Notes
to Unaudited Consolidated Condensed Financial Statements
September
30, 2021
NOTE
1 – SUMMARY OF BUSINESS AND BASIS OF PRESENTATION
Organization
and Business
Cruzani,
Inc. (“Cruzani” or the “Company”) had been a franchise development company that builds and represents popular
franchise concepts, and other related businesses, throughout the United States as well as international markets. The Company was originally
formed as a limited liability company on February 5, 1999 under the name The Powerhouse, L.L.C. pursuant to the laws of the State of
Oklahoma. On November 9, 2006, Powerhouse Productions, L.L.C. filed Articles of Conversion changing the entity from a limited liability
company to a corporation under the name Harcom Productions, Inc. On January 25, 2010, Articles of Merger were filed with the State of
Oklahoma merging U.S. Highland, Inc., an Oklahoma corporation into Harcom Productions, Inc. and the name of the corporation was changed
to US Highland, Inc. US Highland, Inc. was a recreational power sports Original Equipment Manufacturer (“OEM”), developing
motorcycles, quads, single cylinder engines, and v-twin engines under its own brand and for other OEMs. During 2017, the Company exited
the recreational power sports OEM and leisure activity vehicles markets.
On
June 29, 2018, the Company filed Amended and Restated Articles of Incorporation with the State of Nevada to change its name to Cruzani,
Inc.
On June 30, 2018, Supreme Sweets Acquisition
Corp. (n/k/a Oventa, Inc.), a subsidiary of the Company, and the Company (collectively, the “Company”) entered into an asset
purchase agreement (the “Asset Purchase Agreement”) with Supreme Sweets Inc. and 2498411 Ontario, Inc., as sellers (collectively,
the “Seller”), pursuant to which in exchange for CAD $200,000 and a twenty percent (20%) interest in Oventa, Inc., the
Company agreed to acquire the trade secret assets of Seller upon the terms and subject to the conditions set forth in the Asset Purchase
Agreement. A second closing occurred on July 31, 2018, pursuant to which the Company acquired the furniture, fixtures and equipment
of Seller in exchange for CAD $100,000. Seller is engaged in the business of preparing delicious snacks, pastries and baked goods
with high quality ingredients for exceptional taste, including low calorie and gluten-free alternatives. The Asset Purchase Agreement
included a provision, pursuant to which the Company could unwind the transaction if certain milestones were not achieved. The milestones
contemplated in the Asset Purchase Agreement were not met, and accordingly, on February 7, 2019,
effective as of December 31, 2018, the Company terminated the Asset Purchase Agreement with Supreme Sweets Inc. and 2498411 Ontario, Inc,
by written notice to the Seller, and the Company unwound the transaction. The $339,813 of capital injected into Oventa, Inc was written
off as uncollectable by September 30, 2021.
On
September 27, 2018, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Sandrea
Gibson, as seller (the “Seller”), and Recipe Food Co., as the target (the “Target”), pursuant to which in exchange
for up to CAD $237,000, the Company agreed to acquire 80% of the issued and outstanding stock of the Target from the Seller upon
the terms and subject to the conditions set forth in the Stock Purchase Agreement. There were difficulties integrating the Target into
the Company group, which forced the Company to cease injecting additional capital into the Target and recognize a loss of $102,552 for
amounts that had already been loaned to the Target.
On
July 8, 2019, Mr. Dickson entered into a Securities Purchase Agreement (“Purchase Agreement”) with Conrad Huss to sell 5,000,000
shares of Series C Preferred and 5,000 shares of Series B preferred Stock held by Mr. Dickson. As a result, Mr. Huss acquired the right
to vote 99.06 % of the voting control of the Company. The Series B Preferred Stock is also convertible into common stock which, in the
aggregate, would represent up to .01% of the outstanding common stock after the conversion. The Series B Preferred Stock is also convertible
into common stock which, in the aggregate, would represent up to 99.05% of the outstanding common stock after the conversion.
On
July 8, 2019, Everett Dickson, who had been the sole officer of the Company, resigned as an officer of the Company, and Conrad Huss was
appointed the Interim President and Chief Executive Officer of the Company. Mr. Huss is the sole beneficial owner of 5,000,000 and 5,000
shares of Series B and C Preferred Stocks, respectively. Mr. Dickson also resigned as a director of the Company, effective on July 8th,
2019. Mr. Dickson’s resignation was not the result of any disagreement with the management of the Company.
Basis
of Presentation
The
accompanying unaudited interim consolidated condensed financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (“U.S. GAAP”). These unaudited consolidated condensed financial statements
should be read in conjunction with the audited financial statements and footnotes for the year ended December 31, 2020 included on the
Company’s Form 10-K. The results of the three months ended September 30, 2021 are not necessarily indicative of the results to
be expected for the full year ending December 31, 2021.
