The accompanying notes are an integral part of these consolidated financial
statements.
The accompanying notes are an integral part of these consolidated financial
statements.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Note 1 - Nature of Operations
and Basis of Presentation
Organization and Nature
of Operations
Bergio International, Inc.
(the “Company”) was incorporated in the State of Delaware on July 24, 2007 under the name Alba Mineral Exploration, Inc.
On October 21, 2009, as a result of a Share Exchange Agreement, the corporation’s name was changed to Bergio International, Inc.
On February 19, 2020, the Company changed its state of incorporation to Wyoming. The Company is engaged in the product design, manufacturing,
distribution of fine jewelry primarily in the United States and is headquartered in Fairfield, New Jersey. The Company’s intent
is to take advantage of the Bergio brand and establish a chain of retail stores worldwide. The Company’s branded product lines
are products and/or collections designed by the Company’s designer and CEO, Berge Abajian, and will be the centerpiece of the Company’s
retail stores.
On February 10, 2021, the
Company entered into an Acquisition Agreement (“Acquisition Agreement”) with Digital Age Business, Inc., a Florida corporation,
(“Digital Age”), pursuant to which the shareholders of Digital Age agreed to sell all of the assets and liabilities of its
Aphrodite’s business to a recently formed Company known as Aphrodite’s Marketing, Inc. (“Aphrodite’s Marketing”),
a Wyoming corporation in exchange for newly created Series B Preferred Stock of the Company. The Company owns 51% of Aphrodite’s
Marketing (see Note 13).
On July 1, 2021 (“Closing”),
the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with GearBubble, Inc., a Nevada corporation,
(“GearBubble”), pursuant to which the shareholders of GearBubble (the “Equity Recipients”) agreed to sell 100%
of the issued and outstanding shares of GearBubble to a recently formed wholly-owned subsidiary of the Company known as GearBubble Tech,
Inc. (“GearBubble Tech”), a Wyoming corporation in exchange for $3,162,000 (the “Cash Purchase Price”), which
shall be paid as follows: a) $2,000,000 (which was paid in cash at Closing), b) $1,162,000 to be paid in 15 equal installments, and c)
49,000 of the 100,000 authorized shares of the Merger Sub, such that upon the Closing, 51% of the Merger Sub shall be owned by the Company,
and 49% of the Merger Sub shall be owned by the GearBubble Shareholders. The Company owns 51% of GearBubble Tech (see Note 13).
Basis of Presentation
The accompanying interim
condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information,
which includes consolidated interim financial statements and present the consolidated interim financial statements of the Company and
its wholly-owned and majority-owned subsidiaries as of September 30, 2021. All intercompany transactions and balances have been eliminated.
In the opinion of management, all adjustments necessary to present fairly our financial position, results of operations, and cash flows
have been made. Those adjustments consist of normal and recurring adjustments. The condensed consolidated financial statements should
be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2020, and footnotes
thereto included in the Company’s Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on
March 18, 2021 (the “Annual Report”). The results of operations for the three and nine months ended September 30, 2021, are
not necessarily indicative of the results to be expected for the full year.
Impact of the COVID-19
Coronavirus
The Company’s operations
have been affected by the recent and ongoing outbreak of the coronavirus disease 2019 (COVID-19) which in March 2020, was declared a
pandemic by the World Health Organization. The ultimate disruption which may be caused by the outbreak is uncertain; however, it has
resulted in a material adverse impact on the Company’s financial position, operations and cash flows. Areas affected include, but
are not limited to, disruption to the Company’s customers and revenue, including a significant disruption in consumer demand and
accessories, labor workforce, inability of customers to pay outstanding accounts receivable due and owing to the Company as they limit
or shut down their businesses, customers seeking relief or extended payment plans relating to accounts receivable due and owing
to the Company, unavailability of products and supplies used in operations, and the decline in value of assets held by the Company, including
property and equipment. As such, the comparability of the Company’s operating results has been affected by significant adverse
impacts related to the COVID-19 pandemic.
The Company has increased
its online presence to minimize the impact of having to close its retail stores as well as directing efforts towards its wholesale operations.
The Company, as mentioned entered into an agreement to form a newly created company to increase its online presence.
BERGIO INTERNATIONAL,
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Non-controlling Interest
in Consolidated Financial Statements
In December 2007, the FASB
issued ASC 810-10-65, “Non-controlling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin
No. 51” (“SFAS No. 160”). This ASC clarifies that a non-controlling (minority) interest in a subsidiary is an ownership
interest in the entity that should be reported as equity in the consolidated financial statements. It also requires consolidated net
income to include the amounts attributable to both the parent and non-controlling interest, with disclosure on the face of the consolidated
income statement of the amounts attributed to the parent and to the non-controlling interest. In accordance with ASC 810-10- 45-21, those
losses attributable to the parent and the non-controlling interest in subsidiaries may exceed their interests in the subsidiary’s
equity. The excess and any further losses attributable to the parent and the non-controlling interest shall be attributed to those interests
even if that attribution results in a deficit non-controlling interest balance.
On February 9, 2021, the
Company entered into an Acquisition Agreement which resulted to the acquisition of 51% interest in Aphrodite’s Marketing. Additionally,
on July 1, 2021, the Company entered into a Merger Agreement with GearBubble which resulted to the acquisition of 51% interest in the
Merger Sub, GearBubble Tech. As of September 30, 2021, the Company recorded a non-controlling interest balance of $(494,650) in connection
with the majority-owned subsidiaries, Aphrodite’s Marketing and GearBubble Tech as reflected in the accompanying condensed consolidated
balance sheet and losses attributable to non-controlling interest of $483,655 and $860,807 during the three and nine months ended September
30, 2021, respectively as reflected in the accompanying condensed consolidated statements of operations.
Note 2 - Going Concern
These unaudited condensed
consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. As reflected in the accompanying unaudited condensed consolidated financial
statements, the Company had a net loss and cash used in operations of $2,984,584 and $2,295,489, respectively, for the nine months ended
September 30, 2021. Additionally, the Company had an accumulated deficit of approximately $14,800,000 at September 30, 2021. These
factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the
issuance date of this report. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become
cash flow positive or raise additional capital pursuant to debt or equity financings. The Company may seek to raise additional capital
through additional debt and/or equity financings to fund its operations in the future; however, no assurance can be provided that the
Company will be able to raise additional capital on favorable terms, or at all. If the Company is unable to raise additional capital
or secure additional lending in the future to fund its business plan, the Company may need to curtail or cease its operations.
It is our intention to
establish the Company as a holding company for the purpose of establishing retails stores worldwide. The Company’s branded product
lines are products and/or collections designed by the Company’s designer and CEO, Berge Abajian, and will be the centerpiece of
the Company’s retail stores. The Company also intend to complement its own quality-designed jewelry with other products and the
Company’s specially-designed handbags. This is in line with the Company’s strategy and belief that a brand name can create
an association with innovation, design and quality which helps add value to the individual products as well as facilitate the introduction
of new products. It is the Company’s intention to open elegant stores in “high-end” areas and provide excellent service
in our stores which will be staffed with knowledgeable professionals.
The Company has also increased
its online presence to minimize the impact of having to close its retail stores as well as directing efforts towards its wholesale operations.
The newly acquire majority owned subsidiaries, Aphrodite Marketing and GearBubble Tech of which the Company owns 51%, will greatly enhance
the Company’s online presence and provide the opportunity for future growth.
These unaudited condensed
consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded assets,
or the 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
Principles of Consolidation
The accompanying interim
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States
which includes the Company, its wholly-owned subsidiary and its majority owned subsidiaries as of September 30, 2021. All significant
inter-company accounts and transactions have been eliminated.
BERGIO INTERNATIONAL,
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Use of Estimates
The preparation of unaudited
condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant
judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed
at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to
one or more future events. Accordingly, the actual results could differ significantly from estimates. Significant estimates during the
nine months ended September 30, 2021 and 2020 include the estimates of useful lives of property and equipment and intangible assets,
valuation of the operating lease liability and related right-of-use asset, valuation of derivatives, valuation of beneficial conversion
features on convertible debt, allowance for uncollectable receivables, valuation of equity based instruments issued for other than cash,
the fair value of warrants issued with debt, the valuation allowance on deferred tax assets, and stock-based compensation.
Revenue Recognition
The Company applies ASC
Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 establishes a single comprehensive model for entities
to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance.
This standard requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires
certain additional disclosures. ASC 606 requires us to identify distinct performance obligations. A performance obligation
is a promise in a contract to transfer a distinct good or service to the customer. When distinct performance obligations exist,
the Company allocates the contract transaction price to each distinct performance obligation. The standalone selling price, or our
best estimate of standalone selling price, is used to allocate the transaction price to the separate performance obligations. The Company
recognizes revenue when, or as, the performance obligation is satisfied.
Determining whether products
and services are considered distinct performance obligations that should be accounted for separately versus together may require significant
judgment. Also, significant judgment may be required to determine the allocation of transaction price to each distinct performance
obligation.
Generally, revenues are
recognized at the time of shipment to the customer with the price being fixed and determinable and collectability assured, provided title
and risk of loss is transferred to the customer. Provisions, when appropriate, are made where the right to return exists. Shipping and
handling costs charged to customers are classified as sales, and the shipping and handling costs incurred are included in cost of sales.
The Company’s subsidiary, GearBubble Tech,
recognizes revenue from three sources: (1) e-commerce revenue (2) platform subscription fees and (3) partner and services revenue.
|
|
●
|
Revenues
are recognized when the merchandise is shipped to the customer and title is transferred and are recorded net of any returns, and discounts
or allowances. Shipping cost paid by customers are primarily for ecommerce sales and are included in revenue. Merchandise sales
are fulfilled with inventory sourced through our suppliers. Therefore, the Company’s contracts have a single performance obligation
(shipment of product).
|
The Company evaluates the
criteria outlined in ASC 606-10-55, Principal versus Agent Considerations, in determining whether it is appropriate to record
the gross amount of merchandise sales and related costs or the net amount earned as commissions. The Company evaluates whether it is
appropriate to recognize revenue on a gross or net basis based upon its evaluation of whether the Company obtains control of the specified
goods by considering if it is primarily responsible for fulfillment of the promise, has inventory risk, and has the latitude in establishing
pricing and selecting suppliers, among other factors. The ecommerce sellers have no further obligation to the customer after the promised
goods are transferred to the customer. Based on its evaluation of these factors, we have determined we are the principal in these arrangements.
