Our management,USDA. A state’s plan to license and regulate hemp can only commence once the Secretary of USDA approves that state’s plan. In states opting not to devise a hemp regulatory program, USDA will construct a regulatory program under which hemp cultivators in those states must apply for licenses and comply with a federally run program. This system of shared regulatory programming is similar to options states had in other policy areas such as health insurance marketplaces under ACA, or workplace safety plans under OSHA—both of which had federally-run systems for states opting not to set up their own systems. Non-cannabis hemp is a highly regulated crop in the United States for both personal and industrial production.The law outlines actions that are considered violations of federal hemp law (including such activities as cultivating without a license or producing cannabis with more than 0.3 percent THC). The law details possible punishments for such violations, pathways for violators to become compliant, and even which activities qualify as felonies under the supervisionlaw, such as repeated offenses.
Section 12619 of the Farm Bill removes hemp-derived products from its Schedule I status under the Controlled Substances Act, but the legislation does not legalize CBD generally. CBD, with some minor exceptions, remains a Schedule I substance under federal law. The Farm Bill ensures that any cannabinoid—a set of chemical compounds found in the cannabis plant—that is derived from hemp will be legal, if and only if that hemp is produced in a manner consistent with the participationFarm Bill, associated federal regulations, association state regulations, and by a licensed grower. All other cannabinoids, produced in any other setting, remain a Schedule I substance under federal law and are thus illegal.
In October 2018, the United States Drug Enforcement Agency (“DEA”) rescheduled drugs approved by the United States Food and Drug Administration (“FDA”) which contain CBD derived from cannabis and no more than 0.1 percent tetrahydrocannabinols from Schedule I, the highest level of restriction with a high potential for abuse, to Schedule V, the lowest restriction with the lowest potential for abuse under the Controlled Substances Act (“CSA”). This ruling does not apply to Cannabidiol (“CBD”) products such as oils, tinctures, extracts, and other foods because they are not FDA approved.
In October 2018, the FDA was advised by the DEA that removing CBD from the CSA would violate international drug treaties to which the United States is a signatory. Specifically, the DEA explained that the United States would “not be able to keep obligations under the 1961 Single Convention on Narcotic Drugs if CBD were decontrolled under the CSA”.
Consequently, the FDA revised its recommendation and advised the DEA to place CBD in Schedule V—which applies to drugs with demonstrated medical value and deemed unlikely to cause harm, abuse, or addiction—instead. Nonetheless, the FDA declared that “[i]f treaty obligations do not require control of CBD, or the international controls on CBD…are removed at some future time, the above recommendation for Schedule V under the CSA would need to be revisited promptly.”
On May 22, 2018, the DEA released the Internal Directive Regarding the Presence of Cannabinoids in Products and Materials Made from the Cannabis Plant, which states “The mere presence of cannabinoids is not itself dispositive as to whether a substance is within the scope of the CSA; the dispositive question is whether the substance falls within the CSA definition of marijuana.”
Many CBD products are derived from cannabis. Some come from marijuana (“Marijuana-CBD”). Marijuana-CBD remains a Schedule I substance. Marijuana-CBD products may be legal under state law in states like Washington, Oregon, and California but their sale is only permitted through a state-regulated marijuana market in the respective state of legal cultivation. Marijuana-CBD products are only legal in states where they were cultivated and these products are heavily regulated at all stages of production, from seed-to-sale. These products come from licensed producers, are developed by licensed processors or manufacturers, and are sold to the public through licensed retailers or dispensaries. Marijuana-CBD products may also contain significant levels of THC.
On the other hand, CBD derived from industrial hemp (“Hemp-CBD”) can be argued as falling completely outside the CSA because the cultivation of industrial hemp was legalized by Section 7606 of the Agricultural Act of 2014 (the “2014 Farm Bill”). Industrial hemp is defined as the cannabis plant with less than .3% THC. The 2014 Farm Bill also requires that industrial hemp to be cultivated under a state agricultural pilot program. Some states also require a license to cultivate or process industrial hemp into other products like Hemp-CBD.
The distribution of Hemp-CBD products is arguably legal under federal law because the 2014 Farm Bill does not explicitly limit distribution. In oral arguments during HIA v. DEA, the DEA admitted that the 2018 Farm Bill pre-empted the CSA with regards to industrial hemp. The DEA has rarely taken any enforcement action against distributors of Hemp-CBD, in part because Congress has limited the DEA’s ability to use federal funds to do so and because the DEA would have to legally establish that the CSA does in fact cover Hemp-CBD. However, the DEA, FDA, and other federal agencies issued guidance in 2016 stating that the 2014 Farm Bill did not permit the interstate transfer or commercial sale of industrial hemp. Several states like Idaho prohibit the distribution of Hemp-CBD. Other states like Ohio, Michigan, and California significantly restrict the distribution of Hemp-CBD.
Even though Hemp-CBD does not fall within the CSA, Hemp-CBD products have not been approved by the FDA. This is also true of Marijuana-CBD. This means that even cannabis derived Marijuana-CBD and Hemp-CBD products containing less than .1% THC are not approved CBD drugs for lack of FDA approval.
