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iii
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Included in this Annual Report on Form 10-K are “forward-looking”
statements, as well as historical information. Although we believe
that the expectations reflected in these forward-looking statements
are reasonable, we cannot assure you that the expectations
reflected in these forward-looking statements will prove to be
correct. Our actual results could differ materially from those
anticipated in forward-looking statements as a result of certain
factors, including matters described in the section titled “Risk
Factors.” Forward-looking statements include those that use
forward-looking terminology, such as the words “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “may,” “project,”
“plan,” “will,” “shall,” “should,” and similar expressions,
including when used in the negative. Although we believe that the
expectations reflected in these forward-looking statements are
reasonable and achievable, these statements involve risks and
uncertainties and we cannot assure you that actual results will be
consistent with these forward-looking statements. We undertake no
obligation to update or revise these forward-looking statements,
whether to reflect events or circumstances after the date initially
filed or published, to reflect the occurrence of unanticipated
events or otherwise.
We
operate in a very competitive and rapidly changing environment. New
risks emerge from time to time. It is not possible for us to
predict all of those risks, nor can we assess the impact of all of
those risks on our business or the extent to which any factor may
cause actual results to differ materially from those contained in
any forward-looking statement. The COVID-19 pandemic is adversely
affecting us, our customers, counterparties, employees, and
third-party service providers, and the ultimate extent of the
impacts on our business, financial position, results of operations,
liquidity and prospects are uncertain. Continued deterioration in
general business and economic conditions, including further
increases in unemployment rates, or turbulence in domestic or
global markets could adversely affect our revenues and the values
of our assets and liabilities, reduce the availability of funding,
lead to a tightening of credit, and further increase stock price
volatility. In addition, changes to statutes, regulations, or
regulatory policies or practices as a result of, or in response to
COVID-19, could affect us in substantial and unpredictable ways.
The forward-looking statements in this Report are based on
assumptions management believes are reasonable. However, due to the
uncertainties associated with forward-looking statements, you
should not place undue reliance on any forward-looking statements.
Further, forward-looking statements speak only as of the date they
are made, and unless required by law, we expressly disclaim any
obligation or undertaking to publicly update any of them in light
of new information, future events, or otherwise.
From time to time, forward-looking statements also are included in
our other periodic reports on Forms 10-Q and 8-K, in our press
releases, in our presentations, on our website and in other
materials released to the public. Any or all of the forward-looking
statements included in this Report and in any other reports or
public statements made by us are not guarantees of future
performance and may turn out to be inaccurate. These
forward-looking statements represent our intentions, plans,
expectations, assumptions and beliefs about future events and are
subject to risks, uncertainties and other factors. Many of those
factors are outside of our control and could cause actual results
to differ materially from the results expressed or implied by those
forward-looking statements. In light of these risks, uncertainties
and assumptions, the events described in the forward-looking
statements might not occur or might occur to a different extent or
at a different time than we have described. You are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of the date of this Report. All subsequent written
and oral forward-looking statements concerning other matters
addressed in this Report and attributable to us or any person
acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this
Report.
Except to the extent required by law, we undertake no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events, a change in events,
conditions, circumstances or assumptions underlying such
statements, or otherwise.
For discussion of factors that we believe could cause our actual
results to differ materially from expected and historical results
see “Item 1A - Risk Factors” below.
In
this Report, unless otherwise indicated or the context otherwise
requires, “Bergio”, the “Company”, “we”, “us” or “our” refer to
Bergio International, Inc., a Wyoming corporation, and its
subsidiaries.
iv
PART I
Item 1. Business
Company Overview
We
were incorporated as “Alba Mineral Exploration, Inc.” on July 24,
2007, in the State of Delaware for the purpose of engaging in the
exploration of mineral properties. On October 21, 2009, we entered
into an exchange agreement (the “Exchange Agreement”) with Diamond
Information Institute, Inc. (“Diamond Information Institute”),
whereby we acquired all of the issued and outstanding common stock
of Diamond Information Institute and changed the name of the
company to Bergio International, Inc. On February 19, 2020, the
Company changed its state of incorporation to the State of
Wyoming.
The Bergio brand is our most important asset. The Bergio brand is
associated with high-quality, handcrafted and individually designed
pieces with European sensibility, Italian craftsmanship and a bold
flair for the unexpected. Bergio, is one of the most coveted
brands of fine jewelry. Established in 1995, Bergio’s signature
innovative design, coupled with extraordinary diamonds and precious
stones, earned the company recognition as a highly sought-after
purveyor of rare and exquisite treasures from around the globe. As
President, CEO and Head Designer of Bergio, Berge Abajian performs
a highly successful balancing act, accomplished with equal parts
precision and passion. An informed and inspirational leader, Berge
directs the company with the eye and soul of a designer and the
mind of a businessman. The role that is perhaps closest to his
heart, however, is that of designer. With family jewelry roots
reaching back the 1930s, Berge is a third-generation jeweler and a
purist when it comes to design. Berge’s understanding of every
aspect, in both design and manufacturing, creates collections that
are nothing short of peerless in craftsmanship and style. Berge
creates a collection; he looks well beyond the drawing board. Berge
focuses on the woman who will ultimately wear his pieces, bringing
to creation a magnificent piece of jewelry that reflects the beauty
and vitality a woman possesses. Bergio creations are a seamless
blend of classic elegance and subtle flair, adding to a woman’s
charm while never overpowering her.
It
is our intention to establish Bergio as a holding company for the
purpose of establishing retails stores worldwide. Our branded
product lines are products and/or collections designed by our
designer and CEO Berge Abajian and will be the centerpiece of our
retail stores. We also intend to complement our own
quality-designed jewelry with other products and our own specially
designed handbags. This is in line with our 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 our intention to open elegant stores in “high-end” areas and
provide excellent service in our stores which will be staffed with
knowledgeable professionals.
We
also intend to sell our products on a wholesale basis to limited
customers.
On
March 5, 2014, the Company formed a wholly owned subsidiary called
Crown Luxe, Inc. in the State of Delaware (“Crown Luxe”). Crown
Luxe was established to operate the Company’s first retail store,
which was opened in Bergen County, New Jersey in 2014.
During the fall of 2018, we opened our second retail store at the
new Ocean Resort Casino in Atlantic City, New Jersey. We are also
contemplating the opening of new stores in the future.
The Company’s plan is also to expand its online presence and take
advantage of the Bergio Brand. On February 10, 2021, we entered
into an 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 subsidiary of the Company known as Aphrodite’s Marketing,
Inc. (“Aphrodite’s Marketing”), a Wyoming corporation in exchange
for 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). We own 51% of Aphrodite’s Marketing. In addition, the
Company will provide an additional $5,000,000 in financing for
Aphrodite’s Marketing, Inc. (See Notes to the Consolidated
Financial Statements for additional detail and Form 8-K file with
the SEC on February 17, 2021).
1
On
July 1, 2021 (“Closing”), we 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. We own 51% of GearBubble Tech (See Notes to the
Consolidated Financial Statements for additional detail and Form
8-K file with the SEC on July 12, 2021).
The funding for these acquisitions were a combination of proceeds
from the issuance of common stock from our S-1 Registration
Statement and debt.
Aphrodite’s Marketing and GearBubble Tech are expected to increase
our online presence and provide for expansion of the Bergio Brand.
Aphrodite is a one-stop shop for jewelry, gifts, and surprises for
any occasion. The online stores provides for a unique gifting
experience in the ecommerce space. With their technological
experience in ecommerce, we expect to grow the Bergio Brand, and in
conjunction with Bergio’s design expertise and years of experience
in the jewelry industry, we believe we can successfully grow the
business.
The Company has instituted various cost saving measures to conserve
cash and has worked with its debtors in an attempt to negotiate the
debt terms. The Company has been also investigating various
strategies to increase sales and expand its business. The Company
is in negotiations with some potential partners, but, at this time,
there is nothing concrete, but the Company remains positive about
its prospects. However, there is no assurance that the Company will
be successful in its endeavors or that it will be able to increase
its business.
Our future operations are contingent upon increasing revenues and
raising capital for on-going operations and expansion of our
product lines. Because we have a limited operating history, you may
have difficulty evaluating our business and future prospects.
Principal Products and Services
Our products consist of a wide range of unique jewelry styles and
designs made from precious metals such as gold, platinum and Karat
gold, as well as other precious stones. We continuously innovate
and change our designs based upon consumer trends. As a result of
new designs being created, we believe we are able to differentiate
ourselves from our competition and strengthen our brands. We sell
our products to our customers at price points that reflect the
market price of the base material as well as design and processing
fees.
We
believe that we are a trendsetter in jewelry manufacturing. As a
result, we come out with a variety of products throughout the year
that we believe have commercial potential to meet what we feel are
new trends within the industry. The “Bergio” designs consist of
upscale jewelry that includes white diamonds, yellow diamonds,
pearls, and colored stones, in 18K gold, platinum, and palladium.
We currently design and produce approximately 100 to 150 product
styles. Current retail prices for our products range from $400 to
$200,000.
Our product range is divided into three fashion lines: (i) an 18K
gold line, (ii) a bridal line, and (iii) a couture and/or one of
kind pieces. Our Chief Executive Officer and director, Mr. Abajian,
consults regularly with the design teams to design and create new
products and product lines.
Each year, we attempt to expand and/or enhance these lines, while
constantly seeking to identify trends that we believe exist in the
market for new styles or types of merchandise. Design and
innovation are the primary focus of our manufacturing and we are
less concerned with the supply and capacity of raw materials. Mr.
Abajian with his contacts, which are located mostly overseas,
regularly meets to discuss, conceptualize and develop Bergio’s
various products and collections. When necessary, additional
suppliers and design teams can be brought in as needed. Management
intends to maintain a diverse line of jewelry to mitigate
concentration of sales and continuously expand our market
reach.
Competition and Market Overview
The jewelry design and manufacture industry is extremely
competitive and has low barriers to entry. We compete with other
jewelry designers and manufacturers of upscale jewelry as well as
retail jewelry stores and ecommerce stores.
2
There are over 1,500 jewelry design and manufacture companies
worldwide, several of which have greater experience, brand name
recognition and financial resources than Bergio, but our vision to
create a one Branded stores offering variety of products gives us
an advantage over other designers.
Our management believes that the jewelry industry competes in the
global marketplace and therefore must be adaptable to remain
competitive. Consumer spending for discretionary goods such as
jewelry is sensitive to changes in consumer confidence and
ultimately consumer confidence is affected by general business
considerations in the U.S. economy. Consumer discretionary spending
generally declines during times of falling consumer confidence,
which may affect the retail sale of our products. U.S. consumer
confidence reflected these slowing conditions throughout the last
few years.
We
believe that a stronger economy, more spending by young
professionals with an overall trend toward luxury products will
lead to future growth. Therefore, we intend to make strong efforts
to maintain our brand in the industry through our focus on the
innovation and design of our products as well as being able to
consolidate and increase cost efficiency when possible through
acquisitions.
Marketing and Distribution
It
is our intention to establish Bergio as a holding company for the
purpose of establishing retails stores worldwide and increase our
online presence. Our branded product lines are products and/or
collections designed by our designer and CEO Berge Abajian and will
be the centerpiece of our retail and ecommerce stores. We also
intend to complement our own quality-designed jewelry with other
products and our own specially designed handbags manufactured in
Florence Italy also we introduced our silver Fashion Line which
completed the Brand. This is in line with our 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 our intention to open elegant stores in “high-end” areas and
provide excellent service in our stores which will be staffed with
knowledgeable professionals and opening online shopping gives us an
extreme reach into different markets and support our retail
operations. We also intend to sell our products on a wholesale
basis to limited customers.
On
February 10, 2021, we 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.
On
July 1, 2021, we entered into an Agreement and Plan of Merger with
GearBubble, Inc., a Nevada corporation, (“GearBubble”), pursuant to
which the shareholders of GearBubble 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.
Aphrodite’s Marketing and GearBubble Tech are expected to increase
our online presence and provide for expansion of the Bergio
Brand.
Customers
For the years ended December 31, 2022 and 2021, no customer
accounted for over 10% of total revenues.
As
of December 31, 2022, total accounts receivable amounted to
$119,931 and two customers represented 90% (60% and 30%) of this
balance. As of December 31, 2021, accounts receivable amounted to
$51,324 and two customers represented 75% of this balance.
Sources and Availability of Raw Materials and Principal
Suppliers
Most of the inventory and raw materials we purchase occurs through
our manufacturers located in Europe and U.S. The inventory that we
directly maintain is based on recent sales and revenues of our
products but ultimately is at the discretion of Mr. Abajian, and
his experience in the industry. Our inventories are commodities
that can be incorporated into future products or can be sold on the
open market. Additionally, we perform physical inventory
inspections on a quarterly basis to assess upcoming styling needs
and consider the current pricing in metals and stones needed for
our products.
3
We
acquire all raw gemstones, precious metals and other raw materials
used for manufacturing our products on the open market. We are not
constrained in our purchasing by any contracts with any suppliers
and acquire raw material based upon, among other things,
availability and price on the open wholesale market.
Product for U.S. consumption is now produced in the U.S, and our
contracted manufacturer in Italy. Our manufacturing supplier in
Italy, who procures the raw materials in accordance with the
specifications and designs submitted by Bergio. However, the
general supply of precious metals and stones used by us can be
reasonably forecast even though the prices will fluctuate. Any
price differentials in the precious metals and stones will
typically be passed on to the customer.
Most of our precious stones are purchased from various diamond
dealers. We do not have any formal agreements with any of our
suppliers but have established an ongoing relationship with each of
our suppliers.
Intellectual Property
Bergio is a federally registered trademarked name that we own.
Since the first trademark of “Bergio” was filed, all advertising,
marketing, trade shows and overall presentation of our product to
the public has prominently displayed this trademark. As additional
lines are designed and added to our products, we may trademark new
names to distinguish particular products and jewelry lines.
Research and Development
There were no expenses incurred for research and development in
year 2022 and 2021.
Employees
As
of March 30, 2023, Bergio International, Inc, and subsidiaries had
17 full-time employees and 4 part-time employees. Our current
employees are administrative, sales and marketing personnel. No
personnel are covered by a collective bargaining agreement. We use
the services of independent consultants and contractors from time
to time when needed.
Environmental Regulation and Compliance
The United States environmental laws do not materially impact our
manufacturing as we are using state of the art equipment that
complies with all relevant environmental laws.
Approximately 5% of the Company’s manufacturing is contracted to
quality suppliers in the vicinity of Valenza, Italy, with the
remaining 95% of setting and finishing work being conducted in our
Fairfield, New Jersey facility. The setting and finishing work done
in our New Jersey facility involves the use of precision lasers,
rather than using old soldering procedures which uses gas and
oxygen to assemble different elements. Soap and water is used as a
standard to clean the jewelry. Also, a standard polishing compound
is used for the finishing work, but it does not have a material
impact on our cost and effect of compliance with environmental
laws.
Government Regulation
Currently, we are subject to all of the government regulations that
regulate businesses generally such as compliance with regulatory
requirements of federal, state, and local agencies and authorities,
including regulations concerning workplace safety, labor relations,
and disadvantaged businesses. In addition, our operations are
affected by federal and state laws relating to marketing practices
in the retail jewelry industry. We are subject to the jurisdiction
of federal, various state and other taxing authorities. From time
to time, these taxing authorities review or audit our business.
Where You Can Find More Information
Our website address is www.bergio.com. We do not intend our website
address to be an active link or to otherwise incorporate by
reference the contents of the website into this Report. The public
may read and copy any materials the Company files with the U.S.
Securities and Exchange Commission (the “SEC”) at the SEC’s Public
Reference Room at 100 F Street, NE, Washington, DC 20549. The
public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0030. The SEC
maintains an Internet website (http://www.sec.gov)
4
that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the
SEC.
Item 1A. Risk Factors
Risks Related to Our Business and Industry
WE HAVE HAD LIMITED OPERATIONS, HAVE INCURRED LOSSES SINCE
INCEPTION, HAVE LIMITEDCASH TO SUSTAIN OUR OPERATIONS, AND WE NEED
ADDITIONAL CAPITAL TO EXECUTE OUR BUSINESS PLAN AND RECEIVED A
GOING CONCERN OPINION IN PRIOR PERIODS.
The Company has suffered recurring losses. During the year ended
December 31, 2022, the Company had net loss attributable to Bergio
International, Inc. of $2,269,691 and cash used in operations of
$1,920,719. These factors raise substantial doubt about the
Company’s ability to continue as a going concern. The
recoverability of a major portion of the recorded asset amounts
shown in the accompanying consolidated balance sheet is dependent
upon continued operations of the Company, which in turn, is
dependent upon the Company’s ability to raise capital and/or
generate positive cash flows from operations.
Management plans to achieve profitability by increasing its
business through opening additional retail stores and expanding its
online presence. There can be no assurance that the Company can
raise the required capital to support operations or increase sales
to achieve profitable operations. These consolidated financial
statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary
in the event the Company cannot continue in existence.
