2022 __________ ”). Our financial acumen. 891, New York City, New York. service. We our Common Stock. City, New York. us. “BOMO” and currently trades on a sporadic and limited basis. stock and 31,297,119,462 shares were in the public float Interview Mastery. fees the extinguishment of debt. explanations above. Cash used in 2022 is primarily the result of a net loss of $4,580,000, the change in the fair value of derivative liabilities of $545,000, and a gain on new methodology for accounting for debt conversion features $28,000, offset by interest expense on put premium on stock settled debt of $146,000, loss on acquisition from related party of $197,000, amortization of debt discount of $289,000, stock-based compensation of $216,000, initial derivative expense of $2,578,000, and an increase in accounts payable and accrued interest of $972,000. 2021 202 consolidation. and Cash Equivalents 2022 and 2021. The accounting pronouncements 2022 and 2021 loss amount can be reasonably estimated. 2023, respectively. The Company his vast financial, marketing and operational experience. Co-Chairman of the Board writing us. $180,000 per annum. As of December 31, their services as directors. We 2022 and 2021. 2021. 2022 and 2021. 2022 and 2021.☒ 2020☐ _______________________ to _____________001-38392CRUZANI,000-54624Nevada
incorporation or organization)
Identification No.)208 East 51st#208, Suite 891, NY 1002210022(646) 893,1112$0.00001$0.0001 per share.☐☒☐☒☐☒☐☒☒☐☐☒☒☐ ☐☐☒2, 2021,30, 2022, the last business day of the registrant’s most recently completed second quarter, the aggregate market value of the shares of Common Stock held by non-affiliates of the registrant was approximately $1,725,342,31338888991011121213PART III1416171818202126ii “Cruzani,“bowmo, the “Company”, “we”, “us” or “our” refer to Cruzani,bowmo, Inc., a Nevada corporation, and its subsidiaries.On September 28, 2018, the Company received approval from the Financial Industry Regulatory AuthorityFINRA”Cruzani”), effective October 1, 2018, for the change of the Company’s name from “US Highland, Inc.” to “Cruzani, Inc.” (the “Name Change”) and the change of the trading symbol for the Company’s common stock from “UHLN” to “CZNI” (the “Symbol Change”).On January 4, 2019, the Company filed a Certificate of Amendment to its Articles of Incorporation (the “Charter Amendment”) for a 1-for-20 reverse stock split of the Company’s common stock (the “Reverse Split”). On January 8, 2019, the Company received notice from FINRA that the Reverse Split had been approved and would take effect at the opening of trading on January 10, 2019. The number of authorized shares remains unchanged. All share and per share information in this Annual Report on Form 10-K have been retroactively adjusted for all periods presented, unless otherwise indicated, to give effect to the Reverse Stock Split, including the financial statements and notes thereto.On July 8, 2019, Everett Dickson, who had been the sole officer of the Company, resigned as an officer of the Company, and Conrad Huss was appointed the Interim President and Chief Executive Officer of the Company.iiOverviewCruzani, Inc. (“Cruzani” or the “Company”) was most recentlypreviously a franchise development company that buildsbuilt and representsrepresented popular franchise concepts, and other related businesses, throughout the United States as well as in international markets. The Company is currently evaluating various new business models. The Companyoriginally formed as a limited liability companyincorporated on February 5, 1999 under the name The Powerhouse, L.L.C. pursuantMay 22, 2015 (“Target”), and Michael E. Lakshin on behalf of Target’s stockholders. Pursuant to the lawsMerger Agreement, on May 4, 2022, Merger Sub was merged with and into Target with Target surviving the merger as the wholly owned subsidiary of Cruzani (the “Merger”). As consideration for the Merger, Cruzani received all of the issued and outstanding shares of capital stock of Target, and the legacy stockholders of Target received shares of Series G preferred stock of Cruzani having voting rights equivalent to 78% of the total voting rights of all holders of capital stock of Cruzani.Oklahoma. On November 9, 2006, Powerhouse Productions, L.L.C. filed Articles of Conversion changing the entity from a limited liability company to a corporation under the name Harcom Productions, Inc. On January 25, 2010, Articles of Merger were filed with the State of Oklahoma merging U.S. Highland, Inc., an Oklahoma corporation into Harcom Productions, Inc. and the name of the corporation was changed to US Highland, Inc. US Highland, Inc. was a recreational power sports Original Equipment Manufacturer (“OEM”), developing motorcycles, quads, single cylinder engines, and v-twin engines under its own brand and for other OEMs. During 2017, the Company exited the recreational power sports OEM and leisure activity vehicles markets.On June 29, 2018, the Company filed Amended and Restated Articles of Incorporation with the State of NevadaWyoming to change its name to “bowmo, Inc.”ii Inc. The name change is subject to approval by the Financial Industry Regulatory Authority (known as “FINRA”).On June 30, 2018, Supreme Sweets Acquisition Corp. (n/k/a Oventa, Inc.), a subsidiarywas reassessing its business model and strategic goals. Upon completion of the Company,Merger, however, we have decided to pursue our Vertically Integrated Business Model (“the Company (collectively, the “Company”) entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Supreme Sweets Inc. and 2498411 Ontario, Inc., as sellers (collectively, the “Seller”), pursuantadded value to which in exchange for CAD $200,000 and a twenty percent (20%) interest in Oventa, Inc., the Company agreed to acquire the trade secret assets of Seller upon the terms and subject to the conditions set forth in the Asset Purchase Agreement. A second closing occurred on July 31, 2018, pursuant to which the Company acquired the furniture, fixtures and equipment of Seller in exchange for CAD $100,000. Seller is engaged in the business of preparing delicious snacks, pastries and baked goods with high quality ingredients for exceptional taste, including low calorie and gluten-free alternatives. The Asset Purchase Agreement included a provision, pursuant to which the Company could unwind the transaction if certain milestones were not achieved. The milestones contemplated in the Asset Purchase Agreement were not met, and accordingly, effective on December 31, 2018, by written notice to the Seller, the Company unwound the transaction. The capital injected into Oventa, Inc., however, has been secured pursuant to financing statements filed on behalfall segments of the Company,human resources technology (“Company expectsend-to-end hiring processes with its AI-based matching engine while providing just-in-time content, resources, and tools, such as video interviewing and cultural and technical assessments so that hiring organizations can vet their candidates. We refer to receive a return of its injected capital during the calendar year 2019. Subsequent to the December 31 notification, the parties searched for a resolution in an effort to salvage the transaction. In early February, however, it was determined that there wasn’t an acceptable path forward. At that time, the company filed a Form 8-K regarding the matter.On September 27, 2018, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Sandrea Gibson,this as seller (the “Seller”), and Recipe Food Co., as the target (the “Target”), pursuant to which in exchange for up to CAD $237,000, the Company agreed to acquire 80% of the issued and outstanding stock of the Target from the Seller upon the terms and subject to the conditions set forth in the Stock Purchase Agreement. Seller is engaged in the business of preparing and serving delicious, healthy meals on a counter-service basis with high quality ingredients, including low calorie alternatives. Difficulties integrating the Target into the Company group, forced the Company to cease injecting additional capital into the Target. The Target is currently on the market for disposition to a third-party buyer on an arms-length basis.On July 8, 2019, Mr. Dickson entered into a Securities Purchase Agreement (“Purchase Agreement”) with Conrad Huss to sell 5,000,000 shares of Series C Preferred and 5,000 shares of Series B preferred Stock held by Mr. Dickson. As a result, Mr. Huss acquired the right to vote 99.06 % of the voting control of the Company. The Series B Preferred Stock is also convertible into common stock which, in the aggregate, would represent up to .01% of the outstanding common stock after the conversion. The Series B Preferred Stock is also convertible into common stock which, in the aggregate, would represent up to 99.05% of the outstanding common stock after the conversion.On July 8, 2019, Everett Dickson, who had been the sole officer of the Company, resigned as an officer of the Company, and Conrad Huss was appointed the Interim President and Chief Executive Officer of the Company. Mr. Huss is the sole beneficial owner of 5,000,000 and 5,000 shares of Series B and C Preferred Stocks, respectively. Mr. Dickson also resignedSoftware as a director of the Company, effective on July 8th, 2019. Mr. Dickson’s resignation was not the result of any disagreement withService (“Company.recruiting process (“
RPOBusinessCruzani, Inc. (“Cruzani” orRaaS offering will complement our improved HR-Tech platform by offering our clients with a choice of high-touch and high-tech services strategically geared to market needs and objectives.“Company”) is currently reassessing its business model. Aspioneers in the human resources e-learning field. Both programs have been continually improving in order to solve the challenges of today’s job-market realities for more than 20 years.the Company wrote off its existing assetsas job-description development, branded career-page management, pre-employment and is currently evaluating various options to go forward. franchise development company that buildscultural assessments, and represents popular franchise concepts, and other related businesses, throughout the United States as well as international markets. The Company was originally formeda video interview platform—all managed by a team of experienced recruiters.limited liability company on February 5, 1999 underfoundation for our VIBM—performing matching and sourcing at the name The Powerhouse, L.L.C. pursuant to the laws of the State of Oklahoma. On November 9, 2006, Powerhouse Productions, L.L.C. filed Articles of Conversion changing the entity fromcore—we are reshaping how businesses find talent and provide a limited liability company to a corporation under the name Harcom Productions, Inc. On January 25, 2010, Articles of Merger were filed with the State of Oklahoma merging U.S. Highland, Inc., an Oklahoma corporation into Harcom Productions, Inc.quality on-demand experience.name of the corporation was changed to US Highland, Inc. US Highland, Inc. was a recreational power sports Original Equipment Manufacturer (“OEM”), developing motorcycles, quads, single cylinder engines,recruitment industry. Our management team has participated in multiple successful investments and v-twin engines under its own brandtransactions and for other OEMs. During 2017, the Company exited the recreational power sports OEMhas extensive business and leisure activity vehicles markets.On June 29, 2018, the Company filed Amended and Restated Articles of Incorporation with the State of Nevada to change its name to Cruzani, Inc.On June 30, 2018, Supreme Sweets Acquisition Corp. (n/k/a Oventa, Inc.), a subsidiary of the Company, and the Company (collectively, the “Company”) entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Supreme Sweets Inc. and 2498411 Ontario, Inc., as sellers (collectively, the “Seller”), pursuant to which in exchange for CAD $200,000 and a twenty percent (20%) interest in Oventa, Inc., the Company agreed to acquire the trade secret assets of Seller upon the terms and subject to the conditions set forth in the Asset Purchase Agreement. A second closing occurred on July 31, 2018, pursuant to which the Company acquired the furniture, fixtures and equipment of Seller in exchange for CAD $100,000. Seller is engaged in the business of preparing delicious snacks, pastries and baked goods with high quality ingredients for exceptional taste, including low calorie and gluten-free alternatives. The Asset Purchase Agreement included a provision, pursuant to which the Company could unwind the transaction if certain milestones were not achieved. The milestones contemplated in the Asset Purchase Agreement were not met, and accordingly, on February 7, 2019, effective as of December 31, 2018, the Company terminated the Asset Purchase Agreement with Supreme Sweets Inc. and 2498411 Ontario, Inc, by written notice to the Seller, and the Company unwound the transaction. The $339,813 of capital injected into Oventa, Inc was written off as uncollectable as of December 31, 2019.On September 27, 2018, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Sandrea Gibson, as seller (the “Seller”), and Recipe Food Co., as the target (the “Target”), pursuant to which in exchange for up to CAD $237,000, the Company agreed to acquire 80% of the issued and outstanding stock of the Target from the Seller upon the terms and subject to the conditions set forth in the Stock Purchase Agreement. There were difficulties integrating the Target into the Company group, which forced the Company to cease injecting additional capital into the Target and recognize a loss of $102,552 for amounts that had already been loaned to the Target.208 E. 51st99 Wall Street, Suite 201, NYC, NY 10022Cruzani, Inc.chief executive officer.Management. There are no collective-bargaining agreements with our employees, and we have not experienced work interruptions or strikes. We believe our relationship with our employees is good. Our Chief Executive currently has an employment contract.1 RisksWe are currently evaluating a wide variety of businesses to enter into. We may not find one which is profitable.We are currently evaluating various acquisition targets. Some of these propositions may be accepted by the Company, and if implemented, may not come to fruition. As a result, the Company may suffer tremendous losses.meetpay for our ongoing operating expenses.no sources of income at this timelimited financial resources and insufficientother assets to meetpay for our ongoing operating expenses. In the short term, unless we are able to raise additional debt and, or, equitycapital, we shallwill be unable to meetpay for our ongoing operating expenses. Onexpenses and may not be able to continue as a longer-term basis,going concern.intendhad an accumulated deficit of approximately $9.2. million. We expect to merge with another entity with experienced managementcontinue to incur substantial expenditures to develop and opportunitiesmarket our services and could continue to incur losses and negative operating cash flow for growththe foreseeable future. We may never achieve profitability or positive cash flow in return for sharesthe future, and even if we do, we may not be able to continue being profitable. Any failure to achieve and maintain profitability would continue to have an adverse effect on our stockholders’ deficit and working capital and could result in a decline in the price of our common stockCommon Stock or cause us to create valuecease operations.shareholders.staffing business.eventsand other business endeavors. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our Common Stock. Any debt financing that we may secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain such additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be adversely impacted. In addition, our inability to generate or obtain the financial resources needed may require us to delay, scale back, or eliminate some or all of our operations, which may have a significant adverse impact on our business, operating results and financial condition.2 be successfully completed.A pandemic, epidemicdepend, in large part, on our ability to attract new users to, and retain existing users on, our platform. Recruiters and other talent acquisition professionals on our Platform can generally decide to cease using our platform at any time. We have experienced growth in the number of recruiters and other talent acquisition professionals on our platform in recent months. This growth may not continue at the same pace in the future or outbreakat all. In addition, it is possible that the ongoing effects of an infectious disease, such as COVID-19 may have an adverse effect on our user growth in the future. Achieving growth in our community of users may require us to engage in increasingly sophisticated and costly sales and marketing efforts that may not result in additional users. We may also need to modify our pricing model to attract and retain such users. If we fail to attract new users or fail to maintain or expand existing relationships in a cost-effective manner, our business and future prospects would be materially and adversely impacted.3 our financial results.In recent months, a new strain of coronavirus (COVID-19) has spreadsubject us to many countries in the world and the outbreak has been declared a pandemic by the World Health Organization. The U.S. Secretary of Health and Human Services has also declared a public health emergency in the U.S. in response to the outbreak. Considerable uncertainty still surrounds the COVID-19 virus and its potential effects, and the extent of and effectiveness of responses taken on international, national and local levels. Measures taken to limit the impact of COVID-19, including shelter-in-place orders, social distancing measures, travel bans and restrictions, and business and government shutdowns have already resulted in significant negative economic impacts on a global basis.As the coronavirus pandemic continues to rapidly evolve, we cannot at this time accurately predict the effects of these conditions on our efforts to evaluate opportunities and enter into new business lines. Uncertainties remain as to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length and scope of the travel restrictions and business closures imposed by the governments of impacted countries. The continued outbreak of COVID-19, or another infectious disease with similar characteristics, may lead to the implementation of further responses, including additional travel restrictions, government-imposed quarantines or stay-at-home orders, and other public health safety measures,liability, which may result in further disruptions to our business and operations.Unfavorable conditions in the global economy or reduced access to lending markets could harm our business.Our results of operations may vary based on the impact of changes in our industry or the global economy on us or our potential customers in whatever business we choose to operate in. Current or future economic uncertainties or downturns could adversely affect our business, financial condition, and resultsoperating results. operations. Negative conditions in the general economy bothservice from such third parties or material change to, or termination of, our arrangement with them could adversely affect our business.conditions resultingthe head of our AI Engineering, Damian Hischier, who is located in Switzerland. We do not control the physical operation of any of the data centers we use. These facilities are vulnerable to damage or interruption from changes in gross domestic product growth, financial and credit market fluctuations, political turmoil, natural catastrophes, warfare, public health issues, such as the recent outbreak of coronavirus (COVID-19), andearthquakes, hurricanes, floods, fires, cyber security attacks, terrorist attacks, onpower losses, telecommunications failures, and similar events. The occurrence of a natural disaster or an act of terrorism, a decision to close the United States, Europe, the Asia Pacific region,facilities without adequate notice, or elsewhere,other unanticipated problems could cause a decreaseresult in lengthy interruptions to our platform. The facilities also could be subject to break-ins, computer viruses, sabotage, intentional acts of violence, and other misconduct. We may not carry sufficient business investments or decrease accessinterruption insurance to financing which would harm our business.Because insiders control our activities,compensate us for losses that may cause us to act in a manner that is most beneficial to them and not to outside shareholders which could cause us not to take actions that outside investors might view favorably.Conrad R Huss, our CEO, owns the majority of the sharesAsoccur as a result they effectively control all matters requiring director and stockholder approval, including the election of directors, the approval of significant corporate transactions, such as mergers and related party transaction. These insiders also have the ability to delay or perhaps even block, by their ownership ofany events that cause interruptions in our stock, an unsolicited tender offer. This concentration of ownership could have the effect of delaying, deterring or preventing a change in control of our company that you might view favorably. may depend upon outside advisors, who may not be availableable to maintain or renew our agreements or arrangements with these third-party service providers on commercially reasonable terms, and as needed.To supplement the business experience ofor at all. If we are unable to renew our officers and directors,agreements on commercially reasonable terms, our agreements are terminated, or we add additional infrastructure providers, we may be required to employ accountants, technical experts, appraisers, attorneys,experience costs or other consultants or advisors. Our Board without any input from stockholders will make the selection of any such advisors. Furthermore, it is anticipated that such persons may be engaged on an “as needed” basis without a continuing fiduciary or other obligation to us. In the event we consider it necessary to hire outside advisors, we may elect to hire persons who are affiliates, if they are able to provide the required services.We may experience difficulties in integrating acquired businessesIntegration of brands and related operations with our existing business and financial accounting and reporting systems. The difficulties of integration include:●coordinating and consolidating geographically separated systems and facilities;●integrating the management and personnel of the acquired brands, maintaining employee morale and retaining key employees;●implementing our management information systems and financial accounting and reporting systems;●establishing and maintaining effective internal control over financial reporting; and●implementing operational procedures and disciplines to control costs and increase profitability.The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of our business and that of our acquired franchise concepts, and the loss of key personnel. The diversion of management’s attention and any delays or difficulties encountereddowntime in connection with the acquisitiontransfer to, or the addition of, new data center providers. If these providers increase the cost of their services, we may have to increase the fees to use our platform, and our operating results may be adversely impacted.integrationfuture. Although we believe that the terms of our arrangements with related parties are reasonable and generally consistent with market standards, such terms do not necessarily reflect terms that we or such related parties would agree to in arms-length negotiations with an independent third party. Furthermore, potential conflicts of interest can exist if a related party is presented with an issue that may have conflicting implications for the Company and such related party. If a dispute arises in connection with any of these operations could have an adverse effect onarrangements, which is not resolved to the satisfaction of the Company, our business results of operationscould be materially and financial condition afteradversely affected.4 acquisition.Achieving the anticipated benefits of these acquisitions will depend in part upon whether we can integrate them in an efficientglobal and effective manner. We may not accomplish this integration process smoothly or successfully. If management is unable to successfully integrate the acquired brands, the anticipated benefits of the acquisition may not be realized.We depend on key executive management.We depend on the leadershipUnited States economies and experience of our relatively small number of key executive management personnel,accordingly a decreased demand for recruitment and in particular key executive management, particularly our Chief Executive Officer, Conrad Huss. The loss of thestaffing services, of any of our executive management memberswhich could have a material adverse effect on our business, financial condition and prospects,results of operations.find suitable individualsinfluence the results. Any of these changes could have an adverse impact on our operating results and future growth.5 such personnelthe open source software, to limit or stop offering our platform if re-engineering could not be accomplished on a timely or cost-effective basis, to pay monetary damages, or without incurring increased costs,to make available the source code for aspects of our proprietary technology, any of which could adversely affect our business, operating results, and financial condition.WeMoreover, the parties with which we have strategic relationships may fail to devote the resources necessary to expand our reach and increase our distribution. In addition, our agreements with our strategic partners generally do not maintain key man life insurance policiescontain any covenants that would limit competing arrangements. Some of our strategic partners offer, or could in the future offer, competing products and services or have similar strategic relationships with our competitors, and may choose to favor our competitors’ solutions over ours. If we are unsuccessful in establishing or maintaining our relationships with third parties, our growth prospects could be impaired, and our operating results may be adversely impacted. Even if we are successful in establishing and maintaining these strategic relationships with third parties, they may not result in the growth of our client base or increased revenue.6 executive officers. operating results and cash flows.believederive our revenue from a limited number of customers. Our relationships with these customers are fundamental to our success. For the year ended December 31, 2022, five (5) customers accounted for 100% of our total revenue. Any termination of a business relationship with, or a significant sustained reduction in business from, one or more of these customers would have a material adverse effect on our operating results and cash flows unless we are able to secure new customers with similar volume.7 8 continued ability to attract and retain highly skilledhigh-quality management, operations, and other personnel who are in high demand, are often subject to competing employment offers, and are attractive recruiting targets for our competitors. The loss of qualified personnel. There is a high level of competition for experienced, successful personnel in our industry. Ourexecutives and key employees, or inability to meetattract, retain, and motivate high-quality executives and employees required for the planned expansion of our executive staffing requirements in the future couldbusiness, may harm our operating results and impair our growthability to grow.harm our business.We could be party to litigation that could adversely affect us by increasingChief Executive Officer, Secretary and Treasurer, Michael Lakshin, our expenses, diverting management attention or subjecting us to significant monetary damagesPresident and other remedies.We may become involved in legal proceedings involving consumer, employment, real estate related, tort, intellectual property, breach of contract, securities, derivative and other litigation. Plaintiffs in these types of lawsuits often seek recovery of very large or indeterminate amounts, and the magnitudeChairman of the potential loss relatingBoard of Directors, and Conrad Huss, our Co-Chairman of the Board of Directors. The Company has entered into employment agreements with each of these individuals. Our work with each of these key personnel are subject to such lawsuits may not be accurately estimated. Regardlesschanges and/or termination, and our inability to effectively retain the services of whether any such claims have merit, or whether we are ultimately held liable or settle, such litigation may be expensive to defendour key management personnel, could materially and may divert resources and management attention away from our operations and negatively impact reported earnings. With respect to insured claims, a judgment for monetary damages in excess of any insurance coverage could adversely affect our operating results and future prospects.conditionturmoil affecting the banking system or resultsfinancial markets, a more limited market for independent professional service providers or information technology services, and other adverse economic or market conditions may adversely impact our business and operating results. Global economic and political events or uncertainty may cause some of our current or potential clients to curtail spending on hiring and may ultimately result in new regulatory and cost challenges to our operations. Any adverse publicity resulting from these allegations may also adversely affect our reputation, which in turn could adversely affect our results of operations.In addition,The COVID-19 pandemic has had a negative effect on the restaurant industry around the world has been subject to claims that relate to the nutritional content of food products,global economic condition as well as claims that the menusU.S. staffing industry. These adverse conditions could result in reductions in revenue, longer sales cycles, slower adoption of new technologies and practices of franchise concepts have led to customer health issues, including weight gain and other adverse effects. These concernsincreased competition, which could lead to an increase in the regulation of the content or marketing of our products. We may also be subject to such claims in the future and, even if we are not, publicity about these matters (particularly directed at the quick service and fast casual segments of the retail food industry) may harm our reputationturn materially and adversely affect our business, financial condition, and operating results.9 operations.operations and stock price.commonCommon Stock may be affected by limited trading volume and price fluctuations, which could adversely impact the value of our Common Stock.thinly traded,currently restricted by covenants under our agreements with prior investors. Without these restrictions, our Board could issue preferred stock to investors who support us and there is no guarantee of the prices at which the shares will trade.Tradingour management and give effective control of our commonbusiness to our management. Additionally, issuance of preferred stock could block an acquisition resulting in both a drop in our stock price and a decline in interest of our Common Stock. This could cause the market price of our Common Stock shares to drop significantly, even if our business is conducted onperforming well, and make it more difficult for shareholders to sell their Common Stock.10 OTC Marketplace operated byfuture.OTC Markets Group, Inc.,authority to cause us to issue additional shares of Common Stock without the consent of any of our stockholders. Consequently, you may experience more dilution in your ownership of our securities in the future.