Notes
to the Condensed Consolidated Financial Statements
September
30, 2021
(Unaudited)
NOTE
1 - NATURE OF BUSINESS
12
ReTech Corporation is a holding company with subsidiaries that develop, sell, and install software that we believe enhance the shopping
experience for shoppers and retailers. As a holding company, we also acquire synergistic operating companies that manufacture and sell
fashion and other products to other retailers as well as selling these products online. In October 2019, we acquired retail stores in
airport terminals and casinos, solidifying us as a true Omni-Channel retailer. Owning our own brick and mortar stores will allow us to
deploy our cutting-edge software and Apps in the United States, to demonstrate its effectiveness at attracting shoppers and inducing
them to purchase. In our own stores, we plan to test, in real time, new software products which should delight consumers and generate
incremental revenues and profits for our stores. If we can show incremental revenues and profits for ourselves, we believe that other
retailers may follow our example and deploy our software solutions themselves.
With
the intended future launch of our social shopping app, which is in development in 2021 (see subsequent events), we intend to associate
with other retailers on a new shopping platform that will benefit both consumers and retailers in new and exciting ways.
During
the 4th quarter 2019 and continuing in the first quarter 2020 amid the effects of the pandemic created by COVID-19, the Company chose
to consolidate its operations around three operating entities: 12 Tech, Inc., formed in Arizona on December 26, 2019 (“12 Tech”),
12 Retail Corporation, formed on September 17, 2017 (“12 Retail”), and 12 Fashion Group, Inc, formed on June 26, 2020.
12
Retail operates its own retail outlet(s) as well as those of Bluwire Group, LLC (“Bluwire”), that operates retail stores
in airports (mainly in international terminals) and casinos. Because of their locations mainly in international terminals of airports,
all Bluwire Company owned stores and all but one royalty store remains closed due to Covid-19. 12 Retail will also serve to demonstrate
the effectiveness of the software technology created by 12 Tech in improving revenues and profits for retailers as well as providing
access to other retailers through our soon-to-be-launched social shopping app, and through our wholesale fashion business relationships.
12
Fashion Group, Inc., an Arizona Corporation, was formed on June 26, 2020, and operates our fashion wholesale and direct to consumer brands,
including Rune NYC, Social Sunday, and Red Wire Design, as well as consolidating remaining operations from our other smaller fashion
acquisitions.
Today,
12 Tech aims to provide technology solutions both online and inside retail brick and mortar that helps retailers acquire customers, reduce
overhead expenses, streamline operations, and gain incremental revenues and profits. Existing 12 Tech solutions are deployed mainly in
Asia. We are planning to deploy our solutions in the United States retail markets, which serve the world’s largest consumer economy.
While we continue to operate in Asia, we have consolidated our international units, which were focused on our technology deployment (“12
Japan” and “12 Europe”), and consolidated our software development company 12 Hong Kong, Ltd (“12 HK”),
under 12 Tech to further streamline our own operations.
As
the retail environment continues to evolve, we as both retailers and technologists, will evolve with it. We believe our developed software,
both current and in development, will delight consumers, provide contactless experiential shopping, and assist retailers with the recapture
of their revenues as they combat the dual threats of Amazon and Walmart. Our software, once fully deployed and implemented, may provide
retailers with another effective online and mobile sales channel besides their current options of Google, Amazon, and/or Facebook/Instagram.
As
an innovative retail technology company that has been built through acquisitions and ideas, we will continue to search for additional
synergistic acquisitions that bring incremental revenues and profitability and/or provide innovative software solutions.
Principal
subsidiaries
The
details of the principal subsidiaries of the Company are set out as follows:
SCHEDULE OF PRINCIPAL SUBSIDIARIES
Name
of Company
|
|
Place
of Incorporation
|
|
Date
of Incorporation
|
|
|
Acquisition
Date
|
|
Attributable
Equity
Interest %
|
|
|
Business
|
12
Retail Corporation (“12 Retail”)
|
|
Arizona,
USA
|
|
|
Sept.
18, 2017
|
|
|
Formed
by 12 ReTech Corporation
|
|
|
100
|
%
|
|
Includes
the operations of Bluwire Group, LLC (acquired October 1, 2019), and its subsidiaries and as its own operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
Fashion Group Inc
|
|
Arizona,
USA
|
|
|
June
26, 2020
|
|
|
Formed
by 12 ReTech Corporation
|
|
|
100
|
%
|
|
Includes
the operations of Red Wire Group, LLC (acquired February 19, 2019, now defunct), Rune NYC, LLC (acquired March 14, 2019), Social
Decay, LLC dba Social Sunday (acquired November 01, 2019), and other brands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
Tech Inc
|
|
Arizona,
USA
|
|
|
Dec
26,2019
|
|
|
Formed
by 12 ReTech Corporation
|
|
|
100
|
%
|
|
Includes
the operations and Intellectual Properties of 12 Japan Limited (acquired July 31, 2017), 12 Hong Kong Limited (acquired July 31,
2017), and 12 Europe AG (acquired October 26, 2017, now defunct), and its own operations
|
Reverse
Stock Split and increase in authorized shares
On
October 18, 2019, the Company completed a 100-for-1
reverse common stock split reducing the outstanding
common shares to 25,410,391.
Upon the stock split, the Company’s authorized common shares of 8,000,000,000
did not change. The reverse split has been retroactively
applied to share amounts in these consolidated financial statements. As of May 18, 2021, the authorized common stock was increased
to 20,000,000,000 shares
of common stock.
NOTE
2 - GOING CONCERN
The
Company accounts for going concern matters under the guidance of ASU 2014-15, “Presentation of Financial Statements –
Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a” Going Concern”
(“ASU 2014-15”). The guidance in ASU 2014-15 sets forth management’s responsibility to evaluate whether there is substantial
doubt about an entity’s ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when
preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events,
in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern for one year from the date
the financial statements are issued or are available to be issued. This evaluation should include consideration of conditions and events
that are either known or are reasonably knowable at the date the financial statements are issued or are available to be issued, as well
as whether it is probable that management’s plans to address the substantial doubt will be implemented and, if so, whether it is
probable that the plans will alleviate the substantial doubt.
These
interim financial statements have been prepared on a going concern basis which assumes the Company will continue to realize its assets
and discharge its liabilities in the normal course of business. As of September 30, 2021, the Company had a total stockholders deficit
totaling $19,981,598 since
inception, has not yet generated significant revenue from its operations, and will require additional funds to maintain our operations.
As of September 30, 2021, the Company had a working capital deficit of $17,362,204.
These factors raise substantial doubt regarding the Company’s
ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate
future profitable operations and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal
business operations when they become due. The Company intends to finance operating costs over the next twelve months through continued
financial support from its shareholders, the issuance of debt securities and private placements of common stock. These financial statements
do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that
might be necessary should the Company be unable to continue as a going concern.
NOTE
3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. In
our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.
Operating results for the three and nine months ended September 30, 2021, are not necessarily indicative of the results that may
be expected for the year ending December 31, 2021. Notes to the unaudited interim condensed consolidated financial statements that would
substantially duplicate the disclosures contained in the audited consolidated financial statements for fiscal year 2018 have been omitted.
This report should be read in conjunction with the audited consolidated financial statements and the footnotes thereto for the fiscal
year ended December 31, 2020, included in the Company’s Form 10-K as filed with the Securities and Exchange Commission on
June 18, 2021.
Principles
of Consolidation
The
consolidated financial statements include the accounts of the Company and its subsidiaries 12HK, 12JP, 12EU. 12 Retail, Rune NYC, LLC,
Red Wire Group, LLC (“RWG”), Bluwire Group, LLC, Social Decay LLC dba Social Sunday (“Social Sunday”) and Emotion
Fashion Group which included the brands Emotion Apparel, Lexi Luu Designs, Punkz Gear, Skipjack Dive and Dance Wear, Inc. and Cleo VII,
Inc. All inter-company accounts and transactions have been eliminated on consolidation. We currently have no investments accounted for
using the equity or cost methods of accounting.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for
certain revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial
statements include, but are not limited to, stock-based compensation, derivate instruments, accounting for preferred stock, and the valuation
of acquired assets and liabilities. The Company bases its estimates on historical experience, known trends and other market-specific
or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates
when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known.
Actual results could differ from those estimates.
Cash
and Cash Equivalents
Cash
and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three
months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to
an insignificant risk of loss in value. The Company had $94,529
and $11,784
in cash and cash equivalents at September
30, 2021 and December 31, 2020, respectively.
Revenue
Recognition
Under
Financial Accounting Standards Board (“FASB”) Topic 606, “Revenue from Contacts with Customers” (“ASC 606”),
the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration
which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model
prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii)
determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize
revenues when (or as) the Company satisfies a performance obligation.
The
Company’s revenue consists primarily of product sales from our retail stores operating in airport terminals and casinos. Revenue
for retail customers is recognized upon completion of the transaction in the point-of-sale system and satisfaction of the sale by providing
the corresponding inventory at the retail location. Revenue is recognized upon transfer of control of promised products to customers,
generally as risk of loss pass, in an amount that reflects the consideration the Company expects to receive in exchange for those products.
