant and cash received, we recorded a
debt discount on the note principle of $696,850. Management used
the following inputs to value the Discover Warrants by Expected
Term – 3 years, Exercise Price - $0.15, Expected Volatility-
388.94%, Expected dividends – None, and Risk-Free Rate
– 2.54%
As of March 31, 2020, no warrants have vested.
NOTE 10.
COMMITMENTS AND CONTINGENCIES
Legal Matters
A complaint against us, dated February 5, 2020, has been filed in
Hennepin County, Minnesota, by Jean Mork Bredeson, the former
President and former owner of Service 800, making certain claims
related to the Company’s acquisition of Service 800, seeking in
excess of $1.6 million in damages. The Company believes these
claims to be unfounded and the Company is continuing to vigorously
defend itself against this lawsuit. On March 16, 2020, the Company
and Service 800 filed an answer, counterclaim and third-party claim
against Ms. Bredeson and defendants Allen Bredeson and Jeff
Schwedinger, former employees of Service 800. Answers and
Affirmative additional Defenses to Third Party Claims were filed by
Mr. Bredeson on April 7, 2020 and by Mr. Schwedinger on April 9,
2020 and , on April 24, 2020 Mr. Bredeson filed a Motion to
Dismiss. The Company is preparing its responses to such
filings.
In addition to the above, from time to time, we may be involved in
litigation in the ordinary course of business. Other than as set
forth above, we are not currently involved in any litigation that
we believe could have a material adverse effect on our financial
condition or results of operations. Other than as set forth above,
to our knowledge, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the
knowledge of our executive officers or any of our subsidiaries,
threatened against or affecting our Company, our common stock, any
of our subsidiaries or any of our subsidiaries’ officers or
directors in their capacities as such, in which an adverse decision
could have a material adverse effect.
Operating Lease
We currently lease virtual office space at 3773 Howard Hughes
Parkway, Suite: 500 Las Vegas, NV 89169. We pay an annual fee
of $120 for this lease. In February of 2020 the Company moved its
Service 800, Inc. subsidiary to 110 Cheshire Lane, Minnetonka
Minnesota 55305. Service 800 leases 3,210 square feet of office
space under an operating lease agreement with Carlson Center East
LLC. The lease, which expires February 2021, requires base monthly
rents of $4,160, plus operating expenses.
22
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE
11. RELATED PARTIES
As of March 31, 2020, 206,250,000 shares of BCI’s Series A
Convertible 12% Cumulative Preferred stock are held by The 2GP
Group LLC, an entity controlled by Geordan Pursglove, President,
CEO and Director. The Series A Convertible 12% Cumulative Preferred
stock include a three times (3x) voting preference.
During the fourth quarter 2019 the Company canceled 100 shares of
Series A preferred stock, such 100 shares of preferred stock were
returned to treasury, increasing the number of shares of authorized
undesignated preferred stock from 0 to 100. The Board designated 51
of such 100 shares as Series B Preferred. Each share of Series B
Preferred carries approximately 1% of the voting power, but these
shares do not have any economic rights. The Board issued 20 shares
of the Series B Preferred to Geordan Pursglove; the remaining 31
shares of Series B Preferred are authorized but unused. There are
49 shares of authorized but undesignated preferred stock. The value
of this transaction was $293,000 based on an independent valuation
of the transaction.
On May 8, 2019, the Company issued a short-term convertible note
payable for $54,000. The note had a sixty- day term which was
due on July 8, 2019 and bears interest at a rate of 15% per annum.
The company is currently negotiating an extension with the
noteholder as it is currently past due, however the note has no
default provisions.
NOTE
12. NET INCOME (LOSS) PER SHARE OF COMMON STOCK
The Company follows ASC 260-10, which requires presentation of
basic and diluted Earnings per Share (“EPS”) on the face of the
income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of
the basic EPS computation to the numerator and denominator of the
diluted EPS computation. In the accompanying consolidated financial
statements, basic net income (loss) per share of common stock is
computed by dividing the net income (loss) by the weighted average
number of shares of common stock outstanding during the year.
Basic net income (loss) per common share is based upon the
weighted average number of common shares outstanding during the
period. Dilution is computed by applying the treasury stock method.
