UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-Q
☒ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
For the quarterly period ended March 31, 2023
☐ | Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the transition period from ________ to ________
Commission File No. 000-52828
Black Bird Biotech, Inc. |
(Exact name of registrant as specified in its charter) |
Nevada |
| 98-0521119 |
(State or Other Jurisdiction of Incorporation or Organization) |
| (IRS Employer Identification No.) |
3505 Yucca Drive, Suite 104, Flower Mound, Texas 75028
(Address of Principal Executive Offices, Including Zip Code)
(833) 223-4204
(Registrant’s telephone number, including area code)
___________________________________________________________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
Securities Registered under Section 12(b) of the Exchange Act: None
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 ☒ 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Smaller reporting company | ☒ |
Accelerated filer | ☐ | Emerging growth company | ☒ |
Non-accelerated | ☒ |
|
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 ☒
The number of shares outstanding of the registrant’s Common Stock, $.001 par value (being the only class of its common stock), is 250,904,667658,855,696 as of November 14, 2022.May 22, 2023.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
| Page |
| |
3 |
| ||
4 |
| ||
5 |
| ||
| 6 |
| |
| 7 |
|
2 |
Table of Contents |
BLACK BIRD BIOTECH, INC.
(formerly Digital Development Partners, Inc.)
Consolidated Balance Sheets
|
| 9/30/22 (unaudited) |
|
| 12/31/21 (audited) |
| ||
ASSETS |
| |||||||
CURRENT ASSETS |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 66,176 |
|
| $ | 499,766 |
|
Other current assets |
|
|
|
|
|
|
|
|
Inventory |
|
| 90,180 |
|
|
| 74,463 |
|
Prepaid expenses |
|
| --- |
|
|
| 101,189 |
|
Accounts receivable |
|
| 3,913 |
|
|
| 2,741 |
|
Total current assets |
|
| 160,269 |
|
|
| 678,159 |
|
OTHER ASSETS |
|
|
|
|
|
|
|
|
Deposit - asset purchase |
|
| --- |
|
|
| --- |
|
Fixtures and equipment |
|
| 8,245 |
|
|
| 11,601 |
|
Intangible asset |
|
| -- |
|
|
| 84,444 |
|
Total other assets |
|
| 8,245 |
|
|
| 96,045 |
|
TOTAL ASSETS |
| $ | 168,514 |
|
| $ | 774,204 |
|
|
| 3/31/23 (unaudited) |
|
| 12/31/22 (audited) |
| ||||||||||
ASSETS | ASSETS |
| ||||||||||||||
CURRENT ASSETS |
|
|
|
|
| |||||||||||
Cash and cash equivalents |
| $ | 7,234 |
| $ | 44,448 |
| |||||||||
Other current assets |
|
|
|
|
| |||||||||||
Inventory |
| 82,987 |
| 88,381 |
| |||||||||||
Accounts receivable |
| 2,315 |
| 2,259 |
| |||||||||||
Right of use asset - operating lease |
|
| 6,128 |
|
|
| --- |
| ||||||||
Total current assets |
|
| 98,664 |
|
|
| 135,088 |
| ||||||||
OTHER ASSETS |
|
|
|
|
| |||||||||||
Fixtures and equipment |
| 6,009 |
| 7,127 |
| |||||||||||
Deferred offering cost |
| 76,293 |
| 76,293 |
| |||||||||||
Right of use asset - operating lease |
| 9,199 |
| --- |
| |||||||||||
Other asset |
|
| 1,000 |
|
|
| --- |
| ||||||||
Total other assets |
|
| 92,501 |
|
|
| 83,420 |
| ||||||||
TOTAL ASSETS |
| $ | 191,165 |
|
| $ | 218,508 |
| ||||||||
|
| |||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | LIABILITIES AND STOCKHOLDERS’ EQUITY |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||
