NOTES TO CONDENSED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
NOTE 1 - DESCRIPTION OF BUSINESS:
The Company is a Nevada corporation, originally formed as a Utah corporation under the name State Cycle, Inc. on August 7, 1974. The Company re-domiciled to the state of Nevada and changed its name to X Rail Enterprises, Inc. on November 5, 2015, at which time its primary business changed from mining to rail transportation, passenger excursions, rail car construction and rail related operations and services. Effective November 4, 2017, the Company changed its name to Las Vegas Xpress, Inc. On April 13, 2020, the Company entered into an asset purchase agreement (the “Agreement”) with an entity affiliated with the Company’s CEO, whereby the Company would acquire certain intellectual property in connection with a planned change in business to assist first responders with data access and transfer in times of crisis using geospatial technology.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Financial Statement Presentation:
The accompanying unaudited interim financial statements of Maptelligent, Inc., (the “Company”) are condensed and have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. However, the results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any other future period. These interim financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2022.
Use of Estimates:
The preparation of financial statements in conformity with 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 reported periods. Amounts could materially change in the future.
Cash and Cash Equivalents:
The Company considers all highly liquid holdings with maturities of three months or less at the time of purchase to be cash equivalents.
Fair Value of Financial Instruments:
The Company follows ASC 820, “Fair Value Measurements”, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.
The three-level hierarchy for fair value measurements is defined as follows:
Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;
Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active;
Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement
The following table summarizes fair value measurements by level, measured at fair value on a recurring basis:
March 31, 2023 | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Liabilities | | | | | | | | | | | | |
Derivative Liabilities | | $ | - | | | $ | - | | | $ | 2,822,096 | | | $ | 2,822,096 | |
December 31, 2022 | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Liabilities | | | | | | | | | | | | |
Derivative Liabilities | | $ | - | | | $ | - | | | $ | 1,756,192 | | | $ | 1,756,192 | |
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company used a Black Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Equipment
Equipment, consisting of geospatial scanners and software is reported at cost less accumulated depreciation and impairment, if any. Depreciation expense is recognized over the assets’ estimated useful lives of five years using the straight-line method. Major additions and improvements are capitalized as additions to the property and equipment accounts, while replacements, maintenance and repairs that do not improve or extend the life of the respective assets, are expensed as incurred. Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts. Upon sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is recognized.
Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company has early adopted the ASU and determined that there has been no material impact to the financial statements.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company used net cash in operating activities of $137,552 for the three months ended March 31, 2023, and had an accumulated deficit of $38,057,657 and a negative working capital of $3,784,453 as of March 31, 2023. Management believes that it will need additional equity or debt financing to be able to implement its business plan. Given the lack of revenue, capital deficiency and negative working capital, there is substantial doubt about the Company’s ability to continue as a going concern.
While we expect the impacts of COVID-19 may have an adverse effect on our business, financial condition and results of operations, we are unable to predict the extent or nature of these impacts at this time.
Management is attempting to raise additional equity and debt to sustain operations until it can market its services and achieve profitability. The successful outcome of future activities cannot be determined at this time and there are no assurances that, if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results.
The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 4 - EQUIPMENT
| | March 31, 2023 | | | December 31, 2022 | |
| | Cost | | | Accumulated Depreciation | | | Net Book Value | | | Cost | | | Accumulated Depreciation | | | Net Book Value | |
Equipment | | $ | 50,753 | | | $ | (8,459 | ) | | $ | 42,294 | | | $ | 50,753 | | | $ | (5,921 | ) | | $ | 44,832 | |
Software | | | 3,675 | | | | (612 | ) | | | 3,063 | | | | 3,675 | | | | (429 | ) | | | 3,246 | |
Total equipment | | $ | 54,428 | | | $ | (9,071 | ) | | $ | 45,357 | | | $ | 54,428 | | | $ | (6,350 | ) | | $ | 48,078 | |
Depreciation expense for the three months ending March 31, 2023 and 2022, was $2,721 and $0, respectively.
NOTE 5 - NOTES PAYABLE
The Company has notes payable as follows:
| | March 31, | | | December 31, | |
| | 2023 | | | 2022 | |
Notes payable | | $ | 340,000 | | | $ | 340,000 | |
| | | 340,000 | | | | 340,000 | |
Less debt discount | | | - | | | | - | |
Total outstanding notes payable | | $ | 340,000 | | | $ | 340,000 | |
During the three months ended March 31, 2023 and 2022, the Company recorded debt discount amortization of $0 and $28,635, respectively, and interest expense of $10,060 and $13,020, respectively. As of March 31, 2023 and December 31, 2022, the Company had accrued interest of $111,728 and $101,668, respectively.
