Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the quarterly period ended June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 001-36530

Touchpoint Group Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

46-3561419

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

4300 Biscayne Blvd, Suite 203, Miami FL		33137
(Address of principal executive offices)		(Zip Code)

(305) 420-6640

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of August 10, 2022, there were outstanding 792,742,780 shares of the registrant’s common stock, par value $0.0001 per share.

TABLE OF CONTENTS

Part I – FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	21

Item 4.	Controls and Procedures	21

Part II – OTHER INFORMATION

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 6.	Exhibits	24

SIGNATURES		25

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

The statements made in this Report, and in other materials that the Company has filed or may file with the Securities and Exchange Commission, in each case that are not historical facts, contain “forward-looking information” within the meaning of the Private Securities Litigation Reform Act of 1995, and Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, which can be identified by the use of forward-looking terminology such as “may,” “will,” “anticipates,” “expects,” “projects,” “estimates,” “believes,” “seeks,” “could,” “should,” or “continue,” the negative thereof, and other variations or comparable terminology as well as any statements regarding the evaluation of strategic alternatives. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. These risks include, but are not limited to, risks and uncertainties relating to our current cash position and our need to raise additional capital in order to be able to continue to fund our operations; our ability to retain our managerial personnel and to attract additional personnel; competition; our ability to protect intellectual property rights, and any and other factors, including the risk factors identified in the documents we have filed, or will file, with the Securities and Exchange Commission.

In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this report or in any document incorporated herein by reference might not occur. Investors are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the respective dates of this report or the date of the document incorporated by reference in this report. We expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by federal securities laws.

These and other matters the Company discusses in this Report, or in the documents it incorporates by reference into this Report, may cause actual results to differ from those the Company describes. The Company assumes no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

TOUCHPOINT GROUP HOLDINGS, INC.

Condensed Consolidated Balance Sheets

June 30, 2022 and December 31, 2021

(in thousands, except share data)

	June 30, 2022 (unaudited)			December 31, 2021
Assets
Current assets:
Cash	$	16		$	147
Accounts receivable, net		15			31
Prepaid compensation		92			367
Prepaid Air Race expenditure		966			490
Other current assets		46			41
Total		1,135			1,076
Current assets of discontinued operations		1			1
Total current assets		1,136			1,077

Fixed assets, net		555			354
Intangible assets, net		154			91
Goodwill		419			419
Non current assets of discontinued operations		5			5
Total assets	$	2,269		$	1,946

Liabilities, Temporary Equity and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	413		$	339
Accrued expenses		702			534
Accrued compensation		196			277
Deferred revenue		750			20
Loans payable		1,909			1,510
Amount due to related parties		131			81
Share prepayment		60			60
Promissory notes, related parties		1,000			1,000
Current liabilities of continued operations		5,161			3,821
Current liabilities of discontinued operations		11			11
Total current liabilities		5,172			3,832

Total liabilities		5,172			3,832

Temporary Equity – redeemable common stock outstanding 33,946 shares		605			605

Stockholders’ Deficit
Preferred stock: $0.0001 par value, authorized 50,000,000; 409,000 shares issued and outstanding (2021 – 0)		41			—
Common stock: $0.0001 par value, authorized 1,750,000,000; 409,286,010 and 316,085,210 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		40			32
Additional paid-in capital		68,086			66,633
Accumulated deficit		(72,621	)		(70,102	)
Accumulated other comprehensive loss		(24	)		(24	)
Total Touchpoint Group Holdings, Inc. stockholders’ deficit		(4,478	)		(3,461	)
Equity attributable to non-controlling interest		970			970
Total stockholders’ deficit		(3,508	)		(2,491	)

Total liabilities and stockholders’ deficit	$	2,269		$	1,946

See accompanying notes to unaudited condensed consolidated financial statements.

TOUCHPOINT GROUP HOLDINGS, INC.

Condensed Consolidated Statements of Operations

For the three and six months ended June 30, 2022 and 2021

(in thousands, except per share data)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021

Revenue	$	1		$	34		$	31		$	66

Cost of revenue:

Amortization of intangible assets		31			139			62			279
Total cost of revenue		31			139			62			279

Gross deficit		(30	)		(105	)		(31	)		(213	)

Expenses:
General and administrative		891			745			1,497			1,733

Loss from operations		(921	)		(850	)		(1,528	)		(1,946	)

Other income and expense:
Interest expense		(512	)		(100	)		(941	)		(186	)
Foreign exchange		(53	)		—			(54	)		(1	)
Other (expense) income		—			(290	)		4			(290	)
Total other income and expenses		(565	)		(390	)		(991	)		(477	)

Loss for the period		(1,486	)		(1,240	)		(2,519	)		(2,422	)

Loss from discontinued operations		—			(50	)		—			(50	)
Net loss attributable to Touchpoint Group Holdings Inc. common stockholders	$	(1,486	)	$	(1,290	)	$	(2,519	)	$	(2,472	)

Earnings per share

Basic and diluted net loss per share	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.01	)

Weighted average number of shares outstanding
Basic and diluted		368,397			17,186			348,684			166,613

See accompanying notes to unaudited condensed consolidated financial statements.