There is always some risk of enforcement action against Hemp-CBD distributors, as the budgetary restriction that prevented the DEA from using funds to prosecute industrial hemp distributors expired on September 30, 2018. It is also possible that the FDA could take a more aggressive approach to limit the distribution of CBD products.
RISKS RELATED TO OUR SECURITIES
An investment in our shares is highly speculative.
The shares of our common stock are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the risk factors contained herein relating to our business and prospects. If any of the risks presented herein actually occur, our business, financial condition or operating results could be materially adversely affected. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment.
The market price of our Common Stock may fluctuate significantly in the future.
We expect that the market price of our Common Stock may fluctuate in response to one or more of the following factors, many of which are beyond our control:
| ● | competitive pricing pressures; |
| ● | our ability to market our services on a cost-effective and timely basis; |
| ● | changing conditions in the market; |
| ● | changes in market valuations of similar companies; |
| ● | stock market price and volume fluctuations generally; |
| ● | regulatory developments; |
| ● | fluctuations in our quarterly or annual operating results; |
| ● | additions or departures of key personnel; and |
| ● | future sales of our Common Stock or other securities. |
The price at which you purchase shares of our Common Stock may not be indicative of the price that will prevail in the trading market. Shareholders may experience wide fluctuations in the market price of our securities. These fluctuations may have a negative effect on the market price of our securities and may prevent a shareholder from obtaining a market price equal to the purchase price such shareholder paid when the shareholder attempts to sell our securities in the open market. In these situations, the shareholder may be required either to sell our securities at a market price, which is lower than the purchase price the shareholder paid, or to hold our securities for a longer period than planned. An inactive or low trading market may also impair our ability to raise capital by selling shares of capital stock. You may be unable to sell your shares of Common Stock at or above your purchase price, which may result in substantial losses to you and which may include the complete loss of your investment. Any of the risks described above could adversely affect our sales and profitability and the price of our Common Stock.
There is no active public trading market for our common stock and an active market may never develop.
The public trading market for our common stock on the OTCMarkets OTCQB tier, has reflected an uneven and inactive market. Market liquidity will depend on the perception of our operating business and any steps that our management might take to bring us to the awareness of investors. There can be no assurance given that there will be any awareness generated. Consequently, investors may be unable to liquidate their investment or liquidate it at a price that reflects the value of the business. As a result, holders of our securities may not find purchasers for our securities should they to sell securities held by them. Consequently, only investors having no need for liquidity in their investment should purchase our securities and who can hold our securities for an indefinite period.
We have authorized 100,000,000 Preferred Shares and 100,000,000 Class B Common Shares that may result in our officers having the ability to influence stockholder decisions.
The board of directors has the power to establish the dividend rates, liquidation preferences, and voting rights of any series of preferred stock, and these rights may be superior to the rights of holders of the Shares. The board of directors may also establish redemption and conversion terms and privileges with respect to any shares of preferred stock; as such, if we establish such terms and privileges to our preferred shares and we sell or issue preferred shares in future transactions to new investors such investors in subsequent transactions could gain rights, preferences and privileges senior to those of holders of our common stock. Any such preferences may operate to the detriment of the rights of the holders of the Shares, and further, could be used by the board of directors as a device to prevent a change in control of the Registrant, include additional voting power to our officers giving them control over a majority of our outstanding voting power, enabling them to control future stock-based acquisition transactions, to fund employee equity incentive programs, and give them the ability to elect certain directors and to determine the outcome of all matters submitted to a vote of our stockholders. This concentrated control eliminates other stockholders’ ability to influence corporate matters.
We issued 25,000,000 Class B Shares to our Chief Executive Officer, (“CEO”)which entitled him to 2,500,000,000 votes and Chiefto control corporate matters.
We expect to seek additional financing in order to provide working capital to our business. Our board of directors has the power to issue any or all of such authorized but unissued shares at any price they consider sufficient, without stockholder approval. The issuance of additional shares of common stock in the future will reduce the proportionate ownership and voting power of current stockholders
Future sales and issuances of our capital stock, exercise of warrants outstanding or rights to purchase capital stock could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to decline.
We may issue additional securities and future sales and issuances of our capital stock or rights to purchase our capital stock could result in substantial dilution to our existing stockholders. We may sell common stock, convertible securities and other equity securities in one or more transactions at prices and in a manner as we may determine from time to time. If we sell any such securities in subsequent transactions, investors may be materially diluted. Additionally, because we have 9,094,853 Warrants outstanding, which are exercisable for five cents per share with a warrant exercise period of 5 years, any material exercise of the Warrants will because substantial dilution to your shares.
Any market that develops in shares of our common stock will be subject to the penny stock regulations and restrictions pertaining to low priced stocks that will create a lack of liquidity and make trading difficult or impossible.
The trading of our securities will be in the over-the-counter market, which is commonly referred to as the OTCQB as maintained by FINRA. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of our securities.
Rule 3a51-1 of the Exchange Act establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions that are not available to us. It is likely that our shares will be penny stocks for the immediately foreseeable future. This classification severely and adversely affects any market liquidity for our common stock.