In
the opinion of management, all adjustments necessary to present fairly the financial position as of September 30, 2021 and the results
of operations and cash flows presented herein have been included in the financial statements. All such adjustments are of a normal and
recurring nature. Interim results are not necessarily indicative of results of operations for the full year.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less when purchased to be cash equivalents.
Concentrations
of Credit Risk
We
maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor
our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant
credit risk on cash.
Reclassifications
Certain reclassifications have been made to the
prior year financial information to conform to the presentation used in the financial statements for the nine months ended September 30,
2021. There is no effect on the accumulated deficit as the result of these reclassifications.
Principles
of Consolidation
The
accompanying unaudited interim consolidated condensed financial statements include the accounts of the Company. All financial information
has been prepared in conformity with accounting principles generally accepted in the United States of America. All significant intercompany
transactions and balances have been eliminated.
Fair
value of financial instruments
The
Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial
instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure
the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles
generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency
and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which
prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. 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. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
|
|
Level 1:
|
Quoted market prices available
in active markets for identical assets or liabilities as of the reporting date.
|
|
|
Level 2:
|
Pricing inputs other than
quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
|
|
|
Level 3:
|
Pricing inputs that are
generally unobservable inputs and not corroborated by market data.
|
The
carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate
their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of
such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial
arrangements at September 30, 2021 and December 31, 2020.
Convertible
Notes with Fixed Rate Conversion Options
The
Company may enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding
principal and accrued interest may be converted by the holder, into common shares at a fixed discount to the market price of the common
stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. The Company
records the convertible note liability at its fixed monetary amount by measuring and recording a premium, as applicable, on the note
date with a charge to interest expense in accordance with ASC 480 - “Distinguishing Liabilities from Equity”.
Recently
issued accounting pronouncements
The
Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on
the 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 financial position or results of operations.
NOTE
2 – GOING CONCERN
The
accompanying unaudited interim consolidated condensed financial statements have been prepared in conformity with generally accepted accounting
principles which contemplate continuation of the Company on a going-concern basis. The going concern basis assumes that assets are realized,
and liabilities are extinguished in the ordinary course of business at amounts disclosed in the consolidated financial statements. The
Company has incurred recurring losses from operations and has an accumulated deficit of ($82,726,684). The Company’s ability to
continue as a going concern depends upon its ability to obtain adequate funding to support its operations through continuing investments
of debt and/or equity by qualified investors/creditors, internally generated working capital and monetization of intellectual property
assets. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial
statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management
is currently pursuing a business strategy which includes raising the necessary funds to finance the Company’s development and marketing
efforts.
NOTE
3 – LOANS PAYABLE
The
loan payable balances are as follows:
|
|
|
Rate
|
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
|
Loan 1
|
|
|
1
|
%
|
|
$
|
27,000
|
|
|
$
|
27,000
|
|
|
Loan 2
|
|
|
1
|
%
|
|
|
3,000
|
|
|
|
3,000
|
|
|
Loan 3
|
|
|
8
|
%
|
|
|
64,000
|
|
|
|
64,000
|
|
|
Loan 4
|
|
|
8
|
%
|
|
|
160,500
|
|
|
|
160,500
|
|
|
Total
|
|
|
|
|
|
$
|
254,500
|
|
|
$
|
254,500
|
|
Above
notes are past due as of the issuance of these financial statements.
NOTE
4 – CONVERTIBLE NOTES
The
following table summarizes the convertible notes as of September 30, 2021 and December 31, 2020:
|
|
|
Date
|
|
|
Interest
|
|
|
Maturity
|
|
|
|
|
|
|
|
|
Creditor
|
|
Issued
|
|
|
Rate
|
|
|
Date
|
|
|
30-Sep-21
|
|
|
31-Dec-20
|
|
|
Travel Data Solutions, Inc.
|
|
|
18-Nov-17
|
|
|
|
10
|
%
|
|
|
30-Nov-19
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
(1) GW Holdings Group
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
20,000
|
|
|
|
60,750
|
|
|
Travel Data Solutions, Inc.
