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TPT Global Tech (TPTW)

Filed: 23 May 22, 2:50pm

 

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 March 31, 2022

 

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 class

Trading 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 13(a) 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 May 9, 2022, there were 923,029,038 shares of the registrant’s common stock, $0.001 par value, issued and outstanding.

 

 

 

TABLE OF CONTENTS

 

 

 

 

Page

 

 

PART 1 – FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets - March 31, 2022 (Unaudited) and December 31, 2021 (Audited)

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations – Three months ended March 31, 2022 and 2021 (Unaudited)

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Deficit – Three months ended March 31, 2022 and 2021 (Unaudited)

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows – Three months ended March 31, 2022 and 2021 (Unaudited)

 

7

 

 

 

 

 

 

 

Notes to the Condensed Consolidated Financial Statements (Unaudited)

 

9

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

31

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk – Not Applicable

 

36

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

36

 

 

 

 

 

 

 

PART II- OTHER INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

37

 

 

 

 

 

 

Item 1A.

Risk Factors – Not Applicable

 

38

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

38

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

38

 

 

 

 

 

 

Item 4.

Mine Safety Disclosure – Not Applicable

 

38

 

 

 

 

 

Item 5.

Other Information – Not Applicable

 

38

 

 

 

 

Item 6.

Exhibits

 

39

 

 

 

 

 

 

 

Signatures

 

40

 

 

 
2

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

TPT Global Tech, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

ASSETS

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$79,842

 

 

$518,066

 

Accounts receivable, net

 

 

193,222

 

 

 

101,935

 

Prepaid expenses and other current assets

 

 

119,163

 

 

 

122,428

 

Total current assets

 

 

392,227

 

 

 

742,429

 

NON-CURRENT ASSETS

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

1,499,771

 

 

 

1,649,022

 

Operating lease right of use assets

 

 

4,292,534

 

 

 

4,259,758

 

Intangible assets, net

 

 

3,492,184

 

 

 

3,656,241

 

Goodwill

 

 

104,657

 

 

 

104,657

 

Deposits and other assets

 

 

65,319

 

 

 

265,318

 

Total non-current assets

 

 

9,454,465

 

 

 

9,934,996

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$9,846,692

 

 

$10,677,425

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$7,955,398

 

 

$9,653,093

 

Deferred revenue

 

 

296,446

 

 

 

462,643

 

Customer liability

 

 

338,725

 

 

 

338,725

 

Current portion of loans, advances and factoring agreements

 

 

1,151,316

 

 

 

1,446,571

 

Convertible notes payable, net of discounts

 

 

1,986,023

 

 

 

1,162,606

 

Notes payable - related parties, net of discounts

 

 

5,086,172

 

 

 

10,542,842

 

Convertible notes payable – related parties, net of discounts

 

 

721,100

 

 

 

902,781

 

Derivative liabilities

 

 

4,233,404

 

 

 

4,042,910

 

Current portion of operating lease liabilities

 

 

4,330,525

 

 

 

3,987,405

 

Financing lease liabilities

 

 

0

 

 

 

284,055

 

Financing lease liabilities – related party

 

 

689,722

 

 

 

682,704

 

Total current liabilities

 

 

26,788,831

 

 

 

33,506,335

 

 

 

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Loans, advances and factoring agreements, net of current portion and discounts

 

 

218,425

 

 

 

218,425

 

Operating lease liabilities, net of current portion

 

 

2,717,494

 

 

 

2,976,623

 

Total non-current liabilities

 

 

2,935,919

 

 

 

3,195,048

 

Total liabilities

 

 

29,724,750

 

 

 

36,701,383

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

0

 

 

 

0

 

 

See accompanying notes to condensed consolidated financial statements.

 

 
3

Table of Contents

 

TPT Global Tech, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

MEZZANINE EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred Series A, 1,000,000 designated - 1,000,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

3,117,000

 

 

 

3,117,000

 

Convertible Preferred Series B – 3,000,000 shares designated, 2,588,693 shares issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

1,677,473

 

 

 

1,677,473

 

Convertible Preferred Series C – 3,000,000 shares designated, zero shares issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

0

 

 

 

0

 

Convertible Preferred Series D, 10,000,000 designated – 46,649 and zero shares issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

244,592

 

 

 

244,592

 

Convertible Preferred Series E, 10,000,000 designated – 1,792,430 and zero shares issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

11,704,567

 

 

 

0

 

Total mezzanine equity

 

 

16,743,632

 

 

 

5,039,065

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 2,500,000,000 shares authorized, 923,029,038 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

 

 

923,029

 

 

 

923,029

 

Subscriptions payable

 

 

10,935

 

 

 

5,610

 

Additional paid-in capital

 

 

12,860,873

 

 

 

12,860,873

 

Accumulated deficit

 

 

(50,494,312)

 

 

(44,921,837)

Total TPT Global Tech, Inc. stockholders' deficit

 

 

(36,699,475)

 

 

(31,132,325)

Non-controlling interests

 

 

77,785

 

 

 

69,302

 

Total stockholders’ deficit

 

 

(36,621,690)

 

 

(31,063,023)

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

 

$9,846,692

 

 

$10,677,425

 

 

See accompanying notes to condensed consolidated financial statements.

 

 
4

Table of Contents

 

TPT Global Tech, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

For the three months ended

March 31,

 

 

 

2022

 

 

2021

 

REVENUES:

 

 

 

 

 

 

Products

 

$82,000

 

 

$351,166

 

Services

 

 

1,802,163

 

 

 

2,361,184

 

Total Revenues

 

 

1,884,163

 

 

 

2,712,350

 

 

 

 

 

 

 

 

 

 

COST OF SALES:

 

 

 

 

 

 

 

 

Products

 

 

27,603

 

 

 

2,500

 

Services

 

 

995,611

 

 

 

2,159,154

 

Total Costs of Sales

 

 

1,023,214

 

 

 

2,161,654

 

Gross profit

 

 

860,949

 

 

 

550,696

 

EXPENSES:

 

 

 

 

 

 

 

 

Sales and marketing

 

 

0

 

 

 

4,257

 

Professional

 

 

332,950

 

 

 

410,021

 

Payroll and related

 

 

667,892

 

 

 

660,667

 

General and administrative

 

 

471,613

 

 

 

670,209

 

Research and development

 

 

1,750,000

 

 

 

0

 

Depreciation

 

 

152,281

 

 

 

155,361

 

Amortization

 

 

164,057

 

 

 

184,655

 

Total expenses

 

 

3,538,793

 

 

 

2,085,170

 

Loss from operations

 

 

(2,677,844)

 

 

(1,534,474)

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

Derivative gain

 

 

257,024

 

 

 

185,275

 

Loss on debt extinguishment

 

 

(1,982,892)

 

 

 

 

Interest expense

 

 

(1,174,345)

 

 

(390,879)

Other income

 

 

5,582

 

 

 

0

 

Total other income (expenses)

 

 

(2,894,631)

 

 

(205,604)

 

 

 

 

 

 

 

 

 

Net loss before income taxes

 

 

(5,572,475)

 

 

(1,740,078)

Income taxes

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

NET LOSS BEFORE NON-CONTROLLING INTERESTS

 

 

(5,572,475)

 

 

(1,740,078)

 

 

 

 

 

 

 

 

 

NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS

 

 

8,483

 

 

 

27,026

 

 

 

 

 

 

 

 

 

 

NET LOSS ATTRIBUTABLE TO TPT GLOBAL TECH, INC. SHAREHOLDERS

 

$(5,563,992)

 

$(1,713,052)

 

 

 

 

 

 

 

 

 

Loss per common share: Basic and diluted

 

$(0.01)

 

$(0.00)

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

923,029,038

 

 

 

870,424,730

 

 

See accompanying notes to condensed consolidated financial statements.

 

 
5

Table of Contents

 

TPT Global Tech, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

For the three months ended March 31, 2022 and 2021

(Unaudited)

 

 

 

Common Stock

 

 

Subscriptions

Payable

 

 

Additional 

Paid-in

 

 

Accumulated

 

 

Non-Controlling

 

 

Total Stockholders’

 

 

 

Shares

 

 

Amount

 

 

(Receivable)

 

 

Capital

 

 

Deficit

 

 

Interest

 

 

Deficit

 

Balance as of  December 31, 2021

 

 

923,029,038

 

 

$923,029

 

 

$5,610

 

 

$12,860,873

 

 

$(44,921,837)

 

$69,302

 

 

$(31,063,023)

Common stock issued for services or subscription payable

 

 

-

 

 

 

0

 

 

 

5,325

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

5,325

 

Net loss

 

 

-

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(5,572,475)

 

 

8,483

 

 

 

(5,563,992)

Balance as of March 31, 2022

 

 

923,029,038

 

 

$923,029

 

 

$10,935

 

 

$12,860,873

 

 

$(50,494,312)

 

$77,785

 

 

$(36,621,690)

 

 

 

 

Common Stock

 

 

 Subscriptions

 

 

 Additional

 Paid-in

 

 

 Accumulated

 

 

 Non-

Controlling

 

 

 Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 Payable

 

 

 Capital

 

 

 Deficit

 

 

Interest

 

 

Deficit

 

Balance as of  December 31, 2020

 

 

865,564,371

 

 

$865,565

 

 

$125,052

 

 

$11,462,940

 

 

$(40,902,944)

 

$(61,142)

 

$(28,510,529)

Subscription payable for services

 

 

-

 

 

 

0

 

 

 

82,793

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

82,793

 

Issuance of shares for exchange for debt

 

 

7,500,000

 

 

 

7,500

 

 

 

0

 

 

 

339,000

 

 

 

0

 

 

 

0

 

 

 

346,500

 

TPT Strategic license cancellation

 

 

-

 

 

 

0

 

 

 

0

 

 

 

(219,058)

 

 

0

 

 

 

219,058

 

 

 

0

 

Net loss

 

 

-

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(1,713,052)

 

 

(27,026)

 

 

(1,740,078)

Balance as of March 31, 2021

 

 

873,064,371

 

 

$873,065

 

 

$207,845

 

 

$11,582,882

 

 

$(42,615,996)

 

$130,890

 

 

$(29,821,314)

 

See accompanying notes to condensed consolidated financial statements.