TOUCHPOINT GROUP HOLDINGS, INC.

Condensed Consolidated Statements of Comprehensive Loss

For the three and six months ended June 30, 2022 and 2021

(in thousands)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021

Net loss	$	(1,486	)	$	(1,290	)	$	(2,519	)	$	(2,472	)

Foreign currency translation adjustment		—			—			—			—
Total comprehensive loss	$	(1,486	)	$	(1,290	)	$	(2,519	)	$	2,472	)

See accompanying notes to unaudited condensed consolidated financial statements.

TOUCHPOINT GROUP HOLDINGS, INC.

Condensed Consolidated Statements of Equity

For the six months ended June 30, 2022 and 2021

(in thousands)

(unaudited)


	Temporary Equity				Preferred Stock					Common Stock				Additional Paid-in Capital			Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Non-controlling interst		Total Equity
	Number of Shares		Amount		Number of Shares			Amount		Number of Shares		Amount

Balance December 31, 2020		34	$	605		—		$	—		129,290	$	13	$	63,551		$	(64,907	)	$	(24	)	$	970	$	(397	)

Net loss		—		—		—			—		—		—		—			(1,182	)		—			—		(1,182	)
Issuance of shares on partial conversion of note payable		—		—		—			—		29,702		3		315			—			—			—		318
Issuance of shares for loan commitment		—		—		—			—		3,750		—		173			—			—			—		173
Issuance of shares for services		—		—		—			—		7,925		1		163			—			—			—		164
Issuance of shares for services to be provided		—		—		—			—		1,500		—		20			—			—			—		20


Balance March 31, 2021		34		605		—			—		172,167		17		64,222			(66,089	)		(24	)		970		(904	)

Net loss		—		—		—			—		—		—		—			(1,182	)		—			—		(1,182	)
Issuance of shares for conversion of loans payable		—		—		—			—		29,702		3		315			—			—			—		318
Issuance of shares for loan commitment fees		—		—		—			—		3,750		—		173			—			—			—		173
Issuance of shares for financing commitment		—		—		—			—		1,500		—		26			—			—			—		26
Issuance of shares for services		—		—		—			—		7,925		1		163			—			—			—		164


Balance June 30, 2021		34	$	605		—		$	—		215,044	$	21	$	64,899		$	(67,271	)	$	(24	)	$	970	$	(1,405	)

Balance January 01, 2022		34	$	605		20		$	—		316,086	$	32	$	66,633		$	(70,102	)	$	(24	)	$	970	$	(2,491	)

Net loss		—		—		—			—		—		—		—			(1,033	)		—			—		(1,033	)
Issue of Class B preferred shares		—		—		321			32		—		—		289			—			—			—		321
Proceeds from issuance of Class A preferred shares and conversion to common shares		—		—		(10	)		—		10,000		1		124			—			—			—		125
Conversion of Class A preferred shares to common shares		—		—		(10	)		—		—		—		—			—			—			—		—
Warrants issued for financing commitments		—		—		—			—		—		—		409			—			—			—		409
Issuance of common shares for license agreement											10,000		1		124			—			—			—		125


Balance March 31, 2022		34	$	605		321		$	32		336,086	$	34	$	67,579		$	(71,135	)	$	(24	)	$	970	$	(2,544	)

Net loss																		(1,486	)							(1,486	)

Issue of Class B preferred shares						88			9						79											88
Issuance of common shares on cashless exercise of warrants				—		—			—		43,875		4		(4	)		—			—			—		—
Issuance of common shares for partial settlement of amounts owed											16,000		2		18											20
Issuance of common shares for services provided											4,000				20											20
Warrants issued for financing commitments															394											394


Balance June 30, 2022		34	$	605		409		$	41		399,961	$	40	$	68,086		$	(72,621	)	$	(24	)	$	970	$	(3,508	)

See accompanying notes to unaudited condensed consolidated financial statements.

