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TPT Global Tech (TPTW)

Filed: 23 Nov 20, 2:06pm
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
 
FORM 10-Q
 
 
 (Mark One)
 
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
 
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
 
Commission file number: 333-222094
 
TPT Global Tech, Inc.
(Exact name of registrant as specified in its charter)
 
Florida 81-3903357
State or other jurisdiction of incorporation or organization (I.R.S. Employer Identification No.)
   
501 West Broadway, Suite 800
San Diego, CA
 92101
(Address of principal executive offices) (Zip Code)
 
(619) 301-4200
Registrant’s telephone number, including area code
 
______________________________________
 
(Former Address and phone of principal executive offices)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each classTrading Symbol(s)Name of each exchange on which registered
---------
 
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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.
Yes  ☒ No  ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 for Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes  ☒ No  ☐
 
Indicate by check mark whether the registrant is a large accelerated file, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
   Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act.
  ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes
 
 No  ☒
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
As of November 19, 2020, there were 865,879,038 shares of the registrant’s common stock, $0.001 par value, issued and outstanding.
 

 
 
 
TABLE OF CONTENTS
 
  Page
  
   
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 8
   
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31
   
38
   
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39
   
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39
   
39
   
40
   
 41
  
 
 
 
 
PART I – FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
ASSETS
 
 
September 30,
 
 
December 31,
 
 
 
2020
 
 
2019
 
 
 
(Unaudited)
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 $269,957 
 $192,172 
Accounts receivable, net
  215,727 
  379,805 
Prepaid expenses and other current assets
  148,513 
  48,648 
Total current assets
 $634,197 
  620,625 
NON-CURRENT ASSETS
    
    
     Property and equipment, net
 $4,175,333 
  4,423,148 
     Operating lease right of use assets
  4,531,784 
  3,886,045 
     Intangible assets, net
  4,827,998 
  5,369,083 
     Goodwill
  1,640,099 
  1,050,366 
     Deposits and other assets
  150,631 
  104,486 
Total non-current assets
 $15,325,845 
  14,833,128 
 
    
    
TOTAL ASSETS
 $15,960,042 
 $15,453,753 
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
 
 
 
 
 
 
Accounts payable and accrued expenses
 $7,761,710 
 $6,543,635 
    Deferred revenue
  433,277 
  305,741 
    Customer liability
  338,725 
  338,725 
    Current portion of loans, advances and factoring agreements
  2,062,544 
  344,758 
    Current portion of convertible notes payable, net of discounts
  1,711,098 
  2,101,649 
    Notes payable - related parties, net of discounts
  10,668,612 
  9,297,078 
      Current portion of convertible notes payable – related parties, net of discounts
  904,881 
  534,381 
Derivative liabilities
  6,582,252 
  8,836,514 
Current portion of operating lease liabilities
  2,010,102 
  1,921,843 
Financing lease liabilities – related party
  750,964 
  626,561 
       Total current liabilities
 $33,224,165 
  30,850,885 
 
    
    
NON-CURRENT LIABILITIES
    
    
    Loans, advances and factoring agreements, net of current portion and discounts
 $902,551 
  1,000,500 
    Convertible notes payable – related parties, net of current portion and discounts
  18,000 
  388,500 
     Operating lease liabilities, net of current portion
  2,716,507 
  2,009,737 
       Total non-current liabilities
  3,637,058 
  3,398,737 
 Total liabilities
 $36,861,223 
  34,249,622 
 
    
    
Commitments and contingencies – See Note 8
   
   
 
See accompanying notes to condensed consolidated financial statements.
 
 
3
 
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
 
 
 
September 30,
 
 
December 31,
 
 
 
2020
 
 
2019
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
MEZZANINE EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
Convertible Preferred Series A, 1,000,000 designated - 1,000,000 shares issued and outstanding as of September 30, 2020 and December 31, 2019
 $3,117,000 
   
Convertible Preferred Series B, 3,000,000 designated - 2,588,693 shares issued and outstanding as of September 30, 2020 and December 31, 2019
 $1,677,473 
   
Total mezzanine equity
 $4,794,473 
   
 
    
    
STOCKHOLDERS' DEFICIT 
    
    
Preferred Stock, $.001 par value, 100,000,000 shares authorized:
Convertible Preferred Series A, 1,000,000 designated - 1,000,000 shares issued and outstanding as of September 30, 2020 and December 31, 2019
 $ 
 $1,000 
Convertible Preferred Series B, 3,000,000 designated - 2,588,693 shares issued and outstanding as of September 30, 2020 and December 31, 2019
   
  2,589 
Convertible Preferred Series C – 3,000,000 shares designated, zero shares issued and outstanding as of September 30, 2020 and December 31, 2019
   
   
Convertible Preferred Series D – 20,000,000 shares designated, zero shares issued and outstanding as of September 30, 2020 and December 31, 2019
   
   
Common stock, $.001 par value, 1,000,000,000 shares authorized, 858,562,371 and 177,629,939 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively
  858,563 
  177,630 
Subscriptions payable
  811,234 
  574,256 
Additional paid-in capital
  10,523,169 
  13,279,749 
Accumulated deficit
  (37,692,263)
  (32,831,093)
Total TPT Global Tech, Inc. stockholders' deficit
  (25,499,297)
  (18,795,869)
Non-controlling interests
  (196,357)
   
Total stockholders’ deficit
  (25,695,654)
  (18,795,869)
 
    
    
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 $15,960,042 
 $15,453,753 
   
See accompanying notes to condensed consolidated financial statements.

 
4
 
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
 
For the three months ended
September 30,
 
 
For the nine months ended
September 30,
 
 
 
2020
 
 
2019
 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
   Products
 $7,200 
 $4,950 
 $35,291 
 $38,719 
   Services
  2,779,410 
  3,612,550 
  8,584,063 
  6,168,712 
Total Revenues
  2,786,610 
  3,617,500 
  8,619,354 
  6,207,431 
 
    
    
    
    
COST OF SALES:
    
    
    
    
   Products
  7,155 
  4,950 
  34,455 
  40,550 
   Services
  1,818,268 
  2,169,747 
  5,528,645 
  3,884,463 
Total Costs of Sales
  1,825,423 
  2,174,697 
  5,563,100 
  3,925,013 
Gross profit
  961,187 
  1,442,803 
  3,056,254 
  2,282,418 
 EXPENSES:
    
    
    
    
Sales and marketing
  47,568 
  1,746 
  112,575 
  46,063 
Professional
  717,321 
  450,968 
  1,472,043 
  1,447,421 
Payroll and related
  664,278 
  480,524 
  1,910,416 
  1,045,083 
General and administrative
  445,715 
  521,824 
  1,330,427 
  1,138,091 
Research and development
   
   
  1,000,000 
   
Depreciation
  263,683 
  168,655 
  781,050 
  368,362 
Amortization
  182,735 
  83,811 
  548,205 
  643,942 
                Total expenses
  2,321,300 
  1,707,528 
  7,154,716 
  4,688,962 
 Loss from operations
  (1,360,113)
  (264,725)
  (4,098,462)
  (2,406,545)
 
    
    
    
    
OTHER INCOME (EXPENSE)
    
    
    
    
Derivative gain (expense)
  223,229 
  4,533,794 
  (176,790)
  (3,572,107)
Gain (loss) on debt extinguishment
   
   
  1,252,131 
   
Gain (loss) on debt conversions
   
  5,695 
  (775,650)
  5,695 
Interest expense
  (248,158)
  (1,287,966)
  (1,082,259)
  (2,565,404)
                 Total other income (expenses)
  (24,929)
  3,251,523 
  (782,568)
  (6,131,816)
 
    
    
    
    
Net income (loss) before income taxes
  (1,385,042)
  2,986,798 
  (4,881,030)
  (8,538,360)
Income taxes
   
   
   
   
 
    
    
    
    
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTERESTS
  (1,385,042)
  2,986,798 
  (4,881,030)
  (8,538,360)
 
    
    
    
    
   NET LOSS ATTRIBUTABLE TO NON- CONTROLLING INTERESTS
  (19,860
   
  (19,860
   
 
    
    
    
    
NET INCOME (LOSS) ATTRIBUTABLE TO TPT GLOBAL TECH, INC. SHAREHOLDERS
 $(1,365,182)
 $2,986,798 
 $(4,861,170)
 $(8,538,360)
 
    
    
    
    
 Income (loss) per common share: Basic and diluted
 $(0.00)
 $0.02 
 $(0.01)
 $(0.06)
 
    
    
    
    
Weighted average number of common shares outstanding:
    
    
    
    
Basic and diluted
  857,617,316 
  137,084,846 
  696,347,551 
  136,998,031 
 
 See accompanying notes to condensed consolidated financial statements.
 
 
5
 
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For the three and nine months ended September 30, 2020
(Unaudited)
 
 
 
Series A
Preferred Stock
 
 
Series B
Preferred Stock
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Subscriptions Payable
 
 
Additional Paid-in Capital
 
 
Accumulated Deficit
 
 
Non-Controlling Interest
 
 
Total Stockholders’ Deficit
 
Balance as of June 30, 2020
   
 $ 
   
 $ 
  857,562,371 
 $857,563 
 $777,380 
 $9,959111 
 $(36,327,081)
 $ 
 $(24,733,027)
Common stock issuable for director services
   
   
   
   
   
   
  33,854 
   
   
   
  33,854 
Equity interest in QuikLABS issued for cash
   
   
   
   
   
   
   
  288,000 
   
  72,000 
  360,000 
Acquisition of Aire Fitness
    
    
    
   
   
   
   
   
   
  (29,439)
  (29,439)
Common stock issued for settlement of liability
   
   
   
   
  1,000,000 
  1,000 
   
  57,000 
   
   
  58,000 
InnovaQor merger
   
   
   
   
   
   
   
  219,058 
   
  (219,058)
   
Net loss
   
   
   
   
   
   
   
   
  (1,365,182)
  (19,860)
  (1,385,042)
Balance as of September 30, 2020
   
 $ 
   
 $ 
  858,562,371 
 $858,563 
 $881,234 
 $10,523,169 
 $(37,692,263)
 $(196,357)
 $(25,695,654)
 
 
 
Series A
Preferred Stock
 
 
Series B
Preferred Stock
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Subscriptions Payable
 
 
Additional Paid-in Capital
 
 
Accumulated Deficit
 
 
Non-Controlling Interest
 
 
Total Stockholders’ Deficit
 
Balance as of December 31, 2019
  1,000,000 
 $1,000 
  2,588,693 
 $2,589 
  177,629,939 
 $177,630 
 $574,256 
 $13,279,749 
 $(32,831,093)
 $ 
 $(18,795,869)
Common stock issuable for director services
   
   
   
   
   
   
  236,978 
   
   
   
  236,978 
Equity interest in QuikLABS issued for cash
   
   
   
   
   
   
   
  288,000 
   
  72,000 
  360,000 
Acquisition of Aire Fitness
   
   
   
   
   
   
   
   
   
  (29,439)
  (29,439)
Common stock issued for settlement of liability
   
   
   
   
  1,000,000 
  1,000 
   
  57,000 
   
   
  58,000 
Reclassification of preferred stock as mezzanine
  (1,000,000)
  (1,000)
  (2,588,693)
  (2,589)
  ---- 
   
   
  (4,790,884)
   
   
  (4,794,473)
Common stock issued for convertible promissory notes
   
   
   
   
  679,932,432 
  679,933 
   
  1,470,246 
   
   
  2,150,179 
InnovaQor merger
    
    
    
    
    
    
    
  219,058 
   
  (219,058)
   
Net Loss
   
   
   
   
   
   
   
   
  (4,861,170)
  (19,860)
  (4,881,030)
Balance as of September 30, 2020
   
 $ 
   
 $ 
  858,562,371 
 $858,563 
 $811,234 
 $10,523,169 
 $(37,692,263)
 $(196,357)
 $(25,695,654)
 
   See accompanying notes to condensed consolidated financial statements.
 
 
6
 
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT- CONTINUED
For the three and nine months ended September 30, 2019
(unaudited)
 
  
 
 
Series A
Preferred Stock
 
 
Series B
Preferred Stock
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Subscriptions Payable
 
 
Additional Capital
 
 
Accumulated Deficit
 
 
Total
 
Balance as of June 30, 2019
  1,000,000 
 $1,000 
  2,588,693 
 $2,589 
  136,953,904 
 $136,954 
 $371,132 
 $12,681,369 
 $(30,328,085)
 $(17,135,041)
 
    
    
    
    
    
    
    
    
    
    
Issuance of stock and stock options for services
   
   
   
   
   
   
  101,563 
  27,182 
   
  128,745 
 
    
    
    
    
    
    
    
    
    
    
Conversion of debt
    
    
    
    
  2,073,721 
  2,074 
    
  124,589 
    
  126,663 
 
    
    
    
    
    
    
    
    
    
    
Net Loss
   
   
   
   
   
   
   
   
 $(2,986,798)
 $(2,986,798)
 
    
    
    
    
    
    
    
    
    
    
Balance as of September 30, 2019
  1,000,000 
 $1,000 
  2,588,693 
 $2,589 
  136,953,904 
 $136,954 
 $472,695 
 $12,833,140 
 $(27,341,287)
 $(13,892,835)
 
 
 
Series A
Preferred Stock
 
 
Series B
Preferred Stock
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Subscriptions Payable
 
 
Additional Paid-in Capital
 
 
Accumulated Deficit
 
 
Total
 
Balance as of December 31, 2018
  1,000,000 
 $1,000 
  2,588,693 
 $2,589 
  136,953,904 
 $136,954 
 $168,006 
 $12,567,881 
 $(18,802,928)
 $(5,926,498)
 
    
    
    
    
    
    
    
    
    
    
Issuance of stock and stock options for services
   
   
   
   
   
   
  304,689 
  140,670 
   
  445,359 
 
    
    
    
    
    
    
    
    
    
    
Conversion of debt
    
    
    
    
  2,073,721 
  2,074 
    
  124,589 
    
  126,663 
 
    
    
    
    
    
    
    
    
    
    
Net Loss
   
   
   
   
   
   
   
   
 $(8,538,360)
 $(8,538,360)
 
    
    
    
    
    
    
    
    
    
    
Balance as of September 30, 2019
  1,000,000 
 $1,000 
  2,588,693 
 $2,589 
  139,027,625 
 $139,028 
 $472,695 
 $12,833,140 
 $(27,341,287)
 $(13,892,835)
 
See accompanying notes to condensed consolidated financial statements.
 