 

 
6

Table of Contents

 

TPT Global Tech, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

For the three months ended March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$(5,563,992)

 

$(1,740,078)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

152,281

 

 

 

155,361

 

Amortization

 

 

164,057

 

 

 

184,655

 

Amortization of debt discounts

 

 

985,664

 

 

 

212,053

 

Note payable issued for research and development

 

 

1,550,000

 

 

 

0

 

Derivative expense

 

 

(257,024)

 

 

(185,275)

Loss on extinguishment of debt

 

 

1,982,892

 

 

 

0

 

Share-based compensation: Common stock

 

 

5,325

 

 

 

82,793

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(91,287)

 

 

(63,808)

Prepaid expenses and other assets

 

 

3,265

 

 

 

65,019

 

Deposits and other assets

 

 

207,008

 

 

 

55,039

 

Accounts payable and accrued expenses

 

 

580,459

 

 

 

651,188

 

Net change in operating lease right of use assets and liabilities

 

 

51,215

 

 

 

460,244

 

Other liabilities

 

 

(166,197)

 

 

116,280

 

Net cash used in operating activities

 

 

(396,334)

 

 

(6,529)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of equipment

 

 

(10,038)

 

 

(144,481)

Net cash used in investing activities

 

 

(10,038)

 

 

(144,481)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from sale of Series D Preferred Stock

 

 

0

 

 

 

153,744

 

Proceeds from convertible notes, loans and advances

 

 

447,518

 

 

 

1,068,674

 

Payment on convertible loans, advances and factoring agreements

 

 

(457,200)

 

 

(903,978)

Payments on convertible notes and amounts payable – related parties

 

 

(22,170)

 

 

0

 

Payments on financing lease liabilities

 

 

0

 

 

 

(12,060)

Net cash provided by (used in) financing activities

 

 

(31,852)

 

 

306,380

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

(438,224)

 

 

155,370

 

Cash and cash equivalents - beginning of period

 

 

518,066

 

 

 

19,309

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents - end of period

 

$79,842

 

 

$174,679

 

 

See accompanying notes to condensed consolidated financial statements.

 

 
7

Table of Contents

 

TPT Global Tech, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 

(Unaudited)

 

Supplemental Cash Flow Information:

 

Cash paid for:

 

 

2022

 

 

2021

 

Interest

 

$16,386

 

 

$29,325

 

Taxes

 

$0

 

 

$0

 

 

Non-Cash Investing and Financing Activities: 

 

 

 

2022

 

 

2021

 

Debt discount on factoring agreement

 

$543,500

 

 

$0

 

Series E Preferred Stock issued in exchange for debt and payables

 

$

11,704,567

 

 

$0

 

Common Stock issued in exchange for payable and note 

 

$0

 

 

 

 424,397

 

TPT Strategic, Inc. merger – Non-controlling interest in intercompany liabilities rescinded

 

$0

 

 

$(219,058)

 

See accompanying notes to condensed consolidated financial statements.

 

 
8

Table of Contents

 

TPT Global Tech, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

 

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 since the reverse merger in 2014.

 

Name

 

Herein referred to as

 

Acquisition or Incorporation Date

 

Ownership

 

TPT Global Tech, Inc.

 

Company or TPTG

 

1988

 

 

100%

K Telcom and Wireless LLC

 

K Telecom

 

2014

 

 

100%

Global Telecom International LLC

 

Global Telecom

 

2014

 

 

100%

Copperhead Digital Holdings, Inc.

 

Copperhead Digital or CDH

 

2015

 

 

100%

TruCom, LLC

 

TruCom

 

2015

 

 

100%

Nevada Utilities, Inc.

 

Nevada Utilities

 

2015

 

 

100%

CityNet Arizona, LLC

 

CityNet

 

2015

 

 

100%

San Diego Media Inc.

 

SDM

 

2016

 

 

100%

Blue Collar Production, Inc.

 

Blue Collar

 

2018

 

 

100%

TPT SpeedConnect, LLC

 

TPT SpeedConnect

 

2019

 

 

100%

TPT Federal, LLC

 

TPT Federal

 

2020

 

 

100%

TPT MedTech, LLC

 

TPT MedTech

 

2020

 

 

100%

InnovaQor, Inc./TPT Strategic, Inc.

 

InnovaQor and TPT Strategic

 

2020

 

 

94%

QuikLab 1 LLC

 

Quiklab 1

 

2020

 

 

80%

QuikLAB 2, LLC

 

QuikLAB 2

 

2020

 

 

80%

QuikLAB 3, LLC

 

QuikLAB 3

 

2020

 

 

100%

The Fitness Container, LLC

 

Air Fitness

 

2020

 

 

75%

TPT Global Tech Asia Limited

 

TPT Asia

 

2020

 

 

78%

TPT MedTech UK LTD

 

TPT MedTech UK

 

2020

 

 

100%

TPT Global Defense Systems, Inc.

 

TPT Global Defense

 

2021

 

 

100%

TPT Innovations Technology, Inc.

 

TPT Innovations

 

2021

 

 

100%

TPT Global Caribbean Inc.

 

TPT Caribbean

 

2021

 

 

100%

TPT Media and Entertainment, LLC

 

TPT Media and Entertainment

 

2021

 

 

100%

VuMe Live, LLC

 

VuMe Live

 

2021

 

 

100%

Digithrive, LLC

 

Digithrive

 

2021

 

 

100%

 

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.

 

 
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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 months ended March 31, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

 

These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2021. The condensed consolidated balance sheet as of March 31, 2022, has been derived from the consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP.

 

Our condensed consolidated financial statements include the accounts of those entities outlined in Nature of Operations giving consideration to the non-controlling interests where appropriate. All intercompany accounts and transactions have been eliminated in consolidation.

 

Reclassifications

 

Certain amounts presented in previously issued financial statements have been reclassified in these financial statements. During 2021, revenue from products of $348,676 was recorded as revenue from services in the statement of operations and has been reclassified to revenue from products to be consistent with the current period presentation.

 

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 operations for the three months ended March 31, 2022 and 2021. 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 three months ended March 31, 2022 and 2021 came from the following sources disaggregated by services and products, which sources are explained in detail below.

 

 

 

For the three months ended March 31,

 2022

 

 

For the three months ended March 31,

2021 

 

TPT SpeedConnect

 

$1,541,466

 

 

$2,090,406

 

Blue Collar

 

 

98,580

 

 

 

200,040

 

TPT MedTech

 

 

90,315

 

 

 

26,974

 

Other (1)

 

 

71,802

 

 

 

43,764

 

Total Services Revenues

 

$1,802,163

 

 

$2,361,184

 

TPT MedTech

 

 

0

 

 

 

348,676

 

Air Fitness

 

 

82,000

 

 

 

0

 

K Telecom

 

 

0

 

 

 

2,490

 

Total Product Revenues

 

$82,000

 

 

$351,166

 

Total Revenue

 

$1,884,163

 

 

$2,712,350

 

____________

 

(1)

Includes international sales for the three months ended March 31, 2022 of $67,889 related to TPT Asia.

   

 
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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 for TPT SpeedConnect as of March 31, 2022 and December 31, 2021 are $296,446 and $421,643, 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.

 

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.

 

TPT MedTech: Medical Testing Revenue

 

TPT MedTech operates in the Point of Care Testing (“POCT”) market by primarily offering mobile medical testing facilities and software equipped for mobile devices to monitor and manage personalized healthcare. Services used from our mobile medical testing facilities are billing through credit cards at the time of service. Revenue is generated from our software platform as users sign up for our mobile healthcare monitor and management application and tests are performed. If medical testing is in one our own owned facility, the usage of the software application is included in the testing fees. If the testing is in a non-owned outside contracted facility, fees are generated from the usage of the software application on a per test basis and billed monthly.

 

TPT MedTech also offers various products. One is to build and sell its mobile testing facilities called QuikLABs designed for mobile testing. This is used by TPT MedTech for its own testing services. Another is to build customized mobile gyms for exercising. This is sold to third parties. Another is medical equipment, one of which is a sanitizing unit called SANIQuik which is used as a safe and flexible way to sanitize providing an additional routine to hand washing and facial coverings. The SANIQuik has not yet been approved for sale in the United States but has in some parts of the European community. Revenues from these products are recognized when a product is delivered, the sales transaction considered closed and accepted by a customer. When deposits are received for which a product has not been delivered, it is recognized as deferred revenue. Deferred revenue as of March 31, 2022 and December 31, 2021 was $0 and $41,000, respectively. There are no financing terms or variable transaction prices for either of these products.

 

 
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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 as of March 31, 2022 and December 31, 2021. 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.

 

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.

 

Copperhead Digital: ISP and Telecom Revenue

 

Copperhead Digital operated as a regional internet and telecom services provider operating in Arizona under the trade name Trucom. Although there are currently no customers and it will take capital to reopen this revenue stream, Copperhead Digital operated as a wireless telecommunications Internet Service Provider (“ISP”) facilitating both residential and commercial accounts. Copperhead Digital’s primary business model was subscription based, pre-paid monthly reoccurring revenues, from wireless delivered, high-speed internet connections. In addition, the company resold third-party satellite and DSL internet and IP telephony services. Revenue generated from sales of telecommunications services was recognized as the transaction with the customer is considered closed and the customer received and accepted the services that were the result of the transaction. There are no financing terms or variable transaction prices. Due date was detailed on monthly invoices distributed to customer. Services billed monthly in advance were deferred to the proper period as needed. Deferred revenue was contract liabilities for cash received before performance obligations for monthly services are satisfied. Certain of its products required specialized installation and equipment. For telecom products that included installation, if the installation met the criteria to be considered a separate element, product revenue was recognized upon delivery, and installation revenue was recognized when the installation was complete. The Installation Technician collected the signed quote containing terms and conditions when installing the site equipment at customer premises.

 

Revenue for installation services and equipment was billed separately from recurring ISP and telecom services and was recognized when equipment was delivered, and installation was completed. Revenue from ISP and telecom services was recognized monthly over the contractual period, or as services were rendered and accepted by the customer.

 

The overwhelming majority of revenue was recognized when transactions occurred. Since installation fees were generally small relative to the size of the overall contract and because most contracts were for a year or less, the impact of not recognizing installation fees over the contract was immaterial.

