Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☐
Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☐
The accompanying notes are an integral part of
these consolidated financial statements.
The accompanying notes are an integral part of
these consolidated financial statements.
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 CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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 Business”), pursuant to which the shareholders of Digital Age Business 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 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).
On March 24, 2021, the Company filed, with the
Wyoming Secretary of State, a Certificate of Amendment, to amend its Articles of Incorporation. The amendment reflected the increase
in the authorized shares of common stock from 1,000,000,000 shares to 3,000,000,000 shares. On July 9, 2021, the Company filed, with
the Wyoming Secretary of State, a Certificate of Amendment, to amend its Articles of Incorporation (the “Amendment”). The
Amendment reflected the increase in the authorized shares of common stock from 3,000,000,000 shares to 6,000,000,000 shares.
Basis of Presentation
The accompanying consolidated financial statements
have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”), the instructions to Form 10-K, and the rules and regulations of the United States Securities and Exchange Commission (the
“SEC”) for financial information, which includes the consolidated financial statements of the Company and its wholly-owned
and majority-owned subsidiaries as of December 31, 2021. All intercompany transactions and balances have been eliminated. It is management’s
opinion that all material adjustments (consisting of normal recurring adjustments) have been made, which are necessary for a fair financial
statement presentation.
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
increase its online presence through its majority-owned subsidiaries, Aphrodite’s Marketing and GearBubble Tech.
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.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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 December 31, 2021, the Company recorded a non-controlling interest balance of $(557,472) in connection with the majority-owned
subsidiaries, Aphrodite’s Marketing and GearBubble Tech as reflected in the accompanying consolidated balance sheet and losses
attributable to non-controlling interest of $923,629 and $0 during the years ended December 31, 2021 and 2020, respectively as reflected
in the accompanying consolidated statements of operations.
Note 2 - Going Concern
These 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 consolidated financial statements, the Company had a net loss attributable
to Bergio International, Inc. and cash used in operations of $2,638,556 and $2,179,237, respectively, for the year ended December 31,
2021. Additionally, the Company had an accumulated deficit of approximately $14.5 million and working capital deficit of $2,363,877
at December 31, 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. As noted in Note 15, between January 2022 and March 2022, the Company has received net proceeds of $815,000 from the
sale of Series D convertible preferred stock.
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
and provide for the expansion of the Company’s branded product lines. 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. However, there can be no assurance that this venture will be successful or that the Company can raise
the required capital to fund this operation.
These 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 and majority owned subsidiaries as of December 31, 2021. All significant inter-company accounts and transactions have
been eliminated.
Use of Estimates
The preparation of consolidated financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the 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 years ended December 31, 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.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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.
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 revenues
Cost of revenues 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 $4,091,542 and $34,094 for the years ended December 31, 2021 and 2020, are included in selling and marketing
expenses on the consolidated statement of operations.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
Shipping and Handling Costs
The Company accounts for shipping and handling
fees in accordance with ASC 606. While amounts charged to customers for shipping products are included in revenues, the related costs
of shipping products to customers are classified in selling and marketing expenses as incurred.
Reclassifications
Certain prior period amounts have been reclassified
to conform to the current period presentation. The reclassified amounts have no impact on the Company’s previously reported financial
position or results of operations and relates to the presentation of selling and marketing expenses, professional and consulting expenses,
compensation and related expenses, separately on the consolidated statements of operation previously included in the selling, general
and administrative expenses.
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 December 31, 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, prepaid expenses and other current assets, accounts payable and accrued liabilities, and deferred compensation
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.
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
December 31, 2021:
| | |
December 31, 2021 | | |
December 31, 2020 | |
| Description | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
| Total derivative liabilities | |
$ | — | | |
$ | — | | |
$ | 978,232 | | |
$ | — | | |
$ | — | | |
$ | 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.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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 December
31, 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 December 31, 2021 and 2020, the Company had cash in excess of FDIC limits of approximately $165,000, and
$0, respectively.
Accounts Receivable
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. 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 December 31,
2021 and 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.
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 years ended
December 31, 2021 and 2020.
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.
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.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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 years ended December 31, 2021 and 2020,
no customer accounted for over 10% of total revenues.
Concentration of Purchases
The Company purchased
approximately 25% of its finished products from two vendors (11% and 14%) during the year ended December 31, 2021.
Concentration of Accounts Receivable
As of December 31, 202, accounts receivable amounted
to $51,324 and two customers represented 75% of this balance. As of December 31, 2020, accounts receivable amounted to $100,255 and three
customers represented 89% of this balance.
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 - Property and Equipment
Property and equipment consists of the following:
| | |
December 31, | |
| | |
2021 | | |
2020 | |
| | |
| | |
| |
| Leasehold improvements | |
$ | 391,722 | | |
$ | 356,693 | |
| Office and computer equipment | |
| 581,352 | | |
| 566,308 | |
| Selling equipment | |
| 8,354 | | |
| 8,354 | |
| Furniture and fixtures | |
| 20,511 | | |
| 18,487 | |
| | |
| | | |
| | |
| Total at cost | |
| 1,001,939 | | |
| 949,842 | |
| Less: Accumulated depreciation | |
| (911,523 | ) | |
| (855,698 | ) |
| | |
| | | |
| | |
| | |
$ | 90,416 | | |
$ | 94,144 | |
Depreciation expense for the years ended December
31, 2021 and 2020 was $55,825 and $32,538, respectively.
Note 5 - Net 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.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
For the year ended December 31, 2020, 92,755,675
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.
