See the accompanying notes to these audited condensed
consolidated financial statements
See the accompanying notes to these audited condensed
consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies
applied in the presentation of the accompanying financial statements follows:
Basis and business presentation
Marijuana Company of America, Inc. (The “Company”)
was incorporated under the laws of the State of Utah in October 1985 under the name Mormon Mint, Inc. The corporation was originally a
startup company organized to manufacture and market commemorative medallions related to the Church of Jesus Christ of Latter Day Saints.
On January 5, 1999, Bekam Investments, Ltd. acquired one hundred percent of the common shares of the Company and spun the Company off
changing its name Converge Global, Inc. From August 13, 1999 until November 20, 2002, the Company focused on the development and implementation
of Internet web content and e-commerce applications. In October 2009, in a 30 for 1 exchange, the Company merged with Sparrowtech, Inc.
for the purpose of exploration and development of commercially viable mining properties. From 2009 to 2014, we operated primarily in the
mining exploration business.
In 2015, the Company changed its business model
to a marketing and distribution company for medical marijuana. In conjunction with the change, the Company changed its name to Marijuana
Company of America, Inc. At the time of the transition in 2015, there were no remaining assets, liabilities or operating activities of
the mining business.
On September 21, 2015, the Company formed H Smart,
Inc, a Delaware corporation as a wholly owned subsidiary for the purpose of operating the hempSMART brand. H Smart, Inc. is also registered
with the California Secretary of State as a foreign corporation.
On February 1, 2016, the Company formed MCOA
CA, Inc., a California corporation as a wholly owned subsidiary to facilitate mergers, acquisitions and the offering of investments or
loans to the Company.
On May 3, 2017, the Company formed Hempsmart
Limited, a United Kingdom corporation as a wholly owned subsidiary for the purpose of future expansion into the European market.
On May 23, 2018, the Company formed H Smart,
LLC in Washington State. On January 21, 2019, the Company converted this entity into a Washington State corporation named H Smart, Inc.
The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries: H Smart, Inc., H Smart, LLC, Hempsmart Limited and MCOA CA, Inc. All significant
intercompany balances and transactions have been eliminated in consolidation.
Revenue Recognition
For annual reporting
periods after December 15, 2017, the Financial Accounting Standards Board (“FASB”) made effective ASU 2014-09 “Revenue
from Contracts with Customers,” to supersede previous revenue recognition guidance under current U.S. GAAP. Revenue is now recognized
in accordance with FASB ASC Topic 606, Revenue Recognition. The objective of the guidance is to establish the principles that an entity
shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue
and cash flows arising from a contract with a customer. The core principal is to recognize revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for
those goods or services. Two options were made available for implementation of the standard: the full retrospective approach or modified
retrospective approach. The guidance became effective for annual reporting periods beginning after December 15, 2017, including interim
periods within that reporting period, with early adoption permitted. We adopted FASB ASC Topic 606 for our reporting period as of the
year ended December 31, 2017, which made our implementation of FASB ASC Topic 606 effective in the first quarter of 2018. We decided to
implement the modified retrospective transition method to implement FASB ASC Topic 606, with no restatement of the comparative periods
presented. Using this transition method, we applied the new standards to all new contracts initiated on/after the effective date. We also
decided to apply this method to any incomplete contracts we determine are subject to FASB ASC Topic 606 prospectively. For the year ended
December 31, 2021, there were no incomplete contracts. As is more fully discussed below, we are of the opinion that none of our contracts
for services or products contain significant financing components that require revenue adjustment under FASB ASC Topic 606.
Identification of Our Contracts with Our Customers.
Contracts included in our application of FASB
ASC Topic 606, consist completely of sales contracts between us and our customers that create enforceable rights and obligations. For
the year ended December 31, 2021, our sales contracts included the following parties: us, our sales associates and our customers. Our
sales contracts were offered by us and our sales associates to our customers directly through our web site. Our sales contracts, and those
formalized by our sales associates, are represented by an electronic order form, which contains the contractual elements of offer for
sale, acceptance and the provision of consideration consisting of the buyer’s payment, which is concurrent with our delivery of
hempSMART™ product. Since our hempSMART™ product sales contracts are consummated upon receipt of the customer’s acceptance
of our offer; our concurrent receipt of our customers payment; and, our delivery of the agreed to hempSMART™ product, all parties
are equally committed to fulfilling their respective obligations under the sales contracts. Further, the sales contracts specifically
identify (1) parties; (2) quantity of hempSMART™ product ordered; (3) price; and, (4) subject, and so each respective party’s
rights are identifiable and the payment terms are defined. Since the sales contracts are consummated concurrent with offer, acceptance,
payment and delivery of the hempSMART™ product ordered, we recognize revenue and cash flows as the principal from the respective
sales contract transactions as they complete. Further, because our sales contracts are offered, accepted and consummated concurrently,
our ability to collect revenue is immediate. We receive no payments for agreements that do not qualify as a contract. If customers agree
to multiple sales contracts when they are entered into at or near the same time, our policy is to combine those contracts if: (1) the
sales contracts are negotiated as a single package; (2) the payment amount of one sales contract is dependent upon another sales contract;
(3) our performance obligations of delivering multiple hempSMART™ products can be determined to be part of a single transaction.
Since the nature of the entry into and consummation of our sales contracts occur concurrently, there are no changes or modifications to
the terms of the sales contracts that would modify the enforceable rights and performance obligations of the parties and that would materially
alter the timing of our receipt of revenue from our sales contracts.
Identifying the Performance Obligations in
Our Sales Contracts.
In analyzing our sales contracts, our policy
is to identify the distinct performance obligations in a sales contract arrangement. In determining our performance obligations under
our sales contracts, we consider that the terms and conditions of sales are explicitly outlined in our sales contracts and are so distinct
and identifiable within the context of each sales contract, and so are not integrated with other goods, or constitute a modification or
customization of other goods in our contracts, or are highly dependent or highly integrated with other goods in our sales contracts. Thus,
our performance obligations are singularly related to our promise to provide the hempSMART™ products upon receipt of payment. We
offer an assurance warranty on our hempSMART™ products that allows a customer to return any hempSMART™ products within thirty
days if not satisfied for any reason. Assurance warranties are not identifiable performance obligations, since they are electable at the
whim of the customer for any reason. However, we do account for returns of purchase prices if made.
Determination of the Price in Our Sales Contracts.
The transaction
prices in our sales contract is the amount of consideration we expect to be entitled to for transferring promised hempSMART™ products.
The consideration amount is fixed and not variable. The transaction price is allocated to the identified performance obligations in the
contract. These allocated amounts are recognized as revenue when or as the performance obligations are fulfilled, which is concurrently
upon receipt of payment. There are no future options for a contract when considering and determining the transaction price. We exclude
amounts third parties will eventually collect, such as sales tax, when determining the transaction price. Since the timing between receiving
consideration and transferring goods or services is immediate, our sales contract do not have a significant financing component, i.e.,
recognizing revenue at the amount that reflects the cash payment that the customer would have made at the time the goods or services were
transferred to them (cash selling price), rather than significantly before or after the goods or services are provided.
Allocation of the Transaction Price of Our
Sales Contracts.
Our sales contracts are not considered multi-element
arrangements which require the fulfillment of multiple performance obligations. Rather, our sales contracts include one performance obligation
in each contract. As such, from the outset, we allocate the total consideration to each performance obligation based on the fixed and
determinable standalone selling price, which we believe is an accurate representation of what the price is in each transaction.
Recognition of Revenue when the Performance
Obligation is Satisfied.
A performance obligation is satisfied when or
as control of the good or service is transferred to the customer. The standard defines control as “the ability to direct the use
of, and obtain substantially all of the remaining benefits from, the asset.” (ASC 606-10-20). For performance obligations that are
fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation. As noted above, our single performance
obligation sales contracts are singularly related to our promise to provide the hempSMART™ products to the customer upon receipt
of payment, which occurs concurrently and when, upon completion, allows us under our revenue recognition policy to realize revenue.
Product Sales
Revenue from product sales, including delivery
fees, FOB shipping point, is recognized when (1) an order is placed by the customer; (2) the price is fixed and determinable when the
order is placed; (3) the customer is required to and concurrently pays for the product upon order; and, (4) the product is shipped. The
evaluation of our recognition of revenue after the adoption of FASB ASC 606 did not include any judgments or changes to judgments that
affected our reporting of revenues, since our product sales, both pre and post adoption of FASB ASC 606, were evaluated using the same
standards as noted above, reflecting revenue recognition upon order, payment and shipment, which all occurs concurrently when the order
is placed and paid for by the customer, and the product is shipped. Further, given the facts that (1) our customers exercise discretion
in determining the timing of when they place their product order; and, (2) the price negotiated in our product sales is fixed and determinable
at the time the customer places the order, and there is no delay in shipment, we are of the opinion that our product sales do not indicate
or involve any significant customer financing that would materially change the amount of revenue recognized under the sales transaction,
or would otherwise contain a significant financing component for us or the customer under FASB ASC Topic 606.
The Company determined that upon adoption of
ASC 606 there were no quantitative adjustments converting from ASC 605 to ASC 606 respecting the timing of our revenue recognition because
product sales revenue is recognized upon customer order, payment and shipment, which occurs concurrently.
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, disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Significant estimates include the fair value of the Company’s stock, stock-based compensation, fair values
relating to derivative liabilities, debt discounts and the valuation allowance related to deferred tax assets. Actual results may differ
from these estimates.
Cash
The Company considers cash to consist of cash on hand
and temporary investments having an original maturity of 90 days or less that are readily convertible into cash.
Concentrations of credit risk
The Company’s financial instruments that are
exposed to a concentration of credit risk are cash and accounts receivable. Occasionally, the Company’s cash and cash equivalents
in interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically reviewed
by senior management.
Accounts Receivable
Trade receivables are carried at their estimated
collectible amounts. Trade credit is generally extended on a short-term basis; thus, trade receivables do not bear interest. Trade
accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current
financial condition. Net accounts receivable for year end December 31, 2021 and December 31, 2020 were $121,588 and $6,542, respectively.
Allowance for Doubtful Accounts
Any charges to the allowance for doubtful accounts
on accounts receivable are charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level
management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical
write-off percentages and the current status of accounts receivable. Accounts receivable are charged off against the allowance when collectability
is determined to be permanently impaired. As of December 31, 2021, and 2020, allowance for doubtful accounts was $3,267 and $0, respectively.
Inventories
Inventories are stated at the lower of cost or market
with cost being determined on a first-in, first-out (FIFO) basis. The Company writes down its inventory for estimated obsolescence or
unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about
future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory
write-downs may be required. During the periods presented, there were no inventory write-downs. The
value of inventory on December 31, 2021 and December 31, 2020 was $252,199 and $103,483, respectively .
Cost of sales
Cost of sales is comprised of cost of product sold,
packaging, and shipping costs.
Stock-Based Compensation
The Company measures the cost of services received
in exchange for an award of equity instruments including stock, stock options and restricted stock awards based on the fair value of the
award. For employees and directors, the fair value of the award is measured on the grant date and recognized over the period during which
services are required to be provided in exchange for the award, usually the vesting period. For non-employees, share-based compensation
awards are recorded at either the fair value of the services rendered or the fair value of the share-based payments, whichever is more
readily determinable. Stock and restricted stock and option awards are based on the closing price of the stock underlying the awards on
the grant date. Stock-based compensation expense is recorded by the Company in the same expense classifications in the statements of operations,
as if such amounts were paid in cash. As of December 31, 2021, and 2020, the number of outstanding stock options to purchase shares of
common stock was 0 and 0 shares, respectively. 0 and 0 shares were vested as of December 31, 2021 and 2020, respectively.
Net Loss per Common Share, basic and diluted
The Company computes earnings (loss) per share under
Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share is computed
by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings
per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities
into common stock using the “treasury stock” and/or “if converted” methods as applicable.
The computation of basic and diluted income (loss)
per share as of December 31, 2021 and 2020 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if
their exercise prices were greater than the average market price of the common stock during the period.
Potentially dilutive securities excluded from the
computation of basic and diluted net loss per share are as follows:
| Schedule of Potentially Dilutive Securities Excluded from the Computation of Basic and Diluted Net Loss Per Share | |
| | |
| |
| | |
2021 | | |
2020 | |
| Convertible notes payable | |
| 1,282,203,301 | | |
| 137,219,847 | |
| Options to purchase common stock(1) | |
| 0 | | |
| 0 | |
| Warrants to purchase common stock | |
| 293,054,702 | | |
| 110,846,817 | |
| Total | |
| 1,575,258,003 | | |
| 248,066,664 | |
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. For financial statement purposes,
property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 3 to 5
years.
Goodwill and Intangible Assets
Goodwill is carried at cost and is not amortized.
The Company tests goodwill for impairment on an annual basis at the end of each fiscal year, relying on a number of factors including
operating results, business plans, economic projections, anticipated future cash flows and marketplace data. Company management uses its
judgment in assessing whether goodwill has become impaired between annual impairment tests according to specifications set forth in ASC
350. The Company completed an evaluation of goodwill at December 31, 2021 and determined that the goodwill was not impaired.
The Company recognizes an acquired intangible asset
apart from goodwill whenever the intangible asset arises from contractual or other legal rights, or when it can be separated or divided
from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related contract,
asset or liability. Such intangibles are amortized over their useful lives. Impairment losses are recognized if the carrying amount of
an intangible asset subject to amortization is not recoverable from expected future cash flows and its carrying amount exceeds its fair
value.
We evaluate long-lived assets, including intangible
assets and goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of
an asset to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds
its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair value is
determined based on discounted cash flows, appraised values or management's estimates, depending upon the nature of the assets. We have
recorded $0 and $22,658 in impairment charges related to our JV investments during the years ended December 31, 2021 and 2020, respectively.
Investments
The Company follows Accounting Standards Codification
subtopic 321-10, Investments-Equity Securities (“ASC 321-10) which requires the accounting for equity security to be measured at
fair value with changes in unrealized gains and losses are included in current period operations. Where an equity security is without
a readily determinable fair value, the Company may elect to estimate its fair value at cost minus impairment plus or minus changes resulting
from observable price changes (See Note 4).
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets is primarily
comprised of advance payments made to third parties for independent contractors’ services or other general expenses. Prepaid services
and general expenses are amortized over the applicable periods which approximate the life of the contract or service period. The balance
of prepaid insurance at December 31, 2021 and December 31, 2020 was $61,705 and $55,783.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets is primarily
comprised of advance payments made to third parties for independent contractors’ services or other general expenses. Prepaid services
and general expenses are amortized over the applicable periods which approximate the life of the contract or service period. The balance
of prepaid insurance at December 31, 2021 and December 31, 2020 was $61,705 and $55,783.
Derivative Financial Instruments
The Company classifies as equity any contracts
that (i) require physical settlement or net-share settlement or (ii) provide the Company with a choice of net-cash settlement or settlement
in its own shares (physical settlement or net-share settlement) providing that such contracts are indexed to the Company’s own stock.
The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net cash
settle the contract if an event occurs and if that event is outside the Company’s control) or (ii) gives the counterparty a choice
of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assesses classification of its
common stock purchase warrants and other free standing derivatives at each reporting date to determine whether a change in classification
between equity and liabilities is required.
The Company’s free-standing derivatives consisted
of conversion options embedded within its issued convertible debt and warrants with anti-dilutive (reset) provisions. The Company evaluated
these derivatives to assess their proper classification in the balance sheet using the applicable classification criteria enumerated
under GAAP. The Company determined that certain conversion and exercise options do not contain fixed settlement provisions.