For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:
| ● | the basis on which the broker or dealer made the suitability determination, and |
| ● | that the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Disclosure also must be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities when our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares, probably, will be subject to such penny stock rules for the foreseeable future and our shareholders will, likely, find it difficult to sell their securities.
Registered Broker-Dealers and Clearing firms are refusing to trade or clear stocks that are directly or indirectly related to the cannabis and hemp industries, which may negatively impact the trading of our common stock shares.
Because registered Broker-Dealers and Clearing firms are refusing to trade or clear stocks that represent companies directly or indirectly related to the cannabis and hemp industries, certain brokerage firms can no longer trade such stocks on behalf of their clients. Should this trend increase, trading in our stock may be negatively impacted, including lower trading volume and stock prices.
If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our common stock.
Effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud. We maintain a system of internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
The forward-looking statements contained herein report may prove incorrect.
This filing contains certain forward-looking statements, including among others: (i) anticipated trends in our financial condition and results of operations; (ii) our business strategy for expanding our business through regional centers; and (iii) our ability to distinguish ourselves from our current and future competitors. These forward-looking statements are based largely on our current expectations and are subject risks and uncertainties. Actual results could differ materially from these forward-looking statements. In addition to the other risks described elsewhere in this “Risk Factors” discussion, important factors to consider in evaluating such forward-looking statements include: (i) changes to external competitive market factors or in our internal budgeting process which might impact trends in our results of operations; (ii) anticipated working capital or other cash requirements; (iii) changes in our business strategy or an inability to execute our strategy due to unanticipated changes in the environmental cleanup industry; and (iv) various competitive factors that may prevent us from competing successfully in the marketplace. Considering these risks and uncertainties, many of which are described in greater detail elsewhere in this “Risk Factors” discussion, there can be no assurance that the events predicted in forward-looking statements contained in this Prospectus will, in fact, transpire.
Cautionary Note
We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock.
ITEM 2. Management’s Discussion and Analysis of Financial Officer (“CFO”), has evaluatedCondition and Results of Operations
FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the effectivenessplans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.
Although we believe that the expectations reflected in any of our forward- looking statements are reasonable, actual results could differ materially from those projected or assumed in any or our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.
Overview
We are a Nevada corporation formed on August 30, 1985. Our headquarters are in Denver, Colorado. We have been engaged in our current business model since June of 2016, as a result of our having been discharged from a receivership and acquiring Life Marketing, Inc., which was in a different industry as our previous business.
We have experienced recurring losses and negative cash flows from operations since inception, including in our current business model. We anticipate that our expenses will increase as we ramp up our expansion, which likely will lead to additional losses, until such time that we approach profitability, or which there are no assurances. We have relied on equity financing to fund operations. There can be no guarantee that we will ever become profitable, or that adequate additional financing will be realized in the future or otherwise may be available to us on acceptable terms, or at all. If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our expansion efforts. We will need to generate significant revenues to achieve profitability, of which there are no assurances.
Trends and Uncertainties
Our business is subject to the following trends and uncertainties:
| ● | Expansion of live streaming on Facebook could sway our users to spend more time away from our Networks. |
| ● | Social video is generally reaching saturation across social networks in general. |
| ● | Social platforms embrace strong governance policies, i.e. when content is inappropriate or violates end user agreement, how much content is posted on our Networks may be affected. |
| ● | Brands fatigue from new tools and tactics on social networks could result in fewer users embracing some of our new business and E-Commerce tools on our Networks. |
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes that we will be able to realize our assets and discharge our liabilities and commitments in the normal course of business for the foreseeable future. The Company had an accumulated deficit of $31,887,273 at June 30, 2020, had a net loss of $323,779, and gained net cash of $3,878 for the six months ended June 30, 2020. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our generating profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our management intends to finance operating costs over the next nine months with existing cash on hand and the sale of our common stock. While the we believe that we will be successful in obtaining the necessary financing and generating revenue to fund our operations, meet regulatory requirements and achieve commercial goals, there are no assurances that such additional funding will be achieved and that we will succeed in its our future operations.
We will attempt to overcome the going concern opinion by increasing our revenues, as follows:
| ● | By licensing additional Social Network and E-Commerce Platforms; |
| ● | By increasing our marketing staff to enhance our “WeedLife” brand to cannabis/hemp related consumers and businesses located throughout the world; |
| ● | By increasing our social media staff to increase our monthly network traffic from our current 30 million-page views, to support the sales staff growth in online advertising sales on our cannabis/hemp related websites and mobile apps; |
| ● | By increasing our sales staff for online advertising and monthly digital subscription sales on our cannabis/hemp related websites and mobile apps; |
| ● | By increasing our licensee tech and R&D support to Sports Social Network for the increase of membership acquisition, page view traffic, online advertising sales and E-Commerce transactions on all of our sports social network websites and mobile apps; and |
| ● | By increasing our licensee tech and R&D support to Real Estate Social Network. for the sales of online advertising and monthly digital subscription services to real estate professionals on our social network in the international real estate community. |
The foregoing goals will increase expenses and lead to possible net losses. There is no assurance that we will ever be profitable or that debt or equity financing will be available to us. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern. There is no assurance we will be successful in any of these goals.
