The accompanying unaudited notes are an integral part of the unaudited condensed consolidated financial statements
The accompanying unaudited notes are an integral part of the unaudited condensed consolidated financial statements
The accompanying unaudited notes are an integral part of the unaudited condensed consolidated financial statements.
The accompanying unaudited notes are an integral part of the unaudited condensed consolidated financial statements
The accompanying unaudited notes are an integral part of the unaudited condensed consolidated financial statements
Notes to Condensed Consolidated Financial Statements
(1) NATURE OF OPERATIONS
Global Boatworks Holdings, Inc., (the Company, or R3Score), was formed on May 11, 2015, under the laws of the State of Florida. R3Score Technologies, Inc. was formed on May 2, 2018, under the laws of the State of Delaware.
On September 4, 2020, R3Score entered into an Agreement and Plan of Merger (the Merger Agreement) with Global Boatworks Holdings, Inc., (Global) a Florida corporation. Upon completion of the merger, the R3Score shareholders collectively own, as a group, on a fully diluted basis approximately 81% of the consolidated company. The Merger Agreement was consummated on September 23, 2020, but was reflected for accounting purposes as effective July 1, 2020. The merger was treated as a reverse acquisition (R3Score was the acquiring entity) followed by a recapitalization.
R3Score has developed a financial analysis tool that uses artificial intelligence, machine learning, and human empathy together to provide an accurate assessment of a persons credit worthiness and reputation without the bias that is inherent in traditional "scores" used by lenders and employers. The product produces a unique score ranging from 300 to 850, accompanied by a nuanced customer segmentation report that, together, provides actionable information to better align products and services to customers. The products offer more context than traditional criminal background screening tools and/or traditional credit scores. The Companys products provide decision-makers with more actionable data than what is available on the open market. The products proprietary risk models leverage machine learning and existing cross-sector research in a unique manner for a more robust, holistic view of prospective employees and/or consumers. Activity to date has been focused mostly on the development of the algorithms and unique risk models for the product.
The accompanying consolidated financial statements include the activities of R3Score Technologies, Inc., and Global effective July 1, 2020.
(2) BASIS OF PRESENTATION, USE OF ESTIMATES AND GOING CONCERN
a) Basis of Presentation and Principles of Consolidation
The Companys consolidated financial statements include the financial statements of Global Boatworks Holdings, Inc. and its wholly owned subsidiary R3Score Technologies, Inc. All intercompany balances and transactions have been eliminated.
The accompanying condensed consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in the United States of America ("U.S.") as promulgated by the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for interim financial information. The consolidated financial statements reflect all normal recurring adjustments, which, in the opinion of management, are considered necessary for a fair presentation of the results for the periods shown. The results of operations for the periods presented are not necessarily indicative of the results expected for any future period. The information included in these condensed consolidated financial statements should be read in conjunction with Managements Discussion and Analysis and Results of Operations contained elsewhere in this report and the audited consolidated financial statements and accompanying notes filed in Form 8-K filed on December 31, 2020 with the U.S. Securities and Exchange Commission.
b) Use of Estimates: The preparation of 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates in the accompanying unaudited condensed consolidated financial statements involved the valuation of long lived assets, the valuation of common stock issued as compensation, and valuation allowance on the deferred income tax asset.
F-7
Global Boatworks Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(2) BASIS OF PRESENTATION, USE OF ESTIMATES AND GOING CONCERN, continued
c) Going Concern: The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has sustained losses and has a working capital deficit, approximately $1.2 million. These matters raise substantial doubt about the Companys ability to continue as a going concern for a reasonable period of time. The Company is expected to have ongoing expenses as a result of being a publicly held company and normal operational expenses as the Company continues to implement its plan of operations. The ability of the Company to continue as a going concern is dependent upon increasing operations, developing sales and obtaining additional capital and financing. The Company is seeking to raise sufficient equity capital. The Company is seeking to raise sufficient equity capital to enable it to pay off its existing debt. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
d) Discontinued Operations: Subsequent to the merger agreement, management initiated a plan to divest the luxury living vessel business. As a result this segment is classified as discontinued operations.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Cash and cash equivalents: The Company considers all highly liquid securities with original maturities of three months or less when acquired, to be cash equivalents. The Company had no financial instruments that qualified as cash equivalents at September 30, 2020.