Shipping and handling costs are expensed as incurred and are included in cost of revenue. Sales taxes collected from customers, which
are subsequently remitted to governmental authorities, are excluded from revenue.
The
Company earns ancillary revenue including royalty payments and software licensing fees.
Business
Combinations
The
Company accounts for all business combinations in accordance with FASB ASC 805, “Business Combinations” (“ASC 805”),
using the acquisition method of accounting. Under this method, assets and liabilities, including any non-controlling interests, are recognized
at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities
assumed, and is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, may be made subsequent
to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments
subsequent to the measurement period would be recorded as income. Results of operations of the acquired entity are included in the Company’s
results from operations from the date of the acquisition onward and include amortization expense arising from acquired assets. The Company
expenses all costs as incurred related to an acquisition in the consolidated statements of operations.
Accounts
Receivable
The
Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable
and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer
payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. As of
September 30, 2021 and December 31, 2020, the Company did not have an allowance for doubtful accounts.
Inventory
Inventories,
consisting of a computer application, a mirror with a computer screen and touch monitor, are primarily accounted for using the first-in-first-out
(“FIFO”) method and are valued at the lower of cost or net realizable value. Inventories on hand are evaluated on an on-going
basis to determine if any items are obsolete or in excess of future market needs. Items determined to be obsolete are reserved for. As
of September 30, 2021 and December 31, 2020, all inventory on hand is pursuant to our Retail, Bluwire and 12 Fashion Group
(see Note 4).
Impairment
of Long-Lived Assets
The
Company reviews its long-lived assets (property and equipment) for impairment whenever events or circumstances indicate that the carrying
amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted, is less than the carrying amount of the
asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.
Goodwill
is tested annually at December 31 for impairment and upon the occurrence of certain events or substantive changes in circumstances.
As
of December 31, 2020, the Company performed its annual impairment test on all reporting units and determined that each unit had indicating
factors of impairment due to failure to meet respective sales projections. As a result, the Company fully impaired the goodwill from
each 2019 acquisition.
Convertible
Debt and Convertible Preferred Stock
When
the Company issues convertible debt or convertible preferred stock, it first evaluates the balance sheet classification of the convertible
instrument in its entirety to determine whether the instrument should be classified as a liability under ASC 480, Distinguishing Liabilities
from Equity, and second whether the conversion feature should be accounted for separately from the host instrument. A conversion feature
of a convertible debt instrument or certain convertible preferred stock would be separated from the convertible instrument and classified
as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition of an “embedded derivative”
in ASC 815, Derivatives and Hedging. Generally, characteristics that require derivative treatment include, among others, when the conversion
feature is not indexed to the Company’s equity, as defined in ASC 815-40, or when it must be settled either in cash or by issuing
stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it would be separated
from the host instrument and classified as a derivative liability carried on the consolidated balance sheet at fair value, with any changes
in its fair value recognized currently in the consolidated statements of operations.
If
a conversion feature does not meet the conditions to be separated and accounted for as an embedded derivative liability, the Company
then determines whether the conversion feature is “beneficial”. A conversion feature would be considered beneficial if the
conversion feature is “in the money” when the host instrument is issued or, under certain circumstances, later. If convertible
debt contains a beneficial conversion feature (“BCF”), the amount of the proceeds allocated to the BCF reduces the balance
of the convertible debt, creating a discount which is amortized over the debt’s term to interest expense in the consolidated statements
of operations.
When
a convertible preferred stock contains a BCF, after allocating the proceeds to the BCF, the resulting discount is either amortized over
the period beginning when the convertible preferred stock is issued up to the earliest date the conversion feature may be exercised,
or if the convertible preferred stock is immediately exercisable, the discount is fully amortized at the date of issuance. The amortization
is recorded similar to a dividend.
Financial
Instruments and Fair Value Measurements
The
Company’s financial instruments consist primarily of cash, accounts receivable, inventory, prepaid expenses and other current assets,
accounts payable and accrued liabilities, convertible notes payable and due to stockholders. The carrying amounts of such financial instruments
approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether the inputs
are observable in the market and the degree that the inputs are observable. Inputs refer broadly to the assumptions that market participants
would use in pricing the asset or liability, including assumptions about risk. Observable inputs are based on market data obtained from
sources independent of the Company. Unobservable inputs reflect our own assumptions based on the best information available in the circumstances.
The fair value hierarchy prioritizes the inputs used to measure fair value into three broad levels, defined as follows:
|
Level
1
|
—
|
Inputs
are quoted prices in active markets for identical assets or liabilities as of the reporting date.
|
|
Level
2
|
—
|
Inputs
other than quoted prices included within Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted
prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can
be corroborated with observable market data.
|
|
|
|
|
|
Level
3
|
—
|
Unobservable
inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.
This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable
inputs. Unobservable inputs for the asset or liability that reflect management’s own assumptions about the assumptions that
market participants would use in pricing the asset or liability as of the reporting date.
|
The
Company carries certain derivative financial instruments using inputs classified as Level 3 in the fair value hierarchy on the Company’s
consolidated balance sheets. Refer to Note 11 for detail on the derivative liability.
Further,
the Company determined that the certain notes should be measured and carried at fair value in the consolidated financial statements according
to ASC 480, as they are settleable in a variable number of shares based on a fixed monetary amount known at inception.
Net
Loss per Share
The
Company follows ASC 260, “Earnings per Share” (“EPS”), which requires presentation of basic EPS on the
face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator
of the basic EPS computation. In the accompanying financial statements, basic earnings (loss) per share are computed by dividing net
loss by the weighted average number of shares of common stock outstanding during the period. On October 18, 2019, the Company successfully
completed its reverse stock split and reduced its common stock outstanding by a ratio of one hundred for one. Per ASC 505-10, if a reverse
split occurs after the date of the latest reported balance sheet but before the release of the financial statements, then such changes
in the capital structure must be given retroactive effect in the balance sheet. As such, the reverse split has been retroactively applied
to these financial statements.
Diluted
earnings per share reflects the potential dilution that could occur if securities were exercised or converted into common stock or other
contracts to issue common stock resulting in the issuance of common stock that would then share in the Company’s earnings subject
to anti-dilution limitations. In a period in which the Company has a net loss, all potentially dilutive securities are excluded from
the computation of diluted shares outstanding as they would have an anti-dilutive impact. For the three months ended September 30, 2021,
potentially dilutive common shares consist of common stock issuable upon the conversion of convertible notes payable, Series A Preferred
Stock, Series B Preferred Stock, Series D-2 Preferred Stock, Series D-3 Preferred Stock, Series D-5 Preferred Stock and Series D-6 Preferred
Stock (using the if converted method). For the nine months ended September 30, 2021, potentially dilutive common shares consist of common
stock issuable upon the conversion of convertible notes payable, Series A Preferred Stock, Series B Preferred Stock, Series D-2 Preferred
Stock and Series D-3 Preferred Stock (using the if converted method).
All
potentially dilutive securities were excluded from the computation of diluted weighted average number of shares of common stock outstanding
as they would have had an anti-dilutive impact. At September 30, 2021, if all dilutive securities were converted the Company would be
in excess of their authorized shares of common stock.
Under
the provisions of ASC 260, “Earnings per Share,” basic loss per common share is computed by dividing net loss available to
common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted net loss
per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that would then share in the income of the Company, subject to anti-dilution
limitations. Potential common shares consist of the convertible promissory notes payable as of September 30, 2021 and December 31, 2020.
Contingencies
The
Company follows ASC 450-20, “Loss Contingencies” to report accounting for contingencies. Liabilities for loss contingencies
arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability
has been incurred and the amount of the assessment can be reasonably estimated. The company accrued $150,000 associated with legal contingencies
as of September 30, 2021 and December 31, 2020 as part of accrued liabilities.
Management
has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements
will not have a material effect on the Company’s financial statements.
NOTE
4 – ACQUISITIONS
Acquisitions
Red
Wire Group, LLC
On
February 19, 2019, the Company completed the acquisition of Red Wire Group, LLC. (“RWG”) a Utah limited liability company,
pursuant to a share exchange agreement whereby the Company exchanged shares of the Company’s Series D-5 and Series D-6 Preferred
Stock for 100% of the outstanding equity of RWG. Pursuant to the terms of the exchange agreement, the Company acquired (i) 75% of the
membership interests of RWG in exchange for 54,000 shares of the Company’s Series D-6 Preferred Stock (stated value of $5.00 per
share), and (ii) the remaining 25% of the membership interests of RWG in exchange for 37,500 shares of the Company’s Series D-5
Preferred Stock (stated value of $4.00 per share). The total purchase consideration for the RWG acquisition was $450,000, including the
fair value of D-5 and D-6 Preferred Stock of $420,000 and $30,000 in cash. RWG’s results of operations have been included in the
Company’s operating results for the period from February 1, 2019.