The potentially dilutive common stock equivalents
as of December 31, 2021 were excluded from the dilutive loss per share calculation as they would be antidilutive due to the net loss
as follow:
| | |
December 31,
2021 | |
| Common Stock Equivalents: | |
| |
| Stock Warrants | |
| 798,241,666 | |
| Convertible Preferred Stock | |
| 1,277,345,644 | |
| Convertible Notes | |
| 411,183,645 | |
| Total | |
| 2,486,770,955 | |
Note 6 - Convertible Notes Payable
As of December 31, 2021 and 2020, convertible
notes payable consisted of the following:
| | |
December 31, 2021 | | |
December 31, 2020 | |
| | |
| | |
| |
| Principal amount | |
$ | 1,259,000 | | |
$ | 262,104 | |
| Less: unamortized debt discount | |
| (312,714 | ) | |
| (29,234 | ) |
| Convertible notes payable, net | |
$ | 946,286 | | |
$ | 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 was payable on
or before August 20, 2020 and interest accrued at the rate of 12% per annum. Interest was 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 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 was paid (the “Default Interest”). The Holder had 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 equal to 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 had a closing bid which is 5% or lower than that set forth in the Notice
of Conversion.
During the year ended December 31, 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 December
31, 2021 and 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 year ended December 31, 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 December 31, 2021 and 2020 were $0 and $55,000, respectively, with accrued interest of $0
and $2,061 at December 31, 2021 and 2020, respectively.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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 year ended December 31, 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 December 31, 2021 and 2020 were $0 and $44,000, respectively, with accrued interest
of $0 and $868 at December 31, 2021 and 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 year ended December 31, 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 December 31, 2021 and 2020 were $0 and $35,000, respectively, with accrued interest
of $0 and $399 at December 31, 2021 and 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 year ended December 31, 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 December 31, 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 year ended December 31, 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 December 31, 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
year ended December 31, 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 December 31, 2021 was $0.
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 was 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 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 ending on the latest complete trading
day prior to the date of this note. During the year ended December 31, 2021, principal of $53,750 and $2,150 of accrued interest were
fully converted into 19,275,862, shares of common stock. The outstanding principal and accrued interest balance at December 31, 2021
was $0.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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 was 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 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 trading day period ending on the
latest complete trading day prior to the date of this note. During the year ended December 31, 2021, principal of $55,750 and $2,230
of accrued interest were fully converted into 52,709,091, shares of common stock. The outstanding principal and accrued interest balance
at December 31, 2021 was $0.
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 year ended December 31,
2021. The outstanding balance at December 31, 2021 was $55,000, with accrued interest of $3,954 at December 31, 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 year ended December 31,
2021. The outstanding balance at December 31, 2021 was $48,750, with accrued interest of $2,351 at December 31, 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. There were no conversions during the year
ended December 31, 2021. The outstanding balance at December 31, 2021 was $78,750, with accrued interest of $2,140 at December 31, 2021.
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. There were no conversions during the year ended December 31,
2021. The outstanding balance at December 31, 2021 was $53,750, with accrued interest of $1,037 at December 31, 2021.
Sixth Street Lending, LLC
On November 8, 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 November 8, 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 year
ended December 31, 2021. The outstanding balance at December 31, 2021 was $55,000, with accrued interest of $639 at December 31, 2021.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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 notes 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 these notes at the rate of ten percent (10%) per annum. Any amount of principal or interest on these notes which are 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 holders, but not before 180 days from the date of issuance, the holders 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 was equal to $0.0015. Additionally, the Company
granted an aggregate of 756,250,000 warrant to purchase shares of the Company’s common stock in connection with the issuance of
these convertible notes. The warrants have a term of 5 years from the date of grant and exercisable at an exercise price of $0.002. The
Company accounted for the warrants issued with these 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%.
During the year ended December 31, 2021, principal of $544,750, accrued interest of $39,342 and conversion fees of $4,050 were fully
converted into 407,365,253, shares of common stock. The outstanding balance at December 31, 2021 was $967,750 with accrued interest of
$60,459 at December 31, 2021.
For the years ended December 31, 2021 and 2020,
amortization of debt discounts and financing cost related to all the convertible notes above amounted to $1,772,485 and $236,634, respectively,
which has been amortized to interest expense on the accompanying consolidated statements of operations.
In January 2022, the Company entered into an
Amendment to the Convertible Promissory Notes (the “Amendment”) with these lenders whereby the conversion price of the convertible
notes was reduced from $0.0015 to $0.001.
Note 7 - 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. As of December 31, 2021 and 2020, total derivative liabilities amounted $978,232 (consist of derivative liability from
convertible debt of $478,212 and derivative liability related to acquisitions of GearBubble and Aphrodite’s Marketing $500,020)
and $201,430, respectively.
The following is a roll
forward for the years ended December 31, 2021 and 2020 of the fair value liability of price adjustable derivative instruments:
| | |
Fair Value of
Liability for
Derivative
Instruments | |
| | |
| |
| Balance at December 31, 2019 | |
$ | 396,220 | |
| Initial valuation of derivative liabilities included in debt discount | |
| 55,000 | |
| Initial valuation of derivative liabilities included in derivative expense | |
| 127,285 | |
| Reclassification of derivative liabilities to loss from extinguishment of debt | |
| 97,700 | |
| Change in fair value of derivative liabilities | |
| (474,775 | ) |
| Balance at December 31, 2020 | |
| 201,430 | |
| Initial valuation of derivative liabilities included in debt discount | |
| 515,000 | |
| 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 | |
| 354,904 | |
| Reclassification of derivative liabilities to gain from extinguishment of debt | |
| (631,052 | ) |
| Change in fair value of derivative liabilities | |
| (394,428 | ) |
| Balance at December 31, 2021 | |
$ | 978,232 | |
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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 December 31, 2021, the last trading day of the years ended December 31, 2021 and 2020, was $0.002 and $0.0049, respectively.