b) Property and equipment: All property and equipment are recorded at cost and depreciated over their estimated useful lives, using the straight-line method. Upon sale or retirement, the cost and related accumulated depreciation are eliminated from their respective accounts, and the resulting gain or loss is included in the results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred.
c) Impairment of long-lived assets: A long-lived asset is tested for impairment whenever events or changes in circumstances indicate that its carrying value amount may not be recoverable. An impairment loss is recognized when the carrying amount of the asset exceeds the sum of the undiscounted cash flows resulting from its use and eventual disposition. The impairment loss is measured as the amount by which the carrying amount of the long-lived assets exceeds its fair value.
d) Financial instruments and Fair value measurements: 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 instruments.
ASC 825 also requires disclosures of the fair value of financial instruments. The carrying value of the Companys current financial instruments, which include cash and cash equivalents, accounts payable and accrued liabilities approximates their fair values because of the short-term maturities of these instruments.
FASB ASC 820 Fair Value Measurement clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability.
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
F-8
Global Boatworks Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
d) Financial instruments and Fair value measurements: The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
e) Revenue recognition: Revenue is recognized when earned. Revenue is recognized on a gross basis in accordance with ASC 606.
f) Stock compensation for services rendered: Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the shorter of period the employee or director is required to perform the services in exchange for the award or 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.
The Company adopted ASU 2018-07 on January 1, 2019 and accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC 718. The Company used the modified prospective method of adoption. There was no cumulative effect of adoption on January 1, 2019. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option pricing model.
g) Income Taxes: The Company uses the asset and liability method of ASC 740 to account for income taxes. Under this method, deferred income taxes are determined based on the differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements which will result in taxable or deductible amounts in future years and are measured using the currently enacted tax rates and laws. A valuation allowance is provided to reduce net deferred tax assets to the amount that, based on available evidence, is more likely than not to be realized.
The Company follows the provisions of ASC 740-10, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority.
The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
As of September 30, 2020 tax years 2018 and 2019 for the R3Score and 2017, 2018 and 2019 for the corporation remain open for IRS audit. The Company has received no notice of audit or any notifications from the IRS for any of the open tax years.
h) Convertible Notes With Fixed Rate Conversion Features: The Company may issue convertible notes, which are convertible into common shares at a fixed discount to the price of the common stock at the time of conversion. The Company measures the fair value of the note at the time of issuance at the fixed monetary value of the payable and records any premium as interest expense on the issuance date.
i) Debt issue costs: The Company accounts for debt issuance cost paid to lenders, or third parties as debt discounts which are amortized over the life of the underlying debt instrument.
F-9
Global Boatworks Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
j) Business combinations: The Company includes the results of operations of the businesses acquired as of the respective dates stated in the agreement. The Company allocates the fair value of the purchase price of acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill.
k) Net income (loss) per share: Basic loss per share excludes dilution and is computed by dividing the loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the Company. Diluted loss per share is computed by dividing the loss available to stockholders by the weighted average number of shares outstanding for the period and dilutive potential shares outstanding unless consideration of such dilutive potential shares would result in anti-dilution.
l) Derivatives: The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a convertible note containing an embedded derivative instrument, the instrument is marked to fair value at the conversion date and the debt and derivative are removed from the balance sheet, The shares issued upon conversion of the note are recorded at their fair value and a gain or loss on extinguishment is recognized, as applicable.
Equity instruments that are initially classified as equity that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the instrument on the reclassification date.
m) Leases: The Company adopted ASU No. 2016-02: Lease (Topic 842) as of January 1, 2019 using the effective date method. As a part of our policy, we have chosen to exclude leases with a lease term of one year or less. Accordingly we have no leases over one year and thus the adoption of this standard did not have any effect on the accompanying consolidated financial statements.
n) Recent accounting pronouncements: Certain FASB Accounting Standard Updates (ASU) that are not effective until after September 30, 2020 are not expected to have a significant effect on the Companys consolidated financial position or results of operations.
