UNITED STATES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 20202021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number: 001-36530
Touchpoint Group Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 46-3561419 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer | |
4300 Biscayne Blvd, Suite 203, Miami FL | 33137 | |
(Address of principal executive offices) | (Zip Code) |
(305)420-6640
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which | ||
N/A | N/A | N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yesþ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☑ | Smaller reporting company | ☑ |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ Noþ☑
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of August 17, 2020, 39,787,39302, 2021, shares of the registrant’s common stock, par value $0.0001 per share, were outstanding.
TABLE OF CONTENTS
1 | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 | |
26 | ||
26 | ||
27 | ||
27 | ||
28 | ||
28 | ||
28 | ||
28 | ||
29 | ||
30 |
i
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
The statements made in this Report, and in other materials that the Company has filed or may file with the Securities and Exchange Commission, in each case that are not historical facts, contain “forward-looking information” within the meaning of the Private Securities Litigation Reform Act of 1995, and Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, which can be identified by the use of forward-looking terminology such as “may,” “will,” “anticipates,” “expects,” “projects,” “estimates,” “believes,” “seeks,” “could,” “should,” or “continue,” the negative thereof, and other variations or comparable terminology as well as any statements regarding the evaluation of strategic alternatives. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. These risks include, but are not limited to, risks and uncertainties relating to our current cash position and our need to raise additional capital in order to be able to continue to fund our operations; our ability to retain our managerial personnel and to attract additional personnel; competition; our ability to protect intellectual property rights, and any and other factors, including the risk factors identified in the documents we have filed, or will file, with the Securities and Exchange Commission.
In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this report or in any document incorporated herein by reference might not occur. Investors are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the respective dates of this report or the date of the document incorporated by reference in this report. We expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by federal securities laws.
These and other matters the Company discusses in this Report, or in the documents it incorporates by reference into this Report, may cause actual results to differ from those the Company describes. The Company assumes no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
ii
PARTPART I – FINANCIAL INFORMATION
ITEMITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
TOUCHPOINT GROUP HOLDINGS, INC.
Condensed Consolidated Balance Sheets
June 30, 20202021 and December 31, 20192020
(in thousands, except share data)
June 30, 2020 (unaudited) | December 31, 2019 |
| June 30, |
| December 31, |
| ||||||||||
Assets |
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Current assets: |
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Cash | $ | 191 | $ | 258 |
| $ | 114 |
| $ | 118 |
| |||||
Accounts receivable, net | 250 | 80 |
| 148 |
| 124 |
| |||||||||
Prepaid compensation | 550 | 550 |
| 550 |
| 550 |
| |||||||||
Other receivable | 229 | - |
|
| - |
| 66 |
| ||||||||
Advances to acquisition target | 210 | 210 | ||||||||||||||
Other current assets | 182 | 88 |
|
| 187 |
|
| 160 |
| |||||||
1,612 | 1,186 | |||||||||||||||
Current assets of continued operations |
| 999 |
| 1,018 |
| |||||||||||
Current assets of discontinued operations | 1 | 29 |
|
| 1 |
|
| 1 |
| |||||||
Total current assets |
| 1,000 |
| 1,019 |
| |||||||||||
1,613 | 1,215 |
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Other receivable | 250 | 250 | ||||||||||||||
Property and equipment, net | 3 | - | ||||||||||||||
Fixed assets, net |
| 3 |
| 3 |
| |||||||||||
Intangible assets, net | 1,702 | 1,992 |
| 660 |
| 930 |
| |||||||||
Goodwill | 419 | 419 |
| 419 |
| 419 |
| |||||||||
Prepaid compensation, net of current portion | 642 | 917 |
| 92 |
| 367 |
| |||||||||
Non current assets of discontinued operations | 5 | 34 |
|
| 5 |
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| 5 |
| |||||||
Total assets | $ | 4,634 | $ | 4,827 |
| $ | 2,179 |
| $ | 2,743 |
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Liabilities and Stockholders’ Equity | ||||||||||||||||
Liabilities, Temporary Equity and Stockholders’ Deficit |
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Current liabilities: |
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Accounts payable | $ | 665 | $ | 530 |
| $ | 262 |
| $ | 314 |
| |||||
Accrued expenses | 257 | 200 |
| 421 |
| 327 |
| |||||||||
Accrued compensation | 553 | 388 |
| 89 |
| 55 |
| |||||||||
Deferred revenue |
| 70 |
| 60 |
| |||||||||||
Loans payable | 558 | 290 |
| 1,180 |
| 734 |
| |||||||||
Amount due to related parties | 19 | 19 |
| 19 |
| 34 |
| |||||||||
Settlement liability |
| 290 |
|
| - |
| ||||||||||
Promissory notes, related parties | 1,000 | 1,000 |
|
| 1,000 |
|
| 1,000 |
| |||||||
Current liabilities of continued operations | 3,052 | 2,427 |
| 3,331 |
| 2,524 |
| |||||||||
Current liabilities of discontinued operations | 11 | 428 |
|
| 61 |
|
| 11 |
| |||||||
Total current liabilities | 3,063 | 2,855 |
|
| 3,392 |
|
| 2,535 |
| |||||||
|
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| ||||||||||||
Total liabilities | 3,063 | 2,855 |
|
| 3,392 |
|
| 2,535 |
| |||||||
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| ||||||||||||
Temporary Equity – redeemable common stock outstanding 33,944 shares | 605 | 605 | ||||||||||||||
Temporary Equity – redeemable common stock outstanding shares |
| 605 |
| 605 |
| |||||||||||
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Stockholders’ Equity | ||||||||||||||||
Stockholders’ Deficit |
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Preferred stock: |
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$0.0001 par value, authorized 50,000,000; No shares issued and outstanding | — | — | ||||||||||||||
$ par value, authorized ; shares issued and outstanding |
| — |
| — |
| |||||||||||
Common stock: |
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| |||||||||||
$0.0001 par value, authorized 200,000,000; 34,987,393 and 4,098,914 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 4 | 2 | ||||||||||||||
$ par value, authorized ; and shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively |
| 18 |
| 13 |
| |||||||||||
Additional paid-in capital | 62,224 | 61,749 |
| 64,597 |
| 63,551 |
| |||||||||
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|
| ||||||||||||
Accumulated deficit | (62,208 | ) | (61,362 | ) |
| (67,379 | ) |
| (64,907 | ) | ||||||
Accumulated other comprehensive loss | (24 | ) | (24 | ) |
|
| (24 | ) |
|
| (24 | ) | ||||
Total Touchpoint Group Holdings, Inc. stockholders’ (deficit) equity | (4 | ) | 365 | |||||||||||||
Total Touchpoint Group Holdings, Inc. stockholders’ deficit |
| (2,788 | ) |
| (1,367 | ) | ||||||||||
Equity attributable to non-controlling interest | 970 | 1,002 |
|
| 970 |
|
| 970 |
| |||||||
Total stockholders’ equity | 966 | 1,367 | ||||||||||||||
Total stockholders’ deficit |
| (1,818 | ) |
| (397 | ) | ||||||||||
|
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|
| ||||||||||||
Total liabilities and stockholders’ equity | $ | 4,634 | $ | 4,827 | ||||||||||||
Total liabilities and stockholders’ deficit |
| $ | 2,179 |
| $ | 2,743 |
|
See accompanying notes to unaudited condensed consolidated financial statements.
TOUCHPOINT GROUP HOLDINGS, INC.
Condensed Consolidated Statements of Operations
For the three and six months ended June 30, 20202021 and 20192020
(in thousands, except per share data)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, |
| Three Months Ended |
| Six Months Ended |
| ||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
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Revenue | $ | 150 | $ | 48 | $ | 190 | $ | 48 |
| $ | 34 |
| $ | 150 |
| $ | 66 |
| $ | 190 |
| |||||||||||
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Cost of revenue: |
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Software and production costs | - | - | - | 4 |
| - |
| - |
| 1 |
| - |
| |||||||||||||||||||
Amortization of intangible assets | 139 | 166 | 278 | 276 |
|
| 139 |
|
| 139 |
|
| 278 |
|
| 278 |
| |||||||||||||||
139 | 166 | 278 | 280 |
| 139 |
| 139 |
| 279 |
| 278 |
| ||||||||||||||||||||
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Gross profit (deficit) | 11 | (118 | ) | (88 | ) | (232 | ) |
| (105 | ) |
| 11 |
| (213 | ) |
| (88 | ) | ||||||||||||||
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Expenses: |
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General and administrative | 742 | 690 | 1,241 | 1,580 |
| 745 |
| 742 |
| 1,732 |
| 1,241 |
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742 | 690 | 1,241 | 1,580 | |||||||||||||||||||||||||||||
Loss from operations | (731 | ) | (808 | ) | (1,329 | ) | (1,812 | ) |
| (850 | ) |
| (731 | ) |
| (1,945 | ) |
| (1,329 | ) | ||||||||||||
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Other income and expense: |
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Interest expense | (74 | ) | (18 | ) | (122 | ) | (35 | ) |
| (100 | ) |
| (74 | ) |
| (186 | ) |
| (122 | ) | ||||||||||||
Interest income | - | 6 | 3 | 10 |
| - |
| - |
|
|
| 3 |
| |||||||||||||||||||
Foreign exchange | (1 | ) | (1 | ) | (2 | ) | (2 | ) |
| - |
| (1 | ) |
| (1 | ) |
| (2 | ) | |||||||||||||
Legal settlement expense |
| (290) |
| - |
| (290 | ) |
| - |
| ||||||||||||||||||||||
Other (expense) income | (2 | ) | - | 604 | 553 |
|
| - |
|
| (2 | ) |
|
| - |
|
| 604 |
| |||||||||||||
Other income and expense |
| (390 | ) |
| (77 | ) |
| (477 | ) |
| 483 |
| ||||||||||||||||||||
(77 | ) | (13 | ) | 483 | 526 |
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Loss before discontinued operations | (808 | ) | (821 | ) | (846 | ) | (1,286 | ) | ||||||||||||||||||||||||
Loss before discontinued operations for the period |
| (1,240 | ) |
| (808 | ) |
| (2,422 | ) |
| (846 | ) | ||||||||||||||||||||
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Loss from discontinued operations | - | (329 | ) | - | (554 | ) |
| (50 | ) |
| - |
| (50 | ) |
| - |
| |||||||||||||||
Net loss for the period | (808 | ) | (1,150 | ) | (846 | ) | (1,840 | ) | ||||||||||||||||||||||||
Net loss attributable to non-controlling interest | - | 66 | - | 100 | ||||||||||||||||||||||||||||
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Net loss attributable to Touchpoint Group Holdings Inc. common stockholders | $ | (808 | ) | $ | (1,084 | ) | $ | (846 | ) | $ | (1,740 | ) |
| $ | (1,290 | ) |
| $ | (808 | ) |
| $ | (2,472 | ) |
| $ | (846 | ) | ||||
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Earnings per share |
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Basic and diluted net loss per share – continuing operations | $ | (0.03 | ) | $ | (0.23 | ) | $ | (0.05 | ) | $ | (0.36 | ) | ||||||||||||||||||||
Basic and diluted net loss per share – discontinued operations | $ | - | $ | (0.09 | ) | $ | - | $ | (0.16 | ) | ||||||||||||||||||||||
Basic and diluted net loss per share |
| $ | (0.01 | ) |
| $ | (0.03 | ) |
| $ | (0.01 | ) |
| $ | (0.05 | ) | ||||||||||||||||
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Weighted average number of shares outstanding |
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Basic and diluted | 27,354 | 3,601 | 18,034 | 3,567 |
|
| 178,160 |
|
| 27,354 |
|
| 166,613 |
|
| 18,034 |
|
See accompanying notes to unaudited condensed consolidated financial statements.