TOUCHPOINT GROUP HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

For the six months ended June 30, 2022 and 2021

(in thousands)

(unaudited)


	2022			2021
Cash flows from operating activities:

Net loss for the period	$	(2,519	)	$	(2,472	)

Adjustment to reconcile net loss for the period to net cash flows from operating activities:
Shares issued for financing commitment		—			196
Fair value of warrants issued for financing commitment		—			117
Amortization of intangible assets		62			278

Shares issued for services to be provided		20			344
Non-cash interest		647			18
Amortization of shares issued for services		275			277
Changes in operating assets and liabilities:
Accounts receivable		16			(24	)
Deferred revenue		750			10
Other assets		(482	)		59
Settlement liability		—			290
Accounts payable and accrued expenses		161			76
Net cash flows from operating activities – continuing operations		(1,070	)		(831	)
Net cash flows from operating activities – discontinued operations		—			50
Net cash flows from operating activities		(1,070	)		(781	)

Cash used in investing activities:
Purchase of intangible assets		—			(8	)
Purchase of fixed assets		(201	)		—
Net cash flows from investing activities		(201	)		(8	)

Cash flows from financing activities:

Proceeds from issuance of preferred shares		534			—
Repayment of loans		(584	)		(100	)
Advances from related parties, net		50			(15	)
Proceeds from loans		1,140			900
Net cash flows from financing activities		1,140			785
Decrease in cash during the period		(131	)		(4	)

Cash at beginning of the period		147			118

Cash at end of the period	$	16		$	114

Supplementary Information:

Non-cash financing transactions:
Interest paid		194			—

See accompanying notes to unaudited condensed consolidated financial statements.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

Note 1. Description of Business, Organization and Principles of Consolidation

Description of Business

The Company has the following businesses:

(i)

Touchpoint Group Holdings, Inc. (“TGHI”) is a software developer which supplies a robust fan engagement platform designed to enhance the fan experience and drive commercial aspects of the sport and entertainment business.

TGHI brings users closer to the action by enabling them to engage with clubs, favorite players, peers and relevant brands through features that include live streaming, access to limited edition merchandise, gamification (chance to win unique one-off life experiences), user rewards, third party branded offers, credit cards and associated benefits.

TGHI signed a worldwide IP license and Royalty Agreement on February 22, 2022 with GBT Technologies Inc. “GBT” which enables TGHI to license GBT software and technology and to split any royalties earned with GBT on a 50/50 basis.

TGHI acquired certain rights to the World Championship Air Race (“WCAR”) on September 20, 2021, through an asset purchase agreement for approximately $70,000. Management and all key operational staff for the WCAR joined Touchpoint’s wholly owned subsidiary, Air Race Limited (“ARL”), under long-term agreements. In addition, all key supplier, participating host city and participating team contracts were assumed by ARL.

WCAR is a race format developed by Red Bull as the Red Bull Air Race.

The Company is primarily based in the United States of America and the United Kingdom

Interim Period Financial Statements

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The results of operations reflect interim adjustments, all of which are of a normal recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for such interim period. The results reported in these interim condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and note disclosure normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the SEC’s rules and regulations. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on April 15, 2022.

Note 2. Summary of Significant Accounting Policies

Liquidity and Capital Resources

The Company has incurred net losses and negative cash flows from operations which raise substantial doubt about the Company’s ability to continue as a going concern. The Company has principally financed these losses from the sale of equity securities and the issuance of convertible debt instruments.

The Company will be required to raise additional funds through various sources, such as equity and debt financings. While the Company believes it is probable that such financings could be secured, there can be no assurance the Company will be able to secure additional sources of funds to support its operations, or if such funds are available, that such additional financing will be sufficient to meet the Company’s needs or on terms acceptable to us.

Basis of Accounting and Presentation

These condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements.

Accounts Receivable, Revenue Recognition and Concentrations

Performance Obligations - A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under the revenue recognition standard. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s contracts do not typically have variable consideration that needs to be considered when the contract consideration is allocated to each performance obligation.

Revenue Recognition – We recognize revenues from each business segment as described below:

— Continued operations

Touchpoint – Revenue for the sale of a software license is recognized when the customer has use of the services and has access to use the software. Revenue from the usage of software is shared between the customer and Touchpoint in accordance with an operator agreement. The Company also generates revenue through the development and deployment of customized customer apps based on its existing technologies. Based on the terms of the Operator Agreements, the Company recognizes revenue upon approval of the app and related design documents by the customer. Included within deferred revenue is amounts billed and/or collected from customer prior to achieving customer approval. The Company also recognizes revenue through hosting and maintenance fees billed to customers under the Operator Agreements and is eligible to receive a portion of revenues generated through the customer app, as defined.

WCAR – the Company anticipates recognizing the deferred revenue with host city arrangements upon the completion of the air race events.

Impairment of Other Long-Lived Assets

The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets.

Net Loss per Share

Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities. For the three and six months ended June 30, 2022 and 2021, outstanding warrants and shares underlying convertible debt are antidilutive because of net losses, and as such, their effect was not included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations.

