UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended March 31,September 30, 2021
Commission File No. 000-53425
Singlepoint Inc. |
(Name of small business issuer in its charter) |
Nevada |
| 26-1240905 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
2999 North 44th Street Suite 530
Phoenix, AZ 85018
(Address of principal executive offices)
(888) 682-7464
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which | ||
N/A | N/A | N/A |
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 ☒ No ☐
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 and post such files). Yes ☒ 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” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of May 14,November 10, 2021, the Company had 37,496,73852,452,578 outstanding shares of its common stock, par value $0.0001.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2, of Part I of this report include forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by forward-looking statements.
In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “proposed,” “intended,” or “continue” or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other “forward-looking” information. There may be events in the future that we are not able to accurately predict or control. Before you invest in our securities, you should be aware that the occurrence of any of the events described in this Quarterly Report could substantially harm our business, results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities could decline and you could lose all or part of your investment. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report to conform these statements to actual results.
2 |
Table of Contents |
PART I – FINANCIAL INFORMATION |
|
|
| |
|
|
|
|
|
Item 1. | Financial Statements |
|
| |
|
| 4 |
| |
|
| 5 |
| |
| Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (unaudited) |
| 6 |
|
|
| 8 |
| |
| Notes to Condensed Consolidated Financial Statements (unaudited) |
| 9 |
|
|
|
|
|
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
|
| |
|
|
| ||
|
|
| ||
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| ||
|
|
| ||
|
|
| ||
|
|
| ||
|
|
| ||
|
|
| ||
|
|
| ||
|
|
|
3 |
Table of Contents |
SINGLEPOINT INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited) | ||||||||
|
|
|
|
| ||||
|
| September 30, 2021 |
|
| December 31, 2020 |
| ||
|
|
|
|
|
|
| ||
ASSETS |
|
|
|
|
|
| ||
CURRENT ASSETS: |
|
|
|
|
|
| ||
Cash |
| $ | 865,815 |
|
| $ | 198,473 |
|
Accounts receivable, net |
|
| 418,976 |
|
|
| 3,368 |
|
Prepaid expenses |
|
| 56,829 |
|
|
| 4,834 |
|
Inventory |
|
| 68,180 |
|
|
| 63,456 |
|
Note receivable from related party |
|
| 63,456 |
|
|
| 0 |
|
Current portion of deferred compensation, net of discount |
|
| 60,374 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Total Current Assets |
|
| 1,533,630 |
|
|
| 270,131 |
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Property, net |
|
| 59,046 |
|
|
| 79,167 |
|
Investment, at fair value |
|
| 35,000 |
|
|
| 623,637 |
|
Intangible assets, net |
|
| 38,115 |
|
|
| 49,005 |
|
Goodwill |
|
| 2,468,740 |
|
|
| 1,893,740 |
|
Deferred compensation, net of current portion |
|
| 75,467 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Total Assets |
| $ | 4,209,998 |
|
| $ | 2,915,680 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Accounts payable, including related party |
| $ | 707,968 |
|
| $ | 245,362 |
|
Accrued expenses, including accrued officer salaries |
|
| 408,421 |
|
|
| 1,661,208 |
|
Current portion of convertible notes payable, net of debt discount |
|
| 10,500 |
|
|
| 2,434,226 |
|
Capital lease obligations, current portion |
|
| 40,922 |
|
|
| 51,365 |
|
Advances from related party |
|
| 388,676 |
|
|
| 1,151,946 |
|
Short-term notes payable, net of debt discount |
|
| 852,836 |
|
|
| 372,232 |
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
| 2,409,323 |
|
|
| 5,916,339 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES: |
|
|
|
|
|
|
|
|
Convertible notes payable, net of current portion |
|
| 0 |
|
|
| 0 |
|
Capital lease obligations, net of current portion |
|
| 16,308 |
|
|
| 47,517 |
|
Advances from related party, net of current portion |
|
| 651,059 |
|
|
| 0 |
|
Long-term notes payable, net of debt discount |
|
| 1,034,037 |
|
|
| 150,000 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
| 4,110,727 |
|
|
| 6,113,856 |
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Undesignated preferred stock, par value $0.0001; 39,995,000 and 39,998,500 shares authorized as of September 30, 2021, and December 31, 2020, respectively; |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A convertible preferred stock, par value $0.0001; 60,000,000 shares authorized; 56,464,123 and 60,000,000 shares issued and outstanding as of September 30, 2021, and December 31, 2020, respectively |
|
| 5,646 |
|
|
| 6,000 |
|
|
|
|
|
|
|
|
|
|
Class B convertible preferred stock, par value $0.0001; 1,500 shares authorized; 123 shares issued and outstanding as of September 30, 2021, and December 31, 2020, respectively |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Class C convertible preferred stock, par value $0.0001; 1,500 and no shares authorized as of September 30, 2021, and December 31, 2020, respectively; 760 and no shares issued and outstanding as of September 30, 2021, and December 31, 2020, respectively |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Class D convertible preferred stock, par value $0.0001; 2,000 and no shares authorized as of September 30, 2021, and December 31, 2020, respectively; 2,000 and no shares issued and outstanding as of September 30, 2021, and December 31, 2020, respectively |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Common stock, par value $0.0001; 5,000,000,000 shares authorized; 49,004,946 and 33,075,711 shares issued and outstanding as of September 30, 2021, and December 31, 2020, respectively |
|
| 4,900 |
|
|
| 3,308 |
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
| 85,197,685 |
|
|
| 78,132,202 |
|
Accumulated deficit |
|
| (84,335,533 | ) |
|
| (80,785,887 | ) |
Total Singlepoint Inc. stockholders' equity (deficit) |
|
| 872,698 |
|
|
| (2,644,377 | ) |
Non-controlling interest |
|
| (773,427 | ) |
|
| (553,799 | ) |
Total Stockholders' Equity (Deficit) |
|
| 99,271 |
|
|
| (3,198,176 | ) |
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity (Deficit) |
| $ | 4,209,998 |
|
| $ | 2,915,680 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Table of Contents |
SINGLEPOINT INC. AND SUBSIDIARIES | |||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
| For the Three Months Ended |
|
| For the Nine Months Ended |
| |||||||||||||
|
| September 30, 2021 |
|
| September 30, 2020 |
|
| September 30, 2021 |
|
| September 30, 2020 |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
REVENUE |
| $ | 273,877 |
|
| $ | 1,025,129 |
|
| $ | 967,712 |
|
| $ | 2,495,628 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Cost of Revenue |
|
| 217,923 |
|
|
| 796,459 |
|
|
| 824,994 |
|
|
| 1,852,661 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Gross profit |
|
| 55,954 |
|
|
| 228,670 |
|
|
| 142,718 |
|
|
| 642,967 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Consulting fees |
|
| 8,101 |
|
|
| 75,477 |
|
|
| 136,976 |
|
|
| 249,414 |
| |||
Professional and legal fees |
|
| 496,230 |
|
|
| 75,732 |
|
|
| 854,768 |
|
|
| 247,346 |
| |||
Investor relations |
|
| 153,495 |
|
|
| 25,816 |
|
|
| 432,451 |
|
|
| 88,968 |
| |||
General and administrative |
|
| 926,176 |
|
|
| 651,341 |
|
|
| 2,490,732 |
|
|
| 2,031,870 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Operating expenses |
|
| 1,584,002 |
|
|
| 828,366 |
|
|
| 3,914,927 |
|
|
| 2,617,598 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
LOSS FROM OPERATIONS |
|
| (1,528,048 | ) |
|
| (599,696 | ) |
|
| (3,772,209 | ) |
|
| (1,974,631 | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Interest expense |
|
| (39,953 | ) |
|
| (126,143 | ) |
|
| (107,722 | ) |
|
| (355,653 | ) | |||
Amortization of debt discounts |
|
| 0 |
|
|
| (710,314 | ) |
|
| 0 |
|
|
| (1,789,688 | ) | |||
Gain (loss) on settlement of debt |
|
| 626,349 |
|
|
| 0 |
|
|
| 474,622 |
|
|
| (41,264 | ) | |||
Warrant Expense |
|
| (322,338 | ) |
|
| 0 |
|
|
| (322,338 | ) |
|
| 0 |
| |||
Gain (loss) on change in fair value of derivative liability and equity securities |
|
| 0 |
|
|
| 600,497 |
|
|
| (41,627 | ) |
|
| 183,199 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Other income (expense) |
|
| 264,058 |
|
|
| (235,960 | ) |
|
| 2,935 |
|
|
| (2,003,406 | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
