8
2019:
Fair value measured at June 30, 2019 | ||||||||||||||||||||||||
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| Total carrying value at June 30, 2019 |
| Quoted prices in active markets (Level 1) |
| Significant other observable inputs (Level 2) |
| Significant Unobservable inputs (Level 3) | ||||||||||||||||
Fair value measured at June 30, 2020 | Fair value measured at June 30, 2020 | |||||||||||||||||||||||
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| Total carrying value at June 30, 2019 |
| Quoted prices in active markets (Level 1) |
| Significant other observable inputs (Level 2) |
| Significant Unobservable inputs (Level 3) |
| Total carrying value at June 30, 2020 |
| Quoted prices in active markets (Level 1) |
| Significant other observable inputs (Level 2) |
| Significant Unobservable inputs (Level 3) | ||||||||
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Liabilities: |
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Derivative liabilities |
| $ | 60,859 |
| $ | - |
| $ | - |
| $ | 60,859 |
| $ | 212,227 |
| $ | - |
| $ | - |
| $ | 212,227 |
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There were no transfers between Level 1, 2 or 3 during the period.
The table below presents the change in the fair value of the derivative liability during the six months ended June 30, 2019:2020:
Fair value as of December 31, | $ |
Fair value on the date of issuance recorded as a debt discount |
|
Fair value on the date of issuance recorded as a loss on derivatives |
|
| (166,080) |
Loss on change in fair value of derivatives |
|
Fair value as of June 30, | $ |
Convertible debt
The Company records a beneficial conversion feature related to the issuance of convertible debtsdebt that have conversion features at fixed or adjustable rates. The beneficial conversion feature for the convertible instruments is recognized and measured by allocating a portion of the proceeds as an increase in additional paid-in capital and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion features. The beneficial conversion feature will be accreted by recording additional noncash interest expense over the expected life of the convertible notes.
Beneficial Conversion Features
If the conversion feature of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 47020470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.
9
Derivative Financial Instruments
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815. The Company applies the guidance in ASC 815-40-35-12 to determine the order in which each convertible instrument would be evaluated for derivative classification.
Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02). Under ASU No. 2016-2, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU No. 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, The Company adopted this standard on January 1, 2019 using the modified retrospective method. The new standard provides a number of optional practical expedients in transition. The Company elected the ‘package of practical expedients’, which permitted the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs; and all of the new standard’s available transition practical expedients.
The new standard also provides practical expedients for a company’s ongoing accounting. The Company elected the short-term lease recognition exemption for its leases. For those leases with a lease term of 12 months or less, the Company will not recognize ROU assets or lease liabilities. The Company also made an accounting policy election to combine lease and non-lease components of operating leases for all asset classes. The adoption of this new standard did not impact the Company.
In June 2018, the FASB issued ASU No. 2018-07, Compensation Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to employees and nonemployees. Under ASU No. 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The Company adopted the provisions of the guidance on January 1, 2019 with no material impact on the Company’s consolidated financial statements and disclosures.
The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
10Reclassification
Certain reclassifications may have been made to our prior year’s financial statements to conform to our current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.
Note 2.
Going Concern
These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At June 30, 20192020 the Company had not yet achieved profitable operationsandoperations and expects to incur further losses in the development of its business, all of which raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available.
Note 3.
Related Party Transactions
The related party advances are due to the former director and President of the Company for funds advanced. The advances are unsecured, non-interest bearing and have no specific terms for repayment. As of June 30, 2019, the advances totaled $6,000.
Effective March 1, 2012, the Company agreed to pay the President of the Company $4,000 per month for management services if funds are available or to accrue such amount if funds are not available. Effective July 1, 2016, the Company agreed to pay the President of the Company $2,000 per month for management services if funds are available or to accrue such amount if funds are not available. Effective October 1, 2018, the Company agreed to pay the President of the Company $6,000 per month for management services if funds are available or to accrue such amount if funds are not available. Effective April 30, 2019, the Company agreed to payincrease compensation to the President of the Company to $11,500 per month for management services if funds are available or to accrue such amount if funds are not available. The agreement is verbal and can be cancelled at any time. Accounts payable – related party areIn addition, the fees earned but not yet paid of $175,221 and $164,841 at June 30, 2019 and December 31, 2018, respectively.
