The financial statements and related
notes are included as part of this Annual Report.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
NOTE 1 - NATURE OF OPERATIONS
Two Hands Corporation (formerly Innovative
Product Opportunities Inc.) (the "Company") was incorporated on April 3, 2009 in the State of Delaware and established
a fiscal year end of December 31.
From inception (April 3, 2009) until
June 30, 2014 our business was a product development firm creating products designed, prototyped and produced in numerous industries
including consumer and household goods, office products, furniture, and toys.
On March 1, 2012 the Company entered
into a license agreement with Szar International, Inc. (dba Cigar & Spirits Magazine) (“Cigar & Spirits”).
The agreement granted the Company the right to market the products of Cigar & Spirits including but not limited to the sales,
promotion, and advertising vehicles of the Magazine. On July 8, 2013, The Company received written notice that Cigar & Spirits
will cancel the license agreement on August 1, 2013.
Since July 1, 2014, our business is a research
and product development firm. Over the past few years we have specialized in computer vision and gesture recognition technologies.
We have leveraged our relationship with our product development team of programmers and designers to implement our vision for building
a state of the art co-parenting application.
The Two Hands Application launched
on July 25, 2018.
On February 20, 2019, the Company
announced the launch of its application, Two Hands Gone, a new encrypted messaging app.
The Company is also in the business
of working with other independent contractors to build brand awareness campaigns for clients and their products. The Company provides
assistance in building brand awareness for the products it sells through its internet website, out-of-home, mobile, online and
other media outlets as required. Additionally, the Company develops the creative media to support the client’s media buys.
The Company also assists Clients in developing and assisting in matters of developing brand strategies and discussions pertaining
thereof. The Company executes and/or oversee the research, planning, pricing, creative development, tracking and deployment of
all online and out-of-home advertising projects needed to promote client products and services.
The operations of the business are carried
on by a 100% owned subsidiary, I8 Interactive Corporation, a company incorporated under the laws of Canada.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
BASIS OF PRESENTATION
The financial statements present the
balance sheets and statements of operations, stockholders' equity and cash flows of the Company. These financial statements are
presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United
States.
GOING CONCERN
The Company's financial statements are
prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization
of assets and the liquidation of liabilities in the normal course of business. During the year ended December 31, 2018, the Company
incurred a net loss of $8,096,408 and used cash in operating activities of $235,289, and at December 31, 2018, had a stockholders’
deficit of $310,422. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going
concern within one year of the date that the financial statements are issued. The Company will be dependent upon the raising of
additional capital through placement of its common stock in order to implement its business plan. There can be no assurance that
the Company will be successful in this situation. Accordingly, these factors raise substantial doubt as to the Company's ability
to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification
of recorded asset amounts or amounts and classifications of liabilities that might result from this uncertainty. The Company is
funding its initial operations by way of loans from its Chief Executive Officer and others, and the use of equity to pay some operating
expenses. The Company's officers and directors have committed to advancing certain operating costs of the Company.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiary, I8 Interactive Corporation. All intercompany transactions and balances
have been eliminated in consolidation.
USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the financial statements
in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash
flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost, less
accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense when incurred, while
renewals and betterments that materially extend the life of an asset are capitalized.
The costs of assets sold, retired, or otherwise
disposed of, and the related allowance for depreciation, are eliminated from the accounts, and any resulting gain or loss is recognized
in the results from operations. Depreciation is provided over the estimated useful lives of the assets, which are as follows:
Computer equipment
|
50% declining balance over a three year useful life
|
|
|
In the year of acquisition, one half the normal
rate of depreciation is provided.
REVENUE RECOGNITION
In accordance with ASC 606, revenue
is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration
to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step
process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting
the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following
steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the
transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue
when, or as, we satisfy the performance obligation.
During the years ended December 31,
2018 and 2017, the Company had revenue of $390,381 and $43,466, respectively. During 2018 100% of revenue was earned from one customer.
The contract with this customer ended in November 2018. The Company recognized revenue from services provided for brand awareness
campaigns for the client and their products. Revenue is recognized based on time spent on the project at an agreed upon hourly
rate and as recoverable disbursements are incurred.