A DECLINE IN DISCRETIONARY CONSUMER SPENDING MAY ADVERSELY
AFFECT OUR INDUSTRY, OUR OPERATIONS, AND ULTIMATELY OUR
PROFITABILITY.
Luxury products, such as fine jewelry, are discretionary purchases
for consumers. Any reduction in consumer discretionary spending or
disposable income may affect the jewelry industry more
significantly than other industries. Many economic factors outside
of our control could affect consumer discretionary spending,
including the financial markets, consumer credit availability,
prevailing interest rates, energy costs, employment levels, salary
levels, and tax rates. Any reduction in discretionary consumer
spending could materially adversely affect our business and
financial condition.
THERE IS A RISK ASSOCIATED WITH COVID-19
The Company’s operations were and may be continued to be affected
by the recent and ongoing outbreak of the coronavirus disease
(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 may result in a
material adverse impact on the Company’s financial position,
operations and cash flows. Possible areas that may be affected
include, but are not limited to, disruption to the Company’s
customers and revenue, labor workforce, unavailability of products
and supplies used in operations, and the decline in value of assets
held by the Company, including property and equipment.
OUR OPERATING RESULTS MAY BE ADVERSELY IMPACTED BY WORLDWIDE
POLITICAL AND ECONOMIC UNCERTAINTIES AND SPECIFIC CONDITIONS IN THE
MARKETS WE ADDRESS.
In
the recent past, general worldwide economic conditions have
experienced a downturn due to slower economic activity, concerns
about inflation, increased energy costs, decreased consumer
confidence, and reduced corporate profits and capital spending, and
adverse business conditions. Any continuation or worsening of the
current global economic and financial conditions could materially
adversely affect (i) our ability to raise, or the cost of, needed
capital, (ii) demand for our current and future products and (iii)
our ability to commercialize products. We cannot predict the
timing, strength, or duration of any economic slowdown or
subsequent economic recovery, worldwide, or in the display
industry.
THE LOSS OF THE SERVICERS OF OUR KEY EMPLOYEES, PARTICULARLY
THE SERVICES RENDERED BY OUR CHIEF EXECUTIVE OFFICER AND DIRECTOR,
MR. BERGE ABAJIAN, COULD HARM OUR BUSINESS.
5
We
believe our success will depend, to a significant extent, on the
efforts and abilities of Berge Abajian, our Chief Executive
Officer. If we lost Mr. Abajian, we would be forced to expend
significant time and money in the pursuit of a replacement, which
would result in both a delay in the implementation of our business
plan and the diversion of limited working capital. We can give you
no assurance that we could find a satisfactory replacement for Mr.
Abajian at all, or on terms that are not unduly expensive or
burdensome.
OUR FUTURE SUCCESS DEPENDS UPON, IN LARGE PART, OUR
CONTINUING ABILITY TO ATTRACT AND RETAIN QUALIFIED
PERSONNEL.
If
we grow and implement our business plan, we will need to add
managerial talent to support our business plan. There is no
guarantee that we will be successful in adding such managerial
talent. These professionals are regularly recruited by other
companies and may choose to change companies. Given our relatively
small size compared to some of our competitors, the performance of
our business may be more adversely affected than our competitors
would be if we lose well-performing employees and are unable to
attract new ones.
BECAUSE WE INTEND TO OPEN NEW RETAIL STORES AND SUCH ACTIVITY
INVOLVES A NUMBER OF RISKS, OUR BUSINESS MAY SUFFER.
We
may consider acquisitions of assets or other business. Any
acquisition or opening of another retail store or other operations
involves a number of risks that could fail to meet our expectations
and adversely affect our profitability. For example:
·The
acquired assets or business may not achieve expected
results;
·We
may incur substantial, unanticipated costs, delays or other
operational or financial problems when integrating the acquired
assets;
·We
may not be able to retain key personnel of an acquired
business;
·We
may not be able to raise the required capital to expand;
·Our
management’s attention may be diverted; or
·Our
management may not be able to manage the acquired assets or
combined entity effectively or to make acquisitions and grow our
business internally at the same time.
If
these problems arise, we may not realize the expected benefits of
an acquisition.
BECAUSE THE JEWELRY INDUSTRY IN GENERAL IS AFFECTED BY
FLUCTUATIONS IN THE PRICES OF PRECIOUS METALS AND PRECIOUS AND
SEMI-PRECIOUS STONES, WE COULD EXPERIENCE INCREASED OPERATING COSTS
THAT WILL AFFECT OUR BOTTOM LINE.
The availability and prices of gold, diamonds, and other precious
metals and precious and semi-precious stones may be influenced by
cartels, political instability in exporting countries and
inflation.
Shortages of these materials or sharp changes in their prices could
have a material adverse effect on our results of operations or
financial condition. A significant change in prices of key
commodities, including gold, could adversely affect our business or
reduce operating margins and impact consumer demand if retail
prices increased significantly, even though we historically
incorporate any increases in the purchase of raw materials to our
consumers. Additionally, a significant disruption in our supply of
gold or other commodities could decrease the production and
shipping levels of our products, which may materially increase our
operating costs and ultimately affect our profit margins.
BECAUSE WE DEPEND ON OUR ABILITY TO IDENTIFY AND RESPOND TO
FASHION TRENDS, IF WE MISJUDGE THESE TRENDS, OUR ABILITY TO
MAINTAIN AND GAIN MARKET SHARE WILL BE AFFECTED.
The jewelry industry is subject to rapidly changing fashion trends
and shifting consumer demands. Accordingly, our success may depend
on the priority that our target customers place on fashion and our
ability to anticipate, identify, and capitalize upon emerging
fashion trends. If we misjudge fashion trends or are unable to
adjust our products in a
6
timely manner, our net sales may decline or fail to meet
expectations and any excess inventory may be sold at lower
prices.
OUR ABILITY TO MAINTAIN OR INCREASE OUR REVENUES COULD BE
HARMED IF WE ARE UNABLE TO STRENGTHEN AND MAINTAIN OUR BRAND
IMAGE.
We
have spent significant amounts of time and money in branding our
Bergio and Bergio Bridal lines. We believe that primary factors in
determining customer buying decisions, especially in the jewelry
industry, are determined by price, confidence in the merchandise
and quality associated with a brand. The ability to differentiate
products from competitors of the Company has been a factor in
attracting consumers. However, if the Company’s ability to promote
its brand fails to garner brand recognition, its ability to
generate revenues may suffer. If the Company fails to differentiate
its products, its ability to sell its products wholesale will be
adversely affected. These factors could result in lower selling
prices and sales volumes, which could adversely affect its
financial condition and results of operations.
IF WE WERE TO EXPERIENCE SUBSTANTIAL DEFAULTS BY OUR
CUSTOMERS ON ACCOUNTS RECEIVABLE, THIS COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR LIQUIDITY AND RESULTS OF
OPERATIONS.
If
customers responsible for a large amount of accounts receivable
were to become insolvent or otherwise unable to pay for our
products, or to make payments in a timely manner, our liquidity and
results of operations could be materially adversely affected. An
economic or industry downturn could materially affect the ability
to collect these accounts receivable, which could then result in
longer payment cycles, increased collections costs and defaults in
excess of management’s expectations. A significant deterioration in
the ability to collect on accounts receivable could affect our cash
flow and working capital position.
WE MAY NOT BE ABLE TO INCREASE SALES OR OTHERWISE
SUCCESSFULLY OPERATE OUR BUSINESS, WHICH COULD HAVE A SIGNIFICANT
NEGATIVE IMPACT ON OUR FINANCIAL CONDITION.
We
believe that the key to our success is to increase our revenues and
available cash. We may not have the resources required to promote
our business and its potential benefits. If we are unable to gain
market acceptance of our business, we will not be able to generate
enough revenue to achieve and maintain profitability or to continue
our operations.
We
may not be able to increase our sales or effectively operate our
business. To the extent we are unable to achieve sales growth, we
may continue to incur losses. We may not be successful or make
progress in the growth and operation of our business. Our current
and future expense levels are based on operating plans and
estimates of future sales and revenues and are subject to increase
as strategies are implemented. Even if our sales grow, we may be
unable to adjust spending in a timely manner to compensate for any
unexpected revenue shortfall.
Further, if we substantially increase our operating expenses to
increase sales and marketing, and such expenses are not
subsequently followed by increased revenues, our operating
performance and results would be adversely affected and, if
sustained, could have a material adverse effect on our business. To
the extent we implement cost reduction efforts to align our costs
with revenue, our sales could be adversely affected.
WE MAY NEED ADDITIONAL FINANCING WHICH WE MAY NOT BE ABLE TO
OBTAIN ON ACCEPTABLE TERMS. IF WE ARE UNABLE TO RAISE ADDITIONAL
CAPITAL, AS NEEDED, THE FUTURE GROWTH OF OUR BUSINESS AND
OPERATIONS COULD BE SEVERELY LIMITED.
A
limiting factor on our growth is our limited capitalization, which
could impact our ability to execute on our business plan. If we
raise additional capital through the issuance of debt, this will
result in increased interest expense. If we raise additional funds
through the issuance of equity or convertible debt securities, the
percentage ownership of the Company held by existing shareholders
will be reduced and our shareholders may experience significant
dilution. In addition, new securities may contain rights,
preferences or privileges that are senior to those of our Common
Stock. If additional funds are raised by the issuance of debt or
other equity instruments, we may become subject to certain
operational limitations (for example, negative operating
covenants). There can be no assurance that acceptable financing
necessary to further implement our business plan can be obtained on
suitable terms, if at all. Our ability to develop our business,
fund expansion, develop or enhance products or respond to
competitive pressures, could suffer if we are unable to raise the
additional funds on acceptable terms, which would have the effect
of limiting our ability to increase our revenues or possibly attain
profitable operations in the future.
7
WE MAY BE UNABLE TO MANAGE GROWTH, WHICH MAY IMPACT OUR
POTENTIAL PROFITABILITY.
Successful implementation of our business strategy requires us to
manage our growth. Growth could place an increasing strain on our
management and financial resources. To manage growth effectively,
we will need to:
·Establish
definitive business strategies, goals and objectives;
·Maintain
a system of management controls; and
·Attract
and retain qualified personnel, as well as, develop, train and
manage management-level and other employees.
If
we fail to manage our growth effectively, our business, financial
condition or operating results could be materially harmed, and our
stock price may decline.
Risks Related to Our Common Stock
OUR COMMON STOCK IS CURRENTLY QUOTED ON THE OTC MARKETS (PINK
SHEETS), WHICH MAY HAVE AN UNFAVORABLE IMPACT ON OUR STOCK PRICE
AND LIQUIDITY.
Our common stock is quoted on the Pink Sheets, an over-the-counter
electronic quotation system maintained by the OTC Markets.
The quotation of our shares on the Pink Sheets may result in
a less liquid market available for existing and potential
stockholders to trade shares of our common stock, could depress the
trading price of our common stock and could have a long-term
adverse impact on our ability to raise capital in the future.
THERE IS LIMITED LIQUIDITY ON THE PINK SHEETS, WHICH ENHANCES
THE VOLATILE NATURE OF OUR EQUITY.
When fewer shares of a security are being traded on the Pink
Sheets, volatility of prices may increase and price movement may
outpace the ability to deliver accurate quote information.
Due to lower trading volumes in shares of our common stock,
there may be a lower likelihood that orders for shares of our
common stock will be executed, and current prices may differ
significantly from the price that was quoted at the time of entry
of the order.
OUR COMMON STOCK IS CONSIDERED A “PENNY STOCK,” AND IS
SUBJECT TO ADDITIONAL SALE AND TRADING REGULATIONS THAT MAY MAKE IT
MORE DIFFICULT TO SELL.
Our common stock is considered to be a “penny stock” since it does
not qualify for one of the exemptions from the definition of “penny
stock” under Section 3a51-1 of the Exchange Act. Our common stock
is a “penny stock” because it meets one or more of the following
conditions (i) the stock trades at a price less than $5.00 per
share; (ii) it is not traded on a “recognized” national exchange;
(iii) it is not quoted on the Nasdaq Stock Market, or even if so,
has a price less than $5.00 per share; or (iv) is issued by a
company that has been in business less than three years with net
tangible assets less than $5 million.
The principal result or effect of being designated a “penny stock”
is that securities broker-dealers participating in sales of our
common stock will be subject to the “penny stock” regulations set
forth in Rules 15-2 through 15g-9 promulgated under the Exchange
Act. For example, Rule 15g-2 requires broker-dealers dealing in
penny stocks to provide potential investors with a document
disclosing the risks of penny stocks and to obtain a manually
signed and dated written receipt of the document at least two
business days before effecting any transaction in a penny stock for
the investor’s account. Moreover, Rule 15g-9 requires
broker-dealers in penny stocks to approve the account of any
investor for transactions in such stocks before selling any penny
stock to that investor.
This procedure requires the broker-dealer to (i) obtain from the
investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably
determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has
sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the
investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv)
receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor’s
financial situation, investment experience and investment
objectives. Compliance with these requirements may make it more
8
difficult and time consuming for holders of our common stock to
resell their shares to third parties or to otherwise dispose of
them in the market or otherwise.
OUR CURRENT CHIEF EXECUTIVE OFFICER AND SOLE DIRECTOR, MR.
BERGE ABAJIAN HAS SUFFICIENT VOTING POWER TO CONTROL THE VOTE ON
SUBSTANTIALLY ALL CORPORATE MATTERS.
Berge Abajian, our chief executive officer and sole director has
sufficient voting power to control the vote on substantially all
corporate matters. Accordingly, Mr. Abajian will be able to
determine the composition of our board of directors, will retain
the effective voting power to approve all matters requiring
shareholder approval, will prevail in matters requiring shareholder
approval, including, in particular the election and removal of
directors, and will continue to have significant influence over our
business. As a result of his ownership and position in the Company,
Mr. Abajian is able to influence all matters requiring shareholder
action, including significant corporate transactions.
TRADING OF OUR STOCK MAY BE RESTRICTED BY THE U.S. SECURITIES
& EXCHANGE COMMISSION’S PENNY STOCK REGULATIONS, WHICH MAY
LIMIT A STOCKHOLDER’S ABILITY TO BUY AND SELL OUR
STOCK.
The U.S. Securities and Exchange Commission has adopted regulations
which generally define “penny stock” to be any equity security that
has a market price (as defined) less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules,
which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers
and “accredited investors”. The term “accredited investor” refers
generally to institutions with assets in excess of $5,000,000 or
individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse.
The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules,
to deliver a standardized risk disclosure document in a form
prepared by the U.S. Securities and Exchange Commission, which
provides information about penny stocks and the nature and level of
risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the
penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements
showing the market value of each penny stock held in the customer’s
account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer
orally or in writing prior to effecting the transaction and must be
given to the customer in writing before or with the customer’s
confirmation. In addition, the penny stock rules require that prior
to a transaction in a penny stock not otherwise exempt from these
rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and
receive the purchaser’s written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level
of trading activity in the secondary market for the stock that is
subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage
investor interest in and limit the marketability of our common
stock.
WE CURRENTLY HAVE A LIMITED ACCOUNTING STAFF, AND IF WE FAIL
TO DEVELOP OR MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE
MAY NOT BE ABLE TO REPORT OUR FINANCIAL RESULTS TIMELY AND
ACCURATELY OR PREVENT FRAUD, WHICH WOULD LIKELY HAVE A NEGATIVE
IMPACT ON THE MARKET PRICE OF OUR COMMON UNITS.
We
are subject to the public reporting requirements of the Securities
Exchange Act of 1934, as amended (“Exchange Act”). Effective
internal controls are necessary for us to provide reliable and
timely financial reports, prevent fraud and to operate successfully
as a publicly traded partnership.
We
prepare our consolidated financial statements in accordance with
accounting and principles generally accepted in the United States,
but our internal accounting controls may not meet all standards
applicable to companies with publicly traded securities. Our
efforts to develop and maintain our internal controls may not be
successful, and we may be unable to maintain effective controls
over our financial processes and reporting in the future or to
comply with our obligations under Section 404 of the Sarbanes-Oxley
Act of 2002, which we refer to as Section 404. For example, Section
404 requires us, among other things, to annually review and report
on, and our independent registered public accounting firm to attest
to, the effectiveness of our internal controls over financial
reporting. Based on management’s evaluation, as of December
31, 2022, our management concluded that we had several material
weaknesses related to our internal controls over financial
reporting (See Item 9A).
