SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,, D.C. 20549

FORM 10-Q

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d ) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2020

o
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: ~~333-141907~~000-55721

TAUTACHROME, INC.
~~(Exact~~ (Exact name of registrant as specified in its charter)

Delaware
~~20-5034780~~84-2340972
(State or other Jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)

1846 e. Innovation Park Drive, Oro Valley, AZ 85755
(Address of principal executive offices)

(520) 318-5578
(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:

Title of Each Class		Trading Symbols		Name of Exchange on Which Registered
Not applicable		Not applicable		Not applicable

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. Yes x No o

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). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” ~~and~~ “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
¨o
Accelerated filer
¨o
Non-accelerated filer
¨o
Smaller reporting company
x
~~(do not check if a smaller reporting company)~~
Emerging growth company
o

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. o

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of the registrant’s common stock outstanding as of ~~November 3, 2017,~~May 6, 2020, was ~~1,687,982,960.~~3,512,446,311.

TAUTACHROME, INC.

FORM 10-Q

INDEX

PART I – FINANCIAL INFORMATION

Item 1 –
Consolidated Financial Statements

3
3

Item 2 –
Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

17
16

Item 3 –
Quantitive And Qualitative Disclosures About Market Risk

19
25

Item 4 –
Controls and Procedures

19
25

PART II – OTHER INFORMATION

Item 1 –
Legal Proceedings

20
26
~~Item 1A –~~
~~Risk Factors~~
26

Item 2 –
Unregistered Sale of Equity Securities

20
26

Item 3 –
Defaults Upon Senior Securities

20
26

Item 4 –
Mine Safety Disclosures

20
26

Item 5 –
Other Information

20
26

Item 6 –
Exhibits

21
26

Signatures

22
28

PART I – FINANCIAL INFORMATION

ITEM 1 – CONSOLIDATED FINANCIAL STATEMENTS

TAUTACHROME, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	3/31/2020			12/31/2019
ASSETS	(Unaudited)
Current assets:
Cash	$	40,509		$	31,366
Prepaid expenses		237			403
Total current assets		40,746			31,769
TOTAL ASSETS	$	40,746		$	31,769

LIABILITIES
Accounts payable and accrued expenses	$	388,788		$	411,236
Accounts payable - related party		312,329			257,282
Loans from related parties		102,880			103,032
Convertible notes payable - related party, net		109,365			111,999
Convertible notes payable in default, related-party		27,825			-
Short-term convertible notes payable, net		1,023,379			814,685
Convertible notes payable in default		32,000			32,000
Short-term notes payable		13,509			15,465
Derivative liability		1,152,642			2,365,367
Court judgment liability		-			250,000
Total current liabilities		3,162,717			4,361,066

Long-term convertible notes payable, net		-			158,156
Long-term convertible notes payable, related party, net		303,088			84,091
Total non-current liabilities		303,088			242,247

TOTAL LIABILITIES		3,465,805			4,603,313

STOCKHOLDERS' DEFICIT
Series D Convertible Preferred, par value $0.0001. 13,795,104 shares authorized, 13,795,104 shares issued and outstanding at March 31, 2020 and December 31, 2019		1,380			1,380
Series E Convertible Preferred Stock, par value $0.0001. 40,000,000 shares authorized, 40,000 and zero shares outstanding at March 31, 2020 and December 31, 2019, respectively		4			-
Common stock, $0.00001 par value. 4.5 billion shares authorized. 3,509,112,978 and 3,504,460,889 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively		35,092			35,045
Additional paid in capital		7,966,253			6,095,053
Common stock payable		396,996			2,066,584
Accumulated deficit		(12,026,068	)		(12,867,645	)
Effect of foreign currency exchange		201,284			98,039
TOTAL STOCKHOLDERS' DEFICIT		(3,425,059	)		(4,571,544	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	40,746		$	31,769

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

9/30/2017

12/31/2016

ASSETS

Current assets:

Cash

$ 3,624

$ 1,850

Total current assets

3,624

1,850

TOTAL ASSETS

$ 3,624

$ 1,850

LIABILITIES

Accounts payable and accrued expenses

$ 311,966

$ 275,760

Accounts payable - related party

15,555

25,486

Loans from related parties

101,175

99,434

Convertible notes payable - related party

59,160

49,160

Short-term convertible notes payable, net

681,279

583,674

Short-term notes payable

17,236

15,858

Short-term portion of long-term debt

-

11,034

Court judgment liability

54,000

2,382,374

Total current liabilities

1,240,371

3,442,780

Long-term convertible notes payable, net

67,318

87,528

Long-term notes payable

-

19,659

Total non-current liabilities

67,318

107,187

TOTAL LIABILITIES

1,307,689

3,549,967

STOCKHOLDERS' EQUITY (DEFICIT)

Series D Convertible Preferred, par value $0.0001. 13,795,104 shares authorized, 13,795,104 shares issued and outstanding at September 30, 2017 and December 31, 2016

1,380

1,380

Common stock, $0.00001 par value. Four billion shares authorized. 1,687,982,960 and 1,672,789,717 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively

16,880

16,728

Additional paid in capital

3,775,434

3,421,595

Common stock payable

10,586

10,586

Accumulated deficit

(5,121,784 )

(7,081,154 )
Effect of foreign currency exchange

13,439

82,748

TOTAL STOCKHOLDERS' EQUITY

(1,304,065 )

(3,548,117 )

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 3,624

$ 1,850

TAUTACHROME, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended March 31,
	2020			2019
OPERATING EXPENSES
General and administrative	$	312,369		$	130,220
Total operating expenses		312,369			130,220
Operating loss		(312,369	)		(130,220	)

OTHER INCOME / (EXPENSE)
Gain on litigation		105,000			-
Gain on settlement of debt		-			1,330
Interest expense		(161,919	)		(85,825	)
Change in value of derivatives		1,238,313			58,360
Loss on conversion of debt		(27,448	)		(120,775	)
Total other		1,153,946			(146,910	)
Net income or (loss)	$	841,577		$	(277,130	)

OTHER COMPREHENSIVE INCOME (LOSS)
Effect of foreign currency exchange		103,245			(5,865	)
Net comprehensive income or (loss)	$	944,822		$	(282,995	)

Net (loss) or income per common share
Basic	$	0.00		$	0.00
Fully diluted		0.00			0.00

Weighted average shares outstanding
Basic		3,505,021,996			2,300,781,103
Fully diluted		4,345,209,628			2,300,781,103

The accompanying notes are an integral part of these consolidated financial statements.

34
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TAUTACHROME, INC.

CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~STOCKHOLDERS’ DEFICIT

~~(Unaudited)~~December 31, 2018 to March 31, 2020

	Common Stock				Preferred Stock Series D				Preferred Stock Series E				Additional Paid in		Stock			Other Comprehensive Income		Accumulated			Total Stockholders' Equity/
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Payable			(Loss)		Deficit			(Deficit)
Balance, 12/31/18		1,932,483,910	$	19,325		13,795,104	$	1,380		-	$	-	$	4,692,609	$	1,919,927		$	96,202	$	(9,476,829	)	$	(2,747,386	)

Shares issued for conversion of debt		1,551,562,038		15,516		-		-		-		-		686,054		-			-		-			701,570
Shares issued to settle claims		16,123,055		161		-		-		-		-		188,462		-			-		-			188,623
Shares issued for stock payable		4,291,886		43		-		-		-		-		26,238		(26,281	)		-		-			-
Shares earned by consultants		-		-		-		-		-		-		-		172,938			-		-			172,938
Proceeds from officer stock sale		-		-		-		-		-		-		13,750		-			-		-			13,750
Derivative associated with early debt retirement		-		-		-		-		-		-		471,233		-			-		-			471,233
Imputed interest		-		-		-		-		-		-		16,707		-			-		-			16,707
Effect of foreign currency exchange		-		-		-		-		-		-		-		-			1,837		-			1,837
Net loss		-		-		-		-		-		-		-		-			-		(3,390,816	)		(3,390,816	)
Balance, December 31, 2019		3,504,460,889	$	35,045		13,795,104	$	1,380		-		-	$	6,095,053	$	2,066,584		$	98,039	$	(12,867,645	)	$	(4,571,544	)

Shares issued for conversion of debt		4,652,089		47		-		-		-				30,192		-			-		-			30,239
Issue Series E preferred shares		-		-		-		-		40,000		4		1,836,996		(1,837,000	)		-		-			-
Derivative associated with early debt retirement		-		-		-		-		-		-		173		-			-		-			173
Shares earned by consultants		-		-		-		-		-		-		-		22,412			-		-			22,412
Legal settlement		-		-		-		-		-		-		-		145,000			-		-			145,000
Imputed interest		-		-		-		-		-		-		3,839		-			-		-			3,839
Effect of foreign currency exchange		-		-		-		-		-		-		-		-			103,245		-			103,245
Net income		-		-		-		-		-		-		-		-			-		841,577			841,577
Balance, March 31, 2020 (unaudited)		3,509,112,978	$	35,092		13,795,104	$	1,380		40,000	$	4	$	7,966,253	$	396,996		$	201,284	$	(12,026,068	)	$	(3,425,059	)

Nine Months
Ended
September 30,

Three Months
Ended
September 30,

2017

2016

2017

2016

OPERATING EXPENSES

General and administrative

$ 236,111

325,442

$ 31,596

102,062

Depreciation, depletion and amortization

-

92,862

-

33,345

Total operating expenses

236,111

418,304

31,596

135,407

Operating loss

(236,111 )

(418,304 )

(31,596 )

(135,407 )

OTHER INCOME / (EXPENSE)

Gain on litigation

2,372,668

-

2,372,668

-

Interest expense

(177,187 )

(222,972 )

(46,712 )

(39,618 )
Total other

2,195,481

(222,972 )

2,325,956

(39,618 )
Net income (loss)

$ 1,959,370

$ (641,276 )

$ 2,294,360

$ (175,025 )

OTHER COMPREHENSIVE INCOME (LOSS)

Effect of foreign currency exchange

(69,309 )

(35,005 )

(16,914 )

(18,467 )
Net comprehensive income (loss)

$ 1,890,061

$ (676,281 )

$ 2,277,446

$ (193,492 )

Net (loss) or income per common share

Basic

$ 0.00

$ 0.00

$ 0.00

$ 0.00

Diluted

$ 0.00

$ 0.00

$ 0.00

$ 0.00

Weighted average shares outstanding

Basic

1,684,825,134

2,999,921,751

1,687,982,960

3,000,633,430

Diluted

1,828,761,881

2,999,921,751

1,866,629,731

3,000,633,430

The accompanying notes are an integral part of these consolidated financial statements.

45
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TAUTACHROME, INC.