 

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 March 31, 2022, the Company had shares that were potentially common stock equivalents as follows: 

 

Convertible Promissory Notes

 

 

591,746,109

 

Series A Preferred Stock (1)

 

 

1,349,817,129

 

Series B Preferred Stock

 

 

2,588,693

 

Series D Preferred Stock (2)

 

 

34,401,917

 

Series E Preferred Stock (3)

 

 

1,322,588,496

 

Stock Options and Warrants

 

 

129,116,666

 

 

 

 

3,430,259,005

 

 

 
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 ___________

 

(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 2,500,000,000 shares are currently authorized.

 

(2)

Holders of the Series D Preferred Stock may decide after 12 months to convert to common stock @ 75% of the 30 day average market closing price (for previous 30 business days) divided into $5.00. There is also an automatic conversion of the Series D Preferred Stock 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 @ 75% of the 30 day average market closing price (for previous 30 business days) divided into $5.00.

 

(3)

Holders of the Series E Preferred Stock may decide after 12 months to convert to common stock @ 75% of the 30 day average market closing price (for previous 30 business days) divided into $5.00. There is also an automatic conversion of the Series E Preferred Stock 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 E Preferred shall be @ 75% of the 30 day average market closing price (for previous 30 business days) divided into $5.00.

 

Financial Instruments and Fair Value of Financial Instruments

 

Our primary financial instruments at March 31, 2022 consisted of cash equivalents, accounts receivable, accounts payable and debt. 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 March 31, 2022 are the following:

 

Derivative Instrument

 

Fair Value

 

Convertible Promissory Notes

 

$3,297,029

 

Fair value of Warrants issued with the derivative instruments

 

 

936,375

 

 

 

$4,233,404

 

 

Recently Issued Financial Accounting Standards

 

Management has reviewed 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

 

 
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TPT Strategic Merger with Education System Management

 

On June 22, 2021, TPT Strategic and the Company signed a merger agreement with Education Systems Management, LLC (“EDSM”) to create a merged public entity. TPT Strategic will become a non controlling interest to TPTW after the merger and after fund raising efforts at an estimated 28%. Both TPT Strategic and the Company will enter into a software development agreement for the development of a standalone backend and front-end telemedicine technology platform which is not to exceed $3.5M in cost. It is also the intent that current TPT shareholders will receive TPT Strategic stock of 2.5M common shares as a dividend after the merger is complete and appropriate shares are registered with the SEC under a registration rights agreement. Closing was expected on or before August 1, 2021, or as agreed by all parties. The parties have verbally agreed to close as soon as possible once due diligence is completed and are working towards this.

 

NOTE 3 – GOING CONCERN

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

 

We incurred $5,572,475 and $1,740,078, respectively, in losses, and we used $396,334 and $6,529, respectively, in cash for operations for the three months ended March 31, 2022 and 2021. We calculate the net cash used by operating activities by decreasing, or increasing in case of gain, our let loss by those items that do not require the use of cash such as depreciation, amortization, research and development, derivative expense or gain, gain on extinguishment of debt and share-based compensation which totaled to a net $4,583,195 for 2022 and $450,336 for 2021.

 

In addition, we report increases and reductions in liabilities as uses of cash and deceases assets and increases in liabilities as sources of cash, together referred to as changes in operating assets and liabilities. For the three months ended March 31, 2022, we had a net increase in our assets and liabilities of $584,463 primarily from an increase in accounts payable from lag of payments for accounts payable for cash flow considerations. For the three months ended March 31, 2021 we had a net increase to our assets and liabilities of $739,018 for similar reasons.

 

Cash flows from financing activities were ($31,852) and $306,380 for the three months ended March 31, 2022 and 2021, respectively. For the three months ended March 31, 2022, these cash flows were generated from proceeds from convertible notes, loans and advances of $447,518 offset by payment on convertible loans, advances and factoring agreements of $457,200 and payments on amounts payable – related parties of $22,170. For the three months ended March 31, 2021, cash flows from financing activities primarily came from proceeds from the sale of Series D Preferred Stock of $153,744, convertible notes, loans and advances of $1,068,674 offset by payments on convertible loans, advances and factoring agreements of $903,978.

 

Cash flows used in investing activities were $10,038 and $144,481, respectively, for the three months ended March 31, 2022 and 2021 primarily related to the acquisition of property and equipment.

 

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 a period of time, the Company closed its Blue Collar office in Los Angeles and its TPT SpeedConnect offices in Michigan, Idaho and Arizona. Most employees were 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 $1,402,700 in PPP loans. All of these PPP loans were forgiven in the year ended December 31, 2021. 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 continue to decline. 

 

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.

 

 
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NOTE 4 – PROPERTY AND EQUIPMENT

 

Property and equipment and related accumulated depreciation as of March 31, 2022 and December 31, 2021 are as follows: 

 

 

 

2022

 

 

2021

 

Property and equipment:

 

 

 

 

 

 

Telecommunications fiber and equipment

 

$2,696,943

 

 

$2,686,905

 

Medical equipment

 

 

209,499

 

 

 

209,499

 

Office furniture and equipment

 

 

77,859

 

 

 

77,859

 

Total property and equipment

 

 

2,984,301

 

 

 

2,974,263

 

Accumulated depreciation

 

 

(1,484,530)

 

 

(1,325,241)

Property and equipment, net

 

$1,499,771

 

 

$1,649,022

 

 

Depreciation expense was $152,281 and $155,361 for the three months ended March 31, 2022 and 2021, respectively.

 

Approximately $200,000 of property and equipment, included herein, were financed through a financing lease which has been exchanged with Series E Preferred Stock. See Note 7.

 

NOTE 5 – DEBT FINANCING ARRANGEMENTS

 

Financing arrangements as of March 31, 2022 and December 31, 2021 are as follows:

 

 

 

2022

 

 

2021

 

Loans and advances (1)

 

$940,942

 

 

$941,242

 

Convertible notes payable (2)

 

 

1,986,023

 

 

 

1,162,606

 

Factoring agreements (3)

 

 

428,799

 

 

 

723,754

 

Debt – third party

 

$3,355,764

 

 

$2,827,602

 

 

 

 

 

 

 

 

 

 

Line of credit, related party secured by assets (4)

 

$3,043,390

 

 

$3,043,390

 

Debt– other related party, net of discounts (5)

 

 

2,015,500

 

 

 

7,450,000

 

Convertible debt – related party (6)

 

 

721,100

 

 

 

902,781

 

Shareholder debt (7)

 

 

27,282

 

 

 

49,452

 

Debt – related party

 

$5,807,272

 

 

$11,445,623

 

 

 

 

 

 

 

 

 

 

Total financing arrangements

 

$9,163,036

 

 

$14,273,225

 

 

 

 

 

 

 

 

 

 

Less current portion:

 

 

 

 

 

 

 

 

Loans, advances and factoring agreements – third party

 

$(1,151,316)

 

$(1,446,571)

Convertible notes payable third party

 

 

(1,986,023)

 

 

(1,162,606)

Debt – related party, net of discount

 

 

(5,086,172)

 

 

(10,542,842)

Convertible notes payable– related party

 

 

(721,100)

 

 

(902,781)

 

 

 

(8,944,611)

 

 

(14,054,800)

Total long term debt

 

$218,425

 

 

$218,425

 

__________

(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%, 2.15% as of March 31, 2022, 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).

 

$360,000 is a bank loan dated May 28, 2019 which bears interest at Prime plus 6%, 9.25% as of March 31, 2022 and, as amended, is interest only through May 1 2022 at which time the monthly payment of principal and interest of $15,000 is required until the due date of May 1, 2024. The bank loan is collateralized by assets of the Company.

 

 
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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. The loan was in default as of March 31, 2022. Subsequent to March 31, 2022 Odyssey accepted to exchange all of its outstanding principal and interest as of March 31, 2022 of $685,682 into 137,136 of TPT Series E Preferred Shares.

 

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 and are delinquent. The Company is working to renegotiate these promissory notes.

 

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. 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 December 31, 2020. 2,000,000 warrants were issued in conjunction with the issuance of this debt.

 

Pursuant to claims by Auctus that the Company had not complied with terms of the Auctus Convertible Promissory Note, the Company and Auctus entered into a settlement agreement dated October 13, 2021 where by the Company paid $763,231.97 and allowed Auctus to exercise its right to exercise 15,000,000 warrants to purchase 15,000,000 shares of common stock. As such, the balance owning to Auctus as of March 31, 2022 and December 31, 2021 is zero. The Company recognized a gain on debt extinguishment of $7,068,339 when this Auctus Convertible Promissory Note was paid off in large part because of the related derivative liability on the books at the time of the settlement. See Note 8.

 

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 December 31, 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 8.

 

On October 6, 2021, TPT Global Tech, Inc. and FirstFire Global Opportunities Fund, LLC. entered into a convertible promissory note totaling $1,087,000 and a securities purchase agreement (“FirstFire Note”). The FirstFire Note has an original issue discount of 8% and bears interest at 10%, with a default rate of 24%, and is convertible into shares of the Company’s common stock. There is a mandatory conversion in the event a Nasdaq Listing prior to nine months from funding for which the Holder’s principal and interest balances will be converted at a price equal to 25% discount to the opening price on the first day the Company trades on Nasdaq. There is also a voluntary conversion of all principal and accrued interest at the discretion of the Holder at the lower of (1) 75% of the two lowest trade prices during the fifteen consecutive trading day period ending on the trading day immediately prior to the applicable conversion date or (2) discount to market based on subsequent financings with other investors. Subsequent debt issuances have lowered this price to $0.025 per share, adjusted to $.0075 during the three months ended March 31, 2022. The Holder was given registration rights. The FirstFire Note may be prepaid in whole or in part of the outstanding balances at 115% prior to maturity. 225,000,000 common shares of the Company have been reserved with the transfer agent for possible conversion and exercise of warrants. Warrants to purchase 55,000,000 shares of common stock at 110% of the opening price on the first day the Company trades on the Nasdaq exchange were issued to the Holder. Details of the FirstFire Note and securities purchase agreement can be found in the Form 8-K and exhibits filed on October 19, 2021.