“OTC,” under the ticker symbol “CZNI.” Not being listed for trading on an established securities exchange has an adverse effect onprevent investors from readily selling their Common Stock and may otherwise negatively affect the liquidity of our common stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delaysCommon Stock. In addition, in the timingpast, when the market price of transactions and reduction in security analysts’ and the media’s coverage of the Company. This may result in lower prices for your common stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for our common stock. Historically, our common stock has been thinly traded,volatile, holders of that stock have often instituted securities class action litigation against the company that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and there is no guaranteeattention of our management from our business.prices at which the shares will trade, orprice of the ability of stockholders to sell their shares without having an adverse effect on market prices.common stockCommon Stock. We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any dividends in the foreseeable future.We have not paid dividends on our common stock to date, and we may not be in a position to paycash dividends in the foreseeable future. Our ability to pay dividends depends onIn addition, in the future we may enter into agreements that prohibit or restrict our ability to successfully developdeclare or pay dividends on our franchise concept business and generate revenue from future operations. Further, our initial earnings, if any, will likely be retained to finance our growth. Any future dividends will depend upon our earnings, our then-existing financial requirements and other factors and will be at the discretion of our Board of Directors.Because our common stock isCommon Stock. As a “penny stock,” it may be difficult to sell shares of our common stock at times and prices that are acceptable.Our common stock is a “penny stock.” Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk disclosure document prepared by the SEC. This document provides information about penny stocks and the nature and level of risks involved in investing in the penny stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser’s written agreement to the purchase. The penny stock rules may make it difficult for you to sell your shares of our common stock. Because of these rules, many brokers choose not to participate in penny stock transactions and there is less trading in penny stocks. Accordingly,result, you may not always be able to resell shares ofonly receive a return on your investment in our common stock publicly at times and prices that you feel are appropriate.In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common shares, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.Our management concluded that our internal control over financial reporting was not effective as of December 31, 2019. Compliance with public company regulatory requirements, including those relating to our internal control over financial reporting, have and will likely continue to result in significant expenses and,Common Stock if we are unable to maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may be negatively affected.As a public reporting company, we are subject to the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, as well as to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and other federal securities laws. As a result, we incur significant legal, accounting, and other expenses, including costs associated with our public company reporting requirements and corporate governance requirements. As an example of public reporting company requirements, we evaluate the effectiveness of disclosure controls and procedures and of our internal control over financing reporting in order to allow management to report on such controls.Our management concluded that our internal control over financial reporting was not effective as of December 31, 2019 due to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud.If significant deficiencies or other material weaknesses are identified in our internal control over financial reporting that we cannot remediate in a timely manner, investors and others may lose confidence in the reliability of our financial statements and the trading price of our common stock and ability to obtain any necessary equity or debt financing could suffer. This would likely have an adverse effect on the trading price of our common stock and our ability to secure any necessary additional equity or debt financing.Risks Relating to our Equity Line with L2 CapitalResales of shares purchased by L2 Capital under the Equity Purchase Agreement may cause the market price of our common stock to decline.Subject to the terms and conditions of the Equity Purchase Agreement we entered into with L2 Capital, LLC (“L2 Capital”) on July 23, 2018, we have the right to “put,” or sell, up to $5,000,000 worth of shares of our common stock to L2 Capital. Unless terminated earlier, L2 Capital’s purchase commitment will automatically terminate on the earlier of (i) the date on which L2 Capital shall have purchased shares under the Equity Purchase Agreement for an aggregate purchase price of $5,000,000, (ii) July 23, 2020, or (iii) written notice of termination by the Company to L2 Capital (which shall not occur at any time that L2 Capital holds any of the Put Shares). This arrangement is also sometimes referred to herein as the “Equity Line.” The common stock to be issued to L2 Capital pursuant to the Equity Purchase Agreement will be purchased at a price equal to L2 Capital will pay a purchase price equal to 85% of the “Market Price,” which is defined as the lowest one (1) traded price of the common stock on the OTC Marketplace, as reported by Bloomberg Finance L.P., during the five consecutive trading days following the date on which the put shares are delivered to L2 Capital (the “Clearing Date”), or beginning on the Clearing Date if the respective Put Shares are received as DWAC Shares in L2 Capital’s brokerage account prior to 11:00 a.m. ET (the “Valuation Period”). L2 Capital will have the financial incentive to sell the shares of our common stock issuable under the Equity Purchase Agreement in advance of or upon receiving such shares and to realize the profit equal to the difference between the discounted price and the current market price of the shares. This may cause the market price of our common stock to decline.The foregoing description of the terms of the Equity Purchase Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the Equity Purchase Agreement itself.Puts under Equity Purchase Agreement may cause dilution to existing stockholders.From time to time during the term of the Equity Purchase Agreement, and at our sole discretion, we may present L2 Capital with a put notice requiring L2 Capital to purchase shares of our common stock. As a result, our existing stockholders will experience immediate dilution upon the purchase of any of the shares by L2 Capital. L2 Capital may resell some, if not all, of the shares that we issue to it under the Equity Purchase Agreement and such sales could cause the market price of our common stock to decline significantly. To the extent of any such decline, any subsequent puts would require us to issue and sell a greater number of shares to L2 Capital in exchange for each dollar of the put amount. Under these circumstances, the existing stockholders of our company will experience greater dilution. The effect of this dilution may, in turn, cause the price of our common stock to decrease further, both because of the downward pressure on the stock price that would be caused by a large number of sales of our shares into the public market by L2 Capital, and because our existing stockholders may disagree with a decision to sell shares to L2 Capital at a time when our stock price is low, and may in response decide to sell additional shares, further decreasing our stock price. If we draw down amounts under the Equity Line when our share price is decreasing, we will need to issue more shares to raise the same amount of funding.There is no guarantee that we will satisfy the conditions to the Equity Purchase Agreement.Although the Equity Purchase Agreement provides that we can require L2 Capital to purchase, at our discretion, up to $5,000,000 worth of shares of our common stock in the aggregate, our ability to put shares to L2 Capital and obtain funds when requested is limited by the terms and conditions of the Equity Purchase Agreement, including restrictions on when we may exercise our put rights, restrictions on the amount we may put to L2 Capital at any one time, which is determined in part by the trading volume of our common stock, and a limitation on our ability to put shares to L2 Capital to the extent that it would cause L2 Capital to beneficially own more than 9.99% of the outstanding shares of our common stock.We may not have access to the full amount available under the Equity Purchase Agreement with L2 Capital.Our ability to draw down funds and sell shares under the Equity Purchase Agreement requires that a registration statement be declared effective and continue to be effective registering the resale of shares issuable under the Equity Purchase Agreement. The registration statement of which this prospectus is a part registers the resale of 22,500,000 shares of our common stock issuable under the Equity Line. Our ability to sell any additional shares under the Equity Purchase Agreement will be contingent on our ability to prepare and file one or more additional registration statements registering the resale of such additional shares. These registration statements (and any post-effective amendments thereto) may be subject to review and comment by the staff of the Securities and Exchange Commission, and will require the consent of our independent registered public accounting firm. Therefore, the timing of effectiveness of these registration statements (and any post-effective amendments thereto) cannot be assured. Even if we are successful in causing one or more registration statements registering the resale of some or all of the shares issuable under the Equity Purchase Agreement to be declared effective by the Securities and Exchange Commission in a timely manner, we may not be able to sell the shares unless certain other conditions are met. For example, we might have to increase the number of our authorized shares in order to issue the shares to L2 Capital. Increasing the number of our authorized shares will require board and stockholder approval. Accordingly, because our ability to draw down any amounts under the Equity Purchase Agreement with L2 Capital is subject to a number of conditions, there is no guarantee that we will be able to draw down all of the proceeds of $5,000,000 under the Equity Purchase Agreement.11 208 E. 51st. street, #208,99 Wall Street, Suite 891, New York NY 10022On February 13, 2017, Baum Glass & Jayne PLLC (“Plaintiff”) obtained a default judgment against the Company in the amount of $27,083.74. Plaintiff has not attempted enforced collection. The amount was included in accounts payable as of December 31, 2018 and 2017. The management is having discussions with respect to the timing and structuresettlement.On June 20, 2018, GW Holdings Group, Inc. (“GW”) fileddate of this filing, there are no material pending legal or governmental proceedings relating to our Company or properties to which we are a lawsuit against the Company, inparty, and, to our knowledge, there are no material proceedings to which GW alleges that the Company breached two Stock Purchase Agreements that GW entered into with the Company. See NOTE 13- SUBSEQUENT EVENTS for current status on this arrangement.On September 21, 2018, Pro Drive Outboards, LLC (“Pro-Drive”) filedany of our directors, executive officers, or affiliates are a lawsuit against the Company, inparty adverse to us or which Pro-Drive alleges that the Company breachedhave a contract that Pro-Drive entered into with the Company. Pro-Drive is seeking damages in excess of $500,000. The Company has filed an answer, including the defenses of defective service of process and statute of limitations, and the case is currently pending. Because this case has not progressed beyond a motionmaterial interest adverse to dismiss, and any pending outcome is currently unknown the Company has not accrued any amount related to this lawsuit. Management does not view this as being a potential liability. This claim relates to events in the 2010-2012 time line, discussions with management at that time, indicates there is no basis for their claims.8common stock tradesCommon Stock is currently quoted on the OTC Marketplace operated by the OTC Markets Group, Inc., or “OTC,”- Pink Open Market under the ticker symbol “CZNI.”at December 31, 2020,of the date of this report, there were approximately 117116 record holders of our common stock.12 2020,2022, we issued securities that were not registered under the Securities Act, and were not previously disclosed in a Current Report on Form 8-K as listed below. Except where noted, all of the securities discussed in this Item 5 were issued in reliance on the exemption under Section 4(a)(2) of the Securities Act.
