NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS
Corporate History
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 (“Direct Solar America”), completing the acquisition of certain assets of Direct Solar America and AI Live Transfers LLC (See Note 3). The Company owns Fifty One Percent (51%) of the membership interests of Direct Solar America.
Business
We are a company focused on providing renewable energy solutions and energy-efficient applications to drive better health and living. We currently have core subsidiaries including solar and air purification. We built our portfolio through synergistic acquisitions, products, and partnerships to provide a rich, diversified holding base. The Company’s initial focus is on solar energy and we are committed to building a foundation for future expansion opportunities and building 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. As of December 31, 2020 we currently have three subsidiaries, Direct Solar America, 51% interest, Discount Indoor Garden Supply, Inc. (“DIGS”, 90% interest), and ShieldSaver, LLC (“ShieldSaver”, 51% interest). Our principal offices are located at 2999 North 44th Street Suite 530, Phoenix, AZ 85018, telephone: (888) 682-7464. We have formalized, announced and are in the process of spinning out our 1606 Corp. We may decide to due future spin-off additional assets or subsidiaries
Going Concern
The financial statements have been prepared assuming that the Company will continue as a going concern. As of December 31, 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.
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
Principles of Consolidation
The consolidated financial statements include the accounts of Singlepoint, DIGS, Direct Solar America and ShieldSaver as of December 31, 2020 and December 31, 2019, (with the accounts of Jiffy Auto Glass (“JAG”), a former subsidiary dissolved July 26, 2019). All significant intercompany transactions have been eliminated in consolidation.
Revenues
The Company records revenue under the adoption of ASC 606 by analyzing exchanges with its customers using a five-step analysis:
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(1)
|
identifies the contract(s) with a customer;
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(2)
|
identifies the performance obligations in the contract(s);
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(3)
|
determines the transaction price;
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(4)
|
allocates the transaction price to the performance obligations in the contract(s); and
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(5)
|
recognizes revenue when (or as) the entity satisfies a performance obligation.
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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. In accordance with ASC 606, 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.
The Company uses three categories for disaggregated revenue classification:
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(1)
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Retail Sales (DIGS, Singleseed),
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(2)
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Distribution (1606 and related products) and,
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|
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(3)
|
Services Revenue (Direct Solar, Mobile Web Credit Card Gateway, Shieldsaver).
|
Additionally, the Company also disaggregates revenue by subsidiary:
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(1)
|
Singlepoint (parent company)
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|
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(2)
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Direct Solar America
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(3)
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DIGS
|
There were no revenues from Shield Saver or JAG (dissolved in 2019) during the year ended December 31, 2020.
Retail Sales. Our retail sales include our products sold directly to consumers, with sales recognized upon delivery of the product to the customer, with the customer taking risk of ownership and assuming risk of loss. Payment is due upon delivery. DIGS operates an online store and sells nutrients, lights, HVAC systems and other products to consumers. Singleseed provides products through its online portal.
Distribution Revenue. Our distribution revenue includes Singlepoint’s 1606 and related product sales to third-party resellers with revenue recognized upon delivery of the product to the reseller, with the reseller taking risk of ownership and assuming risk of loss. Payment is due upon delivery or within 30 days of invoicing. Except for when sold direct to consumer upon which payment is due immediately.
Services Revenue. Our services revenue includes services provided by Direct Solar America, which earns commission revenue for solar services placed with third-party contractors and recognizes revenue upon date of completion of installation. Cash received in advance of contract completion is recognized as deferred revenue until contracts are complete. Singlepoint’s merchant services provides payment services to businesses with revenue recognized upon the close and remittance of commissions each month. ShieldSaver offers business-to business services related to windshield repair and replacement for consumers. Service revenue is recognized as the performance obligations are fulfilled, with the customer taking risk of ownership and assuming risk of loss. Payment for service revenue is generally due upon completion.
Returns and other adjustments
The Company records an estimate for provisions of discounts, returns, allowances, customer rebates and other adjustments for each shipment, and are netted with gross sales. The Company’s discounts and customer rebates are known at the time of sale and the Company appropriately debits net product revenues for these transactions based on the known discount and customer rebates. The Company estimates for customer returns and allowances based on estimates of historical transactions and accounts for such provisions during the same period in which the related revenues are earned. Customer discounts, returns and rebates on product revenues during the year ended December 31, 2020 and 2019 are not material.
Cash and Cash Equivalents
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 December 31, 2020.
Convertible Instruments
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
Income Taxes
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.
Earnings (loss) Per Common Share
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:
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Year
Ended
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Year
Ended
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|
December 31,
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December 31,
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2020
|
|
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2019
|
|
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Series A Preferred Stock
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1,500,000,000
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1,355,000,000
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Series B Preferred Stock
|
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200,655,733
|
|
|
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-
|
|
Convertible notes
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1,500,000
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|
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603,436,155
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Warrants
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10,000,000
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|
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10,000,000
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Potentially dilutive securities
|
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1,712,155,733
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1,968,436,155
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Use of Estimates in the Preparation of Financial Statements
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.
Fair Value Measurements
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, 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.
As of December 31, 2019, the Company had an investment in equity securities that did not have a readily determinable fair value, or “RDFV”. This investment was assessed and measured at fair value that was determined to be zero. As of December 31, 2020, this investment in equity securities did meet the standards for a RDFV and has been valued as Level 1 instruments. For the year ended December 31, 2020, a net gain of $807,511 was recognized related to the fair value measurement of these equity securities.
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Level 1
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Level 2
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Level 3
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Total
|
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|
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|
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Fair value of convertible notes derivative liability and equity securities - December 31, 2020
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$
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588,637
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$
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-
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$
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-
|
|
|
$
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588,637
|
|
|
|
Level 1
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|
|
Level 2
|
|
|
Level 3
|
|
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Total
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|
|
|
|
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|
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Fair value of convertible notes derivative liability and equity securities - December 31, 2019
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$
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-
|
|
|
$
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-
|
|
|
$
|
2,813,150
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|
|
$
|
2,813,150
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|
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 December 31, 2020:
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|
Derivative
Liability
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|
|
|
|
|
Balance, December 31, 2019
|
|
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2,813,150
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|
Additions recognized as debt discount
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|
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984,801
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|
Derivative liability settlements
|
|
|
(3,053,213
|
)
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Mark-to-market at December 31, 2020
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|
|
(744,738
|
)
|
Balance, December 31, 2020
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|
$
|
-
|
|
|
|
|
|
|
Net income for the year included in earnings relating to the liabilities held at December 31, 2020
|
|
$
|
744,738
|
|
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 December 31, 2020.
Subsequent Events
Other than the events described in Note 12, 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 certain investments using the cost method. If cost exceeds fair value, an impairment loss is recognized unless the impairment is considered temporary. The Company records investments in equity securities using the fair value method. In certain cases, the equity securities may not meet the criteria for RDFV, then the Company determines the fair value using the market price of the equity securities on the given remeasurement date less the applicable discount calculated using a put option pricing model with the applicable assumptions and inputs.
The Company had investments recorded using the cash method of $35,000 and $60,000 as of December 31, 2020 and 2019, respectively.
The Company had investments in equity securities using the fair value method of $588,637 and $0 as of December 31, 2020 and 2019, respectively.
2019 Asset Acquisition - Direct Solar LLC and AI Live Transfers LLC
On May 14, 2019, the Company, via the formation of Direct Solar America, completed the acquisition of certain assets of Direct Solar LLC and AI Live Transfers LLC (the “Acquired Assets”). The Company owns 51% of the membership interests of Direct Solar America. 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 Direct Solar America its portion of distributions of Net Cash Flow (as defined in the Operating Agreement of Direct Solar America), if any, up to $250,000 per quarter, up to a total of $750,000. Direct Solar America has not made any distributions and no amounts have been reinvested as of December 31, 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
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Current assets
|
|
|
-
|
|
Current liabilities
|
|
|
-
|
|
Total net assets acquired
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$
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1,966,340
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The purchase price consists of the following:
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|
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Cash
|
|
|
-
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|
Common Stock
|
|
|
1,966,340
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|
Total purchase price
|
|
$
|
1,966,340
|
|
Total revenue of $2,653,924, net loss of $848,351, and contributed net loss of $410,788 after non-controlling interest related to Direct Solar America for the year ended December 31 , 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 December 31, 2020 and December 31, 2019:
|
|
Direct Solar America
|
|
Balances at December 31, 2019:
|
|
|
1,966,340
|
|
Aggregate goodwill acquired
|
|
|
-
|
|
Impairment losses
|
|
|
-
|
|
Goodwill adjustment
|
|
|
(72,600
|
)
|
Balances at December 31, 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 December 31, 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 year ended December 31, 2020.
During the year ended December 31, 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 three years, a net book value of $49,005 as of December 31, 2020, and amortization expense of $23,595 for the year ended December 31, 2020.
Proforma Information (unaudited)
Singlepoint Direct Solar LLC
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 year ended December 31, 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:
|
|
Year
Ended
December 31,
|
|
|
|
2019
|
|
Net revenue
|
|
$
|
4,098,382
|
|
Net loss
|
|
$
|
(8,125,411
|
)
|
NOTE 4 - CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE
Convertible notes payable consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
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 $37,767 of principal and accrued interest of this note into 37,767,405 shares of the Company’s common stock. This note was amended on October 12, 2020 whereby the maturity due date was extended to December 31, 2022 with monthly payments required commencing October 1, 2020. A final note settlement agreement was executed on January 27, 2021 (see Note 12).
|
|
|
581,723
|
|
|
|
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 $458,360 of principal and accrued interest of this note into 214,880,617 shares of the Company’s common stock and was repaid $194,637 by the Company during the year ended December 31, 2020. The Iliad Note is secured by substantially all assets of the Company. This note was amended on October 12, 2020 whereby the maturity due date was extended to December 31, 2022 with monthly payments required commencing October 1, 2020. A final note settlement agreement was executed on January 27, 2021 (see Note 12).
|
|
|
1,842,003
|
|
|
|
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. The investor converted a total of $201,959 of principal and accrued interest of this note into 107,014,457 shares of the Company’s common stock and the full outstanding balance of $170,000 was repaid during the year ended December 31, 2020.
