CALCULATION
OF REGISTRATION FEE
Title of Each Class of Securities To Be Registered
|
|
Proposed Maximum
Offering Price Per Share
|
Proposed Maximum
Aggregate Offering Price(1)
|
Amount of
Registration Fee
|
|
|
|
|
|
Common Stock by
Selling Shareholders
|
37,361,010
|
$0.014
|
$523,054.14
|
$67.89(2)
|
|
|
|
|
|
|
(1)
|
Estimated solely
for the purpose of computing the registration fee pursuant to Rule
457(o) under the Securities Act of 1933 ("the Securities Act")
based on the average of the 5-day average of the closing price of
the common stock on February 7, 2019 as reported on the
OTC Market QB.
|
|
(2)
|
$763.68 was paid
with original S-1 filing.
|
The registrant
hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until
the registration statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may
determine.
EXPLANATORY
NOTE
This Post-Effective
Amendment No. 1 to the Registration Statement on Form S-1 (File No.
333-222094) (the “Registration Statement”) of TPT
Global, Inc. (“TPT”), as originally declared effective
by the Securities and Exchange Commission (the “SEC”)
on February 13, 2019, is being filed pursuant to the undertakings
in Item 17 of the Registration Statement to (i) include the
information contained in TPT’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2018, that was filed with the
SEC on April 11, 2019, (ii) include the information contained in
TPT’s Quarterly Report on Form 10-Q for the period ended
September 30, 2019, that was filed with the SEC on November 19,
2019 and (iii) update certain other information in the Registration
Statement.
The information
included in this filing amends this Registration Statement and the
prospectus contained therein. No additional securities are being
registered under this Post-Effective Amendment No. 1. All
applicable registration fees were paid at the time of the original
filing of the Registration Statement.
ii
(Subject
to Completion)
PROSPECTUS
TPT
GLOBAL TECH, INC.
37,361,010
shares of common stock of selling shareholders
We are registering
securities listed for sale on behalf of selling shareholders:
37,361,010 shares of common stock.
We will
not receive any
proceeds from sales of shares by selling shareholders.
Our selling
shareholders plan to sell common shares at market prices for so
long as our Company is quoted on OTCQB and as the market may
dictate from time to time. There is a limited market for the common
stock, which has been trading on the OTCQB (“TPTW”) at
$0.014 in the past 5 days.
Title
|
Price
Per Share
|
Common
Stock
|
$0.014*
|
*Five-day average
market price
Our security
holders may sell their securities on the OTCQB at market prices or
at any price in privately negotiated transactions.
This offering involves a high degree of risk; see "RISK FACTORS" beginning on page
6 to read about factors you should consider before buying
shares of the common stock.
These securities have not been approved or disapproved by the
Securities and Exchange Commission (the “SEC”) or any
state or provincial securities commission, nor has the SEC or any
state or provincial securities commission passed upon the accuracy
or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.
This offering will
be on a delayed and continuous basis only for sales of selling
shareholders shares. The selling shareholders are not paying any of
the offering expenses and we will not receive any of the proceeds
from the sale of the shares by the selling shareholders. (See
“Description of Securities –
Shares”).
The information in
this prospectus is not complete and may be changed. We may not sell
these securities until the date that the registration statement
relating to these securities, which has been filed with the
Securities and Exchange Commission, becomes effective. This
prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
The date of this
Prospectus is December 10, 2019.
iii
TABLE
OF CONTENTS
PART I
- INFORMATION REQUIRED IN PROSPECTUS
|
Page No.
|
ITEM
1.
|
Front of
Registration Statement and Outside Front Cover Page of
Prospectus
|
|
ITEM
2.
|
Prospectus Cover
Page
|
|
ITEM
3.
|
Prospectus Summary
Information, Risk Factors and Ratio of Earnings to Fixed
Charges
|
3
|
ITEM
4.
|
Use of
Proceeds
|
23
|
ITEM
5.
|
Determination of
Offering Price
|
24
|
ITEM
6.
|
Dilution
|
24
|
ITEM
7.
|
Selling Security
Holders
|
24
|
ITEM
8.
|
Plan of
Distribution
|
29
|
ITEM
9.
|
Description of
Securities
|
29
|
ITEM
10.
|
Interest of Named
Experts and Counsel
|
31
|
ITEM
11.
|
Information with
Respect to the Registrant
|
31
|
|
a. Description of
Business
|
31
|
|
b. Description of
Property
|
57
|
|
c. Legal
Proceedings
|
57
|
|
d. Market for
Common Equity and Related Stockholder Matters
|
58
|
|
e. Financial
Statements
|
59
|
|
f. Selected
Financial Data
|
61
|
|
g. Supplementary
Financial Information
|
61
|
|
h.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
61
|
|
i. Changes In and
Disagreements With Accountants on Accounting and Financial
Disclosure
|
71
|
|
j. Quantitative and
Qualitative Disclosures About Market Risk
|
71
|
|
k. Directors and
Executive Officers
|
71
|
|
l. Executive and
Directors Compensation
|
74
|
|
m. Security
Ownership of Certain Beneficial Owners and Management
|
79
|
|
n. Certain
Relationships, Related Transactions, Promoters And Control
Persons
|
80
|
ITEM 11
A.
|
Material
Changes
|
82
|
ITEM
12.
|
Incorporation of
Certain Information by Reference
|
82
|
ITEM 12
A.
|
Disclosure of
Commission Position on Indemnification for Securities Act
Liabilities
|
82
|
PART II
– INFORMATION NOT REQUIRED IN PROSPECTUS
|
|
ITEM
13.
|
Other Expenses of
Issuance and Distribution
|
82
|
ITEM
14.
|
Indemnification of
Directors and Officers
|
82
|
ITEM
15.
|
Recent Sales of
Unregistered Securities
|
83
|
ITEM
16.
|
Exhibits and
Financial Statement Schedules
|
83
|
ITEM
17.
|
Undertakings
|
86
|
|
Signatures
|
87
|
ITEM
3. PROSPECTUS SUMMARY INFORMATION, RISK FACTORS AND RATIO OF
EARNINGS TO FIXED CHARGES
Our
Company
TPT Global Tech,
Inc. (“We”, “us”, “our”
“TPT”or “TPT Global”), is incorporated in
the State of Florida with operations located in San Diego,
California, providing complete, communication and data services and
products to small to mid-sized organizations
(“SMB”).
CORPORATE HISTORY
COMPANY OVERVIEW
We were originally
incorporated in 1988 in the state of Florida. TPT Global, Inc., a
Nevada corporation formed in June 2014, merged with Ally Pharma US,
Inc., a Florida corporation, (“Ally Pharma”, formerly
known as Gold Royalty Corporation) in a “reverse
merger” wherein Ally Pharma issued 110,000,000 shares of
Common Stock, or 80% ownership, to the owners of TPT Global, Inc.
and Ally Pharma changed its name to TPT Global Tech, Inc. In 2014,
we acquired all the assets of K Telecom and Wireless LLC (“K
Telecom”) and Global Telecom International, LLC
(“Global Telecom”). Effective January 31, 2015, we
completed our acquisition of 100% of the outstanding stock of
Copperhead Digital Holdings, Inc. (“Copperhead
Digital”) and Subsidiaries, TruCom, LLC
(“TruCom”), Nevada Utilities, Inc. (“Nevada
Utilities”) and CityNet Arizona, LLC (“CityNet”).
In October 2015, we acquired the assets of both Port2Port, Inc.
(“Port2Port”) and Digithrive, Inc.
(“Digithrive”). Effective September 30, 2016, we
acquired 100% ownership in San Diego Media, Inc.
(“SDM”). In December 2016, we acquired the Lion Phone
technology. In October and November 2017, we entered into
agreements to acquire Blue Collar, Inc. (“Blue
Collar”), and certain assets of Matrixsites, Inc.
(“Matrixsites”) which we have completed. On May 7, 2019
we completed the acquisition of a majority of the assets of
SpeedConnect, LLC, which assets were conveyed into our wholly owned
subsidiary TPT SpeedConnect, LLC (“TPT SC” or
“TPT SpeedConnect”) which was formed on April 16,
2019.
We are based in San Diego, California,
and operate as a Media Content Hub for Domestic and International
syndication Technology/Telecommunications company operating on our
own proprietary Global Digital Media TV and Telecommunications
infrastructure platform and also provides technology solutions to
businesses domestically and worldwide. We offer Software as a
Service (SaaS), Technology Platform as a Service (PAAS),
Cloud-based Unified Communication as a Service (UCaaS) and
carrier-grade performance and support for businesses over our
private IP MPLS fiber and wireless network in the United States.
Our cloud-based UCaaS services allow businesses of any size to
enjoy all the latest voice, data, media and collaboration features
in today's global technology markets. We also operate as a Master
Distributor for Nationwide Mobile Virtual Network Operators (MVNO)
and Independent Sales Organization (ISO) as a Master Distributor
for Pre-Paid Cellphone services, Mobile phones, Cellphone
Accessories and Global Roaming Cellphones.
We anticipate
needing an estimated $45,000,000 in capital to continue our
business operations and expansion. We do not have committed sources
for these additional funds and will need to be obtained through
debt or equity placements or a combination of those. As part of
this $45,000,000, we will need to pay a total of $3,350,000 in
Seller loans by February 2020 for prior acquisitions and
approximately $7,800,000 in debt repayments. The remainder is to be
used for equipment purchases and working capital. We are
in negotiations for certain sources to provide funding but at this
time do not have a committed source of these funds.
Our executive
offices are located at 501 West Broadway, Suite 800, San Diego, CA
92101 and the telephone number is (619) 400-4996. We maintain a
website at www.tptglobaltech.com, and such website is not
incorporated into or a part of this filing.
IMPLICATIONS
OF BEING AN EMERGING GROWTH COMPANY
As a company with
less than $1.0 billion of revenue during our last fiscal year, we
qualify as an emerging growth company as defined in the JOBS Act,
and we may remain an emerging growth company for up to five years
from the date of the first sale in this offering. However, if
certain events occur prior to the end of such five-year period,
including if we become a large accelerated filer, our annual gross
revenue exceeds $1.0 billion, or we issue more than $1.0 billion of
non-convertible debt in any three-year period, we will cease to be
an emerging growth company prior to the end of such five-year
period. For so long as we remain an emerging growth company, we are
permitted and intend to rely on exemptions from certain disclosure
and other requirements that are applicable to other public
companies that are not emerging growth companies. In particular, in
this prospectus, we have provided only two years of audited
financial statements and have not included all of the executive
compensation related information that would be required if we were
not an emerging growth company. Accordingly, the information
contained herein may be different than the information you receive
from other public companies in which you hold equity interests.
However, we have irrevocably elected not to avail ourselves of the
extended transition period for complying with new or revised
accounting standards, and, therefore, we will be subject to the
same new or revised accounting standards as other public companies
that are not emerging growth companies.
Summary
of Financial Information
The following
tables set forth, for the periods and as of the dates indicated,
our summary financial data. The statements of operations for the
nine months ended September 30, 2019, and the balance sheet data as
of September 30, 2019 are derived from our unaudited condensed
consolidated financial statements. The unaudited financial
statements include, in the opinion of management, all adjustments
consisting of only normal recurring adjustments, that management
considers necessary for the fair presentation of the financial
information set forth in those statements. You should read the
following information together with the more detailed information
contained in “Selected Financial Data,”
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and our financial
statements and related notes included elsewhere in this prospectus.
Our historical results are not indicative of the results to be
expected in the future and results of interim periods are not
necessarily indicative of results for the entire year. The
statements of operations for the years ended December 31, 2018 and
2017, and balance sheet data as of December 31, 2018, are derived
from our audited financial statements included elsewhere in this
prospectus. You should read the following information together with
the more detailed information contained in “Selected
Financial Data,” “Management’s Discussion and
Analysis of Financial Condition and Results of Operations”
and our financial statements and related notes included elsewhere
in this prospectus. Our historical results are not indicative of
the results to be expected in the future.
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
$16,990,445
|
$10,821,717
|
$8,773,288
|
Current
Liabilities
|
$27,747,088
|
$16,144,015
|
$11,626,688
|
Long-term
Liabilities
|
$3,106,192
|
$604,200
|
$64,819
|
Stockholders’
Equity (Deficit)
|
$(13,892,835)
|
$(5,926,498)
|
$(2,918,219)
|
|
|
|
|
September
30,
2019
(Unaudited)
|
December 31,
2018
(Audited)
|
December 31,
2017
(Audited)
|
Revenues
|
$6,207,431
|
$937,069
|
$2,115,160
|
Net
Loss
|
$(8,538,360)
|
$(5,377,489)
|
$(3,807,401)
|
|
|
|
|
At September 30,
2019, the accumulated deficit was $27,341,287. At December 31,
2018, the accumulated deficit was $18,802,928. At December 31,
2017, the accumulated deficit was $13,425,439. We anticipate that
we will operate in a deficit position and continue to sustain net
losses for the foreseeable future.
CORPORATE
ORGANIZATION CHART
The
Offering
We are registering
37,361,010 shares for sale on behalf of selling
shareholders.
Our common stock,
only, will be transferable immediately upon the effectiveness of
the Registration Statement. (See “Description of
Securities”)
Common shares
outstanding before this offering November 25, 2019
|
145,236,483
|
Maximum common
shares being offered by our existing selling
shareholders
|
37,361,010
|
Maximum common
shares outstanding after this offering
|
145,236,483
|
|
|
We are authorized
to issue 1,000,000,000 shares of common stock with a par value of
$0.001 and 100,000,000 shares of preferred stock. Our current
shareholders, officers and directors collectively own 145,236,483
shares of restricted common stock as of November 25, 2019. Our
shares being registered were issued in the following amounts and at
the following prices:
Number
of Shares
|
Original
Consideration
|
Issue
Price Per Share
|
4,000,000
|
Founders
Services
|
$0.001
|
7,273,927
|
Asset
Acquisition
|
$0.10 to
$0.81
|
2,983,380
|
Conversion of
Payables and
Convertible
Promissory Notes
|
$0.20 to
$0.50
|
8,303,496
|
Private
Placement
|
$0.10 to
$0.50
|
8,126,649
|
Services
|
$0.10 to
$0.77
|
1,967,192
|
Prior Ally
Pharma
|
$0.001
|
4,706,366
|
Gifts to
Family
|
$0.001
|
Currently there is
a limited public trading market for our stock on OTCQB under the
symbol “TPTW.”
Forward Looking
Statements
This prospectus
contains various forward-looking statements that are based on our
beliefs as well as assumptions made by and information currently
available to us. When used in this prospectus, the words "believe",
"expect", "anticipate", "estimate" and similar expressions are
intended to identify forward-looking statements. These statements
may include statements regarding seeking business opportunities,
payment of operating expenses, and the like, and are subject to
certain risks, uncertainties and assumptions which could cause
actual results to differ materially from projections or estimates.
Factors which could cause actual results to differ materially are
discussed at length under the heading "Risk Factors". Should one or
more of the enumerated risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may
vary materially from those anticipated, estimated or projected.
Investors should not place undue reliance on forward-looking
statements, all of which speak only as of the date
made.
RISK
FACTORS RELATED TO OUR BUSINESS
Many of our competitors
are better established and have resources significantly greater
than we have, which may make it difficult to attract and retain
subscribers.
We will compete
with other providers of telephony service, many of which have
substantially greater financial, technical and marketing resources,
larger customer bases, longer operating histories, greater name
recognition and more established relationships in the industry. In
addition, a number of these competitors may combine or form
strategic partnerships. As a result, our competitors may be able to
offer, or bring to market earlier, products and services that are
superior to our own in terms of features, quality, pricing or other
factors. Our failure to compete successfully with any of these
companies would have a material adverse effect on our business and
the trading price of our common stock.
The market for
broadband and VoIP services is highly competitive, and we compete
with several other companies within a single market:
|
|
|
|
•
|
cable operators
offering high-speed Internet connectivity services and voice
communications;
|
|
•
|
incumbent and
competitive local exchange carriers providing DSL services over
their existing wide, metropolitan and local area
networks;
|
|
•
|
3G cellular, PCS
and other wireless providers offering wireless broadband services
and capabilities, including developments in existing cellular and
PCS technology that may increase network speeds or have other
advantages over our services;
|
|
•
|
internet service
providers offering dial-up Internet connectivity;
|
|
•
|
municipalities and
other entities operating free or subsidized WiFi
networks;
|
|
•
|
providers of VoIP
telephony services;
|
|
•
|
wireless Internet
service providers using licensed or unlicensed
spectrum;
|
|
•
|
satellite and fixed
wireless service providers offering or developing broadband
Internet connectivity and VoIP telephony;
|
|
•
|
electric utilities
and other providers offering or planning to offer broadband
Internet connectivity over power lines; and
|
|
•
|
resellers providing
wireless Internet service by “piggy-backing” on DSL or
WiFi networks operated by others.
|
Moreover, we expect
other existing and prospective competitors, particularly if our
services are successful; to adopt technologies or business plans
similar to ours or seek other means to develop a product
competitive with our services. Many of our competitors are
well-established and have larger and better developed networks and
systems, longer-standing relationships with customers and
suppliers, greater name recognition and greater financial,
technical and marketing resources than we have. These competitors
can often subsidize competing services with revenues from other
sources, such as advertising, and thus may offer their products and
services at lower prices than ours. These or other competitors may
also reduce the prices of their services significantly or may offer
broadband connectivity packaged with other products or services. We
may not be able to reduce our prices or otherwise alter our
services correspondingly, which would make it more difficult to
attract and retain subscribers.
Our Acquisitions could
result in operating difficulties, dilution and distractions from
our core business.
We have evaluated,
and expect to continue to evaluate, potential strategic
transactions, including larger acquisitions. The process of
acquiring and integrating a company, business or technology is
risky, may require a disproportionate amount of our management or
financial resources and may create unforeseen operating
difficulties or expenditures, including:
|
•
|
difficulties in
integrating acquired technologies and operations into our business
while maintaining uniform standards, controls, policies and
procedures;
|
|
•
|
increasing cost and
complexity of assuring the implementation and maintenance of
adequate internal control and disclosure controls and procedures,
and of obtaining the reports and attestations that are required of
a company filing reports under the Securities Exchange
Act;
|
|
•
|
difficulties in
consolidating and preparing our financial statements due to poor
accounting records, weak financial controls and, in some cases,
procedures at acquired entities based on accounting principles not
generally accepted in the United States, particularly those
entities in which we lack control; and
|
|
•
|
the inability to
predict or anticipate market developments and capital commitments
relating to the acquired company, business or
technology.
|
Acquisitions of and joint ventures with companies organized outside
the United States often involve additional risks,
including:
|
|
|
|
•
|
difficulties, as a
result of distance, language or culture differences, in developing,
staffing and managing foreign operations;
|
|
•
|
lack of control
over our joint ventures and other business
relationships;
|
|
•
|
currency exchange
rate fluctuations;
|
|
•
|
longer payment
cycles;
|
|
•
|
credit risk and
higher levels of payment fraud;
|
|
•
|
foreign exchange
controls that might limit our control over, or prevent us from
repatriating, cash generated outside the United
States;
|
|
•
|
potentially adverse
tax consequences;
|
|
•
|
expropriation or
nationalization of assets;
|
|
•
|
differences in
regulatory requirements that may make it difficult to offer all of
our services;
|
|
•
|
unexpected changes
in regulatory requirements;
|
|
•
|
trade barriers and
import and export restrictions; and
|
|
•
|
political or social
unrest and economic instability.
|
The anticipated
benefit of any of our acquisitions or investments may never
materialize. Future investments, acquisitions or dispositions could
result in potentially dilutive issuances of our equity securities,
the incurrence of debt, contingent liabilities or amortization
expenses, or write-offs of goodwill, any of which could harm our
financial condition. Future investments and acquisitions may
require us to obtain additional equity or debt financing, which may
not be available on favorable terms, or at all.
Our substantial
indebtedness and our current default status and any restrictive
debt covenants could limit our financing options and liquidity
position and may limit our ability to grow our
business.
Our indebtedness
could have important consequences to the holders of our common
stock, such as:
|
|
|
|
•
|
we may not be able
to obtain additional financing to fund working capital, operating
losses, capital expenditures or acquisitions on terms acceptable to
us or at all;
|
|
•
|
we may be unable to
refinance our indebtedness on terms acceptable to us or at
all;
|
|
•
|
if substantial
indebtedness continues it could make us more vulnerable to economic
downturns and limit our ability to withstand competitive pressures;
and
|
|
•
|
cash flows from
operations are currently negative and may continue to be so, and
our remaining cash, if any, may be insufficient to operate our
business.
|
|
•
|
paying dividends to
our stockholders;
|
|
•
|
incurring, or cause
certain of our subsidiaries to incur, additional
indebtedness;
|
|
•
|
permitting liens on
or conduct sales of any assets pledged as collateral;
|
|
•
|
selling all or
substantially all of our assets or consolidate or merge with or
into other companies;
|
|
•
|
repaying existing
indebtedness; and
|
|
•
|
engaging in
transactions with affiliates.
|
As of September 30,
2019, the total debt or financing arrangements was $13,694,015, of
which $91,618 or less than 1% of total current liabilities is past
due. As of September 30, 2019, financing lease arrangements are in
the amount of $550,450, of which $101,815 is in default. Our
inability to renegotiate our indebtedness may cause lien holders to
obtain possession of a good portion of our assets which would
significantly alter our ability to generate revenues and obtain any
additional financing. There are some of our derivative
financial instruments which are being accounting for as in
default. These represent $4,708,524 or 15% of total
liabilities as of September 30, 2019.
We may experience
difficulties in constructing, upgrading and maintaining our
network, which could adversely affect customer satisfaction,
increase subscriber turnover and reduce our
revenues.
Our success depends
on developing and providing products and services that give
subscribers a high quality Internet connectivity and VoIP
experience. If the number of subscribers using our network and the
complexity of our products and services increase, we will require
more infrastructure and network resources to maintain the quality
of our services. Consequently, we expect to make substantial
investments to construct and improve our facilities and equipment
and to upgrade our technology and network infrastructure. If we do
not implement these developments successfully, or if we experience
inefficiencies, operational failures or unforeseen costs during
implementation, the quality of our products and services could
decline.
We may experience
quality deficiencies, cost overruns and delays on construction,
maintenance and upgrade projects, including the portions of those
projects not within our control or the control of our contractors.
The construction of our network requires the receipt of permits and
approvals from numerous governmental bodies, including
municipalities and zoning boards. Such bodies often limit the
expansion of transmission towers and other construction necessary
for our business. Failure to receive approvals in a timely fashion
can delay system rollouts and raise the cost of completing
construction projects. In addition, we typically are required to
obtain rights from land, building and tower owners to install our
antennas and other equipment to provide service to our subscribers.
We may not be able to obtain, on terms acceptable to us, or at all,
the rights necessary to construct our network and expand our
services.
We also face
challenges in managing and operating our network. These challenges
include operating, maintaining and upgrading network and customer
premises equipment to accommodate increased traffic or
technological advances, and managing the sales, advertising,
customer support, billing and collection functions of our business
while providing reliable network service at expected speeds and
VoIP telephony at expected levels of quality. Our failure in any of
these areas could adversely affect customer satisfaction, increase
subscriber turnover, increase our costs, decrease our revenues and
otherwise have a material adverse effect on our business,
prospects, financial condition and results of
operations.
If we do not obtain and
maintain rights to use licensed spectrum in one or more markets, we
may be unable to operate in these markets, which could adversely
affect our ability to execute our business
strategy.
Even though we have
established license agreements, growth requires that we plan to
provide our services obtaining additional licensed spectrum both in
the United States and internationally, we depend on our ability to
acquire and maintain sufficient rights to use licensed spectrum by
obtaining our own licenses or long-term spectrum leases, in each of
the markets in which we operate or intend to operate. Licensing is
the short-term solution to obtaining the necessary spectrum as
building out spectrum is a long and difficult process that can be
costly and require a disproportionate amount of our management
resources. We may not be able to acquire, lease or maintain the
spectrum necessary to execute our business strategy.
Using licensed
spectrum, whether owned or leased, poses additional risks to us,
including:
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inability to
satisfy build-out or service deployment requirements upon which our
spectrum licenses or leases are, or may be,
conditioned;
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increases in
spectrum acquisition costs;
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adverse changes to
regulations governing our spectrum rights;
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the risk that
spectrum we have acquired or leased will not be commercially usable
or free of harmful interference from licensed or unlicensed
operators in our or adjacent bands;
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with respect to
spectrum we will lease in the United States, contractual disputes
with or the bankruptcy or other reorganization of the license
holders, which could adversely affect our control over the spectrum
subject to such license;
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failure of the FCC
or other regulators to renew our spectrum licenses as they expire;
and
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invalidation of our
authorization to use all or a significant portion of our spectrum,
resulting in, among other things, impairment charges related to
assets recorded for such spectrum.
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If we fail to establish
and maintain an effective system of internal control, we may not be
able to report our financial results accurately or to prevent
fraud. Any inability to report and file our financial results
accurately and timely could harm our business and adversely impact
the trading price of our common stock.
Effective internal
control is necessary for us to provide reliable financial reports
and prevent fraud. If we cannot provide reliable financial reports
or prevent fraud, we may not be able to manage our business as
effectively as we would if an effective control environment
existed, and our business, brand and reputation with investors may
be harmed.
In addition,
reporting a material weakness may negatively impact
investors’ perception of us. We have allocated, and will
continue to allocate, significant additional resources to remedy
any deficiencies in our internal control. There can be no
assurances that our remedial measures will be successful in curing
the any material weakness or that other significant deficiencies or
material weaknesses will not arise in the future.
Interruption or failure of
our information technology and communications systems could impair
our ability to provide our products and services, which could
damage our reputation and harm our operating
results.
We have experienced
service interruptions in some markets in the past and may
experience service interruptions or system failures in the future.
Any unscheduled service interruption adversely affects our ability
to operate our business and could result in an immediate loss of
revenues. If we experience frequent or persistent system or network
failures, our reputation and brand could be permanently harmed. We
may make significant capital expenditures to increase the
reliability of our systems, but these capital expenditures may not
achieve the results we expect.
Our products and
services depend on the continuing operation of our information
technology and communications systems. Any damage to or failure of
our systems could result in interruptions in our service.
Interruptions in our service could reduce our revenues and profits,
and our brand could be damaged if people believe our network is
unreliable. Our systems are vulnerable to damage or interruption
from earthquakes, terrorist attacks, floods, fires, power loss,
telecommunications failures, computer viruses, computer denial of
service attacks or other attempts to harm our systems, and similar
events. Some of our systems are not fully redundant, and our
disaster recovery planning may not be adequate. The occurrence of a
natural disaster or unanticipated problems at our network centers
could result in lengthy interruptions in our service and adversely
affect our operating results.
The industries in which we
operate are continually evolving, which makes it difficult to
evaluate our future prospects and increases the risk of your
investment. Our products and services may become obsolete, and we
may not be able to develop competitive products or services on a
timely basis or at all.
The markets in
which we and our customers compete are characterized by rapidly
changing technology, evolving industry standards and communications
protocols, and continuous improvements in products and services.
Our future success depends on our ability to enhance current
products and to develop and introduce in a timely manner new
products that keep pace with technological developments, industry
standards and communications protocols, compete effectively on the
basis of price, performance and quality, adequately address
end-user customer requirements and achieve market acceptance. There
can be no assurance that the deployment of wireless networks will
not be delayed or that our products will achieve widespread market
acceptance or be capable of providing service at competitive prices
in sufficient volumes. In the event that our products are not
timely and economically developed or do not gain widespread market
acceptance, our business, results of operations and financial
condition would be materially adversely affected. There can also be
no assurance that our products will not be rendered obsolete by the
introduction and acceptance of new communications
protocols.
The broadband
services industry is characterized by rapid technological change,
competitive pricing, frequent new service introductions and
evolving industry standards and regulatory requirements. We believe
that our success depends on our ability to anticipate and adapt to
these challenges and to offer competitive services on a timely
basis. We face a number of difficulties and uncertainties
associated with our reliance on technological development, such
as:
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competition from
service providers using more traditional and commercially proven
means to deliver similar or alternative services;
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competition from
new service providers using more efficient, less expensive
technologies, including products not yet invented or
developed;
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uncertain consumer
acceptance;
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realizing economies
of scale;
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responding
successfully to advances in competing technologies in a timely and
cost-effective manner;
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migration toward
standards-based technology, requiring substantial capital
expenditures; and
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existing, proposed
or undeveloped technologies that may render our wireless broadband
and VoIP telephony services less profitable or
obsolete.
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As the products and
services offered by us and our competitors develop, businesses and
consumers may not accept our services as a commercially viable
alternative to other means of delivering wireless broadband and
VoIP telephony services.
If we are unable to
successfully develop and market additional services and/or new
generations of our services offerings or market our services and
product offerings to a broad number of customers, we may not remain
competitive.
Our future success
and our ability to increase net revenue and earnings depend, in
part, on our ability to develop and market new additional services
and/or new generations of our current services offerings and market
our existing services offerings to a broad number of customers.
However, we may not be able to, among other things:
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successfully
develop or market new services or product offerings or enhance
existing services offerings;
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educate third-party
sales organizations adequately for them to promote and sell our
services offerings;
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develop, market and
distribute existing and future services offerings in a
cost-effective manner; or
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operate the
facilities needed to provide our services offerings.
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If we fail to
develop new service offerings, or if we incur unexpected expenses
or delays in product development or integration, we may lose our
competitive position and incur substantial additional expenses or
may be required to curtail or terminate all or part of our present
planned business operations.
Our failure to do
any of the foregoing could have a material adverse effect on our
business, financial condition and results of operations. In
addition, if any of our current or future services offerings
contain undetected errors or design defects or do not work as
expected for our customers, our ability to market these services
offerings could be substantially impeded, resulting in lost sales,
potential reputation damage and delays in obtaining market
acceptance of these services offerings. We cannot assure you that
we will continue to successfully develop and market new or enhanced
applications for our services offerings. If we do not continue to
expand our services offerings portfolio on a timely basis or if
those products and applications do not receive market acceptance,
become regulatory restricted, or become obsolete, we will not grow
our business as currently expected.
We operate in a very
competitive environment.
There are three
types of competitors for our service offerings.
(1)
The
value-added resellers and other vendors of hardware and software
for on-site installation do not typically have an offering similar
to our cloud-based services. However, they are the primary historic
service suppliers to our targeted customers and will actively work
to defend their customer base.
(2)
There
are a number of providers offering services, but they typically
offer only one or two applications of their choosing instead of our
offering which bundles customer’s chosen
services.
(3)
There
are a few providers that offer more than two applications from the
cloud. However currently, these providers typically offer only
those applications they have chosen.
Our industry is
characterized by rapid change resulting from technological advances
and new services offerings. Certain competitors have substantially
greater capital resources, larger customer bases, larger sales
forces, greater marketing and management resources, larger research
and development staffs and larger facilities than our and have more
established reputations with our target customers, as well as
distribution channels that are entrenched and may be more effective
than ours. Competitors may develop and offer technologies and
products that are more effective, have better features, are easier
to use, are less expensive and/or are more readily accepted by the
marketplace than our offerings. Their products could make our
technology and service offerings obsolete or noncompetitive.
Competitors may also be able to achieve more efficient operations
and distribution than ours may be able to and may offer lower
prices than we could offer profitably. We may decide to alter or
discontinue aspects of our business and may adopt different
strategies due to business or competitive factors or factors
currently unforeseen, such as the introduction by competitors of
new products or services technologies that would make part or all
of our service offerings obsolete or uncompetitive.
In addition, the
industry could experience some consolidation. There is also a risk
that larger companies will enter our markets.
If we fail to maintain
effective relationships with our major vendors, our services
offerings and profitability could suffer.
We use third party
providers for services. In addition, we purchase hardware, software
and services from external suppliers. Accordingly, we must maintain
effective relationships with our vendor base to source our needs,
maintain continuity of supply, and achieve reasonable costs. If we
fail to maintain effective relationships with our vendor base, this
may adversely affect our ability to deliver the best products and
services to our customers and our profitability could
suffer.
Any failure of the
physical or electronic security that resulted in unauthorized
parties gaining access to customer data could adversely affect our
business, financial condition and results of
operations.
We use commercial
data networks to service customers cloud based services and the
associated customer data. Any data is subject to the risk of
physical or electronic intrusion by unauthorized parties. We have a
multi-homed firewalls and Intrusion Detection / Prevention systems
to protect against electronic intrusion and two physical security
levels in our networks. Our policy is to close all external ports
as a default. Robust anti-virus software runs on all client
servers. Systems have automated monitoring and alerting for unusual
activity. We also have a Security Officer who monitors these
systems. We have better security systems and expertise than our
clients can afford separately but any failure of these systems
could adversely affect our business growth and financial
condition.
Demand for our service
offerings may decrease if new government regulations substantially
increase costs, limit delivery or change the use of Internet access
and other products on which our service offerings
depend.
We are dependent on
Internet access to deliver our service offerings. If new
regulations are imposed that limit the use of the Internet or
impose significant taxes on services delivered via the Internet it
could change our cost structure and/or affect our business model.
The significant changes in regulatory costs or new limitations on
Internet use could impact our ability to operate as we anticipate,
could damage our reputation with our customers, disrupt our
business or result in, among other things, decreased net revenue
and increased overhead costs. As a result, any such failure could
harm our business, financial condition and results of
operations.
Our securities, as
offered hereby, are highly speculative and should be purchased only
by persons who can afford to lose their entire investment in us.
Each prospective investor should carefully consider the following
risk factors, as well as all other information set forth elsewhere
in this prospectus, before purchasing any of the shares of our
common stock.
Increasing regulation of
our Internet-based products and services could adversely affect our
ability to provide new products and services.
On
February 26, 2015, the FCC adopted a new "network neutrality"
or Open Internet order (the "2015 Order") that:
(1) reclassified broadband Internet access service as a Title
II common carrier service, (2) applied certain existing Title
II provisions and associated regulations; (3) forbore from
applying a range of other existing Title II provisions and
associated regulations, but to varying degrees indicated that this
forbearance may be only temporary and (4) issued new rules
expanding disclosure requirements and prohibiting blocking,
throttling, paid prioritization and unreasonable interference with
the ability of end users and edge providers to reach each other.
The 2015 Order also subjected broadband providers' Internet traffic
exchange rates and practices to potential FCC oversight and created
a mechanism for third parties to file complaints regarding these
matters. The 2015 Order could limit our ability to efficiently
manage our cable systems and respond to operational and competitive
challenges. In December 2017, the FCC adopted an order (the "2017
Order") that in large part reverses the 2015 Order. The 2017 Order
has not yet gone into effect, however, and the 2015 Order will
remain binding until the 2017 Order takes effect. The 2017 Order is
expected to be subject to legal challenge that may delay its effect
or overturn it. Additionally, Congress and some states are
considering legislation that may codify "network neutrality"
rules.
Offering
telephone services may subject us to additional regulatory burdens,
causing us to incur additional costs.
We offer telephone
services over our broadband network and continue to develop and
deploy interconnected VoIP services. The FCC has ruled that
competitive telephone companies that support VoIP services, such as
those that we offer to our customers, are entitled to interconnect
with incumbent providers of traditional telecommunications
services, which ensures that our VoIP services can operate in the
market. However, the scope of these interconnection rights are
being reviewed in a current FCC proceeding, which may affect our
ability to compete in the provision of telephony services or result
in additional costs. It remains unclear precisely to what extent
federal and state regulators will subject VoIP services to
traditional telephone service regulation. Expanding our offering of
these services may require us to obtain certain authorizations,
including federal and state licenses. We may not be able to obtain
such authorizations in a timely manner, or conditions could be
imposed upon such licenses or authorizations that may not be
favorable to us. The FCC has already extended certain traditional
telecommunications requirements, such as E911 capabilities,
Universal Service Fund contribution, Communications Assistance for
Law Enforcement Act ("CALEA"), measures to protect Customer
Proprietary Network Information, customer privacy, disability
access, number porting, battery back-up, network outage reporting,
rural call completion reporting and other regulatory requirements
to many VoIP providers such as us. If additional telecommunications
regulations are applied to our VoIP service, it could cause us to
incur additional costs and may otherwise materially adversely
impact our operations. In 2011, the FCC released an order
significantly changing the rules governing intercarrier
compensation for the origination and termination of telephone
traffic between interconnected carriers. These rules have resulted
in a substantial decrease in interstate compensation payments over
a multi-year period. The FCC is currently considering additional
reforms that could further reduce interstate compensation payments.
Further, although the FCC recently declined to impose additional
regulatory burdens on certain point to point transport ("special
access") services provided by cable companies, that FCC decision
has been appealed by multiple parties. If those appeals are
successfully, there could be additional regulatory burdens and
additional costs placed on these services.
We may engage in
acquisitions and other strategic transactions and the integration
of such acquisitions and other strategic transactions could
materially adversely affect our business, financial condition and
results of operations.
Our business has
grown significantly as a result of acquisitions, including the
Acquisitions, which entail numerous risks including:
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distraction of our
management team in identifying potential acquisition targets,
conducting due diligence and negotiating acquisition
agreements;
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difficulties in
integrating the operations, personnel, products, technologies and
systems of acquired businesses;
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difficulties in
enhancing our customer support resources to adequately service our
existing customers and the customers of acquired
businesses;
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the potential loss
of key employees or customers of the acquired
businesses;
•
unanticipated
liabilities or contingencies of acquired
businesses;
•
unbudgeted costs
which we may incur in connection with pursuing potential
acquisitions which are not consummated;
•
failure to achieve
projected cost savings or cash flow from acquired businesses, which
are based on projections that are inherently
uncertain;
•
fluctuations in our
operating results caused by incurring considerable expenses to
acquire and integrate businesses before receiving the anticipated
revenues expected to result from the acquisitions;
and
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difficulties in
obtaining regulatory approvals required to consummate
acquisitions.
We also participate
in competitive bidding processes, some of which may involve
significant cable systems. If we are the winning bidder in any such
process involving significant cable systems or we otherwise engage
in acquisitions or other strategic transactions in the future, we
may incur additional debt, contingent liabilities and amortization
expenses, which could materially adversely affect our business,
financial condition and results of operations. We could also issue
substantial additional equity which could dilute existing
stockholders.
If our
acquisitions, including the Acquisitions and the integration of the
Optimum and Suddenlink businesses, do not result in the anticipated
operating efficiencies, are not effectively integrated, or result
in costs which exceed our expectations, our business, financial
condition and results of operations could be materially adversely
affected.
Significant unanticipated
increases in the use of bandwidth-intensive Internet-based services
could increase our costs.
The rising
popularity of bandwidth-intensive Internet-based services poses
risks for our broadband services. Examples of such services include
peer-to-peer file sharing services, gaming services and the
delivery of video via streaming technology and by download. If
heavy usage of bandwidth-intensive broadband services grows beyond
our current expectations, we may need to incur more expenses than
currently anticipated to expand the bandwidth capacity of our
systems or our customers could have a suboptimal experience when
using our broadband service. In order to continue to provide
quality service at attractive prices, we need the continued
flexibility to develop and refine business models that respond to
changing consumer uses and demands and to manage bandwidth usage
efficiently. Our ability to undertake such actions could be
restricted by regulatory and legislative efforts to impose
so-called "net neutrality" requirements on broadband communication
providers like us that provide broadband services. For more
information, see "Regulation—Broadband."
We operate
in a highly competitive business environment which could materially
adversely affect our business, financial condition, results of
operations and liquidity.
We operate in a
highly competitive, consumer-driven industry and we compete against
a variety of broadband, pay television and telephony providers and
delivery systems, including broadband communications companies,
wireless data and telephony providers, satellite-delivered video
signals, Internet-delivered video content and broadcast television
signals available to residential and business customers in our
service areas. Some of our competitors include AT&T and its
DirecTV subsidiary, CenturyLink, DISH Network, Frontier and
Verizon. In addition, our pay television services compete with all
other sources of leisure, news, information and entertainment,
including movies, sporting or other live events, radio broadcasts,
home-video services, console games, print media and the
Internet.
In some instances,
our competitors have fewer regulatory burdens, easier access to
financing, greater resources, greater operating capabilities and
efficiencies of scale, stronger brand-name recognition,
longstanding relationships with regulatory authorities and
customers, more subscribers, more flexibility to offer promotional
packages at prices lower than ours and greater access to
programming or other services. This competition creates pressure on
our pricing and has adversely affected, and may continue to affect,
our ability to add and retain customers, which in turn adversely
affects our business, financial condition and results of
operations. The effects of competition may also adversely affect
our liquidity and ability to service our debt. For example, we face
intense competition from Verizon and AT&T, which have network
infrastructure throughout our service areas. We estimate that
competitors are currently able to sell a fiber-based triple play,
including broadband, pay television and telephony services, and may
expand these and other service offerings to our potential
customers.
Our competitive
risks are heightened by the rapid technological change inherent in
our business, evolving consumer preferences and the need to
acquire, develop and adopt new technology to differentiate our
products and services from those of our competitors, and to meet
consumer demand. We may need to anticipate far in advance which
technology we should use for the development of new products and
services or the enhancement of existing products and services. The
failure to accurately anticipate such changes may adversely affect
our ability to attract and retain customers, which in turn could
adversely affect our business, financial condition and results of
operations. Consolidation and cooperation in our industry may allow
our competitors to acquire service capabilities or offer products
that are not available to us or offer similar products and services
at prices lower than ours. For example, Comcast and Charter
Communications have agreed to jointly explore operational
efficiencies to speed their respective entries into the wireless
market, including in the areas of creating common operating
platforms and emerging wireless technology platforms. In addition,
changes in the regulatory and legislative environments may result
in changes to the competitive landscape.
In addition,
certain of our competitors own directly or are affiliated with
companies that own programming content or have exclusive
arrangements with content providers that may enable them to obtain
lower programming costs or offer exclusive programming that may be
attractive to prospective subscribers. For example, DirecTV has
exclusive arrangements with the National Football League that give
it access to programming we cannot offer. AT&T also has an
agreement to acquire Time Warner, which owns a number of cable
networks, including TBS, CNN and HBO, as well as Warner Bros.
Entertainment, which produces television, film and home-video
content. AT&T's and DirecTV's potential access to Time Warner
programming could allow AT&T and DirecTV to offer competitive
and promotional packages that could negatively affect our ability
to maintain or increase our existing customers and revenues. DBS
operators such as DISH Network and DirecTV also have marketing
arrangements with certain phone companies in which the DBS
provider's pay television services are sold together with the phone
company's broadband and mobile and traditional phone
services.
Most broadband
communications companies, which already have wired networks, an
existing customer base and other operational functions in place
(such as billing and service personnel), offer DSL services. We
believe DSL service competes with our broadband service and is
often offered at prices lower than our Internet services. However,
DSL is often offered at speeds lower than the speeds we offer. In
addition, DSL providers may currently be in a better position to
offer Internet services to businesses since their networks tend to
be more complete in commercial areas. They may also increasingly
have the ability to combine video services with telephone and
Internet services offered to their customers, particularly as
broadband communications companies enter into co-marketing
agreements with other service providers. In addition, current and
future fixed and wireless Internet services, such as 3G, 4G and 5G
fixed and wireless broadband services and Wi-Fi networks, and
devices such as wireless data cards, tablets and smartphones, and
mobile wireless routers that connect to such devices, may compete
with our broadband services.
Our telephony
services compete directly with established broadband communications
companies and other carriers, including wireless providers, as
increasing numbers of homes are replacing their traditional
telephone service with wireless telephone service. We also compete
against VoIP providers like Vonage, Skype, GoogleTalk, Facetime,
WhatsApp and magicJack that do not own networks but can provide
service to any person with a broadband connection, in some cases
free of charge. In addition, we compete against ILECs, other CLECs
and long-distance voice-service companies for large commercial and
enterprise customers. While we compete with the ILECs, we also
enter into interconnection agreements with ILECs so that our
customers can make and receive calls to and from customers served
by the ILECs and other telecommunications providers. Federal and
state law and regulations require ILECs to enter into such
agreements and provide facilities and services necessary for
connection, at prices subject to regulation. The specific price,
terms and conditions of each agreement, however, depend on the
outcome of negotiations between us and each ILEC. Interconnection
agreements are also subject to approval by the state regulatory
commissions, which may arbitrate negotiation impasses. These
agreements, like all interconnection agreements, are for limited
terms and upon expiration are subject to renegotiation, potential
arbitration and approval under the laws in effect at that
time.
We also face
competition for our advertising sales from traditional and
non-traditional media outlets, including television and radio
stations, traditional print media and the Internet.
We face significant risks
as a result of rapid changes in technology, consumer expectations
and behavior.
The broadband
communications industry has undergone significant technological
development over time and these changes continue to affect our
business, financial condition and results of operations. Such
changes have had, and will continue to have, a profound impact on
consumer expectations and behavior. Our video business faces
technological change risks as a result of the continuing
development of new and changing methods for delivery of programming
content such as Internet-based delivery of movies, shows and other
content which can be viewed on televisions, wireless devices and
other developing mobile devices. Consumers' video consumption
patterns are also evolving, for example, with more content being
downloaded for time-shifted consumption. A proliferation of
delivery systems for video content can adversely affect our ability
to attract and retain subscribers and the demand for our services
and it can also decrease advertising demand on our delivery
systems. Our broadband business faces technological challenges from
rapidly evolving wireless Internet solutions. Our telephony service
offerings face technological developments in the proliferation of
telephony delivery systems including those based on Internet and
wireless delivery. If we do not develop or acquire and successfully
implement new technologies, we will limit our ability to compete
effectively for subscribers, content and advertising. In addition,
we may be required to make material capital and other investments
to anticipate and to keep up with technological change. These
challenges could adversely affect our business, financial condition
and results of operations.
Our revenues and growth
may be constrained due to demand exceeding capacity of our systems
or our inability to develop solutions.
We anticipate
generating revenues in the future from broadband connectivity,
other Internet services, and broadband and in the cloud services.
Demand and market acceptance for these recently introduced services
and products delivered over the Internet is uncertain. Critical
issues concerning the use of the Internet, such as ease of access,
security, reliability, cost and quality of service, exist and may
affect the growth of Internet use or the attractiveness of
conducting commerce online. In addition, the Internet and online
services may not be accepted as viable for a number of reasons,
including potentially inadequate development of the necessary
network infrastructure or delayed development of enabling
technologies and performance improvements. To the extent that the
Internet and online services continue to experience significant
growth, there can be no assurance that the infrastructure of the
Internet and online services will prove adequate to support
increased user demands. In addition, the Internet or online
services could lose their viability due to delays in the
development or adoption of new standards and protocols required to
handle increased levels of Internet or online service activity.
Changes in, or insufficient availability of, telecommunications
services to support the Internet or online services also could
result in slower response times and adversely affect usage of the
Internet and online services generally and us in particular. If use
of the Internet and online services does not continue to grow or
grows more slowly than expected, if the infrastructure for the
Internet and online services does not effectively support growth
that may occur, or if the Internet and online services do not
become a viable commercial marketplace, our business could be
adversely affected.
Certain aspects of
our VoIP telephony services differ from traditional telephone
service. The factors that may have this effect
include:
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our subscribers may
experience lower call quality than they experience with traditional
wireline telephone companies, including static, echoes and
transmission delays;
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our subscribers may
experience higher dropped-call rates than they experience with
traditional wireline telephone companies; and
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a power loss or
Internet access interruption causes our service to be
interrupted.
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Additionally, our
VoIP emergency calling service is significantly more limited than
the emergency calling services offered by traditional telephone
companies. Our VoIP emergency calling service can only transmit to
a dispatcher at a public safety answering point, or PSAP, the
location information that the subscriber has registered with us,
which may at times be different from the actual location at the
time of the call. As a result, our emergency calling systems may
not assure that the appropriate PSAP is reached and may cause
significant delays, or even failures, in callers’ receipt of
emergency assistance. Our failure to develop or operate an adequate
emergency calling service could subject us to substantial
liabilities and may result in delays in subscriber adoption of our
VoIP telephony services or all of our services, abandonment of our
services by subscribers, and litigation costs, damage awards and
negative publicity, any of which could harm our business,
prospects, financial condition or results of
operations.
If our subscribers
do not accept the differences between our VoIP telephony services
and traditional telephone service, they may not adopt or keep our
VoIP telephony services or our other services, or may choose to
retain or return to service provided by traditional telephone
companies. Because VoIP telephony services represent an important
aspect of our business strategy, failure to achieve
subscribers’ acceptance of our VoIP telephony services may
adversely affect our prospects, results of operations and the
trading price of our shares.
We rely on
contract manufacturers and a limited number of third-party
suppliers to produce our network equipment and to maintain our
network sites. If these companies fail to perform, we may have a
shortage of components and may be required to suspend our network
deployment and our product and service
introduction.
We depend on
contract manufacturers, to produce and deliver acceptable, high
quality products on a timely basis. We also depend on a limited
number of third parties to maintain our network facilities. If our
contract manufacturer or other providers do not satisfy our
requirements, or if we lose our contract manufacturers or any other
significant provider, we may have an insufficient network services
for delivery to subscribers, we may be forced to suspend portions
of our wireless broadband network, enrollment of new subscribers,
and product sales and our business, prospects, financial condition
and operating results may be harmed.
We rely on highly
skilled executives and other personnel. If we cannot retain and
motivate key personnel, we may be unable to implement our business
strategy.
We will be highly
dependent on the scientific, technical, and managerial skills of
certain key employees, including technical, research and
development, sales, marketing, financial and executive personnel,
and on our ability to identify, hire and retain additional
personnel. To accommodate our current size and manage our
anticipated growth, we must expand our employee base. Competition
for key personnel, particularly persons having technical expertise,
is intense, and there can be no assurance that we will be able to
retain existing personnel or to identify or hire additional
personnel. The need for such personnel is particularly important
given the strains on our existing infrastructure and the need to
anticipate the demands of future growth. In particular, we are
highly dependent on the continued services of our senior management
team, which currently is composed of a small number of individuals.
We do not maintain key-man life insurance on the life of any
employee. The inability of us to attract, hire or retain the
necessary technical, sales, marketing, financial and executive
personnel, or the loss of the services of any member of our senior
management team, could have a material adverse effect on
us.
Our future success
depends largely on the expertise and reputation of our founder,
Chairman and Chief Executive Officer Stephen J. Thomas, Richard
Eberhardt, and the other members of our senior management team. In
addition, we intend to hire additional highly skilled individuals
to staff our operations. Loss of any of our key personnel or the
inability to recruit and retain qualified individuals could
adversely affect our ability to implement our business strategy and
operate our business.
We are currently
managed by a small number of key management and operating
personnel. Our future success depends, in part, on our ability to
recruit and retain qualified personnel. Failure to do so likely
would have an adverse impact on our business and the trading price
of our common stock.
If our data
security measures are breached, subscribers may perceive our
network and services as not secure.
Our network
security and the authentication of the subscriber’s
credentials are designed to protect unauthorized access to data on
our network. Because techniques used to obtain unauthorized access
to or to sabotage networks change frequently and may not be
recognized until launched against a target, we may be unable to
anticipate or implement adequate preventive measures against
unauthorized access or sabotage. Consequently, unauthorized parties
may overcome our encryption and security systems and obtain access
to data on our network, including on a device connected to our
network. In addition, because we operate and control our network
and our subscribers’ Internet connectivity, unauthorized
access or sabotage of our network could result in damage to our
network and to the computers or other devices used by our
subscribers. An actual or perceived breach of network security,
regardless of whether the breach is our fault, could harm public
perception of the effectiveness of our security measures, adversely
affect our ability to attract and retain subscribers, expose us to
significant liability and adversely affect our business
prospects.
Our activities
outside the United States could disrupt our
operations.
We intend to invest
in various international companies and spectrum opportunities
through acquisitions and strategic alliances as these opportunities
arise. Our activities outside the United States operate in
environments different from the one we face in the United States,
particularly with respect to competition and regulation. Due to
these differences, our activities outside the United States may
require a disproportionate amount of our management and financial
resources, which could disrupt our U.S. operations and adversely
affect our business.
In a number of
international markets, we face substantial competition from local
service providers that offer or may offer their own wireless
broadband or VoIP telephony services and from other companies that
provide Internet connectivity services. We may face heightened
challenges in gaining market share, particularly in certain
European countries, where a large portion of the population already
has broadband Internet connectivity and incumbent companies already
have a dominant market share in their service areas. Furthermore,
foreign providers of competing services may have a substantial
advantage over us in attracting subscribers due to a more
established brand, greater knowledge of local subscribers’
preferences and access to significant financial or strategic
resources.
In addition,
foreign regulatory authorities frequently own or control the
incumbent telecommunications companies operating under their
jurisdiction. Established relationships between government-owned or
government-controlled telecommunications companies and their
traditional local providers of telecommunications services often
limit access of third parties to these markets. The successful
expansion of our international operations in some markets will
depend on our ability to locate, form and maintain strong
relationships with established local communication services and
equipment providers. Failure to establish these relationships or to
market or sell our products and services successfully could limit
our ability to attract subscribers to our services.
We may be unable
to protect our intellectual property, which could reduce the value
of our services and our brand.
Our ability to
compete effectively depends on our ability to protect our
proprietary technologies, system designs and manufacturing
processes. We may not be able to safeguard and maintain our
proprietary rights. We rely on patents, trademarks and policies and
procedures related to confidentiality to protect our intellectual
property. Some of our intellectual property, however, is not
covered by any of these protections.
We could be
subject to claims that we have infringed on the proprietary rights
of others, which claims would likely be costly to defend, could
require us to pay damages and could limit our ability to use
necessary technologies in the future.
Our competitors may
independently develop or patent technologies or processes that are
substantially equivalent or superior to ours. These competitors may
claim that our services and products infringe on these patents or
other proprietary rights. Defending against infringement claims,
even merit less ones, would be time consuming, distracting and
costly. If we are found to be infringing proprietary rights of a
third party, we could be enjoined from using such third
party’s rights and be required to pay substantial royalties
and damages and may no longer be able to use the intellectual
property on acceptable terms or at all. Failure to obtain licenses
to intellectual property could delay or prevent the development,
manufacture or sale of our products or services and could cause us
to expend significant resources to develop or acquire
non-infringing intellectual property.
Our business
depends on our brand, and if we do not maintain and enhance our
brand, our ability to attract and retain subscribers may be
impaired and our business and operating results
harmed.
We believe that our
brand is a critical part of our business. Maintaining and enhancing
our brand may require us to make substantial investments with no
assurance that these investments will be successful. If we fail to
promote and maintain our brands, or if we incur significant
expenses in this effort, our business, prospects, operating results
and financial condition may be harmed. We anticipate that
maintaining and enhancing our brand will become increasingly
important, difficult and expensive.
We are subject to
extensive regulation.
Our acquisition,
lease, maintenance and use of spectrum licenses are extensively
regulated by federal, state, local, and foreign governmental
entities. A number of other federal, state, local and foreign
privacy, security and consumer laws also apply to our business.
These regulations and their application are subject to continual
change as new legislation, regulations or amendments to existing
regulations are adopted from time to time by governmental or
regulatory authorities, including as a result of judicial
interpretations of such laws and regulations. Current regulations
directly affect the breadth of services we are able to offer and
may impact the rates, terms and conditions of our services.
Regulation of companies that offer competing services, such as
cable and DSL providers and incumbent telecommunications carriers,
also affects our business indirectly.
We are also subject
to regulation because we provide VoIP telephony services. As an
“interconnected” VoIP provider, we are required under
FCC rules, to comply with the Communications Assistance for Law
Enforcement Act, or CALEA, which requires service providers to
build certain capabilities into their networks and to accommodate
wiretap requests from law enforcement agencies.
In addition, the
FCC or other regulatory authorities may in the future restrict our
ability to manage subscribers’ use of our network, thereby
limiting our ability to prevent or address subscribers’
excessive bandwidth demands. To maintain the quality of our network
and user experience, we manage the bandwidth used by our
subscribers’ applications, in part by restricting the types
of applications that may be used over our network. Some providers
and users of these applications have objected to this practice. If
the FCC or other regulatory authorities were to adopt regulations
that constrain our ability to employ bandwidth management
practices, excessive use of bandwidth-intensive applications would
likely reduce the quality of our services for all subscribers. Such
decline in the quality of our services could harm our
business.
In certain of our
international markets, the services provided by our business may
require receipt of a license from national, provincial or local
regulatory authorities. Where required, regulatory authorities may
have significant discretion in granting the licenses and in the
term of the licenses and are often under no obligation to renew the
licenses when they expire.