Through our suppliers, we have the ability to control the promised goods and as a result, the Company records ecommerce sales on a gross
basis.
BERGIO INTERNATIONAL,
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
The Company refunds the
full cost of the merchandise returned and all original shipping charges if the returned item is defective or we or our partners have
made an error, such as shipping the wrong product. If the return is not a result of a product defect or a fulfillment error and the customer
initiate a return of an unopened item within 30 days of delivery, for most products we refund the full cost of the merchandise minus
the original shipping charge and actual return shipping fees. If our customer returns an item that has been opened or shows signs of
wear, the Company issues a partial refund minus the original shipping charge and actual return shipping fees.
|
|
●
|
The
Company generally recognizes platform subscription fees in the month they are earned. Annual subscription payments received that are
related to future periods are recorded as deferred revenue to be recognized as revenues over the contract term or period.
|
|
|
●
|
Partner
and services revenue is derived from: (1) partner marketing and promotion, and (2) non-recurring professional services. Revenue
from partner marketing and promotion and non-recurring professional services is recognized as the service is performed.
|
Cost of revenue
Cost of revenue consists
primarily of the cost of the merchandise, shipping fees, credit card processing services, fulfillment cost, ecommerce sellers’
pay-out; costs associated with operation and maintenance of the Company’s platform.
Marketing
The Company applies ASC
720 “Other Expenses” to account for marketing costs. Pursuant to ASC 720-35-25-1, the Company expenses marketing costs as
incurred. Marketing costs include advertising and related expenses for third party personnel engaged in marketing and selling activities,
including sales commissions. The Company directs its customers to the Company’s ecommerce platform through social media, digital
marketing, and promotional campaigns. Marketing costs were $645,375 and $7,619 for the three months ended September 30, 2021 and 2020,
respectively, and marketing costs were $2,384,530 and $12,215 for the nine months ended September 30, 2021 and 2020, are included in
selling and marketing expenses on the unaudited condensed statement of operations.
Fair Value of Financial
Instruments
FASB ASC 820 - Fair Value
Measurements and Disclosures, defines fair value 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. FASB ASC 820 requires disclosures about the fair value
of all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about the fair value of financial
instruments are based on pertinent information available to the Company on September 30, 2021. Accordingly, the estimates presented in
these financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments.
FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or
unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement)
and the lowest priority to unobservable inputs (Level 3 measurement).
The three levels of the
fair value hierarchy are as follows:
|
Level
1:
|
Inputs are unadjusted
quoted prices in active markets for identical assets or liabilities available at the measurement date.
|
|
|
|
|
Level
2:
|
Inputs are unadjusted
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, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable
market data.
|
|
|
|
|
Level
3:
|
Inputs
are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would
use in pricing the asset or liability based on the best available information.
|
The carrying amounts reported
in the consolidated balance sheets for cash, due from and to related parties, prepaid expenses, accounts payable and accrued liabilities
approximate their fair market value based on the short-term maturity of these instruments.
In August 2018, the FASB
issued ASU 2018-13,” Changes to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness
of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure
requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Upon
adoption, this guidance did not have a material impact on its consolidated financial statements.
BERGIO INTERNATIONAL,
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Assets or liabilities measured
at fair value or a recurring basis included embedded conversion options in convertible debt and convertible preferred stock and were
as follows at September 30, 2021:
|
|
|
September 30, 2021
|
|
|
December 31, 2020
|
|
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total derivative liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,948,888
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
201,430
|
|
ASC 825-10 “Financial
Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value
option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs.
If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings
at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding equity instruments.
Cash and Cash Equivalents
Cash equivalents are comprised
of certain highly liquid instruments with a maturity of three months or less when purchased. The Company did not have any cash equivalents
on hand at September 30, 2021 and December 31, 2020. The Company places its cash with high credit quality financial institutions. The
Company’s accounts at these institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000.
To reduce its risk associated with the failure of such financial institutions, the Company evaluates, at least annually, the rating of
the financial institutions in which it holds deposits. At September 30, 2021 and December 31, 2020, the Company had cash in excess of
FDIC limits of approximately $380,000, and $0, respectively.
Accounts Receivable
Accounts receivable are
generated from sales of fine jewelry to retail outlets throughout the United States. At September 30, 2021 and December 31, 2020, accounts
receivable were substantially comprised of balances due from retailers.
The Company performs ongoing
credit evaluations of its customers and adjusts credit limits based on customer payment and current credit worthiness, as determined
by review of their current credit information. The Company continuously monitors credit limits for and payments from its customers and
maintains provision for estimated credit losses based on its historical experience and any specific customer issues that have been identified.
While such credit losses have historically been within the Company’s expectation and the provision established, the Company cannot
guarantee that this will continue.
An allowance for doubtful
accounts is provided against accounts receivable for amounts management believes may be uncollectible. The Company determines the adequacy
of this allowance by regularly reviewing the composition of its accounts receivable aging and evaluating individual customer receivables,
considering the customer’s financial condition, credit history and current economic circumstance. The Company historically has
been able to collect the accounts receivable balance during a period of nine months to a year. While credit losses have historically
been within the Company’s expectation and the provision established, the Company cannot guarantee that this will continue. As of
September 30, 2021 and December 31, 2020, the allowance for doubtful accounts was $0 for both periods.
Inventory
Inventories consist primarily
of finished goods and are stated at the lower of cost or market. Cost is determined using the weighted average method, and average cost
is recomputed after each inventory purchase or sale. Inventories are written down if the estimated net realizable value is less than
the recorded value, if appropriate. The Company reviews the carrying cost of inventories by product to determine the adequacy of reserves
for obsolescence. In accounting for inventories, the Company must make estimates regarding the estimated realizable value of inventory.
The estimate is based, in part, on the Company’s forecasts of future sales and age of inventory.
Long-Lived Assets
The Company assesses the
recoverability of the carrying value of its long-lived assets whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount
of an asset to future, undiscounted cash flows expected to be generated by an asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. No impairment losses were
recognized for the nine months ended September 30, 2021 and 2020.
BERGIO INTERNATIONAL,
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Property and equipment
Property is carried at
cost. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are
retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included
in income in the year of disposition. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets,
generally three to five years. The Company recorded depreciation expense of $44,947 and $24,616 during the nine months ended September
30, 2021 and 2020, respectively.
Stock-based compensation
Stock-based compensation
is accounted for based on the requirements of ASC 718 – “Compensation–Stock Compensation”, which requires recognition
in the financial statements of the cost of employee, non-employee and director services received in exchange for an award of equity instruments
over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period).
The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date
fair value of the award.
Derivative Liabilities
The Company has certain
financial instruments that are embedded derivatives associated with capital raises and acquisition (see Note 13). The Company evaluates
all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives
to be separately accounted for in accordance with ASC 815-10 – Derivative and Hedging – Contract in Entity’s Own
Equity. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and
marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company,
the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment,
the respective derivative liability is marked to fair value at the conversion, repayment, or exercise date and then the related fair
value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment.
In July 2017, FASB issued
ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815):
(Part I) Accounting for Certain Financial Instruments with Down Round Features. These amendments simplify the accounting for certain
financial instruments with down-round features. The amendments require companies to disregard the down-round feature when assessing whether
the instrument is indexed to its own stock, for purposes of determining liability or equity classification. For public business entities,
the amendments in Part I of the ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December
15, 2018.
Concentration Risk
Concentration of
Revenues
For the nine months ended
September 30, 2021 and 2020, no customer accounted for over 10% of total revenues.
Recent Accounting Pronouncements
Other accounting standards
that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact
on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to
have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
Note 4 - Net Income
(Loss) per Share
Pursuant to ASC 260-10-45,
basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for
the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock,
common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist
of common stock issuable for stock options and stock warrants (using the treasury stock method), convertible notes and common stock issuable.
These common stock equivalents may be dilutive in the future.
For the nine months
ended September 30, 2020, 121,387,510 shares issuable upon the exercise of warrants and conversion of convertible debt were not included
in the computation of diluted net loss because their inclusion would be anti-dilutive.
BERGIO INTERNATIONAL,
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
The potentially dilutive
common stock equivalents as of September 30, 2021 were excluded from the dilutive loss per share calculation as they would be antidilutive
due to the net loss as follow:
|
|
|
September 30,
2021
|
|
|
Common Stock Equivalents:
|
|
|
|
|
Stock Warrants
|
|
|
756,575,000
|
|
|
Convertible Preferred Stock
|
|
|
283,098,172
|
|
|
Convertible Notes
|
|
|
1,036,315,639
|
|
|
Total
|
|
|
2,076,163,811
|
|
Note 5 - Convertible
Notes Payable
As of September 30, 2021,
and December 31, 2020, convertible notes payable consisted of the following:
|
|
|
September
30,
2021
|
|
|
December
31,
2020
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Principal amount
|
|
$
|
1,732,500
|
|
|
$
|
262,104
|
|
|
Less: unamortized debt discount
|
|
|
(751,896
|
)
|
|
|
(29,234
|
)
|
|
Convertible notes payable, net
|
|
$
|
980,604
|
|
|
$
|
232,870
|
|
Auctus Funds, LLC.
On November 6, 2019, the
Company entered into a 12% convertible promissory note in the amount of $125,000 with Auctus Fund, LLC. The principal and accrued interest
is payable on or before August 20, 2020 and interest accrues at the rate of 12% per annum. Interest shall be computed on the basis of
a 365-day year and the actual number of days elapsed. Any amount of principal or interest on this note which is not paid when due shall
bear interest at the rate of the lesser of (i) twenty-four percent (24%) per annum and (ii) the maximum amount permitted under law from
the due date thereof until the same is paid (the “Default Interest”). The Holder shall have the right from time to time to
convert all or any part of the outstanding and unpaid principal, interest, penalties, and all other amounts under this note into fully
paid and non-assessable shares of common stock.