TOUCHPOINT GROUP HOLDINGS, INC.
Condensed Consolidated Statements of Comprehensive Loss
For the three and six months ended June 30, 20202021 and 20192020
(in thousands)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, |
| Three Months Ended |
| Six Months Ended |
| ||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
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Net loss | $ | (808 | ) | $ | (1,084 | ) | $ | (846 | ) | $ | (1,740 | ) |
| $ | (1,290 | ) |
| $ | (808 | ) |
| $ | (2,472 | ) |
| $ | (846 | ) | ||||
Other comprehensive income: | ||||||||||||||||||||||||||||||||
Foreign currency translation adjustment loss | - | - | - | 11 | ||||||||||||||||||||||||||||
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Foreign currency translation adjustment |
|
| - |
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| - |
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| - |
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| - |
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Total comprehensive loss | $ | (808 | ) | $ | (1,084 | ) | $ | (846 | ) | $ | (1,729 | ) |
| $ | (1,290 | ) |
| $ | (808 | ) |
| $ | (2,472 | ) |
| $ | (846 | ) |
See accompanying notes to unaudited condensed consolidated financial statements.
TOUCHPOINT GROUP HOLDINGS, INC.
Condensed Consolidated Statements of Equity
For the six months ended June 30, 20202021 and 20192020
(in thousands)
(unaudited)
Mezzanine Equity | Common Stock | Additional | Stock Subscription | Accumulated | Accumulated Other Comprehensive | Stock Subscription | Non- Controlling | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Paid-In | Receivable | Deficit | Income | Receivable | Interest | Equity |
| Temporary Equity |
| Common Stock |
| Additional |
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|
| Accumulated |
| Accumulated |
| Non- |
| Total |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-In |
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| Deficit |
| Loss |
| Interest |
| Equity(Deficit) |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, January 1, 2019 | 34 | $ | 605 | 3,502 | $ | 2 | $ | 62,606 | $ | (1,425 | ) | $ | (54,854 | ) | $ | (35 | ) | $ | - | $ | 1,571 | $ | 7,865 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (656 | ) | - | (34 | ) | (690 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation | - | - | - | - | - | - | - | 11 | - | 11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal of interest in Banana Whale Studios PTE Limited | (449 | ) | (449 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, March 31, 2019 | 34 | 605 | 3,502 | 2 | 62,606 | (1,425 | ) | (55,510 | ) | (24 | ) | - | 1,088 | 6,737 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (1,084 | ) | - | - | (66 | ) | (1,150 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares for contract modification | - | - | 82 | - | 127 | - | - | - | - | - | 127 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares for services | - | - | 200 | - | 150 | - | - | - | - | - | 150 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2019 | 34 | $ | 605 | 3,784 | $ | 2 | $ | 62,883 | $ | (1,425 | ) | $ | (56,594 | ) | $ | (24 | ) | $ | $ | 1,022 | $ | 5,864 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Balances, January 1, 2020 | 34 | $ | 605 | 4,099 | $ | 2 | $ | 61,749 | $ | - | $ | (61,362 | ) | $ | (24 | ) | $ | - | $ | 1,002 | $ | 1,374 |
|
| $ | 605 |
|
| $ | 2 |
| $ | 61,749 |
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|
| $ | (61,362 | ) |
| $ | (24 | ) |
| $ | 1,002 |
| $ | 1,367 |
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Net loss | - | - | - | - | - | - | (38 | ) | - | - | - | (38 | ) |
| - |
| - |
| - |
| - |
|
| - |
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| (38 | ) |
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| - |
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| (38 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
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Return of shares | - | - | (474 | ) | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Return of shares on recission of contracts |
| - |
| 0 |
| ) |
| 0 |
| (2 | ) |
|
|
| 0 |
|
|
| (32 | ) |
| (34 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Correction of shares not subject to reverse split |
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| - |
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| - |
| - |
| - |
| - |
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Issuance of shares on partial conversion of note payable | 5,476 | 71 | - | - | - | - | - | 71 |
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| 71 |
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| - |
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| - |
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| - |
| 71 |
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|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Correction of shares not subject to reverse split | 2,400 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for financing commitment | 206 | 8 | - | - | - | - | - | 8 |
|
|
|
|
|
|
|
| 8 |
|
|
|
| - |
|
| - |
|
| - |
| 8 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recission of shares on disposal of Banana Whale Studios PTE Limited | - | - | (89 | ) | - | (2 | ) | - | - | - | - | (32 | ) | (34 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, March 31, 2020 | 34 | 605 | 11,618 | 2 | 61,826 | - | (61,400 | ) | (24 | ) | - | 970 | 1,374 |
|
| 605 |
|
| 2 |
| 61,826 |
|
|
|
| (61,400 | ) |
| (24 | ) |
| 970 |
| 1,374 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (808 | ) | - | (808 | ) |
| - |
| - |
| - |
| - |
|
| - |
|
|
| (808 | ) |
|
| - |
|
|
| (808 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issuance for cash | - | - | 646 | - | 20 | - | - | - | - | - | 20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares for cash |
| - |
| - |
|
| - |
| 20 |
|
|
|
| - |
|
| - |
|
| - |
| 20 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares on partial conversion of note payable | 7,337 | 1 | 28 | - | - | - | - | - | 29 |
|
|
|
|
|
| 1 |
| 28 |
| - |
|
| - |
|
| - |
|
| - |
| 29 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for financing commitment | 354 | 26 | - | - | - | - | - | 26 |
|
|
|
|
|
| - |
| 26 |
| - |
|
| - |
|
| - |
|
| - |
| 26 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares for services |
|
| - |
|
| - |
|
|
|
| 1 |
|
| 324 |
|
|
|
| - |
|
| - |
|
| - |
|
| 325 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2020 |
|
|
| $ | 605 |
|
|
| $ | 4 |
| $ | 62,224 |
|
| ) |
| $ | (62,208 | ) |
| $ | (24 | ) |
| $ | 970 |
| $ | 966 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, January 1, 2021 |
|
| $ | 605 |
|
| $ | 13 |
| $ | 63,551 |
|
|
| $ | (64,907 | ) |
| $ | (24 | ) |
| $ | 970 |
| $ | (397 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss |
| - |
| - |
| - |
| - |
|
| - |
|
|
| (1,182 | ) |
|
| - |
|
| - |
| (1,182 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares for services provided |
|
|
|
|
|
| 1 |
| 163 |
|
|
|
| - |
|
| - |
|
| - |
| 164 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares on conversion of loans payable |
|
|
|
|
|
| 3 |
| 315 |
|
|
|
| - |
|
| - |
|
| - |
| 318 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for services to be provided | - | - | 15,000 | 1 | 324 | - | - | - | - | - | 325 |
|
|
|
|
|
| - |
| 20 |
|
|
|
| - |
|
| - |
|
| - |
| 20 |
| |||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2020 | 34 | 605 | 34,955 | 4 | 62,224 | (62,208 | ) | (24 | ) | - | 970 | 966 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for loan commitment fees |
|
| - |
|
| - |
|
|
|
|
| - |
|
| 173 |
|
|
|
|
| - |
|
| - |
|
|
|
|
| 173 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, March 31, 2021 |
|
| 605 |
|
| 17 |
| 64,222 |
|
|
| (66,089 | ) |
| (24 | ) |
| 970 |
| (904 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss |
|
|
| - |
|
|
|
|
|
|
|
|
| (1,290 | ) |
|
| - |
|
| - |
| (1,290 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of warrants issued for financing commitments |
|
|
|
|
|
|
|
|
| 117 |
|
|
|
|
|
|
|
|
| 117 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares on conversion of note payable |
|
|
|
|
|
| - |
| 56 |
|
|
|
| - |
|
|
|
|
| 56 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for financing commitment |
|
|
|
|
|
|
|
| 23 |
|
|
|
|
|
|
|
|
| 23 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for services to be provided |
|
|
|
|
|
|
|
|
|
| 1 |
|
| 179 |
|
|
|
|
|
|
|
|
|
|
|
|
| 180 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2021 |
|
|
|
| 605 |
|
|
|
| 18 |
|
| 64,597 |
|
|
|
|
|
| (67,379 | ) |
|
| (24 | ) |
|
| 970 |
|
| (1,818 | ) |
See accompanying notes to unaudited condensed consolidated financial statements.
