UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2021
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________from___________to___________
Commission File Number: 000-55505
LIFELOGGER TECHNOLOGIESBRIDGEWAY NATIONAL CORP.
(Exact Name of Registrant as Specified in its Charter)
| 45-5523835 | ||
| (State or Other Jurisdiction of | (I.R.S. Employer | |
| Incorporation or Organization) | Identification No.) |
| ||
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number including area code: 1-561-515-69281-202-846-7869
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
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 [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post 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”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):
| Large accelerated filer [ ] | Accelerated filer [ ] |
| Non-accelerated filer [ ] | Smaller reporting company [X] |
| 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 [X]
Indicate by check mark whether the registrant is an “emerging growth company” as defined in Section 2(a) of the Securities Act and Section 3(a) of the Exchange Act. Yes [X] No [ ]
Indicate by check mark whether the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards providedregistered pursuant to Section 7(a)(2)(B)12(b) of the Securities Act and Section 13(a) of the Exchange Act. [ ]Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Class A Common Stock | BDGY | OTC Pink |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
| Class | Outstanding as of | June 14, 2021 | ||
| Class A Common Stock, $0.001 par value | 2,410,229 |
LIFELOGGER TECHNOLOGIESBRIDGEWAY NATIONAL CORP.
TABLE OF CONTENTS
LIFELOGGER TECHNOLOGIESBRIDGEWAY NATIONAL CORP.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| As at | ||||||||
| September 30, 2017 | December 31, 2016 | |||||||
| (unaudited) | (audited) | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 116 | $ | 101,041 | ||||
| Prepaid expenses | 5,384 | 1,250 | ||||||
| Deferred financing costs | 1,316 | 3,360 | ||||||
| Total current assets | 6,816 | 105,651 | ||||||
| Non-Current Assets | ||||||||
| Furniture and fixtures | 9,578 | 9,578 | ||||||
| Accumulated depreciation | (9,578 | ) | (2,737 | ) | ||||
| Furniture and fixtures, net | - | 6,841 | ||||||
| Total Assets | $ | 6,816 | $ | 112,492 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses (Note 4) | $ | 193,570 | $ | 89,934 | ||||
| Due to related party | - | - | ||||||
| Convertible notes payable, net of unamortized discount of $54,115 and (2016 - 134,628) (Note 5) | 1,053,909 | 1,008,461 | ||||||
| Derivative liability - notes and warrants (Note 6) | 255,452 | 240,955 | ||||||
| Total current liabilities | 1,502,931 | 1,339,350 | ||||||
| Total liabilities | 1,502,931 | 1,339,350 | ||||||
| Stockholders’ Deficiency: | ||||||||
Preferred stock par value $0.001: 5,000,000 shares authorized; Preferred Shares Series A 1,000 and 0 shares issued and outstanding, respectively | 1 | - | ||||||
| Common stock par value $0.001: 495,000,000 shares authorized; 8,023,760 and 2,063,151 shares issued and outstanding, respectively | 8,023 | 2,063 | ||||||
| Additional paid-in capital | 3,901,086 | 3,365,116 | ||||||
| Accumulated deficit | (5,405,225 | ) | (4,594,037 | ) | ||||
| Total stockholders’ deficiency | (1,496,115 | ) | (1,226,858 | ) | ||||
| Total Liabilities and Stockholders’ Deficiency | $ | 6,816 | $ | 112,492 | ||||
| As at | ||||||||
| March 31, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 90,183 | $ | 1,915 | ||||
| Total Current Assets | 90,183 | 1,915 | ||||||
| Property and equipment, net | 76,936 | 79,273 | ||||||
| Rights-of-use assets | 682,702 | 722,088 | ||||||
| Total Assets | $ | 849,821 | $ | 803,276 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | 217,098 | 217,098 | ||||||
| Accrued expenses | 541,250 | 417,960 | ||||||
| Accrued interest expenses on convertible notes payable | 156,880 | 94,727 | ||||||
| Dividend payable | 64,352 | 54,366 | ||||||
| Due to related party | 69,903 | 81,277 | ||||||
| Convertible notes payable, net of unamortized discount $96,166 (2020 - $184,388) | 1,222,834 | 1,086,612 | ||||||
| Derivative liability – notes and warrants | 1,588,272 | 1,717,337 | ||||||
| Right of use liabilities – operating leases, current | 130,644 | 115,547 | ||||||
| Total Current Liabilities | 3,991,233 | 3,784,924 | ||||||
| Long-term Notes payable | 150,000 | - | ||||||
| Right of use liabilities – operating leases, long term | 612,362 | 657,457 | ||||||
| Total Liabilities | 4,753,595 | 4,442,381 | ||||||
| Stockholders’ Deficiency: | ||||||||
| Series A preferred stock, $0.001 par value, 62,374,819 shares authorized, 1,000 shares issued and outstanding (December 31, 2020 – 1,000), respectively | 1 | 1 | ||||||
| Series B preferred stock, $0.001 par value, 125,181 shares authorized, 125,001 shares issued and outstanding (December 31, 2020 – 125,001 shares issued and outstanding), respectively | 125 | 125 | ||||||
| Class B common stock, $0.001 par value, 18,750,000 shares authorized, nil shares issued and outstanding | - | - | ||||||
| Class A common stock, $0.001 par value, 168,750,000 shares authorized, 2,410,229 and 2,410,229 issued and outstanding (December 31, 2020 – 2,410,229 and 2,410,229 issued and outstanding), respectively | 2,410 | 2,410 | ||||||
| Additional paid-in capital | 7,378,923 | 7,388,909 | ||||||
| Accumulated deficit | (11,285,233 | ) | (11,030,550 | ) | ||||
| Total Stockholders’ deficiency | (3,903,774 | ) | (3,639,105 | ) | ||||
| Total Liabilities and Stockholders’ Deficiency | $ | 849,821 | $ | 803,276 | ||||
See accompanying notes to the unaudited consolidated financial statements.
STATEMENTS OF OPERATIONS
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended | Ended | |||||||||||||||
| September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
| Cost of revenue | - | - | - | - | ||||||||||||
| Gross margin | - | - | - | - | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| Research and development | 3,938 | 60,682 | 12,726 | 263,315 | ||||||||||||
| Advertising and promotions | - | 3,188 | - | 13,675 | ||||||||||||
| Consulting -related parties (Note 9) | 25,200 | 25,200 | 75,600 | 75,600 | ||||||||||||
| Consulting - other | 20,500 | 60,596 | 68,553 | 222,007 | ||||||||||||
| Option expense - consulting - other | 79,373 | 173,323 | 238,119 | 521,667 | ||||||||||||
| Impairment of intangible assets | - | - | - | 195,015 | ||||||||||||
| General and administrative | 19,611 | 29,136 | 100,433 | 153,419 | ||||||||||||
| Total operating expenses | 148,622 | 352,125 | 495,431 | 1,444,698 | ||||||||||||
| Loss from operations | (148,622 | ) | (352,125 | ) | (495,431 | ) | (1,444,698 | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Change in fair value of derivative-warrants (Note 6) | - | 7,434 | 5,561 | 14,376 | ||||||||||||
| Change in fair value of derivative-notes (Note 6) | 20,848 | 81,064 | (97,184 | ) | (187,496 | ) | ||||||||||
| Loss on extinguishment of debt (Note 5) | - | - | - | (682,067 | ) | |||||||||||
| Loss on disposal of asset | (6,457 | ) | - | (6,457 | ) | - | ||||||||||
| Commitment fee expense | - | - | - | (250,000 | ) | |||||||||||
| Interest expense | (34,984 | ) | (54,641 | ) | (217,677 | ) | (377,112 | ) | ||||||||
| Total other expenses | (20,593 | ) | 33,857 | (315,757 | ) | (1,482,299 | ) | |||||||||
| Loss before income tax provision | (169,215 | ) | (318,268 | ) | (811,188 | ) | (2,926,997 | ) | ||||||||
| Income tax provision | - | - | - | - | ||||||||||||
| Net Loss | $ | (169,215 | ) | $ | (318,268 | ) | $ | (811,188 | ) | $ | (2,926,997 | ) | ||||
| Net Loss Per Common Share: | ||||||||||||||||
| - Basic and Diluted | $ | (0.03 | ) | $ | (0.17 | ) | $ | (0.20 | ) | $ | (1.30 | ) | ||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||
| - Basic and Diluted | 6,665,756 | 1,842,140 | 4,093,181 | 2,254,689 | ||||||||||||
See accompanying notes to the financial statements.
| F-1 |
LIFELOGGER TECHNOLOGIESBRIDGEWAY NATIONAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCY
FOR THE INTERIM PERIOD ENDED SEPTEMBER 30, 2017 AND YEAR ENDED DECEMBER 31, 2016OPERATIONS (UNAUDITED)
| Preferred stock par value | Common stock par value $0.001 | Total | ||||||||||||||||||||||||||
| $0.001 | $0.001 | Additional | Stockholders’ | |||||||||||||||||||||||||
| Number of | Number of | Paid-in | Accumulated | Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| (a) | (a) | |||||||||||||||||||||||||||
| Balance December 31, 2015 (audited) | 2,747,683 | $ | 2,748 | $ | 927,487 | $ | (1,328,787 | ) | $ | (398,552 | ) | |||||||||||||||||
| Common stock issued on conversion of note payable (Note 5) | - | - | 60,276 | 60 | 497,218 | - | 497,278 | |||||||||||||||||||||
| Options granted for consultant (Note 8) | - | - | - | - | 632,356 | - | 632,356 | |||||||||||||||||||||
| Common stock issued for intangible assets (Note 11) | - | - | 86,673 | 86 | 194,929 | - | 195,015 | |||||||||||||||||||||
| Common stock issued on conversion of convertible notes payable (Note 5) | - | - | 501,852 | 502 | 1,111,793 | - | 1,112,295 | |||||||||||||||||||||
| Shares redeemed (Note 11) | - | - | (1,333,333 | ) | (1,333 | ) | 1,333 | - | - | |||||||||||||||||||
| Net loss | - | - | - | - | - | (3,265,250 | ) | (3,265,250 | ) | |||||||||||||||||||
| Balance, December 31, 2016 (audited) | - | - | 2,063,151 | $ | 2,063 | $ | 3,365,116 | $ | (4,594,037 | ) | $ | (1,226,858 | ) | |||||||||||||||
| Preferred stock issued | 1,000 | 1 | - | - | 99 | - | 100 | |||||||||||||||||||||
| Common stock issued on conversion of convertible | ||||||||||||||||||||||||||||
| note payable (Note 10) | - | - | 5,959,583 | 5,960 | 297,752 | - | 303,712 | |||||||||||||||||||||
| Options granted for consultant (Note 8) | - | - | 238,119 | - | 238,119 | |||||||||||||||||||||||
| Net loss | - | - | - | - | - | (811,188 | ) | (811,188 | ) | |||||||||||||||||||
| Balance, September 30, 2017 (unaudited) | 1,000 | 1 | 8,022,734 | 8,023 | 3,901,086 | (5,405,225 | ) | (1,496,115 | ) | |||||||||||||||||||
(a) Common shares are after reverse stock split of 30:1 as explained in Note 1
| For the three months ended | ||||||||
| March 31, | March 31, | |||||||
| 2021 | 2020 | |||||||
| Operating expenses: | ||||||||
| Professional fees | 10,670 | 32,210 | ||||||
| General and administrative | 160,099 | 176,422 | ||||||
| Amortization expense | 41,723 | 1,958 | ||||||
| Total operating expenses | 212,492 | 210,590 | ||||||
| Loss from operations | (212,492 | ) | (210,590 | ) | ||||
| Other income (expenses) | ||||||||
| Change in fair value of derivative liabilities | 129,065 | 37,994 | ||||||
| Loss on derivative liabilities | - | (1,739,698 | ) | |||||
| Interest expense | (171,256 | ) | (99,330 | ) | ||||
| Total other income (expenses) | (42,191 | ) | (1,801,034 | ) | ||||
| Loss from continuing operations before income tax provision | (254,683 | ) | (2,011,624 | ) | ||||
| Income tax provision | - | - | ||||||
| Loss before income tax provision | (254,683 | ) | (2,011,624 | ) | ||||
| Net loss | (254,683 | ) | (2,011,624 | ) | ||||
| Series B preferred stock dividend | (9,986 | ) | (9,986 | ) | ||||
| Net loss attributable to common stockholders | (264,669 | ) | (2,021,610 | ) | ||||
| Net loss per Common share: | ||||||||
| - Basic and Diluted | (0.11 | ) | (0.84 | ) | ||||
| Weighted average commons shares Outstanding: | ||||||||
| - Basic and Diluted | 2,410,229 | 2,410,229 | ||||||
See accompanying notes to the unaudited consolidated financial statements.
