SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR |
FOR THE QUARTERLY PERIOD ENDED SEPTEMBERJUNE 30, 20182019
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
TAUTACHROME, INC. |
(Exact name of registrant as specified in its charter) |
Delaware |
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(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) |
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 is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | ¨ |
Non-accelerated filer |
| Smaller reporting company | x |
(do not check if a smaller reporting company) | Emerging growth company | ¨ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes o No x
The number of shares of the registrant’s common stock outstanding as of November 9, 2018,August 5, 2019, was 1,827,358,546.3,454,310,478.
TAUTACHROME, INC.
FORM 10-Q
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Management’s Discussion And Analysis Of Financial Condition And Results Of Operations |
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2 |
PART I – FINANCIAL INFORMATION
ItemITEM 1 – Consolidated Financial StatementsCONSOLIDATED FINANCIAL STATEMENTS
TAUTACHROME, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
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| 9/30/2018 |
| 12/31/2017 |
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| 6/30/2019 |
| 12/31/2018 |
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ASSETS |
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Current assets: |
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Cash |
| $ | 33,837 |
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| $ | 9,726 |
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| $ | 33,291 |
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| $ | 6,243 |
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Total current assets |
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| 33,837 |
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| 9,726 |
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| 33,291 |
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| 6,243 |
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TOTAL ASSETS |
| $ | 33,837 |
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| $ | 9,726 |
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| $ | 33,291 |
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| $ | 6,243 |
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LIABILITIES |
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Accounts payable and accrued expenses |
| $ | 427,707 |
| $ | 356,213 |
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| $ | 519,462 |
| $ | 615,847 |
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Accounts payable - related party |
| 14,392 |
| 15,515 |
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| 114,010 |
| 114,052 |
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Loans from related parties |
| 98,529 |
| 100,033 |
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| 103,016 |
| 103,074 |
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Convertible notes payable - related party |
| 87,790 |
| 101,160 |
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| 94,330 |
| 81,340 |
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Short-term convertible notes payable, net |
| 1,002,735 |
| 705,303 |
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| 636,063 |
| 627,928 |
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Notes payable in default |
| 43,500 |
| 103,298 |
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Convertible notes payable in default |
| 177,157 |
| 422,565 |
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Short-term notes payable |
| 15,893 |
| 17,191 |
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| 15,451 |
| 15,501 |
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Derivative liability |
| 779,424 |
| - |
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| 633,709 |
| 365,497 |
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Court judgment liability |
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| 49,000 |
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| 54,000 |
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| 250,000 |
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| 250,000 |
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Total current liabilities |
| 2,518,970 |
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| 1,452,713 |
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| 2,543,198 |
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| 2,595,804 |
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Long-term convertible notes payable, net |
| 27,825 |
| 5,413 |
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| 51,490 |
| 25,000 |
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Long-term convertible notes payable, related party, net |
| 32,825 |
| 32,825 |
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Crypto-currency notes payable |
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| 100,000 |
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| - |
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| 100,000 |
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| 100,000 |
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Total non-current liabilities |
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| 127,825 |
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| 5,413 |
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| 184,315 |
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| 157,825 |
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TOTAL LIABILITIES |
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| 2,646,795 |
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| 1,458,126 |
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| 2,727,513 |
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| 2,753,629 |
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STOCKHOLDERS’ EQUITY (DEFICIT) |
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Series D Convertible Preferred, par value $0.0001. 13,795,104 shares authorized, 13,795,104 shares issued and outstanding at September 30, 2018 and December 31, 2017 |
| 1,380 |
| 1,380 |
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Common stock, $0.00001 par value. Four billion shares authorized. 1,763,596,480 and 1,685,941,636 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively |
| 17,637 |
| 16,860 |
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STOCKHOLDERS' EQUITY (DEFICIT) |
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Series D Convertible Preferred, par value $0.0001. 13,795,104 shares authorized, 13,795,104 shares issued and outstanding at June 30, 2019 and December 31, 2018 |
| 1,380 |
| 1,380 |
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Common stock, $0.00001 par value. Six billion shares authorized. 3,412,503,610 and 1,932,483,910 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively |
| 34,125 |
| 19,325 |
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Additional paid in capital |
| 4,295,209 |
| 3,787,675 |
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| 5,495,918 |
| 4,692,609 |
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Common stock payable |
| 75,115 |
| 23,186 |
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| 1,898,677 |
| 1,919,927 |
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Accumulated deficit |
| (7,078,026 | ) |
| (5,293,041 | ) |
| (10,223,058 | ) |
| (9,476,829 | ) | ||||
Effect of foreign currency exchange |
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| 75,727 |
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| 15,540 |
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| 98,736 |
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| 96,202 |
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TOTAL STOCKHOLDERS’ EQUITY |
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| (2,612,958 | ) |
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| (1,448,400 | ) | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 33,837 |
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| $ | 9,726 |
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TOTAL STOCKHOLDERS' EQUITY |
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| (2,694,222 | ) |
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| (2,747,386 | ) | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ | 33,291 |
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| $ | 6,243 |
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The accompanying notes are an integral part of these consolidated financial statements.