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
2,434,226
|
|
|
|
3,225,225
|
|
Less debt discounts
|
|
|
|
|
|
|
(1,154,327
|
)
|
Convertible notes payable, net
|
|
|
2,434,226
|
|
|
|
2,070,898
|
|
Less current portion of convertible notes, net
|
|
|
(2,434,226
|
)
|
|
|
(2,070,898
|
)
|
Long-term convertible notes payable, net
|
|
$
|
-
|
|
|
$
|
-
|
|
Accrued interest on the above notes payable totaled $518,366 and $227,352 as of December 31, 2020 and 2019, respectively. Interest expense for the above notes payable for the years ended December 31, 2020 and 2019 was $306,158 and $300,168, respectively. Total amortization of debt discounts was $2,174,273 and $1,662,068 for the years ended December 31, 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 December 31, 2020. The two PPP loans include a promissory note with Direct Solar America 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.
Long-term Note Payable
In May 2020, the Company received loan proceeds of $150,000 under the SBA’s Economic Injury Disaster Loan program (“EIDL”). The EIDL dated May 22, 2020, bears interest at 3.75%, has a 30-year term, is secured by substantially all assets of the Company, and is due in monthly installments of $731 beginning May 1, 2021.
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, upon which the lease expires.
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 December 31, 2020 and 2019:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Office and warehouse facilities
|
|
$
|
224,037
|
|
|
$
|
224,037
|
|
Accumulated amortization
|
|
|
(144,870
|
)
|
|
|
(87,106
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
79,167
|
|
|
$
|
136,931
|
|
Future maturities of obligations under capital leases are as follows:
Twelve months ending December 31,
|
|
|
|
2021
|
|
$
|
58,585
|
|
2022
|
|
|
45,020
|
|
2023
|
|
|
3,758
|
|
|
|
|
|
|
Total minimum lease payments
|
|
|
107,363
|
|
Amounts representing interest
|
|
|
(8,481
|
)
|
|
|
$
|
98,882
|
|
NOTE 6 - DERIVATIVE LIABILITY
Derivative Liability- Debt
The fair value of the described embedded derivative on all convertible debt was valued at $0 due to the note amendment executed on October 12, 2020, and $2,813,150 at December 31, 2020 and December 31, 2019, respectively, which was determined using the Black Scholes Pricing Model with the following assumptions:
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
Dividend yields
|
|
|
0
|
%
|
|
|
0
|
%
|
Term
|
|
0-1.0 year
|
|
|
0-2.0 year
|
|
Volatility
|
|
79.54%-107.2
|
%
|
|
107.0%-133.0
|
%
|
Risk free rate
|
|
0.10-1.59
|
%
|
|
1.54-2.60
|
%
|
The Company adjusted the recorded fair value of the derivative liability on debt to market resulting in non-cash, non-operating gain of $744,738 and $604,289 for the years ended December 31, 2020 and 2019, respectively.
Note 2 contains a summary of changes in fair value of the Company’s Level 3 financial liabilities as of December 31, 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. The Company has retroactively reflected this amendment as of December 31, 2019.
On December 18, 2020, the Company amended its Articles of Incorporation to designate 1,500 shares of undesignated preferred stock as Class B Preferred Stock.
Class A Convertible Preferred Shares
As of December 31, 2020 and, 2019, the Company had authorized 100,000,000 shares of preferred stock, $0.0001 par 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 60,000,000 and 54,200,000 shares were issued and outstanding as of December 31, 2020 and 2019, respectively.
Each share of Class A Stock is convertible at any time into 25 shares of common stock, totaling 1,500,000,000 and 1,355,000,000 shares of common stock assuming full conversion of all outstanding shares as of December 31, 2020 and 2019, respectively. 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.
Class B Convertible Preferred Shares
As of December 31, 2020, the Company authorized 1,500 shares of preferred stock, $.0001 par value per share, of which 408 shares were issued and outstanding.
As of December 31, 2020 and 2019, a total of 39,998,500 and 40,000,000 shares of preferred stock remain undesignated and unissued, respectively.
Common Stock
As of December 31, 2020 and 2019, the Company’s authorized common stock was 5,000,000,000 shares, at $0.0001 par value per share, with 2,479,976,812 and 1,698,279,820 shares issued and outstanding as of December 31, 2020 and 2019, respectively.
Equity Financing Agreement
On April 21, 2020, 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 $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 was 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 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 $25,000 or greater than $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, by GHS, would exceed 4.99% of the number of shares of Common Stock outstanding on such date.
The Equity Financing Agreement terminates upon any of the following events: when GHS has purchased an aggregate of $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.
Shares issued during the year ended December 31, 2020
During the year ended December 31, 2020, the Company issued a total of 320,000,000 shares of common stock to GHS at an aggregate price of $812,576 (or $0.0025 per share) under the Put notices issued by the Company under the Equity Financing Agreement.
During the year ended December 31, 2020, the Company issued an aggregate of 391,696,992 shares of common stock to investors for the conversion of a total of $778,657 of convertible debt and accrued interest.
On February 11, 2020, the Company issued 10,000,000 shares of common stock to a consultant for services with a fair value of $87,000, or $0.0087 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.
On October 9, 2020, the Company issued 7,400,000 shares of Class A Preferred Stock to five of the Company’s directors at an aggregate value of $555,000.
On December 8, 2020 the Company issued 15,000,000 shares of common stock to two consultants for services with a fair value of $42,000, or $0.0021 per share.
NOTE 8 - RELATED PARTY TRANSACTIONS
Accrued Officer Compensation
As of December 31, 2020 and December 31, 2019, a total of $1,005,230 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 $911,826 and $735,000, respectively, plus accrued interest of $216,807 and $96,273 as of December 31, 2020 and 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 $216,807 and $78,243, for the years ended December 31, 2020 and 2019, respectively. In November 2020, the Company sold the CEO 1,075,527 common shares of equity securities of Jacksam with a fair value measured at $218,874 and was recorded as a reduction of debt related to advances from the related party.
As of December 31, 2020 and December 31, 2019, a total of $13,039 and $15,222, respectively, was due to the founder of DIGS for advances to DIGS.
As of December 31, 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 $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. If employment is terminated as a result of his death or Disability (as defined in the agreement), the Company shall pay, his Base Salary (as defined in the agreement) and any accrued but unpaid Bonus (as defined in the agreement) and expense reimbursement amounts through the date of his Death or Disability and a lump sum payment equal to two years of Base Salary (at the time his Death or Disability occurs) within 30 days of his Death or Disability. In the event the Company does not have the cash flow to pay such amount within 30 days as set forth above, the Company may make such payments over 12 equal monthly installments. If employment is terminated by the Board of Directors of the Company for Cause (as defined in the agreement), then the Company shall pay his Base Salary through the date of his termination and there shall be no further entitlement to any other compensation or benefits from the Company. If employment is terminated by the Company (or its successor) upon the occurrence of a Change of Control (as defined in the agreement) or within six (6) months thereafter, the Company (or its successor, as applicable) shall (i) continue to pay to his Base Salary for a period of thirty six (36) months following such termination, (ii) pay any accrued and any earned but unpaid Bonus, (iv) pay the Executive the Bonus he would have earned had he remained with the Company for six (6) months from the date which such termination occurs, (iv) pay expense reimbursement amounts through the date of termination. While the Company does not currently have a stock option plan, if one is created in the future and options are granted to Mr. Lambrecht, all such Stock Options that have not vested as of the date of such termination shall be accelerated and deemed to have vested as of such termination date and shall remain exercisable for a period as outlined in the Company’s Stock Option program, and (v) Mr. Lambrecht shall be entitled to receive equivalent share issuances as any executive officer, management or director of the Company receives for a period of 36 months thereafter. If employment is terminated by Mr. Lambrecht for Good Reason (as defined in the agreement), or if this Agreement is not renewed, then the Company shall (i) pay a single lump sum cash payment within five business days of such termination equal to 18 times the then monthly Base Salary in effect regardless of when such termination occurs (provided, that in the event the Company does not have the cash flow to pay such amount within five business days as set forth above, the Company may make such payments over 12 equal monthly installments), and (ii) pay Executive the Bonus he would have earned had he remained with the Company for six (6) months from the date which such termination occurs, and (iii) pay Executive any expense reimbursement amounts owed, and payment for any unused vacation days, through the date of termination. All Stock Options that are scheduled to vest in the contract year of the date of such termination shall be accelerated and deemed to have vested as of the termination date. All Stock Options that have not vested (or deemed to have vested pursuant to the preceding sentence) shall be deemed expired, null and void. Any Stock Options that have vested as of the date of termination shall remain exercisable for a period as outlined in the Company’s Stock Option program.
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 $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. If employment is terminated as a result of his death or Disability (as defined in the agreement), the Company shall pay, his Base Salary (as defined in the agreement) and any accrued but unpaid Bonus (as defined in the agreement) and expense reimbursement amounts through the date of his Death or Disability and a lump sum payment equal to two years of Base Salary (at the time his Death or Disability occurs) within 30 days of his Death or Disability. In the event the Company does not have the cash flow to pay such amount within 30 days as set forth above, the Company may make such payments over 12 equal monthly installments. If employment is terminated by the Board of Directors of the Company for Cause (as defined in the agreement), then the Company shall pay his Base Salary through the date of his termination and there shall be no further entitlement to any other compensation or benefits from the Company. If employment is terminated by the Company (or its successor) upon the occurrence of a Change of Control (as defined in the agreement) or within six (6) months thereafter, the Company (or its successor, as applicable) shall (i) continue to pay to his Base Salary for a period of thirty six (36) months following such termination, (ii) pay any accrued and any earned but unpaid Bonus, (iv) pay the Executive the Bonus he would have earned had he remained with the Company for six (6) months from the date which such termination occurs, (iv) pay expense reimbursement amounts through the date of termination. While the Company does not currently have a stock option plan, if one is created in the future and granted to Mr. Ralston, all such Stock Options that have not vested as of the date of such termination shall be accelerated and deemed to have vested as of such termination date and shall remain exercisable for a period as outlined in the Company’s Stock Option program, and (v) Mr. Ralston shall be entitled to receive equivalent share issuances as any executive officer, management or director of the Company receives for a period of 36 months thereafter. If employment is terminated by Mr. Ralston for Good Reason (as defined in the agreement), or if this Agreement is not renewed, then the Company shall (i) pay a single lump sum cash payment within five business days of such termination equal to 18 times the then monthly Base Salary in effect regardless of when such termination occurs (provided, that in the event the Company does not have the cash flow to pay such amount within five business days as set forth above, the Company may make such payments over 12 equal monthly installments), and (ii) pay Executive the Bonus he would have earned had he remained with the Company for six (6) months from the date which such termination occurs, and (iii) pay Executive any expense reimbursement amounts owed, and payment for any unused vacation days, through the date of termination. All Stock Options that are scheduled to vest in the contract year of the date of such termination shall be accelerated and deemed to have vested as of the termination date. All Stock Options that have not vested (or deemed to have vested pursuant to the preceding sentence) shall be deemed expired, null and void. Any Stock Options that have vested as of the date of termination shall remain exercisable for a period as outlined in the Company’s Stock Option program.
