SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2019MARCH 31, 2020

FOR THE TRANSITION PERIOD FROM ___________ TO _____________.

Commission file number: 000-55721

TAUTACHROME, INC.

(Exact (Exact name of registrant as specified in its charter)

1846 e. Innovation Park Drive, Oro Valley, AZ 85755

(Address of principal executive offices)

(520) 318-5578

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

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 on its corporate Web site, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes x No ¨☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨o

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

The number of shares of the registrant’s common stock outstanding as of November 8, 2019,May 6, 2020, was 3,466,810,478.3,512,446,311.

TAUTACHROME, INC.

FORM 10-Q

INDEX

PART I – FINANCIAL INFORMATION
Item 1	Consolidated Financial Statements		3
Item 2	Management’s Discussion And Analysis Of Financial Condition And Results Of Operations		2017
Item 3	Quantitive And Qualitative Disclosures About Market Risk		2319
Item 4	Controls and Procedures		2319
PART II – OTHER INFORMATION
Item 1	Legal Proceedings		2420
Item 2	Unregistered Sale of Equity Securities		2420
Item 3	Defaults Upon Senior Securities		2420
Item 4	Mine Safety Disclosures		2420
Item 5	Other Information		2420
Item 6	Exhibits		2521
Signatures			2622

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PART I – FINANCIAL INFORMATION

ItemITEM 1 – Consolidated Financial StatementsCONSOLIDATED FINANCIAL STATEMENTS

TAUTACHROME, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

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TAUTACHROME, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

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

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TAUTACHROME, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY / (DEFICIT)

(Unaudited)

		Common Stock								Preferred Stock Series D								Additional  Paid in				Stock				Other Comprehensive				Accumulated				Total Stockholders'
		Shares				Amount				Shares				Amount				Capital				Payable				Income(Loss)				Deficit				Equity/Deficit)
Balance, 12/31/17			1,685,941,636			$	16,860				13,795,104			$	1,380			$	3,787,675			$	23,186			$	15,540			$	(5,293,041	)		$	(1,448,400	)
Shares issued with convertible note payable			15,000,000				150				-				-				127,350				-				-				-				127,500
Preferred Series E shares accrued to ARkNet			-				-				-				-				-				1,837,000				-				-				1,837,000
Shares issued for conversion of debt			221,542,274				2,215				-				-				373,414				-				-				-				375,629
Shares issued to settle lawsuit			10,000,000				100				-				-				59,900				-				-				-				60,000
Derivative associated with early debt retirement			-				-				-				-				326,339				-				-				-				326,339
Shares earned by consultants			-				-				-				-				-				59,741				-				-				59,741
Imputed interest			-				-				-				-				17,931				-				-				-				17,931
Effect of foreign currency exchange			-				-				-				-				-				-				80,662				-				80,662
Net loss			-				-				-				-				-				-				-				(4,183,788	)			(4,183,788	)
Balance,12/31/18			1,932,483,910			$	19,325				13,795,104			$	1,380			$	4,692,609			$	1,919,927			$	96,202			$	(9,476,829	)		$	(2,747,386	)
Shares issued for conversion of debt			1,513,911,627				15,139				-				-				592,306				-				-				-				607,445
Shares issued to settle claims			16,123,055				161				-				-				188,462				-				-				-				188,623
Shares issued for stock payable			4,291,886				43				-				-				26,551				(26,281	)			-				-				313
Shares earned by consultants			-				-				-				-				-				138,988				-				-				138,988
Capital contributed			-				-				-				-				13,750				-				-				-				13,750
Derivative associated with early debt retirement			-				-				-				-				452,402				-				-				-				452,402
Imputed interest			-				-				-				-				12,456				-				-				-				12,456
Effect of foreign currency exchange			-				-				-				-				-				-				34,042				-				34,042
Net loss			-				-				-				-				-				-				-				(2,503,154	)			(2,503,154	)
Balance, September 30, 2019			3,466,810,478			$	34,668				13,795,104			$	1,380			$	5,978,536			$	2,032,634			$	130,244			$	(11,979,983	)		$	(3,802,521	)

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

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TAUTACHROME, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWSSTOCKHOLDERS’ DEFICIT

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

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

TAUTACHROME, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

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

TAUTACHROME, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019MARCH 31, 2020

Note 1 – Organization and Nature of Business

History

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

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

Our Business

Tautachrome operates in the internet applications space, uniquely exploiting the technologies of the Augmented Reality sector, the blockchain/cryptocurrency sector and the smartphone picture and video technology sector. We have high-speed blockchain concepts under development aiming to couple with the Company’s revolutionary patents and licensing in augmented reality, smartphone-image authentication and imagery-based social networking interaction.

Tautachrome is currently pursuing three main avenues of business activity based on our patented activated imaging technology, our blockchain cryptocurrency products, and our licensing of the patent pending ARk technology (together banded “KlickZie” technology):

	1.	KlickZie ARk technology business: The Company has licensed and is developing a new KlickZie augmented reality (“AR”) platform branded ARknet. ARknet enables goods and services providers to establish geolocated augmented reality interfaces, called ARks, allowing consumers to purchase the provider’s products and take advantage of is specials and discounts, using the ARk. A provider’s ARk may be located anywhere in the world, from a store location to anyplace else the provider may desire. The ARknet is a fintech platform connecting consumers to providers in the global $48 trillion household goods market, using augmented reality as the medium of interaction.
	2.	KlickZie’s blockchain cryptocurrency-based ecosystem: The Company has developed its own digital currency (“KLK”), smart contracts using KLKs, and high speed blockchain concepts aimed at supporting fast frictionless transactions within the ARknet as well as incentivizing user download and use of KlickZie products.
	3.	KlickZie Activated Digital Imagery business: The Company is developing downloadable apps based on our patented KlickZie trusted imaging technology and based on our patented trusted image-based social interactions using the pictures and videos that smartphone users create. Trusted imagery and user imagery-based interaction is expected to be widely used within the ARknet.

