PART
I
Unless
otherwise specified or the context otherwise requires, references in this prospectus to “Bridgeway,” the “Company,”
“we”, “our” and “us” refer to Bridgeway National Corp. and its subsidiaries.
ITEM
1. BUSINESS
General
The
Company is structured as a holding company with a business strategy focused on owning subsidiaries engaged in a number of diverse business
activities. We are not a “blank check company” as defined in Rule 419 under the Securities Act of 1933, as amended (the “Securities
Act”). We conduct and plan to continue to conduct our activities in such a manner as not to be deemed an investment company
under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Therefore, no more than 40% of
our total assets can be invested in investment securities, as such term is defined in the Investment Company Act. In addition, we do
not invest or intend to invest in securities as our primary business. Your rights as a holder of shares, and the fiduciary duties of
the Company’s Board of Directors and executive officers, and any limitations relating thereto are set forth in the documents governing
the Company and may differ from those applying to a Delaware corporation. However, the documents governing the Company specify that the
duties of its directors and officers will be generally consistent with the duties of a director of a Delaware corporation.
The
Company’s Board of Directors will oversee the management of the Company and our businesses. Initially, the Company’s Board
of Directors will be comprised of seven (7) directors, with five (5) of those directors appointed by holders of the Company’s Class
A common stock and two (2) of those directors appointed by holders of the Company’s Class B common stock, and at least five (5)
of whom will be the Company’s independent directors.
We
have accumulated a deficit of $11,030,550 as of December 31, 2020 and will likely require significant additional capital to implement
our business plan.
Business
Strategy and Core Strengths
We
anticipate that the operating businesses we acquire will be managed on a decentralized basis with essentially no centralized or integrated
business functions (such as sales, marketing, purchasing, legal or human resources) and minimal involvement by the Company’s corporate
senior management teams in the day-to-day business activities of the operating businesses. The Company’s corporate senior management
team anticipates that it will participate in and have ultimate responsibility for significant decisions, such as capital allocation,
investment activities and the selection of a chief executive officer for each of the operating businesses. We will also be responsible
for establishing, implementing and monitoring corporate governance policies and practices, including those at the operating businesses,
and participating in the resolution of governance-related issues as needed.
We
expect that our business activities at the holding company level will be are managed by a small senior corporate management team, who
will research and identify attractive investment opportunities; delegate responsibilities to competent and motivated managers; set operating
subsidiary goals; assist managers in the achievement of those goals; define risk parameters; develop appropriate incentive programs;
and monitor progress against long-term objectives.
We
believe that our outlook on length of ownership and active management on our part may alleviate the concern that many stakeholders in
potential control transactions may have with regard to their businesses going through multiple sale processes in a short period of time.
We believe this outlook reduces both the risk that securities or whole businesses may be sold at unfavorable points in the overall market
cycle and enhances our ability to develop a comprehensive strategy to grow the earnings and cash flows of each of our businesses, which
we expect will better enable us to meet our long-term corporate objectives of increasing shareholder value.
Our
objective is to grow intrinsic value per share at an attractive rate by retaining capital to reinvest in the productive capabilities
of our current subsidiaries, make opportunistic investments, and/or invest in new, anticipated durable earnings streams. Each of these
options for capital will be compared to one another on a regular basis, and capital will be deployed according to our management’s
judgment as to where it believes allocated capital has the potential to achieve the best long-term return.
Investment
Strategy
We
will seek to focus on acquiring operating businesses and securities that (a) can be purchased at what we believe to be a fair price relative
to intrinsic value, (b) are managed by competent and incentivized management teams, (c) offer reasonable downside protection and (d)
directly contribute to the Company’s strategic goals. Over time, we believe that a focus on these objectives should allow us to
consistently deliver targeted investment returns that outperforms the broader market. We plan to target investments into businesses that
we believe (i) operate in industries with stable long-term operating profiles, (ii) present a stable unlevered free cash flow profile,
(iii) have the ability to quickly adapt to changing economic cycles and (iv) face minimal threats of technological or competitive obsolescence.
We
believe that an investment strategy focused on investments with these character traits coupled with a value investing orientation should
continue to present attractive investment opportunities that allow us to build a less correlated portfolio of operating assets that provide
shareholders with exposure to a mix of growth and acyclical operating assets that allow us to maximize shareholder value.
Management
Strategy
Our
management strategy involves the financial and operational management of the businesses that we anticipate acquiring in a manner that
seeks to grow earnings and cash flow and, in turn increasing stockholder value. In general, we plan to oversee and support the management
team of each of our businesses by, among other things:
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recruiting
and retaining talented managers to operate our businesses by using structured incentive compensation programs, including minority
equity ownership, tailored to each business;
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regularly
monitoring financial and operational performance, instilling consistent financial discipline, and supporting management in the development
and implementation of information systems to effectively achieve these goals:
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assisting
management in their analysis and pursuit of prudent organic growth strategies:
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identifying
and working with management to execute on attractive external growth and acquisition opportunities; and
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forming
strong subsidiary level boards of directors to supplement management in their development and implementation of strategic goals and
objectives
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Our
investment strategy centers around our ability to consistently seek to acquire securities and/or companies at a discount to intrinsic
value as determined by various metrics, including without limitation, replacement cost, break-up value, cash flow and earnings power
and liquidation value.
We
utilize a process-oriented, research-intensive, value-based investing approach. This approach generally involves three (3) critical steps:
(i) fundamental credit, valuation, capital structure and security analysis; (ii) intense analysis of fulcrum issues, such as litigation,
taxes and regulation, that often affect valuation; and (iii) a deep understanding and analysis of contextual factors that often affect
the risk-adjusted attractiveness of an investment position. This approach focuses on exploiting market price dislocations that create
attractive buying opportunities. These dislocations may be caused by such factors as broad-based market drawdowns; busted auction processes;
out of favor, short term industry perceptions; market euphoria; litigation; complex contingent liabilities; corporate malfeasance and
weak corporate governance; general bearish economic conditions; and / or complex and inappropriate capital structures.
While
we plan to principally focus on deploying a material portion of our investable capital into acquiring controlling interests in privately
held and/or thinly traded middle market operating businesses, we may employ a number of acquisition strategies and are permitted to invest
across a variety of industries and types of securities including: (i) publicly traded equities; (ii) publicly traded bonds and privately
issued, non-investment grade debt, bank debt and other corporate obligations; and (iii) privately issued and publicly traded structured
equity and other preferred equity securities.
Key
Elements of Our Strategy:
The
key elements of our business strategy include the following:
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Seek
to Acquire Undervalued Assets. We intend to make investments in businesses that we believe are undervalued and have potential
for growth. We will also seek to capitalize on investment opportunities arising from market inefficiencies, economic or market trends
that have not been identified and reflected in market value, or complex or special situations. Certain opportunities may arise from
companies/assets that experience busted sell-side auction processes, disappointing financial results, liquidity or capital needs,
lowered credit ratings, revised industry forecasts or legal complications. We may acquire businesses or assets directly or we may
establish an ownership position through the purchase of debt or equity securities in the open market or in privately negotiated transactions.
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Utilize
a Low-Cost Model. We believe our low overhead model will allow us to more effectively utilize excess cash flows from our
portfolio of operating businesses and securities to enhance stockholder through efficient capital allocation activities.
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Internal
Resources and External Network Sufficient to Drive Accretive Opportunities. We believe our internal management team and their
strong relationships with industry executives, accountants, attorneys, business brokers, commercial and investment bankers, and other
potential sources of acquisition opportunities offer us a strong pipeline of opportunities. Additionally, the flexibility, creativity,
experience and expertise of our management team in structuring transactions allows us to consider non-traditional and complex transactions
tailored to fit a specific acquisition target.
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Drive
Accountability and Financial Discipline in the Management of our Business. Our management team is accountable directly
to our board of directors and has day-to-day responsibility for general oversight of our business and for capital allocation decisions
of our operating businesses. We continually evaluate our operating subsidiaries with a view towards maximizing value and cost efficiencies,
bringing an owner’s perspective to our operating businesses. In each of these businesses, we will look for senior management
teams with the expertise to run their businesses and boards of directors to oversee the management of those businesses. Each management
team will be responsible for the day-to-day operations of its businesses and directly accountable to its board of directors.
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Competition
In
our core business, which is the acquisition of operating businesses and securities, we face intense competition, including competition
from companies with significantly greater resources than us, and if we are unable to compete effectively with these companies, our market
share may decline, and our business could be harmed.
Employees
As
of the date of this report, we had six (6) employees. We believe that our relationship with our employees is good.
Potential
Effects of the COVID-19 Pandemic on our Business
The
adverse public health developments and economic effects of the COVID-19 pandemic in the United States could adversely affect the Company’s
business. Particularly, the COVID-19 pandemic could potentially lead to an extended economic downturn, which would likely make it more
difficult to identify and acquire potential candidates, as well as limit the availability of acquisition financing. The Company cannot
accurately predict the effect the COVID-19 pandemic will have on the Company.
Corporate
Information
The
Company was originally incorporated in the State of Nevada on June 4, 2012 under the name Snap Online Marketing, Inc. We changed
our name on January 31, 2014 to LifeLogger Technologies Corp. and on April 10, 2019, we reincorporated in Delaware under the name Capital
Park Holdings Corp. On December 19, 2019, we changed our name to Bridgeway National Corp. Our executive offices are located at 1015 15th
Street NW, Suite 1030, Washington DC 20005 and our telephone number is (202) 846-7689.
Change
in Control Transaction
On
January 9, 2019, the Company entered into a Note Conversion Agreement (the “Conversion Agreement”) with SBI Investments LLC,
2014-1, a statutory series of Delaware limited liability corporation (“SBI”), and Old Main Capital, LLC, a Florida series
limited liability corporation (“Old Main”). Pursuant to the Conversion Agreement, SBI converted $549,042 of principal and
$641,565 accrued interest owed to SBI by the Company pursuant to a promissory Note into 42,429 shares of the Company’s Series
B Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), in full satisfaction of such obligation.
Pursuant to the Conversion Agreement, Old Main converted $556,547 of principal and $650,094 accrued interest owed to Old Main by the
Company pursuant to a promissory Note into 54,000 shares of the Company’s Series B Preferred Stock in full satisfaction
of such obligation. Concurrently with and the closing of the transactions for the Old Main Conversion Shares, with an effective date
of January 9, 2019, the Company acquired from Old Main and SBI 83,796 shares of Class A Common Stock and from a prior executive
of the Company, 1,000 shares of Series A Preferred Stock. The purchase price for the Class A Common Stock was $335.18 in the aggregate
and the purchase price for the Series A Preferred Stock was $1 in the aggregate. During the year ended December 31, 2019, the Company
declared $39,391 in dividends on the Series B Preferred Stock, of which $28,073 was paid in cash by a related party and $11,318 accrued.
During the year ended December 31,2020, the Company declared $43,048 in dividends on the Series B Preferred Stock of which $0 was paid
in cash, $43,048 was accrued.
Contemporaneously
with the share sale and purchase transaction, Stewart Garner resigned as the Company’s Chief Executive Officer, Chief Financial
Officer and director and Eric C .Blue, a principal of the Fund was appointed as the Company’s Chairman of the Board, Chief Executive
Officer, Chief Investment Officer and a director. Moreover, we changed our business focus from the development of proprietary cloud-based
software programs to our current business of acquiring majority or minority interests in operating businesses.
