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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
☒
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2022
☐
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|
For the transition period from __________ to ___________
Commission file number: 333-222094
TPT Global Tech,
Inc.
|
(Exact name of registrant as specified in its charter)
|
Florida
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81-3903357
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State or other jurisdiction of incorporation or organization
|
|
(I.R.S. Employer Identification No.)
|
|
|
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501 West Broadway, Suite 800
San Diego, CA
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|
92101
|
(Address of principal executive offices)
|
|
(Zip Code)
|
(619)
301-4200
Registrant’s telephone number, including area code
______________________________________
(Former Address and phone of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
-
|
-
|
-
|
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 past 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to the 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 for 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 file, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,” and
“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 to Section 13(a) of the Securities 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 issuer’s
classes of common stock, as of the latest practicable date.
As of December 9, 2022, there were 1,119,173,261 shares of the
registrant’s common stock, $0.001 par value, issued and
outstanding.
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(Unaudited)
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
63,399 |
|
|
$ |
518,066 |
|
Accounts receivable, net
|
|
|
295,908 |
|
|
|
101,935 |
|
Prepaid expenses and other current assets
|
|
|
204,310 |
|
|
|
122,428 |
|
Total current assets
|
|
|
563,617 |
|
|
|
742,429 |
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
1,091,527 |
|
|
|
1,649,022 |
|
Operating lease right of use assets
|
|
|
3,544,160 |
|
|
|
4,259,758 |
|
Intangible assets, net
|
|
|
3,164,070 |
|
|
|
3,656,241 |
|
Goodwill
|
|
|
104,657 |
|
|
|
104,657 |
|
Deposits and other assets
|
|
|
79,120 |
|
|
|
265,318 |
|
Total non-current assets
|
|
|
7,983,534 |
|
|
|
9,934,996 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$ |
8,547,151 |
|
|
$ |
10,677,425 |
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$ |
8,683,309 |
|
|
$ |
9,653,093 |
|
Deferred revenue
|
|
|
85,070 |
|
|
|
462,643 |
|
Customer liability
|
|
|
338,725 |
|
|
|
338,725 |
|
Current portion of loans, advances and factoring
agreements
|
|
|
744,300 |
|
|
|
1,446,571 |
|
Convertible notes payable, net of discounts
|
|
|
3,467,582 |
|
|
|
1,162,606 |
|
Notes payable - related parties, net of discounts
|
|
|
4,768,047 |
|
|
|
10,542,842 |
|
Convertible notes payable – related parties, net of
discounts
|
|
|
553,100 |
|
|
|
902,781 |
|
Derivative liabilities
|
|
|
4,078,343 |
|
|
|
4,042,910 |
|
Current portion of operating lease liabilities
|
|
|
6,283,655 |
|
|
|
3,987,405 |
|
Financing lease liabilities
|
|
|
— |
|
|
|
284,055 |
|
Financing lease liabilities – related party
|
|
|
703,758 |
|
|
|
682,704 |
|
Total current liabilities
|
|
|
29,705,889 |
|
|
|
33,506,335 |
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Loans, advances and factoring agreements, net of current
portion and discounts
|
|
|
144,000 |
|
|
|
218,425 |
|
Operating lease liabilities, net of current portion
|
|
|
2,183,219 |
|
|
|
2,976,623 |
|
Total non-current liabilities
|
|
|
2,327,219 |
|
|
|
3,195,048 |
|
Total liabilities
|
|
|
32,033,108 |
|
|
|
36,701,383 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
— |
|
|
|
— |
|
See accompanying notes to condensed consolidated financial
statements.
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS -
CONTINUED
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
MEZZANINE EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Preferred Series A, 1,000,000 designated - 1,000,000
shares issued and outstanding as of September 30, 2022 and December
31, 2021
|
|
|
42,983,742 |
|
|
|
3,117,000 |
|
Convertible Preferred Series B – 3,000,000 shares designated,
2,588,693 shares issued and outstanding as of September 30, 2022
and December 31, 2021
|
|
|
1,677,473 |
|
|
|
1,677,473 |
|
Convertible Preferred Series C – 3,000,000 shares designated, zero
shares issued and outstanding as of September 30, 2022 and December
31, 2021
|
|
|
— |
|
|
|
— |
|
Convertible Preferred Series D, 10,000,000 designated – 46,649 and
zero shares issued and outstanding as of September 30, 2022 and
December 31, 2021
|
|
|
244,592 |
|
|
|
244,592 |
|
Convertible Preferred Series E, 10,000,000 designated – 2,043,507
and zero shares issued and outstanding as of September 30, 2022 and
December 31, 2021
|
|
|
13,344,101 |
|
|
|
— |
|
Total mezzanine equity
|
|
|
58,249,908 |
|
|
|
5,039,065 |
|
|
|
|
|
|
|
|
|
|
Stockholders' DEFICIT
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 2,500,000,000 shares authorized,
1,028,178,638 and 923,029,038 shares issued and outstanding as of
September 30, 2022 and December 31, 2021, respectively
|
|
|
1,028,179 |
|
|
|
923,029 |
|
Subscriptions payable
|
|
|
21,585 |
|
|
|
5,610 |
|
Additional paid-in capital
|
|
|
13,286,592 |
|
|
|
12,860,873 |
|
Accumulated deficit
|
|
|
(96,134,890 |
) |
|
|
(44,921,837 |
) |
Total TPT Global Tech, Inc. stockholders' deficit
|
|
|
(81,798,534 |
) |
|
|
(31,132,325 |
) |
Non-controlling interests
|
|
|
62,669 |
|
|
|
69,302 |
|
Total stockholders’ deficit
|
|
|
(81,735,865 |
) |
|
|
(31,063,023 |
) |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' DEFICIT
|
|
$ |
8,547,151 |
|
|
$ |
10,677,425 |
|
See accompanying notes to condensed consolidated financial
statements.
TPT Global Tech,
Inc.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
|
|
For the three months ended
September 30,
|
|
|
For the nine months ended
September 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2021
|
|
|
2022
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
$ |
— |
|
|
$ |
176,230 |
|
|
$ |
82,000 |
|
|
$ |
590,619 |
|
Services
|
|
|
2,052,817 |
|
|
|
2,343,196 |
|
|
|
6,063,465 |
|
|
|
7,220,337 |
|
Total Revenues
|
|
|
2,052,817 |
|
|
|
2,519,426 |
|
|
|
6,145,465 |
|
|
|
7,810,956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF SALES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
|
— |
|
|
|
— |
|
|
|
27,882 |
|
|
|
10,640 |
|
Services
|
|
|
1,691,539 |
|
|
|
1,935,790 |
|
|
|
4,466,047 |
|
|
|
6,276,445 |
|
Total Costs of Sales
|
|
|
1,691,539 |
|
|
|
1,935,790 |
|
|
|
4,493,929 |
|
|
|
6,287,085 |
|
Gross profit
|
|
|
361,278 |
|
|
|
583,636 |
|
|
|
1,651,536 |
|
|
|
1,523,871 |
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
— |
|
|
|
1,186 |
|
|
|
— |
|
|
|
14,431 |
|
Professional
|
|
|
249,989 |
|
|
|
462,732 |
|
|
|
894,615 |
|
|
|
1,209,851 |
|
Payroll and related
|
|
|
572,574 |
|
|
|
574,119 |
|
|
|
1,823,527 |
|
|
|
1,962,434 |
|
General and administrative
|
|
|
489,663 |
|
|
|
454,401 |
|
|
|
1,358,560 |
|
|
|
1,749,985 |
|
Research and development
|
|
|
— |
|
|
|
36,485 |
|
|
|
1,750,000 |
|
|
|
36,485 |
|
Depreciation
|
|
|
150,454 |
|
|
|
160,641 |
|
|
|
448,943 |
|
|
|
480,344 |
|
Amortization
|
|
|
164,057 |
|
|
|
184,655 |
|
|
|
492,171 |
|
|
|
553,965 |
|
Total expenses
|
|
|
1,626,737 |
|
|
|
1,874,219 |
|
|
|
6,767,816 |
|
|
|
6,007,495 |
|
Loss from operations
|
|
|
(1,265,459 |
) |
|
|
(1,290,583 |
) |
|
|
(5,116,280 |
) |
|
|
(4,483,624 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative gain (loss)
|
|
|
102,903 |
|
|
|
(3,472,930 |
) |
|
|
491,301 |
|
|
|
(3,098,381 |
) |
Loss on debt extinguishment
|
|
|
397,008 |
|
|
|
722,200 |
|
|
|
(1,970,030 |
) |
|
|
722,200 |
|
Interest expense
|
|
|
(426,265 |
) |
|
|
(676,983 |
) |
|
|
(4,705,548 |
) |
|
|
(1,477,105 |
) |
Other income (expense)
|
|
|
(53,206 |
) |
|
|
— |
|
|
|
(52,387 |
) |
|
|
(334,908 |
) |
Total other income (expenses)
|
|
|
20,440 |
|
|
|
(3,427,713 |
) |
|
|
(6,236,664 |
) |
|
|
(4,188,194 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before income taxes
|
|
|
(1,245,019 |
) |
|
|
(4,718,296 |
) |
|
|
(11,352,944 |
) |
|
|
(8,671,818 |
) |
Income taxes
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS BEFORE NON-CONTROLLING INTERESTS
|
|
|
(1,245,019 |
) |
|
|
(4,718,296 |
) |
|
|
(11,352,944 |
) |
|
|
(8,671,818 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
|
|
|
(16,156 |
) |
|
|
(1,940 |
) |
|
|
(6,633 |
) |
|
|
(71,214 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEEMED DIVIDEND RELATED TO MODIFICATION OF SERIES A PREFERREED
STOCK
|
|
|
(39,866,742 |
) |
|
|
- |
|
|
|
(39,866,742 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE TO TPT GLOBAL TECH, INC. SHAREHOLDERS
|
|
$ |
(41,095,605 |
) |
|
$ |
(4,716,356 |
) |
|
$ |
(51,213,053 |
) |
|
$ |
(8,600,604 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share: Basic and diluted
|
|
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
950,225,974 |
|
|
|
890,779,038 |
|
|
|
932,094,683 |
|
|
|
879,778,872 |
|
See accompanying notes to condensed consolidated financial
statements.
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
DEFICIT
For the three and nine months ended September 30, 2022 and
2021
(Unaudited)
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Subscriptions Payable (Receivable)
|
|
|
Additional Paid-in Capital
|
|
|
Accumulated Deficit
|
|
|
Non-Controlling Interest
|
|
|
Total Stockholders’ Deficit
|
|
Balance as of June 30, 2022
|
|
|
923,029,038 |
|
|
$ |
923,029 |
|
|
$ |
16,260 |
|
|
$ |
12,860,873 |
|
|
$ |
(55,039,285 |
) |
|
$ |
78,825 |
|
|
$ |
(41,160,298 |
) |
Common stock issued for services or subscription payable
|
|
|
— |
|
|
|
— |
|
|
|
5,325 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,325 |
|
Debt conversion to common stock
|
|
|
105,149,600 |
|
|
|
105,150 |
|
|
|
— |
|
|
|
425,719 |
|
|
|
— |
|
|
|
— |
|
|
|
530,869 |
|
Modification of Series A Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(39,866,742 |
) |
|
|
|
|
|
|
(39,866,742 |
) |
Net loss
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,228,863 |
) |
|
|
(16,156 |
) |
|
|
(1,245,019 |
) |
Balance as of
September 30, 2022
|
|
|
1,028,178,638 |
|
|
$ |
1,028,179 |
|
|
$ |
21,585 |
|
|
$ |
13,286,592 |
|
|
$ |
(96,134,890 |
) |
|
$ |
62,669 |
|
|
$ |
(81,735,865 |
) |
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Subscriptions Payable (Receivable)
|
|
|
Additional Paid-in Capital
|
|
|
Accumulated Deficit
|
|
|
Non-Controlling Interest
|
|
|
Total Stockholders’ Deficit
|
|
Balance as of December 31, 2021
|
|
|
923,029,038 |
|
|
$ |
923,029 |
|
|
$ |
5,610 |
|
|
$ |
12,860,873 |
|
|
$ |
(44,921,837 |
) |
|
$ |
69,302 |
|
|
$ |
(31,063,023 |
) |
Common stock issued for services or subscription payable
|
|
|
— |
|
|
|
— |
|
|
|
15,975 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,975 |
|
Debt conversion to common stock
|
|
|
105,149,600 |
|
|
|
105,150 |
|
|
|
— |
|
|
|
425,719 |
|
|
|
— |
|
|
|
— |
|
|
|
530,869 |
|
Modification of Series A Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(39,866,742 |
) |
|
|
|
|
|
|
(39,866,742 |
) |
Net loss
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,346,311 |
) |
|
|
(6,633 |
) |
|
|
(11,352,944 |
) |
Balance as of
September 30, 2022
|
|
|
1,028,178,638 |
|
|
$ |
1,028,179 |
|
|
$ |
21,585 |
|
|
$ |
13,286,592 |
|
|
$ |
(96,134,890 |
) |
|
$ |
62,669 |
|
|
$ |
(81,735,865 |
) |
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Subscriptions Payable (Receivable)
|
|
|
Additional Paid-in Capital
|
|
|
Accumulated Deficit
|
|
|
Non-Controlling
Interest
|
|
|
Total Stockholders’ Deficit
|
|
Balance as of June 30, 2021
|
|
|
879,029,038 |
|
|
$ |
8,790,305 |
|
|
$ |
(3,265 |
) |
|
$ |
11,919,070 |
|
|
$ |
(44,787,194 |
) |
|
$ |
88,642 |
|
|
$ |
(31,903,717 |
) |
Common stock issued for services or subscription payable
|
|
|
— |
|
|
|
— |
|
|
|
7,100 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,100 |
|
Issuance of shares for cash
|
|
|
29,000,000 |
|
|
|
28,999 |
|
|
|
— |
|
|
|
581,503 |
|
|
|
— |
|
|
|
— |
|
|
|
610,502 |
|
Net loss
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,716,356 |
) |
|
|
(1,940 |
) |
|
|
(4,718,296 |
) |
Balance as of
September 30, 2021
|
|
|
908,029,038 |
|
|
$ |
908,029 |
|
|
$ |
3,835 |
|
|
$ |
12,500,573 |
|
|
$ |
(49,503,549 |
) |
|
$ |
86,702 |
|
|
$ |
(36,004,410 |
) |
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Subscriptions Payable (Receivable)
|
|
|
Additional Paid-in Capital
|
|
|
Accumulated Deficit
|
|
|
Non-Controlling
Interest
|
|
|
Total Stockholders’ Deficit
|
|
Balance as of December 31, 2020
|
|
|
865,564,371 |
|
|
$ |
865,565 |
|
|
$ |
125,052 |
|
|
$ |
11,462,940 |
|
|
$ |
(40,902,944 |
) |
|
$ |
(61,142 |
) |
|
$ |
(28,510,529 |
) |
Common stock issued for services or subscription payable
|
|
|
5,964,667 |
|
|
|
5,965 |
|
|
|
(121,217 |
) |
|
|
336,203 |
|
|
|
— |
|
|
|
— |
|
|
|
220,936 |
|
Issuance of shares in exchange for debt
|
|
|
7,500,000 |
|
|
|
7,500 |
|
|
|
— |
|
|
|
339,000 |
|
|
|
— |
|
|
|
— |
|
|
|
346,500 |
|
Issuance of shares for cash
|
|
|
29,000,000 |
|
|
|
28,999 |
|
|
|
— |
|
|
|
581,503 |
|
|
|
— |
|
|
|
— |
|
|
|
610,502 |
|
TPT Strategic license cancellation
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(219,058 |
) |
|
|
— |
|
|
|
219,058 |
|
|
|
— |
|
Net loss
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,600,605 |
) |
|
|
(71,214 |
) |
|
|
(8,671,819 |
) |
Balance as of
September 30, 2021
|
|
|
908,029,038 |
|
|
$ |
908,029 |
|
|
$ |
3,835 |
|
|
$ |
12,500,573 |
|
|
$ |
(49,503,549 |
) |
|
$ |
86,702 |
|
|
$ |
(36,004,410 |
) |
See accompanying notes to condensed consolidated financial
statements.
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)
|
|
For the nine months ended September 30,
|
|
|
|
2022
|
|
|
2021
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net loss
|
|
$ |
(11,352,944 |
) |
|
$ |
(8,671,819 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
448,943 |
|
|
|
480,344 |
|
Amortization
|
|
|
492,171 |
|
|
|
553,965 |
|
Amortization of debt discounts
|
|
|
3,593,957 |
|
|
|
829,094 |
|
Loss on conversion of notes payable
|
|
|
|
|
|
|
— |
|
Note payable issued for research and development
|
|
|
1,550,000 |
|
|
|
— |
|
Derivative gain
|
|
|
(491,301 |
) |
|
|
3,098,381 |
) |
Loss on extinguishment of debt
|
|
|
1,970,030 |
|
|
|
(722,200 |
) |
Loss on disposition of property and equipment
|
|
|
124,849 |
|
|
|
— |
|
Share-based compensation: Common stock
|
|
|
15,975 |
|
|
|
220,936 |
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
— |
|
Accounts receivable
|
|
|
(193,973 |
) |
|
|
55,152 |
|
Prepaid expenses and other assets
|
|
|
(81,881 |
) |
|
|
133,336 |
|
Deposits and other assets
|
|
|
186,198 |
|
|
|
(60,302 |
) |
Accounts payable and accrued expenses
|
|
|
1,633,792 |
|
|
|
2,137,537 |
|
Net change in operating lease right of use assets and
liabilities
|
|
|
2,218,444 |
|
|
|
1,638,578 |
|
Other liabilities
|
|
|
(377,573 |
) |
|
|
(14,001 |
) |
Net cash used in operating activities
|
|
|
(263,313 |
) |
|
|
(320,999 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
(16,297 |
) |
|
|
(219,298 |
) |
Net cash used in investing activities
|
|
|
(16,297 |
) |
|
|
(219,298 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from sale of Common Stock
|
|
|
|
|
|
|
610,502 |
|
Proceeds from sale of Series D Preferred Stock
|
|
|
— |
|
|
|
233,244 |
|
Proceeds from convertible notes, loans and advances
|
|
|
1,256,187 |
|
|
|
1,961,685 |
|
Payment on convertible loans, advances and factoring agreements
|
|
|
(1,391,580 |
) |
|
|
(2,024,497 |
) |
Proceeds on convertible notes and amounts payable – related
parties
|
|
|
— |
|
|
|
15,544 |
|
Payments on convertible notes and amounts payable – related
parties
|
|
|
(39,664 |
) |
|
|
(5,827 |
) |
|
|
|
|
|
|
|
|
|
Payments on financing lease liabilities and other
|
|
|
— |
|
|
|
(17,264 |
) |
Net cash provided by (used in) financing activities
|
|
|
(175,057 |
) |
|
|
773,387 |
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
(454,667 |
) |
|
|
233,090 |
|
Cash and cash equivalents - beginning of period
|
|
|
518,066 |
|
|
|
19,309 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - end of period
|
|
$ |
63,399 |
|
|
$ |
252,399 |
|
See accompanying notes to condensed consolidated financial
statements.