4
TOUCHPOINT GROUP HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 20202021 and 20192020
(in thousands)
(unaudited)
2020 | 2019 |
| 2021 |
| 2020 |
| ||||||||||
Cash flows from operating activities: |
|
|
|
|
| |||||||||||
|
|
|
|
| ||||||||||||
Net loss for the period | $ | (846 | ) | $ | (1,286 | ) |
| $ | (2,472 | ) |
| $ | (846 | ) | ||
|
|
|
|
| ||||||||||||
Adjustment to reconcile net loss for the period to net cash flows from operating activities: |
|
|
|
|
| |||||||||||
Shares issued for financing commitment | 34 | - |
| 196 |
| 34 |
| |||||||||
Fair value of warrants issued for financing commitment |
| 117 |
|
| - |
| ||||||||||
Amortization of intangible assets | 278 | 276 |
| 278 |
| 278 |
| |||||||||
Gain on sale of interest in subsidiary | (604 | ) | (553 | ) |
|
| - |
| (604 | ) | ||||||
Shares issued for services to be provided | 256 | - |
| 344 |
| 256 |
| |||||||||
Shares issued for contract modification | - | 127 | ||||||||||||||
Shares issued for settlement of accrued interest |
| 18 |
|
| - |
| ||||||||||
Loan discount | 57 | - |
|
| - |
| 57 |
| ||||||||
Forgiveness of note receivable | 3 | - |
|
| - |
| 3 |
| ||||||||
Amortization of shares issued for services | 329 | 423 |
| 277 |
| 329 |
| |||||||||
|
|
|
|
|
| |||||||||||
Changes in operating assets and liabilities: |
|
|
|
|
| |||||||||||
Accounts receivable | (173 | ) | (40 | ) |
| (24 | ) |
| (173 | ) | ||||||
Deferred revenue |
| 10 |
|
| - |
| ||||||||||
Other assets | (30 | ) | (64 | ) |
| 59 |
|
| (30 | ) | ||||||
Settlement liability |
| 290 |
|
|
| |||||||||||
Accounts payable and accrued expenses | 354 | 167 |
|
| 76 |
|
| 354 |
| |||||||
Net cash flows from operating activities – continuing operations | (342 | ) | (950 | ) |
| (831 | ) |
| (342 | ) | ||||||
Net cash flows from operating activities – discontinued operations | - | (323 | ) |
|
| 50 |
|
| - |
| ||||||
Net cash flows from operating activities | (342 | ) | (1,273 | ) |
|
| (781 | ) |
|
| (342 | ) | ||||
|
|
|
|
| ||||||||||||
Cash used in investing activities: |
|
|
|
|
| |||||||||||
Cash advances to acquisition target | - | (126 | ) | |||||||||||||
Proceeds from sale of interest in subsidiary | - | 1,500 | ||||||||||||||
Purchase of intangible assets | (10 | ) | - |
| (8 | ) |
| (10 | ) | |||||||
Purchase of fixed assets | (3 | ) | - |
|
| - |
|
|
| (3 | ) | |||||
Net cash flows from investing activities – continuing operations | (13 | ) | 1,374 | |||||||||||||
Net cash flows from investing activities – discontinued operations | - | (168 | ) | |||||||||||||
Net cash flows from investing activities | (13 | ) | 1,206 |
|
| (8 | ) |
|
| (13 | ) | |||||
|
|
|
|
| ||||||||||||
Cash flows from financing activities: |
|
|
|
|
| |||||||||||
|
|
|
|
| ||||||||||||
Proceeds from issuance of shares | 20 | - |
|
| - |
| 20 |
| ||||||||
Repayment of loans | (190 | ) | - |
| (100 | ) |
| (190 | ) | |||||||
Advances from related parties, net |
| (15 | ) |
|
| - |
| |||||||||
Proceeds from note receivable | 3 | - |
|
|
| 3 |
| |||||||||
Proceeds from loan | 455 | 503 | ||||||||||||||
Net cashflows from financing activities – continuing operations | 288 | 503 | ||||||||||||||
Net cashflows from financing activities – discontinued operations | - | 48 | ||||||||||||||
Net cashflows from financing activities | 288 | 551 | ||||||||||||||
Proceeds from loans |
|
| 900 |
|
| 455 |
| |||||||||
Net cash flows from financing activities |
| 785 |
| 288 |
| |||||||||||
|
| - |
|
| - |
| ||||||||||
(Decrease) increase in cash during the period | (67 | ) | 484 | |||||||||||||
Net cash flows from financing activities |
|
| 785 |
|
| 288 |
| |||||||||
|
|
|
|
|
| |||||||||||
Decrease in cash during the period |
| (4 | ) |
| (67 | ) | ||||||||||
Foreign exchange effect on cash | - | 10 |
|
| - |
|
| - |
| |||||||
|
|
|
|
| ||||||||||||
Cash at beginning of the period | 258 | 353 |
| 118 |
| 258 |
| |||||||||
|
|
|
|
| ||||||||||||
Cash at end of the period | $ | 191 | $ | 847 |
| $ | 114 |
| $ | 191 |
| |||||
|
|
|
|
| ||||||||||||
Supplementary Information: | ||||||||||||||||
Non-cash financing transactions: | ||||||||||||||||
Common stock issued for business combinations | - | 14,220 | ||||||||||||||
Common stock issued for conversion of debt | - | 406 | ||||||||||||||
Issuance of shares on conversion of loan payable |
|
| 18 |
| - |
|
See accompanying notes to unaudited condensed consolidated financial statements.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 20202021
Note 1. Description of Business, Organization and Principles of Consolidation
Description of Business
On September 26, 2019, the Company changed its name from One Horizon Group, Inc. to Touchpoint Group Holdings, Inc. (the “Company”). The Company has the following businesses:
(i) | Touchpoint | |
TGHI brings users closer to the action by enabling them to engage with clubs, favorite players, peers and relevant brands through features that include live streaming, access to limited edition merchandise, gamification (chance to win unique one-off life experiences), user rewards, third party branded offers, credit cards and associated benefits. |
(ii) | The Company is in negotiations to sell its interests in Love Media House, Inc. (“Love Media House”) and as such, it is considered to be discontinued operations. |
(iii) | 123 Wish, Inc. |
The Company is primarily based in the United States of America and the United Kingdom.Kingdom
Interim Period Financial Statements
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions of the Securities and Exchange Commission’sCommission (the “SEC”) instructions.. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The results of operations reflect interim adjustments, all of which are of a normal recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for such interim period. The results reported in these interim condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and note disclosure normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the SEC’s rules and regulations. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019,2020, as filed with the SEC on April 24, 2020.9, 2021 and as amended.
Current Structure of the Company
The Company has the following subsidiaries:
Subsidiary name | % Owned | |||
● 123Wish, Inc. (considered dormant) | 51 | % | ||
● One Horizon Hong Kong Ltd (Limited operations) | 100 | % | ||
● Horizon Network Technology Co. Ltd | 100 | % | ||
● Love Media House, Inc (discontinued operations) | 100 | % | ||
● Touchpoint Connect Limited | 100 | % |
In addition to the subsidiaries listed above, Suzhou Aishuo Network Information Co., Ltd (“Suzhou Aishuo”) is a limited liability company organized in China and controlled by the Company via various contractual arrangements. Suzhou Aishuo is treated as one of our subsidiaries, with limited operations, for financial reporting purposes in accordance with GAAP. During 2021, there have been limited operations at Suzhou Aishou.
During the six months ended June 30, 2021 the main trading of the Group is conducted through the Company and no significant activities are undertaken in the subsidiary companies.
All significant intercompany balances and transactions have been eliminated in consolidation.
6
Note 2. Summary of Significant Accounting Policies
Liquidity and Capital Resources
Historically, theThe Company has incurred net losses and negative cash flows from operations which raise substantial doubt about the Company’s ability to continue as a going concern. The Company has principally financed these losses from the sale of equity securities and the issuance of debt instruments.
The Company will be required to raise additional funds through various sources, such as equity and debt financings. While the Company believes it is probable that such financings could be secured, there can be no assurance the Company will be able to secure additional sources of funds to support its operations, or if such funds are available, that such additional financing will be sufficient to meet the Company’s needs or on terms acceptable to us.
At June 30, 2020,2021, the Company had cash of approximately $191,000.114,000. Together with the Company’s Equity Line with MacRab LLC, and current operational plan and budget, and expected financings, the Company believes that it is probable that it will have sufficienthas the potential to generate positive cash to fund its operations into at least the first quarter of 2021.flows in 2022. However, actual results could differ materially from the Company’s projections.