Property, Plant and Equipment

Property and equipment are stated at cost. Depreciation and amortization are provided for using straight-line methods, in amounts sufficient to charge the cost of depreciable assets to operations over their estimated service lives. In October 2021, ARL began purchasing racing equipment to utilize in future racing events that has not yet been placed in service.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal period. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, determining fair values of assets acquired and liabilities assumed in business combinations, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions.

Note 3. Intangible Assets

Intangible assets consist of the following (in thousands):

	June 30			December 31
	2022			2021
	(unaudited)
Touchpoint software	$	2,084		$	2,084
Air Race Limited (intellectual property)		79			79
GBT License		125			—
Less accumulated amortization		(2,134	)		(2,072	)
		154			91
Goodwill		419			419
Intangible assets, net	$	573		$	510

Note 4. Notes payable

a) Promissory notes, related parties

The promissory notes due to Zhanming Wu ($500,000) and the Company’s CEO, Mark White ($500,000), both considered related parties, including accrued interest of 7% per annum from issuance, were due for repayment on August 31, 2019. Such payments were not made and the parties are in negotiations to extend the maturity dates of the promissory notes. There can be no guarantee that commercially reasonable terms will agreed upon. As of June 30, 2022, the counterparties had not demanded repayment of the promissory notes.

Convertible Loans Payable

	Lender	General terms	Amount due at June 30, 2022	Amount due at December 31, 2021
1	Bespoke Growth Partners Convertible Note #2	In November 2019, the Company issued a convertible promissory note in the original principal amount of $300,000 to Bespoke Growth Partners. The note was due on May 21, 2020, with an interest rate of 20% per annum. During the year ended December 31, 2020 the Company received proceeds under the note of $175,000. In October 2021 the Company issued 10,855,047 shares of common stock, with a fair value of $54,275, as partial payment.	$208,225	$208,225
2	Geneva Roth Remark Holdings, Inc. Note #8	On June 24, 2021, the Company issued a convertible promissory note in the principal amount of $85,000 to Geneva Roth Remark Holdings, Inc. The note is due June 24, 2022 and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 trading days. The balance owing was repaid in full by cash on January 3, 2022.	$—	$85,000
3	Geneva Roth Remark Holdings, Inc. Note #9	On August 3, 2021, the Company issued a convertible promissory note in the principal amount of $68,500 to Geneva Roth Remark Holdings, Inc. The note is due August 3, 2022 and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 trading days. The balance owing was repaid in full by cash on February 3, 2022.	$—	$68,500
4	Geneva Roth Remark Holdings, Inc. Note #10	On August 11, 2021, the Company issued a convertible promissory note in the principal amount of $103,000 to Geneva Roth Remark Holdings, Inc. The note is due August 11, 2022 and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 trading days. The balance owing was repaid in full by cash on February 8, 2022.	$—	$103,000
5	Geneva Roth Remark Holdings, Inc. Note #11	On September 10, 2021, the Company issued a convertible promissory note in the principal amount of $55,000 to Geneva Roth Remark Holdings, Inc. The note is due September 10, 2022 and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 trading days. The balance owing was repaid in full by cash on March 15, 2022.	$—	$55,000
6	Geneva Roth Remark Holdings, Inc. Note #12	On October 1, 2021, the Company issued a convertible promissory note in the principal amount of $88,000 to Geneva Roth Remark Holdings, Inc. The note is due October 1, 2022 and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 trading days. The balance owing was repaid in full on April 1, 2022.	$—	$88,000
7	Quick Capital, LLC Loan #2	On December 10, 2021, the Company issued a convertible promissory note in the principal amount of $200,000 to Quick Capital, LLC. The note is due December 10, 2022, and carries an OID of 10% and has an interest rate of 12% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a fixed price of $0.0125 per share of common stock. On December 10, 2021 the Company issued 3,111,111 shares of common stock and 6,500,000 warrants, convertible into 6,500,000 shares of common stock at $0.02 per share, as loan commitment fees. The balance outstanding as of June 30, 2022 is $200,000.	$200,000	$200,000
8	SBA – PPP loan	The Company has received an SBA PPP loan of $22,425 of which $10,417 has been forgiven. The balance of $12,008 is repayable, together with interest of 1% per annum, at $295 per month until paid in full. The balance outstanding as of June 30, 2022 is $10,827.	$9,940	$11,713