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -
CONTINUED
(Unaudited)
Supplemental Cash Flow Information:
Cash paid for:
|
|
2022
|
|
|
2021
|
|
Interest
|
|
$ |
8,384 |
|
|
$ |
34,420 |
|
Taxes
|
|
$ |
— |
|
|
$ |
— |
|
Non-Cash Investing and Financing
Activities:
|
|
2022
|
|
|
2021
|
|
Debt discount on factoring agreement
|
|
$ |
1,070,591 |
|
|
$ |
811,788 |
|
Series E Preferred Stock issued in exchange for debt and
payables
|
|
$ |
13,344,101 |
|
|
$ |
— |
|
Common Stock issued in exchange for payable and note
|
|
$ |
530,869 |
|
|
|
457,211 |
|
Deemed dividend related to modification of Series A Preferred
Stock
|
|
$ |
39,866,742 |
|
|
|
- |
|
TPT Strategic, Inc. merger – Non-controlling interest in
intercompany liabilities rescinded
|
|
$ |
— |
|
|
$ |
(219,058 |
) |
Issuance of common stock for subscription payable
|
|
$ |
— |
|
|
$ |
210,744 |
|
See accompanying notes to condensed consolidated financial
statements.
TPT Global Tech, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
September 30, 2022
(Unaudited)
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Nature of Operations
The Company was originally incorporated in 1988 in the state of
Florida. TPT Global, Inc., a Nevada corporation formed in June
2014, merged with Ally Pharma US, Inc., a Florida corporation,
(“Ally Pharma”, formerly known as Gold Royalty Corporation) in a
“reverse merger” wherein Ally Pharma issued 110,000,000 shares of
Common Stock, or 80% ownership, to the owners of TPT Global, Inc.
in exchange for all outstanding common stock of TPT Global Inc. and
Ally Pharma agreed to change its name to TPT Global Tech, Inc.
(jointly referred to as “the Company” or “TPTG”).
The following acquisitions have resulted in entities which have
been consolidated into TPTG since the reverse merger in 2014.
Name
|
|
Herein referred to as
|
|
Acquisition or Incorporation Date
|
|
Ownership
|
|
TPT Global Tech, Inc.
|
|
Company or TPTG
|
|
1988
|
|
|
100 |
% |
K
Telcom and Wireless LLC
|
|
K
Telecom
|
|
2014
|
|
|
100 |
% |
Global Telecom International LLC
|
|
Global Telecom
|
|
2014
|
|
|
100 |
% |
Copperhead Digital Holdings, Inc.
|
|
Copperhead Digital or CDH
|
|
2015
|
|
|
100 |
% |
TruCom, LLC
|
|
TruCom
|
|
2015
|
|
|
100 |
% |
Nevada Utilities, Inc.
|
|
Nevada Utilities
|
|
2015
|
|
|
100 |
% |
CityNet Arizona, LLC
|
|
CityNet
|
|
2015
|
|
|
100 |
% |
San Diego Media Inc.
|
|
SDM
|
|
2016
|
|
|
100 |
% |
Blue Collar Production, Inc.
|
|
Blue Collar
|
|
2018
|
|
|
100 |
% |
TPT SpeedConnect, LLC
|
|
TPT SpeedConnect
|
|
2019
|
|
|
100 |
% |
TPT Federal, LLC
|
|
TPT Federal
|
|
2020
|
|
|
100 |
% |
TPT MedTech, LLC
|
|
TPT MedTech
|
|
2020
|
|
|
100 |
% |
InnovaQor, Inc./TPT Strategic, Inc.
|
|
InnovaQor and TPT Strategic
|
|
2020
|
|
|
94 |
% |
QuikLab 1 LLC
|
|
Quiklab 1
|
|
2020
|
|
|
80 |
% |
QuikLAB 2, LLC
|
|
QuikLAB 2
|
|
2020
|
|
|
80 |
% |
QuikLAB 3, LLC
|
|
QuikLAB 3
|
|
2020
|
|
|
100 |
% |
The Fitness Container, LLC
|
|
Air Fitness
|
|
2020
|
|
|
75 |
% |
TPT Global Tech Asia Limited
|
|
TPT Asia
|
|
2020
|
|
|
78 |
% |
TPT MedTech UK LTD
|
|
TPT MedTech UK
|
|
2020
|
|
|
100 |
% |
TPT Global Defense Systems, Inc.
|
|
TPT Global Defense
|
|
2021
|
|
|
100 |
% |
TPT Innovations Technology, Inc.
|
|
TPT Innovations
|
|
2021
|
|
|
100 |
% |
TPT Global Caribbean Inc.
|
|
TPT Caribbean
|
|
2021
|
|
|
100 |
% |
TPT Media and Entertainment, LLC
|
|
TPT Media and Entertainment
|
|
2021
|
|
|
100 |
% |
VuMe Live, LLC
|
|
VuMe Live
|
|
2021
|
|
|
100 |
% |
Digithrive, LLC
|
|
Digithrive
|
|
2021
|
|
|
100 |
% |
We are based in San Diego, California, and operate as a
technology-based company with divisions providing
telecommunications, medical technology and product distribution,
media content for domestic and international syndication as well as
technology solutions. We operate on our own proprietary Global
Digital Media TV and Telecommunications infrastructure platform and
also provide technology solutions to businesses domestically and
worldwide. We offer Software as a Service (SaaS), Technology
Platform as a Service (PAAS), Cloud-based Unified Communication as
a Service (UCaaS) and carrier-grade performance and support for
businesses over our private IP MPLS fiber and wireless network in
the United States. Our cloud-based UCaaS services allow businesses
of any size to enjoy all the latest voice, data, media and
collaboration features in today's global technology markets. We
also operate as a Master Distributor for Nationwide Mobile Virtual
Network Operators (MVNO) and Independent Sales Organization (ISO)
as a Master Distributor for Pre-Paid Cellphone services, Mobile
phones, Cellphone Accessories and Global Roaming Cellphones.
Significant Accounting Policies
Please refer to Note 1 of the Notes to the Consolidated Financial
Statements in the Company's most recent Form 10-K for all
significant accounting policies of the Company, with the exception
of those discussed below.
Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared according to the instructions to Form
10-Q and Section 210.8-03(b) of Regulation S-X of the Securities
and Exchange Commission (“SEC”) and, therefore, certain information
and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) have been
omitted.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the nine months ended
September 30, 2022, are not necessarily indicative of the results
that may be expected for the year ending December 31, 2022.
These condensed consolidated financial statements should be read in
conjunction with the Company’s consolidated financial statements
for the year ended December 31, 2021. The condensed consolidated
balance sheet as of September 30, 2022, has been derived from the
consolidated financial statements at that date, but does not
include all of the information and footnotes required by GAAP.
Our condensed consolidated financial statements include the
accounts of those entities outlined in Nature of Operations giving
consideration to the non-controlling interests where appropriate.
All intercompany accounts and transactions have been eliminated in
consolidation.
Reclassifications
Certain amounts presented in previously issued financial statements
have been reclassified in these financial statements. For the three
and nine months ended September 30, 2021, $176,230 and $579,989,
respectively, was recorded as revenue from services in the
statement of operations and has been reclassified to revenue from
products to be consistent with the current period presentation.
Revenue Recognition
On January 1, 2018, we adopted the new accounting standard ASC
606, Revenue from Contracts with Customers, and all
of the related amendments (“new revenue standard”). We recorded the
change, which was immaterial, related to adopting the new revenue
standard using the modified retrospective method. Under this
method, we recognized the cumulative effect of initially applying
the new revenue standard as an adjustment to the opening balance of
retained earnings. This results in no restatement of prior periods,
which continue to be reported under the accounting standards in
effect for those periods. We expect the impact of the adoption of
the new revenue standard to continue to be immaterial on an ongoing
basis. We have applied the new revenue standard to all contracts as
of the date of initial application and as such, have used the
following criteria described below in more detail for each business
unit:
Identify the contract with the customer.
Identify the performance obligations in the contract.
Determine the transaction price.
Allocate the transaction price to performance obligations in
the contract.
Recognize revenue when or as we satisfy a performance
obligation.
Reserves are recorded as a reduction in net sales and are not
considered material to our consolidated statements of operations
for the nine months ended September 30, 2022 and 2021. In
addition, we invoice our customers for taxes assessed by
governmental authorities such as sales tax and value added taxes,
where applicable. We present these taxes on a net basis.
The Company’s revenue generation for the nine months ended
September 30, 2022 and 2021 came from the following sources
disaggregated by services and products, which sources are explained
in detail below.
|
|
For the nine months ended
September 30, 2022
|
|
|
For the nine months ended
September 30, 2021
|
|
TPT SpeedConnect
|
|
$ |
4,403,345 |
|
|
$ |
5,867,005 |
|
Blue Collar
|
|
|
1,386,970 |
|
|
|
1,241,060 |
|
TPT MedTech
|
|
|
89,755 |
|
|
|
131,291 |
|
Other (1)
|
|
|
183,395 |
|
|
|
7,032 |
|
Total Services Revenues
|
|
$ |
6,063,465 |
|
|
$ |
7,220,337 |
|
TPT MedTech
|
|
|
— |
|
|
|
348,676 |
|
Air Fitness
|
|
|
82,000 |
|
|
|
205,263 |
|
K Telecom
|
|
|
— |
|
|
|
10,630 |
|
Total Product Revenues
|
|
$ |
82,000 |
|
|
$ |
590,619 |
|
Total Revenue
|
|
$ |
6,145,465 |
|
|
$ |
7,810,956 |
|
(1) Includes international sales for the
nine months ended September 30, 2022 of $172,781 related to TPT
Asia.
TPT SpeedConnect: ISP and Telecom Revenue
TPT SpeedConnect is a rural Internet provider operating in 10
Midwestern States under the trade name SpeedConnect. TPT SC’s
primary business model is subscription based, pre-paid monthly
reoccurring revenues, from wireless delivered, high-speed internet
connections. In addition, the company resells third-party satellite
and DSL internet and IP telephony services. Revenue generated from
sales of telecommunications services is recognized as the
transaction with the customer is considered closed and the customer
receives and accepts the services that were the result of the
transaction. There are no financing terms or variable transaction
prices. Due date is detailed on monthly invoices distributed to
customer. Services billed monthly in advance are deferred to the
proper period as needed. Deferred revenue are contract liabilities
for cash received before performance obligations for monthly
services are satisfied. Deferred revenue for TPT SpeedConnect as of
September 30, 2022 and December 31, 2021 are $85,070 and $421,643,
respectively. Certain of our products require specialized
installation and equipment. For telecom products that include
installation, if the installation meets the criteria to be
considered a separate element, product revenue is recognized upon
delivery, and installation revenue is recognized when the
installation is complete. The Installation Technician collects the
signed quote containing terms and conditions when installing the
site equipment at customer premises.
Revenue for installation services and equipment is billed
separately from recurring ISP and telecom services and is
recognized when equipment is delivered and installation is
completed. Revenue from ISP and telecom services is recognized
monthly over the contractual period, or as services are rendered
and accepted by the customer.
The overwhelming majority of our revenue continues to be recognized
when transactions occur. Since installation fees are generally
small relative to the size of the overall contract and because most
contracts are for two years or less, the impact of not recognizing
installation fees over the contract is immaterial.
Blue Collar: Media Production
Services
Blue Collar creates original live action and animated content
productions and has produced hundreds of hours of material for the
television, theatrical, home entertainment and new media markets.
Blue Collar designs branding and marketing campaigns and has had
agreements with some of the world’s largest companies including
PepsiCo, Intel, HP, WalMart and many other Fortune 500 companies.
Additionally, they create motion picture, television and home
entertainment marketing campaigns for studios including Sony,
DreamWorks, Twentieth Century Fox, Universal Studios, Paramount
Studios, and Warner Brothers. With regard to revenue recognition,
Blue Collar receives an agreement from each client to perform
defined work. Some agreements are written, some are verbal. Work
may include creation of marketing materials and/or content
creation. Some work may be short term and take weeks to create and
some work may be longer and take months to create. There are
instances where customer agreements segregate identifiable
obligations (like filming on site vs. film editing and final
production) with separate transaction pricing. The performance
obligation is generally satisfied upon delivery of such film or
production products, at which time revenue is recognized. There are
no financing terms or variable transaction prices.
TPT MedTech: Medical Testing Revenue
TPT MedTech operates in the Point of Care Testing (“POCT”) market
by primarily offering mobile medical testing facilities and
software equipped for mobile devices to monitor and manage
personalized healthcare. Services used from our mobile medical
testing facilities are billing through credit cards at the time of
service. Revenue is generated from our software platform as users
sign up for our mobile healthcare monitor and management
application and tests are performed. If medical testing is in one
our own owned facility, the usage of the software application is
included in the testing fees. If the testing is in a non-owned
outside contracted facility, fees are generated from the usage of
the software application on a per test basis and billed
monthly.
TPT MedTech also offers various products. One is to build and sell
its mobile testing facilities called QuikLABs designed for mobile
testing. This is used by TPT MedTech for its own testing services.
Another is to build customized mobile gyms for exercising. This is
sold to third parties. Another is medical equipment, one of which
is a sanitizing unit called SANIQuik which is used as a safe and
flexible way to sanitize providing an additional routine to hand
washing and facial coverings. The SANIQuik has not yet been
approved for sale in the United States but has in some parts of the
European community. Revenues from these products are recognized
when a product is delivered, the sales transaction considered
closed and accepted by a customer. When deposits are received for
which a product has not been delivered, it is recognized as
deferred revenue. Deferred revenue as of September 30, 2022 and
December 31, 2021 was $0 and $41,000, respectively. There are no
financing terms or variable transaction prices for either of these
products.
SDM: Ecommerce, Email Marketing and Web Design
Services
SDM generates revenue by providing ecommerce, email marketing and
web design solutions to small and large commercial businesses,
complete with monthly software support, updates and maintenance.
Services are billed monthly. There are no financing terms or
variable transaction prices. Platform infrastructure support is a
prepaid service billed in monthly recurring increments. The
services are billed a month in advance and due prior to services
being rendered. The revenue is deferred when invoiced and booked in
the month the service is provided. There is no deferred revenue as
of September 30, 2022 and December 31, 2021. Software support
services (including software upgrades) are billed in real time, on
the first of the month. Web design service revenues are recognized
upon completion of specific projects. Revenue is booked in the
month the services are rendered and payments are due on the final
day of the month. There are usually no contract revenues that are
deferred until services are performed.
K Telecom: Prepaid Phones and SIM Cards Revenue
K Telecom generates revenue from reselling prepaid phones, SIM
cards, and rechargeable minute traffic for prepaid phones to its
customers (primarily retail outlets). Product sales occur at the
customer’s locations, at which time delivery occurs and cash or
check payment is received. The Company recognizes the revenue when
they receive payment at the time of delivery. There are no
financing terms or variable transaction prices.
Copperhead Digital: ISP and Telecom Revenue
Copperhead Digital operated as a regional internet and telecom
services provider operating in Arizona under the trade name Trucom.
Although there are currently no customers and it will take capital
to reopen this revenue stream, Copperhead Digital operated as a
wireless telecommunications Internet Service Provider (“ISP”)
facilitating both residential and commercial accounts. Copperhead
Digital’s primary business model was subscription based, pre-paid
monthly reoccurring revenues, from wireless delivered, high-speed
internet connections. In addition, the company resold third-party
satellite and DSL internet and IP telephony services. Revenue
generated from sales of telecommunications services was recognized
as the transaction with the customer is considered closed and the
customer received and accepted the services that were the result of
the transaction. There are no financing terms or variable
transaction prices. Due date was detailed on monthly invoices
distributed to customer. Services billed monthly in advance were
deferred to the proper period as needed. Deferred revenue was
contract liabilities for cash received before performance
obligations for monthly services are satisfied. Certain of its
products required specialized installation and equipment. For
telecom products that included installation, if the installation
met the criteria to be considered a separate element, product
revenue was recognized upon delivery, and installation revenue was
recognized when the installation was complete. The Installation
Technician collected the signed quote containing terms and
conditions when installing the site equipment at customer
premises.
Revenue for installation services and equipment was billed
separately from recurring ISP and telecom services and was
recognized when equipment was delivered, and installation was
completed. Revenue from ISP and telecom services was recognized
monthly over the contractual period, or as services were rendered
and accepted by the customer.
The overwhelming majority of revenue was recognized when
transactions occurred. Since installation fees were generally small
relative to the size of the overall contract and because most
contracts were for a year or less, the impact of not recognizing
installation fees over the contract was immaterial.
Basic and Diluted Net Loss Per Share
The Company computes net income (loss) per share in accordance with
ASC 260, “Earning per Share”. ASC 260 requires presentation of both
basic and diluted earnings per share (“EPS”) on the face of the
income statement. Basic EPS is computed by dividing net income
(loss) available to common shareholder (numerator) by the weighted
average number of shares outstanding (denominator) during the
period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period using the treasury stock
method for options and warrants and using the if-converted method
for preferred stock and convertible notes. It also gives effect to
any deemed dividends such as during the period for Series A
Preferred Stock. In computing diluted EPS, the average stock price
for the period is used in determining the number of shares assumed
to be purchased from the exercise of stock options or warrants.
Diluted EPS excludes all dilutive potential shares if their effect
is anti-dilutive. As of September 30, 2022, the Company had shares
that were potentially common stock equivalents as
follows:
Convertible Promissory Notes
|
|
|
5,323,753,920 |
|
Series A Preferred Stock (1)
|
|
|
14,370,105,951 |
|
Series B Preferred Stock
|
|
|
2,588,693 |
|
Series D Preferred Stock (2)
|
|
|
71,989,198 |
|
Series E Preferred Stock (3)
|
|
|
3,153,560,185 |
|
Stock Options and Warrants
|
|
|
129,116,666 |
|
|
|
|
23,051,114,612 |
|
_______________
(1) As of September 30, 2022, by amendment, holder of the Series A
Preferred Stock which is Stephen J. Thomas, is guaranteed upon date
of conversion to 60% of the common shares computed to include all
projected conversions of all convertible debt and any other classes
of Preferred Stock as if the conversions had taken place at the
stated conversion price per share (i.e. for the avoidance of doubt
– “fully diluted” as if such conversion had occurred prior to the
Series A conversion.) The Company would have to authorize
additional shares for this to occur as only 2,500,000,000 shares
are currently authorized.
