NOTES
TO CONDENSED FINANCIAL STATEMENTS
September
30, 2021
(unaudited)
NOTE
1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Organization
Social
Life Network, Inc. (referred to herein as “we” or “our” or “us”) is a Technology Business Incubator
(TBI) that provides tech start-ups with seed technology development and executive leadership, making it easier for start-up founders
to focus on raising capital, perfecting their business model, and growing their network usership. Decentral Life is a division of
Social Life Network, that is working on a Decentralized Social Networking project, and has launched what we have designated as a “WDLF
Token” on the Ethereum blockchain.
Corporate
Changes
On
August 30, 1985, we were incorporated as a private corporation, CJ Industries, Inc., in California. On February 24, 2004, we merged with
Calvert Corporation, a Nevada Corporation, changed our name to Sew Cal Logo, Inc., and moved our domicile to Nevada, at which time our
common stock became traded under the ticker symbol “SEWC”.
In
June 2014, Sew Cal Logo, Inc. was placed into receivership in Nevada’s 8th Judicial District (White Tiger Partners, LLC et al v.
Sew Cal Logo, Inc.et al, Case No A-14-697251-C) (Dept. No.: XIII) (the “Receivership”).
On
January 29, 2016, we, as the seller (the “Seller”), completed a business combination/merger agreement (the “Agreement”)
with the buyer, Life Marketing, Inc., a Colorado corporation (the “Buyer”), its subsidiaries and holdings, and all of the
Buyer’s securities holders. We acted through the court-appointed receiver and White Tiger Partners, LLC, our judgment creditor.
The Agreement provided that the then current owners of the private company, Life Marketing, Inc., become the majority shareholders, pursuant
to which an aggregate of 119,473,334
common stock shares were issued to our officers,
composed of 59,736,667
shares each to our Chief Executive Officer, Kenneth
Tapp, and Andrew Rodosevich, our then-Chief Financial Officer.
NOTE
1 – ORGANIZATION AND DESCRIPTION OF BUSINESS (continued)
Corporate
Changes (continued)
On
September 20, 2018, we incorporated MjLink.com, Inc. (“MjLink”), a Delaware Corporation. On February 1, 2020, MjLink.com,
Inc. filed its Form 1-A Offering Document for a Regulation A Tier 2 initial public offering, which the SEC qualified on September 28,
2020. On January 1, 2021, we ceased operating MjLink as a division and MjLink continued operations as an independent company, in return
for MjLink issuing us 15.17% of MjLink’s. outstanding Class A common stock shares.
On
March 4, 2020, our Board increased our number of authorized shares of Common Stock from 500,000,000 to 2,500,000,000 Common Stock Shares
pursuant to an amendment to our Articles of Incorporation with the state of Nevada and submitted to Nevada our Certificate of Designation
of Preferences, Rights and Limitations of our Class B Common Stock, providing that each Class B Common Stock Share has one-hundred (100)
votes on all matters presented to be voted by the holders of Common Stock. The Class B Common Stock Shares only have voting power and
have no equity, cash value, or any other value.
Effective
March 4, 2020, our Board of Directors (the “Board”) authorized the issuance of twenty-five million (25,000,000) Class B Common
Stock Shares to Ken Tapp, our Chief Executive Officer, in return for his services as our Chief Executive Officer from February 1, 2016
to February 29, 2020, which shares are equal to two billion five hundred million (2,500,000,000) votes and have no equity, cash value
or any other value.
On
May 8, 2020, we filed Amended and Restated Articles of Incorporation (“Amended Articles”) in Nevada to increase our authorized
shares from 2,500,000,000 to 10,000,000,000 Shares and our Preferred Shares from 100,000,000 to 300,000,000 Shares. Additionally, the
Amended Articles authorized us from May 8, 2020 and continuing until June 30, 2021, as determined by our Board in its sole discretion,
to effect a Reverse Stock Split of not less than 1 share for every 5,000 shares and no more than 1 share for every 25,000 shares (the
“Reverse Stock Split”).
On
December 11th, 2020, we filed a Form 8-K stating that we would not be executing the Reverse Stock Split, which Reverse Stock
Split expired on March 31st, 2021 pursuant to the May 8, 2020 Amended Articles described immediately above.
Effective
March 28, 2021, our Board the issuance of fifty million (50,000,000) Class B Common Stock Shares to Ken Tapp, our Chief Executive Officer,
in return for his services as our Chief Executive Officer from March 1, 2020 to February 28, 2021, which shares are equal to five billion
(5,000,000,000) votes and have no equity, cash value or any other value. As of the date of this filing, our Chief Executive Officer controls
approximately in excess of 98% of shareholder votes via the Company’s issuance of 75,000,000 Class B Shares to Ken Tapp, thereby
controlling over 7,500,000,000 votes.
Our
Business
We
are a Technology Business Incubator (TBI) that, through individual licensing agreements, provides tech start-ups with seed technology
development, legal and executive leadership, makes it easier for start-up founders to focus on raising capital, perfecting their business
model, and growing their network usership. Our seed technology is an artificial intelligence (“AI”) powered social network
and Ecommerce platform that leverages blockchain technology to increase speed, security and accuracy on the niche social networks that
we license to the companies in our TBI. Decentral Life is a division of Social Life Network, that is working on a Decentralized Social
Networking project, and has launched a WDLF Token on the Ethereum blockchain.
From
2013 through the first half of 2021, we have added niche social networking tech start-ups to our TBI that target consumers and business
professionals in the Cannabis and Hemp, Residential Real Estate industry, Space industry, Hunting, Fishing, Camping and RV’ing
industry, Racket Sports, Soccer, Golf, Cycling, and Motor Sports industries.
Each
of our TBI licensees’ goal is to grow their network usership to a size enabling sale to an acquiring niche industry company or
taking the TBI licensee public or helping them sell their company through a merger or acquisition.
Using
our state-of-art AI and Blockchain technologies that are cloud-based, our licensees’ social networking platforms learn from
the changing online social behavior of users to better connect the business professionals and consumers together. We also utilize AI
in the development and updating of our code, in order to identify and debug our platform faster, and be more cost effective.
On
August 16, 2021, we announced the launch of a new division that will be focused on, among other objectives, upgrading the seed technology
platform that is licensed to our TBI licensees so that it is no longer cloud-based, and is instead a decentralized blockchain application.
The new division, Decentral Life, has the following four main objectives:
1.
Create a decentralized global social networking platform for user privacy, content control, and universal connectivity to all decentralized
networking platforms of the future.
2.
Financially empower network users by rewarding their activity with crypto-loyalty points that can be used to make purchases on the network
or converted to WDLF Tokens to be used on globally accessible cryptocurrency exchanges.
3.
Create and launch a Decentral Life Token on the Ethereum blockchain (“WDLF Token”) that can be used across all TBI
licensee networks so that users can convert their crypto-loyalty points into WDLF Tokens.
4. File with the SEC, a registered initial
coin offering, that if declared effective by the SEC would enable tokens to be sold to investors and the creation of a market
created for the token on cryptocurrency exchanges.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
Our
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”).
Use
of estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates
include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Concentrations
of Credit Risk
We
maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor
our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant
credit risk on cash.
Cash
equivalents
We
consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no
cash equivalents period ended on September 30,
2021, and December 31, 2020.
Accounts
Receivable
Revenues
that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it
is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized
to reduce the amount of receivables to its net realizable value when considered necessary. Any allowance for uncollectible amounts is
evaluated quarterly.
Fair
value of financial instruments
We
follow paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments
and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value
of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally
accepted in the United States of America (U.S. GAAP) and expands disclosures about fair value measurements. To increase consistency and
comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes
the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest
priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable
inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
| Level
1: |
Quoted
market prices available in active markets for identical assets or liabilities as of the reporting date. |
| |
|
| Level
2: |
Pricing
inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the
reporting date. |
| |
|
| Level
3: |
Pricing
inputs that are generally observable inputs and not corroborated by market data. |
The
carrying amount of our financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value
because of the short maturity of those instruments. Our notes payable approximates the fair value of such instruments based upon management’s
best estimate of interest rates that would be available to us for similar financial arrangements at March 31, 2020.
We
do not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis as of September 30, 2021 and December
31, 2020.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue
recognition
We
follow paragraph 605-15-25 of the FASB Accounting Standards Codification for revenue recognition when the right of return exists. We
will recognize revenue when it is realized or realizable and earned. We consider revenue realized or realizable and earned when all of
the following criteria are met: (i) The seller’s price to the buyer is substantially fixed or determinable at the date of sale,
(ii) The buyer has paid the seller, or the buyer is obligated to pay the seller and the obligation is not contingent on resale of the
product. If the buyer does not pay at time of sale and the buyer’s obligation to pay is contractually or implicitly excused until
the buyer resells the product, then this condition is not met., (iii) The buyer’s obligation to the seller would not be changed
in the event of theft or physical destruction or damage of the product, (iv) The buyer acquiring the product for resale has economic
substance apart from that provided by the seller. This condition relates primarily to buyers that exist on paper, that is, buyers that
have little or no physical facilities or employees. It prevents entities from recognizing sales revenue on transactions with parties
that the sellers have established primarily for the purpose of recognizing such sales revenue, (v) The seller does not have significant
obligations for future performance to directly bring about resale of the product by the buyer, and (vi) The amount of future returns
can be reasonably estimated.
Income
taxes
We
follow Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method,
deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities
using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced
by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in the Statements of Income in the period that includes the enactment date.
On
December 22, 2018, the Tax Cuts and Jobs Act (TCJA) was signed into law by the President of the United States. TCJA is a tax reform
act that among other things, reduced corporate tax rates to 21
percent effective January 1, 2018. FASB ASC 740, Income Taxes, requires deferred tax assets and liabilities to be adjusted for the
effect of a change in tax laws or rates in the year of enactment, which is the year in which the change was signed into law.
Accordingly, we adjusted its deferred tax assets and liabilities at March 31, 2020, using the new corporate tax rate of 21
percent.
We
adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty
income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return
should be recorded in the financial statements. Under Section 740-10-25, we may recognize the tax benefit from an uncertain tax position
only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical
merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the
largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25
also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires
increased disclosures. We had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions
of Section 740-10-25.
Stock-based
Compensation
We
account for equity-based transactions with nonemployees under the provisions of ASC Topic No. 505-50, Equity-Based Payments to Non-Employees
(“ASC 505-50”). ASC 505-50 establishes that equity-based payment transactions with nonemployees shall be measured at
the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.
The fair value of common stock issued for payments to nonemployees is measured at the market price on the date of grant. The fair value
of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize
the fair value of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.