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 $80,000 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.
Standard Eco LLC (“Standard Eco”)
On October 8, 2020 Direct Solar America and the principals of Standard Eco agreed to the following terms and conditions:
|
(i)
|
Direct Solar America and principles of Standard Eco agreed to form new joint venture entities, to assist with the build out of a national solar installation network; ownership of the new joint ventures will be 51% Direct Solar America and 49% Standard Eco; if it is required by a state and/or territory that a certain percentage of ownership of an entity is required to be held by a qualifying third-party, both parties shall agree to proportionally dilute by the respective amount of ownership necessary to fulfill that requirement with the understanding that in no case shall Direct Solar America’s ownership interest be dilutable to less than fifty one (51%) percent. Any ownership granted as a requirement for a Qualifying Party shall not have any profit distribution rights and shall be deemed “non voting” with the voting right proportionally distributed based upon the existing memberships ownership interests. Standard Eco shall be allowed to continue operations in all states and territories and shall not be bound to any non-compete language and/or restriction of services.
|
|
|
|
|
(ii)
|
All business initiated through the efforts of Direct Solar America shall be designated to run through the new solar installation entity.
|
As of December 31, 2020, no new additional joint ventures entities were established pursuant to the agreement and there were no financial obligations owed to Standard Eco based on certain threshold criteria.
NOTE 10 - REVENUE CLASSES AND CONCENTRATIONS
Selected financial information for the Company’s operating revenue for disaggregated revenue purposes are as follows:
|
|
Year
Ended
December 31,
|
|
|
Year
Ended
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Revenue by product/service lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$
|
85,428
|
|
|
$
|
158,903
|
|
Distribution
|
|
|
138,809
|
|
|
|
521,013
|
|
Services
|
|
|
2,653,924
|
|
|
|
2,663,917
|
|
Total
|
|
$
|
2,878,161
|
|
|
$
|
3,343,833
|
|
|
|
|
|
|
|
|
|
|
Revenue by subsidiary:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Singlepoint (parent company)
|
|
$
|
184,561
|
|
|
$
|
576,499
|
|
Direct Solar America
|
|
|
2,653,924
|
|
|
|
2,031,743
|
|
DIGS
|
|
|
39,676
|
|
|
|
151,381
|
|
Shield Saver
|
|
|
-
|
|
|
|
19,339
|
|
JAG
|
|
|
-
|
|
|
|
564,870
|
|
Total
|
|
$
|
2,878,161
|
|
|
$
|
3,343,833
|
|
One customer comprised approximately 13% of the Company’s revenue for year ended December 31, 2019. Two customers comprised approximately 35% and 26%, respectively, of the Company's revenue for the year ended December 31, 2020.
NOTE 11 - INCOME TAXES
The components of income tax expense for the years ended December 31, 2020 and 2019 consist of the following:
|
|
2020
|
|
|
2019
|
|
Federal tax statutory rate
|
|
|
21.0
|
%
|
|
|
21.0
|
%
|
Permanent differences
|
|
|
(0.0
|
)%
|
|
|
(11.6
|
)%
|
Valuation allowance
|
|
|
21.0
|
%
|
|
|
(9.4
|
)%
|
Effective rate
|
|
|
0
|
%
|
|
|
0
|
%
|
Significant components of the Company’s estimated deferred tax assets and liabilities as of December 31, 2020 and 2019 are as follows:
|
|
2020
|
|
|
2019
|
|
Deferred tax assets:
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
2,024,000
|
|
|
$
|
1,238,000
|
|
Temporary differences
|
|
|
457,000
|
|
|
|
1,334,000
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax asset
|
|
|
2,481,000
|
|
|
|
2,572,000
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
(2,481,000
|
)
|
|
|
(2,572,000
|
)
|
The Company has net operating losses (“NOLs”) as of December 31, 2020 of approximately $9,700,000 for federal tax purposes, which will expire in varying amounts through 2039. The Company may be able to utilize its NOLs to reduce future federal and state income tax liabilities. However, these NOLs are subject to various limitations under Internal Revenue Code ("IRC") Section 382. IRC Section 382 limits the use of NOLs to the extent there has been an ownership change of more than 50 percentage points. In addition, the NOL carry-forwards are subject to examination by the taxing authority and could be adjusted or disallowed due to such exams. Although the Company has not undergone an IRC Section 382 analysis, it is possible that the utilization of the NOLs could be substantially limited. The Company has no tax provision for the years ended December 31,2020 and 2019 due to the net losses and full valuation allowances against net deferred tax assets.
NOTE 12 - SUBSEQUENT EVENTS
On January 26, 2021 the Company entered into a purchase agreement to acquire 100% ownership of EnergyWyze, LLC, a limited liability company. The purchase price consideration consists of the following:
$75,000.00 with $25,000.00 paid at closing and the remaining balance of $50,000.00 to be in the form of a 180 day Seller Note to be retired in conjunction with any capital raise associated with the intended up listing to a national exchange. The Seller Note would be extendable for a period of 90 days at the Buyer’s option, furthermore the note can be converted at any time by the sellers into Common Stock during the initial 180-day period based on the 10 Day Volume Weighted Average Price (VWAP).
$450,000.00 USD in Restricted Common Stock based on the 10 Day VWAP immediately preceding the closing date and each vesting period. Stock awarded will be allocated equally, $150,000.00 USD each, between the principals named in the LOI , and will vest over a three-year period. Each principal member must be employed by the Company on the vesting date to be awarded the equity award. The vesting schedule shall be as follows: $50,000.00 USD shall vest on July 1, 2021. $100,000.00 USD, representing the remaining individual balance, shall be divided into ten equal amounts and will vest on quarterly basis over the next 10 quarters post the initial vesting period of July 1, 2021.
On January 27, 2021, the Company entered into a Note Settlement Agreement (“Settlement Agreement”) related to the UAHC and Iliad Notes. Pursuant to the terms of the Settlement Agreement, the Company issued 100,000,000 and 30,000,000 shares of common stock to repay the Iliad Note and the UAHC Note, respectively. As of January 27, 2021, the outstanding balances of Iliad Note and the UAHC Note plus accrued interest were $2,253,666.82 and $681,170, respectively. The Company recorded losses on the debt settlement of $136,333 and $35,830, for the Iliad Note and the UAHC Note, respectively.
On January 28, 2021, the Company amended its Articles of Incorporation to designate 1,500 shares of undesignated preferred stock as Class C preferred stock.
On January 28, 2021, the Company entered into a purchase agreement with GHS whereby GHS agreed to purchase, in tranches, up to $1,000,000 of Class C preferred stock in exchange for 1,010 shares of Class C preferred stock. GHS purchased the first tranche of 500 shares for $500,000.
On February 12, 2021, the Company entered into an agreement to purchase 51% ownership of Box Pure Air, LLC, a Delaware limited liability company. The consideration consisted of an aggregate number of common stock shares equal to $500,000.
On February 22, 2021, GHS purchased a second tranche of 250 shares of Class C preferred stock for $250,000.
On March 11, 2021, the Company amended its Articles of Incorporation to designate 2,000 shares of undesignated preferred stock as Class D preferred stock.
On March 11, 2021, the Company entered into a purchase agreement with GHS whereby GHS agreed to purchase, in tranches, up to $2,000,000 of Class D preferred stock in exchange for 2,000 shares of Class D preferred stock. GHS purchased the first tranche of 500 shares for $500,000. On March 19, 2021, GHS purchased the second tranche of 500 shares of Class D preferred stock for $500,000. On March 26, 2021 GHS purchased the third tranche of 500 shares of Class D preferred stock for $500,000. On April 1, 2021, GHS purchased the fourth tranche of 500 shares of Class D preferred stock for $500,000.
On March 22, 2021, we filed a Certificate of Amendment (the “Certificate of Amendment”) with the Secretary of State of the State of Nevada to effect a 1 for 75 reverse stock split. At the effective time of the reverse stock split, every 75 shares of issued and outstanding common stock will be converted into one (1) share of issued and outstanding common stock. The number of authorized shares and the par value per share of the common stock and the number of authorized or issued and outstanding shares of the Company’s preferred stock will remain unchanged.
On April 7, 2021 we completed the spin-off of 1606 Corp. whereby each holder of common stock and Class A Preferred Stock of the Company received one share of unregistered and restricted common stock and Class A Preferred Stock of 1606 Corp. for each such share owned of the Company.