The
RWG acquisition was accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values
of the assets acquired and liabilities assumed. These values are subject to change as we perform additional reviews of our assumptions
utilized. For more information, please see filed 2019 10K.
March
16, 2020, as part of the Company’s streamlining operations and partially because of COVID-19, the Company filed a Chapter 11 Reorganization
of Red Wire Group, LLC. The Company’s 12 Fashion Group continues to service Red Wire Group customers under the trade name Red Wire
Design. The bankruptcy was discharged on or about September 2020 and all debts were extinguished. 12 Fashion Group continues to service
those customers acquired as well as obtaining new accounts by marketing under the d/b/a Red Wire Designs.
Rune
NYC, LLC
Effective
March 14, 2019, the Company completed the acquisition of Rune NYC, LLC (“Rune”), a New York limited liability company, pursuant
to a share exchange agreement whereby the Company exchanged shares of the Company’s Series D-5 Preferred Stock for 92.5% of the
total outstanding equity of Rune and the members of Rune (the “Members”). The Company issued an aggregate of 82,588 shares
of Series D-5 Preferred Stock with a stated value of $4.00 per share, and cash consideration of $49,937, for total purchase consideration
of $380,289. Rune’s results of operations have been included in the Company’s operating results for the period from March
1, 2019. For more information, please see 2019 10K.
Bluwire
Group, LLC
On
October 1, 2019, the Company completed the acquisition of Bluwire Group, LLC (“Bluwire”), a Florida limited liability company,
pursuant to a share exchange agreement whereby the Company exchanged shares of the Company’s Series A Preferred Stock for 60.5%
of the outstanding equity of Bluwire. Pursuant to the terms of the exchange agreement, at closing the Company acquired 60.5% of the membership
interests of Bluwire in exchange for 500,000 shares of the Company’s Series A Preferred Stock. The total purchase consideration
for the Bluwire acquisition was $200,000, the fair value of the Series A Preferred Stock issued. Bluwire’s results of operations
have been included in the Company’s operating results for the period from October 1, 2019. For more information, please see company’s
2019 10K.
Social
Decay, LLC dba Social Sunday
On
November 20, 2019, the Company completed the acquisition of Social Decay, LLC dba Social Sunday (“Social Sunday”), a New
Jersey limited liability company, pursuant to a share exchange agreement whereby the Company exchanged shares of the Company’s
Series D-6 Preferred Stock for 100% of the total outstanding equity of Social Sunday and the member of Social Sunday (the “Member”).
The Company issued an aggregate of 30,000 shares of Series D-6 Preferred Stock with a stated value of $5.00 per share, and an additional
12,000 shares were issued and held in escrow, for total purchase consideration of $210,000. Social Sunday’s results of operations
have been included in the Company’s operating results for the period from November 1, 2019. See company 2019 filed 10K.
All
acquisitions were accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values
of the assets acquired, liabilities assumed and fair value of the minority interest. These values are subject to change as we perform
additional reviews of our assumptions utilized.
NOTE
5 – PREPAID EXPENSE AND OTHER ASSETS
Prepaid
expense and other current assets at September 30, 2021 and December 31, 2020 consist of the following:
SCHEDULE OF PREPAID EXPENSE AND OTHER ASSETS
|
|
September 30, 2021
|
|
|
December 31, 2020
|
|
Prepaid expense
|
|
$
|
11,005
|
|
|
$
|
12,920
|
|
Other assets
|
|
|
89,000
|
|
|
|
-
|
|
Total prepaid expense
and other assets
|
|
$
|
100,005
|
|
|
$
|
12,920
|
|
The
company is developing new software and has so far spent $89,000 towards its development.
The
Company entered into an agreement with very accomplished developers located in South Africa. These same developers were instrumental
in designing the software that is operating today on all debit and credit card smart chips worldwide. These developers will complete
our Social Shopping App platform which processes payments securely to our merchants such that our users will never have their personal
payment data “at risk” online. The total cost will not exceed $650,000 including cash and stock, and it is estimated that
the App may be released before the end of 2021. As of this filing $50,000 have already been made under our installment arrangement.
The
Company also consummated a License Purchase with Tiltsa, Inc of Tiltsa’s cutting edge software. This software license, among other
things, will allow us to access more than 300,000 merchants for our APP and will allow easy uploading of new merchants. We have made
the full $19,000 Payment for the software and our app developers are already integrating this software into our platform.
NOTE
6 – FIXED ASSETS, NET
Fixed
assets at September 30, 2021 and December 31, 2020 consisted of the following:
SCHEDULE OF FIXED ASSETS, NET
|
|
September 30,
2021
|
|
|
December 31, 2020
|
|
|
|
|
|
|
|
|
Office equipment
|
|
$
|
280,966
|
|
|
$
|
280,966
|
|
Furniture and equipment
|
|
|
58,118
|
|
|
|
58,118
|
|
Computer
|
|
|
13,704
|
|
|
|
13,704
|
|
Technical equipment
|
|
|
27,492
|
|
|
|
27,492
|
|
Truck
|
|
|
-
|
|
|
|
-
|
|
Intellectual Property
|
|
|
78,505
|
|
|
|
78,505
|
|
Machinery
|
|
|
-
|
|
|
|
-
|
|
Subtotal Fixed Assets
|
|
|
458,785
|
|
|
|
458,785
|
|
Less: accumulated depreciation
|
|
|
(413,431
|
)
|
|
|
(370,557
|
)
|
Equipment
|
|
$
|
45,353
|
|
|
$
|
88,228
|
|
Depreciation
expense for the three months and nine months ended September 30, 2021 and 2020 was $10,665 and $69,256 (depreciation and amortization
expense) and $42,874 and $264,678, respectively.
NOTE
7 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts
payable and accrued liabilities at September 30, 2021 and December 31, 2020 consisted of the following:
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
|
September 30, 2021
|
|
|
December 31, 2020
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,493,840
|
|
|
$
|
1,356,812
|
|
Accrued expenses
|
|
|
1,539,205
|
|
|
|
1,241,850
|
|
Accrued Salaries
|
|
|
139,300
|
|
|
|
139,300
|
|
Accrued board of director fees
|
|
|
240,000
|
|
|
|
150,000
|
|
Accrued interest
|
|
|
309,915
|
|
|
|
299,631
|
|
Accounts payable and
accrued liabilities
|
|
$
|
3,722,260
|
|
|
$
|
3,187,592
|
|
As of September 30, 2021 and December 31, 2020, accounts payable and
accrued liabilities included salaries of $139,300 and $139,300, respectively and accrued board of director fees of $240,000 and $150,000,
respectively.
NOTE
8 - DUE TO STOCKHOLDERS
Due
to stockholders at September 30, 2021 and December 31, 2020 consists of the following:
SCHEDULE OF DUE TO STOCKHOLDERS
|
|
September 30, 2021
|
|
|
December 31, 2020
|
|
Daniel Monteverde
|
|
|
-
|
|
|
|
-
|
|
Angelo Ponzetta
|
|
|
12,585
|
|
|
|
11,217
|
|
Christopher Burden
|
|
|
172,536
|
|
|
|
172,536
|
|
Maurice Ojeda
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
Due to stockholders
|
|
$
|
385,121
|
|
|
$
|
383,753
|
|
During
the three months ended September 30, 2021 and 2020, in connection with the Bluwire acquisition, the Company assumed liabilities to Bluwire’s
members, Christopher Burden and Maurice Ojeda, totaling $372,536. The amounts do not incur interest and are due on demand.
NOTE
9 – NOTES RELATED PARTY PAYABLE
As
of September 30, 2021 and December 31, 2020, there were two demand notes outstanding totaling $31,000.
NOTE
10 – NOTES PAYABLE
As
of September 30, 2021 and December 31, 2020, there was one note payable outstanding totaling $0 and $35,000 respectively.