RESEARCH AND DEVELOPMENT COSTS
We incurred research and development
costs primarily to the development of Two Hands gone application. Research and development costs are comprised primarily of contract
labor and services.
Software development costs are included
in research and development and are expensed as incurred. FASB ASC Topic 350
Intangibles—Goodwill and Other
requires
that software development costs incurred subsequent to reaching technological feasibility be capitalized, if material. If the process
of developing a new product or major enhancement does not include a detailed program design, technological feasibility is determined
only after completion of a working model. To date, the period between achieving technological feasibility and the general availability
of such software has been short, and the software development costs qualifying for capitalization have been insignificant. The
Company recorded research and development expense of $361,200 and $0 for the years ended December 31, 2018 and 2017, respectively.
INCOME TAXES
The Company accounts for income taxes
in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("FASB ASC")
740, Income Taxes. Under the assets and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for
the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates
in effect for the year in which those temporary differences are expected to be recovered or settled. The Company provides a valuation
allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.
NET LOSS PER SHARE
Basic net income (loss) per share includes
no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per share is computed by dividing earnings available to common shareholders
by the weighted average number of common shares outstanding for the period increased to include the number of additional common
shares that would have been outstanding if potentially dilutive securities had been issued. At December 31, 2018 and 2017, we excluded
the common stock issuable upon conversion of convertible promissory notes of 4,685,970,524 shares and 412,602 shares, respectively,
as their effect would have been anti-dilutive.
FOREIGN CURRENCY TRANSLATION
The financial statements are presented
in the Company’s functional currency which is the United States dollars. In accordance with FASB ASC 830, Foreign Currency
Matters, foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign
exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at exchange rates
prevailing at the transaction date. Revenue and expenses are translated at average rates of exchange during the periods presented.
Related translation adjustments are reported as a separate component of stockholders' deficit, whereas gains or losses resulting
from foreign currency transactions are included in results of operations.
STOCK-BASED COMPENSATION
The Company measures stock-based compensation
at the grant date based on the fair value of the award and recognizes stock-based compensation expense over the requisite service
period.
The Company also grants awards to non-employees
and determines the fair value of such stock-based compensation awards granted as either the fair value of the consideration received
or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments
issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of (1) the date at which
a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty's
performance is completed.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company’s financial instruments
such as cash, accounts payable and accrued liabilities, non-redeemable convertible notes, notes payable and due to related parties
are reported at cost, which approximates fair value due to the short-term nature of these financial instruments.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2016, the FASB issued ASU
No. 2016-02,
Leases.
ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on
the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting
periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required
for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period
presented in the financial statements, with certain practical expedients available. The Company does not anticipate a material
impact to its consolidated financial statements on adopting ASU 2016-02. However, the ultimate impact of adopting ASU 2016-02 will
depend on the Company’s lease portfolio as of the adoption date.
In June 2018, the FASB issued ASU 2018-07—
Compensation—Stock
Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting
, which simplifies the accounting for share-based
payments to nonemployees by aligning it with the accounting for share-based payments to employees subject to certain exceptions.
ASC 2018-07 expands the scope of ASC Topic 718, Compensation-Stock Compensation (“ASC 718”) to include share-based
payments granted to nonemployees in exchange for goods or services used or consumed in an entity’s own operations and supersedes
the guidance in ASC 505-50 by moving it to ASC 718. This amendment is effective beginning January 1, 2019. Early adoption is permitted,
but no earlier than an entity’s adoption date of ASC 606. The Company early adopted ASU 2018-07 with respect to grants of
shares of common stock of the Company made in June 2018.
Other recent accounting pronouncements issued
by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities
and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future
consolidated financial statements.
NOTE 3 – NON-REDEEMABLE CONVERTIBLE
NOTES
On June 10, 2014, the Company agreed
to amend and add certain terms to unsecured, non-interest bearing, due on demand notes payable issued to The Cellular Connection
Ltd. during the period from February 22, 2013 to June 10, 2014 with a total carrying value $42,189. The issue price of the Note
is $42,189 with a face value of $54,193 and the Note has a maturity date of December 31, 2014. At the option of the Company, the
Company may convert principal and interest at a fixed conversion price of $0.0001 per share of the Company’s common stock.