| F-2 |
LIFELOGGER TECHNOLOGIESBRIDGEWAY NATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN STOCKHOLDERS’ DEFICIENCY(UNAUDITED)
(Unaudited)FOR THE THREE MONTH ENDED MARCH 31, 2021 AND 2020
| For the nine months ended | ||||||||
| September 30, 2017 | September 30, 2016 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | (811,188 | ) | $ | (2,926,997 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expenses | 384 | 1,027 | ||||||
| Loss on disposal of asset | 6,457 | |||||||
| Options issued - consulting | 238,119 | 521,667 | ||||||
| Interest expense recognized through accretion of discount on debt | 137,589 | 284,262 | ||||||
| Original issue discount on new financing | 13,444 | 26,653 | ||||||
| Interest expense recognized through amortization of deferred financing costs | 4,545 | 5,334 | ||||||
| Amortization of commitment fee | - | 250,000 | ||||||
| Change in fair value of derivative liabilities-notes | 97,184 | 187,496 | ||||||
| Change in fair value of derivative liabilities-warrants | (5,561 | ) | (14,376 | ) | ||||
| Extinguishment of debt | - | 682,067 | ||||||
| Impairment of intangible asset | - | 195,015 | ||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Other receivable | - | - | ||||||
| Prepaid expenses | (4,134 | ) | 5,945 | |||||
| Accounts payable and accrued expenses | 103,636 | 19,835 | ||||||
| Accounts payable - related party | - | (2,310 | ) | |||||
| Net Cash Used in Operating Activities | (219,525 | ) | (764,382 | ) | ||||
| Financing Activities: | ||||||||
| Issuance of preferred shares | 100 | - | ||||||
| Proceeds from note payable | 121,000 | 849,500 | ||||||
| Payment of deferred financing costs | (2,500 | ) | (7,000 | ) | ||||
| Common shares issued for interest expense | - | - | ||||||
| Net Cash Provided by Financing Activities | 118,600 | 842,500 | ||||||
| Net Change in Cash | (100,925 | ) | 78,118 | |||||
| Cash - Beginning of Reporting Period | 101,041 | 131,699 | ||||||
| Cash - End of Reporting Period | $ | 116 | $ | 209,817 | ||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Interest paid | $ | - | $ | - | ||||
| Income Tax Paid | $ | - | $ | - | ||||
| Supplemental Cash Flow Information | ||||||||
| Issuance of common stocks for settlement of notes payable and accrued interest | $ | - | $ | 1,407,223 | ||||
| Note payable issued for financing cost | $ | - | $ | 250,000 | ||||
| Acquisition of intangible assets | $ | - | $ | 195,015 | ||||
| Issuance of common stocks for settlement of convertible notes payable | $ | 176,232 | $ | 483,684 | ||||
| Shares redeemed | $ | - | $ | 40,000 | ||||
Preferred stock Par value $0.001 | Common stock Par value $0.001 | Additional | Total | |||||||||||||||||||||||||||||||||
| Number of Shares | Amount $ | Number | Amount | Paid-In Capital | Accumulated Deficit | Stockholders’ Deficiency | ||||||||||||||||||||||||||||||
| Series A | Series B | Series A | Series B | of Shares | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Balance, December 31, 2019 | 1,000 | 96,429 | $ | 1 | $ | 96 | 2,410,229 | $ | 2,410 | $ | 6,893,176 | $ | (6,905,767 | ) | $ | (10,084 | ) | |||||||||||||||||||
| Preferred stock issued as compensation for financing | - | 28,572 | - | 29 | - | - | 399,971 | - | 400,000 | |||||||||||||||||||||||||||
| Series B Preferred stock dividend | - | - | - | - | - | - | (9,986 | ) | - | (9,986 | ) | |||||||||||||||||||||||||
| Deemed distributions to CEO | - | - | - | - | - | - | (155,694 | ) | (155,694 | ) | ||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | (2,011,624 | ) | (2,011,624 | ) | |||||||||||||||||||||||||
| Balance, March 31, 2020 | 1,000 | 125,001 | $ | 1 | $ | 125 | 2,410,229 | $ | 2,410 | $ | 7,127,467 | $ | (8,917,391 | ) | $ | (1,787,388 | ) | |||||||||||||||||||
| Balance, December 31, 2020 | 1,000 | 125,001 | $ | 1 | $ | 125 | 2,410,229 | $ | 2,410 | $ | 7,388,909 | $ | (11,030,550 | ) | $ | (3,639,105 | ) | |||||||||||||||||||
| Series B Preferred stock dividend | - | - | - | - | - | - | $ | (9,986 | ) | - | $ | (9,986 | ) | |||||||||||||||||||||||
| Net Loss | - | - | - | - | - | - | - | (254,683 | ) | (254,683 | ) | |||||||||||||||||||||||||
| Balance, March 31, 2021 | 1,000 | 125,001 | $ | 1 | $ | 125 | 2,410,229 | $ | 2,410 | $ | 7,378,923 | $ | (11,285,233 | ) | $ | (3,903,774 | ) | |||||||||||||||||||
See accompanying notes to the unaudited consolidated financial statements.
| F-3 |
LIFELOGGER TECHNOLOGIESBRIDGEWAY NATIONAL CORP.
September 30, 2017CONSOLIDATED STATEMENTS OF CASHFLOWS (UNAUDITED)
| For the Three Months Ended | ||||||||
| March 31, 2021 | March 31, 2020 | |||||||
| Cash flows from Operating Activities: | ||||||||
| Net loss | $ | (254,683 | ) | $ | (2,011,624 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expenses | 2,337 | 1,958 | ||||||
| Interest expense on convertible notes | - | |||||||
| Initial recognition of loss of derivative liabilities | - | 1,739,698 | ||||||
| Interest expense accretion of convertible notes discount | 91,222 | 99,330 | ||||||
| Change in fair value of derivative liabilities | (129,065 | ) | (37,994 | ) | ||||
| Non cash operating lease expense | 39,386 | 39,387 | ||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Prepaid expense | - | (17,244 | ) | |||||
| Security Deposits | (66,155 | ) | ||||||
| Due from related parties | (11,374 | ) | (70,697 | ) | ||||
| Accounts payable and accrued expenses | 185,443 | (21,151 | ) | |||||
| Right of use liabilities | (29,998 | ) | (25,482 | ) | ||||
| Net cash used in operating activities | (106,732 | ) | (369,974 | ) | ||||
| Cash flows from Investing Activities: | ||||||||
| Purchases of property and equipment | - | (66,378 | ) | |||||
| Net cash used in investing activities | - | (66,378 | ) | |||||
| Cash flows from Financing Activities: | ||||||||
| Proceeds from notes payable | 150,000 | - | ||||||
| Proceeds from convertible notes | 45,000 | 750,000 | ||||||
| Net cash provided by financing activities | 195,000 | 750,000 | ||||||
| Net Change in Cash | 88,268 | 313,648 | ||||||
| Cash - Beginning of Reporting Period | 1,915 | - | ||||||
| Cash - End of Reporting Period | $ | 90,183 | $ | 313,648 | ||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Interest Paid | - | - | ||||||
| Income tax paid | - | - | ||||||
| Issuance of Series B preferred stock as compensation for deferred financing fees | - | 400,000 | ||||||
| Dividends declared on series B preferred stock | 9,986 | 9,986 | ||||||
| Right of use assets and right of use liabilities recognized | - | 879,635 | ||||||
| Initial recognition of debt discount | - | 845,000 | ||||||
| Deemed distribution to CEO | - | 155,694 | ||||||
See accompanying notes to the unaudited consolidated financial statements.
| F-4 |
Notes to the Financial StatementsBRIDGEWAY NATIONAL CORP.
(Unaudited)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2021
Note 1 - Organization and Operations
LifeLogger TechnologiesBridgeway National Corp. (the “Company”), which we refer to as “the Company,” “our Company,” “we,” “us” or “our,” was originally incorporated under the laws of the State of Nevada as Snap Online Marketing Inc. on June 4, 2012 under the name Snap Online Marketing Inc. The Companyand subsequently changed its name effectiveto LifeLogger Technologies Corp., which we were referred to as “LifeLogger.” On April 10, 2019, we reincorporated as a Delaware corporation and changed our name to Capital Park Holdings Corp. On December 19, 2019, we changed our name to Bridgeway National Corp. Our principal business address is 1015 15th Street NW Suite 1030, Washington, DC 20005, 202-846-7869. We registered as a reporting company under the Securities Exchange Act of 1934, as amended on April 26, 2013. We are currently listed for trading on the OTC Pink under the trading symbol “BDGY.”
Corporate Structure
The Company is structured as a Delaware corporation that we expect to be treated as a corporation for U.S. federal income tax purposes. Your rights as a holder of shares, and the fiduciary duties of the Company’s Board of Directors and executive officers, and any limitations relating thereto are set forth in the documents governing the Company and may differ from those applying to a Delaware corporation. However, the documents governing the Company specify that the duties of its directors and officers will be generally consistent with the duties of a director of a Delaware corporation. The Company’s Board of Directors will oversee the management of the Company and our businesses. Initially, the Company’s Board of Directors will be comprised of five (5) directors, with three (3) of those directors appointed by holders of the Company’s Class A common stock and two (2) of those directors appointed by holders of the Company’s Class B common stock, and at least three (3) of whom will be the Company’s independent directors.
Prior to the transactions that took place on January 31, 2014 and is9, 2019, we were a lifelogging software company that developed and hostshosted a proprietary cloud-based software solution accessibleaccessible on iOS and Android devices that offers an enhanced media experience for consumers by augmenting videos,videos, livestreams and photos with additional context information and providing a platform that makes it easy to findfind and use that data when viewing or sharing media. Subsequent to transactions that took place on January 9, 2019, in addition to its lifelogging software business, the Company has been structured as a holding company with a business strategy focused on owning subsidiaries engaged in a number of diverse business activities.
| F-5 |
Effective as of February 22, 2017, the Company amended its Articles of Incorporation to increase its authorized capital stock from 125,000,000 to 500,000,000 shares, of which 495,000,000 will be common stock and 5,000,000 will be preferred stock, of which, 1,000 preferred shares have been previously designated as Series A Preferred Stock (the “Series A Preferred Stock”) and effected a 1 for 30 reverse stock split of its issued and outstanding shares of common stock. All per share amounts and number of shares in the financial statements and related notes have been retroactively restated to reflect the reverse stock split.
Note 2 - Summary of Significant Accounting Policies
Reclassification
Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no effect on the previously reported net loss.
Liquidity and Basis of Presentation – Unaudited Interim Financial Information
The accompanying unaudited interimconsolidated financial statements are expressed in United States dollars (“USD”) and related notesNotes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interimconsolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to present a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited interimconsolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 20162020 and notes thereto contained in the information as part of the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on April 17, 2017.
Use of EstimatesJune 1, 2021.
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 and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Areas involving significant estimates and assumptions include: deferred income tax assets and related valuation allowance, accruals and valuation of derivatives, convertible promissory notes, stock options, and assumptions used in the going concern assessment. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known.
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability including certain market assumptions and pertinent information available to management.
The carrying amount of the Company’s financial assets and liabilities, such as cash, accounts payable and accrued expenses approximate their fair value because of the short maturity of those instruments. The non-current financial liabilities including notes payables and derivative liabilities are fair valued as described below.
Valuation of Derivatives
The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date. The change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. the Company analyzed the derivative financial instruments in accordance with ASC 815. The objective is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception which would enable a derivative instrument to be accounted for under the accrual method. The classification of a non-derivative instrument that falls within the scope of ASC 815-40-05 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock. A non-derivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted for as a liability. There is a two-step approach in determining whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument’s contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument’s settlement provisions. The Company utilized multinomial lattice models that value the derivative liability based on a probability weighted discounted cash flow model. The Company utilized the fair value standard set forth by the Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.
The derivative liabilities result in a reduction of the initial carrying amount (as unamortized discount) of the Convertible Notes. This derivative liability is marked-to-market each quarter with the change in fair value recorded in the statement of operations. Unamortized discount is amortized to interest expense using the effective interest method over the life of the Convertible Note.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash and cash equivalents.
Furniture and Fixtures
Furniture and fixtures are recorded at cost less depreciation. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows:
Upon sale or retirement, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations.
Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, is disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
Stock-Based Compensation
The Company accounts for stock-based compensation awards issued in accordance with the provision of ASC 718, which requires that all stock-based compensation issued to acquire goods or services, including grants of employee stock options, be recognized in the statement of operations based on their fair values, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Compensation expense related to stock-based awards is recognized over the requisite service period, which is generally the vesting period.
There were 200,000 options outstanding as of September 30, 2017.
Research and Development
The Company follows paragraph 730-10-25-1 of the FASB Accounting Standards Codification (formerly Statement of Financial Accounting Standards No. 2“Accounting for Research and Development Costs”) and paragraph 730-20-25-11 of the FASB Accounting Standards Codification (formerly Statement of Financial Accounting Standards No. 68“Research and Development Arrangements”) for research and development costs. Research and development costs are charged to expense as incurred. Research and development costs consist primarily of remuneration for research and development staff, depreciation and maintenance expenses of research and development equipment, material and testing costs for research and development as well as research and development arrangements with unrelated third party research and development institutions.