Notes payable issued in Fiscal year 2020
On December 10, 2020 (the “Closing Date”), the Company entered into a Securities Purchase Agreement (the “SPA”), pursuant to which the Company purchased two promissory notes, each with a principal amount of $220,000, for a total principal amount of $440,000. The first Note (“Initial Note”) was issued by the Company on the Closing Date and second Note was issued in February 2021. The Initial Note has an interest rate of 12% per annum and a maturity date of June 10, 2022. The Company received $195,000 from the Initial Note and recorded $25,000 as debt discount. In addition to the Initial Note, on the Closing Date, the Company issued a warrant (“Warrant”) to acquire 146,667 shares of Common Stock at an exercise price of $1.50 per share. The Warrant contains a cashless exercise provision and expires on the fifth anniversary of the Warrant’s issuance date. The Company identified conversion features embedded within warrants issued during the period ended December 31, 2020. The Company has determined that the conversion feature of the Warrants represents an embedded derivative since the conversion price includes a reset provision which could cause adjustments upon conversion. The Company accounted for the issuance of the Warrants as a derivative and recorded derivative liability of $92,400 as debt discount. During the year ended December 31, 2020, the Company recorded amortization of discount of $6,755. Any amount of Principal or Interest on the Initial Note which is not paid when due shall bear interest at the rate of the lesser of twenty-four percent (24%) per annum and the maximum amount permitted under law from the due date thereof until the same is paid. In October of 2022, the Initial Note was amended for payments to be made: $50,000 in October 2022, $50,000 in December 2022 and $120,000 plus all accrued interest in March 2023. As of March 31, 2023 the October scheduled payment was made, the December and March scheduled payments were not made and the Note is in default.
Notes payable issued in Fiscal year 2021
On February 10, 2021, the second note payable (“Second Note”), as part of the Securities Purchase Agreement entered into on the Closing Date was issued. The Second Note has an interest rate of 12% per annum and a maturity date of August 10, 2022. The Company received $195,000 and recorded $25,000 as debt discount. In addition, the Company issued a warrant to acquire 146,667 shares of Common Stock at an exercise price of $1.50 per share. The Company has determined that the conversion feature of the Warrants represents an embedded derivative since the conversion price includes a reset provision which could cause adjustments upon conversion. The Company accounted for the issuance of the Warrants as a derivative and recorded derivative liability of $31,533 as debt discount. During the year ended December 31, 2021, on the two notes the Company recorded total amortization of debt discount of $111,886. Any amount of Principal or Interest on the Second Note which is not paid when due shall bear interest at the rate of the lesser of twenty-four percent (24%) per annum and the maximum amount permitted under law from the due date thereof until the same is paid. In October of 2022, the Second Note was amended for payments to be made: $50,000 in October 2022, $50,000 in December 2022 and $120,000 plus all accrued interest in March 2023. As of March 31, 2023 the October scheduled payment was made, the December and March scheduled payments were not made and the Note is in default.
NOTE 6 - CONVERTIBLE NOTES PAYABLE
The Company has convertible notes payable as follows:
| | March 31, | | | December 31, | |
| | 2023 | | | 2022 | |
| | | | | | |
Promissory note, dated June 2, 2017, bearing interest of 4% annually, payable within a year | | $ | 18,260 | | | $ | 18,260 | |
Promissory note, dated January 5, 2018, bearing interest of 10% annually, payable on July 5, 2018 | | | 33,249 | | | | 33,249 | |
Promissory note, dated April 20, 2018, bearing interest of 12% annually, payable on April 20, 2019 | | | 50,000 | | | | 50,000 | |
Promissory note, dated April 30, 2018, bearing interest of 12% annually, payable on April 30, 2019 | | | 50,000 | | | | 50,000 | |
Promissory note, dated November 23, 2020, bearing interest of 10% annually, payable on November 23, 2021 | | | 200,000 | | | | 200,000 | |
Promissory note, dated February 12, 2021, bearing interest of 10% annually, payable on February 12, 2022 | | | 50,000 | | | | 50,000 | |
Promissory note, dated March 29, 2021, bearing interest of 10% annually, payable on March 29, 2022 | | | 100,000 | | | | 100,000 | |
Promissory note, dated April 29, 2022, bearing interest of 10% annually, payable on April 29, 2023 | | | - | | | | 12,750 | |
Promissory note, dated July 14, 2022, bearing interest of 10% annually, payable on July 14, 2023 | | | - | | | | 39,250 | |
Convertible notes before debt discount | | | 501,509 | | | | 553,509 | |
Less debt discount | | | - | | | | (15,253 | ) |
Total outstanding convertible notes payable | | $ | 501,509 | | | $ | 538,256 | |
During the three months ended March 31, 2023 and 2022, the Company recognized interest expense of $12,464 and $17,245 and amortization of debt discount, included in interest expense, of $41,627 and $36,439, respectively. As of March 31, 2023 and December 31, 2022, the Company recorded accrued interest of $154,753 and $146,190, respectively.