The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the Note. If the Note
is not paid on the maturity date, the outstanding face amount of the Note shall increase by 20% on January 1, 2015. The outstanding
face value of the Note shall increase by another 20% on January 1, 2016 and again on each one year anniversary of the Note until
the Note has been paid in full. During 2014, 2015 and 2016, the Company elected to convert $56,182 of principal and interest into
40,514 shares of the Company’s common stock. During 2018, the Company elected to convert $6,900 of principal and interest
into 23,092,000 shares of common stock of the Company at a fixed conversion prices of $0.0001 per share. This conversions resulted
in a loss on debt settlement of $3,103,200 due to the requirement to record the share issuance at fair value on the date the shares
were issued. The consolidated statement of operations includes interest expense of $3,132 and $2,610 for the years ended December
31, 2018 and 2017, respectively. At December 31, 2018 and 2017 the carrying amount of the Note is $11,892 (face value of $11,892
less $0 unamortized discount) and $15,660 (face value of $15,660 less $0 unamortized discount), respectively.
On September 1, 2016, Doug Clark, former
Chief Executive Officer and related party, assigned the Side Letter Agreement (“Note”) dated June 10, 2014 with a total
carrying value $382,016 to DC Design Inc. (“DC Design”). In addition on September 1, 2016, the Company entered into
an amended Side Letter Agreement with DC Design to amend and add certain terms to the Side Letter Agreement and advances from the
period from June 25, 2014 to December 24, 2014. Under the terms of the amended Side Letter Agreement, the issue price of the Note
is $174,252 with an interest rate 20% per annum and maturity date of December 31, 2017. At the option of the Company, the Company
may convert principal and interest at a fixed conversion price of $0.0001 per share of the Company’s common stock. The modification
of the Note has been accounted for as debt extinguishment and the issuance of a new debt instrument. Accordingly, in connection
with extinguishment of the original debt, the Company recognized a $207,764 gain with a related party as an increase in additional
paid-in capital in the consolidated statement of equity. The Note allows for the lender to secure a portion of the Company assets
up to 200% of the face value of the note. If the Note is not paid on the maturity date, the outstanding face amount of the Note
shall increase by 20% on January 1, 2018. The outstanding face value of the Note shall increase by another 20% on January 1, 2019
and again on each one year anniversary of the Note until the Note has been paid in full. During 2016, the Company elected to convert
$60,000 of principal and interest of the non-redeemable convertible note due to DC Design into 40,000 shares of common stock of
the Company. During 2018, the Company elected to convert $156,000 of principal and interest of a non-redeemable convertible note
due to DC Design into 12,080,000 shares of common stock of the Company. These conversion resulted in a loss on debt settlement
of $385,200 due to the requirement to record the share issuance at fair value on the date the shares were issued. The consolidated
statement of operations includes interest expense of $29,821 and $26,173 for the years ended December 31, 2018 and 2017, respectively.
At December 31, 2018 and 2017 the carrying amount of the Note is $22,923 (face value of $22,923 less $0 unamortized discount) and
$149,102 (face value of $149,102 less $0 unamortized discount), respectively.
On January 8, 2018, the Company entered
into a Side Letter Agreement (“Note”) with The Cellular Connection Ltd., to amend and add certain terms to unsecured,
non-interest bearing, due on demand notes payable totaling $14,930 issued by the Company during the period of June 2014 and December
2017. The issue price of the Note is $14,930 with a face value of $17,916 and the Note has a maturity date of December 31, 2018.
At the option of the Company, the Company may convert principal and interest at a fixed conversion price of $0.0001 per share of
the Company’s common stock. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face
value of the Note. If the Note is not paid on the maturity date, the outstanding face amount of the Note shall increase by 20%
on January 1, 2019. The outstanding face value of the Note shall increase by another 20% on January 1, 2020 and again on each one
year anniversary of the Note until the Note has been paid in full. The consolidated statement of operations includes interest expense
of $2,986 and $0 for the years ended December 31, 2018 and 2017, respectively. At December 31, 2018 and 2017 the carrying amount
of the Note is $17,916 (face value of $17,916 less $0 unamortized discount) and $0, respectively.
