UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended September 30, 2017March 31, 2020

or

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from _________________________ to ________________________

Commission File Number: 333-206260

FIRST FOODS GROUP, INC.
(Exact name of registrant as specified in its charter)

NEVADA		47-4145514
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

720 Monroe Street,First Foods Group, Inc. c/o Incorp Services, Inc.,

3773 Howard Hughes Parkway, Suite E210500S,

Hoboken, NJ 07030Las Vegas, NV 89169-6014

(Address of principal executive offices) (Zip Code)

(201) 471-0988

Registrant’s telephone number, including area code

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes xNo ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One).

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨☒	Smaller reporting company	x
(Do not check if a smaller reporting company)		Emerging growth company	x¨

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 ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Securities registered pursuant to section 12(b) of the Act:

As of November 9, 2017,May 8, 2020, the number of shares outstanding of the registrant’s class of common stock was 16,322,857,21,212,771, par value of $0.001 per share.

TABLE OF CONTENTS

			Pages
				Pages
PART I. FINANCIAL INFORMATION
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)			3
	Condensed Consolidated Balance Sheets at September 30, 2017March 31, 2020 and December 31, 20162019			3
	Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2017March 31, 2020 and 20162019			4
	Condensed Consolidated Statements of Changes in Deficit for the Three Months ended March 31, 2020 and 2019			5
	Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended September 30, 2017ended March 31, 2020 and 20162019			6	5
	Notes to Condensed Consolidated Financial Statements			67
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			1223
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			1727
Item 4.	Controls and Procedures			1727
PART IIOTHER INFORMATION
Item 1.	Legal Proceedings			1829
Item 1A.	Risk Factors			1829
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			1829
Item 3.	Defaults Upon Senior Securities			1829
Item 4.	Mine Safety Disclosures			1829
Item 5.	Other Information			1829
Item 6.	Exhibits			1930
SIGNATURES				31	20

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

First Foods Group, Inc.

Condensed Consolidated Balance Sheets

(Unaudited) 

		September 30, 2017				December 31, 2016
ASSETS
Cash		$	271			$	17,355
Prepaid expenses and other current assets			23,044				-
TOTAL ASSETS		$	23,315			$	17,355
LIABILITIES AND STOCKHOLDERS’ DEFICIT
LIABILITIES
Accounts payable and accrued liabilities		$	282,231			$	17,355
Due to shareholder			167,350				-
Deferred compensation			182,344				-
TOTAL LIABILITIES			631,925				17,355
Commitments
STOCKHOLDERS’ DEFICIT
Series A convertible preferred stock: $0.001 par value, 1 share authorized, no shares issued and outstanding			-				-
Series B convertible preferred stock: $0.001 par value, 4,999,999 shares authorized, no shares issued and outstanding			-				-
Common stock: $0.001 par value, 70,000,000 shares authorized, 16,372,857 and 14,150,000 shares issued and outstanding, respectively			16,373				14,150
Additional paid-in capital			4,114,654				42,949
Accumulated deficit			(4,739,637	)			(57,099	)
Total stockholders’ deficit			(608,610	)			-
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	23,315			$	17,355

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements 

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First Foods Group, Inc.

Condensed Consolidated Statements of Operations

(Unaudited) 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements 

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First Foods Group, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited) 

		For the nine months ended September 30,
		2017				2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss		$	(4,682,538	)		$	(33,578	)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock issued to officers for services rendered			2,932,500				-
Common stock issued to consultants for services rendered			1,141,428				-
Changes in operating assets and liabilities:
Accounts receivable			-				(3,500	)
Prepaid expenses and other current assets			(23,044	)			-
Accounts payable and accrued liabilities			264,876				(671	)
Deferred compensation			182,344				-
Net cash used in operating activities			(184,434	)			(37,749	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shareholder loans			196,547				-
Repayment of shareholder loans			(29,197	)			-
Net cash provided by financing activities			167,350				-
NET DECREASE IN CASH			(17,084	)			(37,749	)
CASH AT BEGINNING OF PERIOD			17,355				61,573
CASH AT END OF PERIOD		$	271			$	23,824
SUPPLEMENTAL CASH FLOW INFORMATION:
CASH PAID FOR:
Interest		$	-			$	-
Income taxes		$	-			$	-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements 

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First Foods Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1 – BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY

Nature of Business

First Foods Group, Inc. (the “Company” or “First Foods” formerly known as Litera Group, Inc.) was incorporated under the laws of the State of Nevada on June 1, 2015, as “Litera Group, Inc.”. The Company is an emerging growth corporation originally formed to provide products and services within the theater and film production community. The Company developed screenplays, stage plays, comedy sketch and skit scripts, short film scripts and other literary and dramatic works, as well as offered abridgment and adaptation services. The Company’s target market was independent film and theatrical producers and small and experimental production studios that scout for new projects to produce and distribute. The Company amended its Articles of Incorporation with the State of Nevada in order to change its name from Litera Group, Inc. to First Foods Group, Inc. (the “Amendment”). The board of directors of the Company approved the Amendment on February 15, 2017. The shareholders of the Company approved the Amendment by written consent on February 15, 2017. The Amendment became effective on February 16, 2017. First Foods is nowa smaller reporting company focused on providing management servicesdeveloping its specialty chocolate product line and funding options for new foodservice brands and menu concepts, including the participationparticipating in merchant cash advances by(“MCA”) through its 1^st Foods Funding Division. First Foods Group, Inc. is also growing its owncontinues to pursue new concepts, both through proprietary developmentfoodservice brands and through mergers, acquisitions, and licensing arrangements.menu concepts.