 

 
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On October 13, 2021, TPT Global Tech, Inc. and Cavalry Investment Fund LP entered into a convertible promissory note totaling $271,250 and a securities purchase agreement (“Cavalry Investment Note”). The Cavalry Investment Note has an original issue discount of 8% and bears interest at 10%, with a default rate of 24%, and is convertible into shares of the Company’s common stock. There is a mandatory conversion in the event a Nasdaq Listing prior to nine months from funding for which the Holder’s principal and interest balances will be converted at a price equal to 25% discount to the opening price on the first day the Company trades on Nasdaq. There is also a voluntary conversion of all principal and accrued interest at the discretion of the Holder at the lower of (1) 75% of the two lowest trade prices during the fifteen consecutive trading day period ending on the trading day immediately prior to the applicable conversion date or (2) discount to market based on subsequent financings with other investors. Subsequent debt issuances have lowered this price to $0.025 per share, adjusted to $.0075 during the three months ended March 31, 2022. The Holder was given registration rights. The Cavalry Investment Note may be prepaid in whole or in part of the outstanding balances at 115% prior to maturity. 56,250,000 common shares of the Company have been reserved with the transfer agent for possible conversion and exercise of warrants. Warrants to purchase 13,750,000 shares of common stock at 110% of the opening price on the first day the Company trades on the Nasdaq exchange were issued to the Holder. Details of the Cavalry Investment Note and securities purchase agreement can be found in the Form 8-K and exhibits filed on October 19, 2021.

 

On October 13, 2021, TPT Global Tech, Inc. and Cavalry Fund I, LP entered into a convertible promissory note totaling $815,250 and a securities purchase agreement (“Cavalry Fund I Note”). The Cavalry Fund I Note has an original issue discount of 8% and bears interest at 10%, with a default rate of 24%, and is convertible into shares of the Company’s common stock. There is a mandatory conversion in the event a Nasdaq Listing prior to nine months from funding for which the Holder’s principal and interest balances will be converted at a price equal to 25% discount to the opening price on the first day the Company trades on Nasdaq. There is also a voluntary conversion of all principal and accrued interest at the discretion of the Holder at the lower of (1) 75% of the two lowest trade prices during the fifteen consecutive trading day period ending on the trading day immediately prior to the applicable conversion date or (2) discount to market based on subsequent financings with other investors. Subsequent debt issuances have lowered this price to $0.0075 per share. The Holder was given registration rights. The Cavalry Fund I Note may be prepaid in whole or in part of the outstanding balances at 115% prior to maturity. 168,750,000 common shares of the Company have been reserved with the transfer agent for possible conversion and exercise of warrants. Warrants to purchase 41,250,000 shares of common stock at $110% of the opening price on the first day the Company trades on the Nasdaq exchange were issued to the Holder. Details of the Cavalry Fund I Note and securities purchase agreement can be found in the Form 8-K and exhibits filed on October 19, 2021.

 

On January 31, 2022, TPT Global Tech, Inc. and Talos Victory Fund, LLC entered into a convertible promissory note totaling $271,750 and a securities purchase agreement (“Talos Note”). The Talos Note is due twelve months from funding, has an original issue discount of 8% and interest rate at 10% per annum (default, as defined, at 16%). There is an optional conversion in the event a Nasdaq Listing prior to nine months from funding for which the Holder’s principal and interest balances will be converted at a price equal to 25% discount to the opening price on the first day the Company trades on Nasdaq. There is also a voluntary conversion of all principal and accrued interest at the discretion of the Holder at $0.0075. The Holder was given registration rights. The Talos Note may be prepaid in whole or in part of the outstanding balances at 100% prior to maturity unless the Holder chose to convert their balances into common stock which they have three days to do so. 73,372,499 common shares of the Company have been reserved with the transfer agent for possible conversion and exercise of warrants. Warrants, expiring five years from issuance, were issued to exercise up to 9,058,333 warrants to purchase 9,058,333 common shares at $0.015, provided, however, that if the Company consummates an Uplist Offering on or before July 6, 2022 then the exercise price shall be 110% of the offering price at which the Uplist Offering is made. Details of the Talos Note and securities purchase agreement can be found in the Form 8-K and exhibits filed on February 8, 2022. The Company and the holder executed the securities purchase agreement in accordance with and in reliance upon the exemption from securities registration for offers and sales to accredited investors afforded, inter alia, by Rule 506 under Regulation D as promulgated by the SEC under the 1933 Act, and/or Section 4(a)(2) of the 1933 Act.

 

On January 31, 2022, TPT Global Tech, Inc. and Blue Lake Partners, LLC entered into a convertible promissory note totaling $271,750 and a securities purchase agreement (“Blue Lake Note”). The Blue Lake Note is due twelve months from funding, has an original issue discount of 8% and interest rate at 10% per annum (default, as defined, at 16%). There is an optional conversion in the event a Nasdaq Listing prior to nine months from funding for which the Holder’s principal and interest balances will be converted at a price equal to 25% discount to the opening price on the first day the Company trades on Nasdaq. There is also a voluntary conversion of all principal and accrued interest at the discretion of the Holder at $0.0075. The Holder was given registration rights. The Blue Lake Note may be prepaid in whole or in part of the outstanding balances at 100% prior to maturity unless the Holder chose to convert their balances into common stock which they have three days to do so. 73,372,499 common shares of the Company have been reserved with the transfer agent for possible conversion and exercise of warrants. Warrants, expiring five years from issuance, were issued to exercise up to 9,058,333 warrants to purchase 9,058,333 common shares at $0.015, provided, however, that if the Company consummates an Uplist Offering on or before July 6, 2022 then the exercise price shall equal 110% of the offering price at which the Uplist Offering is made. Details of the Blue Lake Note and securities purchase agreement can be found in the Form 8-K and exhibits filed on February 8, 2022. The Company and the holder executed the securities purchase agreement in accordance with and in reliance upon the exemption from securities registration for offers and sales to accredited investors afforded, inter alia, by Rule 506 under Regulation D as promulgated by the SEC under the 1933 Act, and/or Section 4(a)(2) of the 1933 Act.

 

 

 
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Both the Talos Note and the Blue Lake Notes have been accounted for as derivative liabilities. The Company recorded an initial derivative expense of $21,781 for each of the two notes. In addition, the Company recorded an initial derivative expense of $235,158 for the warrants.

 

The Company is in default under its derivative financial instruments and received notice of such from 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 EMA. As such, the Company is currently in negotiations with EMA and relative to extending the due date and changing terms on the Note. 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.

 

(3) $101,244 of the Factoring Agreements is 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. This 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 this Factoring Agreement for which $101,244 and $101,244 in principal remained unpaid as of March 31, 2022 and December 31, 2021, respectively.

 

On July 23, 2021, the Company entered into an Agreement for the Purchase and Sale of Future Receipts (“Lendora Factoring Agreement”). The balance to be purchased and sold is $299,800 for which the Company received $190,000, net of fees. Under the Lendora Factoring Agreement, the Company is to pay $18,737.5 per week for 16 weeks at an effective interest rate of approximately 36% annually. The Lendora Factoring Agreement includes a guaranty by the CEO of the Company, Stephen J. Thomas III.

 

On July 23, 2021, the Company entered into a consolidation agreement for the Purchase and Sale of Future Receipts with Lendora Capital (“Lendora Consolidation Agreement”). The balance to be purchased and sold gave consideration for all then outstanding factoring agreements such as the NewCo Factoring Agreements, the NewCo Factoring Agreement #3 and the Lendora Factoring Agreement and amounted to $1,522,984 for which the Company had outstanding balances totaling $967,496. Payments under this Lendora Consolidation Agreement supersedes all other factoring agreement payments and includes $ 31,728.85 per week, at an effective interest rate of approximately 36% annually, for 48 weeks. The Lendora Consolidation Agreement includes a guaranty by the CEO of the Company, Stephen J. Thomas III.

 

The Following factoring agreements were consolidated through the Lendora Consolidation Agreement or previously paid off:

 

On February 21, 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. All deferred payments have been paid.

 

On November 13, 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 was to pay $11,658 per week for 28 weeks at an effective interest rate of approximately 36% annually. The 2020 NewCo Factoring Agreement has been paid back in total.

 

On December 11, 2020, the Company entered into an Agreement for the Purchase and Sale of Future Receipts with Samson MCA LLC (“Samson Factoring Agreement”). The balance to be purchased and sold is $162,500 for which the Company received $118,625, net of fees. Under the Samson Factoring Agreement, the Company was to pay $8,125 per week for 20 weeks at an effective interest rate of approximately 36%. The Samson Factoring Agreement has been paid back in total.

 

On December 11, 2020, the Company entered into a consolidation agreement for the Purchase and Sale of Future Receipts with QFS Capital (“QFS Factoring Agreement”). The balance to be purchased and sold is $976,918 for which the Company receives weekly payments of $29,860 for 20 weeks and then $21,978 for 4 weeks and then $11,669 in the last week of receipts all totaling $696,781 net of fees. During the same time, the Company is required to pay weekly $23,087 for 42 weeks at an effective interest rate of approximately 36% annually. The QFS Factoring Agreement was consolidated through the Lendora Consolidation Agreement.

 

On June 7 and June 14, 2021, the Company entered into two Agreements for the Purchase and Sale of Future Receipts (“NewCo Factoring Agreements”). The balance to be purchased and sold is $199,500 each for which the Company received $144,750 each, net of fees. Under the NewCo Factoring Agreement, the Company is to pay $5,542 each per week for 36 weeks at an effective interest rate of approximately 36% annually. The NewCo Factoring Agreements were consolidated through the Lendora Consolidation Agreement.

 

 
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On June 28, 2021, the Company entered into an Agreement for the Purchase and Sale of Future Receipts (“NewCo Factoring Agreement #3”). The balance to be purchased and sold is $133,000 for which the Company received $100,000. Under the NewCo Factoring Agreement, the Company is to pay $3,695 per week for 36 weeks at an effective interest rate of 36% annually. The NewCo Factoring Agreement #3 was consolidated through the Lendora Consolidation Agreement.

 

(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%, 2.1% as of December 31, 2021, 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 8) and was due, as amended, August 31, 2020. The Company is in negotiations to refinance this Line of Credit.

 

During the years 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 the Company 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 VuMe, formerly 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 a 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 year ended December 31, 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.