3 |
Table of Contents |
TAUTACHROME, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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| Nine Months Ended September 30, |
| Three Months Ended September 30, |
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| Six Months Ended June 30, |
| Three Months Ended June 30, |
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| 2018 |
| 2017 |
| 2018 |
| 2017 |
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| 2019 |
| 2018 |
| 2019 |
| 2018 |
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OPERATING EXPENSES |
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General and administrative |
| $ | 576,230 |
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| 236,111 |
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| $ | 149,307 |
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| 31,596 |
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| $ | 299,519 |
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| $ | 426,923 |
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| $ | 169,299 |
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| $ | 119,498 |
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Total operating expenses |
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| 576,230 |
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| 236,111 |
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| 149,307 |
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| 31,596 |
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| 299,519 |
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| 426,923 |
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| 169,299 |
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| 119,498 |
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Operating loss |
| (576,230 | ) |
| (236,111 | ) |
| (149,307 | ) |
| (31,596 | ) |
| (299,519 | ) |
| (426,923 | ) |
| (169,299 | ) |
| (119,498 | ) | ||||||||
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| �� |
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OTHER INCOME / (EXPENSE) |
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Gain or (loss) on litigation |
| (55,000 | ) |
| 2,372,668 |
| (55,000 | ) |
| 2,372,668 |
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Gain on settlement of debt |
| 1,330 |
| - |
| - |
| - |
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Interest expense |
| (1,003,299 | ) |
| (177,187 | ) |
| (264,730 | ) |
| (46,712 | ) |
| (19,973 | ) |
| (738,569 | ) |
| 65,852 |
| (158,622 | ) | |||||||||
Change in value of derivatives |
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| (150,456 | ) |
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| - |
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| 539,589 |
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| - |
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| (301,036 | ) |
| (690,045 | ) |
| (359,396 | ) |
| 12,740 |
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Loss on conversion of debt |
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| (127,031 | ) |
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| - |
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| (6,256 | ) |
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| - |
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Total other |
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| (1,208,755 | ) |
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| 2,195,481 |
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| 219,859 |
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| 2,325,956 |
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| (446,710 | ) |
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| (1,428,614 | ) |
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| (299,800 | ) |
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| (145,882 | ) |
Net income or (loss) |
| $ | (1,784,985 | ) |
| $ | 1,959,370 |
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| $ | 70,552 |
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| $ | 2,294,360 |
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Net loss |
| $ | (746,229 | ) |
| $ | (1,855,537 | ) |
| $ | (469,099 | ) |
| $ | (265,380 | ) | ||||||||||||||||
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OTHER COMPREHENSIVE INCOME (LOSS) |
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Effect of foreign currency exchange |
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| 60,187 |
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| (69,309 | ) |
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| 14,791 |
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| (16,914 | ) |
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| 2,534 |
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| 45,396 |
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| 8,399 |
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| 30,689 |
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Net comprehensive income or (loss) |
| $ | (1,724,798 | ) |
| $ | 1,890,061 |
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| $ | 85,343 |
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| $ | 2,277,446 |
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| $ | (743,695 | ) |
| $ | (1,810,141 | ) |
| $ | (460,700 | ) |
| $ | (234,691 | ) |
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Net (loss) or income per common share |
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Basic |
| $ | 0.00 |
| $ | 0.00 |
| $ | 0.00 |
| $ | 0.00 |
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Diluted |
| $ | 0.00 |
| $ | 0.00 |
| $ | 0.00 |
| $ | 0.00 |
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Weighted average shares outstanding |
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Basic |
| 1,712,011,307 |
| 1,684,825,134 |
| 1,736,404,988 |
| 1,687,982,960 |
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Diluted |
| 1,712,011,307 |
| 1,828,761,881 |
| 1,952,782,242 |
| 1,866,629,731 |
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Net (loss) or income per common share, basic and diluted |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
| (0.00 | ) |
| $ | (0.00 | ) | |||||||||||||||||
Weighted average shares outstanding, basic and diluted |
| 2,777,602,341 |
| 1,699,612,324 |
| 3,249,186,786 |
| 1,702,937,967 |
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The accompanying notes are an integral part of these consolidated financial statements.
4 |
Table of Contents |
TAUTACHROME, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY / (DEFICIT)
(Unaudited)
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| Common Stock |
| Preferred Stock Series D |
| Additional Paid in |
| Stock |
| Other Comprehensive Income |
| Accumulated |
| Total Stockholders’ Equity / |
|
| Common Stock |
| Preferred Stock Series D |
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Additional Paid in |
| Stock |
| Other Comprehensive |
| Accumulated |
| Total Stockholders' Equity/ |
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| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Payable |
| (Loss) |
| Deficit |
| (Deficit) |
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| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Payable |
| (Loss) |
| Deficit |
| (Deficit) |
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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 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
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Shares issued for conversion of debt |
| 8,493,243 |
| 85 |
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| 54,080 |
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| 54,165 |
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Shares issued for services |
| 6,700,000 |
| 67 |
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| 84,262 |
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| 84,329 |
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Shares retired from consultant |
| (2,041,324 | ) |
| (20 | ) |
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| 20 |
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| - |
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Shares earned by consultant |
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| 12,600 |
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| 12,600 |
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Beneficial conversion feature of convertible notes |
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| 209,040 |
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| 209,040 |
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Imputed interest |
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| 18,678 |
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| 18,678 |
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Effect of foreign currency exchange |
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| (67,208 | ) |
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| (67,208 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income |
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| 1,788,113 |
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| 1,788,113 |
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Balance, 12/31/17 |
| 1,685,941,636 |
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| $ | 16,860 |
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| 13,795,104 |
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| $ | 1,380 |
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| $ | 3,787,675 |
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| $ | 23,186 |
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| $ | 15,540 |
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| $ | (5,293,041 | ) |
| $ | (1,448,400 | ) |
| 1,685,941,636 |
| $ | 16,860 |
| 13,795,104 |
| $ | 1,380 |
| $ | 3,787,675 |
