SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR |
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 20192020
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: 333-141907000-55721
TAUTACHROME, INC. |
(Exact name of registrant as specified in its charter) |
Delaware |
| 84-2340972 |
(State or other Jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
1846 e. Innovation Park Drive, Oro Valley, AZ 85755 |
(Address of principal executive offices) |
(520) 318-5578 |
(Registrant’s telephone number, including area code) |
Securities registered pursuant to section 12(b) of the Act:
Title of Each Class | Trading Symbols | Name of Exchange on Which Registered | ||
Not applicable | Not applicable | Not applicable |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x ☒ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit). Yes ☒ No ☐
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 |
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Non-accelerated filer |
| Smaller reporting company |
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| Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨o
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes o No x☒
The number of shares of the registrant’s common stock outstanding as of August 5, 2019,4, 2020, was 3,454,310,478.4,120,475,247.
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 |
Table of Contents |
PART I – FINANCIAL INFORMATION
ITEM 1 – CONSOLIDATED FINANCIAL STATEMENTS
TAUTACHROME, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| 6/30/2020 |
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| 12/31/2019 |
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| 6/30/2019 |
| 12/31/2018 |
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| (Unaudited) |
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ASSETS |
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Current assets: |
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Cash |
| $ | 33,291 |
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| $ | 6,243 |
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| $ | 16,136 |
| $ | 31,366 |
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Prepaid expenses |
|
| 65 |
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| 403 |
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Total current assets |
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| 33,291 |
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| 6,243 |
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| 16,201 |
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| 31,769 |
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TOTAL ASSETS |
| $ | 33,291 |
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| $ | 6,243 |
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| $ | 16,201 |
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| $ | 31,769 |
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LIABILITIES |
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Accounts payable and accrued expenses |
| $ | 519,462 |
| $ | 615,847 |
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| $ | 372,648 |
| $ | 411,236 |
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Accounts payable - related party |
| 114,010 |
| 114,052 |
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| 378,756 |
| 257,282 |
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Loans from related parties |
| 103,016 |
| 103,074 |
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| 102,676 |
| 103,032 |
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Convertible notes payable - related party |
| 94,330 |
| 81,340 |
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Convertible notes payable - related party, net |
| 117,433 |
| 111,999 |
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Short-term convertible notes payable, net |
| 636,063 |
| 627,928 |
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| 754,963 |
| 814,685 |
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Convertible notes payable in default |
| 177,157 |
| 422,565 |
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| 32,000 |
| 32,000 |
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Short-term notes payable |
| 15,451 |
| 15,501 |
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| 15,157 |
| 15,465 |
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Derivative liability |
| 633,709 |
| 365,497 |
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| 683,049 |
| 2,365,367 |
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Court judgment liability |
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| 250,000 |
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| 250,000 |
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| - |
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| 250,000 |
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Total current liabilities |
| 2,543,198 |
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| 2,595,804 |
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| 2,456,682 |
| 4,361,066 |
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Long-term convertible notes payable, net |
| 51,490 |
| 25,000 |
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| - |
| 158,156 |
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Long-term convertible notes payable, related party, net |
| 32,825 |
| 32,825 |
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| 470,826 |
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| 84,091 |
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Crypto-currency notes payable |
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| 100,000 |
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| 100,000 |
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Total non-current liabilities |
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| 184,315 |
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| 157,825 |
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| 470,826 |
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| 242,247 |
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TOTAL LIABILITIES |
|
| 2,727,513 |
|
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| 2,753,629 |
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| 2,927,508 |
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| 4,603,313 |
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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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STOCKHOLDERS’ 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, 2020 and December 31, 2019 |
| 1,380 |
| 1,380 |
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Series E Convertible Preferred Stock, par value $0.0001. 40,000,000 shares authorized, 40,000 and zero shares outstanding at June 30, 2020 and December 31, 2019, respectively |
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Common stock, $0.00001 par value. 4.5 billion shares authorized. 4,120,475,247 and 3,504,460,889 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively |
| 41,205 |
| 35,045 |
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Additional paid in capital |
| 5,495,918 |
| 4,692,609 |
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| 9,734,133 |
| 6,095,053 |
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Common stock payable |
| 1,898,677 |
| 1,919,927 |
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| 273,884 |
| 2,066,584 |
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Accumulated deficit |
| (10,223,058 | ) |
| (9,476,829 | ) |
| (13,076,089 | ) |
| (12,867,645 | ) | ||||
Effect of foreign currency exchange |
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| 98,736 |
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| 96,202 |
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| 114,176 |
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| 98,039 |
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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 |
|
| $ | 6,243 |
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TOTAL STOCKHOLDERS’ DEFICIT |
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| (2,911,307 | ) |
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| (4,571,544 | ) | ||||||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
| $ | 16,201 |
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| $ | 31,769 |
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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)
|
| Six Months Ended June 30, |
| Three Months Ended June 30, |
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| 2019 |
| 2018 |
| 2019 |
| 2018 |
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| Six Months Ended June 30, |
| Three Months Ended June 30, |
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| 2020 |
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| 2019 |
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| 2020 |
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| 2019 |
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OPERATING EXPENSES |
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General and administrative |