 
7
 
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
 
For the nine months ended
September 30,
 
 
 
2020
 
 
2019
 
Cash flows from operating activities:
 
 
 
 
 
 
Net loss
 $(4,881,030)
 $(8,538,360)
Adjustments to reconcile net loss to net cash used in operating activities:
    
    
Depreciation
  781,050 
  368,362 
Amortization
  548,205 
  643,942 
Amortization of debt discounts
  510,437 
  2,029,978 
Promissory note issued for research and development
  1,000,000 
   
Loss (gain) on conversion of notes payable
  775,650 
  (5,695)
Derivative expense
  176,790 
  3,572,107 
Gain on extinguishment of debt
  (1,252,131)
   
Interest expense default penalty
   
    
Share-based compensation: Common stock
  236,978 
  304,689 
Stock options
   
  140,670 
Note payable – InnovaQor merger
  350,000 
   
Changes in operating assets and liabilities:
    
    
Accounts receivable
  186,328 
  (144,251)
Prepaid expenses and other assets
  (146,010)
  92,715 
Accounts payable and accrued expenses
  1,220,222 
  578,398 
Operating lease right of use assets and liabilities
  149,290 
   
Other liabilities
  127,536 
  (75,544)
Net cash used in operating activities
 $(216,685)
 $(1,032,989)
 
    
    
Cash flows from investing activities:
    
    
Cash paid for acquisition of assets of SpeedConnect
 $ 
 $(798,386)
Purchase of equipment
  (429,886)
   
Net cash used in investing activities
 $(429,886)
 $(798,386)
 
    
    
Cash flows from financing activities:
    
    
Proceeds from sale of non-controlling interests in QuikLABS
  360,000 
   
Proceeds from convertible notes and notes payable – related parties
  2,400 
  512,419 
Proceeds from convertible notes, loans and advances
  1,311,800 
  2,689,675 
Payment on convertible loans, advances and factoring agreements
  (818,978)
  (1,148,976)
Payments on convertible notes and amounts payable – related parties
  (130,866)
  (15,807)
Proceeds from lease agreement
  103,349 
   
Payments on financing lease liabilities 
   
  (9,889)
Net cash provided by financing activities
 $724,356 
 $2,027,422 
 
    
    
Net change in cash
 $77,785 
 $196,047 
Cash and cash equivalents - beginning of period
 $192,172 
 $31,786 
 
    
    
Cash and cash equivalents - end of period
 $269,957 
 $227,833 
  
See accompanying notes to condensed consolidated financial statements.
 
 
8
 
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 
(Unaudited)
 
 
Supplemental Cash Flow Information:
 
Cash paid for:
 
 
 
2020
 
 
2019
 
Interest
 $120,605 
 $9,857 
Taxes
 $ 
 $ 
 
Non-Cash Investing and Financing Activities:
 
 
 
2020
 
 
2019
 
Debt discount on factoring agreement
 $216,720 
 $2,011,600 
Acquisition of assets of SpeedConnect – Liabilities assumed
 $ 
 $1,894,964 
Operating lease liabilities and right of use assets
    
  5,003,178 
Common stock issued in conversion of convertible notes
 $2,258,637 
 $ 
Convertible preferred Series A and B reclassified to mezzanine equity
 $4,790,884 
 $ 
Acquisition of Aire Fitness – Liabilities assumed
 $641,869 
 $ 
InnovaQor merger – Non-controlling interest in intercompany liabilities assumed
 $219,058 
 $ 
Acquisition of property and equipment under finance lease
 $103,349 
 $ 

See accompanying notes to condensed consolidated financial statements.
  
 
9
 
 
TPT Global Tech, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
 
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Nature of Operations
 
The Company was originally incorporated in 1988 in the state of Florida. TPT Global, Inc., a Nevada corporation formed in June 2014, merged with Ally Pharma US, Inc., a Florida corporation, (“Ally Pharma”, formerly known as Gold Royalty Corporation) in a “reverse merger” wherein Ally Pharma issued 110,000,000 shares of Common Stock, or 80% ownership, to the owners of TPT Global, Inc. in exchange for all outstanding common stock of TPT Global Inc. and Ally Pharma agreed to change its name to TPT Global Tech, Inc. (jointly referred to as “the Company” or “TPTG”).
 
The following acquisitions have resulted in entities which have been consolidated into TPTG. In 2014 the Company acquired all the assets of K Telecom and Wireless LLC (“K Telecom”) and Global Telecom International LLC (“Global Telecom”). Effective January 31, 2015, TPTG completed its acquisition of 100% of the outstanding stock of Copperhead Digital Holdings, Inc. (“Copperhead Digital”) and Subsidiaries, TruCom, LLC (“TruCom”), Nevada Utilities, Inc. (“Nevada Utilities”) and CityNet Arizona, LLC (“CityNet”). Effective September 30, 2016, the company acquired 100% ownership in San Diego Media Inc. (“SDM”). In October 2017, we entered into agreements to acquire Blue Collar, Inc. (“Blue Collar”) which closed as of September 1, 2018. On May 7, 2019 we completed the acquisition of a majority of the assets of SpeedConnect, LLC, which assets were conveyed into our wholly owned subsidiary TPT SpeedConnect, LLC (“TPT SC” or “TPT SpeedConnect”) which was formed on April 16, 2019. On January 8, 2020 we formed TPT Federal, LLC (“TPT Federal”), on March 7, 2020 we acquired 75% interest in Bridget Internet, LLC (“Bridge Internet” or “BIC”). On March 30, 2020 we formed TPT MedTech, LLC (“TPT MedTech”) and on June 6, 2020 we formed InnovaQor, Inc (“InnovaQor”). In July and August 2020, the Company formed Quiklab 1 LLC, QuikLAB 2, LLC, QuikLAB 3, LLC and QuikLAB 4, LLC where the Company owns 80% (as agreed per the operating agreement) of all outside equity investments. Effective August 1, 2020 we closed on the acquisition of 75% of The Fitness Container, LLC (“Air Fitness”). In July 2020, we invested in a Hong Kong company called TPT Global Tech Asia Limited of which we own 78%.
 
We are based in San Diego, California, and operate as a technology-based company with divisions providing telecommunications, medical technology and product distribution, media content for domestic and international syndication as well as technology solutions. We operate on our own proprietary Global Digital Media TV and Telecommunications infrastructure platform and also provide technology solutions to businesses domestically and worldwide. We offer Software as a Service (SaaS), Technology Platform as a Service (PAAS), Cloud-based Unified Communication as a Service (UCaaS) and carrier-grade performance and support for businesses over our private IP MPLS fiber and wireless network in the United States. Our cloud-based UCaaS services allow businesses of any size to enjoy all the latest voice, data, media and collaboration features in today's global technology markets. We also operate as a Master Distributor for Nationwide Mobile Virtual Network Operators (MVNO) and Independent Sales Organization (ISO) as a Master Distributor for Pre-Paid Cellphone services, Mobile phones, Cellphone Accessories and Global Roaming Cellphones.
 
Significant Accounting Policies
 
Please refer to Note 1 of the Notes to the Consolidated Financial Statements in the Company's most recent Form 10-K for all significant accounting policies of the Company, with the exception of those discussed below.
 
Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements have been prepared according to the instructions to Form 10-Q and Section 210.8-03(b) of Regulation S-X of the Securities and Exchange Commission (“SEC”) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted.
 
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.
 
These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2019. The condensed consolidated balance sheet at September 30, 2020, has been derived from the consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP.
 
 
 
10
 
 
Our condensed consolidated financial statements include the accounts of K Telecom, Copperhead Digital, SDM, Blue Collar, TPT SpeedConnect, BIC, TPT Federal, TPT MedTech and InnovaQor. All intercompany accounts and transactions have been eliminated in consolidation. Consideration has also been given to the non-controlling interest of 25% in BIC, 25% in Air Fitness, 20% in the QuikLABs and 22% of TPT Global Tech Asia Limited.
 
Revenue Recognition
 
On January 1, 2018, we adopted the new accounting standard ASC 606, Revenue from Contracts with Customers, and all of the related amendments (“new revenue standard”). We recorded the change, which was immaterial, related to adopting the new revenue standard using the modified retrospective method. Under this method, we recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. This results in no restatement of prior periods, which continue to be reported under the accounting standards in effect for those periods. We expect the impact of the adoption of the new revenue standard to continue to be immaterial on an ongoing basis. We have applied the new revenue standard to all contracts as of the date of initial application and as such, have used the following criteria described below in more detail for each business unit:
 
Identify the contract with the customer.
Identify the performance obligations in the contract.
Determine the transaction price.
Allocate the transaction price to performance obligations in the contract.
Recognize revenue when or as we satisfy a performance obligation. 
 
Reserves are recorded as a reduction in net sales and are not considered material to our consolidated statements of income for the nine months ended September 30, 2020 and 2019. In addition, we invoice our customers for taxes assessed by governmental authorities such as sales tax and value added taxes, where applicable. We present these taxes on a net basis.
 
The Company’s revenue generation for the nine months ended September 30, 2020 and 2019 came from the following sources disaggregated by services and products, which sources are explained in detail below.
 
 
 
For the nine months ended
September 30,
2020
 
 
For the nine months ended
September 30,
2019 
 
TPT SpeedConnect
 $7,683,928 
 $5,082,260 
Copperhead Digital
   
  176,640 
K Telecom
  35,291 
  38,719 
San Diego Media
  10,822 
  21,621 
Blue Collar
  877,607 
  888,191 
Other
  11,706 
   
Total Revenue
 $8,619,354 
 $6,207,431 
 
TPT SpeedConnect: ISP and Telecom Revenue
 
TPT SpeedConnect is a rural Internet provider operating in 10 Midwestern States under the trade name SpeedConnect. TPT SC’s primary business model is subscription based, pre-paid monthly reoccurring revenues, from wireless delivered, high-speed internet connections. In addition, the company resells third-party satellite and DSL internet and IP telephony services. Revenue generated from sales of telecommunications services is recognized as the transaction with the customer is considered closed and the customer receives and accepts the services that were the result of the transaction. There are no financing terms or variable transaction prices. Due date is detailed on monthly invoices distributed to customer. Services billed monthly in advance are deferred to the proper period as needed. Deferred revenue are contract liabilities for cash received before performance obligations for monthly services are satisfied. Deferred revenue at September 30, 2020 and December 31, 2019 are $305,165 and $305,741, respectively. Certain of our products require specialized installation and equipment. For telecom products that include installation, if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, and installation revenue is recognized when the installation is complete. The Installation Technician collects the signed quote containing terms and conditions when installing the site equipment at customer premises.
 
Revenue for installation services and equipment is billed separately from recurring ISP and telecom services and is recognized when equipment is delivered and installation is completed. Revenue from ISP and telecom services is recognized monthly over the contractual period, or as services are rendered and accepted by the customer.
 
The overwhelming majority of our revenue continues to be recognized when transactions occur. Since installation fees are generally small relative to the size of the overall contract and because most contracts are for two years or less, the impact of not recognizing installation fees over the contract is immaterial.
 
 
11
 
 
Copperhead Digital: ISP and Telecom Revenue
 
Copperhead Digital is a regional internet and telecom services provider operating in Arizona under the trade name Trucom. Copperhead Digital operates as a wireless telecommunications Internet Service Provider (“ISP”) facilitating both residential and commercial accounts. Copperhead Digital’s primary business model is subscription based, pre-paid monthly reoccurring revenues, from wireless delivered, high-speed internet connections. In addition, the company resells third-party satellite and DSL internet and IP telephony services. Revenue generated from sales of telecommunications services is recognized as the transaction with the customer is considered closed and the customer receives and accepts the services that were the result of the transaction. There are no financing terms or variable transaction prices. Due date is detailed on monthly invoices distributed to customer. Services billed monthly in advance are deferred to the proper period as needed. Deferred revenue are contract liabilities for cash received before performance obligations for monthly services are satisfied. Certain of our products require specialized installation and equipment. For telecom products that include installation, if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, and installation revenue is recognized when the installation is complete. The Installation Technician collects the signed quote containing terms and conditions when installing the site equipment at customer premises.
 