As
a result of the foregoing transaction, a “change in control” of the Company was deemed to have taken place (the “Change
in Control Transaction”).
Recent
Developments
Equity
Purchase Agreement
On
October 24, 2019, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with SBI Investments
LLC, 2014-1, a statutory series of Delaware limited liability company (“SBI”) and Oasis Capital, LLC, a Puerto Rico
limited liability company (“Oasis” and together with SBI, the “Equity Purchasers”), pursuant to
which the Equity Purchasers agreed to, in the aggregate between them, purchase from the Company, up to $10,000,000 (the “Maximum
Commitment Amount”) of our share of common stock.
Under
the terms of the Purchase Agreement, the Company has the right, but not the obligation, to direct an Equity Purchaser, by its delivery
of a put notice (the “Put Notice”) from time to time beginning on the execution date of the Purchase Agreement and
ending on the earlier to occur of (a) the date on which the Equity Purchasers shall have purchased Put Shares equal to the Maximum Commitment
Amount, (b) October 24, 2021 or (c) written notice of termination by the Company to the Equity Purchasers (together, the “Commitment
Period”), to purchase Put Shares (as defined below).
Notwithstanding
any other terms of the Purchase Agreement, in each instance (a) the amount that is the subject of a Put Notice (the “Investment
Amount”) is not more than the Maximum Put Amount (as defined below), (b) the aggregate Investment Amount of all Put Notices
shall not exceed the Maximum Commitment Amount and (b) the Company cannot deliver consecutive Put Notices and/or consummate closings
to the same Equity Purchaser and must alternate between Oasis and SBI. “Maximum Put Amount” means the lesser of (a)
such amount that equals 250% of the average daily trading volume of our shares and (b) $1,000,000. The price paid for each share (the
“Purchase Price”) subject to a Put Notice (the “Put Shares”) shall be 85% of the Market Price (as
defined below) on the date upon which the Purchase Price is calculated in accordance with the terms and conditions of the Purchase Agreement.
“Market Price” means the one lowest traded price of the shares on the principal market for any trading day during
the Valuation Period (as defined below), as reported by Bloomberg Finance L.P. or other reputable source. “Valuation Period”
means the period of five consecutive trading days immediately following the Clearing Date (as defined below) associated with the applicable
Put Notice during which the Purchase Price of the shares is valued, provided, however, that the Valuation Period shall
instead begin on the Clearing Date if the respective Put Shares are received via DWAC in the applicable selling stockholder’s brokerage
account prior to 11:00 a.m. Eastern Time on the respective Clearing Date. “Clearing Date” means the date on which
an Equity Purchaser receives the Put Shares via DWAC in its brokerage account.
As
compensation for the commitments made under the Purchase Agreement, the Company paid to the Equity Purchasers a commitment fee equal
to 4% of the Maximum Commitment Amount (the “Commitment Fee”). The Commitment Fee was paid by the Company by issuing
to the Equity Purchasers 28,572 shares of its Series B Preferred Stock, which shares were authorized for issuance on February
25, 2020 (“Series B Preferred Shares”).
Concurrently
with the execution of the Purchase Agreement, the Company and the Equity Purchasers entered into a Registration Rights Agreement,
dated as of October 24, 2019 (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement,
the Company has filed a registration statement covering the resale by the Equity Purchasers of any Put Shares which may be issued
pursuant to the Purchase Agreement and any and Shares which may be issued upon conversion of the Series B Preferred Shares. The
effectiveness of this registration statement is a condition to the ability of the Company to issue a Put Notice to an Equity Purchaser
and consummate the sale of the applicable number of Put Shares to such Equity Purchaser.
On
April 15, 2021 the Company notified the Equity Purchasers of its intent to terminate the Purchase Agreement effective immediately.
The Series B Preferred Shares issued to the equity purchased which represented the Commitment fee will remain outstanding and
the commitment fee which was previously recorded as deferred financing costs was immediately expensed during the year ended December
31, 2020.
Promissory
Note Purchase Agreement
On
March 2, 2020 (the “Issue Date”), Bridgeway entered into an unsecured promissory note purchase
agreement with SBI, on behalf of itself and the other note purchasers (the “Note Purchasers”), pursuant to
which the Note Purchasers purchased from the Company (a) 12% convertible promissory notes of the Company in an aggregate principal
amount of $845,000 (the “12% Notes”) convertible into Shares (the “Conversion Shares”) of
and (b) warrants (the “Warrants”) to acquire up to 1,111,842 Shares subject to a beneficial ownership
cap of no greater than 4.99% in the case of each Purchaser (the “Warrant Shares”).
The
maturity date of the 12% Notes shall be on that day that is nine (9) months after the Issue Date (the “Maturity
Date”) and is the date upon which the principal amount of the 12% Notes, as well as all accrued and unpaid interest
and other fees, shall be due and payable. As of the date of filing, the 12% Notes are in default. As at December 31, 2020
the Company owed $845,000 (December 31, 2019 - $nil) in principal and the accrued interest was $88,349.
Under
the terms of the 12% Notes, the Note Purchasers shall have the right at any time on or after the Issue Date, to convert (a “Conversion”)
all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the 12% Notes, and any other
amounts owed under the 12% Notes, into shares at the Conversion Price (as defined below); provided, however, that
in no event shall any Note Purchaser be entitled to convert any portion of any of the 12% Notes in excess of that portion of any
12% Note upon conversion of which the sum of (a) the number of owned by the Note Purchaser and its affiliates (other than Shares
issuable upon conversion of the 12% Notes or exercise of the Warrants held by such Note Purchaser) and (b) the number of shares
issuable upon the conversion of the portion of any 12% Note with respect to which the determination of this provision is being
made, would result in beneficial ownership by any Note Purchaser and its affiliates of more than 4.99% of the Company’s
outstanding shares (the “Maximum Share Amount”). The “Conversion Price” per share shall
be the lower of (i) $0.38 or (ii) the Variable Conversion Price (as defined below) (subject to adjustment). The “Variable
Conversion Price” shall mean 70% multiplied by the Market Price (as defined below). “Market Price”
means the lowest Trading Price (as defined below) for our common stock during the fifteen (15) Trading Day period ending on the
last complete Trading Day prior to the Conversion Date. “Trading Price” means, as of any date, the lowest VWAP
price for our shares on the applicable trading market trading market (the “Trading Market”) as reported by
a reliable reporting service.
The
exercise price of the Warrants is $0.38 per share, subject to adjustment. Each Warrant also contains a cashless exercise
option and has a term of five (5) years from the Issue Date.
On
September 30, 2020 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement with Oasis
Capital, LLC (the “Note Purchaser”), pursuant to which the Note Purchaser purchased from the Company (a) the 6%
convertible promissory note of the Company in an aggregate principal amount of $155,000 ($5,000 OID) (the “6%
Note”) convertible into Shares (the “Conversion Shares”) subject to a beneficial ownership cap of no
greater than 4.99% in the case of the Purchaser, and a default rate of 18%. The maturity date of the 6% Note shall be on June
30, 2021 (the “Maturity Date”) and is the date upon which the principal amount of the 6% Note, as well as all
accrued and unpaid interest and other fees, shall be due and payable. The note carries an 18% default interest
rate.
Under
the terms of the 6% Note, the Note Purchaser shall have the right at any time during the period beginning on the date which
is one hundred eighty (180) days following the date of the 6% Note and ending on the later of: (i) the Maturity Date and (ii)
the date of payment of the default amount, to convert (a “Conversion”) all or any part of the outstanding and
unpaid principal amount and accrued and unpaid interest of the 6% Note, and any other amounts owed under the 6% Note, into
shares at the Conversion Price (as defined below); provided, however, that in no event shall the Note Purchaser be entitled
to convert any portion of any of the 6% Note in excess of that portion of the 6% Note upon conversion of which the sum of (a)
the number of shares owned by the Note Purchaser and its affiliates and (b) the number of shares issuable upon the conversion
of the portion of the 6% Note with respect to which the determination of this provision is being made, would result in
beneficial ownership by the Note Purchaser and its affiliates of more than the Maximum Share Amount of 4.99% of the
outstanding shares. The “Conversion Price” shall be equal to the Variable Conversion Price (as defined below)
(subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the
Company’s securities or the securities of any subsidiary of the Company, combinations, recapitalization,
reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean
80% multiplied by the Market Price (as defined below) (representing a discount rate of 20%). “Market Price” means
the average of the three (3) lowest trading prices) for the shares during the fifteen (15) trading day period ending on the
latest complete trading day prior to the Conversion Date.
As at December 31, 2020 the Company owed $155,000 (December 31, 2019 - $nil)
in principal and the accrued interest was $2,344.
On
October 03, 2020 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement
with Oasis Capital, LLC (the “Note Purchaser”), pursuant to which the Note Purchaser purchased from the Company
(a) the 6% convertible promissory note of the Company in an aggregate principal amount of $155,000($5,000 OID) (the “6%
Note”) convertible into Shares (the “Conversion Shares”) subject to a beneficial ownership cap of no
greater than 4.99% in the case of the Purchaser, and a default rate of 18%. The maturity date of the 6% Note shall be on June
30, 2021 (the “Maturity Date”) and is the date upon which the principal amount of the 6% Note, as well as all
accrued and unpaid interest and other fees, shall be due and payable. The note carries a 18% default interest
rate.
Under
the terms of the 6% Note, the Note Purchaser shall have the right at any time during the period beginning on the date which is
one hundred eighty (180) days following the date of the 6% Note and ending on the later of: (i) the Maturity Date and (ii) the
date of payment of the default amount, to convert (a “Conversion”) all or any part of the outstanding and unpaid principal
amount and accrued and unpaid interest of the 6% Note, and any other amounts owed under the 6% Note, into shares at the Conversion
Price (as defined below); provided, however, that in no event shall the Note Purchaser be entitled to convert any portion of any
of the 6% Note in excess of that portion of the 6% Note upon conversion of which the sum of (a) the number of shares owned by
the Note Purchaser and its affiliates and (b) the number of shares issuable upon the conversion of the portion of the 6% Note
with respect to which the determination of this provision is being made, would result in beneficial ownership by the Note Purchaser
and its affiliates of more than the Maximum Share Amount of 4.99% of the outstanding shares. The “Conversion
Price” shall be equal to the Variable Conversion Price (as defined below) (subject to equitable adjustments for stock splits,
stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary
of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable
Conversion Price” shall mean 80% multiplied by the Market Price (as defined below) (representing a discount rate of 20%).
“Market Price” means the average of the three (3) lowest trading prices) for the shares during the fifteen (15) trading
day period ending on the latest complete trading day prior to the Conversion Date.
As
at December 31, 2020 the Company owed $155,000 (December 31, 2019 - $nil) in principal and the accrued interest was $2,344.
On
October 23, 2020 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement
with Geneva Roth Remark Holdings, Inc. (the “Note Purchaser”), pursuant to which the Note Purchaser purchased from
the Company (a) the 9% convertible promissory note of the Company in an aggregate principal amount of $68,000 ($3,000 OID)
(the “9% Note”) convertible into Shares (the “Conversion Shares”) subject to a beneficial ownership
cap of no greater than 4.99% in the case of the Purchaser, and a default rate of 22%. The maturity date of the 9% Note shall be
on October 23, 2021 (the “Maturity Date”) and is the date upon which the principal amount of the 9% Note, as well
as all accrued and unpaid interest and other fees, shall be due and payable. The note carries a 22% default interest rate.