The volatility, expected remaining term, and risk-free interest rates used to estimate the fair value of derivative liabilities at December
31, 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 year ended
December 31,
2021) | | |
December 31,
2021 | |
| Volatility | |
| 218% to 412 | % | |
| 185 | % |
| Expected Remaining Term (in years) | |
| 1.00 to 1.50 | | |
| 0.55
to 0.96 | |
| Risk Free Interest Rate | |
| 0.05 to 0.85 | % | |
| 0.19
to 0.85 | % |
| Expected dividend yield | |
| None | | |
| None | |
| | |
Initial
Valuations
(on new derivative
instruments entered
into during the year ended
December 31,
2020) | | |
December 31,
2020 | |
| Volatility | |
| 676% to 684 | % | |
| 418 | % |
| Expected Remaining Term (in years) | |
| 1.00 | | |
| 0.25
to 0.54 | |
| Risk Free Interest Rate | |
| 0.15 to 0.16 | % | |
| 0.10 | % |
| Expected dividend yield | |
| None | | |
| None | |
Note 8 - Loans Payable
Loans payable consisted of the following:
| | |
December 31, 2021 | | |
December 31, 2020 | |
| | |
| | |
| |
| Principal amount of loans | |
$ | 877,316 | | |
$ | 312,300 | |
| Accrued interest | |
| 92,330 | | |
| - | |
| Loans payable | |
$ | 969,646 | | |
$ | 312,300 | |
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).
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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 year ended December 31, 2021, the
Company fully paid the remaining balance of this loan. Accordingly, the outstanding balances at December 31, 2021 and 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 December 31, 2021 and 2020 was $0, with accrued interest of $13,000 at December
31, 2021 and 2020.
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 year ended December 31, 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. During
the years ended December 31, 2021 and 2020, the Company recognized forgiveness of PPP Loan of $18,291 and $18,608, respectively, as reflected
in the consolidated statements of operations.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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 years ended December 31, 2020, the Company repaid the
remaining outstanding balance of $15,000. The outstanding balances at December 31, 2021 and 2020 were $0 and $15,000, respectively, with
accrued interest of $0 and $155 at December 31, 2021 and 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 had 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 had 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.
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 had 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.
On November 11, 2020, RB Capital Partners, Inc.
and the Company entered into an agreement whereas the Company agreed to allow RB Capital Partners, Inc. to convert $6,000 at $0.001 and
issue 6,000,000 shares and pay the balance of these notes in the amount of $18,000. RB Capital Partners, Inc. agreed to release the Company
of any remaining obligations on the remaining two notes of $25,000 each.
During the year ended December 31, 2021, the
Company paid $6,000 to settle the remaining balance of this $12,000 loan. The outstanding balances due to RB Capital Partners, Inc. at
December 31, 2021 and 2020 were $0 and $18,000, respectively, with accrued interest of $0 for both periods. The Company had committed
to allow RB Capital Partners, Inc. to convert $6,000 at $0.001 and issue 3,000,000 shares at a later date.
Crown Bridge Partners, LLC
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 accrued at the rate of 10% per annum
and was 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 had 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 December 31, 2021 and 2020 were $0 with accrued interest of
$0 and $2,742 at December 31, 2021 and 2020, respectively.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
Trillium Partners LP
On June 16, 2020, the Company entered into a
loan agreement with Trillium Partners 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 December 31, 2021 and 2020 were $12,500 with accrued interest of $1,928
and $363 at December 31, 2021 and 2020, respectively. In February 2022, principal of $12,500, accrued interest of $2,068, and conversion
fees of $2,800 were converted into 21,710,613 shares of common stock.
On September 14, 2020, the Company entered into
a loan agreement with Trillium Partners 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 December 31, 2021 and 2020 were $12,250 for both periods with accrued
interest of $1,225 and $0, respectively. In February 2022, principal of $12,250, accrued interest of $1,639, and conversion fees of $1,800
were converted into 39,222,875 shares of common stock.
On September 18, 2020, the Company entered into
a loan agreement with Trillium Partners 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 December 31, 2021 and 2020 were $15,000 for both periods, with accrued
interest of $1,927 and $378 at December 31, 2021 and 2020, respectively. In February 2022, principal of $15,000, accrued interest of
$3,520, and conversion fees of $1,400 were converted into 37,400,688 shares of common stock.
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. On February 10, 2021, upon
the acquisition of Aphrodite’s Marketing, the Company assumed an outstanding balance of $227,517 with Clearbanc. During the year
ended December 31, 2021, the Company has received $526,620 and repaid back $577,507 related to this capital advance agreement. The loan
or advance is non-interest bearing and due on demand. As of December 31, 2021, the outstanding balance is $200,930 including accrued
interest of $24,300.
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%. On February 10, 2021, upon the acquisition of Aphrodite’s Marketing, the Company assumed an outstanding balance of $359,774
with Shopify. During the year ended December 31, 2021, the Company has received $133,202 and repaid back $472,384 related to this capital
advance agreement. 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 December 31, 2021, the outstanding balance is $30,592 including accrued interest of $10,000.
Business Capital
The Company’s majority owned subsidiary,
Aphrodite’s Marketing, had a loan with Business Capital. On February 10, 2021, upon the acquisition of Aphrodite’s Marketing,
the Company assumed an outstanding balance of $401,867 with Business Capital. During the year ended December 31, 2021, the Company repaid
back $401,867 related to this loan. As of December 31, 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). On February
10, 2021, upon the acquisition of Aphrodite’s Marketing, the Company assumed an outstanding balance of $75,500 with Jonathan Foltz.