On August 5, 2019Covid-19
The outbreak of the novel strain of coronavirus, specifically identified as “COVID- 19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company entered into an equity purchase agreement (“Equity Purchase Agreement”) with Crown Bridge Partners, LLC (“Crown”), whereby Crown is expected to purchase up to $10.0 million of new common stock from the Company at the Company’s option during the next three years. The amount is determined by the market value of trades and priced at an 18% discount to average market price. As of June 30, 2020, 645,757 shares have been sold under the Equity Purchase Agreement for net cash proceeds of $19,969.its operations in future periods.
Basis of Accounting and Presentation
These condensed consolidated financial statements have been prepared in conformity with GAAP.
Foreign Currency Translation
The reporting currency of the Company is the United States dollar. Assets and liabilities other than those denominated in U.S. dollars, primarily in the United Kingdom, are translated into United States dollars at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the period. Gains or losses from these translations are reported as a separate component of other comprehensive income (loss) until all or a part of the investment in the subsidiaries is sold or liquidated. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations.
Transaction gains and losses that arise from exchange-rate fluctuations on transactions denominated in a currency other than the functional currency are included in general and administrative expenses.
Cash
Cash and cash equivalents include bank demand deposit accounts and highly liquid short-term investments with maturities of three months or less when purchased. Cash consists of checking accounts held at financial institutions in the U.S. and the United Kingdom which balances may exceed insured limits at times. The Company has not experienced any losses related to these balances, and management believes the credit risk to be minimal.
Accounts Receivable, Revenue Recognition and Concentrations
Performance Obligations - A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under the revenue recognition standard. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s contracts do not typically have variable consideration that needs to be considered when the contract consideration is allocated to each performance obligation.
Revenue Recognition – We recognize revenues from each business segment as described below:
— DiscontinuedContinued operations
1 |
— Continuing operations
Touchpoint – Revenue for the sale of the software license is recognized when the customer has use of the services and has access to use the software. Revenue from the usage of the software is shared between the customer and Touchpoint in accordance with their operator agreement. The Company also generates revenue through the development and deployment of customized customer apps based on its existing technologies. Based on the terms of the Operator Agreements, the Company recognizes revenue upon approval of the app and related design documents by the customer. Included within deferred revenue is amounts billed and/or collected from customer prior to achieving customer approval. The Company also recognizes revenue through hosting and maintenance |
— Discontinued operations
1. | Love Media House derived income from recording and video services. Income was recognized |
The Company does not have off-balance sheet credit exposure related to its customers. As of June 30, 2021 and December 31, 2020, sixseven customers and five customers respectively, accounted for 100% of the accounts receivable balance and as of December 31, 2019, two customers accounted for 68%100% of the accounts receivable balance. Four customersOne customer accounted for 100%100% of the revenue for the three and six months ended June 30, 20202021, and two customers accounted for 100% of the revenue for the six months ended June 30, 2019.2020.
Intangible Assets
Intangible assets include software development costs and acquired technology and are amortized on a straight-line basis over the estimated useful lives ranging from four to five years. The Company periodically evaluates whether changes have occurred that would require revision of the remaining estimated useful life. The Company performs periodic reviews of its capitalized intangible assets to determine if the assets have continuing value to the Company.
Impairment of Other Long-Lived Assets
The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets. No impairment charge has been determined during the respective three and six months ended June 30, 2020. As set out in Note 3, during the year ended December 31, 2019, the Company recorded an impairment charge related to the Company’s discontinued operations of $2.4 million.
Income Taxes
Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to be recovered or settled. Realization of certain deferred income tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction. The Company records a valuation allowance to reduce deferred income tax assets to amounts that are more likely than not to be realized. The initial recording and any subsequent changes to valuation allowances are based on a number of factors (positive and negative evidence). The Company considers its actual historical results to have a stronger weight than other, more subjective, indicators when considering whether to establish or reduce a valuation allowance.
Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities. For the three and six month periods ended June 30, 20202021 and 2019,2020, outstanding warrants and shares underlying convertible debt are antidilutive because of net losses, and as such, their effect haswas not been included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations.
Accumulated Other Comprehensive Income (Loss)
Other comprehensive income (loss), as defined, includes net income (loss), foreign currency translation adjustment, and all changes in equity (net assets) during a period from nonowner sources. To date, the Company has not had any significant transactions that are required to be reported in other comprehensive income (loss), except for foreign currency translation adjustments.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal period. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, determining fair values of assets acquired and liabilities assumed in business combinations, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions.
8
Recently adopted Accounting Pronouncements
In December 2019,August 2020, the FASB issued ASU 2019-12, "Income Taxes (Topic 740)No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Simplifying the Accounting for Income Taxes,"Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for income taxesconvertible instruments by removing major separation models required under current GAAP. The ASU removes certain exceptionssettlement conditions that are required for equity contracts to qualify for the general principlesderivative scope exception and it also simplifies the diluted earnings per share calculation in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.certain areas. This ASU 2019-12 is effective for us for annual reporting periods beginning January 1, 2021. We are currently reviewing the provisions of this new pronouncement, and the impact, if any, the adoption of this guidance has on our financial position and results of operations.
In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The purpose of this ASU is to reduce the cost and complexity of evaluating goodwill for impairment. It eliminates the need for entities to calculate the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Under this ASU, an entity will perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying value exceeds the reporting unit’s fair value. The new standard is effective for fiscal years, andafter December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2019. The Company adopted2020. This update permits the ASU onuse of either the modified retrospective or fully retrospective method of transition. Effective January 1, 2020. The amendment2021, the Company elected to early adopt ASU 2020-06, which did not have ana material impact on ourthe consolidated financial condition or results of operations.
Other receivables
Other receivables of the Company consisted of receivables from Banana Whale Studios Pte Ltd. (“Banana Whale”)statements and Browning for the balances of amounts outstanding from the sale of the former subsidiaries. The aggregate balances as of June 30, 2020 and December 31, 2019 were $454,000 and $250,000 respectively (see Note 3).
Other receivables comprise the following (in thousands):
June 30, 2020 | December 31, 2019 | |||||||
(unaudited) | ||||||||
Banana Whale | $ | 250 | $ | 250 | ||||
Browning Production & Entertainment, Inc. | 204 | - | ||||||
$ | 454 | $ | 250 |
On February 14, 2020, the Company completed the sale of its interest in Browning to William J. Browning, the holder of the remaining Browning shares. Under the sale agreement, Browning and Mr. Browning agreed to repay advances totaling $210,000, made to Browning by the Company, over a 24-month period ending January 31, 2022 with an early repayment discount, equal to the amount of payment received, given during the six months ending August 31, 2020. Commencing September 1, 2020, the then balance outstanding is to be repaid in equal instalments over the remaining 18 months together with interest of 1% per month. During the six months ended June 30, 2020 the Company received $3,000 and in addition credited Browning with an additional $1,000 repayment discount.
In June 2020, Mr. Browning returned the 89,333 shares of Company common stock issued under the original acquisition for cancellation by the Company.
During the six months ended June 30, 2020, the Company realized a gain of $606,000 on the sale of its 51% interest in Browning.
Note 3. Discontinued operations
On January 1, 2019 the Company sold its 51% interest in Banana Whale to a third party in return for $1,500,000 in cash, a promissory note in the principal amount of $500,000 (the “Banana Whale Note”) and the return of 295,322 shares of the Company’s common stock issued upon acquisition.
In December 2019, an agreement regarding the remaining amount due on the Banana Whale Note of $500,000 was reached pursuant to which the Company received $250,000 in December 2019. In addition, the balance is payable over the two years ending December 2021 whereby the Company will receive an amount equal to 25% of reported EBITDA each quarter up to a maximum amount of $250,000 in the aggregate. As of June 30, 2020, no payments have been received.
During the year ended December 31, 2019, the Company decided to sell its interests in its subsidiaries, Love Media House and Browning. In connection with this determination, the Company concluded the intangible assets related to these subsidiaries were impaired. Accordingly, the Company recorded an impairment charge of approximately $2.4 million which was included in the loss from discontinued operations for the year ended December 31, 2019.disclosures.
On February 18, 2020, the Company completed the sale of its interest in Browning to William J. Browning, the holder of the remaining Browning shares. Under the Recission Agreement, Browning and Mr. Browning agreed to repay advances totaling $210,000, made to Browning by the Company, over a 24-month period ending January 31, 2022 with an early repayment discount, equal to the amount of payment received during the six months ending August 31, 2020. Commencing September 1, 2020, the then balance outstanding is to be repaid in equal instalments over the remaining 18 months together with interest of 1% per month. During the three months ended March 31, 2020, the Company received $1,000 and in addition credited Browning with an additional $1,000 repayment discount reducing the outstanding principal to $204,000 as of June 30, 2020.
In June 2020, Mr. Browning returned the 89,333 shares of Company common stock issued under the original acquisition. The shares have now been cancelled by the Company.
During the six months ended June 30, 2020, the Company realized a gain of $606,000 on the sale of its 51% interest in Browning.