Under this method, options and warrants are assumed to be exercised
at the beginning of the period (or at the time of issuance, if
later), and as if funds obtained thereby were used to purchase
common stock at the average market price during the period.
Convertible debt that is convertible into 2,571,295,012 and
68,617,436 shares of the Company’s common stock are not included in
the computation, along with 249,999,900 and 250,000,000 of the
Company’s preferred stock, for the three months ended March 31,
2020 and 2019, respectively. These shares are not included as they
would be antidilutive. Additionally, there are 16,666,667 and
16,666,667 warrants that are exercisable into shares of stock as of
March 31, 2020 and 2019, and there is an outstanding issue with
Iliad, a former noteholder that claims warrants as being issued and
outstanding that could result in 80,578,512 and 1,308,286 shares
being issued as of March 31, 2020 and 2019. The Company is
currently in negotiations over the issue. As warrants are
exercisable above the current market rate, they would be excluded
from any dilute share calculations.
23
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
The following is a reconciliation of the numerator and denominator
of the basic and diluted earnings per share computations for the
three -month period ended March 31, 2020 and 2019:
|
|
Three-month
periods ended March 31,
|
|
|
|
|
2020
|
|
|
|
2019
|
|
|
Net income (loss)
|
$
|
(424,583)
|
|
|
$
|
(3,754,002)
|
|
|
|
Weighted average
shares used for basic earnings per share
|
|
1,544,555,667
|
|
|
1,043,248,193
|
|
|
|
Incremental diluted
shares
|
|
-
|
*
|
|
-
|
*
|
|
|
Weighted average
shares used for diluted earnings per share
|
|
1,544,555,667
|
|
|
1,043,248,193
|
|
|
|
Net income (loss) per
share:
|
|
|
|
|
Basic
|
$
|
(0.00)
|
|
|
$
|
(0.00)
|
|
|
|
Diluted
|
$
|
(0.00)
|
|
|
$
|
(0.00)
|
|
|
|
*The
shares associated with convertible debt, preferred stock, stock
options and stock warrants are not included because the inclusion
would be anti-dilutive (i.e., reduce the net loss per common
share).
NOTE
13. PROFORMA ACQUISITION FINANCIAL INFORMATION
Description of the
Transactions
Service 800,
Inc.
On
March 4, 2019 Jean Mork Bredeson, Founder and President of Service
800, Inc., received $1,890,000 in cash, a short term cash hold back
of $210,000 and $2,100,000 in a three year 5.5% promissory note.
The $2,100,000 promissory note is personally guaranteed by Geordan
Pursglove Beyond Commerce’s President, CEO. On July 18, 2018 Jean
Mork Bredeson received 2,000,000 shares of Beyond Commerce’s
restricted common stock, and directed the issuance of 3,000,000
additional shares to three other individuals as part of the
business combination as follows: On July 18, 2018 Allen Bredeson,
Vice President of Marketing and Client Relations, received
1,000,000 shares of Beyond Commerce’s restricted common stock.
Derick White, Vice President of Sales received 1,000,000 shares of
Beyond Commerce’s restricted common stock, and Jeff Schwendinger,
Vice President of Operations received 1,000,000 shares of Beyond
Commerce’s restricted common stock. The effective date of this
business combination between Beyond Commerce and Service 800, is
February 28, 2019, when Beyond Commerce received 100% of Service
800 stock, assets consisting of the company’s website, customer
lists, current customer base, and customer’s in the company’s
pipeline and proprietary software.
This acquisition
combined resources and customer base to support more productivity
and help in the development of new product lines. Beyond Commerce
started consolidating Service 800 Inc for financial reporting
purposes as of March 1, 2019. From the date
of acquisition to December 31, 2019, Service 800 reported
revenue of $ 4,099,925.