Deferred Tax Assets and Income Tax Provision
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.
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 the statements of operations in the period that includes the enactment date.
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Earnings per Share
Earnings Per Share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the statements of operations) is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.
Diluted earnings per share exclude all potentially dilutive shares if their effect is anti-dilutive. The Company excluded 200,000 shares of their common stock issuable upon exercise of options and 36,667 shares of their common stock issuable upon exercise of warrants as of September 30, 2017 as their effect was anti-dilutive.
Subsequent Events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
Recently issued accounting pronouncements
In May 2017, an accounting pronouncement was issued by the Financial Accounting Standards Board (“FASB”) ASU 2017-09, “Compensation - Stock Compensation: Scope of Modification Accounting.” ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The updated guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The adoption of this pronouncement will not have a material impact on the financial position and/or results of operations.
In January 2017, an accounting pronouncement was issued by the Financial Accounting Standards Board (“FASB”) to simplify the accounting for goodwill impairment. This guidance eliminates the requirement that an entity calculates the implied fair value of goodwill when measuring an impairment charge. Instead, an entity would record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. This pronouncement is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The adoption is required to be applied on a prospective basis. The adoption of this pronouncement will not have a material impact on the financial position and/or results of operations.
The Company adopted the accounting pronouncement issued by the Financial Accounting Standards Board (“FASB”) to update guidance on how companies account for certain aspects of share-based payments to employees.
In February 2016, an accounting pronouncement was issued by the FASB to replace existing lease accounting guidance. This pronouncement is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet for most leases. Expenses associated with leases will continue to be recognized in a manner similar to current accounting guidance. This pronouncement is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The adoption is required to be applied on a modified retrospective basis for each prior reporting period presented. The Company has not yet determined the effect that the adoption of this pronouncement may have on the financial position and/or results of operations.
In November 2015, an accounting pronouncement was issued by the FASB to simplify the presentation of deferred income taxes within the balance sheet. This pronouncement eliminates the requirement that deferred tax assets and liabilities are presented as current or noncurrent based on the nature of the underlying assets and liabilities. Instead, the pronouncement requires all deferred tax assets and liabilities, including valuation allowances, be classified as noncurrent. This pronouncement is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company has adopted this pronouncement on January 1, 2017, and the adoption did not have a material impact on the financial position and/or results of operations.
Classification of restricted cash – In November 2016, the FASB issued accounting guidance related to the presentation and classification of changes in restricted cash on the statement of cash flows where diversity in practice exists. The new standard is required to be applied with a retrospective approach. The guidance is effective January 1, 2018, with early adoption permitted. We do not expect the adoption to have a material impact on our financial statements.
Clarification on the definition of a business – In January 2017, the FASB issued accounting guidance to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective January 1, 2018, with early adoption permitted. We adopted the guidance effective January 1, 2017, and the adoption did not have a material impact on our financial statements.
Simplifying the measurement for goodwill – In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The new guidance will be applied prospectively and is effective January 1, 2020, with early adoption permitted beginning January 1, 2017.
Clarification on stock-based compensation – In May 2017, the FASB issued accounting guidance to clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The new standard is required to be applied prospectively. The guidance is effective January 1, 2018, with early adoption permitted. We do not expect the adoption to have a material impact on our financial statements.
Note 3 - Going Concern
Theunaudited consolidated financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the unaudited consolidated financial statements, the Company had an accumulated deficit of $5,405,225$11,285,233 at September 30, 2017,March 31, 2021, and a net loss of $811,188 and net cash used of $219,525 in operating activities$254,683 for the nine months periodthree-month ended September 30, 2017.March 31,2021. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
TheAlthough the Company is attempting to further implementhas recently broadened its business plan and operating model in an effort to generate more sufficient revenue; however,and stable sources of revenues and cash flows, its cash position mayis not be sufficient to support its daily operations. While the Company believes in the viability ofthat its new business and operating model presents a viable strategy to further implement its business plan and generate sufficient revenue and believes in its ability to raise additional funds by way of a public or private offering, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.
The unaudited consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
Note 4 - Accounts Payable and Accrued Liabilities
| F-6 |
As at ($) | As at December 31, 2016 ($) | |||||||
| Trade accounts payable | $ | 91,385 | $ | 51,587 | ||||
| Accrued interest on convertible notes payable | 78,178 | 16,079 | ||||||
| Other payable | 24,007 | 22,268 | ||||||
| $ | 193,570 | $ | 89,934 | |||||
Trade accounts payable include $29,623 (2016: $8,065) due to an executive of the Company. The payable balance arose primarily due to consulting charges. The payable is unsecured, non-interest bearing and due on demand.
Note 53 –Notes Payable and Convertible Notes Payable
Convertible Notes Issue Date | Interest Rate | March 31, 2021 Principal Balance | ||||||
| March 2, 2020 | 12 | % | $ | 845,000 | ||||
| September 30, 2020 | 6 | % | $ | 155,000 | ||||
| October 3, 2020 | 6 | % | $ | 155,000 | ||||
| October 23, 2020 | 9 | % | $ | 68,000 | ||||
| November 16, 2020 | 9 | % | $ | 48,000 | ||||
| January 20, 2021 | 9 | % | $ | 48,000 | ||||
| Total | $ | 1,319,000 | ||||||
The weighted average interest rate and remaining term of the fixed rate convertible notes payable is 10% and 4.74 months as of March 31, 2021.
Notes Payable Issue Date | Interest Rate | March 31, 2021 Principal Balance | ||||||
| March 24, 2021 | 3.75 | % | $ | 150,000 | ||||
| Total | $ | 150,000 | ||||||
The movement in notes payable and convertible notes payable is as follows:
| Original amount | Unamortized discount | Guaranteed interest accrued | Net settlement | September 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
| Opening as of January 1, 2016 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 189,921 | ||||||||||||||||
| Conversion on opening balance | (i) | - | - | - | - | - | (189,921 | ) | ||||||||||||||||||||
| Issued: March 9, 2016 | (ii) | 250,000 | - | 10,000 | - | 260,000 | 260,000 | |||||||||||||||||||||
| Issued: March 9, 2016 | (iii) | 296,153 | - | 14,808 | (180,908 | ) | 130,053 | 218,781 | ||||||||||||||||||||
| Issued: June 9, 2016 | (iv) | 87,912 | - | 4,396 | - | 92,308 | 64,919 | |||||||||||||||||||||
| Issued: June 30, 2016 | (v) | 550,000 | (8,956 | ) | 22,000 | (87,504 | ) | 475,540 | 464,761 | |||||||||||||||||||
| Issued: April 11, 2017 | (vi) | 19,167 | (7,283 | ) | 958 | - | 12,842 | - | ||||||||||||||||||||
| Issued: April 11, 2017 | (vii) | 19,167 | (7,283 | ) | 958 | - | 12,842 | - | ||||||||||||||||||||
| Issued: May 2, 2017 | (vi) | 14,444 | (4,700 | ) | 722 | - | 10,466 | - | ||||||||||||||||||||
| Issued: May 2, 2017 | (vii) | 14,444 | (4,700 | ) | 722 | - | 10,466 | - | ||||||||||||||||||||
| Issued: June 1, 2017 | (vi) | 15,000 | (4,975 | ) | 750 | - | 10,775 | - | ||||||||||||||||||||
| Issued: June 1, 2017 | (vii) | 15,000 | (4,975 | ) | 750 | - | 10,775 | - | ||||||||||||||||||||
| Issued: August 8, 2017 | (vi) | 12,778 | (3,920 | ) | 639 | - | 9,497 | - | ||||||||||||||||||||
| Issued: August 8, 2017 | (vii) | 12,778 | (3,920 | ) | 639 | - | 9,497 | - | ||||||||||||||||||||
| Issued: September 1, 2017 | (vi) | 11,667 | (3,403 | ) | 584 | - | 8,848 | - | ||||||||||||||||||||
| Ending as of September 30, 2017 | $ | 1,318,510 | $ | (54,115 | ) | $ | 57,926 | $ | (268,412 | ) | 1,053,909 | 1,008,461 | ||||||||||||||||
| Ending as of December 31, 2016 | $ | 1,184,065 | $ | (134,628 | ) | $ | 51,204 | $ | (92,180 | ) | $ | - | $ | 1,008,461 | ||||||||||||||
(i) Old Main Capital, LLC – September 2015:
On September 14, 2015 (the “Issuance Date”), the Company closed on the transactions contemplated by the securities purchase agreement (the “SPA”) with Old Main
| Original Amount | Unamortized Discount | Guaranteed Interest Accrued | Total | |||||||||||||||
| Issued: March 2, 2020 | (ii) | 845,000 | - | 142,368 | $ | 987,368 | ||||||||||||
| Issued: September 30, 2020 | (ii) | 155,000 | (37,917 | ) | 4,612 | $ | 121,695 | |||||||||||
| Issued October 3, 2020 | (ii) | 155,000 | (52,241 | ) | 4,612 | $ | 107,371 | |||||||||||
| Issued: October 23, 2020 | (iii) | 68,000 | (1,693 | ) | 2,210 | $ | 68,517 | |||||||||||
| Issued: November 16, 2020 | (iii) | 48,000 | (1,890 | ) | 2,025 | $ | 48,135 | |||||||||||
| Issued: January 20, 2021 | (iii) | 48,000 | (2,425 | ) | 1,053 | $ | 46,628 | |||||||||||
| Issued: March 24, 2021 | (iv) | 150,000 | - | - | $ | 150,000 | ||||||||||||
Ending as of March 31,2021 | $ | 1,469,000 | (96,166 | ) | 156,880 | $ | 1,529,714 | |||||||||||
| F-7 |
(i) Securities Purchase Agreement and Convertible Notes Issued to Calvary Fund I, LP; Oasis Capital, LLC (“Old Main”), whereby Old Main agreed to invest $450,000 (the “Purchase Price”) in the Company’s -share capital in exchange for the Note (as defined below) and Warrants (as defined below). Pursuant to the SPA, the Company issued a promissory note to Old Main, in the original principal amount of $473,684, which bears interest at 10% per annum (the “September 2015 Note”). The Purchase Price will be paid as follows: (1) $250,000 funded in cash to the Company on the Issuance Date, (2) the remaining $200,000 within 30 days after the Issuance Date. The principal from each funding date, coupled with the accrued and unpaid interest relating to that principal amount, is due and payable on September 8, 2016 (the “Maturity Date”). Any amount of principal or interest that is due under the September 2015 Note, which is not paid by the Maturity Date, will bear interest at the rate of 24% per annum until it is paid.
Beginning 6 months after the Issuance Date, the Company is required to make bi-weekly amortization payments (one payment every 2 weeks), consisting of 1/12th of the outstanding principal and interest, until the September 2015 Note is on longer outstanding (each a “Bi-Weekly Payment”). Such Bi-Weekly Payments may be made in cash, or in the Company’s common stock (“Common Stock”) if certain equity conditions are satisfied. Such equity conditions include but are not limited to an average daily dollar volume of the Common Stock greater than $25,000 for the 20 trading days prior to a Bi-Weekly Payment. If the equity conditions are satisfied, and the Company decide to make a Bi-Weekly payment in Common Stock, then the shares of Common Stock to be delivered shall be calculated as follows: the amount of the Bi-Weekly Payment divided by the Base Conversion Price (as defined below). The Base Conversion Price shall equal the lower of (i) the closing price of the Common Stock on September 8, 2015, or (ii) 70% of the average of the lowest VWAP of the Common Stock for the 15 trading days immediately prior to the date of the Bi-Weekly Payment. Additionally, Old Main has the right at any time to convert amounts owed under the September 2015 Note into Common Stock at the closing price of the Common Stock on September 8, 2015. If an event of default under the September 2015 Note occurs, Old Main has the right to convert amounts owed under the September 2015 Note into Common Stock at 52% multiplied by the lowest VWAP of the Common Stock for the 15 trading days immediately prior to the applicable conversion date.
The September 2015 Note can be prepaid by the Company at any time while the September 2015 Note is outstanding, at a prepayment price of 125% multiplied by the outstanding principal and interest of the September 2015 Note, subject to Old Main’s discretionary acceptance. If an event of default occurs under the September 2015 Note, which is not cured within 10 business days, Old Main has the option to require the Company’s redemption of the September 2015 Note in cash at a redemption price of 130% multiplied by the outstanding principal and interest of the September 2015 Note. The September 2015 Note contains representations, warranties, events of default, beneficial ownership limitations, and other provisions that are customary of similar instruments.
Effective on March 9, 2016, the September 2015 Note was amended whereby the conversion price in effect on any Conversion Date shall be equal to the lesser of the (i) closing price of the Common Stock on September 8, 2015 (“Fixed Conversion Price”), or (ii) 60% of the lowest traded price of the Common Stock for the 15 consecutive trading days ending on the trading day that is immediately prior to the applicable Conversion Date. All such determinations were appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock during such measuring period. This amendment triggered an extinguishment of the debt since the change in the fair value of the embedded derivative exceeded 10% of the carrying value of the debt. The Company booked a $144,205 loss on extinguishment based on the amendment during the year ended December 31, 2016.