The Company has accounted for the operations of Love Media House and Browning as discontinued operations. The Statements of Operations for the three and six months ended June 30, 2020 and 2019 for discontinued operations is as follows (in thousands, unaudited):
Three Months ended June 30 | Six Months ended June 30 | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenue | $ | - | 206 | $ | - | 407 | ||||||||||
Cost of revenue: | ||||||||||||||||
Software and production costs | - | 89 | - | 167 | ||||||||||||
Amortization | - | 50 | - | 100 | ||||||||||||
- | 139 | - | 267 | |||||||||||||
Gross Profit | - | 67 | - | 140 | ||||||||||||
Expenses | ||||||||||||||||
General and administrative | - | 388 | - | 682 | ||||||||||||
Depreciation | - | 4 | - | 5 | ||||||||||||
Other expenses | - | 4 | - | 7 | ||||||||||||
- | 396 | - | 694 | |||||||||||||
Loss from Discontinued Operations | $ | - | (329 | ) | $ | - | (554 | ) |
The balance sheet of discontinued operations as of June 30, 2020 and December 31, 2019 is as follows (in thousands):
June 30, | December 31, | |||||||
2020 | 2019 | |||||||
(unaudited) | ||||||||
Current Assets | ||||||||
Cash | $ | - | $ | 2 | ||||
Other current assets | 1 | 27 | ||||||
1 | 29 | |||||||
Property and equipment | 5 | 34 | ||||||
$ | 6 | $ | 63 | |||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | - | $ | 36 | ||||
Deferred revenue | - | 15 | ||||||
Loans payable | - | 115 | ||||||
Finance contracts, due within one year | - | 51 | ||||||
Notes payable – related parties | 11 | 211 | ||||||
$ | 11 | $ | 428 |
Note 4. 3. Intangible Assets
Intangible assets consistsconsist of the following (in thousands):
June 30 | December 31 |
| June 30 |
|
| December 31 |
| |||||||||
2020 | 2019 |
| 2021 |
|
| 2020 |
| |||||||||
(unaudited) |
| (unaudited) |
|
|
|
|
| |||||||||
Touchpoint software | $ | 2,938 | $ | 2,950 |
| $ | 2,451 |
|
| $ | 2,443 |
| ||||
Less accumulated amortization |
|
| (1,791 | ) |
|
| (1,513 | ) | ||||||||
|
| 660 |
|
|
| 930 |
| |||||||||
|
|
|
|
|
|
|
| |||||||||
Goodwill | 419 | 419 |
|
| 419 |
|
|
| 419 |
| ||||||
|
|
|
|
|
|
| ||||||||||
3,357 | 3,369 | |||||||||||||||
Less accumulated amortization | (1,236 | ) | (958 | ) | ||||||||||||
Intangible assets, net | $ | 2,121 | $ | 2,411 |
| $ | 1,079 |
|
| $ | 1,349 |
|
Note 5. 4. Notes payable
a) Promissory notes, related parties
The promissory notes due to Zhanming Wu ($500,000)500,000) and the Company’s CEO, Mark White ($500,000)500,000), both considered related parties, including accrued interest of 7% per annum from issuance, were due for repayment on August 31, 2019. Such payments were not made and the parties are in negotiations to extend the maturity dates of the promissory notes. There can be no guarantee that commercially reasonable terms will agreed upon. As of June 30, 2020,2021, the counterparties had not demanded repayment of the promissory notes.
b) Century River LimitedConvertible Loans Payable
The remaining principal balance of $10,000 of the $500,000 loan received from Century River Limited, a company controlled by the Company’s CEO, Mark White was repaid on June 10, 2020.
| Lenders | General terms | Amount due at June 30, 2021 |
1 | Bespoke Growth Partners Convertible Note #1 | The loan was due on January 26, 2020 and bore interest of 20% per annum. During the year ended December 31, 2020, the Company repaid $84,210 of principal and $16,061 of interest on the note by issuing an aggregate of shares of Company common stock to Bespoke Growth Partners. | $15,790 |
2 | Bespoke Growth Partners Convertible Note #2 | In November 2019, the Company issued a convertible promissory note in the original principal amount of $300,000 to Bespoke Growth Partners. The note was due on May 21, 2020, with an interest rate of 20% per annum. During the year ended December 31, 2020 the Company received proceeds under the note of $175,000. | $262,500 |
3 | Geneva Roth Remark Holdings, Inc. Note #2 | In July 2020, the Company issued a convertible promissory note in the principal amount of $63,000 to Geneva Roth Remark Holdings, Inc. The note was due July 27, 2021, and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 days. The final balance was repaid in February 2021 by the issue of shares of common stock.
| $- |
4 | Geneva Roth Remark Holdings, Inc, Note #3 | In October 2020, the Company issued a convertible promissory note in the principal amount of $55,000 to Geneva Roth Remark Holdings, Inc. The note is due October 21, 2021, and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 days. The loan was repaid in full by cash on April 1, 2021. | $- |
5 | Geneva Roth Remark Holdings, Inc. Note #4 | In December 2020, the Company issued a convertible promissory note in the principal amount of $53,500 to Geneva Roth Remark Holdings, Inc. The note was due December 14, 2021, and bore an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 days. The loan was repaid in full in June 2021 by the issuance of shares of common stock. | $- |
6 | Geneva Roth Remark Holdings, Inc. Note #5 | In December 2020, the Company issued a convertible promissory note in the principal amount of $45,500 to Geneva Roth Remark Holdings, Inc. The note is due December 30, 2021, and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 days. The loan was repaid in full by cash on June 29, 2021.
| $- |
7 | Geneva Roth Remark Holdings, Inc. Note #6 | On January 13, 2021, the Company issued a convertible promissory note in the principal amount of $55,000 to Geneva Roth Remark Holdings, Inc. The note is due July 12, 2021, and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35%. The balance owing as of June 30, 2021, is $55,000. The loan was repaid in full in July 2021 by the issuance of shares of common stock.
| $55,000 |
8 | Geneva Roth Remark Holdings, Inc. Note #7 | On February 8, 2021, the Company issued a convertible promissory note in the principal amount of $55,000 to Geneva Roth Remark Holdings, Inc. The note is due August 4, 2021 and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35%. The loan was repaid in full by cash on August 10, 2021.
| $55,000 |
9 | Geneva Roth Remark Holdings, Inc. Note #8 | On June 24, 2021, the Company issued a convertible promissory note in the principal amount of $85,000 to Geneva Roth Remark Holdings, Inc. The note is due June 24, 2022 and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35%. The balance owing as of June 30, 2021, is $85,000. | $85,000 |
10 | Firstfire Global Opportunities Fund, LLC. Loan #2 | On February 5, 2021, the Company issued a convertible promissory note in the principal amount of $100,000 to FirstFire Global Opportunities Fund, LLC. The note was due August 1, 2021 and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35%. The balance owing as of June 30, 2021, is $100,000.
| $100,000 |
11 | LGH Investments, LLC | On March 4, 2021, the Company issued a convertible promissory note in the principal amount of $165,000 to LGH Investments, LLC. The note carries an Original Issue Discount (“OID”) of 10% and has an interest rate of 8% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a fixed price of $0.03 per share of common stock. The balance owing as of June 30, 2021, is $165,000.
| 165,000 |
12 | Jefferson Street Capital, LLC | On March 17, 2021, the Company issued a convertible promissory note in the principal amount of $165,000 to Jefferson Street Capital, LLC. The note carries an OID of 10% and has an interest rate of 8% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a fixed price of $0.03 per share of common stock. The balance owing as of June 30, 2021, is $165,000. | $165,000 |
13 | BHP Capital NY, LLC | On March 24, 2021, the Company issued a convertible promissory note in the principal amount of $165,000 to BHP Capital NY, LLC. The note carries an OID of 10% and has an interest rate of 8% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a fixed price of $0.03 per share of common stock. The balance owing as of June 30, 2021 is $165,000. | $165,000 |
14 | Quick Capital, LLC | On April 2, 2021, the Company issued a convertible promissory note in the principal amount of $110,000 to Quick Capital, LLC. The note is due January 2, 2022, and carries an OID of 10% and has an interest rate of 8% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a fixed price of $0.03 per share of common stock. The balance owing as of June 30, 2021, is $110,000. The Company also issued to Quick Capital, LLC warrants to purchase 3,666,667 shares of the Company’s common shares at $0.10 per share until April 2, 2024.
| $110,000 |
15 | SBA | The Company has received an SBA loan of $2,000 which is repayable together with interest of 3.75% per annum | $2,000 |
| TOTAL |
| $1,180,290 |
c)b) Bespoke Growth Partners Convertible Note #1
In July 2019, the Company issued a convertible promissory note in the original principal amount of $100,000$100,000 to Bespoke Growth Partners. The loan was due on January 26, 2020, and bore interest of 20% per annum. During the six monthsyear ended June 30,December 31, 2020, the Company repaid $84,210$84,210 of principal and $16,061$16,061 of interest on the note by issuing an aggregate of shares of Company common stock to Bespoke Growth Partners. The balance owing as atof June 30, 20202021, was $15,790.$15,790.
d)c) Bespoke Growth Partners Convertible Note #2
In November 2019, the Company issued a convertible promissory note in the original principal amount of $300,000$300,000 to Bespoke Growth Partners. The note was due on May 21, 2020 with an interest rate of 20% per annum. The net loan proceeds will be $200,000, after the loan discount of $100,000. During the six monthsyear ended June 30,December 31, 2020, the Company received proceeds under the note of $175,000.$175,000. The balance outstanding as atof June 30, 2020,2021, including pro-rata loan discount, was
$262,500.
e) Labrys Fund262,500.