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| Six months ended | Six months ended |
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Management fees | $ 52,500 | $ 12,000 |
Robert Sawatsky, who was previously the President and CEO of the Company continuesadvances cash to provide consulting services tofund operations and periodically pays expenses on behalf of the Company relatedsubject to public company reporting with no expected compensation.reimbursement.
Fees earned during the period are as follows:
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| Six months ended June 30, 2020 | Six months ended June 30, 2019 |
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|
|
| Prior period balance | $ 104,623 | $ 68,341 |
| Management fees | 69,000 | 52,500 |
| Cash advances | 9,105 | - |
| Expenses paid on behalf of Company | 4,229 | - |
| Repayments | (90,795) | (42,120) |
| End of period balance | $ 96,162 | $ 78,721 |
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Note 4.
Notes Payable
On January 15, 2020, the Company converted $20,000 in advances from an unrelated third party into a promissory note. The unsecured note bears an interest rate of 8% and matures on January 15, 2021.
During the six-monthsix months period ended June 30, 2020 and 2019, the Company received advances of $0 and $79,900, respectively, from six unrelated third parties. parties. The advances are unsecured, non-interest bearing and have no specific terms for repayment.repayment and payable on demand. As of June 30, 20192020 and December 31, 20182019 the advances totaled $323,900$329,900 and $244,000,$332,900, respectively.
11
Note 5.Convertible Notes Payable and Derivative Liability
Convertible Notes Payable
On April 25, 2019, the Company borrowed $30,000 from an unrelated third party. The unsecured loan had an original issuance discount of $2,500 plus an additional $2,500 to pay for transaction fees of the lender, which will be amortized over the life of the note. In addition the Company is required to pay transaction fees of the lender of $2,500 which is included in accounts payable. The loan bears interest at a rate of 9% and iswas due and payable on October 25, 2020. The Company may prepay2019 and is currently past due. If a default notice is received the loan by paying the lender the outstanding loan principal and accrued interest plus premiums ranging from 5% to 25% and accrued interest.rate will be 18%. The unpaid principal is convertible into shares of the Company’s common stock at the conversion price. The conversion price isof 50% of the lowest trading price of the Company’s common stock during the 20 consecutive trading days immediately prior to the date of conversion. Due to the variable conversion feature the note conversion feature was bifurcated from the note and recorded as a derivative liability. The day one derivative liability was $28,112 which was recorded as a discount on the note payable and a day one loss on the derivative liability of $9,362. In addition, the note holder was issued 25,000 shares of common stock valued atwith a relative fair value of $6,250 which was recorded as a debt discount and will be amortized over the life of the note. On June 15, 2020, the Company converted the $30,000 note and $2,862 into 438,166 shares of common stock with a fair value of $32,862. As of June 30, 2020, the balance on the loan, net of unamortized discount of $0, is $0.
On June 4, 2019, the Company borrowed $55,000 from an unrelated third party. The unsecured loan had an original issuance discount of $5,000 which will be amortized over the life of the note. The loan bears interest at a rate of 10% and is due and payable on March 4, 2020.2020 and is currently past due. If a default notice is received the interest rate will be 20%. At any time on or before December 1, 2019 the Company may prepay the loan by paying the lender the outstanding loan principal and accrued interest plus premiums ranging from 20% to 40%. After December 1, 2019, the Company may not repay the loan without the consent of the lender. At any time after December 1, 2019, the unpaid principal is convertible into shares of the Company’s common stock at the conversion price. The conversion price is 65% of the lowest trading price of the Company’s common stock during the 20 consecutive trading days immediately prior to the date of conversion. Due to the variable conversion feature the note conversion feature was bifurcated from the note and recorded as a derivative liability. The day one derivative liability was $33,615 which was recorded as a discount on the note payable. As of June 30, 2020, the balance on the loan, net of unamortized discount of $0, is $55,000.
