The accompanying
notes are an integral part of these condensed consolidated unaudited financial statements.
The accompanying
notes are an integral part of these condensed consolidated unaudited financial statements.
The accompanying
notes are an integral part of these condensed consolidated unaudited financial statements.
The accompanying
notes are an integral part of these condensed consolidated unaudited financial statements.
Notes to the Condensed Consolidated
Financial Statements
For The Three Months Ended March 31,
2020
NOTE 1 — BUSINESS, GOING CONCERN AND SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements of Coro Global, Inc., a Nevada corporation (the “Company”), have been prepared in accordance
with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally
accepted in the United States of America for complete condensed consolidated financial statements. These unaudited condensed consolidated
financial statements and related notes should be read in conjunction with the Company’s Form 10-K for the fiscal year ended
December 31, 2019 filed with the SEC on April 13, 2020. In the opinion of management, these unaudited condensed consolidated financial
statements reflect all adjustments that are of a normal recurring nature and which are necessary to present fairly the financial
position of the Company as of March 31, 2020, and the results of operations and cash flows for the three months ended March 31,
2020 and 2019. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results
that may be expected for the entire fiscal year.
Principle of Consolidation
The accompanying financial statements
present on a consolidated basis the accounts of the Company and its wholly owned subsidiary, Coro Corp., which was organized in
the State of Nevada on September 14, 2018.
All significant intercompany accounts
and transactions have been eliminated in consolidation.
Nature of Business Operations
Coro Global Inc. (the “Company”)
is a Nevada corporation that was originally formed on November 1, 2005 when Bio-Solutions International, Inc. (“Bio-Solutions”)
entered into an Agreement and Plan of Merger with OmniMed Acquisition Corp., a Nevada corporation and a wholly-owned subsidiary
of Bio-Solutions, OmniMed International, Inc. (“OmniMed”) and the shareholders of OmniMed. On January 17, 2006, OmniMed
changed its name to MedeFile International, Inc. On September 14, 2018 the Company formed a wholly owned subsidiary Coro Corp.
The Company is focused on dynamic global growth opportunities in the financial technology, or Fintech industry. The Company is
developing products and technology solutions for global payments and the financial industry. Effective January 9, 2020, the Company
changed its name to Coro Global Inc.
Covid-19 Pandemic
The Company’s operation has been
materially and adversely impacted by the Covid-19 pandemic. The Company is located in Dade County, Florida which is subject to
a “stay at home” order effective March 26, 2020, until the expiration of the existing State of Emergency. The Company
is not considered an “essential” business and has closed its office. Until this stay at home order is lifted and the
Company can resume its normal operations, the impact of the Covid-19 pandemic on the Company is unknown.
Going Concern
The accompanying condensed consolidated
financial statements have been prepared assuming the Company will continue as a going concern. The Company reported a net loss
of $849,888 for the three months ended March 31, 2020 and has an accumulated deficit of $39,975,699 as of March 31, 2020. The
operating losses raise substantial doubt about the Company’s ability to continue as a going concern.
We will need to raise additional capital
in order to continue operations. The Company’s ability to obtain additional financing may be affected by the success of
its growth strategy and its future performance, each of which is subject to general economic, financial, competitive, legislative,
regulatory and other factors beyond the Company’s control. Additional capital may not be available on acceptable terms,
or at all. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other
financing mechanisms.
Further, if we issue additional equity
or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences
or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available
on acceptable terms, we will have to curtail or cease our operations. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that
might be necessary in the event the Company cannot continue in existence. These financial statements do not include any adjustments
that might arise from this uncertainty.
Cash and Cash Equivalents
For purposes of these financial statements,
cash and cash equivalents includes highly liquid debt instruments with maturity of less than three months.
Concentrations of Credit Risk
Financial instruments and related items,
which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company
places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess
of the FDIC insurance limit. Currently our operating accounts are approximately $368,500 above the FDIC limit.