Revenue for installation services and equipment is billed separately from recurring ISP and telecom services and is recognized when equipment is delivered and installation is completed. Revenue from ISP and telecom services is recognized monthly over the contractual period, or as services are rendered and accepted by the customer.
 
The overwhelming majority of our revenue continues to be recognized when transactions occur. Since installation fees are generally small relative to the size of the overall contract and because most contracts are for a year or less, the impact of not recognizing installation fees over the contract is immaterial.
 
K Telecom: Prepaid Phones and SIM Cards Revenue
 
K Telecom generates revenue from reselling prepaid phones, SIM cards, and rechargeable minute traffic for prepaid phones to its customers (primarily retail outlets). Product sales occur at the customer’s locations, at which time delivery occurs and cash or check payment is received. The Company recognizes the revenue when they receive payment at the time of delivery. There are no financing terms or variable transaction prices.
 
SDM: Ecommerce, Email Marketing and Web Design Services
 
SDM generates revenue by providing ecommerce, email marketing and web design solutions to small and large commercial businesses, complete with monthly software support, updates and maintenance. Services are billed monthly. There are no financing terms or variable transaction prices. Platform infrastructure support is a prepaid service billed in monthly recurring increments. The services are billed a month in advance and due prior to services being rendered. The revenue is deferred when invoiced and booked in the month the service is provided. There is no deferred revenue at September 30, 2020 and December 31, 2019. Software support services (including software upgrades) are billed in real time, on the first of the month. Web design service revenues are recognized upon completion of specific projects. Revenue is booked in the month the services are rendered and payments are due on the final day of the month. There are usually no contract revenues that are deferred until services are performed.
 
Blue Collar: Media Production Services
 
Blue Collar creates original live action and animated content productions and has produced hundreds of hours of material for the television, theatrical, home entertainment and new media markets. Blue Collar designs branding and marketing campaigns and has had agreements with some of the world’s largest companies including PepsiCo, Intel, HP, WalMart and many other Fortune 500 companies. Additionally, they create motion picture, television and home entertainment marketing campaigns for studios including Sony, DreamWorks, Twentieth Century Fox, Universal Studios, Paramount Studios, and Warner Brothers. With regard to revenue recognition, Blue Collar receives an agreement from each client to perform defined work. Some agreements are written, some are verbal. Work may include creation of marketing materials and/or content creation. Some work may be short term and take weeks to create and some work may be longer and take months to create. There are instances where customer agreements segregate identifiable obligations (like filming on site vs. film editing and final production) with separate transaction pricing. The performance obligation is generally satisfied upon delivery of such film or production products, at which time revenue is recognized. There are no financing terms or variable transaction prices.
 
 
 
12
 
 
Basic and Diluted Net Loss Per Share
 
The Company computes net income (loss) per share in accordance with ASC 260, “Earning per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholder (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method for options and warrants and using the if-converted method for preferred stock and convertible notes. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of September 30, 2020, the Company had shares that were potentially common stock equivalents as follows:
 
 
 
2020
 
Convertible Promissory Notes
  98,935,204 
Series A Preferred Stock (1)
  1,223,484,624 
Series B Preferred Stock
  2,588,693 
Stock Options and Warrants
  4,333,333 
 
  1,329,341,854 
 
(1) Holder of the Series A Preferred Stock which is Stephen J. Thomas, is guaranteed 60% of outstanding common stock upon conversion. The Company would have to authorize additional shares for this to occur as only 1,000,000,000 shares are currently authorized.
 
Financial Instruments and Fair Value of Financial Instruments
 
Our primary financial instruments at September 30, 2020 and December 31, 2019 consisted of cash equivalents, accounts receivable, accounts payable, notes payable and derivative liabilities. We apply fair value measurement accounting to either record or disclose the value of our financial assets and liabilities in our financial statements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.
 
Described below are the three levels of inputs that may be used to measure fair value:
 
Level 1 Quoted prices in active markets for identical assets or liabilities.
 
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
 
We consider our derivative financial instruments as Level 3. The balances for our derivative financial instruments as of September 30, 2020 are the following: 
 
Derivative Instrument
 
Fair Value
 
Fair value of Auctus Convertible Promissory Note
 $5,382,241 
Fair value of EMA Financial Convertible Promissory Note
  1,158,820 
Fair value of Warrants issued with the derivative instruments
  41,191 
 
 $6,582,252 
  
Principles of Consolidation
 
Our consolidated financial statements include the wholly-owned accounts of K Telecom and Global, Copperhead Digital, SDM, Blue Collar, TPT SpeedConnect, TPT Federal, BIC, TPT MedTech, InnovaQor, Quiklab 1, QuikLAB 2, QuikLAB 3, QuikLAB 4, Aire Fitness and TPT Global Tech Asia Limited. The consolidated financial statements also give effects to non-controlling interests in BIC of 25%, the QuikLABs of 20%,Aire Fitness of 25% and TPT Global Tech Asia Limited of 22%, where appropriate. All intercompany accounts and transactions have been eliminated in consolidation.
 
 
13
 
 
Use of Estimates
 
The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. The Company’s consolidated financial statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition and results of operations for the periods presented. 
 
Recently Adopted Accounting Pronouncements
  
In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which amends ASC 718, Compensation – Stock Compensation. This ASU requires that most of the guidance related to stock compensation granted to employees be followed for non-employees, including the measurement date, valuation approach, and performance conditions. The expense is recognized in the same period as though cash were paid for the good or service. The effective date is the first quarter of fiscal year 2020, with early adoption permitted, including in interim periods. The ASU has been adopted using a modified-retrospective transition approach. The adoption did not have a material effect on the consolidated financial statements.
 
Management has reviewed other recently issued accounting pronouncements and have determined there are not any that would have a material impact on the condensed consolidated financial statements.
 
NOTE 2 – ACQUISITIONS
 
SpeedConnect Asset Acquisition
 
Effective April 2, 2019, the Company entered into an Asset Purchase Agreement with SpeedConnect, LLC (“SpeedConnect”) to acquire substantially all of the assets of SpeedConnect. On May 7, 2019, the Company closed the transaction underlying the Asset Purchase Agreement with SpeedConnect to acquire substantially all of the assets of SpeedConnect for $2 million and the assumption of certain liabilities. The Asset Purchase Agreement required a deposit of $500,000 made in April and an additional $500,000 payment to close. The additional $500,000 was paid and all other conditions were met to effectuate the sale of substantially all of the assets of SpeedConnect to the Company. As part of the closing, the Company entered into a Promissory Note to pay SpeedConnect $1,000,000 in two equal installments of $500,000 plus applicable interest at 10% per annum with the first installment payable within 30 days of closing and the second installment payable within 60 days of closing (but no later than July 6, 2019). The Company paid off the Promissory Note by June 11, 2019 and by amendment dated May 7, 2019, SpeedConnect forgave $250,000 of the Promissory Note.
 
The Company treated the asset acquisition as a business combination and has allocated the fair market value to assets received in excess of goodwill.
 
 
14
 
 
Purchase Price Allocation:  
 
 
 
TPT Global Tech
 
Effective
 
May 7, 2019
 
 
 
 
 
Purchaser
 
TPT Global Tech
 
 
 
 
 
Consideration Given:
 
 
 
Cash paid
 $1,000,000 
Liabilities:
    
 
    
   Promissory Note
 $750,000 
   Deferred revenue
  230,000 
   Operating lease liabilities
  5,162,077 
   Unfavorable leases
  323,000 
   Accounts and other payables
  591,964 
      Total liabilities
 $7,057,041 
Total Consideration Value
 $8,057,041 
 
    
Assets Acquired:
    
   Customer base
 $350,000 
   Current assets:
    
Cash
  201,614 
        Prepaid and other receivables
  99,160 
        Deposits
  13,190 
Operating lease right of use asset
  5,162,077 
Favorable leases
  95,000 
   Property and equipment
  1,939,000 
Total Assets Acquired
 $7,860,041 
Goodwill
 $197,000 
 
 
Had the acquisition occurred on January 1, 2019, condensed proforma results of operations for the nine months ended September 30, 2019 would be as follows: 
 
 
 
2019
 
Revenue
 $10,970,258 
Cost of Sales
  6,928,862 
Gross Profit
 $4,041,396 
Expenses
  (5,521,661)
Derivative Expense
  (3,572,107)
Interest Expense
  (2,559,709)
Income Taxes
   
Net Loss
 $(7,612,081)
Loss per share
 $(0.06)
 
 
The unaudited proforma results of operations are presented for information purposes only. The unaudited proforma results of operations are not intended to present actual results that would have been attained had the asset acquisition been completed as of January 1, 2019 or to project potential operating results as of any future date or for any future periods. The revenue and net income of TPT SpeedConnect from January 1, 2020 to September 30, 2020 included in the consolidated income statement amounted to $7,683,928 and $824,066, respectively.
 
 
15
 
 
The Fitness Container, LLC
 
On June 1, 2020, the Company signed an agreement for the acquisition of a majority interest in San Diego based manufacturing company, The Fitness Container, LLC dba “Aire Fitness” (www.airefitness.com), for 500,000 shares of common stock in TPT, vesting and issuable after the common stock reaches at least a $1.00 per share closing price in trading, a $500,000 promissory note payable primarily out of future capital raising and a 10% of gross profit royalty from sales of drive through lab operations for the first year. Aire Fitness, in which TPT owns 75%, will operate under TPT‘s Medical division, TPT MedTech. Aire Fitness is a California LLC founded in 2014 focused on custom designing, manufacturing, and selling high-end turnkey outdoor fitness studios. Aire Fitness has contracted with YMCAs, Parks and Recreation departments, Universities and Country Clubs which are currently using its mobile gyms.  Aire Fitness’ existing and future clients will be able to take advantage of TPT’s upcoming Broadband, TV and Social Media platform to offer virtual classes utilizing the company’s mobile gyms. The agreement included an employment agreement for Mario Garcia, former principal owner, which annual employment is to be at $120,000 plus customary employee benefits. This agreement was closed August 1, 2020.
 
The Company evaluated this acquisition in accordance with ASC 805-10-55-4 to discern whether the assets and operations of the assets purchased met the definition of a business. The company concluded that there are processes and sufficient inputs into outputs. Accordingly, the Company accounted for this transaction as a business combination and allocated the purchase price as follows on a provisional basis: 
 
Consideration given at provisional value:
 
 
 
Note payable
 $500,000 
Accounts payable
  141,837 
Non-controlling interest
  (29,439)
 
 $612,398 
 
    
Assets acquired at fair value:
    
Accounts receivable
 $22,665 
 
 $22,665 
Provisional Goodwill
 $589,733 
 
EPIC Reference Labs, Inc. Acquisition
 
On August 6, 2020, TPT MedTech signed a binding letter of intent with Rennova to acquire EPIC Reference Labs, Inc. (“EPIC”), wholly owned subsidiary of Rennova, for $750,000, comprised of a deposit of $25,000 within five days of signing and the remainder due either from 20% of net proceeds received from fund raising that the Company has initiated and as evidence by SEC Filings or a minimum payment of $25,000 per month until paid in full. The first $25,000 payment has been made and is accounted for as a deposit in the consolidated balance sheet. All defined laboratory equipment and a $100,000 lease deposit are to be excluded from the sales price. All liabilities incurred up to signing are to be discharged. Receivables existing at signing are to be 100% ownership of Rennova. There are no other significant assets. This acquisition will allow TPT MedTech to own a license to operate medical testing facilities.
 
TPT MedTech and Rennova have subsequently agreed that the acquisition will be of an asset acquisition of substantially all of the assets of EPIC instead of acquiring the stock of EPIC. Both parties are in the process of finalizing an acquisition agreement (“APA”) otherwise all other terms and conditions are consistent with the binding letter of intent.
 
EPIC is a high complexity clinical laboratory located in West Palm Beach, Florida. The binding letter of intent includes EPIC’s current CLIA certificate of registration that enables TPT MedTech’s Mobile QuikLabs to operate in 46 US States delivering rapid Covid-19 Point-of-Care testing and monitoring. Closing of the acquisition is subject to normal change of ownership application and notification to certain regulatory and licensing bodies. Until the change of ownership is complete, Rennova will operate the laboratory under management agreement dated August 6, 2020 between TPT MedTech, LLC and Rennova. There are approximately $28,000 of expenses in our consolidated statement of operations under the management agreement.
 
InnovaQor Merger with Southern Plains
 
On August 1, 2020, InnovaQor, a wholly-owned subsidiary of the Company, entered into a Merger Agreement with the publicly traded company Southern Plains Oil Corp. (OTC PINK: SPLN prior to Merger Agreement). The SPLN Merger moves the Company’s subsidiary InnovaQor one step closer to completing a recently executed Asset Purchase Agreement with Rennova Health, Inc. The Merger also positions InnovaQor to trade on the OTC Market, which InnovaQor is now traded under INOQ. The Company received 6,000,000 common shares as part of the Merger Agreement out of a total of 6,400,667 common shares outstanding.
 
During August, InnovaQor authorized a Series A Super Majority Preferred Stock valued at $350,000 by management and issued to a third party in exchange for legal services. Effective September 30, 2020, the Series A Super Majority Preferred Stock was exchanged with TPT for a note payable of $350,000 payable in cash or common stock (see Note 5(2)). As such, as of September 30, 2020, the Company, for accounting purposes, took control of the merged InnovaQor and reflected in it’s consolidated balance sheet the non-controlling interest of $219,058 in the liabilities under a license agreement valued at $3,500,000. This $3,500,000 was recorded as a Note Payable and expensed on InnovaQor’s books.
 