During the year ended December 31, 2021, the Company has received $31,636 and repaid back $25,000 related to this loan. The loan is non-interest
bearing and due on demand. As of December 31, 2021, the outstanding balance is $82,136.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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. Nationwide is owned by the
father of Jonathan Foltz (see Note 13). On February 10, 2021, upon the acquisition of Aphrodite’s Marketing, the Company assumed
an outstanding balance of $545,720 with Nationwide. 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. During the year ended December 31, 2021, the Company repaid back $30,000 related to this loan. As of
December 31, 2021, the outstanding balance is $573,750 including accrued interest of $58,030.
Digital Age Business
Through the Company’s majority owned subsidiary,
Aphrodite’s Marketing, has a loan with Digital Age Business. Jonathan Foltz is the President and CEO of Digital Age Business (see
Note 13) The loan is non-interest bearing and due on demand. On February 10, 2021, upon the acquisition of Aphrodite’s Marketing,
the Company assumed an outstanding balance of $113,500 with Digital Age Business. During the year ended December 31, 2021, the Company
repaid back $71,013 related to this loan. As of December 31, 2021, the outstanding balance is $42,487.
Note 9 - Notes Payable
Unsecured Notes Payable
Notes payable are summarized below:
| | |
December 31,
2021 | |
| | |
| |
| Principal amount | |
$ | 1,116,934 | |
| Less: current portion | |
| (855,158 | ) |
| Notes payable - long term portion | |
$ | 261,776 | |
Minimum principal payments
under notes payable are as follows:
| Year ended December 31, 2022 | |
$ | 859,880 | |
| Year ended December 31, 2023 | |
| 15,492 | |
| Year ended December 31, 2024 | |
| 15,492 | |
| Year ended December 31, 2025 | |
| 15,492 | |
| Year ended December 31, 2026 and thereafter | |
| 210,578 | |
| Total principal payments | |
$ | 1,116,934 | |
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. In March 2022,
SBA extended the payment due date from 24 months to 30 months from the date of the note. 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 December 31, 2021 and 2020 were $114,800
with accrued interest of $6,564 and $2,101 December 31, 2021 and 2020, respectively.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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. On February 10, 2021, upon the acquisition of Aphrodite’s
Marketing, the Company assumed an outstanding balance of $150,000 related to this SBA Loan. 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 December 31, 2021 was $150,000 with accrued interest of $8,577 at December 31, 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. Between October 2021 and November 2021,
the Company paid a total of $309,867 towards this promissory note. The outstanding balance at December 31, 2021 was $852,133.
Secured Notes Payable
As of December 31, 2021 secured notes payable
consisted of the following:
| | |
December
31,
2021 | |
| | |
| |
| Principal amounts | |
$ | 400,000 | |
| Less: unamortized debt discount | |
| (61,075 | ) |
| Secured notes payable, net | |
$ | 338,925 | |
Trillium Partners LLP and JP Carey Limited
Partners, LP
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. Currently, the Company is negotiating with the Lenders with regards to the repayment of the Secured Notes.
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 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.
Additionally, the Company granted an aggregate
of 41,666,666 warrant to purchase shares of the Company’s common stock in connection with the issuance of these secured promissory
notes. The warrants have a term of 7 years from the date of grant and exercisable at an exercise price of $0.006. The Company accounted
for the warrants issued with these secured promissory notes by using the relative fair value method. The total debt discount from the
relative fair value of the warrants of $162,387 using a Black-Scholes model with the following assumptions: stock price at valuation
date of $0.006 based on the closing price of common stock at date of grant, exercise price of $0.006, dividend yield of zero, expected
term of 7.00, a risk-free rate of 1.41%, and expected volatility of 482%.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
During the year ended December 31, 2021, the
Company repaid back $190,000 resulting to a remaining balance of $400,000 as of December 31, 2021. For the years ended December 31, 2021
and 2020, amortization of debt discounts related to all the secured promissory notes above amounted to $196,312 and $0, respectively,
which has been amortized to interest expense on the accompanying consolidated statements of operations.
Between January 2022 and February 2022, the Company
repaid back an aggregate of $110,000 to the Lenders.
Note 10 - Related Party Transactions
Advances from Chief Executive Officer and
Accrued Interest
The Company receives periodic advances from the
Company’s Chief Executive Officer (“CEO”) based upon the Company’s cash flow needs. At December 31, 2021 and
2020, $145,347 and $211,141 (consisted of $31,313 current portion and $179,828 long-term portion), respectively, was due to such officer,
which primarily consisted of accrued interest. Interest expense is accrued at an average annual market rate of interest which is 3.25%
at December 31, 2021 and 2020. Interest expense incurred was $13,156 and $16,067 for the years ended December 31, 2021 and 2020, respectively.
Accrued interest was $145,347 and $211,141 at December 31, 2021 and 2020. No terms for repayment have been established.
Effective February 28, 2010, the Company entered
into an employment agreement with the CEO. 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 CEO 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 CEO 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 CEO it is understood and agreed to by the Board, that as long as the Company
is unable to pay the CEO 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 CEO 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
authorized and issued 51 shares of Series A Preferred Stock to the Company’s CEO. Additionally, during the year ended December
31, 2021, the Company authorized and issued an additional 24 shares of Series A Preferred Stock to the Company’s CEO in connection
with the amended and restated certificate of designation for the Company’s Series A Preferred Stock (see Note 12).
During the year ended December 31, 2019, the
CEO converted $500,000 of deferred compensation into 17,000,000 shares of common stock of the Company. In December 2020, the CEO returned
these 17,000,000 shares to the Company and was recorded in treasury stock valued at $103,700.