| $ | 23,186 |
| $ | 15,540 |
| $ | (5,293,041 | ) |
| $ | (1,448,400 | ) | |||||||||||
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Shares issued with convertible note payable |
| 15,000,000 |
| 150 |
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| 127,350 |
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| 127,500 |
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| 15,000,000 |
| 150 |
| - |
| - |
| 127,350 |
| - |
| - |
| - |
| 127,500 |
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Preferred Series E shares accrued to ArKnet |
| - |
| - |
| - |
| - |
| - |
| 1,837,000 |
| - |
| - |
| 1,837,000 |
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Shares issued for conversion of debt |
| 52,654,844 |
| 527 |
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| 146,804 |
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| 147,331 |
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| 221,542,274 |
| 2,215 |
| - |
| - |
| 373,414 |
| - |
| - |
| - |
| 375,629 |
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Shares issued to settle lawsuit |
| 10,000,000 |
| 100 |
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| 59,900 |
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| 60,000 |
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| 10,000,000 |
| 100 |
| - |
| - |
| 59,900 |
| - |
| - |
| - |
| 60,000 |
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Derivative associated with early debt retirement |
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| 159,711 |
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| 159,711 |
|
| - |
| - |
| - |
| - |
| 326,339 |
| - |
| - |
| - |
| 326,339 |
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Shares earned by consultants |
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| 51,929 |
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|
|
| 51,929 |
|
| - |
| - |
| - |
| - |
| - |
| 59,741 |
| - |
| - |
| 59,741 |
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Imputed interest |
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| 13,769 |
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| 13,769 |
|
| - |
| - |
| - |
| - |
| 17,931 |
| - |
| - |
| - |
| 17,931 |
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Effect of foreign currency exchange |
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| 60,187 |
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| 60,187 |
|
| - |
| - |
| - |
| - |
| - |
| - |
| 80,662 |
| - |
| 80,662 |
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Net loss |
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|
|
|
|
|
|
|
|
|
|
|
| (1,784,985 | ) |
|
| (1,784,985 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4,183,788 | ) |
|
| (4,183,788 | ) |
Balance, 9/30/18 |
|
| 1,763,596,480 |
|
| $ | 17,637 |
|
|
| 13,795,104 |
|
| $ | 1,380 |
|
| $ | 4,295,209 |
|
| $ | 75,115 |
|
| $ | 75,727 |
|
| $ | (7,078,026 | ) |
| $ | (2,612,958 | ) | ||||||||||||||||||||||||||||||||||||
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 |
| 1,472,104,759 |
| 14,721 |
| - |
| - |
| 488,210 |
| - |
| - |
| - |
| 502,931 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued to settle claim |
| 3,623,055 |
| 36 |
| - |
| - |
| 3,587 |
| - |
| - |
| - |
| 3,623 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for stock payable |
| 4,291,886 |
| 43 |
| - |
| - |
| 26,551 |
| (26,281 | ) |
| - |
| - |
| 313 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares earned by consultants |
| - |
| - |
| - |
| - |
| - |
| 5,031 |
| - |
| - |
| 5,031 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative associated with early debt retirement |
| - |
| - |
| - |
| - |
| 276,592 |
| - |
| - |
| - |
| 276,592 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
Imputed interest |
| - |
| - |
| - |
| - |
| 8,369 |
| - |
| - |
| - |
| 8,369 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of foreign currency exchange |
| - |
| - |
| - |
| - |
| - |
| - |
| 2,534 |
| - |
| 2,534 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (746,229 | ) |
|
| (746,229 | ) | ||||||||||||||||||||||||||||||||||||
Balance, June 30, 2019 |
|
| 3,412,503,610 |
|
| $ | 34,125 |
|
|
| 13,795,104 |
|
| $ | 1,380 |
|
| $ | 5,495,918 |
|
| $ | 1,898,677 |
|
| $ | 98,736 |
|
| $ | (10,223,058 | ) |
| $ | (2,694,222 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
5 |
Table of Contents |
TAUTACHROME, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| Nine Months Ended September 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2018 |
|
| 2017 |
|
| 2019 |
|
| 2018 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
| ||||||
Net Loss |
| $ | (1,784,985 | ) |
| $ | 1,959,370 |
|
| $ | (746,229 | ) |
| $ | (1,855,537 | ) |
Stock-based compensation |
| 51,929 |
| 84,329 |
|
| 5,344 |
| 33,460 |
| ||||||
(Gain) or loss on litigation |
| 55,000 |
| (2,372,668 | ) | |||||||||||
Loss on conversions |
| 127,031 |
| - |
| |||||||||||
Change in fair value of derivative |
| 150,456 |
| - |
|
| 301,036 |
| 690,045 |
| ||||||
Gains on debt settlements |
| (1,330 | ) |
| - |
| ||||||||||
Amortization of discounts on notes payable |
| 898,104 |
| 71,743 |
|
| 63,560 |
| 660,285 |
| ||||||
Imputed interest |
| 13,769 |
| 11,457 |
|
| 8,369 |
| 9,334 |
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
| ||||||
Accounts payable and accrued expenses |
| 49,319 |
| 128,858 |
|
|
| (44,457 | ) |
|
| 29,540 |
| |||
Accounts payable - related party |
|
| - |
|
|
| 494 |
| ||||||||
Net cash used in operating activities |
| (566,408 | ) |
| (116,417 | ) |
| (286,676 | ) |
| (432,873 | ) | ||||
|
|
|
|
|
| |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
| - |
|
|
| - |
| ||||||||
Net cash used in investing activities |
| - |
| - |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
| ||||||
Proceeds from convertible notes payable |
| 603,000 |
| 208,040 |
|
| 298,200 |
| 593,000 |
| ||||||
Proceeds from crypto-currency notes payable |
| 100,000 |
| - |
| |||||||||||
Principal payments on notes payable |
| (159,298 | ) |
| (30,693 | ) |
| - |
| (147,250 | ) | |||||
Proceeds from related-party loan |
| 1,930 |
| 11,153 |
| |||||||||||
Proceeds from related-party loans |
| 26,000 |
| 1,830 |
| |||||||||||
Principal payments on related-party loans |
|
| (15,300 | ) |
|
| (1,000 | ) |
|
| (13,010 | ) |
|
| (8,050 | ) |
Net cash provided by financing activities |
| 530,332 |
| 187,500 |
|
| 311,190 |
|
| 439,530 |
| |||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Effect of exchange rate changes on cash and cash equivalents |
| 60,187 |
| (69,309 | ) |
| 2,534 |
| 45,396 |
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Net increase/(decrease) in cash |
| 24,111 |
| 1,774 |
|
| 27,048 |
| 52,053 |
| ||||||
Cash and equivalents - beginning of period |
|
| 9,726 |
|
|
| 1,850 |
|
|
| 6,243 |
|
|
| 9,726 |
|
Cash and equivalents - end of period |
| $ | 33,837 |
| $ | 3,624 |
|
| $ | 33,291 |
|
| $ | 61,779 |
| |
|
|
|
|
|
|
|
|
|
|
| ||||||
SUPPLEMENTARY INFORMATION |
|
|
|
|
|
|
|
|
|
| ||||||
Cash paid for interest |
| $ | 7,505 |
| $ | 627 |
|
| $ | - |
| $ | 6,533 |
| ||
Cash paid for income taxes |
| $ | - |
| $ | - |
|
| $ | - |
| $ | - |
| ||
|
|
|
|
|
|
|
|
|
|
| ||||||
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING TRANSACTIONS |
|
|
|
|
| SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING TRANSACTIONS | ||||||||||
Discounts on convertible notes |
| $ | 664,688 |
| $ | 204,040 |
|
| $ | 243,768 |
| $ | 664,688 |
| ||
Conversion of debt to common stock |
| $ | 147,358 |
| $ | 54,167 |
|
| $ | 375,900 |
| $ | 11,155 |
| ||
Settlement of derivative liability |
| $ | 159,711 |
| $ | - |
|
| $ | 276,592 |
| $ | 105,866 |
| ||
Shares issued for settlement of lawsuit |
| $ | 5,000 |
| $ | - |
| |||||||||
Shares issued for settlement |
| $ | 3,623 |
| $ | - |
| |||||||||
Shares issued for stock payable |
| $ | 26,281 |
| $ | - |
|
The accompanying notes are an integral part of these consolidated financial statements.
6 |
Table of Contents |
TAUTACHROME, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBERJUNE 30, 20182019
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
Tautachrome operates in the internet applications space, a large space we believe to be uniquely able to make possible fast growing and novel business. The iPhone, Google, Facebook, Amazon, Twitter, Android, Uber and numerous other examples are remindersexploiting the technologies of the ability ofAugmented Reality sector, the internet applications spaceblockchain/cryptocurrency sector and the smartphone picture and video technology sector. We have high-speed blockchain concepts under development aiming to surprise uscouple with new business universes out of nowhere. A recent surprise was the arrivalCompany’s revolutionary patents and licensing in the internet applications space of blockchain technology, which is empowering enterprises of all sizes to create ecosystems of trade based on self-introducedaugmented reality, smartphone-image authentication and globally useable cryptocurrencies. The arrival of blockchain technology has added a significant new and leading element to Tautachrome’s business plans and activities.imagery-based social networking interaction.
Tautachrome is currently pursuing twothree main avenues of business activity based on our patented activated imaging technology, (branded “KlickZie”our blockchain cryptocurrency products, and the our licensing of the patent pending ARk technology (together banded “KlickZie” technology):
| 1. |
|
|
| |
| 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 |
Since its public announcement on September 25, 2017 (via SEC form 8-K) that it would be using its Twitter site (@Tautachrome_Inc) (http://twitter.com/tautachrome_inc) to post important Company information, and finding this method of publicizing important Company information both fast and 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 current on the Company’s FD disclosures.