Issued
Retired
Interest13
Useful Life
(Years) 14 20202022 and 20192021 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements that are included elsewhere in this Annual Report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. See “Forward-Looking Statements.”Compensation ExpenseCompensation expensetwelve monthsyear ended December 31, 2020 and 2019 was $120,000. This is2022 totaled $186,000, a decrease of $16,000 or 8% compared to $202,000 of revenues for the base salaryyear ended December 31, 2021. This was primarily caused by a reduction in our Recruiting as a Service revenue, offset by an increase in our direct placement revenue.our Chief Executive, Conrad R. HussGeneral and AdministrativeRevenuesGeneral and Administrative20192022 and 2021 was $166,255 compared$432,000 and $404,000, respectively, and consists entirely of compensation paid to $425,698officers.2018.2022 was $182,000, an increase of $182,000 or 100% from $0 through the year ended December 31, 2021. The break-outincrease is due to the consulting contract acquired in the Merger on May 4, 2022 with a fee of $10,000 to $25,000 per month, payable in a note, in which the consultant shall provide accounting and financial statement services, evaluate business acquisition Administrative expense is as follows; 2020 2019 Difference Consulting fees $ 225,000 $ 36,000 $ 189,000 Reconciliation of debt balances 257,324 - 257,324 Financing costs - 100,000 (100,000 ) Investor relations - 2,500 (2,500 ) Transfer agent/SEC/other 14,500 27,755 (13,255 ) Total $ 497,324 $ 166,255 $ 331,069 Line-item analyses follow:Consulting feesadministrative expenses$189,000 higher during$364,000 compared to $21,000 for the current periodyear ended December 31, 2021. The increase was primarily due to payments for investor relations, an increase in development expensesnew consulting contract being entered intoloss of $197,000 as a result of April 1, 2020 at $25,000 per month.Reconciliationthe related party loss on the acquisition of debt balances was $257,324. Upon reconciling the balances of amounts owed to Oasis Capital, LLC, it was determined that the balance was understated by $257,324. This correction was made in the fourth quarter of 2020.Financing costs were $100,000 lower in the current period due to a one-time expense in 2019.Fees20202022 were $48,325$780,000, an increase of $766,000 or 5,485% compared to $104,930$14,000 for the year ended December 31, 2019. Professional fees consist mostly of legal, accounting and audit fees.2021. The decrease was primarilyincrease in expenses were due to reducedgreater legal feesand accounting expenses and expenses associated with conversionsSEC filings and lower audit expenses. 15 Other Income (expense)20202022 was ($1,518,380)$2,933,000, an increase of $2,955,000 or($1,196,345)$22,000 of income for the year ended December 31, 2019.2021. The break-out of Other Income (Expense)increase in expense is as follows; 2020 2019 Difference Interest expense $ (613,046 ) $ (1,024,755 ) $ 411,709 Change in fair value of derivatives (1,837,933 ) 19,557 (1,857,490 ) Loss on receivables - (442,365 ) 442,365 Loss on issuance of convertible Preferred stock - (194,547 ) 194,547 Gain on extinguishment of debt and accrued interest 931,342 492,016 439,326 ) Loss on convertible notes - (46,250 ) (46,250 ) Total $ (1,518,380 ) $ (1,196,345 ) $ (322,035 ) Interest expense was lower by $411,709 in 2020 due to reduced debt levels,primarily the write-off ofresult the third-party debtrecognition and lower amortization of debt discount.The change in fairthe value of derivatives was $1,857,490 higher duederivative liabilities in 2022 of $2,033,000 and additionally the increase of interest expense by $870,000 in 2022 compared to greater volatility in the market price of the Company’s stock.Gain on extinguishment of debt and accrued interest was $439,326 greater due to the write-off of old debt and accrued interest. See NOTE 11- WRITE-OFF OF THIRD-PARTY NOTE for more detail($2,184,029)$4,580,000 for the year ended December 31, 2020,2022, as compared to ($1,587,530)a net loss of $266,000 for the year ended December 31, 2019. Of2021. The increase in net loss is a result of the loss in 2020, approximately ($665,000) was due to operations and the remainder was due primarily to interest expenses and derivative expenses on convertible debt, partially offset by the gain on write-off of debt and accrued interest.2020,2022, we used $37,600$618,000 in operating activities compared to $117,579 used$274 provided by in the prior year.2020,2022, we generated $37,600$782,000 through financing activities compared to $116,000$0 in the year ended December 31, 2019.2021. The reductionincrease in funds was due to reduced,greater funds from financings as the Company evaluates its operating options.$254,400$564,000 on notes payable, allmost of which are in default, and $2,217,163$670,000 for outstanding convertible notes. The majoritynotes, net of discounts. $209,681 of the convertible notes payable are in default. operation and does not currently have revenue generating operations.accumulatedaccu$82$9.2 million, and a net loss for the year ended December 31, 20202022 of $2.2$4.6 million. Of the loss, approximately $400,000$1.6 million was due to operations and the remainder was due primarily to interest expense the write-off of receivables and the loss on the issuance of preferred stock, partially offset by the gain on extinguishment of debt.derivative liabilities. The Company’s ability to continue as a going concern depends upon its ability to obtain adequate funding to support its operations through continuing investments of debt and/or equity by qualified investors/creditors, internally generated working capital and monetization of intellectual property assets. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management is currently pursuing a business strategy which includes raising the necessary funds to finance the Company’s development and marketing efforts. 16 F - 1 Cruzani,consolidated balance sheets of Cruzani,2020 2022019,202stockholders'stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20202022019,202Company'sCompany’s ability to continue as a going concern. Management'sManagement’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.Company'sCompany’s management. Our responsibility is to express an opinion on the Company'sCompany’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB"(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.BF Borgers CPA PCCompany'sCompany’s auditor since 2020June 2, 2021F - 2 Cruzani,owmo, Inc. and Subsidiaries
Consolidated Balance Sheets(Audited) December 31,
2020 December 31,
2019 ASSETS Total Assets $ - $ - LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current Liabilities: Accounts payable $ 326,400 $ 316,400 Accrued interest 1,150,820 1,193,596 Accrued officer compensation 292,000 172,000 Notes payable, net of discounts of $77,004 and $35,547, respectively 1,391,432 1,693,848 Derivative liabilities 2,140,159 472,605 Loans payable 254,500 254,500 Total Current Liabilities 5,555,311 4,102,949 Total Liabilities 5,555,311 4,102,949 Commitments and Contingencies (Note 9) - - STOCKHOLDERS’ DEFICIT: Series A Preferred stock, 3,500,000 shares authorized, par value $0.01; 3,381,520 shares issued and outstanding 33,815 33,815 Series B Preferred stock, 10,000 shares authorized, par value $0.01; 5,000 shares issued and outstanding 50 50 Series C Preferred stock, 10,000,000 shares authorized, par value $0.01; 5,000,000 shares issued and outstanding 50,000 50,000 Series D Preferred stock, 125,000 shares authorized, par value $0.0001; 125,000 shares issued and outstanding 12 12 Series E Preferred stock, 500,000 shares authorized, par value $0.01; 34,985 and 53,000 shares issued and outstanding; respectively 34,985 34,985 Series E Preferred stock to be issued 166,331 140,831 Total preferred stock 285,194 259,694 Common stock 3,000,000,000 shares authorized, $0.00001 par value; 1,339,044,282 and 297,041,945 shares issued and outstanding, respectively at December 31, 2020 and December 31,2019 13,390 2,970 Treasury stock, at cost - 2,917 shares (773,500 ) (773,500 ) Additional paid in capital 76,679,297 75,958,049 Accumulated deficit (81,759,691 ) (79,575,663 ) Total Stockholders’ Deficit (5,555,311 ) (4,102,909 ) Total Liabilities and Stockholders’ Deficit $ - $ -
2022
2021 unaudited condensed consolidated financial statements.statements
.F - 3 Consolidated(Audited) For the Years Ended
December 31, 2020 2019 Operating Expenses: Compensation expense $ 120,000 $ 120,000 General and administrative 497,324 166,255 Professional fees 48,325 104,930 Total operating expenses 665,649 391,185 Loss from operations (665,649 ) (391,185 ) Other Income (Expense): Interest expense (611,789 ) (1,024,755 ) Change in fair value of derivatives (1,837,933 ) 19,557 Loss on receivables - (442,365 ) Loss on issuance of convertible preferred stock - (194,547 ) Gain on extinguishment of debt and accrued interest 931,342 492,016 Loss on convertible notes - (46,250 ) Total other income (expense) (1,518,380 ) (1,196,345 ) Loss before provision for income taxes (2,184,029 ) (1,587,530 ) Provision for income taxes - - Net Loss $ (2,184,029 ) $ (1,587,530 ) Basic loss per share $ (0.01 ) $ (0.01 ) Basic weighted average shares outstanding 488,903,229 197,963,314
2022
2021unaudited condensed consolidated financial statements.statements
.F - 4
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Stock to be issued
Paid-In F - 5
Consolidated Statement of Changes in Stockholders’ Deficit
For the Twelve MonthsYear Ended December 31, 2019(Audited) Series A Series B Series C Series D Series E Series E
Preferred
Stock to be Additional Preferred Stock Preferred Stock Preferred Stock Preferred Stock Preferred Stock issued Common Stock Paid-In Treasury Accumulated Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Stock Deficit Total Balance December 31, 2018 3,381,520 $ 33,815 5,000 $ 50 5,000,000 $ 50,000 125,000 $ 12 53,000 $ 53,000 $ 140,831 73,442,239 $ 734 $ 75,544,112 $ (773,500 ) $ (77,988,132 ) $ (2,939,077 ) Shares issued for extinguishment of convertible debt - - - - - - - - 29,160,864 292 154,840 - 155,132 Net loss - - - - - - - - - - - - - - - - (131,631 ) (131,631 ) Balance March 31, 2019 3,381,520 33,815 5,000 50 5,000,000 50,000 125,000 12 53,000 53,000 - 140,831 102,603,103 1,026 75,698,952 (773,500 ) (78,119,763 ) (2,915,577 ) Cash proceeds for Series E Preferred stock 33,785 33,785 25,500 59,285 Shares issued for extinguishment of Preferred stock - - - - - - - - 66,331,384 663 135,603 - 136,266 Net loss - - - - - - - - - - - - - - - - (832,419 ) (832,419 ) Balance June 30, 2019 3,381,520 33,815 5,000 50 5,000,000 50,000 125,000 12 86,785 86,785 - 166,331 168,934,487 1,689 75,834,555 (773,500 ) (78,952,182 ) (3,552,445 ) Shares issued for extinguishment of Preferred stock (51,800 ) (51,800 ) 128,107,458 1,281 123,494 72,975 Net income - - - - - - - - - - - - - - - - 89,308 89,308 Balance September 30, 2019 3,381,520 $ 33,815 5,000 $ 50 5,000,000 $ 50,000 125,000 $ 12 34,985 $ 34,985 - $ 166,331 297,041,945 $ 2,970 $ 75,958,049 $ (773,500 ) $ (78,862,874 ) $ (3,390,162 ) Net loss - - - - - - - - - - - - - - - - (712,789 ) (712,789 ) Balance, December 31, 2019 3,381,520 $ 33,815 5,000 $ 50 5,000,000 $ 50,000 125,000 $ 12 34,985 $ 34,985 - $ 166,331 297,041,945 $ 2,970 $ 75,958,049 $ (773,500 ) $ (79,575,663 ) $ (4,102,949 ) unaudited condensed consolidated financial statements.F-5Cruzani,F - 6 Consolidated Statement of Changes in Stockholders’ DeficitFor the Nine months Ended September 30, 2020(Audited) Series A Series B Series C Series D Series E Series E
Preferred
Stock to be Additional Preferred Stock Preferred Stock Preferred Stock Preferred Stock Preferred Stock issued Common Stock Paid-In Treasury Accumulated Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Stock Deficit Total Balance December 31, 2019 3,381,520 $ 33,815 5,000 $ 50 5,000,000 $ 50,000 125,000 $ 12 34,985 $ 34,985 $ 166,331 297,041,945 $ 2,970 $ 75,958,049 $ (773,500 ) $ (79,575,663 ) $ (4,102,950 ) Net loss - - - - - - - - - - - - - - - - (130,188 ) (130,188 ) Balance March 31, 2020 3,381,520 33,815 5,000 50 5,000,000 50,000 125,000 12 34,985 34,985 - 166,331 297,041,945 2,970 75,958,049 (773,500 ) (79,705,850 ) (4,233,138 ) Shares issued for extinguishment of accrued interest - - - - - - - - - - - - 73,343,869 733 31,998 - 32,732 Net loss - - - - - - - - - - - �� - - - - - (332,448 ) (332,448 ) Balance June 30, 2020 3,381,520 33,815 5,000 50 5,000,000 50,000 125,000 12 34,985 34,985 - 166,331 370,385,814 3,704 75,990,047 (773,500 ) (80,038,298 ) (4,532,854 ) Shares issued for extinguishment of debt and accrued interest - - - - - - - - - - - - 205,217,291 2,052 148,119 - - 150,172 Net income - - - - - - - - - - - - - - - - (343,357 ) (343,357 ) Balance September 30, 2020 3,381,520 33,815 5,000 50 5,000,000 50,000 125,000 12 34,985 34,985 - 166,331 575,603,105 5,756 76,138,167 (773,500 ) (80,381,656 ) (4,726,040 ) Shares issued for extinguishment of debt and accrued interest - - - - - - - - - - - - 763,441,176 7,634 527,264 - 534,898 Net loss - - - - - - - - - - - - - - - - (1,378,035 ) (1,378,035 ) Balance, December 31, 2020 3,381,520 $ 33,815 5,000 $ 50 5,000,000 $ 50,000 125,000 $ 12 34,985 $ 34,985 - $ 166,331 1,339,044,281 $ 13,390 $ 76,665,430 $ (773,500 ) $ (81,759,691 ) $ (5,555,311 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.F-6Cruzani, Inc. and Subsidiaries(formerly US Highland, Inc.)Consolidatedonsolidated Statements of Cash Flows For the Years Ended