We
account for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation,
which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial
statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited
to additional paid-in capital over the period during which services are rendered.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basic
and Diluted Earnings Per Share
Net
income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income
(loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding
during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number
of shares of common stock and potentially outstanding shares of common stock during the period.
Recently
issued accounting pronouncements
The
Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not
believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position
or results of operations.
NOTE 3 – RESTATEMENT
The following presents a reconciliation of the
Balance Sheets, Statements of Operations, and Statements of Cash Flows from the prior period as previously reported to the restated amounts
:
SCHEDULE
OF CONDENSED CONSOLIDATED BALANCE SHEETS
SOCIAL LIFE NETWORK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| | |
As Reported | | |
Restatement Adjustments | | |
As Restated | |
| | |
September 30, 2021 | |
| | |
As Reported | | |
Restatement Adjustments | | |
As Restated | |
| Current Assets: | |
| | | |
| | | |
| | |
| Cash | |
$ | 3,518 | | |
| - | | |
| 3,518 | |
| Accounts receivable | |
| - | | |
| | | |
| - | |
| Accounts receivable – related party | |
| 408,000 | | |
| - | | |
| 408,000 | |
| Prepaid expenses | |
| 45,000 | | |
| | | |
| 45,000 | |
| Assets from discontinued operations | |
| - | | |
| - | | |
| - | |
| Total current assets | |
| 456,518 | | |
| - | | |
| 456,518 | |
| Total Assets | |
$ | 456,518 | | |
| - | | |
| 456,518 | |
| | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| Current Liabilities: | |
| | | |
| | | |
| | |
| Accounts payable and accrued liabilities | |
$ | 110,758 | | |
| - | | |
| 110,758 | |
| Cash overdraft | |
| - | | |
| - | | |
| - | |
| Total Current Liabilities | |
| 110,758 | | |
| - | | |
| 110,758 | |
| Loans payable – related party | |
| 175,625 | | |
| - | | |
| 175,625 | |
| PPP Loan | |
| 163,111 | | |
| - | | |
| 163,111 | |
| Convertible debt and accrued interest | |
| - | | |
| - | | |
| - | |
| Total Liabilities | |
| 449,494 | | |
| - | | |
| 449,494 | |
| | |
| | | |
| | | |
| | |
| Stockholders’ Equity (Deficit): | |
| | | |
| | | |
| | |
| Common Stock par value $0.001 10,000,000,000 shares authorized, 7,413,399,204 and 6,368,332,350 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | |
| 7,411,414 | | |
| - | | |
| 7,411,414 | |
| Additional paid in capital | |
| 24,157,744 | | |
| 1,817,941 | | |
| 25,975,685 | |
| Accumulated deficit | |
| (31,562,134 | ) | |
| (1,817,941 | ) | |
| (33,380,075 | ) |
| Total Stockholders’ Equity (Deficit) | |
| 7,024 | | |
| - | | |
| 7,024 | |
| Total Liabilities and Stockholders’ Equity | |
$ | 456,518 | | |
| - | | |
| 456,518 | |
SOCIAL
LIFE NETWORK, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
SCHEDULE OF CONDENSED CONSOLIDATED
STATEMENT OF OPERATION
| | |
As Reported | | |
Restatement Adjustments | | |
As Restated | | |
As Reported | | |
Restatement Adjustments | | |
As Restated | |
| | |
For the three months ended
September 30, 2021 | | |
For the nine months ended
September 30, 2021 | |
| | |
As Reported | | |
Restatement Adjustments | | |
As Restated | | |
As Reported | | |
Restatement Adjustments | | |
As Restated | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Revenues | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Digital subscription revenue | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| Licensing revenue – related party | |
| 84,889 | | |
| - | | |
| 84,889 | | |
| 237,389 | | |
| - | | |
| 237,389 | |
| Total revenue | |
| 84,889 | | |
| - | | |
| 84,889 | | |
| 237,389 | | |
| - | | |
| 237,389 | |
| Cost of goods sold | |
| 13,349 | | |
| - | | |
| 13,349 | | |
| 22,238 | | |
| - | | |
| 22,238 | |
| Gross margin | |
| 71,540 | | |
| - | | |
| 71,540 | | |
| 215,151 | | |
| - | | |
| 215,151 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Compensation expense | |
| - | | |
| - | | |
| - | | |
| 52,681 | | |
| - | | |
| 52,681 | |
| Sales and marketing | |
| 2,612 | | |
| - | | |
| 2,612 | | |
| 15,159 | | |
| - | | |
| 15,159 | |
| General and administrative | |
| 86,661 | | |
| - | | |
| 86,661 | | |
| 391,074 | | |
| - | | |
| 391,074 | |
| Total operating expenses | |
| 89,273 | | |
| - | | |
| 89,273 | | |
| 458,914 | | |
| - | | |
| 458,914 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income (loss) from operation | |
| (17,733 | ) | |
| - | | |
| (17,733 | ) | |
| (243,763 | ) | |
| - | | |
| (243,763 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Oher income (expense) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Loss on the extinguishment of debt | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,551,768 | ) | |
| (1,551,768 | ) |
| Interest expense | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Other income (expense) | |
| - | | |
| - | | |
| - | | |
| 110,854 | | |
| (266,173 | ) | |
| (155,319 | ) |
| Total other income (expense) | |
| - | | |
| - | | |
| - | | |
| 110,854 | | |
| (1,817,941 | ) | |
| (1,707,087 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss from continuing operations | |
$ | (17,733 | ) | |
| - | | |
| (17,733 | ) | |
$ | (132,909 | ) | |
| (1,817,941 | ) | |
| (1,950,850 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss from discontinued operations | |
| - | | |
| - | | |
| - | | |
| (27,700 | ) | |
| - | | |
| (27,700 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income (loss) | |
$ | (17,733 | ) | |
| - | | |
| (17,733 | ) | |
$ | (160,609 | ) | |
| (1,817,941 | ) | |
| (1,978,550 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Weighted average number of shares outstanding | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted | |
| 7,443,135,871 | | |
| - | | |
| 7,443,135,871 | | |
| 7,078,783,892 | | |
| - | | |
| 7,078,783,892 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income (loss) per share from continuing operations | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted | |
$ | (0.00 | ) | |
$ | 0.00 | | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | 0.00 | | |
$ | (0.00 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income (loss) per share from discontinued operations | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted | |
$ | 0.00 | | |
| 0.00 | | |
| 0.00 | | |
$ | (0.00 | ) | |
| 0.00 | | |
| (0.00 | ) |
SOCIAL LIFE NETWORK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
SCHEDULE OF CONDENSED STATEMENTS OF CASH FLOWS
| | |
As Reported | | |
Restatement Adjustments | | |
As Restated | |
| | |
For the nine months ended
September 30, 2021 | |
| | |
As Reported | | |
Restatement Adjustments | | |
As Restated | |
| | |
| | |
| | |
| |
| Cash flows used in operating activities | |
| | | |
| | | |
| | |
| Net loss from continuing operations | |
$ | (27,700 | ) | |
$ | (1,817,941 | ) | |
| (1,845,641 | ) |
| Net loss from discontinued operations | |
| (132,909 | ) | |
| - | | |
| (132,909 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities | |
| | | |
| | | |
| | |
| Loss on the extinguishment of debt | |
| 87,622 | | |
| 1,551,768 | | |
| 1,639,390 | |
| Gain on sale of discontinued assets | |
| 78,222 | | |
| - | | |
| 78,222 | |
| Changes in assets and liabilities | |
| | | |
| | | |
| | |
| Accounts receivable | |
| (39,948 | ) | |
| - | | |
| (39,948 | ) |
| Prepaids | |
| (45,000 | ) | |
| - | | |
| (45,000 | ) |
| Cash overdraft | |
| (307 | ) | |
| - | | |
| (307 | ) |
| Accounts payable and accrued expenses | |
| (78,412 | ) | |
| 266,173 | | |
| 187,761 | |
| Net cash used in operating activities | |
| (158,432 | ) | |
| - | | |
| (158,432 | ) |
| | |
| | | |
| | | |
| | |
| Cash flows used in investing activities | |
| | | |
| | | |
| | |
| Net cash used in investing activities | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | |
| Cash flows provided by financing activities | |
| | | |
| | | |
| | |
| Proceeds from the sale of common stock – private placement | |
| 100,000 | | |
| - | | |
| 100,000 | |
| Proceeds from the sale of common stock - convertible note | |
| - | | |
| - | | |
| - | |
| Proceeds from related party loans | |
| 124,050 | | |
| - | | |
| 124,050 | |
| Payment for related party loans | |
| (62,100 | ) | |
| - | | |
| (62,100 | ) |
| Net cash provided by financing activities | |
| 161,950 | | |
| - | | |
| 161,950 | |
| | |
| | | |
| | | |
| | |
| Net increase in cash | |
| 3,518 | | |
| - | | |
| 3,518 | |
| | |
| | | |
| | | |
| | |
| Cash, beginning of period | |
| - | | |
| - | | |
| - | |
| Cash, end of period | |
$ | 3,518 | | |
$ | - | | |
| 3,518 | |
| | |
| | | |
| | | |
| | |
| Supplemental disclosure of cash flow information: | |
| | | |
| | | |
| | |
| Cash paid for interest | |
$ | - | | |
$ | - | | |
$ | - | |
| Cash paid for taxes | |
$ | - | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | |
| Supplemental disclosure of non-cash information: | |
| | | |
| | | |
| | |
| Common stock issued in satisfaction of convertible notes payable | |
$ | 128,346 | | |
$ | - | | |
$ | 128,346 | |
| Cancellation of shares issued in prior years | |
$ | 29,737 | | |
$ | - | | |
$ | 29,737 | |
NOTE
4 – GOING CONCERN
Our
unaudited financial statements have been prepared on a going concern basis, which assumes that we will be able to realize its assets
and discharge its liabilities and commitments in the normal course of business for the foreseeable future. We had an accumulated deficit
of $33,380,075 at September 30, 2021, and a loss from continuing operations of $1,950,850. These factors raise substantial doubt about
our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon its generating profitable operations
in the future and/or to obtain the necessary financing to meet obligations and repay liabilities arising from normal business operations
when they come due. Our management intends to finance operating costs over the next three months with existing cash on hand and public
issuance of common stock. While we believe that it will be successful in obtaining the necessary financing and generating revenue to
fund its operations, meet regulatory requirements and achieve commercial goals, there are no assurances that such additional funding
will be achieved or that we will succeed in its future operations. Our financial statements do not include any adjustments that may result
from the outcome of these uncertainties.