(4) BUSINESS COMBINATION
On September 4, 2020, R3Score entered into an Agreement and Plan of Merger (the Merger Agreement) with Global Boatworks Holdings, Inc., a Florida corporation. Upon completion of the merger, R3Scores shareholders collectively own, as a group, on a fully diluted basis approximately 81% of the combined company. The Merger Agreement was consummated on September 23, 2020, with a July 1, 2020 date for accounting purposes.
Stockholders Equity: Under ASC 80-5, Business Combinations, R3Score was deemed the accounting acquirer based on the following predominate factors: its former owners have the largest portion of voting rights in the Company, the board and Management has more individuals coming from R3Score and the headquarters was moved to the R3Score headquarters.
F-10
Global Boatworks Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(4) BUSINESS COMBINATION, continued
The Company acquired approximately 81% of the equity of Global pursuant to the Merger Agreement by issuing 2,901,291 shares of Common Stock of Global. Total value of equity for the transaction was $2.3 million.. In addition, the Company issued 2,310,000 shares of common stock to settle $115,500 of debt, 1,988,709 shares of common stock to settle $926,035 of accrued liabilities and 3,800,000 shares of common stock for services valued at $3,040,000 rendered in relation to this agreement.
The acquired assets and assumed liabilities of Global were recorded at their estimated fair values. The following table summarizes the consideration paid for Global and the fair value of the assets acquired and liabilities assumed at the acquisition date on July 1, 2020.
| |
Assets acquired:
|
|
Cash and equivalents
|
$
-
|
Intangibles, net of accumulated amortization
|
5,015
|
Goodwill
|
4,367,459
|
Total identifiable assets acquired
|
4,372,474
|
Liabilities assumed:
|
|
Accounts payable and accrued liabilities
|
1,349,451
|
Short term debt plus current portion of long term debt
|
389,300
|
Fair value of derivative liability
|
92,338
|
Long term debt
|
220,352
|
Total liabilities assumed
|
2,051,441
|
Total consideration
|
$
2,321,033
|
As of the date of the Business Combination, the weighted-average useful life of total identifiable intangible assets acquired in the Business Combination, excluding goodwill, is 2.75 years.
Approximately $2.3 million of the goodwill recorded is tax deductible. The Company recorded a 100% impairment of the goodwill into Net assets of discontinued operations.
Transaction Costs
The Company incurred approximately $3.0 million in advisory, legal, accounting and management fees in conjunction with the Business Combination as of September 30, 2020.
F-11
Global Boatworks Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(5) PROPERTY AND EQUIPMENT
Property and Equipment consists of the following:
|
|
|
|
| |
|
|
September 30, 2020
|
|
|
December 31, 2019
|
Equipment
|
$
|
2,250
|
|
$
|
2,250
|
Less: accumulated amortization
|
|
(694)
|
|
|
(207)
|
Total P&E
|
$
|
1,556
|
|
$
|
2,043
|
The Company capitalized the cost of equipment purchased and is amortizing the cost over their estimated useful life of three years, beginning September 2019.
(6) INTANGIBLE ASSETS AND GOODWILL
Intangible assets consists of the following:
|
|
|
|
| |
|
|
September 30, 2020
|
|
|
December 31, 2019
|
Software
|
$
|
118,281
|
|
$
|
52,474
|
Website
|
|
8,400
|
|
|
3,000
|
Less: accumulated amortization
|
|
(28,168)
|
|
|
(5,645)
|
Total
|
$
|
98,513
|
|
$
|
49,829
|
Amortization expense was $23,229 and $5,645 for the six months ended September 30, 2020 and the year ended December 31, 2019, respectively. Amortization expense will be $13,304 for the fourth quarter 2020; $53,264; $31,993; $0; $0 and $0 for the years ended December 31, 2021; 2022, 2023, 2024 and 2025, respectively.