INCOME (LOSS) BEFORE INCOME TAXES |
|
| (1,263,990 | ) |
|
| (835,656 | ) |
|
| (3,769,273 | ) |
|
| (3,978,037 | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Income taxes |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
NET INCOME (LOSS) |
|
| (1,263,990 | ) |
|
| (835,656 | ) |
|
| (3,769,273 | ) |
|
| (3,978,037 | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Loss (income) attributable to non-controlling interests |
|
| (145,437 | ) |
|
| 72,211 |
|
|
| 219,628 |
|
|
| 268,371 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
NET INCOME (LOSS) ATTRIBUTABLE TO SINGLEPOINT INC. STOCKHOLDERS |
| $ | (1,409,427 | ) |
| $ | (763,445 | ) |
| $ | (3,549,645 | ) |
| $ | (3,709,666 | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net income (loss) per share - basic |
| $ | (0.03 | ) |
| $ | (0.03 | ) |
| $ | (0.09 | ) |
| $ | (0.15 | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Weighted average number of common shares outstanding - basic |
|
| 47,313,641 |
|
|
| 24,919,202 |
|
|
| 40,091,601 |
|
|
| 23,969,671 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5 |
Table of Contents |
SINGLEPOINT INC. AND SUBSIDIARIES | ||||||||
(Unaudited) | ||||||||
|
|
|
|
| ||||
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||
|
|
|
|
|
|
| ||
ASSETS |
|
|
|
|
|
| ||
CURRENT ASSETS: |
|
|
|
|
|
| ||
Cash |
| $ | 1,691,686 |
|
| $ | 198,473 |
|
Accounts receivable |
|
| 17,448 |
|
|
| 3,368 |
|
Prepaid expenses |
|
| 78,744 |
|
|
| 4,834 |
|
Inventory |
|
| 284,314 |
|
|
| 63,456 |
|
Current portion of deferred compensation, net of discount |
|
| 203,758 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Total Current Assets |
|
| 2,275,950 |
|
|
| 270,131 |
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Property, net |
|
| 64,726 |
|
|
| 79,167 |
|
Investment, at fair value |
|
| 582,010 |
|
|
| 623,637 |
|
Intangible assets, net |
|
| 45,375 |
|
|
| 49,005 |
|
Goodwill |
|
| 2,468,740 |
|
|
| 1,893,740 |
|
Deferred compensation, net of current portion |
|
| 135,840 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Total Assets |
| $ | 5,572,641 |
|
| $ | 2,915,680 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Accounts payable, including related party |
| $ | 652,825 |
|
| $ | 245,362 |
|
Accrued expenses, including accrued officer salaries |
|
| 1,160,315 |
|
|
| 1,661,208 |
|
Current portion of convertible notes payable, net of debt discount |
|
| 10,500 |
|
|
| 2,434,226 |
|
Capital lease obligations, current portion |
|
| 45,610 |
|
|
| 51,365 |
|
Advances from related party |
|
| 1,174,339 |
|
|
| 1,151,946 |
|
Short-term notes payable |
|
| 880,108 |
|
|
| 372,232 |
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
| 3,923,697 |
|
|
| 5,916,339 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES: |
|
|
|
|
|
|
|
|
Convertible notes payable, net of current portion |
|
| - |
|
|
| - |
|
Capital lease obligations, net of current portion |
|
| 37,419 |
|
|
| 47,517 |
|
Long-term notes payable |
|
| 285,840 |
|
|
| 150,000 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
| 4,246,956 |
|
|
| 6,113,856 |
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Undesignated preferred stock, par value $0.0001; 39,995,000 and 39,998,500 shares authorized as of March 31, 2021, and December 31, 2020, respectively; |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A convertible preferred stock, par value $0.0001; 60,000,000 shares authorized; 59,000,000 and 60,000,000 shares issued and outstanding as of March 31, 2021, and December 31, 2020, respectively |
|
| 5,900 |
|
|
| 6,000 |
|
|
|
|
|
|
|
|
|
|
Class B convertible preferred stock, par value $0.0001; 1,500 shares authorized; 408 shares issued and outstanding as of March 31, 2021, and December 31, 2020, respectively |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Class C convertible preferred stock, par value $0.0001; 1,500 and no shares authorized as of March 31, 2021, and December 31, 2020, respectively; 760 and no shares issued and outstanding as of March 31, 2021, and December 31, 2020, respectively |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Class D convertible preferred stock, par value $0.0001; 2,000 and no shares authorized as of March 31, 2021, and December 31, 2020, respectively; 1,500 and no shares issued and outstanding as of March 31, 2021, and December 31, 2020, respectively |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Common stock, par value $0.0001; 5,000,000,000 shares authorized; 35,377,395 and 33,075,711 shares issued and outstanding as of March 31, 2021, and December 31, 2020, respectively |
|
| 3,538 |
|
|
| 3,308 |
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
| 84,017,072 |
|
|
| 78,132,202 |
|
Accumulated deficit |
|
| (81,927,618 | ) |
|
| (80,785,887 | ) |
Total Singlepoint Inc. stockholders' equity |
|
| 2,098,892 |
|
|
| (2,644,377 | ) |
Non-controlling interest |
|
| (773,207 | ) |
|
| (553,799 | ) |
Total Stockholders' Equity |
|
| 1,325,685 |
|
|
| (3,198,176 | ) |
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity |
| $ | 5,572,641 |
|
| $ | 2,915,680 |
|
SINGLEPOINT INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
|
| Preferred Stock Class A Par Value $0.0001 |
|
| Preferred Stock Class B Par Value $0.0001 |
|
| Preferred Stock Class C Par Value $0.0001 |
|
| Preferred Stock Class D Par Value $0.0001 |
|
| Common Stock Par Value $0.0001 |
|
| Additional |
|
|
|
| Non- |
|
| Total Stockholders' |
| ||||||||||||||||||||||||||||||
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| paid-in Capital |
|
| Accumulated Deficit |
|
| controlling Interest |
|
| Equity (Deficit) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Balance, December 31, 2020 |
|
| 60,000,000 |
|
| $ | 6,000 |
|
|
| 408 |
|
| $ | - |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 33,075,711 |
|
| $ | 3,308 |
|
| $ | 78,132,202 |
|
| $ | (80,785,887 | ) |
| $ | (553,799 | ) |
| $ | (3,198,176 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 133,334 |
|
|
| 13 |
|
|
| 53,853 |
|
|
|
|
|
|
|
|
|
|
| 53,866 |
|
Issuance of common shares for services previously accrued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 87,776 |
|
|
| 9 |
|
|
| 51,266 |
|
|
|
|
|
|
|
|
|
|
| 51,275 |
|
Issuance of preferred shares for cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 760 |
|
|
| 0 |
|
|
| 2,000 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
| 2,760,000 |
|
|
|
|
|
|
|
|
|
|
| 2,760,000 |
|
Issuance of common shares for acquisition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 168,350 |
|
|
| 17 |
|
|
| 499,983 |
|
|
|
|
|
|
|
|
|
|
| 500,000 |
|
Issuance of common shares for principal and accrued interest on notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,096,321 |
|
|
| 210 |
|
|
| 3,378,576 |
|
|
|
|
|
|
|
|
|
|
| 3,378,786 |
|
Conversion of preferred shares |
|
| (3,535,877 | ) |
|
| (354 | ) |
|
| (285 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 7,474,111 |
|
|
| 747 |
|
|
| (111 | ) |
|
|
|
|
|
|
|
|
|
| 282 |
|
Warrants converted to common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,225,000 |
|
|
| 422 |
|
|
| 321,916 |
|
|
|
|
|
|
|
|
|
|
| 322,338 |
|
Rounding adjustment in connection with reverse split |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,744,343 |
|
|
| 174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3,549,646 | ) |
|
| (219,628 | ) |
|
| (3,769,274 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2021 |
|
| 56,464,123 |
|
| $ | 5,646 |
|
|
| 123 |
|
| $ | 0 |
|
|
| 760 |
|
|
| 0 |
|
|
| 2,000 |
|
|
| 0 |
|
|
| 49,004,946 |
|
| $ | 4,900 |
|
| $ | 85,197,685 |
|
| $ | (84,335,533 | ) |
| $ | (773,427 | ) |
| $ | 99,271 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6 |
Table of Contents |
SINGLEPOINT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(Unaudited)
|
| Preferred Stock Par Value $0.0001 |
|
| Common Stock Par Value $0.0001 |
|
| Additional |
|
|
|
|
|
| Total |
| ||||||||||||||||
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| paid-in Capital |
|
| Accumulated Deficit |
|
| Noncontrolling Interest |
|
| Stockholders' Deficit |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Balance, December 31, 2019 |
|
| 54,200,000 |
|
| $ | 5,420 |
|
|
| 22,643,731 |
|
| $ | 2,264 |
|
| $ | 72,377,957 |
|
| $ | (76,752,170 | ) |
| $ | (143,011 | ) |
| $ | (4,509,540 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for services |
|
|
|
|
|
|
|
|
|
| 200,000 |
|
|
| 20 |
|
|
| 117,980 |
|
|
|
|
|
|
|
|
|
|
| 118,000 |
|
Issuance of common shares pursuant to investment agreement |
|
|
|
|
|
|
|
|
|
| 946,501 |
|
|
| 95 |
|
|
| 216,289 |
|
|
|
|
|
|
|
|
|