 
16
 
 
Bridge Internet Acquisition
 
On March 6, 2020, the Company executed an Acquisition and Purchase Agreement (“BIC Agreement”) with Bridge Internet, a Florida Limited Liability Company, formed on February 27, 2020. The Company acquired 75% of Bridge Internet (which had no assets or liabilities and no material operations) for 8,000,000 shares of common stock of the Company. Since this time, both the Company and Bridge Internet have verbally agreed to discontinue its relationship.
 
The Company evaluated this acquisition in accordance with ASC 805-10-55-4 to discern whether the transaction met the definition of a business. The company concluded there were not a sufficient number of key processes that developed the inputs into outputs. Accordingly, the Company accounted for this transaction originally as the hiring of a key member of management and expensed the value of 4,000,000 shares at $6,400.
 
NOTE 3 – GOING CONCERN
 
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
 
Cash flows generated from operating activities were not enough to support all working capital requirements for the nine months ended September 30, 2020 and 2019. We incurred $4,881,030 and $8,538,360, respectively, in losses, and we used $216,685 and $1,032,989, respectively, in cash for operations for the nine months September 30, 2020 and 2019. Cash flows from financing activities were $724,356 and $2,027,422 for the same periods. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a period of one year from the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
In December 2019, COVID-19 emerged and has subsequently spread worldwide. The World Health Organization has declared COVID-19 a pandemic resulting in federal, state and local governments and private entities mandating various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories and quarantining of people who may have been exposed to the virus. After close monitoring and responses and guidance from federal, state and local governments, in an effort to mitigate the spread of COVID-19, around March 18, 2020 for an indefinite period of time, the Company closed its Blue Collar office in Los Angeles, California and its TPT SpeedConnect offices in Michigan, Idaho and Arizona.  Most employees are working remotely, however this is not possible with certain employees and all subcontractors that work for Blue Collar. The Company continues to monitor developments, including government requirements and recommendations at the national, state, and local level to evaluate possible extensions to all or part of such closures.
 
The Company has taken advantage of the stimulus offerings and received $722,200 in April 2020 and believes it has used these funds as is prescribed by the stimulus offerings to have the entire amount forgiven. A portion of the loan to Blue Collar is under the automatic forgiveness amount of $150,000. The Company is also in the process of trying to raise debt and equity financing, some of which may have to be used for working capital shortfalls if revenues decrease significantly because of the COVID-19 closures. 
 
As the COVID-19 pandemic is complex and rapidly evolving, the Company's plans as described above may change. At this point, we cannot reasonably estimate the duration and severity of this pandemic, which could have a material adverse impact on our business, results of operations, financial position and cash flows.
 
In order for us to continue as a going concern for a period of one year from the issuance of these financial statements, we will need to obtain additional debt or equity financing and look for companies with cash flow positive operations that we can acquire. There can be no assurance that we will be able to secure additional debt or equity financing, that we will be able to acquire cash flow positive operations, or that, if we are successful in any of those actions, those actions will produce adequate cash flow to enable us to meet all our future obligations. Most of our existing financing arrangements are short-term. If we are unable to obtain additional debt or equity financing, we may be required to significantly reduce or cease operations.
 
 
 
17
 
 
NOTE 4 – PROPERTY AND EQUIPMENT
 
Property and equipment and related accumulated depreciation as of September 30, 2020 and December 31, 2019 are as follows: 
 
 
2020
 
 
2019
 
Property and equipment:
 
 
 
 
 
 
Telecommunications fiber and equipment
 $5,575,465 
 $5,203,000 
Film production equipment
  369,903 
  369,903 
Office furniture and equipment
  86,899 
  85,485 
Medical equipment
  159,356 
   
Leasehold improvements
  18,679 
  18,679 
Accumulated depreciation
  (2,034,969)
  (1,253,919)
Property and equipment, net
 $4,175,333 
 $4,423,148 
 
Depreciation expense was $781,050 and $368,362 for the nine months ended September 30, 2020 and 2019, respectively.
 
NOTE 5 – DEBT FINANCING ARRANGEMENTS
 
Financing arrangements as of September 30, 2020 and December 31, 2019 are as follows:
 
 
2020
 
 
2019
 
Loans, advances and factoring agreements (1)
 $2,576,174 
  1,121,640 
Convertible notes payable (2)
  1,711,098 
  2,101,649 
Factoring agreements (3)
  388,921 
  223,618 
Debt – third party
 $4,676,193 
  3,446,907 
 
    
    
Line of credit, related party secured by assets (4)
 $3,043,390 
  3,043,390 
Debt– other related party, net of discounts (5)
  7,450,000 
  5,950,000 
Convertible debt – related party (6)
  922,881 
  922,881 
Shareholder debt (7)
  175,222 
  303,688 
Debt – related party
 $11,591,493 
  10,219,959 
 
    
    
Total financing arrangements
 $16,267,686 
  13,666,866 
 
    
    
Less current portion:
    
    
Loans, advances and factoring agreements – third party
 $(2,062,544)
  (344,758)
Convertible notes payable third party
  (1,711,098)
  (2,101,649 
Debt – related party, net of discount
  (10,668,612)
  (9,297,078)
Convertible notes payable– related party
  (904,881)
  (534,381)
 
  (15,347,135)
  (12,277,866)
Total long term debt
 $920,551 
  1,389,000 
  
(1) The terms of $40,000 of this balance are similar to that of the Line of Credit which bears interest at adjustable rates, 1 month Libor plus 2%, 2.2% as of September 30, 2020, and is secured by assets of the Company, was due August 31, 2020, as amended, and included 8,000 stock options as part of the terms which options expired December 31, 2019 (see Note 7).
 
$500,500 is a line of credit that Blue Collar has with a bank, bears interest at Prime plus 1.125%, 4.38% as of September 30, 2020, and is due March 25, 2021.
 
$422,932 is a bank loan dated May 28, 2019 which bears interest at Prime plus 6%, 9.25% as of September 30, 2020, is interest only for the first year, thereafter beginning in June of 2020 payable monthly of principal and interest of $22,900 until the due date of May 1, 2022. The bank loan is collateralized by assets of the Company.
 
$722,220 represents loans under the COVID-19 Pandemic Paycheck Protection Program (“PPP”) originated in April of 2020. The Company believes that it has used the funds such that 100% will be forgiven when it applies for forgiveness in the third or fourth quarter of 2020. $119,371 of this amount relates to a PPP loan for Blue Collar which falls under the automatic forgiveness provisions approved by Congress of all loans under $150,000. If any of the PPP loans are not forgiven then, per the PPP, the unforgiven loan amounts will be payable monthly over a five year period of which payment are to begin no later than 10 months after the covered period as defined at a 2% annual interest rate.
 
 
18
 
 
On June 4, 2019, the Company consummated a Securities Purchase Agreement with Odyssey Capital Funding, LLC. (“Odyssey”) for the purchase of a $525,000 Convertible Promissory Note (“Odyssey Convertible Promissory Note”). The Odyssey Convertible Promissory Note was due June 3, 2020, paid interest at the rate of 12% ( 24% default) per annum and gave the holder the right from time to time, and at any time during the period beginning six months from the issuance date to convert all of the outstanding balance into common stock of the Company limited to 4.99% of the outstanding common stock of the Company. The conversion price was 55% multiplied by the average of the two lowest trading prices for the common stock during the previous 20 trading days prior to the applicable conversion date. The Odyssey Convertible Promissory Note could be prepaid in full at 125% to 145% up to 180 days from origination. Through June 3, 2020, Odyssey converted $49,150 of principal and $4,116 of accrued interest into 52,961,921 shares of common stock of the Company. On June 8, 2020, Odyssey agreed to convert the remaining principal and accrued interest balance on the Odyssey Convertible Promissory Note of $475,850 and $135,000, respectively, to a term loan payable in six months in the form of a balloon payment, earlier if the Company has a funding event, bearing simple interest on the unpaid balance of 0% for the first three months and then 10% per annum thereafter.
 
During August, SPLN authorized and issued 500,000 shares of a Series A Super Majority Preferred Stock that was valued at $350,000 by management and issued to a third party in exchange for legal services. The Series A Super Majority Preferred Stock was exchanged effective September 30, 2020 for a Note Payable with TPT that may be paid in TPT common stock at the option of the Company (see also Note 2). As of September 30, 2020, this $350,000 is reflected as a Note Payable in the consolidated balance sheet, carries zero interest and is due November 30, 2020.
 
The remaining balances generally bear interest at approximately 10%, have maturity dates that are due on demand or are past due, are unsecured and are classified as current in the balance sheets.
 
(2) During 2017, the Company issued convertible promissory notes in the amount of $67,000 (comprised of $62,000 from two related parties and $5,000 from a former officer of CDH), all which were due May 1, 2020 and bear 6% annual interest (12% default interest rate). The convertible promissory notes are convertible, as amended, at $0.25 per share. These convertible promissory notes were not repaid May 1, 2020.
 
During 2019, the Company consummated Securities Purchase Agreements dated March 15, 2019, April 12, 2019, May 15, 2019, June 6, 2019 and August 22, 2019 with Geneva Roth Remark Holdings, Inc. (“Geneva Roth”) for the purchase of convertible promissory notes in the amounts of $68,000, $65,000, $58,000, $53,000 and $43,000 (“Geneva Roth Convertible Promissory Notes”). The Geneva Roth Convertible Promissory Notes are due one year from issuance, pays interest at the rate of 12% (principal amount increases 150%-200% and interest rate increases to 24% under default) per annum and gives the holder the right from time to time, and at any time during the period beginning 180 days from the origination date to the maturity date or date of default to convert all or any part of the outstanding balance into common stock of the Company limited to 4.99% of the outstanding common stock of the Company. The conversion price is 61% multiplied by the average of the two lowest trading prices for the common stock during the previous 20 trading days prior to the applicable conversion date. The Geneva Roth Convertible Promissory Notes may be prepaid in whole or in part of the outstanding balance at 125% to 140% up to 180 days from origination. Geneva Roth converted a total of $244,000 of principal and $8,680 of accrued interest through September 30, 2020 from its various Securities Purchase Agreements into 125,446,546 shares of common stock of the Company leaving no outstanding principal balances as of September 30, 2020. On February 13, 2020, the August 22, 2019 Securities Purchase Agreement was repaid for $63,284, including a premium and accrued interest.
 
On March 25, 2019, the Company consummated a Securities Purchase Agreement dated March 18, 2019 with Auctus Fund, LLC. (“Auctus”) for the purchase of a $600,000 Convertible Promissory Note (“Auctus Convertible Promissory Note”). The Auctus Convertible Promissory Note is due December 18, 2019, pays interest at the rate of 12% (24% default) per annum and gives the holder the right from time to time, and at any time during the period beginning 180 days from the origination date or at the effective date of the registration of the underlying shares of common stock, which the holder has registration rights for, to convert all of the outstanding balance into common stock of the Company limited to 4.99% of the outstanding common stock of the Company. The conversion price is the lessor of the lowest trading price during the previous 25 trading days prior the date of the Auctus Convertible Promissory Note or 50% multiplied by the average of the two lowest trading prices for the common stock during the previous 25 trading days prior to the applicable conversion date. The Auctus Convertible Promissory Note may be prepaid in full at 135% to 150% up to 180 days from origination. Auctus converted $33,180 of principal and $142,004 of accrued interest into 376,000,000 shares of common stock of the Company prior to September 30, 2020. 2,000,000 warrants were issued in conjunction with the issuance of this debt. See Note 7.
 
 
19
 
 
On June 6, 2019, the Company consummated a Securities Purchase Agreement with JSJ Investments Inc. (“JSJ”) for the purchase of a $112,000 Convertible Promissory Note (“JSJ Convertible Promissory Note”). The JSJ Convertible Promissory Note is due June 6, 2020, pays interest at the rate of 12% per annum and gives the holder the right from time to time, and at any time during the period beginning 180 days from the origination date to convert all of the outstanding balance into common stock of the Company limited to 4.99% of the outstanding common stock of the Company. The conversion price is the lower of the market price, as defined, or 55% multiplied by the average of the two lowest trading prices for the common stock during the previous 20 trading days prior to the applicable conversion date. The JSJ Convertible Promissory Note may be prepaid in full at 135% to 150% up to 180 days from origination. JSJ converted $43,680 of principal into 18,500,000 shares of common stock of the Company prior to September 30, 2020. In addition, on February 25, 2020 the Company repaid for $97,000, including a premium and accrued interest, for all remaining principal and accrued interest balances as of that day. 333,333 warrants were issued in conjunction with the issuance of this debt. See Note 7.
 
On June 11, 2019, the Company consummated a Securities Purchase Agreement with EMA Financial, LLC. (“EMA”) for the purchase of a $250,000 Convertible Promissory Note (“EMA Convertible Promissory Note”). The EMA Convertible Promissory Note is due June 11, 2020, pays interest at the rate of 12% (principal amount increases 200% and interest rate increases to 24% under default) per annum and gives the holder the right from time to time to convert all of the outstanding balance into common stock of the Company limited to 4.99% of the outstanding common stock of the Company. The conversion price is 55% multiplied by the lowest traded price for the common stock during the previous 25 trading days prior to the applicable conversion date. The EMA Convertible Promissory Note may be prepaid in full at 135% to 150% up to 180 days from origination. Prior to September 30, 2020, EMA converted $35,366 of principal into 147,700,000 shares of common stock of the Company. 1,000,000 warrants were issued in conjunction with the issuance of this debt. See Note 7.
 