Pursuant to the merger agreement, R3Score recorded $4,367,459 in Goodwill. When management determined to divest the luxury floating living vessel business 100% impairment of the goodwill was recorded in assets of discontinued operations.
(7) ACCRUED EXPENSES
The major components of accrued expenses are:
|
|
| |
|
September 30, 2020
|
|
December 31, 2019
|
Accrued wages
|
$
61,458
|
|
$
21,492
|
Accrued interest
|
23,307
|
|
17,987
|
Total accrued expenses
|
$
84,765
|
|
$
39,479
|
F-12
Global Boatworks Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(8) CONVERTIBLE NOTES
Convertible notes were, as follows:
|
|
| |
|
September 30,
2020
|
|
December 31, 2019
|
Note 1
|
$
-
|
|
$
100,000
|
Note 2
|
-
|
|
10,000
|
Note 3
|
100,000
|
|
100,000
|
Note 4
|
15,000
|
|
15,000
|
Note 5
|
42,500
|
|
42,500
|
Note 6
|
57,500
|
|
57,500
|
Note 7
|
50,000
|
|
50,000
|
Note 8
|
25,000
|
|
25,000
|
Note 9
|
200,000
|
|
-
|
Note 10
|
10,000
|
|
-
|
Note 11
|
12,000
|
|
-
|
Note 12
|
25,000
|
|
-
|
Note 13
|
60,000
|
|
-
|
Note 14
|
50,000
|
|
-
|
Note 15
|
25,000
|
|
-
|
Note 16
|
10,000
|
|
-
|
Note 17
|
20,000
|
|
-
|
Note 18
|
5,000
|
|
-
|
Note 19
|
77,500
|
|
-
|
Note 20
|
7,067
|
|
-
|
Note 21
|
75,000
|
|
-
|
Note 22
|
60,000
|
|
-
|
Total convertible notes
|
926,567
|
|
400,000
|
Less current maturities
|
(374,567)
|
|
(110,000)
|
Long term portion
|
$
552,000
|
|
$
290,000
|
F-13
Global Boatworks Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(8) CONVERTIBLE NOTES, continued
NOTE 1: On September 18, 2018, the company entered into a eighteen month loan agreement in the amount of $100,000 with a third party. The note bears interest at the rate of 8%. At maturity, March 17, 2020 the Company recorded the note plus accrued interest of $11,989 as a liability to issue 6,195,192 shares of the Companys common stock.
NOTE 2: On April 18, 2019, the company entered into a eighteen month loan agreement in the amount of $10,000 with a third party. The note bears interest at the rate of 8%. At maturity, September 17, 2020 the lender converted the note plus accrued interest of $1,148 into 470,669 shares of the Companys common stock.
NOTE 3: On June 27, 2019, the company entered into a two year loan agreement in the amount of $100,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $6,315. This note is convertible into 4,842,624 shares of the Companys common stock.
NOTE 4: On July 1, 2019, the company entered into a two year loan agreement in the amount of $15,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $925 and is convertible into 726,021 shares of the Companys common stock.
NOTE 5: On July 12, 2019, the company entered into a two year loan agreement in the amount of $42,500 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $2,597 and is convertible into 2,054,158 shares of the Companys common stock.
NOTE 6: On July 12, 2019, the company entered into a two year loan agreement in the amount of $57,500 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $2,597 and is convertible into 2,779,155 shares of the Companys common stock.
NOTE 7: On August 27, 2019, the company entered into a two year loan agreement in the amount of $50,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $2,740 and is convertible into 2,467,967 shares of the Companys common stock.
NOTE 8: On October 1, 2019, the company entered into a two year loan agreement in the amount of $25,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $1,216 and is convertible into 1,195,293 shares of the Companys common stock.
NOTE 9: On March 25, 2020, the company entered into a two year loan agreement in the amount of $200,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $4,986 and is convertible into 5,607,539 shares of the Companys common stock.