7 |
Table of Contents |
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 SeptemberJune 30, 2018.2019. 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, 2017,2018 (as amended), as reported in Form 10-K filed with the Securities and Exchange Commission.
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’sCompany'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.
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.
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.
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 ninethree and six months ended SeptemberJune 30, 20182019 as the effect of our potential common stock equivalents would be anti-dilutive.
Recent Accounting Pronouncements
In January 2017, the FASB issued ASU 201701, Business Combinations (Topic 805); Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business to help companies evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. We are evaluating the impact of adopting this guidance on our Consolidated Financial Statements.
8 |
Table of Contents |
Recent Accounting Pronouncements
In July 2017,February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.
The new standard was effective for us on January 1, 2019 and we have adopted 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. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements as the Company has no leases whose term is greater than one year.
In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The guidance permits entities to reclassify tax effects stranded in Accumulated Other Comprehensive Income as a result of tax reform to retained earnings. This new guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2018. Early adoption is permitted in annual and interim periods and can be applied retrospectively or in the period of adoption. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.
In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. The amendment provides guidance on accounting for the impact of the Tax Cuts and Jobs Act (the “Tax Act”) and allows entities to complete the accounting under ASC 740 within a one-year measurement period from the Tax Act enactment date. This standard is effective upon issuance. The Tax Act has several significant changes that impact all taxpayers, including a transition tax, which is a one-time tax charge on accumulated, undistributed foreign earnings. The calculation of accumulated foreign earnings requires an analysis of each foreign entity’s financial results going back to 1986. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 201711,2018-07, Earnings Per ShareCompensation-Stock Compensation (Topic 260)718): Improvements to Nonemployee Share-Based Payment Accounting , Distinguishing Liabilitieswhich expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from Equity (Topic 480), Derivativesnonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and Hedging (Topic 815)the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrumentnew guidance is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 47020, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update re-characterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years,all entities for annual periods, and interim periods within those fiscal years,annual periods, beginning after December 15, 2018. Early2017, with early adoption is permitted for all entities, including adoption in an interim period. If an entity early adoptspermitted. The Company does not expect the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.
The adoption of these standards is not expectedthis ASU to have a material impact on ourits consolidated financial position or results of operations.statements.
9 |
Table of Contents |
Note 3 – Going Concern
We have not begun our core operations in the technology industry and have not yet acquired the assets to enter this markets and we will require additional capital to do so. There is no guarantee that we will acquire the capital to procure the assets to enter this market or, upon doing so, that we will generate positive cash flows from operations. 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.
Note 4 – Related Party Transactions
For the yearsix months ended December 31, 2017,June 30, 2019, we hadaccrued $2,424 of interest to the following transactions with the Twenty Second22nd Trust (the “Trust”), the trustee of whom is Sonny Nugent, the son of our major shareholder and former Chief Executive Officer, Micheal Nugent:
For the nine months ended September 30, 2018, we accrued $3,679 to the 22nd Trust. At September 30, 2018, we owed $98,529 and $19,563 inNugent. The outstanding balances of unpaid principal and interest to the Trust,at June 30, 2019 and December 31, 2018 were $120,951 and $118,591, 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%.
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 as Jon 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 $5,834$3,417 was recorded as additional paid-in capital for the ninesix months ended SeptemberJune 30, 2018.2019. The Company evaluated Dr. Leonard’s note for the existence of a beneficial conversion feature and determined that none existed.
During the ninesix months ended SeptemberJune 30, 2018,2019, we borrowed $26,000 from and repaid $13,010 to Dr. Leonard paid $1,930 of company expenses and this amount is included in our loan to him. Also duringLeonard. At June 30, 2019, the nine months ended September 30, 2018, we repaid Dr. Leonard $15,300 of principal on his loan. At September 30, 2018, webalanced owed Dr. Leonard $87,790.is $94,330.
In addition, at September 30, 2018, we owed $14,392 of related-party accounts payable, mostly arising from Company expenses paid by related parties.
Note 5 – Capital
During the year ended December 31, 2017, we issued 8,493,243 common sharesWe also owe $37,825 to convert $49,249 of convertible notes payable, and $4,916 in accrued interest, to common stock.
Also during the year ended December 31, 2017, we issued 6,700,000 common shares to four consultantsanother officer for services. We valued the shares at their grant date fair values, charging general and administrative expenses with $84,329.
On October 5, 2017, we received 2,041,324 shares back into the treasury from a consultant. These shares were giftedloans he made to the consultant by a major shareholder. We recorded the receiptcompany, only $32,825 of these shares at par value.
On October 16, 2017, we signed a consulting agreement to aide us in developing our blockchain-based cryptotokens in five stages, with 700,000 shares accruing at the completion of each stage. Phase 1 was completed on December 12, 2017. We therefore accrued those 700,000 shares at the date they were earned, charging general and administrative expense $12,600. Additionally, Phases 2,3,4 and 5 were completed on January 16, 2018, February 26, 2018, March 8, 2018 and June 6, 2018, respectively. During the nine months ended September 30, 2018, we accrued anwhich has been formalized into convertible notes. The additional 2,800,000 shares, charging general and administrative expenses with $33,460.
During the nine months ended September 30, 2018, we issued 52,654,844 shares in conversion of outstanding convertible promissory notes. We recorded a reduction of the balance of these notes of $137,000 and $10,328 of principal and interest, respectively. As part of these conversions, we retired $147,328 of associated derivative liabilities which we included in Additional Paid in Capital.
On August 14, 2018, we settled our lawsuit with Richard Morgan (see Note 7) in full by issuing 10 million shares. We valued the shares at their grant date fair values, removing the judgment liability of $5,000 and recording a $55,000 loss on litigation.
Also during the nine months ended September 30, 2018, we issued 15,000,000 sharesis treated as an equity incentive to a creditor (see Note 6) . We valued the sharesadvance. The notes bear interest at their grant-date fair values5% and recorded a discount on that debt of $127,500.may convert at $0.0025 per share.
10 |
Table of Contents |
Preferred StockNote 5 – Capital
On September 29, 2016,During 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 commonyear ended December 31, 2018 we issued 246,542,274 shares in exchange for a new series of non-trading preferred shares.as follows:
On October 5, 2016, the Board of Directors voted to accept the share retirement offer, and on October 20, 2016, the Company filed a Certificate of Designations with the State of Delaware creating 13,795,104 shares of Series D Preferred Stock (the “Preferred Shares”) to effect the exchange.
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 1/100th of a Preferred Share entitles the holder to one vote).