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF ~~STOCKHOLDERS’ EQUITY / (DEFICIT)~~CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2020			2019

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	841,577		$	(277,130	)
Stock-based compensation		22,412			-
Loss on conversions		27,448			120,775
Change in fair value of derivative		(1,238,313	)		(58,360	)
Gain on litigation		(105,000	)		-
Gain on debt settlements		-			(1,330	)
Amortization of discounts on notes payable		128,166			48,934
Imputed interest		3,839			4,008

Changes in operating assets and liabilities:
Prepaid expenses		166			-
Accounts payable and accrued expenses		(3,141	)		54,422
Accounts payable - related party		(184	)		-
Net cash used in operating activities		(323,030	)		(108,681	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible notes payable		285,000			105,475
Proceeds from related-party loans		2,115			18,000
Principal payments on related-party loans		(23,918	)		(11,188	)
Net cash provided by financing activities		263,197			112,287

Effect of exchange rate changes on cash and cash equivalents		68,976			(5,865	)

Net increase/(decrease) in cash		9,143			(2,259	)
Cash and equivalents - beginning of period		31,366			6,243
Cash and equivalents - end of period	$	40,509		$	3,984

SUPPLEMENTARY INFORMATION
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-

SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING TRANSACTIONS
Discounts on convertible notes	$	25,761		$	31,312
Conversion of debt to common stock	$	2,791		$	234,422
Settlement of derivative liability	$	173		$	175,780
Shares issued for debt settlements	$	-		$	3,623
Shares issued for stock payable	$	1,837,000		$	-
Reclassification of fair value of shares granted for settlement	$	145,000		$	-

Common Stock

Preferred
Stock Series D

Additional Paid in

Stock

Other Comprehensive Income

Accumulated

Total Stockholders' Equity /

Shares

Amount

Shares

Amount

Capital

Payable

(Loss)

Deficit

(Deficit)

Balance, 12/31/15

2,987,633,430

$ 29,876

-

$ -

$ 1,539,442

$ -

$ 81,301

$ (2,480,423 )

$ (829,804 )

Acquisition of Photosweep, LLC

13,000,000

130

353,470

353,600

Beneficial conversion feature of convertible notes

335,799

335,799

Common stock to preferred stock swap

(1,379,510,380 )

(13,795 )

13,795,104

1,380

1,100,746

1,088,331

Conversion of debt

51,666,667

517

60,104

10,586

71,207

Effect of debt modifications

18,760

18,760

Imputed interest

13,274

13,274

Effect of foreign currency exchange

1,447

1,447

Net loss

(4,600,731 )

(4,600,731 )
Balance, 12/31/16

1,672,789,717

$ 16,728

13,795,104

1,380

$ 3,421,595

$ 10,586

$ 82,748

$ (7,081,154 )

$ (3,548,117 )

Shares issued for conversion of debt

8,493,243

85

54,080

54,165

Shares issued for services

6,700,000

67

84,262

84,329

Beneficial conversion feature of convertible notes

204,040

204,040

Imputed interest

11,457

11,457

Effect of foreign currency exchange

(69,309 )

(69,309 )
Net loss

1,959,370

1,959,370

Balance, 9/30/17

1,687,982,960

$ 16,880

13,795,104

$ 1,380

$ 3,775,434

$ 10,586

$ 13,439

$ (5,121,784 )

$ (1,304,065 )

The accompanying notes are an integral part of these consolidated financial statements.

5
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~~TAUTACHROME, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

Nine Months
Ended
September 30,

2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES

Net Loss

$ 1,959,370

$ (641,276 )
Stock-based compensation

84,329

92,862

Gain on litigation

(2,372,668 )

-

Amortization of discounts on notes payable

71,743

177,030

Imputed interest

11,457

10,655

Changes in operating assets and liabilities:

Accounts payable and accrued expenses

128,858

120,993

Accounts payable - related party

494

17,602

Net cash used in operating activities

(116,417 )

(222,134 )

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of Photosweep, LLC

-

(39,000 )
Net cash used in investing activities

-

(39,000 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from convertible notes payable

208,040

223,510

Principal payments on notes payable

(30,693 )

(884 )
Proceeds from related-party loan

11,153

64,791

Principal payments on related-party loans

(1,000 )

-

Net cash provided by financing activities

187,500

287,417

Effect of exchange rate changes on cash and cash equivalents

(69,309 )

(35,005 )

Net increase/(decrease) in cash

1,774

(8,722 )
Cash and equivalents - beginning of period

1,850

15,428

Cash and equivalents - end of period

$ 3,624

$ 6,706

SUPPLEMENTARY INFORMATION

Cash paid for interest

$ 627

$ -

Cash paid for income taxes

$ -

$ -

SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING TRANSACTIONS

Discounts on convertible notes

$ 204,040

$ 249,054

Common stock for Photosweep acquisition

$ -

$ 353,600

Note modification

$ -

$ 23,812

Conversions of principal and interest to equity

$ 54,167

$ -

Note payable for trade payable

$ -

$ 34,250

~~The accompanying notes are an integral part of these consolidated financial statements.~~

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TAUTACHROME, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

~~SEPTEMBER 30, 2017~~MARCH 31, 2020

Note 1 – Organization and Nature of Business

History

Tautachrome, Inc. ~~(formerly Roadships Holdings, Inc.)~~ was formed in Delaware on June 5, 2006 as Caddystats, Inc. and hereinafter collectively referred to as “Tautachrome”, the “Company”, “we’ or “us”).

The Company adopted the accounting acquirer’s year end, December 31.

Our Business

~~The Company~~Tautachrome operates in the internet applications space, ~~a space~~ uniquely ~~able to embrace fast growing and novel business. The iPhone, Google, Facebook, Amazon, Twitter, Android, Uber and numerous other examples are reminders~~exploiting the technologies of the ~~ability~~Augmented Reality sector, the blockchain/cryptocurrency sector and the smartphone picture and video technology sector. We have high-speed blockchain concepts under development aiming to couple with the Company’s revolutionary patents and licensing in augmented reality, smartphone-image authentication and imagery-based social networking interaction.

Tautachrome is currently pursuing three main avenues of business activity based on our patented activated imaging technology, our blockchain cryptocurrency products, and our licensing of the ~~internet applications space to surprise us with the arrival of wholly new business universes.~~patent pending ARk technology (together banded “KlickZie” technology):

	1.	KlickZie ARk technology business: The Company has licensed and is developing a new KlickZie augmented reality (“AR”) platform branded ARknet. ARknet enables goods and services providers to establish geolocated augmented reality interfaces, called ARks, allowing consumers to purchase the provider’s products and take advantage of is specials and discounts, using the ARk. A provider’s ARk may be located anywhere in the world, from a store location to anyplace else the provider may desire. The ARknet is a fintech platform connecting consumers to providers in the global $48 trillion household goods market, using augmented reality as the medium of interaction.

	2.	KlickZie’s blockchain cryptocurrency-based ecosystem: The Company has developed its own digital currency (“KLK”), smart contracts using KLKs, and high speed blockchain concepts aimed at supporting fast frictionless transactions within the ARknet as well as incentivizing user download and use of KlickZie products.

	3.	KlickZie Activated Digital Imagery business: The Company is developing downloadable apps based on our patented KlickZie trusted imaging technology and based on our patented trusted image-based social interactions using the pictures and videos that smartphone users create. Trusted imagery and user imagery-based interaction is expected to be widely used within the ARknet.

~~The~~Since its public announcement on September 25, 2017 (via SEC form 8-K) that it would be using its Twitter site (@Tautachrome_Inc) (https://twitter.com/tautachrome_inc) to post important Company ~~is developing a system branded “KlickZie” aimed at turning smartphones, including iPhones, Android phones~~information, and ~~other smartphones, into trustable imagers~~finding this method of publicizing important Company information both fast and ~~advanced communicators. The pictures and videos from trustable imager will be able~~effective, the Company has continued to use this means of public communication almost exclusively, supplemented occasionally with Current Reports via SEC Form 8-Ks. Shareholders are advised to follow us on Twitter to be ~~trusted to be~~current on the ~~original, untampered, un-Photoshopped pictures and videos made by the smartphone, and~~Company’s disclosures in ~~addition the pictures and videos themselves become advanced communicators, able to be used as living, trusted portals to communicate~~conformity with ~~others.~~Regulation FD.

Table of Contents

The KlickZie system concept consists of downloadable software able to securitize the imaging process in the smartphone, together with an advanced cloud system to authenticate KlickZie pictures and videos and to make possible imagery based communication among people who happen upon KlickZie pictures and videos.

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

Consolidated Financial Statements

In the opinion of management, the accompanying financial statements includes all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the period ~~ending September 30, 2017.~~ended March 31, 2020. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in our audited financial statements for the period ended December 31, ~~2016,~~2019, as reported in Form 10-K filed with the ~~Securities and Exchange Commission.~~SEC filed on March 30, 2020.

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.

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Principles of Consolidation

Our consolidated financial statements include the accounts of Tautachrome, Inc. and all majority-owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation.

~~Property, Plant and Equipment~~

We record our property plant and equipment at historical cost. The estimated useful lives of these assets range from three to seven years and are depreciated using the straight-line method over the asset’s useful life.

Long-Lived Assets, Intangible Assets and Impairment

In accordance with U.S. GAAP, the Company’s long-lived assets and amortizable intangible assets are tested for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The Company assesses the recoverability of such assets by determining whether their carrying value can be recovered through undiscounted future operating cash flows, including its estimates of revenue driven by assumed market segment share and estimated costs. If impairment is indicated, the Company measures the amount of such impairment by comparing the fair value to the carrying value.

Revenue Recognition

The Company sells credits in exchange for cash. These credits can be redeemed for ARks which are geo-location objects downloadable into various digital devices. We recognize revenues once the customer has redeemed previously-purchased credits in exchange for ARks. Until that point, any cash received in exchange for credits is accounted for as liabilities.

The company recognizes revenues in accordance with ASC 606 – Revenue From Contracts with Customers which proscribes a five-step process in evaluating the revenue recognition process:

Step 1: Identify the contract with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

The company has determined that the performance obligations are satisfied once the purchased credits are exchanged for ARks. As of March 31, 2020, we have recorded $2,616 in liabilities.

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Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Net Loss Per Share

Basic and diluted net loss per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the year. The per share amounts include the dilutive effect of common stock equivalents in years with net income. Basic and diluted loss per share is the same for the ~~nine~~three months ended ~~September 30, 2017 and 2016~~March 31, 2020 as the effect of our potential common stock equivalents would be anti-dilutive.

Recent Accounting Pronouncements

In ~~January 2017,~~February 2016, the FASB ~~issued ASU~~established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. ~~2017-04, “Intangibles-Goodwill~~2016-02, which requires lessees to recognize leases on-balance sheet and ~~Other (Topic 350) - Simplifying the Test for Goodwill Impairment" (“ASU 2017-04”).~~disclose key information about leasing arrangements. The new standard ~~simplifies~~establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the ~~accounting~~balance sheet for ~~goodwill impairments by eliminating step 2 from~~all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the ~~goodwill quantitative impairment test. Instead, if~~pattern and classification of expense recognition in the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. income statement.