NOTE
11 – CONVERTIBLE NOTES PAYABLE
Convertible
notes payable at September 30, 2021 and December 31, 2020 consists of the following:
SCHEDULE OF CONVERTIBLE NOTES PAYABLE
|
|
September 30, 2021
|
|
|
December 31, 2020
|
|
Dated September 15, 2017
|
|
$
|
187,500
|
|
|
$
|
318,492
|
|
Dated April 25, 2018
|
|
|
40,123
|
|
|
|
40,123
|
|
Dated September 21, 2018
|
|
|
56,714
|
|
|
|
56,714
|
|
Dated October 18, 2018
|
|
|
60,000
|
|
|
|
60,000
|
|
Dated November 28, 2018
|
|
|
-
|
|
|
|
33
|
|
Dated November 28, 2018
|
|
|
10,383
|
|
|
|
21,700
|
|
Dated November 29, 2018
|
|
|
25,000
|
|
|
|
25,000
|
|
Dated December 13, 2018
|
|
|
105,000
|
|
|
|
105,000
|
|
Dated January 15, 2019
|
|
|
115,000
|
|
|
|
115,000
|
|
Dated February 7, 2019
|
|
|
-
|
|
|
|
111,276
|
|
Dated February 19, 2019
|
|
|
-
|
|
|
|
64,500
|
|
Dated February 19, 2019
|
|
|
55,125
|
|
|
|
55,125
|
|
Dated March 13, 2019
|
|
|
55,125
|
|
|
|
55,125
|
|
Dated May 14, 2019
|
|
|
-
|
|
|
|
26,500
|
|
Dated May 17, 2019
|
|
|
27,825
|
|
|
|
27,825
|
|
Dated August 1, 2019
|
|
|
-
|
|
|
|
56,194
|
|
Dated August 7, 2019
|
|
|
55,125
|
|
|
|
55,125
|
|
Dated October 3, 2019
|
|
|
-
|
|
|
|
5,350
|
|
Dated October 25, 2019
|
|
|
6,825
|
|
|
|
6,825
|
|
Dated March 19, 2020
|
|
|
-
|
|
|
|
33,600
|
|
Dated March 25, 2020
|
|
|
33,600
|
|
|
|
33,600
|
|
Dated April 21, 2021
|
|
|
28,875
|
|
|
|
-
|
|
Dated April 30, 2021
|
|
|
33,000
|
|
|
|
-
|
|
Dated May 4, 2021
|
|
|
28,875
|
|
|
|
-
|
|
Dated May 12, 2021
|
|
|
55,125
|
|
|
|
-
|
|
Dated May 17, 2021
|
|
|
44,000
|
|
|
|
-
|
|
Dated May 28, 2021
|
|
|
55,125
|
|
|
|
-
|
|
Dated June 9, 2021
|
|
|
55,125
|
|
|
|
-
|
|
Dated June 24, 2021
|
|
|
27,500
|
|
|
|
-
|
|
Dated June 25, 2021
|
|
|
55,125
|
|
|
|
-
|
|
Dated July 12, 2021
|
|
|
55,125
|
|
|
|
-
|
|
Dated July 13, 2021
|
|
|
55,125
|
|
|
|
-
|
|
Dated August 3, 2021
|
|
|
66,150
|
|
|
|
-
|
|
Dated August 24, 2021
|
|
|
66,150
|
|
|
|
-
|
|
Dated September 14, 2021
|
|
|
66,150
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total convertible notes payable
|
|
|
1,524,795
|
|
|
|
1,273,107
|
|
|
|
|
|
|
|
|
|
|
Less: Unamortized debt discount
|
|
|
(207,328
|
)
|
|
|
(4,460
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total convertible notes
|
|
|
1,317,467
|
|
|
|
1,268,647
|
|
|
|
|
|
|
|
|
|
|
Less: current portion of convertible notes
|
|
|
1,317,467
|
|
|
|
1,268,647
|
|
Long-term convertible notes
|
|
$
|
-
|
|
|
$
|
-
|
|
On
April 21, 2021 the Company entered into a promissory note agreement with Adar Alef, LLC (“Adar”) for loans totaling $28,875.
The consideration to the Company is $25,000 with $3,875 legal fees and OID. The note is convertible after 181 days at a (i) $0.0075 ceiling
or (ii) 60% of the lowest trading price over the past twenty trading days prior to the conversion date.
On
May 4, 2021 the Company entered into a promissory note agreement with Adar Alef, LLC (“Adar”) for loans totaling $28,875.
The consideration to the Company is $25,000 with $3,875 legal fees and OID. The note is convertible after 181 days at a (i) $0.0075 ceiling
or (ii) 60% of the lowest trading price over the past twenty trading days prior to the conversion date.
On
May 12, 2021 the Company entered into a promissory note agreement with Adar Alef, LLC (“Adar”) for loans totaling $55,125.
The consideration to the Company is $50,000 with $5,125 legal fees and OID. The note is convertible after 181 days at a (i) $0.0075 ceiling
or (ii) 60% of the lowest trading price over the past twenty trading days prior to the conversion date.
On
May 28, 2021 the Company entered into a promissory note agreement with Adar Alef, LLC (“Adar”) for loans totaling $55,125.
The consideration to the Company is $50,000 with $5,125 legal fees and OID. The note is convertible after 181 days at a (i) $0.0075 ceiling
or (ii) 60% of the lowest trading price over the past twenty trading days prior to the conversion date.
On
June 9, 2021 the Company entered into a promissory note agreement with Adar Alef, LLC (“Adar”) for loans totaling $55,125.
The consideration to the Company is $50,000 with $5,125 legal fees and OID. The note is convertible after 181 days at a (i) $0.0075 ceiling
or (ii) 60% of the lowest trading price over the past twenty trading days prior to the conversion date.
On
June 25, 2021 the Company entered into a promissory note agreement with Adar Alef, LLC (“Adar”) for loans totaling $55,125.
The consideration to the Company is $50,000 with $5,125 legal fees and OID. The note is convertible after 181 days at a (i) $0.0075 ceiling
or (ii) 60% of the lowest trading price over the past twenty trading days prior to the conversion date.
During
the second quarter 2021, beginning on April 30, 2021 and ending June 24, 2021 the Company received a series additional loans from SBI
Investments under the original convertible note agreement dated November 14, 2017 totaling $104,500 in exchange for $95,000 in cash.
The note is convertible after 181 days at a (i) $0.0075 ceiling or (ii) 60% of the lowest trading price over the past twenty trading
days prior to the conversion date.
On
July 9, 2021, the Company received $50,000
from Adar Alef, LLC (“Adar”) from
a $55,125
convertible promissory note agreement including
fees and legal expenses of $5,125.
The
note is convertible after 181 days at a (i) $0.0035 ceiling or (ii) 60% of the lowest trading price over the past twenty trading
days prior to the conversion date.
On
July 12, 2021, the Company received $50,000
from Adar Alef, LLC (“Adar”) from
a $55,125
convertible promissory note agreement including
fees and legal expenses of $5,125.
The
note is convertible after 181 days at a (i) $0.0035 ceiling or (ii) 60% of the lowest trading price over the past twenty trading
days prior to the conversion date.
On
August 3, 2021, the Company received $60,000
from Adar Alef, LLC (“Adar”) from
a $66,150
convertible promissory note agreement including
fees and legal expenses of $6,150.
The
note is convertible after 181 days at a (i) $0.0035 ceiling or (ii) 60% of the lowest trading price over the past twenty trading
days prior to the conversion date.
On
August 24, 2021, the Company received $60,000
from Adar Alef, LLC (“Adar”) from
a $66,150
convertible promissory note agreement including
fees and legal expenses of $6,150.
The
note is convertible after 181 days at a (i) $0.0035 ceiling or (ii) 60% of the lowest trading price over the past twenty trading
days prior to the conversion date.
On
September 14, 2021, the Company received $60,000
from Adar Alef, LLC (“Adar”) from
a $66,150
convertible promissory note agreement including
fees and legal expenses of $6,150.
The
note is convertible after 181 days at a (i) $0.0035 ceiling or (ii) 60% of the lowest trading price over the past twenty trading
days prior to the conversion date.
During
the nine months ended September 30, 2021 and 2020, the Company recognized interest expense of $2,090,199
and $335,339,
respectively, which represented the amortization of original issue discounts and debt discounts. As of December 31, 2019, all original
issue and debt discounts pertaining to outstanding convertible notes were fully amortized. As of September 30, 2021, the unamortized
debt discount of $207,328
are related to the new convertible notes issued during the
first quarter and second quarter of 2021.
During
the three months and nine months ended September 30, 2021, the Company converted principal and unpaid accrued interest and penalties
totaling $219,525 and $889,771 into an aggregate of 2,964,123,129 and 7,917,324,064 shares of common stock.
The
Company has twenty-eight (28) outstanding convertible notes as of September 30, 2021 with a total outstanding principal of $1,524,795.
The 2019 notes mature from January 2020 to May 2020. The 2020 notes mature in September 2020. The 2021 notes mature in May 2022. These
notes carry an interest rate ranging between 8% and 12% per annum. The notes carry an original issue discount ranging between 10% to
25% of the face value of each note.
As
a subsequent event, during the fourth quarter of 2021, SBI Investments converted $ 72,887 of interest and penalties of the outstanding
convertible note into 539,907,556 shares of common stock.
The
notes may be converted into shares of the Company’s common stock at any time on or after the occurrence of an event of default.
The conversion prices of the notes include the conversion price shall be the 60% multiplied by the lowest trading price during the 30
trading days period ending, in holder’s sole discretion on each conversion, on either (i) the last complete trading day prior to
the conversion date or (ii) the conversion date.
For
some notes, the Company agreed to pay a one-time interest charge of 9% of the principal amount for each note. The notes may be converted
at specified times per the respective agreements. The conversion price shall be 75% multiplied by the lowest trading price during the
10 prior trading days period ending on either (i) the last complete trading day prior to conversion date or (ii) the conversion date.
All
terms of the notes, including but not limited to interest rate, prepayment terms, conversion discount or look-back period will be adjusted
downward if the Company offers more favorable terms to another party, while this note is in effect.
The
notes may be redeemed by the Company at rates ranging from 105% to 130% depending on the redemption date provided that no redemption
is allowed after the 180th day.