Segment Information
The Company has one reportable segment called MjLink.com Inc. the leading social networking platform and virtual event company of the cannabis industry worldwide. MjLink is one of the largest cannabis and hemp technology platforms for connecting professionals and consumers together.
MJLINK.COM INC
SEGMENTED BALANCE SHEETS
(unaudited)
| | June 30, 2020 | | | December 31, 2019 | |
ASSETS | | | | | | |
Current Assets: | | | | | | |
Cash | | $ | 500 | | | $ | 5,500 | |
Accounts receivable | | | 10,500 | | | | 10,500 | |
Accounts receivable – related parties | | | 32,500 | | | | 32,500 | |
Prepaid Expenses | | | 1,863 | | | | 4,659 | |
Total Assets | | $ | 45,363 | | | $ | 53,159 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | | | | | | | | |
Current Liabilities: | | | | | | | | |
Accounts Payable | | $ | - | | | $ | - | |
Accrued Expenses | | | - | | | | - | |
Deferred Revenue | | | 8,542 | | | | 24,896 | |
Intercompany due to parent | | | 354,432 | | | | 356,326 | |
Total Current Liabilities | | | 362,974 | | | | 381,222 | |
Long Term Debt | | | - | | | | - | |
Total Liabilities | | $ | 362,974 | | | $ | 381,222 | |
| | | | | | | | |
Stockholders’ Equity (Deficit): | | | | | | | | |
Common Stock par value | | | 15 | | | | 15 | |
Additional paid in capital | | | - | | | | - | |
Common Stock to be issued | | | - | | | | - | |
Common Stock Receivable | | | - | | | | - | |
Preferred Stock par value | | | - | | | | - | |
Total Stockholders’ Equity (Deficit) | | | (317,626 | ) | | | (328,078 | ) |
Total Equity | | | (317,611 | ) | | | (328,063 | ) |
Total Liabilities and Stockholders’ Equity | | $ | 45,363 | | | $ | 53,159 | |
See accompanying notes to these unaudited condensed consolidated financial statements.
MJLINK.COM INC
SEGMENTED STATEMENTS OF OPERATIONS
(unaudited)
| | For the Three Months Ended
June 30, | | | For the Six Months Ended
June 30, | |
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Revenues: | | | | | | | | | | | | |
Digital marketing revenue | | $ | - | | | $ | 55,200 | | | $ | - | | | $ | 55,200 | |
Digital subscription revenue | | | 7,292 | | | | - | | | | 16,354 | | | | - | |
Advertising revenue | | | - | | | | - | | | | - | | | | 2,500 | |
Event revenue | | | - | | | | 75,985 | | | | - | | | | 75,985 | |
Total revenue | | | 7,292 | | | | 131,185 | | | | 16,354 | | | | 133,685 | |
Costs of goods sold | | | (11,598 | ) | | | 180,403 | | | | (10,816 | ) | | | 180,403 | |
Gross margin | | | 18,890 | | | | (49,218 | ) | | | 27,170 | | | | (46,718 | ) |
| | | | | | | | | | | | | | | | |
Operating Expenses: | | | | | | | | | | | | | | | | |
Compensation expense | | | 1,397 | | | | 65,258 | | | | 4,343 | | | | 139,336 | |
Non-cash stock expense | | | - | | | | - | | | | - | | | | - | |
Sales and marketing | | | 2,378 | | | | 25,969 | | | | 7,227 | | | | 51,453 | |
General and administrative | | | 1,684 | | | | 22,730 | | | | 5,147 | | | | 33,108 | |
Total operating expenses | | | 5,469 | | | | 113,957 | | | | 16,717 | | | | 223,897 | |
| | | | | | | | | | | | | | | | |
Income (Loss) from operations | | | 13,421 | | | | (163,175 | ) | | | 10,453 | | | | (270,615 | ) |
| | | | | | | | | | | | | | | | |
Other Expenses: | | | | | | | | | | | | | | | | |
Interest expense | | | - | | | | - | | | | - | | | | - | |
Other non-operating expenses | | | - | | | | - | | | | - | | | | | |
Total other expenses | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | |
Net Income (Loss) | | $ | 13,421 | | | $ | (163,175 | ) | | $ | 10,453 | | | $ | (270,615 | ) |
| | | | | | | | | | | | | | | | |
Income (loss) per share Basic and Diluted | | $ | 8.95 | | | $ | (108.78 | ) | | $ | 6.97 | | | $ | (180.41 | ) |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | | | | | | | | |
Basic and Diluted | | | 1,500 | | | | 1,500 | | | | 1,500 | | | | 1,500 | |
See accompanying notes to these unaudited condensed consolidated financial statements.
MJLINK.COM, INC.