Under
the terms of the 9% Note, the Note Purchaser shall have the right at any time during the period beginning on the date which is
one hundred eighty (180) days following the date of the 9% Note and ending on the later of: (i) the Maturity Date and (ii) the
date of payment of the default amount, to convert (a “Conversion”) all or any part of the outstanding and unpaid principal
amount and accrued and unpaid interest of the 9% Note, and any other amounts owed under the 9% Note, into shares at the Conversion
Price (as defined below); provided, however, that in no event shall the Note Purchaser be entitled to convert any portion of any
of the 9% Note in excess of that portion of the 9% Note upon conversion of which the sum of (a) the number of shares owned by
the Note Purchaser and its affiliates and (b) the number of shares issuable upon the conversion of the portion of the 9% Note
with respect to which the determination of this provision is being made, would result in beneficial ownership by the Note Purchaser
and its affiliates of more than the Maximum Share Amount of 4.99% of the outstanding shares. The “Conversion Price”
shall be equal to the Variable Conversion Price (as defined below) (subject to equitable adjustments for stock splits, stock dividends
or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company,
combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion
Price” shall mean 65% multiplied by the Market Price (as defined below) (representing a discount rate of 35%). “Market
Price” means the average of the three (3) lowest trading prices) for the shares during the fifteen (15) trading day period
ending on the latest complete trading day prior to the Conversion Date.
As
at December 31, 2020 the Company owed $68,000 (December 31, 2019 - $nil) in principal and the accrued interest was $1,157.
On
November 16, 2020 (the “Issue Date”), the Company entered into an unsecured promissory note purchase
agreement with Geneva Roth Remark Holdings, Inc. (the “Note Purchaser”), pursuant to which the Note Purchaser
purchased from the Company (a) the 9% convertible promissory note of the Company in an aggregate principal amount of $48,000 ($3,000
OID) (the “9% Note II”) convertible into Shares (the “Conversion Shares”) subject to a beneficial
ownership cap of no greater than 4.99% in the case of the Purchaser, and a Default rate of 22%. The maturity date of the 9%
Note II shall be on November 16, 2021 (the “Maturity Date”) and is the date upon which the principal amount of
the 9% Note, as well as all accrued and unpaid interest and other fees, shall be due and payable. The note carries a 22%
default interest rate.
Under
the terms of the 9% Note II, the Note Purchaser shall have the right at any time during the period beginning on the date which
is one hundred eighty (180) days following the date of the 9% Note II and ending on the later of: (i) the Maturity Date and (ii)
the date of payment of the default amount, to convert (a “Conversion”) all or any part of the outstanding and unpaid
principal amount and accrued and unpaid interest of the 9% Note II, and any other amounts owed under the 9% Note II, into shares
at the Conversion Price (as defined below); provided, however, that in no event shall the Note Purchaser be entitled to convert
any portion of any of the 9% Note II in excess of that portion of the 9% Note II upon conversion of which the sum of (a) the number
of shares owned by the Note Purchaser and its affiliates and (b) the number of shares issuable upon the conversion of the portion
of the 9% Note II with respect to which the determination of this provision is being made, would result in beneficial ownership
by the Note Purchaser and its affiliates of more than the Maximum Share Amount of 4.99% of the outstanding shares. The
“Conversion Price” shall be equal to the Variable Conversion Price (as defined below) (subject to equitable adjustments
for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities
of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events).
The “Variable Conversion Price” shall mean 65% multiplied by the Market Price (as defined below) (representing a discount
rate of 35%). “Market Price” means the average of the three (3) lowest trading prices for the shares during the fifteen
(15) trading day period ending on the latest complete trading day prior to the Conversion Date.
As
at December 31, 2020 the Company owed $48,000 (December 31, 2019 - $nil) in principal and the accrued interest was $533.
Acquisition
and Discontinued Operations
The Company entered into an agreement (the
“Transaction Agreement”) on May 3, 2019 with C-PAK, P&G, and Capital Park Holdings Corp., solely in its capacity
as guarantor, for an acquisition of certain assets pertaining to the “Joy” and “Cream Suds” trademarks
for $30,000,000. As at October 1, 2019, the Transaction
Agreement was terminated between the parties. The terms of the termination are undergoing further negotiations. Results of operations,
financial position and cash flows for these businesses are separately reported as discontinued operations for the year ended December
31, 2019. In connection with the closing of the transaction contemplated by the transaction agreement, the Company received
a transaction fee in the amount of $400,000 (the “Transaction Fee”) where the Company recorded the transaction fee
as an accrual with its Deferred Financing Fee balance sheet account. In conjunction with termination of the Transaction Agreement,
the Company has immediately reversed the accrual for the Transaction Fee and immediately expensed the Transaction Fee in this
period.
Small
Business Administration Loans
On
March 31, 2021, Bridgeway was approved for a SBA Loan-1in the amount of $723,743 and on March 24, 2021 was approved for
an SBA Loan-2 in the original principal amount of $150,000. SBA Loan-1 shall be eligible for forgiveness if during the 8-to-24-week
covered period following disbursement: (i) employee and compensation levels are maintained; (ii) the loan proceeds are spent on
payroll costs and other eligible expenses and (iii) at least 60% of the proceeds are spent on payroll costs. For any portion of
the SBA Loan-1 that is not forgiven, it will bear interest at a 1% fixed APR for the life of the loan with payments deferred for
ten (10) months. With respect to the SBA Loan-2, interest will accrue at the rate of 3.75% per annum with installment payments,
including principal and interest, of $731.00 per month beginning on the twelve (12) month anniversary of the funding date. The
balance of principal and interest will be payable on the thirty (30) year anniversary of the funding date.
Class
A Common Stock Reverse Stock Split
On
October 16, 2020, the board of directors (the “Board”) of the Company and a stockholder holding a majority of the
voting power of the Company’s voting stock (the “Majority Stockholder”) took action by joint written consent in lieu
of a meeting to: (i) ratify the approval of an amendment to the Company’s certificate of incorporation, which amendment was filed
with the Delaware Secretary of State on December 19, 2019 and was declared effective on January 20, 2020 (the “December 2019 Amendment”),
which (i) changed the Company’s name from “Capital Park Holdings Corp.” to “Bridgeway National Corp.” and
(ii) increased our authorized capital stock from 30,000,000 shares to 250,000,000 shares, of which 187,500,000 shares
were designated as Class A Common Stock (the “Class A Common Stock”), 18,750,000 shares were designated as Class B
Common Stock (the “Class B Common Stock”) and 62,500,000 shares were designated as preferred stock, of which 1,000
shares were previously designated as Series A Preferred Stock (the “Series A Preferred Stock”) and 125,181 shares
were previously designated as Series B Preferred Stock (the “Series B Preferred Stock”); (ii) approve a further amendment
to the Company’s certificate of incorporation (the “Recapitalization Amendment”) to increase the Common Stock from
187,500,000 shares to 400,000,000 shares, of which 360,000,000 shares will be designated as the Class A Common Stock
and 40,000,000 shares will be designated as the Class B Common Stock and (iii) approve an additional amendment to the certificate
of incorporation to effect a reverse stock split of our outstanding shares of our Class A Common Stock and Class B Common Stock at the
at the ratio of one-for-4 (the “Reverse Stock Split Amendment,” and together with the December 2019 Amendment and the Recapitalization
Amendment, collectively, the “Amendments”).
The
December 2019 Amendment will not be deemed ratified, and the Recapitalization Amendment and Reverse Stock Split Amendment will
not be made effective until at least twenty (20) calendar days after the mailing of the Information Statement accompanying this
Notice. In addition, the Reverse Stock Split Amendment will not be made effective until the Recapitalization Amendment is
made effective, and we receive FINRA approval for the Reverse Stock Split from the Financial Industry Regulatory Authority (“FINRA”).
We received written notification that FINRA had approved the Reverse Stock Split on February 17, 2021.
ITEM
1A. RISK FACTORS
As
a “smaller reporting company,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), we are not required to provide the information required by this Item.
ITEM
1B. UNRESOLVED STAFF COMMENTS
Not
applicable.
ITEM
2. PROPERTIES
Our
executive offices are located at, 1015 15th Street NW, Suite 1030, Washington, D.C. 20005. The commencement date of the lease
was January 29, 2020 and the term concludes on August 31, 2025. During the initial year of the lease, the per annum fixed rent obligation
is $205,965 which increases pursuant to an in-lease escalation clause with the last year of the term having a per annum fixed rent obligation
of $233,030.
ITEM
3. LEGAL PROCEEDINGS
We
are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us that
may materially affect us.
ITEM
4. MINE SAFETY DISCLOSURES
Not
applicable.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 and 2019
Note
1 - Organization and Operations
Bridgeway
National Corp., which we refer to as “the Company,” “our Company,” “we,” “us” or “our,”
was originally incorporated under the laws of the State of Nevada as Snap Online Marketing Inc. on June 4, 2012 and subsequently changed
its name to LifeLogger Technologies Corp., which we were referred to as “LifeLogger.” On April 10, 2019, we reincorporated
as a Delaware corporation and changed our name to Capital Park Holdings Corp. On December 19, 2019, we changed our name to Bridgeway
National Corp. Our principal business address is 1015 15th Street NW Suite 1030, Washington, DC 20005, 202-846-7869. We registered
as a reporting company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) on April 26, 2013. We are
currently listed for trading on the OTC Pink under the trading symbol “BDGY.” See Note 12 “Subsequent Events”
for organizational and operational changes that occurred after December 31, 2020.
On
January 9, 2019, Capital Park Opportunities Fund LP, which we refer to as “Capital Park Opportunities Fund,” acquired (i)
from SBI Investments LLC, 2014-1, a statutory series of Delaware limited liability corporation (“SBI”) and Old Main Capital,
LLC, a Florida series limited liability corporation (“Old Main,” together with SBI, the “Selling Shareholders”)
83,796 shares of the Company’s common stock (the “Common Stock”) owned by the Selling Shareholders and (ii)
from Stewart Garner (the “Series A Preferred Stock Holder”) 1,000 shares of the Company’s Series A Preferred
Stock (the “Preferred Stock”), collectively representing 84.4% of the voting power of the Company’s voting stock. Capital
Park Opportunities Fund is managed by Eric Blue, our Chairman, Chief Executive Officer (“CEO”) and Chief Investment Officer
(“CIO”).
On
January 9, 2019, Eric C. Blue was elected as our sole director, CEO and CIO. On July 13, 2020, Eon Washington commenced an employment
relationship with the Company as its Chief Operating Officer – Director of Operations.
On
April 10, 2019, we converted from a Nevada corporation to a Delaware corporation and adopted new bylaws and a new certificate of incorporation,
which amended and restated the Company’s Articles of Incorporation in Nevada. Under the new certificate of incorporation,
we created an additional series of our stock now named Class B common stock, par value $0.001 per share. Each share of Class B common
stock is identical to the Class A common stock in liquidation, dividend and similar rights. The only difference between our Class B common
stock and our Class A common stock is that each share of Class B common stock has 10 votes for each share held, while the Class A common
stock has a single vote per share, and certain actions cannot be taken without the approval of the holders of the Class B common stock.