The breach of a
license or applicable law, even if inadvertent, can result in the
revocation, suspension, cancellation or reduction in the term of a
license or the imposition of fines. In addition, regulatory
authorities may grant new licenses to third parties, resulting in
greater competition in territories where we already have rights to
licensed spectrum. In order to promote competition, licenses may
also require that third parties be granted access to our bandwidth,
frequency capacity, facilities or services. We may not be able to
obtain or retain any required license, and we may not be able to
renew a license on favorable terms, or at all.
Our wireless
broadband and VoIP telephony services may become subject to greater
state or federal regulation in the future. The scope of the
regulations that may apply to VoIP telephony services providers and
the impact of such regulations on providers’ competitive
position are presently unknown.
Our Chairman and Chief
Executive Officer is also our largest stockholder, and as a result
he can exert control over us and has actual or potential interests
that may diverge from yours.
Mr. Thomas may
have interests that diverge from those of other holders of our
common stock and he owns our super majority voting Series A stock.
As a result, Mr. Thomas may vote the shares he owns or otherwise
cause us to take actions that may conflict with your best interests
as a stockholder, which could adversely affect our results of
operations and the trading price of our common stock.
Through his
control, Mr. Thomas can control our management, affairs and
all matters requiring stockholder approval, including the approval
of significant corporate transactions, a sale of our company,
decisions about our capital structure and, the composition of our
board of directors.
RISK
FACTORS RELATED TO OUR STOCK
We can give no assurance
of success or profitability to our investors.
Cash flows
generated from operating activities were not enough to support all
working capital requirements for the nine months ended September
30, 2019 and 2018. Financing activities described below have helped
with working capital and other capital requirements. We incurred
$8,538,360 and $3,307,841, respectively, in losses, and we used
$1,032,989 and $836,228, respectively, in cash for operations for
the nine months September 30, 2019 and 2018. Cash flows from
financing activities were $2,027,422 and $774,715 for the same
periods. These factors raise substantial doubt about the ability of
the Company to continue as a going concern for a period of one year
from the issuance of these financial statements. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
We acquired the
assets of SpeedConnect on May 7, 2019 for $1,000,000 and a note
payable for $750,000. These assets were conveyed into a wholly
owned subsidiary, TPT SpeedConnect. Although TPT SpeedConnect is
currently generating cash flows, there is expected to be
significant capital required in the near term to upgrade the
current network to 5G standards.
In order for us to
continue as a going concern for a period of one year from the
issuance of these financial statements, we will need to obtain
additional debt or equity financing and look for companies with
cash flow positive operations that we can acquire. There can be no
assurance that we will be able to secure additional debt or equity
financing, that we will be able to acquire cash flow positive
operations, or that, if we are successful in any of those actions,
those actions will produce adequate cash flow to enable us to meet
all our future obligations. Most of our existing financing
arrangements are short-term. If we are unable to obtain additional
debt or equity financing, we may be required to significantly
reduce or cease operations.
Sales of common stock
resulting from issuances of common stock for conversions by our
convertible noteholders or Rule 144 sales in the future will have a
depressive effect on our common stock price.
Most of our
convertible noteholders have rights to convert their notes at
significant discounts to the market prices as shown in the schedule
below, for sale under the requirements of Rule 144 or other
applicable exemptions from registration under the Act and perhaps
under registration statements which the company is preparing to
file in the next thirty days. Rule 144 provides in essence that a
person who has held restricted securities for six months or is
deemed to have held them due to the issuance by the Company of
convertible notes under certain conditions, may sell those shares
in brokerage transactions. There is no limit on the amount of
restricted securities that may be sold by a non-affiliate after the
owner has held the restricted securities for a period of six
months. A sale under Rule 144 or under any other exemption from the
Act, if available, or pursuant to subsequent registration of shares
of common stock of present stockholders underlying the convertible
notes, will have a depressive effect upon the price of the common
stock in the market, since they are issued at a discount to
market-often 50-60% of the lowest bid for differing periods, and
sales can be expected at some discounted prices, with larger than
normal volumes. We have also issued warrants that allow
for the purchase of shares at significant discounts to the market
prices, often 50% of the ten day low bids, or other highly
discounted rates, which would allow the holders of those warrants
to sell shares into the market at a profit over their discounted
price, which could have the effect of depressing the price of the
shares in the market.
Convertible
Promissory Notes as of September 30, 2019 and the underlying common
shares of the Company resulting from conversion as of September 30,
2019 of the principal and accrued interest balances is as
follows:
|
|
|
|
|
Shares Reserved
with Transfer Agent
|
Convertible Debt
2017
|
$67,000
|
$8,122
|
$75,122
|
300,488
|
—
|
Convertible Debt
2018
|
547,200
|
41,567
|
588,767
|
3,928,367
|
—
|
Convertible Debt
2019
|
141,300
|
5,256
|
146,556
|
977,040
|
—
|
Auctus Fund
(2)
|
1,235,507
|
83,517
|
1,319,024
|
62,512,958
|
373,500,000
|
Geneva Roth #1
(3)
|
28,000
|
4,471
|
32,471
|
1,012,272
|
15,902,612
|
Geneva Roth #2
(3)
|
65,000
|
3,676
|
68,676
|
2,158,397
|
66,598,361
|
Geneva Roth
#3
|
58,000
|
2,631
|
60,631
|
1,891,452
|
59,426,230
|
Geneva Roth
#4
|
53,000
|
2,039
|
55,039
|
1,716,437
|
33,510,127
|
Geneva Roth
#5
|
43,000
|
537
|
43,537
|
1,389,833
|
22,862,206
|
Odyssey Capital
(4)
|
525,000
|
29,515
|
554,515
|
22,354,972
|
53,000,000
|
EMA
Financial
|
507,397
|
25,718
|
533,115
|
22,437,522
|
147,723,537
|
JSJ
Investments
|
112,000
|
4,308
|
116,308
|
4,788,277
|
18,500,000
|
SDM Promissory
Note
|
186,881
|
0
|
186,881
|
186,881
|
—
|
|
$3,569,285
|
$211,357
|
$3,780,642
|
125,654,896
|
791,023,073
|
(1)
Includes
consideration for potential equivalent shares upon default as of
September 30, 2019.
(2)
Subsequent to
September 30, 2019 Auctus converted $3,930 of accrued interest into
1,500,000 common shares.
(3)
Subsequent to
September 30, 2019, Geneva Roth converted $73,000 of principal into
9,168,318 common shares.
(4)
Subsequent to
September 30, 2019 Odyssey gave the
Company notice that if the debt was not paid off by December 13,
2019, then they intend to convert $25,000 of principal into
5,384,278 common shares.
We may in the future issue
more shares which could cause a loss of control by our present
management and current stockholders.
We may issue
further shares as consideration for the cash or assets or services
out of our authorized but unissued common stock that would, upon
issuance, represent a majority of the voting power and equity of
our Company. The result of such an issuance would be those new
stockholders and management would control our Company, and persons
unknown could replace our management at this time. Such an
occurrence would result in a greatly reduced percentage of
ownership of our Company by our current shareholders, which could
present significant risks to investors.
We have options issued and
outstanding, convertible promissory notes and preferred stock that
is convertible into common stock. A conversion of such equity and
debt instruments could have a dilutive effect to existing
shareholders.
Summary of
dilutable options, warrants and convertible debt as of September
30, 2019.
|
|
|
|
|
|
Convertible
Debt
|
125,654,896
|
$0.021-1.00(2)
|
Series A Preferred
Stock
|
141,835,420
|
(3)
|
Series B Preferred
Stock
|
2,588,693
|
$1.00
|
Stock Options and
Warrants
|
6,426,453
|
$0.006-0.22
|
|
276,495,462
|
|
(1) No
consideration given for existing anti-dilution
provisions.
(2) Price
used for illustrative purposes. Actual Exercise or
conversion price is a calculation based on the market.
(3) Holder
of Series A Preferred Stock which is Stephen J. Thomas, guaranteed
60% of outstanding common stock upon conversion.
In the event of
default under some of the notes, the conversion rates change,
allowing certain noteholders to convert at a greater discount to
the market, which results in amounts of issuable shares which
cannot be determined at this time.
Our officers and directors
may have conflicts of interests as to corporate opportunities which
we may not be able or allowed to participate
in.
Presently there is
no requirement contained in our Articles of Incorporation, Bylaws,
or minutes which requires officers and directors of our business to
disclose to us business opportunities which come to their
attention. Our officers and directors do, however, have a fiduciary
duty of loyalty to us to disclose to us any business opportunities
which come to their attention, in their capacity as an officer
and/or director or otherwise. Excluded from this duty would be
opportunities which the person learns about through his involvement
as an officer and director of another company. We have no intention
of merging with or acquiring business opportunity from any
affiliate or officer or director. (See “Conflicts of
Interest” at page 73)
We have agreed to
indemnification of officers and directors as is provided by Florida
Statutes.
Florida Statutes
provide for the indemnification of our directors, officers,
employees, and agents, under certain circumstances, against
attorney’s fees and other expenses incurred by them in any
litigation to which they become a party arising from their
association with or activities our behalf. We will also bear the
expenses of such litigation for any of our directors, officers,
employees, or agents, upon such person’s promise to repay us
therefore if it is ultimately determined that any such person shall
not have been entitled to indemnification. This indemnification
policy could result in substantial expenditures by us that we will
be unable to recoup.
Our directors’
liability to us and shareholders is limited.
Florida Statutes
exclude personal liability of our directors and our stockholders
for monetary damages for breach of fiduciary duty except in certain
specified circumstances. Accordingly, we will have a much more
limited right of action against our directors that otherwise would
be the case. This provision does not affect the liability of any
director under federal or applicable state securities
laws.
Our Stock prices in the
Market may be volatile.
The value of our
Common stock following this offering may be highly volatile and
could be subject to fluctuations in price in response to various
factors, some of which are beyond our control. These factors
include:
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|
|
|
•
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quarterly
variations in our results of operations or those of our
competitors;
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•
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announcements by us
or our competitors of acquisitions, new products, significant
contracts, commercial relationships or capital
commitments;
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•
|
disruption to our
operations or those of other sources critical to our network
operations;
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|
•
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the emergence of
new competitors or new technologies;
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•
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our ability to
develop and market new and enhanced products on a timely
basis;
|
|
•
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seasonal or other
variations in our subscriber base;
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•
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commencement of, or
our involvement in, litigation;
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•
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availability of
additional spectrum;
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•
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dilutive issuances
of our stock or the stock of our subsidiaries, or the incurrence of
additional debt;
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•
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changes in our
board or management;
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•
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adoption of new or
different accounting standards;
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•
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changes in
governmental regulations or in the status of our regulatory
approvals;
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•
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changes in earnings
estimates or recommendations by securities analysts;
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•
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announcements
regarding WiMAX and other technical standards; and
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•
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general economic
conditions and slow or negative growth of related
markets.
|
In addition, the
stock market in general, and the market for shares of technology
companies in particular, has experienced price and volume
fluctuations that have often been unrelated or disproportionate to
the operating performance of those companies. We expect the value
of our common stock will be subject to such
fluctuations.
We may not be able to
successfully implement our business strategy without substantial
additional capital. Any such failure may adversely affect the
business and results of operations.
Unless we can
generate revenues sufficient to implement our Business Plan, we
will need to obtain additional financing through debt or bank
financing, or through the sale of shareholder interests to execute
our Business Plan. We expect to need at least $25,000,000 in the
next twelve months in capital or loans to complete our plans and
operations. We may not be able to obtain this financing at all. We
have not sought commitments for this financing, and we have no
terms for either debt or equity financing, and we realize that it
may be difficult to obtain on favorable terms. Moreover, if we
issue additional equity securities to support our operations,
Investor holdings may be diluted. Our business plans are at risk if
we cannot continually achieve additional capital raising to
complete our plans.
We are reliant, in part,
on third party sales organizations, which may not perform as we
expect.
We, from time to
time rely on the sales force of third-party sales organizations
with support from our own selling resources. The third-party
relationships and internal organization are not fully developed at
this time and must be developed. We may not be able to hire
effective inside sales people to help our third-party sales
organizations close sales. There is no assurance that any
approaches will improve sales. Further, using only a direct sales
force would be less cost-effective than our plan to use third-party
sales organizations. In addition, a direct sales model may be
ineffective if we were unable to hire and retain qualified
salespeople and if the sales force fails to complete sales.
Moreover, even if we successfully implement our business strategy,
we may not have positive operating results. We may decide to alter
or discontinue aspects of our business strategy and may adopt
different strategies due to business or competitive
factors.
Our growth may be affected
adversely if our sales of products and services are negatively
affected by competition or other factors.
The growth of our
business is dependent, in large part, upon the development of sales
for our services and product offerings. Market opportunities that
we expect to exist may not develop as expected, or at all. For
example, a substantial percentage of our service offerings is
oriented around data access. If lower cost alternatives are
developed, our sales would decrease and our operating results would
be negatively affected. Moreover, even if market opportunities
develop as expected, new technologies and services offerings
introduced by competitors may significantly limit our ability to
capitalize on any such market opportunity. Our failure to
capitalize on expected market opportunities would adversely affect
revenue growth.
The lack of
operating history and the rapidly changing nature of the market in
which we compete make it difficult to accurately forecast revenues
and operating results. We anticipate that revenues and operating
results might fluctuate in the future due to a number of factors
including the following:
|
•
|
the timing of sales
for current services and products offerings
|
|
•
|
the timing of new
product implementations
|
|
•
|
unexpected delays
in introducing new services and products offerings
|
|
•
|
increased expense
related to sales and marketing, product development or
administration
|
|
•
|
the mix of products
and our services offerings
|
|
•
|
costs related to
possible acquisitions of technology or business.
|
|
•
|
costs of providing
services
|
We may be unable to
compete with larger, more established
competitors.
The market for
providing network delivered service solutions is competitive. We
expect competition to intensify in the future. Many of our
potential competitors have longer operating histories, larger
customer bases, greater recognition and significantly greater
resources. As a result, competitors may be able to respond more
quickly to emerging technologies and changes in customer
requirements than we can. The continuous and timely introduction of
competitively priced services offerings into the market is critical
to our success, and there can be no assurance that we will be able
to introduce such services offerings. We may not be able to compete
successfully against competitors, and the competitive pressures we
face may have an adverse effect on our business.
Our stock will in all
likelihood be thinly traded and as a result you may be unable to
sell at or near ask prices or at all if you need to liquidate your
shares.
The shares of our
common stock may be thinly-traded on the OTC Market, meaning that
the number of persons interested in purchasing our common shares at
or near ask prices at any given time may be relatively small or
non-existent. This situation is attributable to a number of
factors, including the fact that we are a small company which is
relatively unknown to stock analysts, stock brokers, institutional
investors and others in the investment community that generate or
influence sales volume, and that even if we came to the attention
of such persons, they tend to be risk-averse and would be reluctant
to follow an unproven, early stage company such as ours or purchase
or recommend the purchase of any of our Securities until such time
as we became more seasoned and viable. As a consequence, there may
be periods of several days or more when trading activity in our
Securities is minimal or non-existent, as compared to a seasoned
issuer which has a large and steady volume of trading activity that
will generally support continuous sales without an adverse effect
on Securities price. We cannot give you any assurance that a
broader or more active public trading market for our common
Securities will develop or be sustained, or that any trading levels
will be sustained. Due to these conditions, we can give investors
no assurance that they will be able to sell their shares at or near
ask prices or at all if they need money or otherwise desire to
liquidate their securities of our Company.
The regulation of penny
stocks by SEC and FINRA actually discourage the tradability of our
securities.
We are a
“penny stock” company. None of our securities currently
trade in any market and, if ever available for trading, will be
subject to a Securities and Exchange Commission rule that imposes
special sales practice requirements upon broker-dealers who sell
such securities to persons other than established customers or
accredited investors. For purposes of the rule, the phrase
“accredited investors” means, in general terms,
institutions with assets in excess of $5,000,000, or individuals
having a net worth in excess of $1,000,000 or having an annual
income that exceeds $200,000 (or that, when combined with a
spouse’s income, exceeds $300,000). For transactions covered
by the rule, the broker-dealer must make a special suitability
determination for the purchaser and receive the purchaser’s
written agreement to the transaction prior to the sale.
Effectively, this discourages broker-dealers from executing trades
in penny stocks. Consequently, the rule will affect the ability of
purchasers in this offering to sell their securities in any market
that might develop therefore because it imposes additional
regulatory burdens on penny stock transactions.
In addition, the
Securities and Exchange Commission has adopted a number of rules to
regulate “penny stocks". Such rules include Rules 3a51-1,
15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under
the Securities and Exchange Act of 1934, as amended. Because our
securities constitute “penny stocks” within the meaning
of the rules, the rules would apply to us and to our securities.
The rules will further affect the ability of owners of shares to
sell our securities in any market that might develop for them
because it imposes additional regulatory burdens on penny stock
transactions.
Shareholders should
be aware that, according to Securities and Exchange Commission, the
market for penny stocks has suffered in recent years from patterns
of fraud and abuse. Such patterns include (i) control of the market
for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices
through prearranged matching of purchases and sales and false and
misleading press releases; (iii) “boiler room”
practices involving high-pressure sales tactics and unrealistic
price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling
broker-dealers; and (v) the wholesale dumping of the same
securities by promoters and broker-dealers after prices have been
manipulated to a desired consequent investor losses. Our management
is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to
dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the
confines of practical limitations to prevent the described patterns
from being established with respect to our securities.
Inventory in penny
stocks have limited remedies in the event of violations of penny
stock rules. While the courts are always available to seek remedies
for fraud against us, most, if not all, brokerages require their
customers to sign mandatory arbitration agreements in conjunctions
with opening trading accounts. Such arbitration may be through an
independent arbiter. Investors may file a complaint with FINRA
against the broker allegedly at fault, and FINRA may be the
arbiter, under FINRA rules. Arbitration rules generally limit
discovery and provide more expedient adjudication, but also provide
limited remedies in damages usually only the actual economic loss
in the account. Investors should understand that if a fraud case is
filed against a company in the courts it may be vigorously defended
and may take years and great legal expenses and costs to pursue,
which may not be economically feasible for small
investors.
That absent
arbitration agreements related to brokerage accounts, specific
legal remedies available to investors of penny stocks include the
following:
If a penny stock is
sold to the investor in violation of the requirements listed above,
or other federal or states securities laws, the investor may be
able to cancel the purchase and receive a refund of the
investment.
If a penny stock is
sold to the investor in a fraudulent manner, the investor may be
able to sue the persons and firms that committed the fraud for
damages.
The fact that we
are a penny stock company will cause many brokers to refuse to
handle transactions in the stocks, and may discourage trading
activity and volume, or result in wide disparities between bid and
ask prices. These may cause investors significant illiquidity of
the stock at a price at which they may wish to sell or in the
opportunity to complete a sale. Investors will have no effective
legal remedies for these illiquidity issues.
We will pay no dividends
in the foreseeable future.
We have not paid
dividends on our common stock and do not anticipate paying such
dividends in the foreseeable future.
Rule 144 sales of common
stock in the future may have a depressive effect on our stock
price.
All of the
outstanding shares of common stock held by our present officers,
directors, and affiliate stockholders are “restricted
securities” within the meaning of Rule 144 under the
Securities Act of 1933, as amended. As restricted Shares, these
shares may be resold only pursuant to an effective registration
statement or under the requirements of Rule 144 or other applicable
exemptions from registration under the Act and as required under
applicable state securities laws. Rule 144 provides in essence that
a person who has held restricted securities for six months, under
certain conditions, sell every three months, in brokerage
transactions, a number of shares that does not exceed the greater
of 1.0% of a company’s outstanding common stock or the
average weekly trading volume during the four calendar weeks prior
to the sale. There is no limit on the amount of restricted
securities that may be sold by a non-affiliate after the owner has
held the restricted securities for a period of six months. A sale
under Rule 144 or under any other exemption from the Act, if
available, or pursuant to subsequent registration of shares of
common stock of present stockholders, may have a depressive effect
upon the price of the common stock in the market as it
develops.
Any sales of our common
stock, if in significant amounts, are likely to depress the future
market price of our securities.
Assuming all of the
shares of common stock held by the selling security holders
registered hereby are sold, we would have 37,361,010 new
shares that are freely tradable and therefor available for sale, in
market or private transactions.
Unrestricted sales
of 37,361,010 shares of stock by our selling stockholders could
have a huge negative impact on our share price, and the market for
our shares.
Any new potential
investors will suffer a disproportionate risk and there will be
immediate dilution of existing investor’s
investments.
Our present
shareholders have acquired their securities at a cost significantly
less than that which the investors purchasing pursuant to shares
will pay for their stock holdings or at which future purchasers in
the market may pay. Therefore, any new potential investors will
bear most of the risk of loss.
We can issue shares of
preferred stock without shareholder approval, which could adversely
affect the rights of common shareholders.
Our Articles of
Incorporation permit our Board of Directors to establish the
rights, privileges, preferences and restrictions, including voting
rights, of future series of stock and to issue such stock without
approval from our shareholders. The rights of holders of common
stock may suffer as a result of the rights granted to holders of
preferred stock that may be issued in the future. In addition, we
could issue preferred stock to prevent a change in control of our
Company, depriving common shareholders of an opportunity to sell
their stock at a price in excess of the prevailing market
price.
We are a reporting company
due to the effectiveness of this registration
statement.
We are subject to
the reporting requirements under the Securities and Exchange Act of
1934, Section 13a, due to the effectiveness of this offering,
pursuant to Section 15d of the Securities Act and we intend to be
registered under Section 12(g). As a result, shareholders will have
access to the information required to be reported by publicly held
companies under the Exchange Act and the regulations thereunder. As
a result, we will be subject to legal and accounting expenses that
private companies are not subject to and this could affect our
ability to generate operating income.
RISKS
RELATING TO OUR INTELLECTUAL PROPERTY AND POTENTIAL
LITIGATION
We may not be able to
protect our intellectual property and proprietary
rights.
There can be no
assurances that we will be able to obtain intellectual property
protection that will effectively prevent any competitors from
developing or marketing the same or a competing technology. In
addition, we cannot predict whether we will be subject to
intellectual property litigation the outcome of which is subject to
uncertainty and which can be very costly to pursue or defend. We
will attempt to continue to protect our proprietary designs and to
avoid infringing on the intellectual property of third parties.
However, there can be no assurance that we will be able to protect
our intellectual property or avoid suits by third parties claiming
intellectual property infringement.
If our patents and other
intellectual property rights do not adequately protect our service
offering, we may lose market share to competitors and be unable to
operate our business profitably.
Patents and other
proprietary rights are anticipated to be of value to our future
business, and our ability to compete effectively with other
companies depends on the proprietary nature of our current or
future technologies. We also rely upon trade secrets, know-how,
continuing technological innovations and licensing opportunities to
develop, maintain, and strengthen our competitive position. We
cannot assure you that any future patent applications will result
in issued patents, that any patents issued or licensed to us will
not be challenged, invalidated or circumvented or that the rights
granted there under will provide a competitive advantage to us or
prevent competitors from entering markets which we currently serve.
Any required license may not be available to us on acceptable
terms, if at all or may become invalid if the licensee’s
right to such technology become challenged and/or revoked. In
addition, some licenses may be non-exclusive, and therefore
competitors may have access to the same technologies as we do.
Furthermore, we may have to take legal action in the future to
protect our trade secrets or know-how, or to defend them against
claimed infringement of the rights of others. Any legal action of
that type could be costly and time-consuming to us, and we cannot
assure you that such actions will be successful. The invalidation
of key patents or proprietary rights which we own or unsuccessful
outcomes in lawsuits to protect our intellectual property may have
a material adverse effect on our business, financial condition and
results of operations.
We may in the future
become subject to claims that some, or the entire service offering
violates the patent or intellectual property rights of others,
which could be costly and disruptive to us.
We operate in an
industry that is susceptible to patent litigation. As a result, we
or the parties we license technology from may become subject to
patent infringement claims or litigation. Further, one or more of
our future patents or applications may become subject to
interference proceedings declared by the U.S. Patent and Trademark
Office, (“USPTO”) or the foreign equivalents thereof to
determine the priority of claims to inventions. The defense of
intellectual property suits, USPTO interference proceedings or the
foreign equivalents thereof, as well as related legal and
administrative proceedings, are both costly and time consuming and
may divert management's attention from other business concerns. An
adverse determination in litigation or interference proceedings to
which we may become a party could, among other things:
•
subject us to
significant liabilities to third parties, including treble
damages;
•
require disputed
rights to be licensed from a third party for royalties that may be
substantial;
•
require us to cease
using such technology; or
•
prohibit us from
selling certain of our service offerings.
Any of these
outcomes could have a material adverse effect on our business,
financial condition and results of operations.
We will not receive
any proceeds from the sale of the shares being registered on behalf
of our selling shareholders.
We may raise
additional funds through a placement of shares of our common stock.
At this time, there is no committed source for such funds and we
cannot give any assurances of being able to raise such funds. We
will require additional funds to carry out our business plan. The
availability and terms of any future financing will depend on
market and other conditions.
The monies we have
raised thus far from private placements to our current Shareholders
and debt financing is anticipated to be sufficient to pay all
expenses of this registration statement, which is estimated to be
$175,000, including the initial filing of the Form S-1 registration
statement.
ITEM
5. DETERMINATION OF OFFERING PRICE
We have a limited
established market for our common stock as quoted on the OTCQB
under the symbol “TPTW.”
Our selling
shareholders plan to sell shares at such market prices as the
market may dictate from time to time or in private
transactions.
Title
|
Per Share
*
|
Common
Stock
|
$0.014
|
* 5 day average
closing price preceding filing of this Registration Statement
Amendment
As of September 30,
2019, there were 139,027,625 shares of common stock issued and
outstanding.
The market share
price likely bears no relationship to any criteria of goodwill
value, asset value, market price or any other measure of
value.
The following table
sets forth with respect to existing shares being offered and under
this registration, the number of our shares of common stock offered
by shareholders, the percentage ownership of such shares, the total
consideration paid, the percentage of total consideration paid and
the average price per share. All percentages are computed based
upon cumulative shares and consideration assuming sale of all
shares in the line item as compared to maximum in each previous
line.
|
Shares Purchased
and being offered for resale
|
|
|
|
|
|
Existing
Shareholders whose shares are being registered
|
37,361,010
|
25.72%
|
$0.014(3)
|
|
|
|
|
|
(1)
|
Percentage relates
to total percentage of shares to be registered for existing
shareholders.
|
|
(2)
|
Percentage relates
to total percentage of capital raised post offering.
|
|
(3)
|
Based upon 5-day
average closing price.
|
“Net
tangible book value” is the amount that results from
subtracting the total liabilities and intangible assets from the
total assets of an entity. Dilution occurs because we determined
the offering price based on factors other than those used in
computing book value of our stock. Dilution exists because the book
value of shares held by existing stockholders is lower than the
offering price offered to new investors.
As at September 30,
2019 and December 31, 2018, the net tangible book value of our
stock was ($0.13) and ($0.09) per share, respectively.
ITEM 7. SELLING SECURITY HOLDERS
The selling
shareholders obtained their shares of our stock in the following
transactions:
Number
of Shares
|
Original
Consideration
|
Issue
Price Per Share
|
4,000,000
|
Founders
Services
|
$0.001
|
7,273,927
|
Asset
Acquisition
|
$0.10 to
$0.81
|
2,983,380
|
Conversion of
Payables and Convertible Promissory Notes
|
$0.20 to
$0.50
|
8,303,496
|
Private
Placement
|
$0.10 to
$0.50
|
8,126,649
|
Services
|
$0.10 to
$0.77
|
1,967,192
|
Prior Ally
Pharma
|
$0.001
|
4,706,366
|
Gifts to
Family
|
$0.001
|
Other than the
stock transactions discussed above, we have not entered into any
transaction nor are there any proposed transactions in which any
founder, director, executive officer, significant shareholder of
our company or any member of the immediate family of any of the
foregoing had or is to have a direct or indirect material
interest.
No person who may,
in the future, be considered a promoter of this offering, will
receive or expect to receive assets, services or other
considerations from us except those persons who are our salaried
employees or directors. No assets will be, nor expected to be,
acquired from any promoter on behalf of us. We have not entered
into any agreements that require disclosure to the
shareholders.
|
(a)
|
All of the
securities listed below are being registered in this Registration
Statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
|
|
ANDY
NEAL
|
180
|
180
|
0.00%
|
—
|
0.00%
|
ARTHUR
BRANDING
|
1,000
|
1,000
|
0.00%
|
—
|
0.00%
|
BERNIE
KARNS
|
112,500
|
112,500
|
0.08%
|
—
|
0.00%
|
BERTRAM E.
CUTLER
|
19
|
19
|
0.00%
|
—
|
0.00%
|
BREANNE
ROJESKI
|
200
|
200
|
0.00%
|
—
|
0.00%
|
CARLOS ADAMICK
MENDOZA
|
100,000
|
100,000
|
0.07%
|
—
|
0.00%
|
CASH
CUTLER
|
4
|
4
|
0.00%
|
—
|
0.00%
|
CHRISTOPHER
WILLIAMS
|
5,200
|
5,200
|
0.00%
|
—
|
0.00%
|
DALE
FINCK
|
1,000
|
1,000
|
0.00%
|
—
|
0.00%
|
DANIEL
WROBLESKI
|
800
|
800
|
0.00%
|
—
|
0.00%
|
FREDERICK EBERHARDT
(5)
|
1,015,000
|
1,015,000
|
0.70%
|
—
|
0.00%
|
GUADALUPE
SILVA
|
9,350
|
9,350
|
0.01%
|
—
|
0.00%
|
HAYDEN F.
BELLAMY
|
10,000
|
10,000
|
0.01%
|
—
|
0.00%
|
J WINSTON MICHAEL
TRAVIS OLSON
|
1,000
|
1,000
|
0.00%
|
—
|
0.00%
|
JAMES D. AND KAREN
G. SCHINDLER JTWROS
|
1,000
|
1,000
|
0.00%
|
—
|
0.00%
|
JEFF
OLSEN
|
1,094,166
|
714,166
|
0.75%
|
380,000
|
0.26%
|
JOHN
BENDLE
|
2,000
|
2,000
|
0.00%
|
—
|
0.00%
|
KATHI
OLSON
|
10,000
|
10,000
|
0.01%
|
—
|
0.00%
|
KRISTEN REDETTE
OLSON
|
1,000
|
1,000
|
0.00%
|
—
|
0.00%
|
LOUIS
ELLIOTT
|
1,000
|
1,000
|
0.00%
|
—
|
0.00%
|
MARISOL
SCHLEMMER
|
21,000
|
21,000
|
0.01%
|
—
|
0.00%
|
MICHAEL
EMMERS
|
135,000
|
135,000
|
0.09%
|
—
|
0.00%
|
ROBERT A
PUTT
|
2,000
|
2,000
|
0.00%
|
—
|
0.00%
|
ROBERT
ANDREWS
|
1,000
|
1,000
|
0.00%
|
—
|
0.00%
|
SHERRY
ORSBORN
|
7,500
|
7,500
|
0.01%
|
—
|
0.00%
|
SUSAN
ELLSWORTH
|
400
|
400
|
0.00%
|
—
|
0.00%
|
SUSAN ROLL
REVOCABLE TRUST
|
500,000
|
500,000
|
0.34%
|
—
|
0.00%
|
THOMAS B.
SEITER
|
1,000
|
1,000
|
0.00%
|
—
|
0.00%
|
TONI
GIGLIOTTI
|
200
|
200
|
0.00%
|
—
|
0.00%
|
BRIAN
POWERS
|
783,333
|
583,333
|
0.54%
|
200,000
|
0.14%
|
KN SOLOMON
MBAGWU
|
3,750,000
|
2,000,000
|
2.58%
|
1,750,000
|
1.20%
|
EDDIE
BAKER
|
4
|
4
|
0.00%
|
—
|
0.00%
|
JUAN C.
FERNANDEZ
|
12,500
|
12,500
|
0.01%
|
—
|
0.00%
|
KHALID S.
DAOUD
|
5,000
|
5,000
|
0.00%
|
—
|
0.00%
|
KOKI
NAGASHIMA
|
18,544
|
18,544
|
0.01%
|
—
|
0.00%
|
LUI CHI HO
RONALD
|
174
|
174
|
0.00%
|
—
|
0.00%
|
MANUEL
FERNANDEZ
|
550
|
550
|
0.00%
|
—
|
0.00%
|
SHINICHRO
GOTO
|
6
|
6
|
0.00%
|
—
|
0.00%
|
MATTHEW
MCCRIMMON
|
715,000
|
715,000
|
0.49%
|
—
|
0.00%
|
PRAISE DIRECT
HOLDINGS LIMITED
|
1,000
|
1,000
|
0.00%
|
—
|
0.00%
|
SHEN
TIAOJUAN
|
200
|
200
|
0.00%
|
—
|
0.00%
|
ARLENA
FARINAS
|
300
|
300
|
0.00%
|
—
|
0.00%
|
CHIUWAI
SITU
|
400
|
400
|
0.00%
|
—
|
0.00%
|
DAVID
PINTO
|
200
|
200
|
0.00%
|
—
|
0.00%
|
SCOTT
THOMAS
|
4
|
4
|
0.00%
|
—
|
0.00%
|
MARK
ROWAN
|
6,500,000
|
2,000,000
|
4.48%
|
4,500,000
|
3.10%
|
TODD
WIGINGTON
|
16,492
|
16,492
|
0.01%
|
—
|
0.00%
|
RICHARD EBERHARDT
(2)(4)
|
19,000,000
|
2,000,000
|
13.08%
|
17,000,000
|
11.71%
|
GARY COOK
(2)(4)
|
6,500,000
|
2,000,000
|
4.48%
|
4,500,000
|
3.10%
|
STACIE STRICKER
(2)(4)
|
500,000
|
500,000
|
0.34%
|
—
|
0.00%
|
STEPHEN J THOMAS
III (2)(4)
|
26,686,407
|
4,000,000
|
18.37%
|
22,686,407
|
15.62%
|
SCOTT
GOODWIN
|
50,000
|
50,000
|
0.03%
|
—
|
0.00%
|
LINDA
KELLY
|
1,000,000
|
1,000,000
|
0.69%
|
—
|
0.00%
|
QUYNTWAN
HENRY
|
100,000
|
100,000
|
0.07%
|
—
|
0.00%
|
DUANE
JACKSON
|
500,000
|
500,000
|
0.34%
|
—
|
0.00%
|
ENOCH
BRANDE
|
500,000
|
500,000
|
0.34%
|
—
|
0.00%
|
CANE INDUSTRIES
LLC
|
50,000
|
50,000
|
0.03%
|
—
|
0.00%
|
PENNY PROS
LLC
|
50,000
|
50,000
|
0.03%
|
—
|
0.00%
|
TERESA COSTELLO
SCORATOW
|
450,000
|
450,000
|
0.31%
|
—
|
0.00%
|
JOYCE
EARLY
|
5,000
|
5,000
|
0.00%
|
—
|
0.00%
|
NATALIE
WASHCO
|
5,000
|
5,000
|
0.00%
|
—
|
0.00%
|
MARIO
PIANA
|
2,000,000
|
750,000
|
1.38%
|
1,250,000
|
0.86%
|
CARLOS ANDRES
CASTRO
|
5,000
|
5,000
|
0.00%
|
—
|
0.00%
|
CONRAD
CALDERON
|
10,000
|
10,000
|
0.01%
|
—
|
0.00%
|
DELIA
DEOQUINO
|
10,000
|
10,000
|
0.01%
|
—
|
0.00%
|
LIZETTE
CALDERON
|
150,000
|
150,000
|
0.10%
|
—
|
0.00%
|
SHARON
DARRAH
|
20,000
|
20,000
|
0.01%
|
—
|
0.00%
|
ANDY
DOUGHTY
|
60,000
|
60,000
|
0.04%
|
—
|
0.00%
|
BRUNO
BARBARAI
|
50,000
|
50,000
|
0.03%
|
—
|
0.00%
|
CARLETON GREGORY
SOLLOWAY
|
250,000
|
250,000
|
0.17%
|
—
|
0.00%
|
CAROL JOANNE
BOOTH
|
100,000
|
100,000
|
0.07%
|
—
|
0.00%
|
CECIL
JONES
|
32,000
|
32,000
|
0.02%
|
—
|
0.00%
|
CELESTE JANET
FITZPATRICK
|
21,000
|
21,000
|
0.01%
|
—
|
0.00%
|
CRAIG
FULLER
|
2,150,000
|
150,000
|
1.48%
|
2,000,000
|
1.38%
|
CRAIG
HILL
|
100,000
|
100,000
|
0.07%
|
—
|
0.00%
|
DAVID
WARD
|
75,000
|
75,000
|
0.05%
|
—
|
0.00%
|
DEBORAH
MILLER
|
2,000
|
2,000
|
0.00%
|
—
|
0.00%
|
DENNI
GRIFFITH
|
5,000
|
5,000
|
0.00%
|
—
|
0.00%
|
EMILIANO
BONANNO
|
1,255,000
|
455,000
|
0.86%
|
800,000
|
0.55%
|
FEIVEL INVESTMENT
LLC
|
30,000
|
30,000
|
0.02%
|
—
|
0.00%
|
GARY
STEWART
|
20,000
|
20,000
|
0.01%
|
—
|
0.00%
|
GRANT
HENRY
|
10,000
|
10,000
|
0.01%
|
—
|
0.00%
|
HOLLY
MEAD
|
55,000
|
55,000
|
0.04%
|
—
|
0.00%
|
JEBB
DYKSRA
|
75,000
|
75,000
|
0.05%
|
—
|
0.00%
|
JOE
OBEZO
|
5,000
|
5,000
|
0.00%
|
—
|
0.00%
|
KONSTANTIN
SHAPOVALOV
|
10,000
|
10,000
|
0.01%
|
—
|
0.00%
|
KRISSY BARLOW
TAYLOR
|
50,000
|
50,000
|
0.03%
|
—
|
0.00%
|
LAURIE L
POWER
|
10,000
|
10,000
|
0.01%
|
—
|
0.00%
|
MARIO SCADE
GARCIA
|
25,000
|
25,000
|
0.02%
|
—
|
0.00%
|
MARLA
ELLERMAN
|
50,000
|
50,000
|
0.03%
|
—
|
0.00%
|
NORMAN
BRANDER
|
5
|
5
|
0.00%
|
—
|
0.00%
|
PATRICK
TAYLOR
|
10,000
|
10,000
|
0.01%
|
—
|
0.00%
|
REGGIE THOMAS
(2)(6)
|
165,000
|
165,000
|
0.11%
|
—
|
0.00%
|
CHARLES GREGORY
THOMAS (6)
|
8
|
8
|
0.00%
|
—
|
0.00%
|
CHARLES R THOMAS
(6)
|
6
|
6
|
0.00%
|
—
|
0.00%
|
WIE FAMILY
TRUST
|
5
|
5
|
0.00%
|
—
|
0.00%
|
RIGO
FLORES
|
10,000
|
10,000
|
0.01%
|
—
|
0.00%
|
ROBERT
GOOLD
|
100,000
|
100,000
|
0.07%
|
—
|
0.00%
|
RUDOLF EDUARD
BOHLI
|
500,000
|
500,000
|
0.34%
|
—
|
0.00%
|
SANFORD
LEAVENWORTH
|
8,000
|
8,000
|
0.01%
|
—
|
0.00%
|
SHIGETOMI
KOMATSU
|
9
|
9
|
0.00%
|
—
|
0.00%
|
SHANNON
JOHNSON
|
350,000
|
350,000
|
0.24%
|
—
|
0.00%
|
STEPHANIE
KRAUSE
|
88,000
|
88,000
|
0.06%
|
—
|
0.00%
|
THOMAS J.
POWERS
|
95,333
|
12,000
|
0.07%
|
83,333
|
0.06%
|
TOM
SHAEFFER
|
300,000
|
300,000
|
0.21%
|
—
|
0.00%
|
WARREN WINFIELD
GIBSON III
|
100,000
|
100,000
|
0.07%
|
—
|
0.00%
|
YU CHUNG
CHO
|
500,000
|
500,000
|
0.34%
|
—
|
0.00%
|
BRIAN MICHAEL
FIELDING
|
15,035
|
15,035
|
0.01%
|
—
|
0.00%
|
ANDY
ELLISON
|
100,000
|
100,000
|
0.07%
|
—
|
0.00%
|
SHELLY
FULTON
|
250,000
|
250,000
|
0.17%
|
—
|
0.00%
|
BRADEN
SCHUSTER
|
100,000
|
100,000
|
0.07%
|
—
|
0.00%
|
AARON D
CLARK
|
282,459
|
282,459
|
0.19%
|
—
|
0.00%
|
BENJAMIN
AMMONS
|
8,764
|
8,764
|
0.01%
|
—
|
0.00%
|
BROWN LIVING
TRUST
|
16,492
|
16,492
|
0.01%
|
—
|
0.00%
|
CAPITAL-PLUS
PARTNERS
|
333,422
|
333,422
|
0.23%
|
—
|
0.00%
|
CHRISTIAN A.
MASSETTI
|
32,500
|
32,500
|
0.02%
|
—
|
0.00%
|
CHRISTOPHER J.
GAVIGAN
|
20,330
|
20,330
|
0.01%
|
—
|
0.00%
|
CHRISTOPHER SHIPPY
G CANTON
|
65,967
|
65,967
|
0.05%
|
—
|
0.00%
|
CINDY
ARMSTRONG
|
125,000
|
125,000
|
0.09%
|
—
|
0.00%
|
CLEAR VIEW
COMMUNICATIONS
|
40,000
|
40,000
|
0.03%
|
—
|
0.00%
|
CONEXUS
TELECOM
|
125,000
|
125,000
|
0.09%
|
—
|
0.00%
|
CRITICAL SYSTEMS
& SUPPORT LTD
|
13,476
|
13,476
|
0.01%
|
—
|
0.00%
|
DAVID
CLARK
|
8,246
|
8,246
|
0.01%
|
—
|
0.00%
|
DON & BRENDA
MORRIS JT TEN
|
3,298
|
3,298
|
0.00%
|
—
|
0.00%
|
DOUGLAS R
PETERLIN
|
9,616
|
9,616
|
0.01%
|
—
|
0.00%
|
EDWARD
DAVIS
|
30,000
|
30,000
|
0.02%
|
—
|
0.00%
|
EQUITY TRUST
COMPANY, CUSTODIAN FBO KARL M CRISS IRA
|
4,383
|
4,383
|
0.00%
|
—
|
0.00%
|
FORESIGHT GROUP
LLC
|
150,000
|
150,000
|
0.10%
|
—
|
0.00%
|
FRED T DAVIS,
JR.
|
20,000
|
20,000
|
0.01%
|
—
|
0.00%
|
GARY AND JAMIE
GORDON JT
|
7,499
|
7,499
|
0.01%
|
—
|
0.00%
|
GAYLE
SETZER
|
50,025
|
50,025
|
0.03%
|
—
|
0.00%
|
GRANT
EVANS
|
3,298
|
3,298
|
0.00%
|
—
|
0.00%
|
GREG
DREW
|
3,298
|
3,298
|
0.00%
|
—
|
0.00%
|
GREGG
MASSETTI
|
10,231
|
10,231
|
0.01%
|
—
|
0.00%
|
HAL
CLARK
|
21,116
|
21,116
|
0.01%
|
—
|
0.00%
|
IRA
HUGHES
|
16,492
|
16,492
|
0.01%
|
—
|
0.00%
|
JASON
DUNCAN
|
16,492
|
16,492
|
0.01%
|
—
|
0.00%
|
JIM
RICHARDS
|
14,500
|
14,500
|
0.01%
|
—
|
0.00%
|
JOELLE
CLARK
|
167,541
|
167,541
|
0.12%
|
—
|
0.00%
|
JOHN
DREW
|
111,649
|
111,649
|
0.08%
|
—
|
0.00%
|
JOHN P.
WARD
|
36,803
|
36,803
|
0.03%
|
—
|
0.00%
|
JOSEPH LAWRENCE
HAGER
|
20,330
|
20,330
|
0.01%
|
—
|
0.00%
|
JOSH
HITT
|
9,525
|
9,525
|
0.01%
|
—
|
0.00%
|
KIM
KELLAR
|
4,123
|
4,123
|
0.00%
|
—
|
0.00%
|
LISA & DOUG
COOPER JT
|
10,956
|
10,956
|
0.01%
|
—
|
0.00%
|
M-CUBE
CORPORATION
|
6
|
6
|
0.00%
|
—
|
0.00%
|
MARK
CLARK
|
3,298
|
3,298
|
0.00%
|
—
|
0.00%
|
MARK
MONTANO
|
251,649
|
251,649
|
0.17%
|
—
|
0.00%
|
MARK
PALUSO
|
100,000
|
100,000
|
0.07%
|
—
|
0.00%
|
MICHAEL FLEMING
(3)
|
181,953
|
181,953
|
0.13%
|
—
|
0.00%
|
MICHAEL P
MURPHY
|
1,541,949
|
1,541,949
|
1.06%
|
—
|
0.00%
|
NICK
MULHOLLAND
|
75,000
|
75,000
|
0.05%
|
—
|
0.00%
|
NICOLE & ERIC
CARTER JT TEN
|
3,298
|
3,298
|
0.00%
|
—
|
0.00%
|
PAUL E.
KNAG
|
15,035
|
15,035
|
0.01%
|
—
|
0.00%
|
PLANET ONE
COMMUNICATIONS INC.
|
150,000
|
150,000
|
0.10%
|
—
|
0.00%
|
ROBERT
RICCI
|
11,108
|
11,108
|
0.01%
|
—
|
0.00%
|
ROBERT
SCHUSTER
|
100,000
|
100,000
|
0.07%
|
—
|
0.00%
|
ROBERT SETZER
(3)
|
126,120
|
126,120
|
0.09%
|
—
|
0.00%
|
RON A.
LEVENE
|
82,767
|
82,767
|
0.06%
|
—
|
0.00%
|
TERRY
BRODKIN
|
110,000
|
110,000
|
0.08%
|
—
|
0.00%
|
THE MANGIA FAMILY
TRUST U/A DTD 01/12/16
|
3,298
|
3,298
|
0.00%
|
—
|
0.00%
|
TRAVIS
CLARK
|
4,123
|
4,123
|
0.00%
|
—
|
0.00%
|
STEVE
CAUDLE
|
4,000,000
|
2,000,000
|
2.75%
|
2,000,000
|
1.38%
|
MATT
WEIDNER
|
50,000
|
50,000
|
0.03%
|
—
|
0.00%
|
HAYDEN
BRIMHALL
|
50,000
|
50,000
|
0.03%
|
—
|
0.00%
|
MATT
YOUNAN
|
50,000
|
50,000
|
0.03%
|
—
|
0.00%
|
NATE
CURRAN
|
25,000
|
25,000
|
0.02%
|
—
|
0.00%
|
BRETT
BRIMHALL
|
30,000
|
30,000
|
0.02%
|
—
|
0.00%
|
SARGON
BENJAMIN
|
150,000
|
150,000
|
0.10%
|
—
|
0.00%
|
NICOLAS
CAROVILLANO
|
10,000
|
10,000
|
0.01%
|
—
|
0.00%
|
KENT
HARDING
|
550,000
|
550,000
|
0.38%
|
—
|
0.00%
|
JOHN
HACKETT
|
20,000
|
20,000
|
0.01%
|
—
|
0.00%
|
JONATHAN
HAGGER
|
50,000
|
50,000
|
0.03%
|
—
|
0.00%
|
PAUL
SPATZ
|
20,000
|
20,000
|
0.01%
|
—
|
0.00%
|
CRAIG
MATTSON
|
100,000
|
100,000
|
0.07%
|
—
|
0.00%
|
MAXWELL
POST
|
15,000
|
15,000
|
0.01%
|
—
|
0.00%
|
MERIT
PERRY
|
80,000
|
80,000
|
0.06%
|
—
|
0.00%
|
BRANDON
ALICE
|
250,000
|
250,000
|
0.17%
|
—
|
0.00%
|
LEWIS
FREED
|
125,000
|
125,000
|
0.09%
|
—
|
0.00%
|
EUGENE DE LA
CRUZ
|
1,500,000
|
1,500,000
|
1.03%
|
—
|
0.00%
|
DARRYLL
FOSTER
|
250,000
|
250,000
|
0.17%
|
—
|
0.00%
|
DANIEL
CLARK
|
250,000
|
250,000
|
0.17%
|
—
|
0.00%
|
RICHARD
SILVERMAN
|
50,000
|
50,000
|
0.03%
|
—
|
0.00%
|
FINANCIAL BUZZ
MEDIA NETWORKS LLC
|
2,500,000
|
1,250,000
|
1.72%
|
1,250,000
|
0.86%
|
GUIYUN
CHEN
|
10,000
|
10,000
|
0.01%
|
—
|
0.00%
|
ZEWEI
CHEN
|
20,000
|
20,000
|
0.01%
|
—
|
0.00%
|
DONGJUN
JIA
|
20,000
|
20,000
|
0.01%
|
—
|
0.00%
|
SHUNDA
JIA
|
10,000
|
10,000
|
0.01%
|
—
|
0.00%
|
CHRIS
COPELAND
|
12,675
|
12,675
|
0.01%
|
—
|
0.00%
|
DAVID I NEWMAN
REVOCABLE LIVING TRUST
|
1,000,000
|
1,000,000
|
0.69%
|
—
|
0.00%
|
INVESTMENT REAL
ESTATE
|
2,500
|
2,500
|
0.00%
|
—
|
0.00%
|
KERRY J.
NEAL
|
5,000
|
5,000
|
0.00%
|
—
|
0.00%
|
MITSUNOBU
AMAZAKI
|
6
|
6
|
0.00%
|
—
|
0.00%
|
PATRICK
GUIANT
|
55,200
|
55,200
|
0.04%
|
—
|
0.00%
|
ROBERT JAMES
SHUBERT
|
2,500
|
2,500
|
0.00%
|
—
|
0.00%
|
RON
MONARK
|
125,400
|
125,400
|
0.09%
|
—
|
0.00%
|
EDWARD WILLIS
LEVERT Jr.
|
250,000
|
250,000
|
0.17%
|
—
|
0.00%
|
XROADS
LLC
|
10,000
|
10,000
|
0.01%
|
—
|
0.00%
|
|
95,760,750
|
37,361,010
|
|
58,399,740
|
|
|
(1)
|
Based upon
145,236,483 shares of common stock issued and outstanding at
November 25, 2019. Certain shareholders not included in total above
due to small amounts.
|
|
(2)
|
Officer and/or
director of our Company.
|
|
(3)
|
The individuals
have voting control for the entities noted in the list below
(b).
|
|
(4)
|
We are registering
a total of 8,500,000 shares in which our officers/directors are
considered to have beneficial ownership.
|
|
(5)
|
Are the family
members of Richard Eberhardt, officer and a Director of our
Company, but not dependents and he disclaims any ownership or
control of such shares.
|
|
(6)
|
Are the family
members of Stephen J. Thomas, III, officer and a Director of our
Company, but not dependents and he disclaims any ownership or
control of such shares.
|
Other than the
material relationships, discussed above, the listed selling
security holders have not had a material relationship with the
registrant.
(b) The table below
shows the person with voting control for the entities listed in (a)
above.
NAME
OF THE ENTITY
|
PERSON
WITH VOTING CONTROL
|
NUMBER
OF COMMON SHARES BEING REGISTERED
|
AFFILIATE
OF COMPANY?
|
|
|
|
|
Cane Industries,
LLC
|
Chris
Cane
|
50,000
|
No
|
Capital-Plus
Partners
|
Robert
Setzer
|
333,422
|
No
|
Clear View
Communications
|
William
Maloney
|
40,000
|
No
|
Conexus
Telecom
|
Jonathan
Fink
|
125,000
|
No
|
Critical Systems
& Support Ltd.
|
Michael
Fleming
|
13,476
|
No
|
Feivel Investment,
LLC
|
Ethan
Luu
|
30,000
|
No
|
Foresight Group,
LLC
|
Robert
Fabrizio
|
150,000
|
No
|
Investment Real
Estate
|
Unknown
|
2,500
|
No
|
M-Cube
Corporation
|
Unknown
|
6
|
No
|
Penny Pros,
LLC
|
Sean
Ryan
|
50,000
|
No
|
Planet One
Communications, Inc.
|
Ted
Schuman
|
150,000
|
No
|
Praise Direct
Holdings Limited
|
Unknown
|
1,000
|
No
|
FINANCIAL BUZZ
MEDIA NETWORKS LLC
|
Jiang
Yu
|
1,250,000
|
No
|
XROADS,
LLC
|
Unknown
|
10,000
|
No
|
|
|
|
|
ITEM 8. PLAN OF DISTRIBUTION
Upon effectiveness
of this amendment to the registration statement, of which this
prospectus is a part, our existing selling shareholders may sell
their securities at market prices or at any price in privately
negotiated transactions.
Our selling
shareholders may be deemed underwriters in this
offering.
The selling
shareholders are not paying any of the offering expenses and we
will not receive any of the proceeds from the sale of the shares by
the selling shareholders.
ITEM 9. DESCRIPTION OF SECURITIES
The securities
being registered and/or offered by this Prospectus are common
shares.
Common
Stock
We are presently
authorized to issue one billion (1,000,000,000) shares of our
$0.001 par value common stock. A total of One Hundred Thirty-Nine
Million, Twenty-Seven Thousand, Six Hundred Twenty-Five
(139,027,625) common shares are issued and outstanding as of
September 30, 2019.
Common Shares
All common shares
are equal to each other with respect to voting, liquidation, and
dividend rights. Special shareholders' meetings may be called by
the officers or director, or upon the request of holders of at
least one-tenth (1/10th) of the outstanding shares. Holders of
shares are entitled to one vote at any shareholders' meeting for
each share they own as of the record date fixed by the board of
directors. There is no quorum requirement for shareholders'
meetings. Therefore, a vote of the majority of the shares
represented at a meeting will govern even if this is substantially
less than a majority of the shares outstanding. Holders of shares
are entitled to receive such dividends as may be declared by the
board of directors out of funds legally available therefore, and
upon liquidation are entitled to participate pro rata in a
distribution of assets available for such a distribution to
shareholders. There are no conversion, pre-emptive or other
subscription rights or privileges with respect to any shares.
Reference is made to our Articles of Incorporation and our By-Laws
as well as to the applicable statutes of the State of Florida for a
more complete description of the rights and liabilities of holders
of shares. It should be noted that the board of directors without
notice to the shareholders may amend the By-Laws. Our shares do not
have cumulative voting rights, which means that the holders of more
than fifty percent (50%) of the shares voting for election of
directors may elect all the directors if they choose to do so. In
such event, the holders of the remaining shares aggregating less
than fifty percent (50%) of the shares voting for election of
directors may not be able to elect any director.
Preferred shares
As of September 30,
2019, we had authorized one hundred million (100,000,000) shares of
Preferred Stock, of which certain shares had been designated as
Series A Preferred Stock and Series B Preferred Stock.
Series
A Convertible Preferred Stock
In February 2015,
we designated 1,000,000 shares of Preferred Stock as Series A
Preferred Stock.
The Series A
Preferred Stock was designated in February 2015, has a par value of
$.001, is senior to any other class or series of outstanding
Preferred Stock or Common Stock and does not bear dividends. The
Series A Preferred Stock has a liquidation preference immediately
after any Senior Securities, as defined and amended, of an amount
equal to amounts payable owing, including contingency amounts where
Holders of the Series A have personally guaranteed obligations of
the Company. Holders of the Series A Preferred Stock shall,
collectively have the right to convert all of their Series A
Preferred Stock when conversion is elected into that number of
shares of Common Stock of our Company, determined by the following
formula: 60% of the issued and outstanding Common Shares as
computed immediately after the transaction for conversion. For
further clarification, the 60% of the issued and outstanding common
shares includes what the holders of the Series A Preferred Stock
may already hold in common shares at the time of conversion. The
Series A Preferred Stock, collectively, shall have the right to
vote as if converted prior to the vote to an amount of shares equal
to 60% of the outstanding Common Stock of our Company.
In February 2015,
the Board of Directors authorized the issuance of 1,000,000 shares
of Series A Preferred Stock to Stephen J. Thomas, III, Chairman,
CEO and President of our Company, valued at $3,117,000 for
compensation expense.
Series
B Convertible Preferred Stock
In February 2015,
we designated 3,000,000 shares of Preferred Stock as Series B
Preferred Stock.