|
|
|
18-Jan-19
|
|
|
|
10
|
%
|
|
|
31-Jan-20
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Oasis Capital, LLC (See Note 5)
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
1,020,086
|
|
|
Trillium Partners, LP
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
154,500
|
|
|
|
-
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Apr-20
|
|
|
|
10
|
%
|
|
|
31-Dec-20
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Livingston Asset Management, LLC
|
|
|
1-May-20
|
|
|
|
10
|
%
|
|
|
31-Jan-21
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Livingston Asset Management, LLC
|
|
|
20-May-20
|
|
|
|
10
|
%
|
|
|
20-Feb-21
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Jun-20
|
|
|
|
10
|
%
|
|
|
10-Mar-21
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Livingston Asset Management, LLC
|
|
|
11-Jun-20
|
|
|
|
10
|
%
|
|
|
01-Feb-21
|
|
|
|
1,100
|
|
|
|
1,100
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Jul-20
|
|
|
|
10
|
%
|
|
|
31-Mar-21
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Livingston Asset Management, LLC
|
|
|
20-Jul-20
|
|
|
|
10
|
%
|
|
|
20-Apr-21
|
|
|
|
4,500
|
|
|
|
4,500
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Aug-20
|
|
|
|
10
|
%
|
|
|
30-Apr-21
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Livingston Asset Management, LLC
|
|
|
14-Aug-20
|
|
|
|
10
|
%
|
|
|
14-May-21
|
|
|
|
9,500
|
|
|
|
9,500
|
|
|
Livingston Asset Management, LLC
|
|
|
24-Aug-20
|
|
|
|
10
|
%
|
|
|
24-May-21
|
|
|
|
12,500
|
|
|
|
12,500
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Sep-20
|
|
|
|
10
|
%
|
|
|
30-Jun-21
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Oct-20
|
|
|
|
10
|
%
|
|
|
31-Jul-21
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Nov-20
|
|
|
|
10
|
%
|
|
|
30-Aug-21
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Dec-20
|
|
|
|
10
|
%
|
|
|
30-Sep-21
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Jan-21
|
|
|
|
10
|
%
|
|
|
31-Oct-21
|
|
|
|
25,000
|
|
|
|
-
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Feb-21
|
|
|
|
10
|
%
|
|
|
30-Nov-21
|
|
|
|
25,000
|
|
|
|
-
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Mar-21
|
|
|
|
10
|
%
|
|
|
31-Dec-21
|
|
|
|
25,000
|
|
|
|
-
|
|
|
Trillium Partners, LP
|
|
|
24-Mar-21
|
|
|
|
10
|
%
|
|
|
31-Dec-21
|
|
|
|
17,000
|
|
|
|
-
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Apr-21
|
|
|
|
10
|
%
|
|
|
31-Jan-22
|
|
|
|
25,000
|
|
|
|
-
|
|
|
Livingston Asset Management, LLC
|
|
|
1-May-21
|
|
|
|
10
|
%
|
|
|
28-Feb-22
|
|
|
|
25,000
|
|
|
|
-
|
|
|
Trillium Partners, LP
|
|
|
25-May-21
|
|
|
|
12
|
%
|
|
|
25-May-22
|
|
|
|
22,000
|
|
|
|
-
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Jun-21
|
|
|
|
10
|
%
|
|
|
31-Mar-22
|
|
|
|
25,000
|
|
|
|
-
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Jul-21
|
|
|
|
10
|
%
|
|
|
30-Apr-22
|
|
|
|
25,000
|
|
|
|
-
|
|
|
Trillium Partners, LP
|
|
|
6-Jul-21
|
|
|
|
12
|
%
|
|
|
6-Jul-22
|
|
|
|
22,000
|
|
|
|
-
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Aug-21
|
|
|
|
10
|
%
|
|
|
31-Jul-22
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livingston Asset Management,
LLC
|
|
|
1-Sep-21
|
|
|
|
10
|
%
|
|
|
31-Aug-22
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes payable-Gross
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
848,100
|
|
|
$
|
1,468,436
|
|
|
Less: discount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
(77,004
|
)
|
|
Convertible notes payable-net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
848,100
|
|
|
$
|
1,391,432
|
|
As
of September 30, 2021, if fully converted, the convertible debt would be convertible into 1,598,841,558 shares of common stock
|
(1) GW Holdings Group
|
|
|
|
|
|
|
|
|
|
Balance after settlement
|
|
$
|
348,548
|
|
|
Conversions
|
|
|
(328,548
|
)
|
|
|
|
|
|
|
|
Remaining balance at September 30, 2021
|
|
$
|
20,000
|
|
|
(2) Oasis Capital, LLC
|
|
|
|
|
|
|
|
|
|
Balance at 12/31/20
|
|
$
|
1,020,086
|
|
|
Conversions
|
|
|
(618,329
|
)
|
|
Transfer from accrued interest
|
|
|
248,243
|
|
|
Total sold to Trillium Partners LP
|
|
|
(650,000
|
)
|
|
|
|
|
|
|
|
Remaining balance at September 30, 2021
|
|
$
|
-
|
|
|
(3) Trillium Partners, LP
|
|
|
|
|
|
|
|
|
|
Debt purchased from Oasis Capital, LLC
|
|
$
|
650,000
|
|
|
Conversions
|
|
|
(495,500
|
)
|
|
|
|
|
|
|
|
Remaining balance at September 30, 2021
|
|
$
|
154,500
|
|
NOTE
5 – CONTINGENCY ARISING INDEBTEDNESS OWED TO OASIS CAPITAL, LLC
A
contingency arises when there is a situation for which the outcome is uncertain, and which should be resolved in the future,
Generally Accepted Accounting Principles require recognition of only those losses that are probable and for which a loss amount
can be reasonably estimated.