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
Cash
|
|
$
|
854,589
|
|
|
$
|
198,473
|
|
Accounts receivable
|
|
|
300,907
|
|
|
|
3,368
|
|
Prepaid expenses
|
|
|
105,786
|
|
|
|
4,834
|
|
Inventory
|
|
|
68,180
|
|
|
|
63,456
|
|
Note receivable from related party
|
|
|
63,456
|
|
|
|
-
|
|
Current portion of deferred compensation, net of discount
|
|
|
203,761
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
1,596,679
|
|
|
|
270,131
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Property, net
|
|
|
66,404
|
|
|
|
79,167
|
|
Investment, at fair value
|
|
|
35,000
|
|
|
|
623,637
|
|
Intangible assets, net
|
|
|
41,745
|
|
|
|
49,005
|
|
Goodwill
|
|
|
2,468,740
|
|
|
|
1,893,740
|
|
Deferred compensation, net of current portion
|
|
|
135,840
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
4,344,408
|
|
|
$
|
2,915,680
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts payable, including related party
|
|
$
|
640,407
|
|
|
$
|
245,362
|
|
Accrued expenses, including accrued officer salaries
|
|
|
470,922
|
|
|
|
1,661,208
|
|
Current portion of convertible notes payable, net of debt discount
|
|
|
10,500
|
|
|
|
2,434,226
|
|
Capital lease obligations, current portion
|
|
|
39,710
|
|
|
|
51,365
|
|
Advances from related party
|
|
|
342,598
|
|
|
|
1,151,946
|
|
Short-term notes payable
|
|
|
830,108
|
|
|
|
372,232
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
2,334,245
|
|
|
|
5,916,339
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES:
|
|
|
|
|
|
|
|
|
Convertible notes payable, net of current portion
|
|
|
-
|
|
|
|
-
|
|
Capital lease obligations, net of current portion
|
|
|
26,995
|
|
|
|
47,517
|
|
Advances from related party, net of current portion
|
|
|
707,680
|
|
|
|
-
|
|
Long-term notes payable
|
|
|
285,840
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
3,354,760
|
|
|
|
6,113,856
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Undesignated preferred stock, par value $0.0001; 39,995,000 and 39,998,500 shares authorized as of June 30, 2021, and December 31, 2020, respectively;
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A convertible preferred stock, par value $0.0001; 60,000,000 shares authorized; 56,538,285 and 60,000,000 shares issued and outstanding as of June 30, 2021, and December 31, 2020, respectively
|
|
|
5,654
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
|
|
Class B convertible preferred stock, par value $0.0001; 1,500 shares authorized; 123 shares issued and outstanding as of June 30, 2021, and December 31, 2020, respectively
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Class C convertible preferred stock, par value $0.0001; 1,500 and no shares authorized as of June 30, 2021, and December 31, 2020, respectively; 760 and no shares issued and outstanding as of June 30, 2021, and December 31, 2020, respectively
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Class D convertible preferred stock, par value $0.0001; 2,000 and no shares authorized as of June 30, 2021, and December 31, 2020, respectively; 2,000 and no shares issued and outstanding as of June 30, 2021, and December 31, 2020, respectively
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Common stock, par value $0.0001; 5,000,000,000 shares authorized; 42,838,120 and 33,075,711 shares issued and outstanding as of June 30, 2021, and December 31, 2020, respectively
|
|
|
4,283
|
|
|
|
3,308
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
84,824,680
|
|
|
|
78,132,202
|
|
Accumulated deficit
|
|
|
(82,926,105
|
)
|
|
|
(80,785,887
|
)
|
Total Singlepoint Inc. stockholders' equity (deficit)
|
|
|
1,908,512
|
|
|
|
(2,644,377
|
)
|
Non-controlling interest
|
|
|
(918,864
|
)
|
|
|
(553,799
|
)
|
Total Stockholders' Equity (Deficit)
|
|
|
989,648
|
|
|
|
(3,198,176
|
)
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity (Deficit)
|
|
$
|
4,344,408
|
|
|
$
|
2,915,680
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
|
June 30,
2021
|
|
|
June 30,
2020
|
|
|
June 30,
2021
|
|
|
June 30,
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
$
|
454,822
|
|
|
$
|
395,277
|
|
|
$
|
693,835
|
|
|
$
|
1,470,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue
|
|
|
302,332
|
|
|
|
290,594
|
|
|
|
607,071
|
|
|
|
1,056,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
152,490
|
|
|
|
104,683
|
|
|
|
86,764
|
|
|
|
414,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting fees
|
|
|
68,544
|
|
|
|
36,921
|
|
|
|
128,875
|
|
|
|
173,937
|
|
Professional and legal fees
|
|
|
236,981
|
|
|
|
96,796
|
|
|
|
358,538
|
|
|
|
171,614
|
|
Investor relations
|
|
|
111,601
|
|
|
|
19,368
|
|
|
|
278,956
|
|
|
|
63,152
|
|
General and administrative
|
|
|
867,107
|
|
|
|
689,557
|
|
|
|
1,564,556
|
|
|
|
1,380,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
1,284,232
|
|
|
|
842,642
|
|
|
|
2,330,925
|
|
|
|
1,789,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(1,131,742
|
)
|
|
|
(737,959
|
)
|
|
|
(2,244,161
|
)
|
|
|
(1,374,935
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(12,404
|
)
|
|
|
(102,180
|
)
|
|
|
(67,769
|
)
|
|
|
(229,510
|
)
|
Amortization of debt discounts
|
|
|
-
|
|
|
|
(631,084
|
)
|
|
|
-
|
|
|
|
(1,079,374
|
)
|
Loss on settlement of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
(151,727
|
)
|
|
|
(41,264
|
)
|
Gain (loss) on change in fair value of derivative liability and equity securities
|
|
|
0
|
|
|
|
291,634
|
|
|
|
(41,627
|
)
|
|
|
(417,298
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
(12,404
|
)
|
|
|
(441,630
|
)
|
|
|
(261,123
|
)
|
|
|
(1,767,446
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
(1,144,146
|
)
|
|
|
(1,179,589
|
)
|
|
|
(2,505,284
|
)
|
|
|
(3,142,381
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
|
(1,144,146
|
)
|
|
|
(1,179,589
|
)
|
|
|
(2,505,284
|
)
|
|
|
(3,142,381
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss (income) attributable to non-controlling interests
|
|
|
145,657
|
|
|
|
153,799
|
|
|
|
365,065
|
|
|
|
196,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO SINGLEPOINT INC. STOCKHOLDERS
|
|
$
|
(998,489
|
)
|
|
$
|
(1,025,790
|
)
|
|
$
|
(2,140,219
|
)
|
|
$
|
(2,946,221
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share - basic
|
|
$
|
(0.03
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - basic
|
|
|
38,213,035
|
|
|
|
24,075,925
|
|
|
|
36,400,337
|
|
|
|
23,489,688
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
|
|
Preferred Stock Class A Par Value $0.0001
|
|
|
Preferred Stock Class B Par Value $0.0001
|
|
|
Preferred Stock Class C Par Value $0.0001
|
|
|
Preferred Stock Class D Par Value $0.0001
|
|
|
Common Stock Par Value $0.0001
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Number
of
Shares
|
|
|
Amount
|
|
|
Number
of
Shares
|
|
|
Amount
|
|
|
Number of Shares
|
|
|
Amount
|
|
|
Number of Shares
|
|
|
Amount
|
|
|
Number
of
Shares
|
|
|
Amount
|
|
|
Additional
paid-in Capital
|
|
|
Accumulated
Deficit
|
|
|
Non-controlling
Interest
|
|
|
Stockholders'
Equity
(Deficit)
|
|
Balance, December 31, 2020
|
|
|
60,000,000
|
|
|
$
|
6,000
|
|
|
|
408
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,075,711
|
|
|
$
|
3,308
|
|
|
$
|
78,132,202
|
|
|
$
|
(80,785,887
|
)
|
|
$
|
(553,799
|
)
|
|
$
|
(3,198,176
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
133,334
|
|
|
|
13
|
|
|
|
53,853
|
|
|
|
|
|
|
|
|
|
|
|
53,866
|
|
Issuance of preferred shares for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
760
|
|
|
|
-
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
2,760,000
|
|
|
|
|
|
|
|
|
|
|
|
2,760,000
|
|
Issuance of common shares for acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168,350
|
|
|
|
17
|
|
|
|
499,983
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
Issuance of common shares for principal and accrued interest on notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,096,321
|
|
|
|
210
|
|
|
|
3,378,576
|
|
|
|
|
|
|
|
|
|
|
|
3,378,785
|
|
Conversion of preferred shares
|
|
|
(3,461,715
|
)
|
|
|
(346
|
)
|
|
|
(285
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,620,061
|
|
|
|
562
|
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
|
283
|
|
Issuance of common shares for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Rounding adjustment in connection with reverse split
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,744,343
|
|
|
|
174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,140,219
|
)
|
|
|
(365,065
|
)
|
|
|
(2,505,284
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2021
|
|
|
56,538,285
|
|
|
$
|
5,654
|
|
|
|
123
|
|
|
$
|
-
|
|
|
|
760
|
|
|
|
-
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
42,838,120
|
|
|
$
|
4,283
|
|
|
$
|
84,824,680
|
|
|
$
|
(82,926,105
|
)
|
|
$
|
(918,864
|
)
|
|
$
|
989,648
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
SINGLEPOINT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
For the Six Months Ended June 30, 2020
|
|
|
Preferred Stock Class A Par Value $0.0001
|
|
|
Preferred Stock Class B Par Value $0.0001
|
|
|
Preferred Stock Class C Par Value $0.0001
|
|
|
Preferred Stock Class D Par Value $0.0001
|
|
|
Common Stock Par Value $0.0001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of
Shares
|
|
|
Amount
|
|
|
Number
of
Shares
|
|
|
Amount
|
|
|
Number of Shares
|
|
|
Amount
|
|
|
Number of Shares
|
|
|
Amount
|
|
|
Number
of
Shares
|
|
|
Amount
|
|
|
Additional
paid-in Capital
|
|
|
Accumulated
Deficit
|
|
|
Non-controlling
Interest
|
|
|
Stockholders'
Equity
(Deficit)
|
|
Balance, December 31, 2019
|
|
|
54,200,000
|
|
|
$
|
5,420
|
|
|
|
54,200,000
|
|
|
$
|
5,420
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
22,643,731
|
|
|
$
|
2,264
|
|
|
$
|
72,377,957
|
|
|
$
|
(76,752,170
|
)
|
|
$
|
(143,011
|
)
|
|
$
|
(4,509,540
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
20
|
|
|
|
117,980
|
|
|
|
|
|
|
|
|
|
|
|
118,000
|
|
Issuance of common shares for services previously accrued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for principal and accrued interest on convertible notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,097,926
|
|
|
|
110
|
|
|
|
233,311
|
|
|
|
|
|
|
|
|
|
|
|
233,421
|
|
Issuance of preferred shares for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of preferred shares
|
|
|
|
|
|
|
|
|
|
|
(1,600,000
|
)
|
|
|
(160
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
533,333
|
|
|
|
53
|
|
|
|
107
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Warrants issued with convertible notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement of derivative liability due to debt conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
319,765
|
|
|
|
|
|
|
|
|
|
|
|
319,765
|
|
Disposal of subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,946,221
|
)
|
|
|
(196,160
|
)
|
|
|
(3,142,381
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2020
|
|
|
54,200,000
|
|
|
$
|
5,420
|
|
|
|
52,600,000
|
|
|
|
5,260
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,474,991
|
|
|
$
|
2,447
|
|
|
$
|
73,049,120
|
|
|
$
|
(79,698,391
|
)
|
|
$
|
(339,171
|
)
|
|
$
|
(6,980,575
|
)
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
|
|
For the Six Months Ended
|
|
|
|
June 30,
2021
|
|
|
June 30,
2020
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net loss attributable to Singlepoint Inc. stockholders
|
|
$
|
(2,140,219
|
)
|
|
$
|
(2,946,221
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
Loss attributable to non-controlling interests
|
|
|
(365,065
|
)
|
|
|
(196,160
|
)
|
Common stock issued for services
|
|
|
53,867
|
|
|
|
118,000
|
|
Depreciation
|
|
|
28,883
|
|
|
|
28,882
|
|
Amortization of intangibles
|
|
|
7,260
|
|
|
|
16,335
|
|
Amortization of debt discounts
|
|
|
-
|
|
|
|
1,079,374
|