NOTE
5 – RELATED PARTY TRANSACTIONS
Other
than as disclosed below, there has been no transaction, since January 1, 2021, or currently proposed transaction, in which our company
was or is to be a participant and the amount involved exceeds $5,000 or one percent of our total assets at September 30, 2021, and in
which any of the following persons had or will have a direct or indirect material interest:
| |
(a) |
any
director or executive officer of our company; |
| |
|
|
| |
(b) |
any
person who beneficially owns, directly or indirectly, more than 5% of any class of our voting securities; |
| |
|
|
| |
(c) |
any
person that is part of a group, consisting of two or more persons that agreed to act together for the purpose of acquiring, holding,
voting or disposing of our common stock, that acquired control of our company when it was a shell company; and |
| |
|
|
| |
(d) |
any
member of the immediate family (including spouse, parents, children, siblings and in- laws) of any of the foregoing persons. |
We
have Technology Business Incubator (TBI) license agreements with MjLink.com Inc., LikeRE.com Inc., HuntPost.com Inc., NetQub, Inc.,
RacketStar.com Inc., FutPost.com Inc., GolfLynk.com Inc., CycleFans.com Inc., WEnRV.com Inc., RaceScene.com Inc., and SpaceZE.com
Inc., which agreements provide that our TBI licensees pay us a license fee of 5% percentage of annual revenues generated, and 15% of
their common stock, issuable immediately prior to a liquidity event such as an IPO or sale of 51% or more, of a licensee’s common
stock. The 15% common stock payment is non-dilutive prior to a liquidity event described above. Our Chief Executive Office, Kenneth Tapp,
owns less than 1% of our outstanding shares and is a board member of each of our TBI licensees. Ken Tapp owns less than 9.99% of the
outstanding common stock in each of our licensees. Pricing
for the license agreements was established by our board of directors. This type of licensing agreement is standard for technology
incubators and tech start-up accelerators.
Our
related party revenue year-to-date for Fiscal Year 2021 is $237,389 or 100.0%
of our gross revenue.
We
paid 1 (one) of our Advisors, Vincent (Tripp) Keber, $30,000
for his consulting services during the first
quarter of 2021.
From
January 1, 2021 through September 30, 2021, Kenneth Tapp, from time-to-time, provided short-term interest free loans totaling
$118,850
for our operations. At September 30, 2021 we
owed $170,425
to Kenneth Tapp.
As
noted in Note 8, we completed a December 31, 2020 Division Spin-Off Agreement (“Spin-Off Agreement) between MjLink.com, Inc. (“MjLink”)
and us whereby the Parties agreed that we would cease our operating MjLink as our cannabis division. and going forward
MjLink would conduct its own operations (the “Spin-Off”). We recorded a loss from discontinued operations of $-0-
and $27,700
during the three and nine months ended September
30, 2021. In connection with the Spin-Off, MjLink issued us 800,000
or 15.17% of its outstanding shares for
MjLink’s use of our license from January 1st 2020 to December 31, 2020. Ken Tapp is our and MjLink’s Chief Executive Officer
and thus the transaction was treated as a related party transaction. Thereafter,
to reflect the true intention of the Parties
to the Spin-Off Agreement, the Parties then agreed in an Amended Spin-Off Agreement to reflect an effective date of 12:01 am on January
1, 2021 of the Spin-Off transaction (“Effective Date”). Apart from the Effective Date, there were no further changes
to the Spin-Off Agreement.
NOTE
6 – SALES RETURNS
For
the period ended September 30, 2021, we did not issue any credit memos.
NOTE
7 – STOCK WARRANTS
During
the nine months ended September 30, 2021 and the years ended December 31, 2020 we granted zero warrants, Each warrant entitles the holder
to one common stock share at an exercise price ranging from five to twenty cents, with a weighted average price of seven cents. The term
of our warrants have a range from 3 to 5 years from the initial exercise date. The warrants will be expensed as they become exercisable
beginning January 1, 2018 through April 11, 2024. During the three months ended September 30, 2019, 300,000 additional warrants vested,
and as of September 30, 2020 the 17,894,873 Warrants are 100% vested. During the twelve months ended December 31, 2019, we executed a
cashless conversion of 8,800,020 vested warrants in exchange for 4,400,010 common stock shares. The remaining 9,064,853 outstanding warrants
are currently 100% vested to date and not exercised. The aggregate fair value of the warrants as of December 31, 2020 total $2,238,800,
which values are based on the Black-Scholes-Merton pricing model using the following estimates: exercise price ranging from $0.00 to
$0.20, stock prices ranging from $0.0001 to $0.38, risk free rates ranging from 0.07% - 1.60%, volatility ranging from 391% to 562%,
and expected life of the warrants ranging from 3 to 5 years.
A
summary of the status of the outstanding stock warrants and changes during the periods is presented below:
SCHEDULE OF OUTSTANDING STOCK WARRANTS
| | |
Shares
available to purchase with warrants | | |
Weighted
Average Price | | |
Weighted
Average Fair Value | |
| | |
| | |
| | |
| |
| Exercisable, December 31, 2019 | |
| 9,094,853 | | |
$ | 0.07 | | |
$ | - | |
| Issued | |
| - | | |
| - | | |
| - | |
| Exercised | |
| - | | |
| - | | |
| - | |
| Expired | |
| - | | |
| - | | |
| - | |
| Outstanding, March 31, 2020 | |
| 9,094,853 | | |
$ | 0.07 | | |
$ | - | |
| | |
| | | |
| | | |
| | |
| Exercisable, March 31, 2020 | |
| 9,094,853 | | |
| 0.07 | | |
| - | |
| Issued | |
| - | | |
| - | | |
| - | |
| Exercised | |
| - | | |
| - | | |
| - | |
| Expired | |
| - | | |
| - | | |
| - | |
| Outstanding, June 30, 2020 | |
| 9,094,853 | | |
| 0.07 | | |
$ | - | |
| | |
| | | |
| | | |
| | |
| Exercisable, June 30, 2020 | |
| 9,094,853 | | |
| 0.07 | | |
| - | |
| Issued | |
| - | | |
| - | | |
| - | |
| Exercised | |
| - | | |
| - | | |
| - | |
| Expired | |
| - | | |
| - | | |
| - | |
| Outstanding, September 30, 2020 | |
| 9,094,853 | | |
| 0.07 | | |
$ | - | |
| | |
| | | |
| | | |
| | |
| Exercisable, September 30, 2020 | |
| 9,094,853 | | |
$ | 0.07 | | |
$ | - | |
| Issued | |
| - | | |
| - | | |
| - | |
| Exercised | |
| 30,000 | | |
| - | | |
| - | |
| Expired | |
| - | | |
| - | | |
| - | |
| Outstanding, December 31, 2020 | |
| 9,064,853 | | |
| 0.07 | | |
$ | - | |
| Issued | |
| - | | |
| - | | |
| - | |
| Exercised | |
| 101,003 | | |
| - | | |
| - | |
| Expired | |
| - | | |
| - | | |
| - | |
| Outstanding, September 31, 2020 | |
| 8,963,850 | | |
| 0.07 | | |
$ | - | |
SCHEDULE OF RANGE EXERCISE PRICES
| Range
of Exercise Prices | | |
Number
Outstanding 9/30/21 | | |
Weighted
Average Remaining Contractual Life | | |
Weighted
Average Exercise Price | |
| $ |
0.00 –
0.20 | | |
| 8,963,850 | | |
| 1.59
years | | |
$ | 0.07 | |
NOTE
8 – COMMON STOCK AND CONVERTIBLE DEBT
Common
Stock
Class
A
For
the quarter ending December 31, 2019, we issued 2,200,000
stock shares to three professionals for their
services. The shares are valued at $0.10,
the closing stock price on the date of grant, for total non-cash expense of $220,000.
In addition, we entered into subscription agreements with 6 accredited investors. We sold 3,550,000
common stock shares to the accredited investors
at $0.10
per share for total gross proceeds of $355,000.
As of March 31, 2020, we received all the funds. We also issued 102,176
common shares to a single lender as inducement
for the loan. Lastly, one lender converted their debt into 284,373
common shares at $0.04
for a value of $10,000.
These shares were all issued during the three months ended March 31, 2020.
For
the quarter ending March 31, 2020, several lenders converted their debt into 415,479,876 common shares at an average of $0.00140 for
a value of $232,257.
After
unanimous Board of Director approval and Shareholder Approval by consent of over 51% of our outstanding shares, filing of our Definitive
Information Statement, and notice to shareholders, we filed an Amended and Restated Articles of Incorporation to increase its authorized
shares with the State of Nevada (which was approved by the State of Nevada on March 4, 2020) to 2.5 billion shares.
After
unanimous Board of Director approval and Shareholder Approval by consent of over 51% of our outstanding shares, filing of our Definitive
Information Statement and notice to shareholders, we filed Amended and Restated Articles of Incorporation (“Amended Articles”)
to increase our authorized shares with the State of Nevada, which was approved by the State of Nevada on May 8, 2020, which amended articles
increased our authorized Class A Common Stock Shares to Ten Billion (10,000,000,000) Shares, Class B Common Stock Shares to Four Hundred
Million (400,000,000) Shares, and the Preferred Shares to Three Hundred Million (300,000,000) Shares. Additionally, the Amended Articles
authorized us from May 8, 2020 and continuing until June 30, 2021, as determined by our Board of Directors in its sole discretion, to
effect a Reverse Stock Split of not less than 1 share for every 5,000 shares and no more than 1 share for every 25,000 shares.
For
the quarter ending June 30, 2020, several lenders converted their debt into 774,546,579 common shares at an average of $0.00060, for
a value of $44,693.
For
the quarter ending September 30, 2020, several lenders converted their debt into common shares at an average of $0.00005,
for a value of $111,977.
For
the quarter ending December 31, 2020, several lenders converted their debt into 2,619,030,182 common shares at an average of $0.00082,
for a value of $133,902.
For
the quarter ending March 31, 2021, the remaining lenders converted their debt into 709,449,528
common shares at an average of $0.00038
for a value of $267,173.
For
the quarter ending June 30, 2021, we canceled 29,736,667
shares issued in prior years at par value, for
a total value of $29,737.
Class
B
Effective
March 4, 2020, our board of directors authorized the issuance of twenty-five million (25,000,000) Class B Common Stock Shares to Ken
Tapp, our Chief Executive Officer, in return for his services as our Chief Executive Officer from February 1, 2016 to February 29, 2020,
which shares are equal to two billion five hundred million (2,500,000,000) votes and have no equity, cash value or any other value.