On April 21, 2017, the Company entered into a binding term sheet (the “Term Sheet”) with Oded Brenner (“Brenner”). Pursuant to the Term Sheet, the Company and Brenner would form an entity that would own the intellectual property rights to “Blue Stripes-Cacao Shop” (the “IP Entity”) for the United States. The Company had 120 days from the date of the Term Sheet to perform due diligence activities and complete the closing. Upon the completion of due diligence, Company Management and the Board of Directors determined that it was in the best interest of the shareholders to forego a US-wide cacao concept. Instead, on August 31, 2017, the Company formed its own wholly owned cacao subsidiary named Holy Cacao, Inc., a Nevada corporation.corporation (“Holy Cacao”). Holy Cacao has 100 shares of no par value common stock authorized, issued and outstanding with 85 shares owned by the Company and 15 shares owned by non-controlling interests. Holy Cacao is dedicated to producing, packaging, distributing and selling specialty chocolate products, including specialty chocolate products infused with a hemp-based ingredient in accordance with the Company’s understanding of the Agricultural Act of 2014 (the “2014 Farm Bill”) and/or the Agriculture Improvement Act of 2018 (the “2018 Farm Bill,” and together with the 2014 Farm Bill, collectively, the “Farm Bill”), which renders the production of hemp in compliance with the provisions of the Farm Bill federally lawful. The Company has not been, is not, and has no current plans to be involved in producing, packaging, distributing or selling any product that is infused with a marijuana-based ingredient, although it intends to revisit the matter as regulations change in jurisdictions in which it operates. The Company is also dedicated to licensing its intellectual property (“IP”), including its name, brand, and packaging, to third parties. The Company may license its IP to third parties that may produce, package, and distribute hemp-based products pursuant with the Company’s understanding of the Farm Bill. The Company may license its IP to third parties that may produce, package, and distribute marijuana-based products, but only as such licensing is legal. On February 27, 2019, the United States Patent and Trademark Office (the “USPTO”) approved Holy Cacao’s trademark brand, “The Edibles’ Cult.” On November 3, 201726, 2019, the USPTO approved Holy Cacao’s trademark brand, “Purely Irresistible.” The Company has submitted multiple applications to the USPTO for additional brand names, including “Mystere” and “Southeast Edibles” among others. On February 5, 2019, the Company entered intosigned a consultingConsulting Agreement with a consultant to assist in the manufacturing, packaging and distribution of the Company’s chocolate product line. On March 26, 2019, the Company signed a Facility Access and Wholesale Production Purchase and Sale Agreement that allows it to use a fully staffed and fully equipped state of the art manufacturing facility to produce its specialty chocolate product line and sell it to manufacturing and wholesaling companies. On October 10, 2019, the Company signed a master distribution agreement with Oded BrennerCBD Unlimited, Inc, which is a performance-based agreement that requires Mr. Brennerpublic company and a master distributor, to perform specific packaging, marketing and product development duties in connection withdistribute the Company’s launch of its Holy Cacao subsidiary. Holy Cacao will be dedicated to providing specialtyhemp-based chocolate to particular states withinproducts. On March 1, 2020, the US. The Company is currently in the process of negotiating production and packaging contracts with third party providers in anticipation of operating activities to commence in 2018.

On June 19, 2017, the Company entered into a binding term sheet (the “TBS Term Sheet”) with The Big Salad Franchise Company, LLC, a Michigan limited liability company (“TBS”). The Company had 60 days from the date of the Term Sheet to perform due diligence activities and complete the closing. Upon the completion of due diligence, Company Management and theCompany’s Board of Directors determined that it wasmade a strategic decision to broaden the appeal of its hemp-based chocolate products to a wider base of customers, who are particularly discerning about the cleanliness of the Company’s manufacturing facility and quality of its hemp-based chocolate products, by successfully obtaining worldwide Kosher certification from the Union of Orthodox Jewish Congregations of America, Kashruth Division (the “OU”), which is the largest and most recognized certification of its kind in the best interest ofworld. On March 9, 2020, the shareholdersCompany retained Tartikov Beth Din (“BD”) to foregoallow BD to supervise the TBS transaction.hemp-based chocolate products produced by the Company in accordance with OU certification standards.

On October 25, 2017, the Company entered into a contract with TIER Merchant AdvanceAdvances LLC (“TIER”) to participate in the purchase of future receivables from qualified TIER merchants for the purpose of generating near-term and long-term revenue for the Company.

In On November 8, 2018 the opinion of management, the accompanying condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q reflect all normal recurring adjustments necessaryCompany also began providing cash advances directly to present fairly the financial position and results of operations and cash flows for the interim periods presented herein, but are not necessarily indicative of the results of operations for the year ending December 31, 2017. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2016 filed on March 27, 2017, and with the disclosures and risk factors presented therein. The December 31, 2016 condensed balance sheet has been derived from the audited financial statements.merchants.

Liquidity and Going Concern

The Company’s unaudited condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States of America (“GAAP”) 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 and allow it to continue as a going concern. 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.

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First Foods Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

In order to continue as a going concern, the Company will need, among other things, additional capital resources. As of March 31, 2020, the Company had approximately $106,000 in third-party short term debt that is due within the next twelve months. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its operating expenses and seeking equity and/or debt financing. However, neither any members of management nor any significant shareholders are currently committed to invest funds with us and; therefore, we cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The Company does not have sufficient cash flow for the next twelve months from the date of this report. 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. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

In December 2019, a novel strain of coronavirus surfaced. The spread of COVID-19 around the world in the first quarter of 2020 has caused significant volatility in U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies. The Company’s financial position, operations and cash flows as of March 31, 2020 have been adversely affected, and may be further affected in the future, by the recent and ongoing outbreak of the coronavirus disease 2019 (COVID-19) which in March 2020, was declared a pandemic by the World Health Organization. The ultimate disruption which may be caused by the outbreak is uncertain; however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows. Possible areas that may be materially affected include, but are not limited to, disruption to the Company’s labor workforce, unavailability of products and supplies used in operations, and the decline in value of assets held by the Company. As of March 31, 2020 and through the filing date of the financial statements, the Company has continued to collect receivables from its cash advances but has experienced an increase in payment delinquencies and has had two customers renegotiate the terms of their cash advance due to COVID-19.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States of AmericaGAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basis of Presentation

The Company’saccompanying unaudited condensed consolidated financial statements are presented in accordance withwere prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these unaudited condensed consolidated financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read in conjunction with the United StatesCompany’s annual consolidated financial statements included within the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on March 25, 2020.

In the opinion of America (“GAAP”).management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2020 may not be indicative of results for the full year.

The noncontrolling interest represents the proportionate share of the proceeds received and also the income and loss pickup from the fifteen-percent sale of equity interest in our wholly owned subsidiary; Holy Cacao.

Principles of Consolidation

The unaudited condensed consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiariessubsidiary in conformity with GAAP. All intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of twelve months or less to be cash equivalents. At September 30, 2017March 31, 2020 and December 31, 2016, respectively,2019, the Company had $271no cash equivalents.

The Company’s cash is held with financial institutions, and $17,355the account balances may exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit at times. Accounts are insured by the FDIC up to $250,000 per financial institution. The Company has not experienced any losses in cash.such accounts with these financial institutions.

Merchant Cash Advances

The Company participates in the merchant cash advance industry by directly advancing sums to a merchant or a merchant advance provider, TIER, who in turn advances sums to merchants or other merchant cash advance providers. Each reporting period, the Company reviews the carrying value of these advances and determines whether an impairment reserve is necessary. At March 31, 2020, the Company reserved an amount equal to 63% of the outstanding merchant cash advance balance at period end based on the potential impact of Covid 19. In addition, during the three months ended March 31, 2020 the Company wrote off eleven (11) merchant advances for a total of $12,328. These expenses are included in provision for merchant cash advances expense on the accompanying unaudited condensed consolidated statements of operations.