Prior
to the transactions that took place on January 9, 2019, we were a lifelogging software company that developed and hosted a proprietary
cloud-based software solution accessible on iOS and Android devices that offers an enhanced media experience for consumers by augmenting
videos, livestreams and photos with additional context information and providing a platform that makes it easy to find and
use that data when viewing or sharing media. Subsequent to transactions that took place on January 9, 2019, in addition to its lifelogging
software business, the Company has been structured as a holding company with a business strategy focused on owning subsidiaries
engaged in a number of diverse business activities.
Note
2 - Summary of Significant Accounting Policies
Basis
of Presentation
The
consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the
Unites States of America (“US GAAP”), applied on a consistent basis, and are expressed in United States dollars (“USD”).
Going
Concern
The
consolidated financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization
of assets, and liquidation of liabilities in the normal course of business.
As
reflected in the consolidated financial statements, the Company had an accumulated deficit of $11,030,550 at December 31,
2020, and a net loss of ($4,124,783) for the year ended December 31, 2020. These factors raise substantial doubt about
the Company’s ability to continue as a going concern.
Although
the Company has recently broadened its business and operating model in an effort to generate more sufficient and stable sources of revenues
and cash flows, its cash position is not sufficient to support its daily operations. While the Company believes that its new business
and operating model presents a viable strategy to generate sufficient revenue and believes in its ability to raise additional funds by
way of a public or private offering, there can be no assurances to that effect.
The
consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts
or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
Use
of Estimates
The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates
and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that
it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results
experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences
between the estimates and the actual results, future results of operations will be affected.
Cash
Equivalents
For
the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly liquid debt
instruments with original maturities of three months or less.
Property
and Equipment
Property
and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and
betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation
are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided
using the declining balance method for substantially all assets with estimated lives and rates as follows:
Computer
Equipment
|
30%
|
Office Equipment
|
20%
|
Depreciation
methods, useful lives and residual values are reviewed periodically and adjusted prospectively if appropriate.
Property
and equipment as at December 31, 2020 consisted of the following:
|
|
December 31,
2020
$
|
|
|
December 31,
2019
$
|
|
Computer and equipment
|
|
|
23,214
|
|
|
|
4,686
|
|
Office equipment
|
|
|
66,378
|
|
|
|
-
|
|
|
|
|
89,592
|
|
|
|
4,686
|
|
Accumulated depreciation
|
|
|
(10,319
|
)
|
|
|
(703
|
)
|
Total
|
|
|
79,273
|
|
|
|
3,983
|
|
Note
2 - Summary of Significant Accounting Policies (continued)
Goodwill
Goodwill
represents the excess of the purchase price paid, over the net fair value of assets acquired and liabilities assumed, to purchase an
enterprise or asset. The Company tests goodwill for impairment at least annually, during the fourth quarter of each fiscal year, or more
frequently if events or changes in circumstances indicate that the asset may be impaired.
The
accounting guidance provides the Company with the option to perform a qualitative assessment to determine whether further impairment
testing is necessary. At December 31, 2019, the Company recorded an impairment for the goodwill relating to the discontinued operations.
Refer to Note 9.
Intangible
assets
Intellectual
property, customer contracts and tradenames that were acquired by the Company from a third party are capitalized and subsequently measured
at cost less accumulated amortization and accumulated impairment losses, if they have finite useful lives, they are for approved products
or if there are alternative future uses. Amortization is calculated over the cost of the intangible asset less its residual value. Amortization
is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they
are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied
in the asset. At December 31, 2019, the Company recorded an impairment for the intangible assets relating to the discontinued operations.
Refer to Note 9.
Long-Lived
Assets
The
Company applies the provisions of ASC Topic 360, Property, Plant, and Equipment, which addresses financial accounting and reporting for
the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations
when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the
assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair
value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values
are reduced for the cost of disposal. At December 31, 2019, the Company recorded an impairment for the long-lived assets relating to
the discontinued operations.
Revenue
Recognition
ASU
No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for the Company on January
1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected by this new standard.
The Company applied the “modified retrospective” transition method for open contracts for the implementation of Topic
606. This new standard did not result in a material recognition of revenue on the Company’s accompanying consolidated financial
statements for the cumulative impact of applying this new standard.
Revenue
recognized under Topic 606 in a manner that reasonably reflects the delivery of its goods and services to customers in return
for expected consideration and includes the following elements:
|
●
|
executed
contracts with the Company’s customers that it believes are legally enforceable;
|
|
●
|
identification
of performance obligations in the respective contract;
|
|
●
|
determination
of the transaction price for each performance obligation in the respective contract;
|
|
●
|
allocation
the transaction price to each performance obligation; and
|
|
●
|
recognition
of revenue only when the Company satisfies each performance obligation.
|
Fair
Value of Financial Instruments
For
certain of the Company’s consolidated financial instruments, including accounts payable, the carrying amounts approximate their
fair values due to their short maturities.
FASB
ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by
the Company. FASB ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy
for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported
in the condensed consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a
reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected
realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
|
●
|
Level
1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
|
Note
2 - Summary of Significant Accounting Policies (continued)
|
●
|
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for
identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly,
for substantially the full term of the financial instrument.
|
|
|
|
|
●
|
Level
3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the fair value measurement.
|
The
Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities
from Equity, and FASB ASC Topic 815, Derivatives and Hedging.
The
fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and
the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than
one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of
the instrument. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety
requires judgment, and considers factors specific to the asset or liability including certain market assumptions and pertinent information
available to management.
The
carrying amount of the Company’s financial assets and liabilities, such as cash, accounts payable and accrued liabilities approximate
their fair value because of the short maturity of those instruments. The derivative liabilities are fair valued as described below.
Valuation
of Derivatives
The
Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components
of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.”
The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date. The change
in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument,
the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments
that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at
the fair value of the instrument on the reclassification date. The Company analyzed the derivative financial instruments in accordance
with ASC 815. The objective is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s
own stock. This determination is needed for a scope exception which would enable a derivative instrument to be accounted for under the
accrual method. The classification of a non-derivative instrument that falls within the scope of ASC 815-40-05 “Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the
instrument is indexed to an entity’s own stock. A non-derivative instrument that is not indexed to an entity’s own stock
cannot be classified as equity and must be accounted for as a liability. There is a two-step approach in determining whether an instrument
or embedded feature is indexed to an entity’s own stock. First, the instrument’s contingent exercise provisions, if any,
must be evaluated, followed by an evaluation of the instrument’s settlement provisions. The Company utilized multinomial lattice
models that value the derivative liability based on a probability weighted discounted cash flow model. The Company utilized the fair
value standard set forth by the Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could
be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation
sale.
The
derivative liabilities result in a reduction of the initial carrying amount (as unamortized discount) of the Convertible Notes. This
derivative liability is marked-to-market each quarter with the change in fair value recorded in the statement of operations. Unamortized
discount is amortized to interest expense using the effective interest method over the life of the Convertible Note.
Related
Parties
The
Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure
of related party transactions.
Income
Taxes
The
Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset
and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences,
and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion, or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Note
2 - Summary of Significant Accounting Policies (continued)
Under
ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained
in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that
is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test,
no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.
Stock-Based
Compensation
The
Company records stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. FASB
ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and
recognize the expense over the requisite service period. The Company recognizes in the statement of operations the grant-date fair value
of stock options and other equity-based compensation issued to employees and non-employees.
There
were no options outstanding as of December 31, 2020 (December 31, 2019 – Nil).
Basic
and Diluted Earnings Per Share
Earnings
per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”) is
based on the weighted average number of common shares outstanding. Diluted EPS assumes that all dilutive securities are converted. Dilution
is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average
market price during the period. There were 2,640,625 (post reverse split number for 10,562,499) warrants and nil options outstanding
as of December 31, 2020 (December 31, 2019 – nil), which could have been exercised for 2,640,625 common shares (assuming
no cashless exercise), 125,001 shares of preferred convertible stock that were convertible into 120,270 common shares and
$845,000 in convertible notes that were convertible into 120,270 common shares. Due to the net loss incurred potentially dilutive
instruments would be anti-dilutive. Accordingly, diluted loss per share is the same as basic loss for all periods presented.
Recent
Accounting Pronouncements
The
Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on
the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting
pronouncements that have been issued that might have a material impact on its consolidated financial position or results of operations.
Reverse Stock Split
All references
to common shares and common share data in these consolidated financial statements and elsewhere in this Form 10-K as of December 31,
2020 and 2019, and for the years then ended, reflect the Reverse Stock Split approved
by FINRA on February 17, 2021.
Note
3 – Convertible Notes Payable
Note Issue
Date
|
|
Interest
Rate
|
|
|
December 31,
2020 Principal
Balance
|
|
March 2, 2020
|
|
|
12
|
%
|
|
$
|
845,000
|
|
September 30, 2020
|
|
|
6
|
%
|
|
$
|
155,000
|
|
October 3, 2020
|
|
|
6
|
%
|
|
$
|
155,000
|
|
October 23, 2020
|
|
|
9
|
%
|
|
$
|
68,000
|
|
November 16, 2020
|
|
|
9
|
%
|
|
$
|
48,000
|
|
Total
|
|
|
|
|
|
$
|
1,271,000
|
|
The weighted average
interest rate and remaining term of the fixed rate debt
is 10% and 7.17 months as of December 31, 2020.
The
movement in convertible notes payable is as follows:
|
|
|
|
Original
Amount
|
|
|
Unamortized
Discount
|
|
|
Guaranteed
Interest
Accrued
|
|
|
Net
Settlement
|
|
|
Total
|
|
Opening as of January 1, 2016
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending as of December 31, 2018
|
|
|
|
$
|
1,339,066
|
|
|
$
|
(11,809
|
)
|
|
$
|
58,954
|
|
|
$
|
(280,621
|
)
|
|
$
|
1,105,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note Conversion: January 9, 2019
|
|
|
|
$
|
(1,339,066
|
)
|
|
$
|
11,809
|
|
|
$
|
(58,954
|
)
|
|
$
|
280,621
|
|
|
$
|
(1,105,590
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending as of December 31, 2019
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Issued: March 2, 2020
|
|
(ii)
|
|
|
845,000
|
|
|
|
-
|
|
|
|
88,349
|
|
|
|
-
|
|
|
$
|
933,349
|
|
Issued: September 30, 2020
|
|
(ii)
|
|
|
155,000
|
|
|
|
(75,417
|
)
|
|
|
2,344
|
|
|
|
-
|
|
|
$
|
81,927
|
|
Issued October 3, 2020
|
|
(ii)
|
|
|
155,000
|
|
|
|
(103,908
|
)
|
|
|
2,344
|
|
|
|
-
|
|
|
$
|
53,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued: October 23, 2020
|
|
(iii)
|
|
|
68,000
|
|
|
|
(2,433
|
)
|
|
|
1,157
|
|
|
|
-
|
|
|
$
|
66,724
|
|
Issued: November 16, 2020
|
|
(iii)
|
|
|
48,000
|
|
|
|
(2,630
|
)
|
|
|
533
|
|
|
|
-
|
|
|
$
|
45,903
|
|
Ending
as of
December
31,2020
|
|
|
|
$
|
1,271,000
|
|
|
|
(184,388
|
)
|
|
|
94,727
|
|
|
|
-
|
|
|
$
|
1,181,339
|
|
Note
3 – Convertible Notes Payable (continued)
All
convertible notes issued by the Company prior to January 9, 2019 (together with all interest owed on such notes, whether default or ordinary
in nature) were converted into Series B Preferred Shares (the “Equity Shares”) as of January 9, 2019.