The new standard iswas effective for ~~interim and annual periods beginning after December 15, 2019 and early adoption is permitted. The Company early adopted ASU 2017-04~~us on January 1, ~~2017.~~2019 and we have adopted and implemented it. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. We expect to adopt the new standard on January 1, 2019 and use the effective date as our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019.

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Note 3 – Going Concern

~~We have not begun~~In the third quarter 2019, we began operations with our ~~core operations~~ARknet platform, and in ~~the technology industry and have not yet~~October we acquired ~~the~~ assets to enter ~~this markets and we~~the business ARk vertical in our market. We will require additional capital to ~~do so.~~exploit this vertical and to commercialize others. There is no guarantee that we will be able acquire the capital to ~~procure~~exploit and commercialize the ~~assets~~ARknet markets we envision so as to ~~enter this markets or, upon doing so, that we will~~ generate positive cash flows from operations. ~~Substantial~~For these reasons, substantial doubt exists as to Tautachrome’s ability to continue as a going concern. No adjustment has been made to these financial statements for the outcome of this uncertainty.

Management intends to raise additional capital, partly through convertible debt, partly through the direct sale of equity and partly through partnerships with businesses with whom we will provide exclusive use of ARknet techniques in their arenas of operation. We will commit those funds to further refine and develop our ARknet platform. In addition, we intend to market our products through Google and Facebook.

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Note 4 – Related Party Transactions

For the ~~year~~three months ended ~~December~~March 31, ~~2016,~~2020, we ~~had~~accrued $1,198 of interest to the ~~following transactions with the Twenty Second~~22^nd Trust (the ~~"Trust"~~“Trust”), the trustee of whom is Sonny Nugent, the son of our major shareholder and former Chief Executive Officer, Micheal ~~Nugent:~~

· ~~We received $18,331 in cash loans to pay operating expenses and repaid no principal.~~
· ~~We accrued $4,400 in interest payable to the Trust and paid no interest payments.~~
· ~~The outstanding balance at December 31, 2016 to the 22~~^nd ~~Trust was $98,344 and $11,035 for principal and interest, respectively, after adjustments for foreign exchange effect.~~

~~For the nine months ended September 30, 2017, we received $153 in cash loans from the 22~~^nd ~~Trust. At September 30, 2017, we owed $100,085 and $14,778 in~~Nugent. The outstanding balances of unpaid principal and interest ~~to the Trust,~~at March 31, 2020 were $95,765 and $26,205, respectively. The outstanding balances of unpaid principal and interest at December 31, 2019 were $98,032 and $25,361, respectively.

According to our agreement with Mr. Nugent, we accrue interest on all unpaid amounts at 5%. Principal and interest are callable at any time. If principal and interest are called and not repaid, the loan is considered in default after which interest is accrued at 10%.

On July 11, 2019, our CEO and Board Chairman contributed $13,750 to the company which was accounted for as additional paid in capital.

Convertible note payable, related party

On May 5, 2013 (and on August 8, 2013 with an enlargement amendment) the Company entered into a no interest demand-loan agreement with our current Chairman, Jon N. Leonard under which the Company may borrow such money from ~~Jon~~Dr. Leonard as ~~Jon~~Dr. Leonard in his sole discretion is willing to loan.

The terms of the note provide that at the Company’s option, the Company may make repayments in stock, at a fixed share price of $1.00 per share. Also, because this loan is a no-interest loan, an imputed interest expense of ~~$3,345~~$1,529 was recorded as additional paid-in capital for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2020. The Company evaluated Dr. Leonard’s note for the existence of a beneficial conversion feature and determined that none existed.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we ~~received $11,000 in related-party loans from our Board Chairman and CEO,~~repaid $23,918 to Dr. ~~Jon Leonard, and repaid $1,000 in principal.~~Leonard. At ~~September 30, 2017, we~~March 31, 2020, the balanced owed Dr. Leonard ~~$59,160.~~is $55,256.

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~~Note 5 – Capital~~We also owe $33,801 to a Board member for convertible notes payable for loans he made to the company of which $27,825 is in default at March 31, 2020. The notes bear interest at 5% (10% after maturity) and may convert at $0.0025 per share. We originally recorded a discount of $755 in 2019, amortizing $59 and $75 during 2019 and 2020, respectively. The unamortized discount and net liabilities at March 31, 2020 are $621 and $33,180, respectively.

On January 15, 2016 we issued 13,000,000 common shares to acquire all of the members’ interests in Photosweep, LLC. We valued the common stock at the grant date fair value, and included this amount in our acquisition cost of $353,600, or $0.027 per share.

~~On January 1, 2016, we re-negotiated certain~~February 2, 2020, a related-party convertible promissory notes with certain creditors in order to remove the provisions in the notes which caused of a derivative liability. We recorded this renegotiation by removing the derivative liability at December 31, 2015 and recording an increase to Additional Paid in Capital of $18,760.

~~In October, 2016, we issued 51,666,667 common shares to convert $60,000 of convertible notes payable, and $604 in accrued interest, to common stock.~~

~~In November, 2016, we received a Notice of Conversion from a holder of a US Dollar denominated convertible promissory~~ note requesting a conversion of the outstanding principal and interest into the convertible amount of 2,142,857 common shares . We recorded a reduction of principal and interest of $10,000 and $586 of accrued interest, respectively, and we recorded an offsetting common stock payable in the amount of ~~$10,586.~~

~~During the nine months ended September 30, 2017, we issued 8,493,243 shares in conversion of two outstanding convertible promissory notes.~~$27,825 became due and was not paid. We ~~recorded a reduction of~~are presenting this note on the balance ~~of such notes of $37,822~~sheet as “Related-party convertible note payable in default” and ~~$15,959, respectively. We recognized no gain or loss on their conversions as they were converted within~~are currently renegotiating this note with the ~~terms of conversion.~~

During the nine months ended September 30, 2017, we issued 6,700,000 shares pursuant to our agreement with four consultants. We valued the shares at their grant-date fair values and recorded expense of $84,329.

~~At September 30, 2017 and December 31, 2016, we had 1,687,982,960 and 1,672,789,717 common shares issued and outstanding, respectively, from a total of four billion authorized.~~

~~Preferred Stock~~

On September 29, 2016, the Company’s principal shareholders (“Principals”), Dr. Jon N. Leonard, Micheal P. Nugent, and Matthew W. Staker, offered to retire 1,379,510,380 of their common shares in exchange for a new series of non-trading preferred shares.related party.

On October ~~5, 2016,~~10, 2019, we issued a convertible promissory note in the ~~Board~~amount of ~~Directors voted~~$62,500 to ~~accept~~Arknet in exchange for that amount of proceeds. The note bears interest at 5% (10% after maturity), matures 18 months from the ~~share retirement offer,~~date of the note and ~~on October 20, 2016, the Company filed~~can covert to common stock at $0.005 per share. We originally recorded a ~~Certificate~~discount of ~~Designations with the State of Delaware creating 13,795,104 shares of Series D Preferred Stock (the “Preferred Shares”) to effect the exchange.~~$19,278 in 2019, amortizing $2,701 and $2,831 during 2019 and 2020, respectively. The unamortized discount and net liabilities at March 31, 2020 are $13,746 and $48,754, respectively.

~~Share Exchange ratio and Preservation of Voting Rights~~

~~In the share exchange, each principal received 1 Preferred Share for each 100 common shares retired. Each share of Preferred Shares entitles the holder to 100 votes (and each 1/100~~^th ~~of a Preferred Share entitles the holder to one vote).~~

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~~Conversion Rights~~On December 19, 2019, we issued a convertible promissory note in the amount of $60,000 to Arknet in exchange for that amount of proceeds. The note bears interest at 5% (10% after maturity), matures 18 months from the date of the note and can covert to common stock at $0.004 per share. We originally recorded a discount of $24,123 in 2019, amortizing $2,010 and $4,038 during 2019 and 2020, respectively. The unamortized discount and net liabilities at March 31, 2020 are $18,075 and $41,925, respectively.

~~A holder may~~During the three months ended March 31, 2020, we issued four promissory notes to Arknet in the aggregate amount of $285,000. The notes mature between June 24, 2021 and August 10, 2021, bear interest at 5% (10% after maturity) and can convert ~~Preferred Shares~~ to common ~~under~~stock between $0.0025 and $0.0040 per common share. We originally recorded discounts on these notes in the ~~following conditions:~~aggregate of $25,761, amortizing $1,924 during the three months ended March 31, 2020. The unamortized discount and net liabilities at March 31, 2020 for these four notes are $23,837 and $261,163, respectively.

~~Automatic conversion~~Note 5 – ~~each Preferred Share automatically converts to 100 common shares upon the earlier of~~Capital

During the year ended December 31, 2019 we issued 1,571,976,979 shares as follows:

	·	~~The end~~ We issued 1,551,562,038 shares in conversion of ~~5 years (5:00 PM EST, October 5, 2021), or~~outstanding convertible promissory notes. We recorded a reduction of the balance of these notes of $525,621 of principal, $44,418 of interest, and $4,500 of conversion fees and recorded a loss on conversion of $127,031. As part of these conversions, we retired $471,233 of associated derivative liabilities which we included in Additional Paid in Capital.

	·	~~A change~~ We issued 3,623,055 shares to a certain Australian individual who made baseless claims against the Company other than two existing convertible promissory notes which the Company acknowledged. Rather than engage in a prolonged international legal matter, we issued these shares in complete satisfaction of ~~control~~any and all claims against the Company. We valued the shares at their grant date fair value of $3,623, reduced unpaid principal and interest in the amount of $4,258 and $695, respectively, and recorded a $1,330 gain on this settlement.

	·	We issued 12,500,000 shares to a previous supplier to retire trade debts in the amount of $35,000. We valued the shares at the grant date fair value of $185,000 and recorded a reduction of accounts payable of $35,000 and a loss on settlement of $150,000.

	·	We issued 4,291,886 shares to a consultant to reduce our stock payable to them. We reduced the stock payable by $26,281 and recorded additional expense of $313. We recorded an additional stock payable to this consultant of $19,888 during the period.

~~Optional~~During the three months ended March 31, 2020, we issued 4,652,089 shares to a creditor in Australia to convert an outstanding convertible note in the amount of US$2,331 of principal and US$460 of accrued interest. We recognized a loss on the conversion ~~- After October 5, 2017, each holder may convert each share into 100 shares~~ of ~~common stock immediately following a period~~this debt in the amount of ~~ten consecutive trading days during which the average closing or last sale price exceeds $3.00 per share. Also, each holder may convert into 110 shares~~$27,448 and retired $173 of ~~common stock at any time that the shares are listed on a National exchange (for example, the NYSE or NASDAQ).~~derivative liabilities.

~~Related-Party Stock Exchange~~During the three months ended March 31, 2020, we recorded stocks payable to two suppliers in the amount of $22,412.