 

Both the $4,000,000 and $1,000,000 promissory notes related to the VuMe technology and Media Live One Platform were exchanged through a Software Acquisition Agreement dated as of March 25, 2022 for shares of the Company’s Series E Preferred Stock. See Note 7. In this same agreement, the Company agreed to pay Mr. and Mrs. Caudle $1,750,000 for additional developed software that will be used with the VuMe technology which was expensed as research and development during the three months ended March 31, 2022. $200,000 had been paid and was accounted for as a deposit as of December 31, 2021 and the remainder was setup as a note payable as of March 31, 2022. $550,000 to be paid from first proceeds raised by the Company and $1,000,000 as agreed by the Company and Mr. and Mrs. Caudle.

 

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 Air Fitness, payable six months from the date of the note or as agreed by the Company out of future capital raising efforts and does not accrue interest.

 

The $1,600,000 promissory note for the acquisition of Blue Collar and $384,500 of the $500,000 Note Payable for the acquisition of 75% of Air Fitness were exchanged for shares of Series E Preferred Stock as of March 31, 2022. See Note 7.

 

(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 was $181,981 as of December 31, 2021. As of March 1, 20222, this convertible promissory was exchanged with the Company’s Series E Preferred Stock. See Note 7.

 

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. $19,400 of these notes were repaid prior to December 31, 2021.

 

(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.

 

 
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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 March 31, 2022, in the amount of $4,233,404 has a level 3 classification under ASC 825-10.

 

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of March 31, 2022.

 

 

 

Debt Derivative Liabilities

 

Balance, December 31, 2020

 

$5,265,139

 

Change in derivative liabilities from new notes payable and warrants

 

 

1,902,897

 

Change in derivative liabilities from payoff of notes payable

 

 

(6,662,027)

Change in fair value of derivative liabilities at end of period – derivative expense

 

 

3,536,901

 

Balance, December 31, 2021

 

$4,042,910

 

Change in derivative liabilities from new notes payable and warrants

 

 

447,518

 

Change in fair value of derivative liabilities at end of period – derivative expense

 

 

(257,024)

Balance, March 31, 2022

 

$4,233,404

 

 

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 March 31, 2022, the Company marked to market the fair value of the debt derivatives and determined a fair value of $4,233,404 ($3,297,029 from the convertible notes and $936,375 from warrants) in Note 5 (2) above. The Company recorded a gain from change in fair value of debt derivatives of $257,024 for the three months ended March 31, 2022. 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 129.1% to 289.4%, (3) weighted average risk-free interest rate of 0.52% to 2.42% (4) expected life of 0.25 to 4.83 years, and (5) the quoted market price of $0.027 to $0.027 for the Company’s common stock.

 

NOTE 7 - STOCKHOLDERS' DEFICIT

 

Preferred Stock

 

As of March 31, 2022, 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 Preferred Stock, Series D Preferred Stock and Series E Preferred Stock.

 

All Preferred Stock is classified 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

 

The Company designated 1,000,000 shares of Preferred Stock as Series A Preferred Stock. 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. These shares are outstanding as of March 31, 2022.

 

The Series A Preferred Stock has a par value of $0.001, 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.

 

 
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The Series A Preferred Stock is classified 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 B Convertible Preferred Stock

 

In February 2015, the Company designated 3,000,000 shares of Preferred Stock as Series B Convertible Preferred Stock.

 

The Series B Preferred Stock was designated in February 2015, has a par value of $0.001, 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 $0.001, 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 March 31, 2022. There are approximately $659,100 in convertible notes payable convertible into Series C Convertible Preferred Stock which compromise some of the common stock equivalents calculated in Note 1.

 

Series D Convertible Preferred Stock

 

On July 6, 2020, September 15, 2021 and March 31, 2022, the Company amended its Series D Designation from January 14, 2020. These Amendments 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 12 months from issuance an option to convert to common stock at the election of the holder @ 75% 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 @ 75% of the 30 day average market closing price (for previous 30 business days) divided into $5.00, 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%.

 

During the year ended December 31, 2021, 46,649 shares of Series D Preferred Share were purchased for $233,244 of which Stephen Thomas, CEO of the Company, acquired 36,649 for $183,244. The remainder of the shares were purchased by a third party.

 

 
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As of March 31, 2022, there are 46,649 Series D Preferred shares outstanding.

 

Series E Convertible Preferred Stock

 

On March 20, 2022, the Company amended its Series E Designation from November 10, 2021. As amended, the Company designated 10,000,000 shares of the authorized 100,000,000 shares of the Company's $0.001 par value preferred stock as the Series E Convertible Preferred Stock ("the Series E Preferred Shares").

 

Series E 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 12 months from issuance an option to convert to common stock at the election of the holder @ 75% of the 30 day average market closing price (for previous 30 business days) divided into $5.00. ; (iii) Automatic conversion of the Series E 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 E Preferred shall be @ 75% of the 30 day average market closing price (for previous 30 business days) divided into $5.00, 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, C and D 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 E Preferred Stock at between 115% and 140%.

 

As of March 31, 2022, there are 1,792,430 Series E Preferred shares outstanding as a result of exchanges of accounts payable, financing arrangements and lease agreements. The Series E Preferred shares were given a fair value by a third party valuation of $6.53 per share for which they were recorded as of March 31, 2022. The difference between the valuation at $6.53 per share or $11,704,567 and the amount of accounts payable, financing arrangements and lease agreement balances of $9,721,675 or $1,982,892 was recorded as a loss on debt extinguishment for the three months ended March 31, 2022.

 

Common Stock

 

As of March 31, 2022, we had authorized 2,500,000,000 shares of Common Stock, of which 923,029,038 common shares are issued and outstanding.

 

Common Stock Issued for Expenses and Liabilities

 

During the year ended December 31, 2020, he Company issued 7,500,000 shares of stock to Mr. Littman in accordance with its December 28 and 29, 2020 agreements as described in Note 5. These shares were included in a Form S-1 filed by the Company on January 15, 2021. During the year ended December 31, 2021, it was determined in accordance with an underlying agreement, that there was a deficiency of approximately $185,000 from net sales proceeds from sales of the shares and as such, this amount is accounted for in accounts payable as of March 31, 2022.              

 

Stock Purchase Agreement

 

On May 28, 2021, and as amended December 27, 2021, the Company entered into a Common Stock Purchase Agreement (“Purchase Agreement”) and Registration Rights Agreement (“Registration Rights Agreement”) with White Lion Capital, LLC, a Nevada limited liability company (“White Lion”). Under the terms of the Purchase Agreement, White Lion agreed to provide the Company with up to $5,000,000 upon effectiveness of a registration statement on Form S-1 (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (the “Commission”). A Form S-1 was filed on June 30, 2021 regarding this transaction. Subsequent Amendments to Forms S-1 related to this transaction were filed on July 6, 2021 and July 14, 2021. The registrations statement was declared effective July 19, 2021.

 

The Company has the discretion to deliver purchase notice to White Lion and White Lion will be obligated to purchase shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) based on the investment amount specified in each purchase notice. The maximum amount of the Purchase Notice shall be the lesser of: (i) 200% of the Average Daily Trading Volume or (ii) the Investment Limit divided by the highest closing price of the Common Stock over the most recent five (5) Business Days including the respective Purchase Date. Notwithstanding the forgoing, the Investor may waive the Purchase Notice Limit at any time to allow the Investor to purchase additional shares under a Purchase Notice. Pursuant to the Purchase Agreement, White Lion and its affiliates will not be permitted to purchase and the Company may not put shares of the Company’s Common Stock to White Lion that would result in White Lion’s beneficial ownership equaling more than 9.99% of the Company’s outstanding Common Stock. The price of each purchase share shall be equal to eighty-five percent (85%) of the Market Price (as defined in the Purchase Agreement). Purchase Notices may be delivered by the Company to White Lion until the earlier of twelve (12) months (until December 31, 2022, as amended) or the date on which White Lion has purchased an aggregate of $5,000,000 worth of Common Stock under the terms of the Purchase Agreement.

 

 
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Under the Registration Rights Agreement with White Lion, the Company has given purchase notices for 29,000,000 shares of common stock and has received proceeds of $610,502, net of expenses.

 

Subscription Payable

 

As of March 31, 2022, the Company has recorded $10,935 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 for TPT consulting agreements

 

 

1,000,000

 

Shares receivable under terminated acquisition agreement

 

 

(3,096,181)

Net commitment

 

 

(2,096,181)

 

During the year ended December 31, 2021, the Company agreed to a consulting agreement with one of its newest directors, John Wharton, which Agreement was for the issuance of 3,000,000 shares of common stock to vest over two years starting July 30, 2021. These shares were valued at $42,600 and are being expenses at $1,775 per month. As of March 31, 2022, 1,000,000 common shares have vested and $14,200 expensed.

 

Effective November 1, 2017, the Company entered into an agreement to acquire Holly wood Rivera, LLC and HRS Mobile LLC (“HRS”). In March 2018, the HRS acquisition was rescinded and 3,096,181 shares of common stock which were issued as consideration are being returned by the recipients. As such, as of March 31, 2022 the shares for the HRS transaction are reflected as subscriptions receivable based on their par value.

 

Warrants Issued with Convertible Promissory Notes

 

As of March 31, 2022, there were 129,116,666 warrants outstanding that expire in five years or in the years ended December 31, 2024 -2027. As part of the Convertible Promissory Notes payable – third party issuance in Note 5, the Company issued 1,000,000 warrants to purchase 1,000,000 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.

 

 
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During the year ended December 31, 2021, the Company issued warrants in conjunction with the issuance of the FirstFire Note, the Cavalry Investment Note and the Cavalry Fund I Note agreements. Warrants to purchase 110,000,000 shares of common stock at 110% of the opening price on the first day the Company trades on the Nasdaq exchange were issued to these note holders.

 

On January 31, 2022, TPT Global Tech, Inc. issued warrants in conjunction with the issuance of Talos and Blue Lake Note Agreements. Warrants to purchase 18,116,666 shares of common stock at $0.015 per share provided, however, that if the Company consummates an uplist offering on or before July 6, 2022 then the exercise price shall be 110% of the offering price at which the uplist offering is made.

 

The warrants issued under these convertible promissory notes were considered derivative liabilities valued at $936,375 of the total $4,233,404 derivative liabilities as of March 31, 2022. See Note 5.