24
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
The fair value of the
purchase consideration issued to Service 800 Inc. was allocated to
the net tangible assets acquired. The Company accounted for
the Acquisition as the purchase of
a business under GAAP under
the acquisition method of accounting, and the
assets and liabilities acquired were recorded as
the acquisition date, at their respective fair values and
consolidated with those of the Company. The fair value of the net
assets acquired was approximately $3,881,241. The excess of the
aggregate fair value of the net tangible assets has been allocated
to goodwill of $1,299,144. The company wrote down the asset value
of Service 800, Inc. by approximately $635,000 mainly attributable
to the value of the shares of stock issued to certain employees of
Service 800, Inc. as the belief this was not considered an
essential component of the transaction and not valued
accordingly.
The following table
summarizes the estimated fair values of the assets acquired and
liabilities assumed based on external evaluations at the date of
acquisition:
Value of
considered paid:
|
|
|
|
Cash
at Closing
|
|
$
|
2,100,000
|
Promissory Note - discounted
|
|
|
1,781,241
|
Assets acquired
|
|
|
3,881,241
|
Assets Acquired:
|
|
|
|
|
Prepaid expenses
|
|
$
|
28,316
|
|
Property, plant and equipment
|
|
|
47,484
|
|
Intangible assets
|
|
|
2,921,400
|
|
Goodwill
|
|
|
1,299,144
|
|
Assets acquired
|
|
$
|
4,296,344
|
|
|
|
|
|
|
Liabilities
Assumed:
|
|
|
|
|
Accounts payable
|
|
$
|
121,958
|
|
Other current liabilities
|
|
|
293,145
|
|
Liabilities
assumed
|
|
$
|
415,103
|
|
|
|
|
|
|
Net assets
acquired
|
|
$
|
3,881,241
|
|
Fair value of
consideration given
|
|
$
|
3,881,241
|
|
PathUX,
LLC
On
April 24, 2020 the Company entered into a Settlement and Release
Agreement whereas the transaction on May 31, 2019 between the
former shareholders of PathUX and IDriveYourCar was unwound
effective April 1, 2020 and all assets and liabilities were
returned back to these former shareholders.
Furthermore, the shares issued on June 4, 2019, to Robert Bisson,
of 31,500,000 shares of Beyond Commerce’s restricted common stock,
Christian Schine of 31,500,000 shares of Beyond Commerce’s
restricted common stock, and Ryan Rich, of 7,000,000 shares of
Beyond Commerce’s restricted common stock were released from any
further claims. Since, Beyond Commerce had not paid any additional
funds to the previous owners of PathUX and the extension period had
expired, the Company has forfeited the 70,000,000 shares valued at
$427,000 which were reflected in the December 31, 2019 financial
statements.
25
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
Customer
Centered Strategies, LLC. (CCS)
On December 31, 2019 TCA Beyond Commerce, a joint venture which is
80% owned by Beyond Commerce entered into a Membership Interest
Purchase, whereby TCA Beyond Commerce acquired 100% of the
authorized and issued membership interests of CCS from its sole
member. TCA Beyond Commerce acquired the membership interests for a
purchase price $525,000 (the “CCS Purchase Price”), with $175,000
to be paid in cash and the remaining $350,000 to be paid through
TCA Beyond Commerce’s issuance of a convertible promissory note
with an original principal of $350,000 and a conversion feature
that provides the CCS with the right to convert outstanding
principal and accrued interest into shares of the Company’s common
stock at a price based on the 10-day trailing average price of the
Company’s stock.
In
addition to the CCS purchase price, the CCS and Service 800, Inc.,
entered into an employment agreement whereby the CCS will be
employed by Service 800 as Vice President of Operations and
Technologies for a period of six months.