(2) Holders of the Series D Preferred Stock
may decide after 12 months to convert to common stock @ 75% of the
30 day average market closing price (for previous 30 business days)
divided into $5.00. There is also an automatic conversion of the
Series D Preferred Stock without consent of holders upon any
national exchange listing approval and the registration
effectiveness of common stock underlying the conversion rights. The
automatic conversion to common from Series D Preferred shall be @
75% of the 30 day average market closing price (for previous 30
business days) divided into $5.00.
(3) Holders of the Series E Preferred Stock
may decide after 12 months to convert to common stock @ 75% of the
30 day average market closing price (for previous 30 business days)
divided into $5.00. There is also an automatic conversion of the
Series E Preferred Stock without consent of holders upon any
national exchange listing approval and the registration
effectiveness of common stock underlying the conversion rights. The
automatic conversion to common from Series E Preferred shall be @
75% of the 30 day average market closing price (for previous 30
business days) divided into $5.00.
Financial Instruments and Fair Value of Financial
Instruments
Our primary financial instruments at September 30, 2022 consisted
of cash equivalents, accounts receivable, accounts payable and
debt. We apply fair value measurement accounting to either record
or disclose the value of our financial assets and liabilities in
our financial statements. Fair value is defined as the exchange
price that would be received for an asset or paid to transfer a
liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between
market participants on the measurement date. A fair value hierarchy
requires an entity to maximize the use of observable inputs, where
available, and minimize the use of unobservable inputs when
measuring fair value.
Described below are the three levels of inputs that may be used to
measure fair value:
Level 1 Quoted prices in active markets for identical
assets or liabilities.
Level 2 Observable inputs other than Level 1
prices, such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that
are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
Level 3 Unobservable inputs that are supported by
little or no market activity and that are significant to the fair
value of the assets or liabilities.
We consider our derivative financial instruments as Level 3. The
balances for our derivative financial instruments as of September
30, 2022 are the following:
Derivative Instrument
|
|
Fair Value
|
|
Convertible Promissory Notes
|
|
$ |
3,868,395 |
|
Fair value of Warrants issued with the derivative instruments
|
|
|
209,948 |
|
|
|
$ |
4,078,343 |
|
Recently Issued Financial Accounting Standards
Management has reviewed recently issued accounting pronouncements
and have determined there are not any that would have a material
impact on the condensed consolidated financial statements.
NOTE 2 – ACQUISITIONS
TPT Strategic Merger with Information Security and Training
LLC
Dated as of June 29, 2022, TPT Strategic entered into a definitive
agreement for the acquisition of the assets and Information
Security and Training LLC (“IST LLC” or “IST”) (www.istincs.com) a
General Construction and Information Technology Services company
based in Huntsville Alabama with branch offices in Nashville TN,
Birmingham Al, Jackson MS, Fort Campbell KY, New Orleans LA, and
Joint Base Lewis-McChord. The TPT Strategic and IST, LLC agreement,
which closed October 20, 2022, for the acquisition is a stock
transaction where the founder and sole interest holder, Everett
Lanier, is to receive Preferred Series B shares of TPT Strategic
that will convert to a 10% ownership of TPT Strategic under certain
conditions. The acquisition includes the assumption of all assets
and certain liabilities which approximate $1.2M and $1.3M,
respectively, as of December 31, 2021. Audited revenues and net
loss for IST the year ended December 31, 2021 were approximately
$2.6M and $63,000 respectively. Everett Lanier will remain as the
President and will become a Board Member of TPT Strategic.
TPT Strategic previously entered into a merger agreement with
Education System Management, Inc. (“EDSM”) which was contingent on
EDSM completing an audit in six months, which EDSM did not
complete.
On May 10, 2022, as part of a “Smart City” concept and to utilize
its telecommunications expertise, the Company entered into Real
Estate Sales Agreements to acquire approximately 135 acres of land
in Tuskegee, with the Gray Family Limited Partnership and Lakeside
Ranch, Inc. comprised of one approximate 45 acre parcel along
Tuskegee Lake and the second an approximate 85 acre parcel along
route 80 heading to Auburn, Alabama. Per the agreements, TPT Global
Tech will be paying approximately $1,700,000 for the properties, of
which it paid a combined $10,000 in down payments. The Company had
until November 11, 2022 to close the transactions including paying
the remainder of the purchase price. This did not happen, and the
Company is in negotiations to finance this with a bank of which the
Gray Family has verbally said they would honor. Closing of the
transactions are subject to the validity of the verbal commitment
and obtaining financing, all surveys and finalizing master plans
for the kick-off the Company’s “Smart City” project.
NOTE 3 – GOING CONCERN
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern.
We incurred $11,352,944 and $8,671,818, respectively, in losses,
and we used $263,313 and $320,999, respectively, in cash for
operations for the nine months ended September 30, 2022 and 2021.
We calculate the net cash used by operating activities by
decreasing, or increasing in case of gain, our let loss by those
items that do not require the use of cash such as depreciation,
amortization, research and development, derivative expense or gain,
gain or loss on extinguishment of debt and share-based compensation
which totaled to a net $7,704,624 for 2022 and $4,456,370 for
2021.
In addition, we report increases and reductions in liabilities as
uses of cash and deceases assets and increases in liabilities as
sources of cash, together referred to as changes in operating
assets and liabilities. For the nine months ended September 30,
2022, we had a net increase in our operating assets and liabilities
of $3,385,007 primarily from an increase in accounts payable from
lag of payments for accounts payable for cash flow considerations.
For the nine months ended September 30, 2021 we had a net increase
to our operating assets and liabilities of $3,894,450 for similar
reasons.
Cash flows provided by and used in financing activities were
$175,057 and $773,387, respectively, for the nine months ended
September 30, 2022 and 2021, respectively. For the nine months
ended September 30, 2022, these cash flows were generated from
proceeds from convertible notes, loans and advances of $1,256,187
offset by payment on convertible loans, advances and factoring
agreements of $1,391,580 and payments on amounts payable – related
parties of $39,664. For the nine months ended September 30, 2021,
cash flows from financing activities primarily came from proceeds
from the sale of Common Stock and Series D Preferred Stock of
233,244 and $610,502, respectively, convertible notes, loans and
advances of $1,961,685 offset by payments on convertible loans,
advances and factoring agreements of $2,024,497.
Cash flows used in investing activities were $16,297 and $219,298,
respectively, for the nine months ended September 30, 2022 and 2021
primarily related to the acquisition of property and equipment.
These factors raise substantial doubt about the ability of the
Company to continue as a going concern for a period of one year
from the issuance of these financial statements. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
In December 2019, COVID-19 emerged and has subsequently spread
worldwide. The World Health Organization has declared COVID-19 a
pandemic resulting in federal, state and local governments and
private entities mandating various restrictions, including travel
restrictions, restrictions on public gatherings, stay at home
orders and advisories and quarantining of people who may have been
exposed to the virus. After close monitoring and responses and
guidance from federal, state and local governments, in an effort to
mitigate the spread of COVID-19, around March 18, 2020 for a period
of time, the Company closed its Blue Collar office in Los Angeles
and its TPT SpeedConnect offices in Michigan, Idaho and Arizona.
Most employees were working remotely, however this is not possible
with certain employees and all subcontractors that work for Blue
Collar. The Company continues to monitor developments, including
government requirements and recommendations at the national, state,
and local level to evaluate possible extensions to all or part of
such closures.
The Company has taken advantage of the stimulus offerings and
received $1,402,700 in PPP loans. All of these PPP loans were
forgiven in the year ended December 31, 2021. The Company is also
in the process of trying to raise debt and equity financing, some
of which may have to be used for working capital shortfalls if
revenues continue to decline.
In order for us to continue as a going concern for a period of one
year from the issuance of these financial statements, we will need
to obtain additional debt or equity financing and look for
companies with cash flow positive operations that we can acquire.
There can be no assurance that we will be able to secure additional
debt or equity financing, that we will be able to acquire cash flow
positive operations, or that, if we are successful in any of those
actions, those actions will produce adequate cash flow to enable us
to meet all our future obligations. Most of our existing financing
arrangements are short-term. If we are unable to obtain additional
debt or equity financing, we may be required to significantly
reduce or cease operations.
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment and related accumulated depreciation as of
September 30, 2022 and December 31, 2021 are as follows:
|
|
2022
|
|
|
2021
|
|
Property and equipment:
|
|
|
|
|
|
|
Telecommunications fiber and equipment
|
|
$ |
2,703,202 |
|
|
$ |
2,686,905 |
|
Medical equipment
|
|
|
— |
|
|
|
209,499 |
|
Office furniture and equipment
|
|
|
77,860 |
|
|
|
77,859 |
|
Total property and equipment
|
|
|
2,781,062 |
|
|
|
2,974,263 |
|
Accumulated depreciation
|
|
|
(1,689,535 |
) |
|
|
(1,325,241 |
) |
Property and equipment, net
|
|
$ |
1,091,527 |
|
|
$ |
1,649,022 |
|
Depreciation expense was $448,943 and $480,344 for the nine
months ended September 30, 2022 and 2021, respectively.
Approximately $200,000 of property and equipment, included herein,
were financed through a financing lease which has been exchanged
with Series E Preferred Stock. See Note 7.
The Medical Equipment was written off during the nine months ended
September 30, 2022 as it was taken out of service. A net loss of
$124,643, included as part of other income (loss) on the
consolidated statement of operations, was recorded offset by
insurance proceeds of $71,643.
NOTE 5 – DEBT FINANCING ARRANGEMENTS
Financing arrangements as of September 30, 2022 and December 31,
2021 are as follows:
|
|
2022
|
|
|
2021
|
|
Loans and advances (1)
|
|
$ |
465,092 |
|
|
$ |
941,242 |
|
Convertible notes payable (2)
|
|
|
3,467,582 |
|
|
|
1,162,606 |
|
Factoring agreements (3)
|
|
|
423,208 |
|
|
|
723,754 |
|
Debt – third party
|
|
$ |
4,355,882 |
|
|
$ |
2,827,602 |
|
|
|
|
|
|
|
|
|
|
Line of credit, related party secured by assets (4)
|
|
$ |
2,742,929 |
|
|
$ |
3,043,390 |
|
Debt– other related party, net of discounts (5)
|
|
|
2,015,500 |
|
|
|
7,450,000 |
|
Convertible debt – related party (6)
|
|
|
553,100 |
|
|
|
902,781 |
|
Shareholder debt (7)
|
|
|
9,618 |
|
|
|
49,452 |
|
Debt – related party
|
|
$ |
5,321,147 |
|
|
$ |
11,445,623 |
|
|
|
|
|
|
|
|
|
|
Total financing arrangements
|
|
$ |
9,677,029 |
|
|
$ |
14,273,225 |
|
|
|
|
|
|
|
|
|
|
Less current portion:
|
|
|
|
|
|
|
|
|
Loans, advances and factoring agreements – third party
|
|
$ |
(744,300 |
) |
|
$ |
(1,446,571 |
) |
Convertible notes payable third party
|
|
|
(3,467,582 |
) |
|
|
(1,162,606 |
) |
Debt – related party, net of discount
|
|
|
(4,768,047 |
) |
|
|
(10,542,842 |
) |
Convertible notes payable– related party
|
|
|
(553,100 |
) |
|
|
(902,781 |
) |
|
|
|
(9,533,029 |
) |
|
|
(14,054,800 |
) |
Total long term debt
|
|
$ |
144,000 |
|
|
$ |
218,425 |
|
__________
(1) The terms of $40,000 of this balance are similar to that of the
Line of Credit which bears interest at adjustable rates, 1 month
LIBOR plus 2%, 4.55% as of September 30, 2022, and is secured by
assets of the Company, was due August 31, 2020, as amended, and
included 8,000 stock options as part of the terms which options
expired December 31, 2019 (see Note 7).
$360,000 is a bank loan dated May 28, 2019 which bears interest at
Prime plus 6%, 12.25% as of September 30, 2022 and, as amended, is
interest only through October 1 2022 at which time the monthly
payment of principal of $18,000 plus interest is required until the
due date of May 1, 2024. The bank loan is collateralized by assets
of the Company.
On June 4, 2019, the Company consummated a Securities Purchase
Agreement with Odyssey Capital Funding, LLC. (“Odyssey”) for the
purchase of a $525,000 Convertible Promissory Note (“Odyssey
Convertible Promissory Note”). The Odyssey Convertible Promissory
Note was due June 3, 2020, paid interest at the rate of 12% (24%
default) per annum and gave the holder the right from time to time,
and at any time during the period beginning six months from the
issuance date to convert all of the outstanding balance into common
stock of the Company limited to 4.99% of the outstanding common
stock of the Company. The conversion price was 55% multiplied by
the average of the two lowest trading prices for the common stock
during the previous 20 trading days prior to the applicable
conversion date. The Odyssey Convertible Promissory Note could be
prepaid in full at 125% to 145% up to 180 days from common stock of
the Company. On June 8, 2020, Odyssey agreed to convert the
remaining principal and accrued interest balance on the Odyssey
Convertible Promissory Note of $475,850 and $135,000, respectively,
to a term loan payable in six months in the form of a balloon
payment, earlier if the Company has a funding event, bearing simple
interest on the unpaid balance of 0% for the first three months and
then 10% per annum thereafter. During April 2022, Odyssey accepted
to exchange all of its outstanding principal and interest of
$685,682 into 137,136 of TPT Series E Preferred Shares.
The remaining balances generally bear interest at approximately
10%, have maturity dates that are due on demand or are past due,
are unsecured and are classified as current in the balance
sheets.
(2) During 2017, the Company issued convertible promissory
notes in the amount of $67,000 (comprised of $62,000 from two
related parties and $5,000 from a former officer of CDH), all which
were due May 1, 2020 and bear 6% annual interest (12% default
interest rate). The convertible promissory notes are convertible,
as amended, at $0.25 per share. These convertible promissory notes
were not repaid May 1, 2020 and are delinquent. The Company is
working to renegotiate these promissory notes.
On March 25, 2019, the Company consummated a Securities Purchase
Agreement dated March 18, 2019 with Auctus Fund, LLC. (“Auctus”)
for the purchase of a $600,000 Convertible Promissory Note (“Auctus
Convertible Promissory Note”). The Auctus Convertible Promissory
Note is due December 18, 2019, pays interest at the rate of 12%
(24% default) per annum and gives the holder the right from time to
time, and at any time during the period beginning 180 days from the
origination date or at the effective date of the registration of
the underlying shares of common stock, which the holder has
registration rights for, to convert all of the outstanding balance
into common stock of the Company limited to 4.99% of the
outstanding common stock of the Company. The conversion price is
the lessor of the lowest trading price during the previous 25
trading days prior the date of the Auctus Convertible Promissory
Note or 50% multiplied by the average of the two lowest trading
prices for the common stock during the previous 25 trading days
prior to the applicable conversion date. Auctus converted $33,180
of principal and $142,004 of accrued interest into 376,000,000
shares of common stock of the Company prior to December 31, 2020.
2,000,000 warrants were issued in conjunction with the issuance of
this debt. Balances as of September 30 , 2022 and December 31, 2021
are zero. The Company recognized a gain on debt extinguishment of
$7,068,339 when this Auctus Convertible Promissory Note was paid
off in large part because of the related derivative liability on
the books at the time of the settlement. See Note 8.
On June 11, 2019, the Company consummated a Securities Purchase
Agreement with EMA Financial, LLC. (“EMA”) for the purchase of a
$250,000 Convertible Promissory Note (“EMA Convertible Promissory
Note”). The EMA Convertible Promissory Note is due June 11, 2020,
pays interest at the rate of 12% (principal amount increases 200%
and interest rate increases to 24% under default) per annum and
gives the holder the right from time to time to convert all of the
outstanding balance into common stock of the Company limited to
4.99% of the outstanding common stock of the Company. The
conversion price is 55% multiplied by the lowest traded price for
the common stock during the previous 25 trading days prior to the
applicable conversion date. The EMA Convertible Promissory Note may
be prepaid in full at 135% to 150% up to 180 days from origination.
Prior to December 31, 2020, EMA converted $35,366 of principal into
147,700,000 shares of common stock of the Company. 1,000,000
warrants were issued in conjunction with the issuance of this debt.
See Note 8. See below regarding derivative securities in
default.
On October 6, 2021, TPT Global Tech, Inc. and FirstFire Global
Opportunities Fund, LLC. entered into a convertible promissory note
totaling $1,087,000 and a securities purchase agreement (“FirstFire
Note”). The FirstFire Note has an original issue discount of 8% and
bears interest at 10%, with a default rate of 24%, and is
convertible into shares of the Company’s common stock. There is a
mandatory conversion in the event a Nasdaq Listing prior to nine
months from funding for which the Holder’s principal and interest
balances will be converted at a price equal to 25% discount to the
opening price on the first day the Company trades on Nasdaq. There
is also a voluntary conversion of all principal and accrued
interest at the discretion of the Holder at the lower of (1) 75% of
the two lowest trade prices during the fifteen consecutive trading
day period ending on the trading day immediately prior to the
applicable conversion date or (2) discount to market based on
subsequent financings with other investors. Subsequent debt
issuances have lowered this price to $0.025 per share, adjusted to
$.0075 during the three months ended March 31, 2022. The Holder was
given registration rights. The FirstFire Note may be prepaid in
whole or in part of the outstanding balances at 115% prior to
maturity. 225,000,000 common shares of the Company have been
reserved with the transfer agent for possible conversion and
exercise of warrants. Warrants to purchase 55,000,000 shares of
common stock at 110% of the opening price on the first day the
Company trades on the Nasdaq exchange were issued to the Holder.
Details of the FirstFire Note and securities purchase agreement can
be found in the Form 8-K and exhibits filed on October 19, 2021. On
September 15, 2022, FirstFire exercised its right to convert
$59,160 of principal into 17,000,000 shares of common stock. See
below regarding derivative securities in default.