The convertible notes contain a conversion feature and warrants have a reset provision such that the Company could not ensure it would
have adequate authorized shares to meet all possible conversion demands.
As such, the Company was required to record the conversion
feature and the reset provision which does not have fixed settlement provisions as liabilities and mark to market all such derivatives
to fair value at the end of each reporting period.
The Company has adopted a sequencing policy that reclassifies
contracts (from equity to assets or liabilities) with the most recent inception date first. Thus, any available shares are allocated first
to contracts with the most recent inception dates.
Fair Value of Financial Instruments
Fair value estimates discussed herein are based upon
certain market assumptions and pertinent information available to management as of December 31, 2021 and 2020. The respective carrying
value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts
payable. Fair values were assumed to approximate carrying values for cash, accounts payables and short-term notes because they are short
term in nature.
Accrued liabilities
As of December 31, 2021 and 2020, the balance of accrued
liabilities on the Company’s consolidated balance sheets consisted of the following:
| Schedule of consolidated balance sheets | |
| | | |
| | |
| | |
Dec 31, 2021 | |
Dec 31, 2020 |
| | |
| |
|
| Accrued interest | |
$ | 197,407 | | |
$ | 365,279 | |
| Accrued insurance payable | |
| 41,115 | | |
| 29,192 | |
| Accrued vacation liability | |
| 25,417 | | |
| 6,990 | |
| Accrued other expenses | |
| 6,750 | | |
| — | |
| Net Loss from Operations | |
$ | 270,689 | | |
$ | 401,461 | |
Advertising
The Company follows the policy of charging the costs
of advertising to expense as incurred. The Company charged to operations $236,563 and $129,504 for the years ended December 31, 2021 and
2020, respectively, as advertising costs.
Income Taxes
Deferred income tax assets and liabilities are determined
based on the estimated future tax effects of net operating loss and credit carry forwards and temporary differences between the tax basis
of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records
an estimated valuation allowance on its deferred income tax assets if it is not more likely than not that these deferred income tax assets
will be realized.
The Company recognizes a tax benefit from an uncertain
tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on
the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured
based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of December 31,
2021, and 2020, the Company has not recorded any unrecognized tax benefits.
Segment Information
Accounting Standards Codification subtopic Segment
Reporting 280-10 (“ASC 280-10”) establishes standards for reporting information regarding operating segments in annual financial
statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. ASC
280-10 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified
as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating
decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The information disclosed
herein materially represents all of the financial information related to the Company’s two principal operating segments, hempSMART
and cDistro.
The following table represents the Company’s
hempSMART business.
| Schedule of Operation statement | |
| | | |
| | |
| | |
For the Years ended |
| | |
Dec 31, 2021 | |
Dec 31, 2020 |
| | |
| |
|
| | |
| |
|
| Revenues | |
$ | 93,575 | | |
$ | 280,653 | |
| | |
| | | |
| | |
| Cost of Goods Sold | |
| 61,267 | | |
| 159,304 | |
| | |
| | | |
| | |
| Gross Profit | |
| 32,308 | | |
| 121,349 | |
| | |
| | | |
| | |
| Expense | |
| | | |
| | |
| Depreciation Expense | |
| 10,103 | | |
| 5,933 | |
| Stock-based Compensation | |
| 104,685 | | |
| 207,955 | |
| Selling and Marketing | |
| 443,569 | | |
| 393,799 | |
| Payroll and Related expenses | |
| 252,123 | | |
| 165,491 | |
| General and Admin Expenses | |
| 456,322 | | |
| 217,288 | |
| Total Expense | |
| 1,266,802 | | |
| 990,466 | |
| | |
| | | |
| | |
| Net Loss from Operations | |
$ | (1,234,494 | ) | |
$ | (869,117 | ) |
| | |
| | | |
| | |
| | |
| | | |
| | |
The following table represents the Company's cDistro business
segment for the years ended December 31, 2021 and 2020 since it was acquired:
| | |
| | | |
| | |
| | |
For the Years ended |
| | |
Dec 31, 2021 | |
Dec 31, 2020 |
| | |
| |
|
| | |
| |
|
| Revenues | |
$ | 901,535 | | |
$ | — | |
| | |
| | | |
| | |
| Cost of Goods Sold | |
| 810,937 | | |
| — | |
| | |
| | | |
| | |
| Gross Profit | |
| 90,598 | | |
| — | |
| | |
| | | |
| | |
| Expense | |
| | | |
| | |
| Depreciation and amortization expense | |
| 91,358 | | |
| — | |
| Stock-based Compensation | |
| — | | |
| — | |
| Selling and Marketing | |
| 4,549 | | |
| — | |
| Payroll and Related expenses | |
| 110,000 | | |
| — | |
| General and Admin Expenses | |
| 163,355 | | |
| — | |
| Total Expense | |
| 369,262 | | |
| — | |
| | |
| | | |
| | |
| Net Loss from Operations | |
$ | (278,664 | ) | |
$ | — | |
Recent Accounting Pronouncements
There are various updates recently issued, most of
which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have
a material impact on the Company’s financial position, results of operations or cash flows.
Adoption of Accounting Standards
In May 2014, the Financial Accounting Standards Board
(the “FASB”) issued ASU 2014-09 “Revenue from Contracts with Customers” to supersede previous revenue recognition
guidance under current U.S. GAAP. The guidance presents a single five-step model for comprehensive revenue recognition that requires an
entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services. Two options are available for implementation of the
standard which is either the retrospective approach or cumulative effect adjustment approach. The guidance becomes effective for annual
reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted.
The Company has determined that the adoption of ASU-2014-09
will not have a material impact on its financial statements.
COVID-19 Impacts on Accounting Policies and Estimates
COVID-19 Impacts on Accounting Policies and Estimates In light of the currently
unknown ultimate duration and severity of COVID-19, we face a greater degree of uncertainty than normal in making the judgments and estimates
needed to apply our significant accounting policies. As COVID-19 continues to develop, we may make changes to these estimates and judgments
over time, which could result in meaningful impacts to our financial statements in future periods.
Subsequent Events
The Company evaluates
events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation,
the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the
financial statements, except as disclosed.
Subsequent to December 31, 2021, the Company has sold a total
of 90,000,000 shares of common stock at a fixed price of $0.001 per share for a total of $90,000 in cash to accredited investors under
the Company’s active Regulation A offering, qualified by the SEC on October 20, 2021. There is no assurance that the Company will
raise any further funds under the Regulation A offering.
Subsequent to December 31, 2021, the Company has sold a total
of 706,250,000 shares of common stock at a fixed price of $0.0008 per share for a total of $565,000 in cash to accredited investors under
the Company’s active Regulation A offering, qualified by the SEC on October 20, 2021 and amended on December 15, 2021. There is
no assurance that the Company will raise any further funds under the Regulation A offering.
On February 17, 2022, the Company issued 12,500,000 shares of
common stock to SRAX, Inc. in full conversion of a promissory note dated August 7, 2020, at a per-share conversion price of $0.0016.
On April 1, 2022, the Company issued 76,923,077 shares of restricted
common stock to North Equities USA Ltd., valued at $100,000, or $0.0013 per share, in compensation pursuant to a consulting agreement
dated December 24, 2021.
On April 5, 2022, the Company issued 38,762,344 shares of common
stock to an accredited investor in partial conversion of a promissory note dated May 25, 2021, at a per-share conversion price of $0.00039.
On April 6, 2022, the Company issued 435,540,070 shares of restricted
common stock to Beach Labs, Inc., pursuant to the earnout agreement between the Company and Beach Labs executed in relation to the acquisition
of cDistro, Inc.
On April 7, 2022, the Company made a promissory note in the
principal amount of $59,743.96 to a related party.
NOTE 2 – GOING CONCERN AND MANAGEMENT’S
LIQUIDITY PLANS
The accompanying financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
As shown in the accompanying financial statements during year ended December 31, 2021, the Company incurred net losses of $10,191,450
and used cash in operations of $3,984,108. These factors among others may indicate that the Company will be unable to continue as a going
concern for a reasonable period of time.
The Company’s primary source of operating funds
in 2021 and 2020 has been from funds generated from proceeds from the sale of common stock and the issuance of convertible and other debt.
The Company has experienced net losses from operations since its inception but expects these conditions to improve in 2022 and beyond
as it develops its business model. The Company has stockholders’ deficiencies at December 31, 2021 and requires additional financing
to fund future operations.
The Company’s existence is dependent upon management’s
ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s
financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements
do not include any adjustments that might result should the Company be unable to continue as a going concern.
NOTE 3 – PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 2021 and 2020 is summarized as
follows:
| Schedule of Property and Equipment | |
| | |
| |
| | |
2021 | | |
2020 | |
| Computer equipment | |
$ | 30,155 | | |
$ | 20,143 | |
| Machinery | |
| 104,102 | | |
| — | |
| Furniture and fixtures | |
| 13,278 | | |
| 5,140 | |
| Subtotal | |
| 147,535 | | |
| 25,283 | |
| Less accumulated depreciation | |
| (25,947 | ) | |
| (18,741 | ) |
| Property and equipment, net | |
$ | 121,588 | | |
$ | 6,542 | |
Property and equipment are stated at cost and depreciated
using the straight-line method over their estimated useful lives of 3 years. 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.
Depreciation expense was $101,334 and $5,933 for the
year ended December 31, 2021 and 2020.
NOTE 4 – INVESTMENTS
Bougainville Ventures, Inc. Joint Venture
On March 16, 2017, we entered into a joint venture
agreement with Bougainville Ventures, Inc., a Canadian corporation. The purpose of the joint venture was for the Company and Bougainville
to (i) jointly engage in the development and promotion of products in the legalized cannabis industry in Washington State; (ii) utilize
Bougainville’s high quality cannabis grow operations in the State of Washington, where it claimed to have an ownership interest
in real property for use within the legalized cannabis industry; (iii) leverage Bougainville’s agreement with a I502 Tier 3 license
holder to grow cannabis on the site; provide technical and management services and resources including, but not limited to: sales and
marketing, agricultural procedures, operations, security and monitoring, processing and delivery, branding, capital resources and financial
management; and, (iv) optimize collaborative business opportunities. The Company and Bougainville agreed to operate through a Washington
State Limited Liability Company, and BV-MCOA Management, LLC was organized in the State of Washington on May 16, 2017.
As our contribution to the joint venture, the Company
committed to raise not less than $1,000,000 to fund joint venture operations, based upon a funding schedule. The Company also committed
to providing branding and systems for the representation of cannabis related products and derivatives comprised of management, marketing
and various proprietary methodologies directly tailored to the cannabis industry.
The Company and Bougainville’s agreement
provided that funding provided by the Company would contribute towards the joint venture’s ultimate purchase of the land consisting
of a one-acre parcel located in Okanogan County, Washington, for joint venture operations.
As disclosed on Form 8-K on December 11, 2017,
the Company did not comply with the funding schedule for the joint venture. On November 6, 2017, the Company and Bougainville amended
the joint venture agreement to reduce the amount of the Company’s commitment from $1,000,000 to $800,000, and also required the
Company to issue Bougainville 15 million shares of the Company’s restricted common stock. The Company completed its payments pursuant
to the amended agreement on November 7, 2017, and on November 9, 2017, issued to Bougainville 15 million shares of restricted common stock.
The amended agreement provided that Bougainville would deed the real property to the joint venture within thirty days of its receipt of
payment.
Thereafter, the Company determined that Bougainville
had no ownership interest in the property in Washington State, but rather was a party to a purchase agreement for real property that was
in breach of contract for non-payment. Bougainville also did not possess an agreement with a Tier 3 I502 license holder to grow Marijuana
on the property. Nonetheless, as a result of funding arranged for by the Company, Bougainville and an unrelated third party, Green Ventures
Capital Corp., purchased the land, but did not deed the real property to the joint venture. Bougainville failed to pay delinquent property
taxes to Okanogan County and to date, the property has not been deeded to the joint venture.
To clarify the respective contributions and roles
of the parties, the Company offered to enter into good faith negotiations to revise and restate the joint venture agreement with Bougainville.
The Company diligently attempted to communicate with Bougainville to accomplish a revised and restated joint venture agreement, and efforts
towards satisfying the conditions to complete the subdivision of the land by the Okanogan County Assessor. However, Bougainville failed
to cooperate or communicate with the Company in good faith, and failed to pay the delinquent taxes on the real property that would allow
for sub-division and the deeding of the real property to the joint venture.
On August 10, 2018,
the Company advised its independent auditor that Bougainville did not cooperate or communicate with the Company regarding its requests
for information concerning the audit of Bougainville’s receipt and expenditures of $800,000 contributed by the Company in the joint
venture agreement. Bougainville had a material obligation to do so under the joint venture agreement. The Company believes that some of
the funds it paid to Bougainville were misappropriated and that there was self-dealing with respect to those funds. Additionally, the
Company believes that Bougainville misrepresented material facts in the joint venture agreement, as amended, including, but not limited
to, Bougainville’s representations that: (i) it had an ownership interest in real property that was to be deeded to the joint venture;
(ii) it had an agreement with a Tier 3 # I502 cannabis license holder to grow cannabis on the real property; and, (iii) that clear title
to the real property associated with the Tier 3 # I502 license would be deeded to the joint venture thirty days after the Company made
its final funding contribution. As a result, on September 20, 2018, the Company filed suit against Bougainville Ventures, Inc., BV-MCOA
Management, LLC, Andy Jagpal, Richard Cindric, et al. in Okanogan County Washington Superior Court, case number 18-2- 0045324. The Company’s
complaint seeks legal and equitable relief for breach of contract, fraud, breach of fiduciary duty, conversion, recession of the joint
venture agreement, an accounting, quiet title to real property in the name of the Company, for the appointment of a receiver, the return
to treasury of 15 million shares issued to Bougainville, and, for treble damages pursuant to the Consumer Protection Act in Washington
State. The registrant has filed a lis pendens on the real property. The case is currently in litigation.
In connection with the agreement, the Company recorded a cash
investment of $1,188,500 to the Joint Venture during 2017. This was comprised of 49.5% ownership of BV-MCOA Management LLC, and was accounted
for using the equity method of accounting. The Company recorded an annual impairment in 2017 of $792,500, reflecting the Company’s
percentage of ownership of the net book value of the investment. During 2018, the Company recorded equity losses of $37,673 and $11,043
for the first and second quarters respectively, and recorded an annual impairment of $285,986 for the year ended December 31, 2018, at
which time the Company determined the investment to be fully impaired due to Bougainville’s breach of contract and resulting litigation,
as discussed above.
Natural Plant Extract of California
Natural Plant Extract of California & Subsidiaries
Joint Venture; On April 15, 2019, the Company entered into a joint venture agreement with Natural Plant Extracts of California, Inc. and
subsidiaries. The purpose of the joint venture was to utilize Natural Plant Extracts’ California and City cannabis licenses to jointly
operate a business named “Viva Buds” to operate a licensed cannabis distribution service in California. In exchange for acquiring
20% of Natural Plant Extracts’ common stock, the Company agree to pay two million dollars and issue Natural Plant Extract one million
dollars’ worth of the Company’s restricted common stock. As of February 3, 2020, the Company was in arrears in its payment
obligations under the joint venture agreement, and the parties entered into a settlement and release of all claims terminating the joint
venture. The parties agreed to reduce the Company’s equity ownership in Natural Plant Extracts from % to %. The Company also
agreed to pay Natural Plant Extracts $and the balance of $.15 paid in a convertible promissory note issued with terms allowing
Natural Plant Extracts to convert the note into common stock at a 50% discount to the closing price of MCOA’s common stock as of
the maturity date. As of the date of this filing, the Company satisfied its payment obligations under the settlement agreement.
