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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

(Mark One)

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Fiscal Year Ended December 31, 2019

 

OR

 

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number 0-23726

 

ADVANTEGO CORPORATION

(Name of Small Business Issuer in its charter)

 

Colorado   84-1116515
(State of incorporation)   (IRS Employer Identification No.)
     
2000 S. Colorado Blvd.    
Tower 1, Suite 2000    
Denver, CO   80222
(Address of principal executive office)   (Zip Code)

 

Registrant’s telephone number, including area code: (949) 627-8977

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.0001

 

Title of each class   Trading Symbol  

Name of each exchange on which registered

Common Stock   None   None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 

Yes ☐ No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

 

Yes ☐ No

 

Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K ☒

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

  Large accelerated filer Non-accelerated filer
  Accelerated filer Smaller reporting company
      Emerging growth company

 

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ No

 

The aggregate market value of the voting stock held by non-affiliates of the Company on June 30, 2019, was approximately $2,871,640.

 

As of August 31, 2022, the Company had 16,417,863,593 outstanding shares of common stock.

 

Documents incorporated by reference: None

 

 

 

 

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which include but are not limited to, statements concerning our business strategy, plans and objectives, projected revenues, expenses, gross profit, income, and mix of revenue. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by us. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “potential,” “believes,” “seeks,” “hopes,” “estimates,” “should,” “may,” “will,” “with a view to” and variations of these words or similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements.

 

2
 

 

TABLE OF CONTENTS

 

      Page
PART I      
       
ITEM 1. BUSINESS   4
       
ITEM1A. RISK FACTORS   5 
       
ITEM 1B. UNRESOLVED STAFF COMENTS   5 
       
ITEM 2. PROPERTIES   5 
       
ITEM 3. LEGAL PROCEEDINGS   5 
       
ITEM 4. MINE SAFETY DISCLOSURE   6 
       
PART II      
       
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES   6 
       
ITEM 6. SELECTED FINANCIAL DATA   7 
       
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   7 
       
ITEM 8. FINANCIAL STAEMENTS AND SUPPLEMENTARY DATA   8
       
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON AND ACCOUNTING AND FINANCIAL DISCLOSURE   26
       
ITEM 9A. CONTROLS AND PROCEEDURES   26
       
ITEM 9B. OTHER INFORMATION   27
       
PART III      
       
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE   27
       
ITEM 11. EXECUTIVE COMPENSATION   28
       
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS   30
       
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE   31
       
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES   31
       
PART IV      
       
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES   31
       
ITEM 16. FORM 10-K SUMMARY   31
       
SIGNATURES   32

 

3
 

 

Item 1. Business

 

Throughout this Annual Report on Form 10-K Advantego Corporation is referred to as “we,” “our,” “us,” the “Company,” or “Advantego.”

 

The Company was formed as a Colorado corporation on July 21, 1988 as Beneficial Capital Financial Services Corp. On February 2, 1995, the Company changed its name to Golden Eagle International, Inc. (“GEII”). GEII had previously engaged in contract gold milling operations primarily in the state of Nevada in the United States.

 

On October 27, 2016, the Company acquired 100% stock ownership of Advantego Technologies, Inc., a California corporation formed on July 29, 2016, in exchange for 11,628,636 shares of the Company’s common stock. The stock exchange was deemed a reverse merger, as the management and operations of Advantego have continued, and Advantego’s management received in the aggregate a majority ownership in GEII as a result of the stock exchange.

 

On February 1, 2018, we changed our name from GEII to Advantego Corporation and our trading symbol from MYNG to ADGO. On January 31, 2018, our shareholders approved a 1-for-11 reverse stock split, which was effective February 22, 2018.

 

Advantego Corporation (OTCPINK: ADGO), headquartered in Denver, Co., is a fully integrated technical agency that develops stand-alone digital and enterprise software products serving niche opportunities within a specific vertical. It can leverage a proprietary “Intelligent Solution Platform” combining leading third-party technologies with existing data and systems as a specialized Business Process as a Service (BPaaS) that is both efficient and cost effective.

 

The Company has offered a variety of stand-alone products tailored specifically to targeted industries as well as combining these with multiple software applications for large enterprises, affiliate networks and franchise operators delivering a comprehensive, all-inclusive, managed bundled solutions.

 

The Company services have included, but were not limited to product design, engineering and manufacturing, custom enterprise software, and licensing to third parties software applications through several strategic partners.

 

We launched our field testing of various products and services beginning in May 2017 and commenced fulfillment of a revenue generating contract of our digital signage product to a network of certified auto care collision centers beginning in March of 2018 throughout the United States and continued through December 31, 2019. The digital signage product allowed the auto care collision centers to display, on a large television screen or counter displays, information concerning the center, their certifications and other informational and promotional content associated with the automotive industry. As of December 31, 2019, we had delivered approximately 1,250 controllers to the individual auto care collision centers. However, in 2019, our primary client, Assured Performance Network, decided not to purchase any additional digital signature products thus eliminating any recurring revenue the Company had expected to realize. Subsequently, Assured Performance was sold in its entirety eliminate any potential future business.