Revenue Recognition

PriorWe completed, related to December 30, 2016,our merchant cash advance business line, our assessment of the impact of ASC 606 and determined that we recognize revenue in accordance with ASC 860, Transfers and Servicing, which is explicitly excluded from the scope of ASC 606. We participate in the servicing of merchant cash advances that have been provided to third parties, which in accordance with ASC 860, causes us to recognize merchant cash advance (“MCA”) income. We also have product sales from our Holy Cacao division that follow ASC 606.

Product sales are measured based on consideration specified in a contract with a customer that we expect to receive in exchange for goods, net of any variable considerations (e.g. rights to return product, sales incentives, etc.). The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer. These criteria are assumed to have been met upon delivery of the products requested by the customer to the customer’s carrier. The Company applied the practical expedient available under ASC 606 to disregard determining significant financing components, if the good is transferred and payment is received within one year.

When a merchant cash advance is purchased, the Company generated revenuesrecords a merchant cash advance participation receivable for the purchase price. The purchase price consists of the merchant cash advance principal plus an up-front commission that is amortized over the term of the merchant cash advance. The amount of the commission is negotiated between the Company and TIER for each contract. The standard commission is 15% of the merchant cash advance principal but can be reduced depending upon the credit worthiness of the merchant. The average commission paid by the Company since inception has been approximately 7%. If a merchant cash advance contract is signed in one period, but not paid until a subsequent period, a corresponding liability is established in the current period.

At the time the Company participates in a merchant cash advance, the Company records a deferred revenue liability, which is the total future receivable due to the Company less the principal amount of the merchant cash advance. Revenue is recognized and the deferred liability is reduced over the term of the merchant cash advance.

TIER maintains a bank account on behalf of the Company. Each day, TIER receives payment, reflected in the bank account, for each merchant cash advance TIER has purchased on behalf of the Company from various merchant cash advance providers. The Company reduces its merchant cash advance balance by the cash received, which is net of platform fees. Platform fees are a daily charge associated with the ACH service and the financial and reporting management software platform provided by TIER. The platform fees are also negotiated between the Company and TIER for each contract but are typically 4% of the daily merchant cash advance principal amount.

For each merchant cash advance entered into by the Company, TIER receives a daily payment as payments are made on the advance, for each merchant cash advance TIER has purchased on behalf of the Company from various merchant cash advance providers. The Company reduces its merchant cash advance balance by the cash received, which is net of a 2% commission to TIER.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions and sets up an allowance for doubtful accounts when collection is uncertain. Customers’ accounts are written off when all attempts to collect have been exhausted. The Company considers an invoice past due once the term of the invoice has passed and payment has not been received. No interest is charged on past due invoices. Recoveries of accounts receivable previously written off are recorded as income when received. As of March 31, 2020, the Company had no allowance for doubtful accounts.

Inventory

Inventory, consisting of raw materials, work in process and products available for sale, are accounted for using the first-in, first-out method, and are valued at the lower of cost or net realizable value. This valuation requires management to make judgements based on currently available information, about the likely method of disposition, such as through sales to individual customers and returns. The Company has no allowance for inventory reserves.

Inventory consisted of the following as of March 31, 2020 and December 31, 2019:

Equipment

Equipment are stated at cost, less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense when incurred, while renewals and betterments that materially extend the life of an asset are capitalized. When assets are sold, retired or otherwise disposed of, the cost and accumulated depreciation are removed from the salebalance sheets and any resulting gain or loss is reflected in the unaudited condensed consolidated statements of movie scripts. Revenues were recognized whenoperations and members’ deficit in the following conditions were met:period realized.

Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are as follows:

Impairment of Long-Lived Assets

Long-lived assets are comprised of equipment. The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset or group of assets may not be recoverable. If these circumstances exist, recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to future undiscounted net cash flows expected to be generated by the asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. There were no impairments to long-lived assets for the three months ended March 31, 2020 and 2019.

If anyResearch and Development

The Company’s policy is to engage market and branding consultants to research and develop specialty chocolate products, including chocolate products infused with a hemp-based ingredient, and packaging targeted to particular states within the US. The research and development costs for the three months ended March 31, 2020 and 2019, were approximately $4,500 and $70,000, respectively. These expenses are included in general and administrative expenses on the accompanying unaudited condensed consolidated statements of operations.

Deferred Financing Costs

The Company records origination and other expenses related to its debt obligations as deferred financing costs. These expenses are deferred and amortized over the life of the above conditionsrelated debt instrument. In accordance with Accounting Standards Update (“ASU”) No. 2015-03, deferred finance costs, net of accumulated amortization have been included as a contra to the corresponding loans in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019, respectively.

Stock Based Compensation

The Company measures and recognizes compensation expense for all stock-based payments at fair value over the requisite service period. The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options and warrants. For restricted stock grants, fair value is determined as the closing price of our common stock on the date of grant. Equity-based compensation expense is recorded in administrative expenses based on the classification of the employee or vendor. The determination of fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price, as well as by assumptions regarding a number of subjective variables. These variables include, but are not met,limited to, the Company will defer revenue until all conditions are met.expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

Income Taxes

The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of September 30, 2017March 31, 2020 and December 31, 2016,2019, the Company had a full valuation allowance against deferred tax assets. With the historical change in ownership, occurring December 30, 2016, the Company is subject to certain NOL limitations under Section 382 of the Internal Revenue Code.

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First Foods Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Per Share Data

In accordance with “ASC-260 - Earnings per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive shares outstanding as of September 30, 2017March 31, 2020 and 2016.2019 because their effect would be antidilutive.

The Company had 1,499,750 and 403,750 warrants to purchase common stock outstanding at March 31, 2020 and 2019, respectively. The Company had 4,470,000 and 3,370,000 warrants to purchase Series B preferred stock outstanding at March 31, 2020 and 2019, respectively. The Company has outstanding one (1) Series A preferred share that is convertible into five (5) shares of the Company’s common stock. Additionally, the Company has 473,332 Series B preferred shares, and 660,000 Series C preferred shares outstanding that are convertible into 2,366,660 and 660,000 shares of common stock at March 31, 2020 and 2019, respectively. The warrants and preferred stock were not included in the Company’s weighted average number of common shares outstanding because they would be anti-dilutive.

Fair Value of Financial Instruments

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value. The carrying value of cash, merchant cash advances, prepaid expenses, accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments. Management is of the opinion that the Company is not exposed to significant market or credit risks arising from these financial instruments.

Advertising and Promotion

Advertising and promotion costs are expensed as incurred. Advertising and promotion costs recognized in the unaudited condensed consolidated statements of operations for the three months ended March 31, 2020 and 2019, were approximately $15,300 and $10,700, respectively.