Cannabis Global Share Exchange
Share Exchange with Cannabis Global, Inc. On
September 30, 2020, the Company entered into a securities exchange agreement with Cannabis Global, Inc., a Nevada corporation. By virtue
of the agreement, the Company issued 650,000,000 shares of its unregistered common stock to Cannabis Global in exchange for 7,222,222
shares of Cannabis Global unregistered common stock. The Company and Cannabis Global also entered into a lock up leak out agreement which
prevents either party from sales of the exchanged shares for a period of 12 months. Thereafter the parties may sell not more than the
quantity of shares equaling an aggregate maximum sale value of $20,000 per week, or $80,000 per month until all Shares and Exchange Shares
are sold.
Eco Innovation Group Share Exchange
On February 26, 2021, we entered into a Share Exchange Agreement with
Eco Innovation Group, Inc., a Nevada corporation quoted on OTC Markets Pink (“ECOX”) to acquire the number of shares of ECOX’s
common stock, equal in value to $650,000 based on the per-share price of $0.06, in exchange for the number of shares of MCOA common stock
equal in value to $650,000 based on the closing price for the trading day immediately preceding the effective date (the “Share Exchange
Agreement”). For both parties, the Share Exchange Agreement contains a “true-up” provision requiring the issuance
of additional common stock in the event that a decline in the market value of either parties’ common stock should cause the aggregate
value of the stock acquired pursuant to the Share Exchange Agreement to fall below $650,000.
Complementary to the Share Exchange Agreement,
the Company and ECOX entered into a Lock-Up Agreement dated February 26, 2021 (the “Lock-Up Agreement”), providing that the
shares of common stock acquired pursuant to the Share Exchange Agreement shall be subject to a lock-up period preventing its sale for
a period of 12 months following issuance and limiting the subsequent sale to aggregate maximum sale value of $20,000 per week, or $80,000
per month. On October 1, 2021, we entered into a First Amendment to Lock-Up Agreement between the Company and Eco Innovation Group, Inc.,
dated and effective October 1, 2021 (the “Amended Lock-Up Agreement”), which amends that certain Lock-Up Agreement entered
into between the Company and Eco Innovation Group, Inc. on February 26, 2021 (the “Original Lock-Up Agreement”). The Amended
Lock-Up Agreement amends the Original Lock-Up Agreement in one respect, by amending the initial lock-up period from 12 months following
its effective date to 6 months following its effective date. All other terms and conditions of the Original Lock-Up Agreement remain unaffected.
Joint Ventures in Brazil and Uruguay – Development
Stage
On October 1, 2020, we entered into two Joint Venture
Agreements with Marco Guerrero, a director of the Company, dated September 30, 2020, to form joint venture operations in Brazil and in
Uruguay to produce, manufacture, market and sell the Company’s hempSMART™ products in Latin America, and will also work to
develop and sell hempSMART™ products globally. The Joint Venture Agreements contain equal terms for the formation of joint venture
entities in Uruguay and Brazil. The Brazilian joint venture will be headquartered in São Paulo, Brazil, and will be named HempSmart
Produtos Naturais Ltda. (“HempSmart Brazil”). The Uruguayan joint venture will be headquartered in Montevideo, Uruguay and
will be named Hempsmart Uruguay S.A.S. (“HempSmart Uruguay”). Both are in the development stage. Under the Joint Venture Agreements,
the Company will acquire a 70% equity interest in both HempSmart Brazil and HempSmart Uruguay. A minority 30% equity interest in both
HempSmart Brazil and HempSmart Uruguay will be held by newly formed entities controlled by Mr. Guerrero, our director and a successful
Brazilian entrepreneur. The Company will provide capital in the amount of $50,000 to both HempSmart Brazil and HempSmart Uruguay under
the Joint Venture Agreements, for a total capital obligation of $100,000. As of December 31, 2020, this amount has not been disbursed.
It is expected that the proceeds of the initial capital contribution will be used for contracting with third-party manufacturing facilities
in Brazil and Uruguay, and related infrastructure and employment of key personnel. The boards of directors of HempSmart Brazil and HempSmart
Uruguay will consist of three directors, elected by the joint venture partners. As part of the Joint Venture Agreements, the Company will
license, on a royalty-free basis, certain of its intellectual property regarding the Company’s existing products to HempSmart Brazil
and HempSmart Uruguay to enable the joint ventures to manufacture and sell the Company’s products in Brazil, Uruguay, and for export
to other Latin American countries, the United States, and globally in accordance with the terms of the Joint Venture Agreements. The Joint
Venture Agreements provide the partners with a right of first offer. Under this right, each partner may trigger an “interest sale”
right of first offer process at any time pursuant to which the other partners may either acquire the triggering partner’s interest
in the joint ventures, or permit the triggering partner to sell its interest to a third party. In addition, the Company, as majority partner,
may trigger a compulsory buy-sell procedure in the event a joint venture is frustrated in its intent or purpose, pursuant to which the
Company could pursue a sale of all or substantially all of the joint venture. Subject to certain exceptions, the joint venture partners
may not transfer their interests in HempSmart Brazil and HempSmart Uruguay. The Joint Venture Agreements contain customary terms, conditions,
representations, warranties and covenants of the parties for like transactions.
Acquisition of cDistro, Inc.
On June 29, 2021, we acquired 100% of the capital
stock of cDistro, Inc., a Florida-based hemp and CBD product distribution business incorporated in the State of Nevada (“cDistro”)
by a statutory merger and share exchange. After the acquisition, cDistro’s founding partner and Chief Executive Officer, Ronald
Russo, remains its Chief Executive Officer, and our Chief Financial Officer Jesus Quintero serves as cDistro’s Chief Financial Officer.
Asset Purchase Agreement with VBF Brands, Inc.
On October 6, 2021, the Company, through its wholly
owned subsidiary Salinas Diversified Ventures, Inc., a California corporation, entered into an Asset Purchase Agreement, Management Services
Agreement, Cooperation Agreement and Employment Agreement with VBF Brands, Inc., a California corporation (“VBF”), a wholly
owned subsidiary of Sunset Island Group, Inc., a Colorado corporation (“SIGO”). VBF and SIGO agreed to transfer to the Company
all of VBF’s outstanding stock to the Company, and appointed our CEO and CFO Jesus Quintero as President of VBF.
VBF owns various fixed assets including machinery
and equipment, a lease for a 10,000 square foot facility located at 20420 Spence Road, Salinas, California, 93908, leasehold improvements,
good-will, inventory, tradenames including “VBF Brands,” trade secrets, intellectual property, and other tangible and intangible
properties, including licenses issued by the City of Salinas, County of Monterey, and the State of California to operate a licensed cannabis
nursery, cultivation facility, and operations for the manufacturing and distribution of cannabis and cannabis products.
VBF and SIGO agreed to sell and transfer to the Company
all of VBF’s outstanding stock, and, by virtue of the Management Services Agreement, appoint Mr. Jesus Quintero as President of
VBF, vesting management and control of VBF’s licensed cannabis operations in the Company. Concurrently, VBF and Livacich entered
into a Cooperation Agreement, whereby VBF and Livacich agreed to cooperate to facilitate the transfer of ownership of VBF, which includes
licenses issued by the City of Salinas, County of Monterey, and the State of California, to operate a cannabis nursery, cultivation facility
and manufacturing and distribution operations to the Company. The Company also agreed to retain Livacich as Chief Executive Officer for
a term of two years and agreed to compensate her with a salary including a signing cash bonus of $250,000, and a $250,000 performance
cash bonus payable after six months after the Effective Date. The bonus is conditioned upon Livacich meeting an agreed to “Net Revenue”
target of one million dollars ($1,000,000) from VBF’s operations during the six-month period after closing of the Asset Purchase
Agreement, and her compliance with the terms and conditions of this Asset Purchase Agreement, the Management Services Agreement and the
Cooperation Agreement.
As consideration for the transaction, the Company
agreed to assume two secured convertible promissory notes issued by SIGO to St. George Investments, LLC, a Utah limited liability company
(“St. George”) (the “SIGO Notes”). The first note was issued December 8, 2017, in the original face amount of
$170,000.00, and the second was issued February 13, 2018, in the original face amount of $4,245,000.00. SIGO also issued warrants to St.
George to purchase common shares in SIGO, and fifty (50) shares of SIGO’s preferred stock. St. George agreed to cancel the warrants
and preferred shares upon the Company’s assumption of the SIGO Notes.
Under the Asset Purchase Agreement, the closing is
conditioned upon certain conditions precedent, specifically (i) VBF and SIGO’s full corporate authorization, consent and execution
of this Agreement; (ii) VBF’s sale to MCOA of 100% of the issued and outstanding shares of VBF; (iii) full corporate authorization,
consent compliance with and execution of the Management Services Agreement and Cooperation Agreement; (iv) SIGO’s disclosure of
the Agreement on Form 8-K with the Securities and Exchange Commission; (v) full cooperation in MCOA’s financial auditing of VBF
in accordance with ASC 805, including providing unrestricted access to all VBF corporate and financial records and providing all necessary
cooperation with VBF financial personnel; (vi) full cooperation in aiding and assisting Buyer with its change of ownership applications
with the relevant licensing authorities; (vii) the warranty of truthful representations and execution of and compliance with the terms
and conditions of the Executive Employment Agreement, Management Services Agreement and the Cooperation Agreement.
As of the date of this filing, the conditions precedent
to the closing of the Asset Purchase Agreement remain in the process of implementation, so that the Asset Purchase Agreement closing has
not yet occurred pursuant to its terms. Legal counsel for MCOA is currently in the process of working with VBF, Salinas Diversified Ventures,
and the relevant state and local governments to effect the change of control and license transfers necessary to close the Asset Purchase
Agreement.
MARIJUANA COMPANY OF AMERICA, INC.
INVESTMENT ROLL-FORWARD
AS OF DECEMBER 31, 2021
| Schedule of Investment Roll Forward | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| | |
| | |
| |
| | |
INVESTMENTS |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| | |
TOTAL | | |
Consolidated | | |
Cannabis Global | | |
| | |
| | |
Hempsmart | | |
Lynwood | | |
Natural Plant | | |
Salinas Ventures | | |
VBF | | |
| |
| | |
INVESTMENTS | | |
Eliminations | | |
Inc. | | |
ECOX | | |
cDistro | | |
Brazil | | |
JV | | |
Extract | | |
Holding | | |
BRANDS | | |
Vivabuds | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Investment, Beginning balance | |
0 | | |
0 | | |
0 | | |
0 | | |
0 | | |
0 | | |
0 | | |
0 | | |
0 | | |
0 | | |
0 | |
| Investments made during quarter ended 03-31-19 | |
| 0 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter 03-31-19 equity method Loss | |
| 0 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Unrealized gains on trading securities - quarter ended 03-31-19 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance @03-31-19 | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Investments made during quarter ended 06-30-19 | |
$ | 3,073,588 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | 3,000,000 | | |
| - | | |
| - | | |
$ | 73,588 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter 06-30-19 equity method Income (Loss) | |
$ | (29,414 | ) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | (6,291 | ) | |
| | | |
| | | |
$ | (23,123 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Unrealized gains on trading securities - quarter ended 06-30-19 | |
$ | 0 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance @06-30-19 | |
$ | 3,044,174 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 2,993,709 | | |
$ | 0 | | |
$ | 0 | | |
$ | 50,465 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Investments made during quarter ended 09-30-19 | |
$ | 186,263 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | 186,263 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter 09-30-19 equity method Income (Loss) | |
$ | (139,926 | ) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | (94,987 | ) | |
| | | |
| | | |
$ | (44,939 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Sale of trading securities during quarter ended 09-30-19 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Unrealized gains on trading securities - quarter ended 09-30-19 | |
$ | 0 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance @09-30-19 | |
$ | 3,090,511 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 2,898,722 | | |
$ | 0 | | |
$ | 0 | | |
$ | 191,789 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Investments made during quarter ended 12-31-19 | |
$ | 129,812 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | 129,812 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter 12-31-19 equity method Income (Loss) | |
$ | (102,944 | ) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | (23,865 | ) | |
| | | |
| | | |
$ | (79,079 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Reversal of Equity method Loss for 2019 | |
$ | 272,285 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 125,143 | | |
| | | |
| | | |
$ | 147,142 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Impairment of investment in 2019 | |
$ | (2,306,085 | ) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | (2,306,085 | ) | |
| | | |
| | | |
$ | 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Loss on disposition of investment | |
$ | (389,664 | ) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | (389,664 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Sale of trading securities during quarter ended 12-31-19 | |
$ | 0 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Unrealized gains on trading securities - quarter ended 12-31-19 | |
$ | 0 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance @12-31-19 | |
$ | 693,915 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 693,915 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Equity Loss for Quarter ended 03-31-20 | |
| 0 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Recognize Joint venture liabilities per JV agreement @03-31-20 | |
| 0 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Impairment of Equity Loss for Quarter ended 03-31-20 | |
| 0 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Unrealized gains on trading securities - quarter ended 03-31-19 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance @03-31-20 | |
$ | 693,915 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 693,915 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Equity Loss for Quarter ended 06-30-20 | |
| 0 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Impairment of Equity Loss for Quarter ended 06-30-20 | |
| 0 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Sales of of trading securities - quarter ended 06-30-20 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance @06-30-20 | |
$ | 693,915 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 693,915 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Global Hemp Group trading securities issued | |
| 650,000 | | |
| | | |
$ | 650,000 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Investment in Cannabis Global | |
| 0 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance @09-30-20 | |
$ | 1,343,915 | | |
$ | 0 | | |
$ | 650,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 693,915 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Unrealized gain on Global Hemp Group securities - 4th Quarter 2020 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Unrealized gains on Cannabis Global Inc securities - 4th Quarter 2020 | |
| 208,086 | | |
| | | |
$ | 208,086 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance @12-31-20 | |
$ | 1,552,001 | | |
$ | 0 | | |
$ | 858,086 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 693,915 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Investment in ECOX | |
| 650,000 | | |
| - | | |
| - | | |
$ | 650,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance @03-31-21 | |
$ | 2,202,001 | | |
$ | 0 | | |
$ | 858,086 | | |
$ | 650,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 693,915 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Investments made during quarter ended 06-30-21 | |
| 30,898 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 30,898 | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Unrealized gain on Global Hemp Group securities - 2nd quarter 2021 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance @06-30-21 | |
$ | 2,232,899 | | |
$ | 0 | | |
$ | 858,086 | | |
$ | 650,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 30,898 | | |
$ | 693,915 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Investments made during quarter ended 09-30-21 | |
| 68,200 | | |