 

The Company also provided subscription-based online directory listing services and was a reseller of software that allowed potential customers to better locate an auto collision center on the internet. As of August 31, 2022, there were no auto care collision centers using the listing services or software.

 

4
 

 

During the fourth quarter of 2018, the Company signed a Strategic Partnership and Manufacturing Agreement with manufacturer and exporter Shenzhen Ferex Electrical Co., Ltd of China (“Shenzhen”) to manufacture and supply electrical components and systems. The Company began offering design, engineering and manufacturing services to its customers in the beginning of 2019.

 

On May 26, 2019, the Company entered into an agreement with Aska Electronics Co., Ltd of China (“Aska”). Aska is a manufacturer of Bluetooth headphones, sport earbuds and associated listening devices and provides its products as an OEM and as an ODM for projects worldwide.

 

This approach continued throughout 2019 until it became apparent that, Aska and Shenzhen, among others, had limited capital capabilities and fell short of the potential of what management thought could be achieved with them. We learned that a catastrophe such as Covid 19 would devastate many small private and public companies because of their limited surplus capital. Since that time, no further strategic partnership agreements were sought by the Company because of the lack of financial capability in most of the potential associates. At no time was cash or a financeable purchase order offered by any of these associates. As of the date of this filing the Company has not generated any revenue related to the Shenzhen or Aska arrangements, and no consideration has been exchanged. The Company, therefore, has no obligations or contingent liabilities from its relationship with these entities moving forward. Any and all commitments that the Company had agreed to with Aska and Shenzhen have since been terminated or run their course.

 

As of August 31, 2022 we were not conducting any business.

 

Other Information

 

As of August 31, 2022, the Company had no full time employees and 2 part time employees.

 

The Company rents executive office space at 2000 S. Colorado Blvd., Tower 1 Suite 2000, Denver, CO 80222. The Company also rents an executive office at 1 Park Plaza, Suite 600, Irvine, CA on a monthly basis for Advantego Technology, Inc., its wholly owned subsidiary. The combined rent on the Company’s offices in Colorado and California ranges from $269.00 - $369.00 per month, depending on the Company’s usage of these spaces.

 

The Company files its annual, quarterly, and current reports with the Securities and Exchange Commission (SEC), copies of which are available at www.sec.gov. The public may also read and copy any materials that the Company has filed with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.

 

Item 1A. Risk Factors.

 

Not applicable.

 

Item 1B. Unresolved Staff Comments.

 

Not applicable.

 

Item 2. Properties.

 

See Item 1.

 

Item 3. Legal Proceedings.

 

None.

 

5
 

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

Our common stock is quoted on the Over-the-Counter market under the trading symbol “ADGO.” The following table shows the high and low prices of our common stock during the last two years. These prices represent inter-dealer prices, without retail mark-up, markdown, or commission, and may not represent actual transactions.

 

2019  Low   High 
         
First Quarter  $0.246   $0.62 
           
Second Quarter  $0.140   $0.50 
           
Third Quarter  $0.0062   $0.198 
           
Fourth Quarter  $0.0001    $0.005 

 

2018  Low   High 
           
First Quarter  $0.66   $0.970 
           
Second Quarter  $0.65   $2.97 
           
Third Quarter  $0.31   $1.42 
           
Fourth Quarter  $0.14   $1.05 

 

The foregoing prices reflect the 1:11 reverse stock split which became effective on the OTCQB Market on February 22, 2018.

 

Holders of our common stock are entitled to receive dividends as may be declared by the Board of Directors. Our Board of Directors is not restricted from paying any dividends but is not obligated to declare a dividend. No cash dividends have ever been declared and it is not anticipated that cash dividends will ever be paid.

 

Our Articles of Incorporation authorize our Board of Directors to issue up to 10,000,000 shares of preferred stock. The provisions in the Articles of Incorporation relating to the preferred stock allow our directors to issue preferred stock with multiple votes per share and dividend rights which would have priority over any dividends paid with respect to the holders of our common stock. The issuance of preferred stock with these rights may make the removal of management difficult even if the removal would be considered beneficial to shareholders generally and will have the effect of limiting shareholder participation in certain transactions such as mergers or tender offers if these transactions are not favored by our management.

 

As of August 31, 2022, the Company had 16,417,863,593 outstanding shares of common stock which were owned by approximately 450 shareholders of record.

 

6
 

 

Item 6. Selected Financial Data

 

Not applicable.

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

 

During the years ended December 31, 2019 and 2018, we had revenues of $105,583 and $200,061, respectively. Our general and administrative expenses increased to $1,097,000 for the year ended December 31, 2019, compared to $1,041,067 during the year ended December 31, 2018. This increase was primarily the result of increases in marketing costs, investor relations and insurance.