Advertising
The Company follows the policy of charging
the costs of advertising to expense as incurred. The Company incurred $0 and $0, respectively for advertising costs for the three
months ended March 31, 2020 and 2019.
Income Taxes
The Company accounts for income taxes
under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities
are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted
tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred
tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company records net deferred tax assets
to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company
considers all available positive and negative evidence, including future reversals of existing taxable temporary differences,
projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established
against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it
would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the Company would make
an adjustment to the valuation allowance which would reduce the provision for income taxes.
The Company follows the accounting guidance
which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position
will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical
merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially
and in subsequent periods. Also included is guidance on measurement, recognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition.
Property and Equipment
Property and equipment are stated at cost.
When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts
and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed
in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 3 years
up to 5 years.
|
|
|
Depreciation/
|
|
|
|
Amortization
|
|
Asset Category
|
|
Period
|
|
Computer equipment
|
|
5 Years
|
|
Computer software
|
|
3 Years
|
Computer and equipment costs consisted
of the following:
|
|
|
March 31,
2020
|
|
|
December 31,
2019
|
|
|
|
|
|
|
|
|
|
|
Computer equipment
|
|
$
|
9,964
|
|
|
$
|
9,964
|
|
|
Accumulated depreciation
|
|
|
(2,740
|
)
|
|
|
(2,242
|
)
|
|
Balance
|
|
$
|
7,224
|
|
|
$
|
7,722
|
|
Depreciation expense was $498 and $499
for the three months ended March 31, 2020 and 2019, respectively.
Revenue Recognition
Effective January 1, 2018, the Company
recognizes revenue in accordance with Accounting Standards Codification 2014-09, Revenue from Contracts with Customers (Topic
606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific revenue
recognition guidance throughout the Industry Topics of the Accounting Standards Codification. The updated guidance states that
an entity should 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. The guidance also provides
for additional disclosures with respect to revenues and cash flows arising from contracts with customers. The standard was effective
for the first interim period within annual reporting periods beginning after December 15, 2017, and the Company adopted the standard
using the modified retrospective approach effective January 1, 2018. The adoption of this guidance did not have a material impact
on our financial statements.
Fair Value of Financial Instruments
Cash and Equivalents, Deposits In-Transit,
Receivables, Prepaid and Other Current Assets, Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities.
The carrying amounts of these items approximated
fair value.
Fair value is defined as the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. To increase the comparability of fair value measures, Financial Accounting Standards Board (“FASB”)
ASC Topic 820-10-35 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair
value. 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 measurements).
Level 1—Valuations
based on quoted prices for identical assets and liabilities in active markets.
Level 2—Valuations
based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs
that are observable or can be corroborated by observable market data.
Level 3—Valuations
based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market
participants. These valuations require significant judgment.
Impairment of Long Lived Assets
In accordance with Accounting Standards
Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets to
be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. ASC 360-10 relates to assets that can be amortized and the life can be determinable. The Company
reviews property and equipment and other long-lived assets for impairment annually, or whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the asset’s
carrying amount to future undiscounted net cash flows the assets are expected to generate. Cash flow forecasts are based on trends
of historical performance and management’s estimate of future performance, giving consideration to existing and anticipated
competitive and economic conditions. 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 projected discounted future cash flows arising from the assets
or their fair values, whichever is more determinable.
Leases
In February 2016, the FASB issued ASU
2016-02, Leases, which amended current lease accounting to require lessees to recognize (i) a lease liability, which is
a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use
asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease
term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes
were made to align, where necessary, lessor accounting with the lessee accounting model. This standard is effective for fiscal
years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of this ASU did not
have a material impact on our balance sheet.
Net Loss per Share
Basic and diluted loss per share amounts
are computed based on net loss divided by the weighted average number of common shares outstanding. Convertible shares, if converted,
totaling 0 were not included in the computation of diluted loss per share because the assumed conversion and exercise would be
anti-dilutive for the three months ended March 31, 2020 and 2019.