Effective
March 28, 2021, our Board authorized the issuance of fifty million (50,000,000) Class B Common Stock Shares to Ken Tapp, our Chief Executive
Officer, in return for his services as our Chief Executive Officer from March 1, 2020 to February 28, 2021, which shares are equal to
five billion (5,000,000,000) votes and have no equity, cash value or any other value. As of the date of this filing, our Chief Executive
Officer controls approximately in excess of 98% of shareholder votes via our issuance of 75,000,000 Class B Shares to Ken Tapp, thereby
controlling over 7,500,000,000 votes.
As of
September 30, 2021, there are 75,000,000 shares of Class B shares outstanding
Preferred
Stock
As of September 30,
2021 and December 31, 2020 we had 300,000,000 shares of preferred stock authorized with no preferred shares outstanding
Based on a unanimous
vote of our directors, we designated 100,000,000 shares of Cumulative Convertible Preferred A shares. On July 6, 2021, the Certificate
of Rights and Preferences for those shares was approved. Each Preferred A Share has the right to convert each Series A Preferred
Share into 20 Common Stock Shares if and only if, we become listed on the New York Stock Exchange (NYSE) or NASDAQ, and shall have liquidation
rights over other series of Preferred Stock. As of September 30, 2021, no Preferred A shares have been issued.
NOTE
8 – COMMON STOCK AND CONVERTIBLE DEBT (continued)
Convertible
Debt and Other Obligations
Convertible
Debt
We
have no convertible notes payable as of September 30, 2021:*
SUMMARY OF CONVERTIBLE NOTES PAYABLE
| Note | |
Funding
Date | |
Maturity
Date | |
Interest
Rate | | |
Original
Borrowing | | |
Average
Conversion Price | | |
Number
of Shares Converted | | |
Balance
at September
30, 2021 | |
| Note payable (A) | |
April 15, 2019 | |
November 14, 2019 | |
| 7 | % | |
$ | 100,000 | | |
$ | 0.0000 | | |
| 810,911,013 | | |
$ | - | |
| Note payable (B) | |
April 15, 2019 | |
April 14, 2022 | |
| 10 | % | |
$ | 67,500 | | |
$ | 0.0000 | | |
| 117,869,569 | | |
| - | |
| Note payable (C-1) | |
May 24, 2019 | |
December 23, 2019 | |
| 10 | % | |
$ | 80,000 | | |
$ | 0.00004 | | |
| 2,098,755,638 | | |
| - | |
| Note payable (C-2) | |
July 3, 2019 | |
February 2, 2020 | |
| 10 | % | |
$ | 160,000 | | |
$ | 0.0003 | | |
| 1,146,297,040 | | |
| - | |
| Note payable (D) | |
June 12, 2019 | |
June 11, 2020 | |
| 12 | % | |
$ | 110,000 | | |
$ | 0.0019 | | |
| 691,151,660 | | |
| - | |
| Note payable (E) | |
June 26, 2019 | |
March 25, 2020 | |
| 12 | % | |
$ | 135,000 | | |
$ | 0.00004 | | |
| 514,781,219 | | |
| - | |
| Note payable (F) | |
August 7, 2019 | |
August 6, 2020 | |
| 10 | % | |
$ | 100,000 | | |
$ | 0.0007 | | |
| 158,429,766 | | |
| - | |
| Note payable (G) | |
August 21, 2019 | |
August 20, 2020 | |
| 10 | % | |
$ | 148,500 | | |
$ | 0.0001 | | |
| 431,824,675 | | |
| - | |
| Note payable (H) | |
January 28, 2020 | |
January 27, 2021 | |
| 10 | % | |
| 63,000 | | |
$ | 0.0001 | | |
| 1,102,499,999 | | |
| - | |
| Total | |
| |
| |
| | | |
| | | |
$ | 0.0001 | | |
| | | |
$ | - | |
*As
indicated below in footnotes A-H, we had various convertible notes with funding dates in 2019 and 2020, which notes were paid in full
and completely retired by February 5, 2021, specifically, as follows:
A-
November 14, 2019
B
- June 26, 2019
C
- January 25, 2021
D
– February 5, 2021
E
– January 7, 2021
F
– July 28, 2021
G
– January 4, 2021
H
– August 24, 2020
| |
(A) |
On
April 15, 2019, we completed a 7-month term original issue discount convertible note and other related documents with an unaffiliated
third-party funding group to generate $100,000 in additional available cash resources with a payback provision due. The note was
paid in full on November 14, 2019 of $117,700 which includes the original issue discount of $10,000 and interest of $7,700. In connection
therewith, we issued 150,000 common stock shares and additional 102,176 common stock shares on October 15, 2019, per our original
agreement, 412,500 common stock warrants, and reserved 301,412,500 restricted common shares for potential conversion if the note
was note paid in full. The shares were issued during the three months ended June 30, 2019. The conversion price is fixed at $0.15.
Pursuant to current accounting guidelines, we determined that the beneficial conversion feature of the note created a fair value
discount of $13,333 at the date of issuance when the stock price was at $0.17 per share. This note was paid in full on November 14,
2019. |
NOTE
8 – COMMON STOCK AND CONVERTIBLE DEBT (continued)
Convertible
Debt and Other Obligations (continued)
Convertible
Debt (continued)
| |
(B) |
On
April 15, 2019, we completed convertible debenture at zero interest and other related documents with an unaffiliated third-party
funding group to generate $375,000 in additional available cash resources, the funds of which will be released over the 90 days following
execution of the agreement in the amounts of $67,500, $90,000, and $180,000, with a payback provision of $75,000, $100,000, and $200,000,
respectively, over 36 months. In connection therewith, we issued 300,000 common stock warrants, and 20,192,307 restricted common
shares as reserve for potential conversion if the note was note paid in full. The note was unsecured and did not bear interest; however,
the implied interest was determined to be 10% over 36 months since the note was issued at a 10% discount. Subsequently, on June 26,
2019 we nullified the agreement and other related documents with this funding group after the initial disbursement of $67,500. We
refunded the initial tranche of $67,500, a 10% redemption fee of $7,500 for the principle amount plus for the original issue discount
of $7,500, and other additional administrative fees of $30,000, which totaled $105,000. This note was paid in full on June 26, 2019. |
| |
|
|
| |
(C) |
On
May 24, 2019, we completed a 7-month fixed convertible promissory note and other related documents with an unaffiliated third-party
funding group to generate $240,000, which will be distributed in three equal monthly tranches of $80,000, in additional available
cash resources with a payback provision of $80,000 plus the original issue discount of $4,000 or $84,000 due seven months from each
funding date for each tranche, totaling $252,000. We received only two of the three tranches of $80,000, generating $160,000 in additional
available cash resources with a payback provision due on December 23, 2019 and February 2, 2020 totaling $184,800 which includes
the original issue discount of $8,000 plus interest of $16,800. In connection therewith, we issued 50,000 common stock shares for
two tranches with another 25,000 common stock shares to be issued with the third tranche, and we have reserved 8,000,000 which was
subsequently increased to 3 billion restricted common shares for conversion. The conversion price is the lower of $0.08 or sixty
five percent (65%) of the 2 lowest traded prices of the Common Stock for the twenty (20) Trading Days immediately preceding the date
of the date of conversion. We determined that because the conversion price is variable and unknown, it could not determine if it
had enough reserve shares to fulfill the conversion obligation. As such, pursuant to current accounting guidelines, we determined
that the beneficial conversion feature of the note created a fair value discount of $130,633 at the date of issuance when the stock
price was at $0.12 per share. This note was paid in full on January 25, 2021. |
| |
|
|
| |
(D) |
On
June 12, 2019, we completed a 12-month convertible promissory note and other related documents with an unaffiliated third-party funding
group to generate $110,000 in additional available cash resources with a payback provision due on June 11, 2020 of $135,250 which
includes the original issue discount of $11,000 plus interest of $14,250. In connection with the note, we have reserved 14,400,000
restricted common shares as reserve for conversion. The conversion price is a 35% discount to the average of the two (2) lowest trading
prices during the previous twenty (20) trading days to the date of a Conversion Notice. We determined that because the conversion
price is variable and unknown, it could not determine if we had enough authorized shares to fulfill the conversion obligation. On
December 19, 2019, we converted $10,000 of principle into 495,472,078 shares of common stock at approximately $0.035 per share. As
such, pursuant to current accounting guidelines, we determined that the beneficial conversion feature of the note created a fair
value discount of $59,231 at the date of issuance when the stock price was at $0.11 per share. This note was paid in full on February
5, 2021. |
| |
|
|
| |
(E) |
On
June 26, 2019, we completed a 9-month senior convertible promissory note and other related documents with an unaffiliated third-party
funding group to generate $135,000 in additional available cash resources with a payback provision due on March 25, 2020 of $168,000
which includes the original issue discount of $15,000 plus interest of $18,000. In connection with the note, we issued 100,000 common
stock shares and has reserved 15,000,000, which was subsequently increased to 1 billion restricted common shares for conversion.
The conversion price is the lower of $0.08 or sixty five percent (65%) of the 2 lowest traded prices of the Common Stock for the
twenty (20) Trading Days immediately preceding the date of the date of conversion. We determined that because the conversion price
is variable and unknown, it could not determine if we had enough authorized shares to fulfill the conversion obligation. As such,
pursuant to current accounting guidelines, we determined that the beneficial conversion feature of the note created a fair value
discount of $72,692 at the date of issuance when the stock price was at $0.11 per share. This note was paid in full on January 7,
2021. |
NOTE
8 – COMMON STOCK AND CONVERTIBLE DEBT (continued)
Convertible
Debt and Other Obligations (continued)
Convertible
Debt (continued)
| |
(F) |
On
August 7, 2019, we completed a 12-month convertible promissory note and other related documents with an unaffiliated third-party
funding group to generate $100,000 in additional available cash resources with a payback provision due on August 6, 2020 of $121,000
which includes the original issue discount of $10,000 plus interest of $11,000. In connection with the note, we issued 100,000 common
stock shares and has reserved 677,973,124, which was subsequently increased to 105,769,231, restricted common shares for conversion.