Old Main has converted $473,684 of principal and $28,033 of interest for 283,645 shares ranging in price per share of $1.17 to $2.55. This was completely settled by July 2016.
(ii) Equity Line of CreditSBI Investments LLC
On March 9, 2016,2, 2020 (the “Issue Date”), the Company issuedentered into an 8%unsecured promissory note purchase agreement with SBI, on behalf of itself and the other note purchasers (the “Note Purchasers”), pursuant to which the Note Purchasers purchased from the Company (a) 12% convertible promissory notenotes of the Company in thean aggregate principal amount of $250,000 to Old Main as a commitment fee for entering into a term sheet whereby Old Main agreed to provide the Company with up to $5,000,000 in financing over a 24 month period through the purchase$845,000 (the “12% Notes”) of the Company’s common stock. The proposed equity line will be subject to certain conditions, including, but not limited to, the Company’s filing of a Registration Statement covering the resale of the securities issued to Old Main and the Company’s continued compliance with the disclosure requirements under the Securities Exchange Act of 1934, as amended. Old Main’s commitment to provide funding under the equity line of credit is subject to the Company entering into a definitive and binding agreementwhich $75,000 were related to original issuance discount and $20,000 were related to deferred finance costs (with the proposed equity line of credit and as of September 30, 2016understanding that the Company have not entered into any such agreement.
The terms and conditions of the $250,000 note are substantially identical to the March 2016 Note below except the interest rate which is 8% per annum, half of which is guaranteed and the total amount of interest due on the Note for a period ofinitial six months is deemed earned as of the date the note was issued. All interest payments will be payable in cash, or subject to certain equity conditions in cash or common stock in the Company’s discretion. Accrued and unpaidsuch interest shall be due on payable on each conversion date and on the date the note matures,guaranteed) (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise provided forwith respect thereto in accordance with the terms thereof, the “Notes”, and each, a “Note”), convertible into shares (the “Conversion Shares”) of common stock of the Company (the “Common Stock”) and (b) warrants (the “Warrants”) to acquire up to 1,111,842 Shares subject to a beneficial ownership cap of no greater than 4.99% in the note.case of each Purchaser (the “Warrant Shares”).
Beginning six months after the date of the note, the Company is required to begin to make bi-weekly amortization payments (for the avoidance of doubt, bi-weekly shall mean every two weeks), in cash to Old Main until the note is repaid in full. Each bi-weekly payment shall consist of at least 1/12th of the total outstanding amount under the note as of the amortization payment date, including the principal, accrued and unpaid interest (prorated through the entire pay-off period pursuant to this paragraph), and any applicable penalties. The Company may make a bi-weekly payment to Old Main in the Company’s common stock, in the event that the equity conditions provided for in the note are satisfied. The maturity date of the note was March 9, 2017. During the interim period ended, the holder of the note amounting to $281,667 agreed to extend the maturity until January 1, 2018. As of September 30, 2017, the Company continues to accrue interest at the interest rate of 8%
The Company amended this convertible note12% Notes shall be on June 9, 2016 to remove the equity condition limitations, removed the amortization payment requirements, to permit voluntary conversions in common stock and revised the conversion price to mean the lesser of (a) the closing price of the Company’s common stock on March 9, 2016 or (b) 60% of the lowest VWAP price of the Company’s common stock for the 15 consecutive trading days ending on the tradingthat day that is immediately prior to any applicable conversion date. This amendment was treatednine (9) months after the Issue Date (the “Maturity Date”) and is the date upon which the principal amount of the 12% Notes, as an extinguishmentwell as all accrued and unpaid interest and other fees, shall be due and payable. The notes are currently in Default status at a rate of debt and a resultant loss on extinguishment of debt of $94,030 was realized, and recorded in other expenses during the year ended December 31, 2016.24% which has been accrued.
As at September 30, 2017March 31, 2021 the Company owes $250,000 (December 31, 2016 - $250,000)owed $845,000 in principal and the accrued interest is $31,667 (December 31, 2016 - $16,724)was $142,368, which consisted of accrued interest and default interest.
(ii) On September 30, 2020 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement with SBI, on behalf of itself and the other note purchasers (the “Note Purchasers”), pursuant to which consiststhe Note Purchasers purchased from the Company (a) two 6% convertible promissory notes ($155,000 each) of the guaranteedCompany in an aggregate principal amount of $310,000 (the “6% Notes”) convertible into Shares (the “Conversion Shares”) subject to a beneficial ownership cap of no greater than 4.99% in the case of each Purchaser. Pursuant to the agreement, each note was issued with an original issue discount of $5,000 and as such the purchase price was $150,000. The proceeds of one note was received on October 3, 2020.
The maturity date of the 6% Notes shall be on that day that is nine (9) months after the Issue Date (the “Maturity Date”) and is the date upon which the principal amount of the 6% Notes, as well as all accrued and unpaid interest and other fees, shall be due and payable. The notes also carry a default rate of 18%.
| F-8 |
As at March 31, 2021 the Company owed $310,000 in principal and the accrued interest was $9,224. The debenture is convertible into common shares of $10,000 (December 31, 2016 - $10,000) included inthe Company at a conversion price $0.16. The convertible debt was not considered tainted due to 5,812,500 shares of common stock held on reserve for issuance upon full conversion of this debenture. The Company evaluated the convertible notes balancefor a beneficial conversion feature in accordance with ASC 470-20 “Debt with Conversion and Other Options.” The Company determined that the conversion price was below the closing stock price on the commitment date, and the remainderconvertible notes contained a beneficial conversion feature. The Company recognized the intrinsic value of $21,667 (Decemberthe embedded beneficial conversion feature of $258,750 as additional paid-in capital and reduced the carrying value of the convertible notes to $41,250. The carrying value will be accreted over the term of the convertible notes up to their face value of $310,000.
As at March 31, 2016 - $6,274) is recorded in accounts payable2021, the carrying value of the 6% Note was $219,842 and accrued liabilities, Note 4.had an unamortized discount of $90,158 ($86,806 beneficial conversion feature and $3,352 OID).
(iii) Securities Purchase Agreement and Convertible Notes Issued to Old Main Capital, LLCGeneva Roth Remark Holdings, Inc.
On March 9, 2016October 23, 2020 (the “Issuance“Issue Date”) the Company closed on the transaction contemplated by the securities purchase agreement (the “SPA”), the Company entered into an unsecured promissory note purchase agreement with Old Main Capital, LLC (“Old Main”Geneva Roth Remark Holdings, Inc. (the “Note Purchaser”), whereby Old Main agreedpursuant to purchasewhich the Note Purchaser purchased from the Company a(a) the 9% convertible promissory note (the “March 2016 Note”)of the Company in the originalan aggregate principal amount of $296,153 for $269,500, net$68,000 ($3,000 OID) (the “9% Note”) convertible into Shares (the “Conversion Shares”) subject to a beneficial ownership cap of an original issuance discount of $26,653 (the “Purchase Price”), includedno greater than 4.99% in interest expenses. The March 2016 Note bears interest at the rate of 10% per annum, of which there is a guaranteed interest for a period of six (6) months ascase of the Issuance date.Purchaser (the “Maximum Share Amount”). The Purchase Price paid were as follows: (i) $84,500 was paid in cash tomaturity date of the Company9% Note shall be on March 12, 2016 (ii) $100,000 was paid in cash to the Company on April 6, 2016 (iii) $85,000 May 6, 2016. The principal from each funding date and the accrued and unpaid interest relating to that principal amount is due and payable on March 9, 2017October 23, 2021 (the “Maturity Date”). Any amount of principal or interest that is due under the March 2016 Note which is not paid by the Maturity Date will bear interest at the rate of 24% per annum until it is paid and subject to further increase as discussed below.
Beginning 6 months after the Issuance Date, the Company are required to make bi-weekly amortization payments (one payment every 2 weeks), consisting of 1/12th of the outstanding principal and interest, until the March 2016 Note is no longer outstanding (each a “Bi-Weekly Payment”). Such Bi-Weekly Payments may be made in cash, or in the Company’s common stock (“Common Stock”) if certain equity conditions are satisfied. Such equity conditions include but are not limited to an average daily dollar volume of the Common Stock greater than $30,000 for the 20 trading days prior to a Bi-Weekly Payment. If the equity conditions are satisfied, and the Company decide to make a Bi-Weekly payment in Common Stock, then the shares of Common Stock to be delivered shall be calculated as follows: the amount of the Bi-Weekly Payment divided by the Base Conversion Price (as defined below). The Base Conversion Price shall equal the lower of (i) the closing price of the Common Stock on March 9, 2016, or (ii) 70% of the lowest VWAP of the Common Stock for the 15 trading days immediately prior to the date of the Bi-Weekly Payment.
The March 2016 Note can be prepaid by the Company at any time while the March 2016 Note is outstanding, at a prepayment price of 125% multiplied by the outstanding principal and interest of the March 2016 Note, subject to Old Main’s discretionary acceptance. If an event of default occurs under the March 2016 Note, which is not cured within three business days, then upon Old Main’s provision of notice to the Company of the occurrence of such event of default, the Company shall within three business days of such default notice, pay the total amount outstanding under the March 2016 Note in cash (including principal, accrued and unpaid interest, applicable penalties (including default multipliers). In the event that the Company does not pay the total amount outstanding within three (3) business days of such default notice, then the total amount outstanding under the March 2016 Note (post-default amount) at that time shall increase by 50%, and on the fourth business day after such default notice (the “Second Amortization Payment Date”), the Company shall begin to make weekly amortization payments (for the avoidance of doubt, weekly shall mean every week) (each a “Weekly Payment”), in (1) cash to Old Main or (2) Common Stock at a price per share equal to the lesser of (i) the closing price of the Company’s common stock on March 9, 2016 or (ii) 52% of the lowest VWAP of the Common Stock for the 15 consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable conversion date. Each Weekly Payment shall consist of the greater of (i) $10,000 of value under the March 2016 Note or (ii) 1/24th of the total outstanding amount under this March 2016 Note as of the Second Amortization Payment Date, including the principal, accrued and unpaid interest (prorated through the entire pay-off period), and any applicable penalties. As at September 30, 2017, there were no prepayments made on the Note. During the nine months ended September 30, 2017 $180,908 (year ended December 31, 2016 - $92,180) of the principal balance had been converted into equity shares. Refer to Note 10 for further details.
On June 9, 2016 the Company amended the March 2016 Note whereby the Company revised the note to remove the equity condition limitations, removed the amortization payment requirements and to permit voluntary conversions in common stock. The Company also revised the conversion price to mean the lesser of (a) the closing price of the Company’s common stock on March 9, 2016 or (b) 60% of the lowest VWAP price of the Company’s common stock for the 15 consecutive trading days ending on the trading day that is immediately prior to any applicable conversion date. The amendment was accounted for using the extinguishment of debt method. The Company recorded nil (December 31, 2016 - $88,956) loss on extinguishment of debt, which is included in other expenses. During the interim period ended, the holder of the note amounting to $149,514 agreed to extend the maturity to January 1, 2018. As of September 30, 2017, the Company continues to accrue interest at the interest rate detailed above.
As at September 30, 2017 the Company owes $115,245 (December 31, 2016 - $203,973) in principal and the accrued interest is $34,270 (December 31, 2016 - $24,098), which consists of the guaranteed interest accrued of $14,808 (December 31, 2016 - $14,808) included in the convertible notes balance and the remainder of $19,462 (December 31, 2016 - $9,290) is recorded in accounts payable and accrued liabilities, Note 4.
(iv) Securities Purchase Agreement and Convertible Notes Issued to Old Main Capital, LLC
On June 9, 2016 (the “Issuance Date”), the Company closed on the transaction contemplated by the securities purchase agreement (the “SPA”) the Company entered into with Old Main Capital, LLC (“Old Main”), whereby Old Main agreed to purchase from the Company a convertible promissory note (the “Note”) in the original principal amount of $87,912 for $80,000, net of an original issuance discount of $7,912 (the “Purchase Price”). The Note bears interest at the rate of 10% per annum, of which there is a guaranteed interest for a period of six (6) months as of the Issuance date. The Purchase Price was paid on June 9, 2016 in cash. The principal from the funding date and the accrued and unpaid interest relating to that principal amount was due and payable on June 9, 2017 (the “Maturity Date”). Any amount of principal or interest that is due under the Note which is not paid by the Maturity Date will bear interest at the rate of 24% per annum until it is paid and subject to further increase as discussed below. The conversion price is the lesser of (a) the closing price of our common stock on June 9, 2016 or (b) 60% of the lowest VWAP price of the Company’s common stock for the 15 consecutive trading days ending on the trading day that is immediately prior to any applicable conversion date. During the interim period ended, the holder of the note amounting to $99,585 agreed to extend the maturity until January 1, 2018. As of September 30, 2017, the Company continues to accrue interest at the interest rate detailed above.