|
Loss on change in fair value of equity securities
|
|
|
41,627
|
|
|
|
417,298
|
|
(Gain) loss on debt settlement
|
|
|
151,727
|
|
|
|
41,264
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(297,539
|
)
|
|
|
35,464
|
|
Prepaid expenses
|
|
|
(100,952
|
)
|
|
|
15,991
|
|
Inventory
|
|
|
(68,180
|
)
|
|
|
38,757
|
|
Accounts payable
|
|
|
395,045
|
|
|
|
12,254
|
|
Accrued expenses
|
|
|
110,305
|
|
|
|
420,333
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN OPERATING ACTIVITIES
|
|
|
(2,183,241
|
)
|
|
|
(918,429
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Cash received for return on investment
|
|
|
|
|
|
|
25,000
|
|
Cash paid for acquisition
|
|
|
(25,000
|
)
|
|
|
|
|
Cash paid for property, plant and equipment
|
|
|
(16,120
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
|
(41,120
|
)
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from advances from related party
|
|
|
211,397
|
|
|
|
260,000
|
|
Proceeds from short-term notes payable
|
|
|
311,070
|
|
|
|
332,737
|
|
Payments on advances to related party
|
|
|
(8,295
|
)
|
|
|
-
|
|
Payments on convertible notes payable
|
|
|
(75,000
|
)
|
|
|
(25,000
|
)
|
Payments on capital lease obligations
|
|
|
(32,177
|
)
|
|
|
(28,460
|
)
|
Proceeds from issuance of convertible notes
|
|
|
-
|
|
|
|
320,500
|
|
Payments on notes payable
|
|
|
(286,518
|
)
|
|
|
-
|
|
Proceeds from sale of preferred stock - Class C
|
|
|
760,000
|
|
|
|
-
|
|
Proceeds from sale of preferred stock - Class D
|
|
|
2,000,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
2,880,477
|
|
|
|
859,777
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
|
|
|
656,116
|
|
|
|
(33,652
|
)
|
|
|
|
|
|
|
|
|
|
Cash at beginning of period
|
|
|
198,473
|
|
|
|
110,128
|
|
|
|
|
|
|
|
|
|
|
Cash at end of period
|
|
$
|
854,589
|
|
|
$
|
76,476
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
-
|
|
|
$
|
-
|
|
Income tax paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Common stock issued for accrued interest
|
|
$
|
-
|
|
|
$
|
3,185
|
|
Non-cash consideration given for acquisitions through issuance of common stock and notes payable
|
|
$
|
550,000
|
|
|
$
|
-
|
|
Original issue discount from issuance of notes payable
|
|
$
|
-
|
|
|
$
|
39,500
|
|
Common stock issued for conversion of debt and accrued interest
|
|
$
|
-
|
|
|
$
|
233,421
|
|
Recognition of debt discount attributable to derivative liability
|
|
$
|
-
|
|
|
$
|
984,801
|
|
Derivative liability settlements
|
|
$
|
-
|
|
|
$
|
319,765
|
|
Conversion of preferred stock to common stock
|
|
$
|
100
|
|
|
$
|
4,000
|
|
Derivative liability recognized from convertible debt
|
|
$
|
-
|
|
|
$
|
1,133,240
|
|
Inventory transferred to Related Party for Note Receivable
|
|
$
|
63,456
|
|
|
$
|
-
|
|
Investment in Jacksam transferred for reduction in Related Party debt
|
|
$
|
547,010
|
|
|
$
|
-
|
|
Non-cash portion of termination agreement removing accrued compensation and Related Party debt in exchange for stock and new Related Party note
|
|
$
|
1,120,852
|
|
|
$
|
-
|
|
Deferred stock compensation recognized for acquisitions
|
|
$
|
450,000
|
|
|
$
|
-
|
|
Discount recognized on deferred stock compensation for acquisitions
|
|
$
|
110,402
|
|
|
$
|
-
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
SINGLEPOINT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS
Corporate History
On May 14, 2019, Singlepoint Inc. (“Singlepoint” or “the Company”) established a subsidiary, Singlepoint Direct Solar LLC (“Direct Solar America”), 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 Direct Solar America. On January 26, 2021 the Company entered into a purchase agreement to acquire 100% ownership of EnergyWyze, LLC, a limited liability company (“EnergyWyze”) (See Note 3). On February 12, 2021, the Company purchased 51% ownership of Box Pure Air, LLC, (“Box Pure Air”) (See Note 3).
Business
We are a company focused on providing renewable energy solutions and energy-efficient applications to drive better health and living. We currently have core subsidiaries specialized in solar energy and air purification. We built our portfolio through synergistic acquisitions, products, and partnerships. The Company’s initial focus is on solar energy. Through technology solutions we believe we 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. As of June 30, 2021 we currently have five subsidiaries, EnergyWyze LLC, 100% interest, Box Pure Air, 51% interest, Direct Solar America, 51% interest, Discount Indoor Garden Supply, Inc. (“DIGS”), 90% interest, and ShieldSaver, LLC (“ShieldSaver”), 51% interest. Our principal offices are located at 2999 North 44th Street Suite 530, Phoenix, AZ 85018, telephone: (888) 682-7464. In April 2021, we formalized and completed the spin-off of 1606 Corp. We intend to spin-off additional assets or non-core subsidiaries in the future.
Going Concern
The financial statements have been prepared assuming that the Company will continue as a going concern. As of June 30, 2021, 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 has not yet achieved profitable operations and/or adequate cash flows, management will continue to pursue additional debt and equity financing.
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly our consolidated financial position as of June 30, 2021 and December 31, 2020, and the results of our consolidated operations for the interim periods presented. We follow the same accounting policies when preparing quarterly financial data as we use for preparing annual data. These statements should be read in conjunction with the consolidated financial statements and the notes included in our latest annual report on Form 10-K for the year ended December 31, 2020, and our other reports on file with the Securities and Exchange Commission (“SEC”).
Principles of Consolidation
The consolidated financial statements include the accounts of Singlepoint, Direct Solar America, Box Pure Air, EnergyWyze, DIGS, and ShieldSaver as of June 30, 2021 and December 31, 2020, and for the three and six months ended June 30, 2021 and 2020. All significant intercompany transactions have been eliminated in consolidation.
On April 7, 2021 we completed the spin-off of 1606 Corp. whereby each holder of common stock and Class A Preferred Stock of the Company received one share of unregistered and restricted common stock and Class A Preferred Stock of 1606 Corp. for each such share owned of the Company. Inventory of $63,456 went to 1606 Corp. in exchange for a note receivable. All 1606 Corp. brand, web, social, media content, were included with the spin out for the business to be a fully operational entity at time of completion.
Reverse Stock-split
On March 26, 2021, we affected a 1 for 75 reverse stock split of our common stock. At the effective time of the reverse stock split, every 75 shares of issued and outstanding common stock were converted into one (1) share of issued and outstanding common stock. The number of authorized shares and the par value per share of the common stock and the number of authorized or issued and outstanding shares of the Company’s preferred stock remained unchanged. The reverse stock split did not cause an adjustment to the par value or the authorized shares of the common stock. As a result of the reverse stock split, the Company further adjusted the share amounts under its employee incentive plan which had no outstanding options and common stock warrant agreements with third parties. All disclosures of common shares and per common share data in the accompanying financial statements and related notes reflect this reverse stock split for all periods presented.
Revenues
The Company records revenue under the adoption of ASC 606 by analyzing exchanges with its customers using a five-step analysis:
|
(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 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. In accordance with ASC 606, 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.
The Company uses three categories for disaggregated revenue classification:
|
(1)
|
Retail Sales (Box Pure Air, DIGS),
|
|
|
|
|
(2)
|
Distribution (1606 and related products through the date of the spin-off) and,
|
|
|
|
|
(3)
|
Services Revenue (Direct Solar America)
|
Additionally, the Company also disaggregates revenue by subsidiary:
|
(1)
|
Singlepoint (parent company)
|
|
|
|
|
(2)
|
Direct Solar America
|
|
|
|
|
(3)
|
EnergyWyze
|
|
|
|
|
(4)
|
Box Pure Air
|
Retail Sales. Our retail sales include our products sold directly to consumers, with sales recognized upon delivery of the product to the customer, with the customer taking risk of ownership and assuming risk of loss. Payment is due upon delivery. Box Pure Air provides advanced air purification devices to businesses and consumers. DIGS operates an online store and sells nutrients, lights, HVAC systems and other products to consumers.
Distribution Revenue. Our distribution revenue includes SinglePoint’s 1606 Corp. (through the date of the spin-off) and related product sales to third-party resellers with revenue recognized upon delivery of the product to the reseller, with the reseller taking risk of ownership and assuming risk of loss. Payment is due upon delivery or within 30 days of invoicing. Except for when sold directly to the consumer upon which payment is due immediately.
Services Revenue. Our services’ revenue includes services provided by Direct Solar America, which earns revenue for solar services placed with third-party contractors. SinglePoint’s merchant services provide payment services to businesses with revenue recognized upon the close and remittance of commissions each month. ShieldSaver offers business-to-business services related to windshield repair and replacement for consumers. Service revenue is recognized as the performance obligations are fulfilled.
Returns and other adjustments
The Company records an estimate for provisions of discounts, returns, allowances, customer rebates and other adjustments for each shipment, and is netted with gross sales. The Company’s discounts and customer rebates are known at the time of sale and the Company appropriately debits net product revenues for these transactions based on the known discount and customer rebates. The Company estimates for customer returns and allowances based on estimates of historical transactions and accounts for such provisions during the same period in which the related revenues are earned. Customer discounts, returns and rebates on product revenues during the quarter ended June 30, 2021 are not material.
Cash and Cash Equivalents
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 deposits in excess of amounts insured by the FDIC as of June 30, 2021.
Convertible Instruments
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
Income Taxes
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 carryforwards. 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.
Earnings (loss) Per Common Share
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:
|
|
Six Months
|
|
|
Six Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
June 30,
2021
|
|
|
June 30,
2020
|
|
|
|
|
|
|
|
|
Series A Preferred Stock
|
|
|
1,413,457,125
|
|
|
|
1,315,000,000
|
|
Series B Preferred Stock
|
|
|
806,557
|
|
|
|
-
|
|
Series C Preferred Stock
|
|
|
747,540
|
|
|
|
-
|
|
Series D Preferred Stock
|
|
|
1,395,349
|
|
|
|
-
|
|
Convertible notes
|
|
|
20,000
|
|
|
|
19,108,819
|
|
Warrants
|
|
|
10,000,000
|
|
|
|
10,000,000
|
|
Potentially dilutive securities
|
|
|
1,428,295,424
|
|
|
|
2,753,161,412
|
|
Use of Estimates in the Preparation of Financial Statements
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.
Fair Value Measurements
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.
