UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2018
[_] Transition report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________________to ________________
Tech Central, Inc.
(Name of small business issuer in its charter)
Wyoming (State or other jurisdiction of incorporation) | 333-212438 (Commission File Number) | 46-5642819 (IRS Employer Identification No.) |
Tech Central Inc
Abundance Building
43537 Ridge Park Drive
Temecula CA 92590
877-754-2877
(Address and telephone number of registrant's principal executive offices and principal place of business)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 such filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [_]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large"large accelerated filer,” “accelerated filer,” “smaller" "accelerated filer" and "smaller reporting company,” and “emerging growth company”company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | [_] | Accelerated filer | [_] |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes Yes [ ] No [X]
Securities registered pursuant to Section 12(b) of the Act: None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
| Class | |
| Common Stock, $0.001 par value per share |
TABLE OF CONTENTS
INDEX
| Part I. | Financial Information | |
| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |
| Item 4. | Controls and Procedures | |
| Part II. | Other Information | |
| Item 1. | Legal Proceedings | |
| Item 1A. | Risk Factors | 18 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
| Item 3. | Defaults upon Senior Securities | |
| Item 4. | Mine Safety Disclosures | |
| Item 5. | Other Information | |
| Item 6. | Exhibits | |
| Signatures |
| 2 |
2
TECH CENTRAL, INC.
TABLE OF CONTENTS
| Table of Contents to Financial Statements | |
| Balance Sheets as of December 31, | |
| Statements of Operations for the Periods Ended June 30, | |
| Interim Equity Statement for the Periods Ended June 30, 2019 and June 30, 2018 (Unaudited) | 6 |
| Statements of Cash Flows for the Periods Ended June 30, | |
| Notes to the Financial Statements |
| 3 |
3
BALANCE SHEETS
June 30, 20182019 and December 31, 20172018
June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | 62,953 | $ | 30,085 | |||||
| Accounts receivable | 15,250 | 20,250 | ||||||
| Total Current Assets | 78,203 | 50,335 | ||||||
| Other Assets | ||||||||
| Film Equipment net | 5,582 | 7,870 | ||||||
| Script, net | 41,667 | 46,667 | ||||||
| Total Other Assets | 47,249 | 54,537 | ||||||
| Total Assets | $ | 125,452 | $ | 104,872 | ||||
| Liabilities And Stockholders' Equity (Deficit) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 37,730 | $ | 5,800 | ||||
| Derivative Liability | 234,205 | — | ||||||
| Accrued Interest | 752 | — | ||||||
| Notes Payable net of discount | 8,230 | — | ||||||
| Total Current Liabilities | 280,917 | 5,800 | ||||||
| Total Liabilities | 280,917 | 5,800 | ||||||
| Commitments and Contingencies | — | — | ||||||
| Stockholders' Equity (Deficit) | ||||||||
| Common stock $0.001 par value 75,000,000 shares authorized 22,315,250 shares issued and outstanding at June 30, 2019 and 8,836,250 shares authorized and outstanding December 31, 2018 | 22,316 | 18,837 | ||||||
| Shares to be issued | — | 173,950 | ||||||
| Additional paid in capital | 758,572 | 541,988 | ||||||
| Accumulated Deficit | (936,353 | ) | (635,703 | ) | ||||
| Total Stockholders' Equity (Deficit) | (155,465 | ) | 99,072 | |||||
| Total Liabilities and Stockholders' Equity (Deficit) | $ | 125,452 | $ | 104,872 | ||||
See accompanying notes to financial statements
| 4 |
June 30, 2018 (Unaudited) | December 31, 2017 (Audited) | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 3,004 | $ | 5,616 | ||||
| Accounts Receivable, net | 28,200 | 10,500 | ||||||
| Total Current Assets | 31,204 | 16,116 | ||||||
| Other Assets | ||||||||
| Film Equipment, net | 10,157 | 12,446 | ||||||
| Total Other Assets | 10,157 | 12,446 | ||||||
| Total Assets | $ | 41,361 | $ | 28,562 | ||||
| Liabilities And Stockholders' Equity (Deficit) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 10,950 | $ | 2,600 | ||||
| Accounts Payable Related Party | 10,000 | |||||||
| Total Current Liabilities | 20,950 | 2,600 | ||||||
| Total Liabilities | 20,950 | 2,600 | ||||||
| Commitments & Contingencies | - | - | ||||||
| Stockholders' Equity (Deficit) | ||||||||
| Common stock $0.001 par value 75,000,000 shares authorized 8,836,250 shares issued and outstanding at June 30, 2018, and 8,836,250 shares issued and outstanding at December 31, 2017 | 8,837 | 8,837 | ||||||
| Paid in Capital | 51,988 | 51,988 | ||||||
| Accumulated Deficit | (40,414 | ) | (34,863 | ) | ||||
| Total Stockholders' Equity (Deficit) | 20,411 | 25,962 | ||||||
| Total Liabilities and | ||||||||
| Stockholders' Equity (Deficit) | $ | 41,361 | $ | 28,562 | ||||
TECH CENTRAL, INC.