9
THE MARKET PRICE FOR OUR COMMON SHARES IS PARTICULARLY
VOLATILE GIVEN OUR STATUS AS A RELATIVELY UNKNOWN COMPANY WITH A
SMALL AND THINLY TRADED PUBLIC FLOAT, LIMITED OPERATING HISTORY AND
LACK OF PROFITS WHICH COULD LEAD TO WIDE FLUCTUATIONS IN OUR SHARE
PRICE. YOU MAY BE UNABLE TO SELL YOUR COMMON SHARES AT OR ABOVE
YOUR PURCHASE PRICE, WHICH MAY RESULT IN SUBSTANTIAL LOSSES TO
YOU.
The market for our common shares is characterized by significant
price volatility when compared to the shares of larger, more
established companies that trade on a national securities exchange
and have large public floats, and we expect that our share price
will continue to be more volatile than the shares of such larger,
more established companies for the indefinite future. The
volatility in our share price is attributable to a number of
factors. First, as noted above, our common shares are, compared to
the shares of such larger, more established companies, sporadically
and thinly traded. As a consequence of this limited liquidity, the
trading of relatively small quantities of shares by our
shareholders may disproportionately influence the price of those
shares in either direction. The price for our shares could, for
example, decline precipitously in the event that a large number of
our common shares are sold on the market without commensurate
demand. Secondly, we are a speculative or “risky” investment due to
our limited operating history and lack of profits to date, and
uncertainty of future market acceptance for our potential products.
As a consequence of this enhanced risk, more risk-adverse investors
may, under the fear of losing all or most of their investment in
the event of negative news or lack of progress, be more inclined to
sell their shares on the market more quickly and at greater
discounts than would be the case with the stock of a larger, more
established company that trades on a national securities exchange
and has a large public float. Many of these factors are beyond our
control and may decrease the market price of our common shares,
regardless of our operating performance. We cannot make any
predictions or projections as to what the prevailing market price
for our common shares will be at any time, including as to whether
our common shares will sustain their current market prices, or as
to what effect that the sale of shares or the availability of
common shares for sale at any time will have on the prevailing
market price.
WE WILL INCUR INCREASED COSTS AS A RESULT OF BEING A PUBLIC
COMPANY, WHICH COULD AFFECT OUR PROFITABILITY AND OPERATING
RESULTS.
We
voluntarily file annual, quarterly and current reports with the
SEC. In addition, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”)
and the rules subsequently implemented by the SEC and the Public
Company Accounting Oversight Board have imposed various
requirements on public companies, including requiring changes in
corporate governance practices. We expect these rules and
regulations to increase our legal and financial compliance costs
and to make some activities of ours more time-consuming and costly.
We expect to spend between $50,000 and $100,000 in legal and
accounting expenses annually to comply with our SEC reporting
obligations and Sarbanes-Oxley. These costs could affect
profitability and our results of operations.
WE HAVE NOT PAID DIVIDENDS IN THE PAST AND DO NOT EXPECT TO
PAY DIVIDENDS FOR THE FORESEEABLE FUTURE. ANY RETURN ON INVESTMENT
MAY BE LIMITED TO THE VALUE OF OUR COMMON STOCK.
No
cash dividends have been paid on the Company’s common stock. We
expect that any income received from operations will be devoted to
our future operations and growth. The Company does not expect to
pay cash dividends in the near future. Payment of dividends would
depend upon our profitability at the time, cash available for those
dividends, and other factors as the Company’s board of directors
may consider relevant. If the Company does not pay dividends, the
Company’s common stock may be less valuable because a return on an
investor’s investment will only occur if the Company’s stock price
appreciates.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties.
Currently, we lease 200 square feet in Fairfield, NJ for our
offices. The lease expired August 31, 2010 and is being renewed on
a month-to-month basis.
We
also lease a 1,000 square foot retail store in Closter, NJ. The
initial term of the lease is for five years commencing May 1, 2014.
The Company has the option extend its lease for five additional
years upon giving 90 days’ notice. The five-year option is
available up to 20 years. Rent payments are $1,200 a month
for the first two years, $1,275 for the
10
third and fourth year, and $1,350 for the fifth year. If the
Company renews its option for the second five years, the rent will
begin at $1,415 and escalate to $1,665 in the fifth year. If the
option is exercised for the third five-year term, rent will begin
at $1,800 per month and escalate to $2,280 in the fifth year. The
rent for the last five years, if the Company exercises its option,
will be at the fair market value. The Company is also responsible
for its proportionate share of common charges.
In
June 2018, the Company entered into lease agreement Ocean Resort
Casino at 500 Boardwalk in Atlantic City, NJ for approximately
1,000 square feet of retail space to open a retail store. The
initial term is for five (5) years beginning November 18, 2018.
Subject to certain conditions, the lease is renewable for two
additional 5-year periods. Percentage rent payments will be based
on 10% of gross sales at this location and will be paid monthly.
The Company is also responsible for additional rent or common area
charges (“CAM”) of approximately $1,100 monthly.
Through our 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 was subject to an annual increase as
defined in the lease agreement. The Company did not renew this
lease agreement in October 2022.
Additionally, we anticipate opening additional retail stores as we
continue to implement our business plan throughout the United
States. At the current time, our expansion plans are in the
preliminary stages with no formal negotiations being conducted.
Most likely no expansions will take place until additional revenues
can be achieved or additional capital can be raised to help offset
the costs associated with any expansion.
Item 3. Legal Proceedings.
We
are currently not involved in any litigation that we believe could
have a material adverse effect on our 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 our company or any of
our subsidiaries, threatened against or affecting our company, our
common stock, any of our subsidiaries or of our companies or our
subsidiaries’ officers or directors in their capacities as such, in
which an adverse decision could have a material adverse effect.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities.
a) Market Information
The Company’s common stock is listed by the OTC Markets on the Pink
Sheets and trades under the symbol BRGO.
In
September 2019, Bergio International, Inc. filed a Certificate of
Amendment to the Certificate of Incorporation to effectuate a
1-for-10,000 reverse stock split of the Company’s common stock. All
share and per share data have been adjusted to reflect such stock
split.
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 shares.
On
September 26, 2022, the Company filed, with the Wyoming Secretary
of State, a Certificate of Amendment, to amend its Articles of
Incorporation and reflected the increase in the authorized shares
of common stock from 9,000,000,000 shares to 15,000,000,000 shares.
In March 2023, the Company filed, with the Wyoming Secretary of
State, a Certificate of Amendment, to amend its Articles of
Incorporation and reflected the increase in the authorized shares
of common stock from 15,000,000,000 shares to 25,000,000,000
shares.
11
The following table sets forth the range of the high and low bid
quotations of the common stock for the past two years in the
over-the-counter market, as reported by the OTC Markets. The
quotations reflect inter-dealer prices without retail mark-up,
mark-down or commission, and may not represent actual
transactions.
Years Ended
December 31,
|
|
|
|
|
2022
|
|
High
|
|
Low
|
First Quarter
|
|
$
|
0.003
|
|
$
|
0.001
|
Second Quarter
|
|
|
0.001
|
|
|
0.001
|
Third Quarter
|
|
|
0.001
|
|
|
0.0002
|
Fourth Quarter
|
|
|
0.0003
|
|
|
0.00001
|
|
|
|
|
|
|
|
2021
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.060
|
|
$
|
0.005
|
Second Quarter
|
|
|
0.034
|
|
|
0.006
|
Third Quarter
|
|
|
0.012
|
|
|
0.005
|
Fourth Quarter
|
|
|
0.007
|
|
|
0.001
|
b) Holders
As
of December 31, 2022, the Company had approximately 55 shareholders
of record of its issued and outstanding common stock and preferred
stock. This figure does not take into account those shareholders
whose certificates are held in the name of broker-dealers or other
nominees.
c) Dividends
We
have not declared or paid any dividends on our common stock and
preferred stock and intend to retain any future earnings to fund
development and growth of our business. Therefore, we do not
anticipate paying dividends on our common stock and preferred stock
for the foreseeable future. There are no restrictions on our
present ability to pay dividends to stockholders of our common
stock and preferred stock, other than those prescribed by law.
d) Securities Authorized for Issuance under Equity Compensation
Plans
As
of December 31, 2022, we had an incentive stock and award plan
under which 1,000,000,000 shares had been reserved for issuance.
The following table shows information with respect this plan as of
the fiscal year ended December 31, 2022:
Plan
category
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and rights
|
|
Weighted
average
exercise price
of outstanding
options, warrants
|
|
Number of
securities
remaining
available for
future issuance
under Equity
Compensation Plans
|
Equity Compensation
Plans approved by shareholders
|
|
|
--
|
|
$
|
-0-
|
|
|
1,000,000,000
|
Equity Compensation
Plans not approved by shareholders
|
|
|
--
|
|
|
-0-
|
|
|
--
|
Total
|
|
|
--
|
|
$
|
-0-
|
|
|
1,000,000,000
|
Note: Only restricted shares of common stock were issued pursuant
to this plan.
2011 Incentive Stock and Award Plan
In
May 2011, the board of directors (the “Board”) of the Company
adopted the 2011 Incentive Stock and Award Plan (the “Plan”) which
reserved for issuance up to 5,000 shares of its common stock.
The Plan, which has a term of ten years from the date
of adoption, is administered by the Board or by a committee
appointed by the Board. The selection of participants, allotment of
shares, and other conditions related to the grant of options, to
the extent not set forth in the Plan, and are determined by the
Board.
12
2021 Incentive Stock and Award 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. In September 2022, the Company
met the prerequisite related to the effectiveness of an S-8
Registration Statement. The 500,000,000 shares of common stock have
not been issued to the CEO and have been recorded as common stock
issuable as of December 31, 2022.
Recent Sales of Unregistered Securities
During the year ended December 31, 2022, we have issued the
following securities which were not registered under the Securities
Act and not previously disclosed in the Company’s Quarterly Reports
on Form 10-Q or Current Reports on Form 8-K. Unless otherwise
indicated, all of the share issuances described below were made in
reliance on the exemption from registration provided by Section
4(2) of the Securities Act for transactions not involving a public
offering:
On
April 18, 2022, the Company received a notice of conversion from
the holder of the 5 shares of Series C Convertible Preferred Stock
converting into 135,896,517 shares of the Company’s common
stock.
Between January 2022 and February 2022, the Company sold an
aggregate of 855,000 shares of the 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
April 2022, the Company sold an aggregate of 825,000 shares of
Series D Convertible Preferred Stock for total net proceeds of
$740,000 after deducting legal and financing cost of $10,000 or
approximately $0.90 per share. Additionally, the Company granted an
aggregate of 750,000,000 warrants to purchase shares of the
Company’s common stock in connection with the issuance of the sale
of these Series D Convertible Preferred Stock. The warrants have a
term of 7 years from the date of grant and exercisable at an
exercise price of $0.0005 subject to adjustment such as stock
dividends, stock splits, and dilutive issuances. Whenever on or
after the date of issuance of this warrant, the Company issues or
sells, or in for a consideration per share (before deduction of
reasonable expenses or commissions or underwriting discounts or
allowances in connection therewith) less than the exercise price on
the date of issuance (a “Dilutive Issuance”), then immediately upon
the Dilutive Issuance, the Exercise Price will be reduced to the
greater of: (i) the price per share received by the Company upon
such Dilutive Issuance; and (ii)$0.00005.
Between July 2022 and August 2022, the Company received a notice of
conversion from two holders in the aggregate of 245,000 shares of
Series D Convertible Preferred Stock and related accrued dividends
of $5,610 converting into 501,219,817 shares of the Company’s
common stock.
In
October 2022, the Company received a notice of conversion from two
holders in the aggregate of 161,000 shares of Series D Convertible
Preferred Stock and related accrued dividends of $3,420 converting
into 822,101,233 shares of the Company’s common stock.
In
October 2022, the Company sold an aggregate of 446,804,000 shares
of Common Stock to various investors for total proceeds of $89,361
or approximately $0.0002 per share.
13
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 $842,435 for
a total of $2,071,453 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 $52,978 and incurred additional interest
expense of $161,225 for a total of $214,203 underlying certain
outstanding loans payable converted during such period.
From April 2022 through May 2022, the Company issued an aggregate
of 232,079,442 shares of its common stock at an average contractual
conversion price of approximately $0.0004 as a result of the
conversion of principal of $108,750 and accrued interest of $4,350
for a total of $113,100 underlying certain outstanding convertible
notes converted during such period.
In
September 2022, the Company issued an aggregate of 416,000,000
shares of its common stock at an average contractual conversion
price of approximately $0.0002 as a result of the conversion of
principal of $80,000 and accrued interest of $3,200 for a total of
$83,200 underlying certain outstanding convertible notes converted
during such period.
In
October 2022, the Company issued an aggregate of 891,800,000 shares
of its common stock as a result of the conversion of principal of
$63,700 and accrued interest $7,644 on a notes payable issued on
April 13, 2022 and incurred additional interest expense of $17,836
for a total of $89,180.
In
July 2022, the Company issued 12,857,143 shares of its common stock
to a consultant for services rendered. The Company issued
12,857,143 shares of the Company’s common stock valued at
approximately $0.0006 per share or $9,000, being the closing price
of the stock on the date of grant to such consultant.
Rule 10B-18 Transactions
During the year ended December 31, 2022, there were no repurchases
of the Company’s common stock by the Company.
Item 6. [Reserved]
The Company is a smaller reporting company as defined in Item 10
(f) of Regulation S-K and therefore is not required to provide the
information under this item.
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
Forward Looking Statements
This report and other reports filed by our Company from time to
time with the SEC (collectively the “Filings”) contain or may
contain forward-looking statements and information that are based
upon beliefs of, and information currently available to, our
management as well as estimates and assumptions made by our
management. Readers are cautioned not to place undue reliance
on these forward-looking statements, which are only predictions and
speak only as of the date hereof.
When used in the filings, the words “anticipate,” “believe,”
“estimate,” “expect,” “future,” “intend,” “plan,” or the negative
of these terms and similar expressions as they relate to us or our
management identify forward-looking statements. Such statements
reflect our current view with respect to future events and are
subject to risks, uncertainties, assumptions, and other factors,
including those set forth in the Risk Factors on page 5. Should one
or more of these risks or uncertainties materialize, or should the
underlying assumptions prove incorrect, actual results may differ
significantly from those anticipated, believed, estimated,
expected, intended, or planned.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance, or achievements.
Except, as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the
forward-looking statements to conform these statements to actual
results.
14
Our financial statements are prepared in accordance with accounting
principles generally accepted in the United States (“GAAP”). These
accounting principles require us to make certain estimates,
judgments and assumptions. We believe that the estimates, judgments
and assumptions upon which we rely are reasonable based upon
information available to us at the time that these estimates,
judgments and assumptions are made. These estimates, judgments and
assumptions can affect the reported amounts of assets and
liabilities as of the date of the financial statements as well as
the reported amounts of revenues and expenses during the periods
presented. Our financial statements would be affected to the
extent there are material differences between these estimates and
actual results. In many cases, the accounting treatment of a
particular transaction is specifically dictated by GAAP and does
not require management’s judgment in its application. There are
also areas in which management’s judgment in selecting any
available alternative would not produce a materially different
result. The following discussion should be read in conjunction with
our consolidated financial statements and notes thereto appearing
elsewhere in this report.
General
Management’s discussion and analysis of results of operations and
financial condition is intended to assist the reader in the
understanding and assessment of significant changes and trends
related to the results of operations and financial position of the
Company together with its subsidiary. This discussion and analysis
should be read in conjunction with the consolidated financial
statements and accompanying financial notes, and with the Critical
Accounting Policies noted below.
Plan of Operation
The Bergio brand is our most important asset. The Bergio brand is
associated with high-quality, handcrafted and individually designed
pieces with European sensibility, Italian craftsmanship and a bold
flair for the unexpected. Bergio, is one of the most coveted brands
of fine jewelry. Established in 1995, Bergio’s signature innovative
design, coupled with extraordinary diamonds and precious stones,
earned the company recognition as a highly sought-after purveyor of
rare and exquisite treasures from around the globe.
When designer and PEO, Berge Abajian, creates a collection, he
looks well beyond the drawing board. Berge focuses on the woman who
will ultimately wear his pieces, bringing to creation a magnificent
piece of jewelry that reflects the beauty and vitality a woman
possesses. Bergio creations are a seamless blend of classic
elegance and subtle flair, adding to a woman’s charm while never
overpowering her.
It
is our intention to establish Bergio as a holding company for the
purpose of establishing retails stores worldwide. Our branded
product lines are products and/or collections designed by our
designer and CEO Berge Abajian and will be the centerpiece of our
retail stores. We also intend to complement our own
quality-designed jewelry with other products and our own specially
designed handbags. This is in line with our 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 our intention to open elegant stores in “high-end” areas and
provide excellent service in our stores which will be staffed with
knowledgeable professionals.
We
also intend to sell our products on a wholesale basis to limited
customers. We have spent over $3 million in branding the Bergio
name through tradeshows, trade advertising, national advertising
and billboard advertising since launching the line in 1995.
In
2019 we introduced The Silver Fashion Collection ranging in price
from $50 to $1,200. The Company also introduced the Bergio Handbag
Collection, manufactured in Italy with top quality Italian leather
ranging in price from $450 to $875, which are very competitive
entry prices.