On January 8, 2018, the Company
entered into a Side Letter Agreement (“Note”) with Stuart Turk, to amend and add certain terms to unsecured,
non-interest bearing, due on demand notes payable totaling $244,065 issued by the Company during the period of July 2014 and
December 2017. The issue price of the Note is $244,065 with a face value of $292,878 and the Note has a maturity date of
December 31, 2018. At the option of the Company, the Company may convert principal and interest at a fixed conversion price
of $0.0001 per share of the Company’s common stock. The Note allows for the lender to secure a portion of the Company
assets up to 200% of the face value of the Note. If the Note is not paid on the maturity date, the outstanding face amount of
the Note shall increase by 20% on January 1, 2019. The outstanding face value of the Note shall increase by another 20% on
January 1, 2020 and again on each one year anniversary of the Note until the Note has been paid in full. The consolidated
statement of operations includes interest expense of $48,813 and $0 for the years ended December 31, 2018 and 2017,
respectively. At December 31, 2018 and 2017 the carrying amount of the Note is $292,879 (face value of $292,879 less $0
unamortized discount) and $0, respectively.
On April 12, 2018, the Company entered
into a Side Letter Agreement (“Note”) with Jordan Turk to amend and add certain terms to unsecured, non-interest bearing,
due on demand notes payable totaling $45,000 issued by the Company during the period of March 19, 2018 to April 12, 2018. The issue
price of the Note is $45,000 with a face value of $54,000 and the Note has a maturity date of December 31, 2018. At the option
of the Company, the Company may convert principal and interest at a fixed conversion price of $0.0001 per share of the Company’s
common stock. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the Note.
If the Note is not paid on the maturity date, the outstanding face amount of the Note shall increase by 20% on January 1, 2019.
The outstanding face value of the Note shall increase by another 20% on January 1, 2020 and again on each one year anniversary
of the Note until the Note has been paid in full. The consolidated statement of operations includes interest expense of $9,000
and $0 for the years ended December 31, 2018 and 2017, respectively. At December 31, 2018 and 2017 the carrying amount of the Note
is $54,000 (face value of $54,000 less $0 unamortized discount) and $0, respectively.
On May 10, 2018, the Company entered
into a Side Letter Agreement (“Note”) with Jordan Turk to amend and add certain terms to unsecured, non-interest bearing,
due on demand notes payable totaling $35,000 issued by the Company on May 9, 2018. The issue price of the Note is $35,000 with
a face value of $42,000 and the Note has a maturity date of December 31, 2018. At the option of the Company, the Company may convert
principal and interest at a fixed conversion price of $0.0001 per share of the Company’s common stock. The Note allows for
the lender to secure a portion of the Company assets up to 200% of the face value of the Note. If the Note is not paid on the maturity
date, the outstanding face amount of the Note shall increase by 20% on January 1, 2019. The outstanding face value of the Note
shall increase by another 20% on January 1, 2020 and again on each one year anniversary of the Note until the Note has been paid
in full. The consolidated statement of operations includes interest expense of $7,000 and $0 for the years ended December 31, 2018
and 2017, respectively. At December 31, 2018 and 2017 the carrying amount of the Note is $42,000 (face value of $42,000 less $0
unamortized discount) and $0, respectively.
On September 13, 2018, the Company entered
into a Side Letter Agreement (“Note”) with Jordan Turk to amend and add certain terms to unsecured, non-interest bearing,
due on demand notes payable totaling $40,000 issued by the Company during the period of July 10 to September 13, 2018. The issue
price of the Note is $40,000 with a face value of $48,000 and the Note has a maturity date of December 31, 2018. At the option
of the Company, the Company may convert principal and interest at a fixed conversion price of $0.0001 per share of the Company’s
common stock. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the Note.
If the Note is not paid on the maturity date, the outstanding face amount of the Note shall increase by 20% on January 1, 2019.