 

Interest expense during the year ended December 31, 2019 increased to $1,432,516 from $284,307 during the year ended December 31, 2018. The increase was primarily the result of additional interest on convertible debt needed for operations, prepayment interest penalties, the amortization of debt discounts and the default on certain convertible notes payable which resulted in increased interest expenses.

 

Our sources and (uses) of cash for the years ended December 31, 2019 and 2018 are shown below:

 

   2019   2018 
Cash flows used in operating activities  $(1,536,882)  $(964,546)
Cash flows from investing activities   -    - 
Cash flows provided by financing activities   1,448,750    1,019,148 
Net change in cash  $(88,132)  $54,602 

 

Debt Conversion

 

2019 Debt Conversions – Unaffiliated

 

During the year ended December 31, 2019, unaffiliated holders of our convertible notes payable, elected to convert $234,678 of principal into 281,322,314 shares of our common stock and $18,766 in accrued interest into 101,256,825 shares of common stock.

 

During the year ended December 31, 2019, unaffiliated convertible debt holders were issued 87,705,792 shares of common stock in exchange for satisfaction of $15,100 in outstanding invoices.

 

2018 Debt Conversions – Related Party

 

During the year ended December 31, 2018, related party holders of our convertible notes payable, elected to convert $79,590 of principal into 289,417 shares of our common stock and $27,487 in accrued interest into 99,953 shares of common stock.

 

2018 Debt Conversions – Unaffiliated

 

During the year ended December 31, 2018, unaffiliated holders of our convertible notes payable, elected to convert $427,775 of principal into 1,166,469 shares of our common stock and $13,835 in accrued interest into 35,781 shares of common stock at a price of $.275 per share.

 

7
 

 

See Note D to the December 31, 2019 and 2018 consolidated financial statements, which are a part of this report, for a discussion of our notes payable.

 

Other than funding our operating expenses and paying our notes payable, we did not, as of December 31, 2019, have any significant capital requirements.

 

We do not know of any trends, demands, commitments, events or uncertainties that will result in, or that are reasonable likely to result in, our liquidity increasing or decreasing in any material way.

 

Other than the foregoing, we do not know of any significant changes in our expected sources and uses of cash. We do not have any commitments or arrangements from any person to provide us with any equity capital.

 

See Note B to the financial statements included as part of this report for a description of our significant accounting policies.

 

Item 7A. Quantitative and Qualitative Disclosure about Market Risk

 

Not applicable.

 

Item 8. Financial Statements and Supplementary Data.

 

8
 

 

TABLE OF CONTENTS

 

    Page
     
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (FIRM ID 6117)   10
     
CONSOLIDATED FINANCIAL STATEMENTS    
     
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2019 AND 2018   11
     
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018   12
     

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFECIT FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

  13
     
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018   14
     
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018   15-25

 

9
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders

Advantego Corporation

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Advantego Corporation (the Company) as of December 31, 2019 and 2018, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Consideration of the Company’s Ability to Continue as a Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses and has a negative working capital and limited operations which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note A. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ Pinnacle Accountancy Group of Utah

 

We have served as the Company’s auditor since 2018.

 

Pinnacle Accountancy Group of Utah

(a dba of Heaton & Company, PLLC)

Farmington, Utah

September 6, 2022

 

10
 

 

Advantego Corporation

Consolidated Balance Sheets

As of December 31, 2019 and 2018

 

 

           
   December 31,   December 31, 
   2019   2018 
         
ASSETS        
CURRENT ASSETS          
Cash and equivalents  $3,511   $91,643 
Accounts receivable   2,800    25,400 
Inventory   -    6,499 
Prepaid expenses   3,227    7,608 
Total current assets   9,538    131,150 
           
NON-CURRENT ASSETS          
Deferred offering costs   -    64,236 
           
Total Assets  $9,538   $195,386 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES          
Accounts payable - related parties  $217,500   $255,250 
Accounts payable   11,588    16,142 
Accrued interest, convertible notes payable   181,466    28,964 
Convertible notes payable (net of unamortized debt discounts of $77,161 and $124,563 and unamortized debt premium of $774,543 and $504,386 respectively)   3,403,945    1,355,823 
Total current liabilities   3,814,499    1,656,179 
           
Total Liabilities  $3,814,499   $1,656,179 
           
STOCKHOLDERS’ DEFICIT
Preferred stock, par value $.01 per share; 10,000,000 shares authorized          
Series A convertible preferred stock; 150,000 shares designated; 80,000 and 0 shares issued and outstanding, respectively   800    - 
Series B convertible preferred stock; 4,500,000 shares designated; 240,000 shares issued and outstanding   2,400    2,400 
Common stock, par value $.0001 per share; 300,000,000,000 shares authorized; 487,359,288 and 16,712,819 issued and outstanding, respectively   

48,731

    1,671 
Additional paid-in capital   655,701    567,738 
Accumulated deficit   (4,512,593)   (2,032,602)
Total stockholders’ deficit   (3,804,961)   (1,460,793)
Total Liabilities and Stockholders’ Deficit  $9,538   $195,386 

 

The accompanying footnotes are an integral part of these consolidated financial statements.