| $ | 299,519 |
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| $ | 426,923 |
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| $ | 169,299 |
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| $ | 119,498 |
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| $ | 624,591 |
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| $ | 299,519 |
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| $ | 312,222 |
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| $ | 169,299 |
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Total operating expenses |
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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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| 624,591 |
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| 299,519 |
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| 312,222 |
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| 169,299 |
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Operating loss |
| (299,519 | ) |
| (426,923 | ) |
| (169,299 | ) |
| (119,498 | ) |
| (624,591 | ) |
| (299,519 | ) |
| (312,222 | ) |
| (169,299 | ) | ||||||||
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| �� |
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OTHER INCOME / (EXPENSE) |
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Gain on litigation |
| 105,000 |
| - |
| - |
| - |
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Gain on settlement of debt |
| 1,330 |
| - |
| - |
| - |
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| - |
| 1,330 |
| - |
| - |
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Interest expense |
| (19,973 | ) |
| (738,569 | ) |
| 65,852 |
| (158,622 | ) |
| (721,463 | ) |
| (19,973 | ) |
| (559,544 | ) |
| 65,852 |
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Change in value of derivatives |
| (301,036 | ) |
| (690,045 | ) |
| (359,396 | ) |
| 12,740 |
|
| 1,069,877 |
| (301,036 | ) |
| (168,436 | ) |
| (359,396 | ) | |||||||||
Loss on conversion of debt |
|
| (127,031 | ) |
|
| - |
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| (6,256 | ) |
|
| - |
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| (37,267 | ) |
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| (127,031 | ) |
|
| (9,819 | ) |
|
| (6,256 | ) |
Total other |
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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 | ) |
|
| 416,147 |
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|
| (446,710 | ) |
|
| (737,799 | ) |
|
| (299,800 | ) |
Net loss |
| $ | (746,229 | ) |
| $ | (1,855,537 | ) |
| $ | (469,099 | ) |
| $ | (265,380 | ) | ||||||||||||||||
Net income or (loss) |
| $ | (208,444 | ) |
| $ | (746,229 | ) |
| $ | (1,050,021 | ) |
| $ | (469,099 | ) | ||||||||||||||||
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OTHER COMPREHENSIVE INCOME (LOSS) |
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Effect of foreign currency exchange |
|
| 2,534 |
|
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| 45,396 |
|
|
| 8,399 |
|
|
| 30,689 |
|
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| 16,137 |
|
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| 2,534 |
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| (87,108 | ) |
|
| 8,399 |
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Net comprehensive income or (loss) |
| $ | (743,695 | ) |
| $ | (1,810,141 | ) |
| $ | (460,700 | ) |
| $ | (234,691 | ) |
| $ | (192,307 | ) |
| $ | (743,695 | ) |
| $ | (1,137,129 | ) |
| $ | (460,700 | ) |
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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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Net (loss) or income per common share |
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Basic and fully diluted |
| $ | 0.00 |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
| $ | (0.00 | ) | |||||||||||||||||
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Weighted average shares outstanding |
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Basic and fully diluted |
| 3,659,613,359 |
| 2,777,602,341 |
| 3,785,141,462 |
| 3,249,186,786 |
|
The accompanying notes are an integral part of these consolidated financial statements.
4 |
Table of Contents |
TAUTACHROME, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
December 31, 2018 to June 30, 2020
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| Common Stock |
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| Preferred Stock Series D |
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| Preferred Stock Series E |
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| Additional Paid in |
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| Stock |
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| Other Comprehensive Income |
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| Accumulated |
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| Total Stockholders’ Equity / |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Capital |
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| Payable |
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| (Loss) |
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| Deficit |
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| (Deficit) |
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Balance, 12/31/18 |
|
| 1,932,483,910 |
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| $ | 19,325 |
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| 13,795,104 |
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| $ | 1,380 |
|
|
| - |
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| $ | - |
|
| $ | 4,692,609 |
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| $ | 1,919,927 |
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| $ | 96,202 |
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| $ | (9,476,829 | ) |
| $ | (2,747,386 | ) |
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Shares issued for conversion of debt |
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| 1,551,562,038 |
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| 15,516 |
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| - |
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| - |
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| - |
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| - |
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| 686,054 |
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| - |
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| - |
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| - |
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| 701,570 |
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Shares issued to settle claims |
|
| 16,123,055 |
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| 161 |
|
|
| - |
|
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| - |
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| - |
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| - |
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| 188,462 |
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|
| - |
|
|
| - |
|
|
| - |
|
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| 188,623 |
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Shares issued for stock payable |
|
| 4,291,886 |
|
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| 43 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
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| 26,238 |
|
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| (26,281 | ) |
|
| - |
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| - |
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| - |
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Shares earned by consultants |
|
| - |
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| - |
|
|
| - |
|
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| - |
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| - |
|
|
| - |
|
|
| - |
|
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| 172,938 |
|
|
| - |
|
|
| - |
|
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| 172,938 |
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Proceeds from officer stock sale |
|
| - |
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| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
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| 13,750 |
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| - |
|
|
| - |
|
|
| - |
|
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| 13,750 |
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Derivative associated with early debt retirement |
|
| - |
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| - |
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| - |
|
|
| - |
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|
| - |
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|
| - |
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| 471,233 |
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|
| - |
|
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| - |
|