Our products consist of a wide range of unique styles and designs
made from precious metals such as, gold, platinum, and Karat gold,
as well as diamonds and other precious stones. We currently design
and produce approximately 100 to 150 product styles. Current retail
prices for our products range from $400 to $200,000. We have
manufacturing control over our line as a result of having a
manufacturing facility in New Jersey as well as subcontracts with
facilities located in Italy.
15
On
March 5, 2014, the Company formed a wholly owned subsidiary called
Crown Luxe, Inc. in the State of Delaware (“Crown Luxe”). Crown
Luxe was established to operate the Company’s first retail store,
which was opened in Bergen County, New Jersey in 2014.
During the fall of 2018, we opened our second retail store at the
new Ocean Resort Casino in Atlantic City, New Jersey. We are also
contemplating the opening of new stores in the future.
On
February 10, 2021, Bergio International, Inc. entered into an
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 subsidiary of the Company known as Aphrodite’s
Marketing, Inc., a Wyoming corporation in exchange for 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, Inc. We own 51% of Aphrodite’s
Marketing, Inc.
On
July 1, 2021, we entered into an Agreement and Plan of Merger with
GearBubble, Inc., a Nevada corporation, pursuant to which the
shareholders of GearBubble 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
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. We own 51% of GearBubble Tech, Inc.
The funding for these acquisitions were a combination of proceeds
from the issuance of common stock from our S-1 Registration
Statement and debt.
Aphrodite’s Marketing and GearBubble Tech have increased our online
presence and provide for expansion of the Bergio Brand. Aphrodite
is a one-stop shop for jewelry, gifts, and surprises for any
occasion. The online stores provide for a unique gifting experience
in the ecommerce space. With their technological experience in
ecommerce, we expect to grow the Bergio Brand, and in conjunction
with Bergio’s design expertise and years of experience in the
jewelry industry, we believe we can successfully grow the
business.
The Company has instituted various cost saving measures to conserve
cash and has worked with its debtors in an attempt to negotiate the
debt terms. The Company has been also investigating various
strategies to increase sales and expand its business. The Company
is in negotiations with some potential partners, but, at this time,
there is nothing concrete, but the Company remains positive about
its prospects. However, there is no assurance that the Company will
be successful in its endeavors or that it will be able to increase
its business.
Our future operations are contingent upon increasing revenues and
raising capital for on-going operations and expansion of our
product lines. Because we have a limited operating history, you may
have difficulty evaluating our business and future prospects.
The Company’s retail operations have been and continue to be
affected by the recent and ongoing outbreak of the coronavirus
disease (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 may result in a
material adverse impact on the Company’s financial position,
operations and cash flows. Possible areas that may be affected
include, but are not limited to, disruption to the Company’s
customers and revenue, labor workforce, unavailability of products
and supplies used in operations, and the decline in value of assets
held by the Company, including property and equipment.
Results of Operations - For the Year Ended December 31, 2022
Compared to the Year Ended December 31, 2021
Overview
Net revenues decreased during the year ended December 31, 2022 as
compared to the year ended December 31, 2021. Our retail operations
have been impacted by the pandemic. We continue to evaluate our
initiatives. We have expanded
16
our online presence and the Company continues to position itself
for the future with the acquisition of Aphrodite’s Marketing and
GearBubble Tech and take advantage of the Bergio brand in the
E-Commerce space as well as establishing a chain of retail stores
worldwide. Our branded product lines are products and/or
collections designed by our designer and CEO Berge Abajian and will
be the centerpiece of our retail stores. We also intend to
complement our own quality-designed jewelry with other products and
our own specially designed handbags. This is in line with our
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 our intention to open elegant stores in “high-end”
areas and provide excellent service in our stores which will be
staffed with knowledgeable professionals. We continue to be excited
about our store in Atlantic City, NJ. Our initial store in northern
New Jersey has not done as well as we had hoped and the wholesale
market has also not been favorable but with the addition of our
online presence it has helped the company to reach a favorable
balance.
The Company continues to pursue additional financing opportunities
and we have initiated measures to strengthen our financial
position. As a result, we have accomplished the following:
·We
have converted approximately $1,379,000 including accrued interest
of $77,000 of our convertible notes and loan into equity.
·Raised
additional funding from convertible notes, sales of our Series D
Preferred Stock and Common Stock.
These events have allowed us to reduce our debt and provided
funding for operations. We continue to pursue other opportunities.
Moreover, there is no assurance that sufficient funding will be
available, or if available, that its terms will be favorable to the
Company. The consolidated financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
|
Years ended December 31,
|
|
|
|
2022
|
2021
|
Increase
(Decrease)
|
Percent Increase
(Decrease)
|
Net revenues
|
$
|
9,677,710
|
$
|
10,997,988
|
$
|
(1,320,278)
|
(12.00)%
|
Net revenues -
related parties
|
|
139,716
|
|
-
|
|
139,716
|
100%
|
Total net
revenues
|
|
9,817,426
|
|
10,997,988
|
|
(1,180,562)
|
(10.73)%
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
4,622,490
|
|
4,553,047
|
|
69,443
|
1.53%
|
|
|
|
|
|
|
|
|
Gross profit
|
$
|
5,194,936
|
$
|
6,444,941
|
$
|
(1,250,005)
|
(19.40%)
|
|
|
|
|
|
|
|
|
Gross profit as a %
of sales
|
|
52.91%
|
|
58.60%
|
|
|
|
Net Revenues
Net revenues for the year ended December 31, 2022 including ret
revenues – related parties which amounted to $9,817,426
decreased by $1,180,562 as compared to $10,997,988. The decrease in
total net revenues during the year ended December 31, 2022, was
primarily due to the decrease in revenues of our majority owned
subsidiary, Aphrodite’s Marketing, as a result of the decrease in
marketing and advertising expenses through social media, digital
marketing, and promotional campaigns.
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. Cost of revenues for
the year ended December 31, 2022 which amounted to $4,622,490
increased by $69,443 as compared to $4,553,047. This increase is
primarily due to the acquisition of GearBubble Tech in July 2021
whereby the fiscal year 2022 current period included a full year of
GearBubble Tech’s cost of revenues as compared to only six months
from the fiscal year 2021 prior period.
17
Gross Profit
Gross profit decreased by $1,250,005 to $5,194,936 for the year
ended December 31, 2022 as compared to $6,444,941 for the year
ended December 31, 2022. This decrease is primarily
attributable to the decrease in net revenues as discussed
above.
Operating Expenses
Operating expenses decreased by $360,673 to $7,563,009 for the year
ended December 31, 2022 as compared to $7,923,682 for the year
ended December 31, 2021. The decrease was primarily attributable to
i) decrease in selling and marketing expenses of $1,167,272
primarily attributable to decrease in advertising and marketing
activities through social media, digital marketing, and promotional
campaigns ii) increase professional and consulting expenses of
$512,040 primarily related to increase in consulting and contractor
fees related to increase operations as a result of the acquisition
of Aphrodite’s Marketing and GearBubble Tech, iii) increase in
compensation and related taxes of $210,526 primarily related to the
increase in number of employees as a result of the acquisition of
Aphrodite’s Marketing and GearBubble Tech. Additionally, the
Company approved a bonus of $100,000 and recognized stock based
compensation of $150,000 to our CEO for the year ended December 31,
2022 and iv) increase in general and administrative expenses of
$84,033 primarily attributable to increase in amortization expense,
insurance, and office expenses . The overall increase in operating
expenses reflect the increase in business operations as a result of
the acquisition of Aphrodite’s Marketing and GearBubble Tech.
Loss from Operations
As
a result of the above, we had a loss from operation of $2,368,073
for the year ended December 31, 2022 as compared to a loss from
operations of $1,478,741 for the year ended December 31, 2021.
Other Expenses, net
For the year ended December 31, 2022, the Company had other
expenses, net of $889,535 as compared to other expenses, net of
$2,083,444 for the year ended December 31, 2021, a decrease of
$1,193,909 in other expense. The decrease in other expense is
primarily attributed to the decrease in amortization of debt
discount and deferred financing cost of $1,424,034, increase in
change in fair value of derivative liabilities of $233,268,
decrease in derivative expense of $317,198, decrease in fraud loss
caused by computer hackers of $219,174, offset by decrease in gain
from extinguishment of debt of $225,352 and increase in interest
expense of $740,616 from note conversions.
Net Loss Attributable to Bergio International, Inc.
As
a result of the above, we had net loss attributable to Bergio
International, Inc. $2,269,691 for the year ended December 31, 2022
as compared to $2,638,556 for the year ended December 31, 2021.
Liquidity and Capital Resources
The following table summarizes total current assets, liabilities
and working capital at December 31, 2022, compared to December 31,
2021.
|
|
December 31,
|
|
Increase/
|
|
|
2022
|
|
2021
|
|
(Decrease)
|
Current Assets
|
|
$
|
3,440,464
|
|
$
|
4,384,185
|
|
$
|
(943,721)
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
$
|
4,254,005
|
|
$
|
6,748,062
|
|
$
|
(2,494,057)
|
|
|
|
|
|
|
|
|
|
|
Working Capital
|
|
$
|
(813,541)
|
|
$
|
(2,363,877)
|
|
$
|
1,550,336
|
Our working capital deficit was $813,541 at December 31, 2022 as
compared to working capital of $2,363,877 at December 31, 2021.
This decrease in working capital deficit is primarily attributed to
the decrease in liabilities.
During the year ended December 31, 2022, the Company had a net
decrease in cash of $(628,947). The Company’s principal sources and
uses of funds were as follows:
18
Cash used in operating activities.
For the year ended December 31, 2022, the Company used $1,920,719
in cash for operations as compared to $2,179,237 in cash used for
operations for the year ended December 31, 2021. This decrease in
cash used in operations is primarily attributed to net loss of
$2,269,691, amortization expense of $241,956, depreciation of
$40,252, non-cash interest upon conversion of debt of $1,043,496,
amortization of debt discount and deferred financing cost of
$544,763, stock based compensation of $213,674, offset by
non-controlling interest of $987,917, change in fair value of
derivative liabilities of $627,696, gain from extinguishment of
debt $405,700, and increase in changes in operating assets and
liabilities of $324,933 primarily attributable to increase in
accounts receivable of $68,607, increase in accrued compensation
– CEO of $319,640, decrease in inventory of $350,522, decrease
in accounts payable and accrued liabilities of $51,393, and
decrease in deferred compensation – CEO $346,163.
For the year ended December 31, 2021, the Company used $2,179,237
in cash for operations. This increase in cash used in operations is
primarily attributed to increase in net loss, increase in
depreciation and amortization expense of $237,879, increase in
amortization of debt discount and deferred financing cost of
$1,732,163, increase in derivative expense of $227,619, increase in
change in fair value of derivative liabilities of $80,347, increase
in inventory of 943,477, increase in accounts payable and accrued
liabilities of $338,343 offset by non-controlling interest of
$923,629, increase in gain from extinguishment of debt $594,776,
decrease in accounts receivable of $48,931, decrease in prepaid
expenses of $362,111, and decrease deferred compensation of
$99,408.
Cash used in investing activities.
For the year ended December 31, 2021, the Company used $886,209 in
cash for investing activities as a result of cash paid for the
acquisition of GearBubble Tech for $2,000,000 and purchases of
property and equipment of $47,685 offset by cash acquired from the
acquisition of GearBubble Tech of $1,161,476 as compared to $0 of
cash used in investing activities for the year ended December 31,
2022.
Cash provided financing activities.
Cash provided by financing activities for the year ended December
31, 2022 was $1,291,772 as compared to $4,088,560 for the year
ended December 31, 2021 and was primarily the result of net
proceeds received from convertible notes of $201,250, sale of
preferred stock of $1,555,000, sale of common stock of $89,361,
proceeds from loans and advances of $1,213,650, proceeds from a
note of $110,000 offset by repayments of loans payable of
$1,211,601, repayment of secured notes of $400,000, and repayment
of note of $272,884.
Net cash provided by financing activities for the year ended
December 31, 2021 was $4,088,560. This increase is primarily the
result of net proceeds received from convertible notes of
$1,890,000, sale of common stock of $3,768,730, proceeds from loans
and note payable of $1,196,547 offset partially by repayments of
loans and notes payable of $2,108,520, repayment of debt of
$567,403 and repayment of convertible debt of $30,000.
Our indebtedness is comprised of various convertible debt, notes
payable, loans payable, and advances from a stockholder/officer
intended to provide capital for the ongoing manufacturing of our
jewelry line, in advance of receipt of the payment from our retail
distributors.
Convertible Notes
From time to time the Company enters into certain financing
agreements for convertible notes. For the most part, the Company
settles these obligations with the Company’s common stock. As of
December 31, 2022, principal amounts under the convertible notes
payable was $79,250, net of debt discount of $59,926.
Notes Payable
The Company has total notes payable of $702,504 classified as
current portion and total notes payable – long term portion of
$259,496 at December 31, 2022.
Loans and Advances Payable
The Company has loans payable and accrued interest of $1,072,089 at
December 31, 2022.
19
Satisfaction of Our Cash Obligations for the Next 12
Months
A
critical component of our operating plan impacting our continued
existence is to efficiently manage our retail operations and
successfully develop new lines through our Company or through
possible acquisitions and/or mergers as well as opening new retail
stores. Our ability to obtain capital through additional equity
and/or debt financing, and joint venture partnerships will also be
important to our expansion plans. In the event we experience any
significant problems assimilating acquired assets into our
operations or cannot obtain the necessary capital to pursue our
strategic plan, we may have to reduce the growth of our operations.
This may materially impact our ability to increase revenue and
continue our growth.
The Company has suffered recurring losses and has an accumulated
deficit of approximately $19.6 million as of December 31, 2022. As
of December 31, 2022, the Company has $79,250 in principal amounts
of convertible notes, notes payable (current and long-term portion)
of $962,000 and $1,072,089 in loans and advances payable. These
factors raise substantial doubt about the Company’s ability to
continue as a going concern. The recoverability of a major portion
of the recorded asset amounts shown in the accompanying
consolidated balance sheet is dependent upon continued operations
of the Company, which in turn, is dependent upon the Company’s
ability to raise capital and/or generate positive cash flows from
operations.
It
is our intention to establish Bergio as a holding company for the
purpose of establishing retails stores worldwide. Our branded
product lines are products and/or collections designed by our
designer and CEO Berge Abajian and will be the centerpiece of our
retail stores. We also intend to complement our own
quality-designed jewelry with other products and our own
specially-designed handbags. This is in line with our 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 our
intention to open elegant stores in “high-end” areas and provide
excellent service in our stores which will be staffed with
knowledgeable professionals. The Company has also increased its
online presence to minimize the impact of having to close its
retail stores as well as directing efforts towards its wholesale
operations. The acquired majority owned subsidiaries, Aphrodite’s
Marketing and GearBubble Tech, of which Bergio owns 51% will
increase our online presence and provide the opportunity for future
growth.
These consolidated financial statements do not include any
adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities
that might be necessary in the event the Company cannot continue in
existence.
Research and Development
We
are not anticipating significant research and development
expenditures in the near future.
Expected Purchase or Sale of Plant and Significant
Equipment
We
do not anticipate the purchase or sale of any plant or significant
equipment; as such items are not required by us at this time.
Critical Accounting Policies
The Company prepares its financial statements in accordance with
GAAP. In preparing the financial statements and accounting for the
underlying transactions and balances, the Company applies its
accounting policies as disclosed in Note 3 of our Notes to
Consolidated Financial Statements. The Company’s accounting
policies that require a higher degree of judgment and complexity
used in the preparation of financial statements include:
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
20
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.
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, and
third-party e-commerce platform fees and selling fees. The Company
directs its customers to the Company’s ecommerce platform through
social media, digital marketing, and promotional campaigns.
Marketing costs are included in selling and marketing expenses on
the consolidated statement of operations.
Fair Value of Financial Instruments
FASB ASC 820 - Fair Value Measurements and Disclosures, defines
fair value as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement
21
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, 2022. 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, accrued compensation, and deferred
compensation approximate their fair market value based on the
short-term maturity of these instruments.
Derivative Liabilities
The Company has certain financial instruments that are embedded
derivatives associated with capital raises and acquisition (see
Note 13). The Company evaluates all its financial instruments to
determine if those contracts or any potential embedded components
of those contracts qualify as derivatives to be separately
accounted for in accordance with ASC 815-10 – Derivative and
Hedging – Contract in Entity’s Own Equity. This accounting
treatment requires that the carrying amount of any derivatives be
recorded at fair value at issuance and marked-to-market at each
balance sheet date. In the event that the fair value is recorded as
a liability, as is the case with the Company, the change in the
fair value during the period is recorded as either other income or
expense. Upon conversion, exercise or repayment, the respective
derivative liability is marked to fair value at the conversion,
repayment, or exercise date and then the related fair value amount
is reclassified to other income or expense as part of gain or loss
on debt extinguishment.