SEGMENTED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
(unaudited)
| | Preferred Stock | | | Common Stock | | | Additional Paid | | | Common
Stock to be | | | Common Stock | | | Accumulated | | | | |
| | Shares | | | Amount | | | Shares | | | Amount | | | in Capital | | | Issued | | | Receivable | | | Deficit | | | Total | |
Balance, December 31, 2019 | | | - | | | | - | | | | 1,500 | | | $ | 15 | | | $ | - | | | $ | - | | | $ | - | | | $ | (328,078 | ) | | | (328,063 | ) |
Common stock issued for service | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Common stock issued to officers | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Common stock issued to investors | | | | | | | | | | | - | | | | - | | | | - | | | | - | | | | | | | | - | | | | - | |
Common stock cancelled | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Fair value of warrants issued | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Fair value of beneficial conversion feature for convertible notes | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Net Loss for year ended Mar 31, 2020 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,969 | ) | | | (2,969 | ) |
Balance, March 31, 2020 | | | - | | | | - | | | | 1,500 | | | | 15 | | | $ | - | | | $ | - | | | $ | - | | | $ | (331,047 | ) | | $ | (331,032 | ) |
Common stock issued for service | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Common stock issued to officers | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Common stock issued to investors | | | - | | | | | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Common stock cancelled | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Fair value of warrants issued | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Fair value of beneficial conversion feature for convertible notes | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Net Loss for quarter ended June 30, 2020 | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | - | | | | 13,421 | | | | 13,421 | |
Balance, June 30, 2020 | | | - | | | | - | | | | 1,500 | | | | 15 | | | | - | | | | - | | | | - | | | | (317,626 | ) | | | (317,611 | ) |
See accompanying notes to these unaudited condensed consolidated financial statements.
MJLINK.COM INC
SEGMENTED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| | For the Three Months Ended
June 30, | |
| | 2020 | | | 2019 | |
Cash flow from operating activities: | | | | | | |
Net Income (Loss) | | $ | 10,453 | | | $ | (270,615 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
Noncash stock-based compensation | | | - | | | | - | |
Changes in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | - | | | | (5,500 | ) |
Prepaids | | | 2,795 | | | | 6,000 | |
Accounts payable and accrued expenses | | | - | | | | - | |
Intercompany due to parent | | | (18,248 | ) | | | (270,115 | ) |
Net cash used in operating activities | | | (5,000 | ) | | | - | |
| | | | | | | | |
Cash flows used in investing activities: | | | - | | | | - | |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Loan from related parties | | | - | | | | - | |
Proceeds from the sale of common stock | | | - | | | | - | |
Stock Receivable | | | - | | | | - | |
Stock Payable | | | - | | | | - | |
Net cash provided by financing activities | | | - | | | | - | |
| | | | | | | | |
Net increase / decrease in cash | | | (5,000 | ) | | | - | |
Cash at beginning of period | | | 5,500 | | | | - | |
Cash at end of period | | $ | 500 | | | $ | - | |
| | | | | | | | |
Supplemental Disclosures: | | | | | | | | |
Cash paid during the year for: | | | | | | | | |
Interest | | $ | - | | | | - | |
Income taxes | | $ | - | | | $ | - | |
Supplemental disclosure of non-cash activities: | | | | | | | | |
Warrants issued for services | | $ | - | | | $ | - | |
Interest related to amortization of beneficial conversion feature | | $ | - | | | | - | |
See accompanying notes to these unaudited condensed consolidated financial statements.
COMPARATIVE RESULTS FOR FISCAL YEARS
Consolidated Performance - Results of Operationsfor the 3-month periods ended June 30, 2020 and 2019
Revenues
For the 3-month period ending June 30, 2020, we recognized revenue from licensing of $62,500 compared to zero dollars of revenue for the 3-month period ending June 30, 2019. The increase is due to a renewed licensing deal with two of our licensees that provides for a minimum guarantee annual payment of $125,000 from each of our two licensees rather than relying on transactional usage of our platform in first quarter 2019.
For the 3-month period ending June 30, 2020, we recognized $7,292 digital subscription revenue as compared to zero for the 3-month period ending June 30, 2019. The increase in revenue is primarily attributable to recognizing digital subscription service of MjInvest.com over twelve months of service. Our current deferred revenue balance is $13,041 for MjInvest’s digital subscription service.
For the 3-month period ending June 30, 2020, we recognized zero event revenue as compared to $75,985 for the 3-month period ending June 30, 2019. The decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future.
For the 3-month period ending June 30, 2020, we recognized zero digital marketing revenue as compared to $55,200 for the 3-month period ending June 30, 2019. The decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future and as a result there were no marketing campaigns to promote attendees at our events.
Cost of Revenue
Cost of revenue was a negative $10,744 for the 3-month period ending June 30, 2020 compared to $181,934 the 3-month period ending June 30, 2019, representing an increase of $192,678 or 106%. The $192,678 decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future, plus the recoupment of some of our initial costs to set up events in the first quarter 2020.
Operating Expenses
Cash-paid compensation expense decreased by $281,947 or 71.3% to $113,491 for the 3-month period ending June 30, 2020 from $395,437 for the 3-month period ending June 30, 2020. The $281,947 decrease is primarily attributable to the resignation of George Jage as MjLink’s President in June 2019, which was not refilled, and reducing the need for consultants and professionals that were required to meet MjLink’s growth strategies at the onset of January 2019.
During the 3-month period ending June 30, 2020, we recognized zero of non-cash stock-based compensation expense for employees, consultants, and professionals compared to $774,988 for the 3-month period ending June 30, 2019. The decrease is primarily due to a reduced need for additional headcount, streamlining headcount, and being able to maximize productivity with fewer hires as compared to our hiring plans in 2019.
During the 3-month periods ending June 30, 2020 and 2019, we recognized zero of non-cash stock-based compensation expense for warrants for the respective quarters.
Sales and marketing expense decreased $34,466 or 92.9% to $2,650 for the 3-month period ending June 30, 2020 from $37,115 for the 3-month period ending June 30, 2019. The $34,466 decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced MjLink to cancel any in-person events for the foreseeable future including in its first quarter 2020 as opposed to our investing/ramping-up efforts in 2019.
General and administrative expense decreased by $41,603, or 34.8% to $77,815 for the 3-month period ending June 30, 2020 from $119,418 for the 3-month period ending June 30, 2019. The decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future. In addition, unrelated to COVID 19, the decrease is also due to a reduced need for additional headcount, streamlining headcount, and being able to maximize productivity with fewer hires as compared to our hiring plans in 2019.
Other expense
During the three months ended June 30, 2020, we incurred $12,631 of other income from gain on conversion of convertible debt of $44,693 associated with converting our debt into common shares to our debt holders, which offset the interest charges of $32,062 from our convertible debt outstanding. During the three months ended June 30, 2019 we had zero other expenses or income.
Net Loss
Our net loss for the for the 3-month period ending June 30, 2020 was $100,789 compared to a net loss of $1,420,231 for the 3-month period ending June 30, 2019. The decrease in net loss of $1,319,442 is a direct result of lack of issuance of non-cash stock-based compensation expenses to our personnel, decrease in operating expenses, and reduction in revenue due to the unprecedented and mandatory COVID-19 shutdown.
Consolidated Performance - Results of Operationsfor the 6-month periods ended June 30, 2020 and 2019
Revenues
For the 6-month period ending June 30, 2020, we recognized revenue from licensing of $125,000 compared to $25,000 of revenue for the 6-month period ending June 30, 2019. The increase is due to a renewed licensing deal with two of our licensees that provides for a minimum guarantee annual payment of $125,000 from each of our two licensees rather than relying on transactional usage of our platform in first quarter 2019.
For the 6-month period ending June 30, 2020, we recognized $16,354 digital subscription revenue as compared to zero for the 6-month period ending June 30, 2019. The increase in revenue is primarily attributable to recognizing digital subscription service of MjInvest.com over twelve months of service. Our current deferred revenue balance is $13,041 for MjInvest’s digital subscription service.
For the 6-month period ending June 30, 2020, we recognized zero advertising revenue as compared to $2,500 for the 6-month period ending June 30, 2019. The decrease in revenue is primarily attributable to eliminating our sales and marketing staff during the latter part of fiscal year 2019.
For the 6-month period ending June 30, 2020, we recognized zero event revenue as compared to $75,985 for the 3-month period ending June 30, 2019. The decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future.
For the 6-month period ending June 30, 2020, we recognized zero digital marketing revenue as compared to $55,200 for the 6-month period ending June 30, 2019. The decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future and as a result there were no marketing campaigns to promote attendees at our events.
Cost of Revenue
Cost of revenue was a negative $8,879 for the 6-month period ending June 30, 2020 compared to $183,466 the 6-month period ending June 30, 2019, representing a decrease of $192,145 or 104%. The $192,145 decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future, plus the recoupment of some of our initial costs to set up events in the first quarter 2020.
Operating Expenses
Cash-paid compensation expense decreased by $416,146 or 59.8% to $279,969 for the 6-month period ending June 30, 2020 from $695,115 for the 6-month period ending June 30, 2020. The $416,146 decrease is primarily attributable to the resignation of George Jage as MjLink’s President in June 2019, which was not refilled, and reducing the need for consultants and professionals that were required to meet MjLink’s growth strategies in 2019.
During the 6-month period ending June 30, 2020, we recognized zero of non-cash stock-based compensation expense for employees, consultants, and professionals compared to $1,801,333 for the 6-month period ending June 30, 2019. The decrease is primarily due to a reduced need for additional headcount, streamlining headcount, and being able to maximize productivity with fewer hires as compared to our hiring plans in 2019.
During the 6-month periods ending June 30, 2020 and 2019, we recognized zero of non-cash stock-based compensation expense for warrants for the respective quarters.
Sales and marketing expense decreased $100,373 or 92.4% to $8,282 for the 6-month period ending June 30, 2020 from $108,655 for the 6-month period ending June 30, 2019. The $100,373 decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced MjLink to cancel any in-person events for the foreseeable future including in its first quarter 2020 as opposed to our investing/ramping-up efforts in the first quarter of 2019.
General and administrative expense decreased by $104,912, or 44.8% to $129,402 for the 6-month period ending June 30, 2020 from $234,314 for the 6-month period ending June 30, 2019. The decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future. In addition, unrelated to COVID 19, the decrease is also due to a reduced need for additional headcount, streamlining headcount, and being able to maximize productivity with fewer hires as compared to our hiring plans in 2019.
Other expense
During the 6-months ended June 30, 2020, we incurred $56,159 of other expenses from interest charges of $60,563 from our convertible debt outstanding and a net gain of $4,400 associated with converting our debt into common shares to our debt holders. During the 6-months ended June 30, 2019 we had zero other expenses.
Net Loss
Our net loss for the for the 6-month period ending June 30, 2020 was $323,779 compared to a net loss of $2,907,772 for the 6-month period ending June 30, 2019. The decrease in net loss of $1,264,500 is a direct result of lack of issuance of non-cash stock-based compensation expenses to our personnel and a decrease in operating expenses due to the unprecedented and mandatory COVID-19 shutdown.
Segmented Performance - Results of Operationsfor the 3-month periods ended June 30, 2020 and 2019
Revenues
For the 3-month period ending June 30, 2020, MjLink recognized $7,292 digital subscription revenue as compared to zero for the 3-month period ending June 30, 2019. The increase in revenue is primarily attributable to recognizing digital subscription service of MjInvest.com over twelve months of service. Our current deferred revenue balance is $13,041 for MjInvest’s digital subscription service.
For the 3-month period ending June 30, 2020, we recognized zero event revenue as compared to $75,985 for the 3-month period ending June 30, 2019. The decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future.
For the 3-month period ending June 30, 2020, we recognized zero digital marketing revenue as compared to $55,200 for the 3-month period ending June 30, 2019. The decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future and as a result there were no marketing campaigns to promote attendees at our events.
Cost of Revenue
Cost of revenue was a negative $11,598 for the 3-month period ending June 30, 2020 compared to $180,403 the 3-month period ending June 30, 2019, representing a decrease of or 106.4%. The $192,005 decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future, plus the recoupment of some of our initial costs to set up events in the first quarter 2020.
Operating Expenses
Cash-paid compensation expense decreased by $63,861 or 97.9% to $1,397 for the 3-month period ending June 30, 2020 from $65,258 for the 3-month period ending June 30, 2020. The $63,861 decrease is primarily attributable to the resignation of George Jage as MjLink’s President in June 2019, which was not refilled, and reducing the need for consultants and professionals that were required to meet MjLink’s growth strategies in 2019.
During the 3-month periods ending June 30, 2020 and 2019, we recognized zero non-cash stock-based compensation expense for employees, consultants, and professionals.
Sales and marketing expense decreased by $23,591 or 90.8% to $2,378 for the 3-month period ending June 30, 2020 from $25,969 for the 3-month period ending June 30, 2019. The $23,591or decrease is primarily attributable to the mandatory COVID-19 shutdown which forced MjLink to cancel any in-person events for the foreseeable future including in its first quarter 2020. At this time last year, the Company was investing and ramping-up its efforts for in-person events.
General and administrative expense decreased by $21,037, or 92.6% to $1,693 for the 3-month period ending June 30, 2020 from $22,730 for the 3-month period ending June 30, 2019. The decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future. In addition, unrelated to COVID 19 the decrease is also due to a reduced need for additional headcount, streamlining headcount, and being able to maximize productivity with fewer hires as compared to our hiring plans in 2019.
Other expense
During the three months ended June 30, 2020 and 2019, we incurred zero other expenses for each respective quarter.
Net Loss
Our net profit for the for the 3-month period ending June 30, 2020 was $13,421 compared to a net loss of $163,175 for the 3-month period ending June 30, 2019. The net profit is a direct result of recouping some of our initial costs to set up events in the first quarter 2020 due to suspending all in-person MjLink revenue generating activities from the unprecedented and mandatory COVID-19 shutdown
Segmented Performance - Results of Operationsfor the 6-month periods ended June 30, 2020 and 2019
Revenues
For the 6-month period ending June 30, 2020, we recognized $16,354 digital subscription revenue as compared to zero for the 6-month period ending June 30, 2019. The increase in revenue is primarily attributable to recognizing digital subscription service of MjInvest.com over twelve months of service. Our current deferred revenue balance is $13,041 for MjInvest’s digital subscription service.
For the 6-month period ending June 30, 2020, we recognized zero advertising revenue as compared to $2,500 for the 6-month period ending June 30, 2019. The decrease in revenue is primarily attributable to eliminating our sales and marketing staff during the latter part of fiscal year 2019.
For the 6-month period ending June 30, 2020, we recognized zero event revenue as compared to $75,985 for the 6-month period ending June 30, 2019. The decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future.
For the 6-month period ending June 30, 2020, we recognized zero digital marketing revenue as compared to $55,200 for the 6-month period ending June 30, 2019. The decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future and as a result there were no marketing campaigns to promote attendees at our events.
Cost of Revenue
Cost of revenue was a negative $10,816 for the 3-month period ending June 30, 2020 compared to $180,403 the 6-month period ending June 30, 2019, representing a decrease of or 106.0%. The $191,291 decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future, plus the recoupment of some of our initial costs to set up events in the first quarter 2020.