The conversion price shall
equal the lesser of: (i) the lowest trading price during the previous twenty-five (25) trading day period ending on the latest complete
trading day prior to the date of this Note, and (ii) the variable conversion which shall mean 60% multiplied by the lowest trading price
for the common stock during the twenty-five (25) trading day period ending on the latest complete trading day prior to the conversion
date. Furthermore, the conversion price may be adjusted downward if, within three (3) business days of the transmittal of the notice
of conversion to the Borrower or Borrower’s transfer agent, the Common Stock has a closing bid which is 5% or lower than that set
forth in the Notice of Conversion.
During the nine months
ended September 30, 2021, principal of $91,399 and $6,512 of accrued interest were fully converted into 25,642,684, shares of common
stock. The outstanding balances at September 30, 2021 and December 31, 2020 were $0 and $91,399, respectively, with accrued interest
of $0 for both periods.
Power Up Lending Group
On July 13, 2020, the Company
entered into an 8% convertible note in the amount of $55,000 with Power Up Lending Group. The principal and accrued interest was payable
on or before July 13, 2021. The note may not be prepaid except under certain conditions. Any amount of principal or interest on this
note which was not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until
the same was paid. At the option of the Holder, but not before 180 days from the date of issuance, the holder may elect to convert all
or part of the convertible into the Company’s common stock. The conversion price was 63% multiplied by the lowest trading price
(representing a discount rate of 37%) during the previous 15 trading day period ending on the latest complete trading day prior to the
date of this note. During the nine months ended September 30, 2021, principal of 55,000 and $2,200 of accrued interest were converted
into 19,066,667, shares of common stock. The outstanding balances at September 30, 2021 and December 31, 2020 were $0 and $55,000, respectively,
with accrued interest of $0 and $2,061 at September 30, 2021 and December 31, 2020, respectively.
BERGIO INTERNATIONAL,
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
On October 26, 2020, the
Company entered into an 8% convertible note in the amount of $44,000 with Power Up Lending Group. The principal and accrued interest
was payable on or before October 26, 2021. The note may not be prepaid except under certain conditions. Any amount of principal or interest
on this note which was not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof
until the same was paid. At the option of the Holder, but not before 180 days from the date of issuance, the holder may elect to convert
all or part of the convertible into the Company’s common stock. The conversion price was 63% multiplied by the lowest trading price
(representing a discount rate of 37%) during the previous 15 trading day period ending on the latest complete trading day prior to the
date of this note. During the nine months ended September 30, 2021, principal of $44,000 and $1,760 of accrued interest were fully converted
into 9,533,333, shares of common stock. The outstanding balances at September 30, 2021 and December 31, 2020 were $0 and $44,000, respectively,
with accrued interest of $0 and $868 at September 30, 2021 and December 31, 2020, respectively.
On November 9, 2020, the
Company entered into an 8% convertible note in the amount of $35,000 with Power Up Lending Group. The principal and accrued interest
was payable on or before November 9, 2021. The note may not be prepaid except under certain conditions. Any amount of principal or interest
on this note which was not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof
until the same was paid. At the option of the Holder, but not before 180 days from the date of issuance, the holder may elect to convert
all or part of the convertible into the Company’s common stock. The conversion price was 63% multiplied by the lowest trading price
(representing a discount rate of 37%) during the previous 15 trading day period ending on the latest complete trading day prior to the
date of this note. During the nine months ended September 30, 2021, principal of $35,000 and $1,400 of accrued interest were fully converted
into 8,905,753, shares of common stock. The outstanding balances at September 30, 2021 and December 31, 2020 were $0 and $35,000, respectively,
with accrued interest of $0 and $399 at September 30, 2021 and December 31, 2020, respectively.
On January 15, 2021, the
Company entered into an 8% convertible note in the amount of $43,500 with Power Up Lending Group. The principal and accrued interest
was payable on or before January 15, 2022. The note may not be prepaid except under certain conditions. Any amount of principal or interest
on this note which was not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof
until the same is paid. At the option of the Holder, but not before 180 days from the date of issuance, the holder may elect to convert
all or part of the convertible into the Company’s common stock. The conversion price was 63% multiplied by the lowest trading price
(representing a discount rate of 37%) during the previous 15 trading day period ending on the latest complete trading day prior to the
date of this note. During the nine months ended September 30, 2021, principal of $43,500 and $1,740 of accrued interest were fully converted
into 11,905,263, shares of common stock. The outstanding principal and accrued interest balance at September 30, 2021 was $0.
On January 29, 2021, the
Company entered into an 8% convertible note in the amount of $33,000 with Power Up Lending Group. The principal and accrued interest
was payable on or before January 29, 2022. The note may not be prepaid except under certain conditions. Any amount of principal or interest
on this note which was not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof
until the same is paid. At the option of the Holder, but not before 180 days from the date of issuance, the holder may elect to convert
all or part of the convertible into the Company’s common stock. The conversion price was 63% multiplied by the lowest trading price
(representing a discount rate of 37%) during the previous 15 trading day period ending on the latest complete trading day prior to the
date of this note. During the nine months ended September 30, 2021, principal of $33,000 and $1,320 of accrued interest were fully converted
into 9,031,579, shares of common stock. The outstanding principal and accrued interest balance at September 30, 2021 was $0.
On March 3, 2021, the Company
entered into an 8% convertible note in the amount of $63,500 with Power Up Lending Group. The principal and accrued interest was payable
on or before March 3, 2022. The note may not be prepaid except under certain conditions. Any amount of principal or interest on this
note which was not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until
the same is paid. At the option of the Holder, but not before 180 days from the date of issuance, the holder may elect to convert all
or part of the convertible into the Company’s common stock. The conversion price was 63% multiplied by the lowest trading price
(representing a discount rate of 37%) during the previous 15 trading day period ending on the latest complete trading day prior to the
date of this note. During the nine months ended September 30, 2021, principal of $63,500 and $2,540 of accrued interest were fully converted
into 20,012,121, shares of common stock. The outstanding principal and accrued interest balance at September 30, 2021 was $0.
BERGIO INTERNATIONAL,
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
On May 11, 2021, the Company
entered into an 8% convertible note in the amount of $53,750 less legal and financing costs of $3,750 for net proceeds of $50,000 with
Power Up Lending Group. The principal and accrued interest is payable on or before May 11, 2022. The note may not be prepaid except under
certain conditions. Any amount of principal or interest on this note which is not paid when due shall bear interest at the rate of twenty
two percent (22%) per annum from the due date thereof until the same is paid. At the option of the Holder, but not before 180 days from
the date of issuance, the holder may elect to convert all or part of the convertible into the Company’s common stock. The conversion
price shall mean 63% multiplied by the lowest trading price (representing a discount rate of 37%) during the previous 15 trading day
ending on the latest complete trading day prior to the date of this note. There were no conversions during the nine months ended September
30, 2021. The outstanding balance at September 30, 2021 was $53,750, with accrued interest of $1,673 at September 30, 2021.
On June 22, 2021, the Company
entered into an 8% convertible note in the amount of $55,750 less legal and financing costs of $3,750 for net proceeds of $52,000 with
Power Up Lending Group. The principal and accrued interest is payable on or before June 22, 2022. The note may not be prepaid except
under certain conditions. Any amount of principal or interest on this note which is not paid when due shall bear interest at the rate
of twenty two percent (22%) per annum from the due date thereof until the same is paid. At the option of the Holder, but not before 180
days from the date of issuance, the holder may elect to convert all or part of the convertible into the Company’s common stock.
The conversion price shall mean 63% multiplied by the lowest trading price (representing a discount rate of 37%) during the previous
15 trading day trading day period ending on the latest complete trading day prior to the date of this note. There were no conversions
during the nine months ended September 30, 2021. The outstanding balance at September 30, 2021 was $55,750, with accrued interest of
$1,222 at September 30, 2021.
On July 20, 2021, the Company
entered into an 8% convertible note in the amount of $55,000 less legal and financing costs of $3,750 for net proceeds of $51,250 with
Power Up Lending Group. The principal and accrued interest is payable on or before July 20, 2022. The note may not be prepaid except
under certain conditions. Any amount of principal or interest on this note which is not paid when due shall bear interest at the rate
of twenty two percent (22%) per annum from the due date thereof until the same is paid. At the option of the Holder, but not before 180
days from the date of issuance, the holder may elect to convert all or part of the convertible into the Company’s common stock.
The conversion price shall mean 63% multiplied by the lowest trading price (representing a discount rate of 37%) during the previous
15 trading day trading day period ending on the latest complete trading day prior to the date of this note. There were no conversions
during the nine months ended September 30, 2021. The outstanding balance at September 30, 2021 was $55,000, with accrued interest of
$868 at September 30, 2021.
On July 28, 2021, the Company
entered into an 8% convertible note in the amount of $48,750 less legal and financing costs of $3,750 for net proceeds of $45,000 with
Power Up Lending Group. The principal and accrued interest is payable on or before July 28, 2022. The note may not be prepaid except
under certain conditions. Any amount of principal or interest on this note which is not paid when due shall bear interest at the rate
of twenty two percent (22%) per annum from the due date thereof until the same is paid. At the option of the Holder, but not before 180
days from the date of issuance, the holder may elect to convert all or part of the convertible into the Company’s common stock.
The conversion price shall mean 63% multiplied by the lowest trading price (representing a discount rate of 37%) during the previous
15 trading day trading day period ending on the latest complete trading day prior to the date of this note. There were no conversions
during the nine months ended September 30, 2021. The outstanding balance at September 30, 2021 was $48,750, with accrued interest of
$684 at September 30, 2021.
On September 14, 2021,
the Company entered into an 8% convertible note in the amount of $78,750 less legal and financing costs of $3,750 for net proceeds of
$75,000 with Power Up Lending Group. The principal and accrued interest is payable on or before September 14, 2022. The note may not
be prepaid except under certain conditions. Any amount of principal or interest on this note which is not paid when due shall bear interest
at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid. At the option of the Holder, but
not before 180 days from the date of issuance, the holder may elect to convert all or part of the convertible into the Company’s
common stock. The conversion price shall mean 63% multiplied by the lowest trading price (representing a discount rate of 37%) during
the previous 15 trading day trading day period ending on the latest complete trading day prior to the date of this note. During the nine
months ended September 30, 2021, principal of $72,000 and $35,524 of accrued interest were converted into 71,682,466, shares of common
stock. The outstanding balance at September 30, 2021 was $78,750, with accrued interest of $276 at September 30, 2021.