 

Common Stock Reservations

 

The Company has reserved internally 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.

 

Non-Controlling Interests

 

QuikLAB Mobile Laboratories

 

In July and August 2020, the Company formed Quiklab 1 LLC, QuikLAB 2, LLC, QuikLAB 3, LLC and QuikLAB 4, LLC. QuikLAB 4, LLC was subsequently dissolved. It was the intent to use these entities as vehicles into which third parties would invest and participate in owning QuikLAB Mobile Laboratories. As of March 31, 2022, Quiklab 1 LLC, QuikLAB 2, LLC and QuikLAB 3, LLC have received an investment of $470,000, of which Stephen Thomas and Rick Eberhardt, CEO and COO of the Company, have invested $100,000 in QuikLAB 2, LLC. During the year ended December 31, 2021, one investor entered into an agreement at their request, to have their investment returned. $10,000 of this investment was returned with the remaining $60,000 being reclassified to an accounts payable in the balance sheet as of March 31, 2022.

 

The third party investors and Mr. Thomas and Mr. Eberhart, will benefit from owning 20% of QuikLAB Mobile Laboratories specific to their investments. The Company owns the other 80% ownership in the QuickLAB Mobile Laboratories. The net loss attributed to the non-controlling interests from the QuikLAB Mobile Laboratories included in the statement of operations for the three months ended March 31, 2022 and 2021 is $4,220 and $21,382, respectively.

 

Other Non-Controlling Interests

 

InnovaQor, Air Fitness and TPT Asia are other non-controlling interests in which the Company owns 94%, 75% and 78%, respectively. There is very little activity in any of these entities. The net loss attributed to these non-controlling interests included in the statement of operations for the three months ended March 31, 2022 and 2021 is $4,263 and $5,644, respectively.

 

InnovaQor did a reverse merger with Southern Plains of which there ended up being a non-controlling interest ownership of 6% as of December 31, 2020. As a result, $219,058 in the non-controlling interest in liabilities of a license agreement valued at $3,500,000 was reflected in the consolidated balance sheet as of December 31, 2020, which was reversed in the year ended December 31, 2021 when the license agreement was cancelled between all parties.

 

 
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NOTE 8 - COMMITMENTS AND CONTINGENCIES

 

Accounts Payable and Accrued Expenses 

 

Accounts payable:

 

2022

 

 

2021

 

Related parties (1)

 

$313,258

 

 

$2,294,570

 

General operating

 

 

5,164,636

 

 

 

4,788,291

 

Accrued interest on debt (2)

 

 

1,467,810

 

 

 

1,546,889

 

Credit card balances

 

 

164,669

 

 

 

169,035

 

Accrued payroll and other expenses

 

 

211,668

 

 

 

211,668

 

Taxes and fees payable

 

 

633,357

 

 

 

642,640

 

Total

 

$7,955,398

 

 

$9,653,093

 

_______________

 

(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. Some of the prior period amounts have been exchanged as of March 31, 2022 for Series E Preferred Stock. See Note 7.

 

(2)

Portion relating to related parties is $695,880 and $924,612 for March 31, 2022 and December 31, 2021, respectively

 

Operating lease obligations

 

The Company adopted Topic 842 on January 1, 2019. The Company elected to adopt this standard using the optional modified retrospective transition method and recognized a cumulative-effect adjustment to the consolidated balance sheet on the date of adoption. Comparative periods have not been restated. With the adoption of Topic 842, the Company’s consolidated balance sheet now contains the following line items: Operating lease right-of-use assets, Current portion of operating lease liabilities and Operating lease liabilities, net of current portion.

 

As all the existing leases subject to the new lease standard were previously classified as operating leases by the Company, they were similarly classified as operating leases under the new standard. 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 4.87 years.

 

We have various non-cancelable lease agreements for certain of our tower locations with original lease periods expiring between 2021 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. 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 March 31, 2022 and December 31, 2021, operating lease right-of-use assets and liabilities arising from operating leases were $4,292,534 and $4,259,758, respectively. During the three months ended March 31, 2022, cash paid for amounts included for the measurement of lease liabilities was $162,620 and the Company recorded lease expense in the amount of $160,748 in cost of sales.

 

The Company entered into an operating lease agreement for location rights for certain QuikLABS. The operating lease agreement start October 1, 2020 and goes for three years at $9,798 per month. The Company entered an operating agreement to lease colocation space for 5 years. This operating agreement starts October 1, 2020 for $7,140 per month. In addition, the Company entered into office space for Blue Collar which started April 2021 and runs for 3 years beginning at an average of $4,150 for the first six months, $8,300 for twelve months, $8,549 for the next twelve months and $8,805 for the following twelve months.

 

 
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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 March 31, 2022. 

 

2022

 

$4,281,719

 

2023

 

 

1,425,762

 

2024

 

 

1,138,867

 

2025

 

 

699,280

 

2026

 

 

192,464

 

Thereafter

 

 

74,392

 

Total operating lease liabilities

 

 

7,812,485

 

Amount representing interest

 

 

(764,466)

Total net present value

 

$7,048,019

 

 

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 $7,500 and $7,500 in rent and utility payments for this space for the three months ended March 31, 2022 and 2021, respectively.

 

Financing lease obligations

 

Future minimum lease payments are as follows:

 

2022

 

$689,722

 

2023

 

 

 

2024

 

 

 

2025

 

 

 

2026

 

 

 

Thereafter

 

 

 

Total financing lease liabilities

 

 

689,722

 

Amount representing interest

 

 

 

Total future payments (1)(2)

 

$689,722

 

 ____________________

 

(1)

Included is a Telecom Equipment Lease is with an entity owned and controlled by shareholders of the Company and was due August 31, 2020, as amended.

 

Other Commitments and Contingencies 

 

Employment Agreements

 

The Company had employment agreements with certain employees of SDM, K Telecom and Air Fitness. The agreements are such that SDM, K Telecom and Air Fitness, on a standalone basis in each case, must provide sufficient cash flow to financially support the financial obligations within the employment agreements. The employment agreements for SDM and Aire Fitness were terminated with the exchange of debt for Series E Preferred Stock. See Note 7.

 

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 was guaranteed for five years whether or not Ms. Caudle is dismissed with cause. This employment agreement was effectively modified with the Software Acquisition Agreement described in Note 5 such that the Company is required to make payroll payments of $250,000 per year for five years to Ms. Caudle and payroll payments totaling $150,000 over three years to her daughter.

 

Litigation

 

On March 18, 2019, the Company issued to an Investor a convertible promissory note in the principal amount of $600,000.00 (the “Auctus Promissory Note”) and Warrant Agreement (the “Auctus Warrant Agreement”) pursuant to that certain securities purchase agreement dated March 18, 2019 (the “Auctus SPA”) with Auctus Fund, LLC (“Auctus”). Pursuant to claims by Auctus that the Company had not complied with terms of the Auctus SPA, the Company and Auctus entered into a settlement agreement dated October 13, 2021 where by the Company would pay $763,231.97 and allow Auctus to exercise its right to exercise 15,000,000 warrants to purchase 15,000,000 shares of common stock. Auctus agreed to limit the sale of common shares of the Company to 2,000,000 during each respective calendar week. The Company recognized a gain on debt extinguishment of $7,068,339 when this Auctus Promissory Note was paid off in large part because of the related derivative liability on the books at the time of the settlement.

 

 

 
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We have been named in a lawsuit by EMA Financial, LLC (“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 has filed a motion in response for which EMA has filed a motion to dismiss. The Company does not believe at this time that any negative outcome would result in more than the $816,097 it has recorded on its balance sheet as of March 31, 2022.

 

A lawsuit was filed in Michigan by the one of the former owners of SpeedConnect, LLC, John Ogren. Mr. Ogren claimed he was owed back wages related to the acquisition agreement wherein the Company acquired the assets of SpeedConnect, LLC and kept him on through a consulting agreement. The Company’s position was that he ultimately resigned in writing and was not due any back wages. In August 2021, Mr. Ogren was awarded $334,908 in back wages by an Arbitrator. This amount has been included in accounts payable as of September 30, 2021 and expensed in the statement of operations as other expenses for the year ended December 31, 2021. Mr. Ogren and the Company have agreed to a settlement whereby the Company would pay $120,000 within 14 days of a written agreement with four monthly payments of $20,000 starting on December 5, 2021 through March 2, 2022. This debt was completely paid off as of March 31, 2022.

 

We have been named in a lawsuit by a collection law firm on behalf of Pinnacle Towers LLC and Crown Atlantic Company Inc., against TPT Global Tech, Inc. The claim derives from an outstanding debt by incurred by Copperhead Digital. The lawsuit is over unpaid rent that should have been paid by Copperhead Digital but was not paid. The Company believes it has several defenses to this claim and is in the process of communicating with opposing counsel for dismissal of the claims which amount to $386,030.62 plus interest, costs and attorney fees. The Company has accounted for approximately $600,000 in payables on its consolidated balance sheet as of March 31, 2022 for this subsidiary payable.

 

Lawsuits are being threatened by vendors in relation to tower lease payments in accordance with tower lease agreements that were entered into by SpeedConnect. The claims are currently being investigated and the amount in controversy being claimed is approximately 3,500,000. The Company has approximately $1,350,000 in accounts payable for these threatened claims as of March 31, 2022. The claims appear to include lease agreements that have been terminated and future payments not yet due, among other issues. As such, the parties are trying to come up with resolutions for these claims.

 

The Company has been named in a lawsuit, Robert Serrett vs. TruCom, Inc., 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. We recently learned that Mr. Serrett received a default judgement in Texas on May 15, 2018 for $70,650 plus $3,500 in attorney fees and 5% interest and court costs. However, he has made no attempt that we are aware of to obtain a sister state judgment in Arizona, where Trucom resides, or to try and enforce the judgement and collect. Management believes it has good and meritorious defenses and does not belief the outcome of the lawsuit will have any material effect on the financial position of the Company.

 

We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. We anticipate that we (including current and any future subsidiaries) will from time to time become subject to claims and legal proceedings arising in the ordinary course of business. It is not feasible to predict the outcome of any such proceedings and we cannot assure that their ultimate disposition will not have a materially adverse effect on our business, financial condition, cash flows or results of operations.