The outstanding face value of the Note shall increase by another 20% on January 1, 2020 and again on each one year anniversary
of the Note until the Note has been paid in full. The consolidated statement of operations includes interest expense of $8,000
and $0 for the years ended December 31, 2018 and 2017, respectively. At December 31, 2018 and 2017 the carrying amount of the Note
is $48,000 (face value of $48,000 less $0 unamortized discount) and $0, respectively.
NOTE 4 - NOTES PAYABLE
As of December 31, 2018 and 2017, notes
payable due to Stuart Turk, Jordan Turk and The Cellular Connection Limited, a corporation controlled by Stuart Turk, totaling
$127,853 and $258,995, respectively, were outstanding. The balances are non-interest bearing, unsecured and have no specified terms
of repayment.
NOTE 5 – DUE TO RELATED PARTY
As of December 31, 2018 and 2017, advances
of $52,671 and $41,734, respectively, were due to Nadav Elituv, the Company's Chief Executive Officer. The balance is non-interest
bearing, unsecured and have no specified terms of repayment.
Employment Agreements
On July 1, 2016, the Company
executed an employment agreement for the period from July 1, 2016 to June 30, 2017 with Nadav Elituv, the Chief Executive Officer
of the Company whereby the Company shall pay 15 shares of Common Stock of the Company with a fair value of $1,500 ($100.00 per
share) and an annual salary of $360,000 payable monthly on the first day of each month from available funds.
On July 1, 2017, the Company
executed an employment agreement for the period from July 1, 2017 to June 30, 2018 with Nadav Elituv, the Chief Executive Officer
of the Company whereby the Company shall pay 20,000 shares of Common Stock of the Company with a fair value of $926,000 ($46.30
per share).
On September 10, 2018, the Company
executed an employment agreement for the period from July 1, 2018 to June 30, 2019 with Nadav Elituv, the Chief Executive Officer
of the Company whereby the Company shall pay 50,000,000 shares of Common Stock of the Company and an annual salary of $151,200
payable monthly on the first day of each month from available funds.
Stock-based compensation –
salaries expense related to these employment agreements for the years ended December 31, 2018 and 2017 is $1,410,174 and $463,750,
respectively. Stock-based compensation – salaries expense is recognized ratably over the requisite service period. At December
31, 2018, 18,532,423 shares of common stock under the September 10, 2018 employment agreement has not vested.
NOTE 6 - INCOME TAXES
A reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as
follows:
|
|
2018
|
|
2017
|
Net loss before income taxes per consolidated financial statements
|
|
$
|
(8,096,408
|
)
|
|
$
|
(877,867
|
)
|
Income tax rate
|
|
|
21
|
%
|
|
|
35
|
%
|
Income tax recovery
|
|
|
(1,700,300
|
)
|
|
|
(307,300
|
)
|
Non-deductible share-based payments
|
|
|
662,800
|
|
|
|
162,300
|
|
Non-deductible interest
|
|
|
22,800
|
|
|
|
10,100
|
|
Loss on settlement of debt
|
|
|
732,600
|
|
|
|
—
|
|
Valuation allowance change
|
|
|
282,100
|
|
|
|
134,900
|
|
Income tax expense (recovery)
|
|
$
|
—
|
|
|
$
|
—
|
|
The significant component of deferred
income tax assets at December 31, 2018 and 2017 is as follows:
|
|
2018
|
|
2017
|
Net operating loss carry-forward
|
|
$
|
588,900
|
|
|
$
|
306,800
|
|
Valuation allowance
|
|
|
(588,900
|
)
|
|
|
(306,800
|
)
|
Net deferred income tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
During the ended December 31, 2017,
the deferred tax asset was decreased by $201,400 for the reduction in the enacted U.S Federal corporate tax rate from 35% in 2017
to 21% in 2018.
The amount taken into income as deferred
income tax assets must reflect that portion of the income tax loss carry forwards that is more likely-than-not to be realized from
future operations. The Company has chosen to provide a full valuation allowance against all available income tax loss carry forwards.
The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it
is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When
circumstances change and which cause a change in management’s judgment about the realizability of deferred income tax assets,
the impact of the change on the valuation allowance is generally reflected in current income.