LIABILITIES |
|
|
|
|
|
|
|
|
|
| ||||||
Current liabilities |
|
|
|
|
|
|
|
|
|
| ||||||
Other current liabilities |
|
|
|
|
|
|
|
|
|
| ||||||
Accounts payable and accrued liabilities |
| $ | 63,677 |
| $ | 35,973 |
|
| $ | 61,950 |
| $ | 103,849 |
| ||
Accrued interest payable |
| 21,671 |
| 4,446 |
|
| 32,444 |
| 15,977 |
| ||||||
Due to related party |
| 85,743 |
| 5,242 |
|
| 104,123 |
| 79,077 |
| ||||||
Third-party notes payable, net of loan fees of $47,873 and debt discount of $79,087 at September 30, 2022, and $0 and $166,667 at December 31, 2021, respectively |
|
| 655,083 |
|
|
| 58,333 |
| ||||||||
Third-party notes payable, net of loan fees of $46,544 (unaudited) and debt discount of $113,286 (unaudited) at March 31, 2023, and net of loan fees of $142,190 and debt discount of $156,024 at December 31, 2022, respectively |
| 703,325 |
| 669,775 |
| |||||||||||
Lease liability - operating |
|
| 6,128 |
|
|
| --- |
| ||||||||
Total current liabilities |
|
| 826,174 |
|
|
| 103,994 |
|
| 907,970 |
| 868,678 |
| |||
Long-term liabilities |
|
|
|
|
| |||||||||||
Lease liability - operating |
|
| 9,199 |
|
|
| --- |
| ||||||||
Total long-term liabilities |
|
| 9,199 |
|
|
| --- |
| ||||||||
TOTAL LIABILITIES |
| 826,174 |
| 103,994 |
|
| $ | 917,169 |
|
| $ | 868,678 |
| |||
|
|
|
|
|
|
|
|
|
|
| ||||||
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
| ||||||
Preferred stock, $0.001 par value, 50,000,000 shares authorized, 28,500 and -0- shares issued and outstanding at September 30, 2022, and December 31, 2021, respectively |
| $ | 28 |
| $ | --- |
| |||||||||
Common stock, $0.001 par value, 750,000,000 shares authorized, 250,904,667 and 301,230,828 shares issued and outstanding at September 30, 2022, and December 31, 2021, respectively |
| 250,904 |
| 301,230 |
| |||||||||||
Preferred stock, $0.001 par value, 50,000,000 shares authorized, 42,000 and 42,000 shares issued and outstanding at March 31, 2023, and December 31, 2022, respectively |
| $ | 42 |
| $ | 42 |
| |||||||||
Common stock, $0.001 par value, 2,500,000,000 shares authorized, 530,136,997 and 310,695,330 shares issued and outstanding at March 31, 2023, and December 31, 2022, respectively |
| 530,136 |
| 310,695 |
| |||||||||||
Stockholder receivable |
| (1,000 | ) |
| (1,000 | ) |
| (1,000 | ) |
| (1,000 | ) | ||||
Additional paid-in capital |
| 3,131,336 |
| 2,991,163 |
|
| 3,291,701 |
| 3,320,042 |
| ||||||
Retained earnings (accumulated deficit) |
|
| (4,038,928 | ) |
|
| (2,621,183 | ) |
|
| (4,546,883 | ) |
|
| (4,279,949 | ) |
Total stockholders’ equity |
|
| (657,660 | ) |
|
| 670,210 |
|
|
| (726,004 | ) |
|
| (650,170 | ) |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 168,514 |
|
| $ | 774,204 |
|
| $ | 191,165 |
|
| $ | 218,508 |
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3 |
Table of Contents |
BLACK BIRD BIOTECH, INC.
(formerly Digital Development Partners)
Consolidated Statements of Operations
|
| For the Three Months Ended September 30, |
| For the Nine Months Ended September 30, |
|
| For the Three Months Ended March 31, |
| ||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2023 (unaudited) |