 

Customer Contingencies

 

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 these amounts. 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 March 31, 2022 and December 31, 2021.

 

 
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Stock Contingencies

 

The Company has convertible debt, preferred stock, options and warrants outstanding for which common shares would be required to be issued upon exercise by the holders. As of March 31, 2022, the following shares would be issued:

 

Convertible Promissory Notes

 

 

591,746,109

 

Series A Preferred Stock (1)

 

 

1,349,817,129

 

Series B Preferred Stock

 

 

2,588,693

 

Series D Preferred Stock (2)

 

 

34,401,917

 

Series E Preferred Stock (3)

 

 

1,322,588,496

 

Stock Options and Warrants

 

 

129,116,666

 

 

 

 

3,430,259,005

 

_____________________ 

 

(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.

 

(2)

Holders of the Series D Preferred Stock may decide after 18 months to convert to common stock @ 75% of the 30 day average market closing price (for previous 30 business days) divided into $5.00. There is also an automatic conversion of the Series D Preferred Stock 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 @ 75% of the 30 day average market closing price (for previous 30 business days) divided into $5.00.

 

(3)

Holders of the Series E Preferred Stock may decide after 18 months to convert to common stock @ 75% of the 30 day average market closing price (for previous 30 business days) divided into $5.00. There is also an automatic conversion of the Series E Preferred Stock 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 E Preferred shall be @ 75% of the 30 day average market closing price (for previous 30 business days) divided into $5.00.

 

Part of the consideration in the acquisition of Aire Fitness was the issuance of 500,000 restricted common shares of the Company vesting and issuable after the common stock reaches at least a $1.00 per share closing price in trading. To date, this has not occurred but may happen in the future upon which the Company will issue 500,000 common shares to the non-controlling interest owners of Aire Fitness.

 

NOTE 9 – RELATED PARTY ACTIVITY

 

Accounts Payable and Accrued Expenses

 

There are amounts outstanding due to related parties of the Company of $313,258 and $2,294,570, respectively, as of March 31, 2022, and December 31, 2021 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. 

 

Leases

 

See Note 8 for office lease used by CEO.

 

Note Payable and Commitments

 

On March 25, 2022, the Company entered into a Software Development agreement with Mr. and Mrs. Caudle for which a new note payable was created and employment agreements for Mrs. Caudle and her daughter were modified. See Notes 5 and 8.

 

Debt Financing and Amounts Payable

 

As of March 31, 2022, there are amounts due to management/shareholders included in financing arrangements, of which $23,132 is payable from the Company to Stephen J. Thomas III, CEO of the Company. See note 5.

 

 

 
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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 VuMe 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:

 

March 31, 2022

 

 

 

Gross carrying

 amount

 

 

Accumulated Amortization

 

 

Net Book

Value

 

 

Useful Life

 

Customer Base

 

$697,238

 

 

 

(325,808)

 

$371,430

 

 

3-10

 

Developed Technology

 

 

4,595,600

 

 

 

(2,255,255)

 

 

2,340,345

 

 

 

9

 

Film Library

 

 

957,000

 

 

 

(267,350)

 

 

689,650

 

 

 

11

 

Trademarks and Tradenames

 

 

132,000

 

 

 

(41,241)

 

 

90,759

 

 

 

12

 

Total intangible assets, net

 

$6,381,838

 

 

 

(2,889,654)

 

$3,492,184

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$104,657

 

 

 

0

 

 

$104,657

 

 

 

 

 

 

 December 31, 2021

 

 

 

Gross carrying

 amount

 

 

Accumulated Amortization

 

 

Net Book

 Value

 

 

Useful Life

 

Customer Base

 

$697,238

 

 

 

(310,359)

 

$386,879

 

 

3-10

 

Developed Technology

 

 

4,595,600

 

 

 

(2,127,599)

 

 

2,468,001

 

 

 

9

 

Film Library

 

 

957,000

 

 

 

(249,300)

 

 

707,700

 

 

 

11

 

Trademarks and Tradenames

 

 

132,000

 

 

 

(38,339)

 

 

93,661

 

 

 

12

 

Total intangible assets, net

 

$6,381,838

 

 

 

(2,725,597)

 

$3,656,241

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$104,657

 

 

 

0

 

 

$104,657

 

 

 

 

 

 

Amortization expense was $164,057 and $184,655 for the three months ended March 31, 2022 and 2021, respectively.

 

Remaining amortization of the intangible assets is as following for the next five years and beyond:

 

2022

 

$498,022

 

2023

 

 

662,079

 

2024

 

 

662,079

 

2025

 

 

662,079

 

2026

 

 

662,079

 

Thereafter

 

 

345,846

 

 

 

$3,492,184

 

 

 
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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 2021 and 2020 are those in which it is providing Broadband Internet through TPT SpeedConnect and Media Production services through Blue Collar Medical Testing services through TPT MedTech and QuikLABs.

 

The following tables present summary information by segment for the three months ended March 31, 2022 and 2021 respectively:

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

TPT

 SpeedConnect

 

 

Blue Collar

 

 

TPT MedTech and QuikLABS

 

 

Corporate

and other

 

 

Total

 

Revenue

 

$1,541,466

 

 

 

98,580

 

 

 

90,315

 

 

 

153,802

 

 

$1,884,163

 

Cost of revenue

 

$(762,323)

 

 

(147,245)

 

 

0

 

 

 

(113,646)

 

$(1,023,214)

Net income (loss)

 

$170,635

 

 

 

(223,362)

 

 

(17,688)

 

 

(5,502,060)

 

$(5,572,475)

Total assets

 

$5,822,525

 

 

 

270,050

 

 

 

145,132

 

 

 

3,608,985

 

 

$9,846,692

 

Depreciation and amortization

 

$(135,218)

 

 

(1,705)

 

 

(14,931)

 

 

(164,484)

 

$(316,338)

Derivative gain

 

$0

 

 

 

0

 

 

 

0

 

 

 

257,024

 

 

$257,024

 

Interest expense

 

$(144,540)

 

 

(2,477)

 

 

0

 

 

 

(1,027,328)

 

$(1,174,345)

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

TPT

SpeedConnect

 

 

Blue Collar

 

 

TPT

MedTech and QuikLABS

 

 

Corporate

and other

 

 

Total

 

Revenue

 

$2,090,406

 

 

 

200,040

 

 

 

375,650

 

 

 

46,254

 

 

$2,712,350

 

Cost of revenue

 

$(1,618,132)

 

 

(123,265)

 

 

(381,975)

 

 

(38,282)

 

$(2,161,654)

Net income (loss)

 

$(244,462)

 

 

(103,414)

 

 

(440,438)

 

 

(951,764)

 

$(1,740,078)

Total assets

 

$7,583,025

 

 

 

398,819

 

 

 

462,184

 

 

 

4,614,382

 

 

$13,058,410

 

Depreciation and amortization

 

$(148,547)

 

 

(27,834)

 

 

0

 

 

 

(163,635)

 

$(340,016)

Derivative gain

 

$0

 

 

 

0

 

 

 

0

 

 

 

185,275

 

 

$185,275

 

Interest expense

 

$(190,469)

 

 

(8,272)

 

 

0

 

 

 

(192,138)

 

$(390,879)

 

NOTE 12 – SUBSEQUENT EVENTS

 

On April 1, 2022, the Company entered into a Future Receivable Sale and Purchase Agreement (“Mr. Advance Agreement”) with Mr. Advance LLC (”Mr. Advance”). The balance to be purchased and sold is $411,000 for which the Company received $270,715, net of fees. Under the Mr. Advance Agreement, the Company is to pay $8,935 per week for 46 weeks at an effective interest rate of approximately 36% annually.

 

On April 1, 2022, the Company entered into a Future Receipts Sale and Purchase Agreement (“CLOUDFUND Agreement”) with CLOUDFUND LLC (”CLOUDFUND”). The balance to be purchased and sold is $411,000 for which the Company received $272,954, net of fees. Under the CLOUDFUND Agreement, the Company is to pay $8,935 per week for 46 weeks at an effective interest rate of approximately 36% annually.

 

On April 27, 2022, the Company entered into a Future Receivables Sale and Purchase Agreement (“Fox Capital Agreement”) with Fox Capital Group, Inc. (”Fox Capital”). The balance to be purchased and sold is $138,000 for which the Company received $90,000, net of fees. Under the Fox Capital Agreement, the Company is to pay $4,313 per week for 32 weeks at an effective interest rate of approximately 36% annually.

 

Subsequent to March 31, 2022, holders of financing arrangements with the Company totaling $1,255,387 agreed to exchange their financing amounts outstanding for shares of Series E Preferred Stock of the Company. As such, 251,077 shares of Series E Preferred Stock were issued in exchange for $1,255,387 in outstanding financing arrangements.

  

On May 10, 2022, as part of a “Smart City” concept and to utilize its telecommunications expertise, the Company entered into Real Estate Sales Agreements to acquire approximately 135 acres of land in Tuskegee, with the Gray Family Limited Partnership and Lakeside Ranch, Inc. comprised of one approximate 45 acre parcel along Tuskegee Lake and the second an approximate 85 acre parcel along route 80 heading to Auburn, Alabama. Per the agreements, TPT Global Tech will be paying approximately $1,700,000 for the properties, of which it paid a combined $10,000 in down payments. The Company has until November 11, 2022 to close the transactions including paying the remainder of the purchase price which it intends to fund from current fundraising efforts. Closing of the transactions are subject to obtaining financing, all surveys and finalizing master plans for the kick-off the Company’s “Smart City” project.

 

Subsequent events were reviewed through the date the financial statements were issued.

 

 
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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 March 31, 2022, we had an accumulated deficit totaling $50,494,312. This raises substantial doubts about our ability to continue as a going concern.

 

RESULTS OF OPERATIONS

 

For the Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021

 

During the three months ended March 31, 2022, we recognized total revenues of $1,884,163 compared to the prior period of $2,712,350. The decrease is largely attributable to the decrease in internet customers from attrition and the discontinuance of unprofitable operating locations. Decreases in Blue Collar and MedTech revenue also occurred compared to the prior year offset by a slight increase in Air Fitness and TPT Asia revenue. Most of these changes relate to timing of products and services being delivered.