9	Glen Eagles Acquisition LP	On August 10, 2021, the Company issued a convertible promissory note in the principal amount of $126,500 to Glen Eagles LP. The note is due August 10, 2022 and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a fixed price of $0.0125 per share of common stock. During the year ended December 31, 2021 the Company issued 11,500,000 shares of common stock, with a fair value of $57,000 as a reduction of the promissory note. In addition, payments totaling $67,750 were made. The balance owing as of June 30, 2022 is $1,750.	$1,750	$16,750
10	Glen Eagles Acquisition LP	On February 7, 2022 the Company borrowed $75,000 from Glen Eagles Acquisition LP and repaid the same, in cash, on February 9, 2022. On March 9, 2022 the Company borrowed $52,500 from Glen Eagles Acquisition LP and repaid $32,500 , in cash, on March 15, 2022. The loans are unsecured and non-interest bearing. The balance owing was repaid in full on April 11, 2022.	$—	$—
11	Mast Hill Fund LLP	On October 29, 2021, the Company issued a convertible promissory note in the principal amount of $810,000 to Mast Hill Fund LLP The note is due October 29, 2022, and carries an OID of 10% and has an interest rate of 12% per annum. The promissory note is convertible, at the option of the holder, into common shares of the Company at a fixed price of $0.0125 per share of common stock. On October 29, 2021 the Company issued 10,855.047 shares of common stock and 28,065,000 warrants, convertible into 28,065,000 shares of common stock at $0.02 per share, as loan commitment fees. The balance outstanding as of June 30, 2022 is $810,000.	$810,000	$810,000
12	Mast Hill Fund LLP	On March 29, 2022, the Company issued a convertible promissory note in the principal amount of $625,000 to Mast Hill Fund LLP The note is due March 28, 2023, and carries an OID of 10% and has an interest rate of 12% per annum. The promissory note is convertible, at the option of the holder, into common shares of the Company at a fixed price of $0.002 per share of common stock. On March 29, 2022 the Company issued 175,000,000 warrants, convertible into 175,000,000 shares of common stock at $0.002 per share until March 28, 2027, as loan commitment fees. The Company also issued 245,000,000 special warrants, convertible into 245,000,000 shares of common stock at $0.002 per share. These special warrants are only exercisable upon the event of a default of the note.	$625,000	$—
13	Mast Hill Fund LLP	On April 11, 2022, the Company issued a convertible promissory note in the principal amount of $275,000 to Mast Hill Fund LLP The note is due April 11, 2023, and carries an OID of 10% and has an interest rate of 12% per annum. The promissory note is convertible, at the option of the holder, into common shares of the Company at a fixed price of $0.002 per share of common stock. On April 11, 2022 the Company issued 75,000,000 warrants, convertible into 75,000,000 shares of common stock at $0.004 per share until April 11, 2027, as loan commitment fees. The Company also issued 105,000,000 special warrants, convertible into 105,000,000 shares of common stock at $0.002 per share. These special warrants are only exercisable upon the event of a default of the note .	275,000	—
14	Mast Hill Fund LLP	On June 7, 2022, the Company issued a convertible promissory note in the principal amount of $225,000 to Mast Hill Fund LLP The note is due June 7, 2023, and carries an OID of 10% and has an interest rate of 12% per annum. The promissory note is convertible, at the option of the holder, into common shares of the Company at a fixed price of $0.002 per share of common stock. On June 7, 2022 the Company issued 168,750,000 warrants, convertible into 168,750,000 shares of common stock at $0.0012 per share until March 28, 2027, as loan commitment fees. The Company also issued 262,500,000 special warrants, convertible into 262,500,000 shares of common stock at $0.0012 per share. These special warrants are only exercisable upon the event of a default of the note.	225,000	—
15	Talos Victory Fund, LLC	On November 3, 2021, the Company issued a convertible promissory note in the principal amount of $540,000 to Talos Victory Fund, LLC. The note is due November 3, 2022, and carries an OID of 10% and has an interest rate of 12% per annum. The promissory note is convertible, at the option of the holder, into common shares of the Company at a fixed price of $0.0125 per share of common stock. On November 3, 2021 the Company issued 10,144,953 shares of common stock and 15,810,000 warrants, convertible into 15,810,000 shares of common stock at $0.02 per share, as loan commitment fees. Repayments totaling $40,000 have been made.	$500,000	$540,000
	TOTAL Unamortized debt discount Notes payable, net of discounts		$2,854,915 946,237 $1,908,678	$2,186,188 676,644 $1,509,544

Note 5. Share Capital

Preferred Shares

The Company is authorized to issue 50,000,000 shares of preferred stock. The Board of Directors determines the number, terms and rights of the various classes of preferred stock.

Class A

The Company has designated 50,000 preferred shares as Class A Preferred Shares. Each Class A Preferred Share has a stated value of $12.50 per share and is convertible into 1,000 shares of common stock any time after July 1, 2022.

Class B

The Company has designated 1,000,000 preferred shares as Class B Preferred Shares. Each Class B Preferred Share has a stated value of $1.00 per share and is convertible into one shares of common stock any time after July 1, 2022.

Common Stock

Effective February 2, 2022, the Company amended its Articles of Incorporation increasing the number of authorized shares of common stock from 750,000,000 to 1,750,000,000 with a par value of $0.0001.