Conversion
During the three months ended March 31, 2023, the Company converted convertible note principal of $52,000 and accrued interest of $3,901 for total debt of $55,901 into 229,818,269 shares of common stock. The corresponding derivative liabilities at the dates of conversion of $97,450, was settled through additional paid in capital.
During the three months ended March 31, 2022, the Company converted convertible note principal and accrued interest of $56,438 into 23,100,476 shares of common stock. The corresponding derivative liability at the date of conversion of $84,011, was settled through additional paid in capital.
The Company has entered into various convertible notes with variable conversion rates that create derivative liabilities. A description of outstanding convertible notes payable is as follows:
Promissory Notes - Issued in fiscal year 2017
During the year ended December 31, 2017, the Company issued a total of $265,900 of notes with the following terms:
| · | Terms ranging from 9 months to 12 months. Certain note is due on demand. |
| · | Annual interest rates of 4% - 12%. |
| · | Convertible at the option of the holders at issuance. |
| · | Conversion prices are typically based on the discounted (35% - 50% discount) lowest trading prices of the Company’s shares during various periods prior to conversion, the closing sale price. |
| · | Certain notes are currently in default. Default interest rates are 24%. |
Promissory Notes - Issued in fiscal year 2018
During the year ended December 31, 2018, the Company issued a total of $325,000 of notes with the following terms:
| · | Terms ranging from 6 months to 12 months. |
| · | Annual interest rates of 8% - 12%. |
| · | Convertible at the option of the holders at issuance. |
| · | Conversion prices are typically based on the discounted (25 - 50% discount) average closing prices or lowest trading prices of the Company’s shares during various periods prior to conversion. Certain note has a fixed conversion price of $0.0001. |
| · | Notes are currently in default. Default interest rates are 24%. |
Promissory Notes - Issued in fiscal year 2020
During the year ended December 31, 2020, the Company issued a note of $100,000 with the following terms:
| · | Term is 12 months. |
| · | Annual interest rate of 10%. |
| · | Convertible at the option of the holders at issuance. |
| · | Conversion price is the lesser of a) $0.40 or b) 50% of the lowest Trading Price during 20 trading days |
During the year ended December 31, 2021, the Company issued an additional tranche of $100,000.
Promissory Notes - Issued in fiscal year 2021
During the year ended December 31, 2021, the Company issued a total of $373,750 in notes with the following terms:
| · | Term is 12 months. |
| · | Annual interest rate of 10%. |
| · | Convertible at the option of the holders at issuance. |
| · | Conversion price is the lesser of a) $0.10 or b) 50% of the lowest Trading Price during 20 trading days or Conversion price is 65% of the lowest Trading Price during 10 trading days. |
The notes include original issue discounts and financing costs of $18,750 and the Company received cash of $355,000.
Promissory Notes - Issued in fiscal year 2022
During the year ended December 31, 2022, the Company issued a total of $78,000 in notes with the following terms:
| · | Term is 12 months. |
| · | Annual interest rate of 10%. |
| · | Convertible at the option of the holders at issuance. |
| · | Conversion price is the lesser of a) $0.10 or b) 50% of the lowest Trading Price during 20 trading days or Conversion price is 65% of the lowest Trading Price during 10 trading days. |
The notes include original issue discounts and financing costs of $8,000 and the Company received cash of $70,000.
Derivative liabilities
The Company determined that the exercise feature of the warrants met the definition of a liability in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock. The Company will bifurcate the embedded conversion option in the note once the note becomes convertible and account for it as a derivative liability. The fair value of the warrants was recorded as a debt discount being amortized to interest expense over the term of the note.
The Company assessed its convertible notes in accordance with ASC 815 and determined the were derivative liabilities associated with the convertible notes.
The Company valued the conversion features using the Black Scholes valuation model. The fair value of the derivative liability for the note that became convertible for the three months ended March 31, 2023 amounted to $26,374 and was recognized as a debt discount to the notes. The fair value of the derivative liability for all the notes and warrants that became convertible for the year ended December 31, 2022 amounted to $305,707. $238,339 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $67,368 was recognized as a “day 1” derivative loss.