On September 9, 2019, the Company borrowed $30,000 from an unrelated third party. The unsecured loan had an original issuance discount of $2,500 plus an additional $2,500 to pay for transaction fees of the lender, which will be amortized over the life of the note. The loan bears interest at a rate of 9% and is due and payable on March 9, 2020 and is currently past due. If a default notice is received the interest rate will be 18%. The Company may prepay the loan by paying the lender the outstanding loan principal and accrued interest plus premiums ranging from 5% to 25% and accrued interest. The unpaid principal is convertible into shares of the Company’s common stock at the conversion price. The conversion price is 50% of the lowest trading price of the Company’s common stock during the 20 consecutive trading days immediately prior to the date of conversion. Due to the variable conversion feature the note conversion feature was bifurcated from the note and recorded as a derivative liability. The day one derivative liability was $31,581, of which $20,291 was recorded as a day one loss on the derivative liability and an additional $11,290 was recorded as a discount on the notes payable. In addition, the note holder was issued 25,000 shares of common stock with a relative fair value of $13,710 which was recorded as a debt discount and will be amortized over the life of the note. As of June 30, 2020, the balance on the loan, net of unamortized discount of $0, is $30,000.
On November 14, 2019, the Company borrowed $85,000 from an unrelated third party. The unsecured loan had an original issuance discount of $20,000, which will be amortized over the life of the note. The loan bears interest at a rate of 9% and is due and payable on May 14, 2020 and is currently past due. If a default notice is received the interest rate will be 18%. The Company may prepay the loan by paying the lender the outstanding loan principal and accrued interest plus premiums ranging from 5% to 25% and accrued interest. The unpaid principal is convertible into shares of the Company’s common stock at the conversion price. The conversion price is 50% of the lowest trading price of the Company’s common stock during the 20 consecutive trading days immediately prior to the date of conversion. Due to the variable conversion feature the note conversion feature was bifurcated from the note and recorded as a derivative liability. The day one derivative liability was $89,071, of which $24,071 was recorded as a day one loss on the derivative liability and an additional $65,000 was recorded as a discount on the notes payable. As of June 30, 2020, the balance on the loan, net of unamortized discount of $0, is $85,000.
On January 23, 2020, the Company entered into an agreement for up to $120,000 in debt financing from an unrelated third party. The unsecured loan had an original issuance discount of $10,500, which will be amortized over the life of the note. The loan bears interest at a rate of 10% and is due and payable on January 22, 2021. The Company may prepay the loan by paying the lender the outstanding loan principal and accrued interest plus premiums ranging from 5% to 25% and accrued interest. The unpaid principal is convertible into shares of the Company’s common stock at the conversion price. The conversion price is 45% of the lowest trading price of the Company’s common stock during the 25 consecutive trading days immediately prior to the date of conversion. As of June 30, 2020, the Company received $40,000 with original issuance discount of $5,000 from
the first tranche of the note. Due to the variable conversion feature the note conversion feature was bifurcated from the note and recorded as a derivative liability. The day one derivative liability was $50,164, of which $15,164 was recorded as a day one loss on the derivative liability and an additional $35,000 was recorded as a discount on the notes payable. As of June 30, 2020, the balance on the loan, net of unamortized discount of $22,575, is $17,425
During the six months ended June 30, 2020, the Company issued convertible notes in the principal amount of $164,000. The notes are unsecured, bear interest at 8% per year, and are due and payable on February 15, 2021. At the option of the holder, the notes can be converted into shares of the Company’s common stock. The number of shares of the Company’s common stock which will be issued upon any conversion will be determined by dividing the amount to be converted by $0.25. Due to the other variable convertible notes, these fixed convertible notes are treated as derivatives due to possibility of insufficient shares available at conversion to settle the notes. The day one derivative liability was $81,686 and recorded as a discount on the notes payable. As of June 30, 2020, the balance on the loans, net of unamortized discount of $51,697, is $112,303.