In
July 2017, FASB issued ASU No. 2017-11, Earnings Per Share (Topic
260); Distinguishing Liabilities from Equity (Topic 480);
Derivatives and Hedging (Topic 815): (Part I) Accounting for
Certain Financial Instruments with Down Round Features. These
amendments simplify the accounting for certain financial
instruments with down-round features. The amendments require
companies to disregard the down-round feature when assessing
whether the instrument is indexed to its own stock, for purposes of
determining liability or equity classification. For public business
entities, the amendments in Part I of the ASU are effective for
fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2018.
Off Balance Sheet Arrangements
The Company is not party to any off-balance sheet arrangements that
may affect its financial position or its results of operations.
Recently Adopted Authoritative 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.
22
No
other recently issued accounting pronouncements had or are expected
to have a material impact on the Company’s condensed consolidated
financial statements.
Item 7A. Quantitative and Qualitative Disclosures about Market
Risk.
We
do not hold any derivative instruments and do not engage in any
hedging activities.
Item 8. Financial Statements and Supplementary Data.
The financial statements and the reports of our independent
registered public accounting firm required pursuant to this Item
are included in Item 15 of this report and are presented beginning
on page F-1.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
There are no reportable events under this item for the year ended
December 31, 2022.
Item 9A. Controls and Procedures
a) Evaluation of disclosure controls and procedures
We
maintain disclosure controls and procedures designed to ensure that
information required to be disclosed in the reports we file
pursuant to the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) are recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the
SEC, and that such information is accumulated and communicated to
our Principal Executive Officer (“PEO”) and Principal Financial
Officer (“PFO”), to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures,
no matter how well designed and operated, can only provide a
reasonable assurance of achieving the desired control objectives,
and in reaching a reasonable level of assurance, management
necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.
Management designed the disclosure controls and procedures to
provide reasonable assurance of achieving the desired control
objectives.
We
carried out an evaluation, under the supervision and with the
participation of our management, including our PEO and PFO, of the
effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this
Annual Report. Based upon that evaluation, the PEO and PFO
concluded that the Company’s disclosure controls and procedures
were not effective.
b) Management’s Annual Report on Internal Control over Financial
Reporting
Management is responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined
in the Exchange Act Rules 13a-15(f). A system of internal control
over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles.
Under the supervision and with the participation of management,
including the principal executive officer and the principal
financial officer, the Company’s management has evaluated the
effectiveness of its internal control over financial reporting as
of December 31, 2022, based on the criteria established in a report
entitled “Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission”
and the interpretive guidance issued by the Commission in Release
No. 34-55929. Based on this evaluation, the Company’s management
has evaluated and concluded that the Company’s internal control
over financial reporting was ineffective as of December 31, 2022,
and identified the following material weaknesses:
·there
is a lack of accounting personnel with the requisite knowledge of
GAAP and the financial reporting requirements of the SEC.
·there
are insufficient written policies and procedures to insure the
correct application of accounting and financial reporting with
respect to the current requirements of GAAP and SEC disclosure
requirements.
·there
is a lack of segregation of duties, in that we only had one person
performing all accounting-related duties.
23
Notwithstanding the existence of these material weaknesses in our
internal control over financial reporting, our management believes
that the financial statements included in its reports fairly
present in all material respects the Company’s financial condition,
results of operations and cash flows for the periods presented.
The Company will continue its assessment on a quarterly basis. We
plan to hire personnel and resources to address these material
weaknesses. We believe these issues can be solved with hiring
accounting support and plan to do so as soon as we have funds
available for this.
This annual report does not include an attestation report of the
Company’s independent registered public accounting firm regarding
internal control over financial reporting. The Company’s
registered public accounting firm was not required to issue an
attestation on its internal controls over financial reporting
pursuant to temporary rules of the Securities and Exchange
Commission. The Company will continue to evaluate the
effectiveness of internal controls and procedures on an on-going
basis.
c) Changes in Internal Control over Financial Reporting
There have been no changes in our internal controls over financial
reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f)
under the Securities Exchange Act) during the year ended December
31, 2022, that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.
Item 9B. Other Information.
Not applicable.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant and
Corporate Governance
Directors and Executive Officers
The following table and text sets forth the names and ages of all
our directors and executive officers and our key management
personnel as of March 30, 2023. All of our directors serve until
the next annual meeting of stockholders and until their successors
are elected and qualified, or until their earlier death,
retirement, resignation or removal. Executive officers serve at the
discretion of the Board, and are elected or appointed to serve
until the next meeting of the Board following the annual meeting of
stockholders. Also provided is a brief description of the business
experience of each director and executive officer and the key
management personnel during the past five years and an indication
of directorships held by each director in other companies subject
to the reporting requirements under the Federal securities
laws.
Name (age)
|
|
Position
|
|
Year First Elected a Director
|
Berge Abajian
(63)
|
|
Chief Executive Officer and Chairman
|
|
2007
|
Background of Directors and Officers
Berge Abajian became the Chief Executive Officer of
Bergio International in October 2009. Prior to that, Mr. Abajian
served as CEO of the Diamond Information Institute, the predecessor
company to Bergio, from 1988 to October 2009. Mr. Abajian has a BS
in Business Administration from Fairleigh Dickinson University and
is well known and respected in the jewelry industry. Since 2005,
Mr. Abajian has served as the President of the East Coast branch of
the Armenian Jewelry Association and has also served as a Board
Member on MJSA (Manufacturing Jewelers and Suppliers of America),
New York Jewelry Association, and the 2001-2002 Luxury Show.
24
Term of Office
Our directors are appointed for a one-year term to hold office
until the next annual general meeting of our shareholders or until
removed from office in accordance with our bylaws. Our officers are
appointed by our board of directors and hold office until removed
by the board, except to the extent governed by an employment
agreement.
Involvement in Certain Legal Proceedings
To
the best of our knowledge, during the past ten years, none of the
following occurred with respect to our present or former director,
executive officer, or employee: (1) any bankruptcy petition filed
by or against any business of which such person was a general
partner or executive officer either at the time of the bankruptcy
or within two years prior to that time; (2) any conviction in a
criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses);
(3) being subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his or her involvement in
any type of business, securities or banking activities; and (4)
being found by a court of competent jurisdiction (in a civil
action), the SEC or the Commodities Futures Trading Commission to
have violated a federal or state securities or commodities law, and
the judgment has not been reversed, suspended or vacated.
Meetings of Our Board of Directors
Our Board did not hold any meetings during the most recently
completed fiscal year end. Various matters were approved by written
consent, which in each case was executed by the Board.
Committees of the Board
We
do not currently have a compensation committee, nominating
committee, or stock plan committee.
Audit Committee
We
do not have a separately designated standing audit committee. The
entire Board performs the functions of an audit committee, but no
written charter governs the actions of the Board when performing
the functions of what would generally be performed by an audit
committee. The Board approves the selection of our independent
accountants and meets and interacts with the independent
accountants to discuss issues related to financial reporting. In
addition, the Board reviews the scope and results of the audit with
the independent accountants, reviews with management and the
independent accountants our annual operating results, considers the
adequacy of our internal accounting procedures and considers other
auditing and accounting matters including fees to be paid to the
independent auditor and the performance of the independent
auditor.
Nominating Committee
Our Board does not maintain a nominating committee. As a result, no
written charter governs the director nomination process. Our size
and the size of our Board, at this time, do not require a separate
nominating committee.
When evaluating director nominees, our directors consider the
following factors:
·the
appropriate size of our board of directors;
·our
needs with respect to the particular talents and experience of our
directors;
·the
knowledge, skills and experience of nominees, including experience
in finance, administration or public service, in light of
prevailing business conditions and the knowledge, skills and
experience already possessed by other members of the
Board;
·experience
in political affairs;
·experience
with accounting rules and practices; and
25
·the
desire to balance the benefit of continuity with the periodic
injection of the fresh perspective provided by new Board
members.
Our goal is to assemble a Board that brings together a variety of
perspectives and skills derived from high quality business and
professional experience.
Other than the foregoing, there are no stated minimum criteria for
director nominees, although the Board may also consider such other
factors as it may deem are in our best interests as well as our
stockholders. In addition, the Board identifies nominees by first
evaluating the current members of the Board willing to continue in
service. Current members of the Board with skills and experience
that are relevant to our business and who are willing to continue
in service are considered for re-nomination. If any member of the
Board does not wish to continue in service or if the Board decides
not to re-nominate a member for re-election, the Board then
identifies the desired skills and experience of a new nominee in
light of the criteria above. Current members of the Board are
polled for suggestions as to individuals meeting the criteria
described above. The Board may also engage in research to identify
qualified individuals. To date, we have not engaged third parties
to identify or evaluate or assist in identifying potential
nominees, although we reserve the right in the future to retain a
third-party search firm, if necessary.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s directors,
executive officers and persons who beneficially own 10% or more of
a class of securities registered under Section 12 of the Exchange
Act to file reports of beneficial ownership and changes in
beneficial ownership with the SEC. Directors, executive officers
and greater than 10% stockholders are required by the rules and
regulations of the SEC to furnish the Company with copies of all
reports filed by them in compliance with Section 16(a).
Based solely on our review of certain reports filed with the
Securities and Exchange Commission pursuant to Section 16(a) of the
Securities Exchange Act of 1934, as amended, the reports required
to be filed with respect to transactions in our common stock during
the fiscal year ended December 31, 2022, were timely.
Code of Ethics
We
do not currently have a code of ethics that applies to our Chief
Executive Officer, Chief Financial Officer, Chief Accounting
Officer or Controller, or persons performing similar functions.
Because we have only limited business operations and four
officers and directors, we believe a code of ethics would have
limited utility. We intend to adopt such a code of ethics as our
business operations expand and we have more directors, officers and
employees.
Item 11. Executive Compensation.
Overview
The following is a discussion of our program for compensating our
named executive officers and directors. Currently, we do not have a
compensation committee, and as such, our board of directors is
responsible for determining the compensation of our named executive
officers.
Compensation Program Objectives and Philosophy
The primary goals of our policy of executive compensation are to
attract and retain the most talented and dedicated executives
possible, to assure that our executives are compensated effectively
in a manner consistent with our strategy and competitive practice
and to align executive compensation with the achievement of our
short- and long-term business objectives.
The Board considers a variety of factors in determining
compensation of executives, including their particular background
and circumstances, such as their training and prior relevant work
experience, their success in attracting and retaining savvy and
technically proficient managers and employees, increasing our
revenues, broadening our product line offerings, managing our costs
and otherwise helping to lead our Company through a period of rapid
growth.
In
the near future, we expect that our Board will form a compensation
committee charged with the oversight of executive compensation
plans, policies and programs of our Company and with the full
authority to determine and
26
approve the compensation of our chief executive officer and make
recommendations with respect to the compensation of our other
executive officers. We expect that our compensation committee will
continue to follow the general approach to executive compensation
that we have followed to date, rewarding superior individual and
company performance with commensurate compensation.
Employment Agreements
Effective February 28, 2010, the Company entered into an employment
agreement with its CEO. The agreement, which is for a five-year
term, provided 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.
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.
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 did not meet the prerequisite related to the effectiveness
of an S-8 Registration Statement. In September 2022, the Company
has met the prerequisite related to the effectiveness of an S-8
Registration Statement. Accordingly, during the year ended December
31, 2022, the Company recognized stock-based compensation of
$150,000 or $0.0003 per share. The 500,000,000 shares of common
stock have not been issued to the CEO and have been recorded as
common stock issuable as of December 31, 2022.
Retirement Benefits
Currently, we do not provide any Company sponsored retirement
benefits to any employee, including the named executive
officers.
Perquisites
We
have historically provided only modest perquisites to our named
executive officers. We do not view perquisites as a significant
element of our compensation structure, but do believe that
perquisites can be useful in attracting, motivating and retaining
the executive talent for which we compete. It is expected that our
historical practices regarding perquisites will continue and will
be subject to periodic review by our by our board of directors.
27
Summary Compensation Table
The following table presents information regarding compensation of
our principal executive officer, and the two most highly
compensated executive officers other than the principal executive
officer for services rendered during years ended 2022 and 2021,
respectively.
Name and Principal
Position
|
|
Fiscal Year
|
|
Salary
($)(1)(2)
|
|
Bonus
($)(3)
|
|
Stock
Awards
($)(4)
|
|
|
All Other
Compensation
$(5)
|
|
Total
($)
|
Berge Abajian
|
|
2022
|
|
$
|
245,500
|
|
$
|
100,000
|
|
$
|
150,000
|
|
|
$
|
41,411
|
|
$
|
536,911
|
CEO and Chairman
|
|
2021
|
|
$
|
200,000
|
|
|
-
|
|
|
-
|
|
|
$
|
19,079
|
|
$
|
219,079
|
(1)The
amounts shown in this column represent the dollar value of base
salary earned by each named executive officer (“NEO”).
(2)On
January 1, 2019, the CEO amended his employment agreement with the
Company for a term of one year expiring December 31, 2019. The
agreement primarily retains the terms of the Amended Agreement, but
lowers the compensation to $100,000 for the year. Effective July 1,
2019, the Principal Executive Officer agreed to stop deferral of
his salary at least through December 31, 2019 as a result of the
financial situation of the Company. The CEO deferred his salary
until July 2021.
On July 1, 2021, the Company entered into an Amended and Restated
Executive 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.
(3)No
bonus compensation was made to the NEO’s in 2021. In April 2022,
the Board approve a bonus of $100,000 to the NEO as per his Amended
Employment Agreement. The Company has not paid the bonus
compensation of $100,000 as of December 31, 2022 and has been
recorded as accrued bonus compensation.
(4)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 been
filed with the Securities and Exchange Commission on September 21,
2022. Accordingly, during the year ended December 31, 2022, the
Company recognized stock-based compensation of $150,000 or $0.0003
per share. The 500,000,000 shares of common stock have not been
issued to the CEO and have been recorded as common stock issuable
as of December 31, 2022. There were no options granted to NEO
during the year ended December 31, 2022 and 2021.
(5)Other
compensation was made up of Mr. Abajian’s car expense and health
insurance expenses.
Incentive Stock and Award Plan
On
May 9, 2011, the Company’s Board approved, authorized and adopted
the 2011 Incentive Stock and Award Plan (the “Plan”). The Plan was
amended on October 11, 2012. Subject to adjustment for
mergers, reorganizations, consolidation, recapitalization, stock
dividend or other change in corporate structure, a total of
35,000,000 shares of common stock, par value $0.00001 per share is
subject to the Plan. Under the Plan, the Company may grant
non-qualified options (the “Non-qualified Options”), incentive
options (the “Incentive Options” and together with the
Non-qualified Options, the “Options”) and restricted stock (the
“Restricted Stock”) to directors, officers, consultants, attorneys,
advisors and employees. Subject to a tax exception, if any Option
or Restricted Stock expires or is canceled prior to its exercise or
vesting in full, the shares of common stock issuable under the
Option or Restricted Stock may be issuable pursuant to future
Options or Restricted Stock under the Plan.
The Plan shall be administered by a committee consisting of one (1)
director (the “Committee”). In the absence of such a
Committee, the Company’s Board shall administer the Plan.
Each Option shall contain the following material terms:
28
(i)the
exercise price, which shall be determined by the Committee at the
time of grant, shall not be less than 100% of the Fair Market Value
(defined as the closing price on the final trading day immediately
prior to the grant on the principal exchange or quotation system on
which the Common Stock is listed or quoted, as applicable) of the
Common Stock of the Company on the date the Option is granted,
provided that if the recipient of the Option owns more than ten
percent (10%) of the total combined voting power of the Company,
the exercise price shall be at least 110% of the Fair Market
Value;
(ii)the
term of each Option shall be fixed by the Committee, provided that
such Option shall not be exercisable more than ten (10) years after
the date such Option is granted, and provided further that with
respect to an Incentive Option, if the recipient owns more than ten
percent (10%) of the total combined voting power of the Company,
the Incentive Stock Option shall not be exercisable more than five
(5) years after the date such Incentive Option is
granted;
(iii)subject
to acceleration in the event of a Change of Control of the Company
(as further described in the Plan), the period during which the
Options vest shall be designated by the Committee or, in the
absence of any Option vesting periods designated by the Committee
at the time of grant, shall vest and become exercisable in equal
amounts on each fiscal year of the Company through the five (5)
year anniversary of the date on which the Option was
granted;
(iv)no
Option is transferable and each is exercisable only by the
recipient of such Option except in the event of the death of the
recipient; and
(v)with
respect to Incentive Stock Options, the aggregate Fair Market Value
of Common Stock that may be issued for the first time during any
calendar year shall not exceed $100,000.