On October 13, 2021, TPT Global Tech, Inc. and Cavalry Investment
Fund LP entered into a convertible promissory note totaling
$271,250 and a securities purchase agreement (“Cavalry Investment
Note”). The Cavalry Investment Note has an original issue discount
of 8% and bears interest at 10%, with a default rate of 24%, and is
convertible into shares of the Company’s common stock. There is a
mandatory conversion in the event a Nasdaq Listing prior to nine
months from funding for which the Holder’s principal and interest
balances will be converted at a price equal to 25% discount to the
opening price on the first day the Company trades on Nasdaq. There
is also a voluntary conversion of all principal and accrued
interest at the discretion of the Holder at the lower of (1) 75% of
the two lowest trade prices during the fifteen consecutive trading
day period ending on the trading day immediately prior to the
applicable conversion date or (2) discount to market based on
subsequent financings with other investors. Subsequent debt
issuances have lowered this price to $0.025 per share, adjusted to
$.0075 during the three months ended March 31, 2022. The Holder was
given registration rights. The Cavalry Investment Note may be
prepaid in whole or in part of the outstanding balances at 115%
prior to maturity. 56,250,000 common shares of the Company have
been reserved with the transfer agent for possible conversion and
exercise of warrants. Warrants to purchase 13,750,000 shares of
common stock at 110% of the opening price on the first day the
Company trades on the Nasdaq exchange were issued to the Holder.
Details of the Cavalry Investment Note and securities purchase
agreement can be found in the Form 8-K and exhibits filed on
October 19, 2021. See below regarding derivative securities in
default.
On October 13, 2021, TPT Global Tech, Inc. and Cavalry Fund I, LP
entered into a convertible promissory note totaling $815,250 and a
securities purchase agreement (“Cavalry Fund I Note”). The Cavalry
Fund I Note has an original issue discount of 8% and bears interest
at 10%, with a default rate of 24%, and is convertible into shares
of the Company’s common stock. There is a mandatory conversion in
the event a Nasdaq Listing prior to nine months from funding for
which the Holder’s principal and interest balances will be
converted at a price equal to 25% discount to the opening price on
the first day the Company trades on Nasdaq. There is also a
voluntary conversion of all principal and accrued interest at the
discretion of the Holder at the lower of (1) 75% of the two lowest
trade prices during the fifteen consecutive trading day period
ending on the trading day immediately prior to the applicable
conversion date or (2) discount to market based on subsequent
financings with other investors. Subsequent debt issuances have
lowered this price to $0.0075 per share. The Holder was given
registration rights. The Cavalry Fund I Note may be prepaid in
whole or in part of the outstanding balances at 115% prior to
maturity. 168,750,000 common shares of the Company have been
reserved with the transfer agent for possible conversion and
exercise of warrants. Warrants to purchase 41,250,000 shares of
common stock at $110% of the opening price on the first day the
Company trades on the Nasdaq exchange were issued to the Holder.
Details of the Cavalry Fund I Note and securities purchase
agreement can be found in the Form 8-K and exhibits filed on
October 19, 2021. See below regarding derivative securities in
default. Subsequent to September 30, 2022, Cavalry Fund I exercised
its right to to convert $25,000 of default amounts owing into
20,161,290 shares of common stock.
On January 31, 2022, TPT Global Tech, Inc. and Talos Victory Fund,
LLC entered into a convertible promissory note totaling $271,750
and a securities purchase agreement (“Talos Note”). The Talos Note
is due twelve months from funding, has an original issue discount
of 8% and interest rate at 10% per annum (default, as defined, at
16%). There is an optional conversion in the event a Nasdaq Listing
prior to nine months from funding for which the Holder’s principal
and interest balances will be converted at a price equal to 25%
discount to the opening price on the first day the Company trades
on Nasdaq. There is also a voluntary conversion of all principal
and accrued interest at the discretion of the Holder at $0.0075.
The Holder was given registration rights. The Talos Note may be
prepaid in whole or in part of the outstanding balances at 100%
prior to maturity unless the Holder chose to convert their balances
into common stock which they have three days to do so. 73,372,499
common shares of the Company have been reserved with the transfer
agent for possible conversion and exercise of warrants. Warrants,
expiring five years from issuance, were issued to exercise up to
9,058,333 warrants to purchase 9,058,333 common shares at $0.015,
provided, however, that if the Company consummates an Uplist
Offering on or before July 6, 2022 then the exercise price shall be
110% of the offering price at which the Uplist Offering is made.
Details of the Talos Note and securities purchase agreement can be
found in the Form 8-K and exhibits filed on February 8, 2022. The
Company and the holder executed the securities purchase agreement
in accordance with and in reliance upon the exemption from
securities registration for offers and sales to accredited
investors afforded, inter alia, by Rule 506 under Regulation D as
promulgated by the SEC under the 1933 Act, and/or Section 4(a)(2)
of the 1933 Act. On September 1, 2022, Talos exercised its right to
convert $300,675 of principal and interest into 40,090,000 shares
of common stock leaving a zero balance of principal and accrued
interest. See below regarding derivative securities in default.
On January 31, 2022, TPT Global Tech, Inc. and Blue Lake Partners,
LLC entered into a convertible promissory note totaling $271,750
and a securities purchase agreement (“Blue Lake Note”). The Blue
Lake Note is due twelve months from funding, has an original issue
discount of 8% and interest rate at 10% per annum (default, as
defined, at 16%). There is an optional conversion in the event a
Nasdaq Listing prior to nine months from funding for which the
Holder’s principal and interest balances will be converted at a
price equal to 25% discount to the opening price on the first day
the Company trades on Nasdaq. There is also a voluntary conversion
of all principal and accrued interest at the discretion of the
Holder at $0.0075. The Holder was given registration rights. The
Blue Lake Note may be prepaid in whole or in part of the
outstanding balances at 100% prior to maturity unless the Holder
chose to convert their balances into common stock which they have
three days to do so. 73,372,499 common shares of the Company have
been reserved with the transfer agent for possible conversion and
exercise of warrants. Warrants, expiring five years from issuance,
were issued to exercise up to 9,058,333 warrants to purchase
9,058,333 common shares at $0.015, provided, however, that if the
Company consummates an Uplist Offering on or before July 6, 2022
then the exercise price shall equal 110% of the offering price at
which the Uplist Offering is made. Details of the Blue Lake Note
and securities purchase agreement can be found in the Form 8-K and
exhibits filed on February 8, 2022. The Company and the holder
executed the securities purchase agreement in accordance with and
in reliance upon the exemption from securities registration for
offers and sales to accredited investors afforded, inter alia, by
Rule 506 under Regulation D as promulgated by the SEC under the
1933 Act, and/or Section 4(a)(2) of the 1933 Act. On September 8,
2022, Blue Lake exercised its right to convert $360,447 of
principal and interest into 48,059,600 of common shares leaving a
balance of $8,165 in principal and $48,936 of accrued interest. See
below regarding derivative securities in default.
On June 13, 2022, TPT Global Tech, Inc. and 1800 Diagonal Lending
LLC entered into a $200,760 promissory note agreement (1800
Diagonal Note”). The 1800 Diagonal Note has an original issue
discount of 12%, or $21,510.00, and bears interest at 22%, and is
convertible into shares of the Company’s common stock only under
default, as defined. 10 payments of $22,485.10 beginning on July
30, 2022 are to be made each month totaling $224,851,00. At any
time following default, as defined, conversion rights exist at a
discount rate of 25% of the lowest trading price for the Company’s
common stock during the previous 10 trading days prior to
conversion. 194,676,363 common shares of the Company have been
reserved with the transfer agent for possible conversion under a
default. See below regarding derivative securities in default.
The Talos Note, Blue Lake and 1800 Diagonal Notes have been
accounted for as derivative liabilities. The Company recorded an
initial derivative expense of $21,781 for each of the Talos and
Blue Lake notes and $211,931 for the 1800 Diagonal Note. In
addition, the Company recorded an initial derivative expense of
$235,158 for the warrants for the Talos and Blue Lake Notes.
The Company is in default under all of its derivative financial
instruments and has accounted for these defaults under each
agreements default provisions. In February, the Company defaulted
on its FirstFire, Cavalry Investment, and Cavalry Fund I Notes for
failure to uplist within one hundred twenty (120) days from the
date of the Notes. Talos, Blue Lake and 1800 Diagonal are in
default from cross default provisions. In total, $1,206,845 was
recorded as interest expense in the nine months ended September 30,
2022, representing additional principal and interest because of
default. Notice of default was received from EMA for not reserving
enough shares for conversion and for not having filed a Form S-1
Registration Statement with the Securities and Exchange Commission.
It was the intent of the Company to pay back all derivative
securities prior to the due dates but that has not occurred in case
of EMA. As such, the Company is currently in negotiations with EMA
and relative to extending the due date and changing terms on the
Note. The Company has been named in a lawsuit by EMA for failing to
comply with a Securities Purchase Agreement entered into in June
2019. See Note 8 Other Commitments and Contingencies.
(3) $101,244 of the Factoring Agreements is with full recourse, due
February 29, 2020, as amended, was established in June 2016 with a
company that is controlled by a shareholder and is personally
guaranteed by an officer of the Company. This Factoring Agreement
is such that the Company pays a discount of 2% per each 30-day
period for each advance received against accounts receivable or
future billings. The Company was advanced funds from this Factoring
Agreement. The $101,244 was exchanged for 20,249 shares of Series E
Preferred Stock in April 2022. As such, $0 and $101,244 in
principal remained unpaid as of September 30, 2022 and December 31,
2021, respectively. See Note 7.
On July 23, 2021, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts (“Lendora Factoring
Agreement”). The balance to be purchased and sold is $299,800 for
which the Company received $190,000, net of fees. Under the Lendora
Factoring Agreement, the Company is to pay $18,737.5 per week for
16 weeks at an effective interest rate of approximately 36%
annually. The Lendora Factoring Agreement includes a guaranty by
the CEO of the Company, Stephen J. Thomas III.
On July 23, 2021, the Company entered into a consolidation
agreement for the Purchase and Sale of Future Receipts with Lendora
Capital (“Lendora Consolidation Agreement”). The balance to be
purchased and sold gave consideration for all then outstanding
factoring agreements such as the NewCo Factoring Agreements, the
NewCo Factoring Agreement #3 and the Lendora Factoring Agreement
and amounted to $1,522,984 for which the Company had outstanding
balances totaling $967,496. Payments under this Lendora
Consolidation Agreement supersedes all other factoring agreement
payments and includes $ 31,728.85 per week, at an effective
interest rate of approximately 36% annually, for 48 weeks. The
Lendora Consolidation Agreement includes a guaranty by the CEO of
the Company, Stephen J. Thomas III.
The Following factoring agreements were consolidated through the
Lendora Consolidation Agreement or previously paid off:
On February 21, 2020, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts (“2020 Factoring Agreement”).
The balance to be purchased and sold is $716,720 for which the
Company received $500,000, net of fees. Under the 2020 Factoring
Agreement, the Company was to pay $14,221 per week for 50 weeks at
an effective interest rate of approximately 43% annually. However,
due to COVID-19 the payments under the 2020 Factoring Agreement
were reduced temporarily, to between $9,000 and $11,000 weekly. All
deferred payments have been paid.
On November 13, 2020, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts (“2020 NewCo Factoring
Agreement”). The balance to be purchased and sold is $326,400 for
which the Company received $232,800, net of fees. Under the 2020
NewCo Factoring Agreement, the Company was to pay $11,658 per week
for 28 weeks at an effective interest rate of approximately 36%
annually. The 2020 NewCo Factoring Agreement has been paid back in
total.
On December 11, 2020, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts with Samson MCA LLC (“Samson
Factoring Agreement”). The balance to be purchased and sold is
$162,500 for which the Company received $118,625, net of fees.
Under the Samson Factoring Agreement, the Company was to pay $8,125
per week for 20 weeks at an effective interest rate of
approximately 36%. The Samson Factoring Agreement has been paid
back in total.
On December 11, 2020, the Company entered into a consolidation
agreement for the Purchase and Sale of Future Receipts with QFS
Capital (“QFS Factoring Agreement”). The balance to be purchased
and sold is $976,918 for which the Company receives weekly payments
of $29,860 for 20 weeks and then $21,978 for 4 weeks and then
$11,669 in the last week of receipts all totaling $696,781 net of
fees. During the same time, the Company is required to pay weekly
$23,087 for 42 weeks at an effective interest rate of approximately
36% annually. The QFS Factoring Agreement was consolidated through
the Lendora Consolidation Agreement.
On June 7 and June 14, 2021, the Company entered into two
Agreements for the Purchase and Sale of Future Receipts (“NewCo
Factoring Agreements”). The balance to be purchased and sold is
$199,500 each for which the Company received $144,750 each, net of
fees. Under the NewCo Factoring Agreement, the Company is to pay
$5,542 each per week for 36 weeks at an effective interest rate of
approximately 36% annually. The NewCo Factoring Agreements were
consolidated through the Lendora Consolidation Agreement.
On June 28, 2021, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts (“NewCo Factoring Agreement
#3”). The balance to be purchased and sold is $133,000 for which
the Company received $100,000. Under the NewCo Factoring Agreement,
the Company is to pay $3,695 per week for 36 weeks at an effective
interest rate of 36% annually. The NewCo Factoring Agreement #3 was
consolidated through the Lendora Consolidation Agreement.
On April 1, 2022, the Company entered into a Future Receivable Sale
and Purchase Agreement (“Mr. Advance Agreement”) with Mr. Advance
LLC (”Mr. Advance”). The balance to be purchased and sold is
$411,000 for which the Company received $270,715, net of fees.
Under the Mr. Advance Agreement, the Company is to pay $8,935 per
week for 46 weeks at an effective interest rate of approximately
36% annually. The Company is in default with this Agreement for
non-payment and is working to restructure its terms.
On April 1, 2022, the Company entered into a Future Receipts Sale
and Purchase Agreement (“CLOUDFUND Agreement”) with CLOUDFUND LLC
(”CLOUDFUND”). The balance to be purchased and sold is $411,000 for
which the Company received $272,954, net of fees. Under the
CLOUDFUND Agreement, the Company is to pay $8,935 per week for 46
weeks at an effective interest rate of approximately 36% annually.
The Company is in default with this Agreement for non-payment and
is working to restructure its terms.
On April 27, 2022, the Company entered into a Future Receivables
Sale and Purchase Agreement (“Fox Capital Agreement”) with Fox
Capital Group, Inc. (”Fox Capital”). The balance to be purchased
and sold is $138,000 for which the Company received $90,000, net of
fees. Under the Fox Capital Agreement, the Company is to pay $4,313
per week for 32 weeks at an effective interest rate of
approximately 36% annually. The Company is in default with this
Agreement for non-payment and is working to restructure its
terms.
(4) The Line of Credit originated with a bank and was secured by
the personal assets of certain shareholders of Copperhead Digital.
During 2016, the Line of Credit was assigned to the Copperhead
Digital shareholders, who subsequent to the Copperhead Digital
acquisition by TPTG became shareholders of TPTG, and the secured
personal assets were used to pay off the bank. The Line of Credit
bears a variable interest rate based on the 1 Month LIBOR plus
2.0%, 4.55% as of September 30, 222, is payable monthly, and is
secured by the assets of the Company. 1,000,000 shares of Common
Stock of the Company have been reserved to accomplish raising the
funds to pay off the Line of Credit. Since assignment of the Line
of Credit to certain shareholders, which balance on the date of
assignment was $2,597,790, those shareholders have loaned the
Company $445,600 under the similar terms and conditions as the line
of credit but most of which were also given stock options totaling
$85,120 which expired as of December 31, 2019 (see Note 8) and was
due, as amended, August 31, 2020. The $200,922 of the principal
balance was exchanged for 40,092 shares of Series E Preferred Stock
in April 2022. See Note 7. The Company is in negotiations to
refinance the remaining balance of this Line of Credit.
During the years ended December 31, 2019 and 2018, those same
shareholders and one other have loaned the Company money in the
form of convertible loans of $136,400 and $537,200, respectively,
described in (2) and (6).
(5) $350,000 represents cash due to the prior owners of the
technology acquired in December 2016 from the owner of the Lion
Phone which is due to be paid as agreed by the Company and the
former owners of the Lion Phone technology and has not been
determined.
$4,000,000 represents a promissory note included as part of the
consideration of VuMe, formerly ViewMe Live technology acquired in
2017, later agreed to as being due and payable in full, with no
interest with $2,000,000 from debt proceeds and the remainder from
proceeds from a second Company public offering.
$1,000,000 represents a promissory note which was entered into on
May 6, 2020 for the acquisition of Media Live One Platform from
Steve and Yuanbing Caudle for the further development of software.
This was expensed as research and development in the year ended
December 31, 2020. This $1,000,000 promissory note is non-interest
bearing, due after funding has been received by the Company from
its various investors and other sources. Mr. Caudle is a principal
with the Company’s ViewMe technology.
Both the $4,000,000 and $1,000,000 promissory notes related to the
VuMe technology and Media Live One Platform were exchanged through
a Software Acquisition Agreement dated as of March 25, 2022 for
shares of the Company’s Series E Preferred Stock. See Note 7. In
this same agreement, the Company agreed to pay Mr. and Mrs. Caudle
$1,750,000 for additional developed software that will be used with
the VuMe technology which was expensed as research and development
during the nine months ended September 30, 2022. $200,000 had been
paid and was accounted for as a deposit as of December 31, 2021 and
the remainder was setup as a note payable as of September 30, 2022.
$550,000 to be paid from first proceeds raised by the Company and
$1,000,000 as agreed by the Company and Mr. and Mrs. Caudle.
On September 1, 2018, the Company closed on its acquisition of Blue
Collar. Part of the acquisition included a promissory note of
$1,600,000 and interest at 3% from the date of closure. The
promissory note is secured by the assets of Blue Collar.
$500,000 represents a Note Payable related to the acquisition of
75% of Air Fitness, payable six months from the date of the note or
as agreed by the Company out of future capital raising efforts and
does not accrue interest.
The $1,600,000 promissory note for the acquisition of Blue Collar
and $384,500 of the $500,000 Note Payable for the acquisition of
75% of Air Fitness were exchanged for shares of Series E Preferred
Stock as of September 30, 2022. See Note 7.
(6) During 2016, the Company acquired SDM which consideration
included a convertible promissory note for $250,000 due February
29, 2019, as amended, does not bear interest, unless delinquent in
which the interest is 12% per annum, and is convertible into common
stock at $1.00 per share. The SDM balance was $181,981 as of
December 31, 2021. During the nine months ended September 30, 2022,
this convertible promissory was exchanged with the Company’s Series
E Preferred Stock. See Note 7.