As of December 31, 2020, deferred compensation
and advances from CEO of $320,172 and $179,828, totaling $500,000, was classified as a long-term liability as per agreement with the
CEO to defer payment for twelve months. At December 31, 2021, deferred compensation due to CEO amounted to $346,163 and advances from
CEO amounted $145,347 were classified as current portion as reflected in the consolidated balance sheets.
On July 1, 2021, the Company entered into an
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. In July 2021, under the terms of the ESOP, the Board of Directors of the Company approved the future issuance of 500,000,000 shares
to the Company’s CEO subject to the Company increasing its authorized shares to 6,000,000,000 shares and subject to the effectiveness
of an S-8 Registration Statement covering these shares which has not been filed with the Securities and Exchange Commission (“SEC”).
As of December 31, 2021, the Company has not met the prerequisite related to the effectiveness of an S-8 Registration Statement. As such
the Company deemed that these shares have not been legally issued and the measurement date has not been met and therefore will be recognized
until an S-8 Registration Statement becomes effective (see Note 11 and 12).
Advertising and Marketing Fees
The Company incurred advertising and marketing
fees of $27,160 to an affiliated company owned by Mr. Donald Wilson during the year ended December 31, 2021. Mr. Donald Wilson is one
of the majority owners of the 49% of the Merger Sub, GearBubble Tech (see Note 13).
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
Loans Payable
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 8). Jonathan Foltz
is one of the majority owners of the 49% in Acquisition Sub, Aphrodite’s Marketing (see Note 13). As of December 31, 2021, the
outstanding balance is $82,136.
Through the Company’s majority owned subsidiary,
Aphrodite’s Marketing, has loan agreements with Nationwide dated in October 2020 and November 2020. Nationwide is owned by the
father of Jonathan Foltz (see Note 8). As of December 31, 2021, the outstanding balance is $573,750 including accrued interest of $58,030.
Through the Company’s majority owned subsidiary,
Aphrodite’s Marketing, has a loan with Digital Age Business. Jonathan Foltz is the President and CEO of Digital Age Business (see
Note 8). As of December 31, 2021, the outstanding balance is $42,487.
Note 11 - 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.
Consulting Agreement
On November 15, 2021, the Company entered into
an Engagement Agreement (the “Agreement”) with a consulting company which will act as a financial advisor and investment
banker of the Company, whereby the consultant will assist the Company with strategic business plans, investor relations, potential financing
and other financial advisory and investment banking services. The engagement period is for 12 months from the date of the agreement.
As consideration for the services, the Company
will issue a total of 32,043,874 shares of the Company’s common stock based on the following schedule: i) 16,021,937 shares of
common stock upon execution of the Agreement and ii) 16,021,937 shares of common stock upon an uplisting of the Company’s common
stock to a national exchange.
Additionally, the Company shall pay compensation
of 7% of the total gross proceeds of any financing introduce by the consultant (the “Financing”), cash fee for unallocated
expenses of 1%, warrants equal to 5% of the aggregate number of shares of common stock sold in a Financing and transaction fees equal
to 3% in cash at the closing of the Financing. The warrants will be exercisable at an exercise price equal to the prices of the securities
issued to investors in the Financing.
As of December 31, 2021, the16,021,937 shares
of common stock were not issued and has been recognized as common stock issuable. The Company valued this common stock issuable at the
fair value of $62,486 or $0.0039 per common share based on the quoted trading price on the date of grant to be expensed over the term
of the Agreement. During the year ended December 31, 2021, the Company recognized stock-based compensation of $7,811. The remaining balance
of $54,675 shall be expensed during year 2022.
Operating Lease Agreements
The Company leases retail space at two different
locations. The term of the first lease is for a ten-year period from July 2014 to April 2024 starting with a monthly base rent of $1,200.
The base rent is subject to an annual increase as defined in the lease agreement. In addition to the monthly base rent, the Company is
charged separately for common area maintenance which is considered a non-lease component. 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 rate of
10% 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.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
Through the Company’s majority owned subsidiary,
Aphrodite’s Marketing, entered into an approximate three-year lease agreement on October 1, 2019, for its office facilities starting
with a monthly base rent of $6,582. The base rent is subject to an annual increase as defined in the lease agreement. The Company recorded
right-of-use assets and operating lease liabilities of $122,946 related to this lease agreement. The Company used incremental borrowing
rate of 8% during the year ended December 31, 2021. 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 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 December 31, 2021:
| 2022 | |
$ | 81,745 | |
| 2023 | |
| 19,700 | |
| 2024 | |
| 6,660 | |
| Total minimum lease payments | |
| 108,105 | |
| Less amounts representing interest | |
| (7,016 | ) |
| Present value of net minimum lease payments | |
| 101,089 | |
| Less current portion | |
| (76,494 | ) |
| Long-term capital lease obligation | |
$ | 24,595 | |
Amended Employment Agreement
On July 1, 2021, the Company entered into an
Amended and Restated Executive Employment Agreement with the CEO of the Company, Berge Abajian. 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. In July 2021, under the terms of the ESOP, the Board of Directors of the
Company approved the future issuance of 500,000,000 shares to the Company’s CEO subject to the Company increasing its authorized
shares to 6,000,000,000 shares and subject to the effectiveness of an S-8 Registration Statement covering these shares which has not
been filed with the SEC. As of December 31, 2021, the Company has not met the prerequisite related to the effectiveness of an S-8 Registration
Statement. As such the Company deemed that these shares have not been legally issued and the measurement date has not been met and therefore
will be recognized until an S-8 Registration Statement becomes effective (see Note 10 and 12).