Operating Expenses
Cash-paid compensation expense decreased by $134,993 or 96.9% to $4,343 for the 6-month period ending June 30, 2020 from $139,336 for the 6-month period ending June 30, 2020. The $134,993 decrease is primarily attributable to the resignation of George Jage as MjLink’s President in June 2019, which was not refilled, and reducing the need for consultants and professionals that were required to meet MjLink’s growth strategies at the onset of January 2019.
During the 6-month periods ending June 30, 2020 and 2019, we recognized zero non-cash stock-based compensation expense for employees, consultants, and professionals.
Sales and marketing expense decreased by $44,226 or 86.0% to $7,227 for the 6-month period ending June 30, 2020 from $51,453 for the 6-month period ending June 30, 2019. The $44,226 decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced MjLink to cancel any in-person events for the foreseeable future including in its first quarter 2020. At this time last year, we were investing and ramping-up its efforts for in-person events.
General and administrative expense decreased by $27,961, or 84.5% to $5,147 for the 6-month period ending June 30, 2020 from $33,108 for the 6-month period ending June 30, 2019. The decrease is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows, with investors and travel for the foreseeable future. In addition, unrelated to COVID 19 the decrease is also due to a reduced need for additional headcount, streamlining headcount, and being able to maximize productivity with fewer hires as compared to our hiring plans in the first and second quarter 2019.
Other expense
During the 6-months ended June 30, 2020 and 2019, we incurred zero other expenses for each respective quarter.
Net Loss
Our net profit for the for the 6-month period ending June 30, 2020 was $10,453 compared to a net loss of $270,615 for the 6-month period ending June 30, 2019. The net profit is a direct result of recouping some of our initial costs to set up events in the first quarter 2020 due to suspending all in-person MjLink revenue generating activities from the unprecedented and mandatory COVID-19 shutdown
SEGMENTED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2020
(unaudited)
| | Consolidated | | | Social Life Network | | �� | MjLink.com | |
Revenue | | $ | 141,354 | | | $ | 125,000 | | | $ | 16,354 | |
Cost of Sales | | | (8,679 | ) | | | 2,137 | | | | (10,816 | ) |
Gross Margin | | | 150,033 | | | | 122,863 | | | | 27,170 | |
Operating Expenses | | | 417,652 | | | | 400,935 | | | | 16,717 | |
Loss from Operations | | | (267,619 | ) | | | (278,072 | ) | | | 10,453 | |
Other Expenses | | | (56,159 | ) | | | (56,159 | ) | | | - | |
Net loss | | $ | (323,779 | ) | | $ | (334,231 | ) | | $ | 10,453 | |
SEGMENTED BALANCE SHEETS
FOR THE YEAR ENDED JUNE 30, 2020
(unaudited)
| | Consolidated | | | Social Life Network | | | MjLink.com | |
Cash | | $ | 15,435 | | | $ | 14,935 | | | $ | 500 | |
Accounts receivable | | | 348,500 | | | | 305,500 | | | | 43,000 | |
Other current assets | | | 7,363 | | | | 359,433 | | | | 2,363 | |
Total Asset | | $ | 370,799 | | | $ | 679,868 | | | $ | 45,363 | |
Accounts payable | | | 116,096 | | | | 116,096 | | | | - | |
Other current liabilities | | | 50,000 | | | | 50,000 | | | | - | |
Deferred revenue | | | 13,041 | | | | 4,500 | | | | 8,541 | |
Convertible Debt | | | 462,791 | | | | 462,791 | | | | - | |
PPP Loan | | | 163,111 | | | | 163,111 | | | | - | |
Intercompany obligations | | | - | | | | (354,433 | ) | | | 354,433 | |
Equity | | | (434,241 | ) | | | 237,803 | | | | (317,611 | ) |
Total Liabilities & Equity | | $ | 370,799 | | | $ | 679,868 | | | $ | 45,363 | |
Liquidity and Capital Resources
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the 6-month period ending June 30, 2020, net cash outflows used in operating activities was $291,968 compared to net outflows of $1,663,820 for the 6-month period ending June 30, 2019. The decrease in cash in operating activities is primarily attributable to the mandatory COVID-19 shutdown, which forced our personnel to cancel all in-person contact at tradeshows and travel for the foreseeable future.
Cash Flows from Financing Activities
For the 6-month period ending June 30, 2020, net cash flows used in financing activities was $295,846 compared to $1,498,377 for the 6-month period ended June 30, 2019. The decrease in cash in financing activities is primarily attributable to the mandatory COVID-19 shutdown, unprecedented uncertainty in the financial markets, record unemployment figures, and a near halt in business activities for the foreseeable future created a dramatic pullback in risk appetite by current and potentially new investors.
Off-Balance Sheet Arrangements
None.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable
ITEM 4. Controls and Procedures.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures as defined in Securities and Exchange Commission (“SEC”) Rule 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based upon that evaluation, management has concluded that our disclosure controls and procedures are effectivedesigned to ensure that information we are required to disclosebe disclosed in our reports that we file or submitfiled under the Securities Exchange Act is communicated to management, including the CEO and CFO,of 1934, as appropriate to allow timely decisions regarding required disclosure andamended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