The following table
summarizes the estimated fair values of the assets acquired and
liabilities assumed based on internal company evaluations at the
date of acquisition:
Assets
Acquired:
|
|
|
|
|
Cash
|
|
$
|
37,597
|
|
Accounts receivable
|
|
|
155,626
|
|
Prepaid expense
|
|
|
2,500
|
|
Intangible asset – customer list
|
|
|
535,877
|
|
Assets acquired
|
|
$
|
731,600
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
37,817
|
|
Other current liabilities
|
|
|
37,534
|
|
Liabilities
assumed
|
|
$
|
75,350
|
|
|
|
|
|
|
Net assets
acquired
|
|
$
|
656,250
|
|
Fair value of
consideration given:
|
|
|
|
|
Cash
|
|
$
|
175,000
|
|
Convertible note
– 5%
|
|
|
350,000
|
|
Minority interest
|
|
|
131,250
|
|
Total
|
|
$
|
626,250
|
|
26
Table of Contents
BEYOND
COMMERCE, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
The following unaudited pro forma consolidated results of
operations have been prepared as if the acquisition of Service
800,Inc. and Customer Centered Strategies occurred on January 1,
2019:
|
|
Three Months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Net Revenues
|
|
$
|
1,247,590
|
|
|
|
$
1,246,573
|
|
Net (loss) income
from operations
|
|
|
(424,583)
|
|
|
|
(3,754,497)
|
|
Net (loss) income per
share from operations
|
|
|
(0.00)
|
|
|
|
(0.00)
|
|
Weighted average
number of shares – basic and diluted
|
|
|
1,544,555,667
|
|
|
|
1,043,248,193
|
|
NOTE 14. SUBSEQUENT EVENTS
Impact of Disease Outbreak and Management’s Plans
On
March 11, 2020, the World Health Organization declared the outbreak
of a respiratory disease caused by a new coronavirus as a
“pandemic”. First identified in late 2019 and known now as
COVID-19, the outbreak has impacted thousands of individuals
worldwide. In response, many countries have implemented measures to
combat the outbreak which have impacted global business
operations.
Majority of the states within the United States have issued a stay
at home order to its residents. Accordingly, the Company’s revenues
associated with our business model has drastically declined through
date of the financial statements and its results of operations,
cash flows and financial condition have been negatively impacted by
the pandemic.
The
impact of the disease outbreak, as of the date of the financial
statements, remains highly fluid and uncertain. The Company
is unable to predict, with any sort of certainty the timing for the
end of the restrictions. Accordingly, the financial impact on the
results of operations, cash flows and financial condition cannot be
reasonably estimated at this time. No impairments were
recorded as of the balance sheet date; however, due to significant
uncertainty surrounding the situation, management's judgment
regarding this could change in the future.
The Company continues
to maintain the business working with customers to fit their needs
- We are also offering COVID19 type services. We have clients in
the medical field and are offering to do survey work for them in
regards to their response for the COVID outbreak so they can
document how they are doing as a company. We are in touch with our
customers daily, we have even discussed switching them from phone
calls to web surveys until this has passed. Along with the
above the Company Service 800 was approved for the Paycheck
Protection funds to assist in maintaining our employee base.
27
ITEM
2.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Readers are urged to carefully
review and consider the various disclosures made by us in this
report and in our other reports filed with the Securities and
Exchange Commission. Important factors currently known to
management could cause actual results to differ materially from
those in forward-looking statements. We undertake no obligation to
update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes in
the future operating results over time. We believe that our
assumptions are based upon reasonable data derived from and known
about our business and operations. No assurances are made that
actual results of operations or the results of our future
activities will not differ materially from our assumptions. Factors
that could cause differences include, but are not limited to,
expected market demand for our products, fluctuations in pricing
for our products, and competition.
The following discussion provides
information that management believes is relevant to an assessment
and understanding of our past financial condition and plan of
operations. The discussion below should be read in conjunction with
the consolidated financial statements and related notes thereto
included elsewhere in this annual report.
About Beyond
Commerce
Beyond Commerce, Inc. was formed in the State of Nevada on January
12, 2006.
We
plan to operate within two markets: (1) the Business-to-Business
Internet Marketing Technology and Services market and (2) the
Information Management market. Our goal is to develop proprietary
software for digital transformation of clients’ existing content.
We believe our planned platform, strategy, and suite of software
products and services will provide secure and scalable information
control solutions for global companies. We believe our
planned software will assist organizations in finding, utilizing,
and sharing business information between devices in ways that are
intuitive, efficient and productive. We believe that our business
model will ensure that information will remain secure and private,
as necessitated by the current market climate.
In
addition, we plan to provide solutions which facilitate the
exchange of information and data transactions between supply chain
participants, such as manufacturers, retailers, distributors and
financial institutions. The goal is to automate potential client
internal processes thereby increasing productivity and lowering
costs. We plan to develop proprietary algorithms which it will
embed in the planned software to enable clients to access data and
gain insight into their business, through that data, leading to
improved internal decision making.