Note 12 - Stockholder’s Equity
(Deficit)
Employee Stock Ownership Plan
On July 9, 2021, the Board of Directors of the
Company adopted 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 future issuance of 500,000,000 shares of the Company’s Common Stock to the
Company’s CEO, Berge Abajian, subject to the Company increasing its total authorized shares of common stock to 6,000,000,000 which
was increased in July 2021 and subject to the effectiveness of an S-8 Registration Statement covering these shares with the SEC. As of
December 31, 2021, the Company has not met the prerequisite related to the effectiveness of an S-8 Registration Statement. As such the
Company deemed that these shares have not been legally issued and the measurement date has not been met and therefore will be recognized
until an S-8 Registration Statement becomes effective.
Preferred Stock
The Company has authorized the issuance of 10,000,000
shares of preferred stock. 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.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
Certificate of Designation of Series A
Preferred Stock
In September 2011, the Company filed a Certificate
of Designation for Series A Preferred Stock with the Wyoming Secretary of State, and designated 51 shares of preferred stock as Series
A Preferred Stock. In February 2021, the Company filed an amended and restated certificate of designation for the Company’s Series
A Preferred Stock increasing the number of shares to 75 shares.
Designation. The Company had designated
51 shares which was amended and increase from 51 to 75 shares of preferred stock as Series A Preferred Stock. Each share of Series A
Preferred Stock has a par value of $0.001 per share and a stated value of $0.001
Dividends. There will be no
dividends due or payable on the Series A Preferred Stock. Any future terms with respect to dividends shall be determined by the board
of directors of the Company.
Liquidation. Upon any liquidation, the
holders of Series A Preferred Stock are entitled to receive net assets on a pro rata basis. Each holder of Series A Preferred Stock is
entitled to receive ratably any dividends declared by the board of directors of the Company.
Voting Rights. Each one (1) share of the
Series A Preferred Stock shall have voting rights equal to One Percent (1%) of the issued and outstanding shares of the Corporation’s
Common Stock on the date of any such vote, such that the Holder of all Seventy-Five (75) shares of Series A Preferred Stock, shall always
have voting rights equal to Seventy Five Percent (75%) of the issued and outstanding shares of the Company’s Common Stock.
Conversion. The Series A Preferred stock
in non-convertible.
During the year ended December 31, 2021, the
Company issued 24 shares of the Series A Preferred Stock to the Company’s CEO such that the CEO shall maintain voting control.
The Company recorded such issuance at par value.
As of December 31, 2021 and 2020, there were
75 and 51 shares of Series A Preferred Stock issued and outstanding, respectively. The Company’s CEO owns 75 shares of shares of
the Series A Preferred Stock.
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 Wyoming 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.
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.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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 Wyoming 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 December 31, 2021, accrued dividends related to the Series B and C Convertible Preferred Stock amounted
$5,335.
As of December 31, 2021, there were 3,000 and
5 shares of Series B Convertible Preferred Stock and Series C Convertible Preferred Stock issued and outstanding, respectively.
Common Stock Issued and Issuable
On March 24, 2021, the Company filed, with the
Wyoming Secretary of State, a Certificate of Amendment, to amend its Articles of Incorporation. The amendment reflected the increase
in the authorized shares of common stock from 1,000,000,000 shares to 3,000,000,000 shares. On July 9, 2021, the Company filed, with
the Wyoming Secretary of State, a Certificate of Amendment, to amend its Articles of Incorporation. The Amendment reflected the increase
in the authorized shares of common stock from 3,000,000,000 shares to 6,000,000,000 shares.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
During the year ended December 31, 2021
During the year ended December 31, 2021, the
Company sold an aggregate of 538,403,000 shares of Common Stock to various investors for total proceeds of $3,768,730 or approximately
$0.007 per share.
During the year ended December 31, 2021, the
Company issued an aggregate of 587,292,862 shares of its common stock at an average contractual conversion price of approximately $0.002
to various lenders as a result of the conversion of principal, accrued interest and conversion fees of $1,129,681 underlying certain
outstanding convertible notes converted during such period.
In November 2021, in connection with an Agreement
(see Note 11), the Company agreed to issue 16,021,937 shares of common stock to a consultant which was valued at the fair value of $62,486
or $0.0039 per common share based on the quoted trading price on the date of grant to be expensed over the term of the Agreement. During
the year ended December 31, 2021, the Company recognized stock-based compensation of $7,811. The remaining balance of $54,675 shall be
expensed during year 2022. As of December 31, 2021, the16,021,937 shares of common stock were not issued and has been recognized as common
stock issuable.
During the year ended December 31, 2020
During the year ended December 31, 2021, the
Company sold an aggregate of 24,294,400 shares of Common Stock to various investors for total proceeds of $170,061 or approximately $0.007
per share.
During the year ended December 31, 2021, the
Company issued an aggregate of 4,000,000 shares of common stock to various consultants for consulting services rendered. The 4,000,000
shares of common stock had a fair value of $148,000, or $0.037 per share, based on the quoted trading price on the date of grants, which
was fully vested. In connection with this issuance, the Company recognized stock-based consulting expense of $148,000 during the year
ended December 31, 2020.
During the year ended December 31, 2020, the
Company issued an aggregate of 60,240,258 shares of its common stock at an average contractual conversion price of approximately $0.004
to various lenders as a result of the conversion of principal, accrued interest and conversion fees of $223,657 underlying certain outstanding
convertible notes converted during such period.