 

11
 

 

Advantego Corporation

Consolidated Statements of Operations

For the Years Ended December 31, 2019 and 2018

 

 

           
   2019   2018 
         
REVENUES          
Sales  $105,583   $200,061 
Cost of sales   (56,058)   (128,027)
Gross profit   49,525    72,034 
           
OPERATING EXPENSES          
General and administrative   1,097,000    1,041,067 
           
Total operating expenses   1,097,000    1,041,067 
           
OPERATING LOSS   (1,047,475)   (969,033)
           
OTHER INCOME (EXPENSE)          
Interest expense   (1,432,516)   (284,307)
           
Total other income (expense)   (1,432,516)   (284,307)
           
Loss before income taxes   (2,479,991)   (1,253,340)
Income taxes   -    - 
NET LOSS   (2,479,991)   (1,253,340)
           
Loss per share - basic and diluted  $(0.04)  $(0.08)
Weighted average shares outstanding - basic and diluted   60,551,368    16,334,129 

 

The accompanying footnotes are an integral part of these consolidated financial statements.

 

12
 

 

Advantego Corporation

Consolidated Statement of Changes in Stockholders’ Deficit

For the Years Ended December 31, 2019 and 2018

 

 

                                              
   Series A   Series B           Additional       Total 
   Convertible Preferred Stock   Convertible Preferred Stock  

Common Stock

   Paid-in   Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Deficit 
                                     
Balance at December 31, 2017   -    -    240,000   $2,400    14,664,718   $1,466   $163,707   $(779,262)  $(611,689)
                                              
Common stock issued for cash and exercise of warrants   -    -    -    -    130,591    13    82,612    -    82,625 
Common stock issued for debt                       1,166,469    116    427,659    -    427,775 
Common Stock issued for debt - related party   -    -    -    -    289,417    29    79,561    -    79,590 
Common stock issued for accrued interest   -    -    -    -    35,781    4    13,831    -    13,835 
Common stock issued for accrued interest - related party   -    -    -    -    99,953    10    27,477    -    27,487 
Common stock issued for services   -    -    -    -    230,000    23    218,529    -    218,552 
Common stock issued for accrued officer wages   -    -    -    -    95,890    10    38,490    -    38,500 
Debt premium on convertible notes   -    -    -    -    -    -    (1,309,536)   -    (1,309,536)
Amortization of debt premium   -    -    -    -    -    -    805,150    -    805,150 
Deferred offering costs   -    -    -    -    -    -    14,236    -    14,236 
Forgiveness of related party debt   -    -    -    -    -    -    6,022    -    6,022 
Net loss   -    -    -    -    -    -    -    (1,253,340)   (1,253,340)
                                              
Balance at December 31, 2018   -    -    240,000   $2,400    16,712,819   $1,671   $567,738   $(2,032,602)  $(1,460,793)
                                              
Common stock issued for conversion of notes payable   -    -    -    -    281,322,314    28,127    206,551    -    234,678 
Common stock issued for accrued interest   -    -    -    -    101,256,825    10,126    8,640    -    18,766 
Common stock issued for conversion fees   -    -    -    -    87,705,792    8,771    6,329    -    15,100 
Common stock issued for commitment fees   -    -    -    -    361,538    36    137,348    -    137,384 
Debt premium on convertible notes   -    -    -    -    -    -    (3,366,586)   -    (3,366,586)
Amortization of debt premium   -    -    -    -    -    -    3,096,431    -    3,096,431 
Series A Convertible Preferred Stock issued for services   80,000    800    -    -    -    -    (750)   -    50 
Net loss   -    -    -    -    -    -    -    (2,479,991)   (2,479,991)
                                              
Balance at December 31, 2019   80,000   $800    240,000   $2,400    487,359,288   $48,731   $655,701   $(4,512,593)  $(3,804,961)

 

The accompanying footnotes are an integral part of these consolidated financial statements.

 

13
 

 

Advantego Corporation

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2019 and 2018

 

 

           
   2019   2,018 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(2,479,991)  $(1,253,340)
Adjustments to reconcile net loss to net cash used by operating activities
Amortization of debt discount   326,754    210,108 
Stock-based compensation   50    218,552 
Write-off of deferred offering costs   64,236    - 
Common stock issued for conversion fees   15,100    - 
Common stock issued for commitment fees   137,384    - 
Default and prepayment penalties on convertible notes payable   237,141    - 
Changes in operating assets and liabilities          
(Increase) decrease in accounts receivable   22,600    (25,400)
(Increase) decrease in prepaid expenses   4,381    (7,608)
(Increase) decrease in inventory   6,499    (5,499)
(Decrease) in accounts payable - related parties   (37,750)   (124,329)
(Decrease) in accounts payable   (4,554)   (11,158)
(Decrease) in deferred revenue   -    (4,215)
Increase in accrued interest, convertible notes payable - related parties   -    2,781 
Increase in accrued interest, convertible notes payable   171,268    35,562 
           