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~~On October 27, 2016, the Company entered into the above outlined Share Exchange Agreement with related-parties~~Preferred Stock

~~Common stock ownership structure immediately before~~During the year ended December 31, 2018, we accrued $1,837,000 in costs related to the 40,000 Series E Preferred shares promised in our ARknet contract containing a par value of $0.0001. This series of preferred shares have the following rights, limitations, restrictions and ~~after execution of the Share Exchange Agreement was as follows:~~privileges:

	·	They are not entitled to dividends,

	·	They are entitled to no liquidation rights,

	·	Each share has the voting rights of all other voting shares combined, multiplied by 0.00001, and

	·	They have no conversion or redemption rights.

Common Stock Ownership

Immediately Before

Effect of Agreement

Immediately After

Shares

%

Shares

%

Jon Leonard, PhD

1,387,829,545

46.5 %

(1,009,330,578 )

378,498,967

23.5 %
Micheal Nugent

620,756,473

20.8 %

(92,613,893 )

528,142,580

32.8 %
Matthew Staker

346,957,386

11.6 %

(277,565,909 )

69,391,477

4.3 %
Robert McClelland

8,403,524

0.3 %

-

8,403,524

0.5 %
Patrick Greene

2,093,080

0.1 %

-

2,093,080

0.1 %
Non Affiliates

621,593,422

20.8 %

-

621,593,422

38.7 %
Totals

2,987,633,430

100.0 %

(1,379,510,380 )

1,608,123,050

100.0 %
These shares were recorded as issued on January 31, 2020.

Imputed Interest

Certain of our promissory notes bear no nominal interest. We therefore imputed interest expense and ~~increase~~increased Additional Paid in Capital. For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we imputed ~~$11,457~~$3,839 of such interest.

~~Beneficial Conversion Features~~

As discussed in Note 6, we issued certain promissory notes in the United States containing beneficial conversion features. During the nine months ended September 30, 2017, we recorded an increase in Additional Paid in Capital of $204,040. We account for these Beneficial Conversion Features as debt discounts and amortize using the Effective Interest Method.

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Note 6 – Debt

Loans from related parties

~~As is discussed in Note 4,~~At March 31, 2020 we owed ~~$174,023~~$102,880 in related-party ~~debts~~loans consisting of ~~$100,085 and $14,778 unpaid principal and interest,~~$95,765 respectively, to the 22^nd Trust and ~~$59,160~~$7,115 owed to ~~our CEO, Dr. Jon Leonard.~~a related-party Board member .

We also owe $33,801 of convertible notes payable to a Board member for loans he made to the company. The additional $7,115 is treated as an advance. The notes bear interest at 5% and may convert at $0.0025 per share.

On October 10, 2019, we issued a convertible promissory note in the amount of $62,500 to Arknet in exchange for that amount of proceeds. The note bears interest at 5% (10% after maturity), matures 18 months from the date of the note and can covert to common stock at $0.005 per share. We originally recorded a discount of $19,278 in 2019, amortizing $2,701 and $2,831 during 2019 and 2020, respectively. The unamortized discount and net liabilities at March 31, 2020 are $13,746 and $48,754, respectively.

On December 19, 2019, we issued a convertible promissory note in the amount of $60,000 to Arknet in exchange for that amount of proceeds. The note bears interest at 5% (10% after maturity), matures 18 months from the date of the note and can covert to common stock at $0.004 per share. We originally recorded a discount of $24,123 in 2019, amortizing $2,010 and $4,038 during 2019 and 2020, respectively. The unamortized discount and net liabilities at March 31, 2020 are $18,075 and $41,925, respectively.

During the three months ended March 31, 2020, we issued four promissory notes to Arknet in the aggregate amount of $285,000. The notes mature between June 24, 2021 and August 10, 2021, bear interest at 5% (10% after maturity) and can convert to common stock between $0.0025 and $0.0040 per common share. We originally recorded discounts on these notes in the aggregate of $25,761, amortizing $1,924 during the three months ended March 31, 2020. The unamortized discount and net liabilities at March 31, 2020 for these four notes are $23,837 and $261,163, respectively.

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Convertible notes payable

During the year ended December 31, 2016, we borrowed $193,164 from 26 accredited investors in Australia. These promissory notes can be converted into shares of our common stock at the rate of AU$0.01 per share (the aggregate of which convertible shares for all outstanding Australian convertible notes at December 31, 2016 is 82,873,300). These notes are callable by the makers at any time and accrue interest at 5%. For the year ended December 31, 2016, we accrued $29,343 of interest on these notes and made no interest payments. We evaluated these notes for beneficial conversion features and calculated a value of $147,965, all of which has been immediately expensed as interest expense as the notes are due on demand.

~~Also during the year ended December 31, 2016,~~On January 29, 2019, we issued ~~four~~3,623,055 to a certain Australian individual who made baseless claims against the Company other than two existing convertible promissory notes ~~to four accredited investors~~which the Company acknowledged. Rather than engage in ~~exchange for $109,758~~a prolonged international legal matter, we issued these shares in ~~cash. These promissory notes can be converted into~~complete satisfaction of any and all claims against the Company. We valued the shares at their grant date fair values, reduced unpaid principal and interest in the amount of ~~our common stock at various separately-negotiated rates (the aggregate of which convertible shares for all outstanding USA convertible notes at December 31, 2016 is 28,473,915).~~

~~We evaluated these notes for beneficial conversion features~~$4,258 and ~~calculated~~$695, respectively, and recorded a ~~value of $77,852 which we are accounting for as debt discounts.~~

On January 1, 2016, we re-negotiated the eight U.S.-Dollar-denominated promissory notes that were outstanding at December 31, 2015, in order to remove the ratchet provisions which required that we account for those provisions as a derivative liability. The fair value of the derivative liability was the same at January 1, 2016 as it was$1,330 gain on ~~December 31, 2015 which was $23,812.~~

~~However, in so renegotiating, we granted the creditors new, lower conversion prices, which resulted in new beneficial conversion features of $110,000.~~this settlement.

During the ~~year~~three months ended ~~December~~March 31, ~~2016,~~2020, we amortized ~~$106,628~~$128,166 of debt discounts to interest expense, accrued $22,491 of interest on ~~convertible promissory notes originating~~existing notes. Additionally during the three months ended March 31, 2020, we issued 4,652,089 common shares to extinguish a note payable in the ~~United States to~~amount of $2,331 and $460 of unpaid principal and interest, ~~expense.~~respectively, and recorded a loss on conversion of $27,448 in so doing.

~~The aggregate amount~~At March 31, 2020, $32,000 of ~~shares that may be issued upon conversion for~~our third-party convertible notes ~~issued~~payable and $27,825 of related-party convertible notes were in ~~both Australia and the Unites States is 185,489,928.~~

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default.

Convertible notes payable (excluding related-party convertible notes which is discussed in Note 4) at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 and their classification into long-term, short-term and ~~short-term~~in-default were as follows:

	03/31/20			12/31/19
All convertible promissory notes
Unpaid principal		1,510,155			1,578,917
Discounts		(454,776	)		(574,076	)
Convertible notes payable, net	$	1,055,379		$	1,004,841

Classified as short-term
Unpaid principal balance		1,478,155			1,183,685
Discounts		(454,776	)		(369,000	)
Convertible notes payable - short-term, net	$	1,023,379		$	814,685

Classified as long-term
Unpaid principal balance		-			363,232
Discounts		-			(205,076	)
Convertible notes payable - short-term, net	$	-		$	(158,156	)

Classified as in default
Unpaid principal balance		32,000			32,000
Discounts		-			-
Convertible notes payable - short-term, net	$	32,000		$	32,000

9/30/17

12/31/16

Long-term and short-term combined

Unpaid principal

$ 956,901

$ 747,129

Discounts

(208,304 )

(75,927 )
Convertible notes payable, net

$ 748,597

$ 671,202

Classified as short-term

Unpaid principal balance

$ 701,143

$ 597,371

Discounts

(19,864 )

(13,697 )
Convertible notes payable - short-term, net

$ 681,279

$ 583,674

Classified as long-term

Unpaid principal balance

$ 255,758

$ 149,758

Discounts

(188,440 )

(62,230 )
Convertible notes payable - long-term, net

$ 67,318

$ 87,528

~~Convertible~~On May 2, 2019, the company entered into an amendment to one of the convertible promissory notes issued during 2018. The company allowed the creditor to own a larger percentage of the company’s total shares outstanding in ~~Australia~~exchange for a waiver of all default interest. As a result, we recorded a reduction of interest payable to this creditor and interest expense of $140,491. On July 19, 2019, we issued 30,414,329 shares to this creditor extinguishing all principal and interest owed to them.

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~~During~~Imputed Interest

Certain of our promissory notes bear no nominal interest. We therefore imputed interest expense and increased Additional Paid in Capital. For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we ~~had one creditor convert~~imputed $3,839 of such interest. Of this amount, $1,529 is imputed on amounts owed to ~~common stock. We issued 5,250,000 common shares~~Jon Leonard, our Chief Executive Officer, and ~~extinguished $37,822 and $2,049~~$2,310 was imputed on twenty eight outstanding loans in ~~interest, respectively and recognized no gain or loss other than a $386 foreign exchange effect.~~Australia.

~~We accrued $24,469 of nominal interest on these notes for the nine months ended September 30, 2017.~~Derivative liabilities

~~Australian~~The above-referenced convertible ~~notes payable can convert to 77,873,300 common shares in the aggregate.~~

~~Convertible~~ promissory notes issued during the three months ended March 31, 2020 were analyzed in accordance with EITF 07–05 and ASC 815. EITF 07–5, which is effective for fiscal years beginning after December 15, 2009, and interim periods within those fiscal years. The objective of EITF 07–5 is to provide guidance for determining whether an equity–linked financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception under Paragraph 11(a) of ASC 815 which would enable a derivative instrument to be accounted for under the accrual method. The classification of a non–derivative instrument that falls within the scope of EITF 00–19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock. A non–derivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted for as a liability. The EITF reached a consensus that would establish a two–step approach in determining whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument's contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument's settlement provisions.

Derivative financial instruments should be recorded as liabilities in the consolidated balance sheet and measured at fair value. For purposes of this engagement and report, we utilized fair value as the basis for formulating our opinion which has been defined by the Financial Accounting Standards Board (“FASB”) as “the amount for which an asset (or liability) could be exchanged in a current transaction between knowledgeable, unrelated willing parties when neither party is acting under compulsion”. The FASB has provided guidance that its definition of fair value is consistent with the definition of fair market value in IRS Rev. Rule 59–60.

The Company issued certain fixed-rate convertible Subscription Notes from 2015 through March 31, 2020 in the United States

~~All~~ and Australia These convertible notes have become tainted (“The Tainted Notes”) as a result of the issuance of convertible promissory notes issued in the United States ~~bear interest at 5%, and contain conversion privileges which vary depending upon the date issued, but they may convert to an aggregate of 102,616,628 common shares.~~

~~During the nine months ended September 30, 2017, we received $22,040 in loans pursuant to~~since there is a ~~convertible promissory note issued in 2016 on which~~possibility (however remote) that the Company and the creditor agreed, on December 31, 2016, to extend the note to additional amounts paid to the Company by the creditor, inheriting the conversion and interest privileges from the original convertible promissory note. We evaluated this tranche of funding for beneficial conversion features and calculated a value of $22,040 which we are accounting for as debt discounts.