Conversion Rights
A holder may convert Preferred Shares to common under the following conditions:
Automatic conversion – each Preferred Share automatically converts to 100 common shares upon the earlier of
| · | |
|
|
|
| · | |
· | W issued 221,542,274 shares in conversion of outstanding convertible promissory notes. We recorded a reduction of the balance of these notes of $306,623 and $27,728 of principal and interest, respectively and recorded a loss on conversion of $41,278. As part of these conversions, we retired $326,339 of associated derivative liabilities which we included in Additional Paid in Capital. |
During the six months ended June 30, 2019, we issued 1,480,019,700 shares as follows:
· | We issued 1,472,104,759 shares in conversion of outstanding convertible promissory notes. We recorded a reduction of the balance of these notes of $354,464 of principal, $16,936 of interest, and $4,500 of conversion fees and recorded a loss on conversion of $127,031. As part of these conversions, we retired $276,592 of associated derivative liabilities which we included in Additional Paid in Capital. | |
· | 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 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 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 $5,031 during the period. |
Preferred Stock
Optional conversion - After October 5, 2017, each holder may convert each share into 100During 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 (see Note 4) containing a par value of common$0.0001. This series of preferred shares have the following rights, limitations, restrictions and privileges:
· | They are not entitled to dividends, | |
· | They are entitled to no liquidations rights, | |
· | Each share has the voting rights of all other voting shares combined, multiplied by 0.00001, | |
· | They have no conversion or redemption rights. |
These shares have yet to be issued as of June 30, 2019 and are included in stock immediately following a period 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 of common stockpayable at any time that the shares are listed on a National exchange (for example, the NYSE or NASDAQ).date.
Imputed Interest
Certain of our promissory notes bear no nominal interest. We therefore imputed interest expense and increaseincreased Additional Paid in Capital. For the ninesix months ended SeptemberJune 30, 2018,2019, we imputed $13,769$8,369 of such interest.
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Note 6 – Debt
Loans from related parties
As is discussed in Note 4, at SeptemberJune 30, 20182019 we owed $205,882$253,106 in related-party debts consisting of $98,529$135,841 and $19,563$22,935 in unpaid principal and interest, respectively, to the 22nd Trust and $87,790$94,330 owed to our CEO, Dr. Jon Leonard.
Convertible notes payable
During the year ended December 31, 20172018, we issued seveneight new convertible promissory notes in the amount of $633,000, containing original issue discounts totaling $71,688, for net proceeds of $561,313. These convertible notes can convert to common stock at various different prices. We evaluated these convertible notes for beneficial conversion features and calculated a collective value of $209,040 which we are accounting for as debt discounts. The individual notes are discussed in Note 6 to the financial statements filed on Form 10-K for the year ended December 31, 2018 and are hereby incorporated by reference.
During the six months ended June 30, 2019 we issued eleven convertible promissory notes in the aggregate amount of $213,040,$307,531, receiving proceeds therefrom of the same amount.$298,200. These convertible notes can convert to common stock at various prices. We evaluated these convertible notes for beneficial conversion features and calculated a collective value of $209,040$212,456 which we are accounting for as debt discounts. These convertible notes are discussed below:
During the year ended December 31, 2017, we amortized $138,668 of debt discounts to interest expense.
| · | On January 11, 2019, we issued a convertible note in the amount of $100,000 which accrues interest at 5% (10% for unpaid interest and principal after maturity) and matures on July 8, 2020. This note can convert to 83,333,333 shares. |
· | On January 23, 2019, we issued a convertible note in the amount of $1,475 which accrues interest at 5% (10% for unpaid interest and principal after maturity) and matures on July 23, 2020. This note can convert to 1,109,023 shares. | |
· | On January 16, 2019, we issued a convertible note in the amount of $4,000 which accrues interest at 5% (10% for unpaid interest and principal after maturity) and matures on July 16, 2020. This note can convert to 3,007,519 shares. | |
· | During the six months ended June 30, 2019, we issued four promissory notes to an Australian Superfund in the aggregate amount of $20,331 which accrues interest at 5% (10% for unpaid interest and principal after maturity). These notes mature between October 15, 2020 and November 24, 2020 and can convert to 29,044,286 shares in the aggregate. | |
· | Also during the six months ended June 30, 2019, we issued three convertible promissory notes to a lending institution in the aggregate amount of $176,000, receiving proceeds of $167,000. These notes accrue interest at 12% (22% for unpaid interest and principal after maturity) and mature between April 17, 2020 and June 20, 2020. After 180 days from the note date, these notes may convert at 58% of the lowest two trading prices for the twenty days prior to conversion. | |
· | Finally, on May 13, 2019, we issued a convertible note in the amount of $5,725 which accrues interest at 5% (10% for unpaid interest and principal after maturity) and matures on November 13, 2020. This note can convert to 8,178,571 shares. |
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The Company has prepayment rights as follows:
|
| |||
| ||||
| ||||
| ||||
| ||||
| ||||
|
On August 28, 2018,January 29, 2019, we issued 1,515,152 shares3,623,055 to convert $5,000 ofa certain Australian individual who made baseless claims against the original principal to equity.
On February 7,2018,Company other than two existing convertible promissory notes which the Company acknowledged. Rather than engage in a prolonged international legal matter, we issued a convertible promissory notethese shares in 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 $465,000. The first tranche of proceeds in the amount of $220,000 was received$4,258 and $695, respectively, and recorded a $1,330 gain on February 12, 2018. The agreement calls for proceeds, original issue discounts and nominal liabilities as follows:
|
| Proceeds |
|
| Original Issue Discount |
|
| Total Nominal Liability |
| |||
Tranche 1 |
|
| 220,000 |
|
|
| 41,563 |
|
|
| 261,563 |
|
Future tranche(s) |
|
| 180,000 |
|
|
| 23,438 |
|
|
| 203,438 |
|
Total |
|
| 400,000 |
|
|
| 65,000 |
|
|
| 465,000 |
|
The note matures nine months from the date of payment of each tranche (thus, the maturity date for the first tranche is November 9, 2018). The note bears interest at 6%, with any unpaid principal and interest at maturity bearing interest at 18%.this settlement.
After 180 days, the lender has the right to convert any and all principal and interest to common stock at 65% of the lowest trading price over the twenty trading days prior to the notice of conversion. At any time during default, the lender may apply an additional market discount of 15%.
We originally recorded a discount on this note of $446,400 consisting of the original issue discount of $41,563, the initial derivative (see Derivative section below) of $277,337, and an equity incentive of $127,500 in the form of 15,000,000 shares which we valued on the fair value grant date. Of the $446,400 recorded as a discount, we immediately amortized $184,837 to interest expense. During the ninesix months ended SeptemberJune 30, 2018,2019, we amortized an additional $177,812$63,560 of debt discounts to interest expense and accrued $9,843$93,113 of nominal interest.interest on existing notes.