As of June 30, 2019,2020, the total derivative liability on the above notes (other than the convertible note issued on January 23, 2020) was adjusted to a fair value of $60,859.$212,227. During the six months ended June 30, 2019, $8,6372020, $130,855 of the discount was amortized leaving an unamortized balance of $59,979.$74,272. The fair value of the conversion option was estimated using the Black-Scholes option pricing model and the following assumptions during the period: fair value of stock $0.25,$0.12 - $0.55, volatility of 55%50% - 59%66% based on a comparable company peer group, expected term of 0.32 – 0.751.00 years, risk-free rate of 2.1%0.16% - 2.3%1.56% and a dividend yield of 0%.
Note 6.Equity
Capital
On March 26, 2020, the Company designated 1,000 shares of its original 5,000,000 authorized shares of Preferred Stock
During as Series A Preferred Stock (“Series A”) with a $0.001 par value. Each Series A Preferred share entitles the holder to vote on all matters submitted to a vote of our shareholders or with respect to actions that may be taken by written consent. The 1,000 shares of Series A shares shall have the voting power of 250% of the outstanding common shares at the time of any vote. The Series A holders shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, annual dividends payable in cash on the 31st day of December in each year, commencing on December 3l, 2020 at the rate of $0.10 per share per year. On March 26, 2020, the Company issued 1,000 shares of its Series A preferred stock with a fair value of $744,455 to the Company’s CEO, J. Jacob Isaacs. The Company recognized this fair value as compensation during the six months ended June 30, 20192020.
In April 2020, the Company issued 25,000200,000 shares of its restricted common stock tofor cash proceeds of $50,000.
On June 15, 2020, issued 438,166 shares of common stock upon the third party that providedconversion of debt and accrued interest. See Note 5.
Note 7.Commitments and Contingencies
In connection with the acquisition of Fourth Wave Energy, Inc., the Company entered into consulting agreements with certain members of Fourth Wave. The consulting agreements require the $27,500 loan describedCompany to collectively pay $385,000 in Note 6.consulting fees during the terms of the consulting agreements, all but one of which expire between May 31 and June 30, 2020. One consulting agreement is for a twelve month period and expires in the January 2021. As of June 30, 2020, the Company accrued $301,000 in accrued expenses for these consulting agreements.
On May 5, 2020, the Company signed an option agreement to purchase a certain parcel of land in Jefferson County, Colorado for an option fee of $100. The shares were valued at $6,250Company did not exercise the option and issued to the third party as additional consideration for providing the loan.option expired on June 18, 2020.
12
Item 2.
Management’s Discussion and Analysis of Financial Conditions and Results of Operations
The following discussion and analysis by our management of our financial condition and results of operations should be read in conjunction with our unaudited condensed interim financial statements and the accompanying related notes included in this quarterly report and our audited financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 20172019 filed with the Securities and Exchange Commission.
Cautionary Statement Regarding Forward-Looking Statements
This report may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, and we intend that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Any such forward-looking statements would be contained principally in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities and the effects of regulation. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss many of these risks in greater detail in “Risk Factors.” Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits to the report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
OverviewIn March 2020 the Director General of the World Health Organization declared COVID-19 a pandemic. We are still assessing the impact COVID-19 may have on our business, but there can be no assurance that this analysis will enable us to avoid part or all of any impact from the spread of COVID-19 or its consequences, including downturns in business sentiment generally. The extent to which the COVID-19 pandemic and global efforts to contain its spread will impact our operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the pandemic and the actions taken to contain or treat the COVID-19 pandemic.
Overview
Unless otherwise indicated or the context otherwise requires, all references in this Form 10-Q to “we,” “us,” “our,” “our company,” “Pierre”“Fourth Wave” or the “Company” refer to Fourth Wave, Inc (formerly Pierre Corp.).