December 31, 2020 2019 CASH FLOW FROM OPERATING ACTIVITIES: Net loss $ (2,184,029 ) $ (1,587,530 ) Adjustments to reconcile net loss to net cash used in operating activities: Change in fair value of derivatives 1,837,933 (19,557 ) Loss on convertible debt - 46,250 Loss on receivables - 442,365 Loss on issuance of convertible preferred stock - 194,547 Financing note associated with 3a10 financing - 100,000 Fees on extinguishment of debt 15,225 - Reconciliation of debt balances 257,824 - Issuance of non-cash consulting notes 225,000 Debt discount amortization 131,143 296,259 Gain on extinguishment of debt and accrued interest (931,342 ) (492,016 ) Changes in Operating Assets and Liabilities: Other assets - (17,161 ) Accounts payable 10,000 - Accrued interest 480,647 815,264 Accrued officer compensation 120,000 104,000 Net Cash Used in Operating Activities (37,600 ) (117,579 ) CASH FLOWS FROM INVESTING ACTIVITIES: - - CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from convertible debt 37,600 4,000 Proceeds from loans - 25,500 Preferred stock sold for cash - 86,500 Net Cash Provided by Financing Activities 37,600 116,000 Net Increase (Decrease) in Cash - (1,579 ) Cash at Beginning of Year - 1,579 Cash at End of Year $ - $ - Cash paid during the period for: Interest $ - $ - Income taxes $ - $ - Supplemental disclosure of non-cash activity: Common stock issued for conversion of debt and accrued interest $ 359,596 $ 155,432 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.Cruzani, F - 7 20202022019Organizationcurrently evaluating strategic options. We have divested ourselvesan AI-powered recruiting platform. The Company’s principal lines of our current assetsbusiness are direct placement of candidates with employers and are currently performing due diligence onRecruiting as a wide varietyServicealternatives. Most recently, we were a franchise development company that buildstheir recruiting process to the Company.represents popular franchise concepts, and other relatedservices through an onlinethroughout the United States as well as international markets. looking to address hiring needs.originally formedincorporated as a limited liability company on February 5, 1999 underDelaware corporation in 2016.name The Powerhouse, L.L.C. pursuant to the lawsallocation of purchase price of the State of Oklahoma. On November 9, 2006, Powerhouse Productions, L.L.C. filed Articles of Conversion changing the entity from a limited liability company to a corporation under the name Harcom Productions, Inc. On January 25, 2010, Articles of Merger were filed with the State of Oklahoma merging U.S. Highland, Inc., an Oklahoma corporation into Harcom Productions, Inc. and the name of the corporation was changed to US Highland, Inc. US Highland, Inc. was a recreational power sports Original Equipment Manufacturer (“OEM”), developing motorcycles, quads, single cylinder engines, and v-twin engines under its own brand and for other OEMs. During 2017, the Company exited the recreational power sports OEM and leisure activity vehicles markets.On June 29, 2018, the Company filed Amended and Restated Articles of Incorporation with the State of Nevada to change its name to Cruzani, Inc. The name change is subject to approval by the Financial Industry Regulatory Authority (known as “FINRA”).On June 30, 2018, Supreme Sweets Acquisition Corp. (n/k/a Oventa, Inc.), a subsidiary of the Company, and the Company (collectively, the “Company”) entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Supreme Sweets Inc. and 2498411 Ontario, Inc., as sellers (collectively, the “Seller”), pursuant to which in exchange for CAD $200,000 and a twenty percent (20%) interest in Oventa, Inc., the Company agreed to acquire the trade secret assets of Seller upon the terms and subject to the conditions set forth in the Asset Purchase Agreement. A second closing occurred on July 31, 2018, pursuant to which the Company acquired the furniture, fixtures and equipment of Seller in exchange for CAD $100,000. Seller is engaged in the business of preparing delicious snacks, pastries and baked goods with high quality ingredients for exceptional taste, including low calorie and gluten-free alternatives. The Asset Purchase Agreement included a provision, pursuant to which the Company could unwind the transaction if certain milestones were not achieved. The milestones contemplated in the Asset Purchase Agreement were not met, and accordingly, on December 31, 2018, by written notice to the Seller, the Company unwound the transaction. The capital injected into Oventa, Inc., however, has been secured pursuant to financing statements filed on behalf of the Company, and the Company expects to receive a return of its injected capital of approximately US $339,813 during the calendar year 2019. Collectability is based on claims filed for cash that was paid.On September 27, 2018, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Sandrea Gibson, as seller (the “Seller”), and Recipe Food Co., as the target (the “Target”), pursuant to which in exchange for up to CAD $237,000, the Company agreed to acquire 80% of the issued and outstanding stock of the Target from the Seller upon the terms and subject to the conditions set forth in the Stock Purchase Agreement. Seller is engaged in the business of preparing and serving delicious, healthy meals on a counter-service basis with high quality ingredients, including low calorie alternatives. Difficulties integrating the Target into the Company group, which forced the Company to cease injecting additional capital into the Target. The Target is currently on the market for disposition to a third-party buyer on an arms-length basis, which the Company can undertake due to its supermajority ownership.On July 8, 2019, Mr. Dickson entered into a Securities Purchase Agreement (“Purchase Agreement”) with Conrad Huss to sell 5,000,000 shares of Series C Preferred and 5,000 shares of Series B preferred Stock held by Mr. Dickson. As a result, Mr. Huss acquired the right to vote 99.06 % of the voting control of the Company. The Series B Preferred Stock is also convertible into common stock which, in the aggregate, would represent up to .01% of the outstanding common stock after the conversion. The Series B Preferred Stock is also convertible into common stock which, in the aggregate, would represent up to 99.05% of the outstanding common stock after the conversion.On July 8, 2019, Everett Dickson, who had been the sole officer of the Company, resigned as an officer of the Company, and Conrad Huss was appointed the Interim President and Chief Executive Officer of the Company. Mr. Huss is the sole beneficial owner of 5,000,000 and 5,000 shares of Series B and C Preferred Stocks, respectively. Mr. Dickson also resigned as a director of the Company, effective on July 8th, 2019. Mr. Dickson’s resignation was not the result of any disagreement with the management of the CompanyBusinessCruzani, Inc. is currently evaluating various strategic options to engage in.F - 8 Company’s consolidated financial statements include the accounts of bowmo, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been preparedeliminated in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).Concentrations of Credit RiskThe Company currently has no cash on hand or other assetsequivalentsaan original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents for the year ended December 31, 2019 or 2018.ReclassificationsCertain reclassifications have been made to the prior year financial information to conform to the presentation used in the financial statements for the year ended December 31, 2020. There is no net effect as the result of these reclassifications.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 unobservable inputs and not corroborated by market data.F - 9 2018.Income taxesCompany follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assetsCompany’s investment in convertible debt 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 andderivative liabilities are measured at fair value based on the differences betweenstock price of the Company.statementinstruments. These three criteria include circumstances in which (a) the economic characteristics and tax basesrisks of assetsthe embedded derivative instrument are not clearly and liabilities using enacted tax ratesclosely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in effectfair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”fiscal yearintrinsic value of conversion options embedded in whichdebt instruments based upon 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.The Company 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, the Company 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. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.Stock-based CompensationWe 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 atbetween the fair value of the consideration received orunderlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the equity instruments issued, whicheverunderlying common stock at the commitment date of the share transaction and the effective conversion price embedded in the preferred shares.more reliably measurable. not within the entity’s control and could require net cash settlement, then the contract shall be classified as an asset or a liability.commonthe convertible note being equal to a fixed monetary amount. The Company records the convertible note liability as stock issued for payments to nonemployeessettled debt in accordance with ASC 480 - “Distinguishing Liabilities from Equity” and measures the convertible note at its fixed monetary amount, which is measuredthe result of the share price discount at the market pricetime of conversion, and records the put premium, as applicable, on the note date with a charge to interest expense.F - 10 grant. Thethe debt agreements and at fair value as of equity instruments, other than common stock, is estimated usingeach subsequent balance sheet date. The carrying value assigned to the Black-Scholes option valuation model. In general, we recognizehost instrument will be the difference between the previous carrying value of the host instrument and the fair value of the equity instruments issuedderivatives. There is an offsetting debt discount or premium as deferred stock compensation and amortizea result of the costfair value assigned to the derivatives, as well as any debt issuance costs, which are amortized under the straight-line method over the term of the contract.We account for employee stock-based compensationloan. Any change in accordance withfair value is recorded as non-operating, non-cash income or expense at each balance sheet date. If 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 expensederivatives was higher at the subsequent balance sheet date, the Company recorded a non-operating, non-cash charge. If the fair value of the derivatives was lower at the subsequent balance sheet date, the Company recorded non-operating, non-cash income.credited to additional paid-in capitalconsideration transferred are recorded at the date of acquisition at their respective fair values. Definite-lived intangible assets are amortized over the period during which servicesexpected life of the asset. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.rendered.Net income (loss) per common shareBasic net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stockrecognized separately from business combinations and potentially outstanding shares of common stock during the period. The Company’s diluted loss per share is the sameare expensed as the basic loss per share for the years ended December 31, 2019 and 2018, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.Recently issued accounting pronouncementsIn March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This ASU makes targeted amendments to the accounting for employee share-based payments. This guidance is to be applied using various transition methods such as full retrospective, modified retrospective, and prospective based on the criteria for the specific amendments as outlined in the guidance. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016.incurred. The Company adopted this ASUremeasures fair value as of each reporting date and it didchanges resulting from events after the acquisition date, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not have a material impactre-measured and its financial position and results of operations.In February 2016,subsequent settlement is accounted for within equity, or 2) if the FASB issued ASU 2016-02, Leases (Topic 842). The ASU requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial positioncontingent consideration is classified as a liability, to make lease payments (the lease liability)the changes in fair value and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. This new guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods, and early adoption is permitted. In transition, lessees and lessorsaccretion costs are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. recognized in earnings.adopted this ASU and it did not have a material impact its financial position and results of operations.In May 2014, the FASB issued ASU 2014-09, Revenuerecognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with CustomersCustomers” (“TopicASC 606”), which updated through several revisions and clarifications since its original issuance and supersedes previous revenue recognition guidance. This guidance introduces a new principles-based framework for revenue recognition, requiring an entity to recognize revenue representing the transfer of promised goods or services. Revenues are recognized when control is transferred to customers in an amountamounts that reflectsreflect the consideration which the entityCompany expects to be entitled to receive in exchange for those goodsgoods. Revenue recognition is evaluated through the following five steps: (1) identification of the contract, or services. The update also requires new qualitative and quantitative disclosures, beginningcontracts, with a customer; (2) identification of the performance obligations in the quartercontract; (3) determination of adoption, regarding the nature, amount, timingtransaction price; (4) allocation of the transaction price to the performance obligations in the contract; and uncertainty(5) recognition of revenue and cash flows arisingwhen or as a performance obligation is satisfied.F - 11 including significant judgments and changes in judgments, information about contract balances and performance obligations, and assetswith customers are month-to-month for a fixed price. Revenues are recognized from costs incurred to obtain or fulfilon a contract. gross basis when each monthly subscription service is completed.update may be applied usingCompany generates direct placement revenue by earning one-time fees for each time an employer hires one of two prescribed transition methods: retrospectively to the prior reporting period presented (full retrospective method),candidates that the Company refers. The Company sources qualified candidate referrals for the employers’ available jobs through the use of the Company’s Application. Upon the employer hiring one or retrospectively withmore of the cumulative effectCompany’s candidate referrals, the Company earns the direct placement fee, which consists of initially applyingan amount agreed upon between the guidanceCompany and its customers. The fee is a percentage of the referred candidates’ first year’s base salary.aton a gross basis on the date of initial application (the modified retrospective method. The Company adopted this ASU andhire of the candidate placed with an employer, as it didis more than probable that a significant revenue reversal will not haveoccur. This fee is only charged to the employer. Any payments received prior to the hire date are recorded as deferred revenue on the consolidated balance sheets. Payments for recruitment services are typically due