The conversion price is the lower of $0.08 or sixty five percent (65%) of the 2 lowest traded prices of the Common Stock for the
twenty (20) Trading Days immediately preceding the date of the date of conversion. We determined that because the conversion price
is variable and unknown, it could not determine if we had enough authorized shares to fulfill the conversion obligation. As such,
pursuant to current accounting guidelines, we determined that the beneficial conversion feature of the note created a fair value
discount of $73,750 at the date of issuance when the stock price was at $0.09 per share. This note was paid in full on July 28, 2020. |
| |
(G) |
On
August 21, 2019, we completed a 12-month convertible promissory note and other related documents with an unaffiliated third-party
funding group to generate $148,500, which would be distributed in three equal monthly tranches of $49,500. Only one tranche of $49,500
was received, and created available cash resources with a payback provision of $49,500 plus the original issue discount of $5,500
or $55,000 due twelve months from each funding date for each tranche, totaling $165,000. We generated $49,500 in additional available
cash resources with a payback provision due on August 20, 2020 totaling $60,500 which includes the original issue discount of $5,500
plus interest of $5,500. In connection therewith, we issued 50,000 common stock shares for the first tranche with another 50,000
common stock shares to be issued with each additional tranche, which will total 150,000 common shares; we have reserved 80,000,000
which was subsequently increased to 2 billion restricted common shares for conversion. The conversion price is the 35% discount to
the average of the two (2) lowest trading prices during the previous twenty (20) trading days to the date of a Conversion Notice.
We determined that because the conversion price is variable and unknown, it could not determine if it had enough authorized shares
to fulfill the conversion obligation. As such, pursuant to current accounting guidelines, we determined that the beneficial conversion
feature of the note created a fair value discount of $26,654 at the date of issuance when the stock price was approximately $0.07
per share. This note was paid in full on January 4, 2021. |
| |
|
|
| |
(H) |
On
January 28, 2020, we completed a 12-month convertible promissory note and other related documents with an unaffiliated third-party
funding group to generate up to $925,000, which will be distributed in multiple tranches to be determined, in additional available
cash resources with a payback provision of principle debt without an original issue discount plus interest. We received only one
tranche and generated $63,000 in additional available cash resources with a payback provision due on January 27, 2021 totaling $69,300
which includes the principle plus interest of $6,300. We reserved 41,331,475, which was subsequently increased to 1 billion restricted
common shares for conversion. The conversion price is the 39% discount to the average of the two (2) lowest trading prices during
the previous fifteen (15) trading days to the date of a Conversion Notice. We determined that because the conversion price is variable
and unknown, it could not determine if it had enough authorized shares to fulfill the conversion obligation. As such, pursuant to
current accounting guidelines, we determined that the beneficial conversion feature of the note created a fair value discount of
$40,279 at the date of issuance when the stock price was approximately $0.01 per share. This note was paid in full on August 24,
2020. |
| |
● |
On
June 26, 2019, we fully met and timely paid its debt obligation to Note Payable (B). |
| |
● |
On
November 14, 2019, we fully met and timely paid its debt obligation to Note Payable (A). |
| |
● |
On
July 28, 2020, we fully met and timely paid its debt obligation to Note Payable (F). |
| |
● |
On
August 24, 2020, we fully met and timely paid its debt obligation to Note Payable (H). |
| |
● |
On
November 3, 2020, we fully met and timely paid its debt obligation to Note Payable (C-1). |
| |
● |
On
January 4, 2021, we fully met and timely paid its debt obligation to Note Payable (G). |
| |
● |
On
January 7, 2021, we fully met and timely paid its debt obligation to Note Payable (E). |
| |
● |
On
January 25, 2021, we fully met and timely paid its debt obligation to Note Payable (C-2). |
| |
● |
On
February 5, 2021, we fully met and timely paid its debt obligation to Note Payable (D). |
Accordingly,
all of our convertible debt plus interest obligation were fully settled in the first quarter 2021.
NOTE
8 – COMMON STOCK AND CONVERTIBLE DEBT (continued)
Convertible
Debt and Other Obligations (continued)
Other
Obligations
For
the nine months ending September 30, 2021, Kenneth Tapp, from time-to-time provided short-term interest free loans for our operations.
Kenneth Tapp provided an additional net amount of $56,750 in short term interest free loans for legal expenses, totaling $118,850 liquidity
for year-to-date September 30, 2021.
On
April 21, 2020, under the Payroll Protection Program, we received a forgivable loan of $37,411, and on June 10, 2020, we received an
additional forgivable loan of $125,700. Both loans were given to small businesses by the Small Business Application (SBA) to help support
employees of the companies, as financial aid, in order to sustain businesses during the mandatory COVID-19 lockdown.
On
March 12, 2021, MjLink.com relieved all its $364,688 debt obligation to us.
Our
executive and administrative office is located at 3465 Gaylord Court, Suite A509, Englewood, Colorado 80113. We had total rent expense
for the quarter ended September 30, 2021 and 2020 of $8,590 and $5,699, respectively, which is recorded as part of General and Administrative
expenses in the Statement of Operations.
NOTE
9 -DISCONTINUED OPERATIONS
As noted in Note 8, we completed a December 31,
2020 Division Spin-Off Agreement (“Spin-Off Agreement) between MjLink.com, Inc. (“MjLink”) and us whereby the Parties
agreed that we would cease our operating MjLink as our cannabis division. and going forward MjLink would conduct its own operations (the
“Spin-Off”). We recorded a loss from discontinued operations of $-0- and $27,700 during the three and nine months ended September
30, 2021. In connection with the Spin-Off, MjLink issued us 800,000 or 15.17% of its outstanding shares for MjLink’s use of our
license from January 1st 2020 to December 31, 2020. Ken Tapp is our and MjLink’s Chief Executive Officer and thus the transaction
was treated as a related party transaction. Thereafter, to reflect the true intention of the Parties to the Spin-Off Agreement, the Parties
then agreed in an Amended Spin-Off Agreement to reflect an effective date of 12:01 am on January 1, 2021 of the Spin-Off transaction
(“Effective Date”). Apart from the Effective Date, there were no further changes to the Spin-Off Agreement.
SCHEDULE OF DISCONTINUED OPERATIONS
| | |
Three
months ended September 30, 2021 | | |
Nine
months ended September 30, 2021 | |
| | |
| | |
| |
| Operating loss | |
$ | - | | |
$ | (27,700 | ) |
| | |
| | | |
| | |
| Income(loss) before provision
for income taxes | |
| - | | |
$ | (27,700 | ) |
| Provision for income taxes | |
| - | | |
| - | |
| Net loss | |
$ | - | | |
$ | (27,700 | ) |
Board
of Director, Chief Financial Officer, and Board Appointments
None.
Risk
Factors
Risks
Related to Our Business
Our
independent registered public accounting firm has issued a going concern opinion; there is substantial uncertainty that we will continue
operations in which case you could lose your investment.
Our
financial statements dated September 30, 2021, have been prepared on a going concern basis which assumes that we will be able to realize
our assets and discharge our liabilities and commitments in the normal course of business for the foreseeable future. We had an accumulated
deficit of $33,380,075 at September 30, 2021, had a net loss of $1,980,850 and used 158,432 in cash from operating activities
for the six months ended September 30, 2021. These factors raise substantial doubt about our ability to continue as a going concern.
Our ability to continue as a going concern is dependent upon our generating profitable operations in the future and/or to obtain the
necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our
management intends to finance operating costs over the next twelve months with existing cash on hand and public issuance of common stock.
Although we may be successful in obtaining financing and/or generating revenue to fund our operations, meet regulatory requirements and
achieve commercial goals, there are no assurances that such funding will be achieved at a sufficient level or that we will succeed in
our future operations.
If
our Social Networking Platform technology becomes obsolete, our ability to license our Platform and generate revenue from it will be
negatively impacted.
If
our Platform technology becomes obsolete, our results of operations will be adversely affected. The market in which we compete is characterized
by rapid technological change, evolving industry standards, introductions of new products, and changes in customer demands that can render
existing products obsolete and unmarketable. Our Platform will require continuous upgrading, or our technology will become obsolete,
and our business operations will be curtailed or terminate.
Litigation
may adversely affect our business, financial condition, and results of operations
From
time to time in the normal course of its business operations, we may become subject to litigation that may result in liability material
to our financial statements as a whole or may negatively affect our s operating results if changes to our business operations are required.
The cost to defend such litigation may be significant and may require a diversion of resources away from our core operations.
There also may be adverse publicity associated with litigation that could negatively affect customer perception of our business, regardless
of whether the allegations are valid or whether we are ultimately found liable. Insurance may be unavailable at all or in sufficient
amounts to cover any liabilities with respect to these or other matters. A judgment or other liability in excess of the insurance coverage
for any claims could have a material adverse effect on our business, results of operations, and financial condition.
If
we fail to develop or acquire technologies that adequately serve changing consumer behaviors and support our evolving business needs,
our business, financial condition and prospects may be adversely affected.
In
order to respond to changing consumer behaviors, we need to invest in new technologies and platforms to deliver content and provide products
and services where consumers demand it. If we fail to develop or acquire the necessary consumer-facing technologies or if the technologies
we develop or acquire are not received favorably by consumers, our business, financial condition and prospects may be adversely affected.
In addition, as our business evolves and we develop new revenue streams, we must develop or invest in new technology and infrastructure
that satisfy the needs of the changing business; if we fail to do so, our business, financial condition and prospects may suffer. Further,
if we fail to update our current technology and infrastructure to minimize the potential for business disruption, our business, financial
condition and prospects may be adversely affected.
New
social network, online marketplace or application platform features or changes to existing features could fail to attract new users,
retain existing users or generate revenue.
Our
business strategy is dependent on our ability on behalf of our licensees to develop and maintain networks, online marketplaces, and application
platforms and features to attract new users and retain existing ones. Any of the following events may cause decreased use of our properties:
| |
● |
Emergence
of competing websites and applications; |
| |
● |
Inability
to convince potential users to join our network or that of our licensees; |
| |
● |
Technical
issues related to mobile and desk top compatibility; and |
| |
● |
Rise
in safety or privacy concerns. |
Should
any of the above factors or a combination thereof have a material effect on our business, our revenues and results of operations will
be negatively affected.
Our
future success will depend on our key executive officers and our ability to attract, retain, and motivate qualified personnel.
We
are highly dependent on our management team consisting of Kenneth Tapp, our Chief Executive Officer/Chief Technology Officer. Our future
success largely depends upon the continued services of our executive officers and management team. If one or more of our executive officers
are unable or unwilling to continue in their present positions, we may be unable to replace them readily, if at all. Additionally, we
may incur additional expenses to recruit and retain new executive officers. If any of our executive officers joins a competitor or forms
a competing company, we may lose some of our customers and potential customers. Finally, we do not maintain “key person”
life insurance on any of our executive officers. Because of these factors, the loss of the services of any of these key persons could
have a material adverse effect on our business, results of operations, and financial condition.