Net cash flows used by operating activities   (1,536,882)   (964,546)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
    -    - 
Net cash flows provided by investing activities   -    - 
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from sale of common stock and exercise of warrants   -    82,625 
Proceeds from convertible notes payable   2,342,750    1,084,273 
Principal payments on convertible notes payable   (894,000)   (147,750)
           
Net cash flows provided by financing activities   1,448,750    1,019,148 
           
NET CHANGE IN CASH   (88,132)   54,602 
CASH - BEGINNING OF PERIOD   91,643    37,041 
CASH - END OF PERIOD  $3,511   $91,643 
           
Cash paid for          
Interest  $657,239   $36,571 
Taxes  $-   $- 
           
SUPPLEMENTAL CASH FLOW INFORMATION          
Schedule of Non-cash Investing and Financing Activities:          
Conversion of convertible notes payable into common stock  $234,678   $427,775 
Conversion of convertible notes payable - related parties into common stock  $-   $79,590 
Conversion of accrued interest, convertible notes payable into common stock  $18,766   $13,835 
Conversion of accrued interest, convertible notes payable-related parties into common stock  $-   $27,487 
Conversion of officer wages payable into common stock  $-   $38,500 
Issuance of convertible note payable to secure line of credit  $-   $50,000 
Capitalization of stock offering costs (including $14,236 beneficial conversion feature)  $-   $64,236 
Recording of premium on convertible debt at stock redemption value  $3,366,586   $1,309,536 
Amortization to additional paid in capital of premium on convertible notes payable  $3,096,431   $805,150 
Debt discounts on issuance of convertible notes payable  $279,350   $267,252 
Forgiveness of related party debt  $-   $6,022 

 

The accompanying footnotes are an integral part of these consolidated statements.

 

14
 

 

Advantego Corporation

 

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2019 and 2018

 

 

Note A – Organization and Business

 

Organization and Nature of Business

 

Advantego Corporation (“Advantego,” “we,” or the “Company”) was originally incorporated in Colorado on July 21, 1988, as Beneficial Capital Financial Services Corp. On February 2, 1995, the Company changed its name to Golden Eagle International, Inc. (“GEII”). From late 2008 through June 2009, GEII engaged in contract gold milling operations in the state of Nevada in the United States. GEII had not had any business operations since it disposed of its wholly owned subsidiary, Golden Eagle International, Inc. (Bolivia), in the first quarter of fiscal 2010. Prior to that time, GEII had been involved in the business of minerals exploration and (prior to 2005) mining and milling operations in Bolivia through that subsidiary. More recently, GEII had been a non-operating corporation seeking to sell its remaining milling plant and equipment and/or merge with an operating company. Advantego Technologies, Inc. (“ATI”) is a Colorado corporation formed on July 29, 2016. On October 27, 2016, GEII completed a reverse merger with ATI, which resulted in a change of control and the perpetuation of ATI’s management and business operations.

 

Effective February 1, 2018 and pursuant to Board authorization and majority shareholder approval, the Company changed its name to Advantego Corporation (amending GEII’s Articles of Incorporation accordingly), cancelled its Series A, C, and D preferred shares, and effected a 1-for-11 reverse stock split on its issued and outstanding shares of common stock that became effective on the OTCQB on February 21, 2018 under the symbol “ADGO.”

 

The Company empowers business innovation as a technical solutions provider developing stand-alone digital and enterprise software products to capitalize on niche opportunities within a specific market. The Company leverages a proprietary Intelligent Solution Platform combining leading third-party technologies with existing data and systems to deliver a turnkey specialized Business Process as a Services (BPaaS) that is both scalable and cost effective.

We also provide subscription-based online directory listing services and are a reseller of software that allows potential customers to better locate an auto collision center, or any business, on the internet.

 

Basis of Presentation

 

The accompanying consolidated financial statements represent the operations of Advantego Corporation and its wholly owned subsidiary, Advantego Technologies, Inc., with all intercompany transactions eliminated.

 

Going Concern

 

The consolidated financial statements for the years ended December 31, 2019 and 2018 have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern. The Company has not yet achieved profitable operations, has negative working capital, has accumulated losses of $(4,512,593), since its inception through December 31, 2019, and may incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. We can offer no assurances that we will be able to obtain adequate financing to implement our business plan and remain a going concern.

 

15
 

 

Note B – Summary of Significant Accounting Policies

 

Fair Value of Financial Instruments

 

The Company accounts for fair value measurements in accordance with accounting standard ASC 820-10-50, “Fair Value Measurements.” This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

 

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 

Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

 

The Company’s financial instruments consist of cash, accounts receivable, accounts payable, and notes payable. The carrying amount of cash and accounts payable approximates fair value because of the short-term nature of these items. The carrying amount of notes payable approximates fair value as the individual borrowings bear interest at market interest rates and are also short-term in nature.

 

Use of Estimates

 

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 amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the financial statements.