|
| 2022 (unaudited) |
| ||||||
Sales |
| $ | 25,739 |
| $ | 46,694 |
| $ | 70,484 |
| $ | 81,906 |
|
| $ | 7,385 |
| $ | 13,802 |
| ||||
Cost of goods sold |
|
| 12,359 |
|
|
| 39,608 |
|
|
| 38,984 |
|
|
| 63,239 |
|
|
| 3,999 |
|
|
| 7,970 |
|
Gross profit (loss) |
| 13,380 |
| 7,086 |
| 31,500 |
| 18,667 |
|
| 3,386 |
| 5,832 |
| ||||||||||
Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Consulting services |
| 40,600 |
| 123,639 |
| 286,630 |
| 241,426 |
|
| --- |
| 63,100 |
| ||||||||||
Website expense |
| 901 |
| 1,427 |
| 4,358 |
| 11,355 |
|
| 175 |
| 1,720 |
| ||||||||||
Depreciation expense |
| 1,118 |
| 1,118 |
| |||||||||||||||||||
Amortization expense |
| --- |
| 31,667 |
| |||||||||||||||||||
Legal and professional services |
| 5,397 |
| 5,099 |
| 12,597 |
| 48,872 |
|
| 7,350 |
| 5,100 |
| ||||||||||
Advertising and marketing |
| 19,513 |
| 117 |
| 221,800 |
| 5,195 |
|
| --- |
| 102,245 |
| ||||||||||
License fee |
| --- |
| 22,339 |
| 16,998 |
| 24,008 |
|
| 4,325 |
| 16,998 |
| ||||||||||
Rent |
| 600 |
| 1,860 |
| 3,600 |
| 8,520 |
|
| 2,582 |
| 1,800 |
| ||||||||||
General and administrative |
|
| 102,398 |
|
|
| 205,697 |
|
|
| 559,550 |
|
|
| 399,256 |
|
|
| 70,610 |
|
|
| 285,104 |
|
Total expenses |
|
| 169,409 |
|
|
| 360,178 |
|
|
| 1,105,533 |
|
|
| 738,632 |
|
|
| 86,160 |
|
|
| 508,852 |
|
Net operating loss |
| (156,029 | ) |
| (353,092 | ) |
| (1,074,033 | ) |
| (719,965 | ) |
| (82,774 | ) |
| (503,020 | ) | ||||||
Other expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Amortization |
| (21,111 | ) |
| (31,667 | ) |
| (84,444 | ) |
| (73,889 | ) | ||||||||||||
Interest expense |
| (46,535 | ) |
| (65,701 | ) |
| (255,913 | ) |
| (128,790 | ) |
| (184,261 | ) |
| (167,338 | ) | ||||||
Depreciation expense |
|
| (1,118 | ) |
|
| (1,217 | ) |
|
| (3,355 | ) |
|
| (3,080 | ) | ||||||||
Interest income |
|
| 101 |
|
|
| --- |
| ||||||||||||||||
Total other income (expense) |
|
| (68,764 | ) |
|
| (98,585 | ) |
|
| (343,712 | ) |
|
| (205,759 | ) |
|
| (184,160 | ) |
|
| (167,338 | ) |
Profit (loss) before taxes |
| (224,793 | ) |
| (451,677 | ) |
| (1,417,745 | ) |
| (925,724 | ) |
| (266,934 | ) |
| (670,358 | ) | ||||||
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| --- |
|
|
| --- |
|
Net profit (loss) |
|
| (224,793 | ) |
| $ | (451,677 | ) |
| $ | (1,417,745 | ) |
| $ | (925,724 | ) |
| $ | (266,934 | ) |
| $ | (670,358 | ) |
|
|
|
|
|
| |||||||||||||||||||
Net profit (loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Basic |
| $ | (-) |
|
| $ | (-) |
|
| $ | (-) |
|
| $ | (-) |
|
| $ | (0.00 | ) |
| $ | (0.00 | ) |
Diluted |
| $ | (-) |
|
| $ | (-) |
|
| $ | (-) |
|
| $ | (-) |
|
| $ | (0.00 | ) |
| $ | (0.00 | ) |
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Weighted average number of common shares outstanding |
|
|
|
|
| |||||||||||||||||||
Basic |
|
| 292,999,382 |
|
|
| 196,004,788 |
|
|
| 301,232,745 |
|
|
| 172,040,746 |
|
|
| 433,167,850 |
|
|
| 301,230,828 |
|
Diluted |
|
| 335,129,995 |
|
|
| 214,223,263 |
|
|
| 372,484,608 |
|
|
| 194,444,103 |
|
|
| 894,450,785 |
|
|
| 346,355,206 |
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4 |
Table of Contents |
BLACK BIRD BIOTECH, INC.