Non-Controlling Interests in Condensed Consolidated Financial Statements

In June 2011, the FASB issued ASC 810-10-65-1, to clarify that a non-controlling (minority) interest in a subsidiary is an ownership interest in the entity that should be reported as equity in the condensed consolidated financial statements. It also requires consolidated net income to include the amounts attributable to both the parent and non-controlling interest, with disclosure on the face of the unaudited condensed consolidated income statement of the amounts attributed to the parent and to the non-controlling interest. In accordance with ASC 810-10-45-21, those losses attributable to the parent and the non-controlling interest in subsidiaries may exceed their interests in the subsidiary’s equity. The excess and any further losses attributable to the parent and the non-controlling interest shall be attributed to those interests even if that attribution results in a deficit non-controlling interest balance. During the year ended December 31, 2017, the Company entered into a subscription agreement for the sale of a ten-percent equity interest in its wholly owned subsidiary, Holy Cacao, for $200,000 in cash proceeds, in the aggregate. During the year ended December 31, 2019, 5% equity was issued to a service provider due to the completion of Holy Cacao’s first sale of its product, as per the agreement with the service provider. The Company’s periodic reporting now includes the results of operations of Holy Cacao, with the fifteen-percent ownership reported as noncontrolling interests. The cost of goods sold and operating expense for Holy Cacao for the three months ended March 31, 2020 was $748 and $93,482, respectively. There was $3,605 of revenue for Holy Cacao for the three months ended March 31, 2020.

The Company conducts business as two operating segments, First Foods and Holy Cacao. The Company does not distinguish between the two segments and has only one reportable segment based on quantitative thresholds. The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”)From time to time, new accounting pronouncements are issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605-Revenue Recognition and most industry-specific guidance throughout the ASC. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. In July 2015,by the FASB deferredor other standard setting bodies. Unless otherwise discussed, the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early adoption is permitted to the original effective date for annual reporting periods beginning after December 15, 2016 (including interim reporting periods within those periods). The amendments may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company will adopt ASU 2014-09 in the first quarter of 2019 and plans to apply the full retrospective approach. The Company does not anticipatebelieves that the adoptionimpact of ASU 2014-09recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses” to improve information on credit losses for financial assets and net investment in leases that are not accounted for at fair value through net income. ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. In April 2019 and May 2019, the FASB issued ASU No. 2019-04, ”Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” and ASU No. 2019-05, ”Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief” which provided additional implementation guidance on the previously issued ASU. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective date for public filers that are considered small reporting companies (“SRC”) as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since the Company is an SRC, implementation is not needed until January 1, 2023. The Company will continue to evaluate the effect of adopting ASU 2016-13 will have on the Company’s unaudited condensed consolidated financial statements.

NOTE 2 – PREPAID EXPENSES

The following table represents prepaid expenses and other current assets as of September 30, 2017 and December 31, 2016, respectively.

		Year Ended
		September 30, 2017				December 31, 2016
Insurance		$	17,063			$	-
Financing fees			5,000				-
Employee receivable			981				-
Total		$	23,044			$	-

NOTE 32 – RELATED PARTY TRANSACTIONS

Employment Agreements Agreement

On February 27, 2017, Harold Kestenbaum an individual newly appointed by the Board of Directors of the Company assumed the role of Chairman of the Board of Directors and Interim Chief Executive Officer (“Interim CEO”). Pursuant to the consulting contract, the Interim CEO shall receive (i) 750,000 shares of common stock of the Company for his appointment as Chairman of the Board, (ii) $10,000 per month for his role as Interim CEO, which shall be deferred until the Company raises at least $1,500,000 in financing, and (iii) $10,000 for every new franchising client he obtains, and (iv) $2,000 per month for legal services upon acquisition of a franchising client. In conjunction with this individual’s appointment, the former Chief Executive Officer resigned, but will remain as the Secretary and a director of the Company. The shares were valued at $1,500,000, representing a market value of $2.00 per share based on the closing price on the day of trading.

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First Foods Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

On March 1, 2017, Mark J. Keeley an individual newly appointed by the Board of Directors of the Company assumed the role of Chief Financial Officer (“CFO”). Pursuant to thehis Employment Agreement, the CFO shall receive (i) 750,000$20,833 per month. Additionally, Mr. Keeley earns an additional $40,000 per year for his role as a Director of the Board. On March 18, 2020, the Company issued its CFO and Director warrants to purchase 500,000 shares of common stockSeries B Preferred Stock in lieu of $250,000 of deferred salary (see Note 6). As of March 31, 2020 and December 31, 2019, the Company has accrued $141,667 and (ii) $20,833 per month, which shall be deferred until$329,167, respectively, in relation to the Company raises at least $1,500,000employment agreements and $17,860 and $16,953, respectively, in financing. The 750,000 shares of common stock are valued at $1,687,500, representing a fair market value of $2.25 per share based onrelation to the closing price on the day of trading, and are recognized over a 12-month service period as a result of a clawback provision.payroll tax liability.

Consulting Agreements

On October 25,February 27, 2017, Mark J. Keeley was appointed as a directorHarold Kestenbaum assumed the role of the Company byChairman of the Board of Directors (“Chairman”) and Interim Chief Executive Officer (“Interim CEO”). His consulting agreement expired on February 26, 2020 and his January 1, 2020 Board of Director agreement was amended on May 6, 2020 to provide for his continued role as Chairman and Interim CEO. Mr. Kestenbaum earns $40,000 per year for his role as Chairman of the Board. As of March 31, 2020, the Company has accrued a total of $40,000 in relation to compensation earned under the consulting agreement.

On January 30, 2019, the Company entered into a consulting agreement with R and W Financial, an entity owned by a Company director, to assist with the growth of the Company.

A R and W Financial will receive $5,000 per month for an indefinite period of time, subject to cancellation by the Company director, Hershel Weiss, owns the building that includes the Company’s office addressor R and provides office spaceW Financial with 30 days written notice to the other. On November 21, 2019, the Company at no cost.entered into an additional consulting agreement with R and W Financial to assist with the growth of the Company. R and W Financial will receive $7,000 per month for an indefinite period of time, subject to cancellation by the Company or R and W Financial with 10 days written notice to the other. On January 28, 2020, the Company amended the November 21, 2019 agreement with R and W Financial. In accordance with the amendment agreement, effective January 1, 2020, R and W Financial will receive $4,250 every two weeks for an indefinite period of time, subject to cancellation by the Company or R and W Financial with 10 days written notice to the other. The outstanding balance as of March 31, 2020 was $37,713.

Due to ShareholderRelated Party Loans

Throughout the period ended September 30, 2017, the Company Secretary, who is also a director and a shareholder of the Company, provided non-interest bearing short term loans to the Company. A total of $196,547 was advanced during the nine months ended September 30, 2017, and the Company repaid $29,197, for a balance of $167,350.

On October 17, 2017, Obvia LLC, of which the CompanyCompany’s Chief Financial Officer, who is also a director and a shareholder of the Company, is a 50% owner, provided a loan to the Company’s Funding Division in the amount of $100,000 bearing an interest rate of the US Prime Federal Funds Rate +1%, which was amended to be compounded monthly.12% per annum. The note is not secured by the full value of the borrower.