We were incorporated in Nevada on January 21, 2011. Since our incorporation, we have attempted to become involved in a number of business ventures, all of which were unsuccessful and which we have abandoned.
In February 2018, we decidedResidential Energy Efficiency and Renewable Energy Overview
Homes and buildings use energy for heating, cooling, hot water, and electrification. A number of factors determine how much energy is required to become involveddeliver these services including the age of the structure, type of construction, heating, ventilation, and air conditioning (HVAC) equipment used and its condition, lighting, appliances, and electronics used. Different types of energy are used for these end-uses, which is often based on regional energy production and availability, historical construction preferences, and local legislation. Energy sources include, but are not limited to natural gas, heating oil, utility electricity, and on-site renewable energy generation.
Based on home conditions and energy sources, energy efficiency improvements are often the lowest way to reduce ongoing utility and maintenance costs. Energy efficiency improvements often result in improved living comfort, for example
enhanced heating, cooling, lighting, and air quality. Energy efficiency upgrades have an up-front cost but are designed to reduce ongoing utility and maintenance costs. Upgrades also often result in increased home values.
Homes and commercial buildings consume 40% of the energy used in the marijuana industry.United States. Most homeowners could save between 15-25% of their utility bills by addressing wasted energy from drafts, air leaks, and outdated heating and cooling systems. Typical energy efficiency upgrades include sealing air leaks, adding insulation, installing more efficiency windows, doors, and skylights, installing and properly setting programmable thermostats, sealing ducts, tuning or upgrading heating and cooling systems, installing energy efficiency hot water heaters, upgrading household appliances and electronics, and installing energy efficient lighting.
13
We now plan to own and operate medical and adult marijuana cultivation facilities, manufacturing facilities and dispensariesImprovements in California. The first step in our business plan is to acquire licenses to cultivate, manufacture and dispense marijuana.
We currently have agreements with LGM, Org and Lean Green Machine, Inc. (collectively “LGM”) to acquire licenses LGM may be awarded by the state of California in Long Beach and the City of Commerce. LGM has applied for licenses to operate cultivation and manufacturing facilities in these two cities. A cultivation and manufacturing license, awarded together, iselectric heat exchanger (also known as heat pump) technology have increased their usage across the country. Different types of heat pump technologies exist. Some transfer energy from water sources and others directly from the air. Water source heat pumps are often connected to geothermal systems, also known as ground source heating and cooling. Since geothermal technologies rely on transferring energy from the earth instead of creating energy, they are widely considered the most efficient heating and cooling system.
On-site renewable energy generation has been improving greatly for years with gains in performance and reductions in cost. The most typical type of on-site generation is photovoltaics, also known as solar energy. Panels are typically installed on a “micro license”.roof-mounted configuration or on an adjacent ground-mounted system. Inverters capture the solar energy and transform it into electricity. Most residential systems are tied to the existing electrical utility grid for back-up and resiliency when solar energy is not being generated.
Fourth Wave Energy
If LGM is awarded a micro license
On March 16, 2020 we acquired all of the outstanding shares of Fourth Wave Energy, Inc. for Long Beach, we will issue LGM 35,381,2506,200,000 restricted shares of our common stockstock.
Fourth Wave Energy’s GSP system is designed to significantly reduce energy consumption and associated greenhouse gas emissions in considerationresidences and commercial buildings, while improving indoor air quality. By improving the building envelope, reducing energy loads, and generating on-site renewable solar energy the system offers a highly-efficiency whole-home energy upgrade.
The GSP system includes:
·home energy audit and environmental analysis;
·improved building envelope, including upgrades to insulation, sealing, and air tightness;
·on-site photovoltaic power generation;
·efficient heat pump heating, ventilation, and air conditioning (HVAC) technology;
·LED lighting;
·heat pumps for domestic hot water heating;
·energy recovery ventilation systems;
·advanced air filtration and distribution; and
·220v electric vehicle charger
Optional equipment and services includes:
·Battery storage system
·Hot tub and pool heaters
·Xeriscape and landscape design
·ground source geothermal technology for heating and cooling;
·air source heating and cooling depending on home conditions and requirements;
We plan to use a sales force that will market the assignment ofGSP system directly to homeowners.