|
| 216,384 |
|
Issuance of common shares for acquision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
Issuance of common shares for principal and accrued interest on convertible notes |
|
|
|
|
|
|
|
|
|
| 1,584,185 |
|
|
| 158 |
|
|
| 325,059 |
|
|
|
|
|
|
|
|
|
|
| 325,217 |
|
Issuance of preferred shares for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of preferred shares |
|
| (1,600,000 | ) |
|
| (160 | ) |
|
| 533,333 |
|
|
| 53 |
|
|
| 107 |
|
|
|
|
|
|
|
|
|
|
| - |
|
Warrants issued with convertible notes payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement of derivative liability due to debt conversion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 381,102 |
|
|
|
|
|
|
|
|
|
|
| 381,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3,709,666 | ) |
|
| (268,371 | ) |
|
| (3,978,037 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2020 |
|
| 52,600,000 |
|
| $ | 5,260 |
|
|
| 25,907,750 |
|
| $ | 2,590 |
|
| $ | 73,418,494 |
|
| $ | (80,461,836 | ) |
| $ | (411,382 | ) |
| $ | (7,446,874 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7 |
Table of Contents |
SINGLEPOINT INC. AND SUBSIDIARIES | ||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
(Unaudited) | ||||||||||||||
|
| For the Nine Months Ended |
| |||||||||||
|
| September 30, 2021 |
|
| September 30, 2020 |
| ||||||||
|
|
|
|
|
|
| ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
| ||||||||
Net loss attributable to Singlepoint Inc. stockholders |
| $ | (3,549,646 | ) |
| $ | (3,709,666 | ) | ||||||
|
|
|
|
|
|
|
|
| ||||||
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
|
|
|
| ||||||
Loss attributable to non-controlling interests |
|
| (219,628 | ) |
|
| (268,371 | ) | ||||||
Gain on disposal of subsidiary |
|
| 0 |
|
|
| 0 |
| ||||||
Common stock issued for services |
|
| 105,141 |
|
|
| 118,000 |
| ||||||
Depreciation |
|
| 36,823 |
|
|
| 43,323 |
| ||||||
Amortization of intangibles |
|
| 10,890 |
|
|
| 19,965 |
| ||||||
Amortization of debt discounts |
|
| 10,474 |
|
|
| 1,789,688 |
| ||||||
Amortization of deferred compensation |
|
| 90,559 |
|
|
| 0 |
| ||||||
Loss on change in fair value of equity securities |
|
| 41,627 |
|
|
| (183,199 | ) | ||||||
(Gain) loss on debt settlement |
|
| (474,622 | ) |
|
| 41,264 |
| ||||||
Common Stock issued for Warrants |
|
| 322,338 |
|
|
| 0 |
| ||||||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
| ||||||
Accounts receivable |
|
| (415,608 | ) |
|
| 39,085 |
| ||||||
Prepaid expenses |
|
| (51,995 | ) |
|
| 19,593 |
| ||||||
Inventory |
|
| (68,180 | ) |
|
| 38,757 |
| ||||||
Accounts payable |
|
| 462,606 |
|
|
| 4,541 |
| ||||||
Accrued expenses |
|
| 47,804 |
|
|
| 648,042 |
| ||||||
|
|
|
|
|
|
|
|
| ||||||
NET CASH USED IN OPERATING ACTIVITIES |
|
| (3,651,416 | ) |
|
| (1,398,978 | ) | ||||||
|
|
|
|
|
|
|
|
| ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
| ||||||
Cash received for return on investment |
|
|
|
|
|
| 25,000 |
| ||||||
Cash paid for acquisition related expenses |
|
| (25,000 | ) |
|
|
|
| ||||||
Cash paid for property, plant and equipment |
|
| (16,702 | ) |
|
| 0 |
| ||||||
|
|
|
|
|
|
|
|
| ||||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES |
|
| (41,702 | ) |
|
| 25,000 |
| ||||||
|
|
|
|
|
|
|
|
| ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
| ||||||
Proceeds from sale of common stock |
|
| 0 |
|
|
| 216,384 |
| ||||||
Proceeds from advances from related party |
|
| 214,083 |
|
|
| 355,000 |
| ||||||
Proceeds from short-term notes payable |
|
| 311,070 |
|
|
| 332,737 |
| ||||||
Proceeds from long-term notes payable |
|
| 1,500,000 |
|
|
| 150,000 |
| ||||||
Payments on advances to related party |
|
| (21,523 | ) |
|
| 0 |
| ||||||
Payments on convertible notes payable |
|
| (75,000 | ) |
|
| (25,000 | ) | ||||||
Payments on capital lease obligations |
|
| (41,652 | ) |
|
| (43,410 | ) | ||||||
Proceeds from issuance of convertible notes |
|
| 0 |
|
|
| 320,500 |
| ||||||
Payments on notes payable |
|
| (286,518 | ) |
|
| 0 |
| ||||||
Proceeds from sale of preferred stock - Class C |
|
| 760,000 |
|
|
| 0 |
| ||||||
Proceeds from sale of preferred stock - Class D |
|
| 2,000,000 |
|
|
| 0 |
| ||||||
|
|
|
|
|
|
|
|
| ||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES |
|
| 4,360,460 |
|
|
| 1,306,211 |
| ||||||
|
|
|
|
|
|
|
|
| ||||||
NET CHANGE IN CASH |
|
| 667,342 |
|
|
| (67,767 | ) | ||||||
|
|
|
|
|
|
|
|
| ||||||
Cash at beginning of period |
|
| 198,473 |
|
|
| 110,128 |
| ||||||
|
|
|
|
|
|
|
|
| ||||||
Cash at end of period |
| $ | 865,815 |
|
| $ | 42,361 |
| ||||||
|
|
|
|
|
|
|
|
| ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: |
|
|
|
|
|
|
|
| ||||||
Interest paid |
| $ | 7,072 |
|
| $ | 0 |
| ||||||
Income tax paid |
| $ | 0 |
|
| $ | 0 |
| ||||||
|
|
|
|
|
|
|
|
| ||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
| ||||||
Common stock issued for accrued interest |
| $ | 0 |
|
| $ | 4,982 |
| ||||||
Non-cash consideration given for acquisitions through issuance of common stock and notes payable |
| $ | 550,000 |
|
| $ | 0 |
| ||||||
Original issue discount from issuance of notes payable |
| $ | 0 |
|
| $ | 39,500 |
| ||||||
Common stock issued for conversion of debt and accrued interest |
| $ | 0 |
|
| $ | 325,217 |
| ||||||
Recognition of debt discount attributable to derivative liability |
| $ | 0 |
|
| $ | 984,801 |
| ||||||
Derivative liability settlements |
| $ | 0 |
|
| $ | 381,102 |
| ||||||
Conversion of preferred stock to common stock |
| $ | 107 |
|
| $ | 4,000 |
| ||||||
Derivative liability recognized from convertible debt |
| $ | 0 |
|
| $ | 1,133,240 |
| ||||||
Inventory transferred to Related Party for Note Receivable |
| $ | 63,456 |
|
| $ | 0 |
| ||||||
Investment in Jacksam transferred for reduction in Related Party debt |
| $ | 547,010 |
|
| $ | 0 |
| ||||||
Non-cash portion of termination agreement removing accrued compensation and Related Party debt in exchange for stock and new Related Party note |
| $ | 1,234,052 |
|
| $ | 0 |
| ||||||
Deferred stock compensation recognized for acquisitions |
| $ | 450,000 |
|
| $ | 0 |
| ||||||
Discount recognized on deferred stock compensation for acquisitions |
| $ | 110,402 |
|
| $ | 0 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
SINGLEPOINT INC. AND SUBSIDIARIES | |||||||||
(Unaudited) | |||||||||
|
|
|
|
|
|
| |||
|
| For the Three Months Ended |
| ||||||
|
| March 31, 2021 |
|
| March 31, 2020 |
| |||
|
|
|
|
|
|
| |||
|
|
|
|
|
|
| |||
REVENUE |
| $ | 239,013 |
|
| $ | 1,075,222 |
| |
|
|
|
|
|
|
|
|
| |
Cost of Revenue |
|
| 304,739 |
|
|
| 765,608 |
| |
|
|
|
|
|
|
|
|
| |
Gross profit |
|
| (65,726 | ) |
|
| 309,614 |
| |
|
|
|
|
|
|
|
|
| |
OPERATING EXPENSES: |
|
|
|
|
|
|
|
| |
Consulting fees |
|
| 60,331 |
|
|
| 137,016 |
| |
Professional and legal fees |
|
| 121,557 |
|
|
| 74,818 |
| |
Investor relations |
|
| 167,355 |
|
|
| 43,784 |
| |
General and administrative |
|
| 697,450 |
|
|
| 690,972 |
| |
|
|
|
|
|
|
|
|
| |
Operating expenses |
|
| 1,046,693 |
|
|
| 946,590 |
| |
|
|
|
|
|
|
|
|
| |
LOSS FROM OPERATIONS |
|
| (1,112,419 | ) |
|
| (636,976 | ) | |
|
|
|
|
|
|
|
|
| |
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
| |
Interest expense |
|
| (55,366 | ) |
|
| (127,330 | ) | |
Amortization of debt discounts |
|
| - |
|
|
| (448,290 | ) | |
Loss on settlement of debt |
|
| (151,727 | ) |
|
| (41,264 | ) | |
Gain (loss) on change in fair value of derivative liability and equity securities |
|
| (41,627 | ) |
|
| (708,932 | ) | |
|
|
|
|
|
|
|
|
| |
Other income (expense) |
|
| (248,720 | ) |
|
| (1,325,816 | ) | |
|
|
|
|
|
|
|
|
| |
INCOME (LOSS) BEFORE INCOME TAXES |
|
| (1,361,139 | ) |
|
| (1,962,792 | ) | |
|
|
|
|
|
|
|
|
| |
Income taxes |
|
| - |
|
|
| - |
| |
|
|
|
|
|
|
|
|
| |
NET INCOME (LOSS) |
|
| (1,361,139 | ) |
|
| (1,962,792 | ) | |
|
|
|
|
|
|
|
|
| |
Loss (income) attributable to non-controlling interests |
|
| 219,408 |
|
|
| 42,361 |
| |
|
|
|
|
|
|
|
|
| |
NET INCOME (LOSS) ATTRIBUTABLE TO SINGLEPOINT INC. STOCKHOLDERS |
| $ | (1,141,731 | ) |
| $ | (1,920,431 | ) | |
|
|
|
|
|
|
|
|
| |
Net income (loss) per share - basic |
| $ | (0.03 | ) |
| $ | (0.08 | ) | |
|
|
|
|
|
|
|
|
| |
Weighted average number of common shares outstanding - basic |
|
| 34,587,638 |
|
|
| 22,903,450 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
SINGLEPOINT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
|
| Preferred Stock Class A Par Value $0.0001 |
|
| Preferred Stock Class B Par Value $0.0001 |
|
| Preferred Stock Class C Par Value $0.0001 |
|
| Preferred Stock Class D Par Value $0.0001 |
|