NOTE 7 - WARRANTS
During the year ended December 31, 2021, the Company issued 146,667 warrants with an exercise price of $1.50 per common share, for a period of 5 years (Note 5).
The Company determined that the warrants qualify for derivative accounting as a result of the reset feature, which led to no explicit limit to the number of shares to be delivered upon future settlement of the conversion options.
The following summarizes the Company’s warrant activity:
| | Warrants | | | Weighted average exercise price | | | Weighted average remaining life (Year) | |
Outstanding - December 31, 2021 | | | 293,334 | | | $ | 1.50 | | | | 4.03 | |
| | | | | | | | | | | | |
Granted | | | - | | | | - | | | | - | |
Outstanding - December 31, 2022 | | | 293,334 | | | $ | 1.50 | | | | 3.03 | |
| | | | | | | | | | | | |
Granted | | | - | | | | - | | | | - | |
Outstanding - March 31, 2023 | | | 293,334 | | | $ | 1.50 | | | | 2.78 | |
The intrinsic value of the warrants as of March 31, 2023 is $0. All of the outstanding warrants are exercisable as of March 31, 2023.
NOTE 8 - DERIVATIVE INSTRUMENTS
The Company analyzed the conversion options in its convertible notes and warrants for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that the instrument should be classified as a liability since the discounted variable-rate conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.
Fair Value Assumptions Used in Accounting for Derivative Liabilities.
ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.
The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of March 31, 2023. The Black-Scholes model requires six basic data inputs: the exercise or strike price, expected time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model.
The estimated fair values of the liabilities measured on a recurring basis are as follows:
| | Three Months Ended | | | Year Ended | |
| | March 31, | | | December 31, | |
| | 2023 | | | 2022 | |
Expected life in years | | 0.75 - 2.87 years | | | 0.82 - 3.37 years | |
Stock price volatility | | 308% - 498 | % | | 161% - 1007 | % |
Discount rate | | | 4.64 | % | | 0.97% - 4.25 | % |
Expected dividends | | None | | | None | |
The following table summarizes the changes in the derivative liabilities:
Fair Value Measurements Using Significant Observable Inputs (Level 3) | |
| | | |
Balance - December 31, 2021 | | $ | 5,159,248 | |
| | | | |
Addition of new derivatives recognized as debt discounts | | | 238,339 | |
Addition of new derivatives recognized as loss on derivatives | | | 67,368 | |
Settled upon conversion of debt | | | (452,793 | ) |
Gain on change in fair value of the derivative | | | (3,255,970 | ) |
Balance - December 31, 2022 | | $ | 1,756,192 | |
| | | | |
Addition of new derivatives recognized as debt discounts | | | 26,374 | |
Addition of new derivatives recognized as loss on derivatives | | | - | |
Settled upon conversion of debt | | | (97,450 | ) |
Gain on change in fair value of the derivative | | | 1,136,980 | |
Balance - March 31, 2023 | | $ | 2,822,096 | |
The aggregate (gain) loss on derivatives was as follows:
| | March 31, | | | March 31, | |
| | 2023 | | | 2022 | |
Addition of new derivatives recognized as loss on derivatives | | $ | - | | | $ | - | |
Change in fair value of the derivative | | | 1,136,980 | | | | (1,870,464 | ) |
| | $ | 1,136,980 | | | $ | (1,870,464 | ) |
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company takes exemption from ASC 842, “Leases,” as it rents an office at 2831 St. Rose Pkwy, Henderson, Nevada on month-to-month basis for $75 a month.
Litigation
On July 15, 2022, the Company filed a lawsuit with the Eight Circuit District Court in Clark County, Nevada, naming Albert Koenigsberg and Geocommand, Inc. as defendants. The Company sought relief for breach of contract, breach of the covenant of good faith and fair dealing, conversion, unjust enrichment, and breach of fiduciary duty. The Company’s allegations included, among other claims, that Mr. Koenigsberg, during his prior time as an executive of the Company, utilized unauthorized funds, entered into improper agreements, and unaccounted for the Company’s finances. On or about December 30, 2022, the Company was successful in obtaining a total judgment of $57,320.94 against Geocommand, solely, with interest continuing to accrue until paid in full, as follows:
| 1) | The principal sum of $43,500; |
| 2) | Interest calculated at 6.75% on the principal amount from the date of service of the Complaint, August 11, 2022, until this judgment is paid in full, calculated at $8.05 per day, which amounts to $1,867.60 through March 31, 2023, which amount continues to accrue unless and until paid in full; and |
| 3) | Reasonable attorneys’ fees in the amount of $10,892.50; and |
| 4) | Costs of suit in the amount of $1,785.34. |
The matter as it relates to defendant Albert Koenigsberg is ongoing and is scheduled to go to trial later this year.