During the six months ended June 30, 2022 the Company issued the following shares:

Class B Preferred Shares

●

409,000 shares of Class B Preferred Shares for cash consideration of $409,000

Class A Preferred Shares

●

10,000 shares of Class A Preferred Shares for cash consideration of $125,000

Common Stock

●

20,000,000 shares of common stock on conversion of 20,000 shares of Class A Preferred Shares

●

43,200,800 shares of common stock on cashless conversion of 43,875,000 warrants

●

16,000,000 shares of common stock, with a fair value of $19,200, for partial settlement of amounts owing

●

4,000,000 shares of common stock for services received with a fair value of $20,000

Stock Purchase Warrants

At June 30, 2022, the Company had reserved 441,522,727 shares of its common stock for the following outstanding warrants:

Schedule of warrants

Outstanding as of January 1, 2021	—
Granted	72,814,394
Exchanged for common shares	(20,166,667)
Outstanding as of December 31, 2021	52,647,727
Granted	432,750,000
Exchanged for common shares	(43,875,000)
Outstanding as of June 30, 2022	441,522,727

During the six months ended June 30, 2022, 432,750,000 warrants were issued as part of debt financings, 43,875,000 warrants were exercised and no warrants were forfeited. The relative fair value of the warrants were recorded as a debt discountat issuance and is amortized over the life of the related debt.

During the six months ended June 30, 2022, the Company also issued 612,500,000 warrants, and reserved the same number of shares of its common stock, to purchase shares of its common stock at prices of $0.002 to $0.0012 per share solely as security in the event the Company defaults on certain borrowings which are due to be settled in full, either by repaying in cash or converting to shares of common stock, on or before June 7, 2023.

A summary of the weighted average inputs used in measuring the fair value of warrants issued during the six months ended June 30, 2022 are as follows:

Strike price	$0.004
Term (years)	5.0
Volatility	150%
Risk free rate	2.50%
Dividend yield	—

Note 6. Stock-Based Compensation

On August 6, 2013, the Company’s shareholders approved the 2013 Equity Incentive Plan (“2013 Plan”). The 2013 Plan provides for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, cash bonuses and other stock-based awards to employees, directors and consultants of the Company.

There were no options issued during the six months ended June 30, 2022 and there were no options outstanding as at June 30, 2022.

In March 2018, the Company adopted the 2018 Equity Incentive Plan (the “2018 Plan”) to provide additional incentives to the employees, directors and consultants of the Company to promote the success of the Company’s business. During the six months ended June 30, 2022, no common stock of the Company was issued under the 2018 Plan.

Note 7. Subsequent events

Subsequent to June 30, 2022 the Company issued 182,427,044 shares of common stock for conversion $159,848 of debt principal and interest and issuance of 200,996,053 shares of common stock under exercise of cashless warrants.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2022 and 2021 and notes thereto contained elsewhere in this Report, and our annual report on Form 10-K for the twelve months ended December 31, 2021 including the consolidated financial statements and notes thereto. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements. See “Cautionary Note Concerning Forward-Looking Statements.”

Overview

We are a holding company which, through our operating subsidiaries, is engaged in media and digital technology, primarily in sports entertainment and related technologies that bring fans closer to athletes and celebrities.

Current Structure of the Company

The Company has the following subsidiaries:

Subsidiary Name	% Owned
● 123Wish, Inc. (considered dormant)		51	%
● One Horizon Hong Kong Ltd (Limited operations)		100	%
● Horizon Network Technology Co. Ltd		100	%
● Love Media House, Inc (discontinued operations)		100	%
● Air Race Limited		100	%
● AR Management GmbH		100	%

In addition to the subsidiaries listed above, Suzhou Aishuo Network Information Co., Ltd (“Suzhou Aishuo”) is a limited liability company, organized in China and controlled by us via various contractual arrangements. Suzhou Aishuo is treated as one of our subsidiaries for financial reporting purposes in accordance with generally accepted accounting principles in the United States (“GAAP”).

Summary Description of Core Business

We are a software developer which supplies a robust fan engagement platform designed to enhance the fan experience and drive commercial aspects of the sport and entertainment business.

We bring users closer to the action by enabling them to engage with clubs, favorite players, peers and relevant brands through features, available through the Touchpoint APP and program, that include live streaming, access to limited edition merchandise, gamification (chance to win unique one-off life experiences), user rewards, third party branded offers, credit cards and associated benefits.

We are based in the United States of America and the United Kingdom.

Business update

The Company CEO, Mr. White stated, “We continue to make significant progress advancing our next generation fan engagement platform. Specifically, we are now working with numerous fitness brands, celebrities and influencers. The customer response has been overwhelmingly positive, as our platform is specifically designed to bring fans closer to celebrities by providing access to proprietary content, livestream events, as well as exclusive merchandise. To further enhance the platform and add new revenue streams, we are working towards integrating new blockchain machine learning capabilities designed for intuitive analytic feedback, thereby allowing for the creation of highly optimized content strategies both inside the Touchpoint platform and on social media.”

“Building on our core expertise in fan engagement, we announced last year our acquisition of Air Race World Championship (Air Race), a race format developed by Red Bull as the Red Bull Air Race. Since that time, we have been successful in signing multiple host-city agreements. However, given the prolonged impact and travel restrictions associated with the pandemic in addition to global financial market conditions, we made the strategic decision to postpone these events into early 2023, when we believe we can maximize the success and financial impact of these events.”

“Overall, we could not be more excited about the outlook for the business. For this reason, and based on feedback from investors, the Board of Directors made the strategic decision to forgo plans for a reverse split. While our goal remains to list on a senior U.S. stock exchange, we are also exploring a variety of strategic alternatives to maximize value for shareholders. Meanwhile, we remain focused on both advancing plans to launch Air Race in the new year, as well as accelerating the growth of our core Touchpoint fan engagement platform.”

For more information, see http://touchpointgh.com/

Results of Operations

Comparison of three months ended June 30, 2022 and 2021

The following table sets forth key components of our results of operations for the periods.

(All amounts, other than percentages, in thousands of U.S. dollars)

	Three Months Ended June 30,						Change
	2022			2021			Increase/ (decrease)			Percentage Change
	(unaudited)
Revenue	$	1		$	34		$	(33	)		(99.0	)

Cost of revenue		31			139			(108	)		(77.7	)

Gross deficit		(30	)		(105	)		(75	)		(71.4	)

Operating expenses:

General and administrative		891			745			146			20.0

Total operating expenses		891			745			146			20.0

Loss from operations		(921	)		(850	)		(71	)		(8.4	)

Other expense		(565	)		(390	)		(313	)		(406.5	)
Loss before income taxes		(1,486	)		(1,240	)		(246	)		(19.8	)


Total net loss	$	(1,486	)	$	(1,240	)	$	(246	)		(19.8	)

Revenue: Our revenue for the three months ended June 30, 2022, decreased by approximately $33,000 over the same period in 2021. The decrease was a result of the reduction in sales of software licenses during the three months ended June 30, 2022.

Gross Deficit: Gross deficit for the three months ended June 30, 2022, was approximately $30,000 as compared to a deficit of $105,000 for the three months ended June 30, 2021, due primarily to the decrease in revenue and amortization of software.

Operating Expenses: Operating expenses incurred during the three months ended June 30, 2022, were approximately $891,000, an increase of approximately $146,000 when compared to the approximate figure of $745,000 incurred in the three months ended June 30, 2021.

Net Loss: Net loss for the three months ended June 30, 2022, was approximately $1,486,000 as compared to net loss of approximately $1,240,000 for the same period in 2021.

Comparison of six months ended June 30, 2022, and 2021

The following table sets forth key components of our results of operations for the periods indicated.

(All amounts, other than percentages, in thousands of U.S. dollars)

	Six Months Ended June 30,						Change
	2022			2021			Increase/ (decrease)			Percentage Change

Revenue	$	31		$	66		$	(35	)		(53.0	)

Cost of revenue		62			279			(217	)		(77.7	)

Gross deficit		(31	)		(213	)		(182	)		(85.4	)

Operating expenses:

General and administrative		1,497			1,733			(236	)		(13.6	)

Total operating expenses		1,497			1,733			(236	)		(13.6	)

Loss from operations		(1,528	)		(1,946	)		(418	)		(21.5	)

Other expense		(991	)		(477	)		(805	)		(81.2	)
Loss for before discontinued operations		(2,519	)		(2,442	)		(387	)		(18.2	)


Net loss	$	(2,519	)	$	(2,442	)	$	(387	)		(18.2	)

Revenue: Our revenue for the six months ended June 30, 2022, was approximately $31,000 as compared to approximately $66,000 for the six months ended June 30, 2021, a decrease of approximately $35,000. The decrease was due to the decrease in license sales in the second quarter.

Cost of Revenue: Cost of revenue was approximately $31,000 for the six months ending June 30, 2022, as compared to $279,000 for the six months ended June 30, 2021, a decrease of $217,000.

Gross Deficit: Gross deficit for the six months ended June 30, 2022, was approximately $31,000 as compared to a gross deficit of $213,000 for the six months ended June 30, 2021, a decrease in the deficit of approximately $182,000. The decrease was mainly due to the reduction in costs related to application revenue.

Operating Expenses: Operating expenses, including general and administrative expenses, depreciation and acquisition costs for the six months ended June 30, 2022, were approximately $1,497,000 representing an increase of 13.6% over the charge for the same period in 2021. The increase was mainly due to the charge for the issue of warrants, calculated using Blacks Scholes.

Net Loss: Net loss for the six months ended June 30, 2022 was approximately $2,519,000 as compared to loss of approximately $2,472,000 for the same period in 2021.

Liquidity and Capital Resources

Six Months Ended June 30, 2022 and June 30, 2021

The following table sets forth a summary of our net cash flows for the periods indicated:

	For the Six Months Ended June 30 (in thousands)
	2022			2021
Net cash flows from operations		(1,070	)		(831	)
Net cash flows from investing activities		(201	)		(8	)
Net cash flows from financing activities		1,140			785

Net cash used by operating activities of continuing operations increased to $1,070,000 for the six months ended June 30, 2022 from $831,000 for the same period in 2021.

Net cash used from investing activities was approximately $201,000 in the six months ended June 30, 2022, as compared to net cash used of $8,000 in the comparative period in 2021.

Net cash generated in financing activities was approximately $1,140,000 for the six months ended June 30, 2022, as compared to $785,000 for the six months ended June 30, 2021. The cash generated from financing activities in the six months ended June 30, 2022, was primarily from convertible loans raised from US funds, less repayment of a loan raised in 2021.

At June 30, 2022, the Company had cash of approximately $16,000.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements, which have been prepared in accordance with GAAP. Our significant accounting policies are described in notes accompanying the unaudited consolidated financial statements. The preparation of the unaudited consolidated financial statements requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. Estimates are based on information available as of the date of the unaudited financial statements, and accordingly, actual results in future periods could differ from these estimates. Significant judgments and estimates used in the preparation of the unaudited consolidated financial statements apply significant accounting policies described in the notes to our consolidated financial statements.

We consider our recognition of revenues, accounting for the consolidation of operations, accounting for intangible assets and related impairment analyses, the allowance for doubtful accounts and accounting for equity transactions, to be most critical in understanding the judgments that are involved in the preparation of our unaudited consolidated financial statements.

Recent Accounting Pronouncements

See Note 2 to our unaudited condensed financial statements, included in Part I, Item 1., Financial Information of this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

As of June 30, 2022, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of June 30, 2022, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of June 30, 2022, our disclosure controls and procedures were not effective. This was due to certain deficiencies in our controls over financial reporting. In particular a lack of accounting personnel has resulted in an inability to segregate various accounting functions.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1A. RISK FACTORS

Reference is made to the risks and uncertainties disclosed in Item 1A (“Risk Factors”) of our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) filed April 15, 2022, which sections are incorporated by reference into this report, as the same may be updated from time to time. Prospective investors are encouraged to consider the risks described in our 2021 Form 10-K, and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Report and other information publicly disclosed or contained in documents we file with the Securities and Exchange Commission before purchasing our securities. As a smaller reporting company, the Company is not required to disclose material changes to the risk factors that were contained in the 2021 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended June 30, 2022, the Company issued shares of common stock as follows:

	●	5,147,724 shares of common stock, with an aggregate fair value of $56,175, in settlement of principal and interest owing to Geneva Roth Remark Holdings, Inc,

	●	800,000 shares of common stock, with a fair value of $22,800, for a commitment fee payable to Quick Capital, LLC under agreement dated April 2, 2021.

	●	10,000,000 shares of common stock, with a fair value of $180,000, for services provided.

Class B Preferred Shares

●

409,000 shares of Class B Preferred Shares for cash consideration of $409,000

Class A Preferred Shares

●

10,000 shares of Class A Preferred Shares for cash consideration of $125,000

Common Stock

●

20,000,000 shares of common stock on conversion of 20,000 shares of Class A Preferred Shares

●

43,200,800 shares of common stock on cashless conversion of 43,875,000 warrants

●

16,000,000 shares of common stock, with a fair value of $19,200, for partial settlement of amounts owing

●

4,000,000 shares of common stock for services received with a fair value of $20,000

The shares above were issued in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 of Regulation D promulgated under the Securities Act. Each of the investors represented that it was acquiring the shares for investment only and not with a view toward, or for resale in connection with, the public sale or distribution thereof. Accordingly, the shares have not been registered under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

ITEM 6. EXHIBITS

Exhibit No.		Description

31.1		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

31.2		Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

32.1		Section 1350 Certification of Principal Executive Officer

32.2		Section 1350 Certification of Principal Financial Officer

101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation
101.DEF		XBRL Taxonomy Extension Definition
101.LAB		XBRL Taxonomy Extension Labels
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TOUCHPOINT GROUP HOLDINGS, INC.

Date: August 15, 2022	By:	/s/ Mark White
		Mark White
		President and Chief Executive Officer (principal executive officer)

	By:	/s/ Martin Ward
		Martin Ward
		Chief Financial Officer (principal financial officer and principal accounting officer)