|
| - |
|
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| 471,233 |
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Imputed interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
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| 16,707 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 16,707 |
|
Effect of foreign currency exchange |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,837 |
|
|
| - |
|
|
| 1,837 |
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,390,816 | ) |
|
| (3,390,816 | ) |
Balance, December 31, 2019 |
|
| 3,504,460,889 |
|
| $ | 35,045 |
|
|
| 13,795,104 |
|
| $ | 1,380 |
|
|
| - |
|
|
| - |
|
| $ | 6,095,053 |
|
| $ | 2,066,584 |
|
| $ | 98,039 |
|
| $ | (12,867,645 | ) |
| $ | (4,571,544 | ) |
|
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|
Shares issued for conversion of debt |
|
| 560,931,025 |
|
|
| 5,609 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 843,755 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 849,364 |
|
Issue Series E preferred shares |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 40,000 |
|
|
| 4 |
|
|
| 1,836,996 |
|
|
| (1,837,000 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Shares issued for services |
|
| 3,333,333 |
|
|
| 33 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 19,967 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 20,000 |
|
Shares issued for cash |
|
| 1,750,000 |
|
|
| 18 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,482 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,500 |
|
Shares issued to settle legal claim |
|
| 50,000,000 |
|
|
| 500 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 144,500 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 145,000 |
|
Derivative associated with early debt retirement |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 782,972 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 782,972 |
|
Shares earned by consultants |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 44,300 |
|
|
| - |
|
|
| - |
|
|
| 44,300 |
|
Imputed interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 7,408 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 7,408 |
|
Effect of foreign currency exchange |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 16,137 |
|
|
| - |
|
|
| 16,137 |
|
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (208,444 | ) |
|
| (208,444 | ) |
Balance, June 30, 2020 (unaudited) |
|
| 4,120,475,247 |
|
| $ | 41,205 |
|
|
| 13,795,104 |
|
| $ | 1,380 |
|
|
| 40,000 |
|
| $ | 4 |
|
| $ | 9,734,133 |
|
| $ | 273,884 |
|
| $ | 114,176 |
|
| $ | (13,076,089 | ) |
| $ | (2,911,307 | ) |
TAUTACHROME, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY / (DEFICIT)
(Unaudited)The accompanying notes are an integral part of these financial statements
5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock Preferred Stock Series D Additional Paid in Stock Other Comprehensive Accumulated Total Stockholders' Equity/ Shares Amount Shares Amount Capital Payable (Loss) Deficit (Deficit) Balance, 12/31/17 Shares issued with convertible note payable Preferred Series E shares accrued to ArKnet Shares issued for conversion of debt Shares issued to settle lawsuit Derivative associated with early debt retirement Shares earned by consultants Imputed interest Effect of foreign currency exchange Net loss Balance, 12/31/18 Shares issued for conversion of debt Shares issued to settle claim Shares issued for stock payable Shares earned by consultants Derivative associated with early debt retirement Imputed interest Effect of foreign currency exchange Net loss Balance, June 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Table of Contents |
TAUTACHROME, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| Six Months Ended June 30, |
| |||||
|
| 2020 |
|
| 2019 |
| ||
|
|
|
|
|
|
| ||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net Loss |
| $ | (208,444 | ) |
| $ | (746,229 | ) |
Stock-based compensation |
|
| 64,300 |
|
|
| 5,344 |
|
Loss on debt conversions |
|
| 37,267 |
|
|
| 127,031 |
|
Change in fair value of derivative |
|
| (1,069,877 | ) |
|
| 301,036 |
|
Gain on litigation |
|
| (105,000 | ) |
|
| - |
|
Gain on debt settlements |
|
| - |
|
|
| (1,330 | ) |
Amortization of discounts on notes payable |
|
| 659,035 |
|
|
| 63,560 |
|
Imputed interest |
|
| 7,408 |
|
|
| 8,369 |
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expenses |
|
| 338 |
|
|
| - |
|
Accounts payable and accrued expenses |
|
| 5,005 |
|
|
| (44,457 | ) |
Accounts payable - related party |
|
| 130,000 |
|
|
| - |
|
Net cash used in operating activities |
|
| (479,968 | ) |
|
| (286,676 | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from the sale of stock |
|
| 3,500 |
|
|
| - |
|
Proceeds from convertible notes payable |
|
| - |
|
|
| 298,200 |
|
Proceeds from convertible notes payable, related party |
|
| 478,000 |
|
|
| - |
|
Payment of expenses by related party |
|
| 36,172 |
|
|
| - |
|
Proceeds from related-party loans |
|
| - |
|
|
| 26,000 |
|
Principal payments on related-party loans |
|
| (46,828 | ) |
|
| (13,010 | ) |
Net cash provided by financing activities |
|
| 470,844 |
|
|
| 311,190 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
| (6,106 | ) |
|
| 2,534 |
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash |
|
| (15,230 | ) |
|
| 27,048 |
|
Cash and equivalents - beginning of period |
|
| 31,366 |
|
|
| 6,243 |
|
Cash and equivalents - end of period |
| $ | 16,136 |
|
| $ | 33,291 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTARY INFORMATION |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ | - |
|
| $ | - |
|
Cash paid for income taxes |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING TRANSACTIONS |
|
|
|
|
|
|
|
|
Discounts on convertible notes |
| $ | 170,531 |
|
| $ | 243,768 |
|
Conversion of debt to common stock |
| $ | 812,097 |
|
| $ | 375,900 |
|
Settlement of derivative liability |
| $ | 782,972 |
|
| $ | 276,592 |
|
Shares issued for debt settlements |
| $ | 145,000 |
|
| $ | 3,623 |
|
Shares issued for stock payable |
| $ | 1,837,000 |
|
| $ | 26,281 |
|
The accompanying notes are an integral part of these consolidated financial statements.
TAUTACHROME, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| Six Months Ended June 30, |
| |||||
| 2019 |
|
| 2018 |
| |||
|
|
|
|
|
|
| ||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net Loss |
| $ | (746,229 | ) |
| $ | (1,855,537 | ) |
Stock-based compensation |
|
| 5,344 |
|
|
| 33,460 |
|
Loss on conversions |
|
| 127,031 |
|
|
| - |
|
Change in fair value of derivative |
|
| 301,036 |
|
|
| 690,045 |
|
Gains on debt settlements |
|
| (1,330 | ) |
|
| - |
|
Amortization of discounts on notes payable |
|
| 63,560 |
|
|
| 660,285 |
|
Imputed interest |
|
| 8,369 |
|
|
| 9,334 |
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
| (44,457 | ) |
|
| 29,540 |
|
Net cash used in operating activities |
|
| (286,676 | ) |
|
| (432,873 | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from convertible notes payable |
|
| 298,200 |
|
|
| 593,000 |
|
Principal payments on notes payable |
|
| - |
|
|
| (147,250 | ) |
Proceeds from related-party loans |
|
| 26,000 |
|
|
| 1,830 |
|
Principal payments on related-party loans |
|
| (13,010 | ) |
|
| (8,050 | ) |
Net cash provided by financing activities |
|
| 311,190 |
|
|
| 439,530 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
| 2,534 |
|
|
| 45,396 |
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash |
|
| 27,048 |
|
|
| 52,053 |
|
Cash and equivalents - beginning of period |
|
| 6,243 |
|
|
| 9,726 |
|
Cash and equivalents - end of period |
| $ | 33,291 |
|
| $ | 61,779 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTARY INFORMATION |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ | - |
|
| $ | 6,533 |
|
Cash paid for income taxes |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING TRANSACTIONS | ||||||||
Discounts on convertible notes |
| $ | 243,768 |
|
| $ | 664,688 |
|
Conversion of debt to common stock |
| $ | 375,900 |
|
| $ | 11,155 |
|
Settlement of derivative liability |
| $ | 276,592 |
|
| $ | 105,866 |
|
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
JUNE 30, 20192020
Note 1 – Organization and Nature of Business
History
Tautachrome, Inc. was formed in Delaware on June 5, 2006 as Caddystats, Inc., and subsequently renamed Roadships Holdings Inc. and on November 5, 2015 renamed to its current name Tautachrome 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, uniquely exploiting the technologies of the Augmented Reality sector, the blockchain/cryptocurrency(AR) sector and the smartphone picturetrusted imagery sector, with granted and video technology sector. Wepending patents in both sectors. In addition we have high-speed blockchain concepts undertechnologies in development aiming to couple within support of global AR-based social networking and AR-based consumer-provider commerce. These technologies are being rolled out in the Company’s revolutionary patentsARknet platform, beginning in the US and licensing in augmented reality, smartphone-image authentication and imagery-based social networking interaction.aiming for a global operation.