As of December 31, 2018 and 2017 the
Company has no unrecognized income tax benefits. The Company’s policy for classifying interest and penalties associated with
unrecognized income tax benefits is to include such items as tax expense. No interest or penalties have been recorded during the
year ended December 31, 2018 and 2017 and no interest or penalties have been accrued as of December 31, 2018 and 2017. As of December
31, 2018 and 2017, the Company did not have any amounts recorded pertaining to uncertain tax positions.
The tax years from 2009 and forward
remain open to examination by federal and state authorities due to net operating loss and credit carryforwards. The Company is
currently not under examination by the Internal Revenue Service or any other taxing authorities.
NOTE 7 - STOCKHOLDERS' EQUITY
The Company is authorized to issue an
aggregate of 3,000,000,000 common shares with a par value of $0.0001 per share and 1,000,000 shares of preferred stock with a par
value of $0.0001 per share. On August 6, 2013, the Company filed a Certificate of Designation with the Delaware Secretary of State
thereby designating two hundred thousand (200,000) shares as Series A Convertible Preferred Stock. No preferred shares have been
issued.
On August 20, 2018, pursuant to
stockholder consent, our Board of Directors authorized an amendment (the "Amendment") to our Certificate of
Incorporation, as amended, to affect a reverse stock split of the issued and outstanding shares of our common stock, par
value $0.0001, on a 1 for 500 basis (the "Reverse Stock Split"). We filed the Amendment with the Delaware Secretary
of State on August 27, 2018. On September 7, 2018 the Financial Industry Regulatory Authority, Inc. notified us that the
Reverse Stock Split would take effect on September 10, 2018 (the "Effective Date"). All common stock share and
per-share amounts for all periods presented in these consolidated financial statements have been adjusted retroactively to
reflect the reverse stock split.
During 2018, the Company elected to
convert $162,900 of principal and interest of non-redeemable convertible notes into 35,172,000 shares of common stock of the Company
valued at $3,651,300. The conversions resulted in a loss on settlement of debt of $3,488,400.
On February 7, 2018, the Company issued 50,000
shares of common stock valued at $190,000 ($3.80 per share) to settle accrued liabilities for salary of $180,000 and shares to
be issued of $10,000 due to the Nadav Elituv, the Chief Executive Officer of the Company.
On May 22, 2018, the Company issued 17,431
shares of common stock to settle shares to be issued (stock payable) valued at $922,218, which has been recorded over the contract
period ended June 30, 2018, for stock based compensation due to the Nadav Elituv, the Chief Executive Officer of the Company.
On May 22, 2018, the Company issued
25,607 shares of common stock valued at $57,618 ($2.25 per share) for accounts payable of $57,618.
On June 26, 2018, the Company issued
120,000 shares of common stock valued at $294,000 ($2.45 per share) for the services to be provided in a period of June 26, 2018
to December 31, 2018.
On September 10, 2018, the Company issued 20,000,000
shares of common stock valued at $602,000 ($0.0301 per share) to the Nadav Elituv, the Chief Executive Officer of the Company for
officer compensation.
On September 10, 2018, the Company issued 16,000,000
shares of common stock valued at $481,600 ($0.0301 per share) to the Brandon Milner, a Director of the Company.
On September 10, 2018, the Company issued 18,000,000
shares of common stock valued at $541,800 ($0.0301 per share) for the services to be provided in a period of September 10, 2018
to December 31, 2018.
On September 10, 2018, the Company issued 20,000,000
shares of common stock valued at $602,000 ($0.0301 per share) for the services to be provided in a period of September 10, 2018
to September 10, 2019.
On September 10, 2018, the Company issued 42,000,000
shares of common stock valued at $1,264,200 ($0.0301 per share) for the consulting services.
Shares to be issued
As at December 31, 2018 and 2017,
the Company had total shares to be issued for 11,467,577 shares of common stock and 10,062 shares of common stock, respectively,
for stock-based compensation –salaries (see Note 5).