within 30 days of completion of services.material impact its financial position and results of operations.In August 2016,90-180 day guarantee that the FASB issued ASU 2016-15, Statement of Cash Flows: Clarification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which eliminates the diversitycandidate will not resign or be terminated in practice related to classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. This new guidance will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years and early adoption is permitted, including adoption in an interimthat time period. The Company adopted this ASUuses historical evidence as well as additional factors to determine and estimate the amount of consideration received that the Company does not expect to be entitled to. For any amounts received for which the Company does not expect to be entitled, it didwould not haverecognize revenue when the candidate is hired but would recognize those amounts received as a material impact its financial position and results of operations.In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which provides guidance that will require that a statement of cash flows explain the change during the periodrefund liability. The Company included in the totaltransaction price the estimated amount of variable consideration per the expected value method. A refund liability would be credited for the difference between cash cash equivalents,consideration received and amounts generally describedvariable consideration recognized. The refund liability would be updated at the end of each reporting period for any changes in circumstances. As ofrestricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cashhistorically no direct placement revenue has been refunded to the Company.restricted cash equivalents should2021, revenues can be included withcategorized into the following:F - 12 when reconciling the beginning-of-period and end-of-period totalaccounts receivable. Cash and cash equivalents are held in United States financial institutions. At times such amounts shown on the statementmay exceed federally insured limits.cash flows. This new guidance will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years and early adoption is permitted, including adoption in an interim period. The Company adopted this ASU and it did not have a material impact its financial position and results of operations.In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU clarifies the definition of a business when evaluating whether transactions should be31, 2022, one customer accounted for as acquisitions (or disposals)100% of assets or businesses. This new guidance will be effectiveaccounts receivable. As of December 31, 2021, two customers accounted for annual reporting periods beginning aftermore than 10% of accounts receivable, at 80% and 19%, for a total of 99%.15, 2017, including interim periods within those periods. The Company adopted this ASU31, 2022,it did not have10%, for a material impact its financial positiontotal of 100%. During the year ended December 31, 2021, two customers accounted for more than 10% of revenue, at 80% and results19%, for a total of operations.In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350)99%. This ASU simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test, which required computing the implied fair value of goodwill. Under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparinga reporting unit with its carrying amount. An impairment charge should bethe award and is recognized over the shorter of the service period or the vesting period of the stock-based compensation. This guidance establishes standards for the amount byaccounting for transactions in which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated toan entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that reporting unit. This new guidance will be effective January 1, 2020. The Company is currently evaluating the provisions of this guidance and assessing its impactare based on the Company’s consolidated financial statements and disclosures.In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU clarifies an entity’s ability to modify the terms or conditions of a share-based payment award presented. An entity should account for the effects of a modification unless all the following are met: the fair value of the modified award has not changed fromentity’s equity instruments or that may be settled by the issuance of those equity instruments. The Company estimates the fair value onof each stock option at the grant date by using the Black-Scholes option pricing model. Determining the fair value of issuance;stock-based compensation at the vesting conditionsgrant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based compensation represent the modified award are the same as the vesting conditions of the original award immediately before the original award is modified;Company’s best estimates, but these estimates involve inherent uncertainties and the classificationapplication of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. This new guidance will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within those periods. The Company adopted this ASU and it did not have a material impact its financial position and results of operations.In July 2017, the FASBASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. This ASU clarifies the recognition, measurement, and effect on earnings per share of certain freestanding equity-classified financial instruments that include down round features affect entities that present earnings per share in accordance with the guidance in Topic 260, Earnings Per Share. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. This new guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within those periods. The Company has elected to early adopt this ASU and as a result outstanding warrants were not accounted for as a derivative. and does not currently have revenue generating operations. $81,759,691,approximately $9.2 million, and a net loss for the year ended December 31, 20202022, of ($2,184,029). However,$4.6 million. Of the Company only usedloss, approximately $38,000$1.6 million was due to conduct its operations as detailed inand the Statement of Cash flows. remainder was due primarily to interest expense and the derivative liabilities.F - 13
Useful Life
(Years) F - 14 Rate December 31,
2020 December 31,
2019 Loan 1 1% $ 27,000 $ 27,000 Loan 2 1% 3,000 3,000 Loan 3 8% 64,000 39,000 Loan 4 8% 160,500 155,400 Total $ 254,500 $ 224,400 Above notesF - 15 56 – CONVERTIBLE NOTES PAYABLE
Issued
Rate
Date
2022
2021F - 16 2019:Creditor Date
Issued Interest
Rate Maturity
Date 31-Dec-20 31-Dec-19 Third party individual* 25-Jul-13 12% 31-Dec-16 $ - $ 500,000 Adar Bays, LLC 11-Feb-16 24% 11-Feb-17 - 68,004 GW Holdings Group, LLC* 17-May-16 24% 17-May-17 24,000 24,000 Travel Data Solutions 18-Nov-17 10% 30-Nov-19 100,000 100,000 GW Holdings Group, LLC* 16-Mar-18 24% 15-Mar-19 36,750 36,750 Livingston Asset Management, LLC 19-Jul-19 10% 31-Mar-20 - 100,000 Travel Data Solutions 18-Jan-19 10% 31-Jan-20 25,000 25,000 Oasis Capital, LLC various 10% various 1,016,086 875,641 Livingston Asset Management, LLC 1-Apr-20 10% 31-Dec-20 25,000 - Livingston Asset Management, LLC 1-May-20 10% 31-Jan-21 25,000 - Livingston Asset Management, LLC 20-May-20 10% 20-Feb-21 10,000 - Livingston Asset Management, LLC 1-Jun-20 10% 28-Feb-21 25,000 - Livingston Asset Management, LLC 11-Jun-20 10% 10-Mar-21 1,100 Livingston Asset Management, LLC 1-Jul-20 10% 31-Mar-21 25,000 - Livingston Asset Management, LLC 20-Jul-20 10% 20-Apr-21 4,500 Livingston Asset Management, LLC 1-Aug-20 10% 30-Apr-21 25,000 - Livingston Asset Management, LLC 14-Aug-20 10% 14-May-21 9,500 - Livingston Asset Management, LLC 24-Aug-20 10% 24-May-21 12,500 - Livingston Asset Management, LLC 1-Sep-20 10% 30-Jun-21 25,000 - Livingston Asset Management, LLC 1-Oct-20 10% 31-Jul-21 25,000 - Livingston Asset Management, LLC 1-Nov-20 10% 31-Aug-21 25,000 - Livingston Asset Management, LLC 1-Dec-20 10% 30-Sep-21 25,000 - Convertible notes payable-gross $ 1,468,436 $ 1,729,395 Discount (77,004 ) (35,547 ) $ 1,391,432 $ 1,693,848 *F - 17- GW Holdings Group, LLC entered into litigation with the Company on these obligations. See subsequent events for current status**- See Note 11 for more detailF-13F - 18
Issued
Date
Percentage
stock settled
debt18-Nov-17 30-Nov-19 18-Jan-19 31-Jan-20 7-Jul-20 7-Jul-21 15-Jun-22 15-Jun-23 05-Aug-22 28-Jun-23 01-Sept-22 31-June-23 01-Oct-22 31-Jul-23 19-Oct-22 09-Oct-23 19-Oct-22 09-Oct-23 21-Oct-22 21-Oct-23 06-Dec-22 30-Nov-23 01-Nov-22 31-Aug-23 01-Dec-22 30-Sep-23 68 – DERIVATIVE LIABILITIES 4, and its convertible preferred Series E stock. classification.classification under ASC 815-15 Embedded Derivatives (See Note 7 for conversion terms). The fair value of these liabilities is re-measured at the end of every reporting period and the change in fair value is reported in the statement of operations as a gain or loss on derivative financial instruments.F - 19 Binomialmost significant are share price, expected volatility and the expected option pricing modelterm (the time from the issuance date until the maturity date). The Company has historically not paid dividends and has no foreseeable plans to issue dividends. The risk-free interest rate is based on various assumptions. The model incorporates the price of a share of the Company’s common stock (as quoted on the Over the Counter Bulletin Board), volatility, risk free rate, dividend rate and estimated life. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement.yield from governmental zero-coupon bonds with an equivalent term. As, required, these are classified based on the lowest level of input that is significant to the fair value measurement.The following is the Company’s derivative liability measured at fair value on a recurring basis at December 31, 2020 and December 31, 2019: December 31,
2020 December 31
2019 Level One $ -0- $ -0- Level Two $ -0- $ -0- Level Three $ 2,140,159 $ 472,605 Expected
Volatility Risk-free
Interest
Rate Expected
Dividend
Yield Expected
Life
(in years) At December 31, 2019 291.74 % 2.45 % 0 % 0.25 – 0.50 At December 31, 2020 252.67 % .92 % 0 % 0.25 – 0.50 Balance at December 31, 2018 433,924 Addition of new derivative liabilities 194,547 Change in fair value of derivative liability 42,821 Derecognition of derivatives upon settlement of convertible preferred stock (218,904 ) Derecognition of derivatives upon settlement of convertible notes (79,783 ) Balance at December 31, 2019 $ 472,605 Balance at December 31, 2019 472,605 Addition of new derivative liabilities 172,601 Change in fair value of derivative liability 1,837,932 Derecognition of derivatives upon settlement of convertible notes (342,980 ) Balance at December 31, 2020 $ 2,140,149 79 – COMMON STOCKF - 20
Issued
Retired
Interest6-May-22 6-May-22 19-May-22 19-May-22 6-Jun-22 6-Jun-22 10-Jun-22 14-Jun-22 15-Jun-22 17-Jun-22 17-Jun-22 22-Jun-22 23-Jun-22 23-Jun-22 27-Jun-22 27-Jun-22 28-Jun-22 29-Jun-22 30-Jun-22 6-July-22 6-July-22 13-July-22 13-July-22 18-July-22 F - 21 18-July-22 18-July-22 20-July-22 07-Sept-22 14-Sept-22 27-Sept-22 04-Oct-22 04-Oct-22 01-Nov-22 01-Dec-22 12-Dec-22 07-Oct-22 24-Oct-22 18-Nov-22 F - 22 the convertible note (the “Note”) with L2 Capital,Frondeur Partners, LLC (“L2”Frondeur”), King Wharf Opportunities Fund, and funding of the initial tranche of $50,000 on the Note,Trillium Partners, LP, the Company also issued a5,616,000,000 common stock purchase warrantwarrants to purchase up to 381,9055,616,000,000 shares of the Company’s common stock pursuant to the terms therein as a commitment fee. At the time that each subsequent tranche under the Note is funded by L2 in cash, then on such funding date, the warrant shares shall immediately and automatically be increased by the quotient of 100% of the face value of the respective tranche and 110% of the VWAP of the common stock on the Trading Day (as defined in the Note) immediately prior to the funding date of the respective tranche. As of December 31, 2019, the Company had received multiple tranches for which it issued warrants to purchase shares of the Company’s common stock.a variablean exercise price per share between $0.0025 - $0.0001 the above and expire in between five – seven years. The aggregate fair value of the warrants, which was allocated against the debt proceeds totaled $280,438$596,927 based on the Black Scholes Merton pricing model using the following estimates: exercise price ranging from $0.001 – 0.0071, 2.80% – 2.94%$0.00025 and $0.0025, 2.50% - 4.28% risk free rate, 252.42 – 258.24%266.74% - 699.48% volatility and expected life of the warrants of 5 to 7 years. The fair value was credited to additional paid in capital and debited to debt discount to be amortized over the term of the loan. Shares
available to
purchase
with
warrants Weighted
Average
Price Weighted
Average
Fair Value Outstanding, December 31, 2019 22,669,092 $ .0011 $ .0014 Issued - $ - $ - Exercised - $ - $ - Forfeited - $ - $ - Expired - $ - $ - Outstanding, December 31, 2019 22,669,092 $ 0.0011 $ 0.0014 Issued - $ - $ - Exercised - $ - $ - Forfeited - $ - $ - Expired - $ - $ - Outstanding, December 31, 2020 22,669,092 $ 0.0011 $ 0.0014 Exercisable, December 31, 2020 22,669,092 $ 0.0011 $ 0.0014
available
purchase
with
warrants
Average
Price
Remaining
lifeRange of Exercise Prices Number Outstanding
12/31/2020 Weighted Average
Remaining Contractual
Life Weighted Average
Exercise Price $ 0.001 – 0.0071 22,669,092 2.69 years $ 0.0011 Range of Exercise Prices Number Outstanding
12/31/2019 Weighted Average
Remaining Contractual
Life Weighted Average
Exercise Price $ 0.001 – 0.0071 22,669,092 3.69 years $ 0.0011 F-15
Remaining
Contractual Life
Average Exercise