On August 13, 2021, the SEC filed a complaint in the United States District Court for the Southern District of New York against multiple defendants, which include GPL Ventures LLC, Alexander Dillon, and Cosmin Panait, among other parties (altogether “Defendants”). The Complaint indicates that the Defendants participated in a penny stock fraud scheme. The SEC also charged certain of the Defendants with operating as unregistered dealers, and obtained emergency relief to halt their ongoing conduct. Additionally, the complaint alleges that Defendants falsely represented to their brokers that GPL Ventures was not involved in any stock promotions with respect to the shares GPL Ventures was depositing and selling into the market. Furthermore, the complaint also charges Dillon, Panait and the GPL entities with operating as unregistered dealers, and given their ongoing conduct, the SEC sought and obtained an order temporarily restraining these defendants and freezing their assets until further order of the Court. To date, there has been no action taken on the notes with GPL Ventures and it is not known how the Court with address the matter as it relates to the Company. The only relationship is convertible notes payable that are outstanding with the Company. There has been no collection efforts on the part of GPL Ventures LLC. The Company is not a party to the legal action taken by the SEC.
Other than disclosed above, there are no other actions, suits, proceedings, inquiries 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.
As of the date of this Quarterly Report on Form 10-Q, except as set forth herein, management believes that there are no claims against us, which it believes will result in a material adverse effect on our business or financial condition.
NOTE 10 - EQUITY
Authorization of Common and Preferred Stock
The Company is authorized to issue 10,000,000,000 shares of common stock and 1,000,000 shares of preferred A (each share convertible on one for one base for common stock, no voting rights), 10,000 shares of preferred A-2 (each share convertible into four times the sum of all shares of common stock issued and outstanding with the same voting rights), 1,000,000 shares of preferred B (each share convertible into 10 shares of common stock and has 10 votes for any election) and 1,000 shares of preferred C (each share is not convertible and has voting rights equal to four times the sum of total common stock shares issued and outstanding plus the total number of series B, A and A-2 that are issued and outstanding).
Preferred A Stock
As of March 31, 2023 and December 31, 2022, 98,796 shares of the Company’s Preferred A Stock were issued and outstanding.
Preferred C Stock
As of March 31, 2023 and December 31, 2022, 20 shares of the Company’s Preferred C Stock were issued and outstanding.
Common Stock
During the three months ended March 31, 2023, the Company issued 229,818,269 common shares for conversion of debt of $55,901.
NOTE 11 - NET INCOME (LOSS) PER COMMON SHARE
Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods. Diluted net income per common share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the periods. Common equivalent shares consist of convertible preferred stock and convertible notes that are computed using the if-converted method, and outstanding warrants that are computed using the treasury stock method. Antidilutive stock awards consist of stock options that would have been antidilutive in the application of the treasury stock method.
| | Three Months Ended | |
| | March 31, | |
| | 2023 | | | 2022 | |
Numerator: | | | | | | |
Net income (loss) | | $ | (1,357,263 | ) | | $ | 1,692,974 | |
(Gain) loss on change in fair value of derivatives | | | 1,136,980 | | | | (1,870,464 | ) |
Interest on convertible debt | | | 12,464 | | | | 17,245 | |
Net income (loss) - diluted | | $ | (207,819 | ) | | $ | (160,245 | ) |
| | | | | | | | |
Denominator: | | | | | | | | |
Weighted average common shares outstanding | | | 644,065,845 | | | | 254,660,918 | |
Effect of dilutive shares | | | 5,913,181,084 | | | | 801,291,914 | |
Diluted | | | 6,557,246,929 | | | | 1,055,952,832 | |
| | | | | | | | |
Net income (loss) per common share: | | | | | | | | |
Basic | | $ | (0.00 | ) | | $ | 0.01 | |
Diluted | | $ | (0.00 | ) | | $ | (0.00 | ) |
For the three months ended March 31, 2023 and 2022, the convertible instruments and warrants are anti-dilutive and therefore, have been excluded from earnings (loss) per share.
NOTE 12 - SUBSEQUENT EVENTS
The Company analyzed events occurring subsequent to March 31, 2023 through the date these financial statements were issued and noted no items requiring disclosure.