BERGIO INTERNATIONAL,
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Trillium Partners LLP,
3a Capital Establishment, JP Carey Limited Partners, LP, and JP Carey Enterprises, Inc.
On February 11, 2021, the
Company entered into 10% convertible notes totaling $1,512,500 less legal and financing costs of $137,500 for net proceeds of $1,375,000.
The principal and accrued interest is payable on or before February 11, 2022. The note may not be prepaid except under certain conditions.
The Company shall pay interest on a quarterly basis in arrears in cash to the Holder commencing on March 1, 2021 and continuing thereafter
on each quarterly anniversary of such date until the Obligations have been satisfied in full, on the aggregate then outstanding principal
amount of this Note at the rate of ten percent (10%) per annum. Any amount of principal or interest on this note which is not paid when
due shall bear interest at the rate of twenty four percent (24%) per annum from the due date thereof until the same is paid. At the option
of the Holder, but not before 180 days from the date of issuance, the holder may elect to convert all or part of the convertible into
the Company’s common stock. The conversion price in effect on any Conversion Date shall be equal to $0.0015. Additionally, the
Company granted 756,250,000 warrant to purchase shares of the Company’s common stock in connection with the issuance of this convertible
note. The warrants have a term of 5 years from the date of grant and was exercisable at an exercise price of $0.002. The Company accounted
for the warrants issued with this convertible notes by using the relative fair value method. The total debt discount consisted of beneficial
conversion feature of $687,500 and relative fair value of the warrants of $687,500 using a Black-Scholes model with the following assumptions:
stock price at valuation date of $0.013 based on the closing price of common stock at date of grant, exercise price of $0.002, dividend
yield of zero, expected term of 5.00, a risk-free rate of 0.46%, and expected volatility of 424%. There were no conversions during the
nine months ended September 30, 2021. The outstanding balance at September 30, 2021 was $1,440,500 with accrued interest of $57,787 at
September 30, 2021.
For the three and nine
months ended September 30, 2021, amortization of debt discounts and financing cost related to all the convertible notes above amounted
to $553,689 and $1,224,554, respectively, and for the three and nine months ended September 30, 2020 amounted to $67,386 and $186,853,
respectively, which has been amortized to interest expense on the accompanying unaudited condensed consolidated statements of operations.
Note 6 - Derivative
Liability
The Company applies the
provisions of ASC 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Stock, under which convertible instruments
that contain terms and provisions which cause the embedded conversion options to be accounted for as derivative liabilities. As a result,
embedded conversion options in certain convertible notes and convertible preferred stock are recorded as a liability and are revalued
at fair value at each reporting date.
The
following is a roll forward for the nine months ended September 30, 2021 of the fair value liability of price adjustable derivative instruments:
|
|
|
Fair Value of Liability for Derivative Instruments
|
|
|
|
|
(Unaudited)
|
|
|
Balance at December 31, 2020
|
|
$
|
201,430
|
|
|
Initial valuation of derivative liabilities included in debt discount
|
|
|
413,750
|
|
|
Initial valuation of derivative liabilities related to issuance of Series B
and C Preferred Stock
|
|
|
932,378
|
|
|
Initial valuation of derivative liabilities included in derivative expense
|
|
|
311,341
|
|
|
Reclassification of derivative liabilities to gain on extinguishment of debt
|
|
|
(527,958
|
)
|
|
Change in fair value of derivative liabilities
|
|
|
617,947
|
|
|
Balance at September 30, 2021
|
|
$
|
1,948,888
|
|
The Company calculates
the estimated fair values of the liabilities for derivative instruments using the Black-Scholes pricing model. The closing price of the
Company’s common stock at September 30, 2021, the last trading day of the period ended September 30, 2021, was $0.0071. The volatility,
expected remaining term and risk-free interest rates used to estimate the fair value of derivative liabilities at September 30, 2021
are indicated in the table that follows. The expected term is equal to the remaining term of the convertible instruments and the risk-free
rate is based upon rates for treasury securities with the same term.
|
|
|
Initial Valuations
(on new derivative
instruments entered
into during the nine
months ended
September 30,
2021)
|
|
|
September 30,
2021
|
|
|
Volatility
|
|
|
219% to 412
|
%
|
|
|
219
|
%
|
|
Expected Remaining Term (in years)
|
|
|
0.45 to 1.50
|
|
|
|
0.61 to 0.96
|
|
|
Risk Free Interest Rate
|
|
|
0.05 to 0.10
|
%
|
|
|
0.05 to 0.09
|
%
|
|
Expected dividend yield
|
|
|
None
|
|
|
|
None
|
|
BERGIO INTERNATIONAL,
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Note 7 - Loans Payable
Loans payable consisted
of the following:
|
|
|
September
30,
2021
|
|
|
December
31,
2020
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Loans principal amount
|
|
$
|
1,077,459
|
|
|
$
|
312,300
|
|
|
Accrued interest
|
|
|
52,500
|
|
|
|
-
|
|
|
Loans payable
|
|
$
|
1,129,959
|
|
|
$
|
-
|
|
Fife, Typenex and Iliad
In December 2012, the Company
entered into a $325,000 convertible note with Fife consisting of three tranches to be drawn down with the first tranche totaling $125,000,
including $25,000 in loan costs and additional two tranches totaling $200,000. The note bore a 5% annual interest rate and matures eighteen
months from the date of issuance. The note was convertible into shares of the Company’s common stock based on 70% of the average
of the three lowest closing prices of the common stock for the proceeding 15 consecutive trading days immediately prior to the conversion.
During 2013, the conversion price was fixed at $0.005 per share. As of December 31, 2012, the Company only drew down the first tranche
totaling $125,000. On February 11, 2013, April 5, 2013, April 23, 2013, and July 1, 2013, the Company drew down an additional $250,000.
On September 5, 2014, the
Company, Fife, Typenex and Iliad Research and Trading, LLP (“Iliad”) entered into an Assignment and Assumption Agreement
and Note Purchase Agreement (the “Note Purchase Agreement”) whereby Iliad acquired all of Fife’s and Typenex’s
right, title, obligations and interest in, to and arising under the Company notes (as defined in the Note Purchase Agreement) and the
Note Purchase Documents (as defined in the Note Purchase Agreement).
On October 17, 2014, the
Company entered into a financing arrangement with Iliad to provide additional financing in the amount of up to $450,000 through the issuance
of a Secured Convertible Promissory Note (the “Note”). The Company agreed to cover Iliad’s legal, accounting and other
related fees in the amount of $5,000, which was included in the principal balance of the Note. The Note accrued interest at the rate
of 8% per annum until the Note was paid in full. Monies were to be drawn in eight tranches with the initial tranche in the amount of
$105,000, and the remaining balance of $350,000 in seven tranches of $50,000 each. The Company drew down the initial tranche on October
17, 2014. The Note had a maturity date of July 17, 2016. The Company continued to negotiate with the lender.
Beginning nine months after
October 17, 2014 and on the same day each month thereafter, the Company was to make an installment payment, based upon the unpaid balance.
At the option of the Company, payments may be made in cash or by converting the installment amount into shares of the Company’s
common stock. The conversion price was equal to the lesser of (i) $0.0005 per share and (ii) 67.5% of the average of the three lowest
closing bid prices in the 15 trading days immediately preceding the conversion. The Company had the right to prepay the Note at 135%
of the outstanding balance at the time of prepayment.
In August 2020, the Company
and Iliad entered into a Settlement Agreement. Under the terms of the Agreement, the Company and Iliad agreed to settle approximately
$474,000 of convertible debt and accrued interest for a total of $300,000 in a note to be paid in monthly installments of $50,000 beginning
September 1, 2020.
During the nine months
ended September 30, 2021, the Company fully paid the remaining balance of this loan. Accordingly, the outstanding balances at September
30, 2021 and December 31, 2020 were $0 and $150,000 respectively, with accrued interest of $0 for both periods.
111 Recovery Corp. and
Vis Vires Group, Inc.
On April 30, 2015, the
Company entered into an 8% convertible note in the amount of $33,000 with Vis Vires. The principal and accrued interest was payable on
or before November 6, 2015. At the option of the Company, but not before nine months from the date of issuance, the holder may elect
to convert all or part of the convertible into the Company’s common stock. The note was convertible into shares of the Company’s
common stock at a price equal to 60% of the average of the three lowest trading prices during the 10 days prior to the date of conversion
or $0.00009, whichever was greater. During the year ended December 31, 2020 principal of $33,000 and accrued interest of $4,700 was converted
into 9,015,614 shares of common stock. The outstanding balance at September 30, 2021 and December 31, 2020 was $0, with accrued interest
of $13,000 at September 30, 2021 and December 31, 2020.
BERGIO INTERNATIONAL,
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
PPP Loan
On March 27, 2020, the
Company received federal funding through the Paycheck Protection Program (the “PPP”) for the Coronavirus Aid, Relief
and Economic Security (the “CARES Act”), administered by the U.S. Small Business Administration (“SBA”). The
Company determined that it met the criteria to be eligible to obtain a loan under the PPP because, among other reasons, in light of the
COVID-19 outbreak and the uncertainty of economic conditions related thereto, the loan was considered necessary to support the Company’s
ongoing operations and retain all its employees. On April 17, 2020, the Company issued a promissory note to Columbia Bank in the principal
aggregate amount of $18,608 (the “PPP Loan”). On September 5, 2020 the Paycheck Protection Program Flexibility Act was signed
into law and extended the program until December 31, 2020.
Under the terms of the
CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loan granted under the program. Such
forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments
of mortgage interest, rent, and utilities. No assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole
or in part. The PPP Loan had a two-year term and bears interest at a rate of 0.98% per annum. Monthly principal and interest payments
are deferred for nine months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment
penalties. Based on the September 5, 2020 the Paycheck Protection Program Flexibility Act, certain changes will need to be made to the
original note, based on the new law. As of December 31, 2020, the PPP Loan was forgiven by the SBA.