As of December 31, 2019, the Company had an investment in equity securities that did not have a readily determinable fair value, or “RDFV”. This investment was assessed and measured at fair value that was determined to be zero. As of June 30, 2021, and December 31, 2020, this investment in equity securities did meet the standards for a RDFV and has been valued as a Level 1 instrument. For the six months ended June 30, 2021, a loss of $41,627 was recognized related to the fair value measurement of these equity securities.
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of convertible notes derivative liability and equity securities - June 30, 2021
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of convertible notes derivative liability and equity securities - December 31, 2020
|
|
$
|
588,637
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
588,637
|
|
Recently Issued Accounting Pronouncements
There were various 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, 2021.
Subsequent Events
Other than the events described in Note 10, 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 certain investments using the cost method. If cost exceeds fair value, an impairment loss is recognized unless the impairment is considered temporary. The Company records investments in equity securities using the fair value method. In certain cases, the equity securities may not meet the criteria for RDFV, then the Company determines the fair value using Black-Scholes calculations with applicable assumptions.
The Company had investments recorded using the cash method of $35,000 as of June 30, 2021 and December 31, 2020.
The Company had investments in equity securities using the fair value method of $0 and $588,637 as of June 30, 2021, and December 31, 2020, respectively. On April 26, 2021, the Company completed a debt reduction through the sale of Jacksam Corporation shares owned by the Company to Greg Lambrecht. No gain or losses were incurred with this debt settlement.
2021 Acquisition - Box Pure Air, LLC
On February 26, 2021, the Company completed the acquisition of 51% of the membership interests in Box Pure Air, LLC. The purchase price consideration for this ownership interest was $500,000 paid with the issuance of 168,350 shares of common stock. The total value of common stock issued was allocated to goodwill pending further assessment and identification of acquired assets.
Total revenue of $65,430 and $217,098, net loss of ($353,115) and ($353,115), and contributed net loss of ($180,088) and ($152,043) after non-controlling interest related to Box Pure Air for the three and six months ended June 30, 2021, respectively, are included in the Company’s accompanying consolidated statement of operations.
2021 Acquisition - EnergyWyze, LLC
On January 26, 2021 the Company entered into a purchase agreement to acquire 100% ownership of EnergyWyze, LLC, a limited liability company. The purchase price consideration consisted of the following:
The Company paid $25,000 at closing and the remaining balance of $50,000 in the form of a 180-day Note (the “Seller Note”) to be retired in conjunction with any capital raise associated with the up listing of the Company’s common stock to a national exchange. The Seller Note would be extendable for a period of 90-days at the Company’s option, furthermore the note can be converted at any time into Common Stock during the initial 180-day period based on the 10 Day Volume Weighted Average Price (VWAP) of the Company’s common stock. These two components of the purchase price consideration were allocated to Goodwill pending further assessment and identification of acquired assets. The Company paid the $25,000 at the closing and recorded a Seller Note with a fair value of $50,000 as a short-term liability on the balance sheet as of March 31, 2021. As of June 30, 2021, the Seller Note has been paid in full.
The final component of the consideration consisted of the following:
$450,000.00 USD in Restricted Common Stock of the Company based on the 10 Day VWAP immediately preceding the closing date. Such shares are allocated equally, $150,000 USD each, between the principal members of Energy Wyze, and will vest over a three-year period. Each principal member must be employed on the vesting date to be awarded such shares. The vesting schedule shall be as follows: $50,000 USD shall vest on July 1, 2021, and $100,000 USD, representing the remaining balance, shall be divided into ten equal amounts and will vest on quarterly basis over the next 10 quarters post the initial vesting period of July 1, 2021.
For this component of the acquisition, the Company determined the $450,000 payment represented compensation for post-acquisition services due to the vesting directly tied to the sellers’ employment by the Company. Further, the Company determined that it was “more-likely-than-not” the principal members would remain employed for the 36-month vesting period. The Company determined the fair value of the $450,000 using the Black-Scholes calculation method based on the following criteria:
|
|
March 31,
2021
|
|
Dividend yields
|
|
|
0
|
%
|
Exercise price based on 10-day VWAP for the common stock
|
|
$
|
1.47
|
|
Volatility
|
|
|
136.8
|
%
|
Risk free rate
|
|
|
.018
|
%
|
Based on the Black-Scholes calculation, the purchase consideration price of $450,000 had a fair value of $339,599. The Company recorded the $450,000, net of the initial $110,401 discount as a purchase price liability with an offset to deferred compensation asset. The deferred compensation and the discount amount will be amortized to compensation expense over the 36 months consistent with the vesting schedule set forth in the acquisition agreement. The purchase price liability will be converted to common stock upon issuance of any vested shares.
Goodwill and Intangible Assets
The following table presents details of the Company’s goodwill as of June 30, 2021 and December 31, 2020:
|
|
Goodwill
|
|
Balances at December 31, 2020:
|
|
$
|
1,893,740
|
|
Aggregate goodwill acquired
|
|
|
575,000
|
|
Impairment losses
|
|
|
-
|
|
Goodwill adjustment
|
|
|
-
|
|
Balances at June 30, 2021:
|
|
$
|
2,468,740
|
|
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 March 31, 2021, and December 31, 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 as of June 30, 2021.
NOTE 4 - CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE
Convertible notes payable consisted of the following:
|
|
|
|
|
|
|
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
|
|
|
|
|
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 $37,767 of principal and accrued interest of this note into 37,767,405 shares of the Company’s common stock. This note was amended on October 12, 2020 whereby the maturity due date was extended to December 31, 2022 with monthly payments required commencing October 1, 2020. A final note settlement agreement was executed on January 27, 2021, whereby the Company issued 400,000 shares of common stock to repay the outstanding balance of principal plus accrued interest totaling $681,170. The Company recognized a loss on debt settlement of $35,830.
|
|
|
-
|
|
|
|
581,723
|
|
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 $458,360 of principal and accrued interest of this note into 214,880,617 shares of the Company’s common stock and was repaid $194,637 by the Company during the year ended December 31, 2020. The Iliad Note is secured by substantially all assets of the Company. This note was amended on October 12, 2020 whereby the maturity due date was extended to December 31, 2022 with monthly payments required commencing October 1, 2020. A final note settlement agreement was executed on January 27, 2021, whereby the Company issued 1,333,333 shares of common stock to repay the outstanding balance of principal plus accrued interest totaling $2,253,667. The Company recognized a loss on debt settlement of $136,333.
|
|
|
-
|
|
|
|
1,842,003
|
|
|
|
|
|
|
|
|
|
|
Convertible note payable with an accredited investor dated October 31, 2016, with interest at 0%, due October 31, 2017, convertible at $0.525 per share. This note is currently in default.
|
|
|
10,500
|
|
|
|
10,500
|
|
Total convertible notes payable
|
|
|
10,500
|
|
|
|
2,434,226
|
|
Less debt discounts
|
|
|
-
|
|
|
|
-
|
|
Convertible notes payable, net
|
|
|
10,500
|
|
|
|
2,434,226
|
|
Less current portion of convertible notes, net
|
|
|
(10,500
|
)
|
|
|
(2,434,226
|
)
|
Long-term convertible notes payable, net
|
|
$
|
-
|
|
|
$
|
-
|
|
Interest expense for the above notes payable for the six months ended June 30, 2021 and 2020 was $17,744 and $166,071, respectively. Total amortization of debt discounts was $0 and $1,079,374 for the six months ended June 30, 2021 and 2020, 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 was included in short-term notes payable as of December 31, 2020. The two PPP loans include a promissory note with Direct Solar America 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. Under the PPP loan terms, the Company may apply for forgiveness of the PPP loans. On January 27, 2021 the Direct Solar America note was forgiven. On March 9, 2021, the Singlepoint note was forgiven. On January 27, 2021 Direct Solar America received a new PPP loan with principal of $311,070, due January 26, 2026, and bears interest at 1%.
Long-term Note Payable
In May 2020, the Company received loan proceeds of $150,000 under the SBA’s Economic Injury Disaster Loan program (“EIDL”). The EIDL dated May 22, 2020, bears interest at 3.75%, has a 30-year term, is secured by substantially all assets of the Company, and is due in monthly installments of $731 beginning May 1, 2022.
Acquisition of EnergyWyze - Consideration Payables
Related to the acquisition of EnergyWyze, the Company issued a non-interest bearing note in the amount of $50,000 (See Note 3). This note was recorded at face value, which was considered the fair value of this short-term note. As of June 30, 2021, the balance of this note has been satisfied.
Also related to the acquisition of EnergyWyze, the Company incurred a purchase consideration obligation of $450,000 with a fair value of $339,599 (See Note 3), of which $203,759 is included in Short-term notes payable and $135,840 is included in Long-term notes payable.
|
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 $3,688 through February 2022 then increasing to $3,758 per month beginning February 2022.
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. On July 1, 2021, this lease went to a month-to-month basis.
The above leases were 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, 2021 and December 31, 2020:
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
Office and warehouse facilities
|
|
$
|
224,037
|
|
|
$
|
224,037
|
|
Accumulated amortization
|
|
|
(157,332
|
)
|
|
|
(144,870
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
66,705
|
|
|
$
|
79,167
|
|
Future maturities of obligations under capital leases are as follows:
Twelve months ending December 31,
|
|
|
|
2021
|
|
$
|
40,391
|
|
2022
|
|
|
45,020
|
|
2023
|
|
|
3,758
|
|
|
|
|
|
|
Total minimum lease payments
|
|
|
89,169
|
|
Amounts representing interest
|
|
|
(6,140
|
)
|
|
|
$
|
83,029
|
|
NOTE 6 - STOCKHOLDERS’ EQUITY
Class A Convertible Preferred Shares
As of June 30, 2021, and December 31, 2020, the Company had authorized 100,000,000 shares 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 56,538,285 and 60,000,000 shares were issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.
Each share of Class A Stock is convertible at any time into 25 shares of common stock, totaling 1,413,457,125 as of June 30th, 2021 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.
Class B Preferred Stock
As of June 30, 2021, and December 31, 2020, the Company had authorized 1,500 shares of Class B Preferred Stock, $.0001 par value per share, of which 123 shares and 408 shares were issued and outstanding, respectively.
Below is a summary description of the material rights, designations and preferences of the Class B Preferred Stock (all capitalized terms not otherwise defined herein shall have that definition assigned to it as per the Certificate of Designation).