The Company is in default under its derivative financial instruments and received notice of such from Auctus and EMA for not reserving enough shares for conversion and for not having filed a Form S-1 Registration Statement with the Securities and Exchange Commission. It was the intent of the Company to pay back all derivative securities prior to the due dates but that has not occurred in case of Auctus or EMA. As such, the Company is currently in negotiations with Auctus and EMA and relative to extending due dates and changing terms on the Notes. Although we have not been served, we are aware that the Company has been named in a lawsuit by EMA for failing to comply with a Securities Purchase Agreement entered into in June 2019. See Note 8 Other Commitments and Contingencies.
 
On February 14, 2020, the Company agreed to a Secured Promissory Note with a third party for $90,000. The Secured Promissory Note was secured by the assets of the Company and was due June 14, 2020 or earlier in case the Company is successful in raising other monies and carried an interest charge of 10% payable with the principal. The Secured Promissory Note was also convertible at the option of the holder into an equivalent amount of Series D Preferred Stock. The Secured Promissory Note also included a guaranty by the CEO of the Company, Stephen J. Thomas III. This Secured Promissory Note was paid off in June 2020, including $9,000 of interest in June and $1,000 in July 2020.
 
(3) The Factoring Agreement with full recourse, due February 29, 2020, as amended, was established in June 2016 with a company that is controlled by a shareholder and is personally guaranteed by an officer of the Company. The Factoring Agreement is such that the Company pays a discount of 2% per each 30-day period for each advance received against accounts receivable or future billings. The Company was advanced funds from the Factoring Agreement for which $101,244 and $101,244 in principal remained unpaid as of September 30, 2020 and December 31, 2019, respectively.
 
On May 8, 2019, the Company entered into a factoring agreement with Advantage Capital Funding (“2019 Factoring agreement”). $500,000, net of expenses, was funded to the Company with a promise to pay $18,840 per week for 40 weeks until a total of $753,610 is paid which occurred in February 2020.
 
On February 25, 2020, the Company entered into an Agreement for the Purchase and Sale of Future Receipts (“2020 Factoring Agreement”). The balance to be purchased and sold is $716,720 for which the Company received $500,000, net of fees. Under the 2020 Factoring Agreement, the Company was to pay $14,221 per week for 50 weeks at an effective interest rate of approximately 43% annually. However, due to COVID-19 the payments under the 2020 Factoring Agreement were reduced temporarily, to between $9,000 and $11,000 weekly, of which $102,246 in payments have been deferred to be paid at the end of the 50-week term. The 2020 Factoring Agreement includes a guaranty by the CEO of the Company, Stephen J. Thomas III.
 
(4) The Line of Credit originated with a bank and was secured by the personal assets of certain shareholders of Copperhead Digital. During 2016, the Line of Credit was assigned to the Copperhead Digital shareholders, who subsequent to the Copperhead Digital acquisition by TPTG became shareholders of TPTG, and the secured personal assets were used to pay off the bank. The Line of Credit bears a variable interest rate based on the 1 Month LIBOR plus 2.0%, 2.16% as of September 30, 2020, is payable monthly, and is secured by the assets of the Company. 1,000,000 shares of Common Stock of the Company have been reserved to accomplish raising the funds to pay off the Line of Credit. Since assignment of the Line of Credit to certain shareholders, which balance on the date of assignment was $2,597,790, those shareholders have loaned the Company $445,600 under the similar terms and conditions as the line of credit but most of which were also given stock options totaling $85,120 which expired as of December 31, 2019 (see Note 7) and was due, as amended, August 31, 2020.
 
 
20
 
 
During the year ended December 31, 2019 and 2018, those same shareholders and one other have loaned the Company money in the form of convertible loans of $136,400 and $537,200, respectively, described in (2) and (6).
 
(5) $350,000 represents cash due to the prior owners of the technology acquired in December 2016 from the owner of the Lion Phone which is due to be paid as agreed by TPTG and the former owners of the Lion Phone technology and has not been determined.
 
$4,000,000 represents a promissory note included as part of the consideration of ViewMe Live technology acquired in 2017, later agreed to as being due and payable in full, with no interest with $2,000,000 from debt proceeds and the remainder from proceeds from the second Company public offering.
 
$1,000,000 represents a promissory note which was entered into on May 6, 2020 for the acquisition of Media Live One Platform from Steve and Yuanbing Caudle for the further development of software. This was expensed as research and development in the six months ended September 30, 2020. This $1,000,000 promissory note is non-interest bearing, due after funding has been received by the Company from its various investors and other sources. Mr. Caudle is a principal with the Company’s ViewMe technology.
 
On September 1, 2018, the Company closed on its acquisition of Blue Collar. Part of the acquisition included a promissory note of $1,600,000 and interest at 3% from the date of closure. The promissory note is secured by the assets of Blue Collar.
 
$500,000 represents a Note Payable related to the acquisition of 75% of Aire Fitness, payable out of future capital raising efforts and has no specific due date and does not accrue interest.
 
(6) During 2016, the Company acquired SDM which consideration included a convertible promissory note for $250,000 due February 29, 2019, as amended, does not bear interest, unless delinquent in which the interest is 12% per annum, and is convertible into common stock at $1.00 per share. The SDM balance is $182,381 as of September 30, 2020. As of March 1, 2020, this convertible promissory note is delinquent.
 
During 2018, the Company issued convertible promissory notes in the amount of $537,200 to related parties and $10,000 to a non-related party which bear interest at 6% (11% default interest rate), are due 30 months from issuance and are convertible into Series C Preferred Stock at $1.00 per share. Because the Series C Preferred Stock has a conversion price of $0.15 per share, the issuance of Series C Preferred Stock promissory notes will cause a beneficial conversion feature of approximately $38,479 upon exercise of the convertible promissory notes.
 
(7) The shareholder debt represents funds given to TPTG or subsidiaries by officers and managers of the Company as working capital. There are no written terms of repayment or interest that is being accrued to these amounts and they will only be paid back, according to management, if cash flows support it. They are classified as current in the balance sheets.
 
See Lease financing arrangement in Note 8.
 
NOTE 6 -DERIVATIVE FINANCIAL INSTRUMENTS
 
The Company previously adopted the provisions of ASC subtopic 825-10, Financial Instruments (“ASC 825-10”). ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
 
The derivative liability as of September 30, 2020, in the amount of $6,582,252 has a level 3 classification under ASC 825-10.
 
 
21
 
 
The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of September 30, 2020.
 
 
 
Debt Derivative Liabilities
 
  Balance, December 31, 2018
 $ 
Debt discount from initial derivative
  1,774,000 
Initial fair value of derivative liabilities
  2,601,631 
Change in derivative liability from conversion of notes payable
  (407,654)
Change in fair value of derivative liabilities at end of period
  4,868,537 
Balance, December 31, 2019
 $8,836,514 
Change in derivative liabilities from conversion of notes payable
  (1,144,290)
Change in derivative liabilities from the Odyssey conversion to a term loan
  (1,286,763)
Change in fair value of derivative liabilities at end of period – derivative expense
  176,790 
Balance, September 30, 2020
 $6,582,252 
 
Convertible notes payable and warrant derivatives – The Company issued convertible promissory notes which are convertible into common stock, at holders’ option, at a discount to the market price of the Company’s common stock. The Company has identified the embedded derivatives related to these notes relating to certain anti-dilutive (reset) provisions. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date.
 
As of September 30, 2020, the Company marked to market the fair value of the debt derivatives and determined a fair value of $6,582,252 ($6,541,061 from the convertible notes and $41,191 from the warrants) in Note 5 (2) above. The Company recorded a loss from change in fair value of debt derivatives of $176,790 for the nine months ended September 30, 2020. The fair value of the embedded derivatives was determined using Monte Carlo simulation method based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 232.9% to 334.9%, (3) weighted average risk-free interest rate of 0.10% to 0.13% (4) expected life of 0.25 to 1.697 years, and (5) the quoted market price of $0.029 to $0.029 for the Company’s common stock.
 
See Financing lease arrangements in Note 8.
 
NOTE 7 - STOCKHOLDERS' DEFICIT
 
Preferred Stock
 
As of September 30, 2020, we had authorized 100,000,000 shares of Preferred Stock, of which certain shares had been designated as Series A Preferred Stock, Series B Preferred Stock, Series C and Series D Preferred Stock.
 
During the nine months ended September 30, 2020, the Series A Preferred Stock and the Series B Preferred Stock were reclassified as mezzanine equity as a result of the Company not having enough authorized common shares to be able to issue common shares upon their conversion.
 
Series A Convertible Preferred Stock
 
In February 2015, the Company designated 1,000,000 shares of Preferred Stock as Series A Preferred Stock.
 
The Series A Preferred Stock was designated in February 2016, has a par value of $.001, is redeemable at the Company’s option at $100 per share, is senior to any other class or series of outstanding Preferred Stock or Common Stock and does not bear dividends. The Series A Preferred Stock has a liquidation preference immediately after any Senior Securities, as defined and amended, of an amount equal to amounts payable owing, including contingency amounts where Holders of the Series A have personally guaranteed obligations of the Company. Holders of the Series A Preferred Stock shall, collectively have the right to convert all of their Series A Preferred Stock when conversion is elected into that number of shares of Common Stock of the Company, determined by the following formula: 60% of the issued and outstanding Common Shares as computed immediately after the transaction for conversion. For further clarification, the 60% of the issued and outstanding common shares includes what the holders of the Series A Preferred Stock may already hold in common shares at the time of conversion. The Series A Preferred Stock, collectively, shall have the right to vote as if converted prior to the vote to a number of shares equal to 60% of the outstanding Common Stock of the Company.
 
In February 2015, the Board of Directors authorized the issuance of 1,000,000 shares of Series A Preferred Stock to Stephen Thomas, Chairman, CEO and President of the Company, valued at $3,117,000 for compensation expense.
 
 
22
 
 
Series B Convertible Preferred Stock
 
In February 2015, the Company designated 3,000,000 shares of Preferred Stock as Series B Convertible Preferred Stock. There are 2,588,693 shares of Series B Convertible Preferred Stock outstanding as of September 30, 2020.
 
The Series B Preferred Stock was designated in February 2015, has a par value of $.001, is not redeemable, is senior to any other class or series of outstanding Preferred Stock, except the Series A Preferred Stock, or Common Stock and does not bear dividends. The Series B Preferred Stock has a liquidation preference immediately after any Senior Securities, as defined and currently the Series A Preferred Stock, and of an amount equal to $2.00 per share. Holders of the Series B Preferred Stock have a right to convert all or any part of the Series B Preferred Shares and will receive and equal number of common shares at the conversion price of $2.00 per share. The Series B Preferred Stockholders have a right to vote on any matter with holders of Common Stock and shall have a number of votes equal to that number of Common Shares on a one to one basis.
 
Series C Convertible Preferred Stock
 
In May 2018, the Company designated 3,000,000 shares of Preferred Stock as Series C Convertible Preferred Stock.  
The Series C Preferred Stock has a par value of $.001, is not redeemable, is senior to any other class or series of outstanding Preferred Stock, except the Series A and Series B Preferred Stock, or Common Stock and does not bear dividends. The Series C Preferred Stock has a liquidation preference immediately after any Senior Securities, as defined and currently the Series A and B Preferred Stock, and of an amount equal to $2.00 per share. Holders of the Series C Preferred Stock have a right to convert all or any part of the Series C Preferred Shares and will receive an equal number of common shares at the conversion price of $0.15 per share. The Series C Preferred Stockholders have a right to vote on any matter with holders of Common Stock and shall have a number of votes equal to that number of Common Shares on a one to one basis.
 
There are no shares of Series C Convertible Preferred Stock outstanding as of September 30, 2020.
 
Series D Convertible Preferred Stock
 
On June 15, 2020, the Company amended its Series D Designation from January 14, 2020. This Amendment changed the number of shares to 10,000,000 shares of the authorized 100,000,000 shares of the Company's $0.001 par value preferred stock as the Series D Convertible Preferred Stock ("the Series D Preferred Shares.") 
 
Series D Preferred shares have the following features: (i) 6% Cumulative Annual Dividends payable on the purchase value in cash or common stock of the Company at the discretion of the Board and payment is also at the discretion of the Board, which may decide to cumulate to future years; (ii) Any time after 18 months from issuance an option to convert to common stock at the election of the holder @ 80% of the 30 day average market closing price (for previous 30 business days) divided into $5.00. ; (iii) Automatic conversion of the Series D Preferred Stock shall occur without consent of holders upon any national exchange listing approval and the registration effectiveness of common stock underlying the conversion rights. The automatic conversion to common from Series D Preferred shall be on a one for one basis, which shall be post-reverse split as may be necessary for any Exchange listing (iv) Registration Rights – the Company has granted Piggyback Registration Rights for common stock underlying conversion rights in the event it files any other Registration Statement (other than an S-1 that the Company may file for certain conversion common shares for the convertible note financing that was arranged and funded in 2019). Further, the Company will file, and pursue to effectiveness, a Registration Statement or offering statement for common stock underlying the Automatic Conversion event triggered by an exchange listing. (v) Liquidation Rights - $5.00 per share plus any accrued unpaid dividends – subordinate to Series A, B, and C Preferred Stock receiving full liquidation under the terms of such series. The Company has redemption rights for the first year following the Issuance Date to redeem all or part of the principal amount of the Series D Preferred Stock at between 115% and 140%.
 