| | | |
$ | 68,000 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 200 | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Sale of short-term investments in quarter ended- 09-30-21 | |
| 0 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance @09-30-21 | |
$ | 2,301,099 | | |
$ | 0 | | |
$ | 926,086 | | |
$ | 650,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 30,898 | | |
$ | 693,915 | | |
$ | 200 | | |
$ | 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Investments made during quarter ended 12-31-21 | |
| 5,087,079 | | |
| | | |
| | | |
| | | |
$ | 2,975,174 | | |
$ | 90,923 | | |
| | | |
| | | |
| | | |
$ | 2,020,982 | | |
| | |
| Consolidated Eliminations @12/31/21 | |
| (5,060,821 | ) | |
| (5,060,821 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance @12-31-21 | |
$ | 2,327,357 | | |
$ | (5,060,821 | ) | |
$ | 926,086 | | |
$ | 650,000 | | |
$ | 2,975,174 | | |
$ | 90,923 | | |
$ | 30,898 | | |
$ | 693,915 | | |
$ | 200 | | |
$ | 2,020,982 | | |
$ | 0 | |
| Schedule of Debts Amounts Related to Joint Venture Investments | |
| |
|
| |
| |
| |
|
| Loan
Payable |
| |
| | |
| |
Natural | |
| |
| |
| |
General |
| | |
TOTAL | |
Plant | |
Robert
L | |
VBF | |
| |
Operating |
| | |
Debt | |
Extract | |
Hymers
III | |
BRANDS | |
Vivabuds | |
Expense |
| | |
| |
| |
| |
| |
| |
|
| Balance
@03-31-19 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Quarter
03-31-19 loan borrowings | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter
03-31-19 debt conversion to equity | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance
@03-31-19 © | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter
03-31-19 loan borrowings | |
| 3,675,000 | | |
$ | 2,000,000 | | |
| - | | |
| - | | |
$ | 0 | | |
$ | 1,675,000 | |
| Quarter
03-31-19 debt conversion to equity | |
| (1,411,751 | ) | |
$ | (349,650 | ) | |
| | | |
| | | |
| | | |
$ | (1,062,101 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance
@06-30-19 (d) | |
| 2,263,249 | | |
| 1,650,350 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 612,899 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter
09-30-19 loan borrowings | |
| 582,000 | | |
| | | |
| | | |
| | | |
| | | |
$ | 582,000 | |
| Quarter
09-30-19 debt conversion to equity | |
| (187,615 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | (187,615 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance
@09-30-19 (e) | |
| 2,657,634 | | |
| 1,650,350 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 1,007,284 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter
12-31-19 loan borrowings | |
| 2,726,964 | | |
$ | 596,784 | | |
$ | 4,221 | | |
| | | |
| | | |
$ | 2,125,959 | |
| Impairment
of investment in 2019 | |
| (2,156,142 | ) | |
$ | (2,156,142 | ) | |
| | | |
| | | |
| | | |
| | |
| Loss
on settlement of debt in 2019 | |
| 50,093 | | |
$ | 50,093 | | |
| | | |
| - | | |
| - | | |
| | |
| Adjustment
to reclassify amount to accrued liabilities | |
| (85,000 | ) | |
$ | (85,000 | ) | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance
@12-31-19 (f) | |
$ | 3,193,549 | | |
$ | 56,085 | | |
$ | 4,221 | | |
$ | 0 | | |
$ | 0 | | |
$ | 3,133,243 | |
| Quarter
03-31-20 loan borrowings | |
$ | 441,638 | | |
| | | |
| | | |
| | | |
| | | |
$ | 441,638 | |
| Quarter
03-31-20 debt conversion to equity | |
$ | (619,000 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | (619,000 | ) |
| Recognize
Joint venture liabilities per JV agreement @03-31-20 | |
$ | 0 | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter
03-31-20 Debt Discount adjustments | |
$ | 24,138 | | |
| | | |
$ | 24,138 | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance
@03-31-20 (g) | |
$ | 3,040,325 | | |
$ | 56,085 | | |
$ | 28,359 | | |
$ | 0 | | |
$ | 0 | | |
$ | 2,955,881 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter
06-30-20 loan borrowings, net | |
$ | 65,091 | | |
| | | |
$ | 65,091 | | |
| | | |
| | | |
| | |
| Quarter
06-30-20 debt conversion to equity | |
$ | (727,118 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | (727,118 | ) |
| Quarter
06-30-20 reclass of liability | |
$ | 0 | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter
06-30-20 Debt Discount adjustments | |
$ | 405,746 | | |
| | | |
($ | 27,715 | ) | |
| | | |
| | | |
$ | 433,461 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance
@06-30-20 (h) | |
$ | 2,784,044 | | |
$ | 56,085 | | |
$ | 65,735 | | |
$ | 0 | | |
$ | 0 | | |
$ | 2,662,224 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter
09-30-20 debt conversion to equity | |
$ | (606,472 | ) | |
$ | (56,085 | ) | |
($ | 65,735 | ) | |
| - | | |
| - | | |
$ | (484,652 | ) |
| Debt
Settlement during Q3 2020 | |
$ | 0 | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance
@09-30-20 (i) | |
$ | 2,177,572 | | |
($ | 0 | ) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 2,177,572 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter
12-31-20 loan borrowings, net | |
$ | 309,675 | | |
| | | |
| | | |
| | | |
| | | |
$ | 309,675 | |
| Quarter
12-31-20 Debt Discount adjustments | |
$ | (71,271 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | (71,271 | ) |
| Quarter
12-31-20 debt conversion to equity | |
$ | (993,081 | ) | |
| | | |
| | | |
| | | |
| | | |
$ | (993,081 | ) |
| Balance
@12-31-20 (j) | |
$ | 1,422,895 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 1,422,895 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter
03-31-21 debt conversion to equity | |
$ | (1,309,016 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | (1,309,016 | ) |
| Quarter
03-31-21 loan borrowings, net | |
$ | 145,000 | | |
| | | |
| | | |
| | | |
| | | |
$ | 145,000 | |
| Balance
@03-31-21 (k) | |
$ | 258,879 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 258,879 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter
06-30-21 loan borrowings, net | |
$ | 1,251,779 | | |
| - | | |
$ | 185,000 | | |
| - | | |
| - | | |
$ | 1,066,779 | |
| Balance
@06-30-21 (l) | |
$ | 1,510,658 | | |
$ | 0 | | |
$ | 185,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 1,325,658 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter
09-30-21 loan borrowings, net | |
$ | 626,250 | | |
| | | |
| | | |
| | | |
| | | |
$ | 626,250 | |
| Quarter
09-30-21 loan repayments, net | |
$ | (1,077,464 | ) | |
| - | | |
$ | (75,000 | ) | |
| - | | |
| - | | |
$ | (1,002,464 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance
@09-30-21 (m) | |
$ | 1,059,444 | | |
($ | 0 | ) | |
$ | 110,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 949,444 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Quarter
12-31-21 loan borrowings, net | |
$ | 2,710,006 | | |
| - | | |
| - | | |
$ | 1,643,387 | | |
| - | | |
$ | 1,066,619 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance
@12-31-21 (n) | |
$ | 3,769,449 | | |
($ | 0 | ) | |
$ | 110,000 | | |
$ | 1,643,387 | | |
$ | 0 | | |
$ | 2,016,063 | |
| Schedule of debt balance | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
12-31-21 | |
06-30-20 | |
03-31-20 | |
12-31-19 | |
09-30-19 | |
06-30-19 | |
03-31-19 | |
12-31-18 | |
12-31-17 |
| This
includes balances for: | |
| Note
(n) | | |
| Note
(h) | | |
| Note
(g) | | |
| Note
(f) | | |
| Note
(e) | | |
| Note
(d) | | |
| Note
(c) | | |
| Note
(b) | | |
| Note
(a) | |
| -
Debt obligation of JV | |
| 0 | | |
| 478,494 | | |
| 394,848 | | |
| 0 | | |
| 1,633,872 | | |
| 1,778,872 | | |
| 128,522 | | |
| 289,742 | | |
| 1,500,000 | |
| -
Convertible NP, net of discount | |
| 3,769,449 | | |
| 2,784,044 | | |
| 3,040,324 | | |
| 3,193,548 | | |
| 2,688,555 | | |
| 2,149,170 | | |
| 1,536,271 | | |
| 1,132,668 | | |
| 394,555 | |
| -
Longterm debt | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 172,856 | |
| Total
Debt balance | |
$ | 3,769,449 | | |
$ | 3,262,538 | | |
$ | 3,435,172 | | |
$ | 3,193,548 | | |
$ | 4,322,427 | | |
$ | 3,928,042 | | |
$ | 1,664,793 | | |
$ | 1,422,410 | | |
$ | 2,067,411 | |
NOTE 5 – CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE
During the years ended December 31, 2021 and 2020,
the Company issued an aggregate of 1,236,181,851 and 2,291,141,317 shares of its common stock in settlement of the issued convertible
notes payable and accrued interest.
For the years ended December 31, 2021 and 2020, the
Company recorded amortization of debt discounts of $1,993,373 and $1,658,395, respectively, as a charge to interest expense.
Convertible notes payable are comprised of the following:
| Schedule of Convertible Notes Payable | |
| |
|
| | |
2021 | |
2020 |
| Convertible note payable – Power Up Lending Group | |
$ | — | | |
$ | 35,000 | |
| Convertible note payable – Crown Bridge Partners | |
$ | 35,000 | | |
$ | 172,500 | |
| Convertible note payable – Labrys | |
$ | 99,975 | | |
$ | — | |
| Convertible note payable – FF Global Opportunities Fund | |
$ | 243,750 | | |
$ | — | |
| Convertible note payable – GS Capital Partners LLC | |
$ | 82,000 | | |
$ | 143,500 | |
| Convertible note payable – Beach Labs | |
$ | 583,333 | | |
$ | — | |
| Convertible note payable – Pinnacle Consulting Services Inc. | |
$ | 30,000 | | |
$ | 70,000 | |
| Convertible note payable – Geneva Roth | |
$ | 97,939 | | |
$ | 33,500 | |
| Convertible note payable – Dutchess Capital Partners | |
$ | 60,709 | | |
$ | 10,000 | |
| Convertible note payable – Redstart HLDGS | |
$ | — | | |
$ | 109,000 | |
| Convertible note payable – GW Holdings | |
$ | 120,750 | | |
$ | 98,175 | |
| Convertible note payable - Coventry | |
$ | 100,000 | | |
$ | — | |
| Convertible note payable - Sixth Street Lending | |
$ | 60,738 | | |
$ | — | |
| Convertible notes payable -St George | |
$ | 3,914,878 | | |
$ | 1,160,726 | |
| Total | |
$ | 5,429,072 | | |
$ | 1,832,401 | |
| Less debt discounts | |
$ | (1,659,622 | ) | |
$ | (405,507 | ) |
| Net | |
$ | 3,769,450 | | |
$ | 1,426,894 | |
| Less current portion | |
$ | (3,769,450 | ) | |
$ | (1,426,894 | ) |
| Long term portion | |
$ | — | | |
$ | — | |
Convertible notes payable-Power Up Lending
From July 1 through September 12, 2019, the Company
issued four convertible promissory notes in the aggregate principal amount of $294,000 to Power Up Lending (“Power Up”). The
promissory notes bear interest at 10% per annum, are due one year from the respective issuance date and include an original issuance discount
(“OID”) in aggregate of $12,000. Interest shall accrue from the issuance date, but interest shall not become payable until
the notes becomes payable. The notes are convertible at any time at a conversion rate equal to 61% of the Market Price (defined as the
lowest trading price during the 15-trading-day period prior to the conversion date). Upon the issuance of these convertible notes, the
Company determined that the features associated with the embedded conversion option embedded in the debentures, should be accounted for
at fair value, as a derivative liability, as the Company cannot determine if a sufficient number of shares would be available to settle
all potential future conversion transactions. As of the funding date of each note, the Company determined the fair value of the embedded
derivative associated with the convertibility of each note. The fair value of the embedded derivative has been added to the debt discount
(total debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized as interest expense.
The aggregate debt discount of $9,395 is being amortized to interest expense over the respective terms of the notes.
The Company shall have the
right to prepay the notes for an amount ranging from 125% - 140% multiplied by the outstanding balance (all principal and accrued interest)
depending on the Prepayment Period (ranging from 1 to 180 days following the issuance date). The Company is prohibited from effecting
a conversion of any note to the extent that, as a result of such conversion, the investor, together with its affiliates, would beneficially
own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance
of shares of common stock upon conversion of the note.
As of December 31, 2021, the Company owed an aggregate
of $0 of principal and $0 of accrued interest on these convertible promissory notes.
Convertible notes payable-Crown Bridge Partners
From October 1 through December 31, 2019, the Company
issued convertible promissory notes in the aggregate principal amount of $225,000 to Crown Bridge Partners LLC (“Crown Bridge”).
The promissory notes bear interest at 10% per annum, are due one year from the respective issuance date and include an original issuance
discount (“OID”) in aggregate of $22,500. Interest shall accrue from the issuance date, but interest shall not become payable
until the notes becomes payable. The notes are convertible at any time at a conversion rate equal to 60% of the Market Price (defined
as the lowest trading price during the 15-trading-day period prior to the conversion date). Upon the issuance of these convertible notes,
the Company determined that the features associated with the embedded conversion option embedded in the debentures, should be accounted
for at fair value, as a derivative liability, as the Company cannot determine if a sufficient number of shares would be available to settle
all potential future conversion transactions. As of the funding date of each note, the Company determined the fair value of the embedded
derivative associated with the convertibility of each note. The fair value of the embedded derivative has been added to the debt discount
(total debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized as interest expense.
The aggregate debt discount of $78,056 is being amortized to interest expense over the respective terms of the notes.
The Company shall have the
right to prepay the notes for an amount ranging from 125% - 140% multiplied by the outstanding balance (all principal and accrued interest)
depending on the Prepayment Period (ranging from 1 to 180 days following the issuance date). The Company is prohibited from effecting
a conversion of any note to the extent that, as a result of such conversion, the investor, together with its affiliates, would beneficially
own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance
of shares of common stock upon conversion of the note.
As of December 31, 2021, the Company owed an aggregate
of $35,000 of principal and $0 of accrued interest on these convertible promissory notes.
Convertible notes payable-GS Capital Partners
LLC
On December 19, 2019, the Company issued convertible
promissory notes in the aggregate principal amount of $173,000 to GS Capital Partners LLC (“GS Capital”). The promissory notes
bear interest at 10% per annum and is due one year from the respective issuance date and include an original issuance discount (“OID”)
in aggregate of $15,000.
The Holder of this Note is entitled, at its option,
at any time after cash payment, to convert all or any amount of the principal face amount of this Note then outstanding into shares of
the Company's common stock (the "Common Stock") at a price ("Conversion Price") for each share of Common Stock equal
to 62% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the
Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for
the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent. To
the extent the Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all steps
necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees
to honor all conversions submitted pending this increase. In the event the Company experiences a DTC “Chill” on its shares,
the Conversion Price shall be decreased to 52% instead of 62% while that “Chill” is in effect. In no event shall the Holder
be allowed to effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder
and its affiliates would exceed 4.99% of the outstanding shares of the Common Stock of the Company (which may be increased up to 9.9%
upon 60 days’ prior written notice by the Investor). As of the funding date of each note, the Company determined the fair value
of the embedded derivative associated with the convertibility of each note. The fair value of the embedded derivative has been added to
the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized
as interest expense. The aggregate debt discount of $92,396 is being amortized to interest expense over the respective terms of the notes.
As of December 31, 2021, the Company owed an aggregate of $82,000 of principal and $2,561 of accrued interest on these convertible promissory
notes.
In August and September of 2020, the Company issued
convertible promissory notes in the aggregate principal amount of $143,500 to GS Capital. The promissory notes bear interest at 10% per
annum and is due one year from the respective issuance date and include an original issuance discount in aggregate of $5,500.
The Holder of this Note is entitled, at its option,
at any time after cash payment, to convert all or any amount of the principal face amount of this Note then outstanding into shares of
the Company's common stock (the "Common Stock") at a price ("Conversion Price") for each share of Common Stock equal
to 62% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the
Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for
the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer. To the extent
the Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all steps necessary
to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor
all conversions submitted pending this increase. In the event the Company experiences a DTC “Chill” on its shares, the Conversion
Price shall be decreased to 52% instead of 62% while that “Chill” is in effect. In no event shall the Holder be allowed to
effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates
would exceed 4.99% of the outstanding shares of the Common Stock of the Company (which may be increased up to 9.9% upon 60 days’
prior written notice by the Investor).