NOTE 4 – STOCKHOLDERS’ DEFICIT

On Decemberand matures on April 30, 2016, as a result of a private transaction, the control block of voting stock of the Company, represented by 10,500,000 shares of common stock (the “Shares”), was transferred from the founder of the Company to Rosenweiss Capital LLC, and a change of control of the Company occurred. The consideration paid for the Shares, which represent 74% of the issued and outstanding share capital of the Company on a fully-diluted basis, was $200,000. 

On February 27, 2017, a consulting contract containing an award of 750,000 shares of common stock (see Note 3) was executed for the Interim CEO to serve as a Director and Chairman of the Board. The shares were valued at $1,500,000, representing a market value of $2.00 per share. The shares were fully vested at the date of grant and recorded in general and administrative expenses on the condensed consolidated statement of operations.

On March 1, 2017, an employment agreement containing an award of 750,000 shares of common stock was executed for the CFO (see Note 3). The shares were valued at $1,687,500, representing a fair market value of $2.25 per share. The shares are subject to a clawback provision during the CFO’s first year of service from February 1, 2017 through January 31, 2018. As such, the value of the shares is being amortized over 12 months.2020. During the ninethree months ended September 30, 2017,March 31, 2020 and 2019, the Company recorded $1,125,000interest expense of compensation expense which is included in general$2,992 and administrative expenses on$1,724, respectively. As of March 31, 2020 and December 31, 2019, the condensed consolidated statementprincipal balance of operations.this loan was $100,000 and the accrued interest was $17,026 and $14,034, respectively.

On April 27, 2017,26, 2018, R and W Financial, an entity owned by a Company director, provided an unsecured, non-interest bearing loan in the amount of $179,813 which matures on April 25, 2020. This loan has been extended until April 25, 2021. As of March 31, 2020 and December 31, 2019, the principal balance of this loan was $179,813.

On June 14, 2018, the Company issued a promissory note of $100,000 to Mayer Weiss, an immediate family member of a Company director. The note carries a 12% interest rate per annum, and non-compounding interest is to be paid every six months. Additionally, 100,000 shares of common stock were granted to Robert E. Hunt for strategic business to market services. Theissued with the note and are being amortized over the life of the loan which was initially due December 13, 2019. An additional 25,000 shares were recorded byissued with an amendment extending the maturity date to March 13, 2020 and are being amortized over the life of the loan. On March 13, 2020, the Company extended the due date to June 13, 2020 and issued 25,000 shares of the Company’s common stock at $145,000, representing a fair value of $0.20 per share. The Company recorded a total debt discount of $5,000 for the fair market value of $1.45 per share whichthe shares issued. During the three months ended March 31, 2020 and 2019, the Company recorded $5,508 and $1,810 of interest expense related to the amortization of debt discount, respectively, and $2,992 and $2,959 of regular interest, respectively. As of March 31, 2020 and December 31, 2019, the principal balance of this loan was based on$100,000 and the fair market value. This amountaccrued interest was recorded as compensation expense which is included in general$9,041 and administrative expenses on the condensed consolidated statement of operations. On October 31, 2017, these shares were cancelled and replaced with 100,000 warrants. The warrants were issued with an exercise price of $0.01 per share and may be redeemed effective October 31, 2017 through October 31, 2018.

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Notes to Unaudited Condensed Consolidated Financial Statements$6,049, respectively.

On April 28, 2017, 222,857October 11, 2018, the Company issued a promissory note of $250,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 250,000 shares of common stock were issued to Integrity Media, Inc. for advertising, promotion, and due diligence efforts and expenses. The shares were recorded bywith the Companynote valued at $501,428, representing a fair market value of $2.25$0.10 per share, which was based onis the fair market value. This amount was recorded as compensation expense which is included in general and administrative expenses on the condensed consolidated statement of operations.

On May 11, 2017, the Company entered into a consulting agreement to place up to $1.5 million worth of common stock within six months to provide funds to complete an acquisition. The Company may incur fees up to $135,000 in relation to this agreement with a $10,000 retainer payable immediately in common stock valued on the date of signing. The remaining $125,000 is to be placed into escrow and released on the date of closing valued at the closing asking price. Of the $10,000 retainer, $5,000 is non-refundable. As of September 30, 2017 and through the date of these financial statements, the Company has recorded $5,000 as prepaid expense and accrued liabilities, no shares have been issued related to this agreement, and the original agreement is in the process of being renegotiated among and between the Company and the consultant.

On May 24, 2017, 250,000 shares of common stock were granted for consulting services to develop and disseminate corporate information. The shares were recorded by the Company at $495,000, representing a fair market value of $1.98 per share which was based on the fair market value. The shares were fully vested at the date of grant and recorded in general and administrative expenses on the condensed consolidated statement of operations.

On June 23, 2017, 150,000 shares of common stock were granted to Robert Kanuth for fund raising services. The shares were recorded by the Company at $307,500, representing a fair market value of $2.05 per share which was based on the trading price. The shares were fully vested at the date of grant and recorded in general and administrative expenses on the condensed consolidated statement of operations.

On October 25, 2017, the Board of Directors of the Company elected to designate the 5,000,000 preferred shares authorized into two series. Series A Preferred Shares was designated with one share. The remaining 4,999,999 shares were designated as Series B Preferred Shares. The majority shareholder of the Company approved the actions on October 22, 2017. The Board of Directors further resolved to issue the Series A share to Rosenweiss Capital LLC, a related party, for fifty percent (50%) of the voting rights of all outstanding classes of capital stock of the Company at all times and shall offer the Series B as they determine fit. The Board of Directors further resolved that the Board of Directors of the Company file a Certificate of Designation, setting forth such rights, and further resolved that any and all actions heretofore reasonably taken by or on behalf of the Company in the conduct of its business prior to the date hereof are approved, ratified and confirmed in all respects as being the acts and deeds of the Company, including any and all actions heretofore made for or on behalf or in the name of the Company by any of the Company’s officer and directors. The designations, powers, preferences and rights of the shares of Series A Convertible Preferred Stock of the Company Series B Convertible Stock, which such resolution is as follows:

Ranking. The Preferred Stock shall rank, as to payment of dividends, rights to distribution of assets upon liquidation, dissolution rights and/or winding up rights of the Company and such other items as may arise from time to time: (i) senior to the shares of (a) common stock, par value $0.001 per share, of the Company (the “Common Stock”), and (c) any other class or series of capital stock issued by the Company which by its terms does not expressly rank senior to or on a parity with the Preferred Stock (collectively, with the Common Stock and the Series A Stock, the “Junior Stock”), and (ii) pari passu between the Series A Stock and the Series B Stock

Dividend Rights; Distributions.