The
following details the nature of the contingency with Oasis Capital LLC (“Oasis”). In the normal course of its business, Oasis
files notices to convert (“conversion notices”) a portion of its outstanding ownership of the Company’s indebtedness
into shares of common stock. As a customary procedure for the annual audit for the period ended December 31, 2020, the Company’s
auditors confirmed its outstanding balance of the indebtedness and related accrued interest. During the quarter ended September 30, 2021,
Oasis submitted one such conversion which stated that the outstanding indebtedness was far greater than that which was on the Company’s
books. The total amount of the increased indebtedness was approximately $1.5 million. After investigation, the Company determined that
the difference related to liquidated damages that the Company does not believe that it owes.
Since
the Company believes that the loss is not probable and no litigation has been pursued at this time, there has been no recognition of
this liability on the books and records of the Company.
NOTE
6 – PUT PREMIUM ON STOCK SETTLED DEBT
At
the end of the quarter ended September 30, 2021, the Company decided to adopt ASC 480- ” Distinguishing Liabilities from Equity.”
When the enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding
principal and accrued interest may be converted by the holder, into common shares at a fixed discount to the market price of the common
stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. The Company
records the convertible note liability at its fixed monetary amount by measuring and recording a premium, as applicable, on the note
date with a charge to interest expense.
In
previous quarters, the Company had recorded such items as derivative liabilities (See Note seven). Thusly, there was a charge to put
premium on stock settled debt and a decrease to derivative liability. On a going-forward basis, all put premiums will be charged to interest
expense.
The reconciliation of put premium on stock settled debt is as follows
|
Balance at December 31, 2020
|
|
$
|
-
|
|
|
Add: transfers from derivative liability
|
|
|
1,652,421
|
|
|
Gain on new methodology for accounting for debt conversion features
|
|
|
(995,692
|
)
|
|
|
|
|
|
|
|
Balance at June 30, 2021
|
|
|
656,730
|
|
|
Add; put premium on new debt issuances
|
|
|
32,143
|
|
|
Less: put premium on convertible debt extinguished
|
|
|
(425,052
|
)
|
|
Balance at September 30, 2021
|
|
$
|
263,821
|
|
Put
premium on stock settled debt by individual note is as follows:
|
|
|
Date
|
|
|
Maturity
|
|
|
|
|
|
Discount
|
|
|
Put premium on
|
|
|
Creditor
|
|
Issued
|
|
|
Date
|
|
|
30-Sep-21
|
|
|
Percentage
|
|
|
stock settled debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GW Holdings Group
|
|
|
Various
|
|
|
|
Various
|
|
|
|
20,000
|
|
|
|
45%
|
|
|
$
|
16,714
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Apr-20
|
|
|
|
31-Dec-20
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
1-May-20
|
|
|
|
31-Jan-21
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
20-May-20
|
|
|
|
20-Feb-21
|
|
|
|
10,000
|
|
|
|
50
|
%
|
|
|
10,000
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Jun-20
|
|
|
|
10-Mar-21
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
11-Jun-20
|
|
|
|
01-Feb-21
|
|
|
|
1,100
|
|
|
|
50
|
%
|
|
|
1,100
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Jul-20
|
|
|
|
31-Mar-21
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
20-Jul-20
|
|
|
|
20-Apr-21
|
|
|
|
4,500
|
|
|
|
50
|
%
|
|
|
4,500
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Aug-20
|
|
|
|
30-Apr-21
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
14-Aug-20
|
|
|
|
14-May-21
|
|
|
|
9,500
|
|
|
|
50
|
%
|
|
|
9,500
|
|
|
Livingston Asset Management, LLC
|
|
|
24-Aug-20
|
|
|
|
24-May-21
|
|
|
|
12,500
|
|
|
|
50
|
%
|
|
|
12,500
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Sep-20
|
|
|
|
30-Jun-21
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Oct-20
|
|
|
|
31-Jul-21
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Nov-20
|
|
|
|
30-Aug-21
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Dec-20
|
|
|
|
30-Sep-21
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Jan-21
|
|
|
|
31-Oct-21
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Feb-21
|
|
|
|
30-Nov-21
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Mar-21
|
|
|
|
31-Dec-21
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Apr-21
|
|
|
|
31-Jan-22
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
1-May-21
|
|
|
|
28-Feb-22
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Jun-21
|
|
|
|
31-Mar-22
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Trillium Partners, LP
|
|
|
24-Mar-21
|
|
|
|
30-Apr-22
|
|
|
|
17,000
|
|
|
|
50
|
%
|
|
|
17,000
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Jul-21
|
|
|
|
31-May-22
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Aug-21
|
|
|
|
30-Jun-22
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
Livingston Asset Management, LLC
|
|
|
1-Sep-21
|
|
|
|
31-Jul-22
|
|
|
|
25,000
|
|
|
|
30
|
%
|
|
|
10,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Put premium on stock settled debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
263,821
|
|
NOTE
7 – DERIVATIVE LIABILITIES
The
embedded conversion options of the Company’s convertible debentures summarized in Note 4, and its convertible preferred Series
E stock. contain conversion features that qualify for embedded derivative classification. The fair value of these liabilities is re-measured
at the end of every reporting period and the change in fair value is reported in the statement of operations as a gain or loss on derivative
financial instruments.