The loan payableCompany is in negotiation with Bespoke to Labrys Fund LP (“Labrys”) inrevise the amount of $180,000 was repaid in fullrepayment terms and date on January 24, 2020.both loans with Bespoke Growth Partners.
f)d) Geneva Roth Remark Holdings, Inc. Note #2
In MayJuly 2020, the Company issued a convertible promissory note in the principal amount of $133,000$63,000 to Geneva Roth Remark Holdings, Inc. The note was due July 27, 2021, and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 days. The final balance was repaid in February 2021, by the issue of shares of common stock.
e) Geneva Roth Remark Holdings, Inc, Note #3
In October 2020, the Company issued a convertible promissory note in the principal amount of $55,000 to Geneva Roth Remark Holdings, Inc. The note is due May 19,October 21, 2021, and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 days. The loan was repaid in full by cash on April 1, 2021.
f) Geneva Roth Remark Holdings, Inc. Note #4
In December 2020, the Company issued a convertible promissory note in the principal amount of $53,500 to Geneva Roth Remark Holdings, Inc. The note was due December 14, 2021 and bore an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 days. The loan was repaid in full in June 2021, by the issuance of shares of common stock.
g) Geneva Roth Remark Holdings, Inc. Note #5
In December 2020, the Company issued a convertible promissory note in the principal amount of $45,500 to Geneva Roth Remark Holdings, Inc. The note is due December 30, 2021, and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 days. The loan was repaid in full by cash on June 29, 2021.
h) Geneva Roth Remark Holdings, Inc. Note #6
On January 13, 2021, the Company issued a convertible promissory note in the principal amount of $55,000 to Geneva Roth Remark Holdings, Inc. The note is due July 12, 2021, and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35%. The balance owing as aof June 30, 20202021, is $133,000.$55,000. The loan was repaid in full in July 2021 by the issuance of shares of common stock.
g) Firstfire Global Opportunities Fund, LLC.i) Geneva Roth Remark Holdings, Inc. Note #7
In June 2020,On February 8, 2021, the Company issued a convertible promissory note in the principal amount of $145,000$55,000 to Firstfire Global Opportunities Fund, LLC.Geneva Roth Remark Holdings, Inc. The note is due June 15,August 4, 2021, and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35%. The balance owing as aof June 30, 20202021, is $145,000.
Note 6. Share Capital
Common Stock
The Company is authorized to issue 200 million shares of common stock, par value of $0.0001.
During the six months ended June 30, 2020, the Company issued shares of common stock as follows:
During the six months ended June 30, 2020, 563,760 shares of common stock were returned to the Company for cancellation of stock issued during the acquisitions of Banana Whale and Browning and loan payable to Labrys.
During the year ended December 31, 2019, the Company issued shares of common stock as follows:
During the year ended December 31, 2019, 340,000 shares of common stock, issued in December 2018 were returned to the Company for cancellation and the related share subscription due was cancelled.
Stock Purchase Warrants
As at June 30, 2020, the Company had reserved 2,890 shares of its common stock for the outstanding warrants with weighted average exercise price of $20.00. These warrants expired in July 2020.
During the six months ended June 30, 2020, no warrants were issued, forfeited or exercised.
Note 7. Stock-Based Compensation
The shareholders approved a stock option plan on August 6, 2013, the 2013 Equity Incentive Plan (“2013 Plan”). The 2013 Plan is for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, cash bonuses and other stock-based awards to employees, directors and consultants of the Company.
There have been no options issued in the six months ended June 30, 2020 and 2019 and there are no options outstanding as at June 30, 2020.
In March 2018 the Company adopted an Equity Incentive Plan (“the 2018 Plan”) to provide additional incentives to the employees, directors and consultants of the Company to promote the success of the Company’s business. During the six months ended June 30, 2020, no common stock of the Company was issued under the 2018 Plan.
Note 8. Legal Proceedings
The Company has received a claim from the landlord of a property leased by Maham LLC (“Maham”), under which the Company is a guarantor. The Company has retained counsel, is in discussions with the landlord regarding the claim and is discussing a solution to Maham’s financial difficulty.
The Company has also been served a claim from the former management of Love Media House regarding a claim for unpaid wages. The Company disputes the validity of the claim in its entirety.
Note 9. Subsequent event
Effective July 15, 2020, the Company filed a preliminary information statement on Schedule 14C in connection with the approval of the following actions taken by the Company’s Board of Directors and by written consent of the holders of a majority of the voting power of the issued and outstanding capital stock of the Company:
1. Election of seven directors to the Company’s Board to serve until the Company’s 2021 annual meeting of stockholders or until their successors are elected and qualified;
2. Amendment of the Company’s certificate of incorporation, as amended (the “Certificate”), to increase the number of authorized shares of common stock from 200,000,000 to 750,000,000;
3. Holding of a non-binding advisory vote on executive compensation; and
4. Holding of a non-binding advisory vote on the frequency of executive compensation advisory votes (collectively with the matters identified in Items 1 through 3 above, the “Corporate Actions”)$55,000.
The purpose of the information statement is to notify stockholders that on July 14, 2020, stockholders holding a majority of the voting power of our issued and outstanding shares of capital stock executed a written consent approving the Corporate Actions. The written consent that the Company received constitutes the only stockholder approval required for the Corporate Actions under Delaware law and our Certificate and bylaws. As a result, no further action by any other stockholder is required to approve the Corporate Actions. Prior to effecting the Corporate Actions, the Company must file a definitive information statement on Schedule 14C with the SEC, mail the definitive information statement to stockholders of record entitled to notice, and wait at least 20 calendar days following such mailing.j) Geneva Roth Remark Holdings, Inc. Note #8
Effective August 7, 2020On June 24, 2021, the Company issued a convertible promissory note in the principal amount of $125,000$85,000 to EMA Financial, LLC.Geneva Roth Remark Holdings, Inc. The note is due October 30, 2021June 24, 2022 and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35%. The balance owing as of June 30, 2021 is $85,000.
k) Firstfire Global Opportunities Fund, LLC. Loan #1
In June 2020, the Company issued a convertible promissory note in the principal amount of $145,000 to Firstfire Global Opportunities Fund, LLC. The note was due June 15, 2021, and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35% of the lowest trading price in the last 15 days. During the year ended December 31, 2020 the amount of $33,004 was converted to 4,000,000 common shares of the Company. The final balance was repaid during the three months ended March 31, 2021, by the issue of shares of common stock.
l) Firstfire Global Opportunities Fund, LLC. Loan #2
On February 5, 2021, the Company issued a convertible promissory note in the principal amount of $100,000 to FirstFire Global Opportunities Fund, LLC. The note was due August 1, 2021 and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a discount of 35%. The balance owing as of June 30, 2021, is $100,000.
m) EMA Financial, LLC
In August 2020, the Company issued a convertible promissory note in the principal amount of $125,000 to EMA Financial, LLC. The note was due October 30, 2021 and has an interest rate of 10% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at the lower of $0.05 per share and a discount of 35% to the average trading price. The loan was paid in full in February 2021, by the issuance shares of common stock.
n) LGH Investments, LLC
On March 4, 2021, the Company issued a convertible promissory note in the principal amount of $165,000 to LGH Investments, LLC. The note carries an Original Issue Discount (“OID”) of 10% and has an interest rate of 8% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a fixed price of $0.03 per share of common stock. The balance owing as of June 30, 2021 is $165,000.
o) Jefferson Street Capital, LLC
On March 17, 2021, the Company issued a convertible promissory note in the principal amount of $165,000 to Jefferson Street Capital, LLC. The note carries an OID of 10% and has an interest rate of 8% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a fixed price of $0.03 per share of common stock. The balance owing as of June 30, 2021, is $165,000.
p) BHP Capital NY, LLC
On March 24, 2021, the Company issued a convertible promissory note in the principal amount of $165,000 to BHP Capital NY, LLC. The note carries an OID of 10% and has an interest rate of 8% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a fixed price of $0.03 per share of common stock. The balance owing as of June 30, 2021, is $165,000.
q) Quick Capital, LLC
On April 2, 2021, the Company issued a convertible promissory note in the principal amount of $110,000 to Quick Capital, LLC. The note is due January 2, 2022, and carries an OID of 10% and has an interest rate of 8% per annum. The promissory note is convertible, at the option of the holder, after 180 days into common shares of the Company at a fixed price of $0.03 per share of common stock. The balance owing as of June 30, 2021, is $110,000. The Company also issued to Quick Capital, LLC warrants to purchase 3,666,667 shares of the Company’s common shares at $0.10 per share until April 2, 2024.
Common Stock
The Company is authorized to issue
million shares of common stock, par value of $ .During the six months ended June 30, 2021, the Company issued shares of common stock as follows:
● | 374,568, for conversion of convertible promissory notes shares of common stock, with a fair value of $ |
● | 344,276, for services provided. shares of common stock, with a fair value of $ |
● | 20,000, for services to be provided. shares of common stock, with a fair value of $ |
● | 195,925, for commitment fees under convertible promissory notes shares of common stock, with a fair value of $ |
Standby Equity Agreement
On March 16, 2021, the Company completed on a Standby Equity Commitment Agreement (“SECA”) with MacRab LLC whereby during the 24 months commencing on the date on which a registration statement covering the sale of the shares to be purchased by MacRab is declared effective, the Company has the option to sell up to $5.0 million of the Company’s common stock to MacRab at a price equal to 90% of the average of the two lowest volume weighted average prices during the eight trading day days following the clearing date associated with the respective put under the SECA. Under the SECA MacRab are entitled to 2,272,727 stock purchase warrants with an exercise price of $0.044 upon the signing of the agreement. MacRab retains the rights to the warrants if the agreement is ever terminated. The Company hasn’t yet exercised any option to sell any stock under this agreement.
Note 6. Legal settlement expenses
In 2019 the Company received a claim from the landlord of a property leased by Maham LLC, under which the Company is a guarantor.
In July 2021, the company settled the claim with the Landlords of a property leased to Maham LLC (then a possible acquisition target) which the Company had guaranteed. The settled claim amounted to $290,000 and is payable over a 12-month period ending in Judly 2022.