Statements of Operations
June 30, 2019 and June 30 2018
| Three Months ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Revenue | ||||||||||||||||
| Video Filming | $ | — | $ | 19,500 | 5,000 | $ | 24,700 | |||||||||
| Web Site Development | 3,100 | — | 3,100 | — | ||||||||||||
| Total Revenue | 3,100 | 19,500 | 8,100 | 24,700 | ||||||||||||
| Gross Profit | 3,100 | 19,500 | 8,100 | 24,700 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Depreciation and amortization | 3,644 | 1,144 | 7,288 | 2,288 | ||||||||||||
| Computer and Internet | 600 | — | 600 | — | ||||||||||||
| Production expense | 20,000 | — | 20,000 | — | ||||||||||||
| Consulting fees | 1,750 | 11,000 | 1,750 | 11,000 | ||||||||||||
| Commission | 6,000 | — | 6,000 | — | ||||||||||||
| Professional fees | 5,997 | 4,037 | 14,094 | 14,134 | ||||||||||||
| Film Work | 6,000 | — | 6,000 | — | ||||||||||||
| Marketing & advertising | 55,580 | — | 55,580 | 599 | ||||||||||||
| Rent expense | 150 | 100 | 300 | 250 | ||||||||||||
| General & administration | 7,127 | 475 | 7,838 | 1,980 | ||||||||||||
| Total Expenses | 106,848 | 16,756 | 119,450 | 30,251 | ||||||||||||
| Net Operating Income/Loss | $ | (103,748 | ) | $ | 2,744 | $ | (111,350 | ) | $ | (5,551 | ) | |||||
| Other Expense | ||||||||||||||||
| Change in fair value of derivative | 180,318 | — | 180,318 | — | ||||||||||||
| Interest on convertible note | 752 | — | 752 | — | ||||||||||||
| Amortization of debt discount | 8,230 | — | 8,230 | — | ||||||||||||
| Total other income/Expense | 189,300 | — | 189,300 | — | ||||||||||||
| Net Income | $ | (293,048 | ) | $ | 2,744 | $ | (300,650 | ) | $ | (5,551 | ) | |||||
| Basic and Diluted Loss Per Common Share | $ | 0.00 | $ | 0.00 | 0.00 | $ | 0.00 | |||||||||
| Weighted Average Shares Outstanding | 22,315,250 | 8,836,250 | 22,315,250 | 8,836,250 | ||||||||||||
See accompanying notes to consolidated financial statements.
| 5 |
TECH CENTRAL, INC.
INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(Unaudited)
| Common Stock | ||||||||||||||||||||||||
| Number of Shares | Amount | Additional Paid in Capital | Shares to be Issued | Retained Earnings | Total | |||||||||||||||||||
| January 1, 2018 | 8,836,250 | $ | 8,837 | $ | 51,988 | $ | — | $ | (34,863 | ) | $ | 25,962 | ||||||||||||
| Net Income (Loss) | — | — | — | — | (8,296 | ) | (8,296 | ) | ||||||||||||||||
| March 31, 2018 | 8,836,250 | $ | 8,837 | 51,988 | $ | — | $ | (43,159 | $ | 17,666 | ||||||||||||||
| April 1, 2018 | 8,836,250 | $ | 8,837 | $ | 51,988 | $ | — | $ | (43,159 | ) | $ | 17,666 | ||||||||||||
| Net Income (Loss) | — | — | — | 2,744 | 2,744 | |||||||||||||||||||
| June 30, 2018 | 8,836,250 | $ | 8,837 | 51,988 | $ | — | $ | (40,415 | ) | $ | 20,410 | |||||||||||||
| January 1, 2019 | 18,836,250 | $ | 8,837 | $ | 541,988 | $ | 173,950 | $ | (635.703 | ) | $ | 99,072 | ||||||||||||
| Stock issued for Asset | 1,000,000 | 1,000 | 49,000 | (50,000 | ) | — | — | |||||||||||||||||
| Net Income (Loss) | — | — | — | — | (7,602 | ) | (7,602 | ) | ||||||||||||||||
| March 31, 2019 | 19,836,250 | $ | 9,837 | 590,988 | $ | 123,950 | $ | (643,305 | ) | $ | 91,470 | |||||||||||||
| Apri1 1, 2019 | 19,836,250 | $ | 9,837 | $ | 590,988 | $ | 123,950 | $ | (643,305 | ) | $ | 91,470 | ||||||||||||
| Warrants issued with convertible note | 46,113 | 46,113 | ||||||||||||||||||||||
| Stock issued for Asset | 829,000 | 829 | 40,621 | (41,450 | ) | — | — | |||||||||||||||||
| Stock issued for services | 1,050,000 | 1,050 | 51,450 | (52,500 | ) | — | — | |||||||||||||||||
| Stock Issued for Private Offering | 600,000 | 600 | 29,400 | (30,000 | ) | — | — | |||||||||||||||||
| Net Income (Loss) | — | — | — | — | (293,048 | ) | (293,048 | ) | ||||||||||||||||
| June 30, 2019 | 22,315,250 | $ | 22,316 | 758,572 | $ | — | $ | (936,353 | ) | $ | (155,465 | ) | ||||||||||||
See accompanying notes to financial statements
| 6 |
TECH CENTRAL, INC.
Statements of Cash Flows
June 30, 2019 and June 30, 2018
| June 30, | June 30, | |||||||
2019 (Unaudited) | 2018 (Unaudited) | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Income (loss) | $ | (300,650 | ) | $ | (5,551 | ) | ||
| Adjustments to Reconcile Net Loss To Net Cash Provided by (Used In) Operating Activities: | ||||||||
| Stock Issued for Services | ||||||||
| Loss on note | 123,438 | |||||||
| Amortization of debt discount | 8,230 | |||||||
| Accounts receivable | 5,000 | (17,700 | ) | |||||
| Accounts Payable | 31,930 | 18,350 | ||||||
| Accrued Interest | 752 | — | ||||||
| Change in Derivative | 56,880 | |||||||
| Accumulated amortization & depreciation | 7,288 | 2,288 | ||||||
| Net Cash Provided by (used in) Operating Activities | (67,132 | ) | (2,613 | ) | ||||
| FINANCING ACTIVITIES | ||||||||
| Proceeds of convertible note | 100,000 | — | ||||||
| Net cash provided by Financing Activities | 100,000 | — | ||||||
| Increase (Decrease) in Cash | 32,868 | (2,613 | ) | |||||
| Cash at Beginning of Period | 30,085 | 5,617 | ||||||
| Cash at End of Period | $ | 62,953 | $ | 3,004 | ||||
| Cash paid for Interest | $ | — | $ | — | ||||
| Cash paid for income taxes | $ | — | $ | — | ||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||||
| Derivative recorded for debt discount at inception | $ | 53,887 | — | |||||
| Warrants issued as convertible note kicker | $ | 46,113 | — | |||||
See accompanying notes to financial statements.
| 7 |
4
Three Months ended June 30, 2018 | Three Months Ended June 30, 2017 | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Revenue | ||||||||||||||||
| Sales | $ | 19,500 | $ | 15,500 | 24,700 | $ | 25,500 | |||||||||
| Total Revenue | 19,500 | 15,500 | 24,700 | 25,500 | ||||||||||||
| Cost of Goods Sold | - | - | - | - | ||||||||||||
| Gross Profit | 19,500 | 15,500 | 24,700 | 25,500 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Depreciation and amortization | 1,144 | 1,144 | 2,288 | 2,288 | ||||||||||||
| Computer and Internet | - | - | - | 849 | ||||||||||||
| Production Expense | - | 25,000 | - | 25,000 | ||||||||||||
| Photography-Flyers-printing | - | 1,199 | - | 1,199 | ||||||||||||
| Set Building Expense | - | 1,877 | - | 1,877 | ||||||||||||
| Consulting Fees | 11,000 | 2,500 | 11,000 | 7,500 | ||||||||||||
| Professional Fees | 4,037 | 4,547 | 14,134 | 13,378 | ||||||||||||
| Film Work | - | 2,100 | - | 2,100 | ||||||||||||
| Marketing Expense & Advertising | - | (3,900 | ) | 599 | 2,000 | |||||||||||
| Rent Expense | 100 | 225 | 250 | 375 | ||||||||||||
| General & Administrative | 475 | 2,864 | 1,980 | 5,449 | ||||||||||||
| Total Expenses | 16,756 | 37,556 | 30,251 | 62,015 | ||||||||||||
| Net Operating Income/Loss | 2,744 | (22,056 | ) | (5,551 | ) | (36,515 | ) | |||||||||
| Other Income/Expense | ||||||||||||||||
| Income taxes | - | (3,308 | ) | - | (5,477 | ) | ||||||||||
| Total other income/Expense | (3,308 | ) | (5,477 | ) | ||||||||||||
| Net Income | $ | 2,744 | $ | (18,748 | ) | $ | (5,551 | ) | $ | (31,038 | ) | |||||
| Basic and Diluted Loss Per Common Share | $ | 0.00 | $ | 0.00 | 0.00 | $ | 0.00 | |||||||||
| Weighted Average Shares Outstanding | 8,836,250 | 8,836,250 | 8,836,250 | 8,836,250 | ||||||||||||
5
| June 30, | June 30, | |||||||
2018 (Unaudited) | 2017 (Unaudited) | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Income (loss) | $ | (5,551 | ) | $ | (31,038 | ) | ||
| Adjustments to Reconcile Net Loss To Net Cash Provided by (Used In) Operating Activities: | ||||||||
| Accounts receivable | (17,700 | ) | 29,000 | |||||
| Accounts payable | 8,350 | (1,359 | ) | |||||
| Accounts Payable Related Party | 10,000 | - | ||||||
| Income Tax Payable | - | (5,477 | ) | |||||
| Accumulated depreciation | 2,288 | 2,288 | ||||||
| Net Cash Provided by (used in) Operating Activities | (2,613 | ) | (6,586 | ) | ||||
| Increase (Decrease) in Cash | (2,613 | ) | (6,586 | ) | ||||
| Cash at Beginning of Period | 5,617 | 41,592 | ||||||
| Cash at End of Period | $ | 3,004 | $ | 35,006 | ||||
Supplemental Cash Flow information | ||||||||
| Cash paid for Interest | $ | — | $ | — | ||||
| Cash paid for income taxes | $ | — | $ | — | ||||
FOR THE PERIODSTHREE AND SIX MONTHS PERIOD ENDED JUNE 30, 20182019 AND 2017
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.
BUSINESS AND BASIS OF PRESENTATION
Tech Central, Inc. ("TC") was incorporated under the laws of the State of Wyoming on April 28, 2014.
TC was formed as a Media Company engaging in online video and photography content development and distribution; and website and mobile app technology integration design and development.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company as of June 30, 20182019 and December 31, 2017.
ESTIMATES
The preparation of the financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts. Accordingly, actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company maintains a cash balance in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of June 30 2018, 2019 and December 31, 2017.
PROPERTY AND EQUIPMENT
The Company values its investment in property and equipment at cost less accumulated depreciation. Depreciation is computed primarily by the straight-line method over the estimated useful lives of the assets ranging from three to five years.
INVENTORY
Inventory is recorded at lower of cost or market; cost is computed on a first-in first-out basis. The company had no inventory as of June 30, 20182019 and December 31, 2017.
ACCOUNTS RECEIVABLE AND REVENUE
Revenue consists substantially of fees earned from movies and videos that we have interests in and commercial video work. In accordance with ASC 606 we recognize revenue when we satisfy each performance obligation by transferring control of the promised goods or services to our customers. We recognize revenue from a sale or licensing arrangement of a film when we have transferred control of the licensing right to our customer; We recognize revenue from commercial video services rendered when we have transferred control of the commercial video work completed to our customer. Receivables past due for more than 120 days are considered delinquent. Management determines uncollectible accounts by regularly evaluating individual customer receivables and considering a customer's financial condition, credit history, and current economic conditions and by using historical experience applied to an aging of accounts. Recoveries of trade receivables previously written off are recorded when received. The June 30, 2018 and December 31, 2017 allowance was determined to be $20,000
| 8 |
7
FAIR VALUE OF FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS
We have adopted Accounting Standards Codification regarding Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments. The carrying amounts of cash, accounts payable, accrued expenses, and other current liabilities approximate fair value because of the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments in the management of foreign exchange, commodity price or interest rate market risks.
FEDERAL INCOME TAXES
Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with Accounting Standards Codification regarding Accounting for Income Taxes, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred taxes are provided for the estimated future tax effects attributable to temporary differences and carryforwards when realization is more likely than not.
NET INCOME PER SHARE OF COMMON STOCK
We have adopted Accounting Standards Codification regarding Earnings per Share, which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings per share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. We do not have a complex capital structure requiringDue to the computation of diluted earnings per share.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives at each balance sheet date. The Company records an impairment or change in useful life whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed.
STOCK BASED COMPENSATION
The Company recognizes stock-based compensation in accordance with ASC Topic 718 "Stock Compensation", which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values. For non-employee stock-based compensation, we have adopted ASC Topic 505 "Equity-Based Payments to Non-Employees", which requires stock-based compensation related to non-employees to be accounted for based on the fair value of the related stock or options or the fair value of the services on the grant date, whichever is more readily determinable in accordance with ASC Topic 718.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
We have adopted ASC 606, Revenue from Contracts with Customers, 842, which provides accounting guidance related to revenue from contracts with customers. Asleases which as of June 30, 2018,2019, has no impact on our financial condition or results of operations. We have reviewed all other recent pronouncements and December 31, 2017, the Company doesdo not expect any of the recently issued accounting pronouncements tobelieve that they will have a material impact on itsour financial condition or results of operations.
| 9 |
Note 2 - Uncertainty, going concern
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs to allow it to continue as a going concern and therefore, there is substantial doubt about the Company’s ability to continue as a going concern.
As of June 30, 2019, the Company had accumulated deficit of $936,353. As of December 31, 2018, the Company had accumulated deficit of $40,414. As of December 31, 2017, the Company had accumulated deficit of $34,863.$635,703. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts for amounts and classification of liabilities that might result from this uncertainty.
Note 3- Equipment
| Equipment | June 30. 2018 | December 31, 2017 | ||||||
| Equipment | $ | 22,884 | $ | 22,884 | ||||
| Accumulated Depreciation | (12,727 | ) | (10,438 | ) | ||||
| Net Equipment | $ | 10,157 | $ | 12,446 | ||||
| Equipment | June 30, 2019 | December 31, 2018 | ||||||
| Equipment | $ | 22,884 | $ | 22,884 | ||||
| Accumulated Depreciation | (17,302 | ) | (15,014 | ) | ||||
| Net Equipment | $ | 5,582 | $ | 7,870 | ||||
| June 30, 2019 | December 31, 2018 | |||||||
| Script Acquisition | $ | 50,000 | $ | 50,000 | ||||
| Accumulated Amortization | (8,333 | ) | (3,333 | ) | ||||
| Net Equipment | $ | 41,667 | $ | 46,667 | ||||
The Company purchased film equipment for $22,884, which is comprised of video, lighting and editing equipment. The depreciation expense for the three months ended June 30, 2019 was $1,144 and for June 30, 2018, $1,144. The depreciation expense for the six months ended June 30, 2019 was $2,288 and for June 30, 2017,2018, $2,288.
The Company acquired a film script on August 20, 2018 for $50,000 which was paid for with 829,000 shares of stock valued at $.05. The amortization expense for three months ending June 30, 2019 was $2,500 and for the three months ending June 30, 2018 was $0. The amortization expense for six months ending June 30, 2019 was $5,000 and for the six months ending June 30, 2018 was $0.
| 10 |
Note-4 - Commitments and Contingencies
We have an employment agreement with our President Joe Lewis whereby he has agreed to take a salary when he has determined the Company has enough capital to pay a salary. At the quarter ended June 30, 2018 Joe Lewis had a payable of $10,000 for his services. No salaryOn July 2, 2018 he was paid 2017. Atissued 10,000,000 shares. As of June 30, 20182019, and 2017December 31, 2018 there was no accrual of salaries.
Note 5 – Common Stock
At the quarter ended June 30, 2019 the Company had 22,315,250 shares issued and outstanding. At the quarter ended June 30, 2018 the Company had 8,836,250 shares issued and outstanding. There were 10,000,000 common stock issuances during the year ended December 31, 2018 and 18,836,250 shares issued and outstanding.
There were 2,479,000 shares issued in the quarter ending June 30, 2019 that were included at year end in shares to be issued.
| Name | Date Issued | Shares Issued | Price per Share | Total $ Amount | Issued for | ||||||||||||
| Joe Lewis | 7-3-18 | 10,000,000 | $ | .05 | $ | 500,000 | Services | ||||||||||
| Rising Phoenix | 7-25-18 | 1,000,000 | $ | .05 | $ | 50,000 | Consulting Services | ||||||||||
| Darlene Riede | 8-2-18 | 100,000 | $ | .05 | $ | 5,000 | Services | ||||||||||
| MCR Enterprises | 8-16-18 | 500,000 | $ | .05 | $ | 25,000 | Consulting Services | ||||||||||
| Tala Media Corp | 8-20-18 | 829,000 | $ | .05 | $ | 41,450 | Script Asset | ||||||||||
| Hannah Grabowski | 11-12-18 | 250,000 | $ | .05 | $ | 12,500 | Marketing Services | ||||||||||
| Jeremy Woertnik | 11-15-18 | 200,000 | $ | .05 | $ | 10,000 | Services | ||||||||||
| 777 Capital | 12-31-18 | 600,000 | $ | .05 | $ | 30,000 | Investment | ||||||||||
Note 6 – Convertible Loan
Promissory Notes and Warrants – Issued for the six months ended June 30, 2019.
During the six months ended June 30, 2019, the Company issued a total of $112,750 in promissory notes (“Notes”) which included an OID of $12,750 with the following terms:
| · | Term of the note is 9 months. |
| · | Annual interest rate12%. |
| · | Note is convertible at the option of the holder at issuance, 240 days from issuance. |
| · | Conversion prices are typically based on the discounted (38% to 50% discount) average closing prices or lowest trading prices of the Company’s shares during various periods prior to conversion. |
The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Binomial lattice model pricing model to calculate the fair value as of June 30, 2019. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model. (See Note 7).
Warrants were issued in conjunction with the convertible note on June 17, 2019 and were valued at $46,113.
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Note 7 - Derivative Liabilities
The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.
Fair Value Assumptions Used in Accounting for Derivative Liabilities.
ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.
The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Binomial lattice model pricing model to calculate the fair value as of June 30, 2019. The Binomial lattice model model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Binomial lattice model valuation model.
At June 30, 2019, the estimated fair values of the liabilities measured on a recurring basis are as follows:
| Six Months Ended | ||||
| June 30, 2019 | ||||
| Expected term | 0.08 - 5.00 years | |||
| Expected average volatility | 187% - 451% | |||
| Expected dividend yield | — | |||
| Risk-free interest rate | 1.76% - 2.09% |
The following table summarizes the changes in the derivative liabilities during the six months ended June 30, 2019:
| Fair Value Measurements Using Significant Observable Inputs (Level 3) | ||||
| Balance - December 31, 2018 | $ | — | ||
| Addition of new derivatives recognized as debt discounts | 53,887 | |||
| Addition of new derivatives recognized as loss on derivatives | 123,438 | |||
| Loss on change in fair value of the derivative | 56,880 | |||
| Balance - June 30, 2019 | $ | 234,205 |
Note 8 - Warrants
Warrants
A summary of activity regarding warrants issued as follows:
| Warrants Outstanding | ||||||||||
| Weighted Average | ||||||||||
| Shares | Exercise Price | |||||||||
| Outstanding, December 31, 2018 | — | $ | — | |||||||
| Granted | 451,000 | 0.25 | ||||||||
| Exercised | — | — | ||||||||
| Forfeited/canceled | — | — | ||||||||
| Outstanding, June 30, 2019 | 451,000 | $ | 0.25 | |||||||
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The following table summarizes information relating to outstanding and exercisable warrants as of June 30, 2019.
| Warrants Outstanding | Warrants Exercisable | |||||||||||||||||
| Number of | Weighted Average Remaining Contractual life | Weighted Average | Number of | Weighted Average | ||||||||||||||
| Shares | (in years) | Exercise Price | Shares | Exercise Price | ||||||||||||||
| 451,000 | 4.95 | $ | 0.25 | 451,000 | $ | 0.25 | ||||||||||||
The warrants were issued in conjunction with the convertible note on June 17, 2019 and were valued at $46,113.
Note 5 -9– Related Party Transactions
On July 3, 2018 ten million shares were issued to Joe Lewis, CEO was issued 10,000,000 sharesfor services at $.05 per share with a valuation of restricted common stock for his services which was accrued on the balance sheet as accounts payable for the quarter ended June 30, 2018.
Note 7 –10– Subsequent Events
Management has reviewed events between June 30, 20182019 to the date that the financials were available to be issued, and there were no significant events identified for disclosure except as identified belowdisclosure..
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
This "Management's Discussion and Analysis of Financial Condition and Results of Operations" (MD&A) is intended to provide an understanding of our financial condition, change in financial condition, cash flow, liquidity and results of operations. The following MD&A discussion should be read in conjunction with the financial statements and notes to those statements that appear elsewhere in this Form 10-Q and in the Company's Annual Report on Form 10-K. The following discussion contains forward-looking statements that reflect the Company's plans, estimates and beliefs. The Company's actual results could differ materially from those discussed or referred to in the forward-looking statements. Factors that could cause or contribute to any differences include, but are not limited to, those discussed under the caption "Forward-Looking Information and Factors That May Affect Future Results" and under Part I, Item 1A, of the Company's Annual Report on Form 10-K under the heading "Risk Factors."
We were incorporated in Wyoming on April 28, 2014 and we have elected, for the purpose of filing our Registration Statement with the SEC and preparing our audit, December 31 as our fiscal year end.
We are a full-service multi-media Company with a multi operational approach focusing on Online video and photography content development and distribution and Website and mobile app technology integration design and development. Websites are a unique mix of textual content, photos, sometimes video and often times apps, which are designed as plug-ins to websites or for mobile devices, aiding in the conveyance of a website's message whether it be business related or personal. We offer products and solutions to help our customers stand out in the ever-changing internet environment. We have been, initially, capitalized through the acquisition of Assets from our founding shareholder, cash flows from multi-media operations and the proceeds from a Private Placement offering.
For the three months ended June 30, 2019 we had gross revenues of $3,100 derived primarily from commercial video work and digital video and photo integration into website design, and total expenses of $296,148 and a net loss of $293,048 compared to the six months ended June 30, 2019 in which we had gross revenues of $8,100 derived primarily from commercial video work and digital video and photo integration into website design, and total expenses of $308,750 and a net loss of $300,650.
For the three months ended June 30, 2018 we had gross revenues of $19,500 derived primarily from commercial video work and digital video and photo integration into website design, and total expenses of $16,756 and a net profit of $2,744 compared to the six months ended June 30, 2018 in which we had gross revenues of $24,700 derived primarily from commercial video work and digital video and photo integration into website design, and total expenses of $30,251 and a net loss of $5,551.
Our plans are to continue to market our multi-media services focusing on the integration of video with web site design and to continue with the development of our aerial footage for California coastal areas. We may also seek equity financing in the future for the California coastal project. At this time, we have no arrangements for any funding source.
In addition, we are seeking potential acquisitions that fit within our business model. At this time, we have not entered into any agreements with any entities.
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10
Management's Discussion and Analysis of Financial Condition and Results of Operations discusses the Company's financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experiences and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition
Revenue consists substantially of fees earned from movies and videos that we have interests in and commercial video work. In accordance with ASC 606 we recognize revenue when we satisfy each performance obligation by transferring control of the promised goods or services to our customers. We recognize revenue from a sale or licensing arrangement of a film when we have transferred control of the licensing right to our customer;customer. We recognize revenue from commercial video services rendered when we have transferred control of the commercial video work completed to our customer.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires us to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.
Results of Operations
For the Three and Six Months Ended June 30, 20182019 Compared to theThe Three and Six Months Ended June 30, 2017
Revenue
For the three monththree-month period ended June 30, 2019, we had total sales of $3,100 attributed to Website development.
During the six months ended June 30, 2019, we had $8,100 in total sales attributed to $5,000 in Video filming and $3,100 in Website development.
For the three-month period ended June 30, 2018 we had gross revenuestotal sales of $19,500 attributed to Video filming.
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For the six-month period ended June 30, 2018 we had total sales of $24,700 attributed to Video filming.
Cost of Sales
For the three months and six months period ended June 30, 2019, we had no cost of goods.
For the three months and six months period ended June 30, 2018, we had no cost of goods.
Gross Profit
For the three-month period ended June 30, 2019, we recognized a gross profit of $3,100 for sale of Website development.
For the six months period ended June 30, 2019, we recognized a gross profit of $8,100 attributed to $3,100 in Website development and $5,000 in Video filming.
For the three-month period ended June 30, 2018, we recognized a gross profit of $19,500 for the sale of Video filming.
For the six months period ended June 30, 2018, we recognized a gross profit of $24,700 for the sale of Video filming.
Operating Expenses
For the three months period ended June 30, 2019, we incurred total operating expenses of $106,848 consisting of professional fees of $5,997 which were derived primarily from commercial video workattributable to expenses relating to our SEC filings and digital videoaccounting costs, amortization and photo integration into website design,depreciation of $3,644, marketing expense of $55,580 rent $150, consulting fees of $1,750, commission of $6,000, production expense of $26,000 and general and administrative fees of $7,127. Other expenses incurred for the three-month period ended June 30, 2019 included a change in fair value of derivative liabilities of $180,318, amortization of debt discount $8,230 and interest on convertible notes $752 for a total non-operating expense of $189,300.
For the six months period ended June 30, 2019, we incurred total operating expenses of $$119,450 consisting of professional fees of $14,094 which were attributable to expenses relating to our SEC filings and accounting costs, amortization and depreciation of $7,288, marketing expense of $55,580 rent $300, consulting fees of $1,750, commission of $6,000, production expense of $26,000 and general and administrative fees of $7,838. Other expenses incurred for the six-month period ended June 30, 2019 included a change in fair value of derivative liabilities of 180,318, amortization of debt discount $8,230 and interest on convertible notes $752 for a total non-operating expense of $189,300.
16,756
For the three months period ended June 30, 2018, we incurred total operating expenses of $16,756 consisting of professional fees of $4,037 which were attributable to expenses relating to our SEC filings and accounting costs, amortization and depreciation of $1,144, computer and internet expense of $0,rent $100 , consulting fees of $11,000, rent expense of $100 and general &and administrative fees of $475 resulting in a profit of $2,744.
Production Audio Video Expense of $28,076, film work of $2,100, computer and internet expense of $0, rent expense of $225, general & administrative fees of $2,864 and a credit to income tax expense$3,308, resulting in a loss of $18,748.
For the six monthmonths period ended June 30, 2018, we had gross revenues of $24,700, which were derived primarily from commercial video work and digital video and photo integration into website design, andincurred total operating expenses of $30,251 consisting,consisting of professional fees of $14,134 which were attributable to expenses relating to our SEC filings and accounting costs, amortization and depreciation of $2,288, computer and internet expense of $0, marketing expense of $599rent $250, consulting fees of $11,000, rent expenseadvertising of $250$599, and general &and administrative fees of $1,980, resulting in a loss of $5,551.
Production Audio Video Expense of $28,076, film work of $2,100, computer and internet expense of $849, rent expense of $375, general & administrative fees of $5,449 and a credit to income tax expense$5,477 resulting in a loss of $31,038.
For the six months endedSix Months Ended June 30, 2019 Compared to the Six Months Ended June 30, 2018.
As at June 30, 2019, the Company had cash on hand of $62,953, total assets of $125,452, total liabilities of $280,917 and stockholders' deficit of $155,465 as compared to June 30, 2018, compared towhere the six months ended June 30, 2017.Company had cash on hand of $3,004, total assets of $41,361, total liabilities of $20,950 and stockholder’s equity of $20,411.
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During the quarter ended June 30, 2018 and year ended December 31, 2017 was largely attributable2019 we used $(67,132) in operating activities compared to operating losses incurred in the period.
For the quarters ended June 30, 2018 and 20172019 we did not use any fundsgenerated $100,000 in investingfinancing activities.
The company has insufficient cash resources available to fund its primary operations. If we do not receive any additional revenue or receive additional funding, we would not have the ability to implement our business plan. The Company has no agreements in place with its shareholders, officer and director or with any third parties to fund operations. The Company has not negotiated nor has available to it any other thirdthird- party sources of liquidity.
The Company has no, current, off balance sheet arrangements and does not anticipate entering into any offoff- balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition.
Plan of Operation
Our plans are to continue to market our multi-media services focusing on the integration of video with web site design and to continue with the development of our aerial footage for California coastal areas. We may also seek equity financing in the future for the California coastal project. At this time, we have no arrangements for any funding source. In addition, we are seeking potential acquisitions that fit within our business model. At this time, we have not entered into any agreements with any entities.
Marketing and Sales efforts:
Our marketing efforts will primarily be related to marketing our multimedia services and upon completion, the marketing and sales of our California Coast video project.
We plan on optimizing Search Engine Optimization ("SEO") work and internet marketing, and subsequently believe sales will be initially supported through our website. We also plan on engaging a call center for developing interest in our products within the next fiscal year. Successful implementation of our business strategy depends on factors specific to the further development of our products, regulations regarding equities trading, additional financing through equity or debt sources and numerous other factors that may be beyond our control. Adverse changes in the following factors could undermine our business strategy and have a material adverse effect on our business, financial condition, and results of operations and cash flow:
- The ability to anticipate changes in consumer preferences and to meet customers' needs for trading products in a timely cost effective manner; and;
- The ability to establish, maintain and eventually grow market share in a competitive environment.
Income Taxes
We had taxes payable of $0 at the quarter ended June 30, 20182019 as compared to taxes payable of $0 at the year ended December 31, 2017.2018.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation was performed under the supervision of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial and accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by thisour Annual Report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as of June 30, 2018,2019, our disclosure controls and procedures were not effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms due to material weaknesses in our internal controls as described in the December 31, 20172018 annual report..
Changes in Internal Control Over Financial Reporting.
We have made no change in our internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company was not subject to any legal proceedings during the three-month and six month period ended June 30, 20182019 or 2017year ended 2018 and to the best of our knowledge and belief no proceedings are currently threatened or pending.
Item 1A. Risk Factors
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months and six months ended June 30, 2018 and 2017 2019, there were 2,479,000 equity securities issued.
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Item 3. Defaults upon Senior Securities
No senior securities were issued and outstanding during the three months and six months ended June 30, 20182019 and 2017.
Item 4. Mining Safety Disclosures
Not applicable to our Company.
Item 5. Other Information
None.
ITEM 6. EXHIBITS
| Number | Exhibit |
| 101** | Interactive Data files |
** Filed Herewith
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Dated: August | TECH CENTRAL, INC. | |
| By: | /s/ Joe Lewis | |
| Joe Lewis, | ||
| Chief Executive Officer | ||
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