Our
continuing ability to attract and retain highly qualified personnel will also be critical to our success because we will need to hire
and retain additional personnel as its business grows. There can be no assurance that we will be able to attract or retain highly qualified
personnel. We face significant competition for skilled personnel in our industries. This competition may make it more difficult and expensive
to attract, hire, and retain qualified managers and employees. Because of these factors, we may be unable to effectively manage or grow
our business, which could have a material adverse effect on our business, results of operations, and financial condition and as a result,
the value of your investment could be significantly reduced or completely lost.
Should
we lose our licensing revenues during any given period that have historically represented the majority of our revenues, our financial
condition will be negatively affected.
We
have generated a majority of our revenue for the 6 months ended 2021 from licensing revenue. The loss of the majority of our revenues
in future periods in any of these revenue categories will negatively and materially affect our results of operations.
We
expect to incur substantial expenses to meet our reporting obligations as a public company.
We
estimate that it will cost approximately $100,000 annually to maintain the proper management and financial controls for our filings required
as a public reporting company, funds that would otherwise be spent for our business operations. Our public reporting costs may increase
over time, which will increase our expenses and may decrease our potential profitability.
We
have generated a majority of our revenue in 2021 and 2020 from licensing, event, and digital marketing revenues, respectively; the loss
of the majority of our revenues in future periods will negatively affect our results of operations. Because our directors and executive
officers are among our largest stockholders, they can exert significant control over our business and affairs and have actual or potential
interests that may depart from those of investors.
Certain
of our executive officers and directors own a significant percentage of our outstanding capital stock. As of the date of this annual
report, our executive officers and directors and their respective affiliates beneficially own approximately 0.80% of our outstanding
voting stock, including our Chief Executive Officer who owns 0.94% of our voting securities. The holdings of our directors and executive
officers may increase further in the future upon vesting or other maturation of exercise rights under any of the options or warrants
they may hold or in the future be granted, or if they otherwise acquire additional shares of our common stock. The interests of such
persons may differ from the interests of our other stockholders. As a result, in addition to their board seats and offices, such persons
will have significant influence and control over all corporate actions requiring stockholder approval, irrespective of how our other
stockholders may vote, including the following actions:
| |
● |
to
elect or defeat the election of our directors; |
| |
● |
to
amend or prevent amendment of our certificate of incorporation or by-laws; |
| |
● |
to
effect or prevent a merger, sale of assets or other corporate transaction; and |
| |
● |
to
control the outcome of any other matter submitted to our stockholders for a vote. |
This
concentration of ownership by itself may have the effect of impeding a merger, consolidation, takeover or other business consolidation,
or discouraging a potential acquirer from making a tender offer for our common stock, which in turn could reduce our stock price or prevent
our stockholders from realizing a premium over our stock price.
Because
our directors and executive officers are among our largest voting stockholders, they can exert significant control over our business
and affairs and have actual or potential interests that may depart from those of investors.
Certain
of our executive officers and directors own a significant percentage of our outstanding voting stock. As of the date of this quarterly
report, our executive officers and directors and their respective affiliates beneficially own more than 4% of our outstanding voting
stock. The holdings of our directors and executive officers may increase further in the future upon vesting or other maturation of exercise
rights under any of the options or warrants they may hold or in the future be granted, or if they otherwise acquire additional shares
of our common stock. The interests of such persons may differ from the interests of our other stockholders. As a result, in addition
to their board seats and offices, such persons will have significant influence and control over all corporate actions requiring stockholder
approval, irrespective of how our other stockholders may vote, including the following actions:
| |
● |
to
elect or defeat the election of our directors; |
| |
|
|
| |
● |
to
amend or prevent amendment of our certificate of incorporation or by-laws; |
| |
|
|
| |
● |
to
effect or prevent a merger, sale of assets or other corporate transaction; and |
| |
|
|
| |
● |
to
control the outcome of any other matter submitted to our stockholders for a vote. |
This
concentration of ownership by itself may have the effect of impeding a merger, consolidation, takeover or other business consolidation,
or discouraging a potential acquirer from making a tender offer for our common stock, which in turn could reduce our stock price or prevent
our stockholders from realizing a premium over our stock price.
We
will need substantial additional funding to continue our operations, which could result in dilution to our stockholders; we may be unable
to raise capital when needed, if at all, which could cause us to have insufficient funds to pursue our operations, or to delay, reduce
or eliminate our development of new programs or commercialization efforts.
We
expect to incur additional costs associated with operating as a public company and to require substantial additional funding to continue
to pursue our business and continue with our expansion plans. We may also encounter unforeseen expenses, difficulties, complications,
delays and other unknown factors that may increase our capital needs and/or cause us to spend our cash resources faster than we expect.
Accordingly, we expect that we will need to obtain substantial additional funding in order to continue our operations. To date, we have
financed our operations entirely through equity investments by founders and other investors and the incurrence of debt, and we expect
to continue to do so in the foreseeable future. Additional funding from those or other sources may not be available when or in the amounts
needed, on acceptable terms, or at all. If we raise capital through the sale of equity, or securities convertible into equity, it will
result in dilution to our existing stockholders, which could be significant depending on the price at which we may be able to sell our
securities. If we raise additional capital through the incurrence of additional indebtedness, we will likely become subject to further
covenants restricting our business activities, and holders of debt instruments may have rights and privileges senior to those of our
equity investors. In addition, servicing the interest and principal repayment obligations under debt facilities could divert funds that
would otherwise be available to support development of new programs and marketing to current and potential new clients. If we are unable
to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate development of new programs or
future marketing efforts. Any of these events could significantly harm our business, financial condition and prospects.
We
do not have an independent board of directors which could create a conflict of interests and pose a risk from a corporate governance
perspective.
Our
Board of Directors consists mostly of current executive officers and consultants, which means that we do not have any outside or independent
directors. The lack of independent directors:
| |
● |
May
prevent the Board from being independent from management in its judgments and decisions and its ability to pursue the Board responsibilities
without undue influence. |
| |
|
|
| |
● |
May
present us from providing a check on management, which can limit management taking unnecessary risks. |
| |
|
|
| |
● |
Create
potential for conflicts between management and the diligent independent decision-making process of the Board. |
| |
|
|
| |
● |
Present
the risk that our executive officers on the Board may have influence over their personal compensation and benefits levels that may
not be commensurate with our financial performance. |
| |
|
|
| |
● |
Deprive
us of the benefits of various viewpoints and experience when confronting challenges that we face. |
Because
officers serve on our Board of Directors, it will be difficult for the Board to fulfill its traditional role as overseeing management.
Because
we do not have a nominating, audit or compensation committee, shareholders will have to rely on the entire board of directors, no members
of which are independent, to perform these functions.
We
do not have a nominating, audit or compensation committee or any such committee comprised of independent directors. The board of directors
performs these functions. No members of the board of directors are independent directors. Thus, there is a potential conflict in that
board members who are also part of management will participate in discussions concerning management compensation and audit issues that
may affect management decisions.
We
may have difficulty obtaining officer and director coverage or obtaining such coverage on favorable terms or financially be unable to
obtain any such coverage, which may make it difficult for our attracting and retaining qualified members of our board of directors, particularly
to serve on our audit committee and compensation committee, and qualified executive officers.
We
also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and
officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage
or financially be unable to obtain such coverage. These factors could also make it more difficult for us to attract and retain qualified
members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
Security
breaches and other disruptions could compromise the information that we maintain and expose us to liability, which would cause our business
and reputation to suffer.
In
the ordinary course of our business, we may collect and store sensitive data, including intellectual property, our proprietary business
information and that of our customers and business partners, and personally identifiable information of our customers, in our data centers
and on its networks. The secure processing, maintenance and transmission of this information is critical to our business strategy, information
technology and infrastructure and we may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other
disruptions. Any such breach could compromise our network, services and the information stored there could be accessed, publicly disclosed,
lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under
laws that protect the privacy of personal information, regulatory penalties, and disruption to our operations and the services it provides
to customers. This often times results in a loss of confidence in our products and services, which could adversely affect our ability
to earn revenues and competitive position and could have a material adverse effect on our business, results of operations, and financial
condition.
The
products and services that we develop will result in increased costs.
We
expect that our development costs to increase in future periods as we expand into new areas, and such increased costs could negatively
affect our future operating results. We expect to continue to expend substantial financial and other resources on our current business
operations and the creation of organized virtual -events and digital marketing and advertising initiatives. Furthermore, we intend to
invest in marketing, licensing and product development programs, as well as associated sales and marketing programs, and general administration.
These investments may not result in increased revenue or growth in the business. Our failure to materially increase our revenues could
have a material adverse effect on our business, results of operations, and financial condition.
Our
inability to effectively control costs and still maintain our business relationships, could have a material adverse effect on our business,
results of operations, and financial condition.
It
is critical that we appropriately align our cost structure with prevailing market conditions to minimize the effect of economic downturns
our its operations and, in particular, to build and maintain our user relationships. Our inability to align our cost structure in response
to economic downturns on a timely basis could have a material adverse effect on our business, results of operations, and financial condition.
Conversely, adjusting the cost structure to fit economic downturn conditions may have negative effects during an economic upturn or periods
of increasing demand for services/products. If we too aggressively reduce our costs, we may not have sufficient resources to capture
opportunities for expansion and growth and meet customer demand. Our inability to effectively manage resources and capacity to capitalize
on periods of economic upturn could have a material adverse effect on our business, results of operations, and financial condition.
If
we are unable to accurately predict and respond to market developments or demands, its business, results of operations and financial
condition will be adversely affected.
The
cannabis industry is characterized by rapidly evolving technology, government regulations and methodologies, which makes it difficult
to predict demand and market acceptance for our services/products. In order to succeed, we need to adapt the products we offer in order
to keep up with technological developments and changes in consumer needs. We cannot guarantee that we will succeed in enhancing our services/products
or developing or acquiring new services/products or features that adequately address changing technologies, user requirements and market
preferences. We also cannot assure you that the products and services we offer will be accepted by end users. If the products and services
that we offer are not accepted by customers, they will no longer purchase them, which could have a material adverse effect on our business,
results of operations, and financial condition. Changes in technologies, industry standards, the regulatory environment and customer
requirements, and new product introductions by existing or future competitors, could render our existing services/products obsolete and
unmarketable, or require us to enhance current products/services or develop new products and services. This may require us to expend
significant amounts of money, time, and other resources to meet these demands, which could strain its personnel and financial resources.
Furthermore, many modernization projects deal with customer mission critical applications, and therefore encapsulate risk for the customer.