During 2018, the Company issued convertible promissory notes in the
amount of $537,200 to related parties and $10,000 to a non-related
party which bear interest at 6% (11% default interest rate), are
due 30 months from issuance and are convertible into Series C
Preferred Stock at $1.00 per share. $106,000 of these notes were
exchanged for 21,200 shares of Series E Preferred Stock in April
2022 and $19,400 were repaid prior to December 31, 2021. See Note
7.
(7) The shareholder debt represents funds given to TPTG or
subsidiaries by officers and managers of the Company as working
capital. There are no written terms of repayment or interest that
is being accrued to these amounts and they will only be paid back,
according to management, if cash flows support it. They are
classified as current in the balance sheets.
See Lease financing arrangement in Note 8.
NOTE 6 -DERIVATIVE FINANCIAL INSTRUMENTS
The Company previously adopted the provisions of ASC subtopic
825-10, Financial Instruments (“ASC 825-10”).
ASC 825-10 defines fair value as the price that would be received
from selling an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
When determining the fair value measurements for assets and
liabilities required or permitted to be recorded at fair value, the
Company considers the principal or most advantageous market in
which it would transact and considers assumptions that market
participants would use when pricing the asset or liability, such as
inherent risk, transfer restrictions, and risk of nonperformance.
ASC 825-10 establishes a fair value hierarchy that requires an
entity to maximize the use of observable inputs and minimize the
use of unobservable inputs when measuring fair value.
The derivative liability as of September 30, 2022, in the amount of
$4,078,343 has a level 3 classification under ASC 825-10.
The following table provides a summary of changes in fair value of
the Company’s Level 3 financial liabilities as of September 30,
2022.
|
|
Debt Derivative Liabilities
|
|
Balance, December 31, 2021
|
|
$ |
4,042,910 |
|
Change in derivative liabilities from new notes payable and
warrants
|
|
|
622,518 |
|
Change in derivative liabilities from the conversion of debt
|
|
|
(95,784 |
) |
Change in fair value of derivative liabilities at end of period –
derivative expense
|
|
|
(491,301 |
) |
Balance, September 30, 2022
|
|
$ |
4,078,343 |
|
Convertible notes payable and warrant derivatives
– The Company issued convertible promissory notes
which are convertible into common stock, at holders’ option, at a
discount to the market price of the Company’s common stock. The
Company has identified the embedded derivatives related to these
notes relating to certain anti-dilutive (reset) provisions. These
embedded derivatives included certain conversion features. The
accounting treatment of derivative financial instruments requires
that the Company record fair value of the derivatives as of the
inception date of debenture and to fair value as of each subsequent
reporting date.
As of September 30, 2022, the Company marked to market the fair
value of the debt derivatives and determined a fair value of
$4,078,343 ($3,868,395 from the convertible notes and $209,948 from
warrants) in Note 5 (2) above. The Company recorded a gain from
change in fair value of debt derivatives of $491,301 for the nine
months ended September 30, 2022. The fair value of the embedded
derivatives was determined using Monte Carlo simulation method
based on the following assumptions: (1) dividend yield of 0%, (2)
expected volatility of 156.3% to 266.9%, (3) weighted average
risk-free interest rate of 3.16% to 4.16% (4) expected life of 0.33
to 4.33 years, and (5) the quoted market price of $0.002 for the
Company’s common stock.
NOTE 7 - STOCKHOLDERS' DEFICIT
Preferred Stock
As of September 30, 2022, we had authorized 100,000,000 shares of
Preferred Stock, of which certain shares had been designated as
Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred
Stock.
All Preferred Stock is classified as mezzanine equity as a result
of the Company not having enough authorized common shares to be
able to issue common shares upon their conversion.
Series A Convertible Preferred Stock
The Company designated 1,000,000 shares of Preferred Stock as
Series A Preferred Stock. In February 2015, the Board of Directors
authorized the issuance of 1,000,000 shares of Series A Preferred
Stock to Stephen Thomas, Chairman, CEO and President of the
Company, valued at $3,117,000 for compensation expense. These
shares are outstanding as of September 30, 2022.
The Series A Preferred Stock has a par value of $.001, is
redeemable at the Company’s option at $100 per share, is senior to
any other class or series of outstanding Preferred Stock or Common
Stock and does not bear dividends. The Series A Preferred Stock has
a liquidation preference immediately after any Senior Securities,
as defined and amended, of an amount equal to amounts payable
owing, including contingency amounts where Holders of the Series A
have personally guaranteed obligations of the Company.
As of September 30, 2022, by amendment, holders of the Series A
Preferred Stock shall, collectively have the right to convert all
of their Series A Preferred Stock when conversion is elected into
that number of shares of Common Stock of the Company, as amended
and restated July 5, 2022 by the Board of Directors and a majority
of the outstanding voting shares of the Company, determined by the
following formula: 60% of the common shares computed to include all
projected conversions of all convertible debt and any other classes
of Preferred Stock as if the conversions had taken place at the
stated conversion price per share (i.e. for the avoidance of doubt
– “fully diluted” as if such conversion had occurred prior to the
Series A conversion.) The Company determined that due to the
significance of the amendment, it should be accounted for as an
extinguishment and fair valued the amended Series A Preferred Stock
at $42,983,742, creating a deemed dividend of $39,866,742. The
valuation of the amended Series A Preferred Stock was done by a
qualified independent third party.
The record Holders of the Series A Preferred Stock shall have the
right to vote as if converted prior to the vote to an amount of
shares equal to 60% of the common shares computed to include all
projected conversions of all convertible debt and any other classes
of Preferred Stock as if the conversions had taken place at the
stated conversion price per share (i.e. for the avoidance of doubt
– “fully diluted” as if such conversion had occurred prior to the
Series A conversion) on any matter with holders of Common Stock for
any vote required to approve any action, which Florida law provides
may or must be approved by vote or consent of the holders of other
series of voting shares and the holders of Common Stock or the
holders of other securities entitled to vote, if any.
The Series A Preferred Stock is classified as mezzanine equity as a
result of the Company not having enough authorized common shares to
be able to issue common shares upon their conversion.
Series B Convertible Preferred Stock
In February 2015, the Company designated 3,000,000 shares of
Preferred Stock as Series B Convertible Preferred Stock.
The Series B Preferred Stock was designated in February 2015, has a
par value of $.001, is not redeemable, is senior to any other class
or series of outstanding Preferred Stock, except the Series A
Preferred Stock, or Common Stock and does not bear dividends. The
Series B Preferred Stock has a liquidation preference immediately
after any Senior Securities, as defined and currently the Series A
Preferred Stock, and of an amount equal to $2.00 per share. Holders
of the Series B Preferred Stock have a right to convert all or any
part of the Series B Preferred Shares and will receive and equal
number of common shares at the conversion price of $2.00 per share.
The Series B Preferred Stockholders have a right to vote on any
matter with holders of Common Stock and shall have a number of
votes equal to that number of Common Shares on a one-to-one
basis.
There are 2,588,693 shares of Series B Convertible Preferred Stock
outstanding as of September 30, 2022.
Series C Convertible Preferred Stock
In May 2018, the Company designated 3,000,000 shares of Preferred
Stock as Series C Convertible Preferred Stock.
The Series C Preferred Stock has a par value of $.001, is not
redeemable, is senior to any other class or series of outstanding
Preferred Stock, except the Series A and Series B Preferred Stock,
or Common Stock and does not bear dividends. The Series C Preferred
Stock has a liquidation preference immediately after any Senior
Securities, as defined and currently the Series A and B Preferred
Stock, and of an amount equal to $2.00 per share. Holders of the
Series C Preferred Stock have a right to convert all or any part of
the Series C Preferred Shares and will receive an equal number of
common shares at the conversion price of $0.15 per share. The
Series C Preferred Stockholders have a right to vote on any matter
with holders of Common Stock and shall have a number of votes equal
to that number of Common Shares on a one-to-one basis.
There are no shares of Series C Convertible Preferred Stock
outstanding as of September 30, 2022. There are approximately
$391,100 in convertible notes payable convertible into Series C
Convertible Preferred Stock which compromise some of the common
stock equivalents calculated in Note 1.
Series D Convertible Preferred Stock
On July 6, 2020, September 15, 2021 and March 20, 2022, the Company
amended its Series D Designation from January 14, 2020. These
Amendments changed the number of shares to 10,000,000 shares of the
authorized 100,000,000 shares of the Company's $0.001 par value
preferred stock as the Series D Convertible Preferred Stock ("the
Series D Preferred Shares.")
Series D Preferred shares have the following features: (i) 6%
Cumulative Annual Dividends payable on the purchase value in cash
or common stock of the Company at the discretion of the Board and
payment is also at the discretion of the Board, which may decide to
cumulate to future years; (ii) Any time after 12 months from
issuance an option to convert to common stock at the election of
the holder @ 75% of the 30 day average market closing price (for
previous 30 business days) divided into $5.00. ; (iii) Automatic
conversion of the Series D Preferred Stock shall occur without
consent of holders upon any national exchange listing approval and
the registration effectiveness of common stock underlying the
conversion rights. The automatic conversion to common from Series D
Preferred shall be @ 75% of the 30 day average market closing price
(for previous 30 business days) divided into $5.00, which shall be
post-reverse split as may be necessary for any Exchange listing
(iv) Registration Rights – the Company has granted Piggyback
Registration Rights for common stock underlying conversion rights
in the event it files any other Registration Statement (other than
an S-1 that the Company may file for certain conversion common
shares for the convertible note financing that was arranged and
funded in 2019). Further, the Company will file, and pursue to
effectiveness, a Registration Statement or offering statement for
common stock underlying the Automatic Conversion event triggered by
an exchange listing. (v) Liquidation Rights - $5.00 per share plus
any accrued unpaid dividends – subordinate to Series A, B, and C
Preferred Stock receiving full liquidation under the terms of such
series. The Company has redemption rights for the first year
following the Issuance Date to redeem all or part of the principal
amount of the Series D Preferred Stock at between 115% and
140%.
During the year ended December 31, 2021, 46,649 shares of Series D
Preferred Share were purchased for $233,244 of which Stephen
Thomas, CEO of the Company, acquired 36,649 for $183,244. The
remainder of the shares were purchased by a third party.
As of September 30, 2022, there are 46,649 Series D Preferred
shares outstanding.
Series E Convertible Preferred Stock
On March 20, 2022, the Company amended its Series E Designation
from November 10, 2021. As amended, the Company designated
10,000,000 shares of the authorized 100,000,000 shares of the
Company's $0.001 par value preferred stock as the Series E
Convertible Preferred Stock ("the Series E Preferred Shares").
Series E Preferred shares have the following features: (i) 6%
Cumulative Annual Dividends payable on the purchase value in cash
or common stock of the Company at the discretion of the Board and
payment is also at the discretion of the Board, which may decide to
cumulate to future years; (ii) Any time after 12 months from
issuance an option to convert to common stock at the election of
the holder @ 75% of the 30 day average market closing price (for
previous 30 business days) divided into $5.00. ; (iii) Automatic
conversion of the Series E Preferred Stock shall occur without
consent of holders upon any national exchange listing approval and
the registration effectiveness of common stock underlying the
conversion rights. The automatic conversion to common from Series E
Preferred shall be @ 75% of the 30 day average market closing price
(for previous 30 business days) divided into $5.00, which shall be
post-reverse split as may be necessary for any Exchange listing
(iv) Registration Rights – the Company has granted Piggyback
Registration Rights for common stock underlying conversion rights
in the event it files any other Registration Statement (other than
an S-1 that the Company may file for certain conversion common
shares for the convertible note financing that was arranged and
funded in 2019). Further, the Company will file, and pursue to
effectiveness, a Registration Statement or offering statement for
common stock underlying the Automatic Conversion event triggered by
an exchange listing. (v) Liquidation Rights - $5.00 per share plus
any accrued unpaid dividends – subordinate to Series A, B, C and D
Preferred Stock receiving full liquidation under the terms of such
series. The Company has redemption rights for the first year
following the Issuance Date to redeem all or part of the principal
amount of the Series E Preferred Stock at between 115% and
140%.
As of September 30, 2022, there are 2,043,507 Series E Preferred
shares outstanding as a result of exchanges of accounts payable,
financing arrangements and lease agreements. The Series E Preferred
shares were given a fair value by a third-party valuation of $6.53
per share for which they were recorded as of September 30, 2022.
The difference between the valuation at $6.53 per share or
$13,344,101 and the amount of accounts payable, financing
arrangements and lease agreement balances of $10,977,063 or
$2,367,038 was recorded as a loss on debt extinguishment for the
nine months ended September 30, 2022.
Common Stock
As of September 30, 2022, we had authorized 2,500,000,000 shares of
Common Stock, of which 1,028,178,638 common shares are issued and
outstanding.
Common Stock Issued for Expenses and Liabilities
During the year ended December 31, 2020, the Company issued
7,500,000 shares of stock to Mr. Littman in accordance with its
December 28 and 29, 2020 agreements as described in Note 5. These
shares were included in a Form S-1 filed by the Company on January
15, 2021. During the year ended December 31, 2021, it was
determined in accordance with an underlying agreement, that there
was a deficiency of approximately $185,000 from net sales proceeds
from sales of the shares and as such, this amount is accounted for
in accounts payable as of September 30, 2022.
Common Stock Issued for Conversion of Convertible Debt
During the nine months ended September 30, 2022, $716,782 of
principal and accrued interest was converted to 105,149,600 shares
of common stock under the terms and conditions of convertible debt
agreements. Subsequent to September 30, 2022, $86,875 of principal
and accrued interest was converted to 70,161,290 of shares of
common stock under these same terms.
Stock Purchase Agreement
On May 28, 2021, and as amended December 27, 2021, the Company
entered into a Common Stock Purchase Agreement (“Purchase
Agreement”) and Registration Rights Agreement (“Registration Rights
Agreement”) with White Lion Capital, LLC, a Nevada limited
liability company (“White Lion”). Under the terms of the Purchase
Agreement, White Lion agreed to provide the Company with up to
$5,000,000 upon effectiveness of a registration statement on Form
S-1 (the “Registration Statement”) filed with the U.S. Securities
and Exchange Commission (the “Commission”). A Form S-1 was filed on
June 30, 2021 regarding this transaction. Subsequent Amendments to
Forms S-1 related to this transaction were filed on July 6, 2021
and July 14, 2021. The registrations statement was declared
effective July 19, 2021.
The Company has the discretion to deliver purchase notice to White
Lion and White Lion will be obligated to purchase shares of the
Company’s common stock, par value $0.001 per share (the “Common
Stock”) based on the investment amount specified in each purchase
notice. The maximum amount of the Purchase Notice shall be the
lesser of: (i) 200% of the Average Daily Trading Volume or (ii) the
Investment Limit divided by the highest closing price of the Common
Stock over the most recent five (5) Business Days including the
respective Purchase Date. Notwithstanding the forgoing, the
Investor may waive the Purchase Notice Limit at any time to allow
the Investor to purchase additional shares under a Purchase Notice.
Pursuant to the Purchase Agreement, White Lion and its affiliates
will not be permitted to purchase and the Company may not put
shares of the Company’s Common Stock to White Lion that would
result in White Lion’s beneficial ownership equaling more than
9.99% of the Company’s outstanding Common Stock. The price of each
purchase share shall be equal to eighty-five percent (85%) of the
Market Price (as defined in the Purchase Agreement). Purchase
Notices may be delivered by the Company to White Lion until the
earlier of twelve (12) months (until December 31, 2022, as amended)
or the date on which White Lion has purchased an aggregate of
$5,000,000 worth of Common Stock under the terms of the Purchase
Agreement.
Under the Registration Rights Agreement with White Lion, the
Company has given purchase notices for 29,000,000 shares of common
stock and has received proceeds of $610,502, net of expenses.
Subscription Payable
As of September 30, 2022, the Company has recorded $21,585 in stock
subscription payable, which equates to the fair value on the date
of commitment, of the Company’s commitment to issue the following
common shares:
Unissued shares for TPT consulting agreements
|
|
|
1,750,000 |
|
Shares receivable under terminated acquisition agreement
|
|
|
(3,096,181 |
) |
Net commitment
|
|
|
(1,346,181 |
) |
During the year ended December 31, 2021, the Company agreed to a
consulting agreement with one of its newest directors, John
Wharton, which Agreement was for the issuance of 3,000,000 shares
of common stock to vest over two years starting July 30, 2021.
These shares were valued at $42,600 and are being expenses at
$1,775 per month. As of September 30, 2022, 1,750,000 common shares
have vested and $24,850 expensed.
Effective November 1, 2017, the Company entered into an agreement
to acquire Holly wood Rivera, LLC and HRS Mobile LLC (“HRS”). In
March 2018, the HRS acquisition was rescinded and 3,096,181 shares
of common stock which were issued as consideration are being
returned by the recipients. As such, as of September 30, 2022 the
shares for the HRS transaction are reflected as subscriptions
receivable based on their par value.
Warrants Issued with Convertible Promissory Notes
As of September 30, 2022, there were 129,116,666 warrants
outstanding that expire in five years or in the years ended
December 31, 2024 -2027. As part of the Convertible Promissory
Notes payable – third party issuance in Note 5, the Company issued
1,000,000 warrants to purchase 1,000,000 common shares of the
Company at 70% of the current market price. Current market price
means the average of the three lowest trading prices for our common
stock during the ten-trading day period ending on the latest
complete trading day prior to the date of the respective exercise
notice. However, if a required registration statement, registering
the underlying shares of the Convertible Promissory Notes, is
declared effective on or before June 11, 2019 to September 11,
2019, then, while such Registration Statement is effective, the
current market price shall mean the lowest volume weighted average
price for our common stock during the ten-trading day period ending
on the last complete trading day prior to the conversion date.
During the year ended December 31, 2021, the Company issued
warrants in conjunction with the issuance of the FirstFire Note,
the Cavalry Investment Note and the Cavalry Fund I Note agreements.
Warrants to purchase 110,000,000 shares of common stock at 110% of
the opening price on the first day the Company trades on the Nasdaq
exchange were issued to these note holders.
On January 31, 2022, TPT Global Tech, Inc. issued warrants in
conjunction with the issuance of Talos and Blue Lake Note
Agreements. Warrants to purchase 18,116,666 shares of common stock
at $0.015 per share provided, however, that if the Company
consummates an uplist offering on or before July 6, 2022 then the
exercise price shall be 110% of the offering price at which the
uplist offering is made.
The warrants issued under these convertible promissory notes were
considered derivative liabilities valued at $209,948 of the total
$4,078,343 derivative liabilities as of September 30, 2022. See
Note 5.
Common Stock Reservations
The Company has reserved internally 1,000,000 shares of Common
Stock of the Company for the purpose of raising funds to be used to
pay off debt described in Note 5.