~~Also during the nine months ended September 30, 2017, we received $4,000 on a previously-existing promissory note, written in 2016, for which a creditor had~~would not ~~contributed the full amount. All evaluations for the existence of Beneficial Conversion Features for the full value of this creditor’s note were performed in 2016.~~

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~~During the nine months ended September 30, 2017, we converted one U.S. convertible promissory note to common stock. We issued 743,243~~have enough shares ~~to retire $11,000 and $534 of principal and interest, respectively, recognizing no gain or loss on the conversion. In addition, we issued 2,500,000 to retire an interest payable~~ in the ~~amount of $2,374.~~

~~During the nine months ended September 30, 2017, we received $182,000 pursuant~~Treasury to ~~four convertible promissory notes. We evaluated these notes for beneficial conversion features and calculated a value of $182,000 which we are accounting for as debt discounts.~~

~~Short-term portion of long-term debt~~

As discussed in the Long-term notes payable section of this Note, in 2016 we converted a trade account payable balance with a consultant in the amount of $34,250 to a three-year amortizing promissory note. During the nine months ended September 30, 2017, we paid this amortizing note in full.

~~Short-term notes payable~~

~~Short-term notes payable increased from $15,858 at December 31, 2016 to $17,236 which was~~satisfy all ~~due to foreign exchange effect as of September 30, 2017.~~

~~Long-term notes payable~~

On August 9, 2016, we converted a trade account payable balance with a consultant in the amount of $34,250 to a three-year amortizing promissory note with interest at 5%. During the nine months ended September 30, 2017, we paid $30,693 and $627 in principal and interest, respectively, retiring the note.

~~Note 7 – Litigation~~

As is discussed in Note 8 to the financial statements on Form 10-K as of December 31, 2016, the Superior Court of Arizona, Pima County, issued a default judgment relating to a lawsuit (the “First Lawsuit”) filed by Richard Morgan in the amount of $2,377,915.

Additionally, a second lawsuit (the “Second Lawsuit) was filed on January 23, 2017, alleging that the Company’s intellectual property assets that were transferred to it by Click Evidence, Inc. (“Click”) under that May 21, 2015 merger of the Company with Click were fraudulently removed from Click and seeks to have them returned.

During the year ended December 31, 2016, we charged $2,377,915 for the judgment itself and $4,459 of accrued interest to December 31, 2016 to Loss on Litigation for the judgment on the First Lawsuit. Additionally, we accrued $44,294 in interest on the judgment for the nine months ended September 30, 2017.

On August 29, 2017, the Court set aside the judgment in the First Lawsuit resulting in the removal of the liability of $2,377,915 and accrued interest of $4,459 at December 31, 2016, as well as the additional accrued interest recorded during 2017 of $44,294, for a total gain of $2,426,668.possible conversions.

The ~~Second Lawsuit remains pending at~~Convertible Note derivatives were valued as of issuance; conversion; redemption/settlement; and each quarterly period from March 31, 2018 through March 31, 2020. The following assumptions were used for the ~~date of this report. The Company has evaluated the probability distribution~~valuation of the ~~amounts, of an award granted~~derivative liability related to the plaintiff and has determined that the most likely outcome is that the plaintiff will be awarded an award of $5,000. We have therefore accrued $5,000 of judgment liability and recorded a net gain of $2,421,668 to Gain on Litigation.Notes:

	·	The stock price of $0.0115 to $0.00290 in this period would fluctuate with the Company projected volatility.

	·	The notes convert with variable conversion prices based on the percentages of the low or average trades or bids over 20 to 25 trading days.

	·	The effective discounts rates estimated throughout the periods range from 35% to 42% with potentially an additional discount.

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	·	The Holder would automatically convert the note before maturity if the registration was effective and the company was not in default.

	·	The projected annual volatility for each valuation period was based on the historic volatility of the company are 146.0% – 258.3% (annualized over the term remaining for each valuation).

	·	An event of default would occur 0% of the time, increasing 1.00% per month to a maximum of 20%.

	·	The Holders would redeem the notes (with penalties up to 50% depending on the date and full–partial redemption) based on availability of alternative financing of 0% of the time, increasing 1.00% per month to a maximum of 5%.

	·	The Holder would automatically convert the note at the maximum of 2 times the conversion price or the stock price on the date of valuation.

	·	The Holder would automatically convert the note based on ownership or trading volume limitations.

We recorded the initial derivative as both a derivative liability and a debt discount (or initial reduction in carrying value of the debt). We then amortized the debt discounts using the Effective Interest Method which recognizes the cost of borrowing at a constant interest rate throughout the contractual term of the obligation. The effective interest rates on the instruments issued during the year ended December 31, 2019 range from 11% to 564%. The effective interest rates for the instruments issued during the three months ended March 31, 2020 range from 7% to 14%.

At each reporting date, we determine the fair market value for each derivative associated with each of the above instruments. At March 31, 2020, we determined the fair value of these derivatives were $1,152,642.

Changes in outstanding derivative liabilities are as follows:

Balance, December 31, 2019	$	2,365,367
Changes due to new issuances		25,761
Changes due to extinguishments		(173	)
Changes due to adjustment to fair value		(1,238,313	)
Balance, March 31, 2020	$	1,152,642

Note 7 – Litigation

McRae Lawsuit

On October 7,10, 2017, the Company received a letter from the lawyer of Eric L.L McRae ~~of Sedgwick County, Kansas~~ (“McRae”) ~~filed~~ a ~~complaint against~~person whose association with the Company was terminated by the Company on June 16, 2017. The letter demanded payment of 850,000,000 unrestricted Tautachrome common shares to forestall his filing a laundry list of complaints in a variety of government agencies including with the ~~United States~~US District Court in Kansas with complaints of contract breaches and fraud by silence, with the EEOC with complaints of termination by racial discrimination, with the OSHA with complains of termination for ~~the District~~reasons of ~~Kansas asserting~~his being a ~~claim that Tautachrome breached a written agreement for the employment~~whistleblower under Sarbanes-Oxley provisions, and with various regulatory agencies with accusations of ~~McRae and seeking~~ an ~~award of damages in excess of $75,000.~~unspecified nature.

~~Although Tautachrome refutes each~~This history of the legal proceedings in this case are described in Note 7 to the financial statements filed with Form 10-K on March 30, 2020 and ~~every allegation made~~are herewith included by reference.

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On May 5, 2020 the Company settled with the McRae estate in principle for 50 million shares. We valued the shares at the settlement date (May 5, 2020 on which date our closing price was $0.0029) and recorded a Gain on Litigation in the ~~complaint~~amount of $105,000, a reduction of the amount of the liability to $145,000 as a result of that revaluation and ~~intends to vigorously defend against it, we~~reclassified the remaining liability into Stock Payable. As of the date of this report, the shares have ~~accrued $49,000 to expense against this contingency.~~not been issued.

Note 8 – Income Taxes

Deferred income taxes reflect the tax consequences on future years of differences between the tax bases:

	03/31/20			12/31/19

Net operating loss carry-forward		4,821,819			4,579,500

Deferred tax asset	$	1,012,582		$	961,695
Valuation allowance		(1,012,582	)		(961,695	)
Net future income taxes	$	-		$	-

9/30/17

12/31/16

Net operating loss carry-forward

2,006,171

4,048,660

Deferred tax asset at 39%

$ 782,407

$ 1,578,977

Valuation allowance

(782,407 )

(1,578,977 )
Net future income taxes

$ -

$ -

In assessing the realizability of future tax assets, management considers whether it is more likely than not that some portion or all of the future tax assets will not be realized. The ultimate realization of future tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of future tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Management has provided for a valuation allowance on all of its losses as there is no assurance that future tax benefits will be realized.

Our tax loss carry-forwards will begin to expire in 2030.

Note 9 – Subsequent Events

~~On October 7, 2017, Eric L. McRae of Sedgwick County, Kansas (“McRae”) filed~~The Company issued two convertible promissory notes to a ~~complaint against the Company~~related-party in the ~~United States District Court for the District~~aggregate amount of ~~Kansas asserting a claim that Tautachrome breached a written agreement for the employment of McRae and seeking an award of damages in excess of $75,000.~~$32,324.

~~Tautachrome refutes each and every allegation made by McRae~~The Company issued 3,333,333 shares to a consultant to retire a stock payable in the ~~complaint and intends to vigorously defend against it.~~amount of $20,000.

~~We have evaluated subsequent events through the date of this report.~~The McRae lawsuit (See Note 7) was settled in principle for 50 million shares.

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ITEM ~~2 –~~2- MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including: any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. “Forward-looking statements” may include the words “may,~~” “will,~~” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan” or “anticipate” and other similar words.

Although we believe that the expectations reflected in our “forward-looking statements” are reasonable, actual results could differ materially from those projected or assumed. Our future financial condition and results of operations, as well as any “forward-looking statements”, are subject to change and to inherent risks and uncertainties, such as those disclosed in this report. In light of the significant uncertainties inherent in the “forward-looking statements” included in this report, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. Except for its ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any “forward-looking statement”. Accordingly, the reader should not rely on “forward-looking statements”, because they are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by the “forward-looking statements”.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited financial statements, including the notes to those financial statements, included elsewhere in this report.

Overview

~~Tautachrome operates~~We are an early stage internet applications company, engaged in advanced technology and business development in the internet applications ~~space, a space uniquely able to embrace fast growing~~space. We have incurred general and ~~novel business.~~administrative costs, marketing expenses and research and development costs since we commenced our current operations in May 2015, against minimal revenue.