On February 26, 2018, we issued a convertible promissory note in the amountAt June 30, 2019, $177,157 of $100,000. We received the proceeds of $90,000 on the same date, recording an original issue discount of $10,000. The note matures on October 30, 2018 and bears interest at 12%, with any unpaid principal and interest at maturity bearing interest at 18%. The lender may convert any outstanding principal and interest at 60% of the average of the four lowest trading price for twenty five days prior to the notice of conversion. We initially recorded a discount on this note in the amount of $173,273 consisting of the $10,000 original issue discount and an initial derivative of $163,273 (see Derivative section below), but immediately amortized $73,273 to interest expense. During the nine months ended September 30, 2018, we amortized an additional $67,229 of this discount to interest expense. Additionally, during the nine months ended September 30, 2018, we accrued $7,066 of nominal interest.
The Company has the option to prepay the outstanding interest at principal at any time prior to 180 days after issue, incurring the following additional interest expense: 0-90 days: 135%; 91-180 days 150%. After 180 days after issuance, no prepayment is allowed.
On March 9, 2018, we issued a convertible promissory note in the amount of $110,000. We received the proceeds of $100,000 on March 13, 2018, recording an original issue discount of $10,000. The note matures on March 5, 2019 and bears interest at 8%, with any unpaid principal and interest at maturity bearing interest at 16%. The lender may convert any outstanding principal and interest at 63% of lowest closing price for twenty trading days prior to the notice of conversion. We initially recorded a discount on this note in the amount of $131,224 consisting of the $10,000 original issue discount and an initial derivative of $121,224 (see Derivative section below), but immediately amortized $21,224 to interest expense. During the nine months ended September 30, 2018, we amortized an additional $38,430 of this discount to interest expense. Additionally, during the nine months ended September 30, 2018, we accrued $5,567 of nominal interest.
The Company has the option to prepay the outstanding interest at principal at any time prior to 180 days after issue, incurring the following additional interest expense: 0-90 days: 115%; 91-180 days 125%.
During the nine months ended September 30, 2018, we made principal and interest payments on existingour convertible notes of $78,798 and $6,109, respectively, to Eric McRae with whom we are engagedpayable were in a lawsuit (see Note 7).default.
Convertible notes payable (excluding related-party convertible notes which is discussed in Note 4) at SeptemberJune 30, 20182019 and December 31, 20172018 and their classification into long-term, short-term and in-default were as follows:
|
| 09/30/18 |
| 12/31/17 |
|
| 06/30/19 |
| 12/31/18 |
| ||||||
All convertible promissory notes |
|
|
|
|
|
|
|
|
|
| ||||||
Unpaid principal |
| 1,310,581 |
| 960,311 |
|
| 1,068,358 |
| 1,121,243 |
| ||||||
Discounts |
|
| (236,522 | ) |
|
| (146,297 | ) |
|
| (203,648 | ) |
|
| (45,750 | ) |
Convertible notes payable, net |
| $ | 1,074,060 |
|
| $ | 814,014 |
|
| $ | 864,710 |
|
| $ | 1,075,493 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Classified as short-term |
|
|
|
|
|
|
|
|
|
| ||||||
Unpaid principal balance |
| 1,239,257 |
| 825,013 |
|
| 796,494 |
| 673,678 |
| ||||||
Discounts |
|
| (236,522 | ) |
|
| (119,710 | ) |
|
| (160,431 | ) |
|
| (45,750 | ) |
Convertible notes payable - short-term, net |
| $ | 1,002,735 |
|
| $ | 705,303 |
|
| $ | 636,063 |
|
| $ | 627,928 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Classified as long-term |
|
|
|
|
|
|
|
|
|
| ||||||
Unpaid principal balance |
| 27,825 |
| 32,000 |
|
| 94,707 |
| 25,000 |
| ||||||
Discounts |
|
| - |
|
|
| (26,587 | ) |
|
| (43,217 | ) |
|
| - |
|
Convertible notes payable - short-term, net |
| $ | 27,825 |
|
| $ | 5,413 |
|
| $ | 51,490 |
|
| $ | 25,000 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Classified as in default |
|
|
|
|
|
|
|
|
|
| ||||||
Unpaid principal balance |
| 43,500 |
| 103,298 |
|
| 177,157 |
| 422,565 |
| ||||||
Discounts |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Convertible notes payable - short-term, net |
| $ | 43,500 |
|
| $ | 103,298 |
|
| $ | 177,157 |
|
| $ | 422,565 |
|
Crypto-currency notes payable
On August 7, 2018, we issued a Crypto Exchange Promissory Note (“the Crypto Note”) in exchange for $100,000 in cash. The Crypto Note accrues interest at 4% until maturity which is 18 months from issue and 10% after maturity. The holder can convert unpaid principal and accrued interest into KLK20 tokens at any time at the rate of $0.25 per token. The holder may, for up to nine months after issuance, participate in a price guarantee: if the Company offers the tokens at less than $0.25 per token at any point for up to nine months after issuance, then the holder has the option of participating in the offer at the lower price.
For the six months ended June 30, 2019, we accrued $2,000 of interest on this note.
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Derivative liabilities
The above-referenced convertible promissory notes issued during the ninesix months ended SeptemberJune 30, 20182019 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’sinstrument's contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument’sinstrument'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 Subscription Notes from 2015 through 2017June 30, 2019 in the United States and Australia which are convertible at discounted market rates and market prices based on the average of 5 trading day closing bids. The notes are convertible after 1 year from issuance; mature in 18 months from issuance; accrued at 5% interest; and a 10% default rate. These convertible notes have become tainted (“The Tainted Notes) as a result of the issuance of convertible promissory notes issued in the United States since there is a possibility (however remote) that the Company would not have enough shares in the Treasury to satisfy all possible conversions.
The Convertible Note derivatives were valued as of issuance; conversion; redemption/settlement; and theeach quarterly periods ended 3/31/18 and 9/30/18.period from March 31, 2018 through June 30, 2019. The following assumptions were used for the valuation of the derivative liability related to the Notes:
| · | The stock price of |
| · | 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. |
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| · | The effective discounts rates estimated throughout the periods range from 35% to 42% with potentially an additional discount. |
| · | 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 | |
| · | 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 six instruments issued during the nine monthsyear ended September 30,December 31, 2018 range from 243% to 289%. The effective interest rates for the three instruments issued during the six months ended June 30, 2019 range from 250% to 564%.
At each reporting date, we determine the fair market value for each derivative associated with each of the above instruments. At SeptemberJune 30, 2018,2019, we determined the fair value of these derivatives were $779,424.$633,709.
Changes in outstanding derivative liabilities are as follows:
Balance, December 31, 2017 |
| $ | - |
|
Changes due to new issuances |
|
| 788,679 |
|
Changes due to extinguishments |
|
| (159,711 | ) |
Changes due to adjustment to fair value |
|
| 150,456 |
|
Balance, September 30, 2018 |
| $ | 779,424 |
|
Balance, December 31, 2018 |
| $ | 365,497 |
|
Changes due to new issuances |
|
| 243,768 |
|
Changes due to extinguishments |
|
| (276,592 | ) |
Changes due to adjustment to fair value |
|
| 301,036 |
|
Balance, June 30, 2019 |
| $ | 633,709 |
|
Note 7 – Litigation
Morgan Lawsuit
Background
The May 21, 2015 merger of the Company with Click Evidence, Inc. (“Click”) resulted in the transfer of Click’s assets and interests from Click to the Company and in Click becoming an asset-less entity inside the Company and then being disposed of on November 25, 2015. In the November 25, 2015 conveyance of the Click to the new owner, its name was changed to BH Trucking, Inc. (“BH”).