We have reserved 20,000,000 shares of Common Stock of the Company
to grant to certain employee and consultants as consideration for
services rendered and that will be rendered to the Company.
Non-Controlling Interests
QuikLAB Mobile Laboratories
In July and August 2020, the Company formed Quiklab 1 LLC, QuikLAB
2, LLC, QuikLAB 3, LLC and QuikLAB 4, LLC. QuikLAB 4, LLC was
subsequently dissolved. It was the intent to use these entities as
vehicles into which third parties would invest and participate in
owning QuikLAB Mobile Laboratories. As of September 30, 2022,
Quiklab 1 LLC, QuikLAB 2, LLC and QuikLAB 3, LLC have received an
investment of $470,000, of which Stephen Thomas and Rick Eberhardt,
CEO and COO of the Company, have invested $100,000 in QuikLAB 2,
LLC. During the year ended December 31, 2021, one investor entered
into an agreement at their request, to have their investment
returned. $10,000 of this investment was returned with the
remaining $60,000 being reclassified to an accounts payable in the
balance sheet as of September 30, 2022.
The third party investors and Mr. Thomas and Mr. Eberhart, will
benefit from owning 20% of QuikLAB Mobile Laboratories specific to
their investments. The Company owns the other 80% ownership in the
QuickLAB Mobile Laboratories. The net loss attributed to the
non-controlling interests from the QuikLAB Mobile Laboratories
included in the statement of operations for the nine months ended
September 30, 2022 and 2021 is $12,013 and $13,925,
respectively.
Other Non-Controlling Interests
InnovaQor, Air Fitness and TPT Asia are other non-controlling
interests in which the Company owns 94%, 75% and 78%, respectively.
There is little activity in any of these entities. The net profit
attributed to these non-controlling interests included in the
statement of operations for the nine months ended September 30,
2022 and 2021 is $5,380 and $11,987, respectively.
InnovaQor did a reverse merger with Southern Plains of which there
ended up being a non-controlling interest ownership of 6% as of
December 31, 2020. As a result, $219,058 in the non-controlling
interest in liabilities of a license agreement valued at $3,500,000
was reflected in the consolidated balance sheet as of December 31,
2020, which was reversed in the year ended December 31, 2021 when
the license agreement was cancelled between all parties.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Accounts Payable and Accrued Expenses
Accounts payable:
|
|
2022
|
|
|
2021
|
|
Related parties (1)
|
|
$ |
532,472 |
|
|
$ |
2,294,570 |
|
General operating
|
|
|
4,763,790 |
|
|
|
4,788,291 |
|
Accrued interest on debt (2)
|
|
|
1,911,001 |
|
|
|
1,546,889 |
|
Credit card balances
|
|
|
164,558 |
|
|
|
169,035 |
|
Accrued payroll and other expenses
|
|
|
668,848 |
|
|
|
211,668 |
|
Taxes and fees payable
|
|
|
642,640 |
|
|
|
642,640 |
|
Total
|
|
$ |
8,683,309 |
|
|
$ |
9,653,093 |
|
_______________
|
(1)
|
Relates to amounts due to management and members of the Board of
Directors according to verbal and written agreements that have not
been paid as of period end. Some of the prior period amounts have
been exchanged as of September 30, 2022 for Series E Preferred
Stock. See Note 7.
|
|
(2)
|
Portion relating to related parties is $765,802 and $924,612 for
September 30, 2022 and December 31, 2021, respectively
|
Operating lease obligations
The Company adopted Topic 842 on January 1, 2019. The Company
elected to adopt this standard using the optional modified
retrospective transition method and recognized a cumulative-effect
adjustment to the consolidated balance sheet on the date of
adoption. Comparative periods have not been restated. With the
adoption of Topic 842, the Company’s consolidated balance sheet now
contains the following line items: Operating lease right-of-use
assets, Current portion of operating lease liabilities and
Operating lease liabilities, net of current portion.
As all the existing leases subject to the new lease standard were
previously classified as operating leases by the Company, they were
similarly classified as operating leases under the new standard.
The Company has determined that the identified operating leases did
not contain non-lease components and require no further allocation
of the total lease cost. Additionally, the agreements in place did
not contain information to determine the rate implicit in the
leases, so we used our estimated incremental borrowing rate as the
discount rate. Our weighted average discount rate is 10.0% and the
weighted average lease term of 5.4 years.
We have various non-cancelable lease agreements for certain of our
tower locations with original lease periods expiring between 2022
and 2044. Our lease terms may include options to extend or
terminate the lease when it is reasonably certain we will exercise
that option. Certain of the arrangements contain escalating rent
payment provisions. An equipment lease described below and leases
with an initial term of twelve months have not been recorded on the
consolidated balance sheets. We recognize rent expense on a
straight-line basis over the lease term.
As of September 30, 2022 and December 31, 2021, operating lease
right-of-use assets arising from operating leases were $3,544,160
and $4,259,758, respectively. During the nine months ended
September 30, 2022, cash paid for amounts included for the
measurement of lease liabilities was $800,537 and the Company
recorded lease expense in the amount of $1,683,392 in cost of
sales.
The Company entered an operating agreement to lease colocation
space for 5 years. This operating agreement starts October 1, 2020
for $7,140 per month. In addition, the Company entered into office
space for Blue Collar which started April 2021 and runs for 3 years
beginning at an average of $4,150 for the first six months, $8,300
for twelve months, $8,549 for the next twelve months and $8,805 for
the following twelve months.
The following is a schedule showing the future minimum lease
payments under operating leases by years and the present value of
the minimum payments as of September 30, 2022.
2022
|
|
$ |
5,422,219 |
|
2023
|
|
|
1,454,130 |
|
2024
|
|
|
1,158,929 |
|
2025
|
|
|
712,431 |
|
2026
|
|
|
201,450 |
|
Thereafter
|
|
|
73,032 |
|
Total operating lease liabilities
|
|
|
9,022,191 |
|
Amount representing interest
|
|
|
(555,3161 |
) |
Total net present value
|
|
$ |
8,466,874 |
|
Office lease used by CEO
The Company entered into a lease of 12 months or less for living
space which is occupied by Stephen Thomas, Chairman, CEO and
President of the Company. Mr. Thomas lives in the space and uses it
as his corporate office. The company has paid $12,500 and $12,500
in rent and utility payments for this space for the nine months
ended September 30, 2022 and 2021, respectively.
Financing lease obligations
Future minimum lease payments are as follows:
2022
|
|
$ |
703,758 |
|
2023
|
|
|
— |
|
2024
|
|
|
— |
|
2025
|
|
|
— |
|
2026
|
|
|
— |
|
Thereafter
|
|
|
— |
|
Total financing lease liabilities
|
|
|
703,758 |
|
Amount representing interest
|
|
|
— |
|
Total future payments (1)
|
|
$ |
703,758 |
|
____________________
(1) Included is a Telecom Equipment Lease
with an entity owned and controlled by shareholders of the Company
and was due August 31, 2020, as amended.
Other Commitments and Contingencies
Employment Agreements
The Company had employment agreements with certain employees of
SDM, K Telecom and Air Fitness. The agreements are such that SDM, K
Telecom and Air Fitness, on a standalone basis in each case, must
provide sufficient cash flow to financially support the financial
obligations within the employment agreements. The employment
agreements for SDM and Aire Fitness were terminated with the
exchange of debt for Series E Preferred Stock. See Note 7.
On May 6, 2020, the Company entered into an agreement to employ Ms.
Bing Caudle as Vice President of Product Development of the Media
One Live platform for an annual salary of $250,000 for five years,
including customary employee benefits. The payment was guaranteed
for five years whether or not Ms. Caudle is dismissed with cause.
This employment agreement was effectively modified with the
Software Acquisition Agreement described in Note 5 such that the
Company is required to make payroll payments of $250,000 per year
for five years to Ms. Caudle and payroll payments totaling $150,000
over three years to her daughter.
Litigation
On March 18, 2019, the Company issued to an Investor a convertible
promissory note in the principal amount of $600,000.00 (the “Auctus
Promissory Note”) and Warrant Agreement (the “Auctus Warrant
Agreement”) pursuant to that certain securities purchase agreement
dated March 18, 2019 (the “Auctus SPA”) with Auctus Fund, LLC
(“Auctus”). Pursuant to claims by Auctus that the Company had not
complied with terms of the Auctus SPA, the Company and Auctus
entered into a settlement agreement dated October 13, 2021 where by
the Company would pay $763,231.97 and allow Auctus to exercise its
right to exercise 15,000,000 warrants to purchase 15,000,000 shares
of common stock. Auctus agreed to limit the sale of common shares
of the Company to 2,000,000 during each respective calendar week.
The Company recognized a gain on debt extinguishment of $7,068,339
when this Auctus Promissory Note was paid off in large part because
of the related derivative liability on the books at the time of the
settlement.
We have been named in a lawsuit by EMA Financial, LLC (“EMA”) for
failing to comply with a Securities Purchase Agreement entered into
in June 2019. More specifically, EMA claims the Company failed to
honor notices of conversion, failed to establish and maintain share
reserves, failed to register EMA shares and by failed to assure
that EMA shares were Rule 144 eligible within 6 months. EMA has
claimed in excess of $7,614,967 in relief. The Company has filed a
motion in response for which EMA has filed a motion to dismiss. The
Company does not believe at this time that any negative outcome
would result in more than the $876,999 it has recorded on its
balance sheet as of September 30, 2022.
A lawsuit was filed in Michigan by the one of the former owners of
SpeedConnect, LLC, John Ogren. Mr. Ogren claimed he was owed back
wages related to the acquisition agreement wherein the Company
acquired the assets of SpeedConnect, LLC and kept him on through a
consulting agreement. The Company’s position was that he ultimately
resigned in writing and was not due any back wages. In August 2021,
Mr. Ogren was awarded $334,908 in back wages by an Arbitrator. This
amount has been included in accounts payable as of September 30,
2021 and expensed in the statement of operations as other expenses
for the year ended December 31, 2021. Mr. Ogren and the Company
agreed to a settlement whereby the Company would pay $120,000
within 14 days of a written agreement with four monthly payments of
$20,000 starting on December 5, 2021 through March 2, 2022. This
debt was completely paid off as of September 30, 2022.
We have been named in a lawsuit by a collection law firm on behalf
of Pinnacle Towers LLC and Crown Atlantic Company Inc., against TPT
Global Tech, Inc. The claim derives from an outstanding debt by
incurred by Copperhead Digital. The lawsuit is over unpaid rent
that should have been paid by Copperhead Digital but was not paid.
The Company believes it has several defenses to this claim and is
in the process of communicating with opposing counsel for dismissal
of the claims which amount to $386,030.62 plus interest, costs and
attorney fees. The Company has accounted for approximately $600,000
in payables on its consolidated balance sheet as of September 30,
2022 for this subsidiary payable.
Lawsuits are being threatened by vendors in relation to tower lease
payments in accordance with tower lease agreements that were
entered into by SpeedConnect. The claims are currently being
investigated and the amount in controversy being claimed is
approximately $3,500,000. The Company has approximately $4,000,000
in accounts payable for these threatened claims as of September 30,
2022, 2022. The claims appear to include lease agreements that have
been terminated and future payments not yet due, among other
issues. As such, the parties are trying to come up with resolutions
for these claims.
The Company has been named in a lawsuit, Robert Serrett vs. TruCom,
Inc., by a former employee who was terminated by management in
2016. The employee was working under an employment agreement but
was terminated for breach of the agreement. The former employee is
suing for breach of contract and is seeking around $75,000 in back
pay and benefits. We learned that Mr. Serrett received a default
judgement in Texas on May 15, 2018 for $70,650 plus $3,500 in
attorney fees and 5% interest and court costs. However, he has made
no attempt that we are aware of to obtain a sister state judgment
in Arizona, where Trucom resides, or to try and enforce the
judgement and collect. Management believes it has good and
meritorious defenses and does not belief the outcome of the lawsuit
will have any material effect on the financial position of the
Company.
We are not currently involved in any litigation that we believe
could have a material adverse effect on our financial condition or
results of operations. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or,
to the knowledge of the executive officers of our company or any of
our subsidiaries, threatened against or affecting our company, our
common stock, any of our subsidiaries or of our companies or our
subsidiaries’ officers or directors in their capacities as such, in
which an adverse decision could have a material adverse effect. We
anticipate that we (including current and any future subsidiaries)
will from time to time become subject to claims and legal
proceedings arising in the ordinary course of business. It is not
feasible to predict the outcome of any such proceedings and we
cannot assure that their ultimate disposition will not have a
materially adverse effect on our business, financial condition,
cash flows or results of operations.
Customer Contingencies
The Company has collected $338,725 from one customer in excess of
amounts due from that customer in accordance with the customer’s
understanding of the appropriate billings activity. The customer
has filed a written demand for repayment by the Company of these
amounts. Management believes that the customer agreement allows
them to keep the amounts under dispute. Given the dispute, the
Company has reflected the amounts in dispute as a customer
liability on the consolidated balance sheet as of September 30,
2022 and December 31, 2021.
Stock Contingencies
The Company has convertible debt, preferred stock, options and
warrants outstanding which common shares would be required to be
issued upon exercise by the holders. As of September 30, 2022, the
following shares would be issued:
Convertible Promissory Notes
|
|
|
15,323,753,920 |
|
Series A Preferred Stock (1)
|
|
|
14,370,105,951 |
|
Series B Preferred Stock
|
|
|
2,588,693 |
|
Series D Preferred Stock (2)
|
|
|
71,989,198 |
|
Series E Preferred Stock (3)
|
|
|
3,153,560,185 |
|
Stock Options and Warrants
|
|
|
129,116,666 |
|
|
|
|
23,051,114,612 |
|
_______________
|
(1)
|
As of September 30, 2022, by amendment, holder of the Series A
Preferred Stock which is Stephen J. Thomas, is guaranteed upon date
of conversion to 60% of the common shares computed to include all
projected conversions of all convertible debt and any other classes
of Preferred Stock as if the conversions had taken place at the
stated conversion price per share (i.e. for the avoidance of doubt
– “fully diluted” as if such conversion had occurred prior to the
Series A conversion.) The Company would have to authorize
additional shares for this to occur as only 2,500,000,000 shares
are currently authorized.
|
|
|
|
|
(2)
|
Holders of the Series D Preferred Stock may decide after 12 months
to convert to common stock @ 75% of the 30 day average market
closing price (for previous 30 business days) divided into $5.00.
There is also an automatic conversion of the Series D Preferred
Stock without consent of holders upon any national exchange listing
approval and the registration effectiveness of common stock
underlying the conversion rights. The automatic conversion to
common from Series D Preferred shall be @ 75% of the 30 day average
market closing price (for previous 30 business days) divided into
$5.00.
|
|
|
|
|
(3)
|
Holders of the Series E Preferred Stock may decide after 12 months
to convert to common stock @ 75% of the 30 day average market
closing price (for previous 30 business days) divided into $5.00.
There is also an automatic conversion of the Series E Preferred
Stock without consent of holders upon any national exchange listing
approval and the registration effectiveness of common stock
underlying the conversion rights. The automatic conversion to
common from Series E Preferred shall be @ 75% of the 30 day average
market closing price (for previous 30 business days) divided into
$5.00.
|
Part of the consideration in the acquisition of Aire Fitness was
the issuance of 500,000 restricted common shares of the Company
vesting and issuable after the common stock reaches at least a
$1.00 per share closing price in trading. To date, this has not
occurred but may happen in the future upon which the Company will
issue 500,000 common shares to the non-controlling interest owners
of Aire Fitness.
NOTE 9 – RELATED PARTY ACTIVITY
Accounts Payable and Accrued Expenses
There are amounts outstanding due to related parties of the Company
of $532,472 and $2,294,570, respectively, as of September 30, 2022,
and December 31, 2021 related to amounts due to employees,
management and members of the Board of Directors according to
verbal and written agreements that have not been paid as of period
end which are included in accounts payable and accrued expenses on
the balance sheet. See Note 8.
Leases
See Note 8 for office lease used by CEO.
Note Payable and Commitments
On March 25, 2022, the Company entered into a Software Development
agreement with Mr. and Mrs. Caudle for which a new note payable was
created and employment agreements for Mrs. Caudle and her daughter
were modified. See Notes 5 and 8.
Debt Financing and Amounts Payable
As of September 30, 2022, there are amounts due to
management/shareholders included in financing arrangements, of
which $5,468 is payable from the Company to Stephen J. Thomas III,
CEO of the Company. See note 5.
Other Agreements
On April 17, 2018, the CEO of the Company, Stephen Thomas, signed
an agreement with New Orbit Technologies, S.A.P.I. de C.V., a
Mexican corporation, (“New Orbit”), majority owned and controlled
by Stephen Thomas, related to a license agreement for the
distribution of TPT licensed products, software and services
related to Lion Phone and VuMe within Mexico and Latin America
(“License Agreement”). The License Agreement provides for New Orbit
to receive a fully paid-up, royalty-free, non-transferable license
for perpetuity with termination only under situations such as
bankruptcy, insolvency or material breach by either party and
provides for New Orbit to pay the Company fees equal to 50% of net
income generated from the applicable activities. The transaction
was approved by the Company’s Board of Directors in June 2018.
There has been no activity on this agreement.
NOTE 10 – GOODWILL AND INTANGIBLE ASSETS
Goodwill and intangible assets are comprised of the following:
September 30,
2022
|
|
Gross carrying amount
|
|
|
Accumulated Amortization
|
|
|
Net Book Value
|
|
|
Useful Life
|
|
Customer Base
|
|
$ |
697,238 |
|
|
|
(356,706 |
) |
|
$ |
340,532 |
|
|
3-10
|
|
Developed Technology
|
|
|
4,595,600 |
|
|
|
(2,510,567 |
) |
|
|
2,085,033 |
|
|
|
9 |
|
Film Library
|
|
|
957,000 |
|
|
|
(303,450 |
) |
|
|
653,550 |
|
|
|
11 |
|
Trademarks and Tradenames
|
|
|
132,000 |
|
|
|
(47,045 |
) |
|
|
84,955 |
|
|
|
12 |
|
Total intangible assets, net
|
|
$ |
6,381,838 |
|
|
|
(3,217,768 |
) |
|
$ |
3,164,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
$ |
104,657 |
|
|
|
— |
|
|
$ |
104,657 |
|
|
|
|
|
December 31,
2021
|
|
Gross carrying amount
|
|
|
Accumulated Amortization
|
|
|
Net Book Value
|
|
|
Useful Life
|
|
Customer Base
|
|
$ |
697,238 |
|
|
|
(310,359 |
) |
|
$ |
386,879 |
|
|
3-10
|
|
Developed Technology
|
|
|
4,595,600 |
|
|
|
(2,127,599 |
) |
|
|
2,468,001 |
|
|
|
9 |
|
Film Library
|
|
|
957,000 |
|
|
|
(249,300 |
) |
|
|
707,700 |
|
|
|
11 |
|
Trademarks and Tradenames
|
|
|
132,000 |
|
|
|
(38,339 |
) |
|
|
93,661 |
|
|
|
12 |
|
Total intangible assets, net
|
|
$ |
6,381,838 |
|
|
|
(2,725,597 |
) |
|
$ |
3,656,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
$ |
104,657 |
|
|
|
— |
|
|
$ |
104,657 |
|
|
|
|
|
Amortization expense was $492,171 and $553,965 for the nine months
ended September 30, 2022 and 2021, respectively.