Common Stock Warrants
A summary of the Company’s outstanding
stock warrants is presented below:
| | |
Number of
Warrants | | |
Weighted Average
Exercise Price | | |
Weighted
Average
Remaining
Contractual
Life (Years) | |
| Balance at December 31, 2019 | |
| 325,000 | | |
$ | 0.50 | | |
| 4.84 | |
| Granted | |
| - | | |
| - | | |
| - | |
| Balance at December 31, 2020 | |
| 325,000 | | |
$ | 0.50 | | |
| 3.84 | |
| Granted | |
| 797,916,666 | | |
$ | 0.002 | | |
| 5.00 | |
| Balance at December 31, 2021 | |
| 798,241,666 | | |
$ | 0.002 | | |
| 4.26 | |
| Warrants exercisable at December 31, 2021 | |
| 798,241,666 | | |
$ | 0.002 | | |
| 4.26 | |
At December 31, 2021, the aggregate intrinsic
value of warrants outstanding was $0.
In February 2021, the Company granted an aggregate
of 756,250,000 warrant to purchase shares of the Company’s common stock in connection with the issuance of certain convertible
notes. The warrants have a term of 5 years from the date of grant and exercisable at an exercise price of $0.002 subject to adjustment
such as stock dividends, stock splits, and dilutive issuances (see Note 6). These warrants contain a provision for cashless exercise
as defined in the warrant agreement.
In October 2021, the Company granted an aggregate
of 41,666,666 warrant to purchase shares of the Company’s common stock in connection with the issuance of secured promissory notes
(see Note 9). The warrants have a term of 7 years from the date of grant and exercisable at an exercise price of $0.006 subject to adjustment
under the anti-dilution provision. These warrants contain a provision for cashless exercise as defined in the warrant agreement.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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, pursuant to which the shareholders of Digital Age Business
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 Business, 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.
Section 2.2.2 of the Acquisition Agreement further
provides that, at the closing of the Acquisition, Southridge Capital (or its affiliates as directed by Southridge Capital) shall receive
shares of the Company’s newly created Series C Preferred Stock. 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 the Closing.
On February 11, 2021, the Company, Digital Age
Business, 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).
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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 7).
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 consideration paid by the Company as follows:
| Equity instrument (3,000 Series B Convertible Preferred Stock) | |
$ | 664,105 | |
| Embedded conversion options in the 3,000 Series B Convertible Preferred Stock and 20% probability of achieving the Additional Shares | |
| 821,739 | |
| Fair value of total consideration transferred | |
$ | 1,485,844 | |
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 | |
| Liabilities assumed (including loans payable of $2,304,438 and note payable- long term of $150,000) | |
| (3,737,682 | ) |
| Total identifiable net liabilities | |
| (2,140,293 | ) |
| Non-controlling interest in Aphrodite’s Marketing | |
| - | |
| Intangible assets (relating to form of employment contracts and Aphrodite name with estimated three-year life) (1) | |
| 725,867 | |
| Goodwill | |
| 2,900,270 | |
| Total | |
$ | 1,485,844 | |
| Acquisition related cost (legal and audit fees included in professional and consulting expenses for the year ended December 31, 2021) | |
$ | 54,360 | |
(1) For
the year ended December 31, 2021, amortization of intangible assets amounted to $214,592.
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 7). Accordingly, the Company recorded stock-based compensation of $110,640
during the year ended December 31, 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 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.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
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, Donald 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 consideration paid by the Company as follows:
| Cash | |
$ | 2,000,000 | |
| Promissory note | |
| 1,162,000 | |
| Fair value of total consideration transferred | |
$ | 3,162,000 | |
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 | |
| Liabilities assumed | |
| (458,628 | ) |
| Total identifiable net assets | |
| 747,260 | |
| Non-controlling interest in GearBubble Tech | |
| (366,157 | ) |
| Goodwill | |
| 2,780,897 | |
| Total | |
$ | 3,162,000 | |
| Acquisition related cost (legal and audit fees included in professional and consulting expenses for the year ended December 31, 2021) | |
$ | 47,100 | |
Note 14 - Income Taxes
The foregoing amounts are management’s
estimates and the actual results could differ from those estimates. Future profitability in this competitive industry depends on continually
obtaining and fulfilling new profitable sales agreements and modifying products. The inability to increase sales could reduce estimates
of future profitability, which could affect the Company’s ability to realize the deferred tax assets. Significant components of
the Company’s deferred tax assets and liabilities are summarized as follows:
| | |
December 31, | | |
December 31, | |
| | |
2021 | | |
2020 | |
| Deferred tax assets: | |
| | |
| |
| Net operating loss carryforwards | |
$ | 1,761,274 | | |
$ | 1,447,335 | |
| Deferred compensation | |
| 90,002 | | |
| 133,671 | |
| Deferred tax asset | |
| 1,851,277 | | |
| 1,581,006 | |
| Less valuation allowance | |
| (1,851,277 | ) | |
| (1,581,006 | ) |
| | |
| | | |
| | |
| Deferred tax asset, net | |
$ | -- | | |
$ | -- | |
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
Based upon the net losses historically incurred
and, the prospective global economic conditions, management believes that it is not more likely than not that the deferred tax asset
will be realized and has provided a valuation allowance of 100% of the deferred tax asset.
A reconciliation of the income tax (benefit)
provision for the years ended December 31, 2021 and 2020 to the income tax (benefit) provision recognized in the financial statements
is as follows:
| | |
December 31, 2021 | | |
December 31, 2020 | |
| U.S. statutory federal rate | |
| 21 | % | |
| 21 | % |
| State income tax rate, net of federal benefit | |
| 6 | % | |
| 6 | % |
| Change in valuation allowance | |
| (27 | %) | |
| (27 | %) |
| | |
| | | |
| | |
| Effective tax rate | |
| -- | | |
| -- | |
On December 22, 2017, the Tax Cuts and Jobs Act
(the “Act”) was signed into law. The Act decreases the U.S. corporate federal income tax rate from a maximum of 34% to a
flat 21% effective January 1, 2018. The Act also includes a number of other provisions including, among others, the elimination of net
operating loss carrybacks and limitations on the use of future losses, the repeal of the Alternative Minimum Tax regime and the repeal
of the domestic production activities deduction. These provisions are not expected to have a material effect on the Corporation. Given
the significant complexity of the Act and anticipated additional implementation guidance from the Internal Revenue Service, further implications
of the Act may be identified in future periods.