| Common Stock Par Value $0.0001 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| Additional paid-in Capital |
|
| Accumulated Deficit |
|
| Non- controlling Interest |
|
| Total Stockholders' Equity |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Balance, December 31, 2020 |
|
| 60,000,000 |
|
| $ | 6,000 |
|
|
| 408 |
|
| $ | - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 33,075,711 |
|
| $ | 3,308 |
|
| $ | 78,132,202 |
|
| $ | (80,785,887 | ) |
| $ | (553,799 | ) |
| $ | (3,198,176 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 66,667 |
|
|
| 7 |
|
|
| 17,993 |
|
|
|
|
|
|
|
|
|
|
| 18,000 |
|
Issuance of preferred shares for cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 760 |
|
|
| - |
|
|
| 1,500 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
| 2,260,000 |
|
|
|
|
|
|
|
|
|
|
| 2,260,000 |
|
Issuance of common shares for acquisition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 168,350 |
|
|
| 17 |
|
|
| 499,983 |
|
|
|
|
|
|
|
|
|
|
| 500,000 |
|
Issuance of common shares for principal and accrued interest on convertible notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,733,333 |
|
|
| 173 |
|
|
| 3,106,827 |
|
|
|
|
|
|
|
|
|
|
| 3,107,000 |
|
Conversion of preferred shares |
|
| (1,000,000 | ) |
|
| (100 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 333,333 |
|
|
| 33 |
|
|
| 67 |
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,141,731 | ) |
|
| (219,408 | ) |
|
| (1,361,139 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2021 |
|
| 59,000,000 |
|
| $ | 5,900 |
|
|
| 408 |
|
| $ | - |
|
|
| 760 |
|
|
| - |
|
|
| 1,500 |
|
|
| - |
|
|
| 35,377,395 |
|
| $ | 3,538 |
|
| $ | 84,017,072 |
|
| $ | (81,927,618 | ) |
| $ | (773,207 | ) |
| $ | 1,325,685 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Table of Contents |
SINGLEPOINT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
|
| Preferred Stock Class A Par Value $0.0001 |
|
| Preferred Stock Class B Par Value $0.0001 |
|
| Preferred Stock Class C Par Value $0.0001 |
|
| Preferred Stock Class D Par Value $0.0001 |
|
| Common Stock Par Value $0.0001 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| Additional paid-in Capital |
|
| Accumulated Deficit |
|
| Non-controlling Interest |
|
| Total Stockholders' Equity |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Balance, December 31, 2019 |
|
| 54,200,000 |
|
| $ | 5,420 |
|
|
| - |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
|
| 22,643,731 |
|
| $ | 2,264 |
|
| $ | 72,377,957 |
|
| $ | (76,752,170 | ) |
| $ | (143,011 | ) |
| $ | (4,509,540 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 200,000 |
|
|
| 20 |
|
|
| 117,980 |
|
|
|
|
|
|
|
|
|
|
| 118,000 |
|
Issuance of common shares for services previously accrued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for acquisition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for principal and accrued interest on convertible notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 427,127 |
|
|
| 43 |
|
|
| 78,378 |
|
|
|
|
|
|
|
|
|
|
| 78,421 |
|
Issuance of preferred shares for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of preferred shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued with convertible notes payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement of derivative liability due to debt conversion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 158,673 |
|
|
|
|
|
|
|
|
|
|
| 158,673 |
|
Disposal of subsidiary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,920,431 | ) |
|
| (42,361 | ) |
|
| (1,962,792 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2020 |
|
| 54,200,000 |
|
| $ | 5,420 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 23,270,858 |
|
| $ | 2,327 |
|
| $ | 72,732,988 |
|
| $ | (78,672,601 | ) |
| $ | (185,372 | ) |
| $ | (6,117,238 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
SINGLEPOINT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| For the Three Months Ended |
| |||||
|
| March 31, 2021 |
|
| March 31, 2020 |
| ||
|
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
| ||
Net loss attributable to Singlepoint Inc. stockholders |
| $ | (1,141,731 | ) |
| $ | (1,920,431 | ) |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
|
|
|
|
Loss attributable to non-controlling interests |
|
| (219,408 | ) |
|
| (42,361 | ) |
Common stock issued for services |
|
| 18,000 |
|
|
| 118,000 |
|
Depreciation |
|
| 14,441 |
|
|
| 14,441 |
|
Amortization of intangibles |
|
| 3,630 |
|
|
| - |
|
Amortization of debt discounts |
|
| - |
|
|
| 448,290 |
|
Loss on change in fair value of equity securities |
|
| 41,627 |
|
|
| 708,932 |
|
(Gain) loss on debt settlement |
|
| 151,727 |
|
|
| 41,264 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| (14,080 | ) |
|
| 29,509 |
|
Prepaid expenses |
|
| (73,910 | ) |
|
| (451 | ) |
Inventory |
|
| (220,858 | ) |
|
| 6,224 |
|
Accounts payable |
|
| 407,463 |
|
|
| (1,321 | ) |
Accrued expenses |
|
| 35,217 |
|
|
| 201,933 |
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN OPERATING ACTIVITIES |
|
| (997,882 | ) |
|
| (395,971 | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Cash paid for acquisition |
|
| (25,000 | ) |
|
| - |
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES |
|
| (25,000 | ) |
|
| - |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from sale of common stock |
|
| - |
|
|
| - |
|
Proceeds from advances from related party |
|
| 28,749 |
|
|
| 226,800 |
|
Proceeds from short-term notes payable |
|
| 311,070 |
|
|
| - |
|
Payments on advances to related party |
|
| (6,356 | ) |
|
| - |
|
Payments on convertible notes payable |
|
| (25,000 | ) |
|
| (25,000 | ) |
Payments on capital lease obligations |
|
| (15,853 | ) |
|
| (13,878 | ) |
Proceeds from issuance of convertible notes |
|
| - |
|
|
| 320,500 |
|
Payments on notes payable |
|
| (36,515 | ) |
|
| - |
|
Proceeds from sale of preferred stock - Class C |
|
| 760,000 |
|
|
| - |
|
Proceeds from sale of preferred stock - Class D |
|
| 1,500,000 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES |
|
| 2,516,095 |
|
|
| 508,422 |
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH |
|
| 1,493,213 |
|
|
| 112,451 |
|
|
|
|
|
|
|
|
|
|
Cash at beginning of period |
|
| 198,473 |
|
|
| 110,128 |
|
|
|
|
|
|
|
|
|
|
Cash at end of period |
| $ | 1,691,686 |
|
| $ | 222,579 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: |
|
|
|
|
|
|
|
|
Interest paid |
| $ | - |
|
| $ | - |
|
Income tax paid |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Common stock issued for accrued interest |
| $ | - |
|
| $ | 3,185 |
|
Non-cash consideration given for acquisitions through issuance of common stock and notes payable |
| $ | 550,000 |
|
| $ | - |
|
Original issue discount from issuance of notes payable |
| $ | - |
|
| $ | 39,500 |
|
Common stock issued for conversion of debt and accrued interest |
| $ | - |
|
| $ | 78,421 |
|
Derivative liability settlements |
| $ | - |
|
| $ | 158,673 |
|
Conversion of preferred stock to common stock |
| $ | 100 |
|
| $ | - |
|
Derivative liability recognized from convertible debt |
| $ | - |
|
| $ | 873,176 |
|
Deferred stock compensation recognized for acquisitions |
| $ | 450,000 |
|
| $ | - |
|
Discount recognized on deferred stock compensation for acquisitions |
| $ | 110,402 |
|
| $ | - |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
SINGLEPOINT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -– ORGANIZATION AND NATURE OF BUSINESS
Corporate History
Carbon Credits International Inc. (“CCII”), which was formed on October 15, 2007 as a Nevada corporation, was the result of a spin off from Carbon Credits Industries, Inc. (“CCI”), its former parent issuer, on October 17, 2007. On December 23, 2011, CCII entered into a merger agreement with Lifestyle Wireless, Inc. (“LWI”), a Washington Corporation, with CCII remaining as the surviving company. The effective date of the merger was January 10, 2012. On July 1, 2013, CCII changed its name toMay 14, 2019, Singlepoint Inc. (“Singlepoint” or “the Company”). On May 14, 2019, the Company established a subsidiary, Singlepoint Direct Solar LLC (“Direct Solar America”), completing the acquisition of certain assets of Direct Solar AmericaLLC and AI Live Transfers LLC (See Note 3). The Company owns Fifty One Percent (51%) of the membership interests of Direct Solar America. On January 26, 2021 the Company entered into a purchase agreement to acquireacquired 100% ownership of EnergyWyze, LLC, a limited liability company (“EnergyWyze”) (See Note 3). On February 12, 2021, the Company purchased 51% ownership of Box Pure Air, LLC, a Delaware limited liability company (“Box Pure Air”) (See Note 3).