The
following table is a rollforward of activity, by each noteholder, for the nine months ended September 30, 2021:
SUMMARY OF OUTSTANDING NOTES PAYABLE, CHANGE IN DERIVATIVE LIABILITY AND DEBT DISCOUNT
|
|
|
Loan
Holder
|
|
Principal
Amount
|
|
|
Date
|
|
|
Maturity
|
|
|
OID
& Financing Costs
|
|
|
Balance
at 12 31 17
|
|
|
Additions
|
|
|
Payments
|
|
|
Conversion
|
|
|
Balance
at 12 31 18
|
|
|
Additions
|
|
|
Payments
|
|
|
Conversion
|
|
|
Balance
at 12 31 19
|
|
|
Additions
|
|
|
Payments
|
|
|
Conversion
|
|
|
Balance
at 12 31 20
|
|
|
Additions
|
|
|
Payments
|
|
|
Conversion
|
|
|
Balance
at 9 30 21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
SBI
Investment
|
|
$
|
200,000
|
|
|
|
9/27/2017
|
|
|
|
3/15/2018
|
|
|
|
-
|
|
|
|
200,000
|
|
|
|
75,000
|
|
|
|
(25,000
|
)
|
|
|
(93,150
|
)
|
|
|
156,850
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,697
|
)
|
|
|
150,153
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(19,161
|
)
|
|
|
130,992
|
|
|
|
-
|
|
|
|
(90
|
)
|
|
|
(130,902
|
)
|
|
|
-
|
|
|
1
|
|
|
SBI
Investment
|
|
$
|
187,500
|
|
|
|
11/14/2017
|
|
|
|
5/14/2018
|
|
|
|
-
|
|
|
|
187,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
187,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
187,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
187,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
187,500
|
|
|
2
|
|
|
LG
Capital Funding, LLC
|
|
$
|
185,292
|
|
|
|
12/8/2017
|
|
|
|
6/8/2018
|
|
|
|
17,646
|
|
|
|
92,646
|
|
|
|
92,646
|
|
|
|
-
|
|
|
|
(133,032
|
)
|
|
|
52,260
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(52,260
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
3
|
|
|
Cerberus
Finance Group Ltd
|
|
$
|
185,292
|
|
|
|
12/12/2017
|
|
|
|
6/8/2018
|
|
|
|
17,646
|
|
|
|
92,646
|
|
|
|
92,646
|
|
|
|
(25,000
|
)
|
|
|
(53,183
|
)
|
|
|
107,109
|
|
|
|
-
|
|
|
|
(99,684
|
)
|
|
|
(7,425
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
4
|
|
|
Eagle
Equities LLC
|
|
$
|
50,000
|
|
|
|
3/15/2018
|
|
|
|
3/15/2019
|
|
|
|
2,500
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
(50,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
5
|
|
|
Adar
Capital LLC
|
|
$
|
50,000
|
|
|
|
3/15/2018
|
|
|
|
3/15/2019
|
|
|
|
2,500
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
(50,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
6
|
|
|
Bellridge
Capital LP
|
|
$
|
60,000
|
|
|
|
5/17/2018
|
|
|
|
5/17/2019
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
(44,000
|
)
|
|
|
16,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(16,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
7
|
|
|
Auctus
|
|
$
|
100,000
|
|
|
|
4/27/2018
|
|
|
|
4/25/2019
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
(59,877
|
)
|
|
|
40,123
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,123
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
40,123
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,123
|
|
|
8
|
|
|
Bellridge
Capital LP
|
|
$
|
60,000
|
|
|
|
9/17/2018
|
|
|
|
3/15/2019
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,286
|
)
|
|
|
56,714
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
56,714
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
56,714
|
|
|
9
|
|
|
Eagles
Equity
|
|
$
|
50,000
|
|
|
|
9/21/2018
|
|
|
|
3/15/2019
|
|
|
|
2,500
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
(50,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
10
|
|
|
Adar
Bay
|
|
$
|
50,000
|
|
|
|
10/4/2018
|
|
|
|
10/4/2018
|
|
|
|
2,500
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
(50,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
11
|
|
|
Bellridge
Capital LP
|
|
$
|
60,000
|
|
|
|
10/18/2018
|
|
|
|
10/18/2019
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
|
12
|
|
|
Adar
Alef Omnibus
|
|
$
|
64,500
|
|
|
|
11/28/2018
|
|
|
|
11/29/2019
|
|
|
|
4,125
|
|
|
|
-
|
|
|
|
64,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(39,057
|
)
|
|
|
25,443
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(25,410
|
)
|
|
|
33
|
|
|
|
-
|
|
|
|
(33
|
)
|
|
|
-
|
|
|
|
-
|
|
|
13
|
|
|
Adar
Alef Debt Purchase
|
|
$
|
25,000
|
|
|
|
11/28/2018
|
|
|
|
11/29/2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
(25,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
14
|
|
|
LG
Capital Omnibus
|
|
$
|
64,500
|
|
|
|
11/28/2018
|
|
|
|
11/29/2019
|
|
|
|
4,125
|
|
|
|
-
|
|
|
|
64,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,630
|
)
|
|
|
57,870
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(36,170
|
)
|
|
|
21,700
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,317
|
)
|
|
|
10,383
|
|
|
15
|
|
|
LG
Capital Debt Purchase
|
|
$
|
25,000
|
|
|
|
11/29/2018
|
|
|
|
11/29/2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,000
|
|
|
16
|
|
|
LG
Capital Omnibus
|
|
$
|
105,000
|
|
|
|
12/13/2018
|
|
|
|
12/14/2019
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
105,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
105,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
105,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
105,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
105,000
|
|
|
17
|
|
|
LG
Capital Omnibus
|
|
$
|
115,000
|
|
|
|
1/15/2019
|
|
|
|
1/15/2020
|
|
|
|
5,750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
115,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
115,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
115,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
115,000
|
|
|
18
|
|
|
Adar
Alef Omnibus
|
|
$
|
132,720
|
|
|
|
2/7/2019
|
|
|
|
2/7/2020
|
|
|
|
6,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
132,720
|
|
|
|
-
|
|
|
|
-
|
|
|
|
132,720
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(21,444
|
)
|
|
|
111,276
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(111,276
|
)
|
|
|
-
|
|
|
19
|
|
|
Adar
Alef Debt Note
|
|
$
|
108,055
|
|
|
|
2/7/2019
|
|
|
|
2/7/2019
|
|
|
|
8,371
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
108,055
|
|
|
|
-
|
|
|
|
(108,056
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
20
|
|
|
Adar
Alef Omnibus
|
|
$
|
64,500
|
|
|
|
2/19/2019
|
|
|
|
2/19/2020
|
|
|
|
4,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
64,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
64,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(64,500
|
)
|
|
|
-
|
|
|
21
|
|
|
LG
Capital Omnibus
|
|
$
|
55,125
|
|
|
|
2/19/2019
|
|
|
|
2/19/2020
|
|
|
|
2,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,125
|
|
|
22
|
|
|
LG
Capital Omnibus
|
|
$
|
55,125
|
|
|
|
3/13/2019
|
|
|
|
3/13/2020
|
|
|
|
2,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,125
|
|
|
23
|
|
|
Adar
Alef Omnibus #2 Back End
|
|
$
|
26,500
|
|
|
|
5/14/2019
|
|
|
|
2/20/2020
|
|
|
|
1,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
26,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
26,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
26,500
|
|
|
|
-
|
|
|
|
250
|
|
|
|
(26,750
|
)
|
|
|
-
|
|
|
24
|
|
|
LG
Capital Omnibus #5
|
|
$
|
27,825
|
|
|
|
5/17/2019
|
|
|
|
5/15/2020
|
|
|
|
2,825
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
27,825
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,825
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
27,825
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,825
|
|
|
25
|
|
|
Adar
Alef Omnibus #2 BE 3rd Tranche
|
|
$
|
53,500
|
|
|
|
8/1/2019
|
|
|
|
2/7/2020
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
56,194
|
|
|
|
-
|
|
|
|
-
|
|
|
|
56,194
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
56,194
|
|
|
|
-
|
|
|
|
(434
|
)
|
|
|
(55,760
|
)
|
|
|
-
|
|
|
26
|
|
|
LG
Capital Omnibus #7
|
|
$
|
55,125
|
|
|
|
8/6/2019
|
|
|
|
2/7/2020
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,125
|
|
|
27
|
|
|
Adar
Alef Omnibus #2 BE 4th Tranche
|
|
$
|
5,350
|
|
|
|
10/3/2019
|
|
|
|
2/7/2020
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
5,350
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,350
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
5,350
|
|
|
|
-
|
|
|
|
224
|
|
|
|
(5,574
|
)
|
|
|
-
|
|
|
28
|
|
|
LG
Capital Omnibus #8
|
|
$
|
6,825
|
|
|
|
10/25/2019
|
|
|
|
10/26/2020
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
6,825
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,825
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
6,825
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,825
|
|
|
29
|
|
|
Adar
Alef Omnibus # 5th Tranche
|
|
$
|
33,600
|
|
|
|
3/19/2020
|
|
|
|
9/19/2020
|
|
|
|