(formerly Digital Development Partners)
Consolidated Statement of Changes in Stockholders’ Equity (Deficit)
For the NineThree Months Ended September 30,March 31, 2023 and 2022 and 2021 (unaudited)
|
| Preferred Stock |
|
| Common Stock |
|
|
| ||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Stockholder Receivable |
|
| Additional Paid-in Capital |
|
| Retained Earnings (Accumulated Deficit) |
|
| Total |
| ||||||||
Balance, December 31, 2021 |
|
| - |
|
|
| - |
|
|
| 301,230,828 |
|
| $ | 301,230 |
|
| $ | (1,000 | ) |
| $ | 2,991,163 |
|
| $ | (2,621,183 | ) |
| $ | 670,210 |
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (670,358 | ) |
|
| (670,358 | ) |
Balance, March 31, 2022 |
|
| - |
|
|
| - |
|
|
| 301,230,828 |
|
|
| 301,230 |
|
|
| (1,000 | ) |
|
| 2,991,163 |
|
|
| (3,291,541 | ) |
|
| (148 | ) |
Stock issued for services |
|
| - |
|
|
| - |
|
|
| 2,300,000 |
|
|
| 2,300 |
|
|
| - |
|
|
| 32,200 |
|
|
| - |
|
|
| 34,500 |
|
Stock issued for debt cancellation |
|
| - |
|
|
| - |
|
|
| 15,146,188 |
|
|
| 15,146 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 15,146 |
|
Warrants issued in conjunction with debt |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 78,051 |
|
|
| - |
|
|
| 78,051 |
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (522,594 | ) |
|
| (522,594 | ) |
Balance, June 30, 2022 |
|
| - |
|
|
| - |
|
|
| 318,677,016 |
|
|
| 318,676 |
|
|
| (1,000 | ) |
|
| 3,101,414 |
|
|
| (3,814,135 | ) |
|
| (395,045 | ) |
Common stock cancelled in exchange for preferred stock |
|
| 28,500 |
|
|
| 28 |
|
|
| (99,063,659 | ) |
|
| (99,064 | ) |
|
| - |
|
|
| 99,036 |
|
|
| - |
|
|
| - | |
Stock issued for debt cancellation |
|
| - |
|
|
| - |
|
|
| 16,853,810 |
|
|
| 16,855 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 16,855 |
|
Stock issued for warrant exercise |
|
| - |
|
|
| - |
|
|
| 5,062,500 |
|
|
| 5,062 |
|
|
| - |
|
|
| (5,062 | ) |
|
| - |
|
|
| - |
|
Stock issued for warrant exercise |
|
|
|
|
|
|
|
|
|
| 9,375,000 |
|
|
| 9,375 |
|
|
| - |
|
|
| (9,375 | ) |
|
| - |
|
|
| - |
|
Reclassification of warrants issued in conjunction with debt in June 2022 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (70,117 | ) |
|
| - |
|
|
| (70,117 | ) |
Warrants issued in conjunction with debt |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 15,440 |
|
|
| - |
|
|
| 15,440 |
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (224,793 | ) |
|
| (224,793 | ) |
Balance, September 30, 2022 |
|
| 28,500 |
|
| $ | 28 |
|
|
| 250,904,667 |
|
| $ | 250,904 |
|
| $ | (1,000 | ) |
| $ | 3,131,336 |
|
| $ | (4,038,928 | ) |
| $ | (657,600 | ) |
|
| Preferred Stock |
|
| Common Stock |
|
| Stockholder |
|
| Additional Paid-in |
|
| Retained Earnings (Accumulated |
|
|
| |||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Receivable |
|
| Capital |
|
| Deficit) |
|
| Total |
| ||||||||
Balance, December 31, 2022 |
|
| 42,000 |
|
| $ | 42 |
|
|
| 310,695,330 |
|
| $ | 310,695 |
|
| $ | (1,000 | ) |
| $ | 3,320,042 |
|
| $ | (4,279,949 | ) |
| $ | (650,170 | ) |
Common stock issued for debt cancellation |
|
| --- |
|
|
| --- |
|
|
| 68,541,667 |
|
|
| 68,541 |
|
|
| --- |
|
|
| (50,841 | ) |
|
| --- |
|
|
| 17,700 |
|
Common stock issued for debt cancellation |
|
| --- |
|
|
| --- |
|
|
| 41,900,000 |
|
|
| 41,900 |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| 41,900 |
|
Common stock issued for debt cancellation |
|
| --- |
|
|
| --- |
|
|
| 106,500,000 |
|
|
| 106,500 |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| 106,500 |
|
Common stock issued for services |
|
| --- |
|
|
| --- |
|
|
| 2,500,000 |
|
|
| 2,500 |
|
|
| --- |
|
|
| 22,500 |
|
|
| --- |
|
|
| 25,000 |
|
Net loss |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
| $ | (266,934 | ) |
|
| (266,934 | ) |
Balance, March 31, 2023 |
|
| 42,000 |
|
| $ | 42 |
|
|
| 530,136,997 |
|
| $ | 530,136 |
|
| $ | (1,000 | ) |
|
| 3,291,701 |
|
| $ | (4,546,883 | ) |
| $ | (726,004 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2021 |
|
| --- |
|
| $ | --- |
|
|
| 301,230,828 |
|
| $ | 310,693 |
|
| $ | (1,000 | ) |
| $ | 2,991,163 |
|
| $ | (2,621,183 | ) |
| $ | 670,210 |
|
Net loss |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| (670,358 | ) |
|
| (670,358 | ) |
Balance, March 31, 2022 |
|
| --- |
|
| $ | --- |
|
|
| 301,230,828 |
|
| $ | 301,230 |
|
| $ | (1,000 | ) |
| $ | 2,991,163 |
|
| $ | (3,291,541 | ) |
| $ | (148 | ) |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
5 |
Table of Contents |
BLACK BIRD BIOTECH, INC.