(a) At the sole election of the Board, the Board may, at any time and from time to time, declare dividends on the Preferred Stock. Such dividends may be paid, at the sole election of a majority of the Board, either in (i) cash, (ii) shares of Common Stock, (iii) shares of Preferred Stock, (iv) shares of any other equity securities of the Company, or (v) any combination of the foregoing, provided that funds and/or equity securities are legally available to pay such dividends. If the Company elects to pay dividends in shares of Common Stock, Preferred Stock, and/or any other equity securities of the Company, such dividends shall be paid in full shares only, with any shares to be rounded up to a full share for any fractional share to be paid. Dividends declared by the Board of Directors may be paid on any date fixed by the Board to holders of record of shares of Preferred Stock as they appear on the Company’s stock register at the close of business on the record date (the “Record Date”). The Record Date, which shall not be greater than sixty (60) days nor less than ten (10) days before payment of dividends for such Record Date, shall be fixed by the Board.

(b) No dividend payment shall be made on or with respect to any shares of Junior Stock unless, prior thereto, all declared and unpaid dividends on any shares of Preferred Stock shall have been paid on all then outstanding shares of Preferred Stock and/or any then outstanding shares of Parity Stock.

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Notes to Unaudited Condensed Consolidated Financial Statements

(c) In addition to any other dividends that a holder of shares of Preferred Stock is entitled to, a holder of Preferred Stock shall be entitled to receive dividends on an as converted basis when, if and as declared by the Board of Directors for distribution to holders of Common Stock from time to time, only when, as and if declared by the Board of Directors, and only out of funds that are legally available.

Voting Rights.Holders of the Series A Stock shall have voting rights equal to fifty percent (50%) of the voting rights of all outstanding classes of capital stock of the Company at all times. Holders of the Series B Stock shall have voting rights equal to equal to five (5) votes per each share of the Series B Stock.

Stated Value. Upon liquidation, dissolution and/or winding up of the Company (and/or any other reason that the stated value of the Preferred Stock is required and/or deemed advisable by the Board to be determined), shares of Preferred Stock then outstanding shall have a stated value per share as determined by the Board in good faith.

Conversion Rights. Holders of Preferred Stock shall have the following rights with respect to conversion of shares of Preferred Stock into shares of Common Stock: a conversion rate of five (5) shares of Common Stock.

NOTE 5 – SUBSEQUENT EVENTS

The Company has analyzed its operations subsequent to September 30, 2017 through the date of this filing, and noted the following subsequent events, in addition to those disclosed in Notes 1, 3 and 4.

On October 31, 2017, the 100,000 shares of common stock issued to Robert E. Hunt on April 27, 2017 were cancelled and replaced with 100,000 warrants. The warrants were issued with an exercise price of $0.01 per share and may be exercised between October 31, 2017 through October 31, 2018.

On November 2, 2017, the Company entered into an unsecured Promissory Note and Share Agreement whereby the Company promised to pay $90,000 to the lender. The lender advanced $50,000 on the date of the agreement and will advance $40,000 onbe amortized over the life of the loan which is due April 10, 2020 with a balloon payment. The Company recorded a debt discount of $25,000 for the fair market value of the shares issued. During the three months ended March 31, 2020 and 2019, the Company recorded $4,159 and $4,113 of interest expense related to the amortization of debt discount, respectively, and $7,479 and $7,397 of regular interest, respectively. As of March 31, 2020 and December 31, 2019, the principal balance of the note was $250,000 and the accrued interest was $1,637 and $1,658, respectively.

All of the above transactions were approved by disinterested directors.

Director Agreements

On May 10, 2018, the directors of the Company were awarded share-based compensation for the service period of May 10, 2018 through December 31, 2020, as a one-time award of the ability to purchase a particular amount of warrants, ranging from 80,000 to 400,000 (collectively the “Warrants”) with the following terms:

The Company issued warrants with respect to 1,280,000 Series B Preferred Stock, in the aggregate. The Company will expense the fair value of these warrants in the amount of $768,000 ratably during the years ended December 31, 2018, 2019 and 2020 For the three months ended March 31, 2020 and 2019, the Company recorded $72,348 and $71,553 as compensation expense related to the warrants, respectively.

On February 26, 2019, the Company entered into director agreements with each of the Directors of the Company. Pursuant to the agreements, each Director may be compensated with share-based and/or cash-based compensation. The Directors’ compensation for the period January 1, 2017. The note carries an interest rate of 10%2019 through December 31, 2019 was $10,000 per quarter per Director to be paid on a date determined by the Board of Directors. In addition, the Directors were able to receive a one-time award of the ability to purchase a particular amount of warrants, as determined by the Board of Directors.

On January 1, 2020, the director agreements were renewed with the same terms. As of March 31, 2020 and December 31, 2019 the Company has accrued $200,000 and $160,000, respectively, in relation to the director agreements.

On December 31, 2019, three of the Directors of the Company were awarded share-based compensation for services performed during the service period of January 1, 2019 through December 31, 2019, as a one-time award to each purchase 200,000 warrants (collectively the “Warrants”) with the following terms:

The Company issued warrants with respect to 600,000 Series B Preferred Stock, in the aggregate. The Company expensed the fair value of these warrants in the amount of $720,000 for the year ended December 31, 2019.

NOTE 3 – EQUIPMENT

Equipment, net consists of the following:

NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following:

NOTE 5 – LOANS AND LONG-TERM LOANS

On July 23, 2018, the Company issued a promissory note of $100,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every six months. Additionally, 100,000 shares of common stock were issued with the note and will be amortized over the life of the loan which is due on January 22, 2020 with a balloon payment. The Company recorded a debt discount of $5,500 for the fair market value of the shares issued. On January 21, 2020, the note was amended. The Company paid back $50,000 of the note and extended the remaining $50,000 for an additional six months. In accordance with the amendment agreement, the Company issued 50,000 shares of the Company’s common stock at a fair value of $0.24 per share which is the market value on the first day of every month until maturity on May 1, 2018. As partdate of the amendment. The Company recorded a debt discount of $12,000 for the fair market value of the shares issued and will be amortized over the remaining life of the note. During the three months ended March 31, 2020 and 2019, the Company recorded $4,800 and $903 of interest expense related to the amortization of debt discount and $1,841 and $2,959 of regular interest, respectively. As of March 31, 2020 and December 31, 2019, the principal balance of the note was $50,000 and $100,000, the unamortized debt discount was $7,410 and $211 and accrued interest was $134 and $293, respectively.