The Series B
Preferred Stock was designated in February 2015, has a par value of
$.001, is senior to any other class or series of outstanding
Preferred Stock, except the Series A Preferred Stock, or Common
Stock and does not bear dividends. The Series B Preferred Stock has
a liquidation preference immediately after any Senior Securities,
as defined and currently the Series A Preferred Stock, and of an
amount equal to $2.00 per share. Holders of the Series B Preferred
Stock have a right to convert all or any part of the Series B
Preferred Shares and will receive an equal amount of common shares
at the conversion price of $2.00 per share. The Series B Preferred
Stockholders have a right to vote on any matter with holders of
Common Stock and shall have a number of votes equal to that number
of Common Shares on a one to one basis. There are 2,588,693 Series
B Preferred Stock shares issued and outstanding
currently.
Series
C Convertible Preferred Stock
In May 2018, the
Company designated 3,000,000 shares of Preferred Stock as Series C
Convertible Preferred Stock.
The Series C
Preferred Stock was designated in May 2018, has a par value of
$.001, is senior to any other class or series of outstanding
Preferred Stock, except the Series A and Series B Preferred Stock,
or Common Stock and does not bear dividends. The Series C Preferred
Stock has a liquidation preference immediately after any Senior
Securities, as defined and currently the Series A and B Preferred
Stock, and of an amount equal to $2.00 per share. Holders of the
Series C Preferred Stock have a right to convert all or any part of
the Series C Preferred Shares and will receive an equal amount of
common shares at the conversion price of $0.15 per share. The
Series C Preferred Stockholders have a right to vote on any matter
with holders of Common Stock and shall have a number of votes equal
to that number of Common Shares on a one to one basis. There are no
shares of Series C Convertible Preferred Stock outstanding
currently.
Options &
Warrants
Effective October
14, 2017, we adopted the 2017 TPT Global Tech, Inc. Stock Option
and Award Incentive Plan (the "Plan"). The Plan provides for grants
of nonqualified stock options and other stock awards, including
warrants, to designated employees, officers, directors, advisors
and independent contractors. A maximum of 20,000,000 shares of our
common stock were reserved for options and other stock awards under
the Plan. We have the ability to issue either options or warrants
under the Plan.
As of September 30,
2019, we had options outstanding to purchase 3,093,120 shares of
common stock of the Company as follows:
Grant
Purpose
|
Grant
Date
|
Number
|
Exercise
Price
|
Expiration
Date
|
Vesting
|
Part of debt
issuance terms
|
Various
|
93,120
|
$0.046 to
$0.22
|
12-31-2019
|
100%
|
Consulting
|
3-21-2018
|
1,000,000
|
$0.10
|
3-20-2021
|
100%
|
Legal
services
|
3-1-2018
|
2,000,000
|
$0.10
|
2-28-2020
|
Monthly over 18
mos.
|
As part of the
Convertible Promissory Notes issuance, the Company issued 3,333,333
warrants to purchase 3,333,333 common shares of the Company at 70%
of the current market price. Current market price means
the average of the three lowest trading prices for our common stock
during the ten-trading day period ending on the latest complete
trading day prior to the date of the respective exercise
notice. However, if a required registration statement,
registering the underlying shares of the Convertible Promissory
Notes, is declared effective on or before June 11, 2019 to
September 11, 2019, then, while such Registration Statement is
effective, the current market price shall mean the lowest volume
weighted average price for our common stock during the ten-trading
day period ending on the last complete trading day prior to the
conversion date. This registration statement has not yet been filed
for registration.
Transfer Agent
The transfer agent
for our securities is Clear Trust, with offices at 16540 Pointe
Village Dr., Suite 210, Lutz, Florida 33558, Phone (813)
235-4490.
ITEM 10. INTEREST OF NAMED EXPERTS AND
COUNSEL
We have not hired
or retained any experts or counsel on a contingent basis, who would
receive a direct or indirect interest in us, or who is, or was, our
promoter, underwriter, voting trustee, director, officer or
employee.
ITEM 11. INFORMATION WITH RESPECT TO THE
REGISTRANT
a.
DESCRIPTION OF
BUSINESS
BUSINESS
SUMMARY
This prospectus
contains various forward-looking statements that are based on our
beliefs as well as assumptions made by and information currently
available to us. When used in this prospectus, the words "believe",
"expect", "anticipate", "estimate" and similar expressions are
intended to identify forward-looking statements. These statements
may include statements regarding seeking business opportunities,
payment of operating expenses, and the like, and are subject to
certain risks, uncertainties and assumptions which could cause
actual results to differ materially from projections or estimates.
Factors which could cause actual results to differ materially are
discussed at length under the heading "Risk Factors". Should one or
more of the enumerated risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may
vary materially from those anticipated, estimated or projected.
Investors should not place undue reliance on forward-looking
statements, all of which speak only as of the date
made.
In this prospectus, unless the context requires otherwise,
references to “we,” “our,” or
“us” refer to TPT Global Tech, Inc. and our
consolidated subsidiaries.
Company
Overview
We were originally
incorporated in 1988 in the state of Florida. TPT Global, Inc., a
Nevada corporation formed in June 2014, merged with Ally Pharma US,
Inc., a Florida corporation, (“Ally Pharma”, formerly
known as Gold Royalty Corporation) in a “reverse
merger” wherein Ally Pharma issued 110,000,000 shares of
Common Stock, or 80% ownership, to the owners of TPT Global, Inc.
and Ally Pharma changed its name to TPT Global Tech, Inc. In 2014,
we acquired all the assets of K Telecom and Wireless LLC (“K
Telecom”) and Global Telecom International, LLC
(“Global Telecom”). Effective January 31, 2015, we
completed our acquisition of 100% of the outstanding stock of
Copperhead Digital Holdings, Inc. (“Copperhead
Digital”) and Subsidiaries, TruCom, LLC
(“TruCom”), Nevada Utilities, Inc. (“Nevada
Utilities”) and CityNet Arizona, LLC (“CityNet”).
In October 2015, we acquired the assets of both Port2Port, Inc.
(“Port2Port”) and Digithrive, Inc.
(“Digithrive”). Effective September 30, 2016, we
acquired 100% ownership in San Diego Media, Inc.
(“SDM”). In December 2016, we acquired the Lion Phone
technology. In October and November 2017, we entered into
agreements to acquire Blue Collar, Inc. (“Blue
Collar”), and certain assets of Matrixsites, Inc.
(“Matrixsites”) which we have completed. On May 7, 2019
we completed the acquisition of a majority of the assets of
SpeedConnect, LLC, which assets were conveyed into our wholly owned
subsidiary TPT SpeedConnect, LLC (“TPT SC” or
“TPT SpeedConnect”) which was formed on April 16,
2019.
We are based in San Diego, California,
and operate as a Media Content Hub for Domestic and International
syndication Technology/Telecommunications company operating on our
own proprietary Global Digital Media TV and Telecommunications
infrastructure platform and also provides technology solutions to
businesses domestically and worldwide. We offer Software as a
Service (SaaS), Technology Platform as a Service (PAAS),
Cloud-based Unified Communication as a Service (UCaaS) and
carrier-grade performance and support for businesses over our
private IP MPLS fiber and wireless network in the United States.
Our cloud-based UCaaS services allow businesses of any size to
enjoy all the latest voice, data, media and collaboration features
in today's global technology markets. We also operate as a Master
Distributor for Nationwide Mobile Virtual Network Operators (MVNO)
and Independent Sales Organization (ISO) as a Master Distributor
for Pre-Paid Cellphone services, Mobile phones, Cellphone
Accessories and Global Roaming Cellphones.
Our
Key Divisions:
K
Telecom and Global Telecom- GSM Distribution
K Telecom and
Global Telecom are located in the Northwest of the United States
and sell and distribute GSM Cell Phone and Prepaid GSM Services for
MVNO’s (Mobile Virtual Network Operators) through
approximately 100 brick and mortar retail store-front locations in
Washington and Oregon.
TruCom,
LLC– CLEC–Phoenix, Arizona
Our TruCom
division, a subsidiary of Copperhead Digital Holdings, LLC, is a
Facilities Based Competitive Local Exchange Carrier (CLEC)
headquartered in Phoenix, AZ. Founded in 2006 (as Copperhead
Digital Carrier) for the purpose of operating a state-of-the-art
Fiber Optic Network constructed by and acquired from Adelphia
Communications, TruCom now operates its own carrier class Fiber
Optic Network, state-of-the-art Wireless Point-to-Point network,
and Patent Pending proprietary
“Bulletproof”™
technology seamlessly integrating the two.
TruCom offers
Phone, Internet, Fiber Optic, Wireless, Hosted PBX, Wi-Fi, Wi-Max,
Engineering, Cabling, Wiring and Cloud services. With a penchant
for pushing the envelope, TruCom has pioneered innovative, hosted
firewall and managed MPLS service technologies (SuperCore
MPLS™) and was the Industry first to engineer patent-pending
failover services utilizing our own fiber optic and wireless
networks to guarantee business continuity and service uptime.
Located in multiple Local Serving Offices and Points of Presence
(POP’s) in the primary Data Centers in the market,
TruCom’s extensive Fiber Optic Network runs through the heart
of the most densely populated corridors of the Greater Phoenix
Metro Area. Their Wireless Point to Point and Point to Multipoint
Network is fed by the infinitely scalable capacity of the Fiber
Optic Network and consists of more than 16 Major Access Points.
This footprint not only provides coverage throughout the metro
area, but also spans into outlying Cities, often providing the only
carrier grade solution available in the region.
Port2Port
Assets
We acquired assets
that relate to reseller call termination both domestically and
internationally in Dallas Texas of Port2Port. These assets provide
approximately 100 Domestic and international customers and vendors
terminating wholesale calls domestically and
internationally.
San
Diego Media Division
San Diego Media,
Inc. (“SDM”) is an established Southern California
based software engineering and Internet e-commerce marketing
services company that provides enterprise-class integrated
solutions for manufacturers, retailers, and distributors focused on
developing solutions for companies seeking online growth and
profitability.
Founded in 1999,
historically the primary market offering has been MaxEXP®, a
proven stable, productivity-enabling proprietary eCommerce
platform, built on open-standards technology that empowers
companies to deploy and manage eCommerce offerings at lower cost
and at less time than required to deploy more conventional high-end
solutions — and, we believe, all without sacrificing the
essential merchandising functionality, customizability,
extensibility, scalability, security, and performance that much
more expensive solutions provide. MaxEXP supports both B2B and B2C
functionality simultaneously which few other eCommerce solutions
will provide successfully out-of-the-box.
These early
engagements have enabled SDM to solidify and refine the core SDM
technology architecture and to enhance the platform with
market-driven merchandising features and functionality. SDM has
made significant R&D investments in operational infrastructure
including sophisticated monitoring systems, comprehensive security,
time-tracking, client management tools, and continuous compliance
with the demanding payment card industry (PCI)
standards.
SDM has
complemented these systems with a full range of automated and
enterprise-class capabilities for fully integrating with
customer’s legacy systems, call centers, fulfillment houses,
and other critical business process applications.
SDM has
complimented its technologies with a wider range of professional
internet and marketing services that enables client success, to
create successful business relationships over
long-term.
As the market has
changed through the years SDM has continued to innovate and expand
its strategic and technology development partnerships; these
include, MIndTouch, BigCommerce, Avalara, CPC Strategies, eBridge,
Imperva Incapsula, Chris Chase Design. SDM’s newest client is
based in Singapore and it represents its most innovative use of
technologies to date.
Blue
Collar Production Division
Our production
division, Blue Collar Productions (formerly Blue Collar, Inc.),
creates original live action and animated content productions and
has produced hundreds of hours of material for the television,
theatrical, home entertainment and new media markets. Mr. Rowen,
our CEO of Blue Collar, works closely with major television
networks, cable channels and film studios to produce home
entertainment products.
The Documentary
film group at Blue Collar recently completed a film on the cultural
impact of Goodfellas:
20 Years Later that
featured Martin Scorsese, Robert DeNiro, Lorraine Bracco, Leonardo
DiCaprio and many others. They have also produced a series of film
anthologies for Turner Classic Movies. Blue Collar is currently in
production on Built To
Fail, which is a look at the history of street wear. The
film features Tommy Hilfiger, Russell Simmons and a host of notable
street wear designers. They are also in pre-production on
The 29 Club, a look at
notable musicians who all tragically died at age 29; Memories in Music, which is an in-depth
study of the impact of memory through music on Alzheimer’s
patients and Faces of
Vegas, an exploration into the culture of Las Vegas,
Nevada.
Blue Collar
Productions currently has the feature film Looking For Alaska, based on the John
Green novel, producing for Paramount Pictures. The company produced
for a pilot for MTV for a possible series, “My Jam”
aired in the Fall of 2016. Blue Collar has also produced two
seasons of “Caribbean’s Next Top Model
Season.”
Blue Collar
Productions designs branding and marketing campaigns and has had
contracts with some of the world’s largest companies
including PepsiCo, Intel, HP, WalMart and many other Fortune 500
companies. Additionally, they create motion picture, television and
home entertainment marketing campaigns for studios including Sony,
DreamWorks, Twentieth Century Fox, Universal Studios, Paramount
Studios, and Warner Brothers.
The CEO of this
division, Mr. Rowen, has worked with filmmakers including Steven
Spielberg, Ron Howard, Brett Ratner and James Cameron. Mr. Rowen
also has very close working relationships with actors including Tom
Hanks, Brad Pitt, Julia Roberts, Robert Downey, Jr., Denzel
Washington, Ryan Gosling, Sofia Vergara, Mariska Hargitay and many
others.
Prior to starting
Blue Collar Productions, Mr. Rowen functioned as the head of home
entertainment production for DreamWorks SKG from 1997 to 2000. He
also serves as the President of Long Leash Entertainment, an
aggregator of entertainment based intellectual property and creator
of high-end entertainment content.
TPT SpeedConnect:
ISP and Telecom
On May 7, 2019, the
Company completed the acquisition of substantially all of the
assets of SpeedConnect LLC (“SpeedConnect”) for $1.75
million, including the assumption of all contracts and liabilities
pertinent to operations. SpeedConnect was founded in
2002 by
its CEO John Arthur
Ogren and is in its 17th year of
operations as a national, predominantly rural, wireless
telecommunications residential and commercial Internet Service
Provider (ISP). SpeedConnect’s primary business model is
subscription based, monthly reoccurring revenues, from wireless
delivered, high-speed Internet connections utilizing its company
built and owned national network. SpeedConnect also
resells third-party satellite Internet, DSL Internet, IP telephony
and DISH TV products... This Acquisition closed on May 7,
2019.
SpeedConnect
was a privately-held Broadband Wireless Access (BWA) provider.
Today, SpeedConnect is one of the nation’s largest rural
wireless broadband Internet providers which serves approximately
16,000 residential and commercial wireless broadband Internet
customers, in Arizona, Idaho, Illinois, Iowa, Michigan, Montana,
Nebraska, South Dakota and Texas.
SpeedConnect is a
full-service ISP. The company’s Frankenmuth
Michigan back office is run by company employees, and includes,
network management, network monitoring and maintenance, significant
allocations of registered address in public IP4 and IP6 space,
employee based customer service, installation services, automated
resources and application based scheduling and tracking, paper,
ACH, credit card, and email billing, warehousing, fulfillment,
integrated customer premise provisioning, walled garden collections
and customer self-restarts, bandwidth usage tracking, integrated,
secure, and deep financial and operations dash board reporting,
collections, accounting, payables, owned and licensed backhaul,
intelligent bandwidth management, consumption rated billing,
customer payment portals, and all wrapped in a mature, first hit on
all search engines, Internet Brand. The company today services
residential and commercial Internet customers over its 220-cellular
tower foot-print across 10 Midwestern States.
Today’s urban
ISP landscape is highly competitive and dominated by some of the
world’s largest going concerns. Names like
Comcast, AT&T, Cox, Charter and DISH are household
words. Home Internet service has become synonymous with
Cable. However, this is limited to the high-density top
100 markets. Beyond that the competition becomes more
small licensed free wireless providers and
satellite. Wire-line providers, unless backed with
government subsidies, do not build beyond 15 homes per street
mile. SpeedConnect services both rural and
non-rural areas, and historically has done well in both market
places, however the margins are improved in the more rural areas
due to reduced voluntary and involuntary customer
attrition.
SpeedConnect’s
key suppliers include but are not limited to; Great Lakes Data
Systems, Juniper, ZTE, Huawei, Cisco, Sandvine, American Tower, SBA
Tower, Crown Castle, CenturyLink, SuddenLink, South Dakota
Networks, 123 dot net, Genesee Telephone, Air Advantage Fiber, Iron
Mountain, ConVergence, CDW, Talley, Tessco, Bursma Electronics,
DragonWave, Ceragon Networks, Telrad, Arris, AP, APD, Plante
Morran, Fifth Third, Sprint and others.
Technology
Company Overview
Our Company was formed as the successor
of two US Corporations, Ally Pharma US, a Pharmaceutical technology
research company founded in 1988 and TPT Global Inc. a Media
Content, Voice and Data, Interconnect and International gateway
provider. TPT Global Tech is headquartered in San Diego, California
and operates as a holding company for its Media, Smartphone,
Network, Content and SaaS (Software as a Services) domestic and
international businesses.
Historically and
through key acquisitions we launched Telecommunications wholesale
and retail operations in the United States and Internationally.
These first acquisitions with their Customer Bases, Distribution
Channels and Technology are the base for our organic growth
strategy and provide opportunities to cross sell our platforms and
New Media Technology products and services Domestically and
Internationally.
We operate as a Media Content Hub for
Domestic and International syndication,
Technology/Telecommunications company using on our own proprietary
Global Digital Media TV and Telecommunications infrastructure
platform and we also provides technology solutions to businesses
worldwide. We offer Software as a Service (SaaS), Technology
Platform as a Service (PAAS), Cloud-based Unified Communication as
a Service (UCaaS) and carrier-grade performance and support for
businesses over our private IP MPLS fiber and wireless network in
the United States. Our cloud-based UCaaS services allow businesses
of any size to enjoy all the latest voice, data, media and
collaboration features in today's global technology markets. We
also operate as a Master Distributor for Nationwide Mobile Virtual
Network Operators (MVNO) and Independent Sales Organization (ISO)
as a Master Distributor for Pre-Paid Cellphone services, Mobile
phones, Cellphone Accessories and Global Roaming
Cellphones.
Our technologies
“Gathers Big Data” to predict our customers’
viewing and spending habits. We then deliver Products and Services
to support that estimated demand and share advertising revenues
with our Content, Digital Media and Linear Broadcast Partners
worldwide.
Each of our four
divisions contributes to the launch of our global Content delivery
platform “Viewme Live” and creates cross pollinating
revenue opportunities and a closed Global E-commerce Eco
environment which we believe will help us execute our short and
long term corporate objectives. Our Content Division which consists
of Blue Collar Productions (our TV and Film content Production
company) creates original content and in some cases third party
content. Once Content has been produced we will then broadcast and
delivered that content over our proprietary Mobile TV Platform on
our proprietary Trucom Telecommunication Network infrastructure
domestically and internationally.
Our corporate goal
is to work within our four in house divisions (Smartphone, Network,
Content and SaaS) to launch hardware sales and build a viewer
subscriber base domestically and internationally. This edge device
deployment would deliver free Content, free Linear Broadcast feeds
and Social Media features on our Free proprietary Mobile app
platform with the anticipation to aggregate and showcase our
original and third-party Content, Digital Media and Linear
broadcast feeds from and too the four corners of the
Globe.
All of the back
technology or features for Viewme Live have been developed and we
anticipate spending additional $500,000 USD to complete the
front-end features which believe will take approximately 120 days
from our funding event.
We have generated
revenues in 2017 and 2018, and to date in 2019, primarily through
operating as a Facilities Based Telecommunications Competitive
Local Exchange Carrier (“CLEC”) in Arizona and now also
as a Broadband Internet provider. The company currently operates an
approximate 58 miles Fiber optic ring throughout the greater
Phoenix valley offering such services as Basic Residential Phone
service, Basic Business phone service, POT’s lines, Basic
Fiber Broadband Internet services, Wireless Internet Services, Toll
Free 800 services, EFax, Erate, Dedicated T-1 Services, Auto
Attendant, SIP Trunks, Mobile and Voip services. These services
will continue for the forseeable future weighted heavily towards
offering more Wireless Internet services and the Fiber Ring will be
transformed into a Private Test facility to be offered for rent to
businesses needing a private network to test new products for proof
of concept purposes. Since the acquisition of the
assets of SpeedConnect in 2019, we operate as a Broadband
Wireless Access (BWA) provider
and are considered one
of the nation’s largest rural wireless broadband Internet providers serving approximately
16,000 residential and commercial wireless broadband Internet customers, in Arizona, Idaho,
Illinois, Iowa, Michigan, Montana, Nebraska, South Dakota
and Texas.
We, and our related
acquired companies are seeking to be an innovative
Media-Telecom/CUBS (Cloud Unified Businesses Services) company and
one of the first to combine recurring Telecom, Media and
Data/Cloud Services revenue under one roof, then bring all
relevant data from those services into a proprietary telecom
infrastructure and information matrix platform capable of
delivering a “Daily and Intelligent Dashboard” to our
Domestic and International customers. Such a planned cohesive
combination of services and information from a single provider has
been heretofore nonexistent. We intend to pioneer an integrate
communication services and information technology suites to empower
individuals and companies with vital communications, Smartphone,
Network, Content, SaaS (Software as A Service), New Media
Technology products and services, and valuable relevant diagnostic
information both Domestically and
Internationally.
We are currently
able to deliver a live Global TV Broadcast and Social Media
Platform utilizing a Mobile App technology on our proprietary
Content Delivery Network. We plan to expand our Cloud Unified
Business Services (CUBS) technology-based business services
unifying multiple services from the cloud.
CUBS (Cloud Unified Business Services) -
We are a CUBS provider, acquiring customers and then cross selling
additional products and services through our proprietary Wrap
Around Relationship Marketing (WARM) system, intending to make the
customers very sticky.
Planned Activities
Big Data & Predictive Analytics -
Our capability to utilize our proprietary aggregation platform to
gather data from our hardware and software edge device (End Users)
deployments positions the Company to be a leader in predictive
analytics.
Cross-Sales – Our growth strategy
through complimentary acquisitions may create opportunities to
cross and sell its New Generation, New Media technology products
and services to a growing customer base across multiple
distribution channels, both domestically and
internationally.
Market Launch - Thru our acquisition of
View-me Live from Matrix, we have acquired the live backend
broadcast Network technology for our Global Mobile TV and Social
Media platform. Subject to raising capital $500,000 from our fund
raising activities we believe we are approximately 120 days from
completing the frontend development component to launch its
“View-me Live” Mobile APP delivery platform at an
estimated cost of $650,000.
Liquidity
and Capital Resource Needs
Initial Uses of Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$—
|
|
|
|
|
|
|
$—
|
Equipment
|
$15,500,000
|
|
$—
|
|
|
|
|
$15,500,000
|
Hardware
Manufacturing
|
|
|
|
|
$350,000
|
|
|
$350,000
|
Viewme Live
Completion
|
|
|
$650,000
|
|
|
|
|
$650,000
|
Initial Capx
|
$15,500,000
|
$—
|
$650,000
|
$—
|
$350,000
|
|
$—
|
$16,500,000
|
Down Payment
Cash for Acquisitions
|
|
|
|
500,000
|
|
|
|
$500,000
|
Seller Notes/Debt
Retirement
|
|
$1,000,000
|
$2,000,000
|
|
350,000
|
7,850,000
|
—
|
$11,200,000
|
Marketing Budget
|
|
|
|
|
|
|
1,500,000
|
$1,500,000
|
General Working
Capital
|
|
|
|
|
|
|
$12,125,000
|
$12,125,000
|
Issuance Costs
|
|
|
|
|
|
|
$3,175,000
|
$3,175,000
|
Total Project Cost
|
$15,500,000
|
$1,000,000
|
$2,650,000
|
$500,000
|
$700,000
|
$7,850,000
|
$16,800,000
|
$45,000,000
|
Quarter by Quarter Analysis
|
|
|
|
|
|
|
|
|
|
Capital
:
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
4th
|
|
|
|
500,000
|
3,000,000
|
|
|
3,175,000
|
6,675,000
|
2020
|
|
|
|
|
|
|
|
|
—
|
1st
|
2,200,000
|
300,000
|
1,000,000
|
5,000,000
|
2,000,000
|
350,000
|
350,000
|
|
11,200,000
|
2nd
|
|
350,000
|
|
5,000,000
|
|
|
|
|
5,350,000
|
3rd
|
|
|
|
5,000,000
|
|
|
|
|
5,000,000
|
Working
Capital:
|
|
|
|
|
|
|
|
|
—
|
2019
|
|
|
|
|
|
|
|
|
—
|
4th
|
|
|
|
|
|
|
|
1,025,000
|
1,025,000
|
2020
|
|
|
|
|
|
|
|
|
—
|
1st
|
|
|
|
|
|
|
|
2,000,000
|
2,000,000
|
2nd
|
|
|
|
|
|
|
|
2,500,000
|
2,500,000
|
3rd
|
|
|
|
|
|
|
|
11,250,000
|
11,250,000
|
|
2,200,000
|
650,000
|
1,000,000
|
15,500,000
|
5,000,000
|
350,000
|
350,000
|
19,950,000
|
45,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SaaS
|
—
|
300,000
|
350,000
|
|
650,000
|
|
|
|
|
|
|
WC
|
—
|
2,200,000
|
|
—
|
2,200,000
|
2,850,000
|
|
|
|
|
2,850,000
|
Content
|
|
1,000,000
|
|
|
1,000,000
|
|
|
|
|
|
-
|
WC
|
|
|
|
|
—
|
|
1,000,000
|
|
|
|
1,000,000
|
Network
|
3,000,000
|
7,000,000
|
5,000,000
|
5,000,000
|
20,000,000
|
|
|
|
|
|
-
|
WC
|
500,000
|
|
|
|
500,000
|
|
|
20,500,000
|
|
|
20,500,000
|
Phone
|
|
350,000
|
|
|
350,000
|
|
|
|
|
|
-
|
WC
|
—
|
350,000
|
|
|
350,000
|
|
|
|
700,000
|
|
700,000
|
Debt
Pmts
|
|
|
|
|
—
|
|
|
|
|
—
|
-
|
Marketing
|
500,000
|
500,000
|
500,000
|
|
1,500,000
|
|
|
|
|
1,500,000
|
1,500,000
|
Issue
Costs
|
3,175,000
|
|
|
|
3,175,000
|
|
|
|
|
3,175,000
|
3,175,000
|
General
|
525,000
|
1,500,000
|
2,000,000
|
11,250,000
|
15,275,000
|
|
|
|
|
15,275,000
|
15,275,000
|
|
7,700,000
|
13,200,000
|
7,850,000
|
16,250,000
|
45,000,000
|
2,850,000
|
1,000,000
|
20,500,000
|
700,000
|
19,950,000
|
45,000,000
|
Projected Capital Phases
|
|
Form
S-1
|
—
|
Private
Placement
|
$40,000,000
|
Debt
Financing
|
5,000,000
|
|
$45,000,000
|
RECENT
ACQUISITIONS OF OPERATING DIVISIONS/SUBSIDIARIES
On May 7, 2019, the
Company completed the acquisition of substantially all of the
assets of SpeedConnect LLC (“SpeedConnect”) for $1.75
million, including the assumption of all contracts and liabilities
pertinent to operations. SpeedConnect was founded in
2002 by its CEO John Arthur Ogren and is in its 17th year of
operations as a national, predominantly rural, wireless
telecommunications residential and commercial Internet Service
Provider (ISP). SpeedConnect’s primary business model is
subscription based, monthly reoccurring revenues, from wireless
delivered, high-speed Internet connections utilizing its company
built and owned national network. SpeedConnect also
resells third-party satellite Internet, DSL Internet, IP telephony
and DISH TV products. This Acquisition closed on May 7,
2019.
SpeedConnect
was a privately-held Broadband Wireless Access (BWA) provider.
Today, SpeedConnect is one of the nation’s largest rural
wireless broadband Internet providers which serves approximately
16,000 residential and commercial wireless broadband Internet
customers, in Arizona, Idaho, Illinois, Iowa, Michigan, Montana,
Nebraska, South Dakota and Texas.
SpeedConnect is a
full-service ISP. The company’s Frankenmuth
Michigan back office is run by company employees, and includes,
network management, network monitoring and maintenance, significant
allocations of registered address in public IP4 and IP6 space,
employee based customer service, installation services, automated
resources and application based scheduling and tracking, paper,
ACH, credit card, and email billing, warehousing, fulfillment,
integrated customer premise provisioning, walled garden collections
and customer self-restarts, bandwidth usage tracking, integrated,
secure, and deep financial and operations dash board reporting,
collections, accounting, payables, owned and licensed backhaul,
intelligent bandwidth management, consumption rated billing,
customer payment portals, and all wrapped in a mature, first hit on
all search engines, Internet Brand. The company today services
residential and commercial Internet customers over its 220-cellular
tower foot-print across 10 Midwestern States.
Today’s urban
ISP landscape is highly competitive and dominated by some of the
world’s largest going concerns. Names like
Comcast, AT&T, Cox, Charter and DISH are household
words. Home Internet service has become synonymous with
Cable. However, this is limited to the high-density top
100 markets. Beyond that the competition becomes more
small licensed free wireless providers and
satellite. Wire-line providers, unless backed with
government subsidies, do not build beyond 15 homes per street
mile. SpeedConnect services both rural and
non-rural areas, and historically has done well in both market
places, however the margins are improved in the more rural areas
due to reduced voluntary and involuntary customer
attrition.
SpeedConnect’s
key suppliers include but are not limited to; Great Lakes Data
Systems, Juniper, ZTE, Huawei, Cisco, Sandvine, American Tower, SBA
Tower, Crown Castle, CenturyLink, SuddenLink, South Dakota
Networks, 123 dot net, Genesee Telephone, Air Advantage Fiber, Iron
Mountain, ConVergence, CDW, Talley, Tessco, Bursma Electronics,
DragonWave, Ceragon Networks, Telrad, Arris, AP, APD, Plante
Morran, Fifth Third, Sprint and others.
Blue
Collar Production Division
Our production
division, Blue Collar Productions (formerly Blue Collar, Inc.),
creates original live action and animated content productions and
has produced hundreds of hours of material for the television,
theatrical, home entertainment and new media markets. Mr. Rowen,
our CEO of Blue Collar, works closely with major television
networks, cable channels and film studios to produce home
entertainment products.
The Documentary
film group at Blue Collar recently completed a film on the cultural
impact of Goodfellas:
20 Years Later that
featured Martin Scorsese, Robert DeNiro, Lorraine Bracco, Leonardo
DiCaprio and many others. They have also produced a series of film
anthologies for Turner Classic Movies. Blue Collar is currently in
production on Built To
Fail, which is a look at the history of street wear. The
film features Tommy Hilfiger, Russell Simmons and a host of notable
street wear designers. They are also in pre-production on
The 29 Club, a look at
notable musicians who all tragically died at age 29; Memories in Music, which is an in-depth
study of the impact of memory through music on Alzheimer’s
patients and Faces of
Vegas, an exploration into the culture of Las Vegas,
Nevada.
Blue Collar
Productions currently has the feature film Looking For Alaska, based on the John
Green novel, producing for Paramount Pictures. The company produced
for a pilot for MTV for a possible series, “My Jam”
aired in the Fall of 2016. Blue Collar has also produced two
seasons of “Caribbean’s Next Top Model
Season.”
Blue Collar
Productions designs branding and marketing campaigns and has had
contracts with some of the world’s largest companies
including PepsiCo, Intel, HP, WalMart and many other Fortune 500
companies. Additionally, they create motion picture, television and
home entertainment marketing campaigns for studios including Sony,
DreamWorks, Twentieth Century Fox, Universal Studios, Paramount
Studios, and Warner Brothers.
The CEO of this
division, Mr. Rowen, has worked with filmmakers including Steven
Spielberg, Ron Howard, Brett Ratner and James Cameron. Mr. Rowen
also has very close working relationships with actors including Tom
Hanks, Brad Pitt, Julia Roberts, Robert Downey, Jr., Denzel
Washington, Ryan Gosling, Sofia Vergara, Mariska Hargitay and many
others.
Prior to starting
Blue Collar Productions, Mr. Rowen functioned as the head of home
entertainment production for DreamWorks SKG from 1997 to 2000. He
also serves as the President of Long Leash Entertainment, an
aggregator of entertainment based intellectual property and creator
of high-end entertainment content.
Our
Business Methods
Centralized
Platform and New Generation Network
We are now
operating a next-generation broadband network reselling other
companies’ networks on a wholesale arbitrage basis (buying
and reselling other companies’ capacity) on our centralized
VIVO Platform. We are interconnected to U.S. and International
carriers to date. Once funded, we intend to deploy our own
in-country networks in the targeted emerging markets. This will
enable us to be able to provide better quality termination and
increase our operating margins. We believe our platform will
produce substantial operational cost savings. Because of our
pricing advantage, we are able to offer our clients products and
services at an attractive pricing structure, creating a strong
competitive advantage. Based on our low network operating costs and
low-cost infrastructure, we believe we may penetrate emerging
markets with little network build-out and at a reasonable price.
Management believes that our service offerings will be well
received in emerging markets based on existing relationships and
pricing structure, which will enable us to set the industry
standard with little competition.
Once we establish
in-country networks, we will be able to market Phones, Networks,
Content and SaaS products targeted to specific subgroups that
coincide with the country/region where we have a network in place
or a strategic partnership network in place.
Use
of Incumbent Networks
Under formal
agreements we can privately brand and resell incumbent
carriers’ underlying broadband networks, while deploying our
own Wimax/Wi-Fi/GSM service plans and mobile handsets.
As a true value
add, our VIVO billing platform allows us to manage the billing and
routing, offering our customers a seamless, branded network from
anywhere we maintain a relationship. By way of incumbent operator
networks, we can sell and market to retail and wholesale customers
without the high infrastructure costs associated with deploying our
own network. If and when the revenues justify the cost of
constructing our own network, we plan to investigate adding a
wireless Broadband/ GSM network, and transfer our customer base in
a final step to reduce costs of goods sold long-term.
Wholesale
Termination
Wholesale
termination is the reselling of excess network capacity on a
reciprocal basis to other telecom carriers both domestically and
internationally. Due to the large number of carrier relationships
we have in the US and abroad, we believe we can immediately
increase our wholesale termination in each country in which we have
a license to operate. This wholesale activity generates additional
cash flow immediately if successfully implemented. Wholesale
termination is a low risk, low margin business.
Service
Description
Our next-generation
wireless Broadband/GSM network relies on non-line-of-sight
technology. This will provide a level of performance comparable to
that delivered by evolving Worldwide Interoperability of Microwave
Access (WiMAX) standards. The cost advantage equates to substantial
reductions of fixed costs as compared to building traditional,
legacy, and switched networks.
Our products and
marketing strategy unifies the various features available in
today’s telecommunication environment including:
|
•
|
Significant
international broadband capacity
|
|
•
|
High quality VoIP
communication
|
|
•
|
Cellular/GSM and
Wi-Fi wireless convergence
|
|
•
|
IPTV, Content
Applications and Financial Services Products
|
|
•
|
Remote network
management
|
|
•
|
Sophisticated
Prepaid, Wholesale and Retail billing
|
|
•
|
CRM management; and
Intranet Build-out, back office management and
reporting.
|
Our
Business Segments
Our business
segment consists generally of providing strategic, legacy and data
integration products and services to small, medium and enterprise
business, wholesale and governmental customers, including other
communication providers. Our strategic products and services
offered to these customers include our collocation, hosting,
broadband, VoIP, information technology and other ancillary
services. Our services offered to these customers primarily include
local and long-distance voice, inducing the sale of unbundled
network elements (“UNEs”), switched access and other
ancillary services. Our product offerings include the sale of
telecommunications equipment located on customers’ premises
and related products and professional services, all of which are
described further below.
Our products and
services include local and long-distance voice, broadband,
Ethernet, collocation, hosting (including cloud hosting and managed
hosting), data integration, video, network, public access, VoIP,
information technology and other ancillary services.
We offer our
customers the ability to bundle together several products and
services. For example, we offer integrated and unlimited local and
long-distance voice services. Our customers can also bundle two or
more services such as broadband, video (including through our
strategic partnerships), voice services. We believe our customers
value the convenience and price discounts associated with receiving
multiple services through a single company.
Most of our
products and services are provided using our telecommunications
network, which consists of voice and data switches, copper cables,
fiber-optic cables and other equipment.
Described in
greater detail below are our key products and
services.
K
Telecom and Global Telecom- GSM Distribution
K Telecom and
Global Telecom are located in the Northwest of the United States
and sell and distribute GSM Cell Phone and Prepaid GSM Services for
MVNO’s (Mobile Virtual Network Operators) through
approximately 100 brick and mortar retail store-front locations in
Washington and Oregon.
TruCom,
LLC– CLEC–Phoenix, Arizona
Our TruCom
division, a subsidiary of Copperhead Digital Holdings, LLC, is a
Facilities Based Competitive Local Exchange Carrier (CLEC)
headquartered in Phoenix, AZ. Founded in 2006 (as Copperhead
Digital Carrier) for the purpose of operating a state-of-the-art
Fiber Optic Network constructed by and acquired from Adelphia
Communications, TruCom now operates its own carrier class Fiber
Optic Network, state-of-the-art Wireless Point-to-Point network,
and Patent Pending proprietary
“Bulletproof”™
technology seamlessly integrating the two.
TruCom offers
Phone, Internet, Fiber Optic, Wireless, Hosted PBX, Wi-Fi, Wi-Max,
Engineering, Cabling, Wiring and Cloud services. TruCom offers
hosted firewall and managed MPLS service technologies (SuperCore
MPLS™). The company currently operates an approximate 58
miles Fiber optic ring throughout the greater Phoenix valley
offering such services as Basic Residential Phone service, Basic
Business phone service, POT’s lines, Basic Fiber Broadband
Internet services, Wireless Internet Services, Toll Free 800
services, EFax, Erate, Dedicated T-1 Services, Auto Attendant, SIP
Trunks, Mobile and Voip services.
Port2Port
Assets
Assets for reseller
call termination both domestically and internationally. These
assets provide approximately 100 Domestic and international
customers and vendors terminating wholesale calls domestically and
internationally.
San
Diego Media
San Diego Media,
Inc. (“SDM”) is an established Southern California
based software engineering and Internet e-commerce marketing
services company that provides enterprise-class integrated
solutions for manufacturers, retailers, and distributors focused on
developing solutions for companies seeking online growth and
profitability. The primary market offering has been MaxEXP®, a
proven stable, productivity-enabling proprietary eCommerce
platform, built on open-standards technology that empowers
companies to deploy and manage eCommerce offerings at lower cost
and at less time than required to deploy more conventional high-end
solutions.
Media
Content
We operate as a Media Content Hub for
Domestic and International syndication,
Technology/Telecommunications company using on our own proprietary
Global Digital Media TV and Telecommunications infrastructure
platform and we also provides technology solutions to businesses
worldwide. We offer Software as a Service (SaaS), Technology
Platform as a Service (PAAS), Cloud-based Unified Communication as
a Service (UCaaS) and carrier-grade performance and support for
businesses over our private IP MPLS fiber and wireless network in
the United States. Our cloud-based UCaaS services allow businesses
of any size to enjoy all the latest voice, data, media and
collaboration features in today's global technology markets. We
also operate as a Master Distributor for Nationwide Mobile Virtual
Network Operators (MVNO) and Independent Sales Organization (ISO)
as a Master Distributor for Pre-Paid Cellphone services, Mobile
phones, Cellphone Accessories and Global Roaming
Cellphones.
Our technologies
“Gathers Big Data” to predict our customers’
viewing and spending habits. We then deliver Products and Services
to support that estimated demand and share advertising revenues
with our Content, Digital Media and Linear Broadcast Partners
worldwide.
Each of our four
divisions contributes to the launch of our global Content delivery
platform “Viewme Live” and creates cross pollinating
revenue opportunities and a closed Global E-commerce Eco
environment which we believe will help us execute our short and
long term corporate objectives. Our Content Division which consists
of Blue Collar Productions (our TV and Film content Production
company) creates original content and in some cases third party
content. Once Content has been produced we will then broadcast and
delivered that content over our proprietary Mobile TV Platform on
our proprietary Trucom Telecommunication Network infrastructure
domestically and internationally.
CUBS (Cloud Unified Business
Services)
We are a CUBS
provider (Cloud Unified Businesses Services) company and one of the
first to combine recurring Telecom, Media and Data/Cloud
Services revenue under one roof, then bring all relevant data
from those services into a proprietary telecom infrastructure and
information matrix platform capable of delivering a “Daily
and Intelligent Dashboard” to our Domestic and International
customers. Such a planned cohesive combination of services and
information from a single provider has been heretofore nonexistent.
We intend to pioneer an integrate communication services and
information technology suites to empower individuals and companies
with vital communications, Smartphone, Network, Content, SaaS
(Software as A Service), New Media Technology products and
services, and valuable relevant diagnostic information both
Domestically and Internationally.
We are currently
able to deliver a live Global TV Broadcast and Social Media
Platform utilizing a Mobile App technology on our proprietary
Content Delivery Network. We plan to expand our Cloud Unified
Business Services (CUBS) technology-based business services
unifying multiple services from the cloud.
Blue
Collar Production Division
Our production
division, Blue Collar Productions (formerly Blue Collar, Inc.),
creates original live action and animated content productions. Blue
Collar creates original live action and animated content and has
produced hundreds of hours of material for the television,
theatrical, home entertainment and new media markets.
SpeedConnect
On May 7, 2019, the
Company completed the acquisition of substantially all of the
assets of SpeedConnect LLC (“SpeedConnect”) for $1.75
million, including the assumption of all contracts and liabilities
pertinent to operations. The Acquisition closed on May 7, 2019.
SpeedConnect was founded in 2002 by its CEO John Arthur Ogren and
is in its 17th year of operations as a national, predominantly
rural, wireless telecommunications residential and commercial
Internet Service Provider (ISP). SpeedConnect’s primary
business model is subscription based, monthly reoccurring revenues,
from wireless delivered, high-speed Internet connections utilizing
its company built and owned national network. SpeedConnect also
resells third-party satellite Internet, DSL Internet, IP telephony
and DISH TV products.
SpeedConnect is a
privately-held Broadband Wireless Access (BWA) provider. Today,
SpeedConnect is one of the nation’s largest rural wireless
broadband Internet providers which serves approximately 16.000
residential and commercial wireless broadband Internet customers,
in Arizona, Idaho, Illinois, Iowa, Michigan, Montana, Nebraska,
South Dakota and Texas.
SpeedConnect is a
full-service ISP. The company’s Frankenmuth Michigan back
office is run by company employees, and includes network
management, network monitoring and maintenance, significant
allocations of registered address in public IP4 and IP6 space,
employee based customer service, installation services, automated
resources and application based scheduling and tracking, paper,
ACH, credit card, and email billing, warehousing, fulfillment,
integrated customer premise provisioning, walled garden collections
and customer self-restarts, bandwidth usage tracking, integrated,
secure, and deep financial and operations dash board reporting,
collections, accounting, payables, owned and licensed backhaul,
intelligent bandwidth management, consumption rated billing,
customer payment portals, and all wrapped in a mature, first hit on
all search engines, Internet Brand. The company today services
17,000 residential and commercial Internet customers over its
220-cellular tower foot-print across 10 Midwestern
States.
Today’s urban
ISP landscape is highly competitive and dominated by some of the
world’s largest going concerns. Names like Comcast, AT&T,
Cox, Charter and DISH are household words. Home Internet service
has become synonymous with Cable. However, this is limited to the
high-density top 100 markets. Beyond that the competition becomes
more small licensed free wireless providers and satellite.
Wire-line providers, unless backed with government subsidies, do
not build beyond 15 homes per street mile. SpeedConnect services
both rural and non-rural areas, and historically has done well in
both market places, however the margins are improved in the more
rural areas due to reduced voluntary and involuntary customer
attrition.
SpeedConnect’s
key suppliers include but are not limited to; Great Lakes Data
Systems, Juniper, ZTE, Huawei, Cisco, Sandvine, American Tower, SBA
Tower, Crown Castle, CenturyLink, SuddenLink, South Dakota
Networks, 123 dot net, Genesee Telephone, Air Advantage Fiber, Iron
Mountain, ConVergence, CDW, Talley, Tessco, Bursma Electronics,
DragonWave, Ceragon Networks, Telrad, Arris, AP, APD, Plante
Morran, Fifth Third, Sprint and others.
CORPORATE
ORGANIZATION CHART
RECENT
DEVELOPMENTS
We agreed to a JV,
Technology Licensing and Product distribution agreement with New
Orbit Technologies Mexico. New Orbit Technology is controlled by
Stephen J. Thomas Founder, CEO & Chairman TPT Global Tech. The
two companies will share net profits 50% from the distribution and
sale of TPT Global Tech products and services in Mexico. New Orbit
Technology Mexico will focus on Smartphone Technology distribution,
Digital Media Products and Renewable Energy projects in the country
of Mexico. Under the laws in Mexico, New Orbit must be majority
owned by Mexican citizens. We intend to create a collaboration
between TPT Global Tech and New Orbit Mexico whereby our products
and services are distributed to Mexico through the New Orbit
venture. We believe New Orbit Mexico can be the primary
distribution partner for TPT Global Tech products and services in
Mexico.
Dated September 17,
2019, the “Company entered into an agreement with a vendor,
which was finalized September 26, 2019, for the acquisition of
telecommunication equipment and related services (“Equipment
Purchase”). The Equipment Purchase was done on
behalf of TPT SpeedConnect and included telecommunication equipment
and services to accelerate TPT SC’s campaign to launch 5G
Technology to rural America and set the stage to deliver TV,
Internet, Media Content and Phone services across 10 Midwestern
states utilizing our proprietary telecom infrastructure and mobile
media delivery broadcast platform serving approximately 16,000 residential and commercial wireless customers.
Terms of the
Equipment Purchase include an aggregate purchase price of
$12,340,000 in two phases. Phase 1 is for $560,909 of
which $100,000 has be made as a deposit. The remainder
is to be paid within 90 days. Phase 1 includes equipment
and services expected to be installed in the next 90 to 120 days in
TPT SC’s Internet infrastructure. Phase 2 includes
$11,779,089 of equipment and services. Phase 2 is
dependent on certain factors including the Company obtaining
appropriate financing to satisfy the financial obligations within
the Equipment Purchase. The Company does not have
financing secured for the remainder of Phase 1 or Phase 2 at this
time.
CORPORATE
MARKETING STRATEGY
Our corporate
strategy in expanding our operations and potential product and
service streams is as follows.
MARKETING
OBJECTIVE:
Establish our brand
as a competitive service and product provider in the communications
industry.
ADVERTISING
OBJECTIVE:
To create top of
mind brand awareness and emotional relevance resulting: TPT Global
Tech, Inc. being the preferred and requested product line of
products in the industry.
SALES &
MERCHANDISING OBJECTIVES:
Our distributor
will use direct selling efforts. Their efforts will be supported
with our marketing, advertising, and merchandising programs. The
primary task will be to increase the sales through retail
channels.
PURSUE BRAND
RECOGNITION THROUGHOUT THE UNITED STATES
The first marketing
objective must be to refine our brand and secure our place in the
minds of the consumers. This will be accomplished through the
execution of an integrated branding, identity and services
marketing programs. The goals for this segment will be an enhanced
brand identity, a brand applications and a digital assets
suite.
MARKETING
STRATEGY
Our plan includes a
direct sales program targeting businesses, small business and home
office users of communications. The direct sales efforts will be
supported with third party marketing integration. To further
enhance the sales process, we will offer an offering program
including services and product sheets, coupons, point of sale
materials (banners, shelf talkers, and end cap displays and
danglers) and internet marketing programs.
Based on the above
benefit scenarios, we plan to seize the following
opportunities:
•
Build superior
brand recognition and become recognized as a category
leader.
•
Expand the US
distribution into all states.
•
Establish
distribution internationally.
•
Establish and
manage a knowledgeable team of account executives with industry
experience.
•
Create a retail
merchandising program that will build a strong market
share.
The purpose of our
marketing efforts is to move the product sales from their current
position into the rapid growing “popularity” stage. Our
strategy includes the following marketing programs: Branding;
Merchandising; Direct; Display Advertising; Media; Public
Relations; Publicity; Events; Investor Relations; Metrics
Dashboard; and, Personal Sales. Our objective is to gain the sales
momentum required to reach the “brand preference” stage
of product growth as soon as possible. This is the stage where we
plan sales grow at a steady and stabilized pace.
THE
DIRECT MARKETING PROGRAM
A complete direct
marketing program including direct mail, blast email and URLs may
be used to introduce the products to new customers and secure leads
for the sales team. We plan to employ the services of a database
marketing company to leverage techniques to target prospective
clients and reinforce product messages throughout the selling
process. This process will commence with the modeling of our
existing customer data and the analysis of the results using
sophisticated analytic tools. Cross-channel marketing will be
utilized in conjunction with the direct marketing including social
marketing. Our focus of this marketing medium will be relevance and
timing, which only this medium can provide full control over and
the ability to fully quantify the results.
THE
MEDIA MARKETING PROGRAM
We intend to test
several media options to determine which, if any, effectively drive
sales and sales leads. The mediums being consider include outdoor
advertising, both static and mobile, magazine ads, and radio spots.
Other media to be explored are direct mail post cards and emails to
opt in viewers.
THE
PUBLIC RELATIONS/PUBLICITY PROGRAM
We plan to employ
the services of a public relations firm to build a corporate
profile to keep the name and the services and products in front of
consumers. A third-party PR firm will be responsible for writing
and publishing press releases, coordinating event marketing and
managing investor relations.
We employ
marketing, sales and customer service personnel on an as needed
basis for specific events to build brand awareness. We use a range
of marketing strategies and tactics to build our brand and increase
sales, including point-
of-sale materials,
event sponsorship, in-store and on premise promotions, public
relations, and a variety of other traditional and non-traditional
marketing techniques to support the sales of all of our
products.
We believe that a
marketing mix of event promotions, social media, print advertising
in local media and internet advertising providing information and
samples of our products at social events is a strategy that may
help increase sales.
TARGET
CUSTOMER
We plan to profile
our existing customers and create a sophisticated data model to
mathematically and statistically identify our “ideal”
customer. Further the model will be used to learn exactly how the
target customer wishes to be communicated with and marketed
to.
THE
INTERNATIONAL MARKET
We plan to market
our product internationally. Many of the current products offered
by us have features for the international community. This will be a
secondary but strong focus by our marketing team.
EXPERIENCED
MANAGEMENT
Our senior
management team has over 30 years of experience in the various
consumer product industries and has a proven track record of
creating value both organically and through strategic acquisitions.
Our management intends to utilize the best available and
fit-for-purpose technology and experienced contractors to improve
production and expand distribution.
CORPORATE
STRATEGY
Our
Goals
Our primary goal is
to continue to grow our business by improving value to our current
customers and vendors. In providing a high-quality network we
intend to continue to grow our business. Additionally, we intend to
purchase established telecommunications and technology companies
that will immediately generate and increase traffic (revenue) to
our Company’s retail and wholesale network. Companies that we
are strategically aligned with have in their core business
synergistic retail products and services that include, but are not
limited to, Telecom Cloud Services Media, Merchant Services/Mobile
Banking, Cloud Services and Media (e.g. credit/debit card
processing, check/ACH payment processing, ecommerce/merchant
processing, web hosting, voice, data, GSM/Wi-Fi Mobile, Mobile
Money Transfers, IPTV, VOD and Live Mobile Broadcasting, Prepaid
Calling Card and PIN-less Prepaid services). If we acquire a
strategic partner as a subsidiary, we believe we will have the
ability to aggregate their analogous technology platforms onto our
proprietary Software Access System operating platform for
integration and efficiency.
We intend to work
our media to accelerate cohesively in the mobile technology
sectors: LIVE Broadcast, Video on Demand (VOD) Apps, and Digital
Video Magazine (DVM) Apps. While “white labeling” our
technologies as SaaS, our primary focus is what we believe is the
first Global Cyber LIVE Mobile TV broadcast network, Viewme Live.
The Viewme Live Network™ is a 24-hour LIVE worldwide mobile
TV network, delivered via iOS and Android apps. The Viewme Live
Network™ presents a diversity of Linear Broadcast Channels
(Domestically and International), coupled with Social Media
Platforms with combined functions that compete with some of the
largest and most powerful Digital Media platforms, to connected
audiences who live a mobile-centric life.
DEVELOPMENT FLOW
CHART
Network
Services
Domestic and Global
Telecommunications offerings include: Mobile TV, Phone, Internet,
Fiber Optic, Wireless, Hosted PBX, Wi-Fi, Wi-Max, Engineering,
Cabling, Wiring and Cloud services. Our telecommunications division
has pioneered innovative, hosted firewall and managed MPLS service
technologies (SuperCore MPLS) and was the Industry first to
engineer patent-pending Bulletproof™ failover services
utilizing our own fiber optic and wireless networks to guarantee
business continuity and service uptime.
As a retail and business media and
telecommunications provider operating a high-speed Fiber Optic
Network and Wireless Network in the USA at a cost competitive rate
for new technologies, we are growing our operations through sales
of our core voice & data connectivity products to small and
midsized business clients. We have a growth strategy through
acquisitions in order to increase regional operations and deploy
more technologies to niche & underserved markets. Unified Cloud
Services, Unified Communications (UC) or Unified
Communications/Collaboration (UCC) has been a topic of interest to
users looking to evolve from a disorderly combination of media,
voice, email and message communications to something more
structured. Our goal is to target existing and new small and medium
businesses (“SMBs”) to transition their older voice
system businesses, expand
their software collaboration offerings, and most recently build
cloud service offerings. Cloud solution gives our customers
the flexibility to support a myriad of mobile devices as part of
their hardware strategy, whether it's launching a
bring-your-own-device initiative, implementing a one-to-one program
or equipping SMBs with mobile computing carts full of tablets,
netbooks, or notebooks in a secured environment.
Scalability
and Cost Efficiency
Our proprietary
Software Access System platform currently runs our global
operations. In short, it does this by connecting our customer base
with the most profitable vendor route while calculating least cost
routing, analyzing route quality, and respecting
“dipping” protocols. Based on the demand, we have the
ability to scale to meet the needs of our customers. Comparable
“off the shelf” software systems in the marketplace can
cost in the hundreds of thousands of dollars just to purchase, not
to mention expensive service contracts, which may continue in
perpetuity after the original purchase. Our proprietary platform,
in which we have invested and have developed over several years, we
are able to operate a global network with better efficiency which
we believe differentiates us from other competitors in the
marketplace.
We
believe our competitive advantages are:
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Our products and
services are 90% ready to launch globally
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We offer 3-15
seconds latency Cellular – 1-5 on Wi-Fi
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We offer
Proprietary Optimizing / Stabilizing software
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We offer
Multi-Channel LIVE and Video on Demand worldwide
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We offer Patent
Pending real time dynamic failover solution called
Bulletproof™
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We have 57 route
miles of fiber optic network meshed with a microwave canopy in
Phoenix, Arizona
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We offer our own
proprietary voice switching and management platform running least
cost routing and real time financial analytics
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We have over 175
existing USA and International Telephone companies already
interconnected to our telecom switches. These customers and vendors
are ready made strategic technology distribution partners for our
Telecom, Media, and Cloud Services products
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We offer Patent
Pending Full HD Naked Eye 3D Smartphone
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Our
Strategy
Our business,
marketing, and sales strategy is structured around:
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Pursuing selective,
strategic, distribution relationships combined with cash positive
acquisitions to build immediate revenue streams and increase our
Company’s network footprint.
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Utilize the
expanded network to offer our Company’s service thereby
increasing marginal revenues through the low risk offering of
wholesale termination and prepaid services through existing
distribution channels, retail stores and E-Commerce both
domestically and internationally.
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Pursuing markets
within countries where there is a lower concentration of
communications services that will result in initial higher pricing
and potential for gross profit.
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Providing low cost,
pricing leading VoIP/GSM value added services through our
Company’s next-generation centralized software platform and
network.
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Partnering and
developing joint ventures with incumbent networks or government
agencies to penetrate local emerging markets in order to build and
operate Intranet Network Infrastructures that would move data over
a secured network servicing government buildings and agencies,
including police, military, hospitals and schools.
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Our
Intended Marketing Plan and Product Roll Out for 2019 and
2020
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Satellite radio
syndication simulcast with over 25 million domestic U.S.
listeners
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Connected TV
partner with over 18 million viewers worldwide.