(formerly Digital Development Partners)
Consolidated StatementStatements of Changes in Stockholders’ Equity (Deficit)Cash Flows
For the Nine Months Ended September 30, 2022 and 2021 (unaudited)
(continued)
|
| Preferred Stock |
|
| Common Stock |
|
|
| ||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Stockholder Receivable |
|
| Additional Paid-in Capital |
|
| Retained Earnings (Accumulated Deficit) |
|
| Total |
| ||||||||
Balance, December 31, 2020 |
|
| - |
|
| $ | - |
|
|
| 164,925,000 |
|
| $ | 164,925 |
|
| $ | (10,000 | ) |
| $ | 703,353 |
|
| $ | (839,669 | ) |
| $ | 27,609 |
|
Effect of adoption of ASU 2020-06 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (56,343 | ) |
|
| 29,788 |
|
|
| (26,555 | ) |
Stock issued for cash |
|
| - |
|
|
| - |
|
|
| 4,875,000 |
|
|
| 4,875 |
|
|
| - |
|
|
| 190,125 |
|
|
| - |
|
|
| 195,000 |
|
Stock issued for services |
|
| - |
|
|
| - |
|
|
| 150,000 |
|
|
| 1,500 |
|
|
| - |
|
|
| 5,380 |
|
|
| - |
|
|
| 6,880 |
|
Stock issued for commitment fee |
|
| - |
|
|
| - |
|
|
| 2,000,000 |
|
|
| 2,000 |
|
|
| - |
|
|
| 63,000 |
|
|
| - |
|
|
| 65,000 |
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (208,233 | ) |
|
| (208,233 | ) |
Balance, March 31, 2021 |
|
| - |
|
|
| - |
|
|
| 171,950,000 |
|
|
| 171,950 |
|
|
| (1,000 | ) |
|
| 906,865 |
|
|
| (1,018,114 | ) |
|
| 59,701 |
|
Stock issued for cash |
|
| - |
|
|
| - |
|
|
| 3,125,000 |
|
|
| 3,125 |
|
|
| - |
|
|
| 96,875 |
|
|
| - |
|
|
| 100,000 |
|
Stock issued for services |
|
| - |
|
|
| - |
|
|
| 450,000 |
|
|
| 450 |
|
|
| - |
|
|
| 13,050 |
|
|
| - |
|
|
| 13,500 |
|
Stock issued for services |
|
| - |
|
|
| - |
|
|
| 8,000,000 |
|
|
| 8,000 |
|
|
| - |
|
|
| 242,400 |
|
|
| - |
|
|
| 250,400 |
|
Stock issued for services |
|
| - |
|
|
| - |
|
|
| 500,000 |
|
|
| 500 |
|
|
| - |
|
|
| 14,500 |
|
|
| - |
|
|
| 15,000 |
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (265,814 | ) |
|
| (265,814 | ) |
Balance, June 30, 2021 |
|
| - |
|
|
| - |
|
|
| 184,025,000 |
|
|
| 184,025 |
|
|
| (1,000 | ) |
|
| 1,273,690 |
|
|
| (1,283,928 | ) |
|
| 172,787 |
|
Stock issued for cash (Reg A #1) |
|
| - |
|
|
| - |
|
|
| 1,562,500 |
|
|
| 1,562 |
|
|
| - |
|
|
| 48,438 |
|
|
| - |
|
|
| 50,000 |
|
Stock issued for cash (Reg A #2) |
|
| - |
|
|
| - |
|
|
| 51,700,000 |
|
|
| 51,700 |
|
|
| - |
|
|
| 723,800 |
|
|
| - |
|
|
| 775,500 |
|
Stock issued for debt conversion |
|
| - |
|
|
| - |
|
|
| 8,607,995 |
|
|
| 8,608 |
|
|
| - |
|
|
| 93,002 |
|
|
| - |
|
|
| 101,610 |
|
Stock issued for services |
|
| - |
|
|
| - |
|
|
| 1,002,000 |
|
|
| 1,002 |
|
|
| - |
|
|
| 38,076 |
|
|
| - |
|
|
| 39,078 |
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (451,677 | ) |
|
| (451,677 | ) |
Balance, September 30, 2021 |
|
| - |
|
| $ | - |
|
|
| 246,897,495 |
|
| $ | 246,897 |
|
| $ | (1,000 | ) |
| $ | 2,177,006 |
|
| $ | (1,735,605 | ) |
| $ | 687,298 |
|
|
| For the Three Months Ended March 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net loss |
| $ | (266,934 | ) |
| $ | (670,358 | ) |
Adjustments to reconcile net loss to net cash used for operating activities: |
|
|
|
|
|
|
|
|
Stock issued for services |
|
| 5,000 |
|
|
| --- |
|
Depreciation and amortization |
|
| 158,741 |
|
|
| 32,784 |
|
Non-cash debt conversion fees |
|
| 5,250 |
|
| --- |
| |
Account receivable |
|
| (56 | ) |
|
| (708 | ) |
Debt amortization |
|
| --- |
|
|
| 166,667 |
|
Prepaid consulting fees |
|
| --- |
|
|
| 62,600 |
|
Accrued interest |
|
| 16,467 |
|
|
| 672 |
|
Inventory |
|
| 5,394 |
|
|
| (4,166 | ) |
Accrued expenses |
|
| (21,899 | ) |
|
| 14,553 |
|
Other asset |
|
| (1,000 | ) |
|
| --- |
|
Net cash used for operating activities |
|
| (99,037 | ) |
|