Each award of Restricted Stock is subject to the following material
terms:
(i)no
rights to an award of Restricted Stock is granted to the intended
recipient of Restricted Stock unless and until the grant of
Restricted Stock is accepted within the period prescribed by the
Committee;
(ii)Restricted
Stock shall not be delivered until they are free of any
restrictions specified by the Committee at the time of
grant;
(iii)shares
of Restricted Stock are forfeitable until the terms of the
Restricted Stock grant have been satisfied; and
(iv)the
Restricted Stock are not transferable until the date on which the
Committee has specified such restrictions have lapsed.
2021 Incentive Stock and Award 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.
Stock Option Grants
We
have not granted any stock options to the executive officers or
directors since the adoption of the Plan.
Director Compensation
We
do not currently pay any cash fees or expenses to our sole director
for serving on the Board.
29
Compensation Policy
The Company does not believe that its compensation policies are
reasonably likely to increase corporate risk or have a material
adverse effect on the Company.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
The following table sets forth certain information known to the
Company with respect to the beneficial ownership as of March 30,
2023, by (i) all persons who are beneficial owners of five percent
(5%) or more of the Company’s common stock, (ii) each director and
nominee, (iii) the executive officers, and (iv) all current
directors and executive officers as a group.
Name and
Address(1)
|
|
Number of
Shares
Beneficially
Owned
|
|
Percentage
of Class(2)
|
Named Directors and
Officers
|
|
|
|
|
Berge Abajian,
Chairman and CEO (3)
|
|
|
7
|
|
|
*%
|
|
|
|
|
|
|
|
All Officers and
Directors as a Group (1 person)
|
|
|
7
|
|
|
*%
|
·Less
than 0.1%.
(1)Unless
otherwise indicated, the address of each beneficial owner listed
above is c/o Bergio International, Inc., 12 Daniel Road East,
Fairfield, NJ 07007.
(2)Based
on a total of 6,158,480,262 shares of common stock outstanding on
March 30, 2023.
(3)Mr.
Abajian also owns 75 shares of the Company’s Series A Preferred
Stock.
Issuances under the Compensation Plan
The following table provides information as of December 31, 2022
regarding compensation plans under which options to purchase
securities of the Company are authorized for issuance.
Plan
category
|
|
Number of
securities
to be
issued upon
exercise of
outstanding
options
|
|
Weighted
average
exercise
price of
outstanding
options
|
|
Number of
options
remaining
available for
future issuance
under Equity
Compensation Plans
|
Equity Compensation
Plans approved by shareholders
|
|
|
--
|
|
$
|
-0-
|
|
|
100,000,000
|
Equity Compensation
Plans not approved by shareholders
|
|
|
--
|
|
|
-0-
|
|
|
--
|
Total
|
|
|
--
|
|
$
|
-0-
|
|
|
100,000,000
|
Note: The table above refers to incentive stock options for the
purchase of common stock under the Bergio International, Inc. 2021
Stock Incentive Plan (the “Plan”). There are a total of
1,000,000,000 shares issuable under the Plan, of which 100,000,000
are available for issuance as incentive stock options.
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. In September 2022, the Company
has met the prerequisite related to the effectiveness of an S-8
Registration Statement. The 500,000,000 shares of common stock have
not been issued to the CEO and have been recorded as common stock
issuable as of December 31, 2022.
30
No
options or shares were issued under the Plan for the year ending
December 31, 2022.
Changes in Control
We
are not aware of any arrangements that may result in “changes in
control” as that term is defined by the provisions of Item 403(c)
of Regulation S-K.
Item 13. Certain Relationships and Related Transactions, and
Director Independence
The Company receives periodic advances from the Company’s Chief
Executive Officer (“CEO”) based upon the Company’s cash flow needs.
At December 31, 2022 and 2021, $142,854 and $145,347 (fiscal 2021
was primarily consisted of accrued interest) was due to such
officer, respectively. During the year ended December 31, 2022, the
CEO provided advances to the Company for working capital purposes
of $190,000 and the Company repaid $192,493 of these advances.
Director Independence
The common stock of the Company is currently quoted on the OTC
Markets, a quotation system which currently does not have director
independence requirements. On an annual basis, each director
and executive officer will be obligated to disclose any
transactions with the Company in which a director or executive
officer, or any member of his or her immediate family, have a
direct or indirect material interest in accordance with Item 407(a)
of Regulation S-K. Following completion of these disclosures, the
Board will make an annual determination as to the independence of
each director using the current standards for “independence” that
satisfy the criteria for the NASDAQ.
At
this time, the Company does not have any independent directors.
Item 14. Principal Accountant Fees and Services
The following table presents the aggregate fees for professional
audit services and other services rendered our independent
registered public accountants, BF Borgers CPA PC for audits and
reviews performed for the years ended December 31, 2022 and 2021.
Fees for the years ended December 31, 2022 and 2021 were as
follows:
|
|
2022
|
|
2021
|
Audit Fees
|
|
$
|
115,500
|
|
$
|
124,600
|
Audit-Related
Fees
|
|
|
-
|
|
|
-
|
Total Audit and
Audit-Related Fees
|
|
|
115,500
|
|
|
124,600
|
Tax Fees
|
|
|
-
|
|
|
-
|
All Other Fees
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
Total
|
|
$
|
115,500
|
|
$
|
124,600
|
Audit Fees. This category includes the audit of the
Company’s consolidated financial statements, and reviews of the
financial statements included in the Company’s Quarterly Reports on
Form 10-Q. It also includes advice on accounting matters that arose
during, or as a result of, the audit or the review of interim
financial statements, and services which are normally provided in
connection with regulatory filings, or in an auditing
engagement.
Audit Related Fees, tax and other fees. No other fees
under these categories were paid in 2022 and 2021.
31
Item 15. Exhibits and Financial Statement Schedules.
a.) The following documents are filed as a part of this report:
Exhibit
No.
|
|
Description
|
|
|
|
2.1
|
|
Share Exchange
Agreement, dated October 19, 2009, by and between Alba Mineral
Exploration, Inc. and Diamond Information Institute, Inc. (as filed
as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed
with the SEC on October 21, 2009)
|
|
|
|
2.2
|
|
Stock Purchase
Agreement, dated October 20, 2009, by and among Alba Mineral
Exploration, Inc., Owen Gibson, individually, Joan Gibson,
individually, Darcy Brann, individually, Duane Schaffer,
individually, Lindsay Devine, individually, and Dennis Rodowitz,
individually (as filed as Exhibit 2.2 to the Company’s Current
Report on Form 8-K, filed with the SEC on October 21, 2009)
|
|
|
|
3.1
|
|
Articles of
Incorporation, as amended (as filed as Exhibit 3.1 to the Company’s
Registration Statement on Form S-1/A, filed with the SEC on April
23, 2008)
|
|
|
|
3.2
|
|
Certificate of
Amendment to the Articles of Incorporation (as filed as Exhibit 3.1
to the Company’s Current Report on Form 8-K, filed with the SEC on
October 22, 2009)
|
|
|
|
3.3
|
|
Bylaws, as amended
(as filed as Exhibit 3.2 to the Company’s Registration Statement on
Form S-1/A, filed with the SEC on April 23, 2008)
|
|
|
|
3.4
|
|
Certificate of
Designation of Preferences, Rights and Limitations of the Bergio
International Inc. Series A Preferred Stock, as filed with the
Delaware Secretary of State on September 2, 2011 (as filed as
Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with
the SEC on September 8, 2011)
|
|
|
|
3.5
|
|
Certificate of
Amendment of Certificate of Incorporation, dated November 29, 2012
(as filed as Exhibit 3.1 to the Company’s Current Report on Form
8-K, filed with the SEC on December 12, 2012)
|
|
|
|
3.6
|
|
Certificate of
Amendment of Certificate of Incorporation, dated January 14, 2014
(as filed as Exhibit 3.1 to the Company’s Current Report on Form
8-K, filed with the SEC on January 30, 2014)
|
|
|
|
3.7
|
|
Certificate of
Amendment of Certificate of Incorporation, dated February 26, 2014
(as filed as Exhibit 3.1 to the Company’s Current Report on Form
8-K, filed with the SEC on March 3, 2014)
|
|
|
|
3.8
|
|
Certificate of
Amendment of Certificate of Incorporation, dated April 3, 2014 (as
filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K,
filed with the SEC on April 8, 2014)
|
|
|
|
3.9
|
|
Certificate of
Amendment of Certificate of Incorporation, dated October 14, 2014
(as filed as Exhibit 3.1 to the Company’s Current Report on Form
8-K, filed with the SEC on October 16, 2014)
|
|
|
|
10.1
|
|
Order Approving
Stipulation for Settlement of Claim, dated February 4, 2010 (as
filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K,
filed with the SEC on February 5, 2010)
|
|
|
|
10.2
|
|
Amended and Restated
Employment Agreement, dated September 1, 2011, by and between
Bergio International Inc. and Berge Abajian, individually (as filed
as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed
with the SEC on September 8, 2011)
|
|
|
|
10.3
|
|
Bergio International,
Inc. 2011 Stock Incentive and Reward Plan (as filed as Exhibit 10.1
to the Company’s Registration Statement on Form S-8, filed with the
SEC on May 10, 2011).
|
32
Exhibit
No.
|
|
Description
|
|
|
|
10.4
|
|
Committed Equity
Facility Agreement, dated December 23, 2011, by and between Bergio
International Inc. and TCA Global Credit Master Fund, LP (as filed
as Exhibit 10.4 to the Company’s Registration Statement on Form
S-1, filed with the SEC on February 1, 2012)
|
|
|
|
10.5
|
|
Registration Rights
Agreement, dated December 23, 2011, by and between Bergio
International Inc. and TCA Global Credit Master Fund, LP (as filed
as Exhibit 10.5 to the Company’s Registration Statement on Form
S-1, filed with the SEC on February 1, 2012)
|
|
|
|
10.6
|
|
First Amendment to
Committed Equity Facility Agreement, dated October 18, 2012, by and
between Bergio International Inc. and TCA Global Credit Master
Fund, LP (as filed as Exhibit 10.1 to the Company’s Current Report
on Form 8-K, filed with the SEC on October 24, 2012)
|
|
|
|
10.7
|
|
8% Convertible Note
with KBM Worldwide, Inc, dated February 4, 2015 (as filed as
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the
period ended March 31, 2015, filed with the SEC on May 13,
2015)
|
|
|
|
10.8
|
|
8% Convertible Note
with Vis Vires Group, Inc., dated March 11, 2015 (as filed as
Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the
period ended March 31, 2015, filed with the SEC on May 13,
2015)
|
|
|
|
10.9
|
|
8% Convertible Note
with Vis Vires Group, Inc., dated April 30, 2015 (as filed as
Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the
period ended March 31, 2015, filed with the SEC on May 13,
2015)
|
|
|
|
10.10
|
|
8% Convertible Note
with LG Capital Funding, LLC, dated May 4, 2015 (as filed as
Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the
period ended March 31, 2015, filed with the SEC on May 13,
2015)
|
|
|
|
10.11
|
|
Securities Purchase
Agreement with KBM Worldwide, Inc., dated February 4, 2015 (as
filed as Exhibit 10.5 to the Company’s Quarterly Report on Form
10-Q for the period ended March 31, 2015, filed with the SEC on May
13, 2015)
|
|
|
|
10.12
|
|
Securities Purchase
Agreement with Vis Vires Group, Inc., dated March 11, 2015 (as
filed as Exhibit 10.6 to the Company’s Quarterly Report on Form
10-Q for the period ended March 31, 2015, filed with the SEC on May
13, 2015)
|
|
|
|
10.13
|
|
Securities Purchase
Agreement with Vis Vires Group, Inc., dated April 30, 2015 (as
filed as Exhibit 10.7 to the Company’s Quarterly Report on Form
10-Q for the period ended March 31, 2015, filed with the SEC on May
13, 2015)
|
|
|
|
10.14
|
|
Securities Purchase
Agreement with LG Capital Funding, LLC, dated May 4, 2015 (as filed
as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for
the period ended March 31, 2015, filed with the SEC on May 13,
2015)
|
|
|
|
10.15
|
|
Securities Purchase
Agreement, 10% Secured Subordinated Convertible Promissory Note,
Warrant, Security Agreement, Guaranty, and Registration Rights
Agreement, dated February 11, 2021 (as filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K, filed with the SEC on
February 24, 2021)
|
|
|
|
10.16
|
|
Bergio International,
Inc. 2021 Stock Incentive Plan (as filed as Exhibit 10.3 to the
Company’s Current Report on Form 8-K, filed with the SEC on July
12, 2021).
|
33
Exhibit
No.
|
|
Description
|
|
|
|
31.1
|
|
Certification by the
Principal Executive Officer of Registrant pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule
15d-14(a)).*
|
|
|
|
31.2
|
|
Certification by the
Principal Accounting Officer of Registrant pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule
15d-14(a)).*
|
|
|
|
32.1
|
|
Certification by the
Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
32.2
|
|
Certification by the
Principal Accounting Officer pursuant to 18 U.S.C. 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
101.INS
|
|
Inline XBRL Instance
Document *
|
|
|
|
101.SCH
|
|
Inline XBRL Taxonomy
Extension Schema Document *
|
|
|
|
101.CAL
|
|
Inline XBRL Taxonomy
Extension Calculation Linkbase Document *
|
|
|
|
101.DEF
|
|
Inline XBRL Taxonomy
Extension Definition Linkbase Document *
|
|
|
|
101.LAB
|
|
Inline XBRL Taxonomy
Extension Label Linkbase Document *
|
|
|
|
101.PRE
|
|
Inline XBRL Taxonomy
Extension Presentation Linkbase Document *
|
|
|
|
104
|
|
Cover Page
Interactive Data File – the cover page of the Registrant’s
Annual Report on Form 10-K for the year ended December 31,
2022 is formatted in Inline XBRL
|
*Filed
herewith
34
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
BERGIO
INTERNATIONAL, INC.
|
|
(Registrant)
|
|
|
|
Dated: March 30,
2023
|
By:
|
/s/ Berge
Abajian
|
|
|
Berge Abajian
|
|
|
CEO and Chairman
|
|
|
(Principal Executive
Officer)
|
|
|
(Principal Accounting
Officer)
|
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the date
indicated and by signature hereto.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Berge
Abajian
|
|
Chief Executive
Officer and Chairman
|
|
March 30, 2023
|
Berge Abajian
|
|
|
|
|
35
Bergio International, Inc. and Subsidiaries
Contents
BERGIO INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
For the Years Ended
December 31,
|
|
|
2022
|
|
2021
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net loss attributable
to Bergio International, Inc.
|
|
$
|
(2,269,691)
|
|
$
|
(2,638,556)
|
Adjustments to
reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
Non-controlling interest in subsidiaries
|
|
|
(987,917)
|
|
|
(923,629)
|
Amortization expense
|
|
|
241,956
|
|
|
214,592
|
Depreciation expense
|
|
|
40,252
|
|
|
55,825
|
Stock-based compensation
|
|
|
213,674
|
|
|
118,451
|
Amortization of debt discount and deferred financing costs
|
|
|
544,763
|
|
|
1,968,797
|
Derivative expense
|
|
|
37,706
|
|
|
354,904
|
Forgiveness of debt
|
|
|
-
|
|
|
(18,291)
|
Gain from settlement of loan included in other income
|
|
|
-
|
|
|
(6,000)
|
Change in fair value of derivative liabilities
|
|
|
(627,696)
|
|
|
(394,428)
|
Gain from extinguishment of debt
|
|
|
(405,700)
|
|
|
(631,052)
|
Non-cash interest upon conversion of debt
|
|
|
1,043,496
|
|
|
14,425
|
Amortization of right of use assets
|
|
|
(76,495)
|
|
|
50,337
|
Change in operating
assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(68,607)
|
|
|
48,931
|
Inventory
|
|
|
350,522
|
|
|
(943,477)
|
Prepaid expenses and other current assets
|
|
|
32,859
|
|
|
362,111
|
Investment in unconsolidated affiliate
|
|
|
-
|
|
|
(775)
|
Accounts payable and accrued liabilities
|
|
|
(51,393)
|
|
|
338,343
|
Bank overdraft
|
|
|
11,582
|
|
|
-
|
Accrued compensation - CEO
|
|
|
319,640
|
|
|
-
|
Operating lease obligations
|
|
|
76,493
|
|
|
(50,337)
|
Deferred compensation - CEO
|
|
|
(346,163)
|
|
|
(99,408)
|
NET CASH USED IN
OPERATING ACTIVITIES
|
|
|
(1,920,719)
|
|
|
(2,179,237)
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Cash acquired from the acquisition of GearBubble
|
|
|
-
|
|
|
1,161,476
|
Cash paid upon acquisition of GearBubble
|
|
|
-
|
|
|
(2,000,000)
|
Purchase of property and equipment
|
|
|
-
|
|
|
(47,685)
|
NET CASH USED IN
INVESTING ACTIVITIES
|
|
|
-
|
|
|
(886,209)
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from sale of common stock
|
|
|
89,361
|
|
|
3,768,730
|
Proceeds from sale of preferred stock, net of offering cost
|
|
|
1,555,000
|
|
|
-
|
Proceeds from government grant
|
|
|
-
|
|
|
5,000
|
Proceeds from note payable
|
|
|
110,000
|
|
|
18,291
|
Proceeds from loans and advances payable
|
|
|
1,213,650
|
|
|
683,256
|
Proceeds from convertible notes, net of debt issuance cost
|
|
|
201,250
|
|
|
1,890,000
|
Proceeds from secured note payable
|
|
|
-
|
|
|
495,000
|
Repayment on convertible debt
|
|
|
-
|
|
|
(30,000)
|
Repayment on note payable
|
|
|
(272,884)
|
|
|
(309,867)
|
Repayment on loans payable
|
|
|
(1,211,601)
|
|
|
(1,608,653)
|
Repayment on debt
|
|
|
-
|
|
|
(567,403)
|
Repayment on secured notes payable
|
|
|
(400,000)
|
|
|
(190,000)
|
Advance from (payments to) Chief Executive Officer, net
|
|
|
6,996
|
|
|
(65,794)
|
NET CASH PROVIDED BY
FINANCING ACTIVITIES
|
|
|
1,291,772
|
|
|
4,088,560
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND
CASH EQUIVALENTS:
|
|
|
(628,947)
|
|
|
1,023,114
|
CASH AND CASH
EQUIVALENTS - beginning of year
|
|
|
1,093,195
|
|
|
70,081
|
CASH AND CASH
EQUIVALENTS - end of year
|
|
$
|
464,248
|
|
$
|
1,093,195
|
The
accompanying notes are an integral part of these consolidated
financial statements.