During the nine months
ended September 30, 2021, the Company received another PPP Loan in the amount of $18,291 under similar terms as the first loan. On February
17, 2021, the SBA authorized forgiveness of the outstanding principal balance of $18,291 and all accrued interest payable of the Company’s
PPP loan.
Coyne Enterprises, Inc.
On May 23, 2019, the Company
entered into a loan agreement with Coyne Enterprises, Inc. in the amount of $30,000. The term of the loan was for the period September
1, 2019 through November 30, 2019. The Company continues to negotiate the extension of this loan. Interest accrues at the rate of 6%
per annum and is to be paid quarterly. Prepayment or partial payment can be made with no penalty. During the nine months ended September
30, 2020, the Company repaid the remaining outstanding balance of $15,000. The outstanding balances at September 30, 2021 and December
31, 2020 were $0 and $15,000, respectively, with accrued interest of $0 and $155 at September 30, 2021 and December 31, 2020, respectively.
RB Capital Partners,
Inc.
On October 15, 2019, the
Company entered into a 10% convertible note in the amount of $25,000 with RB Capital Partners, Inc. The note was payable on demand but
has a period of twelve months. The principal and accrued interest was payable on or before October 15, 2020. At the option of the Holder,
but not before nine months from the date of issuance, the holder may elect to convert all or part of the convertible into the Company’s
common stock. The note was convertible into shares of the Company’s common stock at a fixed price of $0,001. During the year ended
December 31, 2020, principal of $3,800 was converted into 3,800,000 shares of common stock.
On July 1, 2020, the Company
entered into a 10% convertible note in the amount of $25,000 with RB Capital Partners, Inc. The note was payable on demand but has a
period of twelve months. The principal and accrued interest was payable on or before October 15, 2020. At the option of the Holder, but
not before nine months from the date of issuance, the holder may elect to convert all or part of the convertible into the Company’s
common stock. The note was convertible into shares of the Company’s common stock at a fixed price of $0.50. There were no conversions
during the year ended December 31, 2020.
On August 10, 2020, the
Company entered into a 10% convertible note in the amount of $25,000 with RB Capital Partners, Inc. The note was payable on demand but
has a period of twelve months. The principal and accrued interest was payable on or before October 15, 2020. At the option of the Holder,
but not before nine months from the date of issuance, the holder may elect to convert all or part of the convertible into the Company’s
common stock. The note was convertible into shares of the Company’s common stock at a fixed price of $0.50. There were no conversions
during the year ended December 31, 2020.
BERGIO INTERNATIONAL,
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
On November 11, 2020, RB
Partners and the Company entered into an agreement whereas the Company agreed to allow RB Partners to convert $6,000 at $0.001 and issue
6,000,000 shares and pay the balance of the note in the amount of $18,000. RB Partners agreed to release the Company of any remaining
obligations on the remaining two notes of $25,000 each.
During the nine months
ended September 30, 2021, the Company paid $6,000 to settle the remaining balance of this $12,000 loan. The outstanding balances due
to RB Partners at September 30, 2021 and December 31, 2020 were $0 and $18,000, respectively, with accrued interest of $0 for both periods.
The Company had committed to allow RB Partners to convert $6,000 at $0.001 and issue 3,000,000 at a later date.
Crown Bridge Partners
Inc.
On October 29, 2019, the
Company entered into a 10% convertible promissory note in the amount of $100,000 with Crown Bridge Partners, LLC. This Note carried a
prorated original issue discount of up to $8,000 to cover the Holder’s accounting fees, due diligence fees, monitoring, and/or
other transactional costs incurred in connection with the purchase and sale of the note, which was included in the principal balance
of this note. The holder paid $23,000 for the first tranche ($25,000 less $2,000 discount). The maturity date for each tranche funded
was twelve (12) months from the effective date of each payment as well as any accrued and unpaid interest and other fees. Interest accrues
at the rate of 10% per annum and shall be computed on the basis of a 365-day year and the actual number of days elapsed. Any amount of
principal or interest on this note which was not paid when due shall bear interest at the rate the of lesser of (i) 15% per annum and
(ii) the maximum amount permitted under law from the due date thereof until the same was paid (the “Default Interest”). The
Holder shall have the right from time to time to convert all or any part of the outstanding and unpaid principal, interest, penalties,
and all other amounts under this note into fully paid and non-assessable shares of common stock.
The conversion price was
60% multiplied by the lowest trading price (representing a discount rate of 40%) during the previous twenty-five (25) trading day period
ending on the latest complete trading day prior to the date of this note. The conversion price was subject to a floor price of $0.000035.
During the year ended December
31, 2020, this debt was totally converted into common stock. The outstanding balances at September 30, 2021 and December 31, 2020 were
$0 with accrued interest of $0 and $2,742 at September 30, 2021 and December 31, 2020, respectively.
Trillium Partners LP
On June 16, 2020, the Company
entered into a loan agreement with Trillium Partner LP in the amount of $12,500. The loan and accrued interest was due on December 31,
2020. Interest accrues at the rate of 10% per annum. The outstanding balances at September 30, 2021 and December 31, 2020 were $12,500
with accrued interest of $1,250 and $363 at September 30, 2021 and December 31, 2020, respectively. The Company is negotiating an extension
for this loan.
On September 14, 2020,
the Company entered into a loan agreement with Trillium Partner LP in the amount of $12,250. The loan and accrued interest was due on
March 14, 2021. Interest accrues at the rate of 10% per annum. The outstanding balances at September 30, 2021 and December 31, 2020 were
$12,250 and $12,250, respectively, with accrued interest of $0 for both periods. The Company is negotiating an extension for this loan.
On September 18, 2020,
the Company entered into a loan agreement with Trillium Partner LP in the amount of $15,000. The loan and accrued interest was due on
March 18, 2021. Interest accrues at the rate of 10% per annum. The outstanding balances at September 30, 2021 and December 31, 2020 were
$15,000 and $15,000, respectively, with accrued interest of $1,171 and $378 at September 30, 2021 and December 31, 2020, respectively.
The Company is negotiating an extension for this loan.
Clear Finance Technology
Corporation (“Clearbanc”)
The Company’s majority
owned subsidiary, Aphrodite’s Marketing, has a capital advance agreement with Clearbanc, an e-commerce platform provider. The loan
or advance is non-interest bearing and due on demand. As of September 30, 2021, the outstanding balance is $200,782.
Shopify
The Company’s majority
owned subsidiary, Aphrodite’s Marketing, has a capital advance agreement with Shopify, an e-commerce platform provider with a remittance
rate of 7%. The loan or advance is non-interest bearing, due on demand and are secured by all of the assets of Aphrodite’s Marketing.
As of September 30, 2021, the outstanding balance is $214,154.
BERGIO INTERNATIONAL,
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND
2020
(UNAUDITED)
Business Capital
The Company’s majority
owned subsidiary, Aphrodite’s Marketing, had a loan with Business Capital. As of September 30, 2021, the outstanding balance is
$0.
Jonathan Foltz
The Company’s majority
owned subsidiary, Aphrodite’s Marketing, has a loan with Jonathan Foltz, the President and CEO of Digital Age Business (see Note
13). The loan is non-interest bearing and due on demand. As of September 30, 2021, the outstanding balance is $82,000.
Nationwide Transport
Service, LLC (“Nationwide”)
Through the Company’s
majority owned subsidiary, Aphrodite’s Marketing, has loan agreements with Nationwide dated in October 2020 and November 2020.
Aphrodite’s Marketing did not make the required installment payments pursuant to the loan agreements from December 2020 to February
2021 and as such these loans are currently in default. Interest on defaulted amount ranges from 1% to 3% per month. As of September 30,
2021, the outstanding balance is $525,000 and accrued penalty and interest of $52,500.
Digital Age Business
Through the Company’s
majority owned subsidiary, Aphrodite’s Marketing, has a loan with Digital Age Business. The loan is non-interest bearing and due
on demand. As of September 30, 2021, the outstanding balance is $45,772.
Note 8 – Notes
Payable
Notes payable is summarized
below:
|
|
|
September 30,
2021
|
|
|
|
|
(Unaudited)
|
|
|
Principal amount
|
|
$
|
1,426,800
|
|
|
Less: current portion
|
|
|
(1,165,873
|
)
|
|
Notes payable - long term portion
|
|
$
|
260,927
|
|
Minimum principal payments
under notes payable are as follows:
|
Remaining in December 31, 2021
|
|
$
|
387,333
|
|
|
Year ended December 31, 2022
|
|
|
782,413
|
|
|
Year ended December 31, 2023
|
|
|
15,492
|
|
|
Year ended December 31, 2024
|
|
|
15,492
|
|
|
Year ended December 31, 2025
|
|
|
15,492
|
|
|
Thereafter
|
|
|
210,578
|
|
|
Total principal payments
|
|
$
|
1,426,800
|
|
On July 6, 2020, entered
into a Loan Authorization and Agreement (“SBA Loan Agreement”) with the Small Business Association (“SBA”) in
the amount of $114,800 under the SBA’s Economic Injury Disaster Loan assistance program in light of the impact of the COVID-19
pandemic. Pursuant to the SBA Loan Agreement, the Company received an advanced of $114,800, to be used for working capital purposes only.
Pursuant to the SBA Loan Agreement, the Company executed; (i) a note for the benefit of the SBA (“SBA Note”), which contains
customary events of default; and (ii) a Security Agreement, granting the SBA a security interest in all tangible and intangible personal
property of the Company, which also contains customary events of default. Installment payments, including principal and interest, were
due monthly beginning July 6, 2021 but was extended by the SBA to July 6, 2022 in the amount of $560 each month for a term of thirty
(30) years. Interest accrues on this note at the rate of 3.75%. This note is collateralized by the assets of the Company. The outstanding
balances at September 30, 2021 and December 31, 2020 were $114,800 with accrued interest of $5,127 and $2,101 September 30, 2021 and
December 31, 2020, respectively.