Tautachrome is currently pursuing three main avenues of business activity based on our patented activated imaging technology, our blockchain cryptocurrency products, and the our licensing of the patent pending ARk technology (together banded “KlickZie” technology):
| 1. | KlickZie |
|
| |
| 2. | KlickZie’s blockchain |
|
| |
| 3. | KlickZie Activated Digital Imagery business: The Company is developing downloadable apps based on our patented KlickZie trusted imaging technology and based on our patented trusted image-based social interactions using the pictures and videos that smartphone users create. Trusted imagery and user imagery-based interaction is expected to be widely used within the ARknet. |
Since its public announcement on September 25, 2017 (via SEC form 8-K) that it would be using its Twitter site (@Tautachrome_Inc) (http:(https://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 formForm 8-Ks. Shareholders are advised to follow us on Twitter to be current on the Company’s FD disclosures.disclosures in conformity with Regulation FD.
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 endingended June 30, 2019.2020. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in our audited financial statements for the period ended December 31, 2018 (as amended),2019, as reported in Form 10-K filed with the Securities and Exchange Commission.SEC filed on March 30, 2020.
Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company'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.
Revenue Recognition
The Company sells credits in exchange for cash. These credits can be redeemed for ARks which are geo-location objects downloadable into various digital devices. We recognize revenues once the customer has redeemed previously-purchased credits in exchange for ARks. Until that point, any cash received in exchange for credits is accounted for as liabilities.
8 |
Table of Contents |
The company recognizes revenues in accordance with ASC 606 – Revenue From Contracts with Customers which proscribes a five-step process in evaluating the revenue recognition process:
Step 1: Identify the contract with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
The company has determined that the performance obligations are satisfied once the purchased credits are exchanged for ARks. As of June 30, 2020, we have recorded $2,160 in liabilities.
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 three and six months ended June 30, 2019 and 2020 as the effect of our potential common stock equivalents would be anti-dilutive.
Recent Accounting Pronouncements
In 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 and implemented it. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. We expect to adoptadopted 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”) 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting , which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and 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 new guidance is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
9 |
Table of Contents |
Note 3 – Going Concern
We have not begunIn the third quarter 2019, we began operations with our core operationsARknet platform, and in the technology industry and have not yetOctober we acquired the assets to enter this markets and wethe business ARk vertical in our market. We will require additional capital to do so.exploit this vertical and to commercialize others. There is no guarantee that we will be able acquire the capital to procureexploit and commercialize the assetsARknet markets we envision so as to enter this market or, upon doing so, that we will generate positive cash flows from operations. SubstantialFor these reasons, substantial doubt exists as to Tautachrome’s ability to continue as a going concern. No adjustment has been made to these financial statements for the outcome of this uncertainty.
Management intends to raise additional capital, partly through convertible debt, partly through the direct sale of equity and partly through partnerships with businesses with whom we will provide exclusive use of ARknet techniques in their arenas of operation. We will commit those funds to further refine and develop our ARknet platform. In addition, we intend to market our products through Google and Facebook.
Note 4 – Related Party Transactions
For the six months ended June 30, 2019,2020, we accrued $2,424$2,420 of interest to the 22nd Trust (the “Trust”), the trustee of whom is Sonny Nugent, the son of our major shareholder and former Chief Executive Officer, Micheal Nugent. The outstanding balances of unpaid principal and interest at June 30, 20192020 were $97,676 and $27,723, respectively. The outstanding balances of unpaid principal and interest at December 31, 20182019 were $120,951$98,032 and $118,591,$25,361, respectively.
According to our agreement with Mr. Nugent, we accrue interest on all unpaid amounts at 5%. Principal and interest are callable at any time. If principal and interest are called and not repaid, the loan is considered in default after which interest is accrued at 10%.
On July 11, 2019, our CEO and Board Chairman contributed $13,750 to the company which was accounted for as additional paid in capital.
Convertible note payable, related party
On May 5, 2013 (and on August 8, 2013 with an enlargement amendment) the Company entered into a no interest demand-loan agreement with our current Chairman, Jon N. Leonard under which the Company may borrow such money from JonDr. Leonard as JonDr. Leonard in his sole discretion is willing to loan.
The terms of the note provide that at the Company’s option, the Company may make repayments in stock, at a fixed share price of $1.00 per share. Also, because this loan is a no-interest loan, an imputed interest expense of $3,417$2,504 was recorded as additional paid-in capital for the six months ended June 30, 2019.2020. The Company evaluated Dr. Leonard’s note for the existence of a beneficial conversion feature and determined that none existed.