We
may be unable to identify, purchase or integrate desirable acquisition targets, future acquisitions may be unsuccessful, and we may not
realize the anticipated cost savings, revenue enhancements or other synergies from such acquisitions.
We
plan to investigate and acquire strategic businesses with the potential to be accretive to earnings, increase our market penetration,
brand strength and its market position or enhancement of our existing product and service offerings. There can be no assurance that we
will identify or successfully complete transactions with suitable acquisition candidates in the future. Additionally, if we were to undertake
a substantial acquisition, the acquisition may need to be financed in part through additional financing through public offerings or private
placements of debt or equity securities or through other arrangements. There is no assurance that the necessary acquisition financing
will be available to us on acceptable terms if and when required. Acquisitions could also result in dilutive issuances of equity securities
or the incurrence of debt, which could adversely affect our operating results. We may also unknowingly inherit liabilities from acquired
businesses or assets that arise after the acquisition and that are not adequately covered by indemnities. In addition, if an acquired
business fails to meet our expectations, its operating results, business and financial position may suffer.
If
we fail to maintain an effective system of internal controls, we may be unable to accurately report our financial results or prevent
fraud; as a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business
and the trading price of our stock.
Effective
internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable
financial reports or prevent fraud, our brand and operating results will likely be harmed. We may in the future discover areas of our
internal controls that need improvement. We cannot be certain that any measures we implement will ensure that we achieve and maintain
adequate controls over our financial processes and reporting in the future. Any failure to implement required new or improved controls,
or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations.
Inferior internal controls could also cause investors to lose confidence in our reported financial information and materially harm our
business, which would have a negative effect on our operations.
We
may be unable to effectively manage our growth or improve our operational, financial, and management information systems, which could
have a material adverse effect on our business, results of operations, and financial condition.
In
the near term and contingent upon raising adequate funds from this Offering, we intend to expand our operations significantly to foster
growth. Growth may place a significant strain on our business and administrative operations, finances, management and other resources,
as follows:
| |
● |
The
need for continued development of financial and information management systems; |
| |
● |
The
need to manage strategic relationships and agreements with manufacturers, customers and partners; and |
| |
● |
Difficulties
in hiring and retaining skilled management, technical, and other personnel necessary to support and manage the business. |
Should
we fail to successfully manage growth could, our results of operations will be negatively affected.
If
we fail to protect or develop our intellectual property, business, operations and financial condition could be adversely affected.
Any
infringement or misappropriation of our intellectual property could damage its value and limit its ability to compete. We may have to
engage in litigation to protect the rights to our intellectual property, which could result in significant litigation costs and require
a significant amount of management time and attention. In addition, our ability to enforce and protect our intellectual property rights
may be limited in certain countries outside the United States, which could make it easier for competitors to capture market position
in such countries by utilizing technologies that are similar to those that we develop.
We
may also find it necessary to bring infringement or other actions against third parties to seek to protect its intellectual property
rights. Litigation of this nature, even if successful, is often expensive and time-consuming to prosecute and there can be no assurance
that we will have the financial or other resources to enforce its rights or prevent other parties from developing similar technology
or designing around our intellectual property.
Our
trade secrets may be difficult to protect.
Our
success depends upon the skills, knowledge, and experience of our technical personnel, consultants and advisors. Because we operate in
several highly competitive industries, we rely in part on trade secrets to protect our proprietary technology and processes. However,
trade secrets are difficult to protect. We enter into confidentiality or non-disclosure agreements with our corporate partners, employees,
consultants, outside scientific collaborators, developers, and other advisors. These agreements generally require that the receiving
party keep confidential and not disclose to third party’s confidential information developed by the receiving party or made known
to the receiving party by us during the course of the receiving party’s relationship with us. These agreements also generally provide
those inventions conceived by the receiving party in the course of rendering services to us will be our exclusive property.
These
confidentiality, inventions and assignment agreements may be breached and may not effectively assign intellectual property rights to
us. Our trade secrets also could be independently discovered by competitors, in which case will be unable to prevent the use of such
trade secrets by our competitors. The enforcement of a claim alleging that a party illegally obtained and was using our trade secrets
could be difficult, expensive and time consuming and the outcome would be unpredictable. In addition, courts outside the United States
may be less willing to protect trade secrets. The failure to obtain or maintain meaningful trade secret protection could have a material
adverse effect on our business, results of operations, and financial condition.
The
consideration being paid to our management is not based on arms-length negotiation.
The
compensation and other consideration we have paid or will be paid to our management has not been determined based on arm’s length
negotiations. While management believes that the consideration is fair for the work being performed, we cannot assure that the consideration
to management reflects the true market value of its services.
We
are subject to data privacy and security risks
Our
business activities are subject to laws and regulations governing the collection, use, sharing, protection and retention of personal
data, which continue to evolve and have implications for how such data is managed. In addition, the Federal Trade Commission (the “FTC”)
continues to expand its application of general consumer protection laws to commercial data practices, including to the use of personal
and profiling data from online users to deliver targeted Internet advertisements. Most states have also enacted legislation regulating
data privacy and security, including laws requiring businesses to provide notice to state agencies and to individuals whose personally
identifiable information has been disclosed as a result of a data breach.
Similar
laws and regulations have been implemented in many of the other jurisdictions in which we operate, including the European Union. Recently,
the European Union adopted the General Data Protection Regulation (“GDPR”), which is intended to provide a uniform set of
rules for personal data processing throughout the European Union and to replace the existing Data Protection Directive (Directive 95/46/EC).
Fully enforceable as of May 25, 2018, the GDPR expands the regulation of the collection, processing, use and security of personal data,
contains stringent conditions for consent from data subjects, strengthens the rights of individuals, including the right to have personal
data deleted upon request, continues to restrict the trans-border flow of such data, requires mandatory data breach reporting and notification,
increases penalties for non-compliance and increases the enforcement powers of the data protection authorities. In response to such developments,
industry participants in the U.S., and Europe have taken steps to increase compliance with relevant industry-level standards and practices,
including the implementation of self-regulatory regimes for online behavioral advertising that impose obligations on participating companies,
such as us, to give consumers a better understanding of advertisements that are customized based on their online behavior. We continue
to monitor pending legislation and regulatory initiatives to ascertain relevance, analyze impact and develop strategic direction surrounding
regulatory trends and developments, including any changes required in our data privacy and security compliance programs.
COVID-19
RELATED RISKS
The
outbreak of the coronavirus may negatively impact our business, results of operations and financial condition.
In
December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout
China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak
of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health
and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community
in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”.
The significant outbreak of COVID-19 has resulted in a widespread health crisis that could adversely affect the economies and financial
markets worldwide, and could adversely affect our business, results of operations and financial condition.
The
outbreak of the COVID-19 may adversely affect our customers or subscribers and have an adverse effect on our results of operations.
Further,
the risks described above could also adversely affect our potential licensee’s financial condition, resulting in reduced spending
by our licensee to pay us our license fees. Risks related to an epidemic, pandemic, or other health crisis, such as COVID-19, could negatively
impact the results of operations of one or more of our l licensees or potential licensee operations. The ultimate extent of the impact
of any epidemic, pandemic or other health crisis on our licensees and our business, financial condition and results of operations will
depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning
the severity of such epidemic, pandemic or other health crisis and actions taken to contain or prevent their further spread, among others.
These and other potential impacts of an epidemic, pandemic, or other health crisis, such as COVID-19, could therefore materially and
adversely affect our business, financial condition, and results of operations.
Certain
historical data regarding our business, results of operations, financial condition and liquidity does not reflect the impact of the COVID-19
pandemic and related containment measures and therefore does not purport to be representative of our future performance
The
information included in this Annual report on Form 10-K and our other reports filed with the SEC includes information regarding our business,
results of operations, financial condition and liquidity as of dates and for periods before and during the impact of the COVID-19 pandemic
and related containment measures (including quarantines and governmental orders requiring the closure of certain businesses, limiting
travel, requiring that individuals stay at home or shelter in place and closing borders). Therefore, certain historical information therefore
does not reflect the adverse impacts of the COVID-19 pandemic and the related containment measures. Accordingly, investors are cautioned
not to unduly rely on such historical information regarding our business, results of operations, financial condition or liquidity, as
that data does not reflect the adverse impact of the COVID-19 pandemic and therefore does not purport to be representative of the future
results of operations, financial condition, liquidity or other financial or operating results of us, or our business.
During
2021 and 2020, we experienced material decreases in our revenues due to Covid-19
During
2021 and 2020, we experienced material decreases in our revenues and results of operations due to Covid-19 when comparing our 2019 results
to our 2020 and 2021 financial results. Should this downward Covid-19 related trend continue, our revenues and results of operations
will continue to be materially and negatively impacted.
THE
OUTBREAK OF COVID-19 HAS RESULTED IN A WIDESPREAD HEALTH CRISIS THAT COULD ADVERSELY AFFECT THE ECONOMIES AND FINANCIAL MARKETS WORLDWIDE
AND COULD EXPONENTIALLY INCREASE THE RISK FACTORS DESCRIBED ABOVE AND BELOW.
RISKS
RELATED TO OUR SECURITIES
An
investment in our shares is highly speculative.
The
shares of our common stock are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who
can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully
consider the risk factors contained herein relating to our business and prospects. If any of the risks presented herein actually occur,
our business, financial condition or operating results could be materially adversely affected. In such case, the trading price of our
common stock could decline, and you may lose all or part of your investment.
The
market price of our Common Stock may fluctuate significantly in the future.
We
expect that the market price of our Common Stock may fluctuate in response to one or more of the following factors, many of which are
beyond our control:
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competitive
pricing pressures; |
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our
ability to market our services on a cost-effective and timely basis; |
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changing
conditions in the market; |
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changes
in market valuations of similar companies; |
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stock
market price and volume fluctuations generally; |
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regulatory
developments; |
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fluctuations
in our quarterly or annual operating results; |
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additions
or departures of key personnel; and |
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future
sales of our Common Stock or other securities. |
The
price at which you purchase shares of our Common Stock may not be indicative of the price that will prevail in the trading market. Shareholders
may experience wide fluctuations in the market price of our securities. These fluctuations may have a negative effect on the market price
of our securities and may prevent a shareholder from obtaining a market price equal to the purchase price such shareholder paid when
the shareholder attempts to sell our securities in the open market. In these situations, the shareholder may be required either to sell
our securities at a market price, which is lower than the purchase price the shareholder paid, or to hold our securities for a longer
period than planned. An inactive or low trading market may also impair our ability to raise capital by selling shares of capital stock.