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Through the Company’s
majority owned subsidiary, Aphrodite’s Marketing, entered into a Loan Authorization and Agreement with the SBA, under the SBA’s
Economic Injury Disaster Loan assistance program in light of the impact of the COVID-19 pandemic. Pursuant to the SBA Loan Agreement,
the Company received an advanced of $150,000, to be used for working capital purposes only. Pursuant to the SBA Loan Agreement, the Company
executed; (i) a note for the benefit of the SBA, which contains customary events of default; and (ii) a Security Agreement, granting
the SBA a security interest in all tangible and intangible personal property of the Company, which also contains customary events of
default. The SBA Note bears an interest rate of 3.75% per annum which accrue from the date of the advance. Installment payments, including
principal and interest, were due monthly beginning June 24, 2021 but was extended by the SBA to June 24, 2022 in the amount of $731.
The outstanding balance at September 30, 2021 was $150,000 with accrued interest of $5,894 at September 30, 2021.
On July 1, 2021, the Company
issued a promissory note in the amount of $1,162,000 in connection with the Merger Agreement with GearBubble (see Note 13). The $1,162,000
promissory note is to be paid in 15 equal installments. This note is non-interest bearing and due on demand. The Company did not make
any payments during the three months ended September 30, 2021. The outstanding balance at September 30, 2021 was $1,162,000. Between
October 2021 and November 2021, the Company paid a total of $232,400 towards this promissory note.
Note 9 - Advances from
Principal Executive Officer and Accrued Interest
The Company receives periodic
advances from its principal executive officer based upon the Company’s cash flow needs. At September 30, 2021 and December 31,
2020, $198,027 and $211,141, respectively, was due to such officer, including accrued interest and interest expense is accrued at an
average annual market rate of interest which is 3.25% at September 30, 2021 and December 31, 2020. Interest expense incurred was $7,485
and $5,803 for the nine months ended September 30, 2021 and 2020, respectively. Accrued interest was $16,865 and $170,224 at September
30, 2021 and December 31, 2020. No terms for repayment have been established.
Effective February 28,
2010, the Company entered into an employment agreement with the Company’s Principal Executive Officer (“PEO”). The
agreement, which is for a five-year term, provides for an initial base salary of $175,000 per year with a 3% annual increase thereafter
(the “Base Salary”). The PEO is also entitled to certain bonuses based on net profits before taxes and other customary benefits,
as defined in the agreement. In addition, since it is understood that the Company is employing the PEO during a time of economic decline
throughout the U.S. and at times and from time to time, the Company may not be in a position to pay the full amount of Base Salary owed
the PEO it is understood and agreed to by the Board, that as long as the Company is unable to pay the PEO the full amount of his Base
Salary that the Board shall issue to him, from time to time, an amount of shares that will allow him to remain in possession of fifty-one
percent (51%) of the Company’s then outstanding shares of common stock. Such issuances shall be made to the PEO at any time
when his total share holdings are reduced to an amount less than fifty-one percent (51%) as a result of issuance of shares of common
stock made on behalf of the Company.
Effective September 1,
2011, the Company and PEO entered into an Amended and Restated Employment Agreement (the “Amended Agreement”) which primarily
retains the term and compensation of the original agreement. The Amended Agreement, however, removes the section which previously provided
for the issuance of Company common stock to the CEO, from time to time, when the Company is unable to pay the PEO the full amount of
his Base Salary (as defined in the Amended Agreement) which would allow the PEO to maintain a fifty-one percent (51%) share of the Company’s
outstanding common stock. However, the PEO does have the right to request all or a portion of his unpaid Base Salary be paid with the
Company’s restricted common stock. In addition, the Amended Agreement provides for the issuance of 51 shares of newly authorized
Series A Preferred Stock to be issued to the PEO.
As defined in the Certificate
of Designations, Preferences and Rights of the Series A Preferred Stock, each share of Series A Preferred Stock has voting rights such
that the holder of 51 shares of Series A Preferred Stock will effectively maintain majority voting control of the Company. Effective
November 3, 2011, the PEO notified the Company that for the one-year period, retroactive from April 1, 2011, through December 31, 2012,
he would reduce his Base Salary to $100,000.
The reduction in base compensation
was subsequently extended to December 31, 2013. The PEO is currently deferring his salary to conserve cash. During the year ended December
31, 2019, the principal executive officer converted $500,000 of deferred compensation into 17,000,000 shares of common stock of the Company.
The PEO in December 2020 returned these shares to the Company.
As of December 31, 2020,
deferred compensation and advances from PEO of $320,172 and $179,828, totaling $500,000, was classified as a long-term liability as per
agreement with the PEO to defer payment for twelve months. At September 30, 2021, deferred compensation due to PEO amounted to $346,163
and advances from PEO amounted $187,089.
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Note 10 – Commitments
and Contingencies
Litigation
The Company is currently
not involved in any litigation that we believe could have a material adverse effect on the Company’s financial condition or results
of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the executive officers of the Company or any of the Company’s
subsidiaries, threatened against or affecting the Company, the Company’s common stock, any of the Company’s subsidiaries
or of the Company’s officers or directors in their capacities as such, in which an adverse decision could have a material adverse
effect.
Amended Employment Agreement
On July 1, 2021, the Company
entered into a Amended and Restated Executive Employment Agreement (“Amended Employment Agreement”) with the CEO of the Company,
Berge Abajian (the “Executive”). The term of the Amended Employment Agreement shall be for 5 years and shall be automatically
extended for successive periods of 1 year unless terminated by the Company or the Executive. The Executive shall receive a base salary
of $250,000 per year and such base salary shall automatically increase in a rate of 3% per annum for each consecutive year after 2021
or at such rates as may be approved by the board of directors of the Company. Upon written request of the Executive, the Company shall
pay all or a portion of the base salary owed to Executive in the form of i) a convertible promissory note, or ii) the Company’s
common stock or if available, S-8 common stock. Additionally, the Executive is eligible to receive quarterly bonus at the discretion
of the board of directors of the Company. Additionally, the Executive shall be eligible to participate in the Company’s 2021 Stock
Incentive Plan.
Note 11 - Operating
Lease Liabilities
The Company leases retail
space at two different locations. One lease has monthly payments from $1,350 to $1,665 which expires in May 2024. The second lease has
a contingent rental based on 10% of sales. Contingent rentals are not included in operating lease liabilities. The Company’s leases
generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring
operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease
commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The Company used incremental
borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date. The Company estimated its incremental borrowing
rate based on its credit quality, line of credit agreement and by comparing interest rates available in the market for similar borrowings.
The Company used a discount rate of 10% at September 30, 2021.
Through the Company’s
majority owned subsidiary, Aphrodite’s Marketing entered into an approximate three-year lease agreement on October 1, 2019, to
rent three office suites. The lease requires monthly payments of approximately $8,879 per month.
The following table reconciles
the undiscounted future minimum lease payments (displayed by year in aggregate) under non-cancelable operating leases with terms more
than one year to the total operating lease liabilities on the consolidated balance sheet as of September 30, 2021:
|
2021 remainder
|
|
$
|
25,553
|
|
|
2022
|
|
|
81,745
|
|
|
2022
|
|
|
19,700
|
|
|
2024
|
|
|
6,660
|
|
|
Total minimum lease payments
|
|
|
133,658
|
|
|
Less amounts representing interest
|
|
|
(9,506
|
)
|
|
Present value of net minimum lease payments
|
|
|
124,152
|
|
|
Less current portion
|
|
|
(95,435
|
)
|
|
Long-term capital lease obligation
|
|
$
|
28,717
|
|
|
|
(1)
|
The above amount does not include contingent rentals which may be paid under lease agreement with Ocean Resort Casino. This rental is based upon 10% of gross sales at this location.
|
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Note 12 – Stockholder’s
Equity (Deficit)
Employee Stock Ownership
Plan
On July 9, 2021, the Company
entered into the Bergio International, Inc. 2021 Stock Incentive Plan (the “ESOP”), under which the Company may award shares
of the Company’s Common Stock to employees of the Company and/or its Subsidiaries. The terms of the ESOP allow the Company’s
Board of Directors discretion to award the Company’s Common Stock, in the form of options, stock appreciation rights, restricted
stock awards, restricted stock units, and performance award shares, to such employees, upon meeting the criteria set forth therein, from
time to time. Subject to adjustments as provided in the plan, the shares of common stock that may be issued with respect
to awards granted under the plan shall not exceed an aggregate of 1,000,000,000 shares of common stock. The Company shall reserve
such number of shares for awards under the plan, subject to adjustments as provided in the plan. The maximum number of shares of
common stock under the plan that may be issued as incentive stock options shall be 100,000,000 shares.
On July 9, 2021, and under
the terms of the ESOP, the Company’s Board of Directors approved the issuance of 500,000,000 shares of the Company’s Common
Stock to the Company’s CEO, Berge Abajian, as a Performance Award in recognition of the Closing of the Merger Agreement with GearBubble
and with the acquisition of the assets used in the operation of Aphrodite’s Marketing. The award of such performance award shares
is subject to the Company increasing its total authorized shares of common stock to 9,000,000,000 shares, which the Company plans to
accomplish by filing Articles of Amendment to its Articles of Incorporation in Wyoming.
Preferred stock
The Company has authorized
the issuance of 10,000,000 shares of preferred stock, $0.00001 par value. The Company’s board of directors is authorized, at any
time, and from time to time, to provide for the issuance of shares of preferred stock in one or more series, and to determine the designations,
preferences, limitations and relative or other rights of the preferred stock or any series thereof.
Certificate of Designation
of Series B 2% Convertible Preferred Stock
On February 10, 2021, the
Company filed a Certificate of Designation for Series B Convertible Preferred Stock (the “Certificate of Designations”) with
the Delaware Secretary of State, designating 4,900 shares of preferred stock as Series B Convertible Preferred Stock.
Designation. The
Company had designated 49 shares which was amended and increase from 49 to 4,900 shares of preferred stock as Series B Convertible Preferred
Stock. Each share of Series B Convertible Preferred Stock has a par value of $0.00001 per share and a stated value of $100.