(i)
Securities Purchase Agreement and Convertible Notes Issued to
Calvary Fund I, LP; Oasis Capital, LLC and SBI Investments LLC
On
March 2, 2020 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement with SBI,
on behalf of itself and the other note purchasers (the “Note Purchasers”), pursuant to which the Note Purchasers purchased
from the Company (a) 12% convertible promissory notes of the Company in an aggregate principal amount of $845,000 (the “12% Notes”)
of which $75,000 were related to original issuance discount and $20,000 were related to deferred finance costs (with the understanding
that the initial six months of such interest shall be guaranteed) (together with any note(s) issued in replacement thereof or as a dividend
thereon or otherwise with respect thereto in accordance with the terms thereof, the “Notes”, and each, a “Note”),
convertible into shares (the “Conversion Shares”) of common stock of the Company (the “Common Stock”)
and (b) warrants (the “Warrants”) to acquire up to 1,111,842 Shares subject to a beneficial ownership cap of no
greater than 4.99% in the case of each Purchaser (the “Warrant Shares”).
The
maturity date of the 12% Notes shall be on that day that is nine (9) months after the Issue Date (the “Maturity Date”) and
is the date upon which the principal amount of the 12% Notes, as well as all accrued and unpaid interest and other fees, shall be due
and payable. The notes are currently in Default status at a rate of 24% which has been accrued.
Under
the terms of the 12% Notes, the Note Purchasers shall have the right at any time on or after the Issue Date, to convert (a “Conversion”)
all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the 12% Notes, and any other amounts
owed under the 12% Notes, into shares at the Conversion Price (as defined below); provided, however, that in no event shall
any Note Purchaser be entitled to convert any portion of any of the 12% Notes in excess of that portion of any 12% Note upon conversion
of which the sum of (a) the number of shares owned by the Note Purchaser and its affiliates (other than Shares issuable upon conversion
of the 12% Notes or exercise of the Warrants held by such Note Purchaser) and (b) the number of shares issuable upon the conversion of
the portion of any 12% Note with respect to which the determination of this provision is being made, would result in beneficial ownership
by any Note Purchaser and its affiliates of more than 4.99% of the Company’s outstanding shares (the “Maximum Share Amount”).
The “Conversion Price” per share shall be the lower of (i) $0.38 or (ii) the Variable Conversion Price (as defined
below) (subject to adjustment). The “Variable Conversion Price” shall mean 70% multiplied by the Market Price (as defined
below). “Market Price” means the lowest Trading Price (as defined below) for our common stock during the fifteen (15) Trading
Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Price” means, as of any date, the
lowest VWAP price for our shares on the applicable trading market trading market (the “Trading Market”) as reported by a
reliable reporting service.
The
exercise price of the Warrants is $0.38 per share, subject to adjustment. Each Warrant also contains a cashless exercise option
and has a term of five (5) years from the Issue Date. The Notes and Warrants included embedded derivative features that were accounted
for as derivative liabilities due to the variable conversion prices upon default and forced conversion; full reset provisions; and redemption
features based on FASB. The Warrants were treated as derivative liabilities due to the tainted equity environment based on the notes
that are convertible into an indeterminate number of shares. On March 2, 2020, the Company recorded an initial recognition loss of derivative
liabilities of $1,739,698, $750,000 discount on the notes payable of which $50,700 is 6-months guaranteed interest and $95,000 original
issuance discount amortized over the term of the convertible notes. The amount of amortization recognized on the discount for the year
ended was $845,000.
As
at December 31, 2020 the Company owed $845,000 (December 31, 2019 - $nil) in principal and the accrued interest was $88,349, which
consisted of accrued interest and default interest.
(ii) On
September 30, 2020 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement with
SBI, on behalf of itself and the other note purchasers (the “Note Purchasers”), pursuant to which the Note Purchasers purchased
from the Company (a) two 6% convertible promissory notes ($155,000 each) of the Company in an aggregate principal amount
of $310,000 (the “6% Notes”) convertible into Shares (the “Conversion Shares”) subject to a beneficial ownership
cap of no greater than 4.99% in the case of each Purchaser. Pursuant to the agreement, each note was issued with an original issue
discount of $5,000 and as such the purchase price was $150,000. The proceeds of one note was received on October 3, 2020.
The
maturity date of the 6% Notes shall be on that day that is nine (9) months after the Issue Date (the “Maturity Date”) and
is the date upon which the principal amount of the 6% Notes, as well as all accrued and unpaid interest and other fees, shall be due
and payable. The notes also carry a default rate of 18%.
Under
the terms of the 6% Notes, the Note Purchasers shall have the right at any time on or after the Issue Date, to convert (a “Conversion”)
all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the 6% Notes, and any other amounts
owed under the 6% Notes, into shares at the Conversion Price of $0.16; provided, however, that in no event shall
any Note Purchaser be entitled to convert any portion of any of the 6% Notes in excess of that portion of any 6% Note upon conversion
of which the sum of (a) the number of owned by the Note Purchaser and its affiliates (other than Shares issuable upon conversion of the
6% Notes or exercise of the Warrants held by such Note Purchaser) and (b) the number of shares issuable upon the conversion of the portion
of any 6% Note with respect to which the determination of this provision is being made, would result in beneficial ownership by any Note
Purchaser and its affiliates of more than the Maximum Share Amount up to 4.99% of outstanding shares. The “Conversion Price”
per share shall be $0.16.
As
at December 31, 2020 the Company owed $310,000 (December 31, 2019 - $nil) in principal and the accrued interest was $4,688. The
debenture is convertible into common shares of the Company at a conversion price $0.04. The convertible debt was not considered tainted
due to 5,812,500 shares of common stock held on reserve for issuance upon full conversion of this debenture. The Company evaluated the
convertible notes for a beneficial conversion feature in accordance with ASC 470-20 “Debt with Conversion and Other Options.”
The Company determined that the conversion price was below the closing stock price on the commitment date, and the convertible notes
contained a beneficial conversion feature. The Company recognized the intrinsic value of the embedded beneficial conversion feature of
$258,750 as additional paid-in capital and reduced the carrying value of the convertible notes to $41,250. The carrying value will be
accreted over the term of the convertible notes up to their face value of $310,000.
As at December 31, 2020, the carrying value of the 6% Note
was $130,675 and had an unamortized discount of $179,325 ($172,658 beneficial conversion feature and $6,667 OID). During the year ended December 31, 2020, the Company recorded accretion expense of $89,425.
(iii)
Securities Purchase Agreement and Convertible Notes Issued to Geneva Roth Remark Holdings, Inc.
On
October 23, 2020 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement with
Geneva Roth Remark Holdings, Inc. (the “Note Purchaser”), pursuant to which the Note Purchaser purchased from the Company
(a) the 9% convertible promissory note of the Company in an aggregate principal amount of $68,000 ($3,000 OID) (the “9%
Note”) convertible into Shares (the “Conversion Shares”) subject to a beneficial ownership cap of no greater than 4.99%
in the case of the Purchaser (the “Maximum Share Amount”). The maturity date of the 9% Note shall be on October 23,
2021 (the “Maturity Date”) and is the date upon which the principal amount of the 9% Note, as well as all accrued and unpaid
interest and other fees, shall be due and payable. The Note also has a 22% default interest rate.
Under the terms
of the 9% Note, the Note Purchaser shall have the right at any time during the period beginning on the date which is one hundred eighty
(180) days following the date of the 9% Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the default
amount, to convert (a “Conversion”) all or any part of the outstanding and unpaid principal amount and accrued and unpaid
interest of the 9% Note, and any other amounts owed under the 9% Note, into shares at the Conversion Price (as defined below); provided,
however, that in no event shall the Note Purchaser be entitled to convert any portion of any of the 9% Note in excess of that portion
of the 9% Note upon conversion of which the sum of (a) the number of shares owned by the Note Purchaser and its affiliates and (b) the
number of shares issuable upon the conversion of the portion of the 9% Note with respect to which the determination of this provision
is being made, would result in beneficial ownership by the Note Purchaser and its affiliates of more than the Maximum Share Amount .
The “Conversion Price” shall be equal to the Variable Conversion Price (as defined below) (subject to equitable adjustments
for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of
any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The
“Variable Conversion Price” shall mean 65% multiplied by the Market Price (representing a discount rate of 35%). “Market
Price” means the average of the three (3) lowest trading prices for the shares during the fifteen (15) trading day period ending
on the latest complete trading day prior to the Conversion Date.
As
at December 31, 2020 the Company owed $68,000 (December 31, 2019 - $nil) in principal and the accrued interest was $1,157 with unamortized
debt discount of $2,433. During the year ended December 31, 2020, the Company recorded discount amortization expense of $567.
On November 16, 2020 (the “Issue Date”),
the Company entered into an unsecured promissory note purchase agreement with Geneva Roth Remark Holdings, Inc. (the “Note
Purchaser”), pursuant to which the Note Purchaser purchased from the Company (a) the 9% convertible promissory note of the Company
in an aggregate principal amount of $48,000 ($3,000 OID) (the “9% Note II”) convertible into Shares (the “Conversion
Shares”) subject to a beneficial ownership cap of no greater than 4.99% in the case of the Purchaser (the “Maximum share
Amount”). The maturity date of the 9% Note II shall be on November 16, 2021 (the “Maturity Date”) and is the date
upon which the principal amount of the 9% Note, as well as all accrued and unpaid interest and other fees, shall be due and payable.
The Note also has a 22% default interest rate.
Under the terms
of the 9% Note II, the Note Purchaser shall have the right at any time during the period beginning on the date which is one hundred eighty
(180) days following the date of the 9% Note II and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the
default amount, to convert (a “Conversion”) all or any part of the outstanding and unpaid principal amount and accrued and
unpaid interest of the 9% Note II, and any other amounts owed under the 9% Note II, into shares at the Conversion Price (as defined below);
provided, however, that in no event shall the Note Purchaser be entitled to convert any portion of any of the 9% Note II in excess of
that portion of the 9% Note II upon conversion of which the sum of (a) the number of shares owned by the Note Purchaser and its affiliates
and (b) the number of shares issuable upon the conversion of the portion of the 9% Note II with respect to which the determination of
this provision is being made, would result in beneficial ownership by the Note Purchaser and its affiliates of more than the Maximum
Share Amount . The “Conversion Price”
shall be equal to the Variable Conversion Price (as defined below) (subject to equitable adjustments for stock splits, stock dividends
or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company, combinations,
recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall
mean 65% multiplied by the Market Price (as defined below) (representing a discount rate of 35%). “Market Price” means the
average of the three (3) lowest trading prices for
the shares during the fifteen (15) trading day period ending on the latest complete trading day prior to the Conversion Date.
As
at December 31, 2020 the Company owed $48,000 (December 31, 2019 - $nil) in principal and the accrued interest was $533 with unamortized
debt discount of $2,630. During the year ended December 31, 2020, the Company recorded discount amortization expense of $370.