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Airline
entertainment partnership with over 12 million international
viewers.
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Supported by an
international public relations firm.
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Comprehensive
social media marketing campaign involving popular bloggers and
podcasters
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Our sales and
marketing approach to our business and consumer customers
emphasizes customer-oriented sales, marketing and service. Our
marketing plans include marketing our products and services
primarily through direct sales representatives, inbound call
centers, local retail stores, telemarketing and third parties,
including retailers, satellite television providers, door to door
sales agents and digital marketing firms. We support our
distribution with digital marketing, direct mail, bill inserts,
newspaper and television advertising, website promotions, public
relations activities and sponsorship of community events and sports
venues.
Similarly, our
sales and marketing approach to our business customers includes a
commitment to provide comprehensive communications and IT solutions
for business, wholesale and governmental customers of all sizes,
ranging from small offices to select enterprise customers. We
strive to offer our business customers stable, reliable, secure and
trusted solutions. Our marketing plans include marketing our
products and services primarily through digital advertising, direct
sales representatives, inbound call centers, telemarketing and
third parties, including
telecommunications
agents, system integrators, value-added resellers and other
telecommunications firms. We support our distribution through
digital advertising, events, television advertising, website
promotions and public relations.
Marketing
Designs
We have designed
our services and products offered to be:
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Portable. We offer the ability to
access our network from anywhere within our coverage area without
being restricted to a specific location.
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Simple. Our services are easy to
install. After connecting our modem to an ATA or computer and a
power source, our wireless broadband service is immediately
available and requires no software installation.
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Fast. We offer speeds that typically
exceed legacy cellular networks and are competitive with fixed
broadband offerings.
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A Good Value. We generally price our
services competitively because our costs to build and operate our
network are significantly lower than the networks operated by many
of our competitors.
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With the popularity
of social media, people are demanding fast broadband connectivity
on an increasingly mobile basis. We believe that our services meet
this demand and will market this in our efforts to increase our
subscriber growth rate.
OUR
COMPANY STRENGTHS
We believe the
following competitive strengths enable us to meet the demand for
simple, reliable and portable wireless broadband
connectivity:
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First mover. We are the
first company we are aware of to launch a Global Cyber Mobile TV
and Social Media Network that incorporates functional feature of
the largest Digital Media companies in the world.
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High barriers to entry. Our
issued and pending patents, as well as our proprietary Media
platforms and Naked Eye 3D technology trade secrets give, us a
strong intellectual property position that we believe creates a
significant barrier to entry for potential competitors.
•
Broad range of applications for our
platform. This allows us to build a deep new product
pipeline that creates multiple paths to build a large and
profitable business.
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Multi-billion-dollar addressable
market. “Mobile advertising accounted for more than
half (51%) of the record-breaking $72.5 billion spent by
advertisers last year, according to the latest IAB Internet
Advertising Revenue Report, released today by the Interactive
Advertising Bureau (IAB), and prepared by PwC US. The total
represents a 22 percent increase, up from $59.6 billion in 2015.
Mobile experienced a 77 percent upswing from $20.7 billion the
previous year, hitting
$36.6 billion in
2016.”
http://www.thenewbase.com/home/media-news-events/news-detail/?no_cache=1&newsid=134110&title=mobile-captures-more-than-half-of-all-us-internet-advertising-revenue-for-the-first-time-ever#.WaSg6caZN-U
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Diverse revenue streams including
Digital Media partnerships. We anticipate generating
significant revenue from our Digital Media platforms. Our Linear
Broadcast partners will play a large part in generating revenues
from the sale of mobile and social media advertising.
•
Strong senior leadership
team. Our founders and senior leaders have experience in
building and operating several companies in our business areas. We
have phone, network, content, SaaS, product development, and
commercialization experience that has enabled us to establish
market leadership positions for the companies where we previously
were employed.
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Differentiated Services. We
believe our service is unique because of our combination of our
Worldwide Operational Platform, Worldwide Affiliates, Cutting Edge
Technology, Portability, Simplicity and Speed to Market with a
competitive domestic and International Price Structure. We believe
this combination of factors differentiates our subscriber’s
experience when compared to broadband services provided by DSL,
cable modem, wireless third-generation or 3G, networks.
•
Strong Spectrum Position. We
use unlicensed and licensed spectrum (in Arizona), which avoids
radio frequency interference that hinders competitors using
non-licensed spectrum, such as WiFi network operators. Access to
spectrum is a fundamental barrier to entry for the delivery of
high-quality wireless communications. Through our partnerships, we
believe that we have access to the second largest spectrum position
in our band within the United States.
•
Advanced, Scalable
Technology. Because we intend
to design our own software and equipment, we can refine our product
development roadmap to meet our subscriber’s needs. We
believe our NLOS, IP-based Ethernet architecture and compression
technology confers competitive advantages since it simplifies both
network deployment and customer use while supporting a broad range
of potential premium services.
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Efficient Economic Model. We
believe our individual market economic model is characterized by
low fixed capital and operating expenditures relative to other
wireless and wire line broadband service providers. We believe our
individual market model is highly scalable and replicable across
our markets. As our capabilities evolve, we expect to generate
incremental revenue streams from our subscriber base by developing
and offering premium products and services.
•
Experienced Management Team.
Stephen J. Thomas, our Founder, Chairman, and Chief Executive
Officer, has been an active entrepreneur, operator and investor in
the industry for more than 17 years in VoIP and wireless
communications industry. He previously served as Director of
Network Optimization/Validation for WorldxChange,
Inc. and CEO and President of New Orbit Communications, Inc., which
focused on International Operator Services in United States,
Mexico, El Salvador and Guatemala.
FUTURE PLANS
Lion
Smart Phone Product
We are currently
seeking a manufacturer for our Lion Smart Phone. Our Management
believes our patent pending Lion smart phone is the first
Full HD Naked Eye 3D smart
phone ever launched in the United States. Lion Universe’s
mobile 3D technology is patent pending. The smart phone will be
distributed through our wholly-owned subsidiary K-TEL, in their
existing brick and mortar distribution channel in the Northwest
expanding into other areas. It is anticipated that a national and
international roll out will soon follow. TPTW is building industry
leading personal cellular phones designed for a wide appeal. With a
business model built on innovation and progress starting with the
Lion Phone technology, we intend to produce high-quality and
easy-to-use cellular phones. Our Lion Phone was designed for
consumers looking for portable and affordable cutting-edge
technology. Our first-generation phones come equipped with full
high definition resolution screen for better viewing. We believe
this Full HD Naked Eye 3D smart Phone is perfect for watching
movies, playing games, even editing photos or videos.
Whether that is
looking at photos, playing music, emailing or surfing the web, our
management believes consumers want more from their phones. We
believe our Lion Phone raises the bar for cellular phones. For the
first time ever, cellular users can enjoy quality 3D viewing with
the naked eyes no glasses required enjoying full high definition
video with smooth playback.
Our Management
believes consumers have been waiting for a way to watch their
favorite movies in 3D, with the convenience of their phone and
gamers can have the leisure of playing their games without taking
head gear with them. Our Lion Universe Technology strives to give
customers the best possible experience with our Full HD Naked Eye
3D smart phone in the US and Global markets.
We intend to begin
marketing this phone in 2020.
Mobile
Device Viewer Market Expansion
In general, viewers
are consuming more content via mobile TV distribution, while
rapidly abandoning expensive subscriptions from standard satellite
TV and cable networks. The rise of high-quality content on low-cost
platforms, such as mobile devices, continues to negatively impact
the standard TV industry. The media business is being forced to
evolve and adjust to massive disruptions in content distribution
methods. Traditional media models are functionally broken and will
continue to be disrupted by technology, which is driven by the
needs of the younger generation. The future of media is dependent
on new technology platforms. These platform models (e.g. smart TV,
connected TV boxes, mobile TV devices) are the future of content
distribution. Google, through YouTube, has changed the face of
video content distribution. Amazon continues to disrupt the book
industry. Apple has redefined music and application distribution.
And Microsoft is continuing to change the engagement model and
distribution of content through its Xbox TV game
console.
For the first time
in history, in 3Q 2014, the average time spent (per day) on mobile
devices exceeded the time spent watching television – 177
minutes versus 168 minutes (source: Flurry Analytics). Because of
the meaningful decrease in costs associated with capturing (and
processing) video, and due to significant expansions in bandwidth
and increases in Wi-Fi, Internet/cloud TV disrupted the traditional
television industry. In 2012--2013, cord--cutting, or the process
of canceling a cable TV or satellite subscription and watching
television over the Internet, began to accelerate. Today, mobile
television is becoming even more disruptive as the average mobile
user reaches for his or her mobile phone 150 times a day. By June
2017, more than 180 million mobile apps had already been
downloaded. (source: Apple 2016.)
We believe mobile
delivery has a growing appeal to advertisers and subscribers.
Mobile advertising revenue is expected to grow to $40 billion this
year (source research firm BIA/Kelsey). In July 2013, Americans
viewed 19.6 billion video ads and reached 55.4% of the total U.S.
population. Mobile video ad-spend was projected to exceed $6
billion by the end of 2017. 2017 was expected to be a prime moment
for mobile marketing to capture its share of resulting media
allocations. Pre--roll ads (short commercials that proceed a video)
are considered to be 2.5 times more effective than banner ads. And,
for brand recall, video advertising has a 3.5 times higher recall
pattern than banner advertising across all devices.
Content
Mining Plan
Once our planned
SaaS media applications, smart phones and tablets are launched into
the domestic and international markets, content analytics or
marketing data will be gathered from these devices. The data
generated from these applications and devices will give us an
advantage insight into our subscribers viewing and buying habits.
Once data has been scrubbed of personally identifying information,
we plan to be able to create original or lease content from
broadcast partners to service what our analytics are telling us to
produce (or license), with the intent on moving us closer towards
predictive analytics. Predictive analytics is being able to predict
what our customer likes based on their viewing habits and then
produce that content targeted to our subscriber and then
“push” that new (or licensed) content to
them.
Our
Viewme Live Technology Plan
We offer VML
technology for which we plan to expand marketing. We believe SaaS
Viewme Live (VML) could become a leading Digital Media Mobile TV
technology platform in the business-to-business and
business-to-consumer markets. Our proprietary software platform can
reach a worldwide audience of approximately one billion mobile
viewers. VML addresses global mobile distribution of LIVE and Video
on Demand (“VOD”) content as a white label Software as
a Service (“SaaS”).
VML OTT live
streaming technology is similar to what you see with satellite TV
such as Dish Network and DirecTV, as well as cable companies.
Almost all currently existing live streaming cannot do live
broadcast streaming at this level and usually has anywhere from 1
minute to 10 minute delays or continuous buffering, never loading
the video. With VML, there is the ability to have
“worldwide” access for a live streaming event equal to
standard television broadcasting with tens of millions of
simultaneous users. We believe that VML is the first technology to
be able to achieve this level of live streaming. In emerging
countries that do not have fiber, cable and satellite TV, access to
VML is simple and cost effective, as long as there is a cellular
connection on a 3G network or higher (regardless of provider)[1].
VML aims to provide uninterrupted live streaming on mobile devices
without buffering, crashes, pixilation, or audio and video syncing
issues. One practical application of this technology is that a
viewer can move from a Wi--Fi connection to a 3G connection without
interruption. VML has a unique user interface with multi--channel
access and built-in social media, and we believe it is unlike
anything currently on the market. VML also has the capability to do
a Live Linear Broadcast with VOD.VML’s technology has the
potential to reduce web content pirating since high quality TV
broadcast is now easily accessed worldwide on mobile
devices.
Currently, we
believe we are the only company that does all the above in the
industry and we believe VML has the potential to expand our
technologies and applications even further.
[1] Subject to the
laws and regulations of each country.
The hottest
technology in the over the top (“OTT”) market and the
biggest challenge in the OTT market is “Live Linear Channel
Broadcasting” and “Live Event Broadcasting” to
equal standard television broadcasting on cable and satellite TV.
This type of technology is superior to video on demand (VOD)
streaming technology in both acquisition and delivery. The growth
of OTT video delivery has been significant. In the past year alone,
OTT has grown to $35 billion in global revenue, with $17 billion
coming from emerging markets source Digital TV Research. Viewme
Live (“VML”) has many technology advantages including:
Artificial Intelligence (“AI”); the ability to
simultaneously access millions of users simultaneously with
virtually no latency equivalent to standard television
broadcasting; global distribution (without interruption) on
cellular and Wi--Fi; and a fully interactive menu user interface
and worldwide advertising brokers in place.
VML’s content
delivery network (“CDN”) can potentially reach tens of
millions of mobile devices (tablets and smartphones) and has the
potential to scale to one billion video streams globally. It loads
content within seconds, not only for Wi-Fi, but also more
importantly, on cellular networks that are 3G and higher.
VML’s core technology is fully developed and is able to
support clients on a turnkey native mobile app in less than 60
days. We have already achieved major milestones as the
world’s largest private conduit build out for global
deployment of LIVE and VOD streaming content. Our OTT live
streaming technology is unique and proprietary. Here are some
highlights on how VML can help from telecommunication companies to
TV station broadcasters to digital film libraries.
VML has the ability
to create a “Master Network Mobile App” that can allow
for a multiple channel build out, each with its own unique Pay Per
View charge (optional). This means a company can have a live event
channel per country with a different price per user based on the
economics of that country. VML has unlimited channel build out
(e.g. a company could have 50 channels or 1000 channels). Any
telecommunications company can have professional looking displays
and user interfaces for mobile with VML, similar to what the large
telecommunications companies provide. A Master Network App also
allows a network to expand into other categories by country (e.g.
additional sports categories for various sports by country).
Expansion can focus on audience aggregation for sports and other
forms of entertainment categories. Pay-Per View is an option for
these expanded categories as well. We have built-in worldwide ad
brokers for pre---roll commercial ads so that revenue can be
generated as soon as possible. There is also potential to upsell to
existing advertisers and sponsors and it can be brand specific by
country.
Our
differentiation from web streaming
We are not a
website based video streaming technology. VML is strictly a native
mobile app focused on video streaming technology for mobile
platforms. We are not a dashboard based video content company where
users upload content; we are a complete turnkey SaaS application. A
survey released in May 2015, sponsored by Level 3 Communications,
stated, “Offering both VOD and Live Linear channels will be
critical for OTT providers to entice new prospects and gain market
share. This trend is a critical one. For existing OTT providers,
offering a VOD service may not be enough to maintain, much less
grow, market share.” The trend towards adding live linear
channel content has the potential to become “table
stakes” in the OTT game over the next several years, with
both breaking news and live sports content leading the way in terms
of interest for OTT service providers adding live linear
channels.
SaaS
White Label
We plan to white
label our suite of SaaS technologies for yearly licensing and
monthly maintenance fees. The prospective user base for the SaaS
White Label Suite is extensive as there are more than 200,000 TV
broadcasters worldwide alone, and many of them are seeking to
migrate to the vast mobile video streaming market space. The
sizeable population of potential SaaS clients includes standard
television broadcasters in every country, direct marketing
companies, low-powered antenna broadcasters (such as universities
and churches), IPTV broadcasters, and large content (film and TV)
providers that are seeking to further monetize their properties for
worldwide syndication.
The SaaS suite
includes full app development on Apple iOS, Google Android and Roku
connected boxes, user interface (menu system), advertising broker
network for pre---roll commercial ads (from date of launch), 24/7
LIVE monitoring of inbound and outbound signals, data analytics,
seamless updating to all platforms, Amazon web service (AWS) blade
servers, and coverage up to the first 20 million streams. The white
label product is offered to stand--alone.
User
Interface
In a preprogrammed
live linear broadcast application, viewers have free access via a
playlist by category and have the ability to
“catch--up” with what they may have missed in the LIVE
broadcast, regardless of its original airdate. The video-on-demand
(VOD) feature provides the opportunity to access additional viewers
and monetize past content. After several years in development, we
believe that VML has a significant first to market advantage and that no
other companies currently have a comparable commercialized
offering.
Our
Plan for Strategic Partnering with Telecommunication & Media
Companies
Currently in the
world, viewers usually need to have a contract with a cable
provider (e.g. AT&T, Cox, Xfinity, Spectrum, or Cablevision in
the U.S.) or satellite TV provider (e.g. DirecTV and DISH Network
in the U.S.) and be in range of a residential or business Wi-Fi to
be able to watch over the top (OTT) content on a connected TV
device, website or mobile access. VML is capable of offering a
nearly unlimited number of channels to mobile users virtually
anywhere and everywhere, with global reach, far exceeding two U.S.
satellite companies (DirecTV and DISH Network), which have 500+
channels each and are only available in the U.S.
We believe VML will
immediately appeal to any channel that is currently on DirecTV and
DISH Network for global mobile linear broadcast participation,
simply because these platforms are only available in the U.S.
market.
VML can provide
low--powered TV stations (after found in churches and
universities), along with high--powered stations, the ability to
reach the entire global market. Other potential users are owners of
libraries of digitized content, and LIVE event venues such as music
concerts, sporting events, festivals, beauty pageants, summer and
winter Olympic Games, award shows, red carpet events, trade shows
and conventions. Enthusiasts can produce their own show in any area
and could launch their own channels for travel, food, spirits,
sports, outdoor recreation, retro TV shows, children, cartoons,
comedy, drama, reality, education, automobiles, health,
corporations, shopping, soap opera, game shows, dating, religion,
etc., providing extensive possibilities for media expansion.
Content providers will not be limited by the major TV networks and
film studios for distribution rights.
We
have targeted Telecommunication and Media Company Opportunities to
offer:
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Turn key mobile app
for telecommunication and media companies for immediate
distribution of TV broadcasts on terrestrial, cable and satellite
for free or as subscription.
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Turn key mobile app
for free or pay per view live events.
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Turn key mobile app
for digital libraries of content providers.
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Reseller program
with territorial rights.
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Worldwide analytics
on mobile TV content provided to help with target marketing for
products and services.
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Transitions to the
automotive industry car play systems.
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Option to
pre---load Master Network App on telecommunication company’s
mobile devices such as smart phones and tablets.
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Pre-load the SaaS
white label clients on telecommunication company mobile
devices.
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Geo
Fencing Available (The ability to offer broadcast territories by
region or regional Networks)
Our Plan to Act as
a Reseller with Territorial Rights –
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Value Added
Reseller (VAR) to telecommunication and media
companies.
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Exclusive rights
for a country or region for reselling the white label
opportunity.
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Offer to
Telecommunication and media companies OTT digital content as a
channel or network.
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Offer 1 to 1000
channels by territory.
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Approach emerging
markets as capital resources permit.
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Our business is
subject to a number of risks of which you should be aware before
making an investment decision. These risks are discussed more fully
in the “Risk Factors” section of this prospectus
immediately following this the summary.
Our
Corporate Information
We are a Florida
corporation. Our principal executive offices are located at 501 W.
Broadway, Suite 800, San Diego, CA 92101, and our telephone number
is (619) 400-4996. Our website address is
http://www.tptglobaltech.com. Information on or accessed through
our website is not incorporated into this prospectus and is not a
part of this prospectus.
CYBER
RISKS
Like other large
telecommunications companies, we are a constant target of
cyber-attacks of varying degrees, which has caused us to spend
increasingly more time and money to deal with increasingly
sophisticated attacks. Some of the attacks may result in security
breaches, and we periodically notify our customers, our employees
or the public of these breaches when necessary or appropriate. None
of these resulting security breaches to date have materially
adversely affected our business, results of operations or financial
condition.
We rely on several
other communications companies to provide services or products for
our offerings. We may lease a significant portion of our core fiber
network from our competitors and other third parties. Many of these
leases will lapse in future years. Our future ability to provide
services on the terms of our current offerings will depend in part
upon our ability to renew or replace these leases, agreements and
arrangements on terms substantially similar to those currently in
effect.
For additional
information regarding our systems, network, cyber risks, capital
expenditure requirements and reliance upon third parties, see "Risk
Factors."
COMPETITION,
COMPETITORS, REGULATION AND TAXATION
Competition
General
We compete in a
rapidly evolving and highly competitive market, and we expect
intense competition to continue. In addition to competition from
larger national telecommunications providers, we are facing
increasing competition from several other sources, including cable
and satellite companies, wireless providers, technology companies,
cloud companies, broadband providers, device providers, resellers,
sales agents and facilities-based providers using their own
networks as well as those leasing parts of our network.
Technological advances and regulatory and legislative changes have
increased opportunities for a wide range of alternative
communications service providers, which in turn have increased
competitive pressures on our business. These alternate providers
often face fewer regulations and have lower cost structures than we
do. In addition, the communications industry has, in recent years,
experienced substantial consolidation, and some of our competitors
in one or more lines of our business are generally larger, have
stronger brand names, have more financial and business resources
and have broader service offerings than we currently
do.
Wireless telephone
services are a significant source of competition with our legacy
carrier services. It is increasingly common for customers to
completely forego use of traditional wireline phone service and
instead rely solely on wireless service for voice services. We
anticipate this trend will continue, particularly as our older
customers are replaced over time with younger customers who are
less accustomed to using traditional wireline voice services.
Technological and regulatory developments in wireless services,
Wi-Fi, and other wired and wireless technologies have contributed
to the development of alternatives to traditional landline voice
services. Moreover, the growing prevalence of electronic mail, text
messaging, social networking and similar digital non-voice
communications services continues to reduce the demand for
traditional landline voice services. These factors have led to a
long-term systemic decline in the number of our wireline voice
service customers.
The
Telecommunications Act of 1996, which obligates carriers to permit
competitors to interconnect their facilities to the carrier's
network and to take various other steps that are designed to
promote competition, imposes several duties on a carrier if it
receives a specific request from another entity which seeks to
connect with or provide services using the carrier's network. In
addition, each carrier is obligated to (i) negotiate
interconnection agreements in good faith, (ii) provide
nondiscriminatory "unbundled" access to all aspects of the
carrier's network, (iii) offer resale of its
telecommunications services at wholesale rates and (iv) permit
competitors, on terms and conditions (including rates) that are
just, reasonable and nondiscriminatory, to colocate their physical
plant on the carrier's property, or provide virtual colocation if
physical colocation is not practicable. Current FCC rules require
carriers to lease a network element only in those situations where
competing carriers genuinely would be impaired without access to
such network elements, and where the unbundling would not interfere
with the development of facilities-based competition.
As a result of
these regulatory, consumer and technological developments, carriers
also face competition from competitive local exchange carriers, or
CLECs, particularly in densely populated areas. CLECs provide
competing services through reselling a carrier’s local
services, through use of a carrier's unbundled network elements or
through their own facilities.
Technological
developments have led to the development of new products and
services that have reduced the demand for our traditional services,
as noted above, or that compete with traditional carrier services.
Technological improvements have enabled cable television companies
to provide traditional circuit-switched telephone service over
their cable networks, and several national cable companies have
aggressively marketed these services. Similarly, companies
providing VoIP services provide voice communication services over
the Internet which compete with our traditional telephone service
and our own VoIP services. In addition, demand for our broadband
services could be adversely affected by advanced wireless data
transmission technologies being deployed by wireless providers and
by certain technologies permitting cable companies and other
competitors to deliver faster average broadband transmission speeds
than ours.
Similar to us, many
cable, technology or other communications companies that previously
offered a limited range of services are now offering diversified
bundles of services, either through their own networks, reselling
arrangements or joint ventures. As such, a growing number of
companies are competing to serve the communications needs of the
same customer base. Such activities will continue to place downward
pressure on the demand for and pricing of our
services.
As customers
increasingly demand high-speed connections for entertainment,
communications and productivity, we expect the demands on our
network will continue to increase over the next several years. To
succeed, we must continue to invest in our networks or engage
partners to ensure that they can deliver competitive services that
meet these increasing bandwidth and speed requirements. In
addition, network reliability and security are increasingly
important competitive factors in our business.
Additional
information about competitive pressures is located under the
heading “Risk Factors.”
Competitors
In connection with
providing strategic services to our business customers, which
includes our small, medium and enterprise business, wholesale and
governmental customers, we compete against other telecommunication
providers, as well as other regional and national carriers, other
data transport providers, cable companies, CLECs and other
enterprises, some of whom are substantially larger than us.
Competition is based on price, bandwidth, quality and speed of
service, promotions and bundled offerings. In providing broadband
services, we compete primarily with cable companies, wireless
providers, technology companies and other broadband service
providers. We face competition in Ethernet based services in the
wholesale market from cable companies and fiber based
providers.
Our competitors for
providing integrated data, broadband, voice services and other data
services to our business customers range from small to mid-sized
businesses. Due to the size of some of these companies, our
competitors may be able to offer more inexpensive solutions to our
customers. To compete, we focus on providing sophisticated, secure
and performance-driven services to our business customers through
our infrastructure.
The number of
companies providing business services has grown and increased
competition for these services, particularly with respect to
smaller business customers. Many of our competitors for strategic
services are not subject to the same regulatory requirements as we
are and therefore they are able to avoid significant regulatory
costs and obligations.
Government
Regulation
Overview
As discussed
further below, our operations are subject to significant local,
state, federal and foreign laws and regulations.
We are subject to
the significant regulations by the FCC, which regulates interstate
communications, and state utility commissions, which regulate
intrastate communications. These agencies (i) issue rules to
protect consumers and promote competition, (ii) set the rates that
telecommunication companies charge each other for exchanging
traffic, and (iii) have traditionally developed and administered
support programs designed to subsidize the provision of services to
high-cost rural areas. In most states, local voice service,
switched and special access services and interconnection services
are subject to price regulation, although the extent of regulation
varies by type of service and geographic region. In addition, we
are required to maintain licenses with the FCC and with state
utility commissions. Laws and regulations in many states restrict
the manner in which a licensed entity can interact with affiliates,
transfer assets, issue debt and engage in other business
activities. Many acquisitions and divestitures may require approval
by the FCC and some state commissions. These agencies typically
have the authority to withhold their approval, or to request or
impose substantial conditions upon the transacting parties in
connection with granting their approvals.
The following
description discusses some of the major industry regulations that
may affect our traditional operations, but numerous other
regulations not discussed below could also impact us. Some
legislation and regulations are currently the subject of judicial,
legislative and administrative proceedings which could
substantially change the manner in which the telecommunications
industry operates and the amount of revenues we receive for our
services.
Neither the outcome
of these proceedings, nor their potential impact on us, can be
predicted at this time. For additional information, see "Risk
Factors."
The laws and
regulations governing our affairs are quite complex and
occasionally in conflict with each other. From time to time, we are
fined for failing to meet applicable regulations or service
requirements.
Federal
Regulation
General
We are required to
comply with the Communications Act of 1934. Among other things,
this law requires our local exchange carriers to offer various of
our legacy services at just and reasonable rates and on
non-discriminatory terms. The Telecommunications Act of 1996
materially amended the Communications Act of 1934, primarily to
promote competition.
The FCC regulates
interstate services we provide, including the special access
charges we bill for wholesale network transmission and the
interstate access charges that we bill to long-distance companies
and other communications companies in connection with the
origination and termination of interstate phone calls.
Additionally, the FCC regulates a number of aspects of our business
related to privacy, homeland security and network infrastructure,
including our access to and use of local telephone numbers and our
provision of emergency 911 services. The FCC has responsibility for
maintaining and administering support programs designed to expand
nationwide access to communications services (which are described
further below), as well as other programs supporting service to
low-income households, schools and libraries, and rural health care
providers. Changes in the composition of the five members of the
FCC or its Chairman can have significant impacts on the regulation
of our business.
In recent years,
our operations and those of other telecommunications carriers have
been further impacted by legislation and regulation imposing
additional obligations on us, particularly with regards to
providing voice and broadband service, bolstering homeland
security, increasing disaster recovery requirements, minimizing
environmental impacts and enhancing privacy. These laws include the
Communications Assistance for Law Enforcement Act, and laws
governing local telephone number portability and customer
proprietary network information requirements. In addition, the FCC
has heightened its focus on the reliability of emergency 911
services. The FCC has imposed fines on us and other companies for
911 outages and has adopted new compliance requirements for
providing 911 service. We are incurring capital and operating
expenses designed to comply with the FCC's new requirements and
minimize future outages. All of these laws and regulations may
cause us to incur additional costs and could impact our ability to
compete effectively against companies not subject to the same
regulations.
Over the past
several years, the FCC has taken various actions and initiated
certain proceedings designed to comprehensively evaluate the proper
regulation of the provisions of data services to businesses. As
part of its evaluation, the FCC has reviewed the rates, terms and
conditions under which these services are provided. The FCC's
proceedings remain pending, and their ultimate impact on us is
currently unknown.
Telephony
Services
We operate
traditional telecommunications services in our Arizona subsidiary,
and those services are largely governed under rules established for
CLECs under the Communications Act. The Communications Act entitles
our CLEC subsidiary to certain rights, but as telecommunications
carriers, it also subjects them to regulation by the FCC and the
states. Their designation as telecommunications carriers also
results in other regulations that may affect them and the services
they offer.
Interconnection
and Intercarrier Compensation
The Communications
Act requires telecommunications carriers to interconnect directly
or indirectly with other telecommunications carriers. Under the
FCC's intercarrier compensation rules, we are entitled, in some
cases, to compensation from carriers when they use our network to
terminate or originate calls and in other cases are required to
compensate another carrier for using its network to originate or
terminate traffic. The FCC and state regulatory commissions,
including those in the states in which we operate, have adopted
limits on the amounts of compensation that may be charged for
certain types of traffic. As noted above, the FCC has determined
that intercarrier compensation for all terminating traffic will be
phased down over several years to a "bill-and-keep" regime, with no
compensation between carriers for most terminating traffic by 2018
and is considering further reform that could reduce or eliminate
compensation for originating traffic as well.
Universal
Service
Our CLEC subsidiary
is required to contribute to the USF. The amount of universal
service contribution required of us is based on a percentage of
revenues earned from interstate and international services provided
to end users. We allocate our end user revenues and remit payments
to the universal service fund in accordance with FCC rules. The FCC
has ruled that states may impose state universal service fees on
CLEC telecommunications services.
State
Regulation
Our CLEC subsidiary
telecommunications services are subject to regulation by state
commissions in each state where we provide services. In order to
provide our services, we must seek approval from the state
regulatory commission or be registered to provide services in each
state where we operate and may at times require local approval to
construct facilities. Regulatory obligations vary from state to
state and include some or all of the following requirements: filing
tariffs (rates, terms and conditions); filing operational,
financial, and customer service reports; seeking approval to
transfer the assets or capital stock of the broadband
communications company; seeking approval to issue stocks, bonds and
other forms of indebtedness of the broadband communications
company; reporting customer service and quality of service
requirements; outage reporting; making contributions to state
universal service support programs; paying regulatory and state
Telecommunications Relay Service and E911 fees; geographic
build-out; and other matters relating to competition.
Other
Regulations
Our CLEC subsidiary
telecommunications services are subject to other FCC requirements,
including protecting the use and disclosure of customer proprietary
network information; meeting certain notice requirements in the
event of service termination; compliance with disabilities access
requirements; compliance with CALEA standards; outage reporting;
and the payment of fees to fund local number portability
administration and the North American Numbering Plan. As noted
above, the FCC and states are examining whether new requirements
are necessary to improve the resiliency of communications networks.
Communications with our customers are also subject to FCC, FTC and
state regulations on telemarketing and the sending of unsolicited
commercial e-mail and fax messages, as well as additional privacy
and data security requirements.
Broadband
Regulatory
Classification. Broadband Internet
access services were traditionally classified by the FCC as
"information services" for regulatory purposes, a type of service
that is subject to a lesser degree of regulation than
"telecommunications services." In 2015, the FCC reversed this
determination and classified broadband Internet access services as
"telecommunications services." This reclassification has subjected
our broadband Internet access service to greater regulation,
although the FCC did not apply all telecommunications service
obligations to broadband Internet access service. The 2015 Order
could have a material adverse impact on our business as it may
justify additional FCC regulation or support efforts by States to
justify additional regulation of broadband Internet access
services. In December 2017, the FCC adopted an order that in large
part reverses the 2015 Order and reestablishes the "information
service" classification for broadband Internet access service. The
2017 Order has not yet gone into effect, however, and the 2015
Order will remain binding until the 2017 Order takes effect. The
2017 Order is expected to be subject to legal challenge that may
delay its effect or overturn it.
Net Neutrality, and Current Status. The
2015 Order also established a new "Open Internet" framework that
expanded disclosure requirements on Internet service providers
("ISPs") such as cable companies, prohibited blocking, throttling,
and paid prioritization of Internet traffic on the basis of the
content, and imposed a "general conduct standard" that prohibits
unreasonable interference with the ability of end users and edge
providers to reach each other. The FCC's 2017 Order eliminates
these rules except for certain disclosure requirements (see the
official release summary from the FCC below). Additionally,
Congress and some states are considering legislation that may
codify "network neutrality" rules.
The Federal
Communications Commission has made the following official release
about the Restoring Internet Freedom Order:
"The FCC's
Restoring Internet Freedom Order, which took effect on June 11,
(2018) provides a framework for protecting an open Internet while
paving the way for better, faster and cheaper Internet access for
consumers. It replaces unnecessary, heavy-handed regulations that
were developed way back in 1934 with strong consumer protections,
increased transparency, and common-sense rules that will promote
investment and broadband deployment. The FCC's framework for
protecting Internet freedom has three key parts:
1.
Consumer Protection
The Federal Trade
Commission will police and take action against Internet service
providers for anticompetitive acts or unfair and deceptive
practices. The FTC is the nation's premier consumer protection
agency, and until the FCC stripped it of jurisdiction over Internet
service providers in 2015, the FTC protected consumers consistently
across the Internet economy.
2.
Transparency
A critical part of
Internet openness involves Internet service providers being
transparent about their business practices. That's why the FCC has
imposed enhanced transparency requirements. Internet service
providers must publicly disclose information regarding their
network management practices, performance, and commercial terms of
service. These disclosures must be made via a publicly available,
easily accessible company website or through the FCC's website.
This will discourage harmful practices and help regulators target
any problematic conduct. These disclosures also support innovation,
investment, and competition by ensuring that entrepreneurs and
other small businesses have the technical information necessary to
create and maintain online content, applications, services, and
devices.
Internet Service
Providers must clearly disclose their network management practices
on their own web sites or with the FCC. For more information about
these disclosures, you can visit https://www.fcc.gov/isp-
disclosures.
Removes
Unnecessary Regulations to Promote Broadband
Investment
The Internet wasn't
broken in 2015, when the previous FCC imposed 1930s-era regulations
(known as "Title II") on Internet service providers. And
ironically, these regulations made things worse by limiting
investment in high-speed networks and slowing broadband deployment.
Under Title II, broadband network investment dropped more than 5.6%
-- the first time a decline has happened outside of a recession.
The effect was particularly serious for smaller Internet service
providers (fixed wireless companies, small-town cable operators,
municipal broadband providers, electric cooperatives, and others)
that don't have the resources or lawyers to navigate a thicket of
complex rules...."
The items listed in
this internet Order are for carriers such as Century Link, which is
our contract internet provider, and we are in compliance with the
areas that we are responsible for which are few. We generate the
last mile of internet service but we are actually a reseller of
Century Link services as they provide the bandwidth to
us.
Access
for Persons with Disabilities. The
FCC's rules require us to ensure that persons with disabilities
have access to "advanced communications services" ("ACS"), such as
electronic messaging and interoperable video conferencing. They
also require that certain pay television programming delivered via
Internet Protocol include closed captioning and require entities
distributing such programming to end users to pass through such
captions and identify programming that should be
captioned.
Other
Regulation. The 2015 Order also
subjected broadband providers' Internet traffic exchange rates and
practices to potential FCC oversight and created a mechanism for
third parties to file complaints regarding these matters. In
addition, our provision of Internet services also subjects us to
the limitations on use and disclosure of user communications and
records contained in the Electronic Communications Privacy Act of
1986. Broadband Internet access service is also subject to other
federal and state privacy laws applicable to electronic
communications.
Additionally, providers of broadband Internet
access services must comply with CALEA, which requires providers to
make their services and facilities accessible for law enforcement
intercept requests. Various other federal and state laws apply to
providers of services that are accessible through broadband
Internet access service, including copyright laws, telemarketing
laws, prohibitions on obscenity, and a ban on unsolicited
commercial e-mail, and privacy and data security laws. Online
content we provide is also subject to some of these
laws.
Other
forms of regulation of broadband Internet access service currently
being considered by the FCC, Congress or state legislatures include
consumer protection requirements, cyber security requirements,
consumer service standards, requirements to contribute to universal
service programs and requirements to protect personally
identifiable customer data from theft. Pending and future
legislation in this area could adversely affect our operations as
an Internet service provider and our relationship with our Internet
customers.
Additionally,
from time to time the FCC and Congress have considered whether to
subject broadband Internet access services to the federal Universal
Service Fund ("USF") contribution requirements. Any contribution
requirements adopted for Internet access services would impose
significant new costs on our broadband Internet service. At the
same time, the FCC is changing the manner in which Universal
Service funds are distributed. By focusing on broadband and
wireless deployment, rather than traditional telephone service, the
changes could assist some of our competitors in more effectively
competing with our service offerings.
VoIP Services
We
provide telephony services using VoIP technology ("interconnected
VoIP"). The FCC has adopted several regulations for interconnected
VoIP services, as have several states, especially as it relates to
core customer and safety issues such as e911, local number
portability, disability access, outage reporting, universal service
contributions, and regulatory reporting requirements. The FCC has
not, however, formally classified interconnected VoIP services as
either information services or telecommunications services. In this
vacuum, some states have asserted more expansive rights to regulate
interconnected VoIP services, while others have adopted laws that
bar the state commission from regulating VoIP service.
Universal
Service. Interconnected VoIP services
must contribute to the USF used to subsidize communication services
provided to low income households, to customers in rural and high
cost areas, and to schools, libraries, and rural health care
providers. The amount of universal service contribution required of
interconnected VoIP service providers is based on a percentage of
revenues earned from interstate and international services provided
to end users. We allocate our end user revenues and remit payments
to the universal service fund in accordance with FCC rules. The FCC
has ruled that states may impose state universal service fees on
interconnected VoIP providers.
Local
Number Portability. The FCC requires
interconnected VoIP service providers and their "numbering
partners" to ensure that their customers have the ability to port
their telephone numbers when changing providers. We also contribute
to federal funds to meet the shared costs of local number
portability and the costs of North American Numbering Plan
Administration.
Intercarrier
Compensation. In an October 2011
reform order and subsequent clarifying orders, the FCC revised the
regime governing payments among providers of telephony services for
the exchange of calls between and among different networks
("intercarrier compensation") to, among other things, explicitly
include interconnected VoIP. In that Order, the FCC determined that
intercarrier compensation for all terminating traffic, including
VoIP traffic exchanged in TDM format, will be phased down over
several years to a "bill-and-keep" regime, with no compensation
between carriers for most terminating traffic by 2018. The FCC is
considering further reform in this area, which could reduce or
eliminate compensation for originating traffic as
well.
Other
Regulation. Interconnected VoIP
service providers are required to provide enhanced 911 emergency
services to their customers; protect customer proprietary network
information from unauthorized disclosure to third parties; report
to the FCC on service outages; comply with telemarketing
regulations and other privacy and data security requirements;
comply with disabilities access requirements and service
discontinuance obligations; comply with call signaling
requirements; and comply with CALEA standards. In August 2015, the
FCC adopted new rules to improve the resiliency of the
communications network. Under the new rules, providers of telephony
services, including interconnected VoIP service providers, must
make available eight hours of standby backup power for consumers to
purchase at the point of sale. The rules also require that
providers inform new and current customers about service
limitations during power outages and steps that consumers can take
to address those risks.
For
additional information about these matters, see “Risk
Factors.”
LICENSES
Arizona CLEC
license in Phoenix area. License #20090393 which expires 2023 and
is renewable every seven years.
TITLE
TO PROPERTIES
None.
BACKLOG
OF ORDERS
We currently have
no backlogs of orders for sales, at this time.
GOVERNMENT
CONTRACTS
We have no
government contracts.
COMPANY
SPONSORED RESEARCH AND DEVELOPMENT
We are not
conducting any research.
NUMBER
OF PERSONS EMPLOYED
We have
approximately 50 employees who work approximately 45 hours per
week. All officers work approximately 60 hours per week. Directors
work as needed.
b.
DESCRIPTION OF PROPERTY
DESCRIPTION OF
PROPERTIES/ASSETS
(a)
|
Real
Estate.
|
None.
|
(b)
|
Title to
properties.
|
None.
|
(c)
|
Patents, Trade
Names, Trademarks and Copyrights
|
See
below.
|
Our executive
offices are located in San Diego, California. We do not own any
real property, but lease and office space consisting of
approximately 27,000 sq. ft. among all of our corporate and
subsidiary locations. We believe that substantially all of our
property and equipment is in good condition, subject to normal wear
and tear, and that our facilities have sufficient capacity to meet
the current needs of our business.
PATENTS, TRADE
NAMES, TRADEMARKS AND COPYRIGHTS
Either directly or
through our subsidiaries, we have rights in various patents, trade
names, trademarks, copyrights and other intellectual property
necessary to conduct our business. Our services often use the
intellectual property of others, including licensed software. We
also occasionally license our intellectual property to others as we
deem appropriate. Please see Patent Assignment attached as Exhibit
99.2 to this Registration Statement.
We periodically
receive offers from third parties to purchase or obtain licenses
for patents and other intellectual property rights in exchange for
royalties or other payments. We also periodically receive notices,
or are named in lawsuits, alleging that our products or services
infringe on patents or other intellectual property rights of third
parties. In certain instances, these matters can potentially
adversely impact our operations, operating results or financial
position. For additional information, see “Risk
Factors”.
We may be subject
to various claims and legal actions arising in the ordinary course
of business from time to time. We believe that the ultimate
resolution of these matters, whether individually or in the
aggregate, will not have a material adverse effect on our business,
prospects, financial condition and results of
operations.
At this time, the
Company has been named in a lawsuit, Robert Serrett vs. TruCom,
Inc., by a former employee who was terminated by management in
2016. The employee was working under an employment agreement but
was terminated for breach of the agreement. The former employee is
suing for breach of contract and is seeking around $75,000 in back
pay and benefits. Management believes it has good and meritorious
defenses and does not belief the outcome of the lawsuit will have
any material effect on the financial position of the
Company.
At the end of
December 2017, the Company learned that the new equipment lease
identified for $101,348 was included in a default judgement in a
non-jurisdictional state of Pennsylvania for $169,474 from a
lawsuit by the lessor. Management is working with the lessor to
settle this matter including a proposal for the equipment to be
returned to the lessor and then a negotiated amount for any
deficiency between the value given for the retired equipment and
the $101,348. When concluded, management does not believe the
results will be significantly different than the liability of
$101,347 and $36,903 in accrued interest recorded on the balance
sheet as of September 30, 2019.
As of the date of
this filing, the Company has collected $338,725 from one customer
in excess of amounts due from that customer in accordance with the
customer’s understanding of the appropriate billings
activity. The customer has filed a written demand for repayment by
the Company of these amounts. Management believes that the customer
agreement allows them to keep the amounts under dispute. Given the
dispute, the Company has reflected the amounts in dispute as a
customer liability on the consolidated balance sheet as of December
31, 2018, 2017 and September 30, 2019 and does not believe the
outcome of the dispute will have a material effect on the financial
position of the Company.
In December 2016, a
subsidiary’s landlord agreed to terminate a facilities lease
for 150,000 restricted shares of Common Stock valued at $43,350
from a capital contribution of an officer of the Company.
Subsequent to the agreement, the landlord requested more shares
against the Company’s agreement. As such, $40,404 remains in
liabilities payable to the landlord and the $43,350 was expensed as
rent previously. The matter is still unresolved. Management does
not believe any negative resolution will have a material impact on
the Company’s consolidated financial statements.
d.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information
Currently there is
a limited public trading market for our stock as quoted on the
OTCQB under the symbol TPTW.
Rules Governing Low-price Stocks That
May Affect Our Shareholders' Ability to Resell Shares of Our Common
Stock
Our stock currently
is traded on the OTCQB under the symbol TPTW.
Quotations on the
OTCQB reflect inter-dealer prices, without retail mark-up, markdown
or commission and may not reflect actual transactions. Our common
stock will be subject to certain rules adopted by the SEC that
regulate broker-dealer practices in connection with transactions in
“penny stocks.” Penny stocks generally are securities
with a price of less than $5.00, other than securities registered
on certain national exchanges or quoted on the NASDAQ system,
provided that the exchange or system provides current price and
volume information with respect to transaction in such securities.
The additional sales practice and disclosure requirements imposed
upon broker-dealers are and may discourage broker-dealers from
effecting transactions in our shares which could severely limit the
market liquidity of the shares and impede the sale of shares in the
secondary market.
The penny stock
rules require broker-dealers, prior to a transaction in a penny
stock not otherwise exempt from the rules, to make a special
suitability determination for the purchaser to receive the
purchaser’s written consent to the transaction prior to sale,
to deliver standardized risk disclosure documents prepared by the
SEC that provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer must
also provide the customer with current bid and offer quotations for
the penny stock. In addition, the penny stock regulations require
the broker-dealer to deliver, prior to any transaction involving a
penny stock, a disclosure schedule prepared by the SEC relating to
the penny stock market, unless the broker-dealer or the transaction
is otherwise exempt. A broker-dealer is also required to disclose
commissions payable to the broker-dealer and the registered
representative and current quotations for the securities. Finally,
a broker-dealer is required to send monthly statements disclosing
recent price information with respect to the penny stock held in a
customer's account and information with respect to the limited
market in penny stocks.
Holders
As of November 25,
2019, we have 431 shareholders of record of our common stock. Sales
under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public
information about us. Under Rule 144, a person who has not been an
affiliate at any time during the three months preceding a sale, and
who has beneficially owned the shares proposed to be sold for at
least 6 months, is entitled to sell shares without complying with
the manner of sale, volume limitation or notice provisions of Rule
144.
As of November 25,
2019, our shareholders hold 145,236,483 shares, 37,361,010 of which
may be sold pursuant to this Registration Statement.
Dividends
As of the filing of
this prospectus, we have not paid any dividends to shareholders.
There are no restrictions which would limit our ability to pay
dividends on common equity or that are likely to do so in the
future. The Florida Revised Statutes, however, do prohibit us from
declaring dividends where, after giving effect to the distribution
of the dividend; we would not be able to pay our debts as they
become due in the usual course of business; or our total assets
would be less than the sum of the total liabilities plus the amount
that would be needed to satisfy the rights of shareholders who have
preferential rights superior to those receiving the
distribution.
The following is a
complete list of the financial statements filed as a part of this
Report.
TPT
Global Tech, Inc.
Consolidated
Financial Statements as of December 31, 2018 and 2017
|
Report of
Independent Registered Public Accounting Firm
|
F-2
|
Consolidated
Balance
|
F-3-F-4
|
Consolidated
Statement of Operations
|
F-5
|
Consolidated
Statement of Changes in Stockholders’ Equity
(Deficit)
|
F-6-F-7
|
Consolidated
Statements of Cash Flows
|
F-8-F-9
|
Notes to the
Financial Statements
|
F-10-F-27
|
TPT
Global Tech, Inc.
Condensed
Consolidated Financial Statements as of September 30,
2019
(Unaudited)
|
Condensed
Consolidated Balance Sheets
|
F-32-F-33
|
Condensed
Consolidated Statements of Operations
|
F-34
|
Condensed
Consolidated Statements of Cash Flows
|
F-35-F-36
|
Notes to Condensed
Consolidated Financial Statements
|
F-37-F-51
|
TPT
Global Tech, Inc.
CONSOLIDATED
FINANCIAL STATEMENTS
As
of
December
31, 2018 and 2017
TPT
Global Tech, Inc.
CONSOLIDATED
FINANCIAL STATEMENTS
As
of
December
31, 2018 and 2017
Table of
Contents
|
Page
|
Consolidated
Financial Statements
|
|
Report of
Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance
Sheets
|
F-3–F-4
|
Consolidated Statements of
Operations
|
F-5
|
Consolidated Statements of
Stockholders’ Equity (Deficit)
|
F-6-F-7
|
Consolidated Statements of
Cash Flows
|
F-8-F-9
|
Notes to
Consolidated Financial Statements
|
F-10-F-27
|
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of
Directors and Shareholders of TPT Global Tech, Inc.:
Opinion on the Financial
Statements
We have audited the
accompanying consolidated balance sheets of TPT Global Tech, Inc.
(“the Company”) as of December 31, 2018 and 2017, the
related consolidated statements of operations, stockholders’
deficit, and cash flows for each of the years in the two-year
period ended December 31, 2018 and the related notes (collectively
referred to as the “financial statements”). In our
opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company as
of December 31, 2018 and 2017, and the results of its operations
and its cash flows for each of the years in the two-year period
ended December 31, 2018, in conformity with accounting principles
generally accepted in the United States of America.
Explanatory Paragraph Regarding Going
Concern
The accompanying
financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has suffered recurring losses
from operations and has a net capital deficiency which raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in
Note 3. The financial statements do not include any adjustments
that might result from the outcome of this
uncertainty.
Basis for Opinion
These financial
statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a
public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our
audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement, whether due to error or fraud. The
Company is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. As part of
our audits, we are required to obtain an understanding of internal
control over financial reporting, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express
no such opinion.
Our audits included
performing procedures to assess the risks of material misstatement
of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures
included examining on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.
/s/ Sadler, Gibb & Associates, LLC
We have served as
the Company’s auditor since 2016
Salt Lake City,
UT
April 10,
2019
TPT
Global Tech, Inc.
CONSOLIDATED
BALANCE SHEETS
ASSETS
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
Cash and cash
equivalents
|
$31,786
|
$36,380
|
Accounts
receivable, net
|
48,922
|
25,385
|
Prepaid expenses
and other current assets
|
36,111
|
14,059
|
Total current
assets
|
$116,819
|
$75,824
|
NON-CURRENT
ASSETS
|
|
|
Property
and equipment, net
|
$3,046,942
|
$2,814,067
|
Intangibles,
net
|
6,671,582
|
5,754,933
|
Goodwill
|
924,361
|
70,995
|
Deposits
and other assets
|
62,013
|
57,469
|
Total non-current
assets
|
$10,704,898
|
$8,697,464
|
|
|
|
TOTAL
ASSETS
|
$10,821,717
|
$8,773,288
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
CURRENT
LIABILITIES
|
|
|
Accounts payable
and accrued expenses
|
$4,687,652
|
$2,401,028
|
Accrued
interest on debt
|
306,318
|
182,452
|
Current
portion of debt – third party
|
716,936
|
195,106
|
Current
portion of debt – third party, convertible
|
10,000
|
—
|
Current
portion of debt – related party, net of discount
|
9,137,982
|
7,557,590
|
Current
portion of debt – related party, convertible
|
202,688
|
250,000
|
Customer
liability
|
338,725
|
338,725
|
Capital
leases
|
111,704
|
101,347
|
Capital leases
– related party
|
449,103
|
449,103
|
Accrued interest
related to capital leases
|
176,457
|
135,217
|
Vehicle
leases
|
—
|
5,195
|
Deferred
revenue
|
6,450
|
10,925
|
Total
current liabilities
|
$16,144,015
|
$11,626,688
|
|
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
Long term
portion:
|
|
|
Debt
– third party, net of current portion
|
$5,000
|
$2,819
|
Debt
– related party, convertible, net of current
portion
|
599,200
|
62,000
|
Total
non-current liabilities
|
604,200
|
64,819
|
Total
liabilities
|
$16,748,215
|
$11,691,507
|
|
|
|
Commitments and
contingencies – See Note 8
|
—
|
—
|
STOCKHOLDERS'
DEFICIT
PREFERRED STOCK,
$.001 PAR VALUE 100,000,000 SHARES AUTHORIZED:
|
|
|
|
|
|
Convertible
Preferred Series A, 1,000,000 designated - 1,000,000 shares issued
and outstanding as of December 31, 2018 and 2017
|
$1,000
|
$1,000
|
Convertible
Preferred Series B, 3,000,000 designated - 2,588,693 shares issued
and outstanding as of December 31, 2018 and 2017
|
2,589
|
2,589
|
Convertible
Preferred Series C – 3,000,000 shares designated, zero shares
issued and outstanding as of December 31, 2018 and
2017
|
—
|
—
|
Common stock, $.001
par value, 1,000,000,000 shares authorized, 136,953,904 shares
issued and outstanding as of December 31, 2018 and December 31,
2017
|
136,954
|
136,954
|
Subscriptions
payable
|
168,006
|
25,235
|
Additional paid-in
capital
|
12,567,881
|
10,341,442
|
Accumulated
deficit
|
(18,802,928)
|
(13,425,439)
|
Total stockholders'
deficit
|
(5,926,498)
|
(2,918,219)
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
$10,821,717
|
$8,773,288
|
See accompanying notes to consolidated financial
statements.
TPT
Global Tech, Inc.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
For the years
ended December 31,
|
|
|
|
|
|
|
REVENUES:
|
|
|
Products
|
$119,860
|
$490,241
|
Services
|
817,209
|
1,624,919
|
Total
Revenues
|
$937,069
|
$2,115,160
|
|
|
|
COST OF
SALES:
|
|
|
Products
|
$121,904
|
$479,034
|
Services
|
1,627,130
|
1,685,235
|
Total Costs of
Sales
|
$1,749,034
|
$2,164,269
|
Gross profit
(loss)
|
$(811,965)
|
$(49,109)
|
EXPENSES:
|
|
|
Sales and
marketing
|
$58,712
|
$212,468
|
Professional
|
1,695,053
|
592,456
|
Payroll and
related
|
802,142
|
467,599
|
General and
administrative
|
802,772
|
700,578
|
Depreciation
|
213,823
|
175,492
|
Amortization
|
760,350
|
963,843
|
Total
expenses
|
$4,332,852
|
$3,112,436
|
|
|
|
OTHER INCOME
(EXPENSE)
|
|
|
Impairment of
intangible assets
|
—
|
(471,083)
|
Interest
expense
|
(232,672)
|
(174,773)
|
Total
other income expenses
|
$(232,672)
|
$(645,856)
|
|
|
|
Net loss before
income taxes
|
(5,377,489)
|
(3,807,401)
|
Income
taxes
|
—
|
—
|
NET
LOSS
|
$(5,377,489)
|
$(3,807,401)
|
|
|
|
Loss per common
shares-basic and diluted
|
$(0.04)
|
$(0.03)
|
|
|
|
Weighted-average
common shares outstanding-basic and diluted
|
136,953,904
|
136,953,904
|
|
|
|
See accompanying notes to consolidated financial
statements
TPT
Global Tech, Inc.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' DEFICIT
For
the years ended December 31, 2018 and 2017
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
December 31,
2017
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
136,953,904
|
$136,954
|
$25,235
|
$10,341,442
|
$(13,425,439)
|
$(2,918,219)
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
contributed by officer for services
|
—
|
—
|
—
|
—
|
—
|
—
|
169,271
|
729,252
|
—
|
898,523
|
Issuance of stock
options for services
|
—
|
—
|
—
|
—
|
—
|
—
|
|
256,187
|
—
|
256,187
|
Conversion of debt
for subscription payable
|
—
|
—
|
—
|
—
|
—
|
—
|
2,000
|
—
|
—
|
2,000
|
Cash received for
acquisition of common shares
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
367,500
|
—
|
367,500
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
contributed by officer for subscription payable
|
—
|
—
|
—
|
—
|
—
|
—
|
(35,000)
|
35,000
|
—
|
—
|
Common stock
contributed by officer for acquisition of Blue Collar
|
—
|
—
|
—
|
—
|
—
|
—
|
6,500
|
838,500
|
—
|
845,000
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
$(5,377,489)
|
$(5,377,489)
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
December 31,
2018
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
136,953,904
|
$136,954
|
$168,006
|
$12,567,881
|
$(18,802,928)
|
$(5,926,498)
|
See accompanying notes to consolidated financial
statements
TPT
Global Tech, Inc.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' DEFICIT- CONTINUED
For
the years ended December 31, 2018 and 2017
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
December 31,
2017
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
136,953,904
|
$136,954
|
$25,235
|
$10,341,442
|
$(13,425,439)
|
$(2,918,219)
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
contributed by officer for services
|
—
|
—
|
—
|
—
|
—
|
—
|
169,271
|
729,252
|
—
|
898,523
|
Issuance of stock
options for services
|
—
|
—
|
—
|
—
|
—
|
—
|
|
256,187
|
—
|
256,187
|
Conversion of debt
for subscription payable
|
—
|
—
|
—
|
—
|
—
|
—
|
2,000
|
—
|
—
|
2,000
|
Cash received for
acquisition of common shares
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
367,500
|
—
|
367,500
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
contributed by officer for subscription payable
|
—
|
—
|
—
|
—
|
—
|
—
|
(35,000)
|
35,000
|
—
|
—
|
Common stock
contributed by officer for acquisition of Blue Collar
|
—
|
—
|
—
|
—
|
—
|
—
|
6,500
|
838,500
|
—
|
845,000
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
$(5,377,489)
|
$(5,377,489)
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
December 31,
2018
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
136,953,904
|
$136,954
|
$168,006
|
$12,567,881
|
$(18,802,928)
|
$(5,926,498)
|
See accompanying notes to consolidated
financial statements.