 

Concentration of Credit Risk

 

From time to time our cash balances, held at a major financial institution, exceed the federally insured limits of $250,000. Our management believes that the financial institution is financially sound and the risk of loss is low.

 

Cash and Cash Equivalents

 

For the statement of cash flows, any liquid investments with a maturity of three months or less at the time of acquisition are considered to be cash equivalents.

 

Revenue Recognition

 

The Company recognizes revenue from the sale of products and services in accordance with ASC 606, “Revenue from Contracts with Customers” following the five steps procedure:

 

Step 1: Identify the contract(s) with customers

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to performance obligations

Step 5: Recognize revenue when the entity satisfies a performance obligation

 

16
 

 

The Company recognizes revenue when it satisfies its obligation by transferring control of the good or service to the customer. A performance obligation is satisfied over time if one of the following criteria are met:

 

Revenue from online directory services is recognized over the life of the agreement ranging from one to twelve months. Revenue from digital signage sales is recognized at the time of sale. The Company recognized $217 and $17,967 in online directory services, and $105,366 and $182,094 in digital signage sales during the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019 and 2018, there were no unfulfilled online directory listing arrangements, resulting in no deferred revenue.

 

Accounts Receivable

 

Management reviews outstanding receivables on a quarterly basis. An allowance for doubtful accounts is provided for all receivables deemed uncollectible. As of December 31, 2019 and 2018, no allowance for doubtful accounts was deemed necessary.

 

Stock Based Compensation

 

We measure stock-based compensation cost in accordance with ASC 718, “Compensation – Stock Compensation,” based on the fair value of the awards on the grant date using a Black-Scholes options pricing model. We recognize the expense as the awards vest or as services are rendered.

 

Income (Loss) Per Share

 

The computation of basic earnings (loss) per common share in accordance with ASC 260, “Earnings per Share,” is based on the weighted average number of shares outstanding during each year. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus the common stock equivalents using the “if-converted method” as detailed in the following chart. In 2019 and 2018, the inclusion of these shares on the consolidated statements of operations would have resulted in a weighted average shares fully diluted number that was anti-dilutive, and as such they are excluded.

 

Fully diluted shares for the years ended December 31, 2019 and 2018:

 

           
   2019   2018 
Basic weighted average shares outstanding   60,551,368    16,334,129 
Convertible debt   72,585,772,197    1,282,830 
Series A Preferred Stock   80,000    - 
Series B preferred stock   10,909    10,909 
Warrants   -    181,818 
Total   72,646,414,474    17,809,686 

 

Income Taxes

 

Income taxes are accounted for under the liability method in accordance with ASC 740, “Income Taxes.” Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statements and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized, or the liability settled.

 

17
 

 

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax law and rates on the date of enactment.

 

Effect of New Accounting Pronouncements

 

There are no recent accounting pronouncements that are expected to have a material impact on our financial position, results of operations or cash flows.

 

Note C – Prepaid Expenses

 

We recorded the following prepaid expenses at December 31:

 

           
   2019   2018 
Prepaid Software License  $-   $1,584 
Prepaid Expenses   -    1,190 
Prepaid Insurance   2,238    3,845 
Deposits   989    989 
Total  $3,227   $7,608 

 

Note D – Loans and Notes Payable

 

Convertible Notes Payable - Related Parties

 

We had uncollateralized related party convertible debt obligations outstanding during the year ended December 31, 2018, which were converted in full as detailed below. There were no related party convertible debt obligations outstanding as of the years ended December 31, 2019 and 2018.

 

(a) Gulf Coast Capital, LLC is a company owned by Mark Bogani, our former CEO. The note was dated September 30, 2016 and represented the consolidation of various smaller notes payable previously outstanding totaling $145,112 plus $15,471 in accrued interest.  Interest continued to accrue at the rate of 5%, with principal and interest being due on demand and convertible into our common stock at the option of the lender at a fixed rate of $.275 per share.  Upon the note’s inception, there was a beneficial conversion feature totaling $29,022 that was being amortized and netted against the principal balance as a debt discount. On December 30, 2016, Gulf Coast Capital converted $115,000 of the note into 418,182 shares of the Company’s common stock.  On January 8, 2018, Gulf Coast Capital converted $24,090 principal plus $21,376 in accrued interest into 165,331 shares of our common stock (Note D), at which point the remaining unamortized debt discount of $4,516 was amortized to interest expense. On June 30, 2018, the remaining $6,022 principal balance was forgiven and written-off to additional paid-in capital.
   
(b) Avcon Services, Inc. is a company owned by Tracy Madsen, our CFO. The note represented amounts totaling $30,500 for CFO services during the period of June 2014 through September 2015, was dated December 31, 2015, carried an interest rate of 5%, and was due on demand. The note and accrued interest, or any portion thereof, were convertible at the option of Avcon, into the Company’s common stock at a fixed rate of $.275 per share through December 31, 2020.  On May 10, 2018, this note was sold to Khalid Mirza. On May 30, 2018, Mr. Mirza converted the note principal of $30,500 plus accrued interest of $5,548 into 131,083 shares of our common stock.