In 2020 the Company had been served a claim from the former management of Love Media regarding a claim for unpaid wages. Whilst the Company disputes the validity of this claim in its entirety. It agreed to settle the claim from employees in a full and final settlement with a single payment of $50,000.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our unaudited condensed consolidated financial statements for the three and six months ended June 30, 20202021 and 20192020 and notes thereto contained elsewhere in this Report, and our annual report on Form 10-K for the twelve months ended December 31, 20192020 including the consolidated financial statements and notes thereto. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements. See “Cautionary Note Concerning Forward-Looking Statements.”
Overview
We are a holding company which, through our operating subsidiaries, is engaged in media and digital technology, primarily in sports entertainment and related technologies that bring fans closer to athletes and celebrities.
Current Structure of the Company
The Company has the following subsidiaries:
Subsidiary Name | % Owned | |||||
● | 123Wish, Inc. (considered dormant) | 51 | % | |||
● | Horizon Network Technology Co. Ltd (Limited operations) | 100 | % | |||
● | Love Media House, Inc. (discontinued operations) | 100 | % | |||
● | Touchpoint Connect Limited (formed in September 2019) | 100 | % | |||
● | One Horizon Hong Kong Limited (Limited operations) | 100% |
In addition to the subsidiaries listed above, Suzhou Aishuo Network Information Co., Ltd (“Suzhou Aishuo”) is a limited liability company, organized in China and controlled by us via various contractual arrangements. Suzhou Aishuo is treated as one of our subsidiaries for financial reporting purposes in accordance with generally accepted accounting principles in the United States (“GAAP”).
Summary Description of Core Business
During the three months ended June 30, 2020, the Company consolidated its ownership and the performance of particularly Browning Productions & Entertainment, Inc. (“Browning”) and invested in the Touchpoint brand, bringing fans closer to celebrities by providing access to proprietary content, and livestream events, as well as exclusive merchandise. The platform is optimized for iOS and Android, as well as internet and TV-based applications.
Touchpoint Connect Limited (“TCL”) isWe are a software developer which supplies a robust fan engagement platform designed to enhance the fan experience and drive commercial aspects of the sport and entertainment business.
TCL bringsWe bring users closer to the action by enabling them to engage with clubs, favorite players, peers and relevant brands through features, available through the Touchpoint APP and program, that include live streaming, access to limited edition merchandise, gamification (chance to win unique one-off life experiences), user rewards, third party branded offers, credit cards and associated benefits.
TCL is available to a broad audience as a white label product. The platform provides in-depth analytics that enable marketing teams to ensure that they deliver aligned, strategic messages and campaigns to the right audience at the right time.
The Company isWe are based in the United States of America and the United Kingdom.
Disposal of Discontinued Operations
On October 22, 2018, we entered into an Exchange Agreement (“Browning Exchange Agreement”) pursuant to which we acquired a majority of the outstanding shares (the “Controlling Interest in Browning”) of Browning from William J. Browning, the sole stockholder of Browning.
In exchange for the controlling interest in Browning, we paid Mr. Browning $10,000 and issued to him 12,000 sharesResults of common stock, plus an additional number of shares of common stock which can be up to a maximum of 680,000 shares, determined by dividing two and a half times the net after tax earnings of Browning during the twelve month period ended December 31, 2019 by the average of the closing price of our common stock during the 10 consecutive trading days immediately preceding the end of 2019.
Though the terms of this transaction only required a $20,000 cash payment ($10,000 in cash under the non-binding letter of intent and $10,000 in cash under the Browning Exchange Agreement) to Mr. Browning, we were required to provide Browning with a working capital loan in an initial amount of $150,000, which is to be repaid out of the post-closing net profit of Browning, as well as earmark an additional $150,000 in cash for future investment in Browning (to assist in funding the future operations of Browning).
We had a right of first refusal to purchase the remaining shares of Browning.
During the year ended December 31, 2019, the Company decided to sell its interests in its subsidiaries, Love Media House Inc. (“Love Media”) and Browning. In connection with this determination, the Company concluded the intangible assets related to these subsidiaries were impaired. Accordingly, the Company recorded an impairment charge of $2,440,000 which is included in the loss from discontinued operations.
In February 2020, the Company concluded the sale of its majority interest in Browning for the following consideration;
Currently, the Company is looking to negotiate a sale of its ownership interest in Love Media.Operations
COVID-19 Effects
In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally.
Because COVID-19 infections have been reported throughout the United States and the United Kingdom, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future.
As a result, the Company has seen delays in certain Touchpoint licensing agreements commencing operation which leads to subsequent delays in subscriptions being processed. All of the Company employees and management are able to operate from home while the stay-at-home orders remain in place.
The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition and results of operations.
The measures taken to date have impacted the Company’s business for the fiscal first and second quarters, and are expected to impact the third and fourth quarters and potentially beyond. Management expects that all of its business segments, across all of its geographies, will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time.
For the fiscal years ended December 31, 2019 and 2018, our continuing operations generated revenues of $170,000 and $306,000, respectively; and reported net losses of $3,298,000 and $13,413,000, respectively, and negative cash flow from continuing operating activities of $1,431 and $2,973,000, respectively. As noted in our consolidated financial statements, we had an accumulated deficit of approximately $61.3 million and recurring losses from operations as of December 31, 2019. We anticipate that we will continue to report losses and negative cash flow. Our auditors have raised substantial doubt regarding our ability to continue as a going concern as a result of our historical recurring losses and negative cash flows from operations.
Results of Operations
Comparison of three months ended June 30, 20202021 and 20192020
The following table sets forth key components of our results of operations for the periods.
(All amounts, other than percentages, in thousands of U.S. dollars)
Three Months Ended June 30, | Change |
| Three Months Ended June 30, |
|
| Change |
| |||||||||||||||||||||||||
2020 | 2019 | Increase/ (decrease) | Percentage Change |
| 2021 |
| 2020 |
| Increase/ |
| Percentage |
| ||||||||||||||||||||
(unaudited) |
| (unaudited) |
|
|
|
|
| |||||||||||||||||||||||||
Revenue | $ | 150 | $ | 48 | $ | 102 | 212.5 |
| $ | 34 |
| $ | 150 |
| $ | (116 | ) |
| (77.3 | ) | ||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Cost of revenue | 139 | 166 | (27 | ) | (16.3 | ) |
|
| 139 |
|
| 139 |
|
| - |
|
|
| - |
| ||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Gross profit (deficit) | 11 | (118 | ) | 129 | 109.3 |
| (105 | ) |
| 11 |
|
| (116 | ) |
| (105.4) |
| |||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
General and administrative | 742 | 690 | 52 | 7.5 |
| 745 |
| 742 |
| 3 |
| 0.0 |
| |||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Total operating expenses | 742 | 690 | 52 | 7.5 |
|
| 745 |
|
| 742 |
|
| 3 |
|
| 0.0 |
| |||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Loss from operations | (731 | ) | (808 | ) | 77 | 9.5 |
| (850 | ) |
| (731 | ) |
| (119 | ) |
| (15.9 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Other (expense) income | (77 | ) | (13 | ) | (64 | ) | (492.3 | ) | ||||||||||||||||||||||||
Other expense |
|
| (390 | ) |
|
| (77 | ) |
|
| (313 | ) |
|
| (406 | .5) | ||||||||||||||||
Loss before discontinued operations | (808 | ) | (821 | ) | 13 | 1.6 |
| (1,240 | ) |
| (808 | ) |
| (432 | ) |
| (53.5 | ) | ||||||||||||||
Loss from discontinued operations |
| (50 ) |
| - |
| (50 | ) |
| N/A |
| ||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Loss for discontinued operations | - | (329 | ) | 329 | 100.0 | |||||||||||||||||||||||||||
Total net loss | $ | (808 | ) | $ | (1,150 | ) | $ | 342 | 29.7 |
| $ | (1,290 | ) |
| $ | (808 | ) |
| $ | (482 | ) |
|
| 59.6 |
|
Revenue: Our revenue for the three months ended June 30, 2020 increased2021, decreased by approximately $102,000$116,000 over the same period in 2019.2020. The increase was a result of the reduction in sale of more software licenses during the three months ended June 30, 2020.2021.
Gross Profit (Deficit): Gross profit (deficit) for the three months ended June 30, 20202021, was approximately $11,000$(105,000) as compared to $(118,000)$11,000 for the three months ended June 30, 2019,2020, due primarily to the increasedecrease in revenue.
Operating Expenses: Operating expenses incurred during the three months ended June 30, 20202021, were approximately $742,000,$745,000, an increase of approximately $52,000$3,000 (or 7.5%less than 1%) when compared to the approximate figure of $690,000$742,000 incurred in the three months ended June 30, 2019.2020.
Net Loss: Net loss for the three months ended June 30, 20202021 was approximately $808,000$1,290,000 as compared to net loss of approximately $821,000$808,000 for the same period in 2019.2020.
Comparison of six months ended June 30, 20202021, and 20192020
The following table sets forth key components of our results of operations for the periods indicated.