| (397,956 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Repayment of loans payable - third party |
|
| (88,553 | ) |
|
| (200,000 | ) |
Proceeds loans payable - third parties |
|
| 125,330 |
|
|
| --- |
|
Proceeds from issuance of common stock |
|
| --- |
|
|
| 203,750 |
|
Net advances from related party |
|
| 25,046 |
|
|
| --- |
|
Net cash provided by financing activities |
|
| 61,823 |
|
|
| 3,750 |
|
Net increase (decrease) in cash and cash equivalents |
|
| (37,214 | ) |
|
| (394,206 | ) |
Cash and cash equivalents at beginning of period |
|
| 44,448 |
|
|
| 499,766 |
|
Cash and cash equivalents at end of period |
| $ | 7,234 |
|
| $ | 105,560 |
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Common stock issued to repay third-party debt |
| $ | 160,850 |
|
| $ | --- |
|
Common stock issued for services for reduction in accounts payable |
| $ | 20,000 |
|
| $ | --- |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
Income taxes paid |
| $ | --- |
|
| $ | --- |
|
Interest paid |
| $ | 10,171 |
|
| $ | --- |
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
6 |
Table of Contents |
BLACK BIRD BIOTECH, INC.
(formerly Digital Development Partners)
Consolidated Statements of Cash Flows
(unaudited)
|
| For the Nine Months Ended September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net loss |
| $ | (1,417,745 | ) |
| $ | (925,724 | ) |
Adjustments to reconcile net loss to net cash used for operating activities: |
|
|
|
|
|
|
|
|
Stock issued for services |
|
| 34,500 |
|
|
| 119,650 |
|
Non-cash interest expense for stock conversion of debt |
|
| 7,000 |
|
|
| 2,610 |
|
Amortization |
|
| 84,444 |
|
|
| 73,889 |
|
Depreciation |
|
| 3,356 |
|
|
| 3,080 |
|
Accounts receivable |
|
| (1,172 | ) |
|
| (9,445 | ) |
Amortization of debt discount |
|
| 212,834 |
|
|
| 40,954 |
|
Amortization of financing fees |
|
| 18,047 |
|
|
| 65,639 |
|
Prepaid expense |
|
| 101,189 |
|
|
| 35,380 |
|
Accrued interest |
|
| 17,225 |
|
|
| 9,280 |
|
Inventory |
|
| (15,717 | ) |
|
| (38,449 | ) |
Accrued expenses |
|
| 37,708 |
|
|
| (4,604 | ) |
|
|
|
|
|
|
|
|
|
Net cash used for operating activities |
|
| (918,331 | ) |
|
| (627,740 | ) |
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Machinery and equipment |
|
| - |
|
|
| - |
|
Asset purchase |
|
| - |
|
|
| (180,000 | ) |
Purchase of furniture and equipment |
|
| - |
|
|
| (5,702 | ) |
Net cash used for investing activities |
|
| - |
|
|
| (185,702 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Financing fees paid |
|
| - |
|
|
| (16,750 | ) |
Proceeds from loan payable |
|
| 735,340 |
|
|
| 727,500 |
|
Proceeds from issuance of common stock |
|
| - |
|
|
| 1,120,500 |
|
Net advances from related party |
|
| 70,501 |
|
|
| 807 |
|
Repayment of note payable |
|
| (321,100 | ) |
|
| (251,474 | ) |
Net cash provided by financing activities |
|
| 484,741 |
|
|
| 1,580,583 |
|
Net increase (decrease) in cash and cash equivalents |
|
| (433,590 | ) |
|
| 767,140 |
|
Cash and cash equivalents at beginning of period |
|
| 499,766 |
|
|
| 52,974 |
|
Cash and cash equivalents at end of period |
| $ | 66,176 |
|
| $ | 820,114 |
|
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
| ||
Common stock issued for debt |
| $ | 25,000 |
|
| $ | - |
|
Common stock issued for commitment fee |
| $ | - |
|
| $ | 65,000 |
|
Inventory contributed for capital |
| $ | - |
|
| $ | 773 |
|
| ||||||||
| ||||||||
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
BLACK BIRD BIOTECH, INC.
(formerly Digital Development Partners, Inc.)
Notes to Unaudited Consolidated Financial Statements
September 30, 2022March 31, 2023
1. BASIS OF PRESENTATION AND NATURE OF OPERATIONS
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information required by GAAP for complete annual financial statement presentation.