Note
4 – Derivative Liability
In
connection with the sale of debt or equity instruments, the Company may sell options or warrants to purchase the Company’s common
stock. In certain circumstances, these options or warrants may be classified as derivative liabilities, rather than as equity. Additionally,
the debt or equity instruments may contain embedded derivative instruments, such as embedded derivative features which in certain circumstances
may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.
The
Company’s derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of
the derivative liability recorded as charges or credits to income in the period in which the changes occur. For options, warrants and
bifurcated embedded derivative features that are accounted for as derivative instrument liabilities, the Company estimates fair value
using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. The valuation
techniques require assumptions related to the remaining term of the instruments and risk-free rates of return, the Company’s current
common stock price and expected dividend yield, and the expected volatility of the Company’s common stock price over the life of
the instrument.
The
following table summarizes the warrant derivative liabilities and convertible notes activity for the twelve months ended December
31, 2020 and December 31, 2019:
|
|
Derivative Liabilities
|
|
Fair value at December 31, 2018
|
|
|
461,539
|
|
Elimination of derivative liability due to debt settlement
|
|
|
(461,539
|
)
|
Derivative liabilities as at December 31, 2019
|
|
|
-
|
|
Initial recognition of loss of derivative liabilities
|
|
$
|
1,739,698
|
|
Convertible notes discount
|
|
|
699,300
|
|
Change in fair value of warrants and notes
|
|
|
(721,661
|
)
|
Derivative liabilities as at December 31, 2020
|
|
$
|
1,717,337
|
|
The
Monte Carlo methodology was used to value the derivative components as of December 31, 2020, using the following assumptions:
|
|
Warrants
|
|
|
Notes
|
|
Dividend yield
|
|
|
-
|
|
|
|
12
|
%
|
Risk-free rate for term
|
|
|
0.28%
to 0.88
|
%
|
|
|
0.08%
- 0.95
|
%
|
Volatility
|
|
|
288.6%
to 325.3
|
%
|
|
|
286.5% to 348.1
|
%
|
Remaining term (Years)
|
|
|
4.17
|
|
|
|
0.5
|
|
Stock Price
|
|
|
$0.090
to $0.440
|
|
|
|
$0.090
to $0.440
|
|
Note
5 – Fair Value of Financial Instruments
The
Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued expenses, derivative liabilities
and convertible debt. The estimated fair value of cash and cash equivalents, accounts payable and accrued liabilities approximate their
carrying amounts due to the short-term nature of these instruments.
The
Company utilizes various types of financing to fund its business needs, including convertible debt with warrants attached. The Company
reviews its warrants and conversion features of securities issued as to whether they are freestanding or contain an embedded derivative
and, if so, whether they are classified as a liability at each reporting period until the amount is settled and reclassified into equity
with changes in fair value recognized in current earnings. The fair value of the warrants and the embedded conversion feature of the
convertible debt is classified as a liability. Some of these units have embedded conversion features that are treated as a discount on
the Notes. Such financial instruments are initially recorded at fair value and amortized to interest expense over the life of the debt
using the effective interest method.
Inputs
used in the valuation to derive fair value are classified based on a fair value hierarchy which distinguishes between assumptions based
on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
Level
one - Quoted market prices in active markets for identical assets or liabilities;
Level
two - Inputs other than level one inputs that are either directly or indirectly observable; and
Level
three - Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those
assumptions that a market participant would use.
Determining
which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures
each quarter. The Company’s derivative liability is measured at fair value on a recurring basis. The Company classifies the fair
value of these convertible notes and warrants derivative liability under level three. The Company’s settlement payable is measured
at fair value on a recurring basis based on the most recent settlement offer. The Company classifies the fair value of the settlement
payable under level three. The Company’s rescission liability is measured at fair value on a recurring basis based on the most
recent stock price. The Company classifies the fair value of the rescission liability under level one.
Based
on ASC Topic 815 and related guidance, the Company concluded the common stock purchase warrants are required to be accounted for as derivatives
as of the issue date due to a reset feature on the exercise price. At the date of issuance warrant derivative liabilities were measured
at fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques.
The Company records the fair value of these derivatives on its balance sheet at fair value with changes in the values of these derivatives
reflected in the statements of operations as “Gain (loss) on derivative liabilities.” These derivative instruments are not
designated as hedging instruments under ASC 815-10 and are disclosed on the balance sheet under Derivative Liabilities.
Note
5 – Fair Value of Financial Instruments (continued)
The
following table presents liabilities that are measured and recognized at fair value on a recurring and non-recurring basis:
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Gains (Losses)
|
|
Derivatives
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,717,337
|
|
|
$
|
(1,018,037
|
)
|
Fair Value at December 31, 2020
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,717,337
|
|
|
$
|
(1,018,037
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Fair Value at December 31, 2019
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Note
6 – Stock Options and Warrants:
The
following is a summary of stock option activity:
|
|
Options
Outstanding
|
|
|
Weighted
Average Exercise
Price
|
|
|
Weighted
Average
Remaining Contractual
Life
|
|
|
Aggregate Intrinsic
Value
|
|
Outstanding, December 31, 2018
|
|
|
50,000
|
|
|
$
|
12.00
|
|
|
|
1.42
|
|
|
|
-
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cancelled
|
|
|
(50,000
|
)
|
|
$
|
12.00
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding, December 31, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercisable, December 31, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding, December 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Exercisable, December 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
The
fair value of the stock options was amortized to stock option expense over the vesting period. The Company recorded stock option expense
of $nil, included in operating expenses, during the year ended December 31, 2020, and $nil during the year ended December 31, 2019. At
December 31, 2020, the unamortized stock option expense was $nil (December 31, 2019 - $nil).
As
at December 31, 2020, the Company had the following warrant securities outstanding:
|
|
Common Stock
Warrants
|
|
December 31, 2018
|
|
|
36,667
|
|
Less: Exercised
|
|
|
-
|
|
Less: Cancelled
|
|
|
(36,667
|
)
|
Add: Issued
|
|
|
-
|
|
December 31, 2019
|
|
|
-
|
|
Less: Exercised
|
|
|
-
|
|
Less: Cancelled
|
|
|
-
|
|
Add: Issued
|
|
|
2,640,625
|
*
|
December 31, 2020
|
|
|
2,640,625
|
|
Warrants (Note 4)
|
|
|
1,111,842
|
|
Exercise Price
|
|
$
|
0.380
|
|
Expiration Date
|
|
|
March 2, 2025
|
|
*
As at December 31, 2020, the number of warrants outstanding included
a full reset adjustment due to the issuance of additional convertible notes.
The
fair value of the warrants at issuance was $577,868, with an expiration of March 2, 2025 and exercise price of $0.380.
During the year ended December 31, 2020, the exercise price was reset to $0.16. The fair value of the warrants
as at December 31, 2020 was $473,759.
Note
7 – Related Party Transactions
Related
Parties
Related
parties with whom the Company had transactions are:
Related
Parties
|
|
Relationship
|
|
|
|
Stew
Garner
|
|
Chairman,
CEO, CFO and director (resigned effective January 9, 2019)
|
Eric
Blue
|
|
Chairman,
CEO, CFO and director (effective January 9, 2019)
|
Due
from related company
During
the year ended December 31, 2019, an amount of $113,070 of payments were made on behalf of a related company by virtue of same management.
The amount of $84,997 due to related party as of December 31,2019 were unsecured, bore no interest and were due on demand. Included in
the amount were $28,073 in dividends paid by the related party on behalf of the Company as of December 31, 2019.
During the year ended
December 31, 2020, an amount of $163,626 were characterized as a deemed distribution to the CEO; an amount of $82,642 of advances
and $85,290 of payments were made to the CEO. Included in the due to related party balance sheet account was a balance of $81,277 owed to the current CEO of the
Company as of December 31, 2020, which were unsecured, bore no interest and were due on demand. During the year ended December
31, 2020, the CEO also made $43,686 cash contribution to the Company.
Note
8 - Stockholders’ Deficiency
Shares
Authorized
The
Company’s authorized capital stock consists of 168,750,000 shares of Class A common stock, par value $0.001 per share, 18,750,000 Class
B common stock, par value $0.001per share and 62,500,000 shares of preferred stock, par value $0.001 per share of which 1000
shares are designated “Series A Preferred Stock” and of which one hundred twenty-five thousand one hundred eighty-one (125,181)
shares are designated “Series B Preferred Stock”.
On
January 9, 2019, the Company entered into a Note Conversion Agreement (the “Conversion Agreement”) with SBI Investments LLC,
2014-1, a statutory series of Delaware limited liability corporation (“SBI”), and Old Main Capital, LLC, a Florida series
limited liability corporation (“Old Main”). Pursuant to the Conversion Agreement, SBI converted $549,042 of principal and
$641,565 accrued interest owed to SBI by the Company pursuant to a promissory Note into 42,429 shares of the Company’s Series
B Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), in full satisfaction of such obligation.
Pursuant to the Conversion Agreement, Old Main converted $556,547 of principal and $650,094 accrued interest owed to Old Main by the
Company pursuant to a promissory Note into 54,000 shares of the Company’s Series B Preferred Stock in full satisfaction
of such obligation.
Effective
as of April 10, 2019, the Company reincorporated to the State of Delaware from the State of Nevada and amended its Articles of Incorporation
to decrease its authorized capital stock from 500,000,000 to 30,000,000 shares, of which 25,000,000 will be common
stock and 5,000,000 will be preferred stock, of which, 1000 shares have been previously designated as Series A Preferred
Stock (the “Series A Preferred Stock”) and 96,429 shares have been designated as Series B Preferred Stock (the “Series
B Preferred Stock”). In connection with the Company reincorporating to the State of Delaware, the Company also filed certificates
of designation, preferences and rights for the Series A Preferred Stock and Series B Preferred Stock with the Secretary of State of the
State of Delaware.
Effective as of December 19,
2019, the authorized share capital of the Company was increased from 30,000,000 shares to 250,000,000 shares, of which
187,500,000 shares will be Common Stock (the “Common Stock”), 168,750,000 shares of the Common Stock will be
designated Class A Common Stock (the “Class A Common Stock”), 18,750,000 shares of the Common Stock will be designated
Class B Common Stock (the “Class B Common Stock”) and 62,500,000 shares will be designated preferred stock, of which,
62,374,819 shares have been designated as Series A Preferred Stock (the “Series A Preferred Stock”) and 125,181
shares have been designated as Series B Preferred Stock.
Note
8 - Stockholders’ Deficiency (continued)
Preferred
Stock
During the twelve-month
period ended December 31, 2020, the Company declared $43,048
in dividends on the Series B Preferred Stock. A total of $54,366 was accrued as a dividend payable as of December 31, 2020.
On
January 9, 2019, the Company entered into a Note Conversion Agreement (the “Conversion Agreement”) with SBI Investments LLC,
2014-1, a statutory series of Delaware limited liability corporation (“SBI”), and Old Main Capital, LLC, a Florida series
limited liability corporation (“Old Main”). Pursuant to the Conversion Agreement, SBI converted $549,042 of principal and
$641,565 accrued interest owed to SBI by the Company pursuant to a promissory Note into 42,429 shares of the Company’s Series
B Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), in full satisfaction of such obligation.