Dividends. Holders
of Series B Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available
therefor, and the Company shall accrue, quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, commencing
on the Issuance Date, cumulative dividends on the Series B Preferred Stock at the rate per share (as a percentage of the Stated Value
per share) equal to two percent (2%) per annum on the Stated Value., payable in additional shares of Series B Preferred Stock. So long
as any shares of Series B Preferred Stock remain outstanding, neither the Company nor any subsidiary thereof shall, without the consent
of the Holders of eighty percent (80%) of the shares of Series B Preferred Stock then outstanding (the “Requisite Holders), redeem,
repurchase or otherwise acquire directly or indirectly any Junior Securities (as defined in Section 7), nor shall the Company directly
or indirectly pay or declare any dividend or make any distribution upon, nor shall any distribution be made in respect of, any Junior
Securities, nor shall any monies be set aside for or applied to the purchase or redemption (through a sinking fund or otherwise) of any
Junior Securities.
Liquidation. Upon
any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary or a Sale (as defined below) (a “Liquidation”),
the holders of the Series B Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are capital
or surplus, for each share of Series B Preferred Stock an amount equal to the Stated Value plus all accrued but unpaid dividends per
share, whether declared or not, and all other amounts in respect thereof then due and payable prior to any distribution or payment shall
be made to the holders of any Junior Securities, and if the assets of the Company shall be insufficient to pay in full such amounts,
then the entire assets to be distributed to the holders of Series B Preferred Stock shall be distributed among the holders of Series
B Preferred Stock ratably in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon
were paid in full.
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Voting Rights. Each
holder of the Series B Preferred Stock shall have the right to vote on any matter that may from time to time be submitted to the Company’s
shareholders for a vote, on an as-converted basis, either by written consent or by proxy.
Conversion at Option
of Holder. Each share of Series B Preferred Stock shall be convertible into 0.01% of the total issued and outstanding shares of the
Company’s Common Stock, (such that all 4,900 authorized shares of Series B Preferred Stock, if issued and outstanding, would be
convertible in the aggregate into 49% of the total issued and outstanding shares of the Company’s Common Stock) (as determined
at the earlier of (i) the date of Conversion of the Series B Preferred Stock; and (ii) eighteen (18) months following February 8, 2021)
(“Conversion Ratio”), at the option of a Holder, at any time and from time to time, from and after the issuance of the Series
B Preferred Stock.
Certificate of Designation
of Series C 2% Convertible Preferred Stock
On February 10, 2021, the
Company filed a Certificate of Designation for Series C Convertible Preferred Stock with the Delaware Secretary of State, designating
5 shares of preferred stock as Series B Convertible Preferred Stock.
Designation. The
Company has designated 5 shares of preferred stock as Series C Convertible Preferred Stock. Each share of Series C Convertible Preferred
Stock has a par value of $0.00001 per share and a stated value of $100.
Dividends. Holders
of Series C Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available
therefor, and the Company shall accrue, quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, commencing
on the Issuance Date, cumulative dividends on the Series C Preferred Stock at the rate per share (as a percentage of the Stated Value
per share) equal to two percent (2%) per annum on the Stated Value., payable in additional shares of Series C Preferred Stock. So long
as any shares of Series C Preferred Stock remain outstanding, neither the Company nor any subsidiary thereof shall, without the consent
of the Holders of eighty percent (80%) of the shares of Series C Preferred Stock then outstanding, redeem, repurchase or otherwise acquire
directly or indirectly any Junior Securities, nor shall the Company directly or indirectly pay or declare any dividend or make any distribution
upon, nor shall any distribution be made in respect of, any Junior Securities, nor shall any monies be set aside for or applied to the
purchase or redemption of any Junior Securities.
Liquidation. Upon
any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary or a Sale (as defined below) (a “Liquidation”),
the holders of the Series C Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are capital
or surplus, for each share of Series C Preferred Stock an amount equal to the Stated Value plus all accrued but unpaid dividends per
share, whether declared or not, and all other amounts in respect thereof then due and payable prior to any distribution or payment shall
be made to the holders of any Junior Securities, and if the assets of the Company shall be insufficient to pay in full such amounts,
then the entire assets to be distributed to the holders of Series C Preferred Stock shall be distributed among the holders of Series
C Preferred Stock ratably in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon
were paid in full.
Voting Rights. Each
holder of the Series C Preferred Stock shall have the right to vote on any matter that may from time to time be submitted to the Company’s
shareholders for a vote, on an as-converted basis, either by written consent or by proxy.
Conversion at Option
of Holder. Each share of Series C Preferred Stock shall be convertible into 1% of the total issued and outstanding shares of the
Company’s Common Stock (as determined at the earlier of (i) the date of Conversion of the Series C Preferred Stock; and (ii) eighteen
(18) months following February 8, 2021) (“Conversion Ratio”), at the option of a Holder, at any time and from time to time,
from and after the issuance of the Series C Preferred Stock, except that such conversion will automatically be adjusted so that the Holder’s
total beneficial ownership does not exceed greater than 9.99% of the issued and outstanding shares of the Company’s Common Stock.
On February 10, 2021, the
Company issued 3,000 Series B Convertible Preferred Stock and 5 Series C Convertible Preferred Stock in connection with the acquisition
of Aphrodite’s Marketing (see Note 13). As of September 30, 2021, accrued dividends related to the Series B and C Convertible Preferred
Stock amounted $3,820.
Common stock
From January 1, 2021 through
September 30, 2021, the Company issued an aggregate of 179,625,122 shares of its common stock at an average contractual conversion price
of approximately $0.003 as a result of the conversion of principal, accrued interest and conversion fees of $512,277 underlying certain
outstanding convertible notes converted during such period.
From January 1, 2021 through
September 30, 2021, the Company sold an aggregate of 538,403,000 shares of Common Stock for total proceeds of $3,768,730.
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Note 13 – Business
Acquisitions
Aphrodite’s
Marketing, Inc.
On February 10, 2021, the
Company entered into an Acquisition Agreement with Digital Age Business, Inc., a Florida corporation, (“Digital Age”), pursuant
to which the shareholders of Digital Age agreed to sell all of the assets and liabilities of its Aphrodite’s business to a recently
formed subsidiary of the Company known as Aphrodite’s Marketing, Inc. (“Acquisition Sub”), a Wyoming corporation in
exchange for 3,000 newly created Series B Preferred Stock of the Company, which collectively, shall be convertible at Shareholders’
option, at any time, in whole or in part, into that number of shares of common stock of the Company which shall equal thirty percent
(30%) of the total issued and outstanding common stock of the Company (as determined at the earlier of (i) the date of conversion of
the Series B Preferred Stock; and (ii) eighteen (18) months following the Closing). In addition, the Company will provide an additional
$5,000,000 in financing for Aphrodite’s Marketing.
As additional consideration
for the purchase of the acquired assets, the Company has also agreed to transfer to the selling shareholders 49,000 of the 100,000 authorized
shares of the Acquisition Sub, such that upon the closing date, 51% of the Acquisition Sub shall be owned by the Company, and 49% of
the Acquisition Sub shall be owned by the selling shareholders.
Under the terms of the
Acquisition Agreement, the Acquisition Sub is expected to meet the adjusted financial projections as set forth in the Acquisition Agreement,
in order to earn additional 1,900 Series B Preferred shares, which if earned, shall entitle the selling shareholders to earn up to an
additional 19% (the “Additional Shares”) of Series B Preferred Stock, which, including the 30% of Series B Preferred Stock
issued at closing, shall together convert up to a maximum of 49% of the Company’s then-issued and outstanding shares of common
stock, with the Additional Shares being subject to a two-year vesting period from the date of issuance, based upon additional revenues
of Acquisition Sub, as set forth in the Acquisition Agreement.
In addition, the Acquisition
Agreement requires that upon closing, Jonathan Foltz, the President and CEO of Digital Age, and certain other key employees of Acquisition
Sub received employment agreements from Acquisition Sub with respect to their continued employment (the “Employment Agreements”)
(which will allow such key employees to participate in any employee stock ownership plan (“ESOP”) as offered to the other
Company’s subsidiary employees from time to time) to make certain that current personnel operating the business of Aphrodites.com
shall remain in place for all departments of the business of Aphrodite’s Marketing post-closing of the acquisition.
As further consideration
for the acquisition, under the Acquisition Agreement, the Company agreed to provide Acquisition Sub with certain financing, as follows
(a) upon the signing of the Letter of Intent that preceded this Acquisition Agreement, the Company provided loans to Jonathan Foltz for
the benefit of Aphrodites.com in the amounts of $50,000 on January 22, 2021, $35,000 on January 27, 2021, and $50,000 on February 5,
2021, which were used to pay some of the most pressing of Aphrodite’s Liabilities of as evidenced by the three promissory notes
set forth (b) and upon the signing of this Acquisition Agreement, the Company or its investors will provide equity financing of $615,000
for the benefit of Acquisition Sub, (for which the Company shall enter into a certain Securities Purchase Agreement, Convertible Promissory
Note, Warrant, Guaranty, Security Agreement and Registration Rights Agreement (together, the “BRGO Transaction Documents”),
(the “Initial Financing”) which will be used to pay for (i) partial extinguishing the Assumed Liabilities set forth in the
Acquisition Agreement and (ii) expenses in connection with the acquisition and the audit of Acquisition Sub; (c) and following
the closing of the acquisition, the Company will facilitate a second equity financing for the benefit of the Acquisition Sub in the amount
of an additional $750,000, which shall take place following the effective date of the Company’s new S-1 Registration Statement
(the “Second Financing”), and such funds shall be utilized, in part, to pay for (i) extinguishing the Assumed Liabilities,
and (ii) the expenses incurred in connection with the acquisition and the audit of Acquisition Sub and (d) following the closing, the
Company will raise an additional $3,500,000, the proceeds of which will be used for the Acquisition Sub, by the sale of shares of common
stock of the Company, pursuant to an S-1 Registration Statement (the “Additional Financing”).
It is anticipated that
the Additional Financing will be consummated in tranches over the twelve (12) months following the closing; provided that the first tranche
of the Additional Financing will be at least $750,000, and will be provided to the Acquisition Sub within 60 days after the Company’s
new S-1 Registration Statement is declared effective by the SEC. As noted on Schedule D and Schedule E to the Acquisition Agreement,
the foregoing financing, (including the loans shown on Schedule H, the Initial Financing, the Second Financing and the Additional Financing)
totals $5,000,000, and any financing provided to Acquisition Sub, which exceeds the $5,000,000 total detailed in this Section 2.2.1,
shall be added to the Gross Revenue benchmarks set forth on Schedule D and Schedule E to the Acquisition Agreement.