We will use independent subcontractors to replace a home’s existing heating and air conditioning system with the license to us. As of June 30, 2019 LGM had not been awarded this license and no shares had been issued.
If LGM is awarded a micro license for the City of Commerce, we will issue LGM 35,381,250 shares of our common stock in consideration for the assignment of the license to us. As of June 30, 2019 LGM had not been awarded this license and no shares had been issued.
GSP system. We estimate that itthe removal of an existing HVAC system and the installation of the GSP system will cost approximately $39,000, after tax credits, and will require six monthsapproximately 14 to 21 days to complete.
The sale of solar and geothermal energy system has benefitted from tax credits which lowers the effective cost $750,000of these systems to build and equip a cultivation and manufacturing facilityhomeowners. However, these tax credits are set to expire in either Long Beach or2021. Although there is hope that these tax credits will be extended, there can be no assurance that they will be extended in which case the City of Commerce.
Our estimated costs to operate a cultivation/manufacturing facility are:
Description
Monthly Amount (1)
Nutrients/grow supplies
$ 10,000
Utilities
18,700
Product testing
2,500
Transportation
1,000
Labor
25,000
Security
2,500
Insurance
1,000
Rent
15,000
Legal
5,000
$ 80,700
(1)
Does not include licensing fees or state or local taxes, as the amounts will depend on the locationnet cost of the cultivation/manufacturing facility.GSP system to the homeowner will increase significantly.
If LGMA depiction of a home with the GSP system installed is awarded only one license, or if LGM is not awarded any licenses we will attempt to acquire licenses from other persons who have either applied for or been granted marijuana licenses in California. Although our preference is to acquire micro licenses, we may acquire separate cultivation, manufacturing or dispensary licenses.shown below:
We do not intend to acquire a license associated with a facility or dispensary which is in operation.
We may also apply for a marijuana cultivation, manufacturing or dispensary license in our own name.
J. Jacob Isaacs, our only officer and director, and the owner of 15,750,000 shares of our common stock, intends to sell us, for $100, the same number of shares which we may issue to LGM.
14
On October 15, 2018 an officer and shareholder owning a majorityAs of the Company’s outstanding sharesdate of common stock amended the Company’s Articles of Incorporation to:this filing, Fourth Wave had not generated any revenue.
·
change the name of the Company from Wadena, Corp. to Pierre Corp.
·
reverse split the Company’s outstanding shares of common stock on a 5-for-1 basis. All share references in this document have been retroactively adjusted to reflect this reverse stock split.
Critical Accounting Policies
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, and (ii) the reported amount of expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates.
These estimates and assumptions also affect the reported amounts of costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.
Results of Operations for the three and six months ended June 30, 2019,2020, compared to three and six months ended June 30, 2018.2019.
During the three and six months ended June 30, 2019 General2020 general and Administrative Expenses increased from the comparable periodsadministrative expenses was $334,173 compared to $79,656 in 20182019. The $254,517 increase is due to the change in our business plan which resulted in increased consulting, legal and consultingmanagement fees as well as increased travel costs. Increases
During the three months ended June 30, 2020 other expenses was $116,782 compared to $17,969 in 2019. The $98,813 increase in other expenseexpenses are the result of cost associated with our new note payable arrangements included amortization of discounts, derivative liability expense and interest.
15
Net loss for the three months ended June 30, 2020 and 2019, was $450,955 and $97,625, respectively.
Results of Operations for the six months ended June 30, 2020, compared to six months ended June 30, 2019.
During the six months ended June 30, 2020 general and administrative expenses was $3,537,694 compared to $127,311 in 2019. The $3,410,383 increase is due to the change in our business plan which resulted in increased stock based compensation, consulting, legal and management fees as well as increased travel costs.