F-7
BERGIO INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- CONTINUED -
|
|
For the Years Ended
December 31,
|
|
|
2022
|
|
2021
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
Cash paid during the
year for:
|
|
|
|
|
|
|
Interest
|
|
$
|
26,658
|
|
$
|
-
|
Income taxes
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
Non-cash investing and
financing activities:
|
|
|
|
|
|
|
Issuance of common stock issued for convertible debt, loans
payable, and accrued interest
|
|
$
|
1,463,940
|
|
$
|
1,129,681
|
Deemed dividend upon issuance of Series D preferred stock
|
|
$
|
2,847,378
|
|
$
|
-
|
Debt discount in connection with the issuance of stock warrants
|
|
$
|
-
|
|
$
|
1,375,000
|
Initial amount of ROU asset and related liability
|
|
$
|
-
|
|
$
|
122,946
|
Initial derivative liability recorded in connection with
convertible notes payable
|
|
$
|
201,250
|
|
$
|
515,000
|
Initial derivative liability recorded in connection with
acquisition of Aphrodite’s Marketing related to the issuance of
Series B preferred stock
|
|
$
|
-
|
|
$
|
821,738
|
Initial derivative liability recorded due to commission fees for
the acquisition of Aphrodite’s Marketing related to the issuance of
Series C preferred stock
|
|
$
|
-
|
|
$
|
110,640
|
Issuance of Series B preferred stock issued for the acquisition of
Aphrodite’s Marketing
|
|
$
|
-
|
|
$
|
664,105
|
Non-controlling interest upon acquisition of GearBubble
|
|
$
|
-
|
|
$
|
366,157
|
Reclassification of derivative liability to equity upon conversion
of Series C preferred stock
|
|
$
|
67,284
|
|
$
|
-
|
|
|
|
|
|
|
|
Net liability assumed
in acquisition of Aphrodite’s Marketing:
|
|
|
|
|
|
|
Cash
|
|
$
|
-
|
|
$
|
60,287
|
Accounts receivable, net
|
|
|
-
|
|
|
125,726
|
Inventory
|
|
|
-
|
|
|
1,119,593
|
Prepaid expenses
|
|
|
-
|
|
|
291,783
|
Accounts payable and accrued liabilities
|
|
|
-
|
|
|
(1,283,244)
|
Loans payable
|
|
|
-
|
|
|
(2,304,438)
|
Note payable - long term
|
|
|
-
|
|
|
(150,000)
|
Net
liability assumed
|
|
|
-
|
|
|
(2,140,293)
|
|
|
|
|
|
|
|
Net assets assumed in
acquisition of GearBubble:
|
|
|
|
|
|
|
Cash
|
|
$
|
-
|
|
$
|
1,161,476
|
Prepaid expenses and other current assets
|
|
|
-
|
|
|
40,000
|
Property and equipment
|
|
|
-
|
|
|
4,412
|
Accounts payable and accrued liabilities
|
|
|
-
|
|
|
(458,628)
|
Net
assets assumed
|
|
$
|
-
|
|
$
|
747,260
|
The
accompanying notes are an integral part of these consolidated
financial statements.
F-8
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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
subsidiary of the Company known as Aphrodite’s Marketing, Inc.
(“Aphrodite’s Marketing”), a Wyoming corporation in exchange for
Series B Preferred Stock of the Company. The Company owns 51% of
Aphrodite’s Marketing.
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
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.
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. On April 28, 2022, the Company filed, with
the Wyoming Secretary of State, a Certificate of Amendment, to
amend its Articles of Incorporation and reflected the increase in
the authorized shares of common stock from 6,000,000,000 shares to
9,000,000,000 shares.
On
September 26, 2022, the Company filed, with the Wyoming Secretary
of State, a Certificate of Amendment, to amend its Articles of
Incorporation and reflected the increase in the authorized shares
of common stock from 9,000,000,000 shares to 15,000,000,000 shares.
In March 2023, the Company filed, with the Wyoming Secretary of
State, a Certificate of Amendment, to amend its Articles of
Incorporation and reflected the increase in the authorized shares
of common stock from 15,000,000,000 shares to 25,000,000,000
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, 2022. 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.
F-9
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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 Financial Accounting Standard Board (“FASB”)
issued ASC 810-10-65, “Non-controlling Interests in Consolidated
Financial Statements, an amendment of Accounting Research Bulletin
No. 51” (“SFAS No. 160”). This ASC clarifies that a non-controlling
(minority) interest in a subsidiary is an ownership interest in the
entity that should be reported as equity in the consolidated
financial statements. It also requires consolidated net income to
include the amounts attributable to both the parent and
non-controlling interest, with disclosure on the face of the
consolidated income statement of the amounts attributed to the
parent and to the non-controlling interest. In accordance with ASC
810-10- 45-21, those losses attributable to the parent and the
non-controlling interest in subsidiaries may exceed their interests
in the subsidiary’s equity. The excess and any further losses
attributable to the parent and the non-controlling interest shall
be attributed to those interests even if that attribution results
in a deficit non-controlling interest balance.
On
February 9, 2021, the Company entered into an Acquisition Agreement
which resulted to the acquisition of 51% interest in Aphrodite’s
Marketing. Additionally, on July 1, 2021, the Company entered into
a Merger Agreement with GearBubble which resulted to the
acquisition of 51% interest in the Merger Sub, GearBubble Tech. As
of December 31, 2022 and 2021, the Company recorded a
non-controlling interest balance of $(1,545,389) and $(557,472),
respectively, 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 $987,917 and $923,629 during the years
ended December 31, 2022 and 2021, 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
$2,269,691 and $1,920,719, respectively, for the year ended
December 31, 2022. Additionally, the Company had an accumulated
deficit of approximately $19,605,358 million and working capital
deficit of $813,541 at December 31, 2022. 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
F-10
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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 12, between
January 2022 and April 2022, the Company received net proceeds of
$1,555,000 from the sale of Series D convertible preferred
stock.
The Company increased its online presence and provided for the
expansion of the Company’s branded product lines. The acquired
majority owned subsidiaries, Aphrodite Marketing and GearBubble
Tech of which the Company owns 51%, will 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,
2022. 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, 2022 and 2021 include the estimates of
useful lives of property and equipment and intangible assets,
valuation of the operating lease liability and related right-of-use
asset, valuation of derivatives, valuation of beneficial conversion
features on convertible debt, allowance for uncollectable
receivables, valuation of equity based instruments issued for other
than cash, the fair value of warrants issued with debt, the
valuation allowance on deferred tax assets, and stock-based
compensation.
Revenue Recognition
The Company applies ASC Topic 606, Revenue from Contracts with
Customers (“ASC 606”). ASC 606 establishes a single comprehensive
model for entities to use in accounting for revenue arising from
contracts with customers and supersedes most of the existing
revenue recognition guidance. This standard requires an entity to
recognize revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those
goods or services and also requires certain additional disclosures.
ASC 606 requires us to identify distinct performance
obligations. A performance obligation is a promise in a contract to
transfer a distinct good or service to the customer. When distinct
performance obligations exist, the Company allocates the contract
transaction price to each distinct performance obligation. The
standalone selling price, or our best estimate of standalone
selling price, is used to allocate the transaction price to the
separate performance obligations. The Company recognizes revenue
when, or as, the performance obligation is satisfied.
F-11
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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 revenue consists primarily of the cost of the merchandise,
shipping fees, credit card processing services, fulfillment cost,
ecommerce sellers’ pay-out; costs associated with operation and
maintenance of the Company’s platform.
F-12
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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, and
third-party e-commerce platform fees and selling fees. The Company
directs its customers to the Company’s ecommerce platform through
social media, digital marketing, and promotional campaigns.
Marketing costs were $3,175,036 and $4,888,890 for the years ended
December 31, 2022 and 2021, are included in selling and marketing
expenses on the consolidated statement of operations.
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, and compensation and related expenses,
separately on the consolidated statements of operation previously
included in the general and administrative expenses, and the
presentation of accounts receivable - related party separately on
the consolidated balance sheets previously included in accounts
receivable.
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.
F-13
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
The carrying amounts reported in the consolidated balance sheets
for cash, prepaid expenses and other current assets, accounts
payable and accrued liabilities, accrued compensation, 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, 2022
|
|
December 31, 2021
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
Total derivative
liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
116,508
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
978,232
|
ASC 825-10 “Financial Instruments” allows entities to voluntarily
choose to measure certain financial assets and liabilities at fair
value (fair value option). The fair value option may be elected on
an instrument-by-instrument basis and is irrevocable unless a new
election date occurs. If the fair value option is elected for an
instrument, unrealized gains and losses for that instrument should
be reported in earnings at each subsequent reporting date. The
Company did not elect to apply the fair value option to any
outstanding equity instruments.
Cash and Cash Equivalents
Cash equivalents are comprised of certain highly liquid instruments
with a maturity of three months or less when purchased. The Company
did not have any cash equivalents on hand at December 31, 2022 and
December 31, 2021. 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, 2022 and
2021, the Company did not have cash in excess of FDIC limits.
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, 2022
and 2021, the allowance for doubtful accounts was $0 for both
periods.
F-14
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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, 2022 and 2021.
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.
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.
F-15
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Concentration Risk
Concentration of
Revenues
For the years ended December 31, 2022 and 2021, no customer
accounted for over 10% of total revenues.
Concentration of
Purchases
The Company purchased approximately 36% of its finished products
from two vendors (15% and 21%) during the year ended December 31,
2022. 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, 2022, total accounts receivable amounted to
$119,931 and two customers represented 90% (60% and 30%) of this
balance. As of December 31, 2021, accounts receivable amounted to
$51,324 and two customers represented 75% 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 consist of the following:
|
|
December 31,
|
|
|
2022
|
|
2021
|
|
|
|
|
|
Leasehold
improvements
|
|
$
|
391,722
|
|
$
|
391,722
|
Office and computer
equipment
|
|
|
581,352
|
|
|
581,352
|
Selling equipment
|
|
|
8,354
|
|
|
8,354
|
Furniture and
fixtures
|
|
|
20,511
|
|
|
20,511
|
|
|
|
|
|
|
|
Total at cost
|
|
|
1,001,939
|
|
|
1,001,939
|
Less: Accumulated
depreciation
|
|
|
(951,775)
|
|
|
(911,523)
|
|
|
|
|
|
|
|
|
|
$
|
50,164
|
|
$
|
90,416
|
Depreciation expense for the years ended December 31, 2022 and 2021
was $40,252 and $55,825, respectively.
F-16
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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.
The potentially dilutive common stock equivalents as of December
31, 2022 and 2021 were excluded from the dilutive loss per share
calculation as they would be antidilutive due to the net loss as
follow:
|
|
December 31, 2022
|
|
December 31, 2021
|
|
|
|
|
|
Common Stock
Equivalents:
|
|
|
|
|
|
|
Stock
Warrants
|
|
|
1,547,991,666
|
|
|
798,241,666
|
Convertible Preferred Stock
|
|
|
8,367,543,047
|
|
|
1,277,345,644
|
Convertible Notes
|
|
|
12,192,307,692
|
|
|
411,183,645
|
Total
|
|
|
22,107,842,405
|
|
|
2,486,770,955
|
Note 6 - Convertible Notes Payable
As
of December 31, 2022 and 2021, convertible notes payable consisted
of the following:
|
|
December 31, 2022
|
|
December 31, 2021
|
|
|
|
|
|
Principal amount
|
|
$
|
79,250
|
|
$
|
1,259,000
|
Less: unamortized
debt discount
|
|
|
(59,926)
|
|
|
(312,714)
|
Convertible notes
payable, net
|
|
$
|
19,324
|
|
$
|
946,286
|
Power Up Lending Group
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 were 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, 2022 and 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 were 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, 2022 and 2021 was $0.
F-17
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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 were 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, 2022 and 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 were 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, 2022 and 2021 was $0.
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 were 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, 2022 and
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 were payable on or before July 20, 2022. 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 trading
day period ending on the latest complete trading day prior to the
date of this note. The outstanding balance at December 31, 2021 was
$55,000, with accrued interest of $3,954 at December 31, 2021.
During the year ended December 31, 2022, principal of $55,000 and
$2,200 of accrued interest were fully converted into 65,000,000
shares of common stock. The outstanding principal and accrued
interest balance at December 31, 2022 was $0.
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 were payable on or before July 28, 2022. 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 trading
day period ending on the latest complete trading day prior to the
date of this note. The outstanding balance at December 31, 2021 was
$48,750, with accrued interest of $2,351 at December 31, 2021.
During the year ended December 31, 2022, principal
F-18
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
of
$48,750 and $1,950 of accrued interest were fully converted into
66,710,526 shares of common stock. The outstanding principal and
accrued interest balance at December 31, 2022 was $0.
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 were payable on or before September
14, 2022. 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 trading
day period ending on the latest complete trading day prior to the
date of this note. The outstanding balance at December 31, 2021 was
$78,750, with accrued interest of $2,140 at December 31, 2021.
During the year ended December 31, 2022, principal of $78,750 and
$3,150 of accrued interest were fully converted into 124,478,952
shares of common stock. The outstanding principal and accrued
interest balance at December 31, 2022 was $0.
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 were payable on or before October 4, 2022. 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. The outstanding balance at December 31, 2021 was
$53,750, with accrued interest of $1,037 at December 31, 2021.
During the year ended December 31, 2022, principal of $53,750 and
$2,150 of accrued interest were fully converted into 88,730,159
shares of common stock. The outstanding principal and accrued
interest balance at December 31, 2022 was $0.
1800 Diagonal Lending LLC formerly known as 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 Sixth Street Lending, LLL. The
principal and accrued interest were payable on or before November
8, 2022. 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. The outstanding balance at December 31, 2021 was
$55,000, with accrued interest of $639 at December 31, 2021. During
the year ended December 31, 2022, principal of $55,000 and $2,200
of accrued interest were fully converted into 143,349,283 shares of
common stock. The outstanding principal and accrued interest
balance at December 31, 2022 was $0.
On
March 8, 2022, the Company entered into an 8% convertible note in
the amount of $80,000 less legal and financing costs of $3,750 for
net proceeds of $76,250 with Sixth Street Lending, LLC. The
principal and accrued interest were payable on or before March 8,
2023. 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 65% multiplied by the average two lowest trading price
(representing a discount rate of 35%) during the previous 10
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, 2022, principal of $80,000 and $3,200 of accrued
interest were fully converted into 416,000,000 shares of common
stock. The outstanding principal and accrued interest balance at
December 31, 2022 was $0.
On
July 11, 2022, the Company entered into an 8% convertible note in
the amount of $54,250 less legal and financing costs of $4,250 for
net proceeds of $54,000 with 1800 Diagonal Lending, LLC. The
principal and accrued interest were payable on or before July 11,
2023. 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
F-19
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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 65% multiplied by the average two lowest trading price
(representing a discount rate of 35%) during the previous 15
trading day trading day period ending on the latest complete
trading day prior to the date of this note. In October 2022, the
Company repaid back the principal amount of $54,250, accrued
interest of $963 and prepayment penalty fee of $11,085 for a total
of $66,298. The outstanding principal and accrued interest balance
at December 31, 2022 was $0.