~~Tautachrome is currently pursuing three avenues of business activity:~~

1. ~~KlickZie technology-based business~~ ~~development and monetization, our flagship activity to revolutionize smartphone-based picture and video interaction on the web~~
2. ~~KlickZie cryptotoken ecosystem~~~~, our KLK cryptotoken development activity, allowing KlickZie users to monetize their pictures and videos with KLK currency in an avalanche of novel ways~~
3. ~~Smartphone app development and digital design~~, our activity to develop and monetize important in-house apps and to generate digital design revenue, an activity carried out by our wholly owned subsidiary Polybia Studios, Pty Ltd of Mermaid Beach, Queensland Australia

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~~1. KlickZie technology-based business activity~~

~~Tautachrome’s patented and patent pending KlickZie technology addresses a major need and a new opportunity~~The continuing operations of the ~~internet age.~~

Company are dependent upon our ability to raise adequate financing and to commence profitable operations in the future. The ~~need~~ ~~is for a way to trust~~Company may raise additional capital through the ~~pictures and videos we see on the web.~~ ~~The opportunity~~ ~~is to be able to use the pictures and videos we see on the web as impromptu windows of communication between people.~~

~~There is~~ ~~current~~ need for a universally available, downloadable system that transparently turns the everyday pictures and videos we take from our smartphones into imagery that is trustable to any third party seeing it. With such a system two kinds of imagery would appear on the web: Imagery whose trustworthiness everybody can be absolutely certain of, and all the rest of the imagery which nobody has any ideasale of its ~~trustworthiness. The KlickZie system aims~~equity securities, through an offering of debt securities, or through loans from related parties. We believe that actions presently being taken to ~~satisfy this fundamental need for automatic and “at your fingertips” trustability.~~

~~There is also~~ ~~a new~~~~opportunity~~ ~~that pervasive trustable imagery makes makes possible. This is~~obtain additional funding may provide the opportunity for ~~people to use pictures and videos on the web to readily and safely interact with each other~~ ~~via the imagery itself~~. it is frequently the case that when you run across interesting imagery on the web you won’t know anything about it, including who the author is, who else may have seen it, or what others may think or know about it. By allowing people to interact with interesting or important pictures or videos by using the imagery itself as the portal of communication, the system can add the viewpoints and the information offerings of interacting people to the richness of the pictures and videos. This can be carried by the system into the future along with the imagery, as an evolving tapestry of interaction and imagery.

~~How KlickZie technology works: The KlickZie Activation Platform~~ ~~Consumers will download KlickZie’s free camera upgrade software into their mobile device (iPhone, Android or other smartphone) which thereafter~~ ~~activates~~ the pictures and videos taken by their device using proprietary KlickZie technology. Behind the scenes, the powerful and secure KlickZie software will capture the imagery and all available metadata related to the imaging event, and mark the imagery and its metadata with advanced, highly undetectable KlickZie marking technology.

~~KlickZie Activation~~ KlickZie activation will add a new world of usefulness to ordinary pictures and videos. People who come across an activated picture can, by merely clicking or touching the picture, communicate with the author of the picture, or with amenable others who have seen the picture (“touch-to-comm”). The picture itself makes the communication happen. It does not matter where or how you come across an activated picture, you can engage it, interact with it, or share it, just by touching or clicking it.

What happens to an activated picture from its creation onward gets invisibly added to the picture’s data and can be tracked into the future. Activated pictures can answer many questions. For example, in a group photo you could ask: Have any of the people in my contacts list interacted with this picture? Are any of them engaging it right now? Who else besides my contacts have already engaged this picture in some way? And given an amenable author, who took it? Where? When?

KlickZie’s activated pictures and videos will also possess the power to be completely trustable in the sense that any third party can be absolutely confident of the authenticity of the imagery because KlickZie pictures and videos will be secured in the KlickZie cloud at their creation where they remain until their creator or owner deletes them.

The upshot is that activation allows effective touch to comm with the authors and viewers of smartphone pictures and videos from every source, and activated pictures and videos can be completely trusted imagery.

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~~KlickZie Product Rollout~~. Rolling out KlickZie requires hiring activity to round out the Company technical team. Additional required technical staff include: cloud architects, database engineers, image processing engineers, full stack software engineers, steganography software developers, app development software engineers, and smartphone code defense software engineers.

· ~~Phase 1~~: Build the minimal testable KlickZie system –including the smartphone imaging engine and the service cloud (Rev 1 KlickZie system), identifying and fixing functionality deficiencies and user experience and interface hiccups, building a loyal base of early adopters and defining Rev 2.
· ~~Phase 2~~: Build and release Rev 2 into a limited audience to optimize user experience and user interfaces, to define, build, test and finalize viral growth methodology, to finalize the smartphone imaging engine, to test/finalize the cloud subsystem for global scale up, to build a seed population of 200,000 contented users, and to plan global rollout.
· ~~Phase 3~~~~: Roll out KlickZie system globally, culture by culture and language by language, adding support staff and services as rollout moves forward.~~

~~Monetizing.~~ ~~As presently conceived, the KlickZie product aims at revenues from four primary sources:~~

· ~~Advertising~~ Using pictures and videos as portals of communication allows the presentation of these communications in a framework of the Company’s choice, enabling advertisers to place paid ads within this framework (as is done by Google.)
· ~~User premium service fees~~ KlickZie is intended to be free to consumers. Since KlickZie is handling user imagery and user imagery-based communications, opportunities for users to gain extra KlickZie service are intended to be provided for a fee-based premium user membership.
· ~~App Developer Revenue~~ As conceived, the KlickZie imaging engine is a powerful tool for generating trustable imagery. The KlickZie cloud is intended to allow developers access to this powerful engine along with KlickZie-provided developer tools enabling them to develop apps of their own invention, access being granted under a revenue sharing arrangement.
· ~~Enterprise Revenue~~ Because as conceived the KlickZie imaging engine is a powerful tool for generating trustable imagery, it is able to support the needs of business and industrial enterprises for which trustable imagery from employees, customers or partners is mission critical. Our plans are to license our engine to enterprises on a license fee basis.

~~First KlickZie revenues~~. Our Plan of Operations is prepared for first revenues from enterprise users coming on line within the first year after the receipt of funding sufficient to round out the KlickZie team. Preparations for other KlickZie revenue are geared for the two year and out timeframe.

~~2. KlickZie cryptotoken ecosystem activity:~~ ~~a cryptotoken for the KlickZie user~~

People own and are regular users of 2.5 billion smartphones (including tablets and other connected smart digital imaging devices), and each year trillions of pictures and frames of video are created with these devices.

We believe this enormous flow of smartphone digital imagery has substantial and global economic value that can and should be simply and universally tapped by the ordinary smartphone users themselves. Until KlickZie that economic value has been impossible for ordinary users to access. There are two reasons for this.

~~First,~~ ~~and what KlickZie solves~~~~, is that in order to be monetizable, imagery~~ ~~ownership~~ has to be reliably attached to its author together with the level of trustability of the imagery, the meta data associated with its creation, and its degree of modification since creation. Without reliable ownership, monetization can’t happen.

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~~And second,~~ ~~and what blockchain network technology solves~~~~, is that for the ordinary smartphone users themselves to avail themselves of the potential value of their smartphone imagery, there needs to be a~~ ~~monetizing~~~~ecosystem~~ ~~built upon smartphone imagery that is equipped to trade in it, and that every KlickZie user can access.~~

~~Both of these ingredients are essential for the mass monetization of the smartphone generated imagery market for the benefit and use of the smartphone users themselves.~~

~~Blockchain technology and the KlickZie blockchain~~

Blockchain technology, introduced to the world by Bitcoin, is a wholly digital, internet based value exchange system that is not controlled by any central authority and runs on immutable cryptographic algorithms employing cryptographically secured ownership and exchange of the value element of the system, designated BTC in Bitcoin’s blockchain.

The Company’s KlickZie blockchain, currently being developed, will implement a value exchange ecosystem for smartphone imagery employing a cryptotoken value element designated the KLK cryptotoken (KLK pronounced “click”).

The KLK ecosystem will be an autonomous wholly digital, internet based value system that is not controlled by the Company or by any central authority and like Bitcoin, is running on its own block chain using immutable cryptographic algorithms in which the ownership and exchange of the KLK token will be cryptographically secured.

The Company’s aim is to associate KlickZie imagery with KLK tokens, and to foster global usage of the KLK token in the exchange of value related to smartphone imagery. For situations where the KlickZie cloud system facilitates a KLK-based value exchange, KlickZie will receive a small percentage of the KLKs exchanged for its service.

~~Wikipedia-based description of blockchain technology~~

A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data. A blockchain can serve as an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which cannot happen without a collusion of a magnitude that cannot practically occur.

Blockchains are secure by design and are an example of a distributed computing system with high fault tolerance. Decentralized consensus is achieved with a blockchain. This makes blockchains suitable for the recording of transactions of any kind.

The first distributed blockchain was conceptualized by Satoshi Nakamoto in 2008 and implemented the following year as a core component of the digital currency Bitcoin, where the blockchain serves as the public ledger for all transactions with bitcoin. The invention of the blockchain and its use by bitcoin made bitcoin the first digital currency to solve the double spending problem, without the use of a trusted authority or central server. The bitcoin design has been the inspiration for many other applications.

A blockchain transaction system is fast with a built-in mechanism that establishes trust, requires no specialized equipment, has no chargebacks or monthly fees, and provides a collective bookkeeping solution for ensuring transparency and trust.

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~~The KlickZie Cryptotoken; establishing a monetizing ecosystem for KlickZie users~~

~~We believe that the KLK monetizing ecosystem will provide value to KlickZie users as well as to the Company and its shareholders.~~

With the KLK token in place a new and significant impact may be the transfer of additional wealth into the hands of the consumer. This transfer can be understood by looking at a single example: the advertising business associated with popular social network versus the KlickZie social network.

Below, the picture on the left is how it is now. Advertisers feed ads to users and pay money to the social networks who get all the money and who distribute the users’ own content back to them with ads.

The picture on the right is how it is conceived for KlickZie. Advertisers will feed ads plus KLK to users, but only to users who want the ads. KlickZie will be paid in KLK or $, or both, and KlickZie will distribute the users content to them along with the ads.

KlickZie users will own the imagery they create, both normal imagery and the “view only” pictures or videos, if any, that they create using KlickZie’s Private Picture feature. They also will own any proprietary communications they create using KlickZie’s Touch to Comm functionality. Ownership of imagery can be sold for KLK tokens under a standard smart contract provided in the KLK blockchain. Access to view-only private pictures and proprietary communications owned by users can also be sold for KLK tokens under standard smart contracts provided in the KLK blockchain.

KlickZie is intended to activate, encrypt and store imagery and its meta data on the KlickZie cloud as it is created. Activated imagery which is subsequently modified and then shared is also stored in the KlickZie cloud. KlickZie could then provide trustability reports using a standard smart contract provided on the KLK blockchain.

The KLK blockchain would record the ownership of imagery, the ownership of view-only Private Picture imagery and the ownership of proprietary communications as they are created. Sales of imagery-ownership and the sales of access to Private Picture imagery and proprietary communications made under existing KLK standard smart contracts would then be recorded on the KLK blockchain.

Once launched, KlickZie would no longer have control of the blockchain. The picture below shows the separation of the KlickZie cloud activities from the execution of smart contracts on the KLK blockchain.

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~~Interactions in the KlickZie Trusted Imaging Ecosystem~~

~~Major Stakeholders in the KlickZie Ecosystem~~

The major stakeholders in KlickZie and KLK ecosystem remain the same: the business and non-business organizations with mission critical uses of usage of KlickZie trusted imaging, the independent app developers creating innovative apps exploiting KlickZie technology and the KLK ecosystem using KlickZie app-development tools, consumers adopting and using the KlickZie imaging app in their connected devices, and the KlickZie team who will support the broad usage of KlickZie technology and develop and capture intellectual property for the benefit of Tautachrome and other KlickZie stakeholders.