The
table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities:
|
Derivative liability at March 31, 2021
|
|
$
|
2,140,159
|
|
|
Less; conversions
|
|
|
(1,322,907
|
)
|
|
Add: new debt issuances
|
|
|
94,143
|
|
|
Change in fair value of derivative liability
|
|
|
741,027
|
|
|
Transfer to put premium
|
|
|
(1,652,421
|
)
|
|
Derivative liability at September 30, 2021
|
|
$
|
-
|
|
The
Company uses Level 3 inputs for its valuation methodology for its conversion option liabilities as their fair values were determined
by using the Binomial option pricing model based on various assumptions. The model incorporates the price of a share of the Company’s
common stock (as quoted on the Over the Counter Bulletin Board), volatility, risk free rate, dividend rate and estimated life. Significant
changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As, required, these are
classified based on the lowest level of input that is significant to the fair value measurement.
The
following table shows the assumptions used in the calculations of its derivatives:
|
|
|
Expected
Volatility
|
|
|
Risk-free Interest Rate
|
|
|
Expected Dividend Yield
|
|
|
Expected Life (in years)
|
|
|
At December 31, 2020
|
|
|
251.93
|
%
|
|
|
.62
|
%
|
|
|
0
|
%
|
|
|
0.25 – 0.75
|
|
NOTE
8 – COMMON STOCK
Reincorporation
in State of Wyoming
On
June 21, 2021, the Company received approval from the State of Wyoming to reincorporate in that state and increase its authorized share
count to 10,000,000,000.
During
the six months ended September 30, 2021, the Company issued 4,477,842,359 shares of common stock for the extinguishment of convertible
debt as follows:
|
Creditor
|
|
Date
|
|
Shares
|
|
|
Principal
|
|
|
Accrued interest
|
|
|
Fees
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oasis Capital
LLC
|
|
14-Jan-21
|
|
|
132,565,384
|
|
|
$
|
29,827
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
29,827
|
|
|
Oasis Capital LLC
|
|
27-Jan-21
|
|
|
98,310,546
|
|
|
|
22,120
|
|
|
|
100
|
|
|
|
-
|
|
|
|
22,220
|
|
|
Oasis Capital LLC
|
|
10-Feb-21
|
|
|
155,422,101
|
|
|
|
41,964
|
|
|
|
-
|
|
|
|
-
|
|
|
|
41,964
|
|
|
GW Holdings Group LLC
|
|
2-Mar-21
|
|
|
20,203,797
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
|
Oasis Capital, LLC
|
|
8-Mar-21
|
|
|
175,494,746
|
|
|
|
71,075
|
|
|
|
-
|
|
|
|
-
|
|
|
|
71,075
|
|
|
GW Holdings Group LLC
|
|
9-Mar-21
|
|
|
3,818,181
|
|
|
|
2,520
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,520
|
|
|
Trillium Partners LLC
|
|
10-Mar-21
|
|
|
86,508,841
|
|
|
|
-
|
|
|
|
37,039
|
|
|
|
1,025
|
|
|
|
38,064
|
|
|
Trillium Partners LLC
|
|
12-Mar-21
|
|
|
86,900,826
|
|
|
|
42,000
|
|
|
|
9,550
|
|
|
|
1,025
|
|
|
|
52,575
|
|
|
Trillium Partners LLC
|
|
19-Mar-21
|
|
|
89,695,455
|
|
|
|
58,000
|
|
|
|
174
|
|
|
|
1,025
|
|
|
|
59,199
|
|
|
Oasis Capital LLC
|
|
19-Mar-21
|
|
|
193,311,158
|
|
|
|
95,689
|
|
|
|
-
|
|
|
|
-
|
|
|
|
95,689
|
|
|
Oasis Capital LLC
|
|
6-Apr-21
|
|
|
203,298,776
|
|
|
|
91,484
|
|
|
|
-
|
|
|
|
-
|
|
|
|
91,484
|
|
|
Trillium Partners LLC
|
|
12-Apr-21
|
|
|
92,267,673
|
|
|
|
25,000
|
|
|
|
24,722
|
|
|
|
1,025
|
|
|
|
50,747
|
|
|
Oasis Capital LLC
|
|
26-Apr-21
|
|
|
50,000,000
|
|
|
|
20,250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,250
|
|
|
Oasis Capital LLC
|
|
4-May-21
|
|
|
50,000,000
|
|
|
|
20,250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,250
|
|
|
Trillium Partners LLC