NOTE 8 – SUBSEQUENT EVENTS
License
On January 17, 2019, the Company entered into
an agreement to purchase a 100% interest in the Colombian License held by Plantro Inc S.A.S. The transaction is subject to the
Purchaser’s satisfaction that it can acquire the License free and clear of all encumbrances, completion of due diligence,
receipt of any third-party consents and there being no material adverse change in the License. The Company agreed to pay 10,000,000
(Ten Million) Restricted common shares of Two Hands Corporation and pay a Royalty of 15% of net income, calculated in accordance
with US GAAP, earned from the License to Plantro Inc S.A.S. The Transaction was expected to close on February 15, 2019. On February
27, 2019, the Company announced the closing of the Transaction was extended to the week of April 4, 2019 to satisfy conditions
placed on Plantro Inc S.A.S.
Non-redeemable Convertible Notes
On January 31, 2019, the Company
entered into a Side Letter Agreement (“Note”) with Stuart Turk to amend and add certain terms to unsecured,
non-interest bearing, due on demand notes payable totaling $106,968 issued by the Company during the period of January 3,
2018 to December 28, 2018. The issue price of the Note is $106,968 with a face value of $128,362 and the Note has a maturity
date of December 31, 2019. At the option of the Company, the Company may convert principal and interest at a fixed conversion
price of $0.0001 per share of the Company’s common stock. The Note allows for the lender to secure a portion of the
Company assets up to 200% of the face value of the Note. If the Note is not paid on the maturity date, the outstanding face
amount of the Note shall increase by 20% on January 1, 2020. The outstanding face value of the Note shall increase by another
20% on January 1, 2021 and again on each one year anniversary of the Note until the Note has been paid in full.
On January 31, 2019, the Company entered
into a Side Letter Agreement (“Note”) with The Cellular Connection Ltd. to amend and add certain terms to unsecured,
non-interest bearing, due on demand notes payable totaling $20,885 issued by the Company during the period of January 23, 2018
to October 16, 2018. The issue price of the Note is $20,885 with a face value of $25,062 and the Note has a maturity date of December
31, 2019. At the option of the Company, the Company may convert principal and interest at a fixed conversion price of $0.0001 per
share of the Company’s common stock. The Note allows for the lender to secure a portion of the Company assets up to 200%
of the face value of the Note. If the Note is not paid on the maturity date, the outstanding face amount of the Note shall increase
by 20% on January 1, 2020. The outstanding face value of the Note shall increase by another 20% on January 1, 2021 and again on
each one year anniversary of the Note until the Note has been paid in full.
Convertible Note
On March 1,
2019, the Company entered into a Securities Purchase Agreement with Firstfire Global Opportunities Fund, LLC, (“Holder”)
relating to the issuance and sale of a Senior Convertible Note (the “Note”) with an original principal amount of $200,000
less an original issue discount of $20,000 and transaction costs of $5,000 bearing a 7% annual interest rate and maturing September
1, 2020 for $175,000 in cash. The Note and accrued interest, at the option of the Holder, is convertible into common shares of
the Company at $0.10 per share. After 180 days after the issue date, the Note together with any unpaid accrued interest is convertible
into shares of common stock of the Company at the Holder’s option at the lessor of (i) $0.10 per share or (ii) a variable
conversion price calculated at 65% of the market price defined as the lowest trading price during the ten trading day period ending
on the latest trading day prior to the conversion date. The Company may prepay the Note in cash, if repaid within 90 days of date
of issue, at 115% of the original principal amount plus interest, between 90 days and 120 days at 120% of the original principal
amount plus interest and between 120 days and 180 days at 130% of the original principal amount plus interest. Thereafter, the
Company does not have the right of prepayment. In conjunction with the issuance of the Note, the Company issued 1,000,000 warrants
with an exercise price of $0.20 and a term of two years. The warrants are subject to down round and other anti-dilution protections.
Common Stock
On February 25, 2019, the Company elected
to convert $900 of principal and interest of a non-redeemable convertible note due to The Cellular Connection Ltd. into 9,000,000
shares of common stock of the Company valued at $765,000 ($0.085 per share) at a fixed conversion price of $0.0001 per share. The
conversion resulted in a loss on settlement of debt of $764,100.