Business
We are a company focused on providing renewable energy solutions and energy-efficient applications to drive better health and living. We currently have core subsidiaries includingspecialized in solar energy and air purification. We built our portfolio through synergistic acquisitions, products, and partnerships to provide a rich, diversified holding base.partnerships. The Company’s initial focus is on solar energy and we are committed to building a foundation for future expansion opportunities and building brands based onenergy. Through technology solutions we believe we will increase efficiencies across various markets. We strive to create long-term value for our shareholders by helping our partner companies to increase their market penetration, grow revenue and improve cash flow. As of March 31,September 30, 2021 we currently have five subsidiaries, Energy WyzeEnergyWyze LLC, 100% interest, Box Pure Air, 51% interest, Direct Solar America, 51% interest, Discount Indoor Garden Supply, Inc. (“DIGS”), 90% interest),interest, and ShieldSaver, LLC (“ShieldSaver”), 51% interest).interest. Our principal offices are located at 2999 North 44th Street Suite 530, Phoenix, AZ 85018, telephone: (888) 682-7464. We haveIn April 2021, we formalized and completed the spin-off of 1606 Corp. We intendedintend to spin-off additional assets or non-core subsidiaries in the future.
Going Concern
The financial statements have been prepared assuming that the Company will continue as a going concern. As of March 31,September 30, 2021, the Company has yet to achieve profitable operations and is dependent on its ability to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company’s ability to continue in existence is dependent on the Company’s ability to develop the Company’s businesses and to achieve profitable operations. Since the Company doeshas not anticipate achievingyet achieved profitable operations and/or adequate cash flows, in the near term, management will continue to pursue additional debt and equity financing through private placements of the Company’s common stock.financing.
9 |
Table of Contents |
NOTE 2 -– BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidatedfinancial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly our consolidated financial position as of March 31,September 30, 2021 and December 31, 2020, and the results of our consolidated operations for the interim periods presented. We follow the same accounting policies when preparing quarterly financial data as we use for preparing annual data. These statements should be read in conjunction with the consolidated financial statements and the notes included in our latest annual report on Form 10-K for the year ended December 31, 2020, and our other reports on file with the Securities and Exchange Commission (“SEC”).
Principles of Consolidation
The consolidated financial statements include the accounts of Singlepoint, DIGS, Direct Solar America, ShieldSaver, EnergyWyze, and Box Pure Air, EnergyWyze, DIGS, and ShieldSaver as of March 31,September 30, 2021 and December 31, 2020, and for the three and nine months ended March 31, 2021.September 30, 2021 and 2020. All significant intercompany transactions have been eliminated in consolidationconsolidation.
On April 7, 2021 we completed the spin-off of 1606 Corp. whereby each holder of common stock and Class A Preferred Stock of the Company received one share of unregistered and restricted common stock and Class A Preferred Stock of 1606 Corp. for each such share owned of the Company. Inventory of $63,456 went to 1606 Corp. in exchange for a note receivable. All 1606 Corp. brand, web, social, and media content, were included with the spin out for the business to be a fully operational entity at time of completion.
Reverse Stock-split
On March 26, 2021, we affected a 1 for 75 reverse stock split of our common stock. At the effective time of the reverse stock split, every 75 shares of issued and outstanding common stock waswere converted into one (1) share of issued and outstanding common stock. The number of authorized shares and the par value per share of the common stock and the number of authorized or issued and outstanding shares of the Company’s preferred stock remained unchanged. The reverse stock split did not cause an adjustment to the par value or the authorized shares of the common stock. As a result of the reverse stock split, the Company further adjusted the share amounts under its employee incentive plan which had no outstanding options and common stock warrant agreements with third parties. All disclosures of common shares and per common share data in the accompanying financial statements and related notes reflect this reverse stock split for all periods presented.
Revenues
The Company records revenue under the adoption of ASC 606 by analyzing exchanges with its customers using a five-step analysis:
| (1) | identifies the contract(s) with a customer; |
|
|
|
| (2) | identifies the performance obligations in the contract(s); |
|
|
|
| (3) | determines the transaction price; |
|
|
|
| (4) | allocates the transaction price to the performance obligations in the contract(s); and |
|
|
|
| (5) | recognizes revenue when (or as) the entity satisfies a performance obligation. |
10 |
Table of Contents |
The Company incurs costs associated with product distribution, such as freight and handling costs. The Company has elected to treat these costs as fulfillment activities and recognizes these costs at the same time that it recognizes the underlying product revenue. In accordance with ASC 606, the Company recognizes revenue at an amount that reflects the consideration that the Company expects to be entitled to receive in exchange for transferring goods or services to its customers. The Company’s policy is to record revenue when control of the goods transfers to the customer.
The Company uses three categories for disaggregated revenue classification:
| (1) | Retail Sales |
|
|
|
| (2) | Distribution (1606 Corp. and related |
|
|
|
| (3) | Services Revenue (Direct Solar |
Additionally, the Company also disaggregates revenue by subsidiary:
| (1) | Singlepoint (parent company) | |
|
|
| |
| (2) | Direct Solar America | |
|
|
| |
|
| EnergyWyze | |
|
|
| |
|
| Box Pure Air |
|
Retail Sales. Our retail sales include our products sold directly to consumers, with sales recognized upon delivery of the product to the customer, with the customer taking risk of ownership and assuming risk of loss. Payment is due upon delivery. Box Pure Air provides advanced air purification devices to businesses and consumers. DIGS operates an online store and sells nutrients, lights, HVAC systems and other products to consumers. Singleseed provides products through its online portal.
Distribution Revenue. Our distribution revenue includes Singlepoint’sSinglePoint’s 1606 Corp. (through the date of the spin-off) and DIGS and related product sales to third-party resellers with revenue recognized upon delivery of the product to the reseller, with the reseller taking risk of ownership and assuming risk of loss. Payment is due upon delivery or within 30 days of invoicing. Except for when sold directdirectly to the consumer upon which payment is due immediately.
Services Revenue. Our servicesservices’ revenue includes services provided by Direct Solar America, which earns commission revenue for solar services placed with third-party contractors and recognizes revenue upon date of completion of installation. Cash received in advance of contract completion is recognized as deferred revenue until contracts are complete. Singlepoint’scontractors. SinglePoint’s merchant services providesprovide payment services to businesses with revenue recognized upon the close and remittance of commissions each month. ShieldSaver offers business-to businessbusiness-to-business services related to windshield repair and replacement for consumers. EnergyWyze generates and sells marketing leads to the solar industry. Service revenue is recognized as the performance obligations are fulfilled, with the customer taking risk of ownership and assuming risk of loss. Payment for service revenue is generally due upon completion.fulfilled.
11 |
Table of Contents |
Returns and other adjustments
The Company records an estimate for provisions of discounts, returns, allowances, customer rebates and other adjustments for each shipment, and areis netted with gross sales. The Company’s discounts and customer rebates are known at the time of sale and the Company appropriately debits net product revenues for these transactions based on the known discount and customer rebates. The Company estimates for customer returns and allowances based on estimates of historical transactions and accounts for such provisions during the same period in which the related revenues are earned. Customer discounts, returns and rebates on product revenues during the quarter ended March 31,September 30, 2021 are not material.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of ninety days or less at the time of purchase to be cash equivalents. The Company maintains deposits in financial institutions which are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company had deposits in excess of amounts insured by the FDIC as of March 31,September 30, 2021.
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with the Accounting Standards Committee (“ASC”) 815 “Derivatives and Hedging”. It provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or other expense. Upon conversion or exercise of a derivative financial instrument, the instrument is marked to fair value at the conversion date and is reclassified to equity. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of notes redemption
Income Taxes
The Company accounts for its income taxes in accordance with ASC 740 “Income Taxes”Taxes’’, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards.carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. The Company has a net operating loss carryforward,carryforward; however, due to the uncertainty of realization, the Company has provided a full valuation allowance for deferred tax assets resulting from this net operating loss carryforward.
12 |
Table of Contents |
Earnings (loss) Per Common Share
Basic loss per common share has been calculated based upon the weighted average number of common shares outstanding during the period in accordance with the ASC 260-10, “Earnings per Share”. Common stock equivalents are not used in the computation of loss per share, as their effect would be antidilutive. Diluted EPS includes the effect from potential issuance of common stock, including stock issuable pursuant to the assumed exercise of warrants and conversion of convertible notes and Class A Preferred Stock Classes.Stock. Dilutive EPS is computed by dividing net income (loss) by the sum of the weighted average number of common stock outstanding, and the dilutive shares.