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 Form 8-Ks. Shareholders are advised to follow us on Twitter to be current on the Company’s disclosures in conformity with Regulation FD.

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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 ended September 30, 2019.March 31, 2020. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in our audited financial statements for the period ended December 31, 2018 (as amended),2019, as reported in Form 10-K filed with the SEC.SEC filed on March 30, 2020.

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

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.

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. At September 30, 2019,As of March 31, 2020, we recognized $206 in revenues and $1,985 in unearned revenues includedhave recorded $2,616 in liabilities.

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Use of Estimates

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

Net Loss Per Share

Basic and diluted net loss per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the year. The per share amounts include the dilutive effect of common stock equivalents in years with net income. Basic and diluted loss per share is the same for the three and nine months ended September 30, 2019March 31, 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 adopt the new standard on January 1, 2019 and use the effective date as our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements as the Company has no leases whose term is greater than one year.

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The guidance permits entities to reclassify tax effects stranded in Accumulated Other Comprehensive Income as a result of tax reform to retained earnings. This new guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2018. Early adoption is permitted in annual and interim periods and can be applied retrospectively or in the period of adoption. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.

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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.

Note 3 – Going Concern

In the third quarter this year2019, we began operations with our ARknet platform, and in October we acquired assets to enter the business ARk vertical in our market. We will require additional capital to exploit this vertical and to commercialize others. There is no guarantee that we will be able acquire the capital to exploit and commercialize the ARknet markets we envision so as to generate positive cash flows from operations. For these reasons, substantial doubt exists as to Tautachrome’s ability to continue as a going concern. No adjustment has been made to these financial statements for the outcome of this uncertainty.

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

Note 4 – Related Party Transactions

For the ninethree months ended September 30, 2019,March 31, 2020, we accrued $3,624$1,198 of interest to the 22^nd 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 September 30, 2019March 31, 2020 were $95,765 and $26,205, respectively. The outstanding balances of unpaid principal and interest at December 31, 20182019 were $121,359$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.

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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 Dr. Leonard as Dr. Leonard in his sole discretion is willing to loan.

The terms of the note provide that at the Company’s option, the Company may make repayments in stock, at a fixed share price of $1.00 per share. Also, because this loan is a no-interest loan, an imputed interest expense of $5,177$1,529 was recorded as additional paid-in capital for the ninethree months ended September 30, 2019.March 31, 2020. The Company evaluated Dr. Leonard’s note for the existence of a beneficial conversion feature and determined that none existed.

During the ninethree months ended September 30, 2019,March 31, 2020, we borrowed $26,000 from and repaid $26,050$23,918 to Dr. Leonard. At September 30, 2019,March 31, 2020, the balanced owed Dr. Leonard is $81,290.$55,256.

We also owe $37,825$33,801 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$27,825 is treated as an advance.in default at March 31, 2020. The notes bear interest at 5% (10% after maturity) and may convert at $0.0025 per share. We originally recorded a discount of $755 in 2019, amortizing $59 and $75 during 2019 and 2020, respectively. The unamortized discount and net liabilities at March 31, 2020 are $621 and $33,180, respectively.

On February 2, 2020, a related-party convertible note in the amount of $27,825 became due and was not paid. We are presenting this note on the balance sheet as “Related-party convertible note payable in default” and are currently renegotiating this note with the related party.

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

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

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

Note 5 – Capital

During the year ended December 31, 20182019 we issued 246,542,2741,571,976,979 shares as follows:

	·	We settled our lawsuit with Richard Morgan in full by issuing 10,000,000 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.
	·	We issued 15,000,000 shares as an equity incentive to a creditor. We valued the shares at their grant-date fair values and recorded a discount on that debt of $127,500.
	·	W issued 221,542,2741,551,562,038 shares in conversion of outstanding convertible promissory notes. We recorded a reduction of the balance of these notes of $306,623 and $27,728$525,621 of principal, and interest, respectively and recorded a loss on conversion of $41,278. As part of these conversions, we retired $326,339 of associated derivative liabilities which we included in Additional Paid in Capital.

During the nine months ended September 30, 2019, we issued 1,534,326,568 shares as follows:

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We recorded a stock payable

During the three months ended March 31, 2020, we issued 4,652,089 shares to a consultantcreditor in Australia to convert an outstanding convertible note in the amount of $119,100 pursuant to our contract with them.US$2,331 of principal and US$460 of accrued interest. We recognized a loss on the conversion of this debt in the amount of $27,448 and retired $173 of derivative liabilities.

On July 11, 2019, our CEO and Board Chairman contributed $13,750During the three months ended March 31, 2020, we recorded stocks payable to two suppliers in the company which was accounted for as additional paid in capital.amount of $22,412.