As of the date hereof, there are no Series D Preferred shares outstanding as amended.
 
Common Stock and Capital Contributions
 
As of September 30, 2020, we had authorized 1,000,000,000 shares of Common Stock, of which 858,562,371 common shares are issued and outstanding.
 
 
23
 
 
Common Stock Issued for Conversion of Debt
 
During the nine months ended September 30, 2020, the Company issued 679,932,432 of common shares for $232,430 of principal and $104,300 of interest, resulting in a gain on extinguishment of $1,252,131. In addition, the Company issued 1,000,000 common shares in exchange for $58,000 of legal liabilities.
 
Subscription Payable
 
As of September 30, 2020, the Company has recorded $885,631 in stock subscription payable, which equates to the fair value on the date of commitment, of the Company’s commitment to issue the following common shares:
 
Unissued shares under consulting and director agreements
  6,000,000 
Unissued shares for conversion of debt
  16,667 
Unissued shares for acquisition of Bridge Internet
  4,000,000 
Shares receivable under prior terminated acquisition agreement
  (3,096,181)
Net commitment
  6,920,486 
 
During the nine months ended September 30, 2020, the Company acquired 75% of Bridge Internet for 8,000,000 shares of common stock of TPT Global Tech, Inc., 4,000,000 common shares issued to Sydney “Trip” Camper immediately and 4,000,000 common shares which vest equally over two years. See Note 2.
 
During 2018, a note payable of $2,000 was forgiven for 16,667 common shares.
 
In 2018, Arkady Shkolnik and Reginald Thomas (family member of CEO) were added as members of the Board of Directors. In accordance with agreements with the Company for his services as a director, Mr. Shkolnik is to receive $25,000 per quarter and 5,000,000 shares of restricted common stock valued at approximately $692,500 vesting quarterly over twenty-four months. The quarterly cash payments of $25,000 will be paid in unrestricted common shares if the Company has not been funded adequately to make such payments. Mr. Thomas is to receive $10,000 per quarter and 1,000,000 shares of restricted common stock valued at approximately $120,000 vesting quarterly over twenty-four months. The quarterly payment of $10,000 may be suspended by the Company if the Company has not been adequately funded. As of September 30, 2020, $190,500 and $65,000 has been accrued as accounts payable in the balance sheet for Mr. Shkolnik and Mr. Thomas, respectively. For the nine months ended September 30, 2020 and 2019, $236,978 and $409,688, respectively, have been expensed under these agreements.
 
Effective November 1 and 3, 2017, an officer of the Company contributed 9,765,000 shares of restricted Common Stock to the Company for the acquisition of Blue Collar and HRS. These shares were subsequently issued as consideration for these acquisitions in November 2017. In March 2018, the HRS acquisition was rescinded and 3,625,000 shares of common stock are being returned by the recipients. The other transaction involved 6,500,000 shares for the acquisition of Blue Collar which closed in 2018. As such, as of September 30, 2020 the 3,265,000 shares for the HRS transaction are reflected as subscriptions receivable based on their par value.
 
QuikLAB Mobile Laboratory
 
In July and August 2020, the Company formed Quiklab 1 LLC, QuikLAB 2, LLC, QuikLAB 3, LLC and QuikLAB 4, LLC. It is the intent to use these entities as vehicles into which third parties would invest and participate in owning QuikLAB Mobile Laboratories. As of September 30, 2020, Quiklab 1 LLC and QuikLAB 3, LLC have received an investment of $360,000 for which the third parties will benefit from owning 20% of QuikLAB Mobile Laboratories specific to their investment.
 
 
24
 
 
Stock Options
 
 
 
 
Options Outstanding 
 
 
 
Vested 
 
 
Vesting Period 
 
 
Exercise Price Outstanding and Exercisable 
 
 
 
Expiration Date 
 
December 31, 2018
  3,093,120 
  1,954,230  
100% at issue and 12 to 18 months
 $0.05 to $0.22 

12-31-19 to 3-21-21    
    Expired
  (93,120)
    
 
 $0.05 to $0.22 
  12-31-19 
December 31, 2019
  3,000,000 
  3,000,000 
12 to 18 months
 $0.10 
3-1-20 to 3-21-21   
Expired
  (2,000,000)
    
 
    
    
September 30, 2020
  1,000,000 
  1,000,000 
12 months
 $0.10 
  3-21-21 
 
During the year ended December 31, 2018, the company entered into consulting arrangements primarily for legal work and general business support that included the issuance of stock options to purchase 3,000,000 options to purchase common shares at $0.10 per share. 2,000,000 of these expired. The remaining 1,000,000 are fully vested as of September 30, 2020. The Black-Scholes options pricing model was used to value the stock options. The inputs included the following:
 
(1) Dividend yield of 0%
(2) expected annual volatility of 307% - 311%
(3) discount rate of 2.2% to 2.3%
(4) expected life of 2 years, and
(5) estimated fair value of the Company’s common $0.125 to $0.155 per share.
 
93,120 options expired in 2019. Expense recorded in the six months ended September 30, 2020 and 2019 was $0 and $113,488 related to stock options. No further expense will be incurred to the consolidated statement of operations for the existing stock options.
 
Warrants
 
As of September 30, 2020, there were 3,333,333 warrants outstanding that expire in five years or in the year ended December 31, 2024. As part of the Convertible Promissory Notes payable – third party issuance in Note 5, the Company issued 3,333,333 warrants to purchase 3,333,333 common shares of the Company at 70% of the current market price. Current market price means the average of the three lowest trading prices for our common stock during the ten-trading day period ending on the latest complete trading day prior to the date of the respective exercise notice. However, if a required registration statement, registering the underlying shares of the Convertible Promissory Notes, is declared effective on or before June 11, 2019 to September 11, 2019, then, while such Registration Statement is effective, the current market price shall mean the lowest volume weighted average price for our common stock during the ten-trading day period ending on the last complete trading day prior to the conversion date.
 
The warrants issued were considered derivative liabilities valued at $41,191 of the total $6,582,252, derivative liabilities as of September 30, 2020. See Note 6.
 
Common Stock Reservations
 
The Company has reserved 1,000,000 shares of Common Stock of the Company for the purpose of raising funds to be used to pay off debt described in Note 5.
 
We have reserved 20,000,000 shares of Common Stock of the Company to grant to certain employee and consultants as consideration for services rendered and that will be rendered to the Company.
 
There are Transfer Agent common stock reservations that have been approved by the Company relative to the outstanding derivative financial instruments, the outstanding Form S-1 Registration Statement and general treasury of 96,165,803.
 
 
25
 
 
NOTE 8 - COMMITMENTS AND CONTINGENCIES
 
Accounts Payable and Accrued Expenses 
 
Accounts Payable and Accrued Expenses 
Accounts payable:
 
2020
 
 
2019
 
   Related parties (1)
 $1,207,092 
 $1,141,213 
   General operating
  4,156,498 
  3,342,952 
Accrued interest on debt (2)
  1,167,156 
  793,470 
Credit card balances
  177,714 
  183,279 
Accrued payroll and other expenses
  260,819 
  207,108 
Taxes and fees payable
  641,012 
  633,357 
Unfavorable lease liability
  151,419 
  242,256 
Total
 $7,761,710 
 $6,543,635 
 
(1)
Relates to amounts due to management and members of the Board of Directors according to verbal and written agreements that have not been paid as of period end.
(2)
Portion relating to related parties is $615,141 and $481,942 for September 30, 2020 and December 31, 2019, respectively
 
Operating lease obligations
 
We have various non-cancelable lease agreements for certain of our tower locations with original lease periods expiring between 2020 and 2044. Our lease terms may include options to extend or terminate the lease when it is reasonably certain we will exercise that option. Certain of the arrangements contain escalating rent payment provisions. The Company has determined that the identified operating leases did not contain non-lease components and require no further allocation of the total lease cost. Additionally, the agreements in place did not contain information to determine the rate implicit in the leases, so we used our estimated incremental borrowing rate as the discount rate. Our weighted average discount rate is 10.0% and the weighted average lease term of 6 years. Our Michigan main office lease and an equipment lease described below and leases with an initial term of twelve months have not been recorded on the consolidated balance sheets. We recognize rent expense on a straight-line basis over the lease term.
 
As of September 30, 2020, operating lease right-of-use assets and liabilities arising from operating leases were $4,531,784 and $4,726,609, respectively. During the nine months ended September 30, 2020, cash paid for amounts included for the measurement of lease liabilities was $2,109,462 and the Company recorded lease expense in the amount of $2,109,462 in costs of goods sold.
 
The following is a schedule showing the future minimum lease payments under operating leases by years and the present value of the minimum payments as of September 30, 2020.
 
2020
 $582,089 
2021
  1,949,477 
2022
  1,329,255 
2023
  815,977 
2024
  569,213 
Thereafter
  344,754 
Total operating lease liabilities
 $5,590,765 
Amount representing interest
 $(864,156)
Total net present value
 $4,726,609 
 
Office lease used by CEO
 
The Company entered into a lease of 12 months or less for living space which is occupied by Stephen Thomas, Chairman, CEO and President of the Company. Mr. Thomas lives in the space and uses it as his corporate office. The company has paid $22,500 and $23,641 in rent and utility payments for this space for the nine months ended September 30, 2020 and 2019, respectively.
 
 
 
26
 
 
Financing lease obligations
 
Future minimum lease payments are as follows:
 
Obligation
 
2020
 
 
2021
 
 
In Default
 
 
Total
 
Telecom Equipment Finance (1)
 $449,103 
   
  449,103 
 $449,103 
XRoads Equipment Agreement (2)
  18,790 
  84,559 
   
  103,349 
 
  467,893 
  84,559 
  449,103 
  552,452 
 
(1)
The Telecom Equipment Lease is with an entity owned and controlled by shareholders of the Company and was due August 31, 2020, as amended.
(2)
The Xroads Equipment Agreement is with a third party that allows the Company to pay $11,288 per month starting on November 16, 2020 for eleven months with a $1 value acquisition price at the termination of the lease.
 
Other Commitments and Contingencies 
 
The Company has employment agreements with certain employees of SDM and K Telecom and Aire Fitness. The agreements are such that SDM and K Telecom, on a standalone basis in each case, must provide sufficient cash flow to financially support the financial obligations within the employment agreements.
 
The Company has been named in a lawsuit by a former employee who was terminated by management in 2016. The employee was working under an employment agreement but was terminated for breach of the agreement. The former employee is suing for breach of contract and is seeking around $75,000 in back pay and benefits. Management believes it has good and meritorious defenses and does not believe the outcome of the lawsuit will have any material effect on the financial position of the Company.
 
Although we have not been served, we are aware that the Company has been named in a lawsuit by EMA for failing to comply with a Securities Purchase Agreement entered into in June 2019. More specifically, EMA claims the Company failed to honor notices of conversion, failed to establish and maintain share reserves, failed to register EMA shares and by failed to assure that EMA shares were Rule 144 eligible within 6 months. EMA has claimed in excess of $7,614,967 in relief. The Company is beginning to review the lawsuit but does not believe at this time that any negative outcome would result in more than the $593,120 it has recorded on its balance sheet as of September 30, 2020.
 
As of September 30, 2020, the company has collected $338,725 from one customer in excess of amounts due from that customer in accordance with the customer’s understanding of the appropriate billings activity. The customer has filed a written demand for repayment by the Company of amounts owed. Management believes that the customer agreement allows them to keep the amounts under dispute. Given the dispute, the Company has reflected the amounts in dispute as a customer liability on the consolidated balance sheet as of September 30, 2020 and December 31, 2019 and does not believe the outcome of the dispute will have a material effect on the financial position of the Company.
 
On May 6, 2020, the Company entered into an agreement to employ Ms. Bing Caudle as Vice President of Product Development of the Media One Live platform for an annual salary of $250,000 for five years, including customary employee benefits. The payment is guaranteed for five years whether or not Ms. Caudle is dismissed with cause.
 
NOTE 9 – RELATED PARTY ACTIVITY
 
Accounts Payable and Accrued Expenses
 
There are amounts outstanding due to related parties of the Company of $1,207,092 and $1,141,213, respectively, as of September 30, 2020 and December 31, 2019 related to amounts due to employees, management and members of the Board of Directors according to verbal and written agreements that have not been paid as of period end which are included in accounts payable and accrued expenses on the balance sheet. See Note 8.
 
As is mentioned in Note 7, Reginald Thomas was appointed to the Board of Directors of the Company in August 2018. Mr. Thomas is the brother to the CEO Stephen J. Thomas III. According to an agreement with Mr. Reginald Thomas, he is to receive $10,000 per quarter and 1,000,000 shares of restricted common stock valued at approximately $120,000 vesting quarterly over twenty-four months. The quarterly payment of $10,000 may be suspended by the Company if the Company has not been adequately funded.
 
 
 
27
 
 
Leases
 
See Note 8 for office lease used by CEO.
 