Pursuant to the Conversion Agreement, Old Main converted $556,547 of principal and $650,094 accrued interest owed to Old Main by the
Company pursuant to a promissory Note into 54,000 shares of the Company’s Series B Preferred Stock in full satisfaction
of such obligation. Concurrently with and the closing of the transactions for the Old Main Conversion Shares, with an effective date
of January 9, 2019, the Company acquired from Old Main and SBI 83,796 shares of Class A Common Stock and from a prior executive
of the Company, 1000 shares of Series A Preferred Stock. The purchase price for the Class A Common Stock was $335.18 in the aggregate
and the purchase price for the Series A Preferred Stock was $1 in the aggregate. Each share of Series A Preferred Stock is entitled to
50,000 votes on all matters submitted to a vote of the Company’s stockholders. In the event that such votes do not total
at least 51% of all votes, then the votes cast by the holders of the Series A Preferred Stock shall be equal to 51% of all votes cast
at any meeting of the Company’s stockholders or any issue put to the stockholders for voting.
The
shares of the Series B preferred stock are convertible into shares of the Company’s common stock equal to a forty percent (40%)
discount to the lowest volume weighted average price of the Company’s Common Stock during the fifteen (15) days immediately preceding
the day of exercise of the conversion right. The preferred stock shall have such other rights, preferences and privileges to be set forth
in a certificate of designation to be filed with the Secretary of State including Series B preferred stock are entitled to dividend preference
to receive cash dividends at the rate of three percent (3.00%) of the Original Series B Issue Price per annum and no voting rights. The
Company evaluated the convertible preferred stock under FASB ASC 470-20-30 and determined it contained a beneficial conversion feature.
The intrinsic value of the beneficial conversion feature was determined to be $2,397,248. The beneficial conversion feature was fully
amortized and recorded as a deemed dividend. During the year ended December 31, 2019, the Company declared $39,391 in dividends on the
Series B Preferred Stock, of which $28,073 was paid by a related company and $11,318 accrued.
On
October 24, 2019, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with SBI and Oasis Capital,
LLC, a Puerto Rico limited liability company (“Oasis” and together with SBI, the “Investors”, and each, an “Investor”),
pursuant to which the Investors agreed to, in the aggregate between the Investors, purchase from the Company up to Ten Million Dollars
($10,000,000) (the “Maximum Commitment Amount”) of the Common Stock.
Under
the terms of the Purchase Agreement, the Company shall have the right, but not the obligation, to direct an Investor, by its delivery
to the Investor of a put notice (the “Put Notice”) from time to time beginning on the execution date of the Purchase Agreement
and ending on the earlier to occur of: (i) the date on which the Investors shall have purchased Put Shares equal to the Maximum Commitment
Amount, (ii) October 24, 2021, or (iii) written notice of termination by the Company to the Investors (together, the “Commitment
Period”), to purchase Put Shares.
Note
8- Stockholders’ Deficiency (continued)
Notwithstanding
any other terms of the Purchase Agreement, in each instance, (i) the amount that is the subject of a Put Notice (the “Investment
Amount”) is not more than the Maximum Put Amount (as defined below), (ii) the aggregate Investment Amount of all Put Notices shall
not exceed the Maximum Commitment Amount and (iii) the Company cannot deliver consecutive Put Notices and/or consummate closings to the
same Investor, meaning for the avoidance of doubt, that Put Notices delivered by the Company must alternate between Oasis and SBI. “Maximum
Put Amount” means the lesser of (i) such amount that equals two hundred fifty percent (250%) of the average daily trading volume
of the Common Stock and (ii) One Million Dollars ($1,000,000.00). The price paid for each share of Common Stock (the “Purchase
Price”) subject to a Put Notice (each, a “Put Share”) shall be 85% of the Market Price (as defined below) on the date
upon which the Purchase Price is calculated in accordance with the terms and conditions of the Purchase Agreement. “Market Price”
means the one (1) lowest traded price of the Common Stock on the principal market for any trading day during the Valuation Period (as
defined below), as reported by Bloomberg Finance L.P. or other reputable source. “Valuation Period” means the period of five
(5) consecutive trading days immediately following the Clearing Date (as defined below) associated with the applicable Put Notice during
which the Purchase Price of the Common Stock is valued, provided, however, that the Valuation Period shall instead begin on the Clearing
Date if the respective Put Shares are received as DWAC Shares in the applicable Investor’s brokerage account prior to 11:00 a.m.
EST on the respective Clearing Date. “Clearing Date” means the date on which an Investor receives the Put Shares as DWAC
Shares in its brokerage account.
Concurrently
with the execution of the Purchase Agreement, the Company, SBI and Oasis entered into a Registration Rights Agreement, dated as of October
24, 2019 (the “Registration Rights Agreement”).
Pursuant
to the Registration Rights Agreement, the Company shall by December 8, 2019, file with the SEC an initial registration statement on Form
S-1 covering the maximum number of Registrable Securities (as defined below) as shall be permitted to be included in accordance with
applicable SEC rules, regulations and interpretations so as to permit the resale of such Registrable Securities by the Investors, including
but not limited to under Rule 415 under the Securities Act at then prevailing market prices (and not fixed prices), as mutually determined
by both the Company and the Investors in consultation with their respective legal counsel. “Registrable Securities” means
all of the Put Shares which have been, or which may, from time to time be issued, including without limitation all of the shares of Common
Stock which have been issued or will be issued to an Investor under the Purchase Agreement (without regard to any limitation or restriction
on purchases), and any and all shares of capital stock issued or issuable with respect to Put Shares (as such terms are defined in the
Purchase Agreement) issued or issuable to an Investor, and shares of Common Stock issued to an Investor with respect to the Put Shares
and the Purchase Agreement as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise,
without regard to any limitation on purchases under the Purchase Agreement.
As
compensation for the commitments made under the Purchase Agreement, the Company paid to the Investors a commitment fee equal to four
percent (4%) of the Maximum Commitment Amount (the “Commitment Fee”). The Commitment Fee was paid by the Company by issuing
to the Investors 28,572 shares of the Company’s Series B Preferred Stock, authorized on February 25, 2020 and issued as
on February 25, 2020 with the amount of $400,000 recorded to deferred financing costs. The fair value was determined based on the issuance
price mutually agreed upon between the parties as at the date of issuance.
As
at December 31, 2020, there were 125,181 shares of Series B Preferred Stock authorized. The Series B Preferred Stock are redeemable
at the option of the holders and have an aggregate redemption value of $1,752,534 at the holders’ request based on the
Company’s approval and the Company had declared $43,048 in dividends of which $0 were paid in cash and $43,048 were
accrued.
On
April 15, 2021, the Company notified SBI and Old Main of its intent to terminate the Purchase Agreement effective immediately. The Series
B preferred shares issued to the equity purchasers as a Commitment Fee will remain on record and the deferred financing
costs was immediately expensed during the year ended December 31, 2020.
Note
9- Acquisition and discontinued operations
The
Company entered into an agreement (the “Transaction Agreement”) on May 3, 2019 with C-PAK, P&G, and Capital Park Holdings
Corp., solely in its capacity as guarantor, for an acquisition of certain assets pertaining to the “Joy” and “Cream
Suds” trademarks for $30,000,000.
The
acquisition meets the definition of a business and has been accounted for in accordance with the authoritative guidance on business combinations;
therefore, the tangible and intangible assets acquired and liabilities assumed were recorded at fair value on the acquisition date. The
purchase price of $30,000,000 was allocated as follows:
Tangible assets
|
|
|
|
Molds
|
|
|
17,500
|
|
Prepaid expenses
|
|
|
70,000
|
|
Total
|
|
$
|
87,500
|
|
Intangible asset
|
|
|
|
|
Intellectual Property/Technology
|
|
|
1,028,000
|
|
Customer Base
|
|
|
6,806,000
|
|
Tradenames - trademarks
|
|
|
4,775,000
|
|
Total
|
|
$
|
12,609,000
|
|
Goodwill
|
|
|
17,303,500
|
|
Total net assets acquired
|
|
$
|
30,000,000
|
|
Total cash consideration paid
|
|
$
|
30,000,000
|
|
As
at October 1, 2019, the Transaction Agreement was terminated between the parties. The terms of the termination are undergoing further
negotiations. Results of operations, financial position and cash flows for these businesses are separately reported as discontinued operations.
Financial
information for discontinued operations for the year ended December 31, 2019
Expenses
|
|
|
(2,409,309
|
)
|
Other income (expenses)
|
|
|
|
|
Other income
|
|
|
1,556,376
|
|
Interest expense
|
|
|
(1,388,576
|
)
|
Impairment of intangible assets
|
|
|
(12,005,872
|
)
|
Impairment of goodwill
|
|
|
(17,303,500
|
)
|
Write-off of tangible assets
|
|
|
(17,500
|
)
|
Settlement of debt
|
|
|
32,190,939
|
|
|
|
|
|
|
Income before income tax provision
|
|
|
622,558
|
|
Benefit (provision) for income taxes
|
|
|
-
|
|
Income from discontinued operations, net of taxes
|
|
|
622,558
|
|
There
were no assets or liabilities of discontinued operations held as at December 31, 2019 and December 31, 2020.
Note
9- Acquisition and discontinued operations (continued)
P&G
Secured Promissory Note
In
connection with the entering into of the Transaction Agreement, C-PAK (together with certain affiliates, the “Note Borrowers”)
entered into a Senior Secured Promissory Note (the “Secured Note”) in the original principal amount of $9,950,000 with P&G,
in its respective capacity as the “Note Lender.”
The
interest rate applicable to the borrowing under the Secured Note is equal to 6.00% which is deferred and payable on the maturity date
of the Secured Note. Under the Secured Note, the Borrowers must repay the unpaid principal amount of the Secured Note on September 13,
2019. The Note was not repaid as at maturity date.
The
Secured Note contains customary affirmative and negative covenants, which, among other things, limit the Borrower’s ability to
(i) incur additional indebtedness, (ii) pay dividends or make certain distributions or (iii) dispose of its assets, grant liens or encumber
its assets. These covenants are subject to a number of exceptions and qualifications. During the year ended December 31, 2019, the Company
had recorded an interest expense of $150,477 on the Secured Note.
Due
to the cancellation of the Transaction Agreement, the Secured Note and interest expense has been deemed as settled. Therefore, $nil balance
was outstanding as of December 31, 2019.
Senior
Secured Credit Facility
On
May 3, 2019, C-PAK Consumer Product Holdings LLC, a Delaware limited liability company (“C-PAK”) and C-PAK Consumer
Product IP SPV LLC, a Delaware limited liability company (“C-PAK IP”, together with C-PAK, the ”Borrowers”)
entered into a loan agreement with Piney Lake Opportunities ECI Master Fund LP, a Cayman Islands exempted limited partnership (“PLC
ECI-Master Fund”), in its respective capacities as the “Administrative Agent”, ”Collateral Agent”
and “Lender”, pursuant to which the Borrowers obtained a $22 million term loan (the “Loan Agreement”). The
proceeds of the loan were used to acquire certain assets from The Procter & Gamble Company, an Ohio corporation (“P&G”)
and to pay fees and expenses related thereto. The Borrowers are subsidiaries of a majority-owned subsidiary of the Company, C-PAK
Consumer Product Holdings SPV I LLC, a Delaware limited liability company (“C-PAK Holdings”). C-PAK Holdings is a guarantor
under the Loan Agreement. An additional balance of $3,000,000 was obtained from PLC ECI-Master Fund by related company, C-PAK. The terms
are aligned with the Senior Secured Credit Facility below.