As at September 30, 2017 the Company owes $87,912 (December 31, 2016 - $87,912) in principal and the accrued interest is $11,672 (December 31, 2016 - $4,913), which consists of the guaranteed interest accrued of $4,396 (December 31, 2016 - $4,396) included in the convertible notes balance and the remainder of $7,276 (December 31, 2016 - $518) is recorded in accounts payable and accrued liabilities, Note 4.
(v) Securities Purchase Agreement and Convertible Note Issued to SBI Investments LLC, 2014-1
On June 30, 2016 (the “Issuance Date”) the Company closed on the transaction contemplated by the securities purchase agreement (the “SPA”) the Company entered into with SBI Investments LLC, 2014-1 (“SBI”), whereby SBI agreed to purchase from the Company a convertible promissory note (the “Note”) in the original principal amount of $550,000 for $500,000 net of an original issuance discount of $50,000 (the “Purchase Price”). The Note bears interest at the rate of 8% per annum, half of which is guaranteed and the total amount of interest due on the Note for a period of six months is deemed earned as of the date the note was issued. The Purchase Price was paid on June 30, 2016 in cash. The principal from the funding date and the accrued and unpaid interest relating to that principal amount was due and payable on June 30, 2017 (the “Maturity Date”). Any amount of principal or interest that is due under the Note which is not paid by the Maturity Date will bear interest at the rate of 24% per annum until it is paid and subject to further increase as discussed below. The conversion price is the lesser of (a) the closing price of the Company’s common stock on June 30, 2016 ($2.40 per share) or (b) 60% of the lowest VWAP price of the Company’s common stock for the 20 consecutive trading days ending on the trading day that is immediately prior to any applicable conversion date. This convertible debt has been accounted for as a derivative liability and is included in the Note 6 derivative liability calculations below. During the interim period ended, the holder of the note amounting to $514,269 agreed to extend the maturity to January 1, 2018. As of September 30, 2017, the Company continues to accrue interest at the interest rate detailed above.
Beginning 6 months after the Issuance Date, the Company are required to make bi-weekly amortization payments (one payment every 2 weeks), consisting of 1/12th of the outstanding principal and interest, until the Note is no longer outstanding (each a “Bi-Weekly Payment”). Such Bi-Weekly Payments may be made in cash, or in the Company’s common stock (“Common Stock”) if certain equity conditions are satisfied. Such equity conditions include but are not limited to an average daily dollar volume of the Common Stock greater than $25,000 for the 20 trading days prior to a Bi-Weekly Payment. If the equity conditions are satisfied, and the Company decide to make a Bi-Weekly payment in Common Stock, then the shares of Common Stock to be delivered shall be calculated as follows: the amount of the Bi-Weekly Payment divided by the Base Conversion Price (as defined below). The Base Conversion Price shall equal the lower of (i) the closing price of the Common Stock on June 30, 2016, $2.40 per share, or (ii) 60% of the lowest VWAP of the Common Stock for the 20 trading days immediately prior to the date of the Bi-Weekly Payment.
The Note can be prepaid by the Company at any time while the Note is outstanding, at a prepayment price of 125% multiplied by the outstanding principal and interest of the Note, subject to SBI’s discretionary acceptance. If an event of default occurs under the Note, which is not cured within three business days, then upon SBI’s provision of notice to the Company of the occurrence of such event of default, the Company shall within three business days of such default notice, pay the total amount outstanding under the Note in cash (including principal, accrued and unpaid interest, applicable penalties (including default multipliers). In the event that the Company does not pay the total amount outstanding within three (3) business days of such default notice, the company will pay interest at 24%. As at September 30, 2017, there were no prepayments made on the Note. During the nine months ended September 30, 2017, $87,504 (December 31, 2016 – Nil) of the principal balance had been converted into equity shares. Refer to Note 10 for further details.
As at September 30, 2017 the Company owes $462,496 (December 31, 2016 - $550,000) in principal and the accrued interest is $51,773 (December 31, 2016 - $22,000), which consists of the guaranteed interest accrued of $22,000 (December 31, 2016 - $22,000) included in the convertible notes balance and $29,773 (December 31, 2016 – nil) is recorded in accounts payable and accrued liabilities, Note 4.
(vi) Securities Purchase Agreement and Convertible Note Issued to Old Main Capital
On April 7, 2017, the Company entered into a Securities Purchase Agreement with Old Main whereby it agreed to and issued a 10% Convertible Promissory Note in the principal amount of up to $75,000 (the “April 2017 Old Main Note”) payable in tranches as follows: Tranche 1 paid on April 11, 2017: $19,167 consisting of $17,250 (less $1,250 for Old Main’s legal fees) paid to the Company in cash, and less original issue discount of $1,917. Tranche 2 paid on May 2, 2017: $14,444 consisting of $13,000 paid to the Company in cash, and less original issue discount of $1,444. Tranche 3 paid on June 1, 2017: $15,000 consisting of $13,500 paid to the Company in cash, and less original issue discount of $1,500. Tranche 4 paid on August 8, 2017: $12,778 consisting of $11,500 paid to the Company in cash, and less original issue discount of $1,278. Tranche 5 paid on September 1, 2017: $11,667 consisting of $10,500 paid to the Company in cash, and less original issue discount of $1,167.
Old Main may pay such additional amounts of the Consideration and at such dates as mutually agreed upon by the Borrower and Old Main. The maturity date for each tranche funded shall be twelve (12) months from the effective date of each payment (each a “Maturity Date”) (or such earlier date as the April 2017 Old Main Note is required or permitted to be repaid as provided hereunder, and is the date upon which the principal sumamount of each respective tranche,the 9% Note, as well as anyall accrued and unpaid interest and other fees, relating to that respective tranche, shall be due and payable. The Old MainNote also has a 22% default interest rate. The “Conversion Price” shall be equal to the rightVariable Conversion Price (as defined below) (subject to convert allequitable adjustments for stock splits, stock dividends or any part ofrights offerings by the outstanding and unpaid principal and interest into shares ofCompany relating to the Company’s common stock. The termssecurities or the securities of the Convertible Note are as follows:
Participation in Future Financing. Subject to any existing obligationssubsidiary of the Company, fromcombinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 65% multiplied by the date hereof untilMarket Price (as defined below) (representing a discount rate of 35%). “Market Price” means the date that is the 12-month anniversaryaverage of the date ofthree (3) lowest trading prices) for the April 2017 Old Main Note, upon any issuance byshares during the Company or any of its subsidiaries of its Common Stock or other securities convertible into Common Stock, other than any issuance that is through a public underwritten offering or to an investor or a group of investors that already own Common Stock or securities of the Company, Old Main shall have the right to participate in the subsequent Financing in an amount up to 100% of such Old Main’s pro rata portion as defined below in the April 2017 Old Main Notefifteen (15) trading day period ending on the same terms, conditions and price provided for inlatest complete trading day prior to the Subsequent Financing, subject to any existing obligations of the Company with respect to participation rights.Conversion Date
As at September 30, 2017,March 31, 2021 the Company owes $73,056owed $68,000 in principal and $3,653 in guaranteedthe accrued interest accrued.was $2,210 with unamortized debt discount of $1,693.
| F-9 |
(vii) Securities Purchase Agreement and Convertible Note Issued to SBI Investments LLC, 2014-1
On April 7, 2017,November 16, 2020 (the “Issue Date”), the Company entered into a Securities Purchase Agreementan unsecured promissory note purchase agreement with SBI Investments LLC, 2014-1 (“SBI”Geneva Roth Remark Holdings, Inc. (the “Note Purchaser”) whereby it agreed, pursuant to and issued a 10% Convertible Promissorywhich the Note Purchaser purchased from the Company (a) the 9% convertible promissory note of the Company in thean aggregate principal amount of up$48,000 ($3,000 OID) (the “9% Note II”) convertible into Shares (the “Conversion Shares”) subject to $75,000 (the “April 2017 SBI note”)a beneficial ownership cap of no greater than 4.99% in tranches as follows: Tranche 1 paid on April 11, 2017: $19,167 consisting of $17,250 (less $1,250 for SBI’s legal fees) paid to the Company in cash, and less original issue discount of $1,917. Tranche 2 paid on May 2, 2017: $14,444 consisting of $13,000 paid to the Company in cash, and less original issue discount of $1,444. Tranche 3 paid on June 1, 2017: $15,000 consisting of $13,500 paid to the Company in cash, and less original issue discount of $1,500. Tranche 4 paid on August 8, 2017: $12,778 consisting of $11,500 paid to the Company in cash, and less original issue discount of $1,678.
SBI may pay such additional amountscase of the Consideration and at such dates as mutually agreed upon by the Borrower and SBI.Purchaser (the “Maximum share Amount”). The maturity date for each tranche fundedof the 9% Note II shall be twelve (12) months from the effective date of each payment (each aon November 16, 2021 (the “Maturity Date”) (or such earlier date as the April 2017 SBI is required or permitted to be repaid as provided hereunder, and is the date upon which the principal sumamount of each respective tranche,the 9% Note, as well as anyall accrued and unpaid interest and other fees, relating to that respective tranche, shall be due and payable. The SBINote also has a 22% default interest rate. The “Conversion Price” shall be equal to the rightVariable Conversion Price (as defined below) (subject to convert allequitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any partsubsidiary of the outstandingCompany, combinations, recapitalization, reclassifications, extraordinary distributions and unpaid principal and interest into sharessimilar events). The “Variable Conversion Price” shall mean 65% multiplied by the Market Price (as defined below) (representing a discount rate of 35%). “Market Price” means the average of the Company’s common stock. The terms ofthree (3) lowest trading prices) for the Convertible Note are as follows:shares during the fifteen (15) trading day period ending on the latest complete trading day prior to the Conversion Date
As at September 30, 2017,March 31, 2021 the Company owes $61,389owed $48,000 in principal and $3,069 in guaranteedthe accrued interest accrued.was $2,025 with unamortized debt discount of $1,890.
Participation in Future Financing. SubjectOn January 20, 2021 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement with Geneva Roth Remark Holdings, Inc. (the “Note Purchaser”), pursuant to any existing obligationswhich the Note Purchaser purchased from the Company (a) the 9% convertible promissory note of the Company fromin an aggregate principal amount of $48,000 ($3,000 OID) (the “9% Note III”) convertible into Shares (the “Conversion Shares”) subject to a beneficial ownership cap of no greater than 4.99% in the case of the Purchaser (the “Maximum share Amount”). The maturity date of the 9% Note III shall be on January 20, 2022 (the “Maturity Date”) and is the date hereof untilupon which the date that isprincipal amount of the 12-month9% Note, as well as all accrued and unpaid interest and other fees, shall be due and payable. The Note also has a 22% default interest rate. The “Conversion Price” shall be equal to the Variable Conversion Price (as defined below) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 65% multiplied by the Market Price (as defined below) (representing a discount rate of 35%). “Market Price” means the average of the three (3) lowest trading prices) for the shares during the fifteen (15) trading day period ending on the latest complete trading day prior to the Conversion Date
As at March 31, 2021 the Company owed $48,000 in principal and the accrued interest was $1,053 with unamortized debt discount of $2,425.
(iv) Notes issued to the Small Business Administration
On March 24, 2021, Bridgeway was approved for a SBA Loan-2 in the amount of $150,000. SBA Loan-2, interest will accrue at the rate of 3.75% per annum with installment payments, including principal and interest, of $731.00 per month beginning on the twelve (12) month anniversary of the datefunding date. The balance of the April 2017 SBI, upon any issuance by the Company or any of its subsidiaries of its Common Stock or other securities convertible into Common Stock, other than any issuance that is through a public underwritten offering or to an investor or a group of investors that already own Common Stock or securities of the Company, SBI shall have the right to participate in the subsequent Financing in an amount up to 100% of such SBI’s pro rata portion as defined below in the April 2017 SBI on the same terms, conditions and price provided for in the Subsequent Financing, subject to any existing obligations of the Company with respect to participation rights.
In conjunction with the issuance of the September 2015 Note, the Company simultaneously issued 28,333 common stock purchase warrants to Old Main (the “Warrants”). The Warrants may be exercised by Old Main at any time in the 5-year period following the issuance. The exercise price for each share of the Common Stock is equal to the closing price of the Common Stock on September 8, 2015, $7.88 per share.