During the six months ended June 30, 2019,2020, we borrowed $26,000 from and repaid $13,010$46,828 to Dr. Leonard. At June 30, 2019,2020, the balanced owed Dr. Leonard is $94,330.$32,346.
We also owe $37,825$69,973 to another officera Board member for convertible notes payable for loans he made to the company, only $32,825 of which has been formalized into convertible notes. The additional $5,000 is treated as an advance.company. The notes bear interest at 5% (10% after maturity) and may convert at $0.0025 per share.share (for $33,801 of the debt) and $.002 per share (for $36,172 of the debt). Unamortized discount and net liabilities at June 30, 2020 are $32,147 and $37,825, respectively. Unpaid interest at that date amounts to $7,155.
On October 10, 2019, we issued a convertible promissory note in the amount of $62,500 to Arknet in exchange for that amount of proceeds. The note bears interest at 5% (10% after maturity), matures 18 months from the date of the note and can covert to common stock at $0.005 per share. We originally recorded a discount of $19,278 in 2019, amortizing $2,701 and $5,885 during 2019 and 2020, respectively. The unamortized discount and net liabilities at June 30, 2020 are $10,691 and $51,809, respectively. Unpaid interest at December 31, 2019 and June 30, 2020 amount to $701 and $2,263, respectively.
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On December 19, 2019, we issued a convertible promissory note in the amount of $60,000 to Arknet in exchange for that amount of proceeds. The note bears interest at 5% (10% after maturity), matures 18 months from the date of the note and can covert to common stock at $0.004 per share. We originally recorded a discount of $24,123 in 2019, amortizing $2,010 and $7,324 during 2019 and 2020, respectively. The unamortized discount and net liabilities at June 30, 2020 are $14,789 and $45,211, respectively. Unpaid interest at December 31, 2019 and June 30, 2020 amount to $90 and $1,590, respectively.
During the six months ended June 30, 2020, we issued nine promissory notes to Arknet in the aggregate amount of $478,000. The notes mature between June 24, 2021 and December 31, 2021, bear interest at 5% (10% after maturity) and can convert to common stock between $0.00128 and $0.0040 per common share. We originally recorded discounts on these notes in the aggregate of $66,891, amortizing $9,958 during the six months ended June 30, 2020. The unamortized discount and net liabilities at June 30, 2020 for these nine notes are $55,022 and $422,978, respectively. Unpaid interest at that date amounts to $5,714.
Note 5 – Capital
During the year ended December 31, 20182019 we issued 246,542,2741,571,976,979 shares as follows:
| · | |
We issued | ||
During the six months ended June 30, 2019, we issued 1,480,019,700 shares as follows:
|
|
|
| · | 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 12,500,000 shares to a previous supplier to retire trade debts in the amount of $35,000. We valued the shares at the grant date fair value of $185,000 and recorded a reduction of accounts payable of $35,000 and a loss on settlement of $150,000. |
· | We issued 4,291,886 shares to a consultant to reduce our stock payable to them. We reduced the stock payable by $26,281 and recorded additional expense of $313. We recorded an additional stock payable to this consultant of |
During the six months ended June 30, 2020, we issued
· | 560,931,025 shares of common stock in conversion of $770,081 of principal and $42,016 of unpaid interest. We recorded losses of $37,267 upon conversions. | |
· | 1,750,000 shares of common stock for $3,500 in cash. | |
· | 50,000,000 shares of common stock to settle the McRae lawsuit (see Note 7). | |
· | 3,333,333 shares of common stock for services. We valued the shares at their grant date fair values and included $20,000 in general and administrative expenses. |
Additionally during the six months ended June 30, 2020, we accrued $44,300, payable in common stock, to three consultants for services performed during the period.
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Preferred Stock
During the year ended December 31, 2018, we accrued $1,837,000 in costs related to the 40,000 Series E Preferred shares promised in our ArKnetARknet contract (see Note 4) containing a par value of $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 |
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|
|
| · | Each share has the voting rights of all other voting shares combined, multiplied by 0.00001, and |
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|
| · | They have no conversion or redemption rights. |
These shares have yet to bewere recorded as issued as of June 30, 2019 and are included in stock payable at that date.on January 31, 2020.
Imputed Interest
Certain of our promissory notes bear no nominal interest. We therefore imputed interest expense and increased Additional Paid in Capital. For the six months ended June 30, 2019,2020, we imputed $8,369$7,408 of such interest.
Note 6 – Debt
Loans from related parties
As is discussed in Note 4, atAt June 30, 20192020 we owed $253,106$102,676 in related-party debtsloans consisting of $135,841 and $22,935 in unpaid principal and interest, respectively,$97,676 to the 22nd Trust and $94,330$5,000 owed to our CEO, Dr. Jon Leonard.a related-party Board member .
We also owe $37,825$69,973 of convertible notes payable to another officera Board member for loans he made to the company, only $32,825 of which has been formalized into convertible notes.company. The additional $5,000 is treated as an advance. The notes bear interest at 5% and may convert at $0.0025 per share.
Convertible notes payable
During the year ended December 31, 2018,On October 10, 2019, we issued eight newa convertible promissory notesnote in the amount of $633,000, containing original issue discounts totaling $71,688,$62,500 to Arknet in exchange for net proceedsthat amount of $561,313. These convertible notesproceeds. The note bears interest at 5% (10% after maturity), matures 18 months from the date of the note and can convertcovert to common stock at various different prices.$0.005 per share. We evaluated theseoriginally recorded a discount of $19,278 in 2019, amortizing $2,701 and $5,885 during 2019 and 2020, respectively. The unamortized discount and net liabilities at June 30, 2020 are $10,691 and $45,9247, respectively. Unpaid interest at that date amounts to $701.