On July 23, 2018, the Company issued a promissory note of $18,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every six months. Additionally, 18,000 shares of common stock were issued with the note and will be amortized over the life of the loan which is due on January 22, 2020 with a balloon payment. The Company recorded a debt discount of $990 for the fair market value of the shares issued. On January 23, 2020, the Company amended the note and the term of the note was extended for an additional twelve months. In accordance with the amendment agreement, the Company issued 18,000 shares of the Company’s common stock at a fair value of $0.24 per share, which is the market value on the date of the amendment and will be amortized over the remaining life of the note. The Company recorded a debt discount of $4,320 for the fair market value of the shares issued. During the three months ended March 31, 2020 and 2019, the Company recorded $845 and $163 of interest expense related to the amortization of debt discount and $538 and $533 of regular interest, respectively. As of March 31, 2020 and December 31, 2019, the principal balance of the note was $18,000, the unamortized debt discount was $3,515 and $40 and accrued interest was $231 and $233, respectively.

On January 9, 2019, the Company issued a promissory note of $50,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 50,000 shares of common stock were issued with the note valued at $0.1425 per share, which is the market value on the date of the agreement and will be amortized over the life of the note which is due July 8, 2020 with a balloon payment. The Company recorded a debt discount of $7,125 for the fair market value of the shares issued. During the three months ended March 31, 2020 and 2019, the Company recorded $1,188 and $1,057 of interest expense related to the amortization of debt discount and $1,496 and $1,332 of regular interest, respectively. As of March 31, 2020 and December 31, 2019, the principal balance of the note was $50,000, the unamortized debt discount was $1,292 and $2,479 and the accrued interest was $348 and 352, respectively.

On June 12, 2019, the Company issued a promissory note of $25,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 12,500 shares of common stock were issued with the note valued at $0.295 per share, which is the market value on the date of the agreement and will be amortized over the life of the note which is due June 11, 2021 with a balloon payment. The Company recorded a debt discount of $3,688 for the fair market value of the shares issued. During the three months ended March 31, 2020, the Company recorded $460 of interest expense related to the amortization of debt discount and $748 of regular interest. As of March 31, 2020 and December 31, 2019, the principal balance of the note was $25,000, the unamortized debt discount was $2,207 and $2,667 and the accrued interest was $158 and $160, respectively.

On July 22, 2019, the Company issued a promissory note of $250,000. The interest rate for the note is 12% per annum with non-compounding interest to be paid every month. Additionally, 250,000 shares of common stock were issued with a fair value of $100,000, recorded as a debt discount, and will be amortized over the life of the note, which is due in monthly payments between eighteen (18) months and twenty-three (23) months from July 22, 2019 based upon the sum of funds available in the Company’s First Foods Funding Division. The balance will be paid twenty-four (24) months from July 22, 2019. In addition, the Company issued a warrant to purchase 250,000 shares of the Company’s common stock with an exercise price of $0.25 per share. The warrant was valued at $99,925 based on the Black Scholes Model and included in the debt discount. The warrant is fully vested as of the issue date with an exercise term of three (3) years. During the three months ended March 31, 2020, the Company recorded $24,922 of interest expense related to the amortization of debt discount and $7,479 of regular interest. As of March 31, 2020 and December 31, 2019, the principal balance of the note was $250,000, the unamortized debt discount was $130,636 and $155,558 and the accrued interest was $795 and $815, respectively.

On October 2, 2019, the Company issued a promissory note for $410,000. The interest rate for the note is 12% per annum with non-compounding interest to be paid every month. The Company received $389,500 and the lender retained $20,500 as an original issue discount. Additionally, 410,000 shares of the Company’s common stock were issued with a fair value of $106,600, recorded as a debt discount, and will be amortized over the life of the notes, which are due in monthly payments between eighteen (18) months and twenty-three (23) months from the date of the note based upon the sum of funds available in the Company’s First Foods Funding Division. The balance will be paid twenty-four (24) months from the date of the note. In addition, the Company issued warrants to purchase 205,000 shares of the Company’s common stock with an exercise price of $0.30 per share. The warrants are valued at $52,501 based on the Black Scholes Model and included in the debt discount. The warrants are fully vested as of the date on the note with an exercise term of three (3) years. During the three months ended March 31, 2020, the Company recorded $22,389 of interest expense related to the amortization of debt discount and $12,266 of regular interest. As of March 31, 2020 and December 31, 2019, the principal balance of the note was $410,000, the unamortized debt discount was $135,013 and $157,402 and the accrued interest was $1,098 and $530, respectively.

On October 16, 2019, the Company issued a promissory note for $140,000. The interest rate for the note is 12% per annum with non-compounding interest to be paid every month. The Company received $133,000 and the lender retained $7,000 as an original issue discount. Additionally, 140,000 shares of the Company’s common stock were issued with a fair value of $34,300, recorded as a debt discount, and will be amortized over the life of the notes, which are due in monthly payments between eighteen (18) months and twenty-three (23) months from the issue date based upon the sum of funds available in the Company’s First Foods Funding Division. The balance will be paid twenty-four (24) months from the issue date. In addition, the Company issued warrants to purchase 205,000 and 140,000 shares of the Company’s common stock with an exercise price of $0.30 and $0.50 per share, respectively. The warrants are valued at $83,060 based on the Black Scholes Model and included in the debt discount. The warrants are fully vested as of the issue date with an exercise term of three (3) years. During the three months ended March 31, 2020, the Company recorded $15,502 of interest expense related to the amortization of debt discount and $4,188 of regular interest. As of March 31, 2020 and December 31, 2019, the principal balance of the note was $140,000, the unamortized debt discount was $95,911 and $111,413 and the accrued interest was $3,470 and $0, respectively.

On October 31, 2019, the Company issued a promissory note of $200,000. The interest rate for the note is 12% per annum with non-compounding interest to be paid every month. The Company received $190,000 and the lender retained $10,000 as an original debt discount. Additionally, 200,000 shares of the Company’s common stock were issued with a fair value of $58,000, recorded as a debt discount, and will be amortized over the life of the note, which is due in monthly payments between eighteen (18) months and twenty-three (23) months from the issue date based upon the sum of funds available in the Company’s First Foods Funding Division. The balance will be paid twenty-four (24) months from the issue date. In addition, the Company issued warrants to purchase 200,000 shares of the Company’s common stock with an exercise price of $0.30 per share. The warrants are valued at $57,180 based on the Black Scholes Model and included in the debt discount. The warrants are fully vested as of the issue dates with an exercise term of three (3) years. During the three months ended March 31, 2020, the Company recorded $15,605 of interest expense related to the amortization of debt discount and $5,984 of regular interest. As of March 31, 2020 and December 31, 2019, the principal balance of the note was $200,000, the unamortized debt discount was $99,115 and $114,720 and the accrued interest was $0.

On January 10, 2020, the Company issued a promissory note of $60,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 60,000 shares of common stock were issued with the note valued at $0.28 per share, which is the market value on the date of the agreement and will be amortized over the life of the note which is due July 10, 2021 with a balloon payment. The Company recorded a debt discount of $16,692 for the fair market value of the shares issued. During the three months ended March 31, 2020, the Company recorded $2,476 of interest expense related to the amortization of debt discount and $1,598 of regular interest. As of March 31, 2020, the principal balance of the note was $60,000, the unamortized debt discount was $14,216 and the accrued interest was $398.