On June 9, 2016 and June 30, 2016, the Company entered (either a new issuance or amendment to the March 9, 2016 issuance which requires derivative treatment on June 9, 2016) into convertible derivative notes with Old Main Capital, LLC and SBI Investments LLC – Sea Otter Global Ventures LLC (referred to as the “the Holders”), in the initial amount of $250,000 (Old Main Capital Commitment Fee Note), $296,153 (Old Main Capital Bridge Note), $87,912 (Old Main Capital Note), and $550,000 (SBI Investments LLC – Sea Otter Global Vent (with Original Issue Discounts and deferred financing costs). The notes bear an interest rate of 8% or 10% per annum and matures in 1 year or less under the convertible note agreements, the lender has the right to convert all or any part of the outstanding and unpaid principal and interest into shareswill be payable on the thirty (30) year anniversary of the Company’s common stock. In addition, the Company issued the SBI–Sea Otter Holder a warrant to acquire 8,334 shares of the Company’s common stock. The terms of the Convertible Note are as follows:
The June 9th amendments triggered an extinguishment of the debt since the change in the fair value of the embedded derivative exceeded 10% of the carrying value of the debt. The Company booked a $182,986 loss on extinguishment based on the amendments on the quarter and six-month period ended June 30, 2016.funding date.
The terms of the SBI Warrants are as follows:
| F-10 |
On June 9, 2016, the amended Old Main notes (Bridge Note and Commitment Fee) provided the holder with a variable rate conversion feature. This feature taints all warrants/notes and ongoing derivative treatment is required until the note is paid or converted in full.
This note is a derivative because it contains an embedded conversion feature that resets the conversion price upon a fundamental transaction event. The Company recorded a debt discount based on the original issue discount, the embedded derivative, and the derivative warrant issued. The debt discount is being amortized over the term of the convertible debt.
Note 64 – Derivative Liability
In connection with the sale of debt or equity instruments, the Company may sell options or warrants to purchase the Company’s common stock. In certain circumstances, these options or warrants may be classified as derivative liabilities, rather than as equity. Additionally, the debt or equity instruments may contain embedded derivative instruments, such as embedded derivative features which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.
The Company’s derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income in the period in which the changes occur. For options, warrants and bifurcated embedded derivative features that are accounted for as derivative instrument liabilities, the Company estimates fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. The valuation techniques require assumptions related to the remaining term of the instruments and risk-free rates of return, the Company’s current common stock price and expected dividend yield, and the expected volatility of the Company’s common stock price over the life of the instrument.
The following table summarizes the warrant derivative liabilities and convertible notes activity for the period ending September 30, 2017:three months ended March 31, 2021:
| Description | Derivative Liabilities | |||
| Fair value at December 31, 2016 | $ | 240,955 | ||
| Change due to Issuances | 50,354 | |||
| Change due to debt extinguishment | - | |||
| Change due to Exercise/Conversion | (127,480 | ) | ||
| Change in Fair Value | 91,623 | |||
| Fair value at September 30, 2017 | $ | 255,452 | ||
For the nine month period ended September 30, 2017, net derivative income was $91,623 (September 30, 2016 - $261,618). Further, the change in derivative liability due to exercise/conversion of $297,752 was recorded in APIC.
| Derivative Liabilities | ||||
| Derivative liabilities as at December 31, 2020 | $ | 1,717,337 | ||
| Change in fair value of warrants and notes | (129,065 | ) | ||
| Derivative liabilities as at March 31, 2021 | $ | 1,588,272 | ||
The latticeMonte Carlo methodology was used to value the embedded derivatives within the convertible note and the warrants issued, withderivative components, using the following assumptions.assumptions:
| Assumptions | September 30, 2017 | December 31, 2016 | ||||||||||||||
| Warrants | Notes | |||||||||||||||
| Dividend yield | 0.00 | % | 0.00 | % | - | 12 | % | |||||||||
| Risk-free rate for term | 1.02-1.68 | % | 0.51-1.47 | % | 0.35 | % | 0.03 | % | ||||||||
| Volatility | 275.2-570.0 | % | 120.4-142.8 | % | 342.3 | % | 393.9 | % | ||||||||
| Maturity dates | .50-2.94 years | .19-3.69 years | ||||||||||||||
| Remaining term (Years) | 3.92 | 0.25 | ||||||||||||||
| Stock Price | 0.011-0.030 | 0.453 | $ | 0.0373 | $ | 0.0373 | ||||||||||
During the period ended March 31, 2016, the Company amended the derivative notes on March 9, 2016. The amendment included revising the “Alternate Conversion Price to mean 60% of the lowest traded price of the common stock for the 15 consecutive trading days prior to the conversion date. The derivative liability increased by $91,070 due to the amendment which was booked as an additional debt discount.
| F-11 |
During the quarter ended September 30, 2015, the Company issued 28,333 warrants to an investor as part of their Securities Purchase Agreement in which the investor acquired a Convertible Note. The warrants have an exercise price of $7.88 and a five-year term. The warrants are treated as derivative liabilities since the holder has anti-dilution protections that will re-price the warrant upon the issuance of lower priced equity linked instruments by the Company for the period of 180 days after issuance. The fair value of the derivative liability related to these warrants at issuance was valued at $169,270 and was booked as a debt discount to the Convertible Note and booked as a derivative liability on the balance sheet. The embedded conversion feature of the Convertible Note is treated as a derivative liability since the conversion price is reset upon a fundamental transaction event. The fair value of the derivative liability related to the embedded conversion feature was valued at $92,659 and was booked as a debt discount, included in interest expense(up to the amount of the note, with the excess expensed as interest expense).
Note 75 – Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued expenses, derivative liabilities and convertible debt. The estimated fair value of cash and cash equivalents, accounts payable and accrued liabilitiesthe financial instruments approximate their carrying amounts due to the short-term nature of these instruments.
The Company utilizes various types of financing to fund its business needs, including convertible debt with warrants attached. The Company reviews its warrants and conversion features of securities issued as to whether they are freestanding or contain an embedded derivative and, if so, whether they are classified as a liability at each reporting period until the amount is settled and reclassified into equity with changes in fair value recognized in current earnings. At September 30, 2017, the Company had convertible debt and warrants to purchase common stock. The fair value of the warrants and the embedded conversion feature of the convertible debt is classified as a liability. Some of these units have embedded conversion features that are treated as a discount on the convertible notes. Such financial instruments are initially recorded at fair value and amortized to interest expense over the life of the debt using the effective interest method.
Inputs used in the valuation to derive fair value are classified based on a fair value hierarchy which distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
Level one - Quoted market prices in active markets for identical assets or liabilities;
Level two - Inputs other than level one inputs that are either directly or indirectly observable; and
Level three - Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.
Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company’s derivative liability is measured at fair value on a recurring basis. The Company classifies the fair value of these convertible notes and warrants derivative liability under level three. The Company’s settlement payable is measured at fair value on a recurring basis based on the most recent settlement offer. The Company classifies the fair value of the settlement payable under level three. The Company’s rescission liability is measured at fair value on a recurring basis based on the most recent stock price. The Company classifies the fair value of the rescission liability under level one.
Based on ASC Topic 815 and related guidance, the Company concluded the common stock purchase warrants are required to be accounted for as derivatives as of the issue date due to a reset feature on the exercise price. At the date of issuance warrant derivative liabilities were measured at fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. The Company records the fair value of these derivatives on its balance sheet at fair value with changes in the values of these derivatives reflected in the consolidated statements of operations as “Gain (loss) on“Change in fair value of derivative liabilities.”liabilities” These derivative instruments are not designated as hedging instruments under ASC 815-10 and are disclosed on the balance sheet under Derivative Liabilities.
The following table presents liabilities that are measured and recognized at fair value as of September 30, 2017 on a recurring and non-recurring basis:
| Description | Level 1 | Level 2 | Level 3 | Gains (Losses) | ||||||||||||
| Derivatives | $ | - | $ | - | $ | 255,452 | $ | 91,623 | ||||||||
| Fair Value at September 30, 2017 | $ | - | $ | - | $ | 255,452 | $ | 91,623 | ||||||||
| Description | Level 1 | Level 2 | Level 3 | |||||||||
| Derivatives | $ | - | $ | - | $ | 1,717,337 | ||||||
| Fair Value at December 31, 2020 | $ | - | $ | - | $ | 1,717,337 | ||||||
| Derivatives | $ | - | $ | - | $ | 1,588,272 | ||||||
| Fair Value at March 31, 2021 | $ | - | $ | - | $ | 1,588,272 | ||||||
| F-12 |
Note 86 – Stock Options:Options and Warrants:
The following is a summary of stock option activity:
| Weighted | ||||||||||||||||
| Weighted | Average | |||||||||||||||
| Average | Remaining | Aggregate | ||||||||||||||
| Options | Exercise | Contractual | Intrinsic | |||||||||||||
| Outstanding | Price | Life | Value | |||||||||||||
| Outstanding, December 31, 2016 | 200,000 | $ | 3.00 | |||||||||||||
| Granted | - | |||||||||||||||
| Forfeited | - | |||||||||||||||
| Exercised | - | |||||||||||||||
| Outstanding, September 30, 2017 | 200,000 | $ | 3.00 | 3.17 | $ | - | ||||||||||
| Exercisable, September 30, 2017 | - | $ | - | - | $ | - | ||||||||||
The exercise price for options outstanding and exercisable at September 30, 2017 is as follows:
| Outstanding | Exercisable | |||||||||||
| Number of | Exercise | Number of | Exercise | |||||||||
| Options | Price | Options | Price | |||||||||
| 200,000 | $ | 3.00 | - | $ | - | |||||||
| 200,000 | - | |||||||||||
For options granted during 2015 where the exercise price was equal to the stock price at the date of the grant, the weighted-average fair value of such options was $5.70 and the weighted-average exercise price of such options was $6.00. No options were granted during 2015 where the exercise price was greater than the stock price at the date of grant or where the exercise price was less than the stock price at the date of grant. During 2016 the company reduced the exercise price to $3.00.
The fair value of the stock options is being amortized to stock option expense over the vesting period. The Company recorded stock option expense of $238,119, included in operating expenses, during nine months ended September 30, 2017, and $632,356 during the year ended December 31, 2016. At September 30, 2017, the unamortized stock option expense was $154,100 (December 31, 2016 - $392,218) which will be amortized to expense through December 2018.
The assumptions used in calculating the fair value of options granted using the Black-Scholes option- pricing model for options granted are as follows:
| 2017 | 2016 | |||||||
| Risk-free interest rate | 1.5 | % | 1.5 | % | ||||
| Expected life of the options | 4.8 to 6.5 years | 5.5 to 6.5 years | ||||||
| Expected volatility | 150 | % | 150 | % | ||||
| Expected dividend yield | 0 | % | 0 | % | ||||
As at September 30, 2017,March 31, 2021, the Company had the following warrant securities outstanding:
| Common Stock Warrants | ||||
| December 31, 2016 | 36,667 | |||
| Less: Exercised | - | |||
| Less: Expired | - | |||
| Add: Issued | - | |||
| September 30, 2017 | 36,667 | |||
| Warrants (Note 6) | 28,333 | |||
| Exercise Price | $ | 7.88 | ||
| Expiration Date | September 8, 2015 to September 8, 2020 | |||
| Warrants (Note 5) | 8,334 | |||
| Exercise Price | ** | |||
| Expiration Date | June 30, 2016 to June 30, 2019 | |||
Common Stock Warrants | ||||
| December 31, 2020 | 2,640,625 | * | ||
| Less: Exercised | - | |||
| Less: Cancelled | - | |||
| Add: Issued | ||||
| March 31, 2021 | 2,640,625 | |||
| Warrants (Note 3) | 1,111,842 | |||
| Exercise Price | $ | 0.380 | ||
| Expiration Date | March 2, 2025 |
** Lessor of: $2.46 or $2.88 or anyThe fair value of the warrants at issuance was $577,868, with an expiration of March 2, 2025 and exercise price of equity linked instruments issued by$0.380. During the Company whileyear ended December 31, 2020, the warrant is issued and outstandingexercise price was reset to $0.16. The fair value of the warrants as at March 31, 2021 was $473,759.
| F-13 |
During the three and nine month periods ended September 30, 2017, nil warrants expired unexercised.