The Company has the right to redeem the Class B Preferred Stock, in accordance with the following schedule:
|
i.
|
If all of the Class B Preferred Stock are redeemed within ninety (90) calendar days from the issuance date thereof, the Company shall have the right to redeem the Class B Preferred Stock upon three (3) business days of written notice at a price equal to one hundred and fifteen percent (115%) of the Stated Value together with any accrued but unpaid dividends;
|
|
|
|
|
ii.
|
If all of the Class B Preferred Stock are redeemed after ninety (90) calendar days and within one hundred twenty (120) calendar days from the issuance date thereof, the Company shall have the right to redeem the Class B Preferred Stock upon three (3) business days of written notice at a price equal to one hundred and twenty percent (120%) of the Stated Value together with any accrued but unpaid dividends; and
|
|
|
|
|
iii.
|
If all of the Class B Preferred Stock are redeemed after one hundred and twenty (120) calendar days and within one hundred eighty (180) calendar days from the issuance date thereof, the Company shall have the right to redeem the Class B Preferred Stock upon three (3) business days of written notice at a price equal to one hundred and twenty five percent (125%) of the Stated Value together with any accrued but unpaid dividends.
|
|
|
|
|
iv.
|
The Company shall redeem the Class B Preferred Stock on the date that is One (1) Calendar year from the issuance at an amount equaling the sum of the Stated Value and all accrued but unpaid dividends and all other amounts due pursuant to the Certificate of Designation.
|
The Company shall pay a dividend of eight percent (8%) per annum on the Class B Preferred Stock. Dividends shall be paid quarterly, and at the Company’s discretion, in cash or Class B Preferred Stock calculated at the purchase price.
The Stated Value of the Class B Preferred Stock is $1,200 per share.
Following any Event of Default (as defined in the Certificate of Designation), all outstanding shares of Class B Preferred Stock shall come immediately due for redemption and the redemption amount shall accrue interest at the lesser of (a) 18% per annum or (b) the maximum legal rate. Redemption following an Event of Default shall occur at an amount equaling: one hundred and thirty five percent (135%), multiplied by the sum of the Stated Value, all accrued but unpaid dividends and all other amounts due pursuant to the Certificate of Designation for all shares of Class B Preferred Stock.
The Class B Preferred Stock will vote together with the common stock on an as-converted basis subject to the Beneficial Ownership Limitations (as set forth in the Certificate of Designation).
Each share of the Class B Preferred Stock is convertible, at any time and from time to time from and after the issuance at the option of the Holder thereof, into that number of shares of Common Stock (subject to Beneficial Ownership Limitations) determined by dividing the Stated Value of such share of Preferred Stock by $0.183.
From the date of issuance until the date when the Holder no longer holds any shares of Class B Preferred Stock, upon any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration, Indebtedness or a combination of units thereof (a “Subsequent Financing”), the Holder may elect, in its sole discretion, to exchange (in lieu of conversion), if applicable, all or some of the shares of Class B Preferred Stock then held for any securities or units issued in a Subsequent Financing on a $1.00 for $1.00 basis. Additionally, if in such Subsequent Financing there are any contractual provisions or side letters that provide terms more favorable in the aggregate discount to the investors than the terms provided for hereunder, then the Company shall specifically notify the Holder of such additional or more favorable terms and such terms, at Holder’s option, shall become a part of the transaction documents with the Holder.
In addition to any adjustments pursuant to the terms of the Certificate of Designation, if at any time the Company sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s Preferred Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). Notwithstanding the foregoing, the holders of the Preferred Stock shall not be entitled to such rights relating to the spin-off of non-core assets of the Company, even if the holders of common stock of the Company are entitled to such dividend. Upon a Subsequent Financing, a Holder of at least one hundred (100) shares of Class B Preferred Stock shall have the right to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing on the same terms, conditions and price provided for in the Subsequent Financing.
If at any time on or after the issuance date of the Class B Preferred Stock, the Company proposes to file any Registration Statement with respect to any offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders of the Company for their account (or by the Company and by shareholders of the Company), other than a Registration Statement in connection with a merger or acquisition, then the Company shall offer to the Holders the opportunity to register the sale of such number of Preferred Stock as such Holders may request in writing.
The foregoing summary of terms is subject to, and qualified in its entirety, by the Certificate of Designation for the Class B Preferred Stock.
Class C Preferred Stock
On January 28, 2021, the Company amended its Articles of Incorporation to designate 1,500 shares of undesignated preferred stock as Class C Preferred Stock, of which 760 shares were issued and outstanding as of June 30, 2021.
Below is a summary description of the material rights, designations and preferences of the Class C Preferred Stock (all capitalized terms not otherwise defined herein shall have that definition assigned to it as per the Certificate of Designation).
The Company has the right to redeem the Class C Preferred Stock, in accordance with the following schedule:
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i.
|
If all of the Class C Preferred Stock are redeemed within ninety (90) calendar days from the issuance date thereof, the Company shall have the right to redeem the Class C Preferred Stock upon three (3) business days of written notice at a price equal to one hundred and fifteen percent (115%) of the Stated Value together with any accrued but unpaid dividends;
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ii.
|
If all of the Class C Preferred Stock are redeemed after ninety (90) calendar days and within one hundred twenty (120) calendar days from the issuance date thereof, the Company shall have the right to redeem the Class C Preferred Stock upon three (3) business days of written notice at a price equal to one hundred and twenty percent (120%) of the Stated Value together with any accrued but unpaid dividends; and
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iii.
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If all of the Class C Preferred Stock are redeemed after one hundred and twenty (120) calendar days and within one hundred eighty (180) calendar days from the issuance date thereof, the Company shall have the right to redeem the Class C Preferred Stock upon three (3) business days of written notice at a price equal to one hundred and twenty five percent (125%) of the Stated Value together with any accrued but unpaid dividends.
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iv.
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The Company shall redeem the Class C Preferred Stock on the date that is One (1) Calendar year from the issuance at an amount equaling the sum of the Stated Value and all accrued but unpaid dividends and all other amounts due pursuant to the Certificate of Designation.
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The Company shall pay a dividend of three percent (3%) per annum on the Class C Preferred Stock. Dividends shall be paid quarterly, and at the Company’s discretion, in cash or Class C Preferred Stock calculated at the purchase price. The Stated Value of the Class C Preferred Stock is $1,200 per share.
The Class C Preferred Stock will vote together with the common stock on an as-converted basis subject to the Beneficial Ownership Limitations (as set forth in the Certificate of Designation).
Each share of the Class C Preferred Stock is convertible, at any time and from time to time from and after the issuance at the option of the Holder thereof, into that number of shares of Common Stock (subject to Beneficial Ownership Limitations) determined by dividing the Stated Value of such share by the lesser of (i)(a) $1.22 (a fixed price equaling ninety percent (90%) of the average daily volume weighted average price (“VWAP”) for the Company’s common stock for the five (5) trading days preceding the execution of definitive agreements); and (b) where applicable, a fixed price equaling ninety percent (90%) of the average daily VWAP for the five (5) trading days following a reverse split..
From the date of issuance until the date when the Holder no longer holds any shares of Class C Preferred Stock, upon any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration, Indebtedness or a combination of units thereof (a “Subsequent Financing”), the Holder may elect, in its sole discretion, to exchange (in lieu of conversion), if applicable, all or some of the shares of Class C Preferred Stock then held for any securities or units issued in a Subsequent Financing on a $1.00 for $1.00 basis. Additionally, if in such Subsequent Financing there are any contractual provisions or side letters that provide terms more favorable in the aggregate discount to the investors than the terms provided for hereunder, then the Company shall specifically notify the Holder of such additional or more favorable terms and such terms, at Holder’s option, shall become a part of the transaction documents with the Holder.
If at any time the Company sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s Preferred Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). Notwithstanding the foregoing, the holders of the Preferred Stock shall not be entitled to such rights relating to the spin-off of non-core assets of the Company, even if the holders of common stock of the Company are entitled to such dividend. Upon a Subsequent Financing, a Holder of at least one hundred (100) shares of Class C Preferred Stock shall have the right to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing on the same terms, conditions and price provided for in the Subsequent Financing.
If at any time on or after the issuance date of the Class C Preferred Stock, the Company proposes to file any Registration Statement with respect to any offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders of the Company for their account (or by the Company and by shareholders of the Company), other than a Registration Statement in connection with a merger or acquisition, then the Company shall offer to the Holders the opportunity to register the sale of such number of Preferred Stock as such Holders may request in writing.
The foregoing summary of terms is subject to, and qualified in its entirety, by the Certificate of Designation for the Class C Preferred Stock.
Class D Convertible Preferred Stock
On March 11, 2021, the Company amended its Articles of Incorporation to designate 2,000 shares of undesignated preferred stock as Class D Preferred Stock, of which 2,000 shares were issued and outstanding as of June 30, 2021.
Below is a summary description of the material rights, designations and preferences of the Class D Preferred Stock (all capitalized terms not otherwise defined herein shall have that definition assigned to it as per the Certificate of Designation).
The Company has the right to redeem the Class D Preferred Stock, in accordance with the following schedule:
|
i.
|
If all of the Class D Preferred Stock are redeemed within ninety (90) calendar days from the issuance date thereof, the Company shall have the right to redeem the Class D Preferred Stock upon three (3) business days’ written notice at a price equal to one hundred and fifteen percent (115%) of the Stated Value together with any accrued but unpaid dividends;
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|
|
ii.
|
If all of the Class D Preferred Stock are redeemed after ninety (90) calendar days and within one hundred twenty (120) calendar days from the issuance date thereof, the Company shall have the right to redeem the Class D Preferred Stock upon three (3) business days of written notice at a price equal to one hundred and twenty percent (120%) of the Stated Value together with any accrued but unpaid dividends; and
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|
|
|
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iii.
|
If all of the Class D Preferred Stock are redeemed after one hundred and twenty (120) calendar days and within one hundred eighty (180) calendar days from the issuance date thereof, the Company shall have the right to redeem the Class D Preferred Stock upon three (3) business days of written notice at a price equal to one hundred and twenty five percent (125%) of the Stated Value together with any accrued but unpaid dividends.
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|
|
|
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iv.
|
The Company shall redeem the Class D Preferred Stock on the date that is One (1) Calendar year from the issuance at an amount equaling the sum of the Stated Value and all accrued but unpaid dividends and all other amounts due pursuant to the Certificate of Designation.
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The Company shall pay a dividend of three percent (3%) per annum on the Class D Preferred Stock. Dividends shall be paid quarterly, and at the Company’s discretion, in cash or Class D Preferred Stock calculated at the purchase price. The Stated Value of the Class D Preferred Stock is $1,200 per share.
The Class D Preferred Stock will vote together with the common stock on an as-converted basis subject to the Beneficial Ownership Limitations (as set forth in the Certificate of Designation).