Management Estimates
The presentation of financial statements
in conformity with generally accepted accounting principles 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 reported period. Actual results could differ from those
estimates.
Stock Based Compensation
The Company accounts for employee compensation
related to stock, options or warrants using a fair value-based method whereby compensation cost is measured at the grant date
based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company accounts
for nonemployee compensation related to stock, options or warrants using a fair value-based method whereby compensation cost is
measured at the earlier of a commitment date or completion of services based on the value of the award and is recognized over
the service period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued
to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the measurement
date.
Reclassifications
Certain 2020 balances have been reclassified
in the 2019 financial statement presentation. The reclassification of accrued interest did not have any effect on the financial
statements.
Recent Accounting Pronouncements
All other newly issued accounting pronouncements
not yet effective have been deemed either immaterial or not applicable.
2. DEFERRED STOCK-BASED COMPENSATION - RELATED PARTY
Effective May 18, 2018, the Company appointed
J. Mark Goode as the President and Chief Executive Officer of the Company. He was also appointed a member and Chairman of the
Board of Directors of the Company.
The Company entered into an employment
agreement on May 18, 2018 with Mr. Goode, which provides for an annual salary and certain other benefits. Pursuant to the employment
agreement, Mr. Goode’s annual base salary is $96,000, which may increase to up to $216,000 upon Mr. Goode meeting certain
milestones set forth in the employment agreement related to the Company’s performance and is subject to increases as set
from time to time by the Board. Upon the execution of the employment agreement, Mr. Goode received 500,000 shares of common stock
of the Company valued at $1,250,000 ($2.50 per share). Under the terms of the employment agreement as originally executed, after
one year of employment by the Company as the Chief Executive Officer, the Company agreed to issue to Mr. Goode additional shares
of common stock of the Company equal to 1% of the outstanding shares of the Company at the time of such issuance; after two years
of employment by the Company as the Chief Executive Officer, the Company agreed to issue to Mr. Goode additional shares of common
stock of the Company equal to 1% of the outstanding shares of the Company at the time of such issuance; and after three years
of employment by the Company as the Chief Executive Officer, the Company agreed to issue to Mr. Goode additional shares of common
stock of the Company equal to 1% of the outstanding shares of the Company at the time of such issuance. As of March 31, 2019 and
December 31, 2018 the Company accrued $1,861,178 and $300,995, respectively in accordance with ASC 718-10-55-65 for the portion
earned as the terms of such an award do not establish an ownership relationship because the extent to which (or whether) the employee
benefits from the award depends on something other than changes in the entity’s share price. Therefore, the awards should
be accounted for as a liability award. ASC 718 requires that public companies measure share-based awards classified as liabilities
at fair value at each reporting date. In accordance with 718-30-35-3, a public entity shall measure a liability award under a
share-based payment arrangement based on the award’s fair value re-measured at each reporting date until the date of settlement.
Compensation cost for each period until settlement shall be based on the change (or a portion of the change, depending on the
percentage of the requisite service that has been rendered at the reporting date) in the fair value of the instrument for each
reporting period. During the three months March 31, 2019 the Company recorded and expensed $1,560,183 for these awards.
On May 31, 2019, the Company entered into
amendment no. 1 to the Company’s employment agreement with Mr. Goode. Pursuant to the amendment, the Company’s obligation
to issue additional shares of common stock as compensation to Mr. Goode was amended, such that, the Company issued to Mr. Goode
and his designee 750,000 shares of common stock upon execution of the amendment, and the Company will have no further obligation
to issue to Mr. Goode shares under the employment agreement. The shares will be expensed over the term of the employment agreement.
Mr. Goode will be required to return such 750,000 shares to the Company as follows:
|
|
●
|
Mr.
Goode will return 500,000 of such shares to the Company if he is not serving as chief
executive officer of the Company pursuant to the employment agreement as of May 17, 2020
(the second anniversary of the agreement); and
|
|
|
●
|
Mr.