The following table summarizes the number of shares of common stock issuable pursuant to our convertible securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive even though the exercise price could be less than the average market price of the common shares:
|
| Three Months |
| Three Months |
|
| Nine Months |
| Nine Months |
| ||||||
|
| Ended |
| Ended |
|
| Ended |
| Ended |
| ||||||
|
| March 31, 2021 |
|
| March 31, 2020 |
|
| September 30, 2021 |
|
| September 30, 2020 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Series A Preferred Stock |
| 1,475,000,000 |
| 1,355,000,000 |
|
| 1,411,603,075 |
| 1,315,000,000 |
| ||||||
Series B Preferred Stock |
| 2,675,410 |
| - |
|
| 806,557 |
| - |
| ||||||
Series C Preferred Stock |
| 747,540 |
| - |
|
| 747,540 |
| - |
| ||||||
Series D Preferred Stock |
| 1,395,349 |
| - |
|
| 1,395,349 |
| - |
| ||||||
Convertible notes |
| 20,000 |
| 18,614,460 |
|
| 20,000 |
| 32,342,396 |
| ||||||
Warrants |
|
| 10,000,000 |
|
|
| 10,000,000 |
|
|
| - |
|
|
| 10,000,000 |
|
Potentially dilutive securities |
|
| 1,489,838,299 |
|
|
| 1,383,614,460 |
|
|
| 1,414,572,521 |
|
|
| 1,357,342,396 |
|
Warrant Settlement
In July 2021 the Company entered into agreements with two entities relating to prior notes held by such entities. These agreements provide for the cancellation of all outstanding warrants and to purchase an aggregate of 5,700,000 shares of common stock of the Company.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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 and assumptions.
Fair Value Measurements
On January 1, 2011, the Company adopted guidance which defines fair value, establishes a framework for using fair value to measure financial assets and liabilities on a recurring basis, and expands disclosures about fair value measurements. Beginning on January 1, 2011, the Company also applied the guidance to non-financial assets and liabilities measured at fair value on a non-recurring basis, which includes goodwill and intangible assets. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:
Level 1 - Valuation is based upon unadjusted quoted market prices for identical assets or liabilities in accessible active markets.
Level 2 - Valuation is based upon quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable in the market.
Level 3 - Valuation is based on models where significant inputs are not observable. The unobservable inputs reflect a company’s own assumptions about the inputs that market participants would use.
The Company’s financial instruments consist of cash, accounts receivable, investments, accounts payable, convertible notes payable, advances from related parties, and derivative liabilities. The estimated fair value of cash, accounts receivable, investments, accounts payable, convertible notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments.
Certain non-financial assets are measured at fair value on a nonrecurring basis. Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic impairment tests.
13 |
Table of Contents |
The Company’s derivative liabilities have been valued as Level 3 instruments.
As of December 31, 2019, the Company had an investment in equity securities that did not have a readily determinable fair value, or “RDFV”. This investment was assessed and measured at fair value that was determined to be zero. As of March 31,September 30, 2021, and December 31, 2020, this investment in equity securities did meet the standards for a RDFV and has been valued as a Level 1 instrument. For the threenine months ended March 31,September 30, 2021, a loss of $41,627 was recognized related to the fair value measurement of these equity securities.
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fair value of convertible notes derivative liability and equity securities – March 31, 2021 |
| $ | 547,010 |
|
| $ | – |
|
| $ | – |
|
| $ | 547,010 |
|
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fair value of convertible notes derivative liability and equity securities – September 30, 2021 |
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fair value of convertible notes derivative liability and equity securities – December 31, 2020 |
| $ | 588,637 |
|
| $ | – |
|
| $ | – |
|
| $ | 588,637 |
|
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fair value of convertible notes derivative liability and equity securities – December 31, 2020 |
| $ | 588,637 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 588,637 |
|
Recently Issued Accounting Pronouncements
There were various other accounting standards and interpretations issued recently, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows. Management has evaluated these new pronouncements through March 31,September 30, 2021.
Subsequent Events
Other than the events described in Note 10, there were no subsequent events that required recognition or disclosure. The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission.
14 |
Table of Contents |
NOTE 3 – INVESTMENTS, ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS
Investments
The Company records certain investments using the cost method. If cost exceeds fair value, an impairment loss is recognized unless the impairment is considered temporary. The Company records investments in equity securities using the fair value method. In certain cases, the equity securities may not meet the criteria for RDFV, then the Company determines the fair value using Black-Scholes calculations with applicable assumptions.
The Company had investments recorded using the cash method of $35,000 as of March 31,September 30, 2021 and December 31, 2020.
The Company had investments in equity securities using the fair value method of $547,010$0 and $588,637 as of March 31,September 30, 2021, and December 31, 2020, respectively. On April 26, 2021, the Company completed a debt reduction through the sale of Jacksam Corporation shares owned by the Company to Greg Lambrecht. No gain or losses were incurred with this debt settlement.
2021 Acquisition – Box Pure Air, LLC
On February 26, 2021, the Company completed the acquisition of 51% of the membership interests in Box Pure Air, LLC. The purchase price consideration for this ownership interest was $500,000 paid with the issuance of 168,350 shares of common stock. The total value of common stock issued was allocated to goodwill pending further assessment and identification of acquired assets.
Total revenue of $151,668,$133,297 and $350,395, net incomeloss of $54,991,($125,884) and ($424,008), and contributed net incomeloss of $28,045($64,201) and ($216,244) after non-controlling interest related to Box Pure Air for the three and nine months ended March 31,September 30, 2021, respectively, are included in the Company’s accompanying consolidated statement of operations.
2021 Acquisition – EnergyWyze, LLC
On January 26, 2021 the Company entered into a purchase agreement to acquire 100% ownership of EnergyWyze, LLC, a limited liability company. The purchase price consideration consisted of the following:
The Company paid $25,000.00$25,000 at closing and the remaining balance of $50,000.00$50,000 in the form of a 180-day Note (the “Seller Note”) to be retired in conjunction with any capital raise associated with the up listing of the Company’s common stock to a national exchange. The Seller Note would be extendable for a period of 90-days at the Company’s option, furthermore the note can be converted at any time into Common Stock during the initial 180-day period based on the 10 Day Volume Weighted Average Price (VWAP) of the Company’s common stock. These two components of the purchase price consideration were allocated to Goodwill pending further assessment and identification of acquired assets. The Company paid the $25,000 at the closing and recorded a Seller Note with a fair value of $50,000 as a short-term liability on the balance sheet as of March 31, 2021. As of September 30, 2021, the Seller Note has been paid in full.
Table of Contents |
The final component of the purchase price consideration consisted of the following:
$450,000.00 USD in Restricted Common Stock of the Company based on the 10 Day VWAP immediately preceding the closing date .date. Such shares are allocated equally, $150,000.00$150,000 USD each, between the principal members of Energy Wyze,EnergyWyze, and will vest over a three-year period. Each principal member must be employed on the vesting date to be awarded the equity award.such shares. The vesting schedule shall be as follows: $50,000.00$50,000 USD shall vest on July 1, 2021, and $100,000.00$100,000 USD, representing the remaining balance, shall be divided into ten equal amounts and will vest on quarterly basis over the next 10 quarters post the initial vesting period of July 1, 2021.
For this component of the acquisition, the Company determined the $450,000 payment represented compensation for post-acquisition services due to the vesting directly tied to the sellers’ employment by the Company. Further, the Company determined that it was “more-likely-than-not” the principal members would remain employed for the 36-month vesting period. The Company determined the fair value of the $450,000 using the Black-Scholes calculation method based on the following criteria:
|
| March 31, 2021 |
|
| March 31, 2021 |
| ||
Dividend yields |
| 0 | % |
| 0 | % | ||
Exercise price based on 10-day VWAP for the common stock |
| $ | 1.47 |
|
| $ | 1.47 |
|
Volatility |
| 136.8 | % |
| 136.8 | % | ||
Risk free rate |
| .018 | % |
| .018 | % |
Based on the Black-Scholes calculation, the purchase consideration price of $450,000 had a fair value of $339,599. The Company recorded the $450,000, net of the initial $110,401 discount as a purchase price liability with an offset to deferred compensation asset. The deferred compensation and the discount amount will be amortized to compensation expense over the 36 months consistent with the vesting schedule set forth in the acquisition agreement. The purchase price liability will be converted to common stock upon issuance of any vested shares.
2019 Asset Acquisition –Direct Solar LLC and AI Live Transfers LLC
On May 14, 2019, the Company, via the formation of Direct Solar America, completed the acquisition of certain assets of Direct Solar LLC and AI Live Transfers LLC (the “Acquired Assets”). The Company owns 51% of the membership interests of Direct Solar America. In connection with the acquisition of these assets the Company issued an aggregate of 2,080,783 (post reverse) shares of common stock. The Company agreed that it shall reinvest into Direct Solar America its portion of distributions of Net Cash Flow (as defined in the Operating Agreement of Direct Solar America), if any, up to $250,000 per quarter, up to a total of $750,000.