3,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,600
|
|
|
|
|
|
|
|
|
|
|
|
33,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(33,600
|
)
|
|
|
-
|
|
|
30
|
|
|
LG
Capital Funding, LLC
|
|
$
|
33,600
|
|
|
|
3/25/2020
|
|
|
|
9/20/2020
|
|
|
|
3,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,600
|
|
|
|
|
|
|
|
|
|
|
|
33,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,600
|
|
|
31
|
|
|
Adar
Alef Omnibus 6th Tranche
|
|
$
|
28,875
|
|
|
|
4/21/21
|
|
|
|
4/21/22
|
|
|
|
3,875
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
28,875
|
|
|
|
-
|
|
|
|
-
|
|
|
|
28,875
|
|
|
32
|
|
|
SBI
Investment
|
|
$
|
33,000
|
|
|
|
4/30/21
|
|
|
|
5/1/22
|
|
|
|
3,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
33,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,000
|
|
|
33
|
|
|
Adar
Alef Omnibus 7th Tranche
|
|
$
|
28,875
|
|
|
|
5/4/21
|
|
|
|
5/4/22
|
|
|
|
3,875
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
28,875
|
|
|
|
-
|
|
|
|
-
|
|
|
|
28,875
|
|
|
34
|
|
|
Adar
Alef Omnibus 8th Tranche
|
|
$
|
55,125
|
|
|
|
5/12/21
|
|
|
|
5/13/22
|
|
|
|
5,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,125
|
|
|
35
|
|
|
SBI
Investment
|
|
$
|
44,000
|
|
|
|
5/17/21
|
|
|
|
5/17/22
|
|
|
|
4,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
44,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
44,000
|
|
|
36
|
|
|
Adar
Alef Omnibus 9th Tranche
|
|
$
|
55,125
|
|
|
|
5/28/21
|
|
|
|
5/28/22
|
|
|
|
5,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,125
|
|
|
37
|
|
|
Adar
Alef Omnibus 10th Tranche
|
|
$
|
55,125
|
|
|
|
6/9/21
|
|
|
|
6/10/22
|
|
|
|
5,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,125
|
|
|
38
|
|
|
SBI
Investment
|
|
$
|
27,500
|
|
|
|
6/24/21
|
|
|
|
6/25/22
|
|
|
|
2,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
27,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,500
|
|
|
39
|
|
|
Adar
Alef Omnibus 11th Tranche
|
|
$
|
55,125
|
|
|
|
6/25/21
|
|
|
|
6/26/22
|
|
|
|
5,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,125
|
|
|
40
|
|
|
Adar
Alef Omnibus 12th Tranche
|
|
$
|
55,125
|
|
|
|
7/12/21
|
|
|
|
7/12/22
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,125
|
|
|
41
|
|
|
Adar
Alef Omnibus 12th Tranche
|
|
$
|
55,125
|
|
|
|
7/13/21
|
|
|
|
7/13/22
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
55,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,125
|
|
|
42
|
|
|
Adar
Alef Omnibus 13th Tranche
|
|
$
|
66,150
|
|
|
|
8/3/21
|
|
|
|
8/3/22
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
66,150
|
|
|
|
-
|
|
|
|
-
|
|
|
|
66,150
|
|
|
43
|
|
|
Adar
Alef Omnibus 14th Tranche
|
|
$
|
66,150
|
|
|
|
8/24/21
|
|
|
|
8/24/22
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
66,150
|
|
|
|
-
|
|
|
|
-
|
|
|
|
66,150
|
|
|
44
|
|
|
Adar
Alef Omnibus 14th Tranche
|
|
$
|
66,150
|
|
|
|
9/14/21
|
|
|
|
9/14/22
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
66,150
|
|
|
|
-
|
|
|
|
-
|
|
|
|
66,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
note total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
531,771
|
|
|
|
572,792
|
|
|
|
1,024,292
|
|
|
|
(50,000
|
)
|
|
|
(608,242
|
)
|
|
|
938,842
|
|
|
|
708,344
|
|
|
|
(99,684
|
)
|
|
|
(239,411
|
)
|
|
|
1,308,092
|
|
|
|
67,200
|
|
|
|
-
|
|
|
|
(102,185
|
)
|
|
|
1,273,107
|
|
|
|
691,450
|
|
|
|
(83
|
)
|
|
|
(439,679
|
)
|
|
|
1,524,795
|
|
As
of December 31, 2019, several notes were past maturity, in default and due on demand. As such, the Company accelerated the amortization
of the remaining unamortized original issue and debt discounts. As of September 30, 2021 the notes remained in default and due on demand.
The
Company calculated a default reserve which represents the additional amount the Company would have to pay to all note holders in the
event of the default. SBI Investments have notified the company of default during the 2nd quarter on 2021 on their September
2017 convertible note. Management calculated the amount utilizing additional premiums, accrued interest and default accrued interest
as per the agreements. As of September 30, 2021 and December 31, 2020, the Company recorded a general default reserve of $1,463,120 and
$2,278,648, respectively.
In
December 2020 and continuing, the Company’s 12 Retail subsidiary has received short term funding from a private investor ranging
between $30,000 and $50,000 in advances that are paid back and renewed in 45 to 60 day intervals for inventory and special orders for
customers.
On
March 18, 2021 the Company received $30,000 from Adar Alef, LLC (“Adar”) from a $33,600 convertible promissory note agreement
including fees and legal expenses of $3,600. The note is convertible after 181 days at a (i) $0.0075 ceiling or (ii) 60% of the lowest
trading price over the past twenty trading days prior to the conversion date.
On
March 25, 2021 the Company received $30,000 from LG Capital, LLC (“LG”) from a $33,600 convertible promissory note agreement
including fees and legal expenses of $3,600. The note is convertible after 181 days at a (i) $0.0075 ceiling or (ii) 60% of the lowest
trading price over the past twenty trading days prior to the conversion date.
On
April 30, 2021, the Company received $30,000 from SBI, $40,000 on May 17, 2021 and $25,000 on June 24, 2021.
Between
April 21, 2021 and June 24 2021, the Company received $250,000 from Adar Alef in exchange for $278,250 in convertible debt.
On
May 6, 2021, the Company received $30,000 as an additional advance from Oasis Capital pursuant to previous agreements with Oasis and
on May 13, 2021 an additional $50,000.
In
May 2021, advisory board member, Richard Berman invested $50,000 in exchange for preferred shares with the option to invest a further
$100,000 over the next few months.
On
July 12, 2021 the Company received $50,000
from Adar Alef, LLC (“Adar”) from
a $55,125
convertible promissory note agreement including
fees and legal expenses of $5,125.
The
note is convertible after 181 days at a (i) $0.0035 ceiling or (ii) 60% of the lowest trading price over the past twenty trading
days prior to the conversion date.
On
July 13, 2021, the Company received $50,000
from Adar Alef, LLC (“Adar”) from
a $55,125
convertible promissory note agreement including
fees and legal expenses of $5,125.
The
note is convertible after 181 days at a (i) $0.0035 ceiling or (ii) 60% of the lowest trading price over the past twenty trading
days prior to the conversion date.
On
August 3, 2021, the Company received $60,000
from Adar Alef, LLC (“Adar”) from
a $66,150
convertible promissory note agreement including
fees and legal expenses of $6,150.
The
note is convertible after 181 days at a (i) $0.0035 ceiling or (ii) 60% of the lowest trading price over the past twenty trading
days prior to the conversion date.
On
August 24, 2021, the Company received $60,000
from Adar Alef, LLC (“Adar”) from
a $66,150
convertible promissory note agreement including
fees and legal expenses of $6,150.
The
note is convertible after 181 days at a (i) $0.0035 ceiling or (ii) 60% of the lowest trading price over the past twenty trading
days prior to the conversion date.
On
September 14, 2021, the Company received $60,000
from Adar Alef, LLC (“Adar”) from
a $66,150
convertible promissory note agreement including
fees and legal expenses of $6,150.
The
note is convertible after 181 days at a (i) $0.0035 ceiling or (ii) 60% of the lowest trading price over the past twenty trading
days prior to the conversion date.
NOTE
12 – DERIVATIVE LIABILITIES
The
Company classified certain conversion features in the convertible notes and preferred stock issued as embedded derivative instruments
due to the variable conversion price feature and potential adjustments to conversion prices due to events of default. These conversion
features are recorded as derivative liabilities at fair value in the consolidated financial statements. These fair value estimates were
measured using inputs classified as Level 3 of the fair value hierarchy. The Company develops unobservable Level 3 inputs using the best
information available in the circumstances, which might include its own data, or when it believes inputs based on external data better
reflect the data that market participants would use, its bases its inputs on comparison with similar entities. Due to the existence of
down round provisions, which create a path-dependent nature of the conversion prices of the convertible notes, the Company decided a
Lattice-Based Simulation model, which incorporates inputs classified as Level 3 was appropriate.