Each share of the Class D Preferred Stock is convertible, at any time and from time to time from and after the issuance at the option of the Holder thereof, into that number of shares of Common Stock (subject to Beneficial Ownership Limitations) determined by dividing the Stated Value of such share by $1.73.
From the date of issuance until the date when the Holder no longer holds any shares of Class D Preferred Stock, upon any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration, Indebtedness or a combination of units thereof (a “Subsequent Financing”), the Holder may elect, in its sole discretion, to exchange (in lieu of conversion), if applicable, all or some of the shares of Class D Preferred Stock then held for any securities or units issued in a Subsequent Financing on a $1.00 for $1.00 basis. Additionally, if in such Subsequent Financing there are any contractual provisions or side letters that provide terms more favorable in the aggregate discount to the investors than the terms provided for hereunder, then the Company shall specifically notify the Holder of such additional or more favorable terms and such terms, at Holder’s option, shall become a part of the transaction documents with the Holder.
If at any time the Company sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s Preferred Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). Notwithstanding the foregoing, the holders of the Preferred Stock shall not be entitled to such rights relating to the spin-off of non-core assets of the Company, even if the holders of common stock of the Company are entitled to such dividend. Upon a Subsequent Financing, a Holder of at least one hundred (100) shares of Class D Preferred Stock shall have the right to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing on the same terms, conditions and price provided for in the Subsequent Financing.
If at any time on or after the issuance date of the Class D Preferred Stock, the Company proposes to file any Registration Statement with respect to any offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders of the Company for their account (or by the Company and by shareholders of the Company), other than a Registration Statement in connection with a merger or acquisition, then the Company shall offer to the Holders the opportunity to register the sale of such number of Preferred Stock as such Holders may request in writing.
The foregoing summary of terms is subject to, and qualified in its entirety, by the Certificate of Designation for the Class D Preferred Stock.
As of June 30, 2021, and December 31, 2020, a total of 39,995,000 and 39,998,500 shares of preferred stock remain undesignated and unissued, respectively.
Common Stock
As of June 30, 2021, and December 31, 2020, the Company’s authorized common stock was 5,000,000,000 shares, at $0.0001 par value per share, with 42,475,133 and 33,075,711 shares issued and outstanding, respectively.
Class C and D Preferred Stock Purchase Agreements.
On January 28, 2021, the Company entered into a purchase agreement with GHS whereby GHS agreed to purchase, in tranches, up to $1,000,000 in exchange for 1,010 shares of Class C Preferred Stock. GHS purchased 760 shares for $750,000 as of June 30, 2021.
On March 11, 2021, the Company entered into a purchase agreement with GHS whereby GHS agreed to purchase, in tranches, up to $2,000,000 in exchange for 2,000 shares of Class D Preferred Stock. On March 11, 2021 GHS purchased 500 shares for $500,000. On March 19, 2021, GHS purchased the second tranche of 500 shares of Class D Preferred Stock for $500,000. On March 26, 2021 GHS purchased the third tranche of 500 shares of Class D Preferred Stock for $500,000. On April 1, 2021, GHS purchased the fourth tranche of 500 shares of Class D Preferred Stock for $500,000.
Shares issued during the six months ended June 30, 2021
On January 7, 2021, the Company issued 66,667 shares of common stock to consultants for services with a fair value of $18,000, or $0.27 per share.
On January 26, 2021, the Company issued a total of 1,733,333 shares of common stock to UAHC and Iliad related to the convertible debt settlement agreement (See Note 4).
On February 8, 2021, the Company issued 333,333 shares of common stock for the conversion of Class A Preferred stock.
On March 27, 2021, the Company issued 168,350 shares of common stock for the $500,000 purchase consideration for 51% ownership in Box Pure Air (See Note 3).
On April 2, 2021, the Company issued 1,744,343 shares of common stock in order to round up shares to the nearest round lot in connection with the reverse split.
On May 4, 2021, the Company issued 375,000 shares of common stock in exchange for conversion of preferred Class A Preferred Stock.
On May 26, 2021, the Company issued 66,667 shares of common stock to consultants for services with a fair value of $35,866, or $0.538 per share.
On June 18, 2021, the Company issued 1,868,853 shares of common stock to GHS in exchange for conversion of their preferred stock Class B Preferred Stock.
On June 24, 2021, the Company issued 1,375,000 shares of common stock each (for a total of 2,750,000) to two directors in exchange for conversion of their Class A Preferred Stock, and 2,461,715 shares of Class A Preferred Stock were cancelled.
On June 30, 2021, the Company issued 292,875 shares of common stock in exchange for conversion of Class A Preferred Stock.
NOTE 7 - RELATED PARTY TRANSACTIONS
Accrued Officer Compensation
As of June 30, 2021 and December 31, 2020, a total of $240,750 and $1,005,230, respectively, was accrued for unpaid officer wages due the Company’s CEO, CFO and President under their respective employment agreements.
Other
On May 18, 2021, the Company entered into a Separation Agreement and General Release (the “Separation Agreement”) with Gregory Lambrecht. Pursuant to the Separation Agreement Mr. Lambrecht resigned as an officer and director of the Company and agreed to terminate his employment agreement with the Company. The Company agreed to pay Mr. Lambrecht $764,480.00 due in unpaid accrued compensation and $606,371.63 in indebtedness plus accrued interest through the date of the Agreement (the “Accrued Debt”) as follows: (i) the Company agreed to issue Mr. Lambrecht 362,987 shares of Common Stock (with standard restrictive legend) valued at $0.75 per share, equaling $272,240.00 (the “Shares”), (ii) the Company agreed to pay Mr. Lambrecht $250,000.00 within two business days of the date of the Separation Agreement, and (iii) the remaining amount of Accrued Debt of $848,612.00 will be satisfied through the issuance by the Company of a promissory note (the “Note”). The Note provides for ten percent (10%) per annum interest commencing as of August 1, 2021. The monthly payment amount of principal and interest shall be $21,522.98, with the first payment of $21,522.98 due September 1, 2021, and a final payment amount of $21,523.20 due on August 1, 2025.
On April 26, 2021, the Company completed a debt reduction through the sale of Jacksam Corporation owned by the Company with Greg Lambrecht, CEO, resulting in the decrease of $547,010.37 in current liabilities. No gain or losses were incurred with this debt settlement.
On May 24, 2021, the Seller Note related to the EnergyWyze acquisition was paid in full in exchange for loan sellers pursuant to the terms and conditions in the asset purchase and operating agreement.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Litigation
On July 9, 2021 the Company and Direct Solar America served a complaint (the “Company Complaint”) in the United States District Court for the District of Arizona against Pablo Diaz Curiel, Kjelsey Johnson, and Brian Odle alleging, amongst other things, that the aforementioned individuals: (i) Interference with Direct Solar America’s existing and prospective business opportunities; (ii) made unauthorized use of, claims of ownership, and/or offers for sale under direct Solar America’s commercial identity; (iii) Misappropriated trade secrets of Direct Solar America; (iv) Breach of the Asset Purchase Agreement originally entered into between the Company and Mr. Diaz and Ms. Johnson (against Mr. Diaz and Ms. Johnson); and (v) Breach of the Employment Agreement originally entered into between Direct Solar America and Mr. Diaz (against Mr. Diaz).
Also on July 9, 2021 the Company was served with a Complaint by Mr. Diaz (and certain other parties) against the Company and certain officers (and former officers) of the Company alleging, amongst other things: fraud, interference, breach of fiduciary duty, and breach of contract (“Diaz Complaint”).
On August 6, 2021, the Company obtained a Preliminary Injunction against Pablo Diaz Curiel and Kjelsey Johnson enjoining them from using any information specific to Direct Solar America that was the subject of the Asset Purchase Agreement originally entered into between the Company and Mr. Diaz and Ms. Johnson. This includes among other things 1) any specific customer information; 2) price lists; 3) accounts; 4) web pages; and 5) similar specifically identifiable property. The Preliminary Injunction further prohibits Mr. Diaz and Ms. Johnson from reselling, disclosing or otherwise using Direct Solar America trademarks, client lists or other proprietary data.
On August 11, 2021, an Order was issued consolidating the Company Complaint and the Diaz Complaint which results in the two legal actions being consolidated into one matter, and requiring them to refile their Complaint as a counterclaim.
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 9 - REVENUE CLASSES AND CONCENTRATIONS
Selected financial information for the Company’s operating revenue for disaggregated revenue purposes are as follows:
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|
Six Months
Ended
June 30,
|
|
|
Six Months
Ended
June 30,
|
|
|
|
2021
|
|
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2020
|
|
|
|
|
|
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|
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Revenue by product/service lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$
|
253,250
|
|
|
$
|
34,362
|
|
Distribution
|
|
|
13,904
|
|
|
|
95,693
|
|
Services
|
|
|
426,681
|
|
|
|
1,340,444
|
|
Total
|
|
$
|
693,835
|
|
|
$
|
1,470,499
|
|
|
|
|
|
|
|
|
|
|
Revenue by subsidiary:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Singlepoint (parent company)
|
|
$
|
19,363
|
|
|
$
|
127,865
|
|
Direct Solar America
|
|
|
389,081
|
|
|
|
1,318,184
|
|
DIGS
|
|
|
30,693
|
|
|
|
24,450
|
|
Energy Wyze
|
|
|
37,600
|
|
|
|
-
|
|
Box Pure Air
|
|
|
217,098
|
|
|
|
-
|
|
Total
|
|
$
|
693,835
|
|
|
$
|
1,470,499
|
|
No customer comprised more than 10% of the Company’s revenue for six months ended June 30, 2021 or 2020.
NOTE 10 - SUBSEQUENT EVENTS
Note Purchase Agreement
On July 13, 2021 the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with Bucktown Capital LLC (“BCL”) whereby the Company agreed to issue and sell to BCL a promissory note in the principal amount of $1,580,000 (the “Note”). The Note bears interest at the rate of Eight Percent (8%) per annum, and provides that for the calendar quarter beginning on January 1, 2022 and continuing for each calendar quarter thereafter until the Note is paid in full, the Company will make quarterly cash payments to BCL equal to $250,000. The Company may choose the frequency and amount of each payment (subject to a minimum payment of $50,000) during each applicable quarter so long as the aggregate amount paid during each quarter is equal to $250,000. The Note is a long term liability and not convertible into any securities of the Company.
Warrant Settlement
In July 2021 the Company entered into agreements with two entities relating to prior notes held by such entities. These agreements provide for the cancellation of all of the warrants and the Company issued an aggregate of 5,700,000 shares of common stock of the Company.
SINGLEPOINT INC.
Up to 14,500,000 Shares of
Common Stock
PROSPECTUS
October 22, 2021