NOTE 10: On April 9, 2020, the company entered into a two year loan agreement in the amount of $10,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $229 and is convertible into 279,818 shares of the Companys common stock.
NOTE 11: On July 3, 2020, the company entered into a two year loan agreement in the amount of $12,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $135 and is convertible into 331,984 shares of the Companys common stock.
NOTE 12: On July 8, 2020, the company entered into a two year loan agreement in the amount of $25,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $264 and is convertible into 691,168 shares of the Companys common stock.
F-14
Global Boatworks Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(8) CONVERTIBLE NOTES, continued
NOTE 13: On July 16, 2020, the company entered into a two year loan agreement in the amount of $60,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $567 and is convertible into 1,657,016 shares of the Companys common stock.
NOTE 14: On July 16, 2020, the company entered into a two year loan agreement in the amount of $50,000 with a third party. The note bears interest at the rate of 5%. On September 23, 2020 the lender converted the note plus accrued interest of $473 into 1,380,847 shares of the Companys common stock.
NOTE 15: On August 14, 2020, the company entered into a two year loan agreement in the amount of $25,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $161and is convertible into 687,724 shares of the Companys common stock.
NOTE 16: On September 15, 2020, the company entered into a two year loan agreement in the amount of $10,000 with a third party. The note bears interest at the rate of 5%.At September 30, 2020, this note has accrued interest of $11and is convertible into 226,551 shares of the Companys common stock.
NOTE 17: On September 15, 2020, the company entered into a two year loan agreement in the amount of $20,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $22 and is convertible into 453,103 shares of the Companys common stock.
NOTE 18: On September 22, 2020, the company entered into a two year loan agreement in the amount of $5,000 with a third party. The note bears interest at the rate of 5%. At September 30, 2020, this note has accrued interest of $0 and is convertible into 54,113 shares of the Companys common stock.
NOTE 19: On September 23, 2020 the Company entered into a 45 day loan agreement in the amount of $77,500 with a third party, replacing a previously undocumented loan. The note bears interest at the rate of 0%. At September 30, 2020, this note has accrued interest of $0 and is convertible into 500,000 shares of the Companys common stock.
NOTE 20: On September 23, 2020 the Company entered into a 45 day loan agreement in the amount of $7,067 with a third party, to settle accrued expenses. The note bears interest at the rate of 0%. At September 30, 2020, this note has accrued interest of $0 and is convertible into 50,000 shares of the Companys common stock.
NOTE 21: On September 23, 2020, the company entered into a two year loan agreement in the amount of $75,000 with a third party. The note bears interest at the rate of 6%. At September 30, 2020, this note has accrued interest of $86 and is convertible into 202,703 shares of the Companys common stock.
NOTE 22: On September 23, 2020, the company entered into a two year loan agreement in the amount of $60,000 with a third party. The note bears interest at the rate of 6%. At September 30, 2020, this note has accrued interest of $69 and is convertible into 162,162 shares of the Companys common stock.
(9) SHORT TERM LOANS - RELATED PARTY
During the period ended December 31, 2018, the CEO advanced $8,500 to the Company under an undocumented advance which carries no interest and has no stated maturity. During the year ended December 31, 2019, the CEO advanced an additional $5,000 under this undocumented advance.
F-15
Global Boatworks Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(10) LIABILITY TO ISSUE COMMON SHARES
In March 2020, a convertible note matured in the amount of $100,000 plus accrued interest of $11,989. By contract this note is convertible into 6,195,192 shares of common stock. As the shares have not yet been issued, they are accounted for as a liability to issue shares. In September 2020, a convertible note matured in the amount of $10,000 plus accrued interest of $1,164. By contract this note is convertible into 470,669 shares of common stock. As the shares have not yet been issued, they are accounted for as a liability to issue shares.
During the third quarter the Company recorded a liability to issue 20,405,000 shares of common stock in exchange for services valued at $96,031, or $0.005 per share.