|
|
29-Apr-21
|
|
|
53,055,556
|
|
|
|
25,000
|
|
|
|
238
|
|
|
|
1,025
|
|
|
|
26,263
|
|
|
Trillium Partners LLC
|
|
5-May-21
|
|
|
80,857,455
|
|
|
|
-
|
|
|
|
38,994
|
|
|
|
1,030
|
|
|
|
40,024
|
|
|
Oasis Capital LLC
|
|
22-Jun-21
|
|
|
296,999,838
|
|
|
|
106,919
|
|
|
|
-
|
|
|
|
-
|
|
|
|
106,919
|
|
|
Trillium Partners LLC
|
|
22-Jun-21
|
|
|
229,656,566
|
|
|
|
100,000
|
|
|
|
12,650
|
|
|
|
1,030
|
|
|
|
113,680
|
|
|
GW Holdings Group Inc
|
|
30-Jun-21
|
|
|
175,077,777
|
|
|
|
63,028
|
|
|
|
-
|
|
|
|
-
|
|
|
|
63,028
|
|
|
GW Holdings Group Inc
|
|
2-Jul-21
|
|
|
61,666,666
|
|
|
|
22,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22,200
|
|
|
Trillium Partners LP
|
|
6-Jul-21
|
|
|
348,195,964
|
|
|
|
86,000
|
|
|
|
104,478
|
|
|
|
1,030
|
|
|
|
191,508
|
|
|
Trillium Partners LP
|
|
13-Jul-21
|
|
|
209,870,909
|
|
|
|
114,000
|
|
|
|
399
|
|
|
|
1,030
|
|
|
|
115,429
|
|
|
GW Holdings Group Inc
|
|
14-Jul-21
|
|
|
85,555,555
|
|
|
|
30,800
|
|
|
|
-
|
|
|
|
-
|
|
|
|
30,800
|
|
|
GW Holdings Group Inc
|
|
19-Jul-21
|
|
|
187,500,000
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
|
GW Holdings Group Inc
|
|
27-Jul-21
|
|
|
125,000,000
|
|
|
|
40,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,000
|
|
|
Trillium Partners LP
|
|
2-Aug-21
|
|
|
349,108,591
|
|
|
|
45,500
|
|
|
|
107,078
|
|
|
|
1,030
|
|
|
|
153,608
|
|
|
GW Holdings Group Inc
|
|
2-Aug-21
|
|
|
187,500,000
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
|
Oasis Capital, LLC
|
|
2-Aug-21
|
|
|
150,000,000
|
|
|
|
47,250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
47,250
|
|
|
GW Holdings Group Inc
|
|
2-Aug-21
|
|
|
100,000,000
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
|
Oasis Capital, LLC
|
|
3-Sep-21
|
|
|
150,000,000
|
|
|
|
33,750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,750
|
|
|
Oasis Capital, LLC
|
|
21-Sep-21
|
|
|
150,000,000
|
|
|
|
33,750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,750
|
|
|
GW Holdings Group Inc
|
|
23-Sep-21
|
|
|
100,000,000
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
4,477,842,359
|
|
|
$
|
1,438,377
|
|
|
$
|
335,422
|
|
|
$
|
10,275
|
|
|
$
|
1,784,073
|
|
The
Company issued shares for the extinguishment of Series E Preferred stock as follows:
|
|
|
|
|
|
|
|
|
Preferred
|
|
|
Accrued
|
|
|
|
|
|
|
|
|
Recipient of shares
|
|
Date
|
|
|
Shares
|
|
|
stock
|
|
|
Dividend
|
|
|
Fees
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trillium Partners LLC
|
|
|
25-Mar-21
|
|
|
|
49,871,795
|
|
|
$
|
20,370
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
20,370
|
|
|
Trillium Partners LLC
|
|
|
6-Apr-21
|
|
|
|
39,371,795
|
|
|
|
14,330
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,330
|
|
|
|
|
|
|
|
|
|
89,243,590
|
|
|
$
|
34,700
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
34,700
|
|
NOTE
9 – PREFERRED STOCK
Series
A Convertible Preferred Stock, has a par value of $0.01, may be converted at the holder’s election into shares of common
stock at the conversion rate of ten shares of common stock for one share of Series A Preferred Stock. Each share is entitled to
10 votes, voting with the common stock as a single class, has liquidation rights of $2.00 per share and is not entitled to receive dividends.
As of September 30, 2021, and December 31, 2020, there are 3,381,520 and 3,381,520 shares of Series A preferred stock outstanding, respectively.