As of the funding date of
each note, the Company determined the fair value of the embedded derivative associated with the convertibility of each note. The fair
value of the embedded derivative has been added to the debt discount (total debt discount is limited to the face value of the debt) with
any excess of the derivative liability recognized as interest expense. The aggregate debt discount of $143,500 is being amortized to interest
expense over the respective terms of the notes.
In August 2021, the Company issued convertible promissory
notes in the aggregate principal amount of $82,000 to GS Capital. The promissory notes bear interest at 10% per annum and is due one year
from the respective issuance date and include an original issuance discount in aggregate of $7,000. In connection with the Note, the Company
issued 5,000,000 warrants to purchase common stock with a fair value of $18,086, which was recorded as a debt discount.
The Holder of this Note is entitled, at its option,
at any time after cash payment, to convert all or any amount of the principal face amount of this Note then outstanding into shares of
the Company's common stock (the "Common Stock") at a price ("Conversion Price") for each share of Common Stock equal
to 62% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the
Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for
the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer. To the extent
the Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all steps necessary
to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor
all conversions submitted pending this increase. In the event the Company experiences a DTC “Chill” on its shares, the Conversion
Price shall be decreased to 52% instead of 62% while that “Chill” is in effect. In no event shall the Holder be allowed to
effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates
would exceed 4.99% of the outstanding shares of the Common Stock of the Company (which may be increased up to 9.9% upon 60 days’
prior written notice by the Investor).
As of the funding date of
each note, the Company determined the fair value of the embedded derivative associated with the convertibility of each note. The fair
value of the embedded derivative has been added to the debt discount (total debt discount is limited to the face value of the debt) with
any excess of the derivative liability recognized as interest expense. The aggregate debt discount of $25,086 is being amortized to interest
expense over the respective terms of the notes.
As of December 31, 2021, the Company owed an aggregate
of $82,000 of principal and $2,561 of accrued interest on these convertible promissory notes.
Convertible notes payable-St George Investments
In December 2020, the Company entered into two convertible
promissory notes in the aggregate amount of $160,000 of principal with Bucktown Capital LLC, an entity controlled by the owners of St.
George. The Company received net proceeds of $150,000. The notes mature in December 2020 and bear interest at 8% or 22% in the event of
default. The notes are convertible at the lender’s option at any time at a fixed price of $0.002 per common share, subject to normal
adjustment for common stock splits.
In January and March 2021, the Company entered into
three convertible promissory notes in the aggregate amount of $567,500 of principal with Bucktown Capital LLC, entity controlled by the
owners of St. George. The Company received net proceeds of $535,000. The notes mature in January and March 2022 and bear interest at 8%
or 22% in the event of default. The notes are convertible at the lender’s option at any time at a fixed price of $0.002 per common
share, subject to normal adjustment for common stock splits.
Effective October 6, 2021, the Company issued a secured
convertible promissory note in the amount of $3,492,378 with Chicago Ventures. The Company received cash proceeds of $1,100,000 and included
an original issue discount of $574,916 and paid legal fees of $10,000. This note agreement was assumed by the Company as part of the VBF
Acquisition discussed in Note 13 and includes $1,770,982 which reflects the initial consideration towards the future closing of the VBF
Acquisition. The note bears interest at 8% and is due upon maturity on October 6, 2023. The note is convertible at a fixed price of $0.002
per share. In the event of default as defined in the agreement, the lender has the right to convertible principal and accrued interest
at 70% of the lowest closing trading price over the 10 days preceding the conversion notice.
As of December 31, 2021, the Company owed $3,914,878
of principal and $89,410 of accrued interest on the above convertible promissory notes.
Convertible notes payable - Robert L. Hymers III
On June 17, 2020, the Company issued convertible promissory
notes in the aggregate principal amount of $115,091 to Robert L. Hymers III (“Hymers”) in satisfaction of funds owed to Mr.
Hymers from his consulting contract with the Company for past services rendered and completed. The promissory notes bear interest at 10%
per anum, and is due six months from the respective issuance date of the note along with accrued and unpaid interest. Principal and interest
to be payable as provided below on that date which is six months from the date of issuance (the “Maturity Date”).
For so long as there remains any amount due hereunder,
the Holder shall have the option to convert all or any portion of the unpaid principal amount of this Note, plus accrued interest (together
with the unpaid principal amount, the “Converted Amount”), into shares of the Company’s common stock. The conversion
price (the “Conversion Price”) shall be equal to a fifty percent (50%) discount to the lowest closing bid of the previous
fifteen (15) day trading period, ending on the business day before a Notice of Conversion is delivered to the Company. The number of shares
of Common Stock into which the Converted Amount shall be convertible (the “Conversion Shares”) shall be determined by dividing
(i) the Converted Amount by (ii) the Conversion Price. A conversion shall be deemed to occur on the date that the Company receives an
executed copy of the Conversion Notice.
The aggregate debt discount of $115,091 is being amortized
to interest expense over the respective terms of the notes.
On September 8, 2020, the Company issued convertible
promissory notes in the aggregate principal amount of $70,000 to Robert L. Hymers III (“Hymers”). The promissory note bears
interest at 10% per anum, and is due six months from the respective issuance date of the note along with accrued and unpaid interest.
Principal and interest to be payable as provided below on that date which is six months from the date of issuance (the “Maturity
Date”).
For so long as there remains any amount due hereunder,
the Holder shall have the option to convert all or any portion of the unpaid principal amount of this Note, plus accrued interest (together
with the unpaid principal amount, the “Converted Amount”), into shares of the Company’s common stock. The conversion
price (the “Conversion Price”) shall be equal to a fifty percent (50%) discount to the lowest closing bid of the previous
fifteen (15) day trading period, ending on the business day before a Notice of Conversion is delivered to the Company. The number of shares
of Common Stock into which the Converted Amount shall be convertible (the “Conversion Shares”) shall be determined by dividing
(i) the Converted Amount by (ii) the Conversion Price. A conversion shall be deemed to occur on the date that the Company receives an
executed copy of the Conversion Notice.
The aggregate debt discount of $70,000 is being amortized
to interest expense over the respective terms of the notes.
On February 4, 2021, the Company issued convertible
promissory notes in the aggregate principal amount of $75,000 to Robert L. Hymers III (“Hymers”). The promissory note bears
interest at 10% per anum, and is due one year from the respective issuance date of the note along with accrued and unpaid interest. Principal
and interest to be payable as provided below on that date which is one year from the date of issuance (the “Maturity Date”).
For so long as there remains any amount due hereunder,
the Holder shall have the option to convert all or any portion of the unpaid principal amount of this Note, plus accrued interest (together
with the unpaid principal amount, the “Converted Amount”), into shares of the Company’s common stock. The conversion
price (the “Conversion Price”) shall be equal to a $0.007.
The aggregate debt discount of $75,000 is being amortized
to interest expense over the respective terms of the notes.
Convertible notes payable – Pinnacle Consulting
Services Inc.
On April 30, 2021, the Company issued convertible
promissory notes in the aggregate principal amount of $110,000 to Pinnacle Consulting Services, Inc. (“Pinnacle”). The promissory
note bears interest at 10% per anum, and is due one year from the respective issuance date of the note along with accrued and unpaid interest.
Principal and interest to be payable as provided below on that date which is one year from the date of issuance (the “Maturity Date”).
For so long as there remains any amount due hereunder,
the Holder shall have the option to convert all or any portion of the unpaid principal amount of this Note, plus accrued interest (together
with the unpaid principal amount, the “Converted Amount”), into shares of the Company’s common stock. The conversion
price (the “Conversion Price”) shall be equal to a $0.002.
The aggregate debt discount of $110,000 is being
amortized to interest expense over the respective terms of the notes.
On December 27, 2021, the Company and Pinnacle entered
into an exchange agreement to replace the existing $110,000 of principal and accrued interest of $8,036 to a new note with principal of
$118,036. The new convertible note payable has an exercise price of $0.00065.
On December 27, 2021, the Company issued convertible
promissory notes in the aggregate principal amount of $30,000 to Pinnacle. The promissory note bears interest at 12.5% per anum, and is
due one year from the respective issuance date of the note along with accrued and unpaid interest and includes an original issue discount
(“OID”) of $5,000. Principal and interest to be payable as provided below on that date which is one year from the date of
issuance (the “Maturity Date”).
For so long as there remains any amount due hereunder,
the Holder shall have the option to convert all or any portion of the unpaid principal amount of this Note, plus accrued interest (together
with the unpaid principal amount, the “Converted Amount”), into shares of the Company’s common stock. The conversion
price (the “Conversion Price”) shall be equal to a $0.006. The Conversion price, and any other economic terms will be adjusted
on a ratchet basis if the Company offers a more favorable conversion or stock issuance price, prepayment rate, interest rate, additional
securities, look back period or more favorable terms to another party for any financings while this note is in effect.
The aggregate debt discount of $5,000 is being amortized
to interest expense over the respective terms of the notes.
As of December 31, 2021, the Company owed an aggregate
of $30,000 of principal and $0 of accrued interest on these convertible promissory notes.
Convertible notes payable – Natural Plant
Extract
On April 15, 2019, we entered into a joint venture
with Natural Plant Extract of California, Inc., and subsidiaries, to operate a licensed psychoactive cannabis distribution service in
California. California legalized THC psychoactive cannabis for medicinal and recreational use on January 1, 2018. On February 3, 2020,
we terminated the joint venture.
The Original Material Definitive Agreement
Pursuant to the original material definitive
agreement, we agreed to acquire twenty percent (equal to 200,000) of NPE’s authorized shares in exchange for our payment of $2,000,000
and $ worth of our restricted common stock. We agreed to form a joint venture with NPE incorporated in California under the name
“Viva Buds, Inc.” (“Viva Buds”) for the purpose of operating a California licensed cannabis distribution business
pursuant to California law legalizing THC psychoactive cannabis for recreational and medicinal use.
Our payment obligations were governed by a stock
purchase agreement which required us to make the following payments:
a. Deposit of $350,000 within 5 days of the execution
of the material definitive agreement;
b. Deposit of $250,000 payable within 30 days;
c. Deposit of $400,000 within 60 days;
d. Deposit of $500,000 within 75 days;
e. Deposit of $500,000 within 90 days
We made our initial payment pursuant to this
schedule, but otherwise failed to comply with the payment schedule and we were in breach of contract.
Settlement and Release of All Claims Agreement
On February 3, 2020, the Company and NPE entered
into a settlement and release of all claims agreement. In exchange for a complete release of all claims, the Company and NPE (1) agreed
to reduce our interest in NPE from % to %; (2) we agreed to pay NPE a total of $ as follows: $ concurrent with the execution
of the Settlement and Release of All Claims Agreement, and $ no later than the 5th calendar day for each of the two months following
execution of Settlement and Release of All Claims Agreement; and, (3) to retire the balance of our original valuation obligation from
the material definitive agreement, representing a shortfall of $, in a convertible promissory note, with terms allowing NPE to convert
the note into common stock of MCOA at a % discount to the closing price of MCOA’s common stock as of the maturity date.
As of the date of this filing, the Company satisfied
its payment obligations under the settlement agreement.
Convertible Note Payable – GW Holdings Group
On December 9, 2020, the Company issued convertible promissory notes
in the aggregate principal amount of $98,175 to GW Holdings Group, LLC (“GW”). GW has the option, beginning on the six
month anniversary of the date of issuance, to convert all or any amount of the principal face amount of the notes then outstanding into
shares of the Company's common stock at a conversion price equal to 40% discount of the lowest trading price for the 15 trading days prior
to the date of the conversion. The note accrues interest at a rate of 10% per annum.
On June 3, 2021, the Company entered issued a convertible promissory
note in the amount of $120,750 to. The holder has the option to convert all or any amount of the principal face amount of the note
then outstanding into shares of the Company's common stock at a conversion price equal to $0.005 for the first 90 days and $0.002 thereafter.
The note accrues interest at a rate of 10% per annum and included $15,750 of deferred financing fees and original issue discount
which is being amortized to interest expense over the term of the note.
On August 24, 2021, the Company entered issued a convertible promissory
note in the amount of $120,750 to GW. GW has the option to convert all or any amount of the principal face amount of the note then
outstanding into shares of the Company's common stock at a conversion price equal to $0.0025 for the first 90 days and $0.001 thereafter.
The note accrues interest at a rate of 10% per annum and includes a $15,750 original issue discount which is being amortized
to interest expense over the term of the note
As of December 31, 2021, the Company owed an aggregate
of $120,750 of principal and $4,003 of accrued interest on these convertible promissory notes.
Convertible Notes Payable-Redstart
Holdings
During the year ended December
31, 2020, the Company entered into various convertible promissory notes with Redstart Holdings (“Redstart Holdings”) totaling
a principal amount of $109,000. The promissory notes accrue interest at a rate of 10% per annum, were due one year from the respective
issuance date. The notes were convertible at a conversion price equal to 61% of the market price of the Company’s common stock,
defined as the lowest trading price during the 15-trading-day period prior to the date of conversion. Upon the issuance of these convertible
notes, the Company determined that the features associated with the embedded conversion option embedded in the notes should be accounted
for at fair value, as a derivative liability, as the Company cannot determine if a sufficient number of shares of common stock would be
available to settle all potential future conversion transactions. As of the funding date of each note, the Company determined the fair
value of the embedded derivative associated with the convertibility of each note. The fair value of the embedded derivative has been added
to the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized
as interest expense.
The Company has the right
to prepay the notes for an amount ranging from 125% to 140% multiplied by the outstanding balance (all principal and accrued interest)
depending on the prepayment period (ranging from 1 to 180 days following the issuance date). The Company is prohibited from effecting
a conversion of any note to the extent that, as a result of such conversion, the investor, together with its affiliates, would beneficially
own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance
of shares of common stock upon conversion of the note. During the three months ended March 31, 2021, the Company repaid $109,000 of
principal and $43,204 of total interest and penalties.
During May 2021, the Company
entered into an additional three convertible promissory notes with principal value of $226,250, which accrued interest at 8% per annum
and were convertible at 65% of the average of the two lowest trading prices during the previous 15 day trading period.
As of December 31, 2021, the Company owed an aggregate
of $0 of principal and $0 of accrued interest on these convertible promissory notes, as the notes were paid in full along with early repayment
penalties of $40,857.
Convertible
Note Payable-Firstfire
In July 2021, the Company
issued a convertible promissory note in the aggregate principal amount of $268,750 to Firstfire Global Opportunities Fund LLC (“Firstfire”).
The promissory note accrues interest at 12% per annum, is due one year from the issuance date and includes an original issuance discount
and financing fees in the aggregate amount of $44,888 and received $200,963 of net proceeds. The note is convertible at any
time at a conversion price of $0.005 per share. The Company also issued a five-year warrants to purchase up to 38,174,715 shares
of its common stock to Firstfire, at an exercise price of $0.00704 per share. The aggregate debt discount of $245,851 is being
amortized to interest expense over the respective terms of the note.
The Company is prohibited
from effecting a conversion of the note to the extent that, as a result of such conversion, the investor, together with its affiliates,
would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after
giving effect to the issuance of shares of common stock upon conversion of the note. The Company is prohibited from effecting an exercise
of the warrant to the extent that, as a result of such exercise, the investor, together with its affiliates, would beneficially own more
than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of
shares of common stock upon exercise of the note.
As of December 31, 2021,
the Company owed an aggregate of $243,750 of principal and $14,667 of accrued interest on these convertible promissory notes.
Convertible
Note Payable-Labrys
In June 2021, the Company
issued a convertible promissory note in the aggregate principal amount of $537,500 to Labrys Funds, LP (“Labrys”). The
promissory note accrues interest at 12% per annum, is due one year from the issuance date and includes an original issuance discount
in the aggregate amount of $53,750. The Company also paid $33,750 in deferred financing fees and received $450,000 of net proceeds.
The note is convertible at any time at a conversion price of $0.005 per share. The Company also issued a five-year warrants to purchase
up to 76,349,431 shares of its common stock to Labrys, at an exercise price of $0.00704 per share. In addition, the Company
issued five-year warrants to purchase up to 76,349,431 shares of its common stock to an investment banker for services, which warrants
have an exercise price of $0.008448 per share. The aggregate debt discount of $533,526 is being amortized to interest expense over
the respective terms of the note.
The Company is prohibited
from effecting a conversion of the note to the extent that, as a result of such conversion, the investor, together with its affiliates,
would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after
giving effect to the issuance of shares of common stock upon conversion of the note. The Company is prohibited from effecting an exercise
of the warrant to the extent that, as a result of such exercise, the investor, together with its affiliates, would beneficially own more
than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of
shares of common stock upon exercise of the note.
As of December 31, 2021,
the Company owed an aggregate of $99,975 of principal and $36,476 of accrued interest on these convertible promissory notes.
Convertible
Note Payable- Dutchess Capital Growth Fund LP
On May 25, 2021, the Company issued a convertible
promissory note in the aggregate principal amount of $135,000 to Dutchess Capital Growth Fund LP (“Dutchess”). The promissory
note accrues interest at 8% per annum, is due one year from the issuance date. The Company paid $13,750 in deferred financing
fees and received $121,250 of net proceeds.
Beginning six months after date of issue, the holder
of this Note is entitled, at its option, at any time after cash payment, to convert all or any amount of the principal face amount of
this Note then outstanding into shares of the Company's common stock (the "Common Stock") at a price ("Conversion Price")
for each share of Common Stock equal to 55% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau
OTC Marketplace exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the
future ("Exchange"), for the fifteen prior trading days including the day upon which a Notice of Conversion is received by the
Company or its transfer.
The Company determined the
fair value of the embedded derivative associated with the convertibility of each note. The fair value of the embedded derivative has been
added to the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability
recognized as interest expense. The aggregate debt discount of $135,000 is being amortized to interest expense over the respective terms
of the notes.
As of December 31, 2021,
the Company owed an aggregate of $60,709 of principal and $6,108 of accrued interest on these convertible promissory notes.
Convertible
Note Payable- Geneva Roth Holdings
On December 4, 2020, the Company issued a convertible
promissory note in the aggregate principal amount of $33,500 to Geneva Roth Holdings (“Geneva”). The promissory note accrues
interest at 10% per annum, is due one year from the issuance date.
Beginning six months after date of issue, the holder
of this Note is entitled, at its option, at any time after cash payment, to convert all or any amount of the principal face amount of
this Note then outstanding into shares of the Company's common stock (the "Common Stock") at a price ("Conversion Price")
for each share of Common Stock equal to 55% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau
OTC Marketplace exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the
future ("Exchange"), for the twenty prior trading days including the day upon which a Notice of Conversion is received by the
Company or its transfer. The company repaid the note before it became convertible and therefore, no derivative liability or debt discount
was recorded.
On July 28, 2021, the Company
issued a promissory note in the aggregate principal amount of $169,125 to Geneva Roth Holdings (“Geneva”). The promissory
note accrues interest at 10% per annum, is due one year from the issuance date. The Company paid $13,750 in deferred financing
fees and received $153,750 of net proceeds. The Company also issued five-year warrants to purchase up to 10,147,500 shares
of its common stock to Geneva, at an exercise price of $0.001 per share. The aggregate debt discount of $67,253 is being amortized
to interest expense over the respective terms of the note.
As of December 31, 2021,
the Company owed an aggregate of $97,939 of principal and $13,684 of accrued interest on these promissory notes.
Convertible
Note Payable- Beach Labs
On November 24, 2021, the Company issued a convertible
promissory note in the aggregate principal amount of $625,000 to Beach Labs in connection with the modification of the cDistro acquisition
agreement discussion in Note 13. The promissory note accrues interest at 10% per annum and is due four years from the issuance date.
The holder of this Note is entitled, at its option,
at any time after cash payment, to convert all or any amount of the principal face amount of this Note then outstanding into shares of
the Company's common stock (the "Common Stock") at a price ("Conversion Price") for each share of Common Stock equal
to 70% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the
Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for
the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer.
The Company determined the
fair value of the embedded derivative associated with the convertibility of each note. The fair value of the embedded derivative has been
added to the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability
recognized as interest expense. The aggregate debt discount of $625,000 is being amortized to interest expense over the respective terms
of the notes.
As of December 31, 2021,
the Company owed an aggregate of $583,333 of principal and $15,753 of accrued interest on these promissory notes.
Convertible Note
Payable- Sixth Street Lending
On November 16, 2021, the Company issued a promissory
note in the aggregate principal amount of $60,738 to Sixth Street Lending (“SSL”). The promissory note has a one-time interest
charge of 7,896 and is due one year from the issuance date. The Company paid $10,738 in deferred financing fees and received $50,000 of
net proceeds. The note is convertible at a price ("Conversion Price") for each share of Common Stock equal to 73% of the lowest
trading price of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares
are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the five prior trading
days including the day upon which a Notice of Conversion is received by the Company or its transfer.
As of December 31, 2021,
the Company owed an aggregate of $60,738 of principal and $7,896 of accrued interest on these promissory notes.
Convertible Note
Payable- Coventry
On December 29, 2021, the Company issued a promissory
note in the aggregate principal amount of $100,000 to Coventry (“Coventry”). The promissory note has a one-time interest charge
of 10,000 and is due one year from the issuance date. The Company paid $20,000 in deferred financing fees and received $80,000 of
net proceeds. The note is convertible at a price ("Conversion Price") for each share of Common Stock equal to 90% of the lowest
trading price of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares
are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the five prior trading
days including the day upon which a Notice of Conversion is received by the Company or its transfer.
As of December 31, 2021,
the Company owed an aggregate of $100,000 of principal and $10,000 of accrued interest on these promissory notes.
Summary:
The Company has identified the embedded derivatives
related to the above-described notes and warrants. These embedded derivatives included certain conversion and reset features. The accounting
treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date
of the note and to fair value as of each subsequent reporting date.
For the year ended December 31, 2021 and 2020, the
Company recorded a gain on the change in fair value of derivative liabilities of $3,852 and a loss of $48,204, respectively. For the years
ended December 31, 2021 and 2020, the Company recorded amortization of debt discounts of $1,993,373 and $1,658,395, respectively, as a
charge to interest expense.
At December 31, 2021, the Company determined the aggregate
fair values of $749,756 of embedded derivatives. The fair values were determined using a binomial model based on the following assumptions:
(1) dividend yield of 0%; (2) expected volatility of 95.81% to 192.69%, (3) weighted average risk-free interest rate of 0.06% to 0.26%,
(4) expected life of 0.5 years to 4.5 years, and (5) estimated fair value of the Company's common stock from $0.0012 per share.
On May 4, 2020, we entered into a loan to borrow $35,500
from Pacific Mercantile Bank (“Lender”), pursuant to a Promissory Note issued by Company to Lender (the “PPP Note”).
The loan was made pursuant to the Payroll Protection Program established as part of the Coronavirus Aid, Relief, and Economic Security
Act (the “CARES Act”) and supported by the Small Business Administration (SBA). The PPP Note bears interest at 1.00% per annum,
and may be repaid at any time without penalty. The PPP Note contains customary events of default relating to, among other things, payment
defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result
in a claim for the immediate repayment of all amounts outstanding under the PPP Note. On March 30, 2021, the loan was fully forgiven by
the government and the remaining balance was zero as of December 31, 2021.
NOTE 6 – DERIVATIVE LIABILITIES
As described in Notes 4 and 6, the Company issued
convertible notes and warrants that contained conversion features and a reset provisions. The accounting treatment of derivative financial
instruments requires that the Company record fair value of the derivatives as of the inception date and to fair value as of each subsequent
reporting date.
If an embedded conversion option in a convertible
debt instrument no longer meets the bifurcation criteria in this Subtopic, an issuer shall account for the previously bifurcated conversion
option by reclassifying the carrying amount of the liability for the conversion option (that is, its fair value on the date of reclassification)
to shareholders' equity. Any debt discount recognized when the conversion option was bifurcated from the convertible debt instrument shall
continue to be amortized.
NOTE 7 – STOCKHOLDERS’ DEFICIT
Preferred stock
The Company is authorized to issue 10,000,000 shares
of $0.001 par value preferred stock as of December 31, 2021 and December 31, 2020. As of December 31, 2021, and 2020, the Company has
designated and issued 10,000,000 shares of Class A Preferred Stock.
Each share of Class A Preferred Stock is entitled
to 100 votes on all matters submitted to a vote to the stockholders of the Company, does not have conversion, dividend or distribution
upon liquidation rights. On November 9, 2020, the Company issued 2,000,000 shares of its Class B Preferred Common Stock to Jesus Quintero.
The Class B Preferred Stock carries a voting preference of One Thousand (1,000) times that number of votes on all matters submitted to
the shareholders that is equal to the number of shares of Common Stock (rounded to the nearest whole number), at the record date for the
determination of the shareholders entitled to vote on such matters or, if no such record date is established, at the date such vote is
taken or any written consent of such shareholders is affected. The issuance constitutes a change of control of the Company, as the voting
preference of the issued Class B Preferred Stock provides Mr. Quintero with the right to control a majority of the votes of shareholders
eligible to cast votes on any matter brought before the stockholders. The Class B shares were valued at $2,229,027 and recognized as stock-based
compensation expense during the year ended December 31, 2020. As of December 31, 2021 and 2020, there were 2,000,000 shares of Class B
Preferred Stock outstanding. The Class B Preferred Stock is not convertible into common shares.
Common stock
The Company was authorized to issue 22,000,000,000
shares of $0.001 par value per share common stock as of December 31, 2021. As of December 31, 2021, and 2020, the Company had 7,122,806,264
and 3,136,774,861, respectively, common shares issued and outstanding. As of February 4, 2022, we reduced the par value of our common
stock from $0.001 per share to zero par value ($0.00) per share.
In 2021, the Company issued an aggregate of 142,946,860
shares of its common stock for services rendered with an estimated fair value of $661,292.
In 2021, the Company issued an aggregate of 1,236,181,851
shares of its common stock in settlement of convertible notes payable and accrued interest with an estimated fair value of $2,309,874.
In 2021, the Company issued an aggregate of 22,500,000
shares of its common stock in conversion of related party notes payable with an estimated fair value of $141,750.
In 2021, the Company issued an aggregate of 462,844,406
common shares of its common stock in exchange for exercise of warrants on a cashless basis.
In 2021, the Company sold 1,052,297,599 shares of
its common stock with a value of $2,201,601.
In 2021, the Company issued 3,027,031 shares of its
common stock with an estimated value of $8,623 to settle liabilities.
In 2021, the Company issued 691,935,484 shares of
common stock for investments with an estimated value of $1,300,000.
In 2021, the Company issued 265,164,070 shares of
common stock issued for acquisition of business with an estimated value of $1,617,501.
In 2021, the Company issued 109,134,122 shares for
amendment to an acquisition consideration with an estimated value of $251,008.
In 2020, the Company issued an aggregate of 217,396,427
shares of its common stock for services rendered with an estimated fair value of $785,861.
In 2020, the Company issued an aggregate of 2,291,141,317
shares of its common stock in settlement of convertible notes payable and accrued interest with an estimated fair value of $3,916,940.
In 2020, the Company issued an aggregate of 21,276,596
shares of its common stock in conversion of related party notes payable with an estimated fair value of $50,000.
In 2020, the Company issued an aggregate of 51,054,214
common shares of its common stock in exchange for exercise of warrants on a cashless basis.
In 2020, the Company issued 205,582,481 shares of
its common stock with an estimated value of $762,723 to settle liabilities.
In 2020, the Company sold shares 268,679,513 shares
of its common stock for proceeds of $478,686.
Options
Option valuation models require
the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Binomial Option Pricing
Model with a volatility figure derived from using the Company’s historical stock prices. Management determined this assumption to
be a more accurate indicator of value. The Company accounts for the expected life of options based on the contractual life of options
for non-employees. For employees, the Company accounts for the expected life of options in accordance with the “simplified”
method, which is used for “plain-vanilla" options, as defined in the accounting standards codification.
The risk-free interest rate
was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the
options.
In addition, the Company is required to estimate the expected forfeiture
rate and only recognize expense for those shares expected to vest. In estimating the Company’s forfeiture rate, the Company analyzed
its historical forfeiture rate, the remaining lives of unvested options, and the number of vested options as a percentage of total options
outstanding. If the Company’s actual forfeiture rate is materially different from its estimate, or if the Company reevaluates the
forfeiture rate in the future, the stock-based compensation expense could be significantly different from what the Company has recorded
in the current period.
The following table summarizes the stock option activity
for the years ended December 31, 2021 and 2020:
| Summarizes the Stock Option Activity | |
| |
| |
| |
|
| | |
Shares | |
Weighted-Average Exercise Price | |
Weighted Average Remaining Contractual Term | |
Aggregate Intrinsic Value |
| Outstanding at December 31, 2020 | |
| 16,666,667 | | |
$ | 0.30 | | |
| 7.76 | | |
$ | 15,400,000 | |
| Granted | |
| — | | |
| | | |
| | | |
| | |
| Forfeitures or expirations | |
| — | | |
| | | |
| | | |
| | |
| Outstanding at December 31, 2021 | |
| 16,666,667 | | |
$ | 0.30 | | |
| 6.76 | | |
$ | 15,296,667 | |
| Granted | |
| — | | |
| | | |
| | | |
| | |
| Forfeitures or expirations | |
| (16,666,667 | ) | |
| 0.30 | | |
| | | |
| | |
| Outstanding at December 31, 2021 | |
| 0 | | |
$ | — | | |
| — | | |
| — | |
| Exercisable at December 31, 2021 | |
| 0 | | |
$ | — | | |
| — | | |
$ | — | |
The aggregate intrinsic value in the preceding table
represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s stock price of $0 and
$0 as of December 31, 2021 and 2020, respectively, which would have been received by the option holders had those option holders exercised
their options as of that date.
Warrants
The following table summarizes the stock warrant activity
for the two years ended December 31, 2021:
| Summarizes the Stock Warrant Activity | |
| |
| |
| |
|
| | |
Shares | |
Weighted-Average Exercise Price | |
Weighted Average Remaining Contractual Term | |
Aggregate Intrinsic Value |
| Outstanding at December 31, 2019 | |
| 4,011,111 | | |
| 2.15 | | |
| | | |
| | |
| Granted | |
| 6,980,769 | | |
| 0.01 | | |
| | | |
| | |
| Exercised | |
| (192,521 | ) | |
| 1.78 | | |
| | | |
| | |
| Increase due to reset provision | |
| 322,906,286 | | |
| 0.0004 | | |
| | | |
| | |
| Exercised | |
| (40,843,463 | ) | |
| 0.0027 | | |
| | | |
| | |
| Forfeitures or expirations | |
| — | | |
| | | |
| | | |
| | |
| Outstanding at December 31, 2020 | |
| 293,054,702 | | |
$ | 0.0011 | | |
| 2.2 | | |
$ | 1,023,306 | |
| Granted | |
| 133,107,371 | | |
| 0.0084 | | |
| | | |
| | |
| Exercised | |
| (271,137,466 | ) | |
| 0.01 | | |
| | | |
| | |
| Adjustment due to price reset provision | |
| (9,722,222 | ) | |
| 0.0004 | | |
| | | |
| | |
| Forfeitures or expirations | |
| — | | |
| | | |
| | | |
| | |
| Outstanding at December 31, 2021 | |
| 145,302,385 | | |
$ | 0.0033 | | |
| 2.8 | | |
$ | 70,200 | |
| Exercisable at December 31, 2021 | |
| 145,302,385 | | |
$ | 0.0033 | | |
| 2.8 | | |
$ | 70,200 | |
Certain warrants issued to debt holders have reset
provisions whereby upon subsequent issuances of common stock at a price below the current exercise price, the number of warrants increase
and the exercise price is reduced to the new price. The aggregate intrinsic value in the preceding tables represents the total pretax
intrinsic value, based on warrants with an exercise price less than the Company’s stock price of $0.0012 and $0.004 as of December
31, 2021 and 2020, respectively, which would have been received by the warrant holders had those option holders exercised their warrants
as of that date.
NOTE 8 — FAIR VALUE MEASUREMENT
The Company adopted the provisions of Accounting Standards
Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) on January 1, 2008. ASC 825-10 defines fair value as the
price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded
at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that
market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets for
identical assets or liabilities.
Level 2 – Observable inputs other than Level
1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions
(less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or
corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs to the valuation
methodology that are significant to the measurement of fair value of assets or liabilities.
All items required to be recorded or measured on a
recurring basis are based upon level 3 inputs.
To the extent that valuation is based on models or
inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases,
the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes,
the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level
input that is significant to the fair value measurement.
Upon adoption of ASC 825-10, there was no cumulative
effect adjustment to beginning retained earnings and no impact on the financial statements.
The carrying value of the Company’s cash and
cash equivalents, accounts receivable, accounts payable, short-term borrowings (including convertible notes payable), and other current
assets and liabilities approximate fair value because of their short-term maturity.
As of December 31, 2021, and 2020, the Company did
not have any items that would be classified as level 1 or 2 disclosures.
The Company recognizes its derivative liabilities
as level 3 and values its derivatives using the methods discussed in note 6. While the Company believes that its valuation methods are
appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine
the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary
assumptions that would significantly affect the fair values using the methods discussed in Notes 4 and 5 are that of volatility and market
price of the underlying common stock of the Company.
As of December 31, 2021, and 2020, the Company did
not have any derivative instruments that were designated as hedges.
The combined derivative and warrant liability as of
December 31, 2021 and 2020, in the amounts of $749,756 and $4,426,057 respectively, have a level 3 classification.
The following table provides a summary of changes
in fair value of the Company’s Level 3 financial liabilities for the year ended December 31, 2021:
| Summary of Changes in Fair Value of Derivative Liabilities | |
|
| | |
Debt Derivative |
| Balance, December 31, 2019 | |
$ | 5,693,071 | |
| Increase resulting from initial issuances of additional
convertible notes payable | |
| 1,714,442 | |
| Decreases resulting from conversion or payoff of
convertible notes payable | |
| (7,679,528 | ) |
| Loss due to change in fair value included in earnings | |
| 4,698,072 | |
| Balance, December 31, 2020 | |
$ | 4,426,057 | |
| Increase resulting from initial issuances of additional
convertible notes payable | |
| 2,811,313 | |
| Decreases resulting from conversion | |
| (6,483,762 | |
| Gain due to change in fair value
included in earnings | |
| (3,852 | |
| Balance, December 31, 2021 | |
$ | 749,756 | |
Fluctuations in the Company’s stock price are
a primary driver for the changes in the derivative valuations during each reporting period. During the year ended December 31, 2021, the
Company’s stock price decreased significantly from initial valuations. As the stock price decreases for each of the related derivative
instruments, the value to the holder of the instrument generally decreases. Stock price is one of the significant unobservable inputs
used in the fair value measurement of each of the Company’s derivative instruments.
NOTE 9 — RELATED PARTY TRANSACTIONS
The Company’s current officers and stockholders
advanced funds to the Company for travel related and working capital purposes. As of December 31, 2021, and 2020, there were no related
party advances outstanding.
As of December 31, 2021 and 2020, accrued compensation
due officers and executives included as accrued compensation was $42,925 and $79,214, respectively.
For the years ended December 31, 2021 and 2020, the
Company had sales to related parties of $0 and $13,069, respectively.
During the year ended December 31, 2020, the Company
issued 2,000,000 shares of Class B Preferred Stock to the Company’s CEO that were valued at $2,229,027. See Note 7.
NOTE 10 — COMMITMENTS AND CONTINGENCIES
| Schedule of commitments and contingencies |
|
|
|
|
|
|
|
|
| Liabilities and Accruals |
|
12/31/21 |
|
12/31/20 |
| Accounts payable |
|
|
932,760 |
|
|
|
480,877 |
|
| Accrued compensation |
|
|
42,925 |
|
|
|
79,214 |
|
| Accrued liabilities |
|
|
270,689 |
|
|
|
401,461 |
|
| Notes payable, related parties |
|
|
20,000 |
|
|
|
40,000 |
|
| Loans payable PPP Stimulus |
|
|
— |
|
|
|
35,500 |
|
| Right-of-use liabilities - current portion |
|
|
— |
|
|
|
7,858 |
|
| Liabilities and Accruals |
|
$ |
1,266,374 |
|
|
$ |
1,044,910 |
|
Liabilities and Accruals
For the year ended December 31, 2021 the Company has
accounts payable of $932,760 as compared to $480,877 for the year ended December 31, 2020, which is attributed to $372,428 related to
our new acquisition C-Distro and an increase in MCOA accounts payable of $144,734 due to expansion of our business; as of December 31,
2021 and 2020, accrued compensation due officers and executives included as accrued compensation was $42,925 and $79,214, respectively.
As of December 31, 2021 our accrued liabilities decreased by $130,772 which is attributed to less accruals for settlement agreements at
December 31, 2021 as compared to accruals at December 31, 2020.
On May 4, 2020, we entered into a loan to borrow $35,500
from Pacific Mercantile Bank (“Lender”), pursuant to a Promissory Note issued by Company to Lender (the “PPP Note”).
The loan was made pursuant to the Payroll Protection Program established as part of the Coronavirus Aid, Relief, and Economic Security
Act (the “CARES Act”) and supported by the Small Business Administration (SBA). The PPP Note bears interest at 1.00% per annum,
and may be repaid at any time without penalty. The PPP Note contains customary events of default relating to, among other things, payment
defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result
in a claim for the immediate repayment of all amounts outstanding under the PPP Note. On March 30, 2021, the loan was fully forgiven by
the government and the remaining balance was zero as of December 31, 2021.
As of December 31, 2021 and December 31, 2020, the
Company’s officers and directors have provided advances and incurred expenses on behalf of the Company as such have been evidenced
by the issuance of notes to such officers and directors. The notes are unsecured, due on demand and accrue interest at a rate of 5% per
annum. The balance due to notes payable related party as of December 31, 2021 and December 31, 2020 was $20,000 and $40,000, respectively.
These notes are payable to the estate of Charles Larsen.
To evaluate the impact on adoption of ASC842 –
Leases, on the accounting treatment for leasing of real office property referred to as the “Premises”. The premises is located
in Los Angeles, CA.
The Company utilizes the incremental borrowing rate
in determining the present value of lease payments unless the implicit rate is readily determinable. The Company used an estimated incremental
borrowing rate of 10% to estimate the present value of the right of use liability; however the company entered into a lease agreement
for a virtual office service, therefore ASC842 is not applicable.
Based on the above, the Company has right-of-use
assets of $0 and $7,858 of operating lease liabilities as of December 31, 2021 and 2020, respectively. Operating lease expense for the
year ended December 31, 2021 was $66,582.
Employment contracts
On February 3, 2020, we entered into an executive
employment agreement with Jesus Quintero, our CEO and CFO providing for gross salary of $15,000 monthly, consisting of $12,000 in cash
and $3,000 worth of our common stock valued on the closing price of our common stock on the last trading day of each month. Effective
as of April 22, 2021, we approved an increase in the cash portion of the compensation payable to Jesus Quintero effective as of May 1,
2021, to $20,000 per month, as well as the immediate issuance to Mr. Quintero of 20,000,000 fully paid and non-assessable shares of the
Company’s common stock, par value $0.001 per share, as a one-time bonus, and on April 27, 2021, we entered into a written amendment
memorializing the compensation changes to the February 3, 2020 executive employment agreement with Mr. Quintero.
On February 28, 2020, the Company entered into executive
contracts with its directors Edward Manolos and Themistocles Psomiadis. The agreements are for a term lasting from the effective date
until the earlier of the date of the next annual or special stockholders meeting called for the purposes of electing directors, and the
earliest of the following to occur: (a) the death of the Director; (b) the termination of the Director from his membership on the Board
by the mutual agreement of the Company and the Director; (c) the removal of the Director from the Board by the majority stockholders of
the Company; and (d) the resignation by the Director from the Board. Mr. Psomiadis resigned from the Board of Directors and his contract
was mutually terminated on December 4, 2020. Mr. Manolos’ 2020 contracts provide for payments of $5,000 quarterly.
Litigation
The Company is subject
at times to other legal proceedings and claims, which arise in the ordinary course of its business. Although occasional adverse
decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse
effect on its financial position, results of operations or liquidity.
Bougainville Ventures
On September 20, 2018, the Company filed suit against Bougainville Ventures, Inc., BV-MCOA Management, LLC, Andy Jagpal, Richard Cindric,
et al. in Okanogan County Washington Superior Court, case number 18-2- 0045324.
Background
On March 16, 2017,
we entered into a joint venture agreement with Bougainville Ventures, Inc., a Canadian corporation. The purpose of the joint venture was
for the Company and Bougainville to jointly engage in the development and promotion of products in the legalized cannabis industry in
Washington State; (ii) utilize Bougainville’s high quality cannabis grow operations in the State of Washington, where it claimed
to have an ownership interest in real property for use within the legalized cannabis industry; (iii) leverage Bougainville’s agreement
with a I502 Tier 3 license holder to grow cannabis on the site; provide technical and management services and resources including, but
not limited to: sales and marketing, agricultural procedures, operations security and monitoring, processing and delivery, branding, capital
resources and financial management; and, (iv) optimize collaborative business opportunities. The Company and Bougainville agreed to operate
through a Washington State Limited Liability Company, and BV-MCOA Management, LLC was organized in the State of Washington on May 16,
2017.
As our contribution
to the joint venture, the Company committed to raise not less than $1 million dollars to fund joint venture operations based upon a funding
schedule. The Company also committed to providing branding and systems for the representation of cannabis related products and derivatives
comprised of management, marketing and various proprietary methodologies directly tailored to the cannabis industry. The Company and Bougainville's
agreement provided that funding provided by the Company would go, in part, towards the joint venture’s ultimate purchase of the
land consisting of a one-acre parcel located in Okanogan County, Washington, for joint venture operations.
As disclosed on
Form 8-K on December 11, 2017, the Company did not comply with the funding schedule for the joint venture. On November 6, 2017, the Company
and Bougainville amended the joint venture agreement to reduce the amount of the Company's commitment to $800,000 and also required the
Company to issue Bougainville 15 million shares of the Company's restricted common stock. The Company completed its payments pursuant
to the amended agreement on November 7, 2017, and on November 9, 2017, issued to Bougainville 15 million shares of restricted common stock.
The amended agreement provided that Bougainville would deed the real property to the joint venture within thirty days of its receipt of
payment.
Thereafter, the
Company determined that Bougainville had no ownership interest in the property in Washington State, but rather was a party to a purchase
agreement for real property that was in breach for non-payment. Bougainville also did not possess an agreement with a Tier 3 I502 license
holder to grow Marijuana on the property. Nonetheless, as a result of funding arranged for by the Company, Bougainville and an unrelated
third party, Green Ventures Capital Corp., purchased the land. The land is currently pending the payment of delinquent property taxes
that would allow for the Okanogan County Assessor to sub-divide the property, so that the appropriate portion could be deeded to the joint
venture. Although Bougainville represented it would pay the delinquent taxes, it has not. To date, the property has not been deeded to
the joint venture.
To clarify the
respective contributions and roles of the parties, the Company also offered to enter into good faith negotiations to revise and restate
the joint venture agreement with Bougainville. The Company diligently attempted to communicate with Bougainville in good faith to accomplish
a revised and restated joint venture agreement, and efforts towards satisfying the conditions to complete the subdivision of the land
by the Okanogan County Assessor. However, Bougainville failed to cooperate or communicate with the Company in good faith, and failed to
pay the delinquent taxes on the real property that would allow for sub-division and the deeding of the real property to the joint venture.
Company Determines
to File Suit.
On August 10, 2018,
the Company advised its independent auditor that Bougainville did not cooperate or communicate with the Company regarding its requests
for information concerning the audit of Bougainville’s receipt and expenditures of funds contributed by the Company in the joint
venture agreement. Bougainville had a material obligation to do so under the joint venture agreement. The Company believes that some of
the funds it paid to Bougainville were misappropriated and that there was self-dealing with respect to those funds. Additionally, the
Company believes that Bougainville misrepresented material facts in the joint venture agreement, as amended, including, but not limited
to, Bougainville’s representations that: (i) it had an ownership interest in real property that was to be deeded to the joint venture;
(ii) it had an agreement with a Tier 3 # I502 cannabis license holder to grow cannabis on the real property; and, (iii) that clear title
to the real property associated with the Tier 3 # I502 license would be deeded to the joint venture thirty days after the Company made
its final funding contribution. As a result, on September 20, 2018, the Company filed suit against Bougainville Ventures, Inc., BV-MCOA
Management, LLC, Andy Jagpal, Richard Cindric, et al. in Okanogan County Washington Superior Court, case number 18-2- 0045324. The Company’s
complaint seeks legal and equitable relief for breach of contract, fraud, breach of fiduciary duty, conversion, recession of the joint
venture agreement, an accounting, quiet title to real property in the name of the Company, for the appointment of a receiver, the return
to treasury of 15 million shares issued to Bougainville, and, for treble damages pursuant to the Consumer Protection Act in Washington
State. The registrant has filed a lis pendens on the real property. The case is currently in litigation.
NOTE 11 – INCOME TAXES
As of December 31, 2021, the Company has available
for federal income tax purposes a net operating loss carry forward of approximately $96,565,499, expiring in the year 2038, that may be
used to offset future taxable income, but could be limited under Section 382. The Company has provided a valuation reserve against the
full amount of the net operating loss benefit, since in the opinion of management based upon the earnings history of the Company; it is
more likely than not that the benefits will not be realized. Due to possible significant changes in the Company's ownership, the future
use of its existing net operating losses may be limited. All or portion of the remaining valuation allowance may be reduced in future
years based on an assessment of earnings sufficient to fully utilize these potential tax benefits.
We have adopted the provisions of ASC 740-10-25, which
provides recognition criteria and a related measurement model for uncertain tax positions taken or expected to be taken in income tax
returns. ASC 740-10-25 requires that a position taken or expected to be taken in a tax return be recognized in the financial
statements when it is more likely than not that the position would be sustained upon examination by tax authorities.
Tax position that meet the more likely than not threshold
is then measured using a probability weighted approach recognizing the largest amount of tax benefit that is greater than 50% likely of
being realized upon ultimate settlement. The Company had no tax positions relating to open income tax returns that were considered
to be uncertain. We file income tax returns in the U.S. and in the state of California and Utah with varying statutes of limitations.
The Company is required to file income tax returns
in the U.S. Federal jurisdiction and in California. The Company is no longer subject to income tax examinations by tax authorities for
tax years ending before December 31, 2017.
The Company’s deferred taxes as of December
31, 2021 and 2020 consist of the following:
| Schedule of Deferred Tax Asset | |
| |
|
| | |
2021 | |
2020 |
| Non-Current deferred tax asset: | |
| | | |
| | |
| Net operating loss carry-forwards | |
$ | 96,501,045 | | |
$ | 86,309,595 | |
| Valuation allowance | |
| (96,565,499 | ) | |
| (86,309,595 | ) |
| Net non-current deferred tax asset | |
$ | — | | |
$ | — | |
NOTE 12 –
SUBSCRIPTIONS PAYABLE
Share Exchange with Cannabis Global,
Inc. On September 30, 2020, the Company entered into a securities exchange agreement with Cannabis Global,
Inc., a Nevada corporation. By virtue of the agreement, the Company issued 650,000,000 shares of its unregistered common stock to Cannabis
Global in exchange for 7,222,222 shares of Cannabis Global unregistered common stock. The Company and Cannabis Global also entered into
a lock up leak out agreement which prevents either party from sales of the exchanged shares for a period of 12 months. Thereafter the
parties may sell not more than the quantity of shares equaling an aggregate maximum sale value of $20,000 per week, or $80,000 per month
until all Shares and Exchange Shares are sold. This material transaction involves related parties, insofar as Edward Manolos, our director,
is also a director of Cannabis Global, Inc.
Share Exchange
with Eco Innovation Group, Inc. On March 1, 2021, the Company entered into a securities exchange agreement with Eco Innovation Group,
Inc., a Nevada corporation, to acquire Eco Innovation Group, Inc. common stock, par value $0.001, equal in value to $650,000 based on
the closing price for the trading day immediately preceding the effective date, in exchange for the number of shares of Company common
stock, par value $0.001, equal in value to $650,000 based on the per-share price of $0.06 (the “Share Exchange Agreement”).
For both parties, the Share Exchange Agreement contains a “true-up” provision requiring the issuance of additional common
stock in the event that a decline in the market value of either parties’ common stock should cause the aggregate value of the stock
acquired pursuant to the Share Exchange Agreement to fall below $650,000. Complementary to the Share Exchange Agreement, the Company and
Eco Innovation Group entered into a Lock-Up Agreement dated February 26, 2021, providing that the shares of common stock acquired pursuant
to the Share Exchange Agreement shall be subject to a lock-up period preventing its sale for a period of 12 months following issuance,
and limiting the subsequent sale to an aggregate maximum. The Company recorded a value for additional shares owed to Eco Innovation Group
pursuant to the Share Exchange Agreement of $754,961 as a subscription agreement along with a loss from equity investment of $735,178.
As of December 31, 2021, 41,935,484 shares of the Company’s common stock have been issued for the original agreement.
Additionally,
as discussed in note 13, the Company entered into an agreement with the former owners of cDistro, whereby the Company will issue additional
shares related to the original purchase consideration of that acquisition. During the year ended December 31, 2021, the Company issued
an additional 109,134,122 shares with a fair value of $251,008. The Company owes an additional 180,486,830 shares with a fair value of
$234,633, which was recorded as stock-based compensation.
As a result,
the balance of subscriptions payable as of December 31, 2021 and December 31, 2020 was $989,594 and $670,000, respectively.
NOTE 13 – ACQUISITION
cDistro
On June 29, 2021, the Company,
cDistro Merger Sub, Inc., a Nevada corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), and cDistro, Inc.,
a privately-held Nevada corporation engaged in the hemp and CBD product distribution business (“cDistro”) entered into an
Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which, among other things, Merger Sub merged with and into
cDistro on September 30, 2021, with cDistro becoming a wholly-owned subsidiary of the Company and the surviving corporation in the merger
(the “Merger”). The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions
of Section 368(a) of the Internal Revenue Code of 1986, as amended.
Contingent Consideration
- Earnout Agreement
In connection to the Merger,
the Company and the securityholder of cDistro (the “cDistro Stockholder”) entered into an earnout agreement dated June 29,
2021 (the “Earnout Agreement”), whereby the Company agreed to issue additional shares of its common stock to the cDistro Stockholder
as compensation for the Merger conditioned upon the achievement of certain gross revenue milestones. If cDistro meets revenue targets
of $600,000 per quarter, up to a total of $2,400,000 of revenue, the Company will issue shares worth $250,000 upon the
achievement each quarterly revenue target, with the number of shares to be issued at each payout date calculated based on the lessor of 220,970,059 shares
of common stock or a 30% discount to the average close price of the Company’s common stock for the 20-day period immediately
preceding the payout date of the earnout. In accordance with ASC 805, the Company accounts for this earnout agreement as contingent consideration
based on the number of shares calculated as owed as of each quarter end, with changes in value to be recorded in earnings each reporting
period.
Leak-Out Agreement
On June 29, 2021, in connection
with the Merger and the Earnout Agreement, the cDistro Stockholder entered into a Lock-Up and Leak-Out Agreement with the Company pursuant
to which, among other thing, such stockholder agreed to certain restrictions regarding the resale of the common stock issued pursuant
to the Merger for a period of six months from the date of the Merger.
Employment Agreement
On June 29, 2021, in connection
with the Merger, the Company and the Chief Executive Officer of cDistro entered into an employment agreement, pursuant to which that employee
will serve as cDistro’s Chief Executive Officer for a three-year term.
The
acquisition of cDistro is being accounted for as a business combination under ASC 805. The Company is continuing to gather evidence to
evaluate what identifiable intangible assets were acquired, such as a customer list, and the fair value of each, and expects to finalize
the fair value of the acquired assets within one year of the acquisition date.
The aggregate preliminary fair value of consideration
for the cDistro acquisition was as follows:
| Schedule of aggregate preliminary fair value | |
|
| | |
Amount |
| Cash, net of cash acquired of $94,450 | |
$ | 155,550 | |
| Contingent Consideration - Earnout Agreement | |
| 907,407 | |
| 265,164,070 shares of common stock | |
| 1,617,501 | |
| Total preliminary consideration transferred | |
$ | 2,680,458 | |
A discount of $92,593 on
the contingent consideration was recognized at the acquisition date, and is being amortized through the end of the earnout period. Through
December 31, 2021, the Company has amortized $X to interest expense.
The following information
summarizes the preliminary allocation of the fair values assigned to the assets acquired and liabilities assumed at the acquisition date:
| Schedule summarizes the preliminary allocation of the fair values | |
|
| Accounts Receivable | |
$ | 27,000 | |
| Inventory | |
| 3,000 | |
| Other Assets | |
| 4,943 | |
| Trademarks | |
| 500,000 | |
| Licenses | |
| 600,000 | |
| Customer Relationships | |
| 100,000 | |
| Goodwill | |
| 1,633,557 | |
| Accounts payable | |
| (181,042 | ) |
| Other accrued liabilities | |
| (7,000 | ) |
| Net assets acquired | |
$ | 2,680,458 | |
On November 24, 2021,
the Company entered into a letter agreement (“Letter Agreement”) with an attached amendment to the Merger Agreement (“Amendment
No. 1 to the Merger Agreement”) with cDistro and Beach Labs, Inc., a Florida corporation and the former stockholder of cDistro
prior to the effective date of the Merger Agreement (“Beach Labs”). Capitalized terms used and not defined herein have the
respective meanings assigned to them in the Merger Agreement, as amended by Amendment No. 1 thereto.
Pursuant to the Letter
Agreement, the Company and cDistro agreed to adjust the compensation paid to Beach Labs under the Merger Agreement to maintain the stipulated
value of the compensation paid under the Merger Agreement by issuing part of the stipulated value of that compensation as a promissory
note and performing a true-up on the remaining stipulated value held as stock, and by amending the Merger Agreement to accommodate another
true-up to the stock in the event the market value of the compensation is lower than the stipulated value at the date of Rule 144 availability
to Beach Labs, December 29, 2021. The Letter Agreement also terminates the board observation rights letter with Beach Labs executed in
connection with the Merger Agreement.
Pursuant to the Letter
Agreement and Amendment No. 1 to the Merger Agreement, the Company made a promissory note to Beach Labs in the amount of $625,000,
agreed to satisfy half of the stated Merger Agreement compensation value of $1,200,000 (the “Note”), and performed a true-up
of the Merger Agreement stock compensation to reach the value of $600,000, equaling half of the stated Merger Agreement compensation value
of $1,200,000 (the “True-Up”), and amended the Merger Agreement to add a true-up provision that will maintain that $600,000
of stock compensation value at the date of Beach Lab’s Rule 144 eligibility. The Note is payable in declining monthly installments
over a 4-year period, carries 10% interest, and is convertible at the holder’s option to the Company’s common stock at a conversion
per share price of a 30% discount on the 20-day preceding average closing price of our common stock. In performing the True-Up, the Company
issued 109,134,121 shares of restricted common stock to Beach Labs which had a fair value of $251,008, which was included in stock-based
compensation expense. Additionally, as of December 31, 2021, the Company owed Beach Labs an additional 180,486,830 shares of stock, which
had a fair value of $234,633 which was recorded as stock-based compensation expense and included in Subscriptions Payable on the Company’s
consolidated balance sheet.
Unaudited
Pro Forma Financial Information
The following table sets
forth the pro-forma consolidated results of operations for the year ended December 31, 2021 and 2020 as if the cDistro acquisition occurred
on January 1, 2020. The pro forma results of operations are presented for informational purposes only and are not indicative of the results
of operations that would have been achieved if the acquisitions had taken place on the dates noted above, or of results that may occur
in the future.
| Schedule of pro-forma consolidated results of operations | |
| |
|
| | |
Year ended December 31, |
| | |
2021 | |
2020 |
| Revenue | |
$ | 1,422,678 | | |
$ | 364,811 | |
| Operating loss | |
| (4,847,954 | ) | |
| (5,234,942 | ) |
| Net loss | |
| (10,328,270 | ) | |
| (12,525,433 | ) |
| Net loss per common share | |
$ | (0.00 | ) | |
$ | (0.01 | ) |
| Weighted Average common shares outstanding | |
| 5,390,127,712 | | |
| 1,227,193,458 | |
VBF Brands, Inc.
On October 6, 2021, the Company, through its wholly
owned subsidiary Salinas Diversified Ventures, Inc., a California corporation, entered into an Asset Purchase Agreement, Management Services
Agreement, Cooperation Agreement and Employment Agreement with VBF Brands, Inc., a California corporation (“VBF”), a wholly
owned subsidiary of Sunset Island Group, Inc., a Colorado corporation (“SIGO”). VBF and SIGO agreed to transfer to the Company
all of VBF’s outstanding stock to the Company, and appointed our CEO and CFO Jesus Quintero as President of VBF.
VBF owns various fixed assets including machinery
and equipment, a lease for a 10,000 square foot facility located at 20420 Spence Road, Salinas, California, 93908, leasehold improvements,
good-will, inventory, tradenames including “VBF Brands,” trade secrets, intellectual property, and other tangible and intangible
properties, including licenses issued by the City of Salinas, County of Monterey, and the State of California to operate a licensed cannabis
nursery, cultivation facility, and operations for the manufacturing and distribution of cannabis and cannabis products.
VBF and SIGO agreed to sell and transfer to the Company
all of VBF’s outstanding stock, and, by virtue of the Management Services Agreement, appoint Mr. Jesus Quintero as President of
VBF, vesting management and control of VBF’s licensed cannabis operations in the Company. Concurrently, VBF and Livacich entered
into a Cooperation Agreement, whereby VBF and Livacich agreed to cooperate to facilitate the transfer of ownership of VBF, which includes
licenses issued by the City of Salinas, County of Monterey, and the State of California, to operate a cannabis nursery, cultivation facility
and manufacturing and distribution operations to the Company. The Company also agreed to retain Livacich as Chief Executive Officer for
a term of two years and agreed to compensate her with a salary including a signing cash bonus of $250,000, and a $250,000 performance
cash bonus payable after six months after the Effective Date. The bonus is conditioned upon Livacich meeting an agreed to “Net Revenue”
target of one million dollars ($1,000,000) from VBF’s operations during the six-month period after closing of the Asset Purchase
Agreement, and her compliance with the terms and conditions of this Asset Purchase Agreement, the Management Services Agreement and the
Cooperation Agreement.
As consideration for the transaction, the Company
agreed to assume two secured convertible promissory notes issued by SIGO to St. George Investments, LLC, a Utah limited liability company
(“St. George”) (the “SIGO Notes”). The first note was issued December 8, 2017, in the original face amount of
$170,000.00, and the second was issued February 13, 2018, in the original face amount of $4,245,000.00. SIGO also issued warrants to St.
George to purchase shares in SIGO, and fifty (50) shares of Series A Preferred Stock in SIGO. St. George agreed to cancel the warrants
and preferred shares upon the Company’s assumption of the SIGO Notes.
Under the Asset Purchase Agreement, the closing is
conditioned upon certain conditions precedent, specifically (i) VBF and SIGO’s full corporate authorization, consent and execution
of this Agreement; (ii) VBF’s sale to MCOA of 100% of the issued and outstanding shares of VBF; (iii) full corporate authorization,
consent compliance with and execution of the Management Services Agreement and Cooperation Agreement; (iv) SIGO’s disclosure of
the Agreement on Form 8-K with the Securities and Exchange Commission; (v) full cooperation in MCOA’s financial auditing of VBF
in accordance with ASC 805, including providing unrestricted access to all VBF corporate and financial records and providing all necessary
cooperation with VBF financial personnel; (vi) full cooperation in aiding and assisting Buyer with its change of ownership applications
with the relevant licensing authorities; (vii) the warranty of truthful representations and execution of and compliance with the terms
and conditions of the Executive Employment Agreement, Management Services Agreement and the Cooperation Agreement.
As of the date of this filing, the conditions precedent
to the closing of the Asset Purchase Agreement remain in the process of implementation, so that the Asset Purchase Agreement closing has
not yet occurred pursuant to its terms. Legal counsel for MCOA is currently in the process of working with VBF, Salinas Diversified Ventures,
and the relevant state and local governments to effect the change of control and license transfers necessary to close the Asset Purchase
Agreement.
NOTE 14 – SUBSEQUENT EVENTS
Subsequent to December 31, 2021, the Company
has sold a total of 90,000,000 shares of common stock at a fixed price of $0.001 per share for a total of $90,000 in cash to accredited
investors under the Company’s active Regulation A offering, qualified by the SEC on October 20, 2021. There is no assurance that
the Company will raise any further funds under the Regulation A offering.
Subsequent to December 31, 2021, the Company
has sold a total of 706,250,000 shares of common stock at a fixed price of $0.0008 per share for a total of $565,000 in cash to accredited
investors under the Company’s active Regulation A offering, qualified by the SEC on October 20, 2021 and amended on December 15,
2021. There is no assurance that the Company will raise any further funds under the Regulation A offering.
On February 17, 2022, the Company issued
12,500,000 shares of common stock to SRAX, Inc. in full conversion of a promissory note dated August 7, 2020, at a per-share conversion
price of $0.0016.
On April 1, 2022, the Company issued 76,923,077
shares of restricted common stock to North Equities USA Ltd., valued at $100,000, or $0.0013 per share, in compensation pursuant to a
consulting agreement dated December 24, 2021.
On April 5, 2022, the Company issued 38,762,344
shares of common stock to an accredited investor in partial conversion of a promissory note dated May 25, 2021, at a per-share conversion
price of $0.00039.
On April 6, 2022, the Company issued 435,540,070
shares of restricted common stock to Beach Labs, Inc., pursuant to the earnout agreement between the Company and Beach Labs executed in
relation to the acquisition of cDistro, Inc.
On April 7, 2022, the Company made a promissory
note in the principal amount of $59,743.96 to a related party.