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Filing and service
A first lawsuit was filed in the Superior Court of the State of Arizona, Pima County, by a former consultant to Click, Richard Morgan (“Morgan”). This lawsuit was served on December 2, 2015, against Click/BH, with the Company also named in the lawsuit, but not served by it or effectively made aware of it until 2017.
Allegation
The lawsuit claimed that the consultant’s agreement with Click/BH permitted him to recover a finder’s fee for the cashless stock swap that achieved the merger on May 21, 2015. The new owner of Click/BH, the only party served, declined to defend the lawsuit allowing it to go to default.
Default judgment
On December 16, 2016, the Court issued a default judgment for the plaintiff and against the defendants in the amount of $2,377,915. The Company believes that having not been served or made aware of the lawsuit, it is not a target of the judgment.
Second Lawsuit
On January 23, 2017, the Company and its CEO were served in a second lawsuit by Morgan alleging that the Company’s intellectual property assets that were transferred to it by Click under the May 21, 2015 merger of the Company with Click, were fraudulently removed from Click/BH, and seeks to have them returned to Click/BH.
Effect on the Financial Statements
During the three months ended September 30, 2017 we included in liabilities the default amount of $2,377,915 plus $4,459 interest at 4.5% from December 16, 2016, the date of the judgment, to December 31, 2016.
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.
On August 14, 2018, we settled this lawsuit in full by issuing 10 million shares. We valued the shares at their grant date fair values, removing the judgment liability of $5,000 and recording a $55,000 loss on litigation.
McRae Lawsuit
On October 10, 2017, the Company received a letter from the lawyer of Eric L McRae (“McRae”) a person whose association with the Company was terminated by the Company on June 16, 2017. The letter demanded payment of 850 million unrestricted Tautachrome common shares to forestall his filing a laundry list of complaints in a variety of government agencies including with the 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 reasons of his being a whistleblower under Sarbanes-Oxley provisions, and with various regulatory agencies with accusations of an unspecified nature.
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McRae Lawsuit
On October 7,12, 2017, Eric L. McRae of Sedgwick County, Kansas (“McRae”) filed a complaint, later amended twice, against the Company in the United StatesUS District Court forin Kansas. The amended complaint alleges 1) that the District of Kansas asserting a claim that TautachromeCompany breached a written agreement in an alleged employment by failing to pay him 35 million shares of the Company’s common stock and terminating his association with the Company on June 16, 2017 without proper notice. The complaint goes on to allege 2) that the Company committed fraud by silence for failing to inform him of an intent to receive the employmentbenefit of McRaehis services while harboring an intent to not compensate him, 3) that the Company breached an unwritten agreement with him to provide him with 185 million shares of the Company’s common stock, and seeking an award4) that the Company breached a convertible promissory note by failing and refusing to repay him the principal and accrued interest thereunder. Complaint number 4 is now moot in the belief of damagesthe Company since after the lawsuit was filed the Company continued to repay McRae’s convertible promissory note on schedule with interest due until paid in excess of $75,000.full on October 1, 2018, thus extinguishing the note and making the matter moot. These matters remain before the Court.
On December 12, 2017, McRae brought the Company before the Kansas Human Rights Commission and the U.S. Equal Employment Opportunity Commission (EEOC) alleging that on June 16, 2017 he was terminated from an alleged employment by the Company on the basis of race and for retaliation, and that the Company discriminated against him in the terms of this alleged employment because of race. The Company, knowing that all of McRae’s allegations before the EEOC are completely false, responded to the threatened complaint denying each of McRae’s allegations and providing its own presentation of the facts. The matter is presently stayed pending a claim for mediation by McRae who has so far failed to file a claim. Although Tautachrome refutesthe Company remains confident that should an investigation in this matter continue, it will fully prevail. We do not know when or if such an investigation will materialize.
On December 8, 2017, McRae filed a complaint with the Occupational Safety and Health Administration (the “OSHA”), alleging that his “investigation and reporting” to the Company’s CEO was a contributing factor in the termination of his alleged employment by the Company in violation of the Sarbanes-Oxley Act whistleblower’s provisions. On January 2, 2018, the Company delivered its response to the complaint, denying each of McRae’s allegations and every allegationproviding its own presentation of the facts. McRae dismissed the OSHA claim with prejudice, and the matter cannot be brought again.
On October 17, 2018, we offered McRae 50 million shares in settlement of all outstanding legal actions against us. McRae declined the offer. However, we re-evaluated the liability on these lawsuits from $49,000 to $250,000 based on the closing price of our common stock on the date of the offer. We recognized a loss on litigation of $201,000 in so doing during 2018.
The Company, believing that allegations made by McRae are largely fabricated and aimed at doing harm, has been vigorously defending itself and believes it will prevail in every instance. Despite this belief, to save legal expense the complaint and intendsCompany made a good faith settlement offer to vigorously defend against it, we have accrued $49,000 to expense against this contingency.McRae. The offer was rejected.
17 |
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Note 8 – Income Taxes
Deferred income taxes reflect the tax consequences on future years of differences between the tax bases:
|
| 9/30/18 |
| 12/31/17 |
|
| 06/30/19 |
| 12/31/18 |
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Net operating loss carry-forward |
| 2,773,928 |
| 2,103,201 |
|
| 3,748,205 |
| 3,380,285 |
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Deferred tax asset at 21% and 39%, respectively |
| $ | 582,525 |
| $ | 820,248 |
| |||||||||
Deferred tax asset at 21% |
| $ | 787,123 |
| $ | 709,860 |
| |||||||||
Valuation allowance |
|
| (582,525 | ) |
|
| (820,248 | ) |
|
| (787,123 | ) |
|
| (709,860 | ) |
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
We issued 63,762,06641,806,868 shares in conversion of debt.
Subsequent events were evaluated through the date$104,483 of this report.principal and accrued interest on outstanding convertible debt.
Table of Contents |
Item 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
We are an early stage internet applications company, engaged in advanced technology and business development in the internet applications space. We have incurred general and administrative costs, marketing expenses and research and development costs since we commenced our current operations in May 2015, against no revenue.
The continuing operations of the Company are dependent upon our ability to raise adequate financing and to commence profitable operations in the future. The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through loans from related parties. We believe that actions presently being taken to obtain additional funding may provide the opportunity for the Company to continue as a going concern. There is no guarantee, however, that the Company will be successful in achieving these objectives.