The Company provided a valuation allowance equal
to the deferred income tax asset for the year ended December 31, 2021 and 2020 because it was not known whether future taxable income
will be sufficient to utilize the loss carryforward. The increase in the allowance was $270,271 in fiscal 2021. The potential tax benefit
arising from the loss carryforward of approximately $4,474,000 accumulated through December 31, 2017 will expire in 2037 and the fiscal
2018, 2019, 2020 and 2021 net operating loss carryforward of approximately $2,300,340 may be carried forward indefinitely.
Additionally, the future utilization of the net
operating loss carryforward to offset future taxable income may be subject to an annual limitation as a result of ownership changes or
business changes that could occur in the future. If necessary, the deferred tax assets will be reduced by any carryforward that expires
prior to utilization as a result of such limitations, with a corresponding reduction of the valuation allowance. The Company does not
have any uncertain tax positions or events leading to uncertainty in a tax position. The Company’s 2019, 2020 and 2021 Corporate
Income Tax Returns are subject to Internal Revenue Service examination.
Note 15 - Subsequent Events
Common Stock for Debt Conversion
From January 2022 through March 2022,
the Company issued an aggregate of 1,314,342,897 shares of its common stock at an average contractual conversion price of approximately
$0.001 as a result of the conversion of principal, accrued interest, conversion fees of $1,229,018 and incurred additional interest expense
of $35,976 for a total of $1,264,995 underlying certain outstanding convertible notes converted during such period.
In February 2022, the Company issued an aggregate
of 98,334,176 shares of its common stock at an average conversion price of approximately $0.002 as a result of the conversion of principal,
accrued interest and conversion fees of $62,978 and incurred additional interest expense of $161,225 for a total of $224,203 underlying
certain outstanding loans payable converted during such period. The 98,334,176 shares of common stock had a fair value of $224,203, or
$0.002 per share, based on the quoted trading price on the date of grant.
Preferred Stock
Certificate of Designation of Series D 3%
Convertible Preferred Stock
On January 4, 2022, the Company filed a Certificate
of Designation for Series D Convertible Preferred Stock with the Wyoming Secretary of State, designating 2,500,000 shares of preferred
stock as Series D Convertible Preferred Stock. In February 2022, the Company filed an Amended and Restated Certificate of Designation,
Preference and Rights of the Series D Convertible Preferred Stock. The Company amended and cancelled the mandatory provision and also
amended the fixed conversion price from $0.001 to $0.0008.
BERGIO INTERNATIONAL, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2021 AND 2020
Designation. The Company has designated
2,500,000 shares of preferred stock as Series D Convertible Preferred Stock. Each share of Series D Convertible Preferred Stock has a
par value of $0.00001 per share and a stated value of $1.00.
Dividends. Each share of Series
D Convertible Preferred Stock is entitled to an annual dividend equal to 3% of the stated value which shall be cumulative, payable solely
upon redemption, liquidation or conversion. Upon the occurrence of an event of default, the dividend rate shall automatically increase
to 18%.
Liquidation. Upon any liquidation, dissolution
or winding-up of the Company, whether voluntary or involuntary or upon any deemed liquidation event, after payment or provision for payment
of debts and other liabilities of the Company and after payment or provision for ay liquidation preference payable to the holders of
any preferred stock ranking senior upon liquidation to the Series D Preferred Stock, if any, but prior to any distribution or payment
made to the holders of common stock or the holders of the preferred stock ranking junior upon liquidation to the Series D Preferred Stock,
the holders will be entitled to be paid out of the assets of the Company available for distribution an amount equal to the stated value
plus any accrued but unpaid dividends, default adjustment, if applicable, and any other fees.
Voting Rights. Except as set forth in
the Certificate of Designation, the Series D Preferred Stock shall have no right to vote on any matters requiring shareholder approval
or any matters on which the shareholders are permitted to vote. With respect to any voting rights of the Series D Preferred Stock, the
Series D Preferred Stock shall vote as a class, each share of Series D Preferred Stock shall have one vote on any such matter, and any
such approval may be given via a written consent in lieu of a meeting of the Series D Holders.
Conversion price. The conversion price
(the “Conversion Price”) shall equal the fixed conversion price equal to $0.0008 (subject to equitable adjustments by the
Company relating to the Company’s securities or the securities of any subsidiary of the Company, combinations, recapitalization,
reclassifications, extraordinary distributions and similar events). Notwithstanding anything contained herein to the contrary, in the
event that, following the date of issuance of the Series D Preferred Stock, the Company consummates a financing of at least $7,500,000,
in the aggregate, in one offering or a series of offerings (debt or equity or a combination), the Conversion Price shall be reset to
the Variable Conversion Price. The "Variable Conversion Price" shall mean 65% multiplied by the market price (representing
a discount rate of 35%). Market price means the average of the lowest trading prices for the common stock during the twenty (20) trading
day period ending on the latest complete trading day prior to the conversion date.
Between January 2022 and February 2022, the Company
sold an aggregate of 855,000 shares of Series D Convertible Preferred Stock for total net proceeds of $815,000 after deducting legal
and financing cost of $10,000 or approximately $0.96 per share. In connection with the issuance of these Series D Convertible Preferred
Stock, the Company shall recognize deemed dividend upon issuance.
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