Remaining amortization of the intangible assets is as following for
the next five years and beyond:
2022
|
|
$ |
169,908 |
|
2023
|
|
|
662,079 |
|
2024
|
|
|
662,079 |
|
2025
|
|
|
662,079 |
|
2026
|
|
|
662,079 |
|
Thereafter
|
|
|
345,846 |
|
|
|
$ |
3,164,070 |
|
NOTE 11 – SEGMENT REPORTING
ASC 280, “Segment Reporting”, establishes standards for reporting
information about operating segments on a basis consistent with the
Company's internal organizational structure as well as information
about geographical areas, business segments and major customers in
financial statements for details on the Company's business
segments.
The Company's chief operating decision maker (“CODM”) has been
identified as the CEO who reviews the financial information of
separate operating segments when making decisions about allocating
resources and assessing performance of the group. Based on
management's assessment, the Company considers its most significant
segments for 2021 and 2020 are those in which it is providing
Broadband Internet through TPT SpeedConnect and Media Production
services through Blue Collar Medical Testing services through TPT
MedTech and QuikLABs.
The following tables present summary information by segment for the
three months ended September 30, 2022 and 2021, respectively:
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TPT SpeedConnect
|
|
|
Blue Collar
|
|
|
TPT
MedTech and QuikLABS
|
|
|
Corporate and other
|
|
|
Total
|
|
Revenue
|
|
$ |
1,357,611 |
|
|
|
692,486 |
|
|
|
(560 |
) |
|
|
2,720 |
|
|
$ |
2,052,817 |
|
Cost of revenue
|
|
$ |
(1,303,856 |
) |
|
|
(305,301 |
) |
|
|
— |
|
|
|
(82,382 |
) |
|
$ |
(1,691,539 |
) |
Net income (loss)
|
|
$ |
(486,747 |
) |
|
|
82,809 |
|
|
|
(123,798 |
) |
|
|
(717,284 |
) |
|
$ |
(1,245,019 |
) |
Deemed dividend related to modification of Series A Preferred
Stock
|
|
$ |
— |
|
|
|
— |
|
|
|
— |
|
|
|
(39,866,742 |
) |
|
$ |
(39,866,742 |
) |
Depreciation and amortization
|
|
$ |
(133,391 |
) |
|
|
(1,705 |
) |
|
|
(14,931 |
) |
|
|
(164,483 |
) |
|
$ |
(314,511 |
) |
Derivative gain
|
|
$ |
— |
|
|
|
— |
|
|
|
— |
|
|
|
102,903 |
|
|
$ |
102,903 |
|
Loss on debt extinguishment
|
|
$ |
— |
|
|
|
— |
|
|
|
— |
|
|
|
397,008 |
|
|
$ |
301,224 |
|
Interest expense
|
|
$ |
(98,159 |
) |
|
|
(36,926 |
) |
|
|
— |
|
|
|
(291,181 |
) |
|
$ |
(426,265 |
) |
Total assets
|
|
$ |
5,234,872 |
|
|
|
1,787,540 |
|
|
|
2,942 |
|
|
|
1,521,797 |
|
|
$ |
8,547,151 |
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TPT SpeedConnect
|
|
|
Blue Collar
|
|
|
TPT
MedTech and QuikLABS
|
|
|
Corporate and other
|
|
|
Total
|
|
Revenue
|
|
$ |
1,816,781 |
|
|
|
529,606 |
|
|
|
22,859 |
|
|
|
150,180 |
|
|
$ |
2,519,426 |
|
Cost of sales
|
|
$ |
(1,363,272 |
) |
|
|
(472,299 |
) |
|
|
(21,296 |
) |
|
|
(78,923 |
) |
|
$ |
(1,935,790 |
) |
Net income (loss)
|
|
$ |
(121,318 |
) |
|
|
(22,897 |
) |
|
|
(153,792 |
) |
|
|
(4,420,289 |
) |
|
$ |
(4,718,296 |
) |
Depreciation and amortization
|
|
$ |
(154,000 |
) |
|
|
(27,834 |
) |
|
|
(25,239 |
) |
|
|
(138,223 |
) |
|
$ |
(345,296 |
) |
Derivative expense
|
|
$ |
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,472,930 |
) |
|
$ |
(3,472,930 |
) |
Interest expense
|
|
$ |
(476,925 |
) |
|
|
(8,854 |
) |
|
|
— |
|
|
|
(191,204 |
) |
|
$ |
(676,983 |
) |
Total assets
|
|
$ |
6,817,103 |
|
|
|
1,122,838 |
|
|
|
466,291 |
|
|
|
3,362,516 |
|
|
$ |
11,768,748 |
|
The following tables present summary information by segment for the
nine months ended September 30, 2022 and 2021, respectively:
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TPT SpeedConnect
|
|
|
Blue Collar
|
|
|
TPT
MedTech and QuikLABS
|
|
|
Corporate and other
|
|
|
Total
|
|
Revenue
|
|
$ |
4,403,345 |
|
|
|
1,386,970 |
|
|
|
89,755 |
|
|
|
265,395 |
|
|
$ |
6,145,465 |
|
Cost of sales
|
|
$ |
(3,470,536 |
) |
|
|
(758,462 |
) |
|
|
— |
|
|
|
(264,930 |
) |
|
$ |
(4,493,929 |
) |
Net loss
|
|
$ |
(909,938 |
) |
|
|
(24,354 |
) |
|
|
(213,720 |
) |
|
|
(10,204,935 |
) |
|
$ |
(11,352,944 |
) |
Deemed dividend related to modification of Series A
Preferred Stock
|
|
$ |
— |
|
|
|
— |
|
|
|
— |
|
|
|
(39,866,742 |
) |
|
$ |
(39,866,742 |
) |
Depreciation and amortization
|
|
$ |
(397,187 |
) |
|
|
(5,683 |
) |
|
|
(44,793 |
) |
|
|
(493,450 |
) |
|
$ |
(956,045 |
) |
Derivative gain
|
|
$ |
— |
|
|
|
— |
|
|
|
— |
|
|
|
491,301 |
|
|
$ |
491,301 |
|
Loss on debt extinguishment
|
|
$ |
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,970,030 |
) |
|
$ |
(2,065,814 |
) |
Interest expense
|
|
$ |
(476,840 |
) |
|
|
(42,466 |
) |
|
|
— |
|
|
|
(4,186,243 |
) |
|
$ |
(4,705,548 |
) |
Total assets
|
|
$ |
5,234,872 |
|
|
|
1,787,540 |
|
|
|
9,585 |
|
|
|
1,521,797 |
|
|
$ |
8,547,151 |
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TPT SpeedConnect
|
|
|
Blue Collar
|
|
|
TPT MedTech and QuikLABS
|
|
|
Corporate and Other
|
|
|
Total
|
|
Revenue
|
|
$ |
5,867,005 |
|
|
$ |
1,241,060 |
|
|
$ |
479,967 |
|
|
$ |
222,924 |
|
|
$ |
7,810,956 |
|
Cost of sales
|
|
$ |
(4,502,016 |
) |
|
$ |
(808,129 |
) |
|
$ |
(787,504 |
) |
|
$ |
(189,436 |
) |
|
$ |
(6,287,085 |
) |
Net income (loss)
|
|
$ |
(721,373 |
) |
|
$ |
8,009 |
|
|
$ |
(1,205,060 |
) |
|
$ |
(6,753,395 |
) |
|
$ |
(8,671,819 |
) |
Depreciation and amortization
|
|
$ |
(455,640 |
) |
|
$ |
(83,502 |
) |
|
$ |
(25,239 |
) |
|
$ |
(469,928 |
) |
|
$ |
(1,034,309 |
) |
Derivative expense
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(3,098,381 |
) |
|
$ |
(3,098,381 |
) |
Interest expense
|
|
$ |
(812,859 |
) |
|
$ |
(23,197 |
) |
|
$ |
— |
|
|
$ |
(641,049 |
) |
|
$ |
(1,477,105 |
) |
Total assets
|
|
$ |
6,817,103 |
|
|
$ |
1,122,838 |
|
|
$ |
466,291 |
|
|
$ |
3,362,516 |
|
|
$ |
11,768,748 |
|
NOTE 12 – SUBSEQUENT EVENTS
TPT Strategic Merger with Information Security and Training
LLC
Dated as of June 29, 2022, TPT Strategic entered into a definitive
agreement for the acquisition of the assets and Information
Security and Training LLC (“IST LLC” or “IST”) (www.istincs.com) a
General Construction and Information Technology Services company
based in Huntsville Alabama with branch offices in Nashville TN,
Birmingham Al, Jackson MS, Fort Campbell KY, New Orleans LA, and
Joint Base Lewis-McChord. The TPT Strategic and IST, LLC agreement,
which closed October 20, 2022, for the acquisition is a stock
transaction where the founder and sole interest holder, Everett
Lanier, is to receive Preferred Series B shares of TPT Strategic
that will convert to a 10% ownership of TPT Strategic under certain
conditions. The acquisition includes the assumption of all assets
and certain liabilities which approximate $1.2M and $1.3M,
respectively, as of December 31, 2021. Audited revenues and net
loss for IST the year ended December 31, 2021 were approximately
$2.6M and $163,000 respectively. Everett Lanier will remain as the
President and will become a Board Member of TPT Strategic.
Conversion of Derivative Debt into Common Shares
Between October 19, 2022 and November 17, 2022, FirstFire, Cavalry
Fund I and 1800 Diagonal exercised their rights to convert $111,875
of principal and default principal amounts into 90,994,623 of
shares of common stock. Pending filing of the Company’s Form 10Q
are another $54,000 of principal on notes payable that have been
presented to the Company for Calvary Investment Fund and
Calvary Fund I into 45,000,000 of common shares.
Subsequent events were reviewed through the date the financial
statements were issued.
ITEM 2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Forward-Looking Statements and Associated
Risks.
This Form 10-Q contains certain statements that are
forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995. For this purpose, any statements
contained in this Form 10-Q that are not statements of historical
fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as “may,” “will,” “expect,”
“believe,” “anticipate,” “estimate,” or “continue” or comparable
terminology are intended to identify forward-looking statements.
These statements by their nature involve substantial risks and
uncertainties, and actual results may differ materially depending
on a variety of factors, many of which are not within our control.
These factors include but are not limited to economic conditions
generally and in the industries in which we may participate;
competition within our chosen industry, including competition from
much larger competitors; technological advances and failure to
successfully develop business relationships.
Based on our financial history since inception, our auditor has
expressed substantial doubt as to our ability to continue as a
going concern. As reflected in the accompanying financial
statements, as of September 30, 2022, we had an accumulated deficit
totaling $56,268,148. This raises substantial doubts about our
ability to continue as a going concern.
RESULTS OF
OPERATIONS
For the Three Months
Ended September 30, 2022 Compared to the Three Months Ended
September 30, 2021
During the three months ended September 30, 2022, we recognized
total revenues of $2,052,817 compared to the prior period of
$2,519,426. The decrease is largely attributable to the decrease in
internet customers from attrition and the discontinuance of
unprofitable operating locations.
Gross profit for the three months ended September 30, 2022 was
$361,278 compared to $583,636 for the prior period. The increase is
largely results of unprofitable towers being shut down which during
the period has more than offset the decrease in customers. Gross
profit percentage decreased to 8% from 23%.
During the three months ended September 30, 2022, we recognized
$1,626,737 in operating expenses compared to $1,874,219 for the
prior period. The decrease in large part is from the decrease in
payroll and general and administrative expenses from the decrease
in internet customers.
Derivative gains of $102,903 and expense of $3,472,930 results from
the accounting for derivative financial instruments during the
three months ended September 30, 2022 and 2021, respectively.
The gain on debt extinguishment of $397,008 for the current period
ended September 30, 2022 results from conversion of notes payable
for common shares.
Interest expense decreased for the three months ended September 30,
2022 compared to the prior period by $250,718. The decrease comes
largely from the amortization of debt discounts and default
provisions on the Company’s derivative securities in prior
periods.
During the three months ended September 30, 2022, we recognized a
net loss of $1,245,019 compared to $4,718,296 for the prior period.
The difference was the derivative loss in the prior period of
$3,472,930 versus the derivative gain in the current period of
$102,903.
During the three months ended September 30, 2022, the Company
amended its series A Preferred Stock which resulted in a deemed
dividend of $39,866,742 from the difference between the fair value
of the amended Series A Preferred Stock compared to what had been
recorded on the books.
For the Nine Months
Ended September 30, 2022 Compared to the Nine Months Ended
September 30, 2021
During the nine months ended September 30, 2022, we recognized
total revenues of $6,145,465 compared to the prior period of
$7,810,956. The decrease is largely attributable to the decrease in
internet customers from attrition and the discontinuance of
unprofitable operating locations. Decreases in MedTech revenue also
occurred compared to the prior year from a decrease in
operations.
Gross profit for the nine months ended September 30, 2022 was
$1,651,536 compared to $1,523,871 for the prior period. The
increase is largely a result of unprofitable towers being shut down
which during the period more than offset the decrease in customers
in addition to gross margin contributions from Air Fitness and TPT
MedTech. Gross profit percentage increased to 27% from 20%.
During the nine months ended September 30, 2022, we recognized
$6,767,816 in operating expenses compared to $6,007,496 for the
prior period. The increase was in large part attributable to the
research and development expense of $1,750,000 in the current
period from the acquisition of a software developed by a third
party.
Derivative gain of $491,301 and expense of $3,098,381 results from
the accounting for derivative financial instruments during the nine
months ended September 30, 2022 and 2021, respectively.
The loss on debt extinguishment of $1,970,030 for the current
period ended September 30, 2022 results from the exchange of
accounts payable, financing arrangements and lease agreement
balances as of September 30, 2022 for Series E Preferred Stock and
shares of common stock .
Interest expense increased for the nine months ended September 30,
2022 compared to the prior period by $3,228,443. The increase comes
largely from the amortization of debt discounts and default
provisions on the Company’s derivative securities.
During the nine months ended September 30, 2022, we recognized a
net loss of $11,352,944 compared to $8,671,819 for the prior
period. The difference was loss on debt conversions of $1,970,030
and increase on interest expense from debt discounts and default
provisions as mentioned above slightly offset by the derivative
expense of $3,098,381 in the prior year.
During the three months ended September 30, 2022, the Company
amended its series A Preferred Stock which resulted in a deemed
dividend of $39,866,742 from the difference between the fair value
of the amended Series A Preferred Stock compared to what had been
recorded on the books.
LIQUIDITY AND CAPITAL RESOURCES
We incurred $11,352,944 and $8,671,818, respectively, in losses,
and we used $263,313 and $320,999, respectively, in cash for
operations for the nine months ended September 30, 2022 and 2021.
We calculate the net cash used by operating activities by
decreasing, or increasing in case of gain, our let loss by those
items that do not require the use of cash such as depreciation,
amortization, research and development, derivative expense or gain,
gain or loss on extinguishment of debt and share-based compensation
which totaled to a net $7,704,624 for 2022 and $4,456,370 for
2021.
In addition, we report increases and reductions in liabilities as
uses of cash and deceases assets and increases in liabilities as
sources of cash, together referred to as changes in operating
assets and liabilities. For the nine months ended September 30,
2022, we had a net increase in our operating assets and liabilities
of $3,385,007 primarily from an increase in accounts payable from
lag of payments for accounts payable for cash flow considerations.
For the nine months ended September 30, 2021 we had a net increase
to our operating assets and liabilities of $3,894,450 for similar
reasons.
Cash flows provided by and used in financing activities were
$175,057 and $773,387, respectively, for the nine months ended
September 30, 2022 and 2021, respectively. For the nine months
ended September 30, 2022, these cash flows were generated from
proceeds from convertible notes, loans and advances of $1,256,187
offset by payment on convertible loans, advances and factoring
agreements of $1,391,580 and payments on amounts payable – related
parties of $39,664. For the nine months ended September 30, 2021,
cash flows from financing activities primarily came from proceeds
from the sale of Common Stock and Series D Preferred Stock of
$233,244 and $610,502, respectively, convertible notes, loans and
advances of $1,961,685 offset by payments on convertible loans,
advances and factoring agreements of $2,024,497.
Cash flows used in investing activities were $16,297 and $219,298,
respectively, for the nine months ended September 30, 2022 and 2021
primarily related to the acquisition of property and equipment.
These factors raise substantial doubt about the ability of the
Company to continue as a going concern for a period of one year
from the issuance of these financial statements. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
In December 2019, COVID-19 emerged and has subsequently spread
worldwide. The World Health Organization has declared COVID-19 a
pandemic resulting in federal, state and local governments and
private entities mandating various restrictions, including travel
restrictions, restrictions on public gatherings, stay at home
orders and advisories and quarantining of people who may have been
exposed to the virus. After close monitoring and responses and
guidance from federal, state and local governments, in an effort to
mitigate the spread of COVID-19, around March 18, 2020 for a period
of time, the Company closed its Blue Collar office in Los Angeles
and its TPT SpeedConnect offices in Michigan, Idaho and Arizona.
Most employees were working remotely, however this is not possible
with certain employees and all subcontractors that work for Blue
Collar. The Company continues to monitor developments, including
government requirements and recommendations at the national, state,
and local level to evaluate possible extensions to all or part of
such closures.
The Company has taken advantage of the stimulus offerings and
received $1,402,700 in PPP loans. All of these PPP loans were
forgiven in the year ended December 31, 2021. The Company is also
in the process of trying to raise debt and equity financing, some
of which may have to be used for working capital shortfalls if
revenues continue to decline.
In order for us to continue as a going concern for a period of one
year from the issuance of these financial statements, we will need
to obtain additional debt or equity financing and look for
companies with cash flow positive operations that we can acquire.