The Company intends to offer its cryptotokens, branded KLK, to the public in an offering to be registered under the Securities Act of 1933, for the purpose of raising up to $100 million in proceeds to further develop our KlickZie trusted imaging technology and our KlickZie high speed blockchain, branded the zChain, in support of a KLK-based crypto transaction ecosystem. The Company currently plans to effect the proposed offering through a KLK token website managed by the Company, in which purchases on the KLK token website will be paid for in Ethereum’s “ether” cryptocoins.
Table of Contents |
The proposed offering will take place as soon as practicable upon effectiveness of a registration statement to be filed with the SEC. We can give no assurance that the registration statement will ever be effective or that the proposed offering will take place as anticipated or at all.
Results of Operations - NineSix months ended SeptemberJune 30, 20182019 versus 20172018
We had general and administrative expenses of $576,230$299,519 for the ninesix months ended SeptemberJune 30, 20182019 versus $236,111$426,923 for the same period in 2017. The increase is mainly due to increases in legal fees in defending ourselves in the two lawsuits discussed in Note 7 to the financial statements, increases in development costs of our blockchain technology and iOA/Android application and integration, and certain fees associated with fund-raising.
As is more fully explained in Note 7 to the financial statements, for the nine months ended September 30, 2018, we had a loss on litigation on the Morgan lawsuit of $55,000 versus a gain of $2,372,668 during the same period in 2017.
Interest expense increased from $177,187 during the nine months ended September 30, 2017 to $1,003,299 during the same period in 2018. The increasedecrease is mainly due to decreases in legal fees and certain expenses associated with our financing arrangements in the first quarter of 2018 that we did not incur in the current period.
As is discussed in Note 5 to the financial statements, we had a gain of $1,330 on the settlement of certain Australian convertible promissory notes during the six months ended June 30, 2019. We had no such gain in the previous period.
We had a reduction of interest expense from $738,569 during the six months ended June 30, 2018 to $19,973 in the current period. The vast majority of the change was due to certain one-time discount amortization associated with the six convertible promissory notes issued during the quarter ended March 31, 2018. We had a much smaller amount of one-time amortization during the current period. Also, as discussed in Note 6, we reduced interest expense by $140,491 as a result of an amendment with one of our creditors.
We had losses on changes in the fair values of our derivatives of $301,036 and $690,045 for the six months ended June 30, 2019 and 2018, respectively. This reduction is mostly due to conversions of convertible promissory notes to common stock which reduced the outstanding debt discount amortization owing fromon which the issuance of certain debt instruments (see Note 6 to the financial statements).derivatives are calculated.
During the ninesix months ended SeptemberJune 30, 2018,2019, we had a losslosses on conversions of $150,456 associated with the change in value of derivatives (see Note 6promissory notes to the financial statements).common stock. These losses amounted to $127,031. We had no such loss inlosses during the previous year.
During the ninesix months ended SeptemberJune 30, 2018,2019, we had a foreign exchange gain of $60,187$2,534 versus a lossgain of $69,309$45,396 during the same period in 2017,2018, all of which are currency translation effects resulting from exchange rate differences between the U.S. and Australian dollars.
Our net comprehensive losslosses of $1,724,798$743,695 and comprehensive income of $1,890,061$1,810,141 during the ninesix months ended SeptemberJune 30, 20182019 and 20172018 are a result of the above items.
Results of Operations - Three months ended September 30, 2018 versus 2017
We had general and administrative expenses of $149,307 for the three months ended September 30, 2018 versus $31,596 for the same period in 2017. The increase is mainly due to increases in legal fees in defending ourselves in the two lawsuits discussed in Note 7 to the financial statements, increases in development costs of our blockchain technology and iOA/Android application and integration, and certain fees associated with fund-raising.
As is more fully explained in Note 7 to the financial statements, for the three months ended September 30, 2018, we had a loss on litigation on the Morgan lawsuit of $55,000 versus a gain of $2,372,668 during the same period in 2017.
Interest expense increased from $46,712 during the three months ended September 30, 2017 to $264,730 during the same period in 2018. The increase is mostly due to debt discount amortization owing from the issuance of certain debt instruments (see Note 6 to the financial statements).
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Results of Operations - Three months ended June 30, 2019 versus 2018
We had general and administrative expenses of $169,299 for the three months ended June 30, 2019 versus $119,498 for the same period in 2018. The increase is mostly due to expenses related to the development of our KlickZie ArK technology applications.
We had a reduction of interest expense from $158,622 during the three months ended June 30, 2018 to a net negative interest expense of $65,852 in the current period. As discussed in Note 6, we reduced interest expense by $140,491 as a result of an amendment with one of our creditors. In addition, much of the debt discounts recorded in the first quarter of 2018 have been fully to amortized interest expense before the opening of the current quarter.
During the three months ended SeptemberJune 30, 2018, we had a $12,740 gain of $539,589 associated withresulting from the change in fair value of derivatives (see Note 6our derivative liabilities. During the same period in 2019, we had losses of $359,396. In general, this results from increases in our stock price for the current period.
During the three months ended June 30, 2019, we had losses on conversions of promissory notes to the financial statements).common stock. These losses amounted to $6,256. We had no such gain inlosses during the previous year.
During the three months ended SeptemberJune 30, 2018,2019, we had a foreign exchange gain of $14,791$8,399 versus a lossgain of $16,914$30,689 during the same period in 2017,2018, all of which are currency translation effects resulting from exchange rate differences between the U.S. and Australian dollars.
Our net comprehensive incomelosses of $85,343$460,700 and $2,277,446$234,691 during the threesix months ended SeptemberJune 30, 20182019 and 20172018 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.
At SeptemberJune 30, 2018,2019, the Company had $33,837$33,291 in cash and liabilities totaling $2,646,795.$2,727,513. 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 SeptemberJune 30, 20182019 and December 31, 2017.2018. 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.
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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, 2017,2018, filed with the Securities and Exchange Commission on April 2, 201816, 2019 and is herein incorporated by reference.
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"disclosure controls and procedures”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 SeptemberJune 30, 2018,2019, the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”"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 threesix months ended SeptemberJune 30, 20182019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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ItemITEM 1 – Legal ProceedingsLEGAL 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 NotesNote 7, and 9, or our officers and directors in their capacity as such that could have a material impact on our operations or finances.
ItemITEM 1A – Risk FactorsRISK 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.
ItemITEM 2 – Unregistered Sale of Equity SecuritiesUNREGISTERED SALE OF EQUITY SECURITIES
None
ItemITEM 3 – Defaults Upon Senior SecuritiesDEFAULTS UPON SENIOR SECURITIES
None
ItemITEM 4 – Mine Safety DisclosuresMINE SAFETY DISCLOSURES
Not applicable.
ItemITEM 5 – Other InformationOTHER INFORMATION
None
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Exhibit No. |
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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: August 8, 2019 | By: | /s/ Dr. Jon Leonard | |
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Chief Executive Officer |
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