You may be unable to sell your shares of Common Stock at or above your purchase price, which may result in substantial losses to you
and which may include the complete loss of your investment. Any of the risks described above could adversely affect our sales and profitability
and the price of our Common Stock.
We
have authorized 300,000,000 Preferred Shares and 400,000,000 Class B Common Shares that may result in our officers having the ability
to influence stockholder decisions.
The
board of directors has the power to establish the dividend rates, liquidation preferences, and voting rights of any series of preferred
stock, and these rights may be superior to the rights of holders of the Shares. The board of directors may also establish redemption
and conversion terms and privileges with respect to any shares of preferred stock; as such, if we establish such terms and privileges
to our preferred shares and we sell or issue preferred shares in future transactions to new investors such investors in subsequent transactions
could gain rights, preferences and privileges senior to those of holders of our common stock. Any such preferences may operate to the
detriment of the rights of the holders of the Shares, and further, could be used by the board of directors as a device to prevent a change
in control of the Registrant, include additional voting power to our officers giving them control over a majority of our outstanding
voting power, enabling them to control future stock-based acquisition transactions, to fund employee equity incentive programs, and give
them the ability to elect certain directors and to determine the outcome of all matters submitted to a vote of our stockholders. This
concentrated control eliminates other stockholders’ ability to influence corporate matters
We
expect to seek additional financing in order to provide working capital to our business. Our board of directors has the power to issue
any or all of such authorized but unissued shares at any price they consider sufficient, without stockholder approval. The issuance of
additional shares of common stock in the future will reduce the proportionate ownership and voting power of current stockholders.
Any
market that develops in shares of our common stock will be subject to the penny stock regulations and restrictions pertaining to low
priced stocks that will create a lack of liquidity and make trading difficult or impossible.
The
trading of our securities will be in the over-the-counter market, which is commonly referred to as the OTC Markets as maintained by FINRA.
As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of our securities.
Rule
3a51-1 of the Exchange Act establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security
that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited
number of exceptions that are not available to us. It is likely that our shares will be penny stocks for the immediately foreseeable
future. This classification severely and adversely affects any market liquidity for our common stock.
For
any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s
account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting
forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in
penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make
a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge
and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to
the penny stock market, which, in highlight form, sets forth:
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the
basis on which the broker or dealer made the suitability determination, and |
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that
the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Disclosure
also must be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions payable
to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available
to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements must be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in penny stocks.
Because
of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter
difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders
to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These
additional sales practice and disclosure requirements could impede the sale of our securities when our securities become publicly traded.
In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares,
probably, will be subject to such penny stock rules for the foreseeable future and our shareholders will, likely, find it difficult to
sell their securities.
If
we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting
obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and
sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for
shares of our common stock.
Effective
internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud. We maintain a system of
internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive
officer and principal financial officer, or persons performing similar functions, and effected by our board of directors, management
and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles.
The
forward-looking statements contained herein report may prove incorrect.
This
filing contains certain forward-looking statements, including among others: (i) anticipated trends in our financial condition and results
of operations; (ii) our business strategy for expanding our business through regional centers; and (iii) our ability to distinguish ourselves
from our current and future competitors. These forward-looking statements are based largely on our current expectations and are subject
risks and uncertainties. Actual results could differ materially from these forward-looking statements. In addition to the other risks
described elsewhere in this “Risk Factors” discussion, important factors to consider in evaluating such forward-looking statements
include: (i) changes to external competitive market factors or in our internal budgeting process which might impact trends in our results
of operations; (ii) anticipated working capital or other cash requirements; (iii) changes in our business strategy or an inability to
execute our strategy due to unanticipated changes in the environmental cleanup industry; and (iv) various competitive factors that may
prevent us from competing successfully in the marketplace. Considering these risks and uncertainties, many of which are described in
greater detail elsewhere in this “Risk Factors” discussion, there can be no assurance that the events predicted in forward-looking
statements contained in this Prospectus will, in fact, transpire.
Cautionary
Note
We
have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent,
any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should
carefully consider all of such risk factors before making an investment decision with respect to our common stock.
ITEM
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING
STATEMENTS
This
document contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking
statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue
or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements
concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements
or belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking
statements may include the words “may,” “could,” “estimate,” “intend,” “continue,”
“believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present
our estimates and assumptions only as of the date of this report. Except for our ongoing securities laws, we do not intend, and undertake
no obligation, to update any forward-looking statement.
Although
we believe that the expectations reflected in any of our forward- looking statements are reasonable, actual results could differ materially
from those projected or assumed in any or our forward-looking statements. Our future financial condition and results of operations, as
well as any forward-looking statements, are subject to change and inherent risks and uncertainties.
Overview
We
are a Nevada corporation formed on August 30, 1985. Our headquarters are in Englewood, Colorado. We have been engaged in our current
business model since June of 2016, as a result of our having been discharged from a receivership and acquiring Life Marketing, Inc.,
which was in a different industry as our previous business.
We
have experienced recurring losses and negative cash flows from operations since inception, including in our current business model. We
anticipate that our expenses will increase as we ramp up our expansion, which likely will lead to additional losses, until such time
that we approach profitability, or which there are no assurances. We have relied on equity and debt financing to fund operations to-date.
There can be no guarantee that we will ever become profitable, or that adequate additional financing will be realized in the future or
otherwise may be available to us on acceptable terms, or at all. If we are unable to raise capital when needed, we would be forced to
delay, reduce or eliminate our expansion efforts. We will need to generate significant revenues to achieve profitability, of which there
are no assurances.
Trends
and Uncertainties
Our
business is subject to the trends and uncertainties associated with expansion of niche industry social networks and ecommerce solutions
are increasing in popularity and availability. At some point, industry saturation of technology solutions that we provide to, and support
for TBI participant tech startup companies will make it more difficult for our business model to expand. This will force us to innovate
new technology solutions, which will undoubtedly cost more money to fund.
Going
Concern
The
accompanying consolidated financial statements have been prepared on a going concern basis, which assumes that we will be able to realize
our assets and discharge our liabilities and commitments in the normal course of business for the foreseeable future. We had an accumulated
deficit of $33,380,075 at September 30, 2021, had a net loss of $1,980,850 and lost $243,763 in operating activities
for the nine months ended September 30, 2021. These factors raise substantial doubt about our ability to continue as a going concern.
Our ability to continue as a going concern is dependent upon our generating profitable operations in the future and/or to obtain the
necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our
management intends to finance operating costs over the next twelve months with existing cash on hand. While we believe that we will be
successful generating revenue to fund our operations, meet regulatory requirements and achieve commercial goals, there are no assurances
that we will succeed in our future operations.
We
will attempt to overcome the going concern opinion by increasing our revenues, as follows:
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By
increasing our TBI licensing to additional tech company startups; |
The
foregoing goals will increase expenses and lead to possible net losses. There is no assurance that we will ever be profitable. The consolidated
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of
assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern. There is
no assurance we will be successful in any of these goals.
COMPARATIVE
RESULTS FOR FISCAL YEARS
Consolidated
Performance - Results of Operations for the three and nine month periods ended September 30, 2021 and 2020
Revenues
For
the three-month and nine-month period ending September 30, 2021, we recognized revenue from licensing of $84,889 and $237,389, respectively,
compared to $62,500 and 187,500 for the three-month and nine-month period ending September 30, 2020, respectively.
For
the three-month and nine-month period ending September 30, 2021, we recognized zero digital subscription revenue, compared to $7,083
and $23,438 for the three-month and nine-month ending September 30, 2020, respectively, due to the discontinuation of selling digital
subscriptions in 2021.
Cost
of Revenue
Cost
of revenue for the three-month and nine-month period ending September 30, 2021, was $13,349 and $22,238, respectively, compared
to $1,756 and $6,921 for the three and nine month period ending June 30, 2020, respectively, the decrease of which is due to the discontinuation
of selling digital subscriptions, events and digital marketing in 2021.
Operating
Expenses
For
the three-month and nine-month period September 30, 2021, we recognized compensation expense of $-0- and $52,681, compared to $22,745
and $123,328 for three-month and nine-month period ending September 30, 2020, respectively, the decrease of which is due to the
discontinuation of selling digital subscriptions, events and digital marketing in 2021.
For
the three-month and nine-month September 30, 2021, we recognized sales and marketing expense of $2,612 and $15,159, compared to $1,045
and $9,326 for the three-month and nine-month period ending September 30, 2020, respectively. The increase in sales and marketing
expense is intended to increase our business
For
the three-month and nine-month period September 30, 2021, we recognized general and administrative expense of $86,661 and $391,074, compared
to $55,527 and $364,315 for the three-month and nine-month period ending September 30, 2020, respectively, the increase of which
is due to increased business activity in 2021.
Other
income
During
the three-month and nine-month period ending September 30, 2021, we generated $-0- and $1,707,087 of other expense from converting our debt and accrued interest outstanding into common stock.
Net
Loss
During
the three-month and nine-month period ending September 30, 2021, we recognized a net loss from continuing operations of $17,733 and $1,950,850,
compared to $28,410 and $352,190 for the three-month and nine-month period ending September 30, 2020, respectively, the increase
of which is primarily due to the discontinuation of selling digital subscriptions, events and digital marketing in 2021 and other
expense from converting our debt and accrued interest outstanding into common stock.
During
the three-month and nine-month period ending September 30, 2021, we recognized a net loss from discontinued operations of $-0- and $27,700,
compared to $-0- for the three-month and nine-month period ending September 30, 2020, respectively, primarily due to the spinoff of MjLink
being treated as discontinued operations.
Liquidity
and Capital Resources
Cash
Flows from Operating Activities
Net
cash used in operating activities amounted to $158,432 during the nine-month period ending September 30, 2021, compared to $422,530 during
the nine-month period ending September 30, 2020, the $264,098 decrease of which is primarily attributable to the increase of $1,615,431
in our operating losses offset by $1,551,768 in loss of extinguishment of debt, a gain of $78,222 on sale of discontinued assets, an
increase in accounts payable and accrued expenses of $266,173.
Cash
Flows from Financing Activities
Net
cash provided by financing activities amounted to $161,950 during the nine-month period ending September 30, 2021, compared to $410,973
during the nine-month period ending September 30, 2020. The decrease of $249,023 in financing proceeds is primarily attributable
to $410,973 in convertible note proceeds in 2021 compared to $-0- in 2021; offset to a lesser extent from the private placement of
$100,000 in common stock in 2021 and $61,950 in related party loans in 2021 net of repayment, compared to $-0- sales of common stock
and $-0- in related party loans in 2020.
Off-Balance
Sheet Arrangements
None.