The total value of common stock issued for the purchase of the Acquired Assets was $1,966,340 on the issuance date and was allocated to goodwill based on the workforce acquired and to intangible assets based on trademarks and tradenames acquired. The total purchase price for the Acquired Assets was allocated as follows:
Intangible assets |
| $ | 72,600 |
|
Goodwill |
|
| 1,893,740 |
|
Current assets |
|
| - |
|
Current liabilities |
|
| - |
|
Total net assets acquired |
| $ | 1,966,340 |
|
The purchase price consists of the following: |
|
|
|
|
Cash |
|
| - |
|
Common Stock |
|
| 1,966,340 |
|
Total purchase price |
| $ | 1,966,340 |
|
Total revenue of $61,241, net loss of $273,359, and contributed net loss of $139,413.09 after non-controlling interest related to Direct Solar America for the three months ended March 31, 2021 are included in the Company’s accompanying consolidated statement of operations.
Table of Contents |
Goodwill and Intangible Assets
The following table presents details of the Company’s goodwill as of December 31, 2020September 30, 2021 and December 31, 2019:2020:
|
| Direct Solar America |
|
| Goodwill |
| ||
Balances at December 31, 2019: |
| 1,966,340 |
| |||||
Balances at December 31, 2020: |
| $ | 1,893,740 |
| ||||
Aggregate goodwill acquired |
| - |
|
| 575,000 |
| ||
Impairment losses |
| - |
|
| 0 |
| ||
Goodwill adjustment |
|
| (72,600 | ) |
|
| 0 |
|
Balances at December 31, 2020: |
| $ | 1,893,740 |
| ||||
Balances at September 30, 2021: |
| $ | 2,468,740 |
|
The Company periodically reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Specifically, a goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units.
The Company used the discounted cash flow method for the impairment testing as of March 31,September 30, 2021, and December 31, 2020. The Company performed discounted cash flow analysis projected over four years to estimate the fair value of the reporting unit, using management’s best judgement as to revenue growth rates and expense projections. This analysis indicated cash flows (and discounted cash flows) greater than the book value of goodwill. The Company determined there were no indicators of impairment in goodwill during the period ended March 31, 2021, and the year ended December 31, 2020.
During the year ended December 31, 2020, the Company adjusted its goodwill to reflect its final valuation of its goodwill and intangible assets. The adjustment decreased goodwill and increased intangible assets by $72,600, with no effect on total purchase price. The gross intangible assets of $72,600 have an estimated useful life of three years, a net book value of $45,375 as of March 31, 2021 and $49,005 as of December 31, 2020, respectively. The amortization expense for the three months ended March 31, 2021, was $3,630 and $23,595 for the year ended December 31, 2020.September 30, 2021.
Table of Contents |
NOTE 4 -– CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE
Convertible notes payable consisted of the following: |
|
|
|
| ||||
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||
|
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Convertible note payable to investor (the “UAHC Note”) dated October 10, 2017, with interest at 10%, an OID of $70,000, due October 6, 2019, convertible into shares of the Company’s common stock at a discount of 60% of the average of the three lowest closing bid prices of the Company’s common stock during the 20 trading days prior to conversion. The UAHC Note includes a warrant to purchase 5,000,000 shares of the Company’s common stock at a price of $0.10 per share. The UAHC Note is secured by substantially all assets of the Company. The investor converted a total of $37,767 of principal and accrued interest of this note into 37,767,405 shares of the Company’s common stock. This note was amended on October 12, 2020 whereby the maturity due date was extended to December 31, 2022 with monthly payments required commencing October 1, 2020. A final note settlement agreement was executed on January 27, 2021, whereby the Company issued 400,000 shares of common stock to repay the outstanding balance of principal plus accrued interest totaling $681,170. The Company recognized a loss on debt settlement of $35,830. |
|
| - |
|
|
| 581,723 |
|
|
|
|
|
|
|
|
|
|
Convertible note payable to investor (the “Iliad Note”) dated November 5, 2018 totaling $500,000, plus OID of $225,000 and legal fees of $20,000. The Iliad Note bears interest at 10% and matures on November 5, 2020. Total available under note is $5,520,000, including $500,000 OID (and $20,000 in legal fees applied to the first $500,000 tranche). The Iliad Note is convertible into shares of the Company’s common stock after 180 days at a discount of 35% of the average of the three lowest closing bid prices of the Company’s common stock during the 20 trading days prior to conversion. The Company borrowed $1,925,000 (including OID of $175,000) under this note during the year ended December 31, 2019. The investor converted a total of $458,360 of principal and accrued interest of this note into 214,880,617 shares of the Company’s common stock and was repaid $194,637 by the Company during the year ended December 31, 2020. The Iliad Note is secured by substantially all assets of the Company. This note was amended on October 12, 2020 whereby the maturity due date was extended to December 31, 2022 with monthly payments required commencing October 1, 2020. A final note settlement agreement was executed on January 27, 2021, whereby the Company issued 1,333,333 shares of common stock to repay the outstanding balance of principal plus accrued interest totaling $2,253,667. The Company recognized a loss on debt settlement of $136,333. |
|
| - |
|
|
| 1,842,003 |
|
|
|
|
|
|
|
|
|
|
Convertible note payable with an accredited investor dated October 31, 2016, with interest at 0%, due October 31, 2017, convertible at $0.007 per share. This note is currently in default. |
| $ | 10,500 |
|
| $ | 10,500 |
|
Total convertible notes payable |
|
| 10,500 |
|
|
| 2,434,226 |
|
Less debt discounts |
|
| - |
|
|
| - |
|
Convertible notes payable, net |
|
| 10,500 |
|
|
| 2,434,226 |
|
Less current portion of convertible notes, net |
|
| (10,500 | ) |
|
| (2,434,226 | ) |
Long-term convertible notes payable, net |
| $ | - |
|
| $ | - |
|
Convertible notes payable consisted of the following: |
|
|
|
| ||||
|
|
|
|
| ||||
|
| September 30, 2021 |
|
| December 31, 2020 |
| ||
|
|
|
|
|
|
| ||
Convertible note payable to investor (the “UAHC Note”) dated October 10, 2017, with interest at 10%, an OID of $70,000, due October 6, 2019, convertible into shares of the Company’s common stock at a discount of 60% of the average of the three lowest closing bid prices of the Company’s common stock during the 20 trading days prior to conversion. The UAHC Note includes a warrant to purchase 5,000,000 shares of the Company’s common stock at a price of $0.10 per share. The UAHC Note is secured by substantially all assets of the Company. The investor converted a total of $37,767 of principal and accrued interest of this note into 37,767,405 shares of the Company’s common stock. This note was amended on October 12, 2020 whereby the maturity due date was extended to December 31, 2022 with monthly payments required commencing October 1, 2020. A final note settlement agreement was executed on January 27, 2021, whereby the Company issued 400,000 shares of common stock to repay the outstanding balance of principal plus accrued interest totaling $681,170. The Company recognized a loss on debt settlement of $35,830. |
|
| 0 |
|
|
| 581,723 |
|
|
|
|
|
|
|
|
|
|
Convertible note payable to investor (the “Iliad Note”) dated November 5, 2018 totaling $500,000, plus OID of $225,000 and legal fees of $20,000. The Iliad Note bears interest at 10% and matures on November 5, 2020. Total available under note is $5,520,000, including $500,000 OID (and $20,000 in legal fees applied to the first $500,000 tranche). The Iliad Note is convertible into shares of the Company’s common stock after 180 days at a discount of 35% of the average of the three lowest closing bid prices of the Company’s common stock during the 20 trading days prior to conversion. The Company borrowed $1,925,000 (including OID of $175,000) under this note during the year ended December 31, 2019. The investor converted a total of $458,360 of principal and accrued interest of this note into 214,880,617 shares of the Company’s common stock and was repaid $194,637 by the Company during the year ended December 31, 2020. The Iliad Note is secured by substantially all assets of the Company. This note was amended on October 12, 2020 whereby the maturity due date was extended to December 31, 2022 with monthly payments required commencing October 1, 2020. A final note settlement agreement was executed on January 27, 2021, whereby the Company issued 1,333,333 shares of common stock to repay the outstanding balance of principal plus accrued interest totaling $2,253,667. The Company recognized a loss on debt settlement of $136,333. |
|
| 0 |
|
|
| 1,842,003 |
|
|
|
|
|
|
|
|
|
|
Convertible note payable with an accredited investor dated October 31, 2016, with interest at 0%, due October 31, 2017, convertible at $0.525 per share. This note is currently in default. |
|
| 10,500 |
|
|
| 10,500 |
|
Total convertible notes payable |
|
| 10,500 |
|
|
| 2,434,226 |
|
Less debt discounts |
|
| 0 |
|
|
| 0 |
|
Convertible notes payable, net |
|
| 10,500 |
|
|
| 2,434,226 |
|
Less current portion of convertible notes, net |
|
| (10,500 | ) |
|
| (2,434,226 | ) |
Long-term convertible notes payable, net |
| $ | 0 |
|
| $ | 0 |
|
Interest expense for the above notes payable for the threenine months ended March 31,September 30, 2021 and 2020 was $17,744 and $96,585,$249,033, respectively. Total amortization of debt discounts was $0$36,800 and $448,290$1,789,688 for the threenine months ended March 31,September 30, 2021 and 2020, respectively.