We
plan to offer the proposed software through traditional on-premise
solutions, SaaS as a cloud based solution, or a combination of
on-premise, SaaS or cloud based solutions. We plan to work with our
clients and their needs as to which delivery method they prefer. We
believe giving clients a choice and flexibility will help us to
obtain long-term client value.
RESULTS OF
OPERATIONS FOR THE THREE PERIODS ENDED
Three months ended
March 31, 2020 and March 31,2019.
Revenue
Revenue generated for the three months ended March 31, 2020 was
$1,247,590 as we began reporting revenue being created from both
the Service 800 acquisition which was closed on March 4, 2019 and
was effective February 28, 2019, compared to $463,914 revenue from
the comparable three month period in 2019.
Operating
Expenses
For
three months end March 31, 2020, operating expenses were $1,769,163
and for the three months ended March 31,2019, operating expenses
were $692,700. The significant increase is mainly attributable to
the Service 800
28
acquisition and the related costs associated with
this operation. There was $422,420 in cost of goods sold compared
to $112,054 in the comparable period. Payroll increased to $669,109
from $276,721 during the three months ended March 31,2020 and 2019,
respectively, due to the Service 800 employee addition, and general
and administrative costs increased to $304,035 from $121,043 once
again due to the Service 800 addition.
Non-operating
income (expense)
The
Company reported non-operating loss of $273,911 during the three
months ended March 31, 2020, as compared to a loss of $3,525,216
during the three months ended March 31,2019, mainly attributable to
the changes in the derivative liability and debt fees associated
with the Discover Growth Fund Note.
Net Income
(loss)
For
three months end March 31, 2020, the Company incurred a net loss of
$424,584 as compared to a net loss of $3,754,002 for three months
end March 31,2019, which was primarily due to derivative-related
changes in liability and debt fees associated with the Discover
Growth Fund Note.
Purchase of
Significant Equipment
We
do not anticipate the purchase or sale of any plant or significant
equipment during the next 12 months.
Going
Concern
There is substantial doubt about our ability to continue as a going
concern.
As
of March 31, 2020, we had an accumulated deficit of $48,651,784.
Since we discontinued operations in 2012 the continuity of
our future operations is dependent upon our ability to increase
sales and brand awareness. These conditions raise substantial doubt
about our ability to continue as a going concern. We intend
to continue relying upon the issuance of debt and equity securities
to finance our operations. In this regard, we are restricted
by the number of shares available for issuance in an equity
financing, and we will likely need to increase our authorized
capital in order to take advantage of such financing.
However, there can be no assurance that we will be successful
in obtaining shareholder approval to increase our authorized
capital, that there can be no assurance we will be successful in
raising the funds necessary to maintain operations, or that a
self-supporting level of operations will ever be achieved.
The likely outcome of these future events is indeterminable.
Our financial statements do not include any adjustment to
reflect the possible future effect on the recoverability and
classification of the assets or the amounts and classification of
liabilities that may result should we cease to continue as a going
concern.
Liquidity and
Capital Resources
Our
ability to continue as a going concern is dependent on our ability
to raise additional capital and implement our business plan.
Since inception, we have been funded by related parties
through capital investment and borrowing of funds.
We
had total current assets of $4,353,191 and $2,070,851 as of March
31, 2020 and December 31, 2019, respectively. Current assets
would consist primarily of cash, accounts receivable and Assets
held for sale of $2,652,502 and $113,470 as of March 31, 2020 and
December 31, 2019, respectively. The Company had a $48,651,784
accumulated deficit on its balance sheet as of March 31, 2020.
We
had total current liabilities of $8,742,883 and $8,074,845 as of
March 31, 2020 and December 31, 2019, respectively. Current
liabilities consisted primarily of the derivative liability,
accounts payable, accrued payroll and payroll taxes, contingent
acquisition liabilities, related party debt, convertible debt and
interest, and the accrued interest, and Liabilities associated with
the sale of PathUX of $2,652,502 and $2,109,850, respectively as of
March 31, 2020 and December 31, 2019. The increase in our current
liabilities is attributable to accrued interest, salary accruals
and short-term debt incurred as part of the Service 800 and PathUX
acquisitions.