~~Monetizing the KlickZie Trusted Imagery Ecosystem with the KlickZie “KLK” Token~~

~~Independently Developed Apps~~

The KlickZie app provides a structure for a robust ecosystem that independent developers can take advantage of by creating innovative applications of their own. To assist, the KlickZie team will provide tools for app developers to easily use the KlickZie downloadable software and the KlickZie cloud to create new and valuable ways to use activated imagery.

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~~KLK Payments, App Developers and KlickZie users~~

~~KLK payment made by a KlickZie user to an app developer would trigger a revenue sharing payment to Tautachrome under a standard smart contract provided on the blockchain.~~

Payments in KLK made in an exchange between users in which KlickZie services are used to generate the exchange will also trigger a commission payment to Tautachrome under a standard smart contract on the blockchain.

~~KlickZie Userbase Growth and KLK Awards~~

Consumers would be awarded KLK when KlickZie is downloaded and used. New KlickZie users would be supplied with a KlickZie-provided digital wallet containing the awarded KLK. Also, a user whose picture prompts a download by a new adopter would be rewarded with KLK. KlickZie users would be provided options allowing them to advertise KlickZie to others via their pictures and other means, and would be rewarded with KLK tokens as their efforts result in KlickZie downloads. At user option, a KlickZie picture or video would carry the message to the effect “I’m KlickZie the amazing picture and video app. I’m free. Download me now.” These simple KLK token reward features are a natural driver of fastest possible user growth.

~~New Team members~~

~~The Company has entered into a Pilot Agreement with~~ ~~Honeycomb Digital, LLC~~ in Magnolia Texas (www.honeycomb.digital) to develop a “sample system” reflecting the Company’s KlickZie cloud requirements in accordance with the Company’s KlickZie and KLK requirements. Honeycomb has provided 100% web-based scalable private media libraries with advanced security locking, asynchronous access governance (non-centralized), and easy to use transactional digital rights management to national and global companies since 2001. Honeycomb reduces object load, software platform development requirement, datastore and deployment infrastructure resulting in highly scalable private cloud environments comparable to best in class top tier data centers.

The company has entered into a joint effort to develop the KlickZie blockchain and a KLK token offering with a small R&D company, Kelecorix, Inc. of Rockledge. Florida, with personnel in the US, Estonia and the Ukraine. The effort is proceeding well, with a launch target for shortly after year end.

~~3. Smartphone app development and digital design~~

Our activity to develop and monetize important in-house apps and to generate digital design revenue, is being carried out by our wholly owned subsidiary Polybia Studios, Pty Ltd of Mermaid Beach, Queensland Australia.

~~Recent development work by Polybia includes:~~

· ~~the internal software systems, database servers and branding for travelKeep, a mobile security and networking application for travelers.~~
· ~~websites and branding for companies such as Tautachrome, Novagen Ingenium, Renegade Engines, and Ronna Burton.~~

In addition, Polybia will play an important role in the development of the KlickZie Platform by providing the embedded software development for KlickZie’s advanced image capture, marking and securitization of code for smartphones, tablets, PCs, and other state of the art social sharing platforms. Polybia will also lead the company’s graphic, branding and web design optimization for the mobile user.

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~~Funding~~

~~The KlickZie product rollout requires additional funding. We have said, and continue to say, that his funding may be accomplished by incurring debt, by equity sale or through any other means.~~

~~Token Offering~~

Presently, a viable funding means is the sale of our KLK cryptotokens. The market for crypto “value elements” such as cryptocurrencies like Bitcoin and cryptotokens like KLK is a global market and is presently receiving significant attention. We believe that the value that KlickZie technology and the KLK ecosystem offer will enable us to achieve a successful KLK token sale deriving funds that will allow the Company to ~~develop both~~continue as a ~~vibrant KLK ecosystem and the powerful KlickZie technology we envision.~~

~~Fortune 50 project~~

~~Earlier this year~~going concern. There is no guarantee, however, that the Company reported a substantial project effort on its part developing a business model for a Fortune 50 US company (code named company F-50). The project was aimed at gaining funding for KlickZie development and using the KlickZie system to solve large scale F-50 operational and revenue problems. At this time the project is stalled, and we do not have an estimate as to when if ever it will become un-stalled. We continue to believe that the economic payoff of KlickZie will be ~~attractive and lucrative for companies such as F-50 with a global reach and with a large number of consumer customers.~~

~~No assurances~~

~~There can be no assurances given that any of our funding efforts will be successful.~~

~~Tautachrome uses its Twitter site to post important information about the Company. To keep current with Tautachrome, Inc., please visit us at our Twitter site at https://twitter.com/tautachrome_inc.~~successful in achieving these objectives.

Results of Operations - ~~Nine~~Three months ended ~~September 30, 2017~~March 31, 2020 versus ~~2016~~2019

We had general and administrative expenses of ~~$236,111~~$312,369 for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 versus ~~$325,442~~$130,220 for the same period in ~~2016, or a about a 27% decrease, mostly~~2019. The increase is mainly due to ~~reductions~~increases in ~~our operations in Australia.~~

During the nine months ended September 30, 2016, we amortized $92,862 of the acquisition cost of Photosweep to expense. We had no such amortization in the current year since the asset was fully impaired as of December 31, 2016.

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Interest expense decreased from $222,972 during the nine months ended September 30, 2016 to $177,187 during the same period in 2017. During 2016, we issued convertible promissory notes in Australia containing Beneficial Conversion Features which we accounted for immediately as interest expense since the notes were callable by the maker at any time. We issued no new notes in Australia during the current period.software development costs (a $117,000 increase), professional services (a $28,000 increase) and Arknet license fees (a $50,000 increase).

As is discussed in Note 7 to the financial statements, we ~~recorded~~had a ~~Gain~~gain of $105,000 on ~~Litigation of $2,372,668 relating to our lawsuits with a previous consultant.~~the McRae lawsuit settlement. We had no such ~~gain~~gains in the previous year.

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We had an increase in interest expense from $85,825 during the three months ended March 31, 2019 to $161,919 in the current period. The vast majority of the change was due to discount amortizations.

We had gains on changes in the fair values of our derivatives of $1,238,313 and $58,360 for the three months ended March 31, 2020 and 2019, respectively. This increase is mostly due to changes in the Company stock price and volatility during the quarter as well as fluctuating exchange rates.

We had a decrease in the amount of losses associated with the conversion of convertible debt. During the three months ended March 31, 2020, we had $27,448 of such losses and $120,775 of such losses for the same period in the previous year. The decrease is associated with fewer conversions.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we had a foreign exchange ~~loss~~gain of ~~$69,309~~$103,245 versus a loss of ~~$35,005~~$5,865 during the same period in ~~2016,~~2019, all of which are currency translation effects resulting from exchange rate differences between the U.S. and Australian dollars. The US Dollar gained approximately 15% in value against the Australian Dollar during the first quarter of 2020.

Our net comprehensive gains ~~and~~ losses of ~~$1,890,061~~$944,822 (gain) and ~~$676,281 (loss) during the nine months ended September 30, 2017 and 2016 are a result of the above items.~~

~~Results of Operations - Three months ended September 30, 2017 versus 2016~~

We had general and administrative expenses of $31,596 for the three months ended September 30, 2017 versus $102,062 for the same period in 2016, or a 70% decrease, mostly due to decreases in our operations in Australia.

During the three months ended September 30, 2016, we amortized $33,345 of the acquisition cost of Photosweep to expense. We had no such amortization in the current year since the asset was fully impaired as of December 31, 2016.

~~Interest expense increased from $39,618 during the three months ended September 30, 2016 to $46,712 during the same period in 2017 due to increases in debt levels in the United States.~~

~~As discussed in Note 7 to the financial statements, we recorded a Gain on Litigation of $2,372,668 relating to our lawsuits with a previous consultant. We had no such gain in the previous year.~~

During the three months ended September 30, 2017, we had foreign exchange loss of $16,914 versus a loss of $18,467 during the same period in 2016, all of which are currency translation effects resulting from exchange rate differences between the U.S. and Australian dollars.

~~Our net comprehensive gain and losses of $2,277,446 (gain) and $193,492~~$282,995 (loss) during the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 are a result of the above items.

Liquidity and Capital Resources

Our financial statements have been prepared on a going concern basis that contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

~~The~~At March 31, 2020, the Company ~~has $3,624~~had $40,509 in cash and liabilities totaling ~~$1,307,689.~~$3,465,805. We are currently seeking financing to attain our business goals, but there is no guarantee that we will obtain such financing or, upon obtaining it, that we will be able to invest in productive assets that will result in positive cash flows from operations.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, we had negative cash flows from operations, recurring losses, and negative working capital at ~~September 30, 2017 and December~~March 31, ~~2016.~~2020. These conditions raise substantial doubt as to our ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Management intends to finance these deficits by making additional shareholder notes and seeking additional outside financing through either debt or sales of its common stock.

Plan of Operation

Our immediate term plans for operations is discussed extensively in Item 7 – Management’s Discussion and Analysis or Plan of Operation included in our Form 10-K as of December 31, ~~2016,~~2019, filed with the Securities and Exchange Commission on ~~April 19, 2017~~March 30, 2020 and is herein incorporated by reference.

2418
Table of Contents

ITEM 3 –- QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A smaller reporting company is not required to provide the information required by this item.

ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

We maintain "disclosure controls and procedures" as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon 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.

Based upon the evaluation of our officers and directors of our disclosure controls and procedures as of ~~September 30, 2017,~~March 31, 2020, the end of the period covered by this Quarterly Report on Form 10-Q (the "Evaluation Date"), our Chief Executive Officer has concluded that as of the Evaluation Date that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure. Our management concluded that our disclosure controls and procedures were not effective as a result of material weaknesses in our internal control over financial reporting. We are a small organization with only a few employees. Under these circumstances it is impossible to completely segregate duties. We do not expect our internal controls to be effective until such time as we are able to begin full operations and even then, there are no assurances that our disclosure controls will be adequate in future periods.

Change In Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2519
Table of Contents

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

We may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect on our operations or finances. We are not aware of any pending or threatened litigation against us, other than that described in ~~Notes~~Note 7, ~~and 9,~~ or our officers and directors in their capacity as such that could have a material impact on our operations or finances.

~~ITEM 1A – RISK FACTORS~~

~~We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.~~

ITEM 2 – UNREGISTERED SALE OF EQUITY SECURITIES

None

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 – OTHER INFORMATION

None

26
20
Table of Contents

ITEM 6 - EXHIBITS

Exhibit
No.

Description of Exhibit

~~3.1~~
~~Articles of Incorporation, as filed June 5, 2007 (included as Exhibit 3.1 to the Form SB-2 filed April 5, 2007, and incorporated herein by reference).~~
~~3.2~~
~~Bylaws (included as Exhibit 3.2 to the Form SB-2 filed April 5, 2007, and incorporated herein by reference).~~
~~31.1~~31.1*

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
~~32.1~~32.1**

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
~~101~~101.INS*

~~Interactive data files pursuant to Rule 405 of Regulation S-T.~~XBRL Instance Document
101.SCH*
XBRL Taxonomy Extension Schema Document
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** Furnished herewith

2721

Table of Contents

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Tautachrome, Inc

Date: ~~November 3, 2017~~May 12, 2020
By:
/s/ Dr. Jon Leonard

Dr. Jon Leonard
Chief Executive Officer

2822

Large accelerated filer	¨o	Accelerated filer	¨o
Non-accelerated filer	¨o	Smaller reporting company	x
~~(do not check if a smaller reporting company)~~		Emerging growth company	o

PART I – FINANCIAL INFORMATION

Item 1 –	Consolidated Financial Statements	3	3
Item 2 –	Management’s Discussion And Analysis Of Financial Condition And Results Of Operations	17	16
Item 3 –	Quantitive And Qualitative Disclosures About Market Risk	19	25
Item 4 –	Controls and Procedures	19	25

PART II – OTHER INFORMATION

Item 1 –	Legal Proceedings	20	26
~~Item 1A –~~	~~Risk Factors~~		26
Item 2 –	Unregistered Sale of Equity Securities	20	26
Item 3 –	Defaults Upon Senior Securities	20	26
Item 4 –	Mine Safety Disclosures	20	26
Item 5 –	Other Information	20	26
Item 6 –	Exhibits	21	26
Signatures		22	28

	9/30/2017			12/31/2016
ASSETS
Current assets:
Cash	$	3,624		$	1,850
Total current assets		3,624			1,850
TOTAL ASSETS	$	3,624		$	1,850

LIABILITIES
Accounts payable and accrued expenses	$	311,966		$	275,760
Accounts payable - related party		15,555			25,486
Loans from related parties		101,175			99,434
Convertible notes payable - related party		59,160			49,160
Short-term convertible notes payable, net		681,279			583,674
Short-term notes payable		17,236			15,858
Short-term portion of long-term debt		-			11,034
Court judgment liability		54,000			2,382,374
Total current liabilities		1,240,371			3,442,780

Long-term convertible notes payable, net		67,318			87,528
Long-term notes payable		-			19,659
Total non-current liabilities		67,318			107,187

TOTAL LIABILITIES		1,307,689			3,549,967

STOCKHOLDERS' EQUITY (DEFICIT)
Series D Convertible Preferred, par value $0.0001. 13,795,104 shares authorized, 13,795,104 shares issued and outstanding at September 30, 2017 and December 31, 2016		1,380			1,380
Common stock, $0.00001 par value. Four billion shares authorized. 1,687,982,960 and 1,672,789,717 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		16,880			16,728
Additional paid in capital		3,775,434			3,421,595
Common stock payable		10,586			10,586
Accumulated deficit		(5,121,784	)		(7,081,154	)
Effect of foreign currency exchange		13,439			82,748
TOTAL STOCKHOLDERS' EQUITY		(1,304,065	)		(3,548,117	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	3,624		$	1,850

	Nine Months Ended September 30,						Three Months Ended September 30,
	2017			2016			2017			2016

OPERATING EXPENSES
General and administrative	$	236,111			325,442		$	31,596			102,062
Depreciation, depletion and amortization		-			92,862			-			33,345
Total operating expenses		236,111			418,304			31,596			135,407
Operating loss		(236,111	)		(418,304	)		(31,596	)		(135,407	)

OTHER INCOME / (EXPENSE)
Gain on litigation		2,372,668			-			2,372,668			-
Interest expense		(177,187	)		(222,972	)		(46,712	)		(39,618	)
Total other		2,195,481			(222,972	)		2,325,956			(39,618	)
Net income (loss)	$	1,959,370		$	(641,276	)	$	2,294,360		$	(175,025	)

OTHER COMPREHENSIVE INCOME (LOSS)
Effect of foreign currency exchange		(69,309	)		(35,005	)		(16,914	)		(18,467	)
Net comprehensive income (loss)	$	1,890,061		$	(676,281	)	$	2,277,446		$	(193,492	)

Net (loss) or income per common share
Basic	$	0.00		$	0.00		$	0.00		$	0.00
Diluted	$	0.00		$	0.00		$	0.00		$	0.00

Weighted average shares outstanding
Basic		1,684,825,134			2,999,921,751			1,687,982,960			3,000,633,430
Diluted		1,828,761,881			2,999,921,751			1,866,629,731			3,000,633,430

	Common Stock						Preferred Stock Series D				Additional Paid in		Stock		Other Comprehensive Income			Accumulated			Total Stockholders' Equity /
	Shares			Amount			Shares		Amount		Capital		Payable		(Loss)			Deficit			(Deficit)

Balance, 12/31/15		2,987,633,430		$	29,876			-	$	-	$	1,539,442	$	-	$	81,301		$	(2,480,423	)	$	(829,804	)

Acquisition of Photosweep, LLC		13,000,000			130							353,470										353,600
Beneficial conversion feature of convertible notes												335,799										335,799
Common stock to preferred stock swap		(1,379,510,380	)		(13,795	)		13,795,104		1,380		1,100,746										1,088,331
Conversion of debt		51,666,667			517							60,104		10,586								71,207
Effect of debt modifications												18,760										18,760
Imputed interest												13,274										13,274
Effect of foreign currency exchange																1,447						1,447
Net loss																			(4,600,731	)		(4,600,731	)
Balance, 12/31/16		1,672,789,717		$	16,728			13,795,104		1,380	$	3,421,595	$	10,586	$	82,748		$	(7,081,154	)	$	(3,548,117	)

Shares issued for conversion of debt		8,493,243			85							54,080										54,165
Shares issued for services		6,700,000			67							84,262										84,329
Beneficial conversion feature of convertible notes												204,040										204,040
Imputed interest												11,457										11,457
Effect of foreign currency exchange																(69,309	)					(69,309	)
Net loss																			1,959,370			1,959,370
Balance, 9/30/17		1,687,982,960		$	16,880			13,795,104	$	1,380	$	3,775,434	$	10,586	$	13,439		$	(5,121,784	)	$	(1,304,065	)

	·	~~We received $18,331 in cash loans to pay operating expenses and repaid no principal.~~

	·	~~We accrued $4,400 in interest payable to the Trust and paid no interest payments.~~

	·	~~The outstanding balance at December 31, 2016 to the 22~~^nd ~~Trust was $98,344 and $11,035 for principal and interest, respectively, after adjustments for foreign exchange effect.~~

	Common Stock Ownership
	Immediately Before					Effect of Agreement			Immediately After
	Shares		%						Shares		%

Jon Leonard, PhD		1,387,829,545		46.5	%		(1,009,330,578	)		378,498,967		23.5	%
Micheal Nugent		620,756,473		20.8	%		(92,613,893	)		528,142,580		32.8	%
Matthew Staker		346,957,386		11.6	%		(277,565,909	)		69,391,477		4.3	%
Robert McClelland		8,403,524		0.3	%		-			8,403,524		0.5	%
Patrick Greene		2,093,080		0.1	%		-			2,093,080		0.1	%
Non Affiliates		621,593,422		20.8	%		-			621,593,422		38.7	%
Totals		2,987,633,430		100.0	%		(1,379,510,380	)		1,608,123,050		100.0	%

	9/30/17			12/31/16
Long-term and short-term combined
Unpaid principal	$	956,901		$	747,129
Discounts		(208,304	)		(75,927	)
Convertible notes payable, net	$	748,597		$	671,202

Classified as short-term
Unpaid principal balance	$	701,143		$	597,371
Discounts		(19,864	)		(13,697	)
Convertible notes payable - short-term, net	$	681,279		$	583,674

Classified as long-term
Unpaid principal balance	$	255,758		$	149,758
Discounts		(188,440	)		(62,230	)
Convertible notes payable - long-term, net	$	67,318		$	87,528

	1.	~~KlickZie technology-based business~~ ~~development and monetization, our flagship activity to revolutionize smartphone-based picture and video interaction on the web~~

	2.	~~KlickZie cryptotoken ecosystem~~~~, our KLK cryptotoken development activity, allowing KlickZie users to monetize their pictures and videos with KLK currency in an avalanche of novel ways~~

	3.	~~Smartphone app development and digital design~~, our activity to develop and monetize important in-house apps and to generate digital design revenue, an activity carried out by our wholly owned subsidiary Polybia Studios, Pty Ltd of Mermaid Beach, Queensland Australia

	·	~~Phase 1~~: Build the minimal testable KlickZie system –including the smartphone imaging engine and the service cloud (Rev 1 KlickZie system), identifying and fixing functionality deficiencies and user experience and interface hiccups, building a loyal base of early adopters and defining Rev 2.

	·	~~Phase 2~~: Build and release Rev 2 into a limited audience to optimize user experience and user interfaces, to define, build, test and finalize viral growth methodology, to finalize the smartphone imaging engine, to test/finalize the cloud subsystem for global scale up, to build a seed population of 200,000 contented users, and to plan global rollout.

	·	~~Phase 3~~~~: Roll out KlickZie system globally, culture by culture and language by language, adding support staff and services as rollout moves forward.~~

	·	~~Advertising~~ Using pictures and videos as portals of communication allows the presentation of these communications in a framework of the Company’s choice, enabling advertisers to place paid ads within this framework (as is done by Google.)

	·	~~User premium service fees~~ KlickZie is intended to be free to consumers. Since KlickZie is handling user imagery and user imagery-based communications, opportunities for users to gain extra KlickZie service are intended to be provided for a fee-based premium user membership.

	·	~~App Developer Revenue~~ As conceived, the KlickZie imaging engine is a powerful tool for generating trustable imagery. The KlickZie cloud is intended to allow developers access to this powerful engine along with KlickZie-provided developer tools enabling them to develop apps of their own invention, access being granted under a revenue sharing arrangement.

	·	~~Enterprise Revenue~~ Because as conceived the KlickZie imaging engine is a powerful tool for generating trustable imagery, it is able to support the needs of business and industrial enterprises for which trustable imagery from employees, customers or partners is mission critical. Our plans are to license our engine to enterprises on a license fee basis.

	·	~~the internal software systems, database servers and branding for travelKeep, a mobile security and networking application for travelers.~~

	·	~~websites and branding for companies such as Tautachrome, Novagen Ingenium, Renegade Engines, and Ronna Burton.~~

Exhibit No.		Description of Exhibit

~~3.1~~		~~Articles of Incorporation, as filed June 5, 2007 (included as Exhibit 3.1 to the Form SB-2 filed April 5, 2007, and incorporated herein by reference).~~
~~3.2~~	~~Bylaws (included as Exhibit 3.2 to the Form SB-2 filed April 5, 2007, and incorporated herein by reference).~~
~~31.1~~31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
~~32.1~~32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
~~101~~101.INS*		~~Interactive data files pursuant to Rule 405 of Regulation S-T.~~XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

	Tautachrome, Inc

Date: ~~November 3, 2017~~May 12, 2020	By:	/s/ Dr. Jon Leonard
		Dr. Jon Leonard
		Chief Executive Officer