On January 29, 2020, the Company issued a promissory note of $96,000. The interest rate for the note is 12% per annum with non-compounding interest to be paid every month. The Company received $91,200 and the lender retained $4,800 as an original debt discount. Additionally, 96,000 shares of the Company’s common stock were issued with a fair value of $21,120, recorded as a debt discount, and will be amortized over the life of the note, which is due in monthly payments between eighteen (18) months and twenty-three (23) months from the issue date based upon the sum of funds available in the Company’s First Foods Funding Division. The balance will be paid twenty-four (24) months from the issue date. In addition, the Company issued warrants to purchase 96,000 shares of the Company’s common stock with an exercise price of $0.22 per share. The warrants are valued at $20,717 based on the Black Scholes Model and included in the debt discount. The warrants are fully vested as of the issue dates with an exercise term of three (3) years. During the three months ended March 31, 2020, the Company recorded $3,961 of interest expense related to the amortization of debt discount and $1,957 of regular interest. As of March 31, 2020, the principal balance of the note was $96,000, the unamortized debt discount was $42,676 and the accrued interest was $37.

NOTE 6 – STOCKHOLDERS’ DEFICIT

On January 9, 2019, the Company issued 50,000 shares of common stock on November 3, 2017.in connection with a $50,000 promissory note (See Note 5).

On November 2, 2017March 26, 2019, the Company signed a Facility Access and Wholesale Production Purchase and Sale Agreement for a term of twelve (12) months, which has been extended through June 30, 2020, with an unrelated party to use the party’s leased commercial chocolate product manufacturing facility in exchange for paying the following:

The Company also issued 100,000 shares of the Company’s common stock at the closing market price of $0.30 on February 5, 2019 as a charitable contribution to a non-profit entity in support of the entity’s environmental regeneration efforts.

On January 10, 2020, the Company issued 60,000 shares of common stock in connection with a $60,000 promissory note (see Note 5).

On January 21, 2020, the Company amended its February 21, 2017 consultingthe $100,000 promissory note that it had issued on July 23, 2018. In accordance with the amendment agreement, with Integrity Media, Inc. to release the Company from $10,500issued 50,000 shares of accounts payable that will be recorded by the Company asCompany’s common stock at a gain on the forgivenessfair value of debt in the fourth quarter.$0.24 per share (see Note 5).

On November 3, 2017January 23, 2020, the Company amended the $18,000 promissory note that it had issued on July 23, 2018. In accordance with the amendment agreement, the Company issued 18,000 shares of the Company’s common stock at a fair value of $0.24 per share (see Note 5).

On January 29, 2020, the Company issued 96,000 shares of common stock in connection with a $96,000 promissory note (see Note 5).

On March 6, 2020, the Company entered into a consultingsix-month agreement with Oded Brenner that supersedesa strategic investment consultant (the “Investment Consultant”). The Investment Consultant was awarded 400,000 shares of the Company’s common stock at a fair market value of $0.24 per share, for $96,000.

On March 13, 2020, the Company amended the promissory note to Mayer Weiss to extend the due date to June 13, 2020. In accordance with the amendment agreement, the Company issued 25,000 shares of the Company’s common stock at a fair value of $0.20 per share.

Warrant Activity

Common Stock Warrants

On February 5, 2019, the Company signed a Consulting Agreement for a six (6) month term with a consultant to run the day-to-day manufacturing, packaging and replacesdistribution of the AprilCompany’s chocolate product line. The Consulting Agreement has a $7,000 monthly fee. In addition, the Company issued a warrant to the Consultant to purchase 60,000 shares of the Company’s common stock at the closing market price of $0.30 on February 5, 2019 with a term of three (3) years. The Company valued these warrants using the Black-Scholes option pricing model with the following inputs: exercise price of $0.30; fair market value of underlying stock of $0.30; expected term of 3 years; risk free rate of 2.50%; volatility of 388.56%; and dividend yield of 0%. The total fair value of these warrants is $17,988 and was expensed at issuance. The six-month Consulting Agreement ended on August 5, 2019 and was extended on a monthly basis through December 5, 2019, after which time the consultant was retained by R and W Financial. The consultant continues to provide services to the Company through the November 21, 2017 binding term sheet2019 agreement between the Company and Oded Brenner. The consultingR and W Financial. On January 28, 2020, the Company amended the November 21, 2019 agreement is a performance-based agreement that requires Mr. Brenner to perform specific packaging, marketingwith R and product development duties in connection with the Company’s launch of its Holy Cacao subsidiary.W Financial. In accordance with the consultingamendment agreement, Mr. Brennereffective January 1, 2020, R and W Financial will release the Company from $38,950receive $4,250 every two weeks for an indefinite period of accounts payable that will be recordedtime, subject to cancellation by the Company asor R and W Financial with 10 days written notice to the other.

On July 22, 2019, the Company issued a gainpromissory note of $250,000 (see Note 5). In connection with this note the Company issued a warrant to purchase 250,000 shares of the Company’s common stock with an exercise price of $0.25 per share. The warrant was valued at $99,925 based on the forgiveness of debtBlack Scholes Model and included in the fourth quarter. Mr. Brennerdebt discount. The warrant is fully vested and was fully expensed as of the issue date with an exercise term of three (3) years.

On October 2, 2019, the Company issued a promissory note for $410,000 (see Note 5). In connection with this note the Company issued warrants to purchase 205,000 shares of the Company’s common stock with an exercise price of $0.30 per share. The warrant was valued at $52,501 based on the Black Scholes Model and included in the debt discount. The warrant is fully vested and was fully expensed as of the issue date with an exercise term of three (3) years.

On October 16, 2019, the Company issued a promissory note for $140,000 (see Note 5). In connection with this note the Company issued warrants to purchase 205,000 and 140,000 shares of the Company’s common stock with an exercise price of $0.30 and $0.50 per share, respectively. The warrants were valued at $83,060 based on the Black Scholes Model and included in the debt discount. The warrants are fully vested as of the issue date with an exercise term of three (3) years.

On October 31, 2019, the Company issued a promissory note of $200,000 (see Note 5). In connection with this note the Company issued warrants to purchase 200,000 shares of the Company’s common stock with an exercise price of $0.30 per share. The warrants are valued at $57,180 based on the Black Scholes Model and included in the debt discount. The warrants are fully vested as of the issue date with an exercise term of three (3) years.

On January 29, 2020, the Company issued a promissory note of $96,000 (see Note 5). In connection with this note the Company issued warrants to purchase 96,000 shares of the Company’s common stock with an exercise price of $0.22 per share. The warrants are valued at $20,717 based on the Black Scholes Model and included in the debt discount. The warrants are fully vested as of the issue dates with an exercise term of three (3) years.

A summary of the Company’s warrants to purchase common stock activity is as follows: