UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark One)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from __________ to ___________
Commission file number:
(Exact name of registrant as specified in its charter) |
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State or other jurisdiction of incorporation or organization |
| (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
| (Zip Code) |
(
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.
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).
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 | ☐ |
☒ | 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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of November 8, 2021, there were
TABLE OF CONTENTS
2 |
Table of Contents |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
|
| September 30, |
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| December 31, |
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|
| 2021 |
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| 2020 |
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| (Unaudited) |
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ASSETS | ||||||||
CURRENT ASSETS |
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Cash and cash equivalents |
| $ |
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Accounts receivable, net |
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Prepaid expenses and other current assets |
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Total current assets |
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NON-CURRENT ASSETS |
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Property and equipment, net |
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Operating lease right of use assets |
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Intangible assets, net |
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Goodwill |
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Deposits and other assets |
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Total non-current assets |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
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Current liabilities |
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Accounts payable and accrued expenses |
| $ |
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Deferred revenue |
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Customer liability |
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Current portion of loans, advances and factoring agreements |
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Convertible notes payable, net of discounts |
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Notes payable - related parties, net of discounts |
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Convertible notes payable – related parties, net of discounts |
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Derivative liabilities |
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Current portion of operating lease liabilities |
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Financing lease liabilities |
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Financing lease liabilities – related party |
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Total current liabilities |
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NON-CURRENT LIABILITIES |
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Loans, advances and factoring agreements, net of current portion and discounts |
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Operating lease liabilities, net of current portion |
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Total non-current liabilities |
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Total liabilities |
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Commitments and contingencies |
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See accompanying notes to condensed consolidated financial statements.
3 |
Table of Contents |
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
|
| September 30, |
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| December 31, |
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| 2021 |
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| 2020 |
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| (Unaudited) |
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MEZZANINE EQUITY |
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Convertible Preferred Series A, |
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Convertible Preferred Series B – |
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Convertible Preferred Series C – |
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Convertible Preferred Series D, |
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Total mezzanine equity |
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STOCKHOLDERS' DEFICIT |
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Common stock, $ |
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Subscriptions payable (receivable) |
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Additional paid-in capital |
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Accumulated deficit |
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Total TPT Global Tech, Inc. stockholders' deficit |
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Non-controlling interests |
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Total stockholders’ deficit |
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ |
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| $ |
|
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 |
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| For the nine months ended |
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| 2021 |
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| 2020 |
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| 2021 |
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| 2020 |
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Revenues: |
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Products |
| $ | - |
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| $ |
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| $ |
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| $ |
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Services |
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Total Revenues |
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COST OF SALES: |
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Products |
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Services |
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Total Costs of Sales |
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Gross profit |
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EXPENSES: |
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Sales and marketing |
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Professional |
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Payroll and related |
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General and administrative |
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Research and development |
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Depreciation |
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Amortization |
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Total expenses |
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Loss from operations |
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OTHER INCOME (EXPENSE) |
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Derivative gain (expense) |
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Gain (loss) on debt extinguishment |
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Gain (loss) on debt conversions |
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Interest expense |
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Other expense |
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Total other income (expenses) |
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Net loss before income taxes |
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Income taxes |
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NET LOSS BEFORE NON-CONTROLLING INTERESTS |
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NET LOSS ATTRIBUTABLE TO NON- CONTROLLING INTERESTS |
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NET LOSS ATTRIBUTABLE TO TPT GLOBAL TECH, INC. SHAREHOLDERS |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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Loss per common share: Basic and diluted |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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Weighted average number of common shares outstanding: |
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Basic and diluted |
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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 and nine months ended September 30, 2021 and 2020
(Unaudited)
|
| Series A Preferred Stock |
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| Series B Preferred Stock |
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| Common Stock |
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| Subscriptions Payable |
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| Additional Paid-in |
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| Accumulated |
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| Non-Controlling |
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| Total Stockholders’ |
| ||||||||||||||||||||
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| (Receivable) |
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| Capital |
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| Deficit |
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| Interest |
|
| Deficit |
| |||||||||||
Balance as of June 30, 2021 |
|
| — |
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| $ |
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| — |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ |
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| $ | ( | ) | ||||||
Common stock issued for services or subscription payable |
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| — |
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| — |
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| — |
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Issuance of shares for cash |
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| — |
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| — |
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Net loss |
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| — |
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| — |
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| — |
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| ( | ) |
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| ( | ) |
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| ( | ) | |||||
Balance as of September 30, 2021 |
|
| — |
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| $ |
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| — |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
|
| $ | ( | ) |
|
| Series A Preferred Stock |
|
| Series B Preferred Stock |
|
| Common Stock |
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| Subscriptions Payable |
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| Additional Paid-in |
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| Accumulated |
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| Non-Controlling |
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| Total Stockholders’ |
| ||||||||||||||||||||
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| (Receivable) |
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| Capital |
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| Deficit |
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| Interest |
|
| Deficit |
| |||||||||||
Balance as of December 31, 2020 |
|
| — |
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| $ |
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| — |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | (61,142 | ) |
| $ | ( | ) | ||||||
Common stock issued for services or subscription payable |
|
| — |
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| — |
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| ( | ) |
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Issuance of shares in exchange for debt |
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| — |
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| — |
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Issuance of shares for cash |
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| — |
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| — |
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TPT Strategic license cancellation |
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| — |
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| — |
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| — |
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| ( | ) |
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Net loss |
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| — |
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| — |
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| — |
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| ( | ) |
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| ( | ) |
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| ( | ) | |||||
Balance as of September 30, 2021 |
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| — |
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| $ |
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| — |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| $ | ( | ) |
6 |
Table of Contents |
|
| Series A Preferred Stock |
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| Series B Preferred Stock |
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| Common Stock |
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| Subscriptions |
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| Additional Paid-in |
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| Accumulated |
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| Non-Controlling |
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| Total Stockholders’ |
| ||||||||||||||||||||
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Payable |
|
| Capital |
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| Deficit |
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| Interest |
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| Deficit |
| |||||||||||
Balance as of June 30, 2020 |
|
| — |
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| $ |
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| — |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| $ | ( | ) | |||||||
Common stock issuable for director services |
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| — |
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| — |
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| — |
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Equity interest in QuikLABS issued for cash |
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| — |
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| — |
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| — |
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Acquisition of Aire Fitness |
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| — |
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| ( | ) |
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| ( | ) | |||||
Common stock issued for settlement of liability |
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| — |
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| — |
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InnovaQor merger |
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| — |
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| — |
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| — |
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| ( | ) |
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Net loss |
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| — |
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| — |
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| — |
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| ( | ) |
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| ( | ) |
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| ( | ) | |||||
Balance as of September 30, 2020 |
|
| — |
|
| $ |
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|
| — |
|
| $ |
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|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
| Series A Preferred Stock |
|
| Series B Preferred Stock |
|
| Common Stock |
|
| Subscriptions |
|
| Additional Paid-in |
|
| Accumulated |
|
| Non-Controlling |
|
| Total Stockholders’ |
| ||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Payable |
|
| Capital |
|
| Deficit |
|
| Interest |
|
| Deficit |
| |||||||||||
Balance as of December 31, 2019 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| $ | ( | ) | |||||||||
Common stock issuable for director services |
|
| — |
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| — |
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| — |
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| ||||||||
Equity interest in QuikLABS issued for cash |
|
| — |
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| — |
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|
| — |
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Acquisition of Aire Fitness |
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Common stock issued for settlement of liability |
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Reclassification of preferred stock as mezzanine |
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Common stock issued for convertible promissory notes |
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InnovaQor merger |
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Net Loss |
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Balance as of September 30, 2020 |
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| $ | 811,234 |
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| $ | ( | ) |
| $ | ( | ) |
See accompanying notes to condensed consolidated financial statements.
7 |
Table of Contents |
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Cash flows from operating activities: |
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Net loss |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation |
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Amortization |
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Amortization of debt discounts |
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Promissory note issued for research and development |
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Loss on conversion of notes payable |
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Derivative expense |
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Gain on extinguishment of debt |
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Share-based compensation: Common stock |
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Note payable |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Prepaid expenses and other assets |
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Deposits and other assets |
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Accounts payable and accrued expenses |
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Net change in operating lease right of use assets and liabilities |
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Other liabilities |
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Net cash used in operating activities |
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Cash flows from investing activities: |
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Purchase of equipment |
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Net cash used in investing activities |
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Cash flows from financing activities: |
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Proceeds from sale or non-controlling interests in QuikLABS |
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Proceeds from sale of Common Stock |
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Proceeds from sale of Series D Preferred Stock |
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Proceeds from convertible notes, loans and advances |
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Payment on convertible loans, advances and factoring agreements |
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Proceeds on convertible notes and amounts payable – related parties |
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Payments on convertible notes and amounts payable – related parties |
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Payments on financing lease liabilities |
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Net cash provided by financing activities |
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Cash and cash equivalents - beginning of period |
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Cash and cash equivalents - end of period |
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See accompanying notes to condensed consolidated financial statements.
8 |
Table of Contents |
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Unaudited)
Supplemental Cash Flow Information:
Cash paid for:
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| 2021 |
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| 2020 |
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Interest |
| $ |
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| $ |
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Taxes |
| $ |
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Non-Cash Investing and Financing Activities:
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| 2021 |
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| 2020 |
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Debt discount on factoring agreement |
| $ |
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| $ |
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Common stock issued in exchange for payable and note |
| $ |
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| $ |
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TPT Strategic, Inc. merger – Non-controlling interest in intercompany liabilities rescinded |
| $ | ( | ) |
| $ |
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Issuance of common stock for subscription payable |
| $ |
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Convertible preferred Series A and B reclassified to mezzanine equity |
| $ |
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Common stock issued in conversion of convertible notes |
| $ |
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Convertible preferred Series A and B reclassified to mezzanine equity |
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Acquisition of Aire Fitness – Liabilities assumed |
| $ |
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| $ |
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InnovaQor merger – Non-controlling interest in intercompany liabilities assumed |
| $ |
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| $ |
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Acquisition of property and equipment under finance lease |
| $ |
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| $ |
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See accompanying notes to condensed consolidated financial statements.
9 |
Table of Contents |
TPT Global Tech, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
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
The following acquisitions have resulted in entities which have been consolidated into TPTG. In 2014 the Company acquired all the assets of K Telecom and Wireless LLC (“K Telecom”) and Global Telecom International LLC (“Global Telecom”). Effective January 31, 2015, TPTG completed its acquisition of 100% of the outstanding stock of Copperhead Digital Holdings, Inc. (“Copperhead Digital”) and Subsidiaries, TruCom, LLC (“TruCom”), Nevada Utilities, Inc. (“Nevada Utilities”) and CityNet Arizona, LLC (“CityNet”). Effective September 30, 2016, the company acquired 100% ownership in San Diego Media Inc. (“SDM”). In October 2017, we entered into agreements to acquire Blue Collar, Inc. (“Blue Collar”) which closed as of September 1, 2018. On May 7, 2019 we completed the acquisition of a majority of the assets of SpeedConnect, LLC, which assets were conveyed into our wholly owned subsidiary TPT SpeedConnect, LLC (“TPT SC” or “TPT SpeedConnect”) which was formed on April 16, 2019. On January 8, 2020 we formed TPT Federal, LLC (“TPT Federal”). On March 30, 2020 we formed TPT MedTech, LLC (“TPT MedTech”) and on June 6, 2020 we formed InnovaQor, Inc (“InnovaQor”). In July and August 2020, the Company formed Quiklab 1 LLC, QuikLAB 2, LLC, QuikLAB 3, LLC and QuikLAB 4, LLC where TPT MedTech owns 80% (as agreed per the operating agreement) of all outside equity investments. Effective August 1, 2020 we closed on the acquisition of 75% of The Fitness Container, LLC (“Air Fitness”). In July 2020, we invested in a Hong Kong company called TPT Global Tech Asia Limited of which we own 78%, and during 2020, InnovaQor did a reverse merger with Southern Plains of which there ended up being a non controlling interest of 6% as of September 30, 2021 and December 31, 2020. The name of InnovaQor remained for the merged entities but was changed to TPT Strategic, Inc. on March 21, 2021.
We are based in San Diego, California, and operate as a technology-based company with divisions providing telecommunications, medical technology and product distribution, media content for domestic and international syndication as well as technology solutions. We operate on our own proprietary Global Digital Media TV and Telecommunications infrastructure platform and also provide technology solutions to businesses domestically and worldwide. We offer Software as a Service (SaaS), Technology Platform as a Service (PAAS), Cloud-based Unified Communication as a Service (UCaaS) and carrier-grade performance and support for businesses over our private IP MPLS fiber and wireless network in the United States. Our cloud-based UCaaS services allow businesses of any size to enjoy all the latest voice, data, media and collaboration features in today's global technology markets. We also operate as a Master Distributor for Nationwide Mobile Virtual Network Operators (MVNO) and Independent Sales Organization (ISO) as a Master Distributor for Pre-Paid Cellphone services, Mobile phones, Cellphone Accessories and Global Roaming Cellphones.
Significant Accounting Policies
Please refer to Note 1 of the Notes to the Consolidated Financial Statements in the Company's most recent Form 10-K for all significant accounting policies of the Company, with the exception of those discussed below.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared according to the instructions to Form 10-Q and Section 210.8-03(b) of Regulation S-X of the Securities and Exchange Commission (“SEC”) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.
These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2020. The condensed consolidated balance sheet as of September 30, 2021, has been derived from the consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP.
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Our condensed consolidated financial statements include the accounts of K Telecom and Global, Copperhead Digital, SDM, Blue Collar, TPT SpeedConnect, TPT Federal, TPT MedTech, InnovaQor, Quiklab 1, QuikLAB 2, QuikLAB 3, QuikLAB 4, Aire Fitness and TPT Global Tech Asia Limited. The consolidated financial statements also give effects to non-controlling interests of the QuikLABs of 20%, Aire Fitness of 25%, TPT Global Tech Asia Limited of 22% and InnovaQor of 6%, where appropriate. All intercompany accounts and transactions have been eliminated in consolidation.
Revenue Recognition
We have applied ASC 606, revenue from Contracts with Customers, to all contracts as of the date of initial application and as such, have used the following criteria described below in more detail for each business unit:
Identify the contract with the customer.
Identify the performance obligations in the contract.
Determine the transaction price.
Allocate the transaction price to performance obligations in the contract.
Recognize revenue when or as we satisfy a performance obligation.
Reserves are recorded as a reduction in net sales and are not considered material to our consolidated statements of income for the nine months ended September 30, 2021 and 2020. In addition, we invoice our customers for taxes assessed by governmental authorities such as sales tax and value added taxes, where applicable. We present these taxes on a net basis.
The Company’s revenue generation for the nine months ended September 30, 2021 and 2020 came from the following sources disaggregated by services and products, which sources are explained in detail below.
|
| For the nine months ended September 30, 2021 |
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| For the nine months ended September 30, 2020 |
| ||
TPT SpeedConnect |
| $ |
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| $ |
| ||
Blue Collar |
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TPT MedTech |
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San Diego Media and other |
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Aire Fitness |
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Total Services Revenue |
| $ |
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| $ |
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K Telecom-Product Revenue |
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| 35,291 |
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Total Revenue |
| $ |
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| $ |
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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 at September 30, 2021 and December 31, 2020 are $
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.
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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.
SDM: Ecommerce, Email Marketing and Web Design Services
SDM generates revenue by providing ecommerce, email marketing and web design solutions to small and large commercial businesses, complete with monthly software support, updates and maintenance. Services are billed monthly. There are no financing terms or variable transaction prices. Platform infrastructure support is a prepaid service billed in monthly recurring increments. The services are billed a month in advance and due prior to services being rendered. The revenue is deferred when invoiced and booked in the month the service is provided. There is no deferred revenue at September 30, 2021 and December 31, 2020. 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.
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 facilities, 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 two 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. The other 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. Deferred revenue at September 30, 2021 and December 31, 2020 are zero and zero, respectively. There are no financing terms or variable transaction prices for either of these products.
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.
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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.
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.
Aire Fitness: Revenue from Manufacture of Mobile Units
Aire Fitness is focused on custom designing, manufacturing, and selling high-end turnkey outdoor fitness studios and mobile medical testing labs. Aire Fitness has contracted with YMCAs, Parks and Recreation departments, Universities and Country Clubs which are currently using its mobile gyms. Revenue is dependent on the customer specifics and recognized when the product or mobile unit is delivered, the sales transaction considered closed and accepted by a customer. Deferred revenue at September 30, 2021 and December 31, 2020 are $
Basic and Diluted Net Loss Per Share
The Company computes net income (loss) per share in accordance with ASC 260, “Earning per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholder (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method for options and warrants and using the if-converted method for preferred stock and convertible notes. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of September 30, 2021, the Company had shares that were potentially common stock equivalents as follows:
The Company computes net income (loss) per share in accordance with ASC 260, “Earning per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholder (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method for options and warrants and using the if-converted method for preferred stock and convertible notes. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of September 30, 2021, the Company had shares that were potentially common stock equivalents as follows:
Convertible Promissory Notes |
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Series A Preferred Stock (1) |
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Series B Preferred Stock |
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Series D Preferred Stock (2) |
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Stock Options and Warrants |
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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 1,000,000,000 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.
Financial Instruments and Fair Value of Financial Instruments
Our primary financial instruments at September 30, 2021 and December 31, 2020 consisted of cash equivalents, accounts receivable, accounts payable, notes payable and derivative liabilities. We apply fair value measurement accounting to either record or disclose the value of our financial assets and liabilities in our financial statements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.
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Described below are the three levels of inputs that may be used to measure fair value:
Level 1 Quoted prices in active markets for identical assets or liabilities.
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
We consider our derivative financial instruments as Level 3. The balances for our derivative financial instruments as of September 30, 2021 are the following:
Derivative Instrument |
| Fair Value |
| |
Fair value of Auctus Convertible Promissory Note |
| $ |
| |
Fair value of EMA Financial Convertible Promissory Note |
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| |
Fair value of Warrants issued with the derivative instruments |
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| $ |
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Reclassifications
Certain accounts in the prior year condensed consolidated statement of operations have been reclassified for comparative purposes to conform with the presentation in the current year financial statements. There was no effect on Net loss before income taxes from these reclassifications.
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815 - 40)" ("ASU 2020-06"). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity. The ASU is part of the FASB's simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. The ASU's amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permissible for fiscal years beginning after December 15, 2020. The Company early adopted ASU 2060-06 on January 1, 2021, which had no material impact on its financial statements.
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
The Fitness Container, LLC (DBA Aire Fitness)
On June 1, 2020, the Company signed an agreement for the acquisition of a majority interest in San Diego based manufacturing company, The Fitness Container, LLC dba “Aire Fitness” (www.airefitness.com), for
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The Company evaluated this acquisition in accordance with ASC 805-10-55-4 to discern whether the assets and operations of the assets purchased met the definition of a business. The company concluded that there are processes and sufficient inputs into outputs. Accordingly, the Company accounted for this transaction as a business combination and allocated the purchase price as follows:
Consideration given at fair value: |
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| |
Note payable, net of discount |
| $ |
| |
Accounts payable |
|
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| |
Non-controlling interest |
|
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| |
|
| $ |
| |
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Assets acquired at fair value: |
|
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Cash |
| $ |
| |
Accounts receivable |
|
|
| |
|
| $ |
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Goodwill |
| $ |
|
Included in the consolidated statement of operations for the nine months ended September 30, 2021 is $
TPT Strategic Merger with Southern Plains
On August 1, 2020, InnovaQor (name changed to TPT Strategic, Inc.), a wholly-owned subsidiary of the Company, entered into a Merger Agreement with the publicly traded company Southern Plains Oil Corp. (OTC PINK: SPLN prior to Merger Agreement).
During 2020, TPT Strategic authorized a Series A Super Majority Preferred Stock valued at $
NOTE 3 – GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
Cash flows generated from operating activities were not enough to support all working capital requirements for the nine months ended September 30, 2021 and 2020. Financing activities described below have helped with working capital and other capital requirements.
We incurred $
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 nine months ended September 30, 2021, we had a net increase in our assets and liabilities of $3,894,450 primarily from an increase in accounts payable from lag of payments for accounts payable for cash flow considerations and an increase in the balances from our operating lease liabilities. For the nine months ended September 30, 2021, we had a net increase to our assets and liabilities of $
Cash flows from financing activities were $
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Cash flows used in investing activities were $
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 was not possible with certain employees and all subcontractors that work for Blue Collar. The Company has opened up most of it operations and 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 $
The Company is also in the process of raising debt and equity financing. Through September 30, 2021, the Company raised $
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.
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment and related accumulated depreciation as of September 30, 2021 and December 31, 2020 are as follows:
|
| 2021 |
|
| 2020 |
| ||
Property and equipment: |
|
|
|
|
|
| ||
Telecommunications fiber and equipment |
| $ |
|
| $ |
| ||
Film production equipment |
|
|
|
|
|
| ||
Medical equipment |
|
|
|
|
|
| ||
Office furniture and equipment |
|
|
|
|
|
| ||
Leasehold improvements |
|
|
|
|
|
| ||
Total property and equipment |
|
|
|
|
|
| ||
Accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
Property and equipment, net |
| $ |
|
| $ |
|
Depreciation expense was $
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NOTE 5 – DEBT FINANCING ARRANGEMENTS
Financing arrangements as of September 30, 2021 and December 31, 2020 are as follows:
|
| 2021 |
|
| 2020 |
| ||
Loans and advances (1) |
| $ |
|
| $ |
| ||
Convertible notes payable (2) |
|
|
|
|
|
| ||
Factoring agreements (3) |
|
|
|
|
|
| ||
Debt – third party |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Line of credit, related party secured by assets (4) |
| $ |
|
| $ |
| ||
Debt– other related party, net of discounts (5) |
|
|
|
|
|
| ||
Convertible debt – related party (6) |
|
|
|
|
|
| ||
Shareholder debt (7) |
|
|
|
|
|
| ||
Debt – related party |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Total financing arrangements |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Less current portion: |
|
|
|
|
|
|
|
|
Loans, advances and factoring agreements – third party |
| $ | ( | ) |
| $ | ( | ) |
Convertible notes payable third party |
|
| ( | ) |
|
| ( |
|
Debt – related party, net of discount |
|
| ( | ) |
|
| ( | ) |
Convertible notes payable– related party |
|
| ( | ) |
|
| ( | ) |
|
|
| ( | ) |
|
| ( | ) |
Total long term debt |
| $ |
|
| $ |
|
__________
(1) The terms of $
$
$
$
On June 4, 2019, the Company consummated a Securities Purchase Agreement with Odyssey Capital Funding, LLC. (“Odyssey”) for the purchase of a $
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Effective September 30, 2020, we entered into a Purchase Agreement by which we agreed to purchase the
The remaining balances generally bear interest at approximately
(2) During 2017, the Company issued convertible promissory notes in the amount of $67,000 (comprised of $
During 2019, the Company consummated Securities Purchase Agreements dated March 15, 2019, April 12, 2019, May 15, 2019, June 6, 2019 and August 22, 2019 with Geneva Roth Remark Holdings, Inc. (“Geneva Roth”) for the purchase of convertible promissory notes in the amounts of $
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
See Note 7.
June 6, 2019, the Company consummated a Securities Purchase Agreement with JSJ Investments Inc. (“JSJ”) for the purchase of a $
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
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The Company was in default under its derivative financial instruments and received notice of such from Auctus and EMA for not reserving enough shares for conversion and for not having filed a Form S-1 Registration Statement with the Securities and Exchange Commission. It was the intent of the Company to pay back all derivative securities prior to the due dates but that has not occurred in the case of Auctus or EMA. As such, the Company was in negotiations with Auctus and EMA relative to extending due dates and changing terms on the Notes. The Company settled with Auctus subsequent to September 30, 2021. The Company has been named in a lawsuit by EMA for failing to comply with a Securities Purchase Agreement entered into in June 2019. See Note 8 Other Commitments and Contingencies.
On February 14, 2020, the Company agreed to a Secured Promissory Note with a third party for $
(3) The Factoring Agreement with full recourse, due February 29, 2020, as amended, was established in June 2016 with a company that is controlled by a shareholder and is personally guaranteed by an officer of the Company. The Factoring Agreement is such that the Company pays a discount of 2% per each 30-day period for each advance received against accounts receivable or future billings. The Company was advanced funds from the Factoring Agreement for which $101,244 and $
On July 23, 2021, the Company entered into an Agreement for the Purchase and Sale of Future Receipts (“Lendora Factoring Agreement”).
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
The Following factoring agreements were consolidated through the Lendora Consolidation Agreement or previously paid off:
On May 8, 2019,
On February 21, 2020, the Company entered into an Agreement for the Purchase and Sale of Future Receipts (“2020 Factoring Agreement”).
On November 13, 2020, the Company entered into an Agreement for the Purchase and Sale of Future Receipts (“2020 NewCo Factoring Agreement”).
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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 $
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 $
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 $
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 $
(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
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 $
(5) $
$4,000,000 represents a promissory note included as part of the consideration of ViewMe Live technology acquired in 2017, later agreed to as being due and payable in full, with no interest with $
$
On September 1, 2018, the Company closed on its acquisition of Blue Collar. Part of the acquisition included a promissory note of $
$
(6) During 2016, the Company acquired SDM which consideration included a convertible promissory note for $
During 2018, the Company issued convertible promissory notes in the amount of $
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(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.
During the year ended December 31, 2020, the holders of approximately $
See Lease financing arrangements in Note 8.
NOTE 6 -DERIVATIVE FINANCIAL INSTRUMENTS
The Company previously adopted the provisions of ASC subtopic 825-10, Financial Instruments (“ASC 825-10”). ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The derivative liability as of September 30, 2021, in the amount of $
The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of September 30, 2021.
|
| Debt Derivative Liabilities |
| |
Balance, December 31, 2019 |
| $ |
| |
Change in derivative liabilities from conversion of notes payable |
|
| ( | ) |
Change in derivative liabilities from the Odyssey conversion to a term loan |
|
| ( | ) |
Change in fair value of derivative liabilities for the period – derivative gain |
|
| ( | ) |
Balance, December 31, 2020 |
| $ |
| |
Initial fair value of derivative liabilities during the period |
|
|
| |
Reclassification of certain derivative liabilities |
|
| ( | ) |
Change in fair value of derivative liabilities for period – derivative expense |
|
|
| |
Balance, September 30, 2021 |
| $ |
|
Convertible notes payable and warrant derivatives – The Company issued convertible promissory notes which are convertible into common stock, at holders’ option, at a discount to the market price of the Company’s common stock. The Company has identified the embedded derivatives related to these notes relating to certain anti-dilutive (reset) provisions. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date.
As of September 30, 2021, the Company marked to market the fair value of the debt derivatives and determined a fair value of $
NOTE 7 - STOCKHOLDERS' DEFICIT
Preferred Stock
As of September 30, 2021, we had authorized 100,000,000 shares of Preferred Stock, of which certain shares had been designated as Series A Preferred Stock, Series B Preferred Stock, Series C and Series D Preferred Stock.
During the prior year ended December 31, 2020, the Series A Preferred Stock and the Series B Preferred Stock were reclassified as mezzanine equity as a result of the Company not having enough authorized common shares to be able to issue common shares upon their conversion. The Series C and D Preferred Stock are also classified as mezzanine equity for the same reason.
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Series A Convertible Preferred Stock
In February 2015, the Company designated
The Series A Preferred Stock was designated in February 2016, has a par value of $
During the year ended December 31, 2020, the Series A Preferred Stock was reclassified as mezzanine equity as a result of the Company not having enough authorized common shares to be able to issue common shares upon their conversion.
Series B Convertible Preferred Stock
In February 2015, the Company designated
The Series B Preferred Stock was designated in February 2015, has a par value of $
There are
Series C Convertible Preferred Stock
In May 2018, the Company designated
The Series C Preferred Stock has a par value of $
There are no shares of Series C Convertible Preferred Stock outstanding as of September 30, 2021. There are approximately $678,500 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 September 15, 2020 and September 15, 2021, 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.”)
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Series D Preferred shares have the following features: (i)
During the nine months ended September 30, 2021,
During the year ended December 31, 2020, the related party holders of approximately $
Common Stock
As of September 30, 2021, we had authorized
Common Stock Purchase Agreement
On May 28, 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
As of September 30, 2021,, the Company has given purchase notices for
Subscription Payable
As of September 30, 2021, the Company has recorded $(
23 |
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During 2018, a note payable of $
During the year ended December 31, 2020, the Company signed consulting agreements related to their activities with TPT Global Tech and TPT MedTech with three third parties for which we agreed to issue
In 2018, Arkady Shkolnik and Reginald Thomas (family member of CEO) were added as members of the Board of Directors. In accordance with agreements with the Company for his services as a director, Mr. Shkolnik is to receive $
Effective November 1, 2017, the Company entered into an agreement to acquire Hollywood Rivera, LLC (“HRS”). In March 2018, the HRS acquisition was rescinded and 3,625,000 shares of common stock, which were issued as part of the transaction, are being returned by the recipients. As such, as of September 30, 2021 the 3,265,000 shares for the HRS transaction are reflected as subscriptions receivable based on their par value.
Common Stock Issued During Nine Months ended September 30, 2021
Effective September 30, 2020, we entered into a Purchase Agreement by which we agreed to purchase the
Effective September 30, 2020, we entered into a Settlement Agreement to settle outstanding legal fees due to date in the amount of $
The
Another
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Stock Options
|
| Options Outstanding |
|
| Vested |
|
| Vesting Period |
|
| Exercise Price Outstanding and Exercisable |
|
| Expiration Date |
| |||||
December 31, 2019 |
|
|
|
|
| 3,000,000 |
|
|
|
| $ |
|
|
| ||||||
Expired |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
December 31, 2020 |
|
|
|
|
|
|
|
|
| $ |
|
|
| |||||||
Expired |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
September 30, 2021 |
|
| — |
|
|
|
|
|
| — |
|
|
| — |
|
|
| — |
|
Warrants
As of September 30, 2021, there were
The warrants issued were considered derivative liabilities valued at $
Common Stock Reservations
The Company has reserved
We have reserved
There are Transfer Agent common stock reservations that have been approved by the Company relative to the outstanding derivative financial instruments as of September 30, 2021, the outstanding Form S-1 Registration Statement and general treasury of approximately
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. It is the intent to use these entities as vehicles into which third parties would invest and participate in owning QuikLAB Mobile Laboratories. As of December 31, 2020, Quiklab 1 LLC, QuikLAB 2, LLC and QuikLAB 3, LLC have received an investment of $
Other Non-Controlling Interests
TPT Strategic, Aire Fitness and TPT Asia are other non-controlling interests in which
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TPT Strategic 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, $
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Accounts Payable and Accrued Expenses
Accounts payable: |
| 2021 |
|
| 2020 |
| ||
Related parties (1) |
| $ |
|
| $ |
| ||
General operating |
|
|
|
|
|
| ||
Accrued interest on debt (2) |
|
|
|
|
|
| ||
Credit card balances |
|
|
|
|
|
| ||
Accrued payroll and other expenses |
|
|
|
|
|
| ||
Taxes and fees payable |
|
|
|
|
|
| ||
Unfavorable lease liability |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
|
_______________
| (1)
| Relates to amounts due to management and members of the Board of Directors according to verbal and written agreements that have not been paid as of period end. |
| (2) | Portion relating to related parties is $ |
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
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 September 30, 2021 and December 31, 2020, operating lease liabilities arising from operating leases were $
The Company entered into an operating lease agreement for location rights for certain QuikLABS.
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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 September 30, 2021.
2021 |
| $ |
| |
2022 |
|
|
| |
2023 |
|
|
| |
2024 |
|
|
| |
2025 |
|
|
| |
Thereafter |
|
|
| |
Total operating lease liabilities |
|
|
| |
Amount representing interest |
|
| ( | ) |
Total net present value |
| $ |
|
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 $
Financing lease obligations
Future minimum lease payments are as follows:
2021 |
| $ |
| |
2022 |
|
|
| |
2023 |
|
|
| |
2024 |
|
|
| |
2025 |
|
|
| |
Thereafter |
|
|
| |
Total financing lease liabilities |
|
|
| |
Amount representing interest |
|
| ( | ) |
Total future payments (1)(2) |
| $ |
|
____________________
| (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. |
|
|
|
| (2) | Also included are leases under Xroads Equipment |
Other Commitments and Contingencies
Employment Agreements
The Company has employment agreements with certain employees of SDM, K Telecom and Aire Fitness. The agreements are such that SDM, K Telecom and Aire Fitness, on a standalone basis in each case, must provide sufficient cash flow to financially support the financial obligations within the employment agreements.
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 $
Litigation
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 $
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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 $
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 $
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 $
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 $
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 September 30, 2021, the following shares would be issued:
Convertible Promissory Notes |
|
|
| |
Series A Preferred Stock (1) |
|
|
| |
Series B Preferred Stock |
|
|
| |
Series D Preferred Stock (2) |
|
|
| |
Stock Options and Warrants |
|
|
| |
|
|
|
|
___________
| (1) | Holder of the Series A Preferred Stock which is Stephen J. Thomas, is guaranteed |
|
|
|
| (2) | Holders of the Series D Preferred Stock may decide after 18 months to convert to common stock @ |
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During the fourth quarter of 2020, the related party holders of approximately $4,700,000 of existing financing arrangements agreed to exchange their debt and accrued interest for Series D Preferred Stock through a separate $12 Million Private Placement, conditioned on the Company raising at least $
Part of the consideration in the acquisition of Aire Fitness was the issuance of
NOTE 9 – RELATED PARTY ACTIVITY
Accounts Payable and Accrued Expenses
There are amounts outstanding due to related parties of the Company of $
As is mentioned in Note 7, Reginald Thomas was appointed to the Board of Directors of the Company in August 2018. Mr. Thomas is the brother to the CEO Stephen J. Thomas III. According to an agreement with Mr. Reginald Thomas, he is to receive $
Leases
See Note 8 for office lease used by CEO.
Debt Financing and Amounts Payable
As of September 30, 2021, there are amounts due to management/shareholders included in financing arrangements, of which $
Revenue Transactions and Accounts Receivable
During the nine months ended September 30, 2021, Blue Collar provided production services to an entity controlled by the Blue Collar CEO (355 LA, LLC or “355”) for which it recorded revenues of $
Other Agreements
On April 17, 2018, the CEO of the Company, Stephen Thomas, signed an agreement with New Orbit Technologies, S.A.P.I. de C.V., a Mexican corporation, (“New Orbit”), majority owned and controlled by Stephen Thomas, related to a license agreement for the distribution of TPT licensed products, software and services related to Lion Phone and ViewMe Live within Mexico and Latin America (“License Agreement”). The License Agreement provides for New Orbit to receive a fully paid-up, royalty-free, non-transferable license for perpetuity with termination only under situations such as bankruptcy, insolvency or material breach by either party and provides for New Orbit to pay the Company fees equal to 50% of net income generated from the applicable activities. The transaction was approved by the Company’s Board of Directors in June 2018. There has been no activity on this agreement.
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NOTE 10 – GOODWILL AND INTANGIBLE ASSETS
Goodwill and intangible assets are comprised of the following:
September 30, 2021
|
| Gross carrying amount (1) |
|
| Accumulated Amortization |
|
| Net Book Value |
|
| Useful Life |
| ||||
Customer Base |
| $ |
|
| $ | ( | ) |
| $ |
|
|
| ||||
Developed Technology |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
Film Library |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
Trademarks and Tradenames |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
Favorable leases |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
Other |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
| $ |
|
| $ |
|
| $ |
|
|
|
|
|
Amortization expense was $
December 31, 2020
|
| Gross carrying amount |
|
| Accumulated Amortization |
|
| Net Book Value |
|
| Useful Life |
| ||||
Customer Base |
| $ |
|
|
| ( | ) |
| $ |
|
|
| ||||
Developed Technology |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
Film Library |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
Trademarks and Tradenames |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
Favorable leases |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
Other |
|
|
|
|
| — |
|
|
|
|
|
|
|
| ||
Total intangible assets, net |
| $ |
|
|
| ( | ) |
| $ |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
| $ | 768,091 |
|
|
| — |
|
| $ | 768,091 |
|
|
| — |
|
Remaining amortization of the intangible assets is as following for the next five years and beyond:
2021 |
| $ |
| |
2022 |
|
|
| |
2023 |
|
|
| |
2024 |
|
|
| |
2025 |
|
|
| |
Thereafter |
|
|
| |
|
| $ |
|
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.
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The following tables present summary information by segment for the three months ended September 30, 2021 and 2020 respectively:
2021 |
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| TPT SpeedConnect |
|
| Blue Collar |
|
| TPT |
|
| Corporate and other |
|
| Total |
| |||||
Revenue |
| $ |
|
|
|
|
|
|
|
|
|
|
| $ |
| |||||
Cost of sales |
| $ | ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
| $ | ( | ) |
Net income (loss) |
| $ | ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
| $ | ( | ) |
Total assets |
| $ |
|
|
|
|
|
|
|
|
|
|
| $ |
| |||||
Depreciation and amortization |
| $ | ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
| $ | ( | ) |
Derivative expense |
| $ |
|
|
|
|
|
|
|
|
| ( | ) |
| $ | ( | ) | |||
Interest expense |
| $ | ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) |
| $ | ( | ) |
2020 |
|
|
|
|
|
|
|
| ||||||||
|
| TPT SpeedConnect |
|
| Blue Collar |
|
| Corporate and other |
|
| Total |
| ||||
Revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Cost of revenue |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Net income (loss) |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||
Total assets |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Depreciation and amortization |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Derivative gin |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Interest expense |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
The following tables present summary information by segment for the nine months ended September 30, 2021 and 2020 respectively:
2021 |
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| TPT SpeedConnect |
|
| Blue Collar |
|
| TPT MedTech and QuikLABS |
|
| Corporate and Other |
|
| Total |
| |||||
Revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||
Cost of sales |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Net income (loss) |
| $ | ( | ) |
| $ | $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Total assets |
| $ | 6,817,103 |
|
| $ | 1,122,838 |
|
| $ | 466,291 |
|
| $ |
|
| $ | 11,768,748 |
| |
Depreciation and amortization |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | (469,928 | ) |
| $ | ( | ) |
Derivative expense |
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||
Interest expense |
| $ | ( | ) |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
2020 |
|
|
|
|
|
|
|
| ||||||||
|
| TPT SpeedConnect |
|
| Blue Collar |
|
| Corporate and Other |
|
| Total |
| ||||
Revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Cost of revenue |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Net income (loss) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |
Total assets |
| $ | 7,371,051 |
|
| $ | 559,912 |
|
| $ | 8,029,082 |
|
| $ | 15,960,045 |
|
Depreciation and amortization |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Derivative expense |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||
Interest expense |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
NOTE 12 – SUBSEQUENT EVENTS
Stock Purchase Agreement
Effective October 6 to October 13, 2021, the Company consummated a Securities Purchase Agreements dated October 6, 2021, with First Fire Global Opportunities Fund LLC (“First Fire”), Cavalry Investment Fund, LLC (Cavalry Investment Fund and Cavalry Fund 1, LLC (“Cavalry Fund 1”) (all together referred to as “Investors”) for the purchase of $
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Legal and Debt Settlements
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
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 $
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 $
Series E Convertible Preferred Stock
On November 10, 2021, the Company designated
Series E Preferred shares have the following features:
Subsequent to September 30, 2021, the Company paid JSJ $6,666 to eliminate all outstanding warrants held by JSJ.
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 September 30, 2021, we had an accumulated deficit totaling $49,503,549. This raises substantial doubts about our ability to continue as a going concern.
RESULTS OF OPERATIONS
For the Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020
During the three months ended September 30, 2021, we recognized total revenues of $2,519,426 compared to the prior period of $2,786,610. The decrease is largely attributable to the decrease in internet customers from attrition.
Gross profit for the three months ended September 30, 2021 was $583,636 compared to $961,187 for the prior period. The decrease of is largely attributable to the decrease in internet customers from attrition, which attrition was the primary factor in the reduction in the profit margin for the period as compared to the prior period. Revenues for TPT SpeedConnect have been decreasing while the cost of revenues, primarily tower payments, have not decreased correspondingly but have remained consistent. The decrease in gross margin is also attributable to the continued expenses related to TPT MedTech far exceeding the current revenues.
During the three months ended September 30, 2021, we recognized $1,874,219 in operating expenses compared to $2,321,300 for the prior period. The decrease was in large part attributable to a decrease in depreciation expense as a result of impairments in the prior year and a decrease in payroll from less employees and professional assistance being required for TPT SpeedConnect from the decrease in customers.
Derivative expense of $3,472,30 gain of $223,229 result from the accounting for derivative financial instruments during the three months ended September 30, 2021 and 2020, respectively.
Interest expense increased for the three months ended September 30, 2021 compared to the prior period by $428,825. The increase comes largely from the true up of interest expense on some of the Company’s derivative securities.
During the three months ended September 30, 2021, we recognized a net loss of $4,718,296 compared to $1,385,042 for the prior period. The difference was in large part from the derivative expense and other reasons outlined above.
For the Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020
During the nine months ended September 30, 2021, we recognized total revenues of $7,810,956 compared to the prior period of $8,619,354. The decrease is largely attributable to the decrease in internet customers from attrition.
Gross profit for the nine months ended September 30, 2021 was $1,523,871 compared to $3,056,254 for the prior period. The decrease is largely attributable to the decrease in internet customers from attrition, which attrition was the primary factor in the reduction in the profit margin for the period as compared to the prior period. Revenues for TPT SpeedConnect have been decreasing while the cost of revenues, primarily tower payments, have not decreased correspondingly but have remained consistent. The decrease in gross margin is also attributable to the continued expenses related to TPT MedTech far exceeding the current revenues.
During the nine months ended September 30, 2021, we recognized $6,007,496 in operating expenses compared to $7,154,716 for the prior period. The decrease was in large part attributable to the research and development expenses in the prior period of $1,000,000 and decreases in in payroll from less employees and professional assistance being required for TPT SpeedConnect from the decrease in customers.
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Derivative loss of $3,098,381 and $176,790 result from the accounting for derivative financial instruments during the nine months ended September 30, 2021 and 2020, respectively.
Interest expense increased for the nine months ended September 30, 2021 compared to the prior period by $394,846. The increase is largely from the derivative debt outstanding.
During the nine months ended September 30, 2021, we recognized a net loss of $8,671,819 compared to $4,881,030 for the prior period in large part due to derivative expenses.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows generated from operating activities were not enough to support all working capital requirements for the nine months ended September 30, 2021 and 2020. Financing activities described below have helped with working capital and other capital requirements.
We incurred $8,671,819 and $4,881,030, respectively, in losses, and we used $320,999 and $216,685, respectively, in cash from operations for the nine months ended September 30, 2021 and 2020. 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, promissory note issued for research and development, note payable issued for legal fees, derivative expense or gain, gain on extinguishment of debt, loss on conversion of notes payable, impairment of goodwill and long-loved assts and share-based compensation which totaled to a net $4,456,370 for 2021 and $3,126,979 for 2020.
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 nine months ended September 30, 2021, we had a net increase in our assets and liabilities of $3,894,450 primarily from an increase in accounts payable from lag of payments for accounts payable for cash flow considerations and an increase in the balances from our operating lease liabilities. For the nine months ended September 30, 2021, we had a net increase to our assets and liabilities of $1,537,366 for similar reasons.
Cash flows from financing activities were $773,387 and $724,356 for the nine months ended September 30, 2021 and 2020, respectively. For the nine months ended September 30, 2021, these cash flows were generated primarily from proceeds from sale of Series D Preferred Stock of $233,244 and common stock of $610,502, proceeds from convertible notes, loans and advances of $1,961,685 offset by payment on convertible loans, advances and factoring agreements of $2,024,497 and payments on convertible notes ad amounts payable – related party of $5,827. For the nine months ended September 30, 2020, cash flows from financing activities primarily came from proceeds from convertible notes, loans and advances of $1,311,800 offset by payments on convertible loans, advances and factoring agreements of $818,978 and payments on convertible notes and amounts payable – related parties of $130,349.
Cash flows used in investing activities were $219,298 and $429,886, respectively, for the nine months ended September 30, 2021 and 2020. These cash flows were used for the purchase of 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 was not possible with certain employees and all subcontractors that work for Blue Collar. The Company has opened up most of it operations and continues to monitor developments, including government requirements and recommendations at the national, state, and local level to evaluate possible extensions to all or part of such closures.
The Company has taken advantage of the stimulus offerings and received $722,200 in April 2020 and $680,500 in February 2021. The Company applied for forgiveness of these amounts and $722,200 was forgiven as of September 30, 2021 and the remainder was forgiven subsequent to September 30, 2021. The Company will try and take advantage of additional stimulus as it is available.
The Company is also in the process of raising debt and equity financing. Through September 30, 2021, the Company raised $843,746 from sales of Common Stock and Series D Preferred Stock. Most of this was by way of its agreement with White Lion where they agreed to provide the Company of up to $5,000,000 through a registration statement that was filed with the SEC. In addition, subsequent to September 30, 2021, the Company entered securities purchase agreements for a total of $2,174,000 with which it drew upon and was able to pay off certain debt and address working capital issues.
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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;
· | 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 have impaired our Blue Collar operations significantly in the prior year but which operations are rebounding in 2021. |
· | 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 entered into during the nine months ended September 30, 2021 and subsequently. |
· | 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 2020. The bans on events and gatherings were very material to our Blue Collar operations. Blue Collar in 2021 is rebounding from those declines. |
· | 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. |
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· | 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. |
· | Are you at material risk of not meeting covenants in your credit and other agreements? |
| · | No. |
· | If you include metrics, such as cash burn rate or daily cash use, in your disclosures, are you providing a clear definition of the metric and explaining how management uses the metric in managing or monitoring liquidity? |
| · | Not Applicable. |
· | Are there estimates or assumptions underlying such metrics the disclosure of which is necessary for the metric not to be misleading? |
| · | No. |
· | Have you reduced your capital expenditures and if so, how? |
| · | No. |
· | Have you reduced or suspended share repurchase programs or dividend payments? |
| · | No. |
· | Have you ceased any material business operations or disposed of a material asset or line of business? |
| · | No. |
· | Have you materially reduced or increased your human capital resource expenditures? |
| · | Yes, we have reduced staff for Blue Collar 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. |
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· | 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. |
· | 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. |
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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. |
· | 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 as of September 30, 2021 for those PPP loans forgiven as of that date and continued to disclose as liabilities as of that date those that were forgiven subsequent to September 30, 2021. |
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. |
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· | 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 will be the complete turnaround for these revenues. |
· | 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 September 30, 2021 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
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 20199. 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 $650,975 in relief. The Company has filed an answer and counterclaim. The Company does not believe at this time that any negative outcome would result in more than the $743,491 it has recorded on its balance sheet as of September 30, 2021.
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 in the nine months ended September 30, 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, which was paid in October 2021, with four monthly payments of $20,000 starting on December 5, 2021 through March 2, 2022.
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 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 September 30, 2021 for this subsidiary payable.
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.
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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, 2020.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Aside from what has been disclosed in our Registration Statement on Form S-1/A dated February 13, 2019, amended December 10, 2019, September 14, 2020 and September 29, 2020 and Registration Statement on Form S-8 dated September 25, 2020 and Registration Statement Form S-1/A dated October 28, 2020, amended on January 15, 2021 and in our Form 10K for the year ended December 31, 2020, we have not sold unregistered securities in the past 2 years without registering the securities under the Securities Act of 1933.
We have filed Forms 8-K dated April 22, 2019, May 28, 2019, June 20, 2019, September 19, 2019 and September 30, 2019, related to convertible promissory notes for which the underlying common shares have not be registered.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company is in default under its derivative financial instruments and received notice of such from Auctus and EMA for not reserving enough shares for conversion and for not having filed a Form S-1 Registration Statement with the Securities and Exchange Commission. It was the intent of the Company to pay back all derivative securities prior to the due dates but that has not occurred in case of Auctus or EMA. As such, the Company is currently in negotiations with Auctus and EMA and relative to extending due dates and changing terms on the Notes. 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 |
| ||
| ||
| ||
| ||
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) |
| |
|
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Dated: November 17, 2021 | By: | /s/ Stephen J. Thomas, III |
|
|
| Stephen J. Thomas, III |
|
|
| (Chief Executive Officer, Principal Executive Officer) |
|
|
|
|
|
Dated: November 17, 2021 | By: | /s/ Gary L. Cook |
|
|
| Gary L. Cook |
|
|
| (Chief Financial Officer, Principal Accounting Officer) |
|
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