29
We
had a working capital deficit of $4,389,692 and $6,003,994 as of
March 31, 2020 and December 31, 2019, respectively. The
decrease for the period as of March 31, 2020 compared to December
31, 2019 was primarily due to the PathUX acquisition liabilities
being presented as current in anticipation of the PathUX
unwinding.
30
Table of Contents
Cash Flow from
Operating Activities
For
the three months ended March 31, 2020 and 2019, cash provided by
(used in) operating activities was $(357,625) and $56,939
respectively. This decrease is mainly attributable to the Service
800 acquisitions.
Cash Flow from
Investing Activities
For
the three months ended March 31, 2020 and 2019, cash provided by
(used in) investing activities was $0 and ($2,023,162)
respectively, which represents cash used in the Service 800
transaction.
Cash Flow from
Financing Activities
For
the three months ended March 31, 2020 and 2019, cash provided by
(used in) financing activities was $(5,302) and $2,000,000,
respectively, which represents cash from the Discover Growth Fund
LLC.
Contractual
Obligations
As a
“smaller reporting company,” we are not required to provide tabular
disclosure of contractual obligations.
Inflation
Inflation and changing prices have not had a material effect on our
business and we do not expect that inflation or changing prices
will materially affect our business in the foreseeable future.
Off-Balance Sheet
Arrangements
We
do not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity or capital expenditures
or capital resources that is material to an investor in our
securities.
Seasonality
In
the past, our operating results and operating cash flows
historically have not been subject to seasonal variations. This
pattern may change, however, in the event that we succeed in
bringing our planned products to market.
Critical
Accounting Policies and Estimates
Our
discussion and analysis of our financial condition and results of
operations is based on our unaudited condensed consolidated
financial statements, which have been prepared in accordance with
U.S. generally accepted accounting principles. The preparation of
these unaudited condensed consolidated financial statements
requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent liabilities. On an on-going basis,
we evaluate past judgments and our estimates, including those
related to allowance for doubtful, allowance for inventory
write-downs and write offs, deferred income taxes, provision for
contractual obligations and our ability to continue as a going
concern. We base our estimates on historical experience and on
various other assumptions that we believe to be reasonable under
the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that
are not apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.
31
Note
2 to the consolidated financial statements, presented in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2019,
describe the significant accounting estimates and policies used in
preparation of our consolidated financial statements. There were no
significant changes in our critical accounting estimates during the
three months ended March 31, 2020.
OFF BALANCE SHEET
ARRANGEMENTS
We do not have any
off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources
that is material to our interests.
32
Table of Contents
ITEM
3. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We do not hold any
derivative instruments and do not engage in any hedging
activities.
ITEM
4. CONTROLS AND
PROCEDURES
Evaluation of
Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act) are designed to ensure that
information required to be disclosed in reports filed or submitted
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in SEC rules and forms.
Disclosure and control procedures are also designed to ensure that
such information is accumulated and communicated to management,
including the chief executive officer and chief financial officer,
to allow timely decisions regarding required disclosures.
We
carried out an evaluation, under the supervision and with the
participation of management, including our Principal Executive
Officer and Principal Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures
as of March 31, 2020. In designing and evaluating the disclosure
controls and procedures, management recognizes that there are
inherent limitations to the effectiveness of any system of
disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls and
procedures. Accordingly, even effective disclosure controls and
procedures can only provide reasonable assurance of achieving their
desired control objectives. Additionally, in evaluating and
implementing possible controls and procedures, management is
required to apply its reasonable judgment. Based on the evaluation
described above, our principal executive officer and principal
financial officer concluded that our disclosure controls and
procedures were not effective as of the end of the period covered
by this report because we did not document our Sarbanes-Oxley Act
Section 404 internal controls and procedures.
As
funds become available to us, we expect to implement additional
measures to improve disclosure controls and procedures such as
implementing and documenting our internal controls procedures.
Changes in
internal controls over financial reporting
There was no change in our internal controls over financial
reporting that occurred during the period covered by this report,
which has materially affected, or is reasonably likely to
materially affect, our internal controls over financial
reporting.