Series
B Convertible Preferred Stock, has a par value of $0.01, may be converted at the holder’s election into shares of common
stock at the conversion rate of 4,000 shares of common stock for one share of Series B Preferred Stock. Each share is entitled to
4,000 votes, voting with the common stock as a single class, has liquidation rights of $0.01 per share and is not entitled to receive
dividends. As of September 30, 2021, and December 31, 2020, there are 5,000 and 5,000 shares of Series B preferred stock outstanding,
respectively.
Series
C Convertible Preferred Stock, has a par value of $0.01, may be converted at the holder’s election into shares of common
stock at the conversion rate of 400 shares of common stock for one share of Series C Preferred Stock. Each share is entitled to
400 votes, voting with the common stock as a single class, has liquidation rights of $0.01 per share and is entitled to receive four
hundred times the dividends declared and paid with respect to each share of Common Stock. As of September 30, 2021, and December 31,
2020, there are 5,000,000 and 5,000,000 shares of Series C preferred stock outstanding, respectively.
Series
D Convertible Preferred Stock, has a par value of $0.0001, may be converted at a ratio of the Stated Value plus dividends accrued
but unpaid divided by the fixed conversion price of $0.0015, which conversion price is subject to adjustment. Series D is non-voting,
has liquidation rights to be paid in cash, before any payment to common or junior stock, 140% of the Stated Value ($2.00) per share plus
any dividends accrued but unpaid thereon and is entitled to 8% cumulative dividends. As of September 30, 2021, and December 31, 2020,
there are 125,000 and 125,000 shares of Series D preferred stock outstanding, respectively.
Series
E Convertible Preferred Stock, has a par value of $0.001, and a stated value of $1.00 per share, subject to adjustment. The shares
of Series E Convertible Preferred Stock can convert at a conversion price that is equal to the amount that is 61% of the lowest trading
price of the Company’s common stock during the 20 trading days immediately preceding such conversion. The shares of Series E Convertible
Preferred Stock are subject to redemption by the Company at its option from the date of issuance until the date that is 180 days therefrom,
subject to premium that ranges from 120% to 145%, increasing by 5% during each 30-day period following issuance. Series E carries a 12%
cumulative dividend, which will increase to 22% upon an event of default, is non-voting, and has liquidation rights to be paid in cash,
before any payment to common or junior stock.
On
July 1, 2018, the Company entered into a Stock Purchase Agreement with Device Corp. (“Device”) whereby Device will purchase
up to $250,000 Series E preferred stock for $1 per share. As of December 31, 2019, the Company has received $166,331 for the purchase
of the Series E. Originally, these purchases were recorded as debt because the Preferred shares were not issued. As of the Balance sheet
date and the date of this report, these shares have not been issued to the Purchaser.
On
January 15, 2019, the Company entered into a Stock Purchase Agreement with Geneva Roth Remark Holdings, Inc. (“Geneva”) whereby
Geneva will purchase 53,000 shares of Series E preferred stock for $53,000.During th4e first quarter of Fiscal 2021, Geneva sold their
position to Trillium Partners, LP (“Trillium”) On March 25, 2021, Trillium converted 20,370 shares of Series E preferred
stock into 49,871,795 shares of common stock. As of September 30, 2021, and December 31, 2020, there are -0-and 34,985 shares of Series
E preferred stock outstanding, respectively.
As
of September 30, 2021, all classes of convertible preferred stock were convertible into 2,137,148,533 shares of common stock.
NOTE
10 – RELATED PARTY TRANSACTIONS
On
July 8, 2019, the Company executed an employment agreement with Conrad Huss, the new CEO. The agreement provides for a salary of $10,000
per month. As of September 30, 2021,
$382,000 has been credited to accrued compensation.
NOTE
11 – LOSS ON DEBT LITIGATION
On
February 16, 2021, the Company received notice that a default judgment had been entered against it in the Southern District of New York.
The total amount of the judgment was for $348,548. The Company incurred a loss on the settlement as follows:
|
|
|
|
|
|
Accrued
|
|
|
|
|
|
Date of Note
|
|
Note
|
|
|
Interest
|
|
|
Total
|
|
|
17-May-16
|
|
$
|
24,000
|
|
|
$
|
11,106
|
|
|
$
|
35,106
|
|
|
16-Mar-18
|
|
|
36,750
|
|
|
|
10,280
|
|
|
|
47,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
60,750
|
|
|
$
|
21,386
|
|
|
$
|
82,136
|
|
|
Total settlement amount
|
|
$
|
348,548
|
|
|
Balance
|
|
$
|
82,136
|
|
|
|
|
$
|
266,412
|
|
NOTE
12 – GAIN ON NEW METHODOLOGY FOR ACCOUNTING FOR DEBT CONVERSION FEATURES
The
Company changed its accounting for the methodology for debt conversion features as stated in Note 6- Put premium on stock settled debt.
An one-time gain of $955,692 was recorded in regards to the transition.