Price811 – COMMONPREFERRED STOCKDuringtwelve months ended December 31, 2019, the company issuedholder’s election into shares of common stock as follows:Recipient of shares Date Shares Principal Accrued interest Fees Total Livingston Asset Management LLC 27-May-20 29,288,000 $ - $ 11,301 $ 1,000 $ 12,301 Trillium Partners, LP 12-Jun-20 11,936,286 - 4,013 1,000 5,013 Trillium Partners, LP 29-Jun-20 16,059,792 - 6,709 1,000 7,709 Livingston Asset Management LLC 29-Jun-20 16,059,792 - 6,709 1,000 7,709 Trillium Partners, LP 21-Jul-20 17,545,881 - 6,369 1,000 7,369 Trillium Partners, LP 29-Jul-20 30,386,595 1,300 10,462 1,000 12,762 Oasis Capital, LLC 26-Aug-20 38,689,997 19,430 12,187 Livingston Asset Management, LLC 31-Aug-20 21,547,021 - 10,343 - 10,343 Trillium Partners, LP 04-Sep-20 23,703,521 9,550 803 1,025 11,378 Livingston Asset Management, LLC 17-Sep-20 21,492,859 16,425 339 - 16,764 Oasis Capital, LLC 28-Sep-20 51,851,417 23,333 23,333 Livingston Asset Management, LLC 05-Oct-20 26,834,167 13,941 110 2,050 16,101 Oasis Capital LLC 08-Oct-20 59,641,290 26,839 - - 26,839 Livingston Asset Management, LLC 14-Oct-20 38,869,667 19,516 449 1,025 20,990 Livingston Asset Management, LLC 29-Oct-20 69,365,086 2,275 7,111 1,025 10,411 Oasis Capital LLC 09-Nov-20 76,261,018 20,594 20,594 Livingston Asset Management, LLC 11-Nov-20 76,253,571 30,350 652 1,025 32,027 Oasis Capital LLC 23-Nov-20 91,359,963 20,556 20,556 Livingston Asset Management, LLC 30-Nov-20 76,211,914 25,200 449 1,025 26,674 Livingston Asset Management, LLC 09-Dec-20 71,705,000 23,650 422 1,025 25,097 Livingston Asset Management, LLC 22-Dec-20 56,315,857 18,525 161 1,025 19,711 Oasis Capital LLC 31-Dec-20 120,623,643 9,900 11,812 21,712 1,042,002,336 $ 281,383 $ 78,213 $ 15,225 $ 367,579 Duringat the twelve months ended December 31, 2019, the company issued sharesconversion rate of one share of common stock as follows:Oasis Capital LLC (formerly L2 Capital, LLC) converted $33,149for one share of principal into 16,660,864Preferred Stock.common stock.Device Corp. converted $9,700Series AA and $1,050 of principal and interest, respectively, into 12,500,000 shares of common stock. The loans from Device Corp have no specific terms of conversion and have therefore not been classified as convertible. The shares were valued on the date of conversion at the closingSuper preferred stock price, for a loss on conversion of debt of $46,250.During the year ended December 31, 2018, the Company issued 56,169,737 shares of common stock to settle $259,547 of principal and $19,870 of accrued interest on its convertible notes.On November 20, 2018, the Company and its stockholders approved a 1 for 20 reverse stock split. The reverse stock split was deemed effective by the Financial Industry Regulatory Authority (“FINRA”) on January 10, 2019. All shares throughout these financial statements have been retroactively adjusted to reflect the reverse stock split.NOTE 9 – PREFERRED STOCK2019,2022 and December 31, 2018,20213,381,5200 shares of Series A preferred stock outstanding, respectively.F - 23 2019,2022 and December 31, 2018,20215,0000 shares of Series B preferred stock outstanding, respectively.2019,2022 and December 31, 2018,20215,000,0000 shares of Series C preferred stock outstanding, respectively.2019,2022 and December 31, 2018,2021, there are125,0000 shares of Series D preferred stock outstanding, respectively., The E are mandatorily redeemable after twelve months, and therefore have been classified as mezzanine equity.On July 1, 2018,F Convertible Preferred StockCompany enteredholder’s election into a Stock Purchase Agreement with Device Corp. (“Device”) whereby Device will purchase up to $250,000 Series E preferredshares of common stock at the current conversion rate of 93,761,718 shares of common stock for $1 per share.one share of Series F Preferred Stock. Each share is entitled to 93,761,718 votes, voting with the common stock as a single class, has no liquidation rights and is not entitled to receive dividends.2019, the Company has received $166,331 for the purchase of the Series E. Originally, these purchases were recorded as debt because the Preferred shares were not issued. As of the Balance sheet date2022 and the date of this report, these shares have not been issued to the Purchaser. As such, the Company feels these securities should be classified as Mezzanine equity until they2021fully issued.On January 15, 2019, the Company entered into a Stock Purchase Agreement with Geneva Roth Remark Holdings, Inc. (“Geneva”) whereby Geneva will purchase 53,000101 and 0 shares of Series EF preferred stock issued.$53,000. Asa period ending 18 months following issuance at the conversion rate that will result, in the aggregate, in the holders of December 31, 2019,Series G Preferred Stock receiving that number of shares of Common Stock which equals Seventy Eight Percent (78%) of the total issued and December 31, 2018, thereoutstanding shares of commons stock of the company on a fully diluted basis. The Series G Preferred Stock shall vote with the common stock as a single class, has liquidation rights of $0.001 per share and is entitled to receive an annal dividend of 6% of the Stated Value (the “Divided Rate”), which shall be cumulative, payable solely upon redemption, liquidation, or conversion.34,9851,000,000 and 53,0000 shares of Series EG preferred stock outstanding, respectively. Asissued as of2019, the Company fair valued its Series E preferred stock derivative liability at $40,000.twelve monthsyear ended December 31, 2019, Geneva Roth Remark Holdings converted 18,015152022, as consideration for the reverse merger, the Company issued 1,000,000 shares of Series EG Convertible Preferred stock.into 194,438,842 shares of common stock.Duringalong with the third quarter652,259 Series AA preferred stock, were cancelled on May 4, 2022, upon completion of the 2019 fiscal year, Mr. Huss sold $15,000 worth of Series E preferred to other investors.F - 24 1012 – RELATED PARTY TRANSACTIONSHuss, the new CEO.Huss. The agreement is effectiveprovides for three months with a salary of $10,000 per month. As of December 31, 2019, $292,0002022, $532,000 has been credited to accrued compensation.NOTE 11 – WRITE-OFF OF THIRD-PARTY NOTEOn July 25, 2013, the Company entered into a convertible promissory note (“Note”), in the amount of $500,000 and warrants to purchase 12,500,000 shares of company common stock, of which 10,000,000 of those warrants were exercisable at $0.05 per share and 2,500,000 of the warrants were exercisable at $0.10 per share. The Note has an interest rate of 8% per annum and a maturity date of July 31, 2014.On July 25, 2013, the Company entered into a convertible promissory note (“Note”), in the amount of $500,000 and warrants to purchase 10,197,916 shares of company common stock, of which 8,158,333 of those warrants were exercisable at $0.05 per share and 2,039,583 of the warrants were exercisable at $0.10 per share. The Note has an interest rate of 8% per annum and a maturity date of July 31, 2014.The Company has continued filing reports with the SEC and will be current with the SEC again in the near future, as well as having maintained its active status with the Nevada Secretary of State, since that time. We are currently in contact with the current management of the Company who have provided us with documentation as to the above noted amounts.The Company has stated and records and filings show that the Notes were due and payable as of July 31, 2014 at the latest, and that no payments have been made and that no statements that the Company has renewed the note have been agreed to.The New York Statute of Limitations provides, in relevant part:Section 213: Actions to be commenced within six years: where not otherwise provided for; on contract; on sealed instrument; on bond or note, and mortgage upon real property; by state based on misappropriation of public property; based on mistake; by corporation against director, officer or stockholder; based on fraud. The following actions must be commenced within six years.Section 213(2). an action upon a contractual obligation or liability, express or implied, except as provided in section two hundred thirteen-a of this article or article 2 of the uniform commercial code or article 36-B of the general business law;Based on the New York Statute of Limitations, it is our view that the above referenced Note is no longer enforceable obligations under New York law as it became past due no later than July 31, 2014, more than six (6) years ago.[CPLR 213(2)]NevadaNevada also has a five (5) year statute of limitations for written contracts. Nevada Statutes Title VIII Section 95.11(2)(b). Wherein it states in pertinent part: “A legal or equitable action on a contract, obligation, or liability founded on a written instrument” As such the Note being due as of July 31, 2014, would also be time-barred under Nevada Law.ConclusionBased on the New York and Nevada Statute of Limitations, it is our view that the above referenced Note is no longer an enforceable obligation under New York or Nevada law as it became past due no later than July 31, 2014, more than six (6) years ago.The balance of the Note was $500,000 and accrued interest was $431,342. Therefore, the total gain was $931,342.NOTE 12 – INCOME TAXIn accordance with ASC 740, we are required to recognize the impact of an uncertain tax position in the consolidated financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. An uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained upon examination by the tax authorities. We had no unrecognized tax benefits from uncertain tax positions as of December 31, 2020 and 2019. It is also our policy, in accordance with authoritative guidance, to recognize interest and penalties related to income tax matters in interest and other expense in our Statements of Operations.Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. As a result of our cumulative losses, management has concluded that a full valuation allowance against our net deferred tax assets is appropriate.Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of 21% is being used from 2018 due to the new tax law recently enacted.The provision for income taxes on our loss from continuing operations for the fiscal years ended December 31, 2020 and 2019 are as follows: 2020 2019 Book net income $ (2,184,029 ) $ (1,587,530 ) Less: Change in Fair value of derivatives 1,837,933 (19,557 ) Amortization of discount on convertible debt 131,143 296,259 Loss on issuance of convertible preferred stock - 194,547 Loss on convertible notes - 46,250 Gain on extinguishment of debt and accrued interest (931,342 ) (492,016 ) Taxable net income $ (1,147,522 ) $ (1,562,047 ) Change in Valuation allowance 299,913 408,241 Income tax expense based on taxable net income (299,913 ) (408,241 ) Income tax expense - - Note: The marginal tax rate is calculated as follows:Statutory rate 2020 2019 Federal income tax rate 21.0 % 21.0 % Incremental New York State rate 6.5 % 6.5 % Impact of Federal rate on New York State rate -1.4 % -1.4 % Marginal income tax rate 26.1 % 26.1 % As percentages of net income, the following are the components of tax expense: 2020 2019 Book net income 100.0 % 100.0 % Less: Change in Fair value of derivatives -84.2 % 1.2 % Amortization of discount on convertible debt -6.0 % -18.7 % Loss on issuance of convertible preferred stock 0.0 % -12.3 % Loss on convertible notes 0.0 % -2.9 % Gain on extinguishment of debt 42.6 % 31.0 % Taxable net income 52.5 % 98.4 % Change in Valuation allowance -52.5 % -98.4 % Income tax expense based on taxable net income - - Income tax expense - - At December 31, 2020, the Company had net operating loss carryforwards of approximately $9.6 million that may be offset against future taxable income from the year 2021 to 2040. No tax benefit has been reported in the December 31, 2020 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal Income tax reporting purposes are subject to annual limitations. Our operating loss carry forwards may be limited as to use in future years due to the transfer of preferred securities from our former Chief Executive to our current Chief Executive, Conrad R Huss. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2018.F - 25 On September 21, 2018, Pro Drive Outboards, LLC (“Pro-Drive”) filed A contingency arises when there is a lawsuit againstsituation for which the Company,outcome is uncertain, and which should be resolved in the future, Generally Accepted Accounting Principles require recognition of only those losses that are probable and for which Pro-Drive alleges that the Company breached a contract that Pro-Drive entered into with the Company. Pro-Drive is seeking damages in excess of $500,000. The Company has filed an answer, including the defenses of defective service of process and statute of limitations and a motion to dismiss. The judge granted a motion to dismiss, and the plaintiff’s deadline to appeal has passed, thus concluding the matter.$27,083.74.$27,084. Plaintiff has not attempted enforced collection. The amount was included in accounts payable as of December 31, 2020 and2022.2019.On June 20, 2018, GW Holdings Group, Inc. (“GW”) filed a lawsuit against2022 and 2021 because the Company in which GW alleges that the Company breached two Stock Purchase Agreements that GW entered into with the Company. See Note 13-SUBSEQUENT EVENTS belowincurred a net loss for current status of this litigation. tax purposes.20202022, the Company had federal and state net operating loss carry forwards of $
2022
20212019,2022 and 2021:
2022
2021balance on these notesability to utilize net operating losses if a 50% change in ownership occurs over a three-year period. Such limitation of the net operating losses may have occurred, but we have not analyzed it at this time as the deferred tax asset is $60,750.fully reserved.F - 26 1415 – SUBSEQUENT EVENTSManagement has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statements were issued and has determined that no material subsequent events exist other than the following.GW Holdings Group lawsuitOn February 16, 2021,received notice thatissued three convertible notes. The principal amount of these notes are $10,000 each, for a default judgment had been entered against it in the Southern District of New York. The total amount of the judgment was for $348,548. The company will accrue an approximately $260,000 charge to earnings$30,000. They bear interest at 10% and are due in the first quarter of calendar year 2021 to reflect the judgment.Sale of debtSubsequent to the Balance sheet date, Oasis Capital LLC sold $250,000 of debt to other investors. This note was originally dated as of May 10, 2018.Issuance of common sharesSubsequent to the Balance sheet date the Company has issued 1,095,458,048 shares as follows. There are currently, 2,434,502,239 shares outstandingShares outstanding at December 31, 20201,339,044,282Shares issued for extinguishment of debt1,571,710,494Shares issued for conversion of Preferred stock89,243,590Total shares issued1,660,954,084Shares outstanding at May 15, 20212,999,998,366Extinguishment of debtSubsequent tofull at October 31, 2023, November 30, 2023 and December 31, 2020, the Company extinguished $555,1793 of debt principal plus $1110,817 of accrued interest and incurred $6,155 in fees for the issuance of 1,570,710,494 shares as follows:Creditor Date Shares Principal Accrued interest Fees Total Oasis Capital LLC 14-Jan-21 132,565,384 $ 29,827 $ - $ - $ 29,827 Oasis Capital LLC 27-Jan-21 98,310,546 22,120 100 - 22,220 Oasis Capital LLC 10-Feb-21 155,422,101 41,964 - - 41,964 GW Holdings Group LLC 2-Mar-21 20,203,797 10,000 - - 10,000 Oasis Capital LLC 8-Mar-21 175,494,746 71,075 - - 71,075 GW Holdings Group LLC 9-Mar-21 3,818,181 2,520 - - 2,520 Trillium Partners LLC 3-Mar-21 86,508,841 37,039 1,025 38,064 Trillium Partners LLC 11-Mar-21 86,900,826 42,000 9,550 1,025 52,575 Trillium Partners LLC 17-Mar-21 89,695,455 58,000 174 1,025 59,199 Oasis Capital LLC 19-Mar-21 193,311,158 95,689 - - 95,689 Oasis Capital LLC 6-Apr-21 203,298,776 91,484 - - 91,484 Trillium Partners LLC 12-Apr-21 92,267,673 25,000 24,722 1,025 50,747 Oasis Capital LLC 26-Aprr-21 50,000,000 20,250 - - 20,250 Oasis Capital LLC 6-Apr-21 50,000,000 20,250 - - 20,250 Trillium Partners LLC 29-Apr-21 53,055,556 25,000 238 1,025 26,263 Trillium Partners LLC 5-May-21 80,857,455 - 38,9944 1,030 40,024 Totals 1,571,710,494 $ 555,179 $ 110,817 $ 6,155 $ 672,152 Conversion of Preferred stockissued 154,863,248granted 150,000,000 warrants to purchase 150,000,000 shares of the Company’s common stock for the conversionwith these convertible notes. These warrants have an exercise price of 34,700 shares$0.0001 and a term of preferred stock as follows:Trillium Partners LLC 23-Mar-21 49,871,795 20,370 Trillium Partners LLC 31-Mar-21 39,371,795 14,330 89,243,590 34,700 Issuance of debtSubsequent to Decemberfive years.2020,2023, the Company issued $125,0004,247,383,100 shares of convertible debt as follows:Creditor Date