 

18
 

 

(c) On June 29, 2017, the Company entered into an uncollateralized note payable with its then-CFO, Philip Grey, in the amount of $12,500.  The note carried an interest rate of 6% and matured on June 29, 2018.  The note and accrued interest, or any portion thereof, were convertible at the option of the lender, into the Company’s common stock at a fixed rate of $.275 per share. Upon the note’s inception, there was a beneficial conversion feature totaling $12,500 that was being amortized and netted against the note balance as a debt discount. On January 8, 2018, Mr. Grey converted the $12,500 principal plus accrued interest of $375 into 46,818 shares of common stock (Note E), and the remaining debt discount of $6,216 was amortized to interest expense.
   
(d) On September 25, 2017, the Company entered into an uncollateralized note payable with its former CEO, Mark Bogani, in the amount of $12,500.  The note carried an interest rate of 6% and matured on September 25, 2018.  The note and accrued interest, or any portion thereof, were convertible at the option of the lender, into the Company’s common stock at a fixed rate of $.275 per share. Upon the note’s inception, there was a beneficial conversion feature totaling $12,500 that was being amortized and netted against the principal balance as a debt discount. On January 8, 2018, Mr. Bogani converted the $12,500 principal plus accrued interest of $188 into 46,138 shares of common stock (Note E), and the remaining debt discount of $9,204 was amortized to interest expense.

 

Deferred Offering Costs

 

On June 11, 2018, we issued a fixed price convertible note payable in the amount of $50,000 as a commitment fee to Tangiers in order to provide a long-term funding facility for our operations. The note bears interest at 10% per year, is due and payable on January 11, 2019, and is convertible into shares of our common stock at a fixed rate of $1.44 per share. Under the investment agreement, Tangiers has agreed to provide us with up to $5,000,000 of funding during a three-year period. This investment agreement is pending approval of our S-1 filing. This commitment fee is deemed an offering cost, along with an associated beneficial conversion feature of $14,236, for total offering costs of $64,236 being reported as a non-current asset to be amortized to additional paid-in capital pro-rata in conjunction with each future long-term funding tranche received from Tangiers.

 

As of December 31, 2019, we determined that based on the current price of our stock and the limited prospects for a stock price that would allow us to draw upon the line of credit, we canceled the line of credit and wrote off deferred offering costs in the amount of $64,236.

 

Convertible Notes Payable

 

We had uncollateralized convertible debt obligations with unaffiliated investors outstanding at December 31, 2019 and 2018 as follows:

 

   December 31, 2019   December 31, 2018 
Note  Principal   Less Debt Discount   Plus Premium   Net Note Balance   Accrued Interest   Principal   Less Debt Discount   Plus Premium   Net Note Balance   Accrued Interest 
(a)  $66,691   $-   $-   $66,691   $5,177   $75,000   $(33,599)  $56,250   $97,651   $1,134 
(b)   -    -    -    -    -    50,000    -    -    50,000    2,713 
(c)   49,925    -    -    49,925    8,584    125,000    (11,250)   68,072    181,822    4,500 
(d)   -    -    -    -    -    63,000    (4,980)   34,308    92,328    2,016 
(e)   -    -    -    -    -    65,000    (5,214)   35,561    95,347    2,582 
(f)   -    -    -    -    -    125,000    (12,003)   58,829    171,826    5,417 
(g)   -    -    -    -    -    150,000    (13,978)   70,023    206,045    6,700 
(h)   -    -    -    -    -    50,000    (5,597)   35,401    79,804    1,111 
(i)   273,000    -    -    273,000    11,070    273,000    (37,942)   145,942    381,000    2,791 
(j)   -    -    -    -    -    -    -    -    -    - 
(k)   67,101    (1,076)   10,293    76,318    6,156    -    -    -    -    - 
(l)   -    -    -    -    -    -    -    -    -    - 
(m)   -    -    -    -    -    -    -    -    -    - 
(n)   8,800    (10,066)   53,399    52,133    -    -    -    -    -    - 
(o)   100,000    (62)   17,542    117,480    8,750    -    -    -    -    - 
(p)   26,540    (982)   10,833    36,391    1,254    -    -    -    -    - 
(q)   200    (369)   15,757    15,588    4,936    -    -    -    -    - 
(r)   610,000    (10,792)   267,243    866,451    433,615    -    -    -    -    - 
(s)   85,380    (3,514)   18,741    100,607    5,940    -    -    -    -    - 
(t)   63,000    (1,157)   19,247    81,090    5,061    -    -    -    -    - 
(u)   282,000    -    -    282,000    14,284    -    -    -    -    - 
(v)   40,000    (2,938)   9,685    46,747    2,567    -    -    -    -    - 
(w)   65,185    (6,004)   23,218    82,399    3,632    -    -    -    -    - 
(x)   165,800    (6,800)   45,333    204,333    9,934    -    -    -    -    - 
(y)   200,000    (7,535)   99,537    292,002    10,278    -    -    -    -    - 
(z)   63,000    (3,539)   22,867    82,328    2,296    -    -    -    -    - 
(aa)   282,641    (7,049)   34,113    309,705    16,724    -    -    -    -    - 
(bb)   69,300    (7,858)   26,308    87,750    2,685    -    -    -    -    - 
(cc)   100,000    (5,300)   39,259    133,959    4,111    -    -    -    -    - 
(dd)   88,000    (2,118)   61,166    147,048    4,165    -    -    -    -    - 
Totals  $2,706,563   $(77,159)  $774,541   $3,403,945   $181,466   $976,000   $(124,563)  $504,386   $1,355,823   $28,964 