Goode will return 250,000 of such shares to the Company if he is not serving as chief
executive officer of the Company pursuant to the employment agreement as of May 17, 2021
(the third anniversary of the agreement).
|
On May 31, 2019 the Company recorded the
reclassification of the derivative liability of $2,162,408 for the issuance of these share to additional paid in capital and common
stock. The Company recorded $687,003 for the additional value of the common stock for the vesting of the award during the year
ended December 31, 2019. The Company recorded $292,240 for the additional value of the common stock for the vesting of the award
during the three months ended March 31, 2020. As of March 31, 2020 and December 31, 2019 the unvested amount of the awards was
$608,349 and $900,598, respectively.
3. NOTES PAYABLE – RELATED PARTY
On July 15, 2016, the Company issued a
7% promissory note to a significant shareholder in the principal amount of $100,000. The note had an initial one-year term. On
April 9, 2019, the maturity date of the note was extended to June 30, 2019. On April 12, 2019, the Company entered into an exchange
agreement with The Vantage Group Ltd. (“Vantage”), which held the note, pursuant to which Vantage exchanged a portion
of this note, in the amount of $50,000, for 10,000 newly issued shares of common stock of the Company. The Company repaid the
remaining balance of $50,000. Vantage is owned by Lyle Hauser, an adviser to the Company and its then-largest stockholder.
The changes in this note payable to related
party are reflected in the following at March 31, 2020 and December 31, 2019:
|
|
|
At
March 31,
2020
|
|
|
At
December 31,
2019
|
|
|
Note Payable
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Accrued interest
|
|
$
|
19,438
|
|
|
$
|
19,438
|
|
On January 14, 2019, the Company entered
into an exchange agreement with Lyle Hauser. Pursuant to the exchange agreement, Mr. Hauser exchanged an outstanding convertible
promissory note of the Company in the aggregate amount of $70,382 (including accrued interest) held by Mr. Hauser for a new non-convertible
promissory note of the Company in the principal amount of $70,382. The new note had an original maturity date of March 31, 2019,
which has been extended to June 30, 2020 (see Note 8), and bears interest at the rate of 7% per year, due upon maturity. As of
March 31, 2020 and December 31, 2019, the note had a balance of $70,382 and accrued interest of $5,438.
On February 28, 2019, the Company issued
a promissory note in the principal amount of $110,000 to Lyle Hauser with an original issue discount of $10,000, for a purchase
price of $100,000. The note has a 0% interest rate until maturity and had an original maturity date of March 31, 2019, which was
extended to June 30, 2020. Following the maturity date, the note would bear a 9% annual interest rate until paid in full. During
the three months ended March 31, 2020 the Company repaid a total of $100,000. As of March 31, 2020 and December 31, 2019, the
note had a balance of $10,000 and $110,000, respectively. The remaining amount of the note was repaid in May 2020.
The Company evaluated the modification
under ASC 470-50 and concluded the deletion of the conversion qualifies for debt modification which triggered debt extinguishment;
however, there was no impact to the income statement as there was no unamortized discounts or other fees paid on the under the
prior debt terms.
4. INTELLECTUAL PROPERTY
In September 2017, the Company entered
into and closed an asset purchase agreement with Vantage. Pursuant to the asset purchase agreement, the Company purchased from
Vantage a software application referred to as Dino Might and related intellectual property. As consideration for the purchase,
the Company issued to Vantage 7,000 shares of newly created Series C Preferred Stock, valued at $820,451, and granted to Vantage
a revenue sharing interest in the Dino Might asset pursuant to which the Company agreed to pay to Vantage, for the Company’s
2017 fiscal year and the following nine years, 30% of the revenue generated by the Dino Might asset. In 2017 the Company recognized
an impairment loss of $818,472, on the transaction based on the future discounted cash flows over the next three years. As of
March 31, 2020 and December 31, 2019, the Dino Might asset balance was $1,979.
Intellectual property is stated at cost.
When retired or otherwise disposed, the related carrying value and accumulated amortization are removed from the respective accounts
and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed
in the year incurred.