There can be no assurance that we will be able to secure additional
debt or equity financing, that we will be able to acquire cash flow
positive operations, or that, if we are successful in any of those
actions, those actions will produce adequate cash flow to enable us
to meet all our future obligations. Most of our existing financing
arrangements are short-term. If we are unable to obtain additional
debt or equity financing, we may be required to significantly
reduce or cease operations.
Ongoing Assessment of the Impact of COVID-19
Companies have undertaken and are generally in the process of
making a diverse range of operational adjustments in response to
the effects of COVID-19. These adjustments are numerous and include
a transition to telework; supply chain and distribution
adjustments; and suspending or modifying certain operations to
comply with health and safety guidelines to protect employees,
contractors, and customers, including in connection with a
transition back to the workplace. These types of adjustments may
have an effect on a company that would be material to an investment
or voting decision, and affected companies should carefully
consider their obligations to disclose this information to
investors. Companies also are undertaking a diverse and sometimes
complex range of financing activities in response to the effects of
COVID-19 on their businesses and markets. These activities may
involve obtaining and utilizing credit facilities, accessing public
and private markets, implementing supplier finance programs, and
negotiating new or modified customer payment terms. The SEC has
required a discussion of COVID-19 related considerations, specific
facts and circumstances and make disclosures to address the
following questions;
·
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What are the material operational
challenges that management and the Board of Directors are
monitoring and evaluating? |
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·
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We have been challenged by the
gathering restrictions under state and local rules and lack of
events due to cancellation specifically related to our Blue Collar
operations. |
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·
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How and to what extent have you
altered your operations, such as implementing health and safety
policies for employees, contractors, and customers, to deal with
these challenges, including challenges related to employees
returning to the workplace? |
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·
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We have allowed our employees to
work from home and are using contract service providers where
appropriate. Blue Collar was completely shut down for a period of
time but has implemented health and safety policies for employees,
contractors and customers to be able to resume some of their
operations. |
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·
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How are the changes impacting or
reasonably likely to impact your financial condition and short- and
long-term liquidity? |
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·
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The changes had impaired our Blue
Collar operations significantly in the prior years but which
operations seem to be rebounding. |
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·
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How is your overall liquidity
position and outlook evolving? |
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·
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We have raised limited funds to
help our liquidity position but hope our outlook is bright
primarily through financing opportunities. |
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·
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To the extent COVID-19 is adversely
impacting your revenues, consider whether such impacts are material
to your sources and uses of funds, as well as the materiality of
any assumptions you make about the magnitude and duration of
COVID-19’s impact on your revenues. Are any decreases in cash flow
from operations having a material impact on your liquidity position
and outlook? |
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·
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COVID-19 reduced our historical revenues in the past. The bans on
events and gatherings were very material to our Blue Collar
operations.
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·
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Have you accessed revolving lines
of credit or raised capital in the public or private markets to
address your liquidity needs? |
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·
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We
have raised some funds through financing opportunities described
herein.
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·
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Have COVID-19 related impacts
affected your ability to access your traditional funding sources on
the same or reasonably similar terms as were available to you in
recent periods? |
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·
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No.
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·
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Have you provided additional
collateral, guarantees, or equity to obtain funding? |
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·
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No.
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·
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Have there been material changes in
your cost of capital? |
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·
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No.
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·
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How has a change, or a potential
change, to your credit rating impacted your ability to access
funding? |
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·
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No. |
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·
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Do your financing arrangements
contain terms that limit your ability to obtain additional funding?
If so, is the uncertainty of additional funding reasonably likely
to result in your liquidity decreasing in a way that would result
in you being unable to maintain current operations? |
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·
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No. |
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·
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Are you at material risk of not
meeting covenants in your credit and other agreements? |
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·
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No. |
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·
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If you include metrics, such as
cash burn rate or daily cash use, in your disclosures, are you
providing a clear definition of the metric and explaining how
management uses the metric in managing or monitoring
liquidity? |
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·
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Not Applicable. |
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·
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Are there estimates or assumptions
underlying such metrics the disclosure of which is necessary for
the metric not to be misleading? |
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·
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No. |
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·
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Have you reduced your capital
expenditures and if so, how? |
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·
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No. |
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·
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Have you reduced or suspended share
repurchase programs or dividend payments? |
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·
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No. |
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·
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Have you ceased any material
business operations or disposed of a material asset or line of
business? |
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·
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No. |
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·
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Have you materially reduced or
increased your human capital resource expenditures? |
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·
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Yes, we previously reduced staff
for Blue Collar and are using more contractors for current
work. |
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·
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Are any of these measures temporary
in nature, and if so, how long do you expect to maintain them? |
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·
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These measures were temporary and
are starting to be changed. |
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·
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What factors will you consider in
deciding to extend or curtail these measures? |
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·
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We are opening up and allow
operations as much as possible. |
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·
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What is the short- and long-term
impact of these reductions on your ability to generate revenues and
meet existing and future financial obligations? |
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·
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There is no impact of these
reductions upon our ability to generate revenues or meet financial
obligations. |
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·
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Are you able to timely service your
debt and other obligations? |
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·
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Yes, for most debt
instruments. |
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·
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Have you taken advantage of
available payment deferrals, forbearance periods, or other
concessions? What are those concessions and how long will they
last? |
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·
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Yes. |
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·
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Do you foresee any liquidity
challenges once those accommodations end? |
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·
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Possibly, if creditors demand all
deferrals at once rather than payment over time as indicated. |
·
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Have you altered terms with your
customers, such as extended payment terms or refund periods, and if
so, how have those actions materially affected your financial
condition or liquidity? |
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·
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We have not altered terms with
customers. |
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·
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Did you provide concessions or
modify terms of arrangements as a landlord or lender that will have
a material impact? |
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·
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No. |
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·
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Have you modified other contractual
arrangements in response to COVID-19 in such a way that the revised
terms may materially impact your financial condition, liquidity,
and capital resources? |
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·
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Possibly, if creditors demand all
deferrals at once rather than payment over time as indicated. |
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·
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Are you relying on supplier finance
programs, otherwise referred to as supply chain financing,
structured trade payables, reverse factoring, or vendor financing,
to manage your cash flow? |
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·
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Yes. |
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·
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Have these arrangements had a
material impact on your balance sheet, statement of cash flows, or
short- and long-term liquidity and if so, how? |
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·
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No. |
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·
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What are the material terms of the
arrangements? |
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·
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Most vendors situations now provide
up to 30 days terms; but a good portion has now returned to normal
payment terms. |
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·
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Did you or any of your subsidiaries
provide guarantees related to these programs? |
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·
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No. |
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·
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Do you face a material risk if a
party to the arrangement terminates it? |
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·
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No. |
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·
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What amounts payable at the end of
the period relate to these arrangements, and what portion of these
amounts has an intermediary already settled for you? |
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·
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There have been no settlements.
Most related to up to 30 days with telecommunications vendors and
payments are being included in planned cash flows. |
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·
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Have you assessed the impact
material events that occurred after the end of the reporting
period, but before the financial statements were issued, have had
or are reasonably likely to have on your liquidity and capital
resources and considered whether disclosure of subsequent events in
the financial statements and known trends or uncertainties in
MD&A is required? |
|
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|
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·
|
There are no material events
occurring after the end of the reporting period but before
financial statements were issued which would have any affect on
liquidity or capital resources and there are no new trends or uncertainties
needed to be disclosed. |
Government Assistance – The
Coronavirus Aid, Relief, and Economic Security Act (CARES
Act)
The CARES Act includes financial assistance for companies in the
form of loans and tax relief in the form of deferred or reduced
payments and potential refunds. Companies receiving federal
assistance must consider the short- and long-term impact of that
assistance on their financial condition, results of operations,
liquidity, and capital resources, as well as the related
disclosures and critical accounting estimates and assumptions. We
have not received any financial assistance from the banks or any
government agency.
·
|
How does a loan impact your
financial condition, liquidity and capital resources? |
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|
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·
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We have no government loans, except
PPP loans that have been forgiven. |
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·
|
What are the material terms and
conditions of any assistance you received, and do you anticipate
being able to comply with them? |
|
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|
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·
|
PPP loans only and they have been
forgiven. |
|
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·
|
Do those terms and conditions limit
your ability to seek other sources of financing or affect your cost
of capital? |
|
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|
|
·
|
No. |
|
|
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·
|
Do you reasonably expect restrictions, such as maintaining certain
employment levels, to have a material impact on your revenues or
income from continuing operations or to cause a material change in
the relationship between costs and revenues?
|
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|
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·
|
No. |
|
|
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·
|
Once any such restrictions lapse,
do you expect to change your operations in a material way? |
|
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·
|
No. |
|
|
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·
|
Are you taking advantage of any
recent tax relief, and if so, how does that relief impact your
short- and long-term liquidity? |
|
|
|
|
·
|
We are using payroll tax deferrals
allowed by the tax relief programs. |
|
|
|
·
|
Do you expect a material tax refund
for prior periods? |
|
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|
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·
|
No. |
|
|
|
·
|
Does the assistance involve new
material accounting estimates or judgments that should be disclosed
or materially change a prior critical accounting estimate? |
|
|
|
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·
|
No. |
|
|
|
·
|
What accounting estimates were
made, such as the probability a loan will be forgiven, and what
uncertainties are involved in applying the related accounting
guidance? |
|
|
|
|
·
|
We have recognized forgiveness of
all PPP loans. |
A Company’s Ability to Continue as a Going
Concern
The SEC has advised that Management should consider whether
conditions and events, taken as a whole, raise substantial doubt
about the company’s ability to meet its obligations as they become
due within one year after the issuance of the financial statements.
There is substantial doubt about a company’s ability to continue as
a going concern due to continuation of the COVID-19 pandemic and we
make the following disclosure:
|
·
|
Are there conditions and events
that give rise to the substantial doubt about the company’s ability
to continue as a going concern? |
|
|
|
·
|
Yes. There was concern about our
ability to continue as a going concern prior to COVID 19, however
the continuation of COVID-19 restrictions may hamper Blue Collar
from operating and generating revenues at full capacity. |
|
|
|
|
·
|
For example, have you defaulted on
outstanding obligations? |
|
|
|
·
|
Yes, but not because of
COVID-19. |
|
·
|
Have you faced labor challenges or
a work stoppage? |
|
|
|
·
|
No. |
|
|
|
|
·
|
What are your plans to address
these challenges? |
|
|
|
·
|
At the point of allowing full
operations for Blue Collar and film production companies to fully
operate. |
|
|
|
|
·
|
Have you implemented any portion of
those plans? |
|
|
|
·
|
No, it’s a matter of allowing Blue
Collar to fully operate and trying to raise money and fund
operational plans. |
ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the
Exchange Act and are not required to provide the information
required under this item.
ITEM 4. CONTROLS AND
PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to
be disclosed in our reports filed or submitted under the Securities
Exchange Act of 1934 is recorded, processed, summarized and
reported, within the time period specified in the SEC’s rules and
forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that
information required to be disclosed in our reports filed or
submitted under the Securities Exchange Act of 1934 is accumulated
and communicated to management including our principal executive
officer/principal financial officer as appropriate, to allow timely
decisions regarding required disclosure.
Management has carried out an evaluation of the effectiveness of
the design and operation of our company’s disclosure controls and
procedures. Due to the lack of personnel and outside directors,
management concluded that the Company’s disclosure controls and
procedures are not effective as of such date. The Company
anticipates that with further resources, the Company will expand
both management and the board of directors with additional officers
and independent directors in order to provide sufficient disclosure
controls and procedures.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial
reporting (as defined in Rule 13a-15(f) or 15d-15(f)) during the
quarter ended September 30, 2022 that have materially affected, or
are reasonably likely to materially affect, our internal controls
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On March 18, 2019, the Company issued to an Investor a convertible
promissory note in the principal amount of $600,000.00 (the “Auctus
Promissory Note”) and Warrant Agreement (the “Auctus Warrant
Agreement”) pursuant to that certain securities purchase agreement
dated March 18, 2019 (the “Auctus SPA”) with Auctus Fund, LLC
(“Auctus”). Pursuant to claims by Auctus that the Company had not
complied with terms of the Auctus SPA, the Company and Auctus
entered into a settlement agreement dated October 13, 2021 where by
the Company would pay $763,231.97 and allow Auctus to exercise its
right to exercise 15,000,000 warrants to purchase 15,000,000 shares
of common stock. Auctus agreed to limit the sale of common shares
of the Company to 2,000,000 during each respective calendar week.
The Company recognized a gain on debt extinguishment of $7,068,339
when this Auctus Promissory Note was paid off in large part because
of the related derivative liability on the books at the time of the
settlement.
We have been named in a lawsuit by EMA Financial, LLC (“EMA”) for
failing to comply with a Securities Purchase Agreement entered into
in June 2019. More specifically, EMA claims the Company failed to
honor notices of conversion, failed to establish and maintain share
reserves, failed to register EMA shares and by failed to assure
that EMA shares were Rule 144 eligible within 6 months. EMA has
claimed in excess of $7,614,967 in relief. The Company has filed a
motion in response for which EMA has filed a motion to dismiss. The
Company does not believe at this time that any negative outcome
would result in more than the $876,999 it has recorded on its
balance sheet as of September 30, 2022.
A lawsuit was filed in Michigan by the one of the former owners of
SpeedConnect, LLC, John Ogren. Mr. Ogren claimed he was owed back
wages related to the acquisition agreement wherein the Company
acquired the assets of SpeedConnect, LLC and kept him on through a
consulting agreement. The Company’s position was that he ultimately
resigned in writing and was not due any back wages. In August 2021,
Mr. Ogren was awarded $334,908 in back wages by an Arbitrator. This
amount has been included in accounts payable as of September 30,
2021 and expensed in the statement of operations as other expenses
for the year ended December 31, 2021. Mr. Ogren and the Company
agreed to a settlement whereby the Company would pay $120,000
within 14 days of a written agreement with four monthly payments of
$20,000 starting on December 5, 2021 through March 2, 2022. This
debt was completely paid off as of September 30, 2022.
We have been named in a lawsuit by a collection law firm on behalf
of Pinnacle Towers LLC and Crown Atlantic Company Inc., against TPT
Global Tech, Inc. The claim derives from an outstanding debt by
incurred by Copperhead Digital. The lawsuit is over unpaid rent
that should have been paid by Copperhead Digital but was not paid.
The Company believes it has several defenses to this claim and is
in the process of communicating with opposing counsel for dismissal
of the claims which amount to $386,030.62 plus interest, costs and
attorney fees. The Company has accounted for approximately $600,000
in payables on its consolidated balance sheet as of September 30,
2022 for this subsidiary payable.
Lawsuits are being threatened by vendors in relation to tower lease
payments in accordance with tower lease agreements that were
entered into by SpeedConnect. The claims are currently being
investigated and the amount in controversy being claimed is
approximately $3,500,000. The Company has approximately $4,000,000
in accounts payable for these threatened claims as of September 30,
2022, 2022. The claims appear to include lease agreements that have
been terminated and future payments not yet due, among other
issues. As such, the parties are trying to come up with resolutions
for these claims.
The Company has been named in a lawsuit, Robert Serrett vs. TruCom,
Inc., by a former employee who was terminated by management in
2016. The employee was working under an employment agreement but
was terminated for breach of the agreement. The former employee is
suing for breach of contract and is seeking around $75,000 in back
pay and benefits. We learned that Mr. Serrett received a default
judgement in Texas on May 15, 2018 for $70,650 plus $3,500 in
attorney fees and 5% interest and court costs. However, he has made
no attempt that we are aware of to obtain a sister state judgment
in Arizona, where Trucom resides, or to try and enforce the
judgement and collect. Management believes it has good and
meritorious defenses and does not belief the outcome of the lawsuit
will have any material effect on the financial position of the
Company.
We are not currently involved in any litigation that we believe
could have a material adverse effect on our financial condition or
results of operations. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or,
to the knowledge of the executive officers of our company or any of
our subsidiaries, threatened against or affecting our company, our
common stock, any of our subsidiaries or of our companies or our
subsidiaries’ officers or directors in their capacities as such, in
which an adverse decision could have a material adverse effect. We
anticipate that we (including current and any future subsidiaries)
will from time to time become subject to claims and legal
proceedings arising in the ordinary course of business. It is not
feasible to predict the outcome of any such proceedings and we
cannot assure that their ultimate disposition will not have a
materially adverse effect on our business, financial condition,
cash flows or results of operations.
ITEM 1A. RISK FACTORS
No Material Changes in Risk Factors since the disclosure contained
in the Form 10-K for the year ended December 31, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS
On September 1, 2022, Talos exercised its right to convert $300,675
of principal and interest into 40,090,000 shares of common stock
leaving a zero balance of principal and accrued interest.
On September 8, 2022, Blue Lake exercised its right to convert
$360,447 of principal and interest into 48,059,600 of common shares
leaving a balance of $8,165 in principal and $48,936 of accrued
interest.
On
September 15, 2022, FirstFire exercised its right to convert
$59,160 of principal into 17,000,000 shares of common stock.
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES
The Company is in default under approximately $7,300,000 of its
financing arrangements, including all of its derivative financial
instruments, and has received notice of such default from EMA for
not reserving enough shares for conversion and for not having filed
a Form S-1 Registration Statement with the Securities and Exchange
Commission. It was the intent of the Company to pay back all
financing arrangements prior to the due dates but that has not
occurred primarily from the Company’s inability to raise sufficient
capital. As such, the Company is currently in negotiations with its
financial arrangements in default relative to extending due
dates,changing terms or even exchanging for other Company
securties. The Company has been named in a lawsuit by EMA for
failing to comply with a Securities Purchase Agreement entered into
in June 2019.
ITEM 4. MINE SAFETY
DISCLOSURE
Not Applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibits. The following is a complete list of
exhibits filed as part of this Form 10-Q. Exhibit numbers
correspond to the numbers in the Exhibit Table of Item 601 of
Regulation S-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
|
TPT GLOBAL TECH, INC.
|
|
|
(Registrant)
|
|
|
|
|
|
Dated: December 13, 2022
|
By:
|
/s/ Stephen J. Thomas, III
|
|
|
|
Stephen J. Thomas, III
|
|
|
|
(Chief Executive Officer, Principal Executive Officer)
|
|
|
|
|
|
Dated: December 13, 2022
|
By:
|
/s/ Gary L. Cook
|
|
|
|
Gary L. Cook
|
|
|
|
(Chief Financial Officer, Principal Accounting Officer)
|
|
TPT Global Tech (PK) (USOTC:TPTW)
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