The
following table present the assumptions used in Black-Scholes Simulation model to determine the fair value of the derivative liabilities
as of September 30, 2021:
SCHEDULE OF CHANGES IN DERIVATIVES LIABILITIES
Derivative Liabilities at June 30, 2021
|
|
$
|
6,062,003
|
|
Additional new conversion option derivatives
|
|
$
|
38,804
|
|
Conversion of note derivatives
|
|
$
|
(1,382,373
|
)
|
Change in fair value
|
|
$
|
5,371,776
|
|
Derivative Liabilities at September 30, 2021
|
|
$
|
10,090,212
|
|
Derivative Liabilities at December 31, 2020
|
|
$
|
23,798,241
|
|
Additional new conversion option derivatives
|
|
$
|
1,898,748
|
|
Conversion of note derivatives
|
|
$
|
(20,148,254
|
)
|
Change in fair value
|
|
$
|
4,541,477
|
|
Derivative Liabilities at September 30, 2021
|
|
$
|
10,090,212
|
|
During
the three months ended September 30, 2021, the Company recorded new derivative liabilities of $1,898,748 related to the issuance of convertible
notes payable and Series D-2 Preferred Stock and converted $20,148,254 in derivative liability to additional paid-in capital due to conversions
of notes payable and Series D-2 Preferred Stock into common stock.
NOTE
13 – MERCHANT FINANCING
On
January 4, 2020, the Company’s Rune subsidiary entered into another future receivable purchase agreement with Vox Funding and received
$14,500. This agreement provides for payment over 70 business days and carried a fee of $4,850. This obligation is not convertible under
any terms into Company stock.
On
January 24, 2020, the Company’s Social Sunday subsidiary entered into a first future receivable purchase agreement with Vox Funding
and received $14,500. This agreement provides for payment over 3.5 months and carried a fee of $4,850. This obligation is not convertible
under any terms into Company stock.
On
March 3, 2020, the Company’s Social Sunday subsidiary entered into a second future receivable purchase agreement with Vox Funding
and received $5,605. This agreement provides for payment over 2 months and carried a fee of $1,895. This obligation is not convertible
under any terms into Company stock.
On
March 5, 2020, the Company’s Bluwire subsidiary entered into a second future receivable purchase agreement with Reliant Funding
and received $83,000. This agreement provides for payment over 6 months and carries a fee of $3,000. This obligation is not convertible
under any terms into Company stock.
On
March 16, 2020, the President of the United States of America issued a stay-at-home instructions and business closure directive in response
to COVID-19 pandemic. Management took steps to promptly close all its Bluwire stores and Fashion Group operations, laying off the vast
majority of its employees. The Company’s landlords and Libertas, Vox and Reliant have all agreed to collections deferment of an
indeterminant duration (see note above regarding individual agreements). The Fashion Group continues limited operations in creating and
producing PPE materials.
As
a consequence of the Covid-19 shutdowns as of March 16, 2020, the Company’s Bluwire Group subsidiary also suspended making any
payments on its Merchant Cash Advance facility to Libertas Funding. Merchant Cash Advances are based on the collection of “future
receivables” and with the businesses being closed no future payments were due. Libertas has accepted that position and has voluntarily
ceased all collection activity.
In
May 2021, the Company entered into a verbal agreement with Vox to repay $250 per week and all collection efforts are put on hold and
forbearance on other receivable holders
The
Company entered into a verbal agreement with Reliant Funding has been in forbearance. Since April 2021, and the Company pays $10 per
week until Bluwire Newark is re-opened.
As
of September 30, 2021, the Company had total merchant financing payables of $407,632 with unamortized discounts of $2,754 for net payable
of $404,878. As of December 31, 2020, the Company had total merchant financing payables of $412,647 with unamortized discounts of $2,754
for net payable of $409,892.
Additional
Working Capital from convertible debt and under the CARES Act.
The
Federal Government of the United States of America on March 27, 2020, passed the Cares Act allowing companies to quality SBA Payroll
Protection Loans (PPP). These loans provide for certain funding based on previous employment which in part may be forgivable under certain
conditions. The remaining portion needs to be repaid over 2 years with a 6-month moratorium on payments and carry a 1% annual interest
rate. These loans require no collateral nor personal guarantees. During the subsequent period from May 5, 2020 to May 22, 2021, the Company’s
subsidiaries quality and received an aggregate of $294,882 in 2020 and $302,602 in 2021 in PPP loans.
In
August 2020, two of the Company’s subsidiaries qualified for the United States Small Business Administration (“SBA”)
Economic Industry Disaster Loans (“EIDL”) and the Company received $325,300 under the program. These loans are unsecured,
have no personal guaranty, carry a 3.75% annual interest rate with aggregate monthly payments of 13 months after receipt of funds. Management
has used these funds to retain key personnel, pay regulatory fees, rent, begin work on a new website for Bluwire, make progress on this
retail APP and acquire product to re-open one of its Bluwire Stores.
On
June 4, 2021, $70,200 of the first round of PPP loans was forgiven by the SBA. During the third quarter, $224,682 of the first and second
round PPP loans were also forgiven by the SBA. As a subsequent event, the $192,900 of the PPP loans were also forgiven by the SBA.
NOTE
14 - STOCKHOLDERS’ DEFICIT
Reverse
Stock Split
On
October 18, 2019, the Company completed a 100 for 1 reverse common stock split reducing the outstanding common shares to 25,410,391.
On May 18, 2021 the authorized was increased to 20,000,000,000 shares of common stock.
Preferred
Stock
The
Preferred Stock may be divided into several number of series as the Board of Directors may determine. The Board of Directors is
authorized to determine and alter the rights, preferences, privileges, and restrictions granted to and imposed upon any wholly unissued
series of Preferred Stock, and to fix the number of shares of any series of Preferred Stock and the designation of any such series of
Preferred Stock. The Board of Directors may increase or decrease (but not below the number of shares such series then outstanding) the
number of shares of any series subsequent to the issue of shares of that series.
The
Series B Redeemable Convertible Preferred Stock is classified as temporary equity as it is mandatorily redeemable by the holder at a
future date. The Series D-1 and D-2 Preferred Stock are classified as temporary equity as they are redeemable immediately. The Series
D-3 Preferred Stock is also classified as temporary equity due to its put option, which providers the holders the right to put the shares
to the Company for cash if they elect not to convert into shares of common stock.
2021
Transactions
In
March 2021, the company issued 1,250 Series A shares for cash for $5,000.
In
April 2021, the company issued 1,250 Series A shares for cash $5,000.
In
April 2021, the company issued 25,000 Series A shares for cash for $50,000.
In
June 2021, the company converted 64,400 of series B shares and $64,400 into 212,015,385 common shares.
During
the second quarter, Oasis converted 275,075 series D-2 preferred shares and $888,860 of principal and interest into 1,269,800,000 common
shares.
During
the third quarter, Geneva Roth converted the remaining 106,000 series B preferred shares or $106,000 into 387,307,692 common shares.
Also,
during the third quarter, on July 27, 2021, the Company issued one
additional preferred series C share to the CEO Angelo Ponzetta.
2020
Transactions
On
January 16, 2020, an existing Series B stockholder purchased 53,000 Series B Preferred shares for proceeds of $53,000 under the same
terms as their prior purchases.
In
June 2020, the holders of 3,600 shares of Series B Preferred Stock converted these shares for 29,353,846 shares of common stock.
During
the three months ended March 31, 2020, Oasis Capital converted 5,450 Series D-2 Preferred shares with a value of $10,897 into 25,642,105
common shares.
During
the third quarter, 2020 the company issued $12,750 Series A shares in restricted shares to employees under the Employee Restricted Stock
Plan.
During
the remainder of 2020, the Company converted an aggregate of 17,500 shares of Series D-2 Preferred Stock with a fair value of $35,103
into 329,500,000 shares of common stock.
Common
Stock
2021
Transactions
During
the first quarter, 2021, LG converted $8,500 of principal and $3,455 of interest of its outstanding convertible note into 199,249,833
shares of common stock.
During
the first quarter, 2021, SBI Investments converted $37,125 of principal of the outstanding convertible note into 175,000,000 shares of
common stock.
During
the first quarter, 2021, Adar Alef converted $25,733 of principal the outstanding convertible note into 429,549,999 shares of common
stock.
During
the second quarter, 2021 the company converted $211,320 of principal and $351,498 of principal and interest and penalties into 4,419,451,103
common shares made up of the following:
During
the second quarter of 2021, LG converted $2,817 of principal and $1,251 of interest of its outstanding convertible note into 67,788,524
shares of common stock.
During
the second quarter of 2021, SBI Investments converted $93,777 of principal and $307,847 of interest and penalties of the outstanding
convertible note into 1,137,946,080 shares of common stock.
During
the second quarter of 2021, Adar Alef converted $130,047 of principal and $30,016 of interest of the outstanding convertible note into
3,203,716,499 shares of common stock.
During
the second quarter, Oasis converted Oasis converted 275,075 series D-2 preferred shares and $888,860 of principal and interest into 1,269,800,000
common shares.