5. EQUITY
On September 29, 2017, the Company filed
a Certificate of Designation of Series C Preferred Stock with the Secretary of State of Nevada (the “Series C Certificate
of Designation”). The Company authorized 7,000 shares of preferred stock as Series C Preferred Stock. The Company issued
7,000 shares of Series C Preferred Stock on September 29, 2017. All outstanding shares of Series C Preferred Stock were converted
to common stock in April 2018. No shares of Series C Preferred Stock are outstanding as of March 31, 2020 and December 31, 2019,
and no such shares may be re-issued.
On May 18, 2018, the Company appointed
J. Mark Goode as the new President and Chief Executive Officer of the Company, effective May 18. 2018. He was also appointed a
member and Chairman of the Board of Directors of the Company. The Company entered into an employment agreement on May 18, 2018
with Mr. Goode, which provides for an annual salary and certain other benefits. Pursuant to the employment agreement, Mr. Goode’s
annual base salary is $96,000, which may increase to up to $216,000 upon Mr. Goode meeting certain milestones set forth in the
employment agreement related to the Company’s performance and is subject to increases as set from time to time by the Board.
Upon the execution of the employment agreement, Mr. Goode was issued 500,000 shares of common stock of the Company valued at $1,250,000
($2.50 per share).
On May 31, 2019, the Company entered into
amendment no. 1 to the Company’s employment agreement with J. Mark Goode, the Company’s chief executive officer and
director. Pursuant to the amendment, the Company’s obligation to issue additional shares of common stock as compensation
to Mr. Goode was amended, such that, the Company issued to Mr. Goode and his designee 750,000 shares of common stock upon execution
of the amendment, and the Company will have no further obligation to issue to Mr. Goode shares under the employment agreement.
Mr. Goode will be required to return such 750,000 shares to the Company as follows:
|
|
●
|
Mr.
Goode will return 500,000 of such shares to the Company if he is not serving as chief
executive officer of the Company pursuant to the employment agreement as of May 17, 2020
(the second anniversary of the agreement); and
|
|
|
●
|
Mr.
Goode will return 250,000 of such shares to the Company if he is not serving as chief
executive officer of the Company pursuant to the employment agreement as of May 17, 2021
(the third anniversary of the agreement).
|
On May 31, 2019 the Company recorded the
reclassification of the derivative liability of $2,162,408 for the issuance of these share to additional paid in capital and common
stock. The Company recorded $687,003 for the additional value of the common stock for the vesting of the award during the year
ended December 31, 2019. The Company recorded $292,240 for the additional value of the common stock for the vesting of the award
during the three months ended March 31, 2020. As of March 31, 2020 and December 31, 2019 the unvested amount of the awards was
$608,349 and $900,598, respectively.
From January 1, 2020 to March 31, 2020,
the Company entered into and closed securities purchase agreements with accredited investors pursuant to which the Company issued
and sold an aggregate of 200,000 shares of common stock for an aggregate purchase price of $1,000,000.
6. COMMITMENTS AND CONTINGENCIES
In December 2018, we entered into a software
license agreement with Swirlds to license Hashgraph for the Coro platform. The Company is obligated to pay a first year licensing
fee of $225,000 which will be due prior to launch of the Coro product and a fee for additional nodes at $15,000 per node. In addition
the Company is required to pay a 10% transaction fee for account holders on the Swirlds Customer Network. The agreement automatically
renews for an additional one year and the fees may not increase more than 1%.
On March 9, 2020, the Company entered
into an engagement agreement with Aegis Capital Corp. (“Aegis”), pursuant to which we engaged Aegis to act as lead
underwriter in connection with a proposed public offering of common stock by the Company. In the event the contemplated offering
is completed, the agreement contemplates, that (subject to execution of an underwriting agreement for the offering) Aegis will
be entitled to a 8% underwriting discount, a 1% non-accountable expense allowance, reimbursement of certain expenses, and warrants
to purchase 8% of the number of shares of common stock sold in the offering. The agreement has a term that ends six months from
the date thereof or upon completion of the proposed offering. As of March 31, 2020 the Company has recorded $85,000 of deferred
offering costs consisting of $60,000 of legal fees and $25,000 of underwrite due diligence fees. Upon the completion of the offering
the Company will reclassify to additional paid in capital.