Note 97 – Related Party Transactions
Related Parties
Related parties with whomDuring the three months ended March 31, 2021, an amount of $11,374 in payments were made to the CEO. Included the due to related party balance sheet account was a balance of $69,903 owing to the current CEO of the Company had transactions are:
Consulting services from Officer
Consulting services provided by the officer for the nine months ended June 30, 2017as of March 31, 2021, which were unsecured, bore no interest and 2016were due on demand.
| September 30, 2017 | September 30, 2016 | |||||||
| President, Chief Executive Officer and Chief Financial Officer | $ | 75,600 | $ | 75,600 | ||||
Note 10 -8- Stockholders’ Deficiency
Shares Authorized
The Company’s authorized capital stock consists of 495,000,000 shares of common stock, par value $0.001 per shareClass A and 5,000,000 shares of preferred stock, par value $0.001 per share.Class B Common Stock Reverse Stock Split
On December 28, 2016,October 16, 2020, the board of directors (the “Board”) of the Company filedand a stockholder holding a majority of the voting power of the Company’s voting stock (the “Majority Stockholder”) took action by joint written consent in lieu of a meeting to: (i) ratify the approval of an amendment to the Company’s certificate of designation, preferences and rights of Series A Preferred Stock (the “Certificate of Designation”)incorporation, which amendment was filed with the Delaware Secretary of State ofon December 19, 2019 and was declared effective on January 20, 2020 (the “December 2019 Amendment”), which (i) changed the State of NevadaCompany’s name from “Capital Park Holdings Corp.” to designate 1,000 shares of its previously authorized preferred stock as Series A Preferred Stock. The holders of shares of Series A Preferred Stock that are not entitled to dividends or distributions have the following voting rights:
Effective as of February 22, 2017, the Company amended its Articles of Incorporation to increase its“Bridgeway National Corp.” and (ii) increased our authorized capital stock from 125,000,00030,000,000 shares to 500,000,000250,000,000 shares, of which 495,000,000 will be common stock168,750,000 shares were designated as Class A Common Stock (the “Class A Common Stock”), 18,750,000 shares were designated as Class B Common Stock (the “Class B Common Stock”) and 5,000,000 will be62,500,000 shares were designated as preferred stock, of which 1,00062,374,819 shares have beenwere previously designated as Series A Preferred Stock (the “Series A Preferred Stock”) and effected125,181 shares were previously designated as Series B Preferred Stock (the “Series B Preferred Stock”); (ii) approve a 1 for 30further amendment to the Company’s certificate of incorporation (the “Recapitalization Amendment”) to increase the Common Stock from 187,500,000 shares to 400,000,000 shares, of which 360,000,000 shares will be designated as the Class A Common Stock and 40,000,000 shares will be designated as the Class B Common Stock and (iii) approve an additional amendment to the certificate of incorporation to effect a reverse stock split of its issued andour outstanding shares of common stock. All per share amountsour Class A Common Stock and numberClass B Common Stock at the at the ratio of shares inone-for-4 (the “Reverse Stock Split Amendment,” and together with the financial statementsDecember 2019 Amendment and related notes have been retroactively restated to reflect the reverse stock split.Recapitalization Amendment, collectively, the “Amendments”).
The December 2019 Amendment will not be deemed ratified, and the Recapitalization Amendment and Reverse Stock Split Amendment will not be made effective until at least twenty (20) calendar days after the mailing of the Information Statement accompanying this Notice. In addition, the Reverse Stock Split Amendment will not be made effective until the Recapitalization Amendment is made effective and we receive FINRA approval for the Reverse Stock Split from the Financial Industry Regulatory Authority (“FINRA”). We received written notification that FINRA had approved the Reverse Stock Split on February 17, 2021.
Common Stock
Common Shares Issued for Cash
No common shares were issued for cash during the year ended December 31, 2016.
No common shares were issued for cash during the nine months period ended September 30, 2017.
Common Shares Issued for Non- CashPreferred Stock
During the nine monthsthree-month period ended September 30, 2017,March 31,2021, the Company declared $9,986 in dividends on the Series B Preferred Stock, of which $9,986 was accrued as a total of $87,503dividend payable.
| F-14 |
Note 9- Lease
The Company entered into an operating lease agreement with a scheduled commencement date on January 15, 2020 for a sixty-seven-month term, with an option to renew for a five-year term.
The Company adopted ASC 842 – Leases using the modified retrospective cumulative catch-up approach beginning on January 1, 2019. Under this approach, the Company did not restate its comparative amounts and recognized a right-of-use asset equal to the present value of the June 2016 Note was convertedfuture lease payments. The Company elected to 2,758,313 sharesapply the practical expedient to only transition contracts which were previously identified as leases and elected to not recognize right-of-use assets and lease obligations for leases of common stocklow value assets.
When measuring the right of use liabilities, the Company discounted lease payments using its incremental borrowing rate at an average price of $0.0317 per share as follows:January 15, 2020. The weighted-average-rate applied is 12%.
| $ | ||||
| Operating lease right-of-use asset at | 722,088 | |||
| Amortization | (39,386 | ) | ||
| Balance at March 31, 2021 | 682,702 | |||
773,004 | ||||
| Principal repayment | (29,998 | ) | ||
| Balance at | 743,006 | |||
| 130,644 | ||||
| 612,362 | ||||
| ||||
During the nine month period ended September 30, 2017, a total of $88,728 of the March 2016 Note was converted to 3,201,270 shares of common stock at an average price of $0.0277 per share as follows:
The related derivative liability of $127,480, as disclosed in Note 6,operating lease expense was transferred to$52,779 for the additional paid-in capital during the ninethree months period ended September 30, 2017.
Preferred Stock
On February 21, 2017, the Company entered into an investment agreement (the “Investment Agreement”) with Stewart Garner, the Company’s Chief Executive OfficerMarch 31, 2021 and the sole member of its board of directors. Pursuant to the terms of the Investment Agreement, the Company sold to Mr. Garner 1,000 shares of the Company’s Series A Preferred Stock, par value of $0.001 per share, at a purchase price of $0.10 per share, or an aggregate of $100.
Note 11 - Acquisition of Assets
On June 30, 2016, the Company completed the acquisition of certain assets of Pixorial pursuant to the terms of the Amended and Restated Asset Purchase Agreement entered into among the Company, Pixorial and Andres Espiniera dated June 20, 2016 (the “Amended Agreement”). Pursuant to the terms of the Amended Agreement, the Company agreed to purchase, and Pixorial agreed to sell certain assets of Pixorial comprised of the trademark “What’s Your Story” and its customer list (the “Pixorial Asset Acquisition”).
Under the terms of the Amended Agreement, the Company issued 86,673 shares of its unregistered common stock to the existing shareholders and certain creditors of Pixorial. In addition, the Company amended the exercise price of Mr. Espineira’s November 10, 2015 stock option award to acquire 200,000 shares of the Company’s common stock to $3.00 per share. The shares of the Company’s common stock to be issued to Pixorial’s shareholders and creditors will also be subject to a lock-up agreement whereby one-third the number received by each may be sold beginning as of each of the first three anniversaries of the closing of the Pixorial Asset Acquisition.
Consummation of the Pixorial Asset Acquisition, which shall occur no later than July 15, 2016, is subject to certain conditions, including: (i) consent to the Asset Purchase Transaction by both the shareholders of Pixorial and the principals of Siena Pier Ventures 2007 Fund, LLP and Siena Pier Ventures, LLC (the “Secured Creditors”), holders of certain indebtedness of the Companyincluded in the aggregate principal sum of $2,025,000 (the “Siena Debt”), shall have been delivered; (ii) the Secured Creditors shall have agreed to cancel a portion of the Siena Debt for 81,260 of the total 86,673 shares of the Company’s common stock to be tendered as consideration, (iii) such Secured Creditors’ shares also being subject to a lock-up agreement whereby only one-third of the shares may be sold beginning on each of the first three anniversaries of the closing of the Pixorial Asset Acquisition;general and (iv) the parties shall have reaffirmed to one another as of closing their customary representations and warranties made as of the execution date under the Amended Agreement.administrative expenses.
The common stock was valued at $195,015 based onfollowing table represents the closing pricecontractual undiscounted cash flows for right of $2.25/shareuse liabilities – operating leases due within twelve months of the Company’s common stock on the acquisition date. The purchase price was allocated as follows: trademark - $5,000 and customer list - $190,015. Management determined that these intangible assets were impaired and took a charge to earnings of $195,015 during the year ended December 31, 2016.March 31,2021
| $ | ||||
| 2021 | 158,336 | |||
| 2022 | 216,392 | |||
| 2023 | 221,802 | |||
| 2024 | 227,347 | |||
| 2025 | 135,934 | |||
| Total minimum lease payments | 959,811 | |||
| Less: effect of discounting | (216,805 | ) | ||
| Present value of future minimum lease payments | 743,006 | |||
| Less: current portion of right of use liabilities – operating leases | 130,644 | |||
| Noncurrent portion of right of use liabilities – operating leases | 612,362 | |||
Note 12 -10- Subsequent Events
The Company’s management has evaluated subsequent events up to December 8, 2017On March 31, 2021, Bridgeway was approved for a SBA Loan-1 in the dateamount of $723,743. SBA Loan-1 shall be eligible for forgiveness if during the financial statements were issued, pursuant8-to-24-week covered period following disbursement: (i) employee and compensation levels are maintained; (ii) the loan proceeds are spent on payroll costs and other eligible expenses and (iii) at least 60% of the proceeds are spent on payroll costs. For any portion of the SBA Loan-1 that is not forgiven, it will bear interest at a 1% fixed APR for the life of the loan with payments deferred for ten (10) months. Subsequent to the requirementsapproval, cash was received as of ASC 855 and has determined the following material subsequent events:April 2021.
On October 10, 2017 $4,500 of June 2016 Note debt was converted to 750,000 shares of common stock at a conversion price of $.006 per share.
| F-15 |
On November 15, 2017, the Company received Tranche 6 of the April 7, 2017 Convertible Note from Old Main Capital of $10,278 consisting of $9,250 paid to the Company in cash, net of the original issue discount of $1,028.
On November 15, 2017, the Company received Tranche 5 of the April 7, 2017 Convertible Note from SBI Investments LLC of $10,278 consisting of $9,250 paid to the Company in cash, net of the original issue discount of $1,028.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results. Factors that could cause our actual results of operations and financial condition to differ materially are discussed in greater detail in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on April 8, 2016.
We caution that the factors described herein, and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report on Form 10-Q.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company
We arePrior to the transactions that took place on January 9, 2019, we were a lifelogging software company that developed and hostshosted a proprietary cloud-based software solution accessibleaccessible on iOS and Android devices that offers an enhanced media experience for consumers by augmenting videos,videos, livestreams and photos with additional context information and providing a platform that makes it easy to findfind and use that data when viewing or sharing media. The first iteration ofSubsequent to transactions that context information istook place on January 9, 2019, in addition to its lifelogging software business, the Company has been structured as a holding company with a business strategy focused on geo-location, face-detection, and different options for tagging and social interaction.owning subsidiaries engaged in a number of diverse business activities.
Following the launchResults of our private beta version of the LifeLogger Platform in August 2015 to users who expressed interest for exclusive testing with their iOS and Android devices, we launched an open public version during the first quarter of 2016. This release has the primary value proposition built in with geo-coordinates, face detection, playback with interactive map, social engagement features that enable easy sharing and ability to “like” other postings. Among the potential uses of our platform are the ability to share a video of a customer’s vacation in Europe with others that is integrated with an interactive map showing the viewer where the video is taking place, allowing the viewer to switch to the map view and even show additional views of those locations and other media taken by other people nearby. The end result is designed to provide an enhanced media experience much richer than just sharing the video alone.Operations
We maintain the operation of this platform and are seeking potential distributors, joint venture and strategic alliance partners and additional sources of financing to enable us to pursue continued marketing and future development and commercialization activities to increase engagement and make improvements to the user interface and experience.
We completed a prototype of our integrated Lifelogger wearable video camera for testing in 2014 and continue to market this product to potential distributors and joint venture and strategic alliance partners. We will evaluate opportunities from these marketing efforts to determine the extent of our future development and marketing of this device.
Our VisionThree months ended March 31, 2021, as compared to three months ended March 31, 2020
Our mission is to connect people with the media that matters to them. To accomplish this, we envision collecting as much data as possible about the captured device agnostic media allowing users to get videos from their iOS or Android device, or other wearable camera and/or sensor solutions. In addition to the data we might collect to augment the video, our plan is to anonymously collect viewing data and evaluate habits to determine what is most relevant to our customers as we intersect those patterns with the customer’s connected social media networks. Between the data we are capable of adding to users’ media and data that is publicly available (e.g. street views, mapping, other people’s videos), users are able to access other media that’s relevant to their photos and/or video. We believe that the end result is a much richer experience for our users and a data network that facilitates finding media that is relevant to our customers.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016
The following comparative analysis on results of operations was based primarily on the comparative consolidated financial statements, footnotes and related information for the periods identified below and should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this report. The results discussed below are for the three and nine months ended September 30, 2017March 31, 2021 and 2016.2020. For comparative purposes, we are comparing the three and nine months ended September 30, 2017,March 31, 2021, to the three and nine months ended September 30, 2016.March 31, 2020. The following discussion should be read in conjunction with the Company’s consolidated financial statements and the related notes included in this quarterly report.
Revenue.Revenue
Total revenue was $0 for the threethree-month periods ended March 31, 2021 and nine months ended September 30, 2017 and September 30, 2016,March 31, 2020, respectively. The Company currently cannot predict when the Company will become revenue producing.
| -3- |
Cost of Revenue.
We had no cost of revenues for the three and nine monthsperiod ended September 30, 2017 and 2016March 31, 2021 or the period ended March 31, 2020 as we had no revenues. We are not able to predict what our expected gross profits will be in remaining periods in fiscal 2017 as we are unable to estimate software licensing revenue from our LifeLogger Platform.
Operating Expenses.