On December 19, 2019, we issued a convertible notespromissory note in the amount of $60,000 to Arknet in exchange for beneficial conversion featuresthat amount of proceeds. The note bears interest at 5% (10% after maturity), matures 18 months from the date of the note and calculatedcan covert to common stock at $0.004 per share. We originally recorded a collective valuediscount of $209,040 which we$24,123 in 2019, amortizing $2,010 and $7,324 during 2019 and 2020, respectively. The unamortized discount and net liabilities at June 30, 2020 are accounting for as debt discounts. The individual notes are discussed in Note 6$18,075 and $45,211, respectively. Unpaid interest at that date amounts to the financial statements filed on Form 10-K for the year ended December 31, 2018 and are hereby incorporated by reference.$1,590.
During the six months ended June 30, 20192020, we issued eleven convertiblenine promissory notes to Arknet in the aggregate amount of $307,531, receiving proceeds therefrom of $298,200. These convertible$478,000. The notes mature between June 24, 2021 and December 31, 2021, bear interest at 5% (10% after maturity) and can convert to common stock between $0.00128 and $0.0040 per common share. We originally recorded discounts on these notes in the aggregate of $66,891, amortizing $9,958 during the six months ended June 30, 2020. The unamortized discount and net liabilities at various prices. We evaluatedJune 30, 2020 for these convertible notes for beneficial conversion features and calculated a collective value of $212,456 which we are accounting for as debt discounts. These convertiblenine notes are discussed below:$55,022 and $422,978, respectively. Unpaid interest at that date amounts to $5,714.
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Short-term notes payable
At June 30, 2020, we owed AU$22,000 (US$15,157) to three Australian investors on promissory notes which contain no conversion privileges.
Convertible notes payable
On January 29, 2019, we issued 3,623,055 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 values, reduced unpaid principal and interest in the amount of $4,258 and $695, respectively, and recorded a $1,330 gain on this settlement.
During the six months ended June 30, 2019,2020, we amortized $63,560$659,035 of debt discounts to interest expense and accrued $93,113$39,330 of interest on existing notes. Additionally during the six months ended June 30, 2020, we issued 560,931,025 common shares to extinguish $770,081 and $42,016 of unpaid principal and interest, respectively, and recorded a loss on conversion of $37,267 in so doing.
At June 30, 2019, $177,1572020, $32,000 of our third-party convertible notes payable were in default.
Convertible notes payable (excluding related-party convertible notes which is discussed in Note 4) at June 30, 20192020 and December 31, 20182019 and their classification into long-term, short-term and in-default were as follows:
|
| 06/30/19 |
| 12/31/18 |
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| 06/30/20 |
|
| 12/31/19 |
| |||||
All convertible promissory notes |
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|
|
|
|
|
|
| ||||||
Unpaid principal |
| 1,068,358 |
| 1,121,243 |
|
| 798,577 |
| 1,578,917 |
| ||||||
Discounts |
|
| (203,648 | ) |
|
| (45,750 | ) |
|
| (11,614 | ) |
|
| (574,076 | ) |
Convertible notes payable, net |
| $ | 864,710 |
|
| $ | 1,075,493 |
|
| $ | 786,963 |
| $ | 1,004,841 |
| |
|
|
|
|
|
|
|
|
|
|
| ||||||
Classified as short-term |
|
|
|
|
|
|
|
|
|
| ||||||
Unpaid principal balance |
| 796,494 |
| 673,678 |
|
| 766,577 |
| 1,183,685 |
| ||||||
Discounts |
|
| (160,431 | ) |
|
| (45,750 | ) |
|
| (11,614 | ) |
|
| (369,000 | ) |
Convertible notes payable - short-term, net |
| $ | 636,063 |
|
| $ | 627,928 |
|
| $ | 754,963 |
| $ | 814,685 |
| |
|
|
|
|
|
|
|
|
|
|
| ||||||
Classified as long-term |
|
|
|
|
|
|
|
|
|
| ||||||
Unpaid principal balance |
| 94,707 |
| 25,000 |
|
| - |
| 363,232 |
| ||||||
Discounts |
|
| (43,217 | ) |
|
| - |
|
|
| - |
|
|
| (205,076 | ) |
Convertible notes payable - short-term, net |
| $ | 51,490 |
|
| $ | 25,000 |
|
| $ | - |
| $ | (158,156 | ) | |
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|
|
|
|
|
|
|
|
|
| ||||||
Classified as in default |
|
|
|
|
|
|
|
|
|
| ||||||
Unpaid principal balance |
| 177,157 |
| 422,565 |
|
| 32,000 |
| 32,000 |
| ||||||
Discounts |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Convertible notes payable - short-term, net |
| $ | 177,157 |
|
| $ | 422,565 |
|
| $ | 32,000 |
| $ | 32,000 |
|
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On May 2, 2019, the company entered into an amendment to one of the convertible promissory notes issued during 2018. The company allowed the creditor to own a larger percentage of the company’s total shares outstanding in exchange for a waiver of all default interest. As a result, we recorded a reduction of interest payable to this creditor and interest expense of $140,491. On July 19, 2019, we issued 30,414,329 shares to this creditor extinguishing all principal and interest owed to them.
Crypto-currency notes payableImputed Interest
On August 7, 2018, we issued a Crypto Exchange Promissory Note (“the Crypto Note”)Certain of our promissory notes bear no nominal interest. We therefore imputed interest expense and increased Additional Paid 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.
Capital. For the six months ended June 30, 2019,2020, we accrued $2,000imputed $7,408 of interestsuch interest. Of this amount, $2,504 is imputed on this note.
Derivative liabilities
The above-referenced convertible promissory notes issued during the six months ended June 30, 20192020 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 certain fixed-rate convertible Subscription Notes from 2015 through June 30, 2019May 20, 2020 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)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.