Debt Financing and Amounts Payable/Receivable
 
As of September 30, 2020, there are amounts due to management/shareholders of $175,222 included in financing arrangements, of which $101,645 is payable from the Company to Stephen J. Thomas III, CEO of the Company. See Note 5. In addition, as of September 30, 2020 and December 31, 2019, amounts receivable from Mark Rowen, CEO of Blue Collar were $54,977 and $0, respectively, consisting of a net balance in advances and reimbursable expenses.
 
Revenue Transactions
 
Blue Collar provided production services to an entity controlled by the Blue Collar CEO (355 LA, LLC or “355”) for which it recorded revenues of $398,677 and $0, respectively, for the nine months ended September 30, 2020 and 2019. 355 was formed in October 2019 by the CEO of Blue Collar for the purpose of production of certain additional footage for a 355 customer. 355 has opportunity to engage with other production relationships outside of using Blue Collar. Accounts receivable from 355 as of September 30, 2020 and December 31, 2019 is $0 and $0, respectively.
 
Other Agreements
 
On April 17, 2018, the CEO of the Company, Stephen Thomas, signed an agreement with New Orbit Technologies, S.A.P.I. de C.V., a Mexican corporation, (“New Orbit”), majority owned and controlled by Stephen Thomas, related to a license agreement for the distribution of TPT licensed products, software and services related to Lion Phone and ViewMe Live within Mexico and Latin America (“License Agreement”). The License Agreement provides for New Orbit to receive a fully paid-up, royalty-free, non-transferable license for perpetuity with termination only under situations such as bankruptcy, insolvency or material breach by either party and provides for New Orbit to pay the Company fees equal to 50% of net income generated from the applicable activities. The transaction was approved by the Company’s Board of Directors in June 2018. There has been no activity on this agreement.
 
NOTE 10 – GOODWILL AND INTANGIBLE ASSETS
 
Goodwill and intangible assets are comprised of the following:
 
  September 30, 2020  
 
 
 
Gross carrying amount (1)
 
 
Accumulated Amortization
 
 
Net Book Value
 
 
Useful Life
 
Customer Base
 $938,000 
 $(182,124)
 $755,876 
  3-10 
Developed Technology
  4,595,600 
  (1,489,319)
  3,106,281 
  9 
Film Library
  957,000 
  (159,050)
  797,950 
  11 
Trademarks and Tradenames
  132,000 
  (23,829)
  108,171 
  12 
Favorable leases
  95,000 
  (42,400)
  52,600 
  3 
Other
  7,120 
   
  7,120 
  10 
 
  6,724,720 
  (1,896,722)
  4,827,998 
    
 
    
    
    
    
Goodwill
 $1,640,099 
 $ 
 $1,640,099 
    
 
Amortization expense was $548,205 and $643,942 for the nine months ended September 30, 2020 and 2019, respectively.
 
 
28
 
 
 December 31, 2019
 
 
 
Gross carrying amount
 
 
Accumulated Amortization
 
 
Net Book Value
 
 
Useful Life
 
Customer Base
 $1,197,200 
 $(364,383)
 $832,817 
  3-10 
Developed Technology
  4,595,600 
  (1,106,351)
  3,489,249 
  9 
Film Library
  957,000 
  (104,900)
  852,100 
  11 
Trademarks and Tradenames
  132,000 
  (15,123)
  116,877 
  12 
Favorable leases
  95,000 
  (16,960)
  78,040 
  3 
 
  6,976,800 
  (2,707,717)
  5,369,083 
    
 
    
    
    
    
Goodwill
 $1,050,366 
 $ 
 $1,050,366 
    
 
Remaining amortization of the intangible assets is as following for the next five years and beyond:
 
 
 
2020
 
2020
 $188,969 
2021
  798,524 
2022
  791,404 
2023
  788,036 
2024
  771,052 
Thereafter
  1,490,013 
 
 $4,827,998 
  
On May 6, 2020, the Company entered into an agreement with Steve and Yuanbing Caudle for the acquisition of the Media One Live platform for $1,000,000 in the form of a promissory note, non-interest bearing, due after funding has been received by the Company from its various investors and other sources. Mr. Caudle is a principal with the ViewMe technology that is being developed by the Company. This technology is considered to be the social media add on to the ViewMe live streaming engine platform. The Company evaluated this acquisition in accordance with ASC 985-20 Costs of Software to be Sold, Leased or Marketed and concluded that the cost of the acquisition is to be treated as an expense as research and development.
 
NOTE 11 – SEGMENT REPORTING
 
ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company's business segments.
 
The Company's chief operating decision maker (“CODM”) has been identified as the CEO who reviews the financial information of separate operating segments when making decisions about allocating resources and assessing performance of the group. Based on management's assessment, the Company considers its most significant segments for 2020 and 2019 are those in which it is providing Broadband Internet through TPT SpeedConnect and Media Production services through Blue Collar.
 
 
 
29
 
 
The following table presents summary information by segment for the nine months ended September 30, 2020 and 2019 respectively:
 
2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TPT SpeedConnect
 
 
Blue Collar
 
 
Corporate and other
 
 
Total
 
Revenue
 $7,683,928 
 $877,607 
 $57,819 
 $8,619,354 
Cost of revenue
 $4,876,775 
 $418,968 
 $267,357 
 $5,563,100 
Net income (loss)
 $880,554 
 $(174,388)
 $(5,597,196)
 $(4,881,030)
Depreciation and amortization
 $390,422 
 $83,502 
 $855,331 
 $1,329,255 
Derivative expense
 $ 
 $ 
 $176,790 
 $176,790 
Interest expense
 $135,500 
 $28,172 
 $918,587 
 $1,082,259 
 
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TPT SpeedConnect
 
 
Blue Collar
 
 
Corporate and other
 
 
Total
 
Revenue
 $4,762,827 
 $888,191 
 $556,413 
 $6,207,431 
Cost of revenue
 $3,003,849 
 $567,897 
 $353,267 
 $3,925,013 
Net loss
 $926,279 
 $(251,079)
 $(9,213,560)
 $(8,538,360)
Depreciation and amortization
 $147,056 
 $15,422 
 $849,826 
 $1,012,304 
Derivative expense
 $ 
 $ 
 $3,572,107 
 $3,572,107 
Interest expense
 $ 
 $85,647 
 $2,479,757 
 $2,565,404 
 
NOTE 12 – SUBSEQUENT EVENTS
 
Transcell Biologics
 
On November 8, 2020, the Company’s subsidiary TPT MedTech entered into a letter of intent investment agreement with Transcell Biologics and Transcell Oncologics whereby TPT MedTech would invest $3,000,000 at closing. Closing is anticipated to be after sufficient capital is raised, customary due diligence is complete and agreement by all parties as to the valuation and stake for which the investment would represent. The Company believes that Transcell Biologics and Transcell Oncologics have significant synergies with TPT MedTech’s current and anticipated activities.
 
Subsequent to September 30, 2020, the Company signed consulting agreements related to their activities with TPT MedTech with two third parties on October 2, 2020 for which we agreed to issue 300,000 shares of restricted common stock. In addition, the Company issued 14,667 of subscribed shares.
 
Subsequent to September 30, 2022, the Company issued restricted common shares under its agreements with its outside directors for which is issued 6,000,000 shares. In addition, 1,000,000 shares were issued to a consultant as a bonus for IR consulting services performed.
 
On November 17, 2020, the Company entered into an Agreement for the Purchase and Sale of Future Receipts (“2020 NewCo Factoring Agreement”). The balance to be purchased and sold is $326,400 for which the Company received $232,800, net of fees. Under the 2020 NewCo Factoring Agreement, the Company is to pay $11,658 per week for 28 weeks at an effective interest rate of approximately 36% annually. The 2020 NewCO Factoring Agreement includes a guaranty by the CEO of the Company, Stephen J. Thomas III.
 
Subsequent to September 30, 2022, we entered into a Settlement Agreement to settle outstanding legal fees in the amount of $74,397 for TPT common shares. The number of shares to be issued in consideration is to be computed at the five day average trading price as specified under Rule 474 under the Securities Act of 1933 for the 5 days preceding the date of the request for acceleration of the effective date of this registration of our common shares to be issued. This $74,397 may also be fully settled in cash at any time prior to the issuance of the shares of stock of the Company.
 
Subsequent events were reviewed through the date the financial statements were issued.
 
 
30
 
 
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 
Forward-Looking Statements and Associated Risks.
 
This Form 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.
 
Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. As reflected in the accompanying financial statements, as of September 30, 2020, we had an accumulated deficit totaling $37,692,263. This raises substantial doubts about our ability to continue as a going concern.
 
RESULTS OF OPERATIONS
 
For the Three Months Ended September 30, 2020 Compared to the Three Months Ended September 30, 2019
 
During the three months ended September 30, 2020, we recognized total revenues of $2,786,610 compared to the prior period of $3,617,500. The decrease is largely attributable to the decrease in internet customers from attrition.
 
Gross profit for the three months ended September 30, 2020 was $961,187 compared to $1,442,803 for the prior period. The decrease of $481,616 is largely attributable to the decrease in internet customer from attrition.
 
During the three months ended September 30, 2020, we recognized $2,321,300 in operating expenses compared to $1,707,528 for the prior period. The increase of $613,772 was in large part attributable to increased payroll and professional fees from its TPT MedTech activities.
 
Derivative gain of $223,229 and $4,533,794 results from the accounting for derivative financial instruments during the three months ended September 30, 2020 and 2019.
 
Interest expense decreased for the three months ended September 30, 2020 compared to the prior period by $1,039,808. The decrease is largely from the derivative debt being in default of the increased penalty amounts that were accounted for in the prior period versus this period.
 
During the three months ended September 30, 2020, we recognized a net loss of $1,385,042 compared to net income of $2,986,798 for the prior period. The difference of $4,371,840 was primarily a result of the accounting resulting from the valuation of debt classified as derivative financial instruments.
 
For the Nine Months Ended September 30, 2020 Compared to the Nine Months Ended September 30, 2019
 
During the nine months ended September 30, 2020, we recognized total revenues of $8,619,354 compared to the prior period of $6,207,431. The increase is attributed to the acquisition of the assets of SpeedConnect on May 7, 2019.
 
Gross profit for the nine months ended September 30, 2020 was $3,056,254 compared to $2,282,418 for the prior period. The increase of $773,836 is largely attributable to the acquisition of the assets of SpeedConnect.
 
During the nine months ended September 30, 2020, we recognized $7,154,716 in operating expenses compared to $4,688,962 for the prior period. The increase of $2,465,754 was in large part attributable to the acquisition of the assets of SpeedConnect and $1,000,000 of research and development expense.
 
Derivative expense of $176,790 and $3,572,107 results from the accounting for derivative financial instruments during the nine months ended September 30, 2020 and 2019.
 
Interest expense decreased for the nine months ended September 30, 2020 compared to the prior period by $1,483,145. The decrease is largely from the derivative debt being in default of the increased penalty amounts that were accounted for in the prior period versus this period.
 
During the nine months ended September 30, 2020, we recognized a net loss of $4,881,030 compared to a loss of $8,538,360 for the prior period. The difference of $3,657,330 was primarily a result of the accounting resulting from the valuation of debt classified as derivative financial instruments.
 
 
31
 
  
LIQUIDITY AND CAPITAL RESOURCES
 
Cash flows generated from operating activities were not enough to support all working capital requirements for the nine months ended September 30, 2020 and 2019. We incurred $4,881,030 and $8,538,360, respectively, in losses, and we used $216,685 and $1,032,989, respectively, in cash for operations for the nine months September 30, 2020 and 2019. Cash flows from financing activities were $724,356 and $2,027,422 for the same periods. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a period of one year from the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
In December 2019, COVID-19 emerged and has subsequently spread worldwide. The World Health Organization has declared COVID-19 a pandemic resulting in federal, state and local governments and private entities mandating various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories and quarantining of people who may have been exposed to the virus. After close monitoring and responses and guidance from federal, state and local governments, in an effort to mitigate the spread of COVID-19, around March 18, 2020 for an indefinite period of time, the Company closed its Blue Collar office in Los Angeles, California and its TPT SpeedConnect offices in Michigan, Idaho and Arizona.  Most employees are working remotely, however this is not possible with certain employees and all subcontractors that work for Blue Collar. The Company continues to monitor developments, including government requirements and recommendations at the national, state, and local level to evaluate possible extensions to all or part of such closures.
 
The Company has taken advantage of the stimulus offerings and received $722,200 in April 2020 and believes it has used these funds as is prescribed by the stimulus offerings to have the entire amount forgiven. A portion of the loan to Blue Collar is under the automatic forgiveness amount of $150,000. The Company is also in the process of trying to raise debt and equity financing, some of which may have to be used for working capital shortfalls if revenues decrease significantly because of the COVID-19 closures. 
 
As the COVID-19 pandemic is complex and rapidly evolving, the Company's plans as described above may change. At this point, we cannot reasonably estimate the duration and severity of this pandemic, which could have a material adverse impact on our business, results of operations, financial position and cash flows.
 
In order for us to continue as a going concern for a period of one year from the issuance of these financial statements, we will need to obtain additional debt or equity financing and look for companies with cash flow positive operations that we can acquire. There can be no assurance that we will be able to secure additional debt or equity financing, that we will be able to acquire cash flow positive operations, or that, if we are successful in any of those actions, those actions will produce adequate cash flow to enable us to meet all our future obligations. Most of our existing financing arrangements are short-term. If we are unable to obtain additional debt or equity financing, we may be required to significantly reduce or cease operations.
 