Limitations on the
Effectiveness of Controls
A
control system, no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the control
system’s objectives will be met. The Company’s management,
including its Principal Executive Officer and its Principal
Financial Officer, do not expect that the Company’s disclosure
controls will prevent or detect all errors and all fraud. Further,
the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of
fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur
because of simple error or mistake. Controls can also be
circumvented by the individual acts of some persons, by collusion
of two or more people, or by management override of the controls.
The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated
goals under all potential future conditions. Over time, controls
may become inadequate because of changes in conditions or
deterioration in the degree of compliance with associated policies
or procedures. Because of the
33
inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.
34
Table of Contents
PART II
– OTHER INFORMATION
ITEM
1. LEGAL
PROCEEDINGS.
A complaint against us, dated February 5, 2020, has been filed in
Hennepin County, Minnesota, by Jean Mork Bredeson, the former
President and former owner of Service 800, making certain claims
related to the Company’s acquisition of Service 800, seeking in
excess of $1.6 million in damages. The Company believes these
claims to be unfounded and the Company is continuing to vigorously
defend itself against this lawsuit. On March 16, 2020, the Company
and Service 800 filed an answer, counterclaim and third-party claim
against Ms. Bredeson and defendants Allen Bredeson and Jeff
Schwedinger, former employees of Service 800. Answers and
Affirmative and Additional Defenses to Third Party Claims were
filed by Mr. Bredeson on April 7, 2020 and by Mr. Schwedinger on
April 9, 2020 and, on April 24, 2020, Ms. Bredeson filed a Motion
to Dismiss. The Company is preparing its responses to such
filings.
In addition to the above, from time to time, we may be involved in
litigation in the ordinary course of business. Other than as set
forth above, we are not currently involved in any litigation that
we believe could have a material adverse effect on our financial
condition or results of operations. Other than as set forth above,
to our knowledge, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the
knowledge of our executive officers or any of our subsidiaries,
threatened against or affecting our Company, our common stock, any
of our subsidiaries or any of our subsidiaries’ officers or
directors in their capacities as such, in which an adverse decision
could have a material adverse effect.
ITEM
1A. RISK
FACTORS.
We
believe there are no changes that constitute material changes from
the risk factors previously disclosed in our Annual Report on Form
10-K, filed with the U.S Securities and Exchange Commission on
April 15, 2020.
ITEM
2. UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Other than described
below, there were no unregistered sales of equity securities that
were not otherwise disclosed in a current report on Form 8-K.
On February 11,2020,
the Company issued 76,000,000 shares of common stock to Discover
Group Fund LLC following the conversion of debt and interest held
by Discover Group Fund LLC.
On March 9, 2020, the
Company issued 27,730,000 shares of common stock to Discover Group
Fund LLC following the conversion of debt and interest held by
Discover Group Fund LLC.
On March 25,2020, the
Company issued 29,180,000 shares of common stock to Discover Group
Fund LLC following the conversion of debt and interest held by
Discover Group Fund LLC.
35
Table of Contents
Except where noted,
all the securities discussed in this Part II, Item 2 were issued in
reliance on the exemption under Section 4(a)(2) of the Securities
Act.
ITEM
3. DEFAULTS UPON
SENIOR SECURITIES.
There
has been no default in the payment of principal, interest, sinking
or purchase fund installment, or any other material default, with
respect to any indebtedness of the Company.
ITEM
4. MINE SAFETY
DISCLOSURES.
Not applicable.
ITEM
5. OTHER
INFORMATION.
There is no other
information required to be disclosed under this item which was not
previously disclosed.
ITEM
6. EXHIBITS.
36
* In accordance with
SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and
not deemed filed for purposes of Section 18 of the Exchange
Act.
37
Table of Contents
SIGNATURES
In accordance with
Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
|
Beyond Commerce,
Inc.
|
|
|
|
Dated: May 14,
2020
|
By:
|
/s/ Geordan
Pursglove
|
|
|
Geordan
Pursglove,
Chief Executive Officer
(Principal Executive, Financial and
Accounting Officer)
|
38