Issued Interest
Rate Maturity
Date Amount Livingston Asset Management, LLC 1-Jan-21 10 % 31-Oct-21 $ 25,000 Livingston Asset Management, LLC 1-Feb-21 10 % 30-Nov-21 25,000 Livingston Asset Management, LLC 1-Mar-21 10 % 31-Dec-21 25,000 Livingston Asset Management, LLC 1-Apr-21 10 % 31-Jan-22 25,000 Livingston Asset Management, LLC 1-May-21 10 % 28-Feb-21 25,000 $ 125,000 F - 27 ITEM 9. On February 14, 2020, Cruzani, Inc. (the “Registrant”) dismissed Fruci & Associates II, PLLC (“Fruci & Associates II, PLLC”) as Independent Registered Public Accountants. On February 14, 2020, the Board of Directors of the Company authorized the dismissal.During the fiscal year ended December 31, 2018 and through Fruci & Associates II, PLLC’s dismissal on February 14, 2020, there were (1) no disagreements with Fruci & Associates II, PLLC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Fruci & Associates II, PLLC would have caused Fruci & Associates II, PLLC to make reference to the subject matter of the disagreements in connection with its reports, and (2) no events of the type listed in paragraphs (A) through (D) of Item 304(a)(1)(v) of Regulation S-K.We furnished Fruci & Associates II, PLLC with a copy of this disclosure on February 14, 2020, providing Fruci & Associates II, PLLC with the opportunity to furnish the Company with a letter addressed to the SEC stating whether it agrees with the statements made by us herein in response to Item 304(a) of Regulation S-K and, if not, stating the respect in which it does not agree. A copy of Fruci & Associates II, PLLC’s letter to the SEC is filed as Exhibit 16.1 on the Company’s form 8-K filed with the Securities and Exchange Commission on February 18, 2020.Furthermore, on February 13, 2020, the Registrant engaged BF Borgers CPA PC as its new independent registered public accounting firm beginning with the period ended June 30, 2019. The change in the Registrant’s independent registered public accounting firm was approved by the board of directors. During the most recent fiscal year and through the date of this Current Report, neither the Registrant nor anyone on its behalf consulted with BF Borgers CPA PC regarding any of the following:(i) The application of accounting principles to a specific transaction, either completed or proposed;(ii) The type of audit opinion that might be rendered on the Registrant’s financial statements, and none of the following was provided to the Registrant:(a) a written report; or(b) oral advice that BF Borgers CPA PC concluded was an important factor considered by the Registrant in reaching a decision as to an accounting, auditing or financial reporting issue; or(iii) Any matter that was subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event, as described in Item 304(a)(1)(v) of Regulation S-K.no assurancen2018.2022. The framework used by management in making that assessment was the criteria set forth in the document entitled “2013 Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, management concluded that, during the period covered by this report, such internal controls and procedures were not effective as of December 31, 20182022 and that material weaknesses in ICFR existed as more fully described below.17 20182022 our internal controls over financial reporting were not effective at the reasonable assurance level:2018.2022. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.As a result, as of the date of filing, we have not completed our ASC 606 implementation process and, thus, cannot disclose the quantitative impact of adoption on our financial statements. In addition, dueDue to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.20182022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except the implementation of the controls identified above.18 their agesexecutive officers listed in the table above and any other person(s) pursuant to which he was elected as of March 31, 2019 are listed below. The number of directors is determined by the Board. All directors hold office until the next annual meetinga director or appointed as an executive officer.board or until their successors haveCompany. Mr. Aizman is accomplished staffing and recruiting professional with over 19 years of experience in recruiting, sales, management, business development, and marketing. From Mar 1997 to August 2016, Mr. Aizman served as the Account Manager with SANS Consulting Services, Inc. located in Greater New York City Area, Mr. Aizman’s Clients included: JPMorgan Chase, Citigroup, Credit Suisse, and others. In September 2016, Mr. Aizman joined us our Co-Founder and Chief Operating Officer. On May 27, 2022, Mr. Aizman was appointed as a Director, Chief Executive Officer, Secretary and Treasurer. We believe Mr. Aizman is qualified to serve as a director of the Company due to his expensive experience in Recruiting Industry.duly elected and qualified. Officers are elected byappointed BOWMO™’s Chairman of the Board and their terms of office are, except to the extent governed by employment contract, at the discretion of the Board.NameAgePositionDirector SinceConrad R Huss71President and Chief Executive OfficerJune, 2019Directors are electedPresident. We believe Mr. Lakshin is qualified to serve until the next annual meeting of stockholders and until their successors are elected and qualified. Directors are elected byas a plurality of the votes cast at the annual meeting of stockholders and hold office until the expiration of the term for which he or she was elected and until a successor has been elected and qualified.A majority of the authorized number of directors constitutes a quorum of the Board of Directors for the transaction of business. The directors must be present at the meeting to constitute a quorum. However, any action required or permitted to be taken by the Board of Directors may be taken without a meeting if all members of the Board of Directors individually or collectively consent in writing to the action.Executive officers are appointed by, and serve at the pleasure of, the Board of Directorsdirector of the Company subjectdue to any contractual arrangements.RR. Huss, President and Chief Executiveservesserved as the sole officer and director of the Company.Cruzani. Mr. Huss is a financial professional with over 25 years of investment banking and operating experience. Most recently, he was with Ocean Cross Capital Markets, as Senior Managing Director from 2011 to 2013. Previously, Mr. Huss served as the Senior Managing Director at Southridge Investment Group from 2006 to 2011. We believe Mr. Huss is qualified to serve as a director of the Company due to his financial and operational experience.Family RelationshipsThere are no familial relationships among any of our directors or officers.19 14●20 We have not yetcodeCode of businessEthics that applies to all of our employees, including our Executive Chairman, Chief Executive Officer, and Chief Financial Officer. Although not required, the Code of Ethics also applies to our directors. The Code of Ethics provides written standards that we believe are reasonably designed to deter wrongdoing and promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and ethics.professional relationships, full, fair, accurate, timely and understandable disclosure and compliance with laws, rules and regulations, including insider trading, corporate opportunities and whistleblowing or the prompt reporting of illegal or unethical behavior. We intend to do sowill provide a copy of our Code of Ethics, without charge, upon request in the near future and to post it on our website at www.cruzani.com.2018,2022, were timely.concernsregarding the total compensation awarded to, earned by and paid or accrued by the Company during the last two fiscal years indicated to (i) all individuals that served as the Company’s principalour executive officer or acted in a similar capacityofficers for the Company at any time during the fiscal years ended December 31, 20192022 and 2018; (ii) the two most highly compensated2021:who were serving asthrough base salary. Each of our executive officers has substantial responsibilities in connection with our day-to-day operations.21 the Company at the end of the fiscal years ended December 31, 2020 and 2019 whose total compensation exceeded $100,000; and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to clause (ii) above but for the fact that the individual was not serving as an executive officer of the Company at the end of the fiscal year ended December 31, 2020.Conrad R Huss, the Company’s principal executive officer and sole officer of the Company, received $60,000 and $0, respectively, for compensation during the fiscal years ended December 31, 2019 and 2018.Mr. Huss replaced Everett M. Dickson as Chief Executive Officer in 2019. Everett M. Dickson was the Company’s principal executive officer and sole officer of the Company throughout all of 2018 and portions of 2019. He, received $52,000 and $120,000, respectively, for compensation during the fiscal years ended December 31, 2019 and 2018. Mr. Dickson also received 5,000,000 shares of its Series C Preferred stock for services rendered in 2018. The stock was valued based on the services performed for total non-cash expense of $120,000.Director CompensationThe Company’s directors, including the Chairman of the Board, do not receive compensation for their services as such. The Registrant reimburses the directors for their reasonable out-of-pocket expenses for attending meetings of the Board of Directors.Long-Term Incentive Plans2020,2022 and 2021, $284,514 and $260,430 in accrued but unpaid base salary, respectively.Company haddate of this 10-K we have issued no awards under the plan.plans in effect. Further,benefits. We have, however, adopted a 401(k) retirement plan.Company had no pension plans ordate of this 10-K, we do not have any plans or agreements which provide compensation onin the event of a termination of employment or a corporate change in control.Securities AuthorizedIssuance under Equity Compensation Planshave not adopted any equity compensation plans.Changesdo, however, reimburse our directors for their reasonable out-of-pocket expenses in ControlWe are not aware of any arrangements, including any pledge by any person of our securities, the operation of which may result in a change in control of the Company. Effective December 31, 2017, however, pursuant to our Articles of Incorporation, our Board has been granted the authority, without further stockholder approval, to provide for the issuance of up to 3,550,000 shares of our preferred stock in one or more series and to determine the dividend rights, conversion rights, voting rights, rights in terms of redemption, liquidation preferences, the number of shares constituting any such series and the designation of such series. Our Board has the power to afford preferences, powers and rights (including voting rights) to the holders of any preferred stock preferences, such rights and preferences being senior to the rights of holders of common stock. As of December 31, 2018, 865,000 shares of “blank check” preferred stock remain available for designation and issuance. Although we have no present intention to issue any additional shares of preferred stock, the issuance of shares of preferred stock, or the issuance of rights to purchase such shares, may have the effect of delaying, deferring or preventing a change in control of our Company.2019,2022, for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding shares of Common Stock, (ii) each named executive officer and director, and (iii) all executive officers and directors as a group. A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants. Unless otherwise indicated, voting and investment power relating to the shares shown in the tables for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children. Common Stock Series A
Preferred Stock Series B
Preferred Stock Series C
Preferred Stock Name and Address of
Beneficial Owner(1) Amount Percent of
Class Amount Percent of
Class Amount Percent of
Class Amount Percent of
Class Officers & Directors: Conrad R Huss Chief Executive Officer, Interim Chief Financial Officer and Sole Director(2) - - - - - - 5,000,000 50.0 % All Directors and Officers as a group (1 person) - - - - - - 5,000,000 50.0 % 5% Stockholders: *Less than 1%22 Series D
Preferred Stock Series E
Preferred Stock Name and Address of Beneficial Owner(1) Amount Percent of
Class Amount Percent of
Class 5% Stockholders: L2 Capital, LLC
8900 State Line Rd.,
Suite 410 Leawood, Kansas
66206 125,000 100.0 % - -
Beneficial
Ownership (1)Applicable percentages are based on 297,041,945our common stockSeries B Preferred Stock, 5,000,000 shares of Series C Preferred Stock and calculated as required by rules promulgated by the SEC.101 shares of Series F Preferred Stock.Conrad R Huss has an Employment agreement which pays him $120,000 annually. To date, his entire salary has been accrued.yearyears ended December 31, 2020.20202022 and 2021 we were billed approximately $29,000 20202022 and 2019.yearyears ended December 31, 2020yearyears ended December 31, 2020.23 24
NumberBy-lawsDocument*Document.**Document*Document.**Document*Document.**Document*Document.**LabelsLabel Linkbase Document*Document.**Document*Document.**†*25 CRUZANI, Date: June 2, 2021By:/s/ Conrad R HussName:Conrad R HussTitle:Chief Executive Officer Officer)Date: June 2, 2021By:/s/ Conrad R HussName:Conrad R HussTitle:Chief Financial Officer(Principal Financial, and Accounting Officer)2126