Ongoing Assessment of the Impact of COVID-19
 
Companies have undertaken and are generally in the process of making a diverse range of operational adjustments in response to the effects of COVID-19. These adjustments are numerous and include a transition to telework; supply chain and distribution adjustments; and suspending or modifying certain operations to comply with health and safety guidelines to protect employees, contractors, and customers, including in connection with a transition back to the workplace. These types of adjustments may have an effect on a company that would be material to an investment or voting decision, and affected companies should carefully consider their obligations to disclose this information to investors. Companies also are undertaking a diverse and sometimes complex range of financing activities in response to the effects of COVID-19 on their businesses and markets. These activities may involve obtaining and utilizing credit facilities, accessing public and private markets, implementing supplier finance programs, and negotiating new or modified customer payment terms. The SEC has required a discussion of COVID-19 related considerations, specific facts and circumstances and make disclosures to address the following questions;
 
 
32
 
 
What are the material operational challenges that management and the Board of Directors are monitoring and evaluating?
 
We are challenged by the gathering restrictions under state and local rules and lack of events due to cancellation specifically related to our Blue Collar operations.
 
How and to what extent have you altered your operations, such as implementing health and safety policies for employees, contractors, and customers, to deal with these challenges, including challenges related to employees returning to the workplace?
 
We have allowed our employees to work from home and are using contract service providers where appropriate. Blue Collar continues to be mostly shut down but has implemented health and safety policies for employees, contractors and customers to the limited work that is being done.
 
How are the changes impacting or reasonably likely to impact your financial condition and short- and long-term liquidity?
 
The changes have impaired our Blue Collar operations significantly.
 
How is your overall liquidity position and outlook evolving?
 
We have raised limited funds to help our liquidity position but hope our outlook is bright primarily through a pending private placement and current discussions with other funding opportunities.
 
To the extent COVID-19 is adversely impacting your revenues, consider whether such impacts are material to your sources and uses of funds, as well as the materiality of any assumptions you make about the magnitude and duration of COVID-19’s impact on your revenues. Are any decreases in cash flow from operations having a material impact on your liquidity position and outlook?
 
COVID-19 has reduced our historical revenues by approximately 20% from that of 2019. The bans on events and gatherings are very material to our Blue Collar operations. Our reduced cash flows from Blue Collar operations has materially impacted our growth from that segment of our business.
 
Have you accessed revolving lines of credit or raised capital in the public or private markets to address your liquidity needs?
 
We have raised some limited funds through private sources but have mainly relied on PPP funding and cash flows from those parts of our business with positive cash flows.
 
Have COVID-19 related impacts affected your ability to access your traditional funding sources on the same or reasonably similar terms as were available to you in recent periods?
 
No.
 
Have you provided additional collateral, guarantees, or equity to obtain funding?
 
No.
 
 
33
 
 
Have there been material changes in your cost of capital?
 
No.
 
How has a change, or a potential change, to your credit rating impacted your ability to access funding?
 
 ●            
No.
 
 Do your financing arrangements contain terms that limit your ability to obtain additional funding? If so, is the uncertainty of additional funding reasonably likely to result in your liquidity decreasing in a way that would result in you being unable to maintain current operations?
 
No.
 
Are you at material risk of not meeting covenants in your credit and other agreements?
 
No.
 
If you include metrics, such as cash burn rate or daily cash use, in your disclosures, are you providing a clear definition of the metric and explaining how management uses the metric in managing or monitoring liquidity?
 
Not Applicable.
 
Are there estimates or assumptions underlying such metrics the disclosure of which is necessary for the metric not to be misleading?
 
No.
 
Have you reduced your capital expenditures and if so, how?
 
No.
 
Have you reduced or suspended share repurchase programs or dividend payments?
 
No.
 
Have you ceased any material business operations or disposed of a material asset or line of business?
 
No.
 
Have you materially reduced or increased your human capital resource expenditures?
 
Yes, we have reduced staff for Blue Collar.
 
 
34
 
 
Are any of these measures temporary in nature, and if so, how long do you expect to maintain them?
 
These measures are temporary and will be maintained until events are allowed again of medium to large size.
 
What factors will you consider in deciding to extend or curtail these measures?
 
We will consider whether medium to large gatherings are allowed.
 
What is the short- and long-term impact of these reductions on your ability to generate revenues and meet existing and future financial obligations?
 
There is no impact of these reductions upon our ability to generate revenues or meet financial obligations.
 
Are you able to timely service your debt and other obligations?
 
Yes.
 
Have you taken advantage of available payment deferrals, forbearance periods, or other concessions? What are those concessions and how long will they last?
 
Yes. Certain debt deferrals are pending more know COVID 19 information.
 
Do you foresee any liquidity challenges once those accommodations end? 
 
 ●            
Possibly, if creditors demand all deferrals at once rather than payment over time as indicated.
 
Have you altered terms with your customers, such as extended payment terms or refund periods, and if so, how have those actions materially affected your financial condition or liquidity?
 
We have not altered terms with customers.
 
Did you provide concessions or modify terms of arrangements as a landlord or lender that will have a material impact?
 
No.
 
Have you modified other contractual arrangements in response to COVID-19 in such a way that the revised terms may materially impact your financial condition, liquidity, and capital resources?
 
Possibly, if creditors demand all deferrals at once rather than payment over time as indicated.
 
Are you relying on supplier finance programs, otherwise referred to as supply chain financing, structured trade payables, reverse factoring, or vendor financing, to manage your cash flow?
 
Yes.
 
 
35
 
 
Have these arrangements had a material impact on your balance sheet, statement of cash flows, or short- and long-term liquidity and if so, how?
 
No.
 
 What are the material terms of the arrangements?
 
Most vendors situations now provide up to 30 days terms.
 
Did you or any of your subsidiaries provide guarantees related to these programs?
 
No.
 
Do you face a material risk if a party to the arrangement terminates it?
 
No.
 
What amounts payable at the end of the period relate to these arrangements, and what portion of these amounts has an intermediary already settled for you?
 
There have been no settlements. Most related to up to 30 days with telecommunications vendors and payments are being included in planned cash flows.
 
Have you assessed the impact material events that occurred after the end of the reporting period, but before the financial statements were issued, have had or are reasonably likely to have on your liquidity and capital resources and considered whether disclosure of subsequent events in the financial statements and known trends or uncertainties in MD&A is required?
 
There are no material events occurring after the end of the reporting period but before financial statements were issued which would have any affect on liquidity or capital resources and there are no new trends or uncertainties needed to be disclosed.
 
Government Assistance – The Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
 
The CARES Act includes financial assistance for companies in the form of loans and tax relief in the form of deferred or reduced payments and potential refunds. Companies receiving federal assistance must consider the short- and long-term impact of that assistance on their financial condition, results of operations, liquidity, and capital resources, as well as the related disclosures and critical accounting estimates and assumptions. We have not received any financial assistance from the banks or any government agency.
 
How does a loan impact your financial condition, liquidity and capital resources?
 
We have no government loans, except PPP loans that we anticipate will be forgiven.
 
What are the material terms and conditions of any assistance you received, and do you anticipate being able to comply with them?
 
PPP loans only and we anticipate forgiveness.
 
Do those terms and conditions limit your ability to seek other sources of financing or affect your cost of capital?
 
No.
 
 
36
 
 
Do you reasonably expect restrictions, such as maintaining certain employment levels, to have a material impact on your revenues or income from continuing operations or to cause a material change in the relationship between costs and revenues?
 
No.
 
Once any such restrictions lapse, do you expect to change your operations in a material way?
 
No.
 
Are you taking advantage of any recent tax relief, and if so, how does that relief impact your short- and long-term liquidity?
 
We are using payroll tax deferrals allow by the tax relief programs.
 
Do you expect a material tax refund for prior periods?
 
No.
 
Does the assistance involve new material accounting estimates or judgments that should be disclosed or materially change a prior critical accounting estimate?
 
No.
 
What accounting estimates were made, such as the probability a loan will be forgiven, and what uncertainties are involved in applying the related accounting guidance?
 
We anticipate forgiveness of our PPP loans but have disclosed them as loans through September 30, 2020.
 
A Company’s Ability to Continue as a Going Concern
 
The SEC has advised that Management should consider whether conditions and events, taken as a whole, raise substantial doubt about the company’s ability to meet its obligations as they become due within one year after the issuance of the financial statements. There is substantial doubt about a company’s ability to continue as a going concern due to continuation of the COVID-19 pandemic and we make the following disclosure:
 
Are there conditions and events that give rise to the substantial doubt about the company’s ability to continue as a going concern?
 
Yes. There was concern about our ability to continue as a going concern prior to COVID 19, however the continuation of COVID-19 prohibits Blue Collar from operating and generating revenues at full capacity.
 
For example, have you defaulted on outstanding obligations?
 
Yes, but not because of COVID-19.
 
Have you faced labor challenges or a work stoppage?
 
No.
 
 
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What are your plans to address these challenges?
 
At the point of allowing bigger sized of gathering and for Blue Collar and film production companies to fully operate will be the turnaround for these revenues.
 
Have you implemented any portion of those plans?
 
No, it’s a matter of allowing Blue Collar to fully operate.
 
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.
 
ITEM 4. CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures
 
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management including our principal executive officer/principal financial officer as appropriate, to allow timely decisions regarding required disclosure.
 
Management has carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. Due to the lack of personnel and outside directors, management concluded that the Company’s disclosure controls and procedures are not effective as of such date. The Company anticipates that with further resources, the Company will expand both management and the board of directors with additional officers and independent directors in order to provide sufficient disclosure controls and procedures.
 
Changes in Internal Control Over Financial Reporting
 
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)) during the quarter ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
 
 
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PART II - OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
 
Although we have not been served, we are aware that the Company has been named in a lawsuit by EMA for failing to comply with a Securities Purchase Agreement entered into in June 2019.  More specifically, EMA claims the Company failed to honor notices of conversion, failed to establish and maintain share reserves, failed to register EMA shares and by failed to assure that EMA shares were Rule 144 eligible within 6 months.  EMA has claimed in excess of $7,614,967 in relief.  The Company is beginning to review the lawsuit but does not believe at this time that any negative outcome would result in more than the $593,120 it has recorded on its balance sheet as of September 30, 2020.
 
ITEM 1A. RISK FACTORS
  
No Material Changes in Risk Factors since the disclosure contained in the Form 10-K for the year ended December 31, 2019.
 
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
Aside from what has been disclosed in our Registration Statement on Form S-1/A dated February 13, 2019, amended December 10, 2019, and in the Company’s Form 10-K for the year ended December 31, 2019, and which has been issued pursuant to conversions of amounts due under convertible promissory notes as reflected below, we have not sold unregistered securities in the past 2 years without registering the securities under the Securities Act of 1933.
 
2020 Conversions
 
 
 



 Date
 
Principal
 
 
Accrued Interest
 
 
Share Amounts
 
 
Price Per Share
 
 Auctus4/6/2020
 $3,536 
 $3,536 
  27,936,930 
 $0.0003 

4/9/2020
 $1,006 
 $6,066 
  27,936,930 
 $0.0003 

4/15/20
 $5,574 
 $3,536 
  30,725,000 
 $0.0003 

4/21/20
 $5,197 
 $2,257 
  29,298,332 
 $0.0003 
Odyssey6/3/20
 $5,650 
 $676 
  4,340,405 
 $0.0015 
 
We have filed Forms 8-K dated April 22, 2019, May 28, 2019, June 20, 2019, September 19, 2019, and September 30, 2019, related to convertible promissory notes for which the underlying common shares have not be registered.
 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
 
The Company is in default under its derivative financial instruments and received notice of such from Auctus for not reserving enough shares for conversion and for not having filed a Form S-1 Registration Statement with the Securities and Exchange Commission. It was the intent of the Company to pay back all derivative securities prior to the due dates but that has not occurred in case of Auctus and EMA. As such, the Company is currently in negotiations with Auctus and EMA relative to extending due dates and changing terms on the Notes.
 
ITEM 4. MINE SAFETY DISCLOSURE
 
Not Applicable.
 
ITEM 5. OTHER INFORMATION
 
None.
 
  
 
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ITEM 6. EXHIBITS
 
Exhibits. The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.
 
Exhibit No. Description 
 Certification of Chief Executive Officer Pursuant to Rule 13a–14(a) or 15d-14(a) of the Securities Exchange Act of 1934
 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
 Certification of Chief Executive Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 Certification of Chief Financial Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS XBRL Instance Document (1)
101.SCH XBRL Taxonomy Extension Schema Document (1)
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF XBRL Taxonomy Extension Definition Linkbase Document (1)
101.LAB XBRL Taxonomy Extension Label Linkbase Document (1)
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document (1)
 
 (1)Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
 
 
 
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SIGNATURES
 
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.
 
 TPT GLOBAL TECH, INC.
 (Registrant)
   
Dated: November 23, 2020By:/s/ Stephen J. Thomas, III
  Stephen J. Thomas, III
  (Chief Executive Officer, Principal Executive Officer)
   
   
Dated: November 23, 2020By:/s/ Gary L. Cook
  Gary L. Cook
  (Chief Financial Officer, Principal Accounting Officer)
   
   
 
 
 
 
 
 
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