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The Convertible Note derivatives were valued as of issuance; conversion; redemption/settlement; and each quarterly period from March 31, 2018 through June 30, 2019.23, 2020 (the date of the extinguishment of the liability). The following assumptions were used for the valuation of the derivative liability related to the Notes:
| · | The stock price of |
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|
| · | The notes convert with variable conversion prices based on the percentages of the low or average trades or bids over 20 to 25 trading days. |
| ||
· | The effective discounts rates estimated throughout the periods range from 35% to 42% with potentially an additional discount. | |
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| · | The Holder would automatically convert the note before maturity if the registration was effective and the company was not in default. |
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| · | The projected annual volatility for each valuation period was based on the historic volatility of the company are |
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| · | An event of default would occur 0% of the time, increasing 1.00% per month to a maximum of 20%. |
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| · | 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%. |
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| · | 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. |
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| · | 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 year ended December 31, 20182019 range from 243%11% to 289%564%. The effective interest rates for the three instruments issued during the six months ended June 30, 20192020 range from 250%7% to 564%203%.
At each reporting date, we determine the fair market value for each derivative associated with each of the above instruments. At
During the six months ended June 30, 2019,2020, creditors holding variable-rate convertible notes, whose variable rate gives rise to the existing of the derivative liability and the tainted notes’ derivative liabilities, were fully converted. However, at June 30, 2020 we determinedhad potential dilution of common shares from our Series D convertible preferred stock, convertible notes both in Australia and the fair valueUnited States, and our stock payable of these derivatives were $633,709.approximately 1,900,301,343 shares. This, when combined with the issued and outstanding shares at June 30, 2020 of 4,120,475,247, results in more shares issued or issuable than we have available in the company treasury. Therefore, at June 30, 2020, we maintained a derivative liability in the amount of $683,049.
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Changes in outstanding derivative liabilities are as follows:
Balance, December 31, 2018 |
| $ | 365,497 |
| ||||
Balance, December 31, 2019 |
| $ | 2,365,367 |
| ||||
Changes due to new issuances |
| 243,768 |
|
| 170,531 |
| ||
Changes due to extinguishments |
| (276,592 | ) |
| (782,972 | ) | ||
Changes due to adjustment to fair value |
|
| 301,036 |
|
|
| (1,069,877 | ) |
Balance, June 30, 2019 |
| $ | 633,709 |
| ||||
Balance, June 30, 2020 |
| $ | 683,049 |
|
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”).
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 million850,000,000 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.
On October 12, 2017, McRae filed a complaint, later amended twice, againstMay 5, 2020 the Company settled with the McRae estate for 50 million common shares. We valued the shares at the settlement date (May 5, 2020 on which date our closing price was $0.0029) and recorded a Gain on Litigation in the US District Court in Kansas. The amended complaint alleges 1) that the Company breachedamount of $105,000, a written agreement in an alleged employment by failing to pay him 35 million sharesreduction 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 benefit of his 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 sharesamount of the Company’s common stock, and 4)liability to $145,000 as a result of that revaluation. We issued 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 the Company since after the lawsuit was filed the Company continued to repay McRae’s convertible promissory noteshares on schedule with interest due until paid in full on October 1, 2018, thus extinguishing the note and making the matter moot. These matters remain before the Court.May 18, 2020.
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 the 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 providing 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 Company made a good faith settlement offer to McRae. The offer was rejected.
Note 8 – Income Taxes
Deferred income taxes reflect the tax consequences on future years of differences between the tax bases:
|
| 06/30/19 |
| 12/31/18 |
|
| 06/30/20 |
|
| 12/31/19 |
| |||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Net operating loss carry-forward |
| 3,748,205 |
| 3,380,285 |
|
| 5,127,078 |
| 4,579,500 |
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Deferred tax asset at 21% |
| $ | 787,123 |
| $ | 709,860 |
| |||||||||
Deferred tax asset |
| $ | 1,076,686 |
| $ | 961,695 |
| |||||||||
Valuation allowance |
|
| (787,123 | ) |
|
| (709,860 | ) |
|
| (1,076,686 | ) |
|
| (961,695 | ) |
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
WeOn July 27, 2020, the Company issued 41,806,868 sharesa convertible promissory note for $220,000 resulting in conversionproceeds of $104,483$200,000 and original issue discounts of principal and accrued interest on outstanding convertible debt.$20,000.
Table of Contents |
Item 2 -2- Management’s Discussion And Analysis Of Financial Condition And Results Of Operations
This report contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including: any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. “Forward-looking statements” may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan” or “anticipate” and other similar words.
Although we believe that the expectations reflected in our “forward-looking statements” are reasonable, actual results could differ materially from those projected or assumed. Our future financial condition and results of operations, as well as any “forward-looking statements”, are subject to change and to inherent risks and uncertainties, such as those disclosed in this report. In light of the significant uncertainties inherent in the “forward-looking statements” included in this report, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. Except for its ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any “forward-looking statement”. Accordingly, the reader should not rely on “forward-looking statements”, because they are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by the “forward-looking statements”.
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited financial statements, including the notes to those financial statements, included elsewhere in this report.
Overview
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 nominimal 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.
Results of Operations - Six months ended June 30, 20192020 versus 20182019
We had general and administrative expenses of $299,519$624,591 for the six months ended June 30, 20192020 versus $426,923$299,519 for the same period in 2018.2019. The decreaseincrease is mainly due to decreasesincreases in legalsoftware development costs (a $241,280 increase) and Arknet license fees and certain expenses associated with our financing arrangements in the first quarter of 2018 that we did not incur in the current period.(a $100,000 increase).
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As is discussed in Note 57 to the financial statements, we had a gain of $1,330$105,000 on the settlement of certain Australian convertible promissory notesMcRae lawsuit settlement. We had no such gains in the previous year.
We had an increase in interest expense from $19,973 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, 20182019 to $19,973$721,463 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.amortizations.
We had gains and losses on changes in the fair values of our derivatives of $1,069,877 (gain) and $301,036 and $690,045(loss) for the six months ended June 30, 2020 and 2019, and 2018, respectively. This reductionThe gain in 2020 is mostlyalmost entirely due to conversionsthe redemptions resulting in the extinguishments of certain derivative liabilities.
We had an increase in the amount of losses associated with the conversion of convertible promissory notes to common stock which reduceddebt. During the outstanding debtsix months ended June 30, 2020, we had $37,267 of such losses and $127,031 of such losses for the same period in the previous year. The increase is associated with the renegotiation of conversion prices on whichseveral of the derivatives are calculated.conversions.
During the six months ended June 30, 2019, we had losses on conversions of promissory notes to common stock. These losses amounted to $127,031. We had no such losses during the previous year.
During the six months ended June 30, 2019,2020, we had a foreign exchange gain of $2,534$16,137 versus a gain of $45,396$2,534 during the same period in 2018,2019, all of which are currency translation effects resulting from exchange rate differences between the U.S. and Australian dollars. The US Dollar gained approximately 2% in value against the Australian Dollar during the six months ended June 30, 2020.
Our net comprehensive losses of $743,695$192,307 and $1,810,141$743,695 during the six months ended June 30, 20192020 and 20182019 are a result of the above items.
Results of Operations - Three months ended June 30, 20192020 versus 20182019
We had general and administrative expenses of $169,299$312,222 for the three months ended June 30, 20192020 versus $119,498$169,299 for the same period in 2018.2019. The increase is mostlymainly due to expenses related to theincreases in software development of our KlickZie ArK technology applications.costs (a $124,000 increase) and Arknet license fees (a $50,000 increase).
We had a reduction ofan increase in interest expense from $158,622 during$65,852 (a gain in interest expense in 2019 resulting from a renegotiation of a certain convertible note in May, 2019 – see Note 6) to $559,544, an increase of $625,396. The vast majority of the change was due to discount amortizations.
We had losses on changes in the fair values of our derivatives of $168,436 and $359,396 for the three months ended June 30, 2018 to a net negative interest expense2020 and 2019, respectively. Most of $65,852the change results from different levels of convertible debts between the two periods.
We had an increase in the current period. As discussedamount of losses associated with the conversion of convertible debt. During the three months ended June 30, 2020, we had $9,819 of such losses and $6,256 of such losses for the same period in Note 6, we reduced interest expense by $140,491 as a resultthe previous year. The increase is associated with the renegotiation of an amendment with one of our creditors. In addition, muchconversion prices on several 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.conversions.
During the three months ended June 30, 2018,2020, we had a $12,740foreign exchange loss of $87,108 versus a gain resulting from the change in fair value of our derivative liabilities. During$8,399 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 common stock. These losses amounted to $6,256. We had no such losses during the previous year.
During the three months ended June 30, 2019, we had a foreign exchange gain of $8,399 versus a gain of $30,689 during the same period in 2018, all of which are currency translation effects resulting from exchange rate differences between the U.S. and Australian dollars. The US Dollar lost approximately 12% in value against the Australian Dollar during the second quarter of 2020.
Our net comprehensive losses of $460,700$1,137,129 and $234,691$460,700 during the sixthree months ended June 30, 20192020 and 20182019 are a result of the above items.
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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 June 30, 2019,2020, the Company had $33,291$16,201 in cashcurrent assets and current liabilities totaling $2,727,513.$2,456,682. 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 June 30, 2019 and December 31, 2018.2020. These conditions raise substantial doubt as to our ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Management intends to finance these deficits by making additional shareholder notes and seeking additional outside financing through either debt or sales of its common stock.
Plan of Operation
Our immediate term plans for operations is discussed extensively in Item 7 – Management’s Discussion and Analysis or Plan of Operation included in our Form 10-K as of December 31, 2018,2019, filed with the Securities and Exchange Commission on April 16, 2019March 30, 2020 and is herein incorporated by reference.
A smaller reporting company is not required to provide the information required by this item.
ItemITEM 4 - Controls and Procedures– 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.
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Based upon the evaluation of our officers and directors of our disclosure controls and procedures as of June 30, 2019,2020, 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 sixthree months ended June 30, 20192020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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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 Note 7, or our officers and directors in their capacity as such that could have a material impact on our operations or finances.
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 2 – UNREGISTERED SALE OF EQUITY SECURITIES
NoneA portion of the securities were issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), by reason of the exemption from registration afforded by the provisions of Section 4(a)(2) thereof, and Rule 506(b) of Regulation D promulgated thereunder, as a transaction by an issuer not involving any public offering. The investors did not enter into any of the transactions with the Company as a result of or subsequent to any advertisement, article, notice, or other communication published in any newspaper, magazine, or similar media or broadcast on television or radio, or presented at any seminar or meeting. Each investor was also afforded the opportunity to ask questions of management and to receive answers concerning the terms and conditions of the transaction. No selling commissions were paid in connection with these transactions.
A portion of the securities were issued without registration under the Securities Act, by reason of the exemption from registration afforded by Rule 903 of Regulation S promulgated thereunder. In determining that the issuance of certain of such securities qualified for exemption in reliance on Regulation S, the Company relied on the following facts: each recipient represented that it is not a “U.S. Person” within the meaning of Regulation S under the Securities Act and that he, she or it would not sell the shares in the U.S. for a period of at least one year after purchase.
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 – MINE SAFETY DISCLOSURES
Not applicable.
NoneOn July 22, 2020, the Arizona Corporation Arknet Inc filed a Form 3 with the SEC disclosing itself as an affiliate of the Company as a result of its acquisition of 100% of the Company’s Series E Preferred stock under the terms of a technology license agreement issued to Tautachrome by Arknet on October 17, 2018 which license was disclosed in Tautachrome’s 10KA for FY 2018, filed on April 18, 2019.
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Exhibit No. | Description of Exhibit | ||
101.INS* | XBRL Instance Document | ||
101.SCH* | XBRL Taxonomy Extension Schema Document | ||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* Filed herewith.
** Furnished herewith
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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 | |||
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Date: August 12, 2020 | By: | /s/ Dr. Jon Leonard | |
Dr. Jon Leonard Chief Executive Officer |