During
the third quarter of 2021, SBI Investments converted $79,021 of interest and penalties of the outstanding convertible note into 555,714,296
shares of common stock.
During
the third quarter of 2021, Adar Alef converted $121,684 of principal and $22,820 of interest of the outstanding convertible note into
2,408,408,833 shares of common stock.
As
a subsequent event, during the fourth quarter of 2021, SBI Investments converted $ 72,887 of interest and penalties of the outstanding
convertible note into 539,907,556 shares of common stock.
2020
Transactions
During
the three months ended March 31, 2020, LG converted $20,100 of principal and $2,274 of interest of its outstanding convertible note into
36,764,427 shares of common stock.
During
the three months ended March 31, 2020, SBI Investments converted $4,722 of principal of the outstanding convertible note into 12,649,250
shares of common stock.
During
the three months ended March 31, 2020, Adar Alef converted $25,410 of principal and $4,659 of interest of the outstanding convertible
note into 84,000,954 shares of common stock.
During
the three months ended March 31, 2020, Oasis Capital converted 5,450 Series D -2 Preferred shares with a value of $10,897 into 25,642,105
shares of common stock.
During
the remainder of 2020, LG converted $16,070 of principal and $4,875 of interest of its outstanding convertible note into 292,969,666
shares of common stock.
During
the remainder of 2020, SBI Investments converted $7,098 of principal of the outstanding convertible note into 78,869,151 shares of common
stock.
During
the remainder of 2020, Adar Alef converted $21,444 of principal of the outstanding convertible note into 250,418,916 shares of common
stock.
During
the remainder of 2020, the Company converted an aggregate of 17,500 shares of Series D-2 Preferred Stock with a fair value of $35,103
into 329,500,000 shares of common stock.
NOTE
15 - COMMITMENTS
Lease
Commitments
The
Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys
to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for
consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to
obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease
and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets.
Lease expense for variable lease components are recognized when the obligation is probable.
Operating
lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of
lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease
term. The Company primarily leases buildings (real estate) which are classified as operating leases. ASC 842 requires a lessee to discount
its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental
borrowing rate. As an implicit interest rate is not readily determinable in the Company’s leases, the incremental borrowing rate
is used based on the information available at commencement date in determining the present value of lease payments.
The
lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered
by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option
to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term
(and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met.
Lease
payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or
rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain.
Variable
lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the event, activity, or
circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating
expenses in the Company’s income statement in the same line item as expense arising from fixed lease payments. As of and during
the year ended December 31, 2020, management determined that there were no variable lease costs.
Right
of Use Asset
In
connection with the Bluwire acquisition, the Company recognized a right of use asset of $33,461. The Company used an effective borrowing
rate of 13% within the calculation. The lease agreement matures in August 2021. Minimum remaining rental payments in 2021 are $33,461,
respectively. As of September 30, 2021, the Company fully amortized the remaining ROU Asset and ROU Liability.
Operating
Leases
The
Company and its subsidiaries have various short-term leases that mature in 2020.
During
the second and third quarters up and until the date of this filing the Company has been making post-Covid moves in closing various historically
non-profitable Bluwire locations primarily Denver airport, and one location in JFK international airports, or moving this JFK location
inside the terminal, redesigning its signature App for a post Covid world, and renegotiating its minimum base rental commitments for
all of its retail stores. In all cases there is a rent moratorium until October 1st, 2020. For the Casino store, we did a soft opening
on September 11, 2020 and then closed for a two-week period in November 2019 to hire and train new staff and management. The store
reopened in full on November 29, 2020 in time for Cyber Monday. Management continues to monitor the situation in our prime airport locations
or Newark and Dulles airports for reopening. Base monthly rent on the Mohegan Sun store was $6,916,
plus a percentage rent equal to 8%
of the gross sales that exceeds $86,450
per month until January 2021. The lease expires
on April
14, 2021. This lease has been renegotiated and
taken over by a different subsidiary of the company that was able to fully stock the store with inventory. and management believes that
it will be successful eliminating the minimum base rental feature in all of its retail locations before that date.
On
August 13, 2020, the Company’s 12 Fashion Group, a division of 12 Retail Corporation, entered into a new office location under
a 2-year lease with an option for a third year beginning on August 17, 2020. This new location is 1,600 square feet and caries a base
monthly rent of $5,651.30, plus a pro-rated expenses for garbage and utilities of $743. Management believes that this additional space
is necessary to manage the consolidation of its fashion brands.
Other
Commitments
The
Company has a significant contract with an independent contractor third party company which plays a critical role to the ongoing operations
of the Company. The contract is for an initial period of five years for which can be cancelled upon six months’ notice and payment
of all outstanding fees. The minimum monthly payment is $35,000 for which additional amounts are to be reimbursed for expenses, etc.
During the three months ended September 30, 2021, the Company paid $208,250 under the contract to which an additional $335,447 was payable
as of September 30, 2021. The Company relies upon the third party for obtaining financing, targeting acquisitions, general corporate
guidance, financial reporting, etc.
Legal
& Contingencies
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Auctus
Fund Management (“Auctus”) vs. 12 ReTech Corporation. Auctus Filed suit in August 2019 claiming breach of contract on
a convertible promissory note dated April
25, 2018, which had a remaining principal
balance of nearly $40,000.
Auctus claimed damages totaling over $482,000.
The Company had entered into a settlement agreement with Auctus that required the Company to make a cash payment of $117,000
and which was dependent on the Company receiving
funding from a foreign investor. That investment did not occur, and the Company was unable to perform. Upon information and belief,
management believes that Auctus will at some point re-institute that lawsuit. Management has reserved on its financial statements
a sum in excess of $482,000
regarding this claim. To the best of management’s knowledge, Auctus has not taken other actions.
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Bellridge
Capital, LP, one of the Company’s convertible debt providers has sued the Company for non-performance and has obtained a default
judgment in the amount of $214,195.74 in the southern district of New York. The Company maintains that service of process is defective,
and the Company will also assert lack of jurisdiction if any collection effort is ever undertaken among other potential legal claims
and defenses. The Company and Bellridge have nearly completed negotiations to settle this disputed claim and management expects to
resolve this favorably.
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J&S
properties sued the Company regarding a lease for a subsidiary in-the State of Utah that was never guaranteed by the Company
and obtained a default judgement in Salt Lake County. The Company maintains that it was never properly served and has, it believes,
substantial defenses that it will raise should J&S properties ever try to enforce the judgment.
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RedWire
Group, LLC (“RedWire Group”) filed for bankruptcy under Chapter 11 subsection V on March 6, 2020, and the case in ongoing.
The Company has funded the initial costs, as well as some ongoing storage costs for RedWire Group equipment. The Company plans to
liquidate the equipment and some other assets to pay creditors. This Chapter 11 was converted by the Court to a Chapter 7 and discharged.
The equipment was liquidated in 2021, and the Bank (Bank of American Fork) has been paid in full and all other debts have been discharged.
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Leider
Enterprises, Inc. D/b/a SM Distribution Inc a Florida corporation sued Bluwire Sun, LLC in Florida. Bluwire Sun never received any
product from this company and is defending this lawsuit in Florida. So far all Leider enterprises claims have been denied but
litigation in ongoing.
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Rottenberg,
Meril, Solomon, Bertiger & Guttilla (“Rottenberg”) sued the Company in Bergen County New Jersey and obtained a default
judgement because the Company was never served. The Company believes it has substantial counterclaims and defenses should Rottenberg
ever try to enforce this judgement.
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PCG
Advisory Group (“PAG”) obtained a default judgement of $63,350 in New York because, we believe, it never properly served
the Company and has tried to domesticate that judgement in Arizona. The Arizona Court refused to domesticate the judgment and has
given PAG some time to prove proper service. That period has expired.
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VXB
& Orfwid d/b/a Lost + Wander sued the Company’s Social Decay d/b/a Social Sunday subsidiary and named the Company
for invoices. The Company never guaranteed obligations for Social Sunday and intends to vigorously defend this lawsuit as meritless.
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Tessco
Technologies v Bluwire filed suit in Maryland. The Company has not been properly served and if served would dispute jurisdiction
as well as other defenses on behalf of its Bluwire subsidiary.
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George
Sharpe, In May 2021 sued the Company in Nevada to try to obtain custodianship of the Company. This was defeated and the Company may
be filing for attorney fees, although there are no guarantees the court will award us our attorney fees or other outcomes.
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NOTE
16 – SUBSEQUENT EVENTS
The
Company evaluated all events and transactions that occurred after September 30, 2021 and through the date of this filing in accordance
with FASB ASC 855, “Subsequent Events”. The Company determined that it does have material subsequent events to disclose
as follows:
During
the fourth quarter of 2021, SBI Investments converted $72,887of interest and penalties of the outstanding convertible note into 539,907,556
shares of common stock.
During
the fourth quarter of 2021, Adar Alef converted $60,350 of principal and $22,820 of interest of the outstanding convertible note into
1,386,173,500 shares of common stock.
As
a subsequent event, the $192,900 of the PPP loans were also forgiven by the SBA.