NOTE
13 – COMMITMENTS AND CONTINGENCIES
During
the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates
the merits of the case in accordance with FASB ASC 450-20-50, Contingencies. The Company evaluates its exposure to the matter, possible
legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is
probable and can be reasonably estimated, it establishes the necessary accruals.
On
September 21, 2018, Pro Drive Outboards, LLC (“Pro-Drive”) filed a lawsuit against the Company, in which Pro-Drive alleges
that the Company breached a contract that Pro-Drive entered into with the Company. Pro-Drive is seeking damages in excess of $500,000.
The Company has filed an answer, including the defenses of defective service of process and statute of limitations and a motion to dismiss.
The judge granted a motion to dismiss, and the plaintiff’s deadline to appeal has passed,
thus concluding the matter. contingent liabilities that should be reflected in the financial statements.
On
February 13, 2017, Baum Glass & Jayne PLLC (“Plaintiff”) obtained a default judgment against the Company in the amount
of $27,083.74. Plaintiff has not attempted enforced collection. The amount was included in accounts payable as of September 30, 2021
and December 31, 2020.
NOTE
14 – COVID-19
The
Company, like all enterprises, is currently dealing with the impact of COVID-19 on future prospects. Recent events such as the vaccinations
mitigate, but do not eliminate, the possible adverse consequences to the domestic and international economies. Recent increases in the
Delta Variant of COVID-19 have resulted in greater infections and its ultimate impact cannot be ascertained
NOTE
15 – IMPACT OF CLIMATE CHANGE
The
Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of
climate-related financial information. The TCFD requires that the impact of climate change upon risk assessment, capital allocation and
strategic planning be discussed.
At
this time, the impact cannot be determined.
NOTE
16 – SUBSEQUENT EVENTS
Issuance
of shares of common stock
Subsequent to September 30, 2021, the Company
issued 1,860,076,291 shares for the extinguishment of $437,750 of principal interest on debt, 77,419 of accrued interest, and $7,210 in
fees as follows below:
|
|
|
|
|
|
|
|
|
|
|
Accrued
|
|
|
|
|
|
|
|
|
Creditor
|
|
Date
|
|
Shares
|
|
|
Principal
|
|
|
interest
|
|
|
Fees
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oasis Capital, LLC
|
|
01-Oct-21
|
|
|
150,000,000
|
|
|
$
|
33,750
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
33,750
|
|
|
GW Holdings Group Inc
|
|
05-Oct-21
|
|
|
100,000,000
|
|
|
|
32,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,000
|
|
|
Oasis Capital, LLC
|
|
13-Oct-21
|
|
|
150,000,000
|
|
|
|
33,750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,750
|
|
|
Livingston Asset Management LLC
|
|
19-Oct-21
|
|
|
87,643,429
|
|
|
|
25,000
|
|
|
|
4,645
|
|
|
|
1,030
|
|
|
|
30,675
|
|
|
Oasis Capital, LLC
|
|
22-Oct-21
|
|
|
150,000,000
|
|
|
|
33,750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,750
|
|
|
Livingston Asset Management LLC
|
|
26-Oct-21
|
|
|
88,715,857
|
|
|
|
25,000
|
|
|
|
5,021
|
|
|
|
1,030
|
|
|
|
31,051
|
|
|
Livingston Asset Management LLC
|
|
26-Oct-21
|
|
|
87,021,143
|
|
|
|
25,000
|
|
|
|
4,427
|
|
|
|
1,030
|
|
|
|
30,457
|
|
|
Livingston Asset Management LLC
|
|
27-Oct-21
|
|
|
85,995,686
|
|
|
|
25,000
|
|
|
|
4,068
|
|
|
|
1,030
|
|
|
|
30,098
|
|
|
Livingston Asset Management LLC
|
|
27-Oct-21
|
|
|
84,903,714
|
|
|
|
25,000
|
|
|
|
3,686
|
|
|
|
1,030
|
|
|
|
29,716
|
|
|
Livingston Asset Management LLC
|
|
27-Oct-21
|
|
|
83,827,371
|
|
|
|
25,000
|
|
|
|
3,310
|
|
|
|
1,030
|
|
|
|
29,340
|
|
|
Oasis Capital, LLC
|
|
28-Oct-21
|
|
|
200,000,000
|
|
|
|
-
|
|
|
|
45,000
|
|
|
|
-
|
|
|
|
45,000
|
|
|
Trillium Partners LP
|
|
01-Nov-21
|
|
|
591,969,091
|
|
|
|
154,500
|
|
|
|
7,261
|
|
|
|
1,030
|
|
|
|
162,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
1,860,076,291
|
|
|
$
|
437,750
|
|
|
$
|
77,419
|
|
|
$
|
7,210
|
|
|
$
|
522,379
|
|
Issuance
of Convertible debt
Subsequent
to September 30, 2021, the Company issued $50,000 in notes for consulting services. The Company is working on a new
consulting agreement with its existing consultant.