These unaudited interim consolidated financial statements, as of September 30, 2022,March 31, 2023, and for the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary to fairly present the Company’s financial position and the results of its operations for the periods presented, in accordance with the accounting principles generally accepted in the United States of America. Operating results for the ninethree months ended September 30, 2022,March 31, 2023, are not necessarily indicative of the results to be expected for other interim periods or for the full year ending December 31, 2022.2023. These unaudited interim financial statements should be read in conjunction with the financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021,2022, as filed with the Securities Exchange Commission.
Nature of Operations
The Company is the exclusive worldwide manufacturer and distributor for MiteXstreamTM, an EPA-certified plant-based biopesticide effective in the eradication of mites and other similar pests, including spider mites, that destroy crops, particularly cannabis, hops, coffee and house plants, as well as molds and mildew.
The Company also manufactures and sells, under its Grizzly Creek NaturalsTM brand name, CBD products, including CBD Oils, gummies and pet treats, as well as CBD-infused personal care products.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GOING CONCERN
Going Concern
The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The Company had a working capital deficit of $(665,905) at September 30, 2022.$809,306 (unaudited) as of March 31, 2023. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company’s activities will necessitate significant uses of working capital beyond 2022.for 2023 and beyond. Additionally, the Company’s capital requirements will depend on many factors, including the success of the Company’s researching for new markets. The Company plans to continue financing its operations with cash received from financing activities, more specifically from related party loans.
While the Company strongly believes that its capital resources will be sufficient in the near term, there is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.
Table of Contents |
Cash and Cash Equivalents and Restricted Cash
Cash and equivalents include investments with initial maturities of three months or less. The Company had no cash equivalents as of September 30, 2022,March 31, 2023, and December 31, 2021.2022.
Income Taxes
The Company accounts for income taxes utilizing ASC 740, “Income Taxes”. ASC 740 requires the measurement of deferred tax assets for deductible temporary differences and operating loss carry forwards, and of deferred tax liabilities for taxable temporary differences. Measurement of current and deferred tax liabilities and assets is based on provisions of enacted tax law. The effects of future changes in tax laws or rates are not included in the measurement. The Company recognizes the amount of taxes payable or refundable for the current year and recognizes deferred tax liabilities and assets for the expected future tax consequences of events and transactions that have been recognized in the Company’s financial statements or tax returns. The Company currently has substantial net operating loss carry forwards. The Company has recorded a 100% valuation allowance against net deferred tax assets due to uncertainty of their ultimate realization. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
Basic and Diluted Net Loss Per Share
Net loss per share is calculated in accordance with ASC 260, Earnings per Share, for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
There are potential dilutive securities as of September 30, 2022March 31, 2023 and 2021.2022.