 

19
 

 

From January 17, 2019 through August 7, 2019, the Company issued twenty-one (21) Convertible Promissory Notes to third parties ranging in face values from a low of $40,000 to a high of $610,000 all with maturity dates ranging of nine (9) months to one (1) year. Annual interest rates ranged from a low of 0% to a high of 12%. All notes are convertible at any time after 6 months of the funding of the note into a variable number of the Company’s common stock, based on a conversion rate from 58% to 62% of the lowest trading price from a range of 15 to 25 of the previous days to conversion. When the Company received proceeds, proceeds ranged from $31,800 to $557,500, after disbursements for the lender’s transaction costs, fees and expenses which in aggregate resulted in a total discount ranging from $500 to $52,500 that are amortized to interest expense over the life of each note. Additionally, the notes’ variable conversion rate component requires that the note be valued at its stock redemption value (i.e., “if converted” value) pursuant to ASC 480, “Distinguishing Liabilities from Equity,” with the excess over the note’s undiscounted face value being deemed a premium to be added to the principal balance and amortized to additional paid-in capital over the life of the note. As such, the Company recorded premiums on the note(s) ranging from $42,200 to $1,300,101 as a reduction to additional paid-in capital based on a discounted “if-converted” rates from $.04 to $.33 per share based on the trading prices ranging from 15 to 25 days preceding the note’s issuance), with redemption values between $67,029 and $191,101 due to the range from $.06 to $.45 per share fair market value of the Company’s stock on the note’s date of issuance. Debt discount amortization is recorded as interest expense, while debt premium amortization is recorded as an increase to additional paid-in capital.

 

Debt discount amortization for the years ended December 31, 2019 and 2018, totaled $326,754 and $210,108 respectively. Amortization of debt premiums for the years ended December 31, 2019 and 2018, totaled $3,096,431 and $805,150, respectively, while interest expense for the years ended December 31, 2019 and 2018 totaled was $1,105,762 and $74,199 respectively. Based on the share conversion formula and the share price of $.0001 on December 31, 2019, the outstanding convertible debt principal of 2,706,563 is convertible into 68,023,290,276 shares of fully diluted common stock. Accrued interest of $181,465 on December 31, 2019, is convertible into 4,562,481,921 fully diluted shares if converted based on a discounted share price of $.0001 in accordance with the conversion agreements

 

The convertible notes have various default provisions which result in default during 2020 (see Note H – Subsequent Events). These default terms include a default interest rate of 24% if the notes are not repaid or converted by the maturity date. The noteholder (aa) declared an event of default during the quarter ending December 31, 2019, which increased the note payable from $75,000 to $207,641 and accrued interest from $3,925 to $18,399.

 

20
 

 

For a description of conversions of convertible notes payable during the reporting periods, please see Note E.

 

Note E – Stockholders’ Equity

 

Common Stock

 

We are authorized to issue 300,000,000,000 shares of our $.0001 par value common stock, of which 487,359,288 and 16,712,819 were issued and outstanding at December 31, 2019 and 2018, respectively.

 

On January 8, 2018, the Company issued 95,890 shares of our common stock to a former officer in exchange for $38,500 owed to him for services rendered during 2016 and 2017. The shares were issued at a 50% discount to the market price of the shares which resulted in a fair market value adjustment of $39,552 which was classified as an additional wage expense during the year ended December 31, 2018.

 

On February 1, 2018, the Company issued 190,000 shares of common stock based on the stock’s approximate trading price of $.80 per share for total value of $152,000. The shares were issued to an independent consultant for services rendered over the six months following issuance.

 

On October 1, 2018, the company issued 20,000 shares of our common stock at a price of $2 per share to a former consultant in exchange for $12,000 owed to him for services rendered during 2018.

 

On March 8, 2018, the Company issued 20,000 shares of common stock to an unaffiliated individual as a finder’s fee in connection with the procurement of a variable rate convertible note with an unrelated party as detailed in Note C (d). The stock was valued at $15,000 based on the per-share stock price of $.75 on the issuance date and recorded as a debt discount that was netted with the underlying convertible note and amortized to interest expense over the length of the note, which was converted in full in May 2018.

 

On May 21 through May 30, 2018, the Company issued 110,955 shares of common stock to friends and family under the Company’s Friends and Family Stock Offering at a price of $.55 per share in exchange for $61,025 in cash.

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