During the first 90 to 180 days following the date of these notes,
the Company had the right to prepay the principal and accrued but
unpaid interest due under the above notes issued to Sixth Street
Lending LLC, together with any other amounts that the Company may
owe the holder under the terms of the note, at a premium ranging
from 120% to 125% as defined in the note agreement. After this
initial 180-day period, the Company does not have a right to prepay
such notes.
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 were
payable on or before February 11, 2022. The notes may not be
prepaid except under certain conditions. The Company was to 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 was 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
was 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.
In
January 2022, the Company entered into Amendment to the Convertible
Promissory Notes Agreements (the “Amendment”) with these lenders
whereby the conversion prices of the convertible notes were reduced
from $0.0015 to $0.001. Consequently, the Company recorded interest
expense of $806,458 from the reduction of the conversion prices
during the year ended December 31, 2022.
During the year ended December 31, 2022, principal of $967,750,
accrued interest of $55,469 and conversion fees of $16,000 were
fully converted into a total of 1,058,153,419 shares of common
stock and incurred additional interest expense of $35,976 from such
conversion. The outstanding principal and accrued interest balance
at December 31, 2022 was $0.
Boot Capital, LLC
On
October 3, 2022, the Company entered into an 8% convertible note in
the amount of $79,250 less legal and financing costs of $4,250 for
net proceeds of $75,000 with Boot Capital LLC. The principal and
accrued interest is payable on or before October 3, 2023. 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 65%
multiplied by the average two lowest trading price (representing a
discount rate of 35%) during the previous 15 trading day period
ending on the latest complete trading day prior to the date of
this
F-20
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
note. During the first 90 to 180 days following the date of this
note, the Company has the right to prepay the principal and accrued
but unpaid interest due under this note together with any other
amounts that the Company may owe the holder under the terms of the
note, at a premium ranging from 120% to 125% as defined in the note
agreement. After this initial 180-day period, the Company does not
have a right to prepay such note. There were no conversions during
the year ended December 31, 2022. The outstanding balance at
December 31, 2022 was $79,250, with accrued interest of $1,546.
Amortization of debt
discounts and financing cost
For the year ended December 31, 2022 and 2021, amortization of debt
discounts and financing cost related to all the convertible notes
above amounted to $456,265 and $1,968,797, respectively, which has
been amortized and included in amortization of debt discount and
deferred financing cost on the accompanying consolidated statements
of operations.
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, 2022 and 2021, total derivative
liabilities amounted $116,508 (consist of derivative liability from
convertible debt of $108,594 and derivative liability related to
acquisition of Aphrodite’s Marketing $7,914) and $978,232 (consist
of derivative liability from convertible debt of $478,212 and
derivative liability related to acquisition of Aphrodite’s
Marketing $500,020), respectively.
The following is a roll forward for the years ended December 31,
2022 and 2021 of the fair value liability of price adjustable
derivative instruments:
|
|
Fair Value of
Liability for
Derivative
Instruments
|
|
|
|
|
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
|
Initial valuation of
derivative liabilities included in debt discount
|
|
|
201,250
|
Initial valuation of
derivative liabilities included in derivative expense
|
|
|
37,706
|
Reclassification of
derivative liabilities to gain from extinguishment of debt
|
|
|
(405,700)
|
Reclassification of
derivative liabilities to additional paid in capital upon
conversion
|
|
|
(67,284)
|
Change in fair value
of derivative liabilities
|
|
|
(627,696)
|
Balance at
December 31, 2022
|
|
$
|
116,508
|
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,
2022 and 2021 was $0.00001 and $0.002, respectively. The
volatility, expected remaining term, and risk-free interest rates
used to estimate the fair value of derivative liabilities at
December 31, 2022 and 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.
F-21
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
|
|
Initial Valuations
(on new derivative
instruments entered
into during the
year ended
December 31, 2022)
|
|
December 31, 2022
|
Volatility
|
|
|
150%
to 219%
|
|
|
186%
|
Expected Remaining
Term (in years)
|
|
|
0.08
to 1.00
|
|
|
0.08
to 0.78
|
Risk Free Interest
Rate
|
|
|
0.52
to 4.05%
|
|
|
4.12
to 4.73%
|
Expected dividend
yield
|
|
|
None
|
|
|
None
|
|
|
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
|
Note 8 - Loans and Advances Payable
Loans and advances payable consisted of the following:
|
|
December 31, 2022
|
|
December 31, 2021
|
|
|
|
|
|
Principal amount of
loans and advances
|
|
$
|
839,613
|
|
$
|
877,316
|
Accrued interest
|
|
|
232,476
|
|
|
92,330
|
Loans and advances
payable
|
|
$
|
1,072,089
|
|
$
|
969,646
|
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.
F-22
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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
principal balances and accrued interest due to RB Capital Partners,
Inc. at December 31, 2022 and 2021 was $0. 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.
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 accrued at the rate
of 10% per annum. The outstanding balances at December 31, 2021 was
$12,500 with accrued interest of $1,928. 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. During the year ended December 31, 2022, the Company
incurred additional interest expense of $31,024 from such
conversion into common stock. As of December 31, 2022, the
principal balance and accrued interest is $0.
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 accrued at the rate of
10% per annum. The outstanding balances at December 31, 2021 was
$12,250 with accrued interest of $1,225. 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. During the year ended December 31, 2022, the Company
incurred additional interest expense of $68,755 from such
conversion into common stock. As of December 31, 2022, the
principal balance and accrued interest is $0.
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 principal balance and accrued
interst at December 31, 2021 was $15,000 and $1,927, 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. During the year ended December 31, 2022, the
Company incurred additional interest expense of $61,445 from such
conversion into common stock. As of December 31, 2022, the
principal balance and accrued interest is $0.
On
June 16, 2022, the Company received proceeds related to a loan with
Trillium Partners LP in the amount of $100,000. The loan and
accrued interest were due on demand. Interest accrues at the rate
of 3% per annum. As of December 31, 2022, the principal balance and
accrued interest is $100,000 and $4,340, respectively.
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. During
the year ended December 31, 2022, the Company has received $297,500
and repaid back $498,430 related to this capital advance agreement.
As of December 31, 2022, the outstanding balance is $0.
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
F-23
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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. During the year ended December 31,
2022, the Company has received $196,100 and repaid back $226,692
related to this capital advance agreement. As of December 31, 2022,
the outstanding balance is $0.
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, 2022 and 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. 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. During
the year ended December 31, 2022, the Company has received $90,150
and repaid back $25,239 related to this loan. Additionally, during
the year ended December 31, 2022, Nationwide (see below) has
assumed $65,513 of this loan. As of December 31, 2022, the
outstanding balance is $81,534.
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. 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. During the year ended December 31, 2022, the
Company has repaid back $150,000 related to this loan.
Additionally, during the year ended December 31, 2022, Nationwide
has assumed a total of $106,000 of loans related to Digital Age
Business and Jonathan Foltz (see above). As of December 31, 2022,
the outstanding balance is $608,500 including accrued interest of
$77,718.
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. 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. During the year ended December 31, 2022, the
Company has repaid back $2,000 related to this loan. Additionally,
during the year ended December 31, 2022, Nationwide (see above) has
assumed $40,487 of this loan. As of December 31, 2022, the
outstanding balance is $0.
Amazon Capital Services, Inc.
In
July 2022, the Company’s majority owned subsidiary, Aphrodite’s
Marketing, entered into a loan agreement with Amazon Capital
Services, Inc. (“Amazon”) for a loan amount of $64,000. The loan
bears an annual interest rate of 12% and has a loan term of 6
months from date of the loan. During the year ended December 31,
2022, the Company has repaid back $55,531 related to this loan. As
of December 31, 2022, the outstanding balance is $11,001 including
accrued interest of $2,532.
F-24
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Bluevine Capital, Inc.
In
August 2022, the Company’s majority owned subsidiary, Aphrodite’s
Marketing, entered into a line of credit agreement with Bluevine
Capital, Inc. (“Bluevine”) for up to a loan amount of $200,000. The
loan bears weekly interest rate of 0.54% and an upfront fee of 1.6%
which were deducted from the loan amount. The loans are repaid in
26 weekly installments from the date of the loan. During the
year ended December 31, 2022, the Company has drawn a total loan of
$200,000 and repaid back $112,412. As of December 31, 2022, the
outstanding balance is $87,588.
Square Advance
In
September 2022, the Company’s majority owned subsidiary,
Aphrodite’s Marketing, executed a merchant cash advance agreement
with Square Advance. Under the agreement, the Company sold an
aggregate of $174,875 in future receivables for a purchase amount
of $125,000. The aggregate principal amount is payable in weekly
instalments totaling $7,286 until such time that the obligation is
fully satisfied for approximately 6 months. During the year ended
December 31, 2022, the Company has received $118,750 (net of debt
cost fee of $6,250 which was amortized immediately to interest
expense) and repaid back $97,638 related to this loan advance. This
loan is guaranteed by the CEO of the Company and Jonathan Foltz.
During the year ended December 31, 2022, interest expense incurred
related to this advance amounted to $31,171. As of December 31,
2022, the outstanding balance is $58,533.
EAdvance Services
In
November 2022, the Company’s majority owned subsidiary, Aphrodite’s
Marketing, executed a purchase and sale of future receipt agreement
with EAdvance Services. Under the agreement, the Company sold an
aggregate of $213,900 in future receipt or receivables for a
purchase amount of $155,000. The aggregate principal amount is
payable in daily instalments of $1,782 until such time that the
obligation is fully satisfied for approximately 4 months. During
the year ended December 31, 2022, the Company has received $150,350
(net of debt cost fee of $4,650 which was amortized immediately to
interest expense) and repaid back $43,659 related to this loan.
This loan is guaranteed by the CEO of the Company. During the year
ended December 31, 2022, interest expense incurred related to this
advance amounted to $13,592. As of December 31, 2022, the
outstanding balance is $124,933.
Note 9 - Notes Payable
Unsecured Notes Payable
Notes payable is summarized below:
|
|
December 31, 2022
|
|
December 31, 2021
|
|
|
|
|
|
Principal amount
|
|
$
|
962,000
|
|
$
|
1,116,934
|
Less: current
portion
|
|
|
(702,504)
|
|
|
(855,158)
|
Notes payable - long
term portion
|
|
$
|
259,496
|
|
$
|
261,776
|
Minimum principal payments under notes payable are as follows:
Year ended December
31, 2023
|
|
$
|
712,692
|
Year ended December
31, 2024
|
|
|
15,492
|
Year ended December
31, 2025
|
|
|
15,492
|
Year ended December
31, 2026
|
|
|
15,492
|
Year ended December
31, 2027
|
|
|
15,492
|
Year ended December
31, 2028 and thereafter
|
|
|
187,340
|
Total principal
payments
|
|
$
|
962,000
|
F-25
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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 was $114,800 with accrued interest of
$6,564. The outstanding balances at December 31, 2022 was $114,800
with accrued interest of $11,195.
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. In March 2022, SBA extended the payment
due date from 24 months to 30 months from the date of the note. The
outstanding balance at December 31, 2021 was $150,000 with accrued
interest of $8,577. The outstanding balance at December 31, 2022
was $150,000 with accrued interest of $14,627.
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
and is payable to Mr. Donald Wilson who is one of the majority
owners of the 49% of GearBubble Tech. 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. During the year ended December 31, 2022, the Company has
repaid back $154,933 related to promissory note. As of December 31,
2022, the outstanding balance is $697,200. The Company negotiated
with Mr. Donald Wilson to defer the installment payments in the
future.
On
April 13, 2022, the Company entered into a 12% promissory note in
the amount of $127,400 less original issue discount of $13,650 and
legal and financing costs of $3,750 for net proceeds of $110,000
with Sixth Street Lending, LLC. The principal and accrued interest
is payable on or before April 13, 2023. 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. Accrued, unpaid Interest
and outstanding principal, subject to adjustment, shall be paid in
ten (10) payments each in the amount of $14,268.80 (a total payback
to the Holder of $142,688). The first payment shall be due May 30,
2022 with nine (9) subsequent payments each month thereafter. The
Company shall have a five (5) day grace period with respect to each
payment. The Company has right to accelerate payments or prepay in
full at any time with no prepayment penalty. At any time following
an Event of Default, the Holder shall have the right, to convert
all or any part of the outstanding and unpaid amount of this Note
into shares of Common Stock. The conversion price shall mean 75%
multiplied by the lowest Trading Price for the Common Stock during
the ten (10) Trading Days prior to the Conversion Date
(representing a discount rate of 25%). For the year ended December
31, 2022, amortization of debt discounts related to this promissory
note amounted to $17,400 which was amortized and included in
amortization of debt discount and deferred financing cost on the
accompanying consolidated statements of operations. During the year
ended December 31, 2022, the Company has paid back in cash the
principal amount of $63,700 related to this promissory note. In
October 2022, the Company issued an aggregate of 891,800,000 shares
of its common stock as a result of the conversion of principal of
$63,700 and accrued interest of $7,644 and incurred additional
interest expense of $17,836 for a total of $89,180. The outstanding
principal balance and accrued interest at December 31, 2022 was
$0.
F-26
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Secured Notes Payable
Secured notes payable consisted of the following:
|
|
December 31, 2022
|
|
December 31, 2021
|
|
|
|
|
|
Principal amount
|
|
$
|
-
|
|
$
|
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 were due on February 4, 2022.
Principal and interest shall be paid with weekly payments (each a
“Weekly Payment”) as follows: (A) payments of $7,500 shall be paid
to the Lenders on each Friday within the month of November 2021;
(B) payments of $40,000 shall be paid to the Lender on each Friday
within the month of December 2021); (C) payments of $35,000 shall
be paid to the Lender on each Friday with the month of January 2022
; and (D) the remainder of any amounts outstanding pursuant to
these Secured Notes and the Secured Advance Agreement (as defined )
including the outstanding 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%.
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,
amortization of debt discounts related to all the secured
promissory notes above amounted to $196,312. During the year ended
December 31, 2022, the Company fully amortized the remaining debt
discount of 61,075 which was included in amortization of debt
discount and deferred financing cost on the accompanying
consolidated statements of operations. During the year ended
December 31, 2022, the Company repaid back $400,000 resulting to an
outstanding balance of $0 as of December 31, 2022.
F-27
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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, 2022 and 2021, $142,854 and $145,347 (fiscal 2021
was primarily consisted of accrued interest) was due to such
officer, respectively. Interest expense was accrued at an average
annual market rate of interest which is 3.25% at December 31, 2021.
Interest expense incurred was $13,156 for the year ended December
31, 2021. Interest expense incurred was $2,845 for the year ended
December 31, 2022. During the year ended December 31, 2022, the CEO
provided advances to the Company for working capital purposes of
$190,000. The Company repaid $192,493 of these advances.
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.
At
December 31, 2021, deferred compensation due to CEO amounted to
$346,163 and advances from CEO amounted $145,347. In April 2022,
the remaining balance of $346,163 of deferred compensation due to
CEO was reclassed to accrued compensation- CEO. Additionally, in
April 2022, the Company accrued bonus compensation of $100,000 to
the CEO. During the year ended December 31, 2022, the Company has
repaid back $126,523 of accrued compensation to CEO. As of December
31, 2022, accrued compensation - CEO amounted $319,640 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 been
filed with the Securities and Exchange Commission (“SEC”) on
September 21, 2022 (see Note 12).
Consulting, Advertising, and Marketing Fees
The Company incurred consulting fees of $46,905 to an affiliated
company owned by Mr. Donald Wilson during the year ended December
31, 2022. 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.
F-28
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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, 2022 and 2021, the outstanding balance was
$81,534 and $82,136, respectively.
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, 2022 and 2021, the
outstanding balance was $608,500 and $573,750, respectively.
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, 2022 and 2021, the outstanding balance was $0 and
$42,487, respectively.
Revenues and Accounts Receivable
During the year ended December 31, 2022, the Company generated
revenues of $86,060 from an affiliated company owned by Mr. Donald
Wilson who is one of the majority owners of the 49% of GearBubble
Tech. During the year ended December 31, 2022, the Company
generated revenues of $53,655 from an affiliated company owned by
the brother of the CEO of the Company. As of December 31, 2022,
accounts receivable to these affiliated companies amounted $0.
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 was
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, the 16,021,937 shares of common stock were
not issued and has been recognized as common stock issuable. The
Company valued these shares 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, 2022, the Company recognized stock-based
compensation of $54,674. In May 2022, the
F-29
BERGIO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Company issued the 16,021,937 shares of common stock to such
consultant. The consulting services were completed in July 2022 and
no Financing has occurred under this Agreement.
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.
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 year 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 Company did not renew this lease
agreement in October 2022.
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, 2022:
Year 2023
|
$
|
19,700
|
Year 2024
|
|
6,660
|
Total minimum lease
payments
|
|
26,360
|
Less amounts
representing interest
|
|
|