During the six months ended June 30, 2020 other expenses was $220,970 compared to $17,969 in 2019. The $203,001 increase in other expenses is the result of costs associated with our new note payable arrangements included amortization of discounts, derivative liability expense and interest.
Net loss for the six months ended June 30, 2020 and 2019, was $3,758,664 and $145,280, respectively.
Liquidity and Capital Resources
Our sources and (uses) of cash for the sixthree months ended June 30, 20192020 and 20182019 were:
| 2018 |
| 2017 |
| ||||
|
|
|
|
| ||||
Cash (used in) operations |
| $ | (121,449) |
|
| $ | (64,653) |
|
Sale of common stock |
| $ | - |
|
|
| 150,000 |
|
Proceeds from advances, related party |
| $ | - |
|
| $ | 1,012 |
|
Proceeds on convertible notes |
| $ | 75,000 |
|
| $ | - |
|
Proceeds from advances, unrelated party |
| $ | 79,900 |
|
| $ | 20,000 |
|
| 2020 |
| 2019 |
| ||||
|
|
|
|
| ||||
Cash used in operations |
| $ | (245,537 | ) |
| $ | (121,449) |
|
Payment on notes payable |
| $ | (3,000) |
|
| $ | - |
|
Proceeds on convertible notes |
| $ | 199,000 |
|
| $ | 75,000 |
|
Advances from unrelated party |
| $ | - |
|
| $ | 79,900 |
|
Proceeds from sale of common stock |
| $ | 50,000 |
|
| $ | - |
|
Going Concern
The unaudited financial statements accompanying the report have been prepared on a going concern basis, which assumes that our company will be able to meet our obligations and continue our operations for our next fiscal year. Realization values may be substantially different from carrying values as shown and the financial statements do not give effect to
adjustments that would be necessary to the carrying values and classification of assets and liabilities should we be unable to continue as a going concern. At June 30, 2019,2020, we have had no revenue and have not yet achieved profitable operations and expect to incur further losses in the development of our business, all of which raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that we will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available.
There areis no assurancesassurance that we will be able to obtain further funds required for our continued operations. We are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be forced to scale down or perhaps even cease the operation of our business.business
Item 4.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the direction and with the participation of the Company’s management, including the Company’s Chief Executive and Chief Financial Officer, the Company has conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures as of June 30, 2019.2020. The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its periodic reports with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations, and that such information is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Company’s disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching its desired disclosure control objectives. Based on the evaluation, the Chief Executive and Chief Financial Officer concluded that the Company’s disclosure
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controls and procedures were not effective as of June 30, 2019. 2020.
Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting that occurred during the six months ended June 30, 20192020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II
OTHER INFORMATION
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
The Company sold shares of common stock for that were not reported on a Current Report on Form 8-K or in Part II, Item 5 of the Annual report on Form 10-K and such transactions are being reported hereby, as follows.
Between May and August 2018, third party investors purchased 3,734,000 shares of the Company’s common stock for a purchase price of $0.05 per share totaling $186,700.
The Company relied upon the exemption provided by Section 4(a)(2) of the Securities Act of 1933 in connection with issuance of the securities described above. The persons who acquired these securities were sophisticated investors and were provided full information regarding the Company’s business and operations. There was no general solicitation in connection with the offer or sale of these securities. The persons who acquired these securities acquired them for their own accounts. The certificates representing these securities will bear a restricted legend providing that they cannot be sold except pursuant to an effective registration statement or an exemption from registration. No commission was paid to any person in connection with the sale of these securities.
Item 5.
Other Information
See Note 6 to the financial statements included as part of this report.
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Item 6.
Exhibits
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SIGNATURES
Pursuant to the requirements 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.
DATED: August 19, 201913, 2020FOURTH WAVE ENERGY, INC.
PIERRE CORP.
By:/s/ J. JacobJacob Isaacs
J. Jacob Isaacs, Principal Executive, Financial and Accounting Officer
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