Related Parties
A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
Inventories
Inventories consist primarily of raw materials and finished goods. The inventory is recorded at the lower of cost or market which approximates first-in, first-out (FIFO).
Property and Equipment
Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets which range from 3-5 years.
Accounts Receivable and Revenue Recognition
Accounts receivable is recorded net of an allowance for expected losses. As of March 31, 2023 and 2022, there is $-0- and $-0- recorded as allowance for doubtful accounts. Revenue is recognized at the point of invoicing for sales of inventory.
Deferred Financing Costs
Deferred financing costs are capitalized and amortized over the life of the loan using the straight-line method which approximates the effective interest method. As of March 31, 2023, there were $46,544 in unamortized loan fees.
8 |
Table of Contents |
Convertible Notes
The Company reviews the terms of convertible debt, equity instruments, and other financing arrangements to determine whether there are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately. In connection with the convertible debt agreements, the Company issued shares of common stock and common stock warrants. The Company has allocated the net proceeds from the debt agreements to the estimated fair value of these equity-linked instruments, which is recorded as a discount to the related debt balances. The Company amortizes the debt discount over the contractual maturity of the related debt agreements.
Leases
Under the lease standard, ASC 842, Leases, right of use assets and lease liabilities are established on the balance sheet for leases with an expected term greater than a year by discounting the amounts of fixed rent payments in the lease agreement for the duration of the lease, which is reasonably certain, considering the probability of exercising any early termination and extension options. Assets leased for only a portion of their useful lives are accounted for as operating leases.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06-Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)-Accounting For Convertible Instruments and Contracts in an Entity's Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020.
The Company has early adopted ASU 2020-06 for the year beginning January 1, 2021.
Change in Accounting Principle
In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06-Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)-Accounting For Convertible Instruments and Contracts in an Entity's Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020.
9 |
Table of Contents |
The Company has early adopted ASU 2020-06 for the year beginning January 1, 2021.
The Company will adopt the if-converted method for calculating EPS and the modified retrospective method as the transition method. The if-converted method assumes that the conversion of convertible securities occurs at the beginning of the reporting period and the modified retrospective recognizes the cumulative effect of the change as an adjustment to the beginning balance of retained earnings as of the date of adoption. Under the modified-retrospective method, no adjustment should be made to the comparative-period information including EPS.
During the nine months ended September 30, 2021, the cumulative effect of the changes on retained earnings is $29,788, additional paid-in-capital is $56,343 and notes payable is $26,555, as reflected in the accompanying financial statements. During the nine months ended September 30, 2021 the effect on EPS would be unchanged after the adoption of ASU 2020-06.
3. CORONAVIRUS PANDEMIC
During 2020 a strain of coronavirus (COVID-19) was reported worldwide resulting in decreased economic activity and closures of businesses which has adversely affected the broader global economy. The virus, including the responses thereto, has continued to affect the economy through 2021. The Company is taking all necessary steps to keep its business premises in a safe environment and is constantly monitoring the impact of COVID-19.into 2023. At this time, the extent to which COVID-19 will continue to impact the economy and the Company is uncertain. Pandemics or other significant public heath events could have a material adverse effect on the Company and the results of its operations in the future.
4. CONCENTRATION OF CREDIT RISK
In the normal course of business the Company maintains cash with a Federally-insured financial institution. Individual account balance may occasionally exceed the Federally-insured limit of $250,000. The Company has not experienced and does not anticipate any losses as a result of any account balances exceeding the Federally-insured limits.
5. PREFERRED STOCK
During the year ended December 31, 2022, pursuant to six separate Exchange Agreements a total of 42,000 shares of Series A Preferred Stock were issued in exchange for a total of 123,472,996 shares of common stock, which shares of common stock were cancelled and returned to the status of authorized and unissued.
6. COMMON STOCK
Common Stock Issued for Services
Three Months Ended March 31, 2023
In April 2022, the Company entered into an executive services agreement with a former executive officer, pursuant to which it was obligated to issue 1,000,000 shares of its common stock upon execution of such agreement, then 500,000 shares of its common stock on each of July 1, 2022, October 1, 2022, January 1, 2023, and April 1, 2023. At December 31, 2022, the Company was obligated to issue a total of 2,000,000 shares of its common stock pursuant to this agreement, the total value of which, $20,000, is included in the Company’s accounts payable at December 31, 2022. All 2,000,000 shares were issued subsequent to December 31, 2022. In addition, during the three months ended March 31, 2023, the Company issued 500,000 