TPT
Global Tech, Inc.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
For the years
ended December 31,
|
|
|
|
Cash flows from
operating activities:
|
|
|
Net
loss
|
$(5,377,489)
|
(3,807,401)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation
|
213,823
|
175,492
|
Amortization
|
760,350
|
963,843
|
Accretion
of interest
|
29,681
|
—
|
Impairment
of intangible assets
|
—
|
471,083
|
Bad
debt expense
|
—
|
38,022
|
Share-based
compensation: Common stock
|
864,079
|
—
|
Stock
options
|
256,187
|
9,124
|
Changes
in operating assets and liabilities:
|
|
|
Decrease
(increase) in accounts receivable
|
232,218
|
21,449
|
Decrease
(increase) in prepaid expenses and other assets
|
19,805
|
182,332
|
Increase
in accounts payable and accrued expenses
|
1,482,590
|
1,137,470
|
Increase
in customer liability
|
—
|
89,375
|
Increase
(decrease) in other liabilities
|
602,349
|
(31,197)
|
Net
cash used in operating activities
|
$(916,407)
|
(750,408)
|
|
|
|
Cash flows from
investing activities:
|
|
|
Acquisition
of property and equipment
|
$(1,336)
|
—
|
Net
cash received from acquisition
|
41,950
|
—
|
Net
cash provided by investing activities
|
$40,614
|
—
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
Proceeds
from stock subscriptions
|
367,500
|
70,000
|
Proceeds
from debt – related party
|
574,694
|
637,600
|
Proceeds
from debt – third party
|
20,000
|
107,635
|
Payments
for debt and leases
|
(76,136)
|
(111,495)
|
Payments
on leases
|
(14,859)
|
(10,238)
|
Net cash provided
by financing activities
|
$871,199
|
693,502
|
|
|
|
|
|
|
Net decrease in
cash
|
$(4,594)
|
(56,906)
|
Cash and cash
equivalents - beginning of period
|
$36,380
|
93,286
|
|
|
|
Cash and cash
equivalents - end of period
|
$31,786
|
36,380
|
|
|
|
See accompanying notes to consolidated financial
statements
TPT
Global Tech, Inc.
CONSOLIDATED
STATEMENTS
OF
CASH FLOWS - CONTINUED
Supplemental
Cash Flow Information:
Cash used
for:
|
|
|
Interest
expense
|
$11,292
|
$—
|
Taxes
|
$—
|
$—
|
Non-Cash
Investing and Financing Activity:
|
|
|
Common stock issued
for acquisition of Blue Collar
|
$845,000
|
$—
|
Note Payable issued
for acquisition, net of discount
|
$1,533,217
|
$—
|
Stock subscription
for conversion of debt
|
$2,000
|
$—
|
Acquisition of
intangible assets ViewMe Live for note payable and common stock
contributed by officer
|
$—
|
$4,595,600
|
Common stock to be
contributed by officer for subscriptions payable
|
$—
|
$7,500
|
Common stock
contributed by officer for pending acquisition
|
$—
|
$6,500
|
Common stock
receivable for cancelled acquisition
|
$—
|
$3,265
|
See accompanying notes to consolidated financial
statements
TPT
Global Tech, Inc.
NOTE
1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature
of Operations
The Company was
originally incorporated in 1988 in the state of Florida. TPT
Global, Inc., a Nevada corporation formed in June 2014, merged with
Ally Pharma US, Inc., a Florida corporation, (“Ally
Pharma”, formerly known as Gold Royalty Corporation) in a
“reverse merger” wherein Ally Pharma issued 110,000,000
shares of Common Stock, or 80% ownership, to the owners of TPT
Global, Inc. in exchange for all outstanding common stock of TPT
Global Inc. and Ally Pharma agreed to change its name to TPT Global
Tech, Inc. (jointly referred to as “the Company” or
“TPTG”).
The following
acquisitions have resulted in entities which have been consolidated
into TPTG. In 2014 the Company acquired all the assets of K Telecom
and Wireless LLC (“K Telecom”) and Global Telecom
International LLC (“Global Telecom”). Effective January
31, 2015, TPTG completed its acquisition of 100% of the outstanding
stock of Copperhead Digital Holdings, Inc. (“Copperhead
Digital”) and Subsidiaries, TruCom, LLC
(“TruCom”), Nevada Utilities, Inc. (“Nevada
Utilities”) and CityNet Arizona, LLC (“CityNet”).
Effective September 30, 2016, the company acquired 100% ownership
in San Diego Media Inc. (“SDM”). In October 2017, we
entered into agreements to acquire Blue Collar, Inc. (“Blue
Collar”) which closed as of September 1, 2018.
We are based in San
Diego, California, and operate as a Media Content Hub for Domestic
and International syndication Technology/Telecommunications company
operating on our own proprietary Global Digital Media TV and
Telecommunications infrastructure platform and also provide
technology solutions to businesses domestically and worldwide. We
offer Software as a Service (SaaS), Technology Platform as a
Service (PAAS), Cloud-based Unified Communication as a Service
(UCaaS) and carrier-grade performance and support for businesses
over our private IP MPLS fiber and wireless network in the United
States. Our cloud-based UCaaS services allow businesses of any size
to enjoy all the latest voice, data, media and collaboration
features in today's global technology markets. We also operate as a
Master Distributor for Nationwide Mobile Virtual network Operators
(MVNO) and Independent Sales Organization (ISO) as a Master
Distributor for Pre-Paid Cellphone services, Mobile phones,
Cellphone Accessories and Global Roaming Cellphones. In addition,
we create media marketing materials and content.
Principles
of Consolidation
Our consolidated
financial statements include the accounts of K Telecom and Global
Telecom, Copperhead Digital, SDM, Port 2 Port, and Blue Collar. All
intercompany accounts and transactions have been eliminated in
consolidation.
CRITICAL
ACCOUNTING POLICIES
Revenue
Recognition
On January 1, 2018,
we adopted the new accounting standard ASC 606, Revenue from Contracts with Customers,
and all of the related amendments (“new revenue
standard”). We recorded the change, which was immaterial,
related to adopting the new revenue standard using the modified
retrospective method. Under this method, we recognized the
cumulative effect of initially applying the new revenue standard as
an adjustment to the opening balance of retained earnings. This
results in no restatement of prior periods, which continue to be
reported under the accounting standards in effect for those
periods. We expect the impact of the adoption of the new revenue
standard to continue to be immaterial on an ongoing basis. We have
applied the new revenue standard to all contracts as of the date of
initial application.
The Company’s
revenue generation for the last two years came from the following
sources, which sources are explained in detail below.
|
|
|
Copperhead
Digital
|
$400,763
|
$867,896
|
K
Telecom
|
119,860
|
490,241
|
San Diego
Media
|
169,142
|
365,506
|
Blue
Collar
|
219,474
|
—
|
P2P
|
25,430
|
390,137
|
Other
|
2,400
|
1,380
|
Total
Revenue
|
$937,069
|
$2,115,160
|
Copperhead
Digital: ISP and Telecom Revenue
Copperhead Digital
is a regional internet and telecom services provider operating in
Arizona under the trade name Trucom. Copperhead Digital operates as
a wireless telecommunications Internet Service Provider
(“ISP”) facilitating both residential and commercial
accounts. Copperhead Digital’s primary business model is
subscription based, pre-paid monthly reoccurring revenues, from
wireless delivered, high-speed internet connections. In addition,
the company resells third-party satellite and DSL internet and IP
telephony services. Revenue generated from sales of
telecommunications services is recognized as the transaction with
the customer is considered closed and the customer receives and
accepts the services that were the result of the transaction. Due
date is detailed on monthly invoices distributed to customer.
Services billed monthly in advance are deferred to the proper
period as needed. Certain of our products require specialized
installation and equipment. For telecom products that include
installation, if the installation meets the criteria to be
considered a separate element, product revenue is recognized upon
delivery, and installation revenue is recognized when the
installation is complete. The Installation Technician collects the
signed quote containing terms and conditions when installing the
site equipment at customer premises.
Revenue for
installation services and equipment is billed separately from
recurring ISP and telecom services, and is recognized when
equipment is delivered and installation is completed. Revenue from
ISP and telecom services is recognized monthly over the contractual
period, or as services are rendered and accepted by the
customer.
The overwhelming
majority of our revenue continues to be recognized when
transactions occur. Since installation fees are generally small
relative to the size of the overall contract and because most
contracts are for a year or less, the impact of not recognizing
installation fees over the contract is immaterial.
K
Telecom: Prepaid Phones and SIM Cards Revenue
K Telecom generates
revenue from reselling prepaid phones, SIM cards, and rechargeable
minute traffic for prepaid phones to its customers (primarily
retail outlets). Product sales occur at the customer’s
locations, at which time delivery occurs and cash or check payment
is received. The Company recognizes the revenue when they receive
payment at the time of delivery.
SDM:
Ecommerce, Email Marketing and Web Design Services
SDM generates
revenue by providing ecommerce, email marketing and web design
solutions to small and large commercial businesses, complete with
monthly software support, updates and maintenance. Services are
billed monthly. Platform infrastructure support is a prepaid
service billed in monthly recurring increments. The services are
billed a month in advance and due prior to services being rendered.
The revenue is deferred when invoiced and booked in the month the
service is provided. Software support services (including software
upgrades) are billed in real time, on the first of the month. Web
design service revenues are recognized upon completion of specific
projects. Revenue is booked in the month the services are rendered
and payments are due on the final day of the month.
Blue
Collar: Media Production Services
Blue Collar creates
original live action and animated content productions, and has
produced hundreds of hours of material for the television,
theatrical, home entertainment and new media markets. Blue Collar
designs branding and marketing campaigns and has had agreements
with some of the world’s largest companies including PepsiCo,
Intel, HP, WalMart and many other Fortune 500 companies.
Additionally, they create motion picture, television and home
entertainment marketing campaigns for studios including Sony,
DreamWorks, Twentieth Century Fox, Universal Studios, Paramount
Studios, and Warner Brothers. With regard to revenue recognition,
Blue Collar receives an agreement from each client to perform
defined work. Some agreements are written, some are verbal. Work
may include creation of marketing materials and/or content
creation. Some work may be short term and take weeks to create and
some work may be longer and take months to create. There are
instances where customer agreements segregate identifiable
obligations (like filming on site vs. film editing and final
production) with separate transaction pricing. The performance
obligation is generally satisfied upon delivery of such film or
production products, at which time revenue is
recognized.
P2P
Asset Activity: Telecom Revenue
Port 2 Port
Communications (P2P) is a U.S. domestic minutes provider that sells
wholesale long distance domestic telecom minutes to other domestic
U.S. carriers. A service is defined as wholesale telecom minute
based on a per-minute and per-destination rate basis. A series of
services for P2P would be substantially the same and would include
a pattern of transfers of services to a customer on a per-minute
flat rate basis for all destinations in a specified geographic.
Revenue generated from sales of minute services are recognized when
weekly invoices are generated and distributed.
Share-based
Compensation
The Company is
required to measure and recognize compensation expense for all
share-based payment awards (including stock options) made to
employees and directors based on estimated fair value. Compensation
expense for equity-classified awards is measured at the grant date
based on the fair value of the award and is recognized as an
expense in earnings over the requisite service period.
The Company records
compensation expense related to non-employees that are awarded
stock in conjunction with selling goods or services and recognizes
compensation expenses over the vesting period of such
awards.
Income
Taxes
Deferred tax assets
and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the year 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
our income tax provision in the period of enactment.
We recognize
deferred tax assets to the extent that we believe that these assets
are more likely than not to be realized. In making such a
determination, we consider all available positive and negative
evidence, including future reversal of existing taxable temporary
differences, projected future taxable income, tax-planning
strategies, and results of recent operations, including taxable
income in carryback periods. If we determine that we would be able
to realize our deferred tax assets in the future in excess of their
net recorded amount, we would make an adjustment to the deferred
tax asset valuation allowance, which would reduce our income tax
provision.
We account for
uncertain tax positions using a “more-likely-than-not”
recognition threshold. We evaluate uncertain tax positions on a
quarterly basis and consider various factors, including, but not
limited to, changes in tax law, the measurement of tax positions
taken or expected to be taken in tax returns, the effective
settlement of matters subject to audit, new audit activity and
changes in facts or circumstances related to a tax
position.
It is our policy to
record costs associated with interest and penalties related to tax
in the selling, general and administrative line of the consolidated
statements of operations.
Cash
and Cash Equivalents
The company
considers all investments with a maturity date of three months or
less when purchased to be cash equivalents. There are no cash
equivalents as of December 31, 2018 and 2017.
Accounts
Receivable
We establish an
allowance for potential uncollectible accounts receivable. All
accounts receivable 60 days past due are considered uncollectible
unless there are circumstances that support collectability. Those
circumstances are documented. As of December 31, 2018 and 2017, the
allowance for uncollectible accounts receivable was $49,191 and
$38,022, respectively. Receivables are charged off when collection
efforts cease.
Property
and Equipment
Property and
equipment are stated at cost or fair value if acquired as part of a
business combination. Depreciation is computed by the straight-line
method and is charged to operations over the estimated useful lives
of the assets. Maintenance and repairs are charged to expense as
incurred. The carrying amount of accumulated depreciation of assets
sold or retired are removed from the accounts in the year of
disposal and any resulting gain or loss in s included in results of
operations. The estimated useful lives of property and equipment
are telecommunications network - 20 years, telecommunications
equipment - 7 to 10 years, and computers and office equipment - 3
years.
Goodwill
and Intangible Assets
Goodwill relates to
amounts that arose in connection with our various business
combinations and represents the difference between the purchase
price and the fair value of the identifiable tangible and
intangible net assets when accounted for using the acquisition
method of accounting. Goodwill is not amortized, but it is subject
to periodic review for impairment.
We test goodwill
and other intangible assets with indefinite lives at the reporting
unit level for impairment on an annual basis and between annual
tests, if events and circumstances indicate it is more likely than
not that the fair value of a reporting unit is less than its
carrying value. Events that would indicate potential impairment and
trigger an interim impairment assessment include, but are not
limited to, current economic and market conditions, including a
decline in market capitalization, a significant adverse change in
legal factors, business climate or operational performance of the
business and an adverse action or assessment by a
regulator.
In performing the
annual goodwill impairment test, we utilize the two-step approach.
The first step, or Step 1, requires a comparison of the carrying
value of each reporting unit to its estimated fair value. To
estimate the fair value of our reporting units for Step 1, we use a
combination of the income approach, the market comparable approach
and the market transaction approach. The income approach is based
on a discounted cash flow analysis, or DCF approach, and calculates
the fair value by estimating the after-tax cash flows attributable
to a reporting unit and then discounting the after-tax cash flows
to a present value, using a risk-adjusted discount rate.
Assumptions used in the DCF approach require the exercise of
significant judgment, including judgment about appropriate discount
rates and terminal values, growth rates and the amount and timing
of expected future cash flows. The forecasted cash flows are based
on our most recent operating activities and assumed growth rates.
We believe our assumptions are consistent with the plans and
estimates used to manage the underlying businesses. The discount
rates, which are intended to reflect the risks inherent in future
cash flow projections, used in the DCF approach are based on
estimates of the weighted-average cost of capital, or WACC, of
market participants relative to each respective reporting unit. The
market approaches consider comparable and transactional market data
based on multiples of revenue or earnings before interest, taxes,
depreciation and amortization, or EBITDA, based on trading
multiples of selected guidelines companies and deal multiples of
selected target companies.
If the carrying
value of a reporting unit exceeds its estimated fair value, we are
required to perform the second step, or Step 2, of the annual
goodwill impairment test to measure the amount of impairment loss,
if any. Step 2 of the goodwill impairment test compares the implied
fair value of a reporting unit’s goodwill to its carrying
value. The implied fair value of goodwill is calculated as the
difference between the fair value of the reporting unit and the
estimated fair value of its assets and liabilities. To the extent
this amount is below the carrying value of goodwill, an impairment
charge is recorded to write down the carrying value to its implied
value. Based on our impairment testing, we do not consider an
impairment charge to goodwill necessary as of December 31, 2018 and
2017.
Impairment charges
related to goodwill, if any, have no impact on our cash
balances.
Impairment of Other Long-lived Tangible and Intangible
Assets
Our intangible
assets consist primarily of customer relationships, developed
technology and the film library. The majority of our intangible
assets were recorded in connection with our various business
combinations. Our intangible assets are recorded at fair value at
the time of their acquisition. We amortize intangible assets over
their estimated useful lives.
The estimated
useful lives of the individual categories of intangible assets were
based on the nature of the applicable intangible asset and the
expected future cash flows to be derived from the intangible asset.
Amortization of intangible assets with finite lives is recognized
over the shorter of the respective lives of the agreement or the
period of time the intangible assets are expected to contribute to
future cash flows. We amortize our finite-lived intangible assets
based on patterns on which the respective economic benefits are
expected to be realized. We amortize the majority of our intangible
assets on a straight-line basis from three to nine years, as this
methodology most closely approximates the pattern of economic
benefits for these assets.
We evaluate
long-lived tangible and intangible assets whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. If indicators of impairment are
present with respect to long-lived tangible and intangible assets
used in operations and undiscounted future cash flows are not
expected to be sufficient to recover the assets’ carrying
amount, additional analysis is performed as appropriate and the
carrying value of the long-lived assets is reduced to the estimated
fair value, if this is lower, and an impairment loss is charged to
expense in the period the impairment is identified. Factors we
generally consider important which could trigger an impairment
review on the carrying value of other long-lived tangible and
intangible assets include the following: (1) significant
underperformance relative to expected historical or projected
future operating results, (2) significant changes in the
manner of our use of acquired assets or the strategy for our
overall business, (3) underutilization of our tangible assets,
(4) discontinuance of product lines by ourselves or our
customers, (5) significant negative industry or economic
trends, (6) significant decline in our stock price for a
sustained period,
(7) significant
decline in our market capitalization relative to net book value and
(8) goodwill impairment identified during an impairment
review. As of December 31, 2018 and 2017, we performed evaluations
that resulted in no impairments of intangible assets.
Business Acquisitions
Our business
acquisitions have historically been made at prices above the fair
value of the assets acquired and liabilities assumed, resulting in
goodwill or some identifiable intangible asset. Significant
judgment is required in estimating the fair value of intangible
assets and in assigning their respective useful lives. The fair
value estimates are based on available historical information and
on future expectations and assumptions deemed reasonable by
management but are inherently uncertain.
We generally employ
the income method to estimate the fair value of intangible assets,
which is based on forecasts of the expected future cash flows
attributable to the respective assets. Significant estimates and
assumptions inherent in the valuations reflect a consideration of
other marketplace participants and include the amount and timing of
future cash flows (including expected growth rates and
profitability), the underlying product life cycles, economic
barriers to entry, a brand’s relative market position and the
discount rate applied to the cash flows. Unanticipated market or
macroeconomic events and circumstances may occur, which could
affect the accuracy or validity of the estimates and
assumptions.
Net assets acquired
are recorded at their fair value and are subject to adjustment upon
finalization of the fair value analysis.
Basic
and Diluted Net Loss Per Share
The Company
computes net income (loss) per share in accordance with ASC 260,
“Earning per Share””. ASC 260 requires
presentation of both basic and diluted earnings per share
(“EPS”) on the face of thee income statement. Basic EPS
is computed by dividing net income (loss) available to common
shareholder (numerator) by the weighted average number of shares
outstanding (denominator) during the period. Diluted EPS gives
effect to all dilutive potential common shares outstanding during
the period using the treasury stock method and convertible
preferred stock using the if-converted method. In computing diluted
EPS, the average stock price for the period is used in determining
the number of shares assumed to be purchased from the exercise of
stock options or warrants. Diluted EPS excludes all dilutive
potential shares if their effect is anti-dilutive. As of December
31, 2018 and 2017, the Company had shares that were potentially
common stock equivalents as follows:
|
|
|
Series A Preferred
Stock
|
128,056,506
|
62,671,309
|
Series B Preferred
Stock
|
2,588,693
|
2,588,693
|
Stock
Options
|
3,093,120
|
93,520
|
Convertible
Debt
|
4,252,555
|
1,339,536
|
|
137,990,874
|
66,599,536
|
Concentration
of Credit Risk, Off-Balance Sheet Risks and Other Risks and
Uncertainties
Financial
instruments that potentially subject us to concentration of credit
risk primarily consist of cash and cash equivalents and accounts
receivable. We invest our excess cash primarily in high quality
securities and limit the amount of our credit exposure to any one
financial institution. We do not require collateral or other
securities to support customer receivables; however, we perform
on-going credit evaluations of our customers and maintain
allowances for potential credit losses.
At
December 31, 2018 and 2017, two customer accounts receivable
balances were 28% and 0%, respectively, of our aggregate accounts
receivable or revenues.
Financial
Instruments and Fair Value of Financial Instruments
Our primary
financial instruments at December 31, 2018 and 2017 consisted
of cash equivalents, accounts receivable, accounts payable and
debt. We apply fair value measurement accounting to either record
or disclose the value of our financial assets and liabilities in
our financial statements. Fair value is defined as the exchange
price that would be received for an asset or paid to transfer a
liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between
market participants on the measurement date. A fair value hierarchy
requires an entity to maximize the use of observable inputs, where
available, and minimize the use of unobservable inputs when
measuring fair value.
Described below are
the three levels of inputs that may be used to measure fair
value:
Level 1 Quoted prices in active
markets for identical assets or liabilities.
Level 2 Observable inputs other
than Level 1 prices, such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or
other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the
assets or liabilities.
Level 3 Unobservable inputs that
are supported by little or no market activity and that are
significant to the fair value of the assets or
liabilities.
Research
and Development
Our research and
development programs focus on telecommunications products and
services. Research and development costs are expensed as incurred.
Any payments received from external parties to fund our research
and development activities reduce the recorded research and
development expenses.
Advertising
Costs
Advertising costs
are expensed as incurred. The Company incurred advertising costs of
$220 and $1,350 for the years ended December 31, 2018 and 2017,
respectively.
Use
of Estimates
The preparation of
financial statements in conformity with United States generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ materially from those
estimates. The Company’s consolidated financial statements
reflect all adjustments that management believes are necessary for
the fair presentation of their financial condition and results of
operations for the periods presented.
Derivative
Financial Instruments
Derivative
financial instruments, as defined in ASC 815, “Accounting for
Derivative Financial Instruments and Hedging Activities”,
consist of financial instruments or other contracts that contain a
notional amount and one or more underlying (e.g. interest rate,
security price or other variable), require no initial net
investment and permit net settlement. Derivative financial
instruments may be free-standing or embedded in other financial
instruments. Further, derivative financial instruments are
initially, and subsequently, measured at fair value and recorded as
liabilities or, in rare instances, assets.
The Company does
not use derivative financial instruments to hedge exposures to
cash-flow, market or foreign-currency risks. However, the Company
had issued financial instruments including convertible promissory
notes payable with features during 2017 that were either (i) not
afforded equity classification, (ii) embody risks not clearly and
closely related to host contracts, or (iii) may be net-cash settled
by the counterparty. As required by ASC 815, in certain instances,
these instruments are required to be carried as derivative
liabilities, at fair value, in our financial
statements.
The Company
estimates the fair values of derivative financial instruments using
the Black-Scholes option valuation technique. Estimating fair
values of derivative financial instruments requires the development
of significant and subjective estimates (such as volatility,
estimated life and interest rates) that may, and are likely to,
change over the duration of the instrument with related changes in
internal and external market factors. In addition, option-based
techniques are highly volatile and sensitive to changes in the
trading market price of our common stock, which has a
high-historical volatility. Since derivative financial instruments
are initially and subsequently carried at fair values, the
Company’s operating results will reflect the volatility in
these estimate and assumption changes.
During September
2017, the Company issued convertible promissory notes in the amount
of $55,000 (comprised of two $25,000 notes to two related parties
and one $5,000 note to a former officer of CDH), all which are due
May 1, 2020 and bear 6% annual interest and are convertible into
common stock of the Company at 60% of the average closing market
share price for the prior 10 trading days. Subsequent to September
30, 2017 and prior to December 31, 2017, the Company issued an
additional $12,000 of the same convertible promissory notes with
the same conversion features. However, in November 2017, all of
these convertible promissory notes included as derivative financial
instruments totaling $67,000 were amended such that the conversion
price became fixed at $0.25 per share, and the derivative features
were eliminated. As such, the derivative accounting as of and
through September 31, 2017 was reversed and there is no resulting
derivative accounting that is evident in the 2018 or 2017 financial
statements.
Recently
Adopted Accounting Pronouncements
On January 1, 2018,
we adopted the new accounting standard ASC 606, Revenue from Contracts with Customers,
and all of the related amendments (“New Revenue
Standard”). In our evaluations and in adopting the modified
retrospective approach for contracts and revenue in general, there
was no difference in our revenue recognition practices upon
adoption that resulted in adjustments material to the consolidated
financial statements. We expect the impact of the adoption of the
New Revenue Standard to continue to be immaterial on an ongoing
basis.
In June 2018, the
FASB issued ASU No. 2018-07, Improvements to Nonemployee
Share-Based Payment Accounting, which amends ASC 718, Compensation
– Stock Compensation. This ASU requires that most of the
guidance related to stock compensation granted to employees be
followed for non-employees, including the measurement date,
valuation approach, and performance conditions. The expense is
recognized in the same period as though cash were paid for the good
or service. The effective date is the first quarter of fiscal year
2020, with early adoption permitted, including in interim periods.
The ASU has been adopted using a modified-retrospective transition
approach. The adoption is not considered to have a material effect
on the consolidated financial statements.
In February 2016,
the FASB issued ASU 2016-02, Leases (Topic 842) and subsequent
amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU
2018-11, ASU 2018-20 and ASU 2019-01 (collectively, Topic 842).
Topic 842 requires lessees to classify leases as either finance or
operating leases and to record a right-of-use asset and a lease
liability for all leases with a term greater than 12 months
regardless of the lease classification. We expect to adopt Topic
842 using the effective date, January 2019, as the date of our
initial application of the standard. Consequently, financial
information for the comparative periods will not be updated. We
expect that our finance and operating lease commitments will be
subject to the new standard and recognized as finance and operating
lease liabilities and right-of-use assets upon our adoption of
Topic 842, which will increase our total assets and total
liabilities that we report relative to such amounts prior to
adoption.
Management has
reviewed other recently issued accounting pronouncements and have
determined there are not any that would have a material impact on
the condensed consolidated financial statements.
Reclassifications
Certain prior
period amounts were reclassified to conform to the current period
presentation. Specifically, we reclassified 2017 Debt- related
party in the amount of $62,000 to long-term related party
convertible debt to conform to current year
presentation.
NOTE
2 – ACQUISITIONS
Blue
Collar Acquisition
The Company entered
into an Acquisition and Purchase Agreement on November 3, 2017, but
amended on February 9, 2018, March 29, 2018 and August 16, 2018, to
be effective September 1, 2018 with Blue Collar Inc. (“Blue
Collar”), a media production company and California
Corporation and its shareholders, to acquire 100% of the
outstanding ownership of Blue Collar, including equipment,
furniture and other assets, for 6,500,000 shares of restricted
Common Stock and $1,600,000 (which was determined to have a fair
value of approximately $1,533,000) in a Seller note payable that is
to be paid within eight months of September 1, 2018, as amended in
August 2018, and bears annual interest of 3% (12% interest upon
default). See Notes 7 and 11. The acquisition is a key element in
the Company’s overall strategic plans. Change in control took
place on September 1, 2018 with the addition of senior company
personnel being added to the Board of Directors of Blue Collar and
on all bank accounts.
The Company applied
the acquisition method of accounting to the business combination
and has valued each of the assets acquired and liabilities. The
assets and liabilities were deemed to be recorded at fair value as
of the acquisition date of September 1, 2018.
Purchase Price
Allocation:
|
|
Effective
|
9-1-18
|
|
|
Purchaser
|
|
|
|
Consideration
Given:
|
|
Common
Stock
|
6,500,000
|
|
6,500,000
|
Estimated
Value
|
$.13
|
Consideration Share
Value
|
845,000
|
Note
Payable
|
$1,533,217
|
Liabilities:
|
|
Bank
debt
|
500,500
|
Lease
payable
|
20,020
|
Accounts
and other payables
|
386,652
|
Total Consideration
Value
|
$3,285,389
|
|
|
Consideration
Received:
|
|
Intangible
asset
|
$1,677,000
|
Goodwill
|
853,366
|
Assets
|
|
Current
assets
|
297,704
|
Fixed
assets
|
445,362
|
Other
assets
|
11,957
|
Total Consideration
Received
|
$3,285,389
|
Had the acquisition
occurred on January 1, 2017, condensed proforma statement of
operations for the years ended December 31, 2018 and 2017 would be
as follows:
|
|
|
Revenue
|
$2,355,467
|
$3,966,866
|
Cost of
Sales
|
2,350,657
|
3,226,912
|
Gross Profit
(Loss)
|
$4,810
|
$739,954
|
Expenses
|
(4,768,116)
|
(4,058,844)
|
Interest Expense
and impairment
|
(275,935)
|
(694,637)
|
Income
taxes
|
—
|
—
|
Net
Loss
|
$(5,039,241)
|
$(4,013,527)
|
Included in the
consolidated statement of operations for the year ended December
31, 2018 are the results of operations for Blue Collar for the four
months ended December 31 which are the following:
|
|
Revenue
|
$219,474
|
Cost of
Sales
|
215,973
|
Gross Profit
(Loss)
|
$3,501
|
Expenses
|
(301,105)
|
Interest
Expense
|
(66,571)
|
Income
taxes
|
—
|
Net
Loss
|
$(364,175)
|
Total Industrial Plant Services, Inc. Acquisition and Subsequent
Termination
On April 18, 2018,
the Company entered into an Acquisition and Purchase Agreement in
draft form with Total Industrial Plant Services, Inc.
(“TIPS”), a Texas Corporation and its shareholders, to
acquire the assets, intellectual property and technology for
3,000,000 shares of restricted Common Stock and $2,500,000 payable
at closing. A condition upon closing was that TIPS’ financial
information, including existing contracts and projected contract
revenue levels, was to be audited by a SEC Certified Public
Accounting firm in accordance with SEC requirements.
Shortly after the
date of the agreement, which was in draft form, the Company
determined that the terms under the Acquisition and Purchase
Agreement, on TIPS’ part, were unperformable and that several
representations made by TIPS were not accurate. As such, the
Company verbally terminated the Acquisition and Purchase Agreement.
On August 29, 2018, the Company gave written notice of termination
to TIPS.
Separately, during
the due diligence phase, the Company extended TIPS $37,950 in
working capital. The Company was working with TIPS on a repayment
plan but has made the determination to provide for an allowance for
bad debt of 100% of this balance as of December 31,
2018.
HRS
Agreement and Subsequent Rescission
On November 1,
2017, as amended February 9, 2018, the Company entered into an
Acquisition and Purchase Agreement with Hollywood Riviera LLC and
HRS Mobile LLC and their members who share common ownership to
acquire 100% ownership interest in both of these companies for
3,265,000 restricted Common Stock and, and $3,350,000 in cash to be
used to retire debt and pay for ownership interests. In conjunction
with this Acquisition, 3,265,000 shares of restricted Common Stock
were issued during 2017. On March 28, 2018, by mutual agreement,
this Agreement was rescinded and the 3,625,000 shares of common
stock are being returned by the recipients and have been recorded
as $3,625 in stock subscription receivable as of December 31, 2018.
These common shares have yet to be returned as of the issuance of
these financial statements.
NOTE
3 – GOING CONCERN
The accompanying
consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.
Cash flows
generated from operating activities were not enough to support all
working capital requirements for the years ended December 31, 2018
and 2017. Financing activities described below have helped with
working capital and other capital requirements. We incurred
$5,377,489 and $3,807,401, respectively, in losses, and we used
$916,407 and $750,408, respectively, in cash for operations for the
years ended December 31, 2018 and 2017. Cash flows from financing
activities were $871,199 and $693,502 for the same periods. These
factors raise substantial doubt about the ability of the Company to
continue as a going concern for a period of one year from the
issuance of these financial statements. The financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
Subsequent to
December 31, 2018, shareholders extended loans to the Company in
the amount of approximately $104,300 into debt that is convertible
one dollar into one share of sock of Series C Preferred Stock that
has been designated convertible into common stock at $0.15 per
share and includes terms similar to the other Preferred Stock. A
third-party advanced the company $50,000 on March 13, 2019 with
verbal terms that included repayment in 45 days at 10%. There were
no other terms on this.
On March 19, 2019,
the “Company consummated a Securities Purchase Agreement
dated March 15, 2019 with Geneva Roth Remark Holdings, Inc.
(“Geneva Roth”) for the purchase of a $68,000
Convertible Promissory Note (“Geneva Roth Convertible
Promissory Note”). This Geneva Roth Convertible Promissory
Note is part of a larger investment term sheet with Geneva Roth, at
their option, to invest in the Company up to $975,000.
In addition, On
March 25, 2019, TPT Global Tech, Inc. (the “Company”)
consummated a Securities Purchase Agreement dated March 18, 2019
with Auctus Fund, LLC. (“Auctus”) for the purchase of a
$600,000 Convertible Promissory Note (“Auctus Convertible
Promissory Note”).
In order for us to
continue as a going concern for a period of one year from the
issuance of these financial statements, we will need to obtain
additional debt or equity financing and look for companies with
cash flow positive operations that we can acquire. There can be no
assurance that we will be able to secure additional debt or equity
financing, that we will be able to acquire cash flow positive
operations, or that, if we are successful in any of those actions,
those actions will produce adequate cash flow to enable us to meet
all our future obligations. Most of our existing financing
arrangements are short-term. If we are unable to obtain additional
debt or equity financing, we may be required to significantly
reduce or cease operations.
NOTE
4 – PROPERTY AND EQUIPMENT
Property and
equipment and related accumulated depreciation as of December 31,
2018 and 2017 are as follows:
|
|
|
Property and
equipment:
|
|
|
Telecommunications
fiber and equipment
|
$3,274,045
|
3,274,045
|
Film production
equipment
|
369,903
|
—
|
Office furniture
and equipment
|
82,014
|
23,898
|
Leasehold
improvements
|
18,679
|
—
|
Accumulated
depreciation
|
(697,699)
|
(483,876)
|
Property and
equipment, net
|
$3,046,942
|
2,814,067
|
Depreciation
expense was $213,823 and $175,492 for the years ended December 31,
2018 and 2017, respectively.
NOTE 5 – DEBT FINANCING
ARRANGEMENTS
Financing
arrangements as of December 31, 2018 and 2017 are as
follows:
|
|
|
Business loans and
advances (1)
|
$615,692
|
114,016
|
Convertible debt
(2)
|
15,000
|
5,000
|
Factoring agreement
(3)
|
101,244
|
78,909
|
Debt – third
party
|
$731,936
|
197,925
|
|
|
|
Line of credit,
related party secured by assets (4)
|
$3,043,390
|
3,043,390
|
Debt– other
related party, net of discounts (5)
|
5,912,898
|
4,350,000
|
Convertible debt
– related party (2)
|
801,888
|
312,000
|
Shareholder debt
(6)
|
181,694
|
164,200
|
Debt –
related party
|
$9,939,870
|
7,869,590
|
|
|
|
Total financing
arrangements
|
$10,671,806
|
8,067,515
|
|
|
|
Less current
portion:
|
|
|
Debt
– third party
|
$(716,936)
|
(195,106)
|
-
third party, convertible
|
(10,000)
|
—
|
Debt
– related party, net of discount
|
(9,137,982)
|
(7,557,590)
|
– related party, convertible
|
(202,688)
|
(250,000)
|
|
(10,067,606)
|
(8,002,696)
|
Total long term
debt
|
$604,200
|
64,819
|
(1)
The
terms of $40,000 of this balance are similar to that of the Line of
Credit which bears interest at adjustable rates, 1 month Libor plus
2%, 4.34% as of December 31, 2018, and is secured by assets of the
Company, is due August 31, 2019, as amended, and included 8,000
stock options as part of the terms (see Note 7). $500,500 is a line
of credit that Blue Collar has with a bank, bears interest at Prime
plus 1.125%, 6.38% as of December 31, 2018, and is due March 25,
2021. $10,000 is an amount the bears interest at 6%, subsequently
increased to 11%, as it was due and not repaid on October 10, 2018.
The remaining balances generally bear interest at approximately
10%, have maturity dates that are due on demand or are past due,
are unsecured and are classified as current in the balance
sheets.
(2)
During
2017, the Company issued convertible promissory notes in the amount
of $67,000 (comprised of $62,000 from two related parties and
$5,000 from a former officer of CDH), all which are due May 1, 2020
and bear 6% annual interest (12% default interest rate). The
convertible promissory notes are convertible, as amended, at $0.25
per share. During 2016, the Company acquired SDM which
consideration included a convertible promissory note for $250,000
due August 31, 2018, as amended, does not bear interest, unless
delinquent in which the interest is 12% per annum, and is
convertible into common stock at $1.00 per share. The SDM balance
is $202,688 as of December 31, 2018. During 2018, the Company
issued convertible promissory notes in the amount of $537,200 to
related parties and $10,000 to a non-related party which bear
interest at 6% (11% default interest rate), are due 30 months from
issuance and are convertible into Series C Preferred Stock at $1.00
per share. Because the Series C Preferred Stock has a conversion
price of $0.15 per share, the issuance of Series C Preferred Stock
promissory notes will cause a beneficial conversion feature of
approximately $38,479 upon exercise of the convertible promissory
notes.
(3)
The
Factoring Agreement with full recourse, due August 31, 2019, as
amended, was established in June 2016 with a company that is
controlled by a shareholder and is personally guaranteed by an
officer of the Company. The Factoring Agreement is such that the
Company pays a discount of 2% per each 30-day period for each
advance received against accounts receivable or future billings.
The Company was advanced funds from the Factoring Agreement for
which $101,244 and $78,909 in principal remained unpaid as of
December 31, 2018 and 2017, respectively.
(4)
The
Line of Credit originated with a bank and was secured by the
personal assets of certain shareholders of Copperhead Digital.
During 2016, the Line of Credit was assigned to the Copperhead
Digital shareholders, who subsequent to the Copperhead Digital
acquisition by TPTG became shareholders of TPTG, and the secured
personal assets were used to pay off the bank. The Line of Credit
bears a variable interest rate based on the 1 Month LIBOR plus
2.0%, 3.91% as of December 31, 2018, is payable monthly, and is
secured by the assets of the Company. 1,000,000 shares of Common
Stock of the Company have been reserved to accomplish raising the
funds to pay off the Line of Credit. Since assignment of the Line
of Credit to certain shareholders, which balance on the date of
assignment was $2,597,790, those shareholders have loaned the
Company $445,600 under the similar terms and conditions as the line
of credit but most of which were also given stock options totaling
85,120 (see Note 7) and is due, as amended, August 31, 2019. During
the year ended December 31, 2018, those same shareholders and one
other have loaned the Company money in the form of convertible
loans of $537,200 described in (2) above.
(5)
$350,000
represents cash due to the prior owners of the technology acquired
in December 2016 from the owner of the Lion Phone which is due to
be paid as agreed by TPTG and the former owners of the Lion Phone
technology and has not been determined. $4,000,000 represents a
promissory note included as part of the consideration of ViewMe
Live technology acquired in 2017, later agreed to as being due and
payable in full, with no interest with $2,000,000 from debt
proceeds intended to be obtained in 2018 and the remainder from
proceeds from the second Company public offering intended to be in
2019. On September 1, 2018, the Company closed on its acquisition
of Blue Collar. Part of the acquisition included a promissory note
of $1,600,000 (fair value of $1,533,217, net of a discount to fair
value of $66,783 which is being amortized through expense through
the due date of May 1, 2019) and interest at 3% from the date of
closure. $29,681 was amortized as interest expense in the year
ended December 31, 2018. The promissory note is secured by the
assets of Blue Collar.
(6)
The
shareholder debt represents funds given to TPTG or subsidiaries by
officers and managers of the Company as working capital. There are
no written terms of repayment or interest that is being accrued to
these amounts and they will only be paid back, according to
management, if cash flows support it. They are classified as
current in the balance sheets.
See Lease financing
arrangement in Note 8.
NOTE
6 - INCOME TAXES
The following table
sets forth the components of the Company’s income tax expense
(benefit) for the years ended December 31, 2018 and
2017:
Current:
|
|
|
Federal State and
local
|
$—
|
—
|
Total
Current
|
$—
|
—
|
Deferred:
|
|
|
Federal State and
local benefit
|
$(1,129,273)
|
(791,570)
|
Net operating loss,
net of state tax effect
|
(84,070)
|
(47,462)
|
Meals and
entertainment
|
2,183
|
2,736
|
Stock based
expenses
|
235,256
|
—
|
Other
|
84,071
|
56,796
|
Allowance
|
891,833
|
779,500
|
Total
Benefit
|
$—
|
—
|
The following table
sets forth a reconciliation of the Company’s income tax
expense (benefit) as the federal statutory rate to recorded income
tax expense (benefit) for the years ended December 31, 2018 and
2017:
|
|
|
Statutory
rate
|
21%
|
21%
|
Change in valuation
allowance
|
(21%)
|
(21%)
|
Stock based
compensation
|
(0%)
|
(0%)
|
Net operating loss,
net of state tax effect
|
(1%)
|
(1%)
|
Other
|
(1%)
|
(1%)
|
Total
|
—
|
—
|
The following table
sets forth the components of the Company’s deferred income
taxes as of December 31, 2018 and 2017:
Current deferred
tax assets (liabilities):
|
|
|
Valuation
allowance
|
$—
|
—
|
Total current
deferred tax asset (liability)
|
$—
|
—
|
|
|
|
Noncurrent deferred
tax assets (liabilities):
|
|
|
Intangible assets
amortization
|
$620,447
|
460,773
|
Net operating loss
carry forwards
|
1,681,403
|
949,243
|
Stock base
compensation
|
1,287,336
|
1,287,336
|
Other
|
98,927
|
98,927
|
Less; Valuation
allowance
|
$(3,688,113)
|
(2,796,279)
|
Total noncurrent
deferred tax asset (liability)
|
—
|
—
|
|
|
|
Total deferred tax
asset (liability)
|
$—
|
—
|
The Company has
approximately $8,000,000 and 4,500,000 of net operating loss carry
forwards as of December 31, 2018 and 2017, respectively, which
expire in varying amounts, if unused. Because of the change in
ownership of more than 50% of the Company in accordance with
Section 382 of the IRS Code, these net operating loss carry
forwards may be significantly limited to use in future
periods.
NOTE
7 - STOCKHOLDERS' EQUITY
Preferred
Stock
As of December 31,
2018, we had authorized 100,000,000 shares of Preferred Stock, of
which certain shares had been designated as Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred
Stock.
Series
A Convertible Preferred Stock
In February 2015,
the Company designated 1,000,000 shares of Preferred Stock as
Series A Preferred Stock.
The Series A
Preferred Stock was designated in February 2016, has a par value of
$.001, is redeemable at the Company’s option at $100 per
share, is senior to any other class or series of outstanding
Preferred Stock or Common Stock and does not bear dividends. The
Series A Preferred Stock has a liquidation preference immediately
after any Senior Securities, as defined, and of an amount equal to
$100 per share. Holders of the Series A Preferred Stock shall,
collectively have the right to convert all of their Series A
Preferred Stock when conversion is elected into that number of
shares of Common Stock of the Company, determined by the following
formula: 60% of the issued and outstanding Common Shares as
computed immediately after the transaction for conversion. For
further clarification, the 60% of the issued and outstanding common
shares includes what the holders of the Series A Preferred Stock
may already hold in common shares at the time of conversion. The
Series A Preferred Stock, collectively, shall have the right to
vote as if converted prior to the vote to an amount of shares equal
to 60% of the outstanding Common Stock of the Company.
In February 2015,
the Board of Directors authorized the issuance of 1,000,000 shares
of Series A Preferred Stock to Stephen Thomas, Chairman, CEO and
President of the Company, valued at $3,116,000 for compensation
expense.
Series
B Convertible Preferred Stock
In February 2015,
the Company designated 3,000,000 shares of Preferred Stock as
Series B Convertible Preferred Stock. There are 2,588,693 shares of
Series B Convertible Preferred Stock outstanding as of December 31,
2018.
The Series B
Preferred Stock was designated in February 2015, has a par value of
$.001, is not redeemable, is senior to any other class or series of
outstanding Preferred Stock, except the Series A Preferred Stock,
or Common Stock and does not bear dividends. The Series B Preferred
Stock has a liquidation preference immediately after any Senior
Securities, as defined and currently the Series A Preferred Stock,
and of an amount equal to $2.00 per share. Holders of the Series B
Preferred Stock have a right to convert all or any part of the
Series B Preferred Shares and will receive and equal amount of
common shares at the conversion price of $2.00 per share. The
Series B Preferred Stock holders have a right to vote on any matter
with holders of Common Stock and shall have a number of votes equal
to that number of Common Shares on a one to one basis.
Series
C Convertible Preferred Stock
In May 2018, the
Company designated 3,000,000 shares of Preferred Stock as Series C
Convertible Preferred Stock. There are no shares of Series C
Convertible Preferred Stock outstanding as of December 31,
2018.
The Series C
Preferred Stock was designated in May 2018, has a par value of
$.001, is not redeemable, is senior to any other class or series of
outstanding Preferred Stock, except the Series A and Series B
Preferred Stock, or Common Stock and does not bear dividends. The
Series C Preferred Stock has a liquidation preference immediately
after any Senior Securities, as defined and currently the Series A
and B Preferred Stock, and of an amount equal to $2.00 per share.
Holders of the Series C Preferred Stock have a right to convert all
or any part of the Series C Preferred Shares and will receive an
equal amount of common shares at the conversion price of $0.15 per
share. The Series C Preferred Stock holders have a right to vote on
any matter with holders of Common Stock and shall have a number of
votes equal to that number of Common Shares on a one to one
basis.
Common
Stock and Capital Contributions
As of December 31,
2018, we had authorized 1,000,000,000 shares of Common Stock, of
which 136,953,904 common shares are issued and
outstanding.
Common Stock Contributions Related to Acquisitions
Effective November
1 and 3, 2017, an officer of the Company contributed 9,765,000
shares of restricted Common Stock to the Company for the
acquisition of Blue Collar and HRS. These shares were subsequently
issued as consideration for these acquisitions in November 2017. In
March 2018, the HRS acquisition was rescinded and 3,625,000 shares
of common stock are being returned by the recipients. The other
transaction involved 6,500,000 shares for the acquisition of Blue
Collar. In March 2018 and again in August 2018, this transaction
was amended and closed on September 1, 2018. As such, as of
December 31, 2018 both the 3,265,000 shares for the HRS transaction
are reflected as subscriptions receivable based on their par
value.
Common Stock Issued for Expenses and Liabilities
During the year
ended December 31, 2018, the Company entered into a two-year
agreement for legal services. The agreement provided for 4,000,000
shares of restricted common stock to be issued. 2,000,000 to be
issued for previous legal services upon execution of the agreement
in March 2018 and the remaining 2,000,000 in the form of stock
options to purchase common stock at $0.10 per share, of which the
stock options would vest equally over 18 months. The value of the
Company’s common stock upon execution of the agreement was
$0.125 per share, or $250,000 which was recorded as professional
expenses during 2018. See stock options and warrants discussion
below for the value of the 2,000,000 stock options
During the year
ended December 31, 2018, the Company also entered into a
twelve-month general consulting agreement with a third party to
provide general business advisory services to be rendered through
March 30, 2019 for 1,000,000 restricted shares of common stock and
1,000,000 options to purchase restricted common shares at $0.10 per
share for 36 months from the time of grant. The fair value of the
common shares granted was based on the Company’s stock price
of $0.155 per share, or $155,000 of which $120,556 was expensed
during the period for the portion of service term complete as of
December 31, 2018.
During the year
ended December 31, 2018, the Company entered into a consulting
agreement for market services for which it granted 2,500,000 shares
of restricted common stock and will pay $50,000. The per share
value used was the Company’s closing stock price of $0.1297
on the date of the agreement, or a total of $324,250 which was
expensed in 2018.
For these three
agreements, the underlying stock for the stock options are intended
to come from the contribution of stock by an officer of the
Company. During the years ended December 31, 2018, the Company
recorded $694,806 as stock-based compensation related to these
agreements. As of December 31, 2018, amortization of $34,444 is
remaining to be amortized over three months for the general
consulting agreement.
Common Stock Payable Issued for Expenses and
Liabilities
During the years
ended December 31, 2018, 16,667 of common shares were subscribed to
for a note payable on the balance sheet of $2,000.
In August 2018, a
majority of the outstanding voting shares of the Company voted
through a consent resolution to support a consent resolution of the
Board of Directors of the Company to add two new directors to the
Board. As such, Arkady Shkolnik and Reginald Thomas (family member
of CEO) were added as members of the Board of Directors. The total
members of the Board of Directors after this addition is four. In
accordance with agreements with the Company for his services as a
director, Mr. Shkolnik is to receive $25,000 per quarter and
5,000,000 shares of restricted common stock valued at approximately
$692,500 vesting quarterly over twenty-four months. The quarterly
cash payments of $25,000 will be paid in unrestricted common shares
if the Company has not been funded adequately to make such
payments. Mr. Thomas is to receive $10,000 per quarter and
1,000,000 shares of restricted common stock valued at approximately
$120,000 vesting quarterly over twenty-four months. The quarterly
payment of $10,000 may be suspended by the Company if the Company
has not been adequately funded. As of December 31, 2018, $37,500
and $15,000 has been accrued in the balance sheet for Mr. Shkolnik
and Mr. Thomas, respectively.
Common Stock Contributions by Officer for Cash
During the year
ended December 31, 2018, 3,675,000 restricted shares of Common
Stock were subscribed to from investors for $367,500 or $0.10 per
share, which stock was contributed by an officer of the Company as
a capital contribution.
Stock Options
|
|
|
|
Exercise Price
Outstanding and Exercisable
|
|
December 31,
2016
|
----
|
---
|
---
|
---
|
------
|
Granted
|
93,120
|
93,120
|
|
$0.05 to $0.22
|
12-31-19
|
December 31,
2017
|
93,120
|
93,120
|
---
|
$0.05 to $0.22
|
12-31-19
|
Granted
|
3,000,000
|
---
|
|
$0.10
|
|
December 31,
2018
|
3,093,120
|
1,954,230
|
|
$0.05 to $0.22
|
|
Stock options to
purchase approximately 3,093,120 shares of common stock of the
Company are outstanding as of December 31, 2018 related to debt
issuances (see Note 5) at prices ranging from $0.05 to $0.22 per
share.
In addition, the
company granted through consulting arrangements primarily for legal
work and general business support that included the issuance of
stock options to purchase 3,000,000 options to purchase common
shares at $0.10 per share, 1,000,000 of which is fully vested and
2,000,000 which will vest over 18 months from date of grant. All
these stock options have an exercise period of 24 to 36 months. The
Black-Scholes options pricing model was used to value the stock
options. The inputs included the following:
(1)
|
Dividend
yield of 0%
|
(2)
|
expected
annual volatility of 307% - 311%
|
(3)
|
discount rate
of 2.2% to 2.3%
|
(4)
|
expected life
of 2 years, and
|
(5)
|
estimated
fair value of the Company’s common $0.125 to $0.155 per
share.
|
During the years
ended December 31, 2018, the Company recorded $256,187 as
stock-based compensation related to the stock options and the
related service period for which services have been rendered. For
future periods, the remaining value of the stock options totaling
approximately $140,668 will be amortized into the statement of
operations consistent with the period for which the services will
be rendered, which is two years for the legal agreement and one
year for the general consulting agreement.
Common Stock Reservations
The Company has
reserved 1,000,000 shares of Common Stock of the Company for the
purpose of raising funds to be used to pay off debt described in
Note 5.
We have reserved
20,000,000 shares of Common Stock of the Company to grant to
certain employee and consultants as consideration for services
rendered and that will be rendered to the Company.
NOTE
8 - COMMITMENTS AND CONTINGENCIES
Accounts
Payable and Accrued Expenses
|
|
|
Accounts payable:
|
|
|
Related
parties (1)
|
$741,577
|
$216,732
|
General
operating
|
3,037,601
|
2,040,947
|
Credit card
balances
|
246,949
|
95,689
|
Accrued
expenses;
|
33,063
|
25,958
|
Taxes and fees
payable
|
629,462
|
21,702
|
Total
|
$4,687,652
|
$2,401,028
|
|
(1)
|
Relates to amounts
due to management and members of the Board of Directors according
to verbal and written agreements that have not been paid as of
period end.
|
Lease
Obligations
Future minimum
lease payments are as follows:
Obligation
|
|
|
|
Telecom Equipment
Finance (1)
|
$449,103
|
—
|
$449,103
|
Telecommunications
Equipment Lease (2)
|
—
|
101,347
|
101,347
|
Production
Equipment Lease (3)
|
10,357
|
—
|
10,357
|
Total
|
$459,460
|
101,347
|
$560,807
|
(1) The Telecom
Equipment Lease is with an entity owned and controlled by
shareholders of the Company and is due August 31, 2019, as
amended.
(2) The
Telecommunications Equipment Lease requires payments of $3,702 per
month and is in default. See discussion below in Other Commitments
and Contingencies. In December 2017, the Company learned that the
telecommunications equipment lease identified herein for $101,348
was included in a default judgement in a non-jurisdictional state
of Pennsylvania for $169,474 from a lawsuit by the lessor.
Management is working with the lessor to settle this matter
including a proposal for the equipment to be returned to the lessor
and then a negotiated amount for any deficiency between the value
given for the retired equipment and the $101,348. When concluded,
management does not believe the results will be significantly
different than the liability of $101,348 and accrued fees and
interest of $27,070 recorded.
(3) The Production
Equipment Lease, maturing on April 15, 2019, required payments of
$2,535 per month and includes imputed interest at 8.5%. The lease
was entered into in 2015 for the purchase of equipment in the
amount of approximately $120,000 (see Note 2).
Other
Commitments and Contingencies
The Company has
employment agreements with certain employees of SDM and K Telecom.
The agreements are such that SDM and K Telecom, on a standalone
basis in each case, must provide sufficient cash flow to
financially support the financial obligations within the employment
agreements.
In December 2016, a
subsidiary’s landlord agreed to terminate a facilities lease
for 150,000 restricted shares of Common Stock valued at $43,350
from a capital contribution of an officer of the Company.
Subsequent to the agreement, the landlord requested more shares
against the Company’s agreement. As such, $63,053 remains in
liabilities payable to the landlord and the $43,350 was expensed as
rent previously. The matter is still unresolved. Management does
not believe any negative resolution will have a material impact on
the Company’s consolidated financial
statements.
The company has
been named in a lawsuit by a former employee who was terminated by
management in 2016. The employee was working under an employment
agreement but was terminated for breach of the agreement. The
former employee is suing for breach of contract and is seeking
around $75,000 in back pay and benefits. Management believes it has
good and meritorious defenses and does not believe the outcome of
the lawsuit will have any material effect on the financial position
of the Company.
As of December 31,
2018, the company has collected $338,725 from one customer in
excess of amounts due from that customer in accordance with the
customer’s understanding of the appropriate billings
activity. The customer has filed a written demand for repayment by
the Company of amounts owed. Management believes that the customer
agreement allows them to keep the amounts under dispute. Given the
dispute, the Company has reflected the amounts in dispute as a
customer liability on the consolidated balance sheet as of December
31, 2018 and does not believe the outcome of the dispute will have
a material effect on the financial position of the
Company.
NOTE
9 – RELATED PARTY ACTIVITY
During the years
ended December 31, 2018 and 2017, the Company entered into a lease
for living space which is occupied by Stephen Thomas, Chairman, CEO
and President of the Company. Mr. Thomas lives in the space and
uses it as his corporate office. The company has paid $26,792 in
rent and utility payments for this space for the year ended
December 31, 2018.
There are shares
issuances and capital contributions from an officer of the Company.
See Note 7. Also, there are debt and lease balances outstanding due
to shareholders and other related parties of the Company of
$741,577 and $216,732, respectively, as of December 31, 2018 and
2017 related to amounts due to management and members of the Board
of Directors according to verbal and written agreements that have
not been paid as of period end which are included in accounts
payable and accrued expenses on the balance sheet. See Notes 5 and
7.
On April 17, 2018,
the CEO of the Company, Stephen Thomas, signed an agreement with
New Orbit Technologies, S.A.P.I. de C.V., a Mexican corporation,
(“New Orbit”), majority owned and controlled by Stephen
Thomas, related to a license agreement for the distribution of TPT
licensed products, software and services related to Lion Phone and
ViewMe Live within Mexico and Latin America (“License
Agreement”). The License Agreement provides for New Orbit to
receive a fully paid-up, royalty-free, non-transferable license for
perpetuity with termination only under situations such as
bankruptcy, insolvency or material breach by either party and
provides for New Orbit to pay the Company fees equal to 50% of net
income generated from the applicable activities. The transaction
was approved by the Company’s Board of Directors in June
2018. There has been no activity on this agreement.
As is mentioned in
Note 7, Reginald Thomas was appointed to the Board of Directors of
the Company in August 2018. Mr. Thomas is the brother to the CEO
Stephen J. Thomas III. According to an agreement with Mr. Reginald
Thomas, he is to receive $10,000 per quarter and 1,000,000 shares
of restricted common stock valued at approximately $120,000 vesting
quarterly over twenty-four months. The quarterly payment of $10,000
may be suspended by the Company if the Company has not been
adequately funded.
NOTE
10 – GOODWILL AND INTANGIBLE ASSETS
Goodwill and
intangible assets are comprised of the following:
December 31,
2018
|
Gross carrying
amount (1)
|
|
|
|
Customer
Base
|
$1,947,200
|
(1,374,933)
|
572,267
|
3-10
|
Developed
Technology
|
$6,105,600
|
(1,059,070)
|
5,046,530
|
9
|
Film
Library
|
$957,000
|
(32,700)
|
924,300
|
11
|
Trademarks and
Tradenames
|
$132,000
|
(3,515)
|
128,485
|
12
|
|
$9,141,800
|
(2,470,218)
|
6,671,582
|
|
|
|
|
|
|
Goodwill
|
$924,361
|
—
|
924,361
|
—
|
|
|
|
|
|
(1) Increases from
the prior year are from the acquisition of Blue Collar. See more
details on this acquisition in Note 2 to these consolidated
financial statements.
December 31,
2017
|
|
|
|
|
Customer
Base
|
$1,422,100
|
(1,392,102)
|
29,998
|
3
|
Developed
Technology
|
6,105,600
|
(380,665)
|
5,724,935
|
9
|
|
$7,527,700
|
(1,772,767)
|
5,754,933
|
|
|
|
|
|
|
Goodwill
|
$70,995
|
—
|
70,995
|
—
|
Remaining
amortization of the intangible assets is as following for the next
five years and beyond:
|
|
|
|
|
|
|
Customer
Base
|
53,455
|
53,455
|
53,455
|
53,455
|
53,455
|
304,992
|
Developed
Technology
|
678,404
|
678,404
|
678,404
|
678,404
|
678,404
|
1,654,510
|
Film
Library
|
87,000
|
87,000
|
87,000
|
87,000
|
87,000
|
489,300
|
Trademarks
and Tradenames
|
11,000
|
11,000
|
11,000
|
11,000
|
11,000
|
73,485
|
NOTE
11 – SUBSEQUENT EVENTS
Subsequent to
December 31, 2018, shareholders extended loans to the Company in
the amount of approximately $104,300 for multiple debt agreements
that have maturity dates ranging from April 2021 to May 2021, bear
annual interest of 6% (11% default) and are convertible one dollar
into one share of stock of Series C Preferred Stock that has been
designated convertible into common stock at $0.15 per share and
includes terms similar to the other Preferred Stock. A third-party
advanced the company $50,000 on March 13, 2019 with verbal terms
that included repayment in 45 days and a payback of $55,000. This
equates to 10% interest on the amount advanced. There were no other
terms on this.
On March 19, 2019,
the Company consummated a Securities Purchase Agreement dated March
15, 2019 with Geneva Roth for the purchase of a $68,000 Geneva Roth
Convertible Promissory Note. This Geneva Roth Convertible
Promissory Notes is part of a larger investment term sheet with
Geneva Roth, at their option, to invest in the Company up to
$975,000. The Geneva Roth Convertible Promissory Note is due March
15, 2020, pays interest at the rate of 12% per annum and gives the
holder the right from time to time, and at any time during the
period beginning 180 days from the origination date to the maturity
date or date of default to convert all or any part of the
outstanding balance into common stock of the Company limited to
4.99% of the outstanding common stock of the Company. The
conversion price is 61% multiplied by the average of the two lowest
trading prices for the common stock during the previous 20 trading
days prior to the applicable conversion date. The Geneva Roth
Convertible Promissory Note may be prepaid in whole or in part of
the outstanding balance at 125% to 140% up to 180 days from
origination.
On March 25, 2019,
TPT Global Tech, Inc. (the “Company”) consummated a
Securities Purchase Agreement dated March 18, 2019 with Auctus
Fund, LLC. (“Auctus”) for the purchase of a $600,000
Convertible Promissory Note (“Convertible Promissory
Note”). The Convertible Promissory Note is due December 18,
2019, pays interest at the rate of 12% per annum and gives the
holder the right from time to time, and at any time during the
period beginning 180 days from the origination date or at the
effective date of the registration of the underlying shares of
common stock, which the holder has registration rights for, to
convert all of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price is 50% multiplied by the average of
the two lowest trading prices for the common stock during the
previous 25 trading days prior to the applicable conversion date.
The Convertible Promissory Note may be prepaid in full at 135% to
150% up to 180 days from origination.
As part of the
transaction, Auctus was issued 2,000,000 warrants to purchase
2,000,000 common shares of the Company at 70% of the current market
price. Current market price means the average of the three lowest
trading prices for our common stock during the ten-trading day
period ending on the latest complete trading day prior to the date
of the respective exercise notice. However, if the registration
statement described above is declared effective on or before June
11, 2019, then, while such Registration Statement is effective, the
current market price shall mean the lowest volume weighted average
price for our common stock during the ten-trading day period ending
on the last complete trading day prior to the conversion
date.
Effective April 3,
the Company entered into an Asset Purchase Agreement for the
acquisition of substantially all of the assets of SpeedConnect LLC
(“SpeedConnect”) for $2 million and the assumption of
all contracts and liabilities pertinent to operations. The Asset
Purchase Agreement includes a deposit of $500,000, paid as part of
entering into the Asset Purchase Agreement. Additionally, $500,000
is to be paid at closing after normal due diligence, audit and
other conditions are met, anticipated to be in April of 2019. In
addition, at the time of closing, the Company will enter into a
Promissory Note to pay SpeedConnect in two equal installments of
$500,000 plus applicable interest at 10% per annum each within 30
and 60 days, respectively, of closing. The closing date cannot be
beyond June 30, 2019. In addition, on or before 90 days from the
closing, the Company is to contribute $1 million in cash to the
assets as working capital. The promissory note will include a
security interest in all the assets until paid and a guaranty by
the CEO of the Company, Stephen Thomas.
SpeedConnect is as
a national, predominantly rural, wireless telecommunications
residential and commercial Internet Service Provider (ISP). The
acquisition is expected to be completed by the end of April 2019.
SpeedConnect’s primary business model is subscription based,
monthly reoccurring revenues, from wireless delivered, high-speed
Internet connections utilizing its company built and owned national
network. SpeedConnect also resells third-party satellite Internet,
DSL Internet, IP telephony and DISH TV products. Mr. Ogren, the
founder, will stay on as the CEO of SpeedConnect for the Company
for the next two years.
TPT
Global Tech, Inc. and Subsidiaries
CONDENSED
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
As
of
September
30, 2019
TPT
Global Tech, Inc. and Subsidiaries
CONDENSED
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
As
of
September
30, 2019
Table of
Contents
|
Page
|
Condensed
Consolidated Financial Statements
|
|
Condensed Consolidated
Balance Sheets
|
F-30 -
F-31
|
Condensed
Consolidated Statements of Operations
|
F-32
|
Condensed
Consolidated Statements of Stockholders’ Deficit
|
F-33 -
F-34
|
Condensed Consolidated
Statements of Cash Flows
|
F-35 -
F-36
|
Notes to Condensed
Consolidated Financial Statements
|
F-37 -
F-51
|
=
TPT
Global Tech, Inc.
CONDENSED
CONSOLIDATED BALANCE SHEETS
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
Cash and cash
equivalents
|
$227,833
|
$31,786
|
Accounts
receivable, net
|
193,173
|
48,922
|
Prepaid expenses
and other current assets
|
20,550
|
36,111
|
Total current
assets
|
$441,556
|
$116,819
|
NON-CURRENT
ASSETS
|
|
|
Property
and equipment, net
|
$4,617,580
|
$3,046,942
|
Operating
lease right of use assets
|
4,240,823
|
---
|
Intangible
assets, net
|
6,472,640
|
6,671,582
|
Goodwill
|
1,121,361
|
924,361
|
Deposits
and other assets
|
96,485
|
62,013
|
Total non-current
assets
|
$16,548,889
|
$10,704,898
|
|
|
|
TOTAL
ASSETS
|
$16,990,445
|
$10,821,717
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
CURRENT
LIABILITIES
|
|
|
Accounts payable
and accrued expenses
|
$6,392,022
|
$4,993,970
|
Deferred
revenue
|
160,906
|
6,450
|
Customer
deposits
|
338,725
|
338,725
|
Loans,
advances and agreements
|
1,534,229
|
716,936
|
Current
portion of convertible notes payable, net of discounts
|
1,704,029
|
10,000
|
Notes
payable - related parties, net of discounts
|
9,528,376
|
9,137,982
|
Current
portion of convertible notes payable – related parties, net
of discounts
|
388,881
|
202,688
|
Derivative
liabilities
|
5,255,932
|
---
|
Current portion of
operating lease liabilities
|
1,716,195
|
---
|
Financing lease
liabilities
|
138,250
|
138,774
|
Financing lease
liabilities – related party
|
619,543
|
598,490
|
Total
current liabilities
|
$27,747,088
|
$16,144,015
|
|
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
Convertible
note payable, net of current portion and discounts
|
$---
|
$5,000
|
Convertible
notes payable – related parties, net of current portion and
discounts
|
538,500
|
599,200
|
Long
term portion of operating lease liabilities
|
2,567,692
|
---
|
Total
non-current liabilities
|
3,106,192
|
604,200
|
Total
liabilities
|
$30,853,280
|
$16,748,215
|
|
|
|
Commitments and
contingencies – See Note 8
|
—
|
—
|
See accompanying notes to condensed consolidated financial
statements.
STOCKHOLDERS'
DEFICIT
PREFERRED STOCK,
$.001 PAR VALUE 100,000,000 SHARES AUTHORIZED:
|
|
|
|
|
|
Convertible
Preferred Series A, 1,000,000 designated - 1,000,000 shares issued
and outstanding as of September 30, 2019 and December 31,
2018
|
$1,000
|
$1,000
|
Convertible
Preferred Series B, 3,000,000 designated - 2,588,693 shares issued
and outstanding as of September 30, 2019 and December 31,
2018
|
2,589
|
2,589
|
Convertible
Preferred Series C – 3,000,000 shares designated, zero shares
issued and outstanding as of September 30, 2019 and December 31,
2018
|
—
|
—
|
Common stock, $.001
par value, 1,000,000,000 shares authorized, 139,027,625 and
136,953,904 shares issued and outstanding as of September 30, 2019
and December 31, 2018, respectively
|
139,028
|
136,954
|
Subscriptions
payable
|
472,695
|
168,006
|
Additional paid-in
capital
|
12,833,140
|
12,567,881
|
Accumulated
deficit
|
(27,341,287)
|
(18,802,928)
|
Total stockholders'
deficit
|
(13,892,835)
|
(5,926,498)
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
$16,990,445
|
$10,821,717
|
See accompanying notes to condensed consolidated financial
statements.
TPT
Global Tech, Inc.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
For the three
months ended
September
30,
|
For the nine
months ended
September
30,
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
Products
|
$4,950
|
$26,650
|
$38,719
|
$105,080
|
Services
|
3,612,550
|
174,825
|
6,168,712
|
535,624
|
Total
Revenues
|
$3,617,500
|
$201,475
|
$6,207,431
|
$640,704
|
|
|
|
|
|
COST OF
SALES:
|
|
|
|
|
Products
|
$4,950
|
$27,609
|
$40,550
|
$110,004
|
Services
|
2,169,747
|
286,956
|
3,884,463
|
725,020
|
Total Cost of
Sales
|
$2,174,697
|
$314,565
|
$3,925,013
|
$835,024
|
Gross profit
(loss)
|
$1,442,803
|
$(113,090)
|
$2,282,418
|
$(194,320)
|
EXPENSES:
|
|
|
|
|
Sales and
marketing
|
$1,746
|
$9,225
|
$46,063
|
$49,123
|
Professional
|
450,968
|
474,861
|
1,447,421
|
1,153,540
|
Payroll and
related
|
480,524
|
193,824
|
1,045,083
|
564,580
|
General and
administrative
|
521,824
|
175,570
|
1,138,091
|
495,306
|
Depreciation
|
168,655
|
53,151
|
368,362
|
140,897
|
Amortization
|
83,811
|
182,523
|
643,942
|
551,723
|
Total
expenses
|
$1,707,528
|
$1,089,155
|
$4,688,962
|
$2,955,170
|
|
|
|
|
|
Operating
income (loss)
|
$264,725
|
$(1,202,245
|
$(2,406,545)
|
$(3,149,490)
|
|
|
|
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
Derivative
expense
|
4,533,794
|
—
|
(3,572,107)
|
—
|
Gain on conversion
of notes payable
|
5,695
|
---
|
5,695
|
---
|
Interest
expense
|
(1,287,966)
|
(79,810)
|
(2,565,404)
|
(158,351)
|
Total
other income (expenses)
|
$3,251,523
|
$(79,810)
|
$(6,131,816)
|
$(158,351)
|
|
|
|
|
|
Net income (loss)
before income taxes
|
2,986,798
|
(1,282,055)
|
(8,538,360)
|
(3,307,841)
|
Income
taxes
|
—
|
—
|
—
|
—
|
|
|
|
|
|
NET INCOME
(LOSS)
|
$2,986,798
|
$(1,282,055)
|
$(8,538,360)
|
$(3,307,841)
|
|
|
|
|
|
Earnings
(loss) per common share: Basic and diluted
|
$0.02
|
$(0.01)
|
$(0.06)
|
$(0.02)
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
Basic and
diluted
|
137,084,846
|
136,953,904
|
136,998,031
|
136,953,904
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements
TPT
Global Tech, Inc.
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For
the three and nine months ended September 30, 2019 and
2018
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
July 1, 2019
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
136,953,904
|
$136,954
|
$371,132
|
$12,681,369
|
$(30,328,085)
|
$(17,135,041)
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock
and stock options for services
|
—
|
—
|
—
|
—
|
—
|
—
|
101,563
|
27,182
|
—
|
128,745
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of
debt
|
---
|
---
|
---
|
---
|
2,073,721
|
2,074
|
---
|
124,589
|
---
|
126,663
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
$2,986,798
|
$2,986,798
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
September 30,
2019
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
139,027,625
|
$139,028
|
$472,695
|
$12,833,140
|
$(27,341,287)
|
$(13,892,835)
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
December 31,
2018
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
136,953,904
|
$136,954
|
$168,006
|
$12,567,881
|
$(18,802,928)
|
$(5,926,498)
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock
and stock options for services
|
—
|
—
|
—
|
—
|
—
|
—
|
304,689
|
140,670
|
—
|
445,359
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of
debt
|
---
|
---
|
---
|
---
|
2,073,721
|
2,074
|
---
|
124,589
|
---
|
126,663
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
$(8,538,360)
|
$(8,538,360)
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
September 30,
2019
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
139,027,625
|
$139,028
|
$472,695
|
$12,833,140
|
$(27,341,287)
|
$(13,892,835)
|
See accompanying notes to condensed consolidated financial
statements.
TPT
Global Tech, Inc.
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT-
CONTINUED
For
the three and nine months ended September 30, 2019 and
2018
(Unaudited)
|
Series
A Prefferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of July
1, 2018
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
136,953,904
|
$136,954
|
$711,832
|
$10,454,996
|
$(15,451,225)
|
$(4,143,854)
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock
and stock options for services
|
---
|
---
|
---
|
---
|
---
|
---
|
(616,889)
|
1,136,081
|
—
|
519,192
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of Blue
Collar
|
---
|
---
|
---
|
---
|
---
|
---
|
6,500
|
838,500
|
---
|
845,000
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
subscription shares
|
|
|
|
|
|
---
|
(35,000)
|
35,000
|
---
|
---
|
|
---
|
----
|
---
|
---
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
$(1,282,055)
|
$(1,282,055)
|
Balance as of
September 30, 2018
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
136,953,904
|
$136,954
|
$66,443
|
$12,464,511
|
$(16,733,280)
|
$(4,061,717)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
December 31, 2017
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
136,953,904
|
$136,954
|
$25,235
|
$10,371,442
|
$(13,425,439)
|
$(2,918,219)
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock
and stock options for services
|
---
|
---
|
---
|
---
|
---
|
---
|
67,708
|
882,135
|
—
|
949,843
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of
Blue Collar
|
---
|
---
|
---
|
---
|
---
|
---
|
6,500
|
838,500
|
---
|
845,000
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
subscription shares
|
---
|
---
|
---
|
---
|
---
|
---
|
(35,000)
|
35,000
|
---
|
---
|
|
|
|
|
|
|
|
|
|
|
|
Cash received for
common stock to be contributed by officer
|
—
|
—
|
—
|
—
|
—
|
—
|
---
|
367,500-
|
—
|
367,500
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of
debt
|
|
|
|
|
|
|
2,000
|
|
|
2,000
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
$(3,307,841)
|
$(3,307,841)
|
Balance as of
September 30, 2018
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
136,953,904
|
$136,954
|
$66,443
|
$12,464,511
|
$(16,733,280)
|
$(4,061,717)
|
See accompanying notes to condensed consolidated financial
statements
TPT
Global Tech, Inc.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
For the nine
months ended September 30,
|
|
|
|
Cash flows
from operating activities:
|
|
|
Net
loss
|
$(8,538,360)
|
$(3,307,841)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation
|
368,362
|
140,897
|
Amortization
|
643,942
|
551,723
|
Amortization
of debt discount
|
2,029,978
|
—
|
Gain on conversion
of notes payable
|
(5,695)
|
—
|
Derivative
expense
|
3,572,107
|
—
|
Share-based
compensation: Common stock
|
304,689
|
615,684
|
Stock
options
|
140,670
|
152,879
|
Changes
in operating assets and liabilities:
|
|
|
Accounts
receivable
|
(144,251)
|
25,098)
|
Prepaid
expenses and other assets
|
92,715
|
(719)
|
Accounts
payable and accrued expenses
|
578,398
|
1,006,076
|
Other
liabilities
|
(75,544)
|
(20,025)
|
Net
cash used in operating activities
|
$(1,032,989)
|
$(836,228)
|
|
|
|
Cash flows from
investing activities:
|
|
|
Net cash from
acquisition of assets of Blue Collar
|
$---
|
$41,927
|
Net
cash paid for acquisition of assets of SpeedConnect
|
(798,386)
|
---
|
Net
cash provided (used in) by investing activities
|
$(798,386)
|
$41,927
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
Proceeds
from stock subscriptions
|
—
|
367,500
|
Proceeds
from convertible notes and notes payable – related
parties
|
512,419
|
439,300
|
Proceeds
from convertible notes, loans and advances
|
2,689,675
|
21,064
|
Payment
on loans, advances and agreements
|
(1,148,976)
|
—
|
Payments
on convertible notes – related parties
|
(15,807)
|
(48,836)
|
Payments
on financing lease liabilities
|
(9,889)
|
(4,313)
|
Net
cash provided by financing activities
|
$2,027,422
|
$774,715
|
|
|
|
|
|
|
Net change in
cash
|
$196,047
|
$(19,586)
|
Cash and cash
equivalents - beginning of period
|
$31,786
|
$36,380
|
|
|
|
Cash and cash
equivalents - end of period
|
$227,833
|
$16,794
|
|
|
|
See accompanying notes to condensed consolidated financial
statements
TPT
Global Tech, Inc.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS -
CONTINUED
(Unaudited)
Supplemental
Cash Flow Information:
Cash paid
for:
|
|
|
Interest
|
$9,857
|
$—
|
Taxes
|
$—
|
$—
|
Non-Cash
Investing and Financing Activities:
|
|
|
Discount on
derivative financial instruments
|
$2,011,600
|
$—
|
Common stock issued
for prepaid expenses
|
$—
|
479,250
|
Common stock issued
for acquisition of Blue Collar
|
$—
|
845,000
|
Note payable issued
for acquisition of Blue Collar, net of discount
|
$—
|
1,533,217
|
Stock subscription
payable issued for conversion of debt
|
$—
|
$2,000
|
Liabilities assumed
in SpeedConnect asset acquisition
|
$1,894,964
|
$—
|
Operating lease
liabilities and right of use assets
|
$5,003,178
|
$—
|
See accompanying notes to condensed consolidated financial
statements
TPT
Global Tech, Inc.
NOTE
1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature
of Operations
The Company was
originally incorporated in 1988 in the state of Florida. TPT
Global, Inc., a Nevada corporation formed in June 2014, merged with
Ally Pharma US, Inc., a Florida corporation, (“Ally
Pharma”, formerly known as Gold Royalty Corporation) in a
“reverse merger” wherein Ally Pharma issued 110,000,000
shares of Common Stock, or 80% ownership, to the owners of TPT
Global, Inc. in exchange for all outstanding common stock of TPT
Global Inc. and Ally Pharma agreed to change its name to TPT Global
Tech, Inc. (jointly referred to as “the Company” or
“TPTG”).
The following
acquisitions have resulted in entities which have been consolidated
into TPTG. In 2014 the Company acquired all the assets of K Telecom
and Wireless LLC (“K Telecom”) and Global Telecom
International LLC (“Global Telecom”). Effective January
31, 2015, TPTG completed its acquisition of 100% of the outstanding
stock of Copperhead Digital Holdings, Inc. (“Copperhead
Digital”) and Subsidiaries, TruCom, LLC
(“TruCom”), Nevada Utilities, Inc. (“Nevada
Utilities”) and CityNet Arizona, LLC (“CityNet”).
Effective September 30, 2016, the company acquired 100% ownership
in San Diego Media Inc. (“SDM”). In October 2017, we
entered into agreements to acquire Blue Collar, Inc. (“Blue
Collar”) which closed as of September 1, 2018. On
May 7, 2019 we completed the acquisition of a majority of the
assets of SpeedConnect, LLC, which assets were conveyed into our
wholly owned subsidiary TPT SpeedConnect, LLC (“TPT SC”
or “TPT SpeedConnect”) which was formed on April 16,
2019.
We are based in San
Diego, California, and operate as a Media Content Hub for Domestic
and International syndication Technology/Telecommunications company
operating on our own proprietary Global Digital Media TV and
Telecommunications infrastructure platform and also provide
technology solutions to businesses domestically and worldwide. We
are a rural Broadband Wireless Access (BWA) provider, Software as a
Service (SaaS), Technology Platform as a Service (PAAS),
Cloud-based Unified Communication as a Service (UCaaS) and
carrier-grade performance and support for businesses over our
private IP MPLS fiber and wireless network in the United States.
Our cloud-based UCaaS services allow businesses of any size to
enjoy all the latest voice, data, media and collaboration features
in today's global technology markets. We also operate as a Master
Distributor for Nationwide Mobile Virtual Network Operators (MVNO)
and Independent Sales Organization (ISO) as a Master Distributor
for Pre-Paid Cellphone services, Mobile phones, Cellphone
Accessories and Global Roaming Cellphones. In addition, we create
media marketing materials and content.
Basis
of Presentation
The accompanying
unaudited condensed consolidated financial statements have been
prepared according to the instructions to Form 10-Q and Section
210.8-03(b) of Regulation S-X of the Securities and Exchange
Commission (“SEC”) and, therefore, certain information
and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) have
been omitted.
In the opinion of
management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the nine months ended September 30,
2019 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2019.
These condensed
consolidated financial statements should be read in conjunction
with the Company’s consolidated financial statements for the
year ended December 31, 2018. The condensed consolidated balance
sheet at September 30, 2019, has been derived from the consolidated
financial statements at that date, but does not include all of the
information and footnotes required by GAAP.
Our condensed
consolidated financial statements include the accounts of K
Telecom, Copperhead Digital, SDM, Blue Collar and TPT SpeedConnect.
All intercompany accounts and transactions have been eliminated in
consolidation.
CRITICAL
ACCOUNTING POLICIES
Revenue
Recognition
On January 1, 2018,
we adopted the new accounting standard ASC 606, Revenue from Contracts with Customers,
and all of the related amendments (“new revenue
standard”). We recorded the change, which was immaterial,
related to adopting the new revenue standard using the modified
retrospective method. Under this method, we recognized the
cumulative effect of initially applying the new revenue standard as
an adjustment to the opening balance of retained earnings. This
results in no restatement of prior periods, which continue to be
reported under the accounting standards in effect for those
periods. We expect the impact of the adoption of the new revenue
standard to continue to be immaterial on an ongoing basis. We have
applied the new revenue standard to all contracts as of the date of
initial application.
The Company’s
revenue generation for the last two years came from the following
sources, which sources are explained in detail below.
|
For the nine
months ended September 30, 2019
|
For the nine
months ended September 30, 2018
|
TPT
SpeedConnect
|
$5,082,260
|
$---
|
Copperhead
Digital
|
176,640
|
322,550
|
K
Telecom
|
38,719
|
105,080
|
San Diego
Media
|
21,621
|
141,426
|
Blue
Collar
|
888,191
|
46,218
|
P2P
|
—
|
25,430
|
Total
Revenue
|
$6,207,431
|
$640,704
|
TPT SpeedConnect: ISP and Telecom Revenue
TPT SpeedConnect is
a rural Internet provider operating in 10 Midwestern States under
the trade name SpeedConnect. TPT SC’s primary business model
is subscription based, pre-paid monthly reoccurring revenues, from
wireless delivered, high-speed internet connections. In addition,
the company resells third-party satellite and DSL internet and IP
telephony services. Revenue generated from sales of
telecommunications services is recognized as the transaction with
the customer is considered closed and the customer receives and
accepts the services that were the result of the transaction. Due
date is detailed on monthly invoices distributed to customer.
Services billed monthly in advance are deferred to the proper
period as needed. Certain of our products require specialized
installation and equipment. For telecom products that include
installation, if the installation meets the criteria to be
considered a separate element, product revenue is recognized upon
delivery, and installation revenue is recognized when the
installation is complete. The Installation Technician collects the
signed quote containing terms and conditions when installing the
site equipment at customer premises.
Revenue for
installation services and equipment is billed separately from
recurring ISP and telecom services and is recognized when equipment
is delivered and installation is completed. Revenue from ISP and
telecom services is recognized monthly over the contractual period,
or as services are rendered and accepted by the
customer.
The overwhelming
majority of our revenue continues to be recognized when
transactions occur. Since installation fees are generally small
relative to the size of the overall contract and because most
contracts are for two years or less, the impact of not recognizing
installation fees over the contract is immaterial.
Copperhead Digital: ISP and Telecom Revenue
Copperhead Digital
is a regional internet and telecom services provider operating in
Arizona under the trade name Trucom. Copperhead Digital operates as
a wireless telecommunications Internet Service Provider
(“ISP”) facilitating both residential and commercial
accounts. Copperhead Digital’s primary business model is
subscription based, pre-paid monthly reoccurring revenues, from
wireless delivered, high-speed internet connections. In addition,
the company resells third-party satellite and DSL internet and IP
telephony services. Revenue generated from sales of
telecommunications services is recognized as the transaction with
the customer is considered closed and the customer receives and
accepts the services that were the result of the transaction. Due
date is detailed on monthly invoices distributed to customer.
Services billed monthly in advance are deferred to the proper
period as needed. Certain of our products require specialized
installation and equipment. For telecom products that include
installation, if the installation meets the criteria to be
considered a separate element, product revenue is recognized upon
delivery, and installation revenue is recognized when the
installation is complete. The Installation Technician collects the
signed quote containing terms and conditions when installing the
site equipment at customer premises.
Revenue for
installation services and equipment is billed separately from
recurring ISP and telecom services, and is recognized when
equipment is delivered and installation is completed. Revenue from
ISP and telecom services is recognized monthly over the contractual
period, or as services are rendered and accepted by the
customer.
The overwhelming
majority of our revenue continues to be recognized when
transactions occur. Since installation fees are generally small
relative to the size of the overall contract and because most
contracts are for a year or less, the impact of not recognizing
installation fees over the contract is immaterial.
K Telecom: Prepaid Phones and SIM Cards Revenue
K Telecom generates
revenue from reselling prepaid phones, SIM cards, and rechargeable
minute traffic for prepaid phones to its customers (primarily
retail outlets). Product sales occur at the customer’s
locations, at which time delivery occurs and cash or check payment
is received. The Company recognizes the revenue when they receive
payment at the time of delivery.
SDM: Ecommerce, Email Marketing and Web Design
Services
SDM generates
revenue by providing ecommerce, email marketing and web design
solutions to small and large commercial businesses, complete with
monthly software support, updates and maintenance. Services are
billed monthly. Platform infrastructure support is a prepaid
service billed in monthly recurring increments. The services are
billed a month in advance and due prior to services being rendered.
The revenue is deferred when invoiced and booked in the month the
service is provided. Software support services (including software
upgrades) are billed in real time, on the first of the month. Web
design service revenues are recognized upon completion of specific
projects. Revenue is booked in the month the services are rendered
and payments are due on the final day of the month.
Blue Collar: Media Production Services
Blue Collar creates
original live action and animated content productions and has
produced hundreds of hours of material for the television,
theatrical, home entertainment and new media markets. Blue Collar
designs branding and marketing campaigns and has had agreements
with some of the world’s largest companies including PepsiCo,
Intel, HP, WalMart and many other Fortune 500 companies.
Additionally, they create motion picture, television and home
entertainment marketing campaigns for studios including Sony,
DreamWorks, Twentieth Century Fox, Universal Studios, Paramount
Studios, and Warner Brothers. With regard to revenue recognition,
Blue Collar receives an agreement from each client to perform
defined work. Some agreements are written, some are verbal. Work
may include creation of marketing materials and/or content
creation. Some work may be short term and take weeks to create and
some work may be longer and take months to create. There are
instances where customer agreements segregate identifiable
obligations (like filming on site vs. film editing and final
production) with separate transaction pricing. The performance
obligation is generally satisfied upon delivery of such film or
production products, at which time revenue is
recognized.
P2P Asset Activity: Telecom Revenue
Port 2 Port
Communications (P2P) is a U.S. domestic minutes provider that sells
wholesale long distance domestic telecom minutes to other domestic
U.S. carriers. A service is defined as wholesale telecom minute
based on a per-minute and per-destination rate basis. A series of
services for P2P would be substantially the same and would include
a pattern of transfers of services to a customer on a per-minute
flat rate basis for all destinations in a specified geographic.
Revenue generated from sales of minute services are recognized when
weekly invoices are generated and distributed.
Basic
and Diluted Net Loss Per Share
The Company
computes net income (loss) per share in accordance with ASC 260,
“Earning per Share”. ASC 260 requires presentation of
both basic and diluted earnings per share (“EPS”) on
the face of thee income statement. Basic EPS is computed by
dividing net income (loss) available to common shareholder
(numerator) by the weighted average number of shares outstanding
(denominator) during the period. Diluted EPS gives effect to all
dilutive potential common shares outstanding during the period
using the treasury stock method for options and warrants and using
the if-converted method for preferred stock and convertible notes.
In computing diluted EPS, the average stock price for the period is
used in determining the number of shares assumed to be purchased
from the exercise of stock options or warrants. Diluted EPS
excludes all dilutive potential shares if their effect is
anti-dilutive. As of September 30, 2019, the Company had shares
that were potentially common stock equivalents as
follows:
|
|
Series A Preferred
Stock
|
141,835,420
|
Series B Preferred
Stock
|
2,588,693
|
Stock Options and
Warrants
|
6,426,453
|
Convertible
Debt
|
125,654,896
|
|
276,495,462
|
Financial
Instruments and Fair Value of Financial Instruments
Our primary
financial instruments at September 30, 2019 and December 31, 2018
consisted of cash equivalents, accounts receivable, accounts
payable, notes payable and derivative liabilities. We apply fair
value measurement accounting to either record or disclose the value
of our financial assets and liabilities in our financial
statements. Fair value is defined as the exchange price that would
be received for an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants
on the measurement date. A fair value hierarchy requires an entity
to maximize the use of observable inputs, where available, and
minimize the use of unobservable inputs when measuring fair
value.
Described below are
the three levels of inputs that may be used to measure fair
value:
Level 1 Quoted prices in active
markets for identical assets or liabilities.
Level 2 Observable inputs other
than Level 1 prices, such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or
other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the
assets or liabilities.
Level 3 Unobservable inputs that
are supported by little or no market activity and that are
significant to the fair value of the assets or
liabilities.
We consider our
derivative financial instruments as Level 3. The
balances for our derivative financial instruments as of September
30, 2019 are the following:
|
|
Fair value of
Geneva Roth Convertible Promissory Notes
|
$288,852
|
Fair value of
Auctus Convertible Promissory Note
|
$3,051,995
|
Fair value of
Odyssey Capital Convertible Promissory Note
|
$744,394
|
Fair value of EMA
Financial Convertible Promissory Note
|
$912,138
|
Fair value of JSJ
Investment Convertible Promissory Note
|
$188,068
|
Fair value of
Warrants issued with the derivative instruments
|
$70,486
|
Use
of Estimates
The preparation of
financial statements in conformity with United States generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ materially from those
estimates. The Company’s consolidated financial statements
reflect all adjustments that management believes are necessary for
the fair presentation of their financial condition and results of
operations for the periods presented.
Recently
Adopted Accounting Pronouncements
In June 2018, the
FASB issued ASU No. 2018-07, Improvements to Nonemployee
Share-Based Payment Accounting, which amends ASC 718, Compensation
– Stock Compensation. This ASU requires that most of the
guidance related to stock compensation granted to employees be
followed for non-employees, including the measurement date,
valuation approach, and performance conditions. The expense is
recognized in the same period as though cash were paid for the good
or service. The effective date is the first quarter of fiscal year
2019, with early adoption permitted, including in interim periods.
The ASU has been adopted using a modified-retrospective transition
approach. The adoption is not considered to have a material effect
on the consolidated financial statements.
In February 2016,
the FASB issued ASU 2016-02, Leases (Topic 842) and subsequent
amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU
2018-11, ASU 2018-20 and ASU 2019-01 (collectively, Topic 842).
Topic 842 requires lessees to classify leases as either finance or
operating leases and to record a right-of-use asset and a lease
liability for all leases with a term greater than 12 months
regardless of the lease classification. We adopted Topic 842 using
the effective date, January 2019, as the date of our initial
application of the standard. Consequently, financial information
for the comparative periods has not been updated. Our finance and
operating lease commitments are subject to the new standard and we
recognize as finance and operating lease liabilities and
right-of-use assets. The effect on our condensed
consolidated financial statements has not been material until we
acquired the assets of SpeedConnect, which effect has been recorded
during the period ended September 30, 2019 and is reflected in the
condensed consolidated financial statements as of September 30,
2019.
Management has
reviewed other recently issued accounting pronouncements and have
determined there are not any that would have a material impact on
the condensed consolidated financial statements.
NOTE
2 – ACQUISITIONS
TPT
SpeedConnect, LLC Asset Acquisition
SpeedConnect
Asset Acquisition
Effective April 2,
2019, the Company entered into an Asset Purchase Agreement with
SpeedConnect, LLC (“SpeedConnect”) to acquire
substantially all of the assets of SpeedConnect. On May
7, 2019, the Company closed the transaction underlying the Asset
Purchase Agreement with SpeedConnect to acquire substantially all
of the assets of SpeedConnect for $2 million and the assumption of
certain liabilities. The Asset Purchase Agreement
required a deposit of $500,000 made in April and an additional
$500,000 payment to close. The additional $500,000 was
paid and all other conditions were met to effectuate the sale of
substantially all of the assets of SpeedConnect to the
Company. As part of the closing, the Company entered
into a Promissory Note to pay SpeedConnect $1,000,000 in two equal
installments of $500,000 plus applicable interest at 10% per annum
with the first installment payable within 30 days of closing and
the second installment payable within 60 days of closing (but no
later than July 6, 2019). The Company paid off the
Promissory Note by June 11, 2019 and by amendment dated May 7,
2019, SpeedConnect forgave $250,000 of the Promissory
Note.
The Company treated
the asset acquisition as a business combination and has allocated
the fair market value to assets received in excess of
goodwill.
Purchase Price
Allocation:
|
|
Effective
|
|
|
|
Purchaser
|
|
|
|
Consideration
Given:
|
|
Cash
paid
|
$1,000,000
|
Liabilities:
|
|
|
|
Promissory
Note
|
$750,000
|
Deferred
revenue
|
230,000
|
Unfavorable
leases
|
323,000
|
Accounts
and other payables
|
591,964
|
Total
liabilities
|
$1,894,964
|
Total Consideration
Value
|
$2,894,964
|
|
|
Assets
Acquired:
|
|
Customer
base
|
$350,000
|
Current
assets:
|
|
Cash
|
201,614
|
Prepaid
and other receivables
|
99,160
|
Deposits
|
13,190
|
Favorable
leases
|
95,000
|
Property
and equipment
|
1,939,000
|
Total Assets
Acquired
|
$2,697,964
|
Goodwill
|
$197,000
|
Had the acquisition
occurred on January 1, 2018, condensed proforma results of
operations for the nine months ended September 30, 2019 and 2018
would be as follows:
|
|
|
Revenue
|
$10,970,258
|
$13,634,120
|
Cost of
Sales
|
6,928,862
|
7,812,095
|
Gross
Profit
|
$4,041,396
|
$5,822,025
|
Expenses
|
(5,521,661)
|
(6,791,761)
|
Derivative
Expense
|
(3,572,107
|
—
|
Interest Expense
and Impairment
|
(2,559,709)
|
(158,351)
|
Income
Taxes
|
—
|
—
|
Net
Loss
|
$(7,612,081)
|
$(1,128,087)
|
Loss per
share
|
$(0.06)
|
$(0.01)
|
The unaudited
proforma results of operations are presented for information
purposes only. The unaudited proforma results of operations are not
intended to present actual results that would have been attained
had the asset acquisition been completed as of January 1, 2018 or
to project potential operating results as of any future date or for
any future periods. The revenue and net loss of TPT SpeedConnect
since May 7, 2019 acquisition date through September 30, 2019
included in the consolidated income statement amounted to
$5,082,259 and $641,299, respectively.
NOTE
3 – GOING CONCERN
The accompanying
consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.
Cash flows
generated from operating activities were not enough to support all
working capital requirements for the nine months ended September
30, 2019 and 2018. Financing activities described below have helped
with working capital and other capital requirements. We incurred
$8,538,360 and $3,307,841, respectively, in losses, and we used
$1,032,989 and $836,228, respectively, in cash for operations for
the nine months September 30, 2019 and 2018. Cash flows from
financing activities were $2,777,422 and $774,715 for the same
periods. These factors raise substantial doubt about the ability of
the Company to continue as a going concern for a period of one year
from the issuance of these financial statements. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
We acquired the
assets of SpeedConnect on May 7, 2019 for $1,000,000 and a note
payable for $750,000. These assets were conveyed into a wholly
owned subsidiary, TPT SpeedConnect. Although TPT SpeedConnect is
currently generating cash flows, there is expected to be
significant capital required in the near term to upgrade the
current network to 5G standards.
In order for us to
continue as a going concern for a period of one year from the
issuance of these financial statements, we will need to obtain
additional debt or equity financing and look for companies with
cash flow positive operations that we can acquire. There can be no
assurance that we will be able to secure additional debt or equity
financing, that we will be able to acquire cash flow positive
operations, or that, if we are successful in any of those actions,
those actions will produce adequate cash flow to enable us to meet
all our future obligations. Most of our existing financing
arrangements are short-term. If we are unable to obtain additional
debt or equity financing, we may be required to significantly
reduce or cease operations.
NOTE
4 – PROPERTY AND EQUIPMENT
Property and
equipment and related accumulated depreciation as of September 30,
2019 and December 31, 2018 are as follows:
|
|
|
Property and
equipment:
|
|
|
Telecommunications
fiber and equipment
|
$5,213,045
|
$3,274,045
|
Film production
equipment
|
369,903
|
369,903
|
Office furniture
and equipment
|
82,014
|
82,104
|
Leasehold
improvements
|
18,679
|
18,679
|
|
$5,683,641
|
$3,744,641
|
Accumulated
depreciation
|
(1,066,061)
|
(697,699)
|
Property and
equipment, net
|
$4,617,580
|
$3,046,942
|
Depreciation
expense was $368,362 and $140,897 for the nine months ended
September 30, 2019 and 2018, respectively.
NOTE
5 – DEBT FINANCING ARRANGEMENTS
Financing
arrangements as of September 30, 2019 and December 31, 2018 are as
follows:
|
|
|
Business loans and
advances, net of discounts (1)
|
$1,122,118
|
$615,692
|
Convertible notes
payable, net of discounts (2)
|
1,704,029
|
15,000
|
Factoring agreement
(3)
|
412,111
|
101,244
|
Debt – third
party
|
$3,238,258
|
$731,936
|
|
|
|
Line of credit,
related party secured by assets (4)
|
$3,043,390
|
$3,043,390
|
Debt– other
related party, net of discounts (5)
|
5,950,000
|
5,912,898
|
Convertible debt
– related party (2)
|
927,381
|
801,888
|
Shareholder debt
(6)
|
534,986
|
181,694
|
Debt –
related party
|
$10,455,757
|
$9,939,870
|
|
|
|
Total financing
arrangements
|
$13,694,015
|
10,671,806
|
|
|
|
Less current
liabilities:
|
|
|
Business
loans, advances and agreements
|
$(1,534,229)
|
$(716,936)
|
Convertible notes
payable, net of discount
|
(1,704,029)
|
(10,000)
|
Notes
payable – related parties, net of discount
|
(9,528,376)
|
(9,137,982)
|
Convertible
notes payable – related party
|
(388,881)
|
(202,688)
|
|
$(13,155,515)
|
$(10,067,606)
|
Total non-current
liabilities
|
$538,500
|
$604,200
|
(1) The terms of
$40,000 of this balance are similar to that of the Line of Credit
which bears interest at adjustable rates, 1 month Libor plus 2%,
3.8% as of September 30, 2019, and is secured by assets of the
Company, is due February 28, 2020, as amended, and included 8,000
stock options as part of the terms (see Note 7).
$500,500 is a line
of credit that Blue Collar has with a bank, bears interest at Prime
plus 1.125%, 6.125% as of September 30, 2019, and is due March 25,
2021.
$500,000 is a bank
loan dated May 28, 2019 which bears interest at Prime plus 6%,
11.0% as of September 30, 2019, is interest only for the first
year, thereafter payable monthly of principal and interest until
the due date of May 1, 2022. The bank loan is
collateralized by assets of the Company.
$10,000 is an
amount the bears interest at 6%, subsequently increased to 11%, as
it was due and not repaid on October 10, 2018. The remaining
balances generally bear interest at approximately 10%, have
maturity dates that are due on demand or are past due, are
unsecured and are classified as current in the balance
sheets.
(2) During 2017,
the Company issued convertible promissory notes in the amount of
$67,000 (comprised of $62,000 from two related parties and $5,000
from a former officer of CDH), all which are due May 1, 2020 and
bear 6% annual interest (12% default interest rate). The
convertible promissory notes are convertible, as amended, at $0.25
per share.
During 2016, the
Company acquired SDM which consideration included a convertible
promissory note for $250,000 due February 28, 2020, as amended,
does not bear interest, unless delinquent in which the interest is
12% per annum, and is convertible into common stock at $1.00 per
share. The SDM balance is $186,881 as of September 30,
2019.
During 2018, the
Company issued convertible promissory notes in the amount of
$537,200 to related parties and $10,000 to a non-related party
which bear interest at 6% (11% default interest rate), are due 30
months from issuance and are convertible into Series C Preferred
Stock at $1.00 per share. During 2019, the Company issued these
same securities with the same terms in the amount of $141,300 to
related parties. Because the Series C Preferred Stock
has a conversion price of $0.15 per share, the issuance of Series C
Preferred Stock promissory notes will cause a beneficial conversion
feature of approximately $38,479 upon exercise of the convertible
promissory notes.
During 2019, the
Company consummated Securities Purchase Agreements dated March 15,
2019, April 12, 2019, May 15, 2019, June 6, 2019 and August 22,
2019 with Geneva Roth Remark Holdings, Inc. (“Geneva
Roth”) for the purchase of convertible promissory notes in
the amounts of $68,000, $65,000, $58,000, $53,000 and $43,000
(“Geneva Roth Convertible Promissory
Notes”). The Geneva Roth Convertible Promissory
Notes are due one year from issuance, pays interest at the rate of
12% (principal amount increases 150%-200% and interest rate
increases to 24% under default) per annum and gives the holder the
right from time to time, and at any time during the period
beginning 180 days from the origination date to the maturity date
or date of default to convert all or any part of the outstanding
balance into common stock of the Company limited to 4.99% of the
outstanding common stock of the Company. The conversion price is
61% multiplied by the average of the two lowest trading prices for
the common stock during the previous 20 trading days prior to the
applicable conversion date. The Geneva Roth
Convertible Promissory Notes may be prepaid in whole or in part of
the outstanding balance at 125% to 140% up to 180 days from
origination. During September 2019, Geneva Roth
converted a total of $40,000 of principal of the March 15, 2019
Securities Purchase Agreement into 1,073,721 shares of common stock
of the Company leaving an outstanding principal balance on the
March 15, 2019 Securities Purchase Agreement of
$28,000. Subsequent to September 30, 2019, Geneva Roth
converted another $28,000 of principal into 3,129,911 shares of
common stock of the Company leaving a principal balance of zero for
the March 15, 2019 Securities Purchase Agreement.
On March 25, 2019,
the Company consummated a Securities Purchase Agreement dated March
18, 2019 with Auctus Fund, LLC. (“Auctus”) for the
purchase of a $600,000 Convertible Promissory Note (“Auctus
Convertible Promissory Note”). The Auctus
Convertible Promissory Note is due December 18, 2019, pays interest
at the rate of 12% (24% default) per annum and gives the holder the
right from time to time, and at any time during the period
beginning 180 days from the origination date or at the effective
date of the registration of the underlying shares of common stock,
which the holder has registration rights for, to convert
all of the outstanding balance into common stock of the Company
limited to 4.99% of the outstanding common stock of the
Company. The conversion price is the lessor of the
lowest trading price during the previous 25 trading days prior the
date of the Auctus Convertible Promissory Note or 50% multiplied by
the average of the two lowest trading prices for the common stock
during the previous 25 trading days prior to the applicable
conversion date. The Auctus Convertible Promissory Note may be
prepaid in full at 135% to 150% up to 180 days from origination.
Auctus converted $21,100 of accrued interest into 1,000,000 shares
of common stock of the Company during September
2019. Subsequent to September 30, 2019, Auctus converted
another $3,930 of accrued interest into 1,500,000 shares of common
stock of the Company. 2,000,000 warrants were issued in
conjunction with the issuance of this debt. See Note
7.
On June 4, 2019,
the Company consummated a Securities Purchase Agreement with
Odyssey Capital Funding, LLC. (“Odyssey”) for the
purchase of a $525,000 Convertible Promissory Note (“Odyssey
Convertible Promissory Note”). The Odyssey
Convertible Promissory Note is due June 3, 2020, pays interest at
the rate of 12% ( 24% default) per annum and gives the holder the
right from time to time, and at any time during the period
beginning six months from the issuance date to convert
all of the outstanding balance into common stock of the Company
limited to 4.99% of the outstanding common stock of the
Company. The conversion price is 55% multiplied by the
average of the two lowest trading prices for the common stock
during the previous 20 trading days prior to the applicable
conversion date. The Odyssey Convertible
Promissory Note may be prepaid in full at 125% to 145% up to 180
days from origination.
On June 6, 2019,
the Company consummated a Securities Purchase Agreement with JSJ
Investments Inc. (“JSJ”) for the purchase of a $112,000
Convertible Promissory Note (“JSJ Convertible Promissory
Note”). The JSJ Convertible Promissory Note is due
June 6, 2020, pays interest at the rate of 12% per annum and gives
the holder the right from time to time, and at any time during the
period beginning 180 days from the origination date to
convert all of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price is the lower of the market
price, as defined, or 55% multiplied by the average of the two
lowest trading prices for the common stock during the previous 20
trading days prior to the applicable conversion
date. The JSJ Convertible Promissory Note may be
prepaid in full at 135% to 150% up to 180 days from
origination. 333,333 warrants were issued in
conjunction with the issuance of this debt. See Note
7.
On June 11, 2019,
the Company consummated a Securities Purchase Agreement with EMA
Financial, LLC. (“EMA”) for the purchase of a $250,000
Convertible Promissory Note (“EMA Convertible Promissory
Note”). The EMA Convertible Promissory Note is due
June 11, 2020, pays interest at the rate of 12% (principal amount
increases 200% and interest rate increases to 24% under
default) per annum and gives the holder the right from
time to time to convert all of the outstanding balance
into common stock of the Company limited to 4.99% of the
outstanding common stock of the Company. The conversion
price is 55% multiplied by the lowest traded price for the common
stock during the previous 25 trading days prior to the applicable
conversion date. The EMA Convertible Promissory
Note may be prepaid in full at 135% to 150% up to 180 days from
origination. 1,000,000 warrants were issued in
conjunction with the issuance of this debt. See Note
7.
The Company may be
in default under several of its new derivative financial
instruments for not having filed a Form S-1 Registration Statement
with the Securities and Exchange Commission by now. It
is the intent of the Company to pay back all derivative securities
prior to December 31, 2019 and is in negotiation for a term loan to
do so. In addition, the Company is in negotiation to not
have to file a Form S-1registrations statement to register certain
underlying shares of common stock for warrants that were issued
with the derivative securities. Otherwise, the Company
may have to file a Form S-1 to register these underlying common
shares.
(3) One Factoring
Agreement with full recourse, due February 28, 2020, as amended,
was established in June 2016 with a company that is controlled by a
shareholder and is personally guaranteed by an officer of the
Company. The Factoring Agreement is such that the Company pays a
discount of 2% per each 30-day period for each advance received
against accounts receivable or future billings. The Company was
advanced funds from the Factoring Agreement for which $101,244 in
principal remained unpaid as of September 30, 2019 and December 31,
2018.
Another factoring
agreement was entered into dated May 8, 2019 with Advantage Capital
Funding. $527,000 was actually funded to the Company
with a promise to pay $18,840 per week for 40 weeks until a total
of $753,610 is paid. $310,867 remains outstanding under
this factoring agreement as of September 30, 2019.
(4) The Line of
Credit originated with a bank and was secured by the personal
assets of certain shareholders of Copperhead Digital. During 2016,
the Line of Credit was assigned to the Copperhead Digital
shareholders, who subsequent to the Copperhead Digital acquisition
by TPTG became shareholders of TPTG, and the secured personal
assets were used to pay off the bank. The Line of Credit bears a
variable interest rate based on the 1 Month LIBOR plus 2.0%, 3.8%
as of September 30, 2019, is payable monthly, and is secured by the
assets of the Company. 1,000,000 shares of Common Stock of the
Company have been reserved to accomplish raising the funds to pay
off the Line of Credit. Since assignment of the Line of Credit to
certain shareholders, which balance on the date of assignment was
$2,597,790, those shareholders have loaned the Company $445,600
under the similar terms and conditions as the line of credit but
most of which were also given stock options totaling 85,120 (see
Note 7) and is due, as amended, February 28, 2020.
During the year
ended December 31, 2018, these same shareholders and one other
loaned the Company money in the form of convertible loans of
$537,200 described in (2) above.
(5) $350,000
represents cash due to the prior owners of the technology acquired
in December 2016 from the owner of the Lion Phone which is due to
be paid as agreed by TPTG and the former owners of the Lion Phone
technology and has not been determined.
$4,000,000
represents a promissory note included as part of the consideration
of ViewMe Live technology acquired in 2017, later agreed to as
being due and payable in full, with no interest with $2,000,000
from debt proceeds and the remainder from proceeds from the second
Company public offering intended to be in 2019.
On September 1,
2018, the Company closed on its acquisition of Blue Collar. Part of
the acquisition included a promissory note of $1,600,000 (fair
value of $1,533,217, net of a discount to fair value of $66,783
which is being amortized through expense through the due date of
May 1, 2019) and interest at 3% from the date of closure. $19,275
was amortized as interest expense in the nine months ended
September 30, 2019. The promissory note is secured by the assets of
Blue Collar.
(6) The shareholder
debt represents funds given to TPTG or subsidiaries by officers and
managers of the Company as working capital. There are no written
terms of repayment or interest that is being accrued to these
amounts and they will only be paid back, according to management,
if cash flows support it. They are classified as current in the
balance sheets.
During the nine
months ended September 30, 2019, the Company borrowed $50,000 from
a related party for working capital with no written
terms. This was paid back prior to September 30, 2019
with $7,000 representing interest on the funds.
Note
6 -Derivative Financial Instruments
The Company
previously adopted the provisions of ASC subtopic
825-10, Financial
Instruments (“ASC 825-10”). ASC 825-10
defines fair value as the price that would be received from selling
an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When
determining the fair value measurements for assets and liabilities
required or permitted to be recorded at fair value, the Company
considers the principal or most advantageous market in which it
would transact and considers assumptions that market participants
would use when pricing the asset or liability, such as inherent
risk, transfer restrictions, and risk of nonperformance. ASC 825-10
establishes a fair value hierarchy that requires an entity to
maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value.
The derivative
liability as of September 30, 2019, in the amount of $5,255,932 has
a level 3 classification under ASC 825-10.
The following table
provides a summary of changes in fair value of the Company’s
Level 3 financial liabilities as of September 30,
2019. There were no derivative financial instruments as
of December 31, 2018.
|
Debt Derivative
Liabilities
|
Balance, December
31, 2018
|
$—
|
Debt discount from
initial derivative
|
1,774,000
|
Initial fair value
of derivative liabilities
|
2,601,631
|
Change in
derivative liability from conversion of notes payable
|
(90,175)
|
Change in fair
value of derivative liabilities at end of period
|
970,476
|
Balance, September
30, 2019
|
$5,255,932
|
Derivative expense
for the nine months ended September 30, 2019
|
$3,572,107
|
Convertible notes payable and warrant
derivatives – The Company issued convertible
promissory notes which are convertible into common stock, at
holders’ option, at a discount to the market price of the
Company’s common stock. The Company has identified the
embedded derivatives related to these notes relating to certain
anti-dilutive (reset) provisions. These embedded derivatives
included certain conversion features. The accounting treatment of
derivative financial instruments requires that the Company record
fair value of the derivatives as of the inception date of debenture
and to fair value as of each subsequent reporting
date.
As of September 30,
2019, the Company marked to market the fair value of the debt
derivatives and determined a fair value of $5,255,932 ($5,185,446
from the convertible notes and $70,486 from the warrants) in Note 5
(2) above. The Company recorded a loss from change in fair value of
debt derivatives of $3,572,107 for the nine months ended September
30, 2019. The fair value of the embedded derivatives was determined
using Monte Carlo simulation method based on the following
assumptions: (1) dividend yield of 0%, (2) expected volatility of
178.2% to 278.9%, (3) weighted average risk-free interest rate of
1.55% to 1.88% (4) expected life of 0.72 to 5.0 years, and (5) the
quoted market price of $0.045 to $0.098 for the Company’s
common stock.
See Financing lease
arrangements in Note 8.
NOTE
7 - STOCKHOLDERS' DEFICIT
Preferred
Stock
As of September 30,
2019, we had authorized 100,000,000 shares of Preferred Stock, of
which certain shares had been designated as Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred
Stock.
Series
A Convertible Preferred Stock
In February 2015,
the Company designated 1,000,000 shares of Preferred Stock as
Series A Preferred Stock.
The Series A
Preferred Stock was designated in February 2016, has a par value of
$.001, is redeemable at the Company’s option at $100 per
share, is senior to any other class or series of outstanding
Preferred Stock or Common Stock and does not bear dividends. The
Series A Preferred Stock has a liquidation preference immediately
after any Senior Securities, as defined and amended, of an amount
equal to amounts payable owing, including contingency amounts where
Holders of the Series A have personally guaranteed obligations of
the Company. Holders of the Series A Preferred Stock shall,
collectively have the right to convert all of their Series A
Preferred Stock when conversion is elected into that number of
shares of Common Stock of the Company, determined by the following
formula: 60% of the issued and outstanding Common Shares as
computed immediately after the transaction for conversion. For
further clarification, the 60% of the issued and outstanding common
shares includes what the holders of the Series A Preferred Stock
may already hold in common shares at the time of conversion. The
Series A Preferred Stock, collectively, shall have the right to
vote as if converted prior to the vote to an number of shares equal
to 60% of the outstanding Common Stock of the Company.
In February 2015,
the Board of Directors authorized the issuance of 1,000,000 shares
of Series A Preferred Stock to Stephen Thomas, Chairman, CEO and
President of the Company, valued at $3,116,000 for compensation
expense.
Series
B Convertible Preferred Stock
In February 2015,
the Company designated 3,000,000 shares of Preferred Stock as
Series B Convertible Preferred Stock. There are 2,588,693 shares of
Series B Convertible Preferred Stock outstanding as of September
30, 2019.
The Series B
Preferred Stock was designated in February 2015, has a par value of
$.001, is not redeemable, is senior to any other class or series of
outstanding Preferred Stock, except the Series A Preferred Stock,
or Common Stock and does not bear dividends. The Series B Preferred
Stock has a liquidation preference immediately after any Senior
Securities, as defined and currently the Series A Preferred Stock,
and of an amount equal to $2.00 per share. Holders of the Series B
Preferred Stock have a right to convert all or any part of the
Series B Preferred Shares and will receive and equal number of
common shares at the conversion price of $2.00 per share. The
Series B Preferred Stockholders have a right to vote on any matter
with holders of Common Stock and shall have a number of votes equal
to that number of Common Shares on a one to one basis.
Series
C Convertible Preferred Stock
In May 2018, the
Company designated 3,000,000 shares of Preferred Stock as Series C
Convertible Preferred Stock. There are no shares of Series C
Convertible Preferred Stock outstanding as of September 30,
2019.
The Series C
Preferred Stock was designated in May 2018, has a par value of
$.001, is not redeemable, is senior to any other class or series of
outstanding Preferred Stock, except the Series A and Series B
Preferred Stock, or Common Stock and does not bear dividends. The
Series C Preferred Stock has a liquidation preference immediately
after any Senior Securities, as defined and currently the Series A
and B Preferred Stock, and of an amount equal to $2.00 per share.
Holders of the Series C Preferred Stock have a right to convert all
or any part of the Series C Preferred Shares and will receive an
equal number of common shares at the conversion price of $0.15 per
share. The Series C Preferred Stockholders have a right to vote on
any matter with holders of Common Stock and shall have a number of
votes equal to that number of Common Shares on a one to one
basis.
Common
Stock and Capital Contributions
As of September 30,
2019, we had authorized 1,000,000,000 shares of Common Stock, of
which 139,027,625 common shares are issued and
outstanding.
Common Stock Contributions Related to Acquisitions
Effective November
1 and 3, 2017, an officer of the Company contributed 9,765,000
shares of restricted Common Stock to the Company for the
acquisition of Blue Collar and HRS. These shares were subsequently
issued as consideration for these acquisitions in November 2017. In
March 2018, the HRS acquisition was rescinded and 3,625,000 shares
of common stock are being returned by the recipients. The other
transaction involved 6,500,000 shares for the acquisition of Blue
Collar which closed in 2018. As such, as of September 30, 2019 the
3,265,000 shares for the HRS transaction are reflected as
subscriptions receivable based on their par value.
Common Stock Issued for Expenses and Liabilities
During the year
ended December 31, 2018, the Company entered into a two-year
agreement for legal services. The agreement provided for 4,000,000
shares of restricted common stock to be issued. 2,000,000 to be
issued for previous legal services upon execution of the agreement
in March 2018 and the remaining 2,000,000 in the form of stock
options to purchase common stock at $0.10 per share, of which the
stock options would vest equally over 18 months. The value of the
Company’s common stock upon execution of the agreement was
$0.125 per share, or $250,000 which was recorded as professional
expenses during 2018. See stock options and warrants discussion
below for the value of the 2,000,000 stock options.
During the year
ended December 31, 2018, the Company also entered into a
twelve-month general consulting agreement with a third party to
provide general business advisory services to be rendered through
September 30, 2019 for 1,000,000 restricted shares of common stock
and 1,000,000 options to purchase restricted common shares at $0.10
per share for 36 months from the time of grant. The fair value of
the common shares granted was based on the Company’s stock
price of $0.155 per share, or $155,000 of which $34,444 was
expensed during the nine months ended September 30, 2019 for the
portion of service term completed during this period.
For these two
agreements, the underlying stock for the stock options are intended
to come from the contribution of stock by an officer of the
Company. During the nine months ended September 30, 2019, the
Company recorded $140,670 as stock-based compensation related to
these agreements.
Common Stock Payable Issued for Expenses and
Liabilities
As of September 30,
2019, 16,667 of common shares were subscribed to in 2018 for a note
payable of $2,000.
In 2018, a majority
of the outstanding voting shares of the Company voted through a
consent resolution to support a consent resolution of the Board of
Directors of the Company to add two new directors to the Board. As
such, Arkady Shkolnik and Reginald Thomas (family member of CEO)
were added as members of the Board of Directors. The total members
of the Board of Directors after this addition is four. In
accordance with agreements with the Company for his services as a
director, Mr. Shkolnik is to receive $25,000 per quarter and
5,000,000 shares of restricted common stock valued at approximately
$692,500 vesting quarterly over twenty-four months. The quarterly
cash payments of $25,000 will be paid in unrestricted common shares
if the Company has not been funded adequately to make such
payments. Mr. Thomas is to receive $10,000 per quarter and
1,000,000 shares of restricted common stock valued at approximately
$120,000 vesting quarterly over twenty-four months. The quarterly
payment of $10,000 may be suspended by the Company if the Company
has not been adequately funded. As of September 30, 2019, $97,500
and $30,000 has been accrued in the balance sheet for Mr. Shkolnik
and Mr. Thomas, respectively. For the nine months ended
September 31, 2019 and 2018, $409,688 and $91,042, respectively,
have been expensed under these agreements.
Stock Options
|
|
Options
Outstanding
|
|
Vested
|
|
Vesting
Period
|
|
Exercise Price
Outstanding and Exercisable
|
|
Expiration
Date
|
|
December 31,
2017
|
|
|
|
93,120
|
|
|
|
93,120
|
|
|
100% at
issue
|
|
|
$0.05 to
$0.22
|
|
|
12-31-19
|
|
Granted
|
|
|
|
3,000,000
|
|
|
|
—
|
|
|
12 to 18
months
|
|
$
|
0.10
|
|
|
2-28-20
to
3-20-21
|
|
December 31,
2018
|
|
|
|
3,093,120
|
|
|
|
1,954,230
|
|
|
|
|
|
$0.05 to
$0.22
|
|
|
12-31-19 to
3-20-21
|
|
Granted
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
|
|
3,093,120
|
|
|
|
2,176,453
|
|
|
|
|
|
$0.05 to
$0.22
|
|
|
12-31-19 to
3-20-21
|
Stock options to
purchase approximately 3,093,120 shares of common stock of the
Company are outstanding as of September 30, 2019 related to debt
issuances (see Note 5) at prices ranging from $0.05 to $0.22 per
share.
In addition, the
company granted through consulting arrangements primarily for legal
work and general business support that included the issuance of
stock options to purchase 3,000,000 options to purchase common
shares at $0.10 per share, 1,000,000 of which is fully vested and
2,000,000 which will vest over 18 months from date of grant. All
these stock options have an exercise period of 24 to 36 months. The
Black-Scholes options pricing model was used to value the stock
options. The inputs included the following:
(1)
|
Dividend
yield of 0%
|
(2)
|
expected
annual volatility of 307% - 311%
|
(3)
|
discount rate
of 2.2% to 2.3%
|
(4)
|
expected life
of 2 years, and
|
(5)
|
estimated
fair value of the Company’s common $0.125 to $0.155 per
share.
|
During the nine
months ended September 30, 2019, the Company recorded $140,670 as
stock-based compensation related to the stock options and the
related service period for which services have been
rendered.
Common Stock Reservations
The Company has
reserved 1,000,000 shares of Common Stock of the Company for the
purpose of raising funds to be used to pay off debt described in
Note 5.
We have reserved
20,000,000 shares of Common Stock of the Company to grant to
certain employee and consultants as consideration for services
rendered and that will be rendered to the Company.
There are Transfer
Agent common stock reservations that have been approved by the
Company relative to the outstanding derivative financial
instruments, the outstanding Form S-1 Registration Statement and
general treasury of 411,244,492 as of September 31,
2019. Subsequent to September 30, 2019 this was
increased to 856,342,464. .
Warrants
As part of the
Convertible Promissory Notes issuance in Note 5, the Company issued
3,333,333 warrants to purchase 3,333,333 common shares of the
Company at 70% of the current market price. Current
market price means the average of the three lowest trading prices
for our common stock during the ten-trading day period ending on
the latest complete trading day prior to the date of the respective
exercise notice. However, if a required registration
statement, registering the underlying shares of the Convertible
Promissory Notes, is declared effective on or before June 11, 2019
to September 11, 2019, then, while such Registration Statement is
effective, the current market price shall mean the lowest volume
weighted average price for our common stock during the ten-trading
day period ending on the last complete trading day prior to the
conversion date.
The warrants issued
were considered derivative liabilities valued at $70,046 of the
total $5,255,932, derivative liabilities as of September 30, 2019.
See Note 5.
NOTE
8 - COMMITMENTS AND CONTINGENCIES
Accounts Payable
and Accrued Expenses as of September 30, 2019 and December 31,
2018:
|
|
|
Accounts payable:
|
|
|
Related
parties (1)
|
$1,022,036
|
$741,577
|
General
operating
|
3,269,735
|
3,036,601
|
Credit
card balances
|
258,647
|
246,949
|
Accrued
interest on debt
|
642,258
|
306,319
|
Accrued
expenses
|
565,990
|
33,062
|
Taxes
and fees payable
|
633,357
|
629,462
|
Total
|
$6,392,023
|
$4,993,970
|
|
(1)
|
Relates to amounts
due to management and members of the Board of Directors according
to verbal and written agreements that have not been paid as of
period end.
|
Lease
Arrangements
We have various
non-cancelable lease agreements for certain of our tower locations
with original lease periods expiring between 2019 and 2044. Our
lease terms may include options to extend or terminate the lease
when it is reasonably certain we will exercise that option. Certain
of the arrangements contain escalating rent payment
provisions.
Lease Cost – Actual lease cost for
the nine months ended September 30, 2019 was
$1,074,604.
Summary of future
payments
|
$5,046,242
|
Discount
|
(762,355)
|
Net Present
Value
|
$4,283,887
|
Lease Term and Discount Rate - The
weighted-average remaining lease term (in years) and discount rate
related to the operating leases were as
follows:
Weighted average
lease term
|
|
6
years
|
Discount
Rate
|
|
|
12
|
%
|
Maturity of Lease Liabilities
- The following represents future minimum lease
payments by year and the present value of the minimum payment as
of September 30, 2019
as follows:
|
|
2019-
remaining
|
$623,978
|
2020
|
1,994,924
|
2021
|
1,331,810
|
2022
|
832,664
|
2023
|
316,946
|
Thereafter
|
193,175
|
Total lease
payments
|
$5,293,497
|
Less imputed
interest
|
(1,009,610)
|
Present value of
minimum lease payments
|
$4,283,887
|
Financing lease
obligations not included in the above calculations are as follows
as of September 30, 2019:
Obligation
|
|
|
|
|
Telecom Equipment
Finance (1)
|
$449,103
|
—
|
170,440
|
$619,543
|
Telecommunications
Equipment (2)
|
—
|
101,347
|
36,903
|
138,250
|
Production
Equipment Lease (3)
|
---
|
—
|
—
|
---
|
Total
|
$449,103
|
101,347
|
207,343
|
$757,793
|
(1) The Telecom
Equipment Lease is with an entity owned and controlled by
shareholders of the Company and is due February 28, 2020, as
amended.
(2) The
Telecommunications Equipment Lease requires payments of $3,702 per
month and is in default. See discussion below in Other Commitments
and Contingencies. In December 2017, the Company learned that the
telecommunications equipment lease identified herein for $101,347
was included in a default judgement in a non-jurisdictional state
of Pennsylvania for $169,474 from a lawsuit by the lessor.
Management is working with the lessor to settle this matter
including a proposal for the equipment to be returned to the lessor
and then a negotiated amount for any deficiency between the value
given for the retired equipment and the $101,347. When concluded,
management does not believe the results will be significantly
different than the liability of $101,347 and accrued fees and
interest of $36,903 recorded.
(3) The Production
Equipment Lease, maturing on April 15, 2019, required payments of
$2,535 per month and includes imputed interest at 8.5%. The lease
was entered into in 2015 for the purchase of equipment in the
amount of approximately $120,000.
Other
Commitments and Contingencies
The Company has
employment agreements with certain employees of SDM and K Telecom.
The agreements are such that SDM and K Telecom, on a standalone
basis in each case, must provide sufficient cash flow to
financially support the financial obligations within the employment
agreements.
In December 2016, a
subsidiary’s landlord agreed to terminate a facilities lease
for 150,000 restricted shares of Common Stock valued at $43,350
from a capital contribution of an officer of the Company.
Subsequent to the agreement, the landlord requested more shares
against the Company’s agreement. As such, $63,053 remains in
liabilities payable to the landlord and the $43,350 was expensed as
rent previously. The matter is still unresolved. Management does
not believe any negative resolution will have a material impact on
the Company’s consolidated financial statements.
The Company has
been named in a lawsuit by a former employee who was terminated by
management in 2016. The employee was working under an employment
agreement but was terminated for breach of the agreement. The
former employee is suing for breach of contract and is seeking
around $75,000 in back pay and benefits. Management believes it has
good and meritorious defenses and does not believe the outcome of
the lawsuit will have any material effect on the financial position
of the Company.
As of September 30,
2019, the Company has collected $338,725 from one customer in
excess of amounts due from that customer in accordance with the
customer’s understanding of the appropriate billings
activity. The customer has filed a written demand for repayment by
the Company of amounts owed. Management believes that the customer
agreement allows them to keep the amounts under dispute. Given the
dispute, the Company has reflected the amounts in dispute as a
customer liability on the consolidated balance sheet as of
September 30, 2019 and does not believe the outcome of the dispute
will have a material effect on the financial position of the
Company.
NOTE
9 – RELATED PARTY ACTIVITY
The Company entered
into a lease for living space which is occupied by Stephen Thomas,
Chairman, CEO and President of the Company. Mr. Thomas lives in the
space and uses it as his corporate office. The Company has paid
$23,641 and $21,267 in rent and utility payments for this space for
the nine months ended September 30, 2019 and 2018,
respectively.
There are shares
issuances and capital contributions from an officer of the Company.
See Note 7. Also, there are debt and balances
outstanding due to shareholders and other related parties of the
Company of $1,022,036 and $741,577, respectively, as of September
30, 2019 and December 31, 2018 related to amounts due to management
and members of the Board of Directors according to verbal and
written agreements that have not been paid as of period end which
are included in accounts payable and accrued expenses on the
balance sheet. See Notes 7 and 8.
As is mentioned in
Note 7, Reginald Thomas was appointed to the Board of Directors of
the Company in August 2018. Mr. Thomas is the brother to the CEO
Stephen J. Thomas III. According to an agreement with Mr. Reginald
Thomas, he is to receive $10,000 per quarter and 1,000,000 shares
of restricted common stock valued at approximately $120,000 vesting
quarterly over twenty-four months. The quarterly payment of $10,000
may be suspended by the Company if the Company has not been
adequately funded.
NOTE
10 – GOODWILL AND INTANGIBLE ASSETS
Goodwill and
intangible assets are comprised of the following:
September 30,
2019
|
|
|
|
|
Customer
Base
|
$2,297,200
|
(1,438,736)
|
858,464
|
3-10
|
Developed
Technology
|
$6,105,600
|
(1,567,873)
|
4,537,727
|
9
|
Film
Library
|
$957,000
|
(86,850)
|
870,150
|
11
|
Trademarks and
Tradenames
|
$132,000
|
(12,221)
|
119,779
|
12
|
Favorable
Leases
|
$95,000
|
(8,480)
|
86,520
|
3
|
|
$9,586,800
|
(3,114,160)
|
6,472,640
|
|
|
|
|
|
|
Goodwill
|
$1,121,361
|
—
|
1,121,361
|
—
|
Amortization
expense was $643,942 and $551,723 for the nine months ended
September 30, 2019 and 2018, respectively.
December 31,
2018
|
|
|
|
|
Customer
Base
|
$1,947,200
|
(1,374,933)
|
572,267
|
3-10
|
Developed
Technology
|
$6,105,600
|
(1,059,070)
|
5,046,530
|
9
|
Film
Library
|
$957,000
|
(32,700)
|
924,300
|
11
|
Trademarks and
Tradenames
|
$132,000
|
(3,515)
|
128,485
|
12
|
|
$9,141,800
|
(2,470,218)
|
6,671,582
|
|
|
|
|
|
|
Goodwill
|
$924,361
|
—
|
924,361
|
—
|
Remaining
amortization of the intangible assets as of September 30, 2019 is
as follows:
|
|
|
|
|
|
|
Customer
Base
|
$26,384
|
$103,455
|
$103,455
|
$103,455
|
$103,455
|
$418,260
|
Developed
Technology
|
169,601
|
678,404
|
678,404
|
678,404
|
678,404
|
1,654,510
|
Film
Library
|
18,050
|
87,000
|
87,000
|
87,000
|
87,000
|
504,100
|
Trademarks and
Tradenames
|
2,902
|
11,000
|
11,000
|
11,000
|
11,000
|
72,877
|
Favorable
Leases
|
5,088
|
20,352
|
20,352
|
20,352
|
20,352
|
24
|
Total
|
$222,025
|
$900,211
|
$900,211
|
$900,211
|
$900,211
|
$2,649,771
|
NOTE
11 – SUBSEQUENT EVENTS
Subsequent to
September 30, 2019, Geneva Roth converted another $28,000 of
principal into 3,129,911 shares of common stock of the Company
leaving a principal balance of zero for the March 15, 2019
Securities Purchase Agreement. See Note 7.
In addition,
subsequent to September 30, 2019, Auctus converted another $3,930
of accrued interest into 1,500,000 shares of common stock of the
Company. See Note 7.
Subsequent events
were reviewed through the date the financial statements were
issued.
f. SELECTED FINANCIAL INFORMATION
Not
applicable.
g.
SUPPLEMENTARY FINANCIAL INFORMATION
Not
applicable.
h.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our
audited financial statements and notes thereto included herein. In
connection with, and because we desire to take advantage of, the
"safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995, we caution readers regarding certain
forward-looking statements in the following discussion and
elsewhere in this report and in any other statement made by, or on
our behalf, whether or not in future filings with the Securities
and Exchange Commission. Forward-looking statements are statements
not based on historical information and which relate to future
operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and
assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of
which are beyond our control and many of which, with respect to
future business decisions, are subject to change. These
uncertainties and contingencies can affect actual results and could
cause actual results to differ materially from those expressed in
any forward-looking statements made by, or on our behalf. We
disclaim any obligation to update forward-looking
statements.
We generate
revenues primarily through operating as a Competitive Local
Exchange Carrier (“CLEC”) in Arizona as a distributor
of cell phones and telecommunications equipment and as a provider
of ecommerce and cloud solutions in the western United
States.
Our operating
divisions historically have been those that sale telecommunications
and Internet services and those that sale telecommunications
products.
Our plan of
operations for the next 12 months is as follows:
MILESTONES
|
4th Quarter
2019
|
|
|
Expand Sales of
products and services organically and through acquisitions.
Equipment acquisition and installation.
Raise additional
capital through offering of common stock or loans to support sales
growth strategy. Equipment acquisition and
installation.
|
|
|
|
|
|
|
1st Quarter
2020
|
|
|
Sales expansion
through Media, Telecom, SaaS, and Content Product Releases and
Acquisitions. Equipment acquisition and installation.
|
|
|
|
|
|
|
2nd Quarter
2020
|
|
|
Expansion of
national and international sales
|
|
|
|
|
|
|
3rd Quarter
2020
|
|
|
Additional
acquisitions and development costs marketing capital to launch our
mobile banking division
|
RESULTS OF
OPERATIONS
For the Three Months Ended
September 30, 2019 Compared to the Three Months Ended September 30,
2018
During the three
months ended September 30, 2019, we recognized total revenues of
$3,617,500 compared to the prior period of $201,475. The increase
is attributed to the acquisition of the assets of SpeedConnect on
May 7, 2019 and Blue Collar September 1, 2018.
Gross profit (loss)
for the three months ended September 30, 2019 was $1,442,803
compared to $(113,090) for the prior period. The increase of
$1,555,893 is largely attributable to the acquisition of the assets
of SpeedConnect and Blue Collar.
During the three
months ended September 30, 2019, we recognized $1,707,528 in
operating expenses compared to $1,089,155 for the prior period. The
increase of $618,373 was in large part attributable to the
acquisition of the assets of SpeedConnect and Blue
Collar.
Derivative benefit
of $4,533,794 results from the accounting for derivative financial
instruments during the three months ended September 30,
2019.
Interest expense
increased for the three months ended September 30, 2019 compared to
the prior period by $1,208,156. Increases from higher interest
rates and increased debt, including very debt classified as
derivative financial instruments and the resulting accounting of
those considered in default was the primary reason for the
increase.
During the three
months ended September 30, 2019, we recognized a net income of
$2,986,798 compared to a loss of $1,282,055 for the prior period.
The difference of $4,268,853 was primarily a result of the
derivative benefit of $4,533,794 offset by interest expense
increases recorded from the accounting and valuation of debt
classified as derivative financial instruments.
For the Nine Months Ended
September 30, 2019 Compared to the Nine Months Ended September 30,
2018
During the nine
months ended September 30, 2019, we recognized total revenues of
$6,207,431 compared to the prior period of $640,704. The increase
is attributed to the acquisition of the assets of SpeedConnect on
May 7, 2019 and Blue Collar September 1, 2018.
Gross profit (loss)
for the nine months ended September 30, 2019 was $2,282,418
compared to $(194,320) for the prior period. The increase of
$2,476,738 is largely attributable to the acquisition of the assets
of SpeedConnect and Blue Collar.
During the nine
months ended September 30, 2019, we recognized $4,688,962 in
operating expenses compared to $2,955,170 for the prior period. The
increase of $1,733,792 was in large part attributable to the
acquisition of the assets of SpeedConnect and Blue
Collar.
Derivative expense
of $3,572,107 results from the accounting for derivative financial
instruments during the nine months ended September 30,
2019.
Interest expense
increased for the nine months ended September 30, 2019 compared to
the prior period by $2,407,053. Increases from higher interest
rates and increased debt, including very debt classified as
derivative financial instruments and the resulting accounting of
those considered in default was the primary reason for the
increase.
During the nine
months ended September 30, 2019, we recognized a net loss of
$8,538,360 compared to $3,307,841 for the prior period. The
increase in the loss of $5,230,519 was primarily a result of the
derivative expense of $3,572,107 and interest expense of $2,565,404
in large part from the accounting and valuation of debt classified
as derivative financial instruments and the resulting accounting of
those considered in default.
LIQUIDITY AND
CAPITAL RESOURCES
Cash flows
generated from operating activities were not enough to support all
working capital requirements for the nine months ended September
30, 2019 and 2018. Financing activities described below have helped
with working capital and other capital requirements. We incurred
$8,538,360 and $3,307,841, respectively, in losses, and we used
$1,032,989 and $836,228, respectively, in cash for operations for
the nine months September 30, 2019 and 2018. Cash flows from
financing activities were $2,777,422 and $774,715 for the same
periods. These factors raise substantial doubt about the ability of
the Company to continue as a going concern for a period of one year
from the issuance of these financial statements. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
We acquired the
assets of SpeedConnect on May 7, 2019 for $1,000,000 and a note
payable for $750,000. These assets were conveyed into a wholly
owned subsidiary, TPT SpeedConnect. Although TPT SpeedConnect is
currently generating cash flows, there is expected to be
significant capital required in the near term to upgrade the
current network to 5G standards.
In order for us to
continue as a going concern for a period of one year from the
issuance of these financial statements, we will need to obtain
additional debt or equity financing and look for companies with
cash flow positive operations that we can acquire. There can be no
assurance that we will be able to secure additional debt or equity
financing, that we will be able to acquire cash flow positive
operations, or that, if we are successful in any of those actions,
those actions will produce adequate cash flow to enable us to meet
all our future obligations. Most of our existing financing
arrangements are short-term. If we are unable to obtain additional
debt or equity financing, we may be required to significantly
reduce or cease operations.
For the Year Ended
December 31, 2018 Compared to the Year Ended December 31,
2017
During the year
ended December 31, 2018, we recognized total revenues of $937,069
compared to the prior period of $2,115,160. We continued to incur a
decrease in revenues for our telecommunications services during
2018 compared to the prior period. This is in large part from the
loss of two major customers and a reduction of wholesale activity
which combined amounted to a decrease of approximately $832,000 for
2018 compared to 2017. We also had a reduction for the same periods
of $370,381 from telecommunications equipment sales and a reduction
of $196,768 from Internet ecommerce activity both as a result of
health issues among the management group, offset by an increase in
revenues of $219,474 from the acquisition of Blue Collar as of
September 1, 2018.
Gross profit (loss)
for the year ended December 31, 2017 was $(811,965) compared to
$(49,109) for the prior period. The decrease of $762,856 pertained
primarily to decreases in telecommunications revenue. In addition,
we recorded additional telecommunications taxes of approximately
$600,000 during the 2018 that were unexpected and are being
contested.
During the year
ended December 31, 2018, we recognized $4,332,852 in expenses
compared to $3,112,436 for the prior period. The increase of
$1,220,416 was primarily a result of stock-based compensation in
2018 of $1,120,266 and an increase in payroll and related expenses
of $334,543. The increases of payroll and related expenses is from
employment agreements entered towards the end of 2017. Payroll
accruals are being made in accordance with the employment
agreements and a portion of the accruals are being paid according
to cash flow availability.
During the year
ended December 31, 2018, we recognized a net loss of $5,377,489
compared to $3,807,401 for the prior period. The increase in the
loss of $1,570,088 was a result of stock compensation expense of
$1,120,266, the increase in payroll and related expenses of
$334,543 and the reduction of gross profits from the decrease in
revenues and the unexpected telecommunications taxes of
approximately $600,000 in the current period.
A summary of
material terms of our debt as of September 30, 2019 is as
follows:
|
|
Balance
|
|
Rate
|
|
Due
Date
|
|
Past
Due
|
|
Conversion
|
|
Secured
|
Third party
debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business loans and
advances
|
|
$
|
1,122,118
|
|
|
|
4.4-11.5%
|
annual
|
|
|
(1
|
)
|
|
$
|
91,618
|
|
|
|
None
|
|
|
Company
assets
|
Convertible Notes
Payable
|
|
|
1,704,029
|
|
|
|
6%
|
annual
|
|
|
5-1-20
|
|
|
$
|
10,000
|
|
|
|
Convertible at
$0.15 to $0.25 per share
|
|
|
Company
assets
|
Factoring
Agreement
|
|
|
412,111
|
|
|
|
2%
|
monthly
|
|
|
2-29-20
|
|
|
$
|
101,244
|
|
|
|
None
|
|
|
None
|
Total third party
debt
|
|
$
|
3,238,258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related party
debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Line of
Credit
|
|
$
|
3,043,390
|
|
|
|
1 Mo Libor plus
2.0%
|
annual
|
|
|
(1
|
)
|
|
|
None
|
|
|
|
None
|
|
|
Company
assets
|
Debt
(Matrixsites)(4)
|
|
|
4,000,000
|
|
|
|
0%
|
|
|
|
(2
|
)
|
|
|
None
|
|
|
|
None
|
|
|
ViewMe Live
assets
|
Debt (Lion
Phone)
|
|
|
350,000
|
|
|
|
0%
|
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
None
|
Debt (Blue
Collar)(3)
|
|
|
1,600,000
|
|
|
|
3%
|
|
|
|
2-29-20
|
|
|
|
None
|
|
|
|
None
|
|
|
Blue Collar
assets
|
Convertible
Debt
|
|
|
927,381
|
|
|
|
4-6%
|
annual
|
|
|
1-31-19 to various
in 2020 and 2021
|
|
|
|
None
|
|
|
|
Convertible at
$0.15 to $0.25 per share
|
|
|
Company
assets
|
Shareholder
Debt
|
|
|
534,986
|
|
|
|
0%
|
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
None
|
Total related party
debt
|
|
$
|
10,455,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financing
arrangements
|
|
$
|
13,694,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Subsequently
amended to February 29, 2020, except for past due
balances.
(2) $2,000,000 from
debt proceeds and $2,000,000 from the second Company public
offering.
(3) On September 1,
2018, the Company closed on its acquisition of Blue Collar. Part of
the acquisition included a promissory note of $1,600,000. The
promissory note is secured by the assets of Blue
Collar.
Consequences of not
repaying the Blue Collar $1,600,000 debt and the Matrixsites
$4,000,000 debt are outlined in the security agreements which are
the following:
The lender (seller)
may foreclose on the assets in the event of default of non-payment
or other default and may bid in the assets at foreclosure at less
than the debt. This could have the practical effect of taking away
the assets pledged, through the foreclosure and, may leave a
deficiency under the note, which would mean the company would have
none of the assets and still retain liability for an unknown
amount, and have no business related to these
acquisitions.
In order for us to
continue as a going concern, we will need to obtain additional debt
or equity financing and look for companies with cash flow positive
operations that we can acquire. There can be no assurance that we
will be able to secure additional debt or equity financing, that we
will be able to acquire cash flow positive operations, or that, if
we are successful in any of those actions, those actions will
produce adequate cash flow to enable us to meet all our future
obligations. Most of our existing financing arrangements are
short-term. If we are unable to obtain additional debt or equity
financing, we may be required to significantly reduce or cease
operations.
We expect to need
$45,000,000 in capital or loans to complete our plans and
operations. Our sources of capital are loans and sales of equity
from common or preferred stock. We have no commitments for loans or
equity sales at this date.
Derivative
Financial Instruments
The Company
previously adopted the provisions of ASC subtopic
825-10, Financial
Instruments (“ASC 825-10”). ASC 825-10
defines fair value as the price that would be received from selling
an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When
determining the fair value measurements for assets and liabilities
required or permitted to be recorded at fair value, the Company
considers the principal or most advantageous market in which it
would transact and considers assumptions that market participants
would use when pricing the asset or liability, such as inherent
risk, transfer restrictions, and risk of nonperformance. ASC 825-10
establishes a fair value hierarchy that requires an entity to
maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value.
The derivative
liability as of September 30, 2019, in the amount of $5,255,932 has
a level 3 classification under ASC 825-10.
The following table
provides a summary of changes in fair value of the Company’s
Level 3 financial liabilities as of September 30,
2019. There were no derivative financial instruments as
of December 31, 2018.
|
Debt Derivative
Liabilities
|
Balance, December
31, 2018
|
$—
|
Debt discount from
initial derivative
|
1,774,000
|
Initial fair value
of derivative liabilities
|
2,601,631
|
Change in
derivative liability from conversion of notes payable
|
(90,175)
|
Change in fair
value of derivative liabilities at end of period
|
970,476
|
Balance, September
30, 2019
|
$5,255,932
|
Derivative expense
for the nine months ended September 30, 2019
|
$3,572,107
|
Convertible notes payable and warrant
derivatives – The Company issued convertible
promissory notes which are convertible into common stock, at
holders’ option, at a discount to the market price of the
Company’s common stock. The Company has identified the
embedded derivatives related to these notes relating to certain
anti-dilutive (reset) provisions. These embedded derivatives
included certain conversion features. The accounting treatment of
derivative financial instruments requires that the Company record
fair value of the derivatives as of the inception date of debenture
and to fair value as of each subsequent reporting
date.
As of September 30,
2019, the Company marked to market the fair value of the debt
derivatives and determined a fair value of $5,255,932 ($5,185,446
from the convertible notes and $70,486 from the warrants) in Note 5
(2) above. The Company recorded a loss from change in fair value of
debt derivatives of $3,572,107 for the nine months ended September
30, 2019. The fair value of the embedded derivatives was determined
using Monte Carlo simulation method based on the following
assumptions: (1) dividend yield of 0%, (2) expected volatility of
178.2% to 278.9%, (3) weighted average risk-free interest rate of
1.55% to 1.88% (4) expected life of 0.72 to 5.0 years, and (5) the
quoted market price of $0.045 to $0.098 for the Company’s
common stock.
CRITICAL
ACCOUNTING POLICIES
Revenue
Recognition
We have been
recognizing revenue in prior years when the following four basic
criteria have been met: (1) persuasive evidence of an
arrangement exists, (2) delivery has occurred or services have
been rendered, (3) the fee is fixed or determinable and
(4) collection is reasonably assured. On a going forward
basis, we will follow the New Revenue Standard with the following
five criteria as part of our process 1) identify the contract, 2)
identify separate performance obligations, 3) determine the
transaction price, 4) allocate the transaction price among the
performance obligations, and 5) recognize revenue when the
performance obligations are satisfied.
Revenue generated
from product sales, cell phones and telecommunications equipment,
is recognized as revenue upon transfer of the title and risk of
loss of the products to third-party customers, less a reserve for
estimated product returns and other incentive arrangements
including rebates.
Revenue generated
from sales of telecommunications services are recognized as the
transaction with the customer is considered closed and begins
receiving and accepts the services that were the result of the
transaction.
For products that
include installation, if the installation meets the criteria to be
considered a separate element, product revenue is recognized upon
delivery, and installation revenue is recognized when the
installation is complete. For sales that include customer-specified
acceptance criteria, revenue is recognized after the acceptance
criteria have been met. Certain of our products require specialized
installation. Revenue for these products is deferred until
installation is completed. Revenue from services is deferred and
recognized over the contractual period, or as services are rendered
and accepted by the customer. Some of our sales transactions
qualify as multiple-element arrangements which require us to
identify separate units of accounting within the arrangement and
allocate the transaction consideration across these separate
accounting units. For arrangements that include non-software
elements, the transaction’s consideration is allocated to
each unit of accounting based on its relative selling price. When
applying the relative selling price method, the selling price of
each deliverable is determined based upon the following hierarchy
of evidence: vendor-specific objective evidence, which is generally
based upon historical prices in stand-alone transactions;
third-party evidence, which is generally based on market data on
sales of similar products and services, if available; and
management’s best estimate of selling price.
Management’s best estimate of selling price is generally
based upon the following considerations: stand-alone sales prices,
established price lists, costs to produce and profit margins for
similar products.
For cloud-based
solutions, we use the relative fair value method to allocate
transaction consideration to each unit of accounting, whereby the
evidence used in the determination of fair value estimates are
based solely on vendor specific objective evidence. To the extent
that vendor specific objective evidence does not exist for
delivered elements of the transaction, we apply the residual
method.
With regard to
media production services, we receive oral and written agreements
from each client to perform defined work. Work may include creation
of marketing materials and/or content creation and may be short
term or long term. The agreements reflect the expected performance
obligations and milestones and understandings of the transaction
price and details. When the performance obligations and milestones
are met, we recognize transaction prices that are allocated or
applicable to those performance obligations and
milestones.
On January 1, 2018,
we adopted the new accounting standard ASC 606, Revenue from Contracts with Customers,
and all of the related amendments (“new revenue
standard”). We recorded the change, which was immaterial,
related to adopting the new revenue standard using the modified
retrospective method. Under this method, we recognized the
cumulative effect of initially applying the new revenue standard as
an adjustment to the opening balance of retained earnings. This
results in no restatement of prior periods, which continue to be
reported under the accounting standards in effect for those
periods. We expect the impact of the adoption of the new revenue
standard to continue to be immaterial on an ongoing basis. We have
applied the new revenue standard to all contracts as of the date of
initial application.
The Company’s
revenue generation for the nine months ended September 30, 2019 and
years ended December 31, 2018 and 2017 came from the following
sources, which sources are explained in detail below.
|
|
|
|
TPT
SpeedConnect
|
$5,082,260
|
$—
|
$—
|
Copperhead
Digital
|
176,640
|
400,763
|
867,896
|
K
Telecom
|
38,719
|
119,860
|
490,241
|
San Diego
Media
|
21,621
|
169,142
|
365,506
|
Blue
Collar
|
888,191
|
219,474
|
—
|
P2P
|
—
|
25,430
|
390,137
|
Other
|
—
|
2,400
|
1,380
|
Total
Revenue
|
$6,207,431
|
$937,069
|
$2,115,160
|
TPT
SpeedConnect: ISP and Telecom Revenue
TPT SpeedConnect is
a rural BWA provider operating in 10 Midwestern States under the
trade name SpeedConnect. TPT SC’s primary business model is
subscription based, pre-paid monthly reoccurring revenues, from
wireless delivered, high-speed internet connections. In addition,
the company resells third-party satellite and DSL internet and IP
telephony services. Revenue generated from sales of
telecommunications services is recognized as the transaction with
the customer is considered closed and the customer receives and
accepts the services that were the result of the transaction. Due
date is detailed on monthly invoices distributed to customer.
Services billed monthly in advance are deferred to the proper
period as needed. Certain of our products require specialized
installation and equipment. For telecom products that include
installation, if the installation meets the criteria to be
considered a separate element, product revenue is recognized upon
delivery, and installation revenue is recognized when the
installation is complete. The Installation Technician collects the
signed quote containing terms and conditions when installing the
site equipment at customer premises.
Revenue for
installation services and equipment is billed separately from
recurring ISP and telecom services and is recognized when equipment
is delivered and installation is completed. Revenue from ISP and
telecom services is recognized monthly over the contractual period,
or as services are rendered and accepted by the
customer.
The overwhelming
majority of our revenue continues to be recognized when
transactions occur. Since installation fees are generally small
relative to the size of the overall contract and because most
contracts are for two years or less, the impact of not recognizing
installation fees over the contract is immaterial.
Copperhead
Digital: ISP and Telecom Revenue
Copperhead Digital
is a regional internet and telecom services provider operating in
Arizona under the trade name Trucom. Copperhead Digital operates as
a wireless telecommunications Internet Service Provider
(“ISP”) facilitating both residential and commercial
accounts. Copperhead Digital’s primary business model is
subscription based, pre-paid monthly reoccurring revenues, from
wireless delivered, high-speed internet connections. In addition,
the company resells third-party satellite and DSL internet and IP
telephony services. Revenue generated from sales of
telecommunications services is recognized as the transaction with
the customer is considered closed and the customer receives and
accepts the services that were the result of the transaction. Due
date is detailed on monthly invoices distributed to customer.
Services billed monthly in advance are deferred to the proper
period as needed. Certain of our products require specialized
installation and equipment. For telecom products that include
installation, if the installation meets the criteria to be
considered a separate element, product revenue is recognized upon
delivery, and installation revenue is recognized when the
installation is complete. The Installation Technician collects the
signed quote containing terms and conditions when installing the
site equipment at customer premises.
Revenue for
installation services and equipment is billed separately from
recurring ISP and telecom services and is recognized when equipment
is delivered and installation is completed. Revenue from ISP and
telecom services is recognized monthly over the contractual period,
or as services are rendered and accepted by the
customer.
The overwhelming
majority of our revenue continues to be recognized when
transactions occur. Since installation fees are generally small
relative to the size of the overall contract and because most
contracts are for a year or less, the impact of not recognizing
installation fees over the contract is immaterial.
K
Telecom: Prepaid Phones and SIM Cards Revenue
K Telecom generates
revenue from reselling prepaid phones, SIM cards, and rechargeable
minute traffic for prepaid phones to its customers (primarily
retail outlets). Product sales occur at the customer’s
locations, at which time delivery occurs and cash or check payment
is received. The Company recognizes the revenue when they receive
payment at the time of delivery.
SDM:
Ecommerce, Email Marketing and Web Design Services
SDM generates
revenue by providing ecommerce, email marketing and web design
solutions to small and large commercial businesses, complete with
monthly software support, updates and maintenance. Services are
billed monthly. Platform infrastructure support is a prepaid
service billed in monthly recurring increments. The services are
billed a month in advance and due prior to services being rendered.
The revenue is deferred when invoiced and booked in the month the
service is provided. Software support services (including software
upgrades) are billed in real time, on the first of the month. Web
design service revenues are recognized upon completion of specific
projects. Revenue is booked in the month the services are rendered
and payments are due on the final day of the month.
Blue
Collar: Media Production Services
Blue Collar creates
original live action and animated content productions and has
produced hundreds of hours of material for the television,
theatrical, home entertainment and new media markets. Blue Collar
designs branding and marketing campaigns and has had agreements
with some of the world’s largest companies including PepsiCo,
Intel, HP, WalMart and many other Fortune 500 companies.
Additionally, they create motion picture, television and home
entertainment marketing campaigns for studios including Sony,
DreamWorks, Twentieth Century Fox, Universal Studios, Paramount
Studios, and Warner Brothers. With regard to revenue recognition,
Blue Collar receives an agreement from each client to perform
defined work. Some agreements are written, some are verbal. Work
may include creation of marketing materials and/or content
creation. Some work may be short term and take weeks to create and
some work may be longer and take months to create. There are
instances where customer agreements segregate identifiable
obligations (like filming on site vs. film editing and final
production) with separate transaction pricing. The performance
obligation is generally satisfied upon delivery of such film or
production products, at which time revenue is
recognized.
P2P
Asset Activity: Telecom Revenue
Port 2 Port
Communications (P2P) is a U.S. domestic minutes provider that sells
wholesale long distance domestic telecom minutes to other domestic
U.S. carriers. A service is defined as wholesale telecom minute
based on a per-minute and per-destination rate basis. A series of
services for P2P would be substantially the same and would include
a pattern of transfers of services to a customer on a per-minute
flat rate basis for all destinations in a specified geographic.
Revenue generated from sales of minute services are recognized when
weekly invoices are generated and distributed.
Use
of Estimates
The preparation of
financial statements in conformity with United States generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ materially from those
estimates. The Company’s consolidated financial statements
reflect all adjustments that management believes are necessary for
the fair presentation of their financial condition and results of
operations for the periods presented.
Share-based
Compensation
We are required to
measure and recognize compensation expense for all share-based
payment awards (including stock options) made to employees and
directors based on estimated fair value. Compensation expense for
equity-classified awards is measured at the grant date based on the
fair value of the award and is recognized as an expense in earnings
over the requisite service period.
We record
compensation expense related to non-employees that are awarded
stock in conjunction with selling goods or services and recognize
compensation expenses over the vesting period of such
awards.
In June 2018, the
FASB issued ASU No. 2018-07, Improvements to Nonemployee
Share-Based Payment Accounting, which amends ASC 718, Compensation
– Stock Compensation. This ASU requires that most of the
guidance related to stock compensation granted to employees be
followed for non-employees, including the measurement date,
valuation approach, and performance conditions. The expense is
recognized in the same period as though cash were paid for the good
or service. The effective date is the first quarter of fiscal year
2020, with early adoption permitted, including in interim periods.
The ASU has been adopted using a modified-retrospective transition
approach. The adoption is not considered to have a material effect
on the consolidated financial statements.
Income
Taxes
Deferred tax assets
and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the year 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
our income tax provision in the period of enactment.
We recognize
deferred tax assets to the extent that we believe that these assets
are more likely than not to be realized. In making such a
determination, we consider all available positive and negative
evidence, including future reversal of existing taxable temporary
differences, projected future taxable income, tax-planning
strategies, and results of recent operations, including taxable
income in carryback periods. If we determine that we would be able
to realize our deferred tax assets in the future in excess of their
net recorded amount, we would make an adjustment to the deferred
tax asset valuation allowance, which would reduce our income tax
provision.
We account for
uncertain tax positions using a “more-likely-than-not”
recognition threshold. We evaluate uncertain tax positions on a
quarterly basis and consider various factors, including, but not
limited to, changes in tax law, the measurement of tax positions
taken or expected to be taken in tax returns, the effective
settlement of matters subject to audit, new audit activity and
changes in facts or circumstances related to a tax
position.
During November
2015, the FASB issued Accounting Standards Update No. 2015-17,
ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which
simplifies the presentation of deferred income taxes. ASU 2015-17
requires that deferred tax assets and liabilities be classified as
non-current in a statement of financial position. We adopted ASU
2015-17 effective December 31, 2015.
It is our policy to
record costs associated with interest and penalties related to tax
in the selling, general and administrative line of the consolidated
statements of operations.
Goodwill
and Intangible Assets
Goodwill relates to
amounts that arose in connection with our various business
combinations and represents the difference between the purchase
price and the fair value of the identifiable tangible and
intangible net assets when accounted for using the acquisition
method of accounting. Goodwill is not amortized but is subject to
periodic review for impairment.
We test goodwill
and other intangible assets with indefinite lives at the reporting
unit level for impairment on an annual basis and between annual
tests, if events and circumstances indicate it is more likely than
not that the fair value of a reporting unit is less than its
carrying value. Events that would indicate potential impairment and
trigger an interim impairment assessment include, but are not
limited to, current economic and market conditions, including a
decline in market capitalization, a significant adverse change in
legal factors, business climate or operational performance of the
business and an adverse action or assessment by a
regulator.
In performing the
annual goodwill impairment test, we utilize the two-step approach.
The first step, or Step 1, requires a comparison of the carrying
value of each reporting unit to its estimated fair value. To
estimate the fair value of our reporting units for Step 1, we use a
combination of the income approach, the market comparable approach
and the market transaction approach. The income approach is based
on a discounted cash flow analysis, or DCF approach, and calculates
the fair value by estimating the after-tax cash flows attributable
to a reporting unit and then discounting the after-tax cash flows
to a present value, using a risk-adjusted discount rate.
Assumptions used in the DCF approach require the exercise of
significant judgment, including judgment about appropriate discount
rates and terminal values, growth rates and the amount and timing
of expected future cash flows. The forecasted cash flows are based
on our most recent operating activities and assumed growth rates.
We believe our assumptions are consistent with the plans and
estimates used to manage the underlying businesses. The discount
rates, which are intended to reflect the risks inherent in future
cash flow projections, used in the DCF approach are based on
estimates of the weighted-average cost of capital, or WACC, of
market participants relative to each respective reporting unit. The
market approaches consider comparable and transactional market data
based on multiples of revenue or earnings before interest, taxes,
depreciation and amortization, or EBITDA, based on trading
multiples of selected guidelines companies and deal multiples of
selected target companies.
If the carrying
value of a reporting unit exceeds its estimated fair value, we are
required to perform the second step, or Step 2, of the annual
goodwill impairment test to measure the amount of impairment loss,
if any. Step 2 of the goodwill impairment test compares the implied
fair value of a reporting unit’s goodwill to its carrying
value. The implied fair value of goodwill is calculated as the
difference between the fair value of the reporting unit and the
estimated fair value of its assets and liabilities. To the extent
this amount is below the carrying value of goodwill, an impairment
charge is recorded to write down the carrying value to its implied
value.
Impairment charges
related to goodwill, if any, have no impact on our cash
balances.
Impairment of Other Long-lived Tangible and Intangible
Assets
Our intangible
assets consist primarily of customer relationships and developed
technology. The majority of our intangible assets were recorded in
connection with our various business combinations. Our intangible
assets are recorded at fair value at the time of their acquisition.
We amortize intangible assets over their estimated useful
lives.
The estimated
useful lives of the individual categories of intangible assets were
based on the nature of the applicable intangible asset and the
expected future cash flows to be derived from the intangible asset.
Amortization of intangible assets with finite lives is recognized
over the shorter of the respective lives of the agreement or the
period of time the intangible assets are expected to contribute to
future cash flows. We amortize our finite-lived intangible assets
based on patterns on which the respective economic benefits are
expected to be realized. We amortize themajority of our intangible
assets on a straight-line basis from three to nine years, as this
methodology most closely approximates the pattern of economic
benefits for these assets.
We evaluate
long-lived tangible and intangible assets whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. If indicators of impairment are
present with respect to long-lived tangible and intangible assets
used in operations and undiscounted future cash flows are not
expected to be sufficient to recover the assets’ carrying
amount, additional analysis is performed as appropriate and the
carrying value of the long-lived assets is reduced to the estimated
fair value, if this is lower, and an impairment loss is charged to
expense in the period the impairment is identified. Factors we
generally consider important which could trigger an impairment
review on the carrying value of other long-lived tangible and
intangible assets include the following: (1) significant
underperformance relative to expected historical or projected
future operating results, (2) significant changes in the
manner of our use of acquired assets or the strategy for our
overall business, (3) underutilization of our tangible assets,
(4) discontinuance of product lines by ourselves or our
customers, (5) significant negative industry or economic
trends, (6) significant decline in our stock price for a
sustained period, (7) significant decline in our market
capitalization relative to net book value and (8) goodwill
impairment identified during an impairment review.
Business Acquisitions
Our business
acquisitions have historically been made at prices above the fair
value of the assets acquired and liabilities assumed, resulting in
goodwill or some identifiable intangible asset. Significant
judgment is required in estimating the fair value of intangible
assets and in assigning their respective useful lives. The fair
value estimates are based on available historical information and
on future expectations and assumptions deemed reasonable by
management but are inherently uncertain.
We generally employ
the income method to estimate the fair value of intangible assets,
which is based on forecasts of the expected future cash flows
attributable to the respective assets. Significant estimates and
assumptions inherent in the valuations reflect a consideration of
other marketplace participants and include the amount and timing of
future cash flows (including expected growth rates and
profitability), the underlying product life cycles, economic
barriers to entry, a brand’s relative market position and the
discount rate applied to the cash flows. Unanticipated market or
macroeconomic events and circumstances may occur, which could
affect the accuracy or validity of the estimates and
assumptions.
Net assets acquired
are recorded at their fair value and are subject to adjustment upon
finalization of the fair value analysis.
Right
of Use Assets and Lease Liabilities
In February 2016,
the FASB issued ASU 2016-02, Leases (Topic 842) and subsequent
amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU
2018-11, ASU 2018-20 and ASU 2019-01 (collectively, Topic 842).
Topic 842 requires lessees to classify leases as either finance or
operating leases and to record a right-of-use asset and a lease
liability for all leases with a term greater than 12 months
regardless of the lease classification. We adopted Topic 842 using
the effective date, January 2019, as the date of our initial
application of the standard. Consequently, financial information
for the comparative periods has not been updated. Our finance and
operating lease commitments are subject to the new standard and we
recognize as finance and operating lease liabilities and
right-of-use assets. The effect on our condensed
consolidated financial statements has not been material until we
acquired the assets of SpeedConnect, which effect has been recorded
during the period ended September 30, 2019 and is reflected in the
condensed consolidated financial statements as of September 30,
2019.
Research
and Development
Our research and
development programs focus on telecommunications products and
services. Research and development costs are expensed as incurred.
Any payments received from external parties to fund our research
and development activities reduce the recorded research and
development expenses.
OPERATIONAL
BUDGET
We intend to expend
funds over the next four quarters as follows:
Time
Period
|
|
Description
|
|
$
Amount
|
|
4th Quarter
2019
|
|
|
Expand Sales of
products and services organically and through
acquisitions.
Raise additional
capital through offering of common stock or loans to support sales
growth strategy and debt payments. Equipment
purchases.
|
|
$
|
7,700,000
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter
2020
|
|
|
Sales expansion
through Media, Telecom, SaaS, and Content Product Releases and
Acquisitions. Equipment purchases.
|
|
$
|
13,200,000
|
|
|
|
|
|
|
|
|
|
|
|
2nd Quarter
2020
|
|
|
Expansion of
national and international sales and acquisitions. Equipment
purchases.
|
|
$
|
7,850,000
|
|
|
|
|
|
|
|
|
|
|
|
3rd Quarter
2020
|
|
|
Additional
acquisitions and development costs marketing capital to launch our
mobile banking division. Equipment purchases. (1)
|
|
$
|
16,250,000
|
|
(1)
A portion of
this is expected to be available for use in
2021.
Our Operational
Budget in the next year is as follows:
Working
Capital
|
$6,050,000
|
Marketing
|
$1,500,000
|
Legal, Audit and
Accounting
|
$400,000
|
Fees, rent, travel,
marketing and general & administrative expenses
|
$2,000,000
|
|
$9,950,000
|
The Company may
change any or all of the budget categories in the execution of its
business model. None of the line items are to be considered fixed
or unchangeable. The Company may need substantial additional
capital to support its budget. We have not recognized revenues from
our operational activities.
Based on our
current cash reserves of approximately $100,000 as of September 30,
2019, we do not have the cash for the operational budget going
forward. If we are unable to generate enough
revenue, to cover our
operational costs, we will need to seek additional sources of
funds. Currently, we have no committed source for any
funds as of date hereof. No representation is made that any
funds will be available when needed. In the event funds
cannot be raised if and when needed, we may not be able to carry
out our business plan and could fail in business as a result of
these uncertainties.
The independent
registered public accounting firm’s report on our financial
statements as of December 31, 2018, includes a “going
concern” explanatory paragraph that describes substantial
doubt about our ability to continue as a going
concern.
i. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
Not
applicable.
j.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not
applicable.
k. DIRECTORS and EXECUTIVE
OFFICERS
Name
|
Age
|
Position
|
Term
|
Stephen J. Thomas,
III
|
55
|
President, Chief
Executive Officer and Chairman of the Board
|
Annual
|
Richard
Eberhardt
|
61
|
Executive
Vice-President and Director
|
Annual
|
Arkady
Shkolnik
|
55
|
Director
|
Annual
|
Reginald
Thomas
|
54
|
Director
|
Annual
|
Gary
Cook
|
61
|
Chief Financial
Officer
|
Annual
|
Stacie
Stricker
|
46
|
Corporate Secretary
and Controller
|
Annual
|
Stephen J. Thomas, III – President, Chief Executive Officer
and Chairman of the Board
Mr. Thomas was
appointed President, CEO and Chairman of the Board of TPT Global
Tech, Inc. on August 11, 2014. Previously, Mr. Thomas was Manager
of TPT Group, LLC (2015-2017) and Director of TPT Group, Inc.
(2011-2014). Mr. Thomas was founder, CEO and Director of Trans
Pacific Telecom, Inc. from 2000-2011 and prior to that was
president and CEO of New Orbit Communications (1999-2001). In 2002,
as CEO of Trans Pacific Telecom Group, Mr. Thomas was featured on
CBS MarketWatch for winning “Product of the Year Award for
2002” VIVOware at the Internet Telephony Conference and Expo
an event focused on voice, video, fax and data convergence. During
his employment with New Orbit, Mr. Thomas worked extensively
throughout Latin America, gaining extensive expertise and resources
in the international telecom marketplace. Mr. Thomas has also
served as Director of Network Optimization/Validation for
WorldxChange Communications, one of the largest privately held
facilities-based telecommunications company with headquarters in
San Diego, California and international operations all over the
globe. His responsibilities included Cost Assurance for expenses.
As a matter of disclosure, in 2005 Mr. Thomas was an ISP equipment
provider to Access Point Africa (“APA”). APA allowed
its license to expire in Sierra Leone, and as a result APA and
several individuals were alleged to have violated the Sierra Leone
Telecommunications Act by operating an unlicensed internet access
point. Mr. Thomas was charged as well as for the offense which
bears a fine of up to $3,000 but the charge is unresolved at this
time, but he intends to resolve it in the next several
months.
Mr. Thomas attended
Northeastern University majoring in Finance and Management (1984 to
1987).