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Section 2.2.2 of the Acquisition
Agreement further provides that, at the closing of the Acquisition, Southridge (or its affiliates as directed by Southridge) shall receive
shares of the Company’s newly created Series C Preferred Stock which, collectively, shall be convertible into that number of shares
of common stock of the Company which shall equal five percent (5%) of the total issued and outstanding shares of the Company’s
Common Stock (as determined at the earlier of: (i) the date of conversion of the Series C Preferred Stock; and (ii) eighteen (18) months
following the Closing).
On February 11, 2021, the
Company, Digital Age, Acquisition Sub, and the selling shareholders entered into the First Amendment to the February 10, 2021 Acquisition
Agreement (the “Amendment”) for the purpose of allocating the Series B Preferred Stock to the selling shareholders without
fractional shares, which resulted in changing the Certificate of Designation for the Series B Preferred Stock to reflect a total of 4,900
authorized shares of Series B Preferred Stock, and for the purpose of reflecting a total of 3,000 shares of Series B Preferred Stock
to be issued to the selling shareholders upon closing, (and the opportunity for the selling shareholders to earn up to an additional
1,900 shares of Series B Preferred Stock upon reaching certain gross revenue benchmarks).
The Company accounted for
the acquisition utilizing the purchase method of accounting in accordance with ASC 805 “Business Combinations”. Accordingly,
the Company applied push–down accounting and adjusted to fair value all of the assets acquired directly on the financial statements
of the majority owned subsidiary, Aphrodite’s Marketing.
The Company accounted for
the value under ASC 805-50-30-2 “Business Combinations” whereby if the consideration is not in the form of cash, the measurement
is based on either the cost which shall be measured based on the fair value of the consideration given or the fair value of the assets
(or net assets) acquired, whichever is more clearly evident and thus more reliably measurable. The consideration of 3,000 Series B Convertible
Preferred Stock was convertible at 51,084,935 shares of common stock at the time of closing. Additionally, since the Series B Convertible
Preferred Stock could increase in value over the 18-month exercise period and such terms does not contain an explicit limit in the number
of common stock to be delivered upon conversion, the Company accounted for the embedded conversion option in the 3,000 Series B Convertible
Preferred Stock issued under the Acquisition Agreement as derivative liabilities. The Company determined that there is a 20% probability
of achieving the post-acquisition milestones to earn the Additional Shares.
The Company deemed that
the fair value of the consideration given was $0.013 per share based on the quoted trading price on the date of the closing amounting
to $664,105 which is more clearly evident and more reliable measurement basis. Additionally, the Company recorded $821,739 of fair value
from the embedded conversion options in the 3,000 Series B Convertible Preferred Stock and 20% probability of achieving the Additional
Shares as derivative liability (see Note 6).
The estimated fair values
of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition
date to estimate the fair value of assets acquired and liabilities assumed. The Company believes that information provides a reasonable
basis for estimating the fair values of assets acquired and liabilities assumed.
The net purchase price
paid by the Company was allocated to assets acquired and liabilities assumed on the records of the Company as follows:
|
Current assets (including cash of $60,287)
|
|
$
|
1,597,389
|
|
|
Intangible assets (relating to form of employment contracts and Aphrodite name with estimated three-year
life) (1)
|
|
|
725,867
|
|
|
Goodwill
|
|
|
2,900,270
|
|
|
|
|
|
|
|
|
Liabilities assumed (including loans payable of $2,304,438 and note payable- long term of $150,000)
|
|
|
(3,737,682
|
)
|
|
Net purchase price
|
|
$
|
1,485,844
|
|
|
|
(1)
|
For the three and nine months ended September 30, 2021, amortization of intangible assets amounted to $60,489 and $154,103, respectively.
|
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Additionally, on February
10, 2021, the Company recorded $110,640 of fair value from the embedded conversion options in the 5 Series C Convertible Preferred Stock
issued to Southridge as commission fees related to the Acquisition Agreement (see Note 6). Accordingly, the Company recorded stock-based
compensation of $110,640 during the nine months ended September 30, 2021.
GearBubble Tech,
Inc.
Pursuant to the terms of
the May 6, 2021 Binding Letter of Intent, on July 1, 2021 (“Closing”), the Company entered into an Agreement and Plan of
Merger (the “Merger Agreement”) with GearBubble, Inc., a Nevada corporation, (“GearBubble”), pursuant to which
the shareholders of GearBubble (the “Equity Recipients”) agreed to sell 100% of the issued and outstanding shares of GearBubble
to a recently formed wholly-owned subsidiary of the Company known as GearBubble Tech, Inc., a Wyoming corporation (the “Merger
Sub”) in exchange for $3,162,000 (the “Cash Purchase Price”), which shall be paid as follows: a) $2,000,000 (which
was paid in cash at Closing), b) $1,162,000 to be paid in 15 equal installments, and c) 49,000 of the 100,000 authorized shares of the
Merger Sub, such that upon the Closing, 51% of the Merger Sub shall be owned by the Company, and 49% of the Merger Sub shall be owned
by the GearBubble Shareholders. Accordingly, the Company owns 51% of GearBubble Tech.
Under the terms of the
Merger Agreement, the GearBubble Shareholders also have an opportunity to earn shares of the Company’s common stock (“BRGO
Incentive Common Shares”) if certain revenue and net income benchmarks are met by Merger Sub in the three years following the Closing
of the Acquisition Agreement.
The Merger Agreement requires
that following the Closing of the Merger Agreement, Don Wilson, the President and CEO of GearBubble, and certain other key employees
of Acquisition Sub shall receive employment agreements from Acquisition Sub with respect to their continued employment (the “Employment
Agreements”) which will allow such key employees to participate in any employee stock ownership plan (“ESOP”) as offered
to other Company’s subsidiary employees from time to time) to make certain that current personnel operating the business of GearBubble
shall remain in place for all departments of the business of GearBubble post-Closing of the Acquisition.
At the Closing, the Equity
Recipients will grant the Company the right of first refusal (the “First Refusal Right”) to purchase the Transfer Shares
for cash. The aggregate cash price for the Transfer Shares shall equal (i) the average of a minimum of two (2) and a maximum of three
(3) independent valuations of Merger Sub, each as of the date when the Company notifies the Equity Recipients of its intent to exercise
the First Refusal Right, and each of which shall be undertaken by an independent valuation firm (to be identified by the Company and
mutually acceptable to the Equity Recipients), multiplied by (ii) 49%. If the First Refusal Right has not been exercised and the Equity
Recipients have not otherwise had a liquidity event with respect to the Merger Sub prior to such date, each Equity Recipient will have
a one-time put right (the “Put Right”) that, if elected by such Equity Recipient, would obligate the Company to buy the Transfer
Shares held by such Equity Recipient for cash at a price per Transfer Share based upon the independent fair market valuation per share
as determined by an independent valuation firm (chosen in the same manner as set forth in the prior sentence).
The net purchase price
paid by the Company was allocated to assets acquired and liabilities assumed on the records of the Company as follows:
|
Current assets (including cash of $1,161,476)
|
|
$
|
1,201,476
|
|
|
Equipment, net
|
|
|
4,412
|
|
|
Goodwill
|
|
|
2,780,897
|
|
|
|
|
|
|
|
|
Liabilities assumed
|
|
|
(458,628
|
)
|
|
Non-controlling interest
|
|
|
(366,157
|
)
|
|
Net purchase price
|
|
$
|
3,162,000
|
|
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
Note 14 – Subsequent
Events
Common Stock For Debt
Conversion
From October 2021 through
November 2021, the Company issued an aggregate of 148,542,013 shares of its common stock at an average contractual conversion price of
approximately $0.0015 as a result of the conversion of principal, accrued interest and conversion fees for a total of 222,813 underlying
certain outstanding convertible notes converted during such period.
Convertible Note Payable
On October 4, 2021, the
Company entered into an 8% convertible note in the amount of $53,750 less legal and financing costs of $3,750 for net proceeds of $50,000
with Power Up Lending Group. The principal and accrued interest is payable on or before October 4, 2022. The note may not be prepaid
except under certain conditions. Any amount of principal or interest on this note which is not paid when due shall bear interest at the
rate of twenty two percent (22%) per annum from the due date thereof until the same is paid. At the option of the Holder, but not before
180 days from the date of issuance, the holder may elect to convert all or part of the convertible into the Company’s common stock.
The conversion price shall mean 63% multiplied by the lowest trading price (representing a discount rate of 37%) during the previous
15 trading day trading day period ending on the latest complete trading day prior to the date of this note.
Secured Advance Agreements
On October 27, 2021, the
Company, together with its majority owned subsidiaries, Aphrodite Marketing and GearBubble Tech (collectively the “Borrower”),
entered into two Secured Advance Agreements (the “Secured Advance Agreements”) with J.P. Carey Limited Partners L.P. and
Trillium Partners L.P. (the “Lenders”). The advances will be issued through separate promissory notes subject to all terms
and conditions as defined in the Secured Advance Agreements. Such advances ae secured by a security interest in the Borrower’s
existing and future assets (as specifically defined in the Secured Advance Agreements), including all rights to received payments (including
credit card payments) from the sale of goods or services, inventory, property and equipment, and general intangibles. If any payments
in the promissory notes are not timely paid, it shall be considered an event of default and the Borrower shall pay a late fee of 5% of
the late payment. Accordingly, the Company entered into Secured Promissory Notes (the “Secured Notes”) in an aggregate amount
of $590,000 less legal and financing costs of $5,000 and original issue discount of $90,000 for net proceeds of $495,000. The Secured
Notes shall be due on February 4, 2022.
Principal and interest
shall be paid with weekly payments (each a “Weekly Payment”) as follows: (A) payments of $7,500 shall be paid to the Lenders
on each Friday within the month of November 2021; (B) payments of $40,000 shall be paid to the Lender on each Friday within the month
of December 2021); (C) payments of $35,000 shall be paid to the Lender on each Friday with the month of January 2022 ; and (D) the remainder
of any amounts outstanding pursuant to these Secured Notes and the Secured Advance Agreement (as defined ) including the outstanding
the repayment amount shall be paid to the Lenders on February 4, 2022. Upon the occurrence of an event of default, the principal or interest
on this note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum.