Carbon Credits International Inc. (“CCII”), which was formed on October 15, 2007 as a Nevada corporation, was the result of a spin off from Carbon Credits Industries, Inc. (“CCI”), its former parent issuer, on October 17, 2007. On December 23, 2011, CCII entered into a merger agreement with Lifestyle Wireless, Inc. (“LWI”), a Washington Corporation, with CCII remaining as the surviving company. The effective date of the merger was January 10, 2012. On July 1, 2013, CCII changed its name to Singlepoint Inc. (“Singlepoint” or “the Company”). On May 14, 2019, the Company established a subsidiary, Singlepoint Direct Solar LLC (“SDS”), completing the acquisition of certain assets of Direct Solar LLC and AI Live Transfers LLC (See Note 3). The Company owns Fifty One Percent (51%) of the membership interests of SDS.
The Company looks to acquire businesses and build brands based on technology solutions we believe will increase efficiencies across various markets. We strive to create long-term value for our shareholders by helping our partner companies to increase their market penetration, grow revenue and improve cash flow. We currently have three subsidiaries, Singlepoint Direct Solar LLC (“SDS”, 51% interest), Discount Garden Supply, Inc. (“DIGS”, 90% interest), and ShieldSaver, LLC (“ShieldSaver”, 51% interest).
The financial statements have been prepared assuming that the Company will continue as a going concern. As of June 30, 2020, the Company has yet to achieve profitable operations and is dependent on its ability to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company’s ability to continue in existence is dependent on the Company’s ability to develop the Company’s businesses and to achieve profitable operations. Since the Company does not anticipate achieving profitable operations and/or adequate cash flows in the near term, management will continue to pursue additional equity financing through private placements of the Company’s common stock.
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission including Form 10-Q and Regulation S-X. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly state the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been omitted pursuant to such rules and regulations. These financial statements and the information included under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the audited financial statements and explanatory notes for the year ended December 31, 2019 as disclosed in our Form 10-K filed with the Securities and Exchange Commission on March 31, 2020. The results of the six months ended June 30, 2020 (unaudited) are not necessarily indicative of the results to be expected for the pending full year ending December 31, 2020.
The consolidated financial statements include the accounts of Singlepoint, DIGS, SDS and ShieldSaver as of June 30, 2020 and December 31, 2019, and for the three and six months ended June 30, 2020 and 2019 (with the accounts of Jiffy Auto Glass (“JAG”), a former subsidiary, included in the three and six months ended June 30, 2019). All significant intercompany transactions have been eliminated in consolidation.
It is the Company’s policy that revenue from product sales or services will be recognized in accordance with ASC 606 “Revenue from Contracts with Customers”. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In applying the new revenue recognition model to contracts with customers, an entity: (1) identifies the contract(s) with a customer; (2) identifies the performance obligations in the contract(s); (3) determines the transaction price; (4) allocates the transaction price to the performance obligations in the contract(s); and (5) recognizes revenue when (or as) the entity satisfies a performance obligation. The accounting standards update applies to all contracts with customers except those that are within the scope of other topics in the FASB Accounting Standards Codification.
The Company incurs costs associated with product distribution, such as freight and handling costs. The Company has elected to treat these costs as fulfillment activities and recognizes these costs at the same time that it recognizes the underlying product revenue. As this policy election is in line with the Company’s previous accounting practices, the treatment of shipping and handling activities under Topic 606 did not have any impact on the Company’s results of operations, financial condition and/or financial statement disclosures. In accordance with the new guidance, the Company recognizes revenue at an amount that reflects the consideration that the Company expects to be entitled to receive in exchange for transferring goods or services to its customers. The Company’s policy is to record revenue when control of the goods transfers to the customer.
In addition to selling the Company’s products to customers, the Company recognizes revenues by sharing commissions with Independent Sales Organizations as an agent on a net basis.
The Company considers all highly liquid investments with the original maturities of ninety days or less at the time of purchase to be cash equivalents. The Company maintains deposits in financial institutions which are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company had no deposits in excess of amounts insured by the FDIC as of June 30, 2020.
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with the Accounting Standards Committee (“ASC”) 815 “Derivatives and Hedging”. It provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or other expense. Upon conversion or exercise of a derivative financial instrument, the instrument is marked to fair value at the conversion date and is reclassified to equity. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of notes redemption
The Company accounts for its income taxes in accordance with ASC 740 “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. The Company has a net operating loss carryforward, however, due to the uncertainty of realization, the Company has provided a full valuation allowance for deferred tax assets resulting from this net operating loss carryforward.
Basic loss per common share has been calculated based upon the weighted average number of common shares outstanding during the period in accordance with the ASC 260-10, “Earnings per Share”. Common stock equivalents are not used in the computation of loss per share, as their effect would be antidilutive. Diluted EPS includes the effect from potential issuance of common stock, including stock issuable pursuant to the assumed exercise of warrants and conversion of convertible notes and Class A Preferred Stock. Dilutive EPS is computed by dividing net income (loss) by the sum of the weighted average number of common stock outstanding, and the dilutive shares.
The following table summarizes the number of shares of common stock issuable pursuant to our convertible securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive even though the exercise price could be less than the average market price of the common shares:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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. Actual results could differ from those estimates and assumptions.
On January 1, 2011, the Company adopted guidance which defines fair value, establishes a framework for using fair value to measure financial assets and liabilities on a recurring basis, and expands disclosures about fair value measurements. Beginning on January 1, 2011, the Company also applied the guidance to non-financial assets and liabilities measured at fair value on a non-recurring basis, which includes goodwill and intangible assets. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:
Level 1 - Valuation is based upon unadjusted quoted market prices for identical assets or liabilities in accessible active markets.
Level 2 - Valuation is based upon quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable in the market.
Level 3 - Valuation is based on models where significant inputs are not observable. The unobservable inputs reflect a company’s own assumptions about the inputs that market participants would use.
The Company’s financial instruments consist of cash, accounts receivable, investments, accounts payable, convertible notes payable, advances from related parties, and derivative liabilities. The estimated fair value of cash, accounts receivable, investments, accounts payable, convertible notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments.
Certain non-financial assets are measured at fair value on a nonrecurring basis. Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic impairment tests.
The Company’s derivative liabilities have been valued as Level 3 instruments.
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of convertible notes derivative liability – June 30, 2020
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
3,895,484
|
|
|
$
|
3,895,484
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of convertible notes derivative liability – December 31, 2019
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
2,813,150
|
|
|
$
|
2,813,150
|
|
The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of December 31, 2019 and June 30, 2020:
|
|
Derivative
Liability
|
|
Balance, December 31, 2019
|
|
|
2,813,150
|
|
Additions recognized as debt discount
|
|
|
984,801
|
|
Derivative liability settlements
|
|
|
(319,765
|
)
|
Mark-to-market at June 30, 2020
|
|
|
417,298
|
|
Balance, June 30, 2020
|
|
$
|
3,895,484
|
|
|
|
|
|
|
Net loss for the year included in earnings relating to the liabilities held at June 30, 2020
|
|
$
|
417,298
|
|
Recently Issued Accounting Pronouncements
Leases
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement are dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease are disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard was effective for our interim and annual periods beginning January 1, 2019 and was applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. We adopted this standard on January 1, 2019. The adoption of this standard resulted in a charge of approximately $14,000 to general and administrative expense for the year ended December 31, 2019.
There were various other accounting standards and interpretations issued recently, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows. Management has evaluated these new pronouncements through June 30, 2020.
Subsequent Events
Other than the events described in Note 11, there were no subsequent events that required recognition or disclosure. The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission.
NOTE 3 – INVESTMENTS, ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS
Investments
The Company records its investments using the cost method. If cost exceeds fair value, an impairment loss is recognized unless the impairment is considered temporary.
The Company had total investments of $35,000 and $60,000 as of June 30, 2020 and December 31, 2019, respectively.
2019 Asset Acquisition – Direct Solar LLC/ AI Live Transfers LLC
On May 14, 2019, the Company, via the formation of SDS, completed the acquisition of certain assets of Direct Solar LLC and AI Live Transfers LLC (the “Acquired Assets”). The Company owns Fifty One Percent (51%) of the membership interests of SDS. In connection with the acquisition of these assets the Company issued an aggregate of 156,058,751 shares of common stock. The Company agreed that it shall reinvest into SDS its portion of distributions of Net Cash Flow (as defined in the Operating Agreement of SDS), if any, up to Two Hundred and Fifty Thousand ($250,000) Dollars per quarter, up to a total of Seven Hundred and Fifty Thousand ($750,000) Dollars. SDS has not made any distributions and no amounts have been reinvested as of June 30, 2020.
The total value of common stock issued for the purchase of the Acquired Assets was $1,966,340 on the issuance date and was allocated to goodwill based on the workforce acquired and to intangible assets based on trademarks and tradenames acquired. The total purchase price for the Acquired Assets was allocated as follows:
Intangible assets
|
|
$
|
72,600
|
|
Goodwill
|
|
|
1,893,740
|
|
Current assets
|
|
|
-
|
|
Current liabilities
|
|
|
-
|
|
Total net assets acquired
|
|
$
|
1,966,340
|
|
The purchase price consists of the following:
|
|
|
|
|
Cash
|
|
|
-
|
|
Common Stock
|
|
|
1,966,340
|
|
Total purchase price
|
|
$
|
1,966,340
|
|
Total revenue of $1,318,184, net loss of $412,642, and contributed net loss of $210,449 after non-controlling interest related to SDS for the six months ended June 30, 2020 are included in the Company’s accompanying consolidated statement of operations.
Goodwill and Intangible Assets
The following table presents details of the Company’s goodwill as of June 30, 2020 and December 31, 2019:
|
|
SDS
|
|
Balances at December 31, 2018:
|
|
$
|
-
|
|
Aggregate goodwill acquired
|
|
|
1,966,340
|
|
Impairment losses
|
|
|
-
|
|
Balances at December 31, 2019:
|
|
|
1,966,340
|
|
Aggregate goodwill acquired
|
|
|
-
|
|
Impairment losses
|
|
|
-
|
|
Goodwill adjustment
|
|
|
(72,600
|
)
|
Balances at June 30, 2020:
|
|
$
|
1,893,740
|
|
The Company periodically reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Specifically, a goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units.
The Company used the discounted cash flow method for the impairment testing as of June 30, 2020. The Company performed discounted cash flow analysis projected over four years to estimate the fair value of the reporting unit, using management’s best judgement as to revenue growth rates and expense projections. This analysis indicated cash flows (and discounted cash flows) greater than the book value of goodwill. The Company determined there were no indicators of impairment in goodwill during the six months ended June 30, 2020.
During the six months ended June 30, 2020, the Company adjusted its goodwill to reflect its final valuation of its goodwill and intangible assets. The adjustment decreased goodwill and increased intangible assets by $72,600, with no effect on total purchase price. The gross intangible assets of $72,600 have an estimated useful life of five years, a net book value of $56,265 as of June 30, 2020, and amortization expense of $16,335 for the six-months ended June 30, 2020. Total future annual amortization expense is $14,520 per year.
Proforma Information (unaudited)
SDS
The following unaudited pro forma information presents the consolidated results of the Company’s operations and the results of the acquisition of the Acquired Assets as if the May 14, 2019 acquisition had been consummated on January 1, 2019. Such unaudited pro forma information is based on historical unaudited financial information with respect to the Acquired Assets acquisition and does not include operational or other charges which might have been affected by the Company. The unaudited pro forma information for the six months ended June 30, 2019 presented below is for illustrative purposes only and is not necessarily indicative of the results which would have been achieved or results which may be achieved in the future:
|
|
Six Months
Ended
June 30,
|
|
|
|
2019
|
|
Net revenue
|
|
$
|
1,960,082
|
|
Net loss
|
|
$
|
(9,014,714
|
)
|
NOTE 4 - CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE
Convertible notes payable consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
|
|
|
|
|
|
|
Convertible note payable to investor (the “CVP Note”) dated October 10, 2017, with interest at 10%, an Original Issue Discount (“OID”) of $70,000, due October 6, 2019, convertible into shares of the Company’s common stock at a discount of 60% of the average of the three lowest closing bid prices of the Company’s common stock during the 20 trading days prior to conversion. The CVP Note provides for additional tranches of a maximum of $3,970,000, which includes OID of 10%. The note includes a warrant to purchase 5,000,000 shares of the Company’s common stock at a price of $0.10 per share. The CVP Note is secured by substantially all assets of the Company. The investor converted a total of $444,500 of principal and accrued interest of this note into 105,875,646 shares of the Company’s common stock and was repaid $40,000 by the Company during the year ended December 31, 2019. Additionally, the investor converted a total of $78,420 of principal and accrued interest of this note into 32,034,513 shares of the Company’s common stock and was repaid $25,000 by the Company in 2020, resulting in repayment in full in March 2020.
|
|
|
-
|
|
|
|
100,235
|
|
|
|
|
|
|
|
|
|
|
Convertible note payable to investor (the “UAHC Note”) dated October 10, 2017, with interest at 10%, an OID of $70,000, due October 6, 2019, convertible into shares of the Company’s common stock at a discount of 60% of the average of the three lowest closing bid prices of the Company’s common stock during the 20 trading days prior to conversion. The UAHC Note includes a warrant to purchase 5,000,000 shares of the Company’s common stock at a price of $0.10 per share. The UAHC Note is secured by substantially all assets of the Company. The investor converted a total of $125,000 of principal and accrued interest of this note into 29,543,067 shares of the Company’s common stock and was repaid $50,000 by the Company during the year ended December 31, 2019. This note is currently in default.
|
|
|
619,490
|
|
|
|
619,490
|
|
|
|
|
|
|
|
|
|
|
Convertible note payable to investor (the “Iliad Note”) dated November 5, 2018 totaling $500,000, plus OID of $225,000 and legal fees of $20,000. The Iliad Note bears interest at 10% and matures on November 5, 2020. Total available under note is $5,520,000, including $500,000 OID (and $20,000 in legal fees applied to the first $500,000 tranche). The Iliad Note is convertible into shares of the Company’s common stock after 180 days at a discount of 35% of the average of the three lowest closing bid prices of the Company’s common stock during the 20 trading days prior to conversion. The Company borrowed $1,925,000 (including OID of $175,000) under this note during the year ended December 31, 2019. The investor converted a total of $155,000 of principal and accrued interest of this note into 50,309,973 shares of the Company’s common stock during the six months ended June 30, 2020. The Iliad Note is secured by substantially all assets of the Company.
|
|
|
2,340,000
|
|
|
|
2,495,000
|
|
|
|
|
|
|
|
|
|
|
Convertible note payable to investor (the “GSC Note”) dated March 11, 2020 totaling $320,500, plus OID of $30,000 and legal fees of $9,500. The GSC Note bears interest at 10% and matures on March 6, 2021. Total available under note is $1,440,000, including $120,000 OID (and $9,500 in legal fees taken on first $320,500 tranche). The GSC Note is convertible into shares of the Company’s common stock at any time at a discount of 25% of the lowest closing bid price of the Company’s common stock during the 10 trading days prior to conversion.
|
|
|
360,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Convertible note payable with an accredited investor dated October 31, 2016, with interest at 0%, due October 31, 2017, convertible at $0.007 per share. This note is currently in default.
|
|
$
|
10,500
|
|
|
$
|
10,500
|
|
|
|
|
|
|
|
|
|
|
Total convertible notes payable
|
|
|
3,329,990
|
|
|
|
3,225,225
|
|
Less debt discounts
|
|
|
(1,099,254
|
)
|
|
|
(1,154,327
|
)
|
Convertible notes payable, net
|
|
|
2,230,736
|
|
|
|
2,070,898
|
|
Less current portion of convertible notes, net
|
|
|
(2,230,736
|
)
|
|
|
(2,070,898
|
)
|
Long-term convertible notes payable, net
|
|
$
|
-
|
|
|
$
|
-
|
|
Aggregate maturities of long-term debt as of June 30, 2020 are due in future years as follows:
2020
|
|
$
|
2,230,736
|
|
|
|
$
|
2,230,736
|
|
Accrued interest on the above notes payable totaled $390,238 and $227,352 as of June 30, 2020 and December 31, 2019, respectively. Interest expense for the above notes payable for the six months ended June 30, 2020 and 2019 was $166,071 and $182,932, respectively. Total amortization of debt discounts was $1,079,374 and $780,086 for the six months ended June 30, 2020 and 2019, respectively.
Short-term Notes Payable
In May 2020, the Company received total loan proceeds of $332,737 under the SBA’s Paycheck Protection Program (“PPP”) and is included in short-term notes payable as of June 30, 2020. The two PPP loans include a promissory note with SDS with principal of $312,300, due May 7, 2022, and a promissory note with Singlepoint with principal of $20,437, due in 18 monthly installments beginning December 12, 2020. Both PPP loans bear interest at 1%. Under the PPP loan terms, the Company may apply (and plans to apply) for forgiveness of the PPP loans.
NOTE 5 – OBLIGATIONS UNDER CAPITAL LEASE
The Company leases approximately 1,400 square feet of office space at 2999 North 44th Street, Phoenix, Arizona 85018 through January 31, 2023 at a monthly base rent of $3,270 through January 2020, increasing to $3,618, $3,688 and to $3,758 per month beginning February 2020, February 2021 and February 2022, respectively.
On July 2, 2019, the Company executed a lease agreement for an industrial building space in California for 24 months at base rent of $2,400 per month through June 30, 2021.
The above leases are classified as capital leases under ASC 842 which the Company adopted in 2019. The following is a summary of property held under these capital leases at June 30, 2020 and December 31, 2019:
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Office and warehouse facilities
|
|
$
|
224,037
|
|
|
$
|
224,037
|
|
Accumulated amortization
|
|
|
(115,988
|
)
|
|
|
(87,106
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
108,049
|
|
|
$
|
136,931
|
|
Future maturities of obligations under capital leases are as follows:
Twelve months ending June 30,
|
|
|
|
2021
|
|
$
|
72,568
|
|
2022
|
|
|
44,603
|
|
2023
|
|
|
26,302
|
|
|
|
|
|
|
Total minimum lease payments
|
|
|
143,473
|
|
Amounts representing interest
|
|
|
(14,316
|
)
|
|
|
$
|
129,157
|
|
NOTE 6 - DERIVATIVE LIABILITY
Derivative Liability- Debt
The fair value of the described embedded derivative on all convertible debt was valued at $3,895,484 and $2,813,150 at June 30, 2020 and December 31, 2019, respectively, which was determined using the Black Scholes Pricing Model with the following assumptions:
Dividend yields
|
|
|
0%
|
|
Term
|
|
0 – 2.0 year
|
|
Volatility
|
|
79.7%–99.9%
|
|
Risk free rate:
|
|
0.16–1.59%
|
|
For the years ended June 30, 2020 and December 31, 2019, the Company adjusted the recorded fair value of the derivative liability on debt to market resulting in non-cash, non-operating loss of $417,298 and $3,147,650 for the six months ended June 30, 2020 and 2019, respectively.
Note 2 contains a summary of changes in fair value of the Company’s Level 3 financial liabilities as of June 30, 2020.
NOTE 7 - STOCKHOLDERS’ DEFICIT
On January 30, 2020, the Company amended its Articles of Incorporation and authorized 5,000,000,000 shares of common stock (previously 2,000,000,000 shares) and 100,000,000 shares of preferred stock (previously 60,000,000 shares), of which 60,000,000 shares are designated as Class A Convertible Preferred Stock and 40,000,000 shares of preferred stock remain undesignated. The Company has retroactively reflected this amendment as of December 31, 2019.
Class A Convertible Preferred Shares
As of June 30, 2020 and December 31, 2019, the Company had authorized 100,000,000 shares, respectively, of preferred stock, $0.0001 per value per share, of which 60,000,000 shares are designated as Series A Convertible Preferred Stock (“Class A Stock”) with $0.0001 par value per share, of which 52,600,000 and 54,200,000 shares were issued and outstanding as of June 30, 2020 and December 31, 2019, respectively. As of June 30, 2020 and December 31, 2019, a total of 40,000,000 shares of preferred stock remain undesignated and unissued.
Each share of Class A Stock is convertible at any time into 25 shares of common stock, totaling 1,355,000,000 shares of common stock assuming full conversion of all outstanding shares. No dividends are payable unless declared by the Board of Directors. Each share of Class A Stock votes with the shares of Common Stock and is entitled to 50 votes per share and ranks senior to all other classes of stock in liquidation in the amount of $1 per share.
In April 2020, the President converted 1,600,000 shares of Class A stock for 40,000,0000 shares of the Company’s common stock.
Common Shares
As of June 30, 2020, the Company’s authorized common stock was 5,000,000,000 shares, at $0.0001 par value per share, with 1,835,624,306 and 1,698,279,820 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively.
Shares issued during the six months ended June 30, 2020
During the six months ended June 30, 2020, the Company issued an aggregate of 82,344,486 shares of common stock to investors for the conversion of a total of $233,421 of convertible debt and accrued interest.
On January 13, 2020, the Company issued 10,000,000 shares of common stock to a consultant for services with a fair value of $88,000, or $0.0088 per share.
On March 12, 2020, the Company issued 5,000,000 shares of common stock to a consultant for services with a fair value of $30,000, or $0.0060 per share.
NOTE 8 - RELATED PARTY TRANSACTIONS
Accrued Officer Compensation
As of June 30, 2020 and December 31, 2019, a total of $788,611 and $588,611, respectively, was accrued for unpaid officer wages due the Company’s CEO, CFO and President under their respective employment agreements.
Other
The Company’s CEO has advanced the Company funds since 2017, with a balance due of $995,700 and $735,000, respectively, plus accrued interest of $150,536 and $96,273 as of June 30, 2020 and December 31, 2019, respectively. These balances accrue interest at 12% beginning on October 1, 2018, are unsecured and due on demand. Total interest expense on the advances totaled $54,263 and $35,556 for the six months ended June 30, 2020 and 2019, respectively.
As of June 30, 2020 and December 31, 2019, a total of $16,619 and $16,619, respectively, was due our CEO and our President and is included in accounts payable.
As of June 30, 2020 and December 31, 2019, a total of $14,522 and $15,222, respectively, was due to the founder of DIGS for advances to DIGS.
As of June 30, 2020 and December 31, 2019, a total of $0 and $2,892, respectively, was due the founder of DIGS and is included in accounts payable.
In March 2020, the board of directors authorized the conversion of amounts payable to the Company’s officers to the Company’s common stock. The amounts are convertible at the option of the officer at a conversion price of $0.01 per share. As of the date of this report, no officer has converted any monies owed into shares of the Company’s common stock.
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Employment Agreements
In May 2018 the Company entered into an employment agreement with Mr. Greg Lambrecht. The agreement provided that Mr. Lambrecht would serve as CEO and CFO of the Company for a term of three years at an annual salary of Two Hundred Twenty Thousand Dollars ($220,000), and an incentive bonus as determined by the board of directors. The agreement shall automatically be renewed for additional three-year periods unless either party has provided written termination of this Agreement at least 90 days prior to the expiration of such term. Greg Lambrecht resigned as CFO of the Company in January 2020.
In May 2018 the Company entered into an employment agreement with Mr. Ralston. The agreement provided that Mr. Ralston would serve as President of the Company for a term of three years at an annual salary of One Hundred Thousand Dollars ($100,000), and an incentive bonus as determined by the board of directors. The agreement shall automatically be renewed for additional three-year periods unless either party has provided written termination of this Agreement at least 90 days prior to the expiration of such term.
In January 2020, the Company entered into an employment agreement with Corey Lambrecht to serve as the Chief Financial Officer of the Company effective January 1, 2020. The following is a summary of the material terms of the employment agreement (all capitalized terms not otherwise defined herein are defined in the employment agreement): term is for a period of one year; salary is Eighty Thousand Dollars ($80,000.00) per year; if employment is terminated as a result of his death or Disability, the Company shall pay the Base Salary and any accrued but unpaid Bonus and expense reimbursement amounts through the date of his Death or Disability and a lump sum payment equal to $40,000 (at the time his Death or Disability occurs) within 30 days of his Death or Disability; If employment is terminated by the Board for Cause, then the Company shall pay the Base Salary and Bonus earned through the date of his termination; If employment is terminated upon the occurrence of a Change of Control or within six (6) months thereafter, the Company (or its successor, as applicable) shall (i) continue to pay to the Base Salary for a period of six (6) months following such termination, (ii) pay any accrued and any earned but unpaid Bonus, (iii) pay the Bonus he would have earned had he remained with the Company for six (6) months from the date which such termination occurs, and (iv) pay expense reimbursement amounts through the date of termination.
Equity Incentive Plan
On January 30, 2020, the Company adopted the 2019 Equity Incentive Plan (the “Plan”) to provide additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons. As of the date of this report the Company has not issued any awards under the Plan.
NOTE 10 - REVENUE CLASSES AND CONCENTRATIONS
Selected financial information for the Company’s operating revenue for disaggregated revenue purposes are as follows:
|
|
Six Months
Ended
June 30,
|
|
|
Six Months
Ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Revenue by product/service lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$
|
34,362
|
|
|
$
|
79,973
|
|
Distribution
|
|
|
95,693
|
|
|
|
454,172
|
|
Services
|
|
|
1,340,444
|
|
|
|
585,604
|
|
Total
|
|
$
|
1,470,499
|
|
|
$
|
1,119,749
|
|
|
|
|
|
|
|
|
|
|
Revenue by subsidiary:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Singlepoint (parent company)
|
|
$
|
127,865
|
|
|
$
|
478,228
|
|
SDS
|
|
|
1,318,184
|
|
|
|
85,784
|
|
DIGS
|
|
|
24,450
|
|
|
|
70,951
|
|
Shield Saver
|
|
|
-
|
|
|
|
19,340
|
|
JAG
|
|
|
-
|
|
|
|
465,446
|
|
Total
|
|
$
|
1,470,499
|
|
|
$
|
1,119,749
|
|
One customer represented approximately 57% of the Company’s accounts receivable balance as of June 30, 2020. Two customers represented approximately 70% and 17%, respectively, of the Company’s accounts receivable balance as of December 31, 2019. No customer comprised more than 10% of the Company’s revenue for six months ended June 30, 2020 or 2019.
NOTE 11 - SUBSEQUENT EVENTS
Equity Financing Agreement
On April 21, 2020 Singlepoint Inc. (the “Company”) entered an Equity Financing Agreement (the “Equity Financing Agreement”) and Registration Rights Agreement (the “Registration Rights Agreement”) with GHS Investments LLC (“GHS”). Pursuant to the Equity Financing Agreement GHS agreed to purchase up to Seven Million Dollars ($7,000,000) in shares of the Company’s common stock, from time to time over the course of twenty four (24) months after effectiveness of a registration statement on Form S-1 (the “Registration Statement”) of the underlying shares of Common Stock (the “Contract Period”). The Registration Statement was declared effective on July 29, 2020 at which time the Company is authorized to direct GHS to purchase shares of Common Stock of the Company.
The Equity Financing Agreement grants the Company the right, from time to time at its sole discretion (subject to certain conditions) during the Contract Period, to direct GHS to purchase shares of Common Stock on any business day (a “Put”), provided that at least ten trading days has passed since the most recent Put. The purchase price of the shares of Common Stock contained in a Put shall be eighty percent (80%) percent of the lowest volume weighted average price (VWAP) of the Company’s Common Stock for ten (10) consecutive trading days preceding the Put. No Put will be made in an amount less than twenty-five thousand dollars ($25,000) or greater than five hundred thousand dollars ($500,000). In no event is the Company entitled to make a Put or is Investor be entitled to purchase that number of shares of Common Stock of the Company, which when added to the sum of the number of shares of Common Stock beneficially owned (as such term is defined under Section 13(d) and Rule 13d-3 of the 1934 Act), by GHS, would exceed 4.99% of the number of shares of Common Stock outstanding on such date, as determined in accordance with Rule 13d-1(j) of the 1934 Act.
The Equity Financing Agreement shall terminate upon any of the following events: when GHS has purchased an aggregate of Seven Million Dollars ($7,000,000) in the Common Stock of the Company pursuant to the Equity Financing Agreement; on the Date that is twenty-four (24) calendar months from the date the Registration Statement is declared "Effective"; at such time that the Registration Statement is no longer in effect; by the Company at any time, after ninety (90) calendar days notice following the closing of any Put; or upon thirty (30) calendar days after written notice by the Company if no Put Notices have been delivered. Actual sales of shares of Common Stock to the Investor under the Equity Financing Agreement will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the Common Stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations. The net proceeds under the Equity Financing Agreement to the Company will depend on the frequency and prices at which the Company sells shares of its stock to GHS.
On August 6, 2020, the Company issued 14,820,249 shares of common stock to GHS at a price of $51,404 (or $0.0035 per share) under the initial Put notice issued by the Company under the Equity Financing Agreement.
Letter of Intent
On July 20, 2020 SDS entered into a letter of intent (the “Letter of Intent”) with Standard Eco LLC (“Standard Eco,” a developer and installer of grid tied solar electric systems). Pursuant to the Letter of Intent SDS would acquire Fifty One Percent (51%) of the interests of Standard Eco in exchange for Fifty Thousand Dollars ($50,000) and shares of common stock of the Company (the “Shares”) valued at Five Hundred Fifteen Thousand Dollars ($515,000), based on the 10 day volume weighted average price of the common stock immediately preceding the closing date or dates defined in the definitive agreement. The Letter of Intent provides: (i) that the holders of the Shares will agree to enter into voting agreements to vote along in concurrence with board of directors of the Company for a three-year period, (ii) Seventy Percent (70%) of the quarterly net profits (if any) to be distributed in accordance with ownership percentages within 45 days of the end of the quarter or when the financial statements for each quarter are prepared, (iii) Twenty Percent (20%) of the annual profit (if any) shall remain in the company for working capital or general corporate purposes, (iv) the remaining annual profit (if any) shall be distributed within 45 days of the end of the calendar year or when the annual financial statement are prepared, and (v) retain certain employees of Standard Eco for a period of at least two years. The closing of the transactions set forth in the Letter of Intent are contingent on satisfactory completion of due diligence, and entry into suitable definitive documentation.