Richard Eberhardt- Executive Vice- President and
Director
Mr. Eberhardt was
appointed Executive Vice-President and Director of TPT Global Tech,
Inc. on October 10, 2014. Mr. Eberhardt also serves as Chief
Executive Officer of Copperhead Digital Holdings, LLC, a
wholly-owned subsidiary of TPT Global, Inc. Previously, Mr.
Eberhardt served CEO/COO of Pacific Bio Medical, a Durable Medical
Equipment provider, located in Phoenix, Arizona (2008-2012). From
2012-2015, Mr. Eberhardt served as Consultant and Sales Director
for two telecommunications companies, Fathom Voice and Ipitomy
located in Indiana and Florida, respectively. Founding member of a
telecommunications firm, WorldxChange, located in San Diego, CA.
(1989-2001) With WorldxChange, he researched, designed, and
implemented start-up business sales and marketing models resulting
in wholesale, commercial, and consumer revenue channels. He opened
and operated offices in approximately 23 countries. He created and
managed channels with 25K+ agents and $15M in monthly
revenue.
We believe his
management experience is valuable to our company because he is an
experienced sales and business development executive with strong
business acumen and more than thirty years of experience leading
sales and marketing operations. He has managed growth and revenue
expansion through effective management of accounts and consultative
sales approach that aligns the interests of all
parties.
He has sought, and
negotiated, partnerships and asset management agreements across
multiple channels, including wholesale telecom providers (AT&T,
Verizon, Global Crossing, and Worldcom). He has managed structured
methodologies that combined strengths of marketing, sales, and
operations to reduce redundancies, improve order-processing times,
and streamline business flow. He has experience in reviving product
lines with rebranding and repackaging, as well as created
communications bundles, and incentive programs to maximize existing
client penetration and drive vertical growth.
Arkady Shkolnik – Director
Mr. Shkolnik was
appointed a Director of TPT Global Tech, Inc. on August 15, 2018.
Mr. Shkolnik has over 25 years of senior-level management
experience in the Semiconductor, Wireless and Telecommunications
industry. He is currently VP EMEA of Sales with Qualcomm (2010
– present). In addition to being a leader at Qualcom, Mr.
Shkolnik served on the Board of Advisors at Zeevo Technology, Inc,
(2009 to 2012) leading up to their acquisition by Broadcom and
brings extensive experience in global business development, sales,
marketing, product management and strategic account management to
TPT Global’s already diverse board. From 2006 until 2010, Mr.
Shkolnik was Vice President, EMEA Sales & Business Development
of PacketVideo Corporation. Previous experience includes Executive
Vice President, Sales & Business Development of Quorum Systems
(2005-2006), Vice President, Sales & Business Development of
Broadcom (acquired by Widcomm) from 2000-2005, and Director of
Sales, North America Wireless ASIC Business Unit at Philips
Semiconductors/VLSI Technology from 1991-2000.
Mr. Shkolnik has
developed and managed strategic OEM and semiconductor relationships
globally. Aligning sales and marketing functions with corporate
objectives, he has negotiated and secured over ~100 License,
Technology and CSA agreements with customers such as Samsung, LG,
Sony, Panasonic, HTC, BlackBerry, Microsoft, IBM, HP, Dell, Compaq,
Logitech, TDK, Acer, TI, Philips, STM, Broadcom, CSR, Toyota,
Panasonic, ZTE, and others.
Mr. Shkolnik
attended Temple University where he received a Bachelor of Applied
Science (B.A.Sc.), Electrical and Electronics Engineering Skills
& Endorsements (1984).
Reginald Thomas – Director
Mr. Thomas was
appointed a Director of TPT Global Tech, Inc. on August 15, 2018.
He has over 20 years of experience working for technology companies
where he is an accomplished business leader driving world class
customer and partner experiences though the delivery of innovative
software products and solutions for leading global companies.
Specific results include:
Cisco: (July 2018 -
present) As Partner Delivery Executive he supports 3 of
Cisco’s largest Multi National Partners- IBM US IBM Canada,
and Presidio. He aligned these Partners go to market strategy with
Cisco’s shifting business strategy to influence more than
$15M in services sales in the last 14 months.
Cisco: (2007 -
2017) As the Sr. Product Manager he owned Cisco’s Services
Portal strategy, the UX Strategy, the build, and adoption of
Cisco’s Services Portal. Under his direction it grew from 2
to 24 integrated service offers delivering a seamless customer and
partner experience.
Openwave: (2001 -
2007) IT Director of Program Management- through his leadership he
designed the foundation for the Program Management Office that
managed the upgrades to mission critical databases requiring the
management of highly technical resources; multiple applications
delivery from concept to development, companywide roll outs for ERP
systems, and Merger & Acquisition consolidation.
Lucent /Avaya:
(1997 - 2001) E- Commerce Product and Strategy Lead where he had
global responsibility for Lucent’s online Partner Portal. He
e- enabled Lucent to transition $10M of Distributor order revenue
to a seamless online experience realizing significant savings in
the cost per order.
Mr. Thomas
graduated from the University of Connecticut in 1988 with a BS in
Business.
Gary Cook – Chief Financial Officer
Mr. Cook was appointed Chief Financial
Officer of TPT Global Tech, Inc. on November 1, 2017. Mr. Cook has
served as chief financial officer, secretary or treasurer for
several small to medium size public and private companies in
various industries for over 25 years including providing Chief
Financial Officer services for several companies on a contract
basis (2008-2017), in addition to full time employment with eVision
USA.com, Inc. (1996-2002), Cognigen Networks, Inc. (2003-2008), and
SolaRover, Inc. (2009-2015). Prior to this, Mr. Cook worked in the
auditing department for KPMG in both the New Orleans, LA and
Denver, CO offices for 12 years.
His experience includes companies from
start-ups to multimillion-dollar international operating companies
in the internet marketing, software development, medical device,
alternative energy, telecommunications, securities broker/dealer,
private equity and manufacturing industries. While working with
KPMG, Mr. Cook worked in other industries such as oil & gas,
oil & gas services, cable, theatre exhibition, mining, banking,
construction and not-for-profit.
Mr. Cook
has a broad experience in
accounting, finance, human resources, legal, insurance, contracts,
banking relations, shareholder relations, internal controls, SEC
matters, financial reporting and other corporate administrative and
governance matters for both private and public companies. Mr. Cook
has held Series 7, 24, 27 and 63 licenses from FINRA successor to
the NASD.
Mr. Cook attended
and graduated from Brigham Young University between 1979 and 1982.
He is a certified public accountant and licensed with the State of
Colorado.
Stacie Stricker – Corporate Secretary and
Controller
Ms. Stricker was
appointed Corporate Secretary and Controller of TPT Global Tech,
Inc. on October 10, 2014.
For nearly twenty
years, Ms. Stricker has served as a senior-level financial
operations leader and business partner in the telecommunications
industry with companies such as Star Telecommunications, Telstra
USA, and Acceris Communications. To make the best use of her
significant experience in internal Corporate Controller roles, Ms.
Stricker launched 2S Accounting Services in 2012. At 2S, Ms.
Stricker and her team built strong relationships with specially
selected clients and develop adaptable and efficient solutions to
their business and accounting challenges.
In addition to
being a passionate and decisive organizational leader with
experience transforming business units to deliver profitability and
value, Ms. Stricker is experienced in accounting and all facets of
financial operations, system and staff development, process
development and internal control maintenance, strategy development
and high performance team management. She is also a long-standing
member of the National Association of Credit Manager’s
Telecom Industry Group.
Ms. Stricker
completed her undergraduate work at the University of California,
Santa Barbara in 1994 and received her MBA from Pepperdine
University in 2008. Additionally, in 2010, Ms. Stricker completed
the Certificate of Public Accounting program at the University of
California, Santa Barbara.
KEY
EMPLOYEES OF SUBSIDIARIES
Steve Caudle - CEO Cloud Services
Steve Caudle has
been in the technology field for 31 years and brings significant
operations and technology development experiences to TPT Global
Tech, Inc. Mr. Caudle began his career at the IBM “Think
Tank” and Fairchild/National Semiconductor located in Silicon
Valley California. Steve then moved on to work for the Department
of Defense for eighteen years and specialized in code writing and
software applications. Steve moved to the private sector and was
the Chief Information Officer (CIO) at North Face Corporation and
then moved to become the Executive VP of ZDTV (renamed TechTV) and
then became C-NET now owned by CBS.
Robert Haas, CEO of
Levi Strauss, contracted Mr. Caudle as an executive consultant
where he was placed in charge of relocating their data center from
San Francisco, California to Dallas, Texas (1988).
Subsequently, Mr.
Caudle joined ESST, where he was the CIO. ESST was a public
company. Steve Caudle then joined Mr. Fred Chan, CEO of ESST in
starting a new company called Vialta, Inc. Mr. Caudle was again the
CIO and the number two person in charge of Vialta. Vialta designed
DVD laser decoder chips that were used in many DVD players in the
world. Vialta grew the company from 3 employees to over 4,000 in
just five months and over $1.2 billion in revenue while he was
there.
Upon leaving
Vialta, Mr. Caudle started his own software development company
called Matrixsites. Matrixsites has developed software and
applications for a variety of companies such as Federal Express,
Wells Fargo Bank, Bank of America, Apple, Pixar, ITV Guide and
China Mobile.
Mr. Caudle received
his Bachelors of Science Degree in Electrical Engineering from San
Jose State University in 1977 and holds one U.S.
Patent.
Mark Rowen- CEO Media Division
Mark Rowen is a
seasoned executive with over 25 years in the film and television
business. In 2000, Mr. Rowen founded Blue Collar Productions, Inc.,
an entity with which we entered into an acquisition agreement in
November 2017 and amended in February 2018, where he remains
President today. Blue Collar is a leader in the creation of
original live action and animated content and has produced hundreds
of hours of material for the television, theatrical, home
entertainment and new media markets. Mr. Rowen works closely with
all of the major television networks, cable channels and film
studios to produce home entertainment products.
Mr. Rowen also
works with a wide array of notable filmmakers including Steven
Spielberg, Ron Howard, Brett Ratner and James Cameron to name a
few. Mr. Rowen also has very close working relationships with
actors including Tom Hanks, Brad Pitt, Julia Roberts, Robert
Downey, Jr., Denzel Washington, Ryan Gosling, Sofia Vergara,
Mariska Hargitay and many others.
Prior to starting
Blue Collar Productions, Mr. Rowen functioned as the head of home
entertainment production for DreamWorks SKG from 1997 to 2000. He
also serves as the President of Long Leash Entertainment, an
aggregator of entertainment based intellectual property and creator
of high end entertainment content.
Mr. Rowen is a
graduate of the University of California, Los Angeles. He is also
actively involved in charitable organizations including
Stand Up 2 Cancer,
The Joyful Heart
Foundation, Save The
Children, and other philanthropic endeavors in the
arts.
Conflicts of Interest
– General.
Our directors and
officers are, or may become, in their individual capacities,
officers, directors, controlling shareholders and/or partners of
other entities engaged in a variety of non-profit and for-profit
organizations. Thus, there exist potential conflicts of interest
including, among other things, time, efforts and corporation
opportunity, involved in participation with such other business
entities.
Conflicts of Interest
– Corporate Opportunities
Presently no
requirement contained in our Articles of Incorporation, Bylaws, or
minutes which requires our officers and directors to disclose
business opportunities which come to their attention. Our officers
and directors do, however, have a fiduciary duty of loyalty to us
to disclose to us any business opportunities which come to their
attention, in their capacity as an officer and/or director or
otherwise. Excluded from this duty would be opportunities which the
person learns about through his involvement as an officer and
director of another company. We have no intention of merging with
or acquiring an affiliate, associate person or business opportunity
from any affiliate or any client of any such person.
l.
EXECUTIVE AND DIRECTORS COMPENSATION
COMPENSATION
The following table
sets forth the compensation paid to officers and board members
during the nine months ended September 30, 2019 and fiscal years
ended December 31, 2018 and 2017. The table sets forth this
information for TPT Global Tech, Inc. including salary, bonus, and
certain other compensation to the Board members and named executive
officers for the nine months ended September 30, 2019 and for the
fiscal years ended December 31, 2018 and 2017
SUMMARY EXECUTIVE COMPENSATION
TABLE
|
|
|
|
|
|
|
Non-equity
incentive plan compensation
($)
|
Non-qualified
deferred compensation earnings
($)
|
All other
compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Thomas,
III CEO and President
|
|
2019(1)
|
129,770
|
—
|
—
|
—
|
—
|
—
|
—(2)
|
129,770(3)
|
|
|
2018
|
98,790
|
—
|
—
|
—
|
—
|
—
|
—(2)
|
98,790(3)
|
|
|
2017
|
95,402
|
—
|
—
|
—
|
—
|
—
|
—(2)
|
95,402(3)
|
|
|
|
|
|
|
|
|
|
|
Richard Eberhardt,
Executive Vice-President
|
|
2019(1)
|
68,650
|
—
|
—
|
—
|
—
|
—
|
—
|
68,650(3)
|
|
|
2018
|
21,115
|
—
|
—
|
—
|
—
|
—
|
—
|
21,115(3)
|
|
|
2017
|
60,015
|
—
|
—
|
—
|
—
|
—
|
—
|
60,015(3)
|
|
|
|
|
|
|
|
|
|
|
Gary Cook,
CFO
|
|
2019(1)
|
74,650
|
—
|
—
|
—
|
—
|
—
|
|
74,650(3)
|
|
|
2018
|
45,100
|
—
|
—
|
—
|
—
|
—
|
—
|
45,100(3)
|
|
|
2017
|
68,500
|
—
|
—
|
—
|
—
|
—
|
—
|
68,500(3)
|
|
|
|
|
|
|
|
|
|
|
Stacie Stricker,
Secretary and Controller
|
|
2019(1)
|
52,750
|
—
|
—
|
—
|
—
|
—
|
—
|
52,750(3)
|
|
|
2018
|
52,850
|
—
|
—
|
—
|
—
|
—
|
—
|
52,850(3)
|
|
|
2017
|
52,600
|
—
|
—
|
—
|
—
|
—
|
—
|
52,600(3)
|
(1) Represents nine
months ended September 30, 2019.
(2) The Company
entered into a lease for living space which is occupied by Stephen
Thomas, Chairman, CEO and President of the Company. Mr. Thomas
lives in the space and uses it as his corporate office. The Company
has paid approximately $23,641 in rent and utility payments for
this space for the nine months ended September 30, 2019. No portion
of the payments on this lease have been included in amounts shown
in compensation to Mr. Stephen Thomas and has approximated $40,000
a year in 2015-2018.
(3) These amounts
do not include compensation that has been accrued on the books of
the Company in accordance with employment agreements and other
previous contract work performed but has not been paid because of
the lack of cash flows. Accrued but unpaid compensation as of
September 30, 2019 is as follows: Stephen J. Thomas, III - $35,606;
Richard Eberhardt - $197,000; Gary Cook - $192,194; and Stacie
Stricker - $129,800.
OPTION/WARRANT GRANTS IN THE LAST
FISCAL YEAR
On October 14,
2017, the Board of Directors and majority stockholders of TPT
approved the 2017 TPT Global Tech, Inc. Stock Option and Award
Incentive Plan (“the 2017 Plan.”) There are 20,000,000
shares of our common stock reserved under the 2017
Plan.
During 2018 and
through the nine months ended September 30, 2019, in conjunction
with the issuance of certain debt, options exercisable for 93,120
shares were issued outside of the 2017 Plan, 3,093,120 of which we
issued as of September 30, 2019. The number of options, exercise
price and expiration date of these options are as
follows:
Stock
Option
|
Share
|
Expire
|
Granted
|
Price
|
Date
|
6,000
|
$0.063
|
12/31/2019
|
2,000
|
$0.046
|
12/31/2019
|
21,200
|
$0.22
|
12/31/2019
|
6,400
|
$0.135
|
12/31/2019
|
5,500
|
$0.12
|
12/31/2019
|
8,300
|
$0.22
|
12/31/2019
|
8,720
|
$0.135
|
12/31/2019
|
7,000
|
$0.094
|
12/31/2019
|
4,000
|
$0.066
|
12/31/2019
|
2,000
|
$0.063
|
12/31/2019
|
4,000
|
$0.10
|
12/31/2019
|
4,000
|
$0.062
|
12/31/2019
|
2,000
|
$0.064
|
12/31/2019
|
4,000
|
$0.1347
|
12/31/2019
|
4,000
|
$0.052
|
12/31/2019
|
2,000
|
$0.220
|
12/31/2019
|
2,000
|
$0.062
|
12/31/2019
|
1,000,000
|
$0.10
|
3/20/2021
|
2,000,000
|
$0.10
|
2/28/2020
|
3,093,120
|
|
|
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR END AND SEPTEMBER 30, 2019
The following table
sets forth certain information concerning outstanding equity awards
held by our appointed executive officers for the fiscal year ended
December 31, 2018 and as of September 30, 2019 (the "Named
Executive Officers"):
|
|
|
|
Number of
securities underlying unexercised options (#)
exercisable
|
Number of
securities underlying unexercised options (#)
unexercisable
|
Equity incentive
plan awards: Number of securities underlying unexercised unearned
options
(#)
|
Option exercise
price
($)
|
|
Number of shares
or units of stock that have not vested
(#)
|
Market value of
shares of units of stock that have not vested
($)
|
Equity incentive
plan awards: Number of unearned shares, units or other rights that
have not vested (#)
|
Equity incentive
plan awards: Market or payout value of unearned shares, units or
others rights that have not vested
($)
|
Stephen J. Thomas,
III, CEO and Chairman
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
Richard Eberhardt,
Executive VP
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
Gary Cook,
CFO
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
Stacie Stricker,
Secretary and Controller
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
DIRECTOR
COMPENSATION
All of our officers
and/or directors will continue to be active in other companies. All
officers and directors have retained the right to conduct their own
independent business interests.
The term of office
for each Director is one (1) year, or until his/her successor is
elected at our annual meeting and qualified. The term of office for
each of our Officers is at the pleasure of the Board of
Directors.
The Board of
Directors has no nominating, auditing committee or a compensation
committee. Therefore, the selection of person or election to the
Board of Directors was neither independently made nor negotiated at
arm's length.
At this time, our
Directors do not receive cash compensation for serving as members
of our Board of Directors.
The following table
sets forth certain information concerning compensation paid to our
directors for services as directors, but not including compensation
for services as officers reported in the "Summary Executives’
Compensation Table" during the years ended December 31, 2018, 2017
and 2016:
Name
|
|
Year
|
Fees earned or
paid in cash
($)
|
|
|
Non-equity
incentive plan compensation ($)
|
Non-qualified
deferred compensation earnings
($)
|
All other
compensation ($)
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J.
|
|
2019
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Thomas,
|
|
2018
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
III (1)
|
|
2017
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
Richard
|
|
2019
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Eberhardt
|
|
2018
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(2)
|
|
2017
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
Arkady
|
|
2019
|
75,000
|
259,688
|
—
|
—
|
—
|
—
|
334,688
|
Shkolnik
|
|
2018
|
41,666
|
144,271
|
—
|
—
|
—
|
—
|
185,937
|
(3)
|
|
2017
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
Reginald
|
|
2019
|
30,000
|
45,000
|
—
|
—
|
—
|
—
|
75,000
|
Thomas
|
|
2018
|
16,666
|
25,000
|
—
|
—
|
—
|
—
|
41,666
|
(3)
|
|
2017
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
____________________
(1)
Mr.
Thomas is also an officer and as such he receives the compensation
as disclosed in the Executive Compensation Table.
(2)
Mr.
Eberhardt is also an officer and as such he receives the
compensation as disclosed in the Executive Compensation
Table
(3)
In
August 2018, a majority of the outstanding voting shares of the
Company voted through a consent resolution to support a consent
resolution of the Board of Directors of the Company to add two new
directors to the Board. As such, Arkady Shkolnik and Reginald
Thomas were added as members of the Board of Directors. The total
members of the Board of Directors after this addition is four. In
accordance with agreements with the Company for his services as a
director, Mr. Shkolnik is to receive $25,000 per quarter and
5,000,000 shares of restricted common stock valued at approximately
$687,500 vesting quarterly over twenty-four months. The quarterly
cash payments of $25,000 will be paid in unrestricted common shares
if the Company has not been funded adequately to make such
payments. Mr. Thomas is to receive $10,000 per quarter and
1,000,000 shares of restricted common stock valued at approximately
$119,000 vesting quarterly over twenty-four months. The quarterly
payment of $10,000 may be suspended by the Company if the Company
has not been adequately funded
Employment
Agreements with Officers and Directors of TPT Global Tech,
Inc.
We have
employment/consultant agreements with our key officers, as listed
below. Described below are the compensation packages our Board
approved for our executive officers. The compensation agreements
were approved by our board based upon recommendations conducted by
the board.
Name
|
|
Position
|
|
Annual
Compensation
|
Stephen J. Thomas,
III (1)
|
|
Chief Executive
Officer
|
|
$150,000
|
|
|
|
|
|
Richard Eberhardt
(2)
|
|
Executive Vice
President
|
|
$150,000
|
|
|
|
|
|
Gary Cook
(3)
|
|
Chief Financial
Officer
|
|
$150,000
|
|
|
|
|
|
Arkady Shkolnik
(4)
|
|
Director
|
|
$100,000
|
|
|
|
|
|
Reginald Thomas
(5)
|
|
Director
|
|
$40,000
|
(1) Pursuant to an
employment agreement dated November 1, 2017, Mr. Thomas receives a
base salary of $150,000 per year. In addition to the base salary,
Mr. Thomas is eligible to receive performance bonuses as to be
determined by our Board of Directors. The agreement has a
three-year term and expires on October 31, 2020.
Upon an affirmative
vote of not less than two-thirds of the Board of Directors, the
employment may be terminated without further liability on the part
of our Company. Cause is considered to be an act or acts of serious
dishonesty fraud, or material and deliberate injury related to our
business, including personal enrichment at the expense of our
Company. If there is a termination for cause the benefits of any
bonus for the period preceding termination would be
forfeit.
In addition, the
agreement provides for Mr. Thomas to be able to terminate the
agreement for Good Reason. Good Reason is considered to be (1) an
adverse change in his status or position as CEO, (2) a reduction in
base salary, or (3) action by us that adversely affected his
participation in the benefits.
(2) Pursuant to an
employment agreement dated November 1, 2017, Mr. Eberhardt receives
a base salary of $150,000 per year. In addition to the base salary,
Mr. Eberhardt is eligible to receive performance bonuses as to be
determined by our Board of Directors. The agreement has a
three-year term and expires on October 31, 2020.
Upon an affirmative
vote of not less than two-thirds of the Board of Directors, the
employment may be terminated without further liability on the part
of our Company. Cause is considered to be an act or acts of serious
dishonesty fraud, or material and deliberate injury related to our
business, including personal enrichment at the expense of our
Company. If there is a termination for cause the benefits of any
bonus for the period preceding termination would be
forfeit.
In addition, the
agreement provides for Mr. Eberhardt to be able to terminate the
agreement for Good Reason. Good Reason is considered to be (1) an
adverse change in his status or position as CEO, (2) a reduction in
base salary, or (3) action by us that adversely affected his
participation in the benefits.
(3) Pursuant to an
employment agreement dated November 1, 2017, Mr. Cook receives a
base salary of $150,000 per year for which currently he devotes no
less than 60% of his full-time. In addition to the base salary, Mr.
Cook is eligible to receive performance bonuses as to be determined
by our Board of Directors. The agreement has a three-year term and
expires on October 31, 2020.
Upon an affirmative
vote of not less than two-thirds of the Board of Directors, the
employment may be terminated without further liability on the part
of our Company. Cause is considered to be an act or acts of serious
dishonesty fraud, or material and deliberate injury related to our
business, including personal enrichment at the expense of our
Company. If there is a termination for cause the benefits of any
bonus for the period preceding termination would be
forfeit.
In addition, the
agreement provides for Mr. Cook to be able to terminate the
agreement for Good Reason. Good Reason is considered to be (1) an
adverse change in his status or position as CEO, (2) a reduction in
base salary, or (3) action by us that adversely affected his
participation in the benefits.
(4) In accordance
with an Independent Director Agreement with the Company for his
services as a director, Mr. Shkolnik is to receive $25,000 per
quarter and 5,000,000 shares of restricted common stock valued at
approximately $687,500 vesting quarterly over twenty-four months.
The quarterly cash payments of $25,000 will be paid in unrestricted
common shares if the Company has not been funded adequately to make
such payments.
(5) In accordance
with an Independent Director Agreement with the Company for his
services as director, Mr. Thomas is to receive $10,000 per quarter
and 1,000,000 shares of restricted common stock valued at
approximately $119,000 vesting quarterly over twenty-four months.
The quarterly payment of $10,000 may be suspended by the Company if
the Company has not been adequately funded.
m. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AS OF NOVEMBER 25, 2019
The following table
sets forth information with respect to the beneficial ownership of
our outstanding common stock by:
|
·
|
each person who is
known by TPT to be the beneficial owner of five percent (5%) or
more of TPT common stock;
|
|
·
|
Our Chief Executive
Officer, our other executive officers, and each director as
identified in the “Management — Executive
Compensation” section; and
|
|
·
|
all of our
directors and executive officers as a group.
|
Beneficial
ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock
and options, warrants and convertible securities that are currently
exercisable or convertible within 60 days of the date of this
document into shares of our common stock are deemed to be
outstanding and to be beneficially owned by the person holding the
options, warrants or convertible securities for the purpose of
computing the percentage ownership of the person, but are not
treated as outstanding for the purpose of computing the percentage
ownership of any other person.
Name and Address of Beneficial
Owner
|
Amount and Nature
of Beneficial Owner
|
Percent of Class
Pre-Offering (1)
|
Percent of Class
Post-Offering (1)
|
Stephen J. Thomas,
III, Chairman, President and CEO *
|
26,686,407(1)
|
18.37%
|
14.61%
|
|
|
|
|
Richard Eberhardt,
Director, Executive Vice- President *
|
19,000,000
|
13.08%
|
10.41%
|
|
|
|
|
Arkady Shkolnik,
Director *
|
3,541,667(2)
|
2.38%
|
1.90%
|
|
|
|
|
Reginald Thomas,
Director *
|
708,333(2)
|
0.49%
|
.039%
|
|
|
|
|
Gary Cook, CFO
*
|
6,500,000
|
4.48%
|
3.56%
|
|
|
|
|
Stacie Stricker,
Corporate Secretary and Controller *
|
500,000
|
0.374%
|
0.27%
|
|
|
|
|
All Directors and
Executive Officers as a group
|
59,936,407
|
39.14%
|
31.14%
|
|
|
|
|
5%+
Shareholders
|
|
|
|
|
|
|
|
Stephen J. Thomas,
III, Chairman, President and CEO *
|
26,686,407(1)
|
18.37%
|
14.61%
|
|
|
|
|
Richard Eberhardt,
Director, Executive Vice- President *
|
19,000,000
|
13.08%
|
10.41%
|
|
|
|
|
Jack
Najjur
PO Box
692211
Orlando, FL
32869
|
8,095,000
|
5.57%
|
4.43%
|
*The Address for
the above individuals and entities is c/o 501 West Broadway, Suite
800, San Diego, CA 92101.
(1)
Based
upon 145,236,483 shares issued and outstanding. Does not
contemplate the Series A Preferred Stock held 100% by Stephen J.
Thomas, III which guarantees the holder to 60% of the outstanding
common stock in shares when converted and 60% of any vote prior to
or after conversion. At this time, approximately 142,000,000
additional common shares would be issued if Mr. Thomas were to
convert his Series A Preferred Stock holdings to common
stock.
(2)
In
August 2018, the Company added two new directors to the Board.
Arkady Shkolnik and Reginald Thomas were added as members of the
Board of Directors. The total members of the Board of Directors
after this addition is four. In accordance with agreements with the
Company for his services as a director, Mr. Shkolnik is to receive
5,000,000 shares of restricted common stock vesting quarterly over
twenty-four months. Mr. Thomas is to receive 1,000,000 shares of
restricted common stock vesting quarterly over twenty-four months.
The earned but not issued common shares through December 2019 have
been included in the calculations.
Rule 13d-3 under
the Securities Exchange Act of 1934 governs the determination of
beneficial ownership of securities. That rule provides that a
beneficial owner of a security includes any person who directly or
indirectly has or shares voting power and/or investment power with
respect to such security. Rule 13d-3 also provides that a
beneficial owner of a security includes any person who has the
right to acquire beneficial ownership of such security within sixty
days, including through the exercise of any option, warrant or
conversion of a security. Any securities not outstanding which are
subject to such options, warrants or conversion privileges are
deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by such
person. Those securities are not deemed to be outstanding for the
purpose of computing the percentage of the class owned by any other
person.
n. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS,
PROMOTERS AND CONTROL PERSONS
Other than the
transactions discussed below, we have not entered into any
transaction in past two years, nor are there any proposed
transactions in which any of the founders, directors, executive
officers, shareholders or any members of the immediate family of
any of the foregoing had or is to have a direct or indirect
material interest.
Issuance of
Equity
In 2014, In August
2014, TPTG Global, Inc. merged with Ally Pharma in a “reverse
merger” wherein Ally Pharma issued 110,000,000 shares of
Common Stock, or 80% ownership, to the owners of TPT Global, Inc.
in exchange for all outstanding common stock of TPT Global, Inc.
and Ally Pharma agreed to change its name to TPT Global Tech, Inc.
Because of this change in control of Ally Pharma, the transaction
is accounted for as a non-monetary transaction (specifically
referred to as a reverse recapitalization) wherein the operations
of the accounting Acquirer are re-casted in terms of the accounting
Acquiree’s (legal acquirer, TPTG fka Ally Pharma) common
stock. 110,000,000 shares of common stock were issued equaling 80%
of the 136,753,685 post-merger common shares outstanding. Stephen
Thomas, as he became an officer and director of the Company,
received 110,000,000 shares of common stock at that
time.
Related
Party Employment Agreements and Family Relationships of
Directors
Pursuant to an
employment agreement dated November 1, 2017, Stephen Thomas, CEO,
director, and majority shareholder, receives a base salary of
$150,000 per year. In addition to the base salary, Mr. Thomas is
eligible to receive performance bonuses as to be determined by our
Board of Directors. The agreement has a three-year term and expires
on October 31, 2020. Stephen Thomas is the brother of one of our
directors, Reginald Thomas.
Pursuant to an
employment agreement dated November 1, 2017, Richard Eberhardt,
Executive Vice-President, director and affiliate shareholder,
receives a base salary of $150,000 per year. In addition to the
base salary, Mr. Eberhardt is eligible to receive performance
bonuses as to be determined by our Board of Directors. The
agreement has a three-year term and expires on October 31,
2020.
Pursuant to an
employment agreement dated November 1, 2017, Gary Cook, CFO,
receives a base salary of $150,000 per year for which currently he
devotes no less than 60% of his full-time. In addition to the base
salary, Mr. Cook is eligible to receive performance bonuses as to
be determined by our Board of Directors. The agreement has a
three-year term and expires on October 31, 2020.
In accordance with
an Independent Director Agreement with the Company for his services
as a director, Mr. Shkolnik is to receive $25,000 per quarter and
5,000,000 shares of restricted common stock valued at approximately
$687,500 vesting quarterly over twenty-four months. The quarterly
cash payments of $25,000 will be paid in unrestricted common shares
if the Company has not been funded adequately to make such
payments.
In accordance with
an Independent Director Agreement with the Company for his services
as director, Mr. Thomas is to receive $10,000 per quarter and
1,000,000 shares of restricted common stock valued at approximately
$119,000 vesting quarterly over twenty-four months. The quarterly
payment of $10,000 may be suspended by the Company if the Company
has not been adequately funded. Reginald Thomas is the brother of
Stephen Thomas, our CEO, a director, and largest
shareholder.
Capital
Contributions by Officer, Director, Principal
Shareholder
The Company has
issued restricted common shares as follows during 2017, 2018 and
through November 25, 2019 (2). The shares through the convertible
debt conversions were contributed by Stephen J. Thomas, III for the
identified corporate purposes:
Common
Stock
Date
|
|
Acquiree
|
|
Purpose
|
|
Number of
Shares
|
|
Total
Consideration
|
|
Price per
Share
|
|
|
Aug.
2017
|
|
|
Investor
(1)
|
|
Stock
Subscription
|
|
|
50,000
|
|
|
$
|
7,500
|
|
|
|
$
|
0.15
|
|
|
Oct.
2017
|
|
|
Investor
(1)
|
|
Stock
Subscription
|
|
|
350,000
|
|
|
$
|
35,000
|
|
|
|
$
|
0.10
|
|
|
Oct.
2017
|
|
|
Matrixsites Viewme
Live
|
|
Acquisition
|
|
|
4,000,000
|
|
|
$
|
595,600
|
|
|
|
$
|
0.1489
|
|
|
Nov.
2017
|
|
|
Investor
(1)
|
|
Stock
Subscription
|
|
|
400,000
|
|
|
$
|
30,000
|
|
|
|
$
|
0.075
|
|
|
Jan.
2018
|
|
|
Investors
|
|
Stock
Subscription
|
|
|
1,220,000
|
|
|
$
|
122,000
|
|
|
|
$
|
0.10
|
|
|
Mar.
2018
|
|
|
Contractor
|
|
Services
|
|
|
2,000,000
|
|
|
$
|
250,000
|
|
|
|
$
|
0.125
|
|
|
Mar.
2018
|
|
|
Contractor
|
|
Services
|
|
|
1,000,000
|
|
|
$
|
155,000
|
|
|
|
$
|
0.155
|
|
|
Sept.
2018
|
|
|
Blue
Collar
|
|
Acquisition
|
|
|
6,500,000
|
|
|
$
|
845,000
|
|
|
|
$
|
0.13
|
|
|
May
2018
|
|
|
Investors
|
|
Stock
Subscription
|
|
|
2,455,000
|
|
|
$
|
245,500
|
|
|
|
$
|
0.10
|
|
|
May
2018
|
|
|
Contractor
|
|
Services
|
|
|
2,500,000
|
|
|
$
|
324,252
|
|
|
|
$
|
0.129
|
|
|
June
2018
|
|
|
Investor
|
|
Debt
Balance
|
|
|
16,667
|
|
|
$
|
2,000
|
|
|
|
$
|
0.12
|
|
|
Sept.
2019
|
|
|
Geneva
Roth
|
|
Convertible
Debt
|
|
|
201,207
|
|
|
$
|
10,000
|
|
|
|
$
|
0.0497
|
|
|
Sept.
2019
|
|
|
Geneva
Roth
|
|
Convertible
Debt
|
|
|
380,711
|
|
|
$
|
15,000
|
|
|
|
$
|
0.0394
|
|
|
Sept.
2019
|
|
|
Geneva
Roth
|
|
Convertible
Debt
|
|
|
491,803
|
|
|
$
|
15,000
|
|
|
|
$
|
0.0305
|
|
|
Sept.
2019
|
|
|
Auctus
|
|
Convertible
Debt
|
|
|
1,000,000
|
|
|
$
|
20,350
|
|
|
|
$
|
0.0204
|
|
|
Oct.
2019
|
|
|
Geneva
Roth
|
|
Convertible
Debt
|
|
|
487,805
|
|
|
$
|
12,000
|
|
|
|
$
|
0.0246
|
|
|
Nov.
2019
|
|
|
Geneva
Roth
|
|
Convertible
Debt
|
|
|
1,052,632
|
|
|
$
|
8,000
|
|
|
|
$
|
0.0076
|
|
|
Nov.
2019
|
|
|
Auctus
|
|
Convertible
Debt
|
|
|
1,500,000
|
|
|
$
|
3,930
|
|
|
|
$
|
0.0026
|
|
(1)
Investor is brother of Mr. Eberhardt, Executive Vice-President and
Director of the Company.
(2)
Subsequent to November 25, 2019, Geneva Roth received common shares
for the conversion of convertible debt in the amount of 4,459,460
shares for $33,000 of principal. Odyssey gave the Company notice
that if the debt was not paid off by December 13, 2019, then they
intend to convert $25,000 of principal into 5,384,278 common
shares.
Director Independence
Our board of
directors undertook our annual review of the independence of the
directors and considered whether any director had a material
relationship with us or our management that could compromise his
ability to exercise independent judgment in carrying out his
responsibilities. As a result of this review, the board of
directors affirmatively determined that none of our directors are
“independent” as such term is used under the rules and
regulations of the Securities and Exchange Commission.
ITEM
11A. MATERIAL CHANGES
SpeedConnect
Asset Acquisition
Effective April 2,
2019, the Company entered into an Asset Purchase Agreement with
SpeedConnect, LLC (“SpeedConnect”) to acquire
substantially all of the assets of SpeedConnect. On May
7, 2019, the Company closed the transaction underlying the Asset
Purchase Agreement with SpeedConnect to acquire substantially all
of the assets of SpeedConnect for $2 million and the assumption of
certain liabilities. The Asset Purchase Agreement
required a deposit of $500,000 made in April and an additional
$500,000 payment to close. The additional $500,000 was
paid and all other conditions were met to effectuate the sale of
substantially all of the assets of SpeedConnect to the
Company. As part of the closing, the Company entered
into a Promissory Note to pay SpeedConnect $1,000,000 in two equal
installments of $500,000 plus applicable interest at 10% per annum
with the first installment payable within 30 days of
closing and the
second installment payable within 60 days of closing (but no later
than July 6, 2019). The Company paid off the Promissory
Note by June 11, 2019 and by amendment dated May 7, 2019,
SpeedConnect forgave $250,000 of the Promissory Note.
Subsequent to
September 30, 2019, Geneva Roth converted another $73,000 of
principal into 9,168,318 shares of common stock of the Company
leaving a principal balance of zero for the March 15, 2019
Securities Purchase Agreement.
Subsequent to
September 30, 2019, Auctus converted another $3,930 of accrued
interest into 1,500,000 shares of common stock of the
Company.
In
addition, subsequent to September 30, 2019, Odyssey gave the
Company notice that if the debt was not paid off by December 13,
2019, then they intend to convert $25,000 of principal into
5,384,278 common shares.
ITEM 12. INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE
WHERE
YOU CAN FIND MORE INFORMATION
We have filed with
the SEC a registration statement on Form S-1 under the
Securities Act of 1933 with respect to the securities offered by
this prospectus. This prospectus does not contain all of the
information included in the registration statement. For further
information pertaining to us and our common stock, you should refer
to the registration statement and the exhibits filed with the
registration statement. Whenever we make reference in this
prospectus to any of our contracts, agreements or other documents,
the references are not necessarily complete, and you should refer
to the exhibits attached to the registration statement for copies
of the actual contract, agreement or other document.
We are subject to
the informational requirements of the Securities Exchange Act of
1934 and file reports and other information with the SEC. You can
read our SEC filings, including the registration statement, over
the internet at the SEC's website at http://www.sec.gov. You may
also read and copy any document we file with the SEC at its Public
Reference Room at 100 F Street N.E.,
Washington, D.C. 20549. Additionally, you can obtain
copies of the documents at prescribed rates by writing to the
Public Reference Section of the SEC at 100 F Street N.E.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of its
Public Reference Room.
INCORPORATION
OF DOCUMENTS BY REFERENCE
The SEC allows us
to “incorporate by reference” into this prospectus
information we have filed with it. The information incorporated by
reference is an important part of this prospectus and is considered
to be part of this prospectus. We incorporate by reference the
documents listed as exhibits to the document in Item
16.
ITEM
12A. DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
The Florida
Statutes requires us to indemnify officers and directors for any
expenses incurred by any officer or director in connection with any
actions or proceedings, whether civil, criminal, administrative, or
investigative, brought against such officer or director because of
his or her status as an officer or director, to the extent that the
director or officer has been successful on the merits or otherwise
in defense of the action or proceeding. The Florida Statutes
permits a corporation to indemnify an officer or director, even in
the absence of an agreement to do so, for expenses incurred in
connection with any action or proceeding if such officer or
director acted in good faith and in a manner in which he or she
reasonably believed to be in or not opposed to the best interests
of us and such indemnification is authorized by the stockholders,
by a quorum of disinterested directors, by independent legal
counsel in a written opinion authorized by a majority vote of a
quorum of directors consisting of disinterested directors, or by
independent legal counsel in a written opinion if a quorum of
disinterested directors cannot be obtained.
The Florida
Statutes prohibits indemnification of a director or officer if a
final adjudication establishes that the officer's or director's
acts or omissions involved intentional misconduct, fraud, or a
knowing violation of the law and were material to the cause of
action. Despite the foregoing limitations on indemnification, the
Florida Statutes may permit an officer or director to apply to the
court for approval of indemnification even if the officer or
director is adjudged to have committed intentional misconduct,
fraud, or a knowing violation of the law.
The Florida
Statutes also provides that indemnification of directors is not
permitted for the unlawful payment of distributions, except for
those directors registering their dissent to the payment of the
distribution.
According to our
bylaws, we are authorized to indemnify our directors to the fullest
extent authorized under Florida Law subject to certain specified
limitations.
Insofar as
indemnification for liabilities arising under the Securities Act of
1933 (the “Act”) may be permitted to directors,
officers and persons controlling us pursuant to the foregoing
provisions or otherwise, we are advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable.
[OUTSIDE
BACK COVER PAGE OF PROSPECTUS]
Dealer
Prospectus Delivery Requirements
PART
II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND
DISTRIBUTION
We have expended,
or estimate to expend fees in relation to this registration
statement as detailed below:
|
|
Attorney
Fees
|
$25,000
|
Audit
Fees
|
$125,000
|
Transfer Agent
Fees
|
$2,000
|
SEC Registration
and Blue Sky Registration fees (estimated)
|
$5,000
|
Printing Costs and
Miscellaneous Expenses (estimated)
|
$18,000
|
Total
|
$175,000
|
ITEM 14. INDEMNIFICATION OF DIRECTORS AND
OFFICERS
Our officers and
directors are indemnified as provided by the Florida Revised
Statutes and the bylaws.
Under the Florida
Revised Statutes, director immunity from liability to a company or
its shareholders for monetary liabilities applies automatically
unless it is specifically limited by a company's Articles of
Incorporation. Our Articles of Incorporation do not specifically
limit the directors’ immunity. Excepted from that immunity
are: (a) a willful failure to deal fairly with us or our
shareholders in connection with a matter in which the director has
a material conflict of interest; (b) a violation of criminal law,
unless the director had reasonable cause to believe that his or her
conduct was lawful or no reasonable cause to believe that his or
her conduct was unlawful; (c) a transaction from which the director
derived an improper personal profit; and (d) willful
misconduct.
Our bylaws provide
that it will indemnify the directors to the fullest extent not
prohibited by Florida law; provided, however, that we may modify
the extent of such indemnification by individual contracts with the
directors and officers; and, provided, further, that we shall not
be required to indemnify any director or officer in connection with
any proceeding, or part thereof, initiated by such person unless
such indemnification: (a) is expressly required to be made by law,
(b) the proceeding was authorized by the board of directors, (c) is
provided by us, in sole discretion, pursuant to the powers vested
under Florida law or (d) is required to be made pursuant to the
bylaws.
Our bylaws provide
that it will advance to any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is
or was a director or officer of us, or is or was serving at the
request of us as a director or executive officer of another
company, partnership, joint venture, trust or other enterprise,
prior to the final disposition of the proceeding, promptly
following request therefore, all expenses incurred by any director
or officer in connection with such proceeding upon receipt of an
undertaking by or on behalf of such person to repay said amounts if
it should be determined ultimately that such person is not entitled
to be indemnified under the bylaws or otherwise.
Our bylaws provide
that no advance shall be made by us to an officer except by reason
of the fact that such officer is or was our director in which event
this paragraph shall not apply, in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, if a
determination is reasonably and promptly made: (a) by the board of
directors by a majority vote of a quorum consisting of directors
who were not parties to the proceeding, or (b) if such quorum is
not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written
opinion, that the facts known to the decision-making party at the
time such determination is made demonstrate clearly and
convincingly that such person acted in bad faith or in a manner
that such person did not believe to be in or not opposed to the
best interests of us.
ITEM
15. RECENT SALES OF UNREGISTERED SECURITIES
In August 2014,
TPTG Global, Inc. merged with Ally Pharma in a “reverse
merger” wherein Ally Pharma issued 110,000,000 shares of
Common Stock, or 80% ownership, to the owners of TPT Global, Inc.
in exchange for all outstanding common stock of TPT Global, Inc.
and Ally Pharma agreed to change its name to TPT Global Tech, Inc.
Because of this change in control of Ally Pharma, the transaction
is accounted for as a non-monetary transaction (specifically
referred to as a reverse recapitalization) wherein the operations
of the accounting Acquirer are re-casted in terms of the accounting
Acquiree’s (legal acquirer, TPTG fka Ally Pharma) common
stock. 110,000,000 shares of common stock were issued equaling 80%
of the 136,753,685 post-merger common shares
outstanding.
Subsequent to the
reverse merger, the 110,000,000 shares were classified originally
as founders shares but were used for corporate considerations as
noted below. As such, the founders are net of the other share
activity.
Number
of Shares
|
Original
Consideration
|
Issue
Price Per Share
|
31,449,740
|
Founders
Shares
|
$0.001
|
17,548,102
|
Asset
Acquisition
|
$0.10 to
$0.81
|
2,983,380
|
Conversion of
Payables and
Convertible
Promissory Notes
|
$0.20 to
$0.50
|
8,403,496
|
Private
Placement
|
$0.10 to
$0.50
|
44,429,891
|
Services
|
$0.10 to
$0.77
|
5,406,366
|
Gifts to
Family
|
$0.001
|
Exemption
From Registration Claimed
All of the above
sales by us of our unregistered securities were made by us in
reliance upon Rule 506 of Regulation D and Section 4(a)(5) of the
Securities Act of 1933, as amended (the "1933 Act"). All of the
individuals and/or entities that purchased the unregistered
securities were primarily existing shareholders, known to us and
our management, through pre-existing business relationships, as
long-standing business associates and employees. All purchasers
were provided access to all material information, which they
requested, and all information necessary to verify such information
and were afforded access to our management in connection with their
purchases. All purchasers of the unregistered securities acquired
such securities for investment and not with a view toward
distribution, acknowledging such intent to us. All certificates or
agreements representing such securities that were issued contained
restrictive legends, prohibiting further transfer of the
certificates or agreements representing such securities, without
such securities either being first registered or otherwise exempt
from registration in any further resale or
disposition.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
Number
|
Description
|
|
3.1
|
Articles of Incorporation of Chatham
International, Inc. (9.30.96)
|
(1)
|
3.2
|
Articles of Incorporation of Cornerstone
Capital, Inc. (12.30.98)
|
(1)
|
3.3
|
Articles of Amendment of Art, Music &
Entertainment, Inc. – name change to Global Assets &
Services, Inc. (7.30.01)
|
(1)
|
3.4
|
Articles of Merger – Global Assets &
Services. Inc. and SDE 3, Inc. (1.17.02)
|
(1)
|
3.5
|
Articles of Amendment of Global Assets &
Services, Inc. – name change to Jointland Development,
Inc. (12.27.04)
|
(1)
|
3.6
|
Articles of Amendment of Jointland Development,
Inc. – Article IV amendment (4.5.10)
|
(1)
|
3.7
|
Articles of Amendment of Jointland Development,
Inc. – name change to Gold Royalty Corp.
(10.19.10)
|
(1)
|
3.8
|
Articles of Amendment of Gold Royalty Corp.
– new name Reuben Cannon Entertainment, Inc.
(8.24.12)
|
|
3.9
|
Articles of Amendment of Gold Royalty Corp.
– new name Ally Pharma US, Inc.
(10.31.12)
|
(1)
|
3.10
|
Articles of Amendment of Ally Pharma US, Inc.
– new name TPT Global Tech, Inc.
|
(1)
|
3.11
|
Articles of Amendment of TPT Global Tech, Inc.
– Preferred Stock Series A & B
(2.6.15)
|
(1)
|
3.12
|
Articles of Incorporation of Copperhead Digital
Holdings, Inc.
|
(1)
|
3.13
|
Articles of
Organization of Trucom, LLC
|
(1)
|
3.14
|
Articles of
Organization of CityNet Arizona, LLC
|
(1)
|
3.15
|
Certificate of Amendment of Transactive
Intermedia, Inc. – name change to San Diego Media,
Inc.
|
(1)
|
3.16
|
Articles of
Organization of K Telecom and Wireless, LLC
|
(1)
|
3.17
|
Articles of Incorporation of Blue Collar,
Inc.
|
(1)
|
3.18
|
Articles of
Organization of Center for Education in TV and Radio
LLC
|
(1)
|
3.19
|
Articles of
Amendment to Articles of Organization of Center for Education in TV
and Radio LLC name change to Hollywood Riviera Studio,
LLC
|
(1)
|
3.20
|
Articles of
Organization of HRS Mobile, LLC
|
(1)
|
3.21
|
Bylaws of TPT Global Tech,
Inc.
|
(1)
|
4.1
|
Form of Vesting
Warrants
|
(1)
|
4.2
|
Form of Unsecured
Convertible Commercial Promissory Note - $250,000
|
(1)
|
4.3
|
Form of
Commercial Convertible Promissory Notes
|
(1)
|
4.4
|
2017 TPT Global
Tech, Inc. Stock Option And Award Incentive Plan
|
(1)
|
4.5
|
Series A Designation
|
(1)
|
4.6
|
Series B Designation
|
(1)
|
4.7
|
Promissory Note
– HRS
|
(2)
|
4.8
|
Promissory Note
– Blue Collar
|
(2)
|
4.9
|
Promissory Note - Blue Collar - Amendment No.
1 (2.9.18)
|
(3)
|
4.10
|
Promissory Note - MatrixSites, Inc.
(10.31.17)
|
(3)
|
4.11
|
Series C
Designation
|
(3)
|
|
Opinion re:
Legality
|
Filed
Herewith
|
10.1
|
Employment
Agreement, Stephen J. Thomas, III
|
(1)
|
10.2
|
Employment
Agreement, Gary Cook
|
(1)
|
10.3
|
Employment
Agreement, Richard Eberhardt
|
(1)
|
10.4
|
Agreement and Plan of Merger – Ally Pharma
US, Inc. and TPT Global, Inc. (9.30.14)
|
(1)
|
10.5
|
Purchase Agreement Ally Pharma US, Inc. and K
Telecom and Wireless and Global Telecom International LLC
(8.1.14)
|
(1)
|
10.6
|
Acquisition and Purchase Agreement between TPT
Global Tech, Inc. and Copperhead Digital Holdings, Inc.
(1.31.15)
|
(1)
|
10.7
|
Lease Agreement between Copperhead Digital
Holdings, Inc. and Telecom Finance LLC
(9.14.10)
|
(1)
|
10.8
|
Acquisition and Purchase Agreement between TPT
Global Tech, Inc. and Port 2 Port, Inc.
(9.30.15)
|
(1)
|
10.9
|
Acquisition and Purchase Agreement between TPT
Global Tech, Inc. and San Diego Media, Inc.
(9.30.16)
|
(1)
|
10.10
|
Amendment #1 to Acquisition & Purchase
Agreement between TPT Global Tech, Inc. and San Diego Media,
Inc. (12.9.16)
|
(1)
|
10.11
|
Asset Acquisition Agreement between TPT Global
Tech, Inc. and Interest Holders of the Lion Phone Technology
(12.15.16)
|
(1)
|
10.12
|
Acquisition and
Purchase Agreement between TPT Global Tech, Inc. and MatrixSites,
Inc.
|
(1)
|
10.13
|
Acquisition and Purchase Agreement between TPT
Global Tech, Inc. and Hollywood Riviera LLC, HRS Mobile LLC
(11.1.17)
|
(1)
|
10.14
|
Acquisition and Purchase Agreement between TPT
Global Tech, Inc. and Blue Collar Productions, Inc.
(11.3.17)
|
(1)
|
10.15
|
HRS
Amendment
|
(2)
|
10.16
|
Amendment No. 1 – Acquisition and Purchase
Agreement between TPT Global Tech, Inc. and Blue Collar
Productions, Inc. (2.9.18)
|
(2)
|
10.17
|
Amendment No. 2 – Acquisition and Purchase
Agreement between TPT Global Tech, Inc. and Blue Collar
Productions, Inc. (3.29.18)
|
(3)
|
10.18
|
Amendment No. 3 - Acquisition and Purchase
Agreement between TPT Global Tech, Inc. and Blue Collar
Productions, Inc. (3.29.18)
|
(3)
|
10.19
|
Independent
Director Agreement, Arkady Shkolnik
|
(3)
|
10.20
|
Independent
Director Agreement, Reginald Thomas
|
(3)
|
10.21
|
Product, Software & Services License
Agreement – New Orbit Technologies, Inc.
(4.17.17)
|
(3)
|
10.22
|
Rescission,
Settlement Agreement and Mutual Release
|
(3)
|
10.23
|
Security &
Pledge Agreement - Blue Collar
|
(4)
|
10.24
|
Security &
Pledge Agreement - Matrixsites
|
(4)
|
|
Subsidiaries
|
Filed
Herewith
|
|
|
|
23.1
|
Consent of
Attorney
|
Filed
Herewith
|
|
Consent of
Accountant
|
Filed
Herewith
|
|
|
|
|
|
|
99.1
|
Trucom LLC
Complete Patent
|
(1)
|
99.2
|
Patent Assignment – Ellifson to TruCom
LLC(2.11.13)
|
(1)
|
(1) Incorporated by
reference from the exhibits included in the Company’s
Registration Statement on Form S-1 dated December 15,
2017.
(2) Incorporated by
reference from the exhibits included in the Company’s
Registration Statement on Form S-1/A dated February 23,
2018.
(3) Incorporated by
reference from the exhibits included in the Company’s
Registration Statement on Form S-1/A dated October 1,
2018.
(4) Incorporated by
reference from the exhibits included in the Company’s
Registration Statement on Form S-1/A dated November 5,
2018.
We hereby undertake
the following:
To file, during any
period in which offers or sales are being made, a post-effective
amendment to this registration statement:
|
a.
|
To include any
prospectus required by Section 10(a) (3) of the Securities Act of
1933;
|
|
b.
|
To reflect in the
prospectus any facts or events arising after the effective date of
this registration statement, or most recent post-effective
amendment, which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
registration statement; and
|
|
c.
|
To include any
material information with respect to the plan of distribution not
previously disclosed in this registration statement or any material
change to such information in the registration
statement.
|
That, for the
purpose of determining any liability under the Securities Act, each
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
To remove from
registration by means of a post-effective amendment any of the
securities being registered hereby which remain unsold at the
termination of the Offering.
Insofar as
indemnification for liabilities arising under the Securities Act
may be permitted to the directors, officers and controlling persons
pursuant to the provisions above, or otherwise, we have been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act, and is, therefore,
unenforceable.
In the event that a
claim for indemnification against such liabilities, other than the
payment by us of expenses incurred or paid by one of the directors,
officers, or controlling persons in the successful defense of any
action, suit or proceeding, is asserted by one of the directors,
officers, or controlling persons in connection with the securities
being registered, we will unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the
Securities Act, and we will be governed by the final adjudication
of such issue.
For determining
liability under the Securities Act, to treat the information
omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant under Rule 424(b) (1)
or (4) or 497(h) under the Securities Act as part of this
Registration Statement as of the time the Commission declared it
effective.
In accordance with
the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Post-Effective Form S-1 and
authorized this Registration Statement to be signed on our behalf
by the undersigned, thereunto duly authorized, in the City of San
Diego, State of California, on December 10, 2019.
TPT
GLOBAL TECH, INC.
/s/ Stephen J.
Thomas, III
|
|
December 10,
2019
|
Stephen J. Thomas,
III
|
|
|
(Chief Executive
Officer and Principal Executive Officer)
|
|
|
|
|
|
|
|
|
/s/ Gary
Cook
|
|
December 10,
2019
|
Gary
Cook
|
|
|
(Chief Financial
Officer and Principal Accounting Officer)
|
|
|
|
|
|
|
|
|
In accordance with
the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the
capacities and on the dates stated.
/s/ Stephen J.
Thomas, III
|
|
December 10,
2019
|
Stephen J. Thomas,
III, Director
|
|
|
|
|
|
|
|
|
/s/ Richard
Eberhardt
|
|
December 10,
2019
|
Richard Eberhardt,
Director
|
|
|
|
|
|
/s/ Arkady
Shkolnik
|
|
December 10,
2019
|
Arkady Shkolnik,
Director
|
|
|
|
|
|
|
|
|
/s/ Reginald
Thomas
|
|
December 10,
2019
|
Reginald Thomas,
Director
|
|
|
|
|
|
|
|
|
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