(11) COMMITMENTS AND CONTINGENCIES
a) Leases: We occupy approximately four hundred (400) square feet of office space without charge at the residence of our Chief Executive Officer.
d) Legal Matters: From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of September 30, 2020, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.
(12) STOCKHOLDERS EQUITY
At September 30, 2020 and December 31, 2019, the Company has 5,000,000,000 shares of par value $0.0001 common stock authorized and 114,307,062 and 71,244,696 issued and outstanding, respectively. At September 30, 2020 and December 31, 2019, the Company has 10,000,000 shares of par value $0.0001 preferred stock authorized and 1,000,000 Redeemable Series A preferred shares issued and outstanding.
In the third quarter 2020, the Company issued 2,310,000 shares of common stock to six individuals/legal entities in exchange for the conversion of debt valued at $115,500, or $0.05 per share. The Company also issued 2,901,291 shares of common stock to consummate the acquisition. The Company issued 35,862,365 shares of common stock in exchange for services valued at $3,190,893, or $0.09 per share. The Company issued 1,988,709 shares of common stock to settle accrued expenses in the amount of $926,035, or $0.05 per share.
In the first quarter 2020, the Company issued 6,195,192 shares of common stock exchange for the conversion of debt valued at $111,989, or $0.02 per share.
In the third quarter 2019, the Company issued 5,164,388 shares of common stock in exchange for services valued at $24,305, or $0.005 per share.
In the second quarter 2019, the Company issued 10,401,930 shares of common stock in exchange for services valued at $48,954, or $0.005 per share. The Company also issued 4,249,676 shares of common stock in exchange for $20,000 cash, or $0.005 per share.
In the first quarter 2019, the Company issued 1,214,628 shares of common stock in exchange for services valued at $81,016, or $0.005 per share.
F-16
Global Boatworks Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(13) DISCONTINUED OPERATIONS
Subsequent to the merger agreement, management initiated a plan to divest the luxury living vessel business. As a result this segment is classified as discontinued operations. R3Score recorded $38,361 as the results of discontinued operations for the period ended September 30, 2020.
(14) CONCENTRATIONS OF RISK
The Company maintains its cash in bank deposit accounts, which may, at times, may exceed federally insured limits. The Company had no cash balances in excess of FDIC insured limits at September 30, 2020 and December 31, 2019, respectively.
(15) COVID-19 PANDEMIC
The Companys management is unable to predict the full impact of COVID-19 on the Company.
The corona virus pandemic and subsequent State of Maryland ordered shut down did not have a significant effect upon the Companys operations. The Companys access to capital was moderately curtailed , during the pandemic. The Company, as yet, does not know what the ultimate consequences of the pandemic will be upon its business model. Because of COVID-19 and the uncertainty surrounding economic conditions moving forward the Company cannot predict the full impact, although it has had only a moderate impact to date. The Companys staff and outside professionals were already working remotely prior to the onset of the pandemic.
(16) SUBSEQUENT EVENTS
a) Convertible debt: In November 2020, NOTE 19 was amended to $35,000 paid in cash on December 7, 2020 and the $42,500 balance converted into 350,000 shares of the Companys common stock. The cash payment portion of this note is in default.
In November 2020, NOTE 20 was amended to extend the maturity date to the latter of June 7,2021 or the date that the Company raises $1.5 million or more in new capital.
b) Liability to issue common shares: In October 2020, the Company issued the 20,405,000 shares of common stock in exchange for services valued at $96,031, or $0.005 per share. In December 2020, the Company issued the 6,195,192 shares of common stock finalizing the conversion of the $100,000 note balance plus $11,989 accrued interest.
c) Stockholders equity: In November 2020, the Company authorized the designation of 1,000,000 shares of Preferred Stock Series B. This Series B has no voting rights; receives dividends at a rate of 6%; is redeemable for 180 days at an increasing redemption premium to a maximum of 135%; beginning180 days after issuance is convertible into common stock at a 35% discount to the then current trading price of the common stock and each such conversion is limited to a maximum of 4.99% of the them issued and outstanding common stock.
F-17