 

Gross profit for the three months ended March 31, 2022 was $860,949 compared to $550,696 for the prior period. The increase is largely attributable to the change in internet customers. Although revenues for TPT SpeedConnect have been decreasing as described above, part of the decrease has been with unprofitable operating locations which has helped the gross profit margin. Gross profit percentage increased to 46% from 20%.

 

During the three months ended March 31, 2022, we recognized $3,538,793 in operating expenses compared to $2,085,170 for the prior period. The increase was in large part attributable to the research and development expense of $1,750,000 in the current period ended March 31, 2022 from the acquisition of a software developed by a third party.

 

Derivative gains of $257,024 and $185,275 results from the accounting for derivative financial instruments during the three months ended March 31, 2022 and 2021, respectively.

 

The loss on debt extinguishment of $1,982,892 for the current period ended March 31, 2022 results from the exchange of accounts payable, financing arrangements and lease agreement balances as of March 31, 2022 for Series E Preferred Stock.

 

Interest expense increased for the three months ended March 31, 2022 compared to the prior period by $783,466. The increase comes largely from the amortization of debt discounts on some of the Company’s derivative securities.

 

During the three months ended March 31, 2022, we recognized a net loss of $5,572,475 compared to $1,740,078 for the prior period. The difference was the loss on extinguishment of accounts payable, financing arrangements and lease agreement balances, the increase in interest expense from amortization of debt discounts and a decrease in revenue from interest customers and other reasons outlined above.

 

 
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LIQUIDITY AND CAPITAL RESOURCES

 

We incurred $5,572,475 and $1,740,078, respectively, in losses, and we used $396,334 and $6,529, respectively, in cash for operations for the three months ended March 31, 2022 and 2021. We calculate the net cash used by operating activities by decreasing, or increasing in case of gain, our let loss by those items that do not require the use of cash such as depreciation, amortization, research and development, derivative expense or gain, gain on extinguishment of debt and share-based compensation which totaled to a net $4,583,195 for 2022 and $450,336 for 2021.

 

In addition, we report increases and reductions in liabilities as uses of cash and deceases assets and increases in liabilities as sources of cash, together referred to as changes in operating assets and liabilities. For the three months ended March 31, 2022, we had a net increase in our assets and liabilities of $584,463 primarily from an increase in accounts payable from lag of payments for accounts payable for cash flow considerations. For the three months ended March 31, 2021 we had a net increase to our assets and liabilities of $739,018 for similar reasons.

 

Cash flows from financing activities were ($31,852) and $306,380 for the three months ended March 31, 2022 and 2021, respectively. For the three months ended March 31, 2022, these cash flows were generated from proceeds from convertible notes, loans and advances of $447,518 offset by payment on convertible loans, advances and factoring agreements of $457,200 and payments on amounts payable – related parties of $22,170. For the three months ended March 31, 2021, cash flows from financing activities primarily came from proceeds from the sale of Series D Preferred Stock of $153,744, convertible notes, loans and advances of $1,068,674 offset by payments on convertible loans, advances and factoring agreements of $903,978.

 

Cash flows used in investing activities were $10,038 and $144,481, respectively, for the three months ended March 31, 2022 and 2021 primarily related to the acquisition of property and equipment.

 

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 a period of time, the Company closed its Blue Collar office in Los Angeles and its TPT SpeedConnect offices in Michigan, Idaho and Arizona. Most employees were 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 $1,402,700 in PPP loans. All of these PPP loans were forgiven in the year ended December 31, 2021. 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 continue to decline. 

 

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;

 

 
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·

What are the material operational challenges that management and the Board of Directors are monitoring and evaluating?

 

 

·

We have been 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 was completely shut down for a period of time but has implemented health and safety policies for employees, contractors and customers to be able to resume some of their operations.

 

·

How are the changes impacting or reasonably likely to impact your financial condition and short- and long-term liquidity?

   

 

·

The changes had impaired our Blue Collar operations significantly in the prior years but which operations seem to be rebounding.

  

·

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 financing 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 reduced our historical revenues in the past. The bans on events and gatherings were very material to our Blue Collar operations.

 

·

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 funds through financing opportunities described herein.

 

·

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.

 

·

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.

 

 
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Table of Contents

 

·

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 previously reduced staff for Blue Collar and are using more contractors for current work.

 

·

Are any of these measures temporary in nature, and if so, how long do you expect to maintain them?

 

 

·

These measures were temporary and are starting to be changed.

 

·

What factors will you consider in deciding to extend or curtail these measures?

  

 

·

We are opening up and allow operations as much as possible.

 

·

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, for most debt instruments.

 

·

Have you taken advantage of available payment deferrals, forbearance periods, or other concessions? What are those concessions and how long will they last?

 

 

·

Yes.

 

·

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.

 

 
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·

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.

 

·

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; but a good portion has now returned to normal payment 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 have been 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 they have been forgiven.

 

·

Do those terms and conditions limit your ability to seek other sources of financing or affect your cost of capital?

 

 

·

No.

 

 
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Table of Contents

 

·

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 allowed 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 have recognized forgiveness of all PPP loans.

 

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 restrictions may hamper 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.

 

·

What are your plans to address these challenges?

 

 

·

At the point of allowing full operations for Blue Collar and film production companies to fully operate.

 

·

Have you implemented any portion of those plans?

 

 

·

No, it’s a matter of allowing Blue Collar to fully operate and trying to raise money and fund operational plans.

 

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 March 31, 2022 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

 

 On March 18, 2019, the Company issued to an Investor a convertible promissory note in the principal amount of $600,000.00 (the “Auctus Promissory Note”) and Warrant Agreement (the “Auctus Warrant Agreement”) pursuant to that certain securities purchase agreement dated March 18, 2019 (the “Auctus SPA”) with Auctus Fund, LLC (“Auctus”). Pursuant to claims by Auctus that the Company had not complied with terms of the Auctus SPA, the Company and Auctus entered into a settlement agreement dated October 13, 2021 where by the Company would pay $763,231.97 and allow Auctus to exercise its right to exercise 15,000,000 warrants to purchase 15,000,000 shares of common stock. Auctus agreed to limit the sale of common shares of the Company to 2,000,000 during each respective calendar week. The Company recognized a gain on debt extinguishment of $7,068,339 when this Auctus Promissory Note was paid off in large part because of the related derivative liability on the books at the time of the settlement.

 

We have been named in a lawsuit by EMA Financial, LLC (“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 has filed a motion in response for which EMA has filed a motion to dismiss. The Company does not believe at this time that any negative outcome would result in more than the $816,097 it has recorded on its balance sheet as of March 31, 2022.

 

A lawsuit was filed in Michigan by the one of the former owners of SpeedConnect, LLC, John Ogren. Mr. Ogren claimed he was owed back wages related to the acquisition agreement wherein the Company acquired the assets of SpeedConnect, LLC and kept him on through a consulting agreement. The Company’s position was that he ultimately resigned in writing and was not due any back wages. In August 2021, Mr. Ogren was awarded $334,908 in back wages by an Arbitrator. This amount has been included in accounts payable as of September 30, 2021 and expensed in the statement of operations as other expenses for the year ended December 31, 2021. Mr. Ogren and the Company have agreed to a settlement whereby the Company would pay $120,000 within 14 days of a written agreement with four monthly payments of $20,000 starting on December 5, 2021 through March 2, 2022. This debt was completely paid off as of March 31, 2022.

 

We have been named in a lawsuit by a collection law firm on behalf of Pinnacle Towers LLC and Crown Atlantic Company Inc., against TPT Global Tech, Inc. The claim derives from an outstanding debt by incurred by Copperhead Digital. The lawsuit is over unpaid rent that should have been paid by Copperhead Digital but was not paid. The Company believes it has several defenses to this claim and is in the process of communicating with opposing counsel for dismissal of the claims which amount to $386,030.62 plus interest, costs and attorney fees. The Company has accounted for approximately $600,000 in payables on its consolidated balance sheet as of March 31, 2022 for this subsidiary payable.

 

 
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Lawsuits are being threatened by vendors in relation to tower lease payments in accordance with tower lease agreements that were entered into by SpeedConnect. The claims are currently being investigated and the amount in controversy being claimed is approximately $3,500,000. The Company has approximately $1,350,000 in accounts payable for these threatened claims as of March 31, 2022. The claims appear to include lease agreements that have been terminated and future payments not yet due, among other issues. As such, the parties are trying to come up with resolutions for these claims.

 

The Company has been named in a lawsuit, Robert Serrett vs. TruCom, Inc., 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. We recently learned that Mr. Serrett received a default judgement in Texas on May 15, 2018 for $70,650 plus $3,500 in attorney fees and 5% interest and court costs. However, he has made no attempt that we are aware of to obtain a sister state judgment in Arizona, where Trucom resides, or to try and enforce the judgement and collect. Management believes it has good and meritorious defenses and does not belief the outcome of the lawsuit will have any material effect on the financial position of the Company.

 

We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. We anticipate that we (including current and any future subsidiaries) will from time to time become subject to claims and legal proceedings arising in the ordinary course of business. It is not feasible to predict the outcome of any such proceedings and we cannot assure that their ultimate disposition will not have a materially adverse effect on our business, financial condition, cash flows or results of operations.

 

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, 2021.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

The Company is in default under its derivative financial instruments and received notice of such from 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 EMA. As such, the Company is currently in negotiations with EMA relative to extending due dates and changing terms on the Note. The Company has been named in a lawsuit by EMA for failing to comply with a Securities Purchase Agreement entered into in June 2019.

 

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 

31.1

 

Certification of Chief Executive Officer Pursuant to Rule 13a–14(a) or 15d-14(a) of the Securities Exchange Act of 1934

31.2

 

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934

32.1

 

Certification of Chief Executive Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

 

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 - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

 

XBRL Taxonomy Extension Schema Document

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

104

 

Cover Page Interactive Data File (formatted as an Inline XBRL document and included in Exhibit 101)

 

 
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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: May 23, 2022

By:

/s/ Stephen J. Thomas, III

 

 

 

Stephen J. Thomas, III

 

 

 

(Chief Executive Officer, Principal Executive Officer)

 

 

 

 

 

Dated: May 23, 2022

By:

/s/ Gary L. Cook

 

 

 

Gary L. Cook

 

 

 

(Chief Financial Officer, Principal Accounting Officer)

 

 

 
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