(All amounts, other than percentages, in thousands of U.S. dollars)
Six Months Ended June 30, | Change |
| Six Months Ended June 30, |
|
| Change |
| |||||||||||||||||||||||||
2020 | 2019 | Increase/ (decrease) | Percentage Change |
| 2021 |
| 2020 |
| Increase/ |
| Percentage |
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Revenue | $ | 190 | $ | 48 | $ | 142 | 295.6 |
| $ | 66 |
| $ | 190 |
| $ | (124 | ) |
| (65.8 | ) | ||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Cost of revenue | 278 | 276 | 2 | 0.7 |
|
| 279 |
|
| 278 |
|
| (1 | ) |
|
| 0.0 |
| ||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Gross deficit | (88 | ) | (232 | ) | 144 | 62.1 |
| (213 | ) |
| (88 | ) |
| (125 | ) |
| (142.0 | ) | ||||||||||||||
|
|
|
|
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|
|
|
| ||||||||||||||||||||||||
Operating expenses: |
|
|
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|
|
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|
| |||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
General and administrative | 1,241 | 1,580 | (339 | ) | (21.5 | ) |
| 1,732 |
| 1,241 |
| 491 |
|
| 39.6 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Total operating expenses | 1,241 | 1,580 | (339 | ) | (21.5 | ) |
| 1,732 |
| 1,241 |
| 491 |
| 39.6 |
| |||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Loss from operations | (1,329 | ) | (1,812 | ) | 483 | 26.7 |
| (1,945 | ) |
| (1,329 | ) |
| (616 | ) |
| (46.4 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Other income | 483 | 526 | (43 | ) | (8.2 | ) | ||||||||||||||||||||||||||
Other expense |
|
| (477 | ) |
|
| 483 |
|
| (960 | ) |
|
| (198.6 | ) | |||||||||||||||||
Loss for before discontinued operations | (846 | ) | (1,286 | ) | 440 | 34.2 |
| (2,422 | ) |
| (846 | ) |
| (1,576 | ) |
| 186.3 |
| ||||||||||||||
Loss from discontinued operations |
| (50) |
| - |
| (50) |
| N/A |
| |||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Loss for discontinued operations | - | (554 | ) | 554 | 100.0 | |||||||||||||||||||||||||||
Net loss | $ | (846 | ) | $ | (1,840 | ) | $ | 994 | 54.0 |
| $ | (2,472 | ) |
| $ | (846 | ) |
| $ | (1,626 | ) |
|
| 192.2 |
|
Revenue: Our revenue for the six months ended June 30, 20202021, was approximately $190,000$66,000 as compared to approximately $48,000$190,000 for the six months ended June 30, 2019,2020, an increasedecrease of approximately $142,000.$124,000. The increasedecrease was due to the increasedecrease in license sales in the second quarter.
Cost of Revenue: Cost of revenue was approximately $278,000$279,000 for the six months ending June 30, 20202021 as compared to $276,000the same amount for the six months ended June 30, 2019.2020.
Gross Deficit: Gross deficit for the six months ended June 30, 20202021, was approximately $88,000$213,000 as compared to a gross deficit of $232,000$88,000 for the six months ended June 30, 2019, a reduction2020, an increase in the deficit of approximately $144,000.$125,000. The reductionincrease was mainly due to the increasereduction in revenue as set forth above.
Operating Expenses: Operating expenses, including general and administrative expenses, depreciation and acquisition costs were approximately $1,329,000 and $1,812,000 duringfor the six months ended June 30, 2020 and 2019, respectively. The reduction in operating costs primarily related to2021, were approximately $1,732,000 representing an increase of 39.6% over the reduction in travel costs of the business operations due to COVID 2019 including staff working from home, when compared to costs incurred incharge for the same period in 2019.2020. The increase was mainly due to the charge for the issue of warrants, calculated using Blacks Scholes.
Net Loss: Net loss for the six months ended June 30, 20202021 was approximately $846,000$2,472,000 as compared to loss of approximately $1,840,000$846,000 for the same period in 2019. The net loss decrease was primarily due to the increase in Revenue and the reduction in running costs shown above.2020.
Liquidity and Capital Resources
Six Months Ended June 30, 20202021 and June 30, 20192020
The following table sets forth a summary of our net cash flows for the periods indicated:
For the Six Months Ended June 30 (in thousands) |
| For the Six Months Ended |
| |||||||||||||
2020 | 2019 |
| 2021 |
| 2020 |
| ||||||||||
Net cash flows from operations | (342 | ) | (1,273 | ) |
| (781 | ) |
| (342 | ) | ||||||
Net cash flows from investing activities | (13 | ) | 1,206 |
| (8 | ) |
| (13 | ) | |||||||
Net cash flows from financing activities | 288 | 551 |
| 785 |
| 288 |
|
Net cash used by operating activities of continuing operations decreasedincreased to $342,000$781,000 for the six months ended June 30, 20202021 from $1,273,000$342,000 for the same period in 2019.2020.
Net cash used from investing activities was approximately $13,000$8,000 in the six months ended June 30, 20202021, as compared to net cash raisedused of $1,206,000$13,000 in the comparative period in 2019. The difference was primarily the $1,500,000 raised from the initial proceeds on the sale of the Company’s holding in Banana Whale Studios Pte Ltd in 2019.2020.
Net cash generated in financing activities was approximately $785,000 for the six months ended June 30, 2021, as compared to $288,000 for the six months ended June 30, 2020 as compared to $551,000 for the six months ended June 30, 2019.2020. The cash generated from financing activities in the six months ended June 30, 20202021, was primarily from convertible loans raised from US funds, less repayment of a loan raised in 2019. Whereas the net cash generated in the comparative period in 2019 was primarily generated from a loan from a related party.2020.
At June 30, 2020,2021, the Company had cash of approximately $191,000.$114,000.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements, which have been prepared in accordance with GAAP. Our significant accounting policies are described in notes accompanying the unaudited consolidated financial statements. The preparation of the unaudited consolidated financial statements requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. Estimates are based on information available as of the date of the unaudited financial statements, and accordingly, actual results in future periods could differ from these estimates. Significant judgments and estimates used in the preparation of the unaudited consolidated financial statements apply significant accounting policies described in the notes to our consolidated financial statements.
We consider our recognition of revenues, accounting for the consolidation of operations, accounting for intangible assets and related impairment analyses, the allowance for doubtful accounts and accounting for equity transactions, to be most critical in understanding the judgments that are involved in the preparation of our unaudited consolidated financial statements.
Recent Accounting Pronouncements
See Note 2 to our unaudited condensed financial statements, included in Part I, Item 1., Financial Information of this Quarterly Report on Form 10-Q.
Off-Balance Sheet Arrangements
As of June 30, 2020,2021, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of June 30, 2020,2021, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of June 30, 2020,2021, our disclosure controls and procedures were not effective. This was due to certain deficiencies in our controls over financial reporting. In particular a lack of accounting personnel has resulted in an inability to segregate various accounting functions.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
(b) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PARTPART II – OTHER INFORMATION
TheIn 2019 the Company has received a claim from the landlord of a property leased by Maham LLC, under which the Company is a guarantor. The Company has taken legal advice and its counsel is liaising
In July 2021, the company settled the claim with the landlord regardingLandlords of a property leased to Maham LLC (then a possible acquisition target) which the Company had guaranteed. The settled claim amounted to $290,000 and is also discussingpayable over a solution to Maham’s financial difficulty.12-month period ending in July 2022.
TheIn 2020 the Company has alsohad been served a claim from the former management of Love Media regarding a claim for unpaid wages. TheWhilst the Company disputes the validity of itsthis claim in its entirety. It agreed to settle the claim from employees in a full and final settlement with a single payment of $50,000.
Reference is made to the risks and uncertainties disclosed in Item 1A (“Risk Factors”) of our Annual Report on Form 10-K for the year ended December 31, 20192020 (the “2019“2020 Form 10-K”) filed April 24, 2020,9, 2021, which sections are incorporated by reference into this report, as the same may be updated from time to time. Prospective investors are encouraged to consider the risks described in our 20192020 Form 10-K, and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Report and other information publicly disclosed or contained in documents we file with the Securities and Exchange Commission before purchasing our securities. As a smaller reporting company, the Company is not required to disclose material changes to the risk factors that were contained in the 20192020 Form 10-K. However, in light of the recent coronavirus (COVID-19) pandemic, set forth below is a risk factor relating to COVID-19. Other than as set forth below, as of the filing date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors faced by the Company from those previously disclosed in the 2019 Form 10-K, as updated from time to time.
Public health epidemics or outbreaks, such as the novel strain of coronavirus (COVID-19), could adversely impact our business.
In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally.
Because COVID-19 infections have been reported throughout the United States and the United Kingdom, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future.
As a result, the Company has seen delays in certain Touchpoint licensing agreements commencing operation, which leads to subsequent delays in subscriptions being processed. All of the Company employees and management are able to operate from home while stay-at-home orders remain in place.
The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition and results of operations.
The measures taken to date have impacted the Company’s business for the fiscal first and second quarters, and are expected to impact the Company’s business for the third and fourth quarters and potentially beyond. Management expects that all of its business segments, across all of its geographies, will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended June 30, 2020,2021, the Company issued shares of common stock as follows:
● | 5,147,724 shares of common stock, with an aggregate fair value of |
● |
● | 10,000,000 shares of common stock, with a fair value of |
The shares above were issued in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 of Regulation D promulgated under the Securities Act. Each of the investors represented that it was acquiring the shares for investment only and not with a view toward, or for resale in connection with, the public sale or distribution thereof. Accordingly, the shares have not been registered under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEMITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
None.
Exhibit No. | Description | |
31.1 | Rule 13a-14(a)/15d-14(a) Certification of | |
31.2 | Rule 13a-14(a)/15d-14(a) Certification of | |
32.1 | Section 1350 Certification of | |
32.2 | Section 1350 Certification of Principal Financial Officer | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation | |
101.DEF | XBRL Taxonomy Extension Definition | |
101.LAB | XBRL Taxonomy Extension Labels | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TOUCHPOINT GROUP HOLDINGS, INC. | ||
Date: August | By: | /s/ Mark White |
Mark White | ||
President and Chief Executive Officer | ||
By: | /s/ Martin Ward | |
Martin Ward | ||
Chief Financial Officer (principal financial officer and principal accounting officer) |
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