7. RELATED PARTY
On January 14, 2019, the Company entered
into an exchange agreement with Lyle Hauser. Pursuant to the exchange agreement, Mr. Hauser exchanged an outstanding convertible
promissory note of the Company in the aggregate amount of $70,382 (including accrued interest) held by Mr. Hauser for a new non-convertible
promissory note of the Company in the principal amount of $70,382. The new note had an original maturity date of March 31, 2019,
which has been extended to June 30, 2020 (see Note 8), and bears interest at the rate of 7% per year, due upon maturity. As of
March 31, 2020 and December 31, 2019, the note had a balance of $70,382 and accrued interest of $5,438.
On January 14, 2019 the Company entered
into an exchange agreement with Vantage. Pursuant to the exchange agreement, Vantage exchanged the remaining amount due on a convertible
promissory note of the Company, equal to $17,780 (including accrued interest) held by Vantage for a new non-convertible promissory
note of the Company in the principal amount of $17,780. The new note had an original maturity date of March 31, 2019, which was
extended to December 31, 2019, and bore interest at the rate of 7% per year, due upon maturity. Accrued interest at March 31,
2020 and December 31, 2019 amounted to $1,245. The Company repaid note in full on November 19, 2019.
On February 28, 2019, the Company issued
a promissory note in the principal amount of $110,000 to Lyle Hauser with an original issue discount of $10,000, for a purchase
price of $100,000. The note has a 0% interest rate until maturity and had an original maturity date of March 31, 2019, which was
extended to June 30, 2020. Following the maturity date, the note would bear a 9% annual interest rate until paid in full. During
the three months ended March 31, 2020 the Company repaid a total of $100,000. As of March 31, 2020 and December 31, 2019, the
note had a balance of $10,000 and $110,000, respectively.
During the three months ended March 31, 2020
and 2019 the Company paid Dorr Asset Management consulting fees and expenses of $68,367 and $0, respectively. Dorr Asset Management
is controlled by Brian and David Dorr, related parties to the Company.
8. SUBSEQUENT EVENTS
On April 7, 2020, the maturity date of
outstanding notes held by Lyle Hauser, consisting of (i) a promissory note, dated on or about January 14, 2019, in the original
principal amount of $70,384,as amended by amendment No. 1 thereto, dated April 9, 2019, amendment No. 2 thereto, dated July 3,
2019, amendment No. 3 thereto, dated October 1, 2019, and amendment no. 4 thereto, dated January 17, 2020; and (ii) an original
issue discount promissory note, dated on or about February 28, 2019, in the original principal amount of $110,000 (of which $100,000
has been repaid, leaving an outstanding balance of $10,000), as amended by amendment No. 1 thereto, dated April 9, 2019, amendment
No. 2 thereto, dated July 3, 2019, amendment No. 3 thereto, dated October 1, 2019, and amendment No. 4 thereto, dated January
17, 2020, was extended to June 30, 2020. In consideration for the extension of the maturity date of the notes, the Company issued
to the designee of Lyle Hauser 33,000 shares of common stock. Between April 1, 2020 to May 14, 2020, the
Company repaid $25,000 of loans due to Lyle Hauser.
From April 1, 2020 to May 5, 2020,
we entered into and closed securities purchase agreements with accredited investors pursuant to which the Company issued and sold
an aggregate of 10,000 shares of common stock for an aggregate purchase price of $50,000.
On May 5, 2020, we issued 26,500 shares of common stock to consultants
pursuant to two consulting agreements, including one issuance of 22,500 shares and one issuance of 4,000 shares, for business development
consulting services.