Total operating expenses were $148,622$212,492 and $352,125$210,590 for the three months ended September 30, 2017March 31, 2021 and 2016,March 31, 2020, respectively. Total operatingOperating expenses were $495,431 and $1,444,698 foressentially flat, which reflects the nine months ended September 30, 2017 and 2016, respectively. The decrease is primarily attributable to decreases in research and development, other consulting, option expense, impairmentCompany’s increased expenses associated with a broadening of intangible assets and general and administrative expenses.its operating strategy.
Other ExpensesIncome (Expenses).
Other expenses (income) were $20,593expense for the three-month period ended March 31, 2021 decreased by $1,758,843 compared to the three-month period ended March 31, 2020, as a result of a decrease in the loss on derivative liabilities.
Net Loss
The net loss was $254,683 and $(33,857)$2,011,624 for the three months ended September 30, 2017March 31, 2021 and 2016, respectively. Other expenses (income) were $315,757 and $1,482,299 for the nine months ended September 30, 2017 and 2016, respectively. The decrease is primarily attributable to no loss on extinguishment of debt, change in fair value of derivatives, commitment fee expense, change in fair value of derivative warrants and notes and interest expenses associated with the decrease in borrowing. We expect increases in our interest expense due to our increased borrowings and are unable to predict changes in the fair value of our derivative securities which is largely based on the trading price of our common stock.
Net Loss. The net loss was $169,215 and $318,268 for the three months ended September 30, 2017 and 2016, respectively. The net loss was $811,188 and $2,926,997 for the nine months ended September 30, 2017 and 2016,March 31, 2020, respectively. This decrease is a result of thea decrease in operating expenses andthe other expenses as discussed above.
Liquidity and Capital Resources
Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. As of September 30, 2017March 31, 2021, our working capital deficit amounted to $1,496,115,$3,901,050 an increase of $262,416$118,041 as compared to working capital deficit of $1,233,699,$3,783,009 as of December 31, 2016.2020. This increase is primarily a result of a decrease in cash and an increase in total current liabilities.accrued expenses.
Net cash used in operating activities was $219,525($106,732) during the nine monthsthree-month period ended September 30, 2017March 31, 2021 compared to $764,382($369,974) in the nine monththree-month period ended September 30, 2016.March 31, 2020. The decrease was primarily due to a reduction in operating expenses as well as a reduced derivative liability.
Capital Resources
The Company is a holding company and its liquidity needs are primarily for fixed and recurring operational expenses.
As of March 31, 2021, the Company had $90,183 of cash and cash equivalents compared to $1,915 as of December 31, 2020.
Our subsidiaries’ principal liquidity requirements arise from cash used in operating activities, is primarily attributable to a decrease in net loss offset by no extinguishmentdebt service, R&D expenditures, development of debt incurredback-office systems, operating costs and a decrease in stock option expense.
Net cash used in investing activities was $0 during the nine months period ended September 30, 2017expenses, and 2016.
Net cash provided by financing activities was $118,600 during the nine months period ended September 30, 2017 compared to $842,500 in the nine months period ended September 30, 2016. The decrease in cash provided by financing activities was primarily a result of a reduction in proceeds from the Company’s issuances of notes payable.income taxes.
We currently have limited cash resources on hand and our projected operating expenses and working capital needs exceed our income and cash resources. We have curtailedexpect to finance our future developmentgrowth and marketing plans untiloperations, through public offerings and private placements of debt and equity securities, credit facilities, vendor financing, capital lease financing and other financing arrangements, as well as cash generated from the operations of our subsidiaries. In the future, we aremay also choose to sell assets or certain investments to generate cash.
At this time, we believe that we will be able to enter into an agreement with a potential distributor, joint venture or strategic alliance partner or source of additional financingcontinue to provide us with sufficientmeet our liquidity requirements and fund our fixed obligations and other cash to continue these activities. As a result, capital raising has been and continues to be essentialneeds for our continued operations salesfor at least the next twelve months through a combination of distributions from our subsidiaries and marketing efforts and further developmentfrom raising of our LifeLogger platform. We potentially will have to issue additional debt or equity, refinancing of certain of our indebtedness or preferred stock, other financing arrangements and/or the sale of assets and certain investments. We anticipate that as we continue to scale our operations, we will reinvest cash and receivables into the growth of our various businesses, and therefore do not anticipate keeping a large amount of cash on hand at the holding company level. The ability of our subsidiaries to make distributions to the Company is and will be in the future subject to numerous factors, including restrictions contained in each subsidiary’s financing agreements, regulatory requirements and the availability of sufficient funds at each subsidiary. Although the Company believes that it will be able to raise equity capital, refinance indebtedness or preferred stock, enter into a strategic arrangementother financing arrangements or engage in asset sales and sales of certain investments sufficient to fund any cash needs that we are not able to satisfy with a third partythe funds expected to carry out some aspects ofbe provided by our business plan. Theresubsidiaries, there can be no assurance that additional capitalit will be availableable to us. Other than the agreements discussed below, we currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have no other such arrangements or plans currently in effect, our inability to raise funds for the above purposes will have a severe negative impactdo so on our ability to remain a viable company.
Recent Financing Transactions
Securities Purchase Agreement and Convertible Note Issued to Old Main Capital, LLC
Promissory Notes to Old Main Capital, LLC and to SBI Investments LLC, 2014-1
On April 7, 2017, the Company entered into a Securities Purchase Agreement with two investors (the “Investors”) whereby it agreed to and issued to each of the investors (each an “Investor” and collectively, the “Investors”) a 10% Convertible Promissory Note in the principal amount of up to $75,000 (each, the “April 2017 Note” and collectively, the “April 2017 Notes”) payable in tranches as follows to date: April 11, 2017 $19,167 consisting of $17,250 (less $1,250 for The Investor’s legal fees) paidterms satisfactory to the Company in cash,if at all. Such financing options, if pursued, may also ultimately have the effect of negatively impacting our liquidity profile and less original issue discountprospects over the long-term. In addition, the sale of $1,917. Tranche two on May 2, 2017 $14,444 consisting of $13,000 paid toassets or the Company’s investments may also make the Company in cash, and less original issue discount of $1,444. Tranche 3 paid on June 1, 2017: $15,000 consisting of $13,500 paidattractive to the Company in cash, and less original issue discount of $1,500. Tranche 4 paid on August 8, 2017: $12,778 consisting of $11,500 paid to the Company in cash, and less original issue discount of $1,278. Tranche 5 paid on September 1, 2017: $11,667 consisting of $10,500 paid to the Company in cash, and less original issue discount of $1,167. Each Investor may pay such additional amounts of the consideration and at such dates as mutually agreed upon by the Company and The Investor. The maturity date for each tranche funded shall be twelve (12) months from the effective date of each payment (each a “Maturity Date”)potential investors or such earlier date as the April 2017 Notes is required or permitted to be repaid as provided hereunder, and is the date upon which the principal sum of each respective tranche, as well as any accrued and unpaid interest and other fees relating to that respective tranche, shall be due and payable. Each Investor has the right to convert all or any part of the outstanding and unpaid principal and interest into shares of the Company’s common stock. The terms of the Convertible Note are as follows:
Participation in Future Financing. Subject to any existing obligations of the Company, from the date hereof until the date that is the 12-month anniversary of the date each of the April 2017 Notes, upon any issuance by the Company or any of its subsidiaries of its Common Stock or other securities convertible into Common Stock, other than any issuance that is through a public underwritten offering or to an investor or a group of investors that already own Common Stock or securities of the Company, Each of the Investors shall have the right to participate in the subsequent Financing in an amount up to 100% of such Each of the Investors’ pro rata portion as defined below in the April 2017 Notes on the same terms, conditions and price provided for in the Subsequent Financing, subject to any existing obligations of the Company with respect to participation rights.
During the period ended September 30, 2017, the holders of convertible notes in the aggregate principal amount of $431,118 that matured or became due have agreed to extend the maturity date of these notes to January 1, 2018.future financing partners.
Going Concern Consideration
We have incurred significant losses since our inception on June 4, 2012. We had a net loss during the nine months period ended September 30, 2017 of $811,188 and an accumulated deficit of $5,405,225 as of September 30, 2017. This raises substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent our ability to raise additional capital and generate additional revenues and profits from our business plan.
In the opinion of our independent registered public accounting firm for our fiscal year ended December 31, 2016, our auditor included a statement that there is a substantial doubt as our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Inflation
In the opinion of management, inflation has not and will not have a material effect on our operations in the immediate future. Management will continue to monitor inflation and evaluate the possible future effects of inflation on our business and operations.
Off-Balance Sheet Arrangements
Under SEC regulations, we are required to disclose our off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. As of September 30, 2017,the date the unaudited consolidated financial statements were issued, we have no off-balance sheet arrangements that meet such criterion.arrangements.
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CRITICAL ACCOUNTING POLICIES
Our significant accounting policies are disclosed in Note 2 of our Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.Report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this Item 3.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) that are designed to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported as specified in the SEC’s rules and forms and that such information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, or CEO, and our Chief Financial Officer, CFO, to allow timely decisions regarding required disclosure. Management, with the participation of
As previously reported in our CEO and CFO, performed an evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2017. BasedAnnual Report on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were not effective as of September 30, 2017Form 10-K for the reasons discussed below.
Managementfiscal year ended December 31, 2020, we identified material weaknesses in internal controls over financial reporting. We have continued to address and mitigate these material weaknesses through the implementation and testing of controls, including taking the following material weakness and significant deficiencies in its assessment of the effectiveness of disclosure controls and procedures as of September 30, 2017:actions:
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| ● | Embed a specific and precise journal entry review and approval process at the subsidiary locations, utilizing systematic workflow approval wherever feasible. | |
| ● | Finalize and implement a company-wide formal delegation of authority policy with defined authorization levels and integrate these approval limits with our enterprise resource planning system or other invoice approval software as appropriate. | |
| ● | Continue the process of the identification of qualified accounting personnel, including the hiring of a corporate controller and other accounting personnel over the next several months. |
We expectWhile management believes that it has identified the initiatives that need to be materially dependent uponundertaken, the controls as described above are in the process of being implemented and have not had sufficient time for management to conclude that they are operating effectively. Therefore, the material weaknesses reported will continue to exist until the aforementioned controls have had sufficient time for management to conclude that they are operating effectively.
Notwithstanding the assessment that our internal control over financial reporting is not effective and that there were material weaknesses as identified in this report, based on our reliance on third parties to provide us with accounting consulting services, related to derivative liability treatmentongoing testing and procedures performed, management and our principal executive officers, believe the financial statements included in this Quarterly Report on Form 10-Q fairly represent in all material respects our financial position, results of operations and cash flows at and for other accounting services for the foreseeable future. We believe this will be sufficient to remediate theperiods covered thereby in all material weaknesses related to our accounting for derivative liability treatment discussed above. Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP, there are no assurances that the material weaknesses and significant deficiencies in our disclosure controls and procedures will not result in errors in our financial statements which could lead to a restatement of those financial statements.respects.
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Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.
Changes in Internal Control
There were noOther than as disclosed above, there have not been any changes identified in connection with our internal control over financial reporting, as such term is defined in Rules 13(a)-15(f) and 15d-15(f) under the Exchange Act, during the three months ended September 30, 2017period of this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We know of no material, existing or pending legal proceedings against our company, nor are we involved asnot presently a plaintiff inparty to any material proceeding or pending litigation. There are no proceedings in whichlitigation, nor to the knowledge of management is any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.litigation threatened against us that may materially affect us.
Not applicable to smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On July 12, 2017 $1,704 of June 2016 Note debt was converted to 200,000 shares of common stock at a conversion price of $.00852 per share.None.
On August 1, 2017 $3,578 of June 2016 Note debt was converted to 420,000 shares of common stock at a conversion price of $.00852 per share
On August 1, 2017 $3,762 of March 2016 Note debt was converted to 380,000 shares of common stock at a conversion price of $.0099 per share.
On August 1, 2017 $3,762 of March 2016 Note debt was converted to 380,000 shares of common stock at a conversion price of $.0099 per share.
On August 7, 2017 $4,132 of June 2016 Note debt was converted to 485,000 shares of common stock at a conversion price of $.00852 per share
On August 7, 2017 $4,263 of March 2016 Note debt was converted to 490,000 shares of common stock at a conversion price of $.0087 per share.
On August 9, 2017 $4,422 of March 2016 Note debt was converted to 670,000 shares of common stock at a conversion price of $.0066 per share.
On August 15, 2017 $3,720 of June 2016 Note debt was converted to 500,000 shares of common stock at a conversion price of $.0744 per share
These shares of our common stock were issued in reliance on the exemption from registration provided by Sections 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act “).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
None.
| 31.1* | Section 302 | |
| 31.2* | Section 302 | |
| 32.1* | Section 906 | |
| 32.2* | Section 906 Certification of Principal Financial Officer. | |
| 101.INS* | XBRL Instance Document | |
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* Filed herewith.
+ Management contract or compensatory plan or arrangement.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Dated: | By: | /s/ | |
| Chairman of the Board, Chief Executive Officer | |||
| (Principal | |||
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