18 |
Table of Contents |
Short-term Notes Payable
In May 2020, the Company received total loan proceeds of $332,737 under the SBA’s Paycheck Protection Program (“PPP”) and iswas included in short-term notes payable as of March 31, 2021 and December 31, 2020. The two PPP loans includeincluded a promissory note with Direct Solar America with principal of $312,300 due May 7, 2022, and a promissory note with Singlepoint with principal of $20,437 due in 18 monthly installments beginning December 12, 2020. Both loans were forgiven in 2021. On January 27, 2021 Direct Solar America received a new PPP loans bearloan with principal of $311,070, due January 26, 2026, and bears interest at 1% (“New PPP Loan”). Under the PPP loan terms, the Company may apply (and plans to apply) for forgiveness of the PPP loans. On March 9,August 16, 2021 the Singlepoint note principal of $20,437New PPP Loan to Direct Solar America was forgiven.
Long-term Notes Payable
In July 2021the Company entered into a Note PayablePurchase Agreement (the “Note Purchase Agreement”) with Bucktown Capital LLC (“BCL”) whereby the Company agreed to issue and sell to BCL a promissory note in the principal amount of $1,580,000 (the “Note”). The Note bears interest at the rate of Eight Percent (8%) per annum, and provides that for the calendar quarter beginning on January 1, 2022 and continuing for each calendar quarter thereafter until the Note is paid in full, the Company will make quarterly cash payments to BCL equal to $250,000. The Company may choose the frequency and amount of each payment (subject to a minimum payment of $50,000) during each applicable quarter so long as the aggregate amount paid during each quarter is equal to $250,000. The Note matures in July 2024. The Note contains the following covenants: (i) Company will timely file on the applicable deadline all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the 1934 Act, and will take all reasonable action under its control to ensure that adequate current public information with respect to Company, as required in accordance with Rule 144 of the 1933 Act, is publicly available, and will not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination; (ii) the Common Stock shall be listed or quoted for trading on any of (a) NYSE, (b) NASDAQ, (c) OTCQX, (d) OTCQB, or (e) OTC Pink; (iii) trading in Company’s Common Stock will not be suspended, halted, chilled, frozen, reach zero bid or otherwise cease trading on Company’s principal trading market for more than two (2) consecutive Trading Days; and (iv) Company will not enter into any financing transaction with John Kirkland or any of his affiliated entities. The Note is a long-term liability and not convertible into any securities of the Company.
In May 2020, the Company received loan proceeds of $150,000 under the SBA’s Economic Injury Disaster Loan program (“EIDL”). The EIDL dated May 22, 2020, bears interest at 3.75%, has a 30-year term, is secured by substantially all assets of the Company, and is due in monthly installments of $731 beginning May 1, 2021.2022.
Acquisition of EnergyWyze - Consideration Payables
Related to the acquisition of EnergyWyze, the Company issued a non-interest bearing note in the amount of $50,000 (See Note 3). This note iswas recorded at face value, which iswas considered the fair value of this short-term note. As of March 31,June 30, 2021, the balance of this note is included in Short-term notes payable on the balance sheet.had been satisfied.
Also related to the acquisition of EnergyWyze, the Company incurred a purchase consideration obligation of $450,000 with a fair value of $339,599 (See Note 3), of which $203,759 is included in Short-term notes payable and $135,840 is included in Long-term notes-payable.notes payable.
19 |
Table of Contents |
NOTE 5 – OBLIGATIONS UNDER CAPITAL LEASE
The Company leases approximately 1,400 square feet of office space at 2999 North 44th Street, Phoenix, Arizona 85018 through January 31, 2023 at a monthly base rent of $3,270$3,688 through January 2020,February 2022 then, increasing to $3,618, $3,688 and to $3,758 per month beginning February 2020, February 2021 and February 2022, respectively.2022.
On July 2, 2019, the Company executed a lease agreement for an industrial building space in California for 24 months at base rent of $2,400 per month through June 30, 2021. On July 1, 2021, upon which thethis lease expires.went to a month-to-month basis. On September 5, 2021, this lease was terminated.
The above leases arewere classified as capital leases under ASC 842 which the Company adopted in 2019. The following is a summary of property held under these capital leases at March 31,September 30, 2021 and December 31, 2020:
|
| March 31, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Office and warehouse facilities |
| $ | 224,037 |
|
| $ | 224,037 |
|
Accumulated amortization |
|
| (159,311 | ) |
|
| (144,870 | ) |
|
|
|
|
|
|
|
|
|
Total |
| $ | 64,726 |
|
| $ | 79,167 |
|
|
| September 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Office and warehouse facilities |
| $ | 172,026 |
|
| $ | 224,037 |
|
Accumulated amortization |
|
| (129,682 | ) |
|
| (144,870 | ) |
|
|
|
|
|
|
|
|
|
Total |
| $ | 42,344 |
|
| $ | 79,167 |
|
Future maturities of obligations under capital leases are as follows:
Twelve months ending December 31, |
|
|
|
|
|
| ||
2021 |
| $ | 40,391 |
|
| $ | 11,064 |
|
2022 |
| 45,020 |
|
| 45,020 |
| ||
2023 |
|
| 3,758 |
|
| 3,758 |
| |
|
|
|
|
|
|
|
| |
Total minimum lease payments |
| 89,169 |
|
| 59,842 |
| ||
Amounts representing interest |
|
| (6,140 | ) |
|
| (2,612 | ) |
|
| $ | 83,029 |
|
| $ | 57,230 |
|
20 |
Table of Contents |
NOTE 6 -– STOCKHOLDERS’ EQUITY
Class A Convertible Preferred Shares
As of March 31,September 30, 2021, and December 31, 2020, the Company had authorized 100,000,000 shares of preferred stock, $0.0001 parper value per share, of which 60,000,000 shares are designated as ClassSeries A Convertible Preferred Stock (“Class A Stock”) with $0.0001 par value per share, of which 59,000,00056,464,123 and 60,000,000 shares were issued and outstanding as of March 31,September 30, 2021 and December 31, 2020, respectively.
Each share of Class A Stock is convertible at any time into 25 shares of common stock, totaling 1,475,000,000 and 1,500,000,0001,411,603,075 shares of common stock, as of September 30, 2021, assuming full conversion of all outstanding shares as of March 31, 2021 and December 31, 2020, respectively.shares. No dividends are payable unless declared by the Board of Directors. Each share of Class A Stock votes with the shares of Common Stock and is entitled to 50 votes per share and ranks senior to all other classes of stock in liquidation in the amount of $1 per share.
Class B Preferred Stock
As of March 31,September 30, 2021, and December 31, 2020, the Company had authorized 1,500 shares of Class B Preferred Stock, $.0001 par value per share, of which 123 shares and 408 shares were issued and outstanding.outstanding, respectively.
Below is a summary description of the material rights, designations and preferences of the Class B Preferred Stock (all capitalized terms not otherwise defined herein shall have that definition assigned to itthem as per the Certificate of Designation).
The Company has the right to redeem the Class B Preferred Stock, in accordance with the following schedule:
The Company shall pay a dividend of eight percent (8%) per annum on the Class B Preferred Stock. Dividends shall be paid quarterly, and at the Company’s discretion, in cash or Class B Preferred Stock calculated at the purchase price. The Stated Value of the Class B Preferred Stock is $1,200 per share.
Following any Event of Default (as defined in the Certificate of Designation), all outstanding shares of Class B Preferred Stock shall come immediately due for redemption and the redemption amount shall accrue interest at the lesser of (a) 18% per annum or (b) the maximum legal rate. Redemption following an Event of Default shall occur at an amount equaling: one hundred and thirty five percent (135%), multiplied by the sum of the Stated Value, all accrued but unpaid dividends and all other amounts due pursuant to the Certificate of Designation for all shares of Class B Preferred Stock.
The Class B Preferred Stock will vote together with the common stock on an as-converted basis subject to the Beneficial Ownership Limitations (as set forth in the Certificate of Designation).
Each share of the Class B Preferred Stock is convertible, at any time and from time to time from and after the issuance at the option of the Holder thereof, into that number of shares of Common Stock (subject to Beneficial Ownership Limitations) determined by dividing the Stated Value of such share of Preferred Stock by $0.183.
From the date of issuance until the date when the Holder no longer holds any shares of Class B Preferred Stock, upon any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration, Indebtedness or a combination of units thereof (a “Subsequent Financing”), the Holder may elect, in its sole discretion, to exchange (in lieu of conversion), if applicable, all or some of the shares of Class B Preferred Stock then held for any securities or units issued in a Subsequent Financing on a $1.00 for $1.00 basis. Additionally, if in such Subsequent Financing there are any contractual provisions or side letters that provide terms more favorable in the aggregate discount to the investors than the terms provided for hereunder, then the Company shall specifically notify the Holder of such additional or more favorable terms and such terms, at Holder’s option, shall become a part of the transaction documents with the Holder.
Class C Preferred Stock
On January 28, 2021, the Company amended its Articles of Incorporation to designate 1,500 shares of undesignated preferred stock as Class C Preferred Stock, of which 760 shares were issued and outstanding as of
Below is a summary description of the material rights, designations and preferences of the Class C Preferred Stock (all capitalized terms not otherwise defined herein shall have that definition assigned to it as per the Certificate of Designation).
|