As
security for its obligations under the Loan Agreement, C-PAK Holdings and the Borrowers granted a lien on substantially all of its assets
to the Lender pursuant to a Guaranty and Security Agreement dated May 3, 2019, by and among the Borrowers, C-PAK Holdings and the Collateral
Agent (the “Guaranty and Security Agreement”) and a Trademark Security Agreement dated May 3, 2019 by and between C-PAK IP
and the Collateral Agent (the “Trademark Security Agreement”).
The
Loan Agreement contains customary affirmative and negative covenants, which, among other things, limit the Borrower’s ability to
(i) incur additional indebtedness, (ii) pay dividends or make certain distributions or (iii) dispose of its assets, grant liens or encumber
its assets. These covenants are subject to a number of exceptions and qualifications.
The
interest rate applicable to the borrowing under the Loan Agreement is equal to LIBOR plus a margin of 12.00% which is payable monthly
beginning on June 30, 2019. Under the Loan Agreement, the Borrowers must repay the unpaid principal amount of the loans quarterly in
an amount equal to $440,000 which was to begin on September 30, 2019. The Loan Agreement will mature on May 3, 2024. As at December 31,
2019, the monthly instalments were not yet repaid. During the year ended December 31, 2019, the Company had recorded an interest expense
of $825,407 on the loan payable.
Due
to the cancellation of the Transaction Agreement, the loan and interest expense has been deemed as settled. Therefore, $nil balance was
outstanding for the year ended December 31, 2019. In connection with the closing of the transaction contemplated by the transaction
agreement, the Company received a transaction fee in the amount of $400,000 (the “Transaction Fee”) where the Company recorded
the transaction fee as an accrual with its Deferred Financing Fee balance sheet account. In conjunction with termination of the Transaction
Agreement, the Company has immediately reversed the accrual for the Transaction Fee and immediately expensed the Transaction Fee in this
period.
Note
10 – Income Tax Provision
Deferred
Tax Assets
At
December 31, 2020, the Company had net operating loss (“NOL”) carryforwards for Federal income tax purposes of $4,170,283
that may be offset against future taxable income through 2036. No tax benefit has been reported with respect to these net operating
loss carry-forwards in the accompanying consolidated financial statements because the Company believes that the realization of the Company’s
net deferred tax assets of approximately $875,760 was not considered more likely than not and accordingly, the potential tax benefits
of the net loss carry-forwards are offset by a full valuation allowance.
Deferred
tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred
tax assets because of the uncertainty regarding its realizability.
The
statutory rate and the effective tax rate for and as of December 31, 2020 was 21% (2019 – 21%).
Components
of the unrealized deferred tax assets:
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Net deferred tax assets – Non-current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected income tax benefit from NOL carry-forwards
|
|
|
875,760
|
|
|
|
636,814
|
|
Less valuation allowance
|
|
|
(875,760
|
)
|
|
|
(636,814
|
)
|
Deferred tax assets, net of valuation allowance
|
|
$
|
-
|
|
|
|
-
|
|
Income
Tax Provision in the Statements of Operations
A
reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes
is as follows:
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
|
$
|
|
|
$
|
|
Loss from continuing operations
|
|
|
(4,124,783
|
)
|
|
|
(399,719
|
)
|
|
|
|
|
|
|
|
|
|
Expected income tax recovery from net loss
|
|
|
(866,204
|
)
|
|
|
(83,941
|
)
|
Non-deductible expenses
|
|
|
496,375
|
|
|
|
148
|
|
Change in valuation allowance
|
|
|
369,829
|
|
|
|
83,793
|
|
|
|
|
—
|
|
|
|
—
|
|
The
Company is neither under examination by any taxing authority, nor has it been notified of any impending examination. The Company’s
tax years for its Federal and State jurisdictions which are currently open for examination are the years of 2016 - 2020.
Note 11- Lease
The
Company entered into an operating lease agreement with a scheduled commencement date on January 15, 2020 for a sixty-seven-month term,
with an option to renew for a five-year term.
The
Company adopted ASC 842 – Leases using the modified retrospective cumulative catch-up approach beginning on January 1, 2019. Under
this approach, the Company did not restate its comparative amounts and recognized a right-of-use asset equal to the present value of
the future lease payments. The Company elected to apply the practical expedient to only transition contracts which were previously identified
as leases and elected to not recognize right-of-use assets and lease obligations for leases of low value assets.
When
measuring the right of use liabilities, the Company discounted lease payments using its incremental borrowing rate at January 15, 2020.
The weighted-average-rate applied is 12%.
|
|
$
|
|
Operating lease right-of-use asset – initial recognition
|
|
|
879,635
|
|
Amortization
|
|
|
(157,547
|
)
|
Balance at December 31, 2020
|
|
|
722,088
|
|
|
|
|
|
|
Right of use liabilities – operating leases – initial recognition
|
|
|
879,635
|
|
Principal repayment
|
|
|
(106,631
|
)
|
Balance at December 31, 2020
|
|
|
773,004
|
|
|
|
|
|
|
Current portion of right of use liabilities – operating leases
|
|
|
115,547
|
|
Noncurrent portion of right of use liabilities – operating leases
|
|
|
657,457
|
|
The
operating lease expense was $217,919 for the twelve months ended December 31, 2020 and included in the general and
administrative expenses.
The
following table represents the contractual undiscounted cash flows for right of use liabilities – operating leases due within twelve
months of December 31,
|
|
$
|
|
2021
|
|
|
211,114
|
|
2022
|
|
|
216,392
|
|
2023
|
|
|
221,802
|
|
2024
|
|
|
227,347
|
|
2025
|
|
|
135,934
|
|
|
|
|
|
|
Total minimum lease payments
|
|
|
1,012,589
|
|
Less: effect of discounting
|
|
|
(239,585
|
)
|
Present value of future minimum lease payments
|
|
|
773,004
|
|
Less: current portion of right of use liabilities – operating leases
|
|
|
115,547
|
|
Noncurrent portion of right of use liabilities – operating leases
|
|
|
657,457
|
|
Note
12 - Subsequent Events
Small
Business Administration Loans
On
March 31, 2021, Bridgeway was approved for a SBA Loan-1in the amount of $723,743 and on March 24, 2021 was approved for an SBA
Loan-2 in the original principal amount of $150,000. SBA Loan-1 shall be eligible for forgiveness if during the 8-to-24-week covered
period following disbursement: (i) employee and compensation levels are maintained; (ii) the loan proceeds are spent on payroll costs
and other eligible expenses and (iii) at least 60% of the proceeds are spent on payroll costs. For any portion of the SBA Loan-1 that
is not forgiven, it will bear interest at a 1% fixed APR for the life of the loan with payments deferred for ten (10) months. With respect
to the SBA Loan-2, interest will accrue at the rate of 3.75% per annum with installment payments, including principal and interest, of
$731.00 per month beginning on the twelve (12) month anniversary of the funding date. The balance of principal and interest will be payable
on the thirty (30) year anniversary of the funding date.
Subsequent
Financing Transaction
On
January 20, 2021 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement with
Geneva Roth Remark Holdings, Inc. (the “Note Purchaser”), pursuant to which the Note Purchaser purchased from the
Company (a) the 9% convertible promissory note of the Company in an aggregate principal amount of $48,000 ($3,000 OID) (the
“9% Note III”) convertible into Shares (the “Conversion Shares”) subject to a beneficial ownership cap of no
greater than 4.99% in the case of the Purchaser (the “Maximum share Amount”). The maturity date of the 9% Note III shall
be on January 20, 2022 (the “Maturity Date”) and is the date upon which the principal amount of the 9% Note, as well as
all accrued and unpaid interest and other fees, shall be due and payable. The Note also has a 22% default interest
rate.
Under
the terms of the 9% Note III, the Note Purchaser shall have the right at any time during the period beginning on the date which is one
hundred eighty (180) days following the date of the 9% Note III and ending on the later of: (i) the Maturity Date and (ii) the date of
payment of the default amount, to convert (a “Conversion”) all or any part of the outstanding and unpaid principal amount
and accrued and unpaid interest of the 9% Note III, and any other amounts owed under the 9% Note III, into shares at the Conversion Price;
provided, however, that in no event shall the Note Purchaser be entitled to convert any portion of any of the 9% Note III in excess of
that portion of the 9% Note III upon conversion of which the sum of (a) the number of shares owned by the Note Purchaser and its affiliates
and (b) the number of shares issuable upon the conversion of the portion of the 9% Note III with respect to which the determination of
this provision is being made, would result in beneficial ownership by the Note Purchaser and its affiliates of more than the Maximum
Share Amount. The “Conversion Price” shall be equal to the Variable Conversion Price (as defined below) (subject to equitable
adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities
of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events).
The “Variable Conversion Price” shall mean 65% multiplied by the Market Price (representing a discount rate of 35%). “Market
Price” means the average of the three (3) lowest trading prices for the shares during the fifteen (15) trading day period ending
on the latest complete trading day prior to the Conversion Date.
Class
A and Class B Common Stock Reverse Stock Split
On
October 16, 2020, the board of directors (the “Board”) of the Company and a stockholder holding a majority of the voting
power of the Company’s voting stock (the “Majority Stockholder”) took action by joint written consent in lieu of a
meeting to: (i) ratify the approval of an amendment to the Company’s certificate of incorporation, which amendment was filed with
the Delaware Secretary of State on December 19, 2019 and was declared effective on January 20, 2020 (the “December 2019 Amendment”),
which (i) changed the Company’s name from “Capital Park Holdings Corp.” to “Bridgeway National Corp.” and
(ii) increased our authorized capital stock from 30,000,000 shares to 250,000,000 shares, of which 168,750,000 shares
were designated as Class A Common Stock (the “Class A Common Stock”), 18,750,000 shares were designated as Class B
Common Stock (the “Class B Common Stock”) and 62,500,000 shares were designated as preferred stock, of which 62,374,819
shares were previously designated as Series A Preferred Stock (the “Series A Preferred Stock”) and 125,181 shares
were previously designated as Series B Preferred Stock (the “Series B Preferred Stock”); (ii) approve a further amendment
to the Company’s certificate of incorporation (the “Recapitalization Amendment”) to increase the Common Stock from
187,500,000 shares to 400,000,000 shares, of which 360,000,000 shares will be designated as the Class A Common Stock
and 40,000,000 shares will be designated as the Class B Common Stock and (iii) approve an additional amendment to the certificate
of incorporation to effect a reverse stock split of our outstanding shares of our Class A Common Stock and Class B Common Stock at the
at the ratio of one-for-4 (the “Reverse Stock Split Amendment,” and together with the December 2019 Amendment and the Recapitalization
Amendment, collectively, the “Amendments”).
The
December 2019 Amendment will not be deemed ratified, and the Recapitalization Amendment and Reverse Stock Split Amendment will not be
made effective until at least twenty (20) calendar days after the mailing of the Information Statement accompanying this Notice. In addition,
the Reverse Stock Split Amendment will not be made effective until the Recapitalization Amendment is made effective and we receive FINRA
approval for the Reverse Stock Split from the Financial Industry Regulatory Authority (“FINRA”). We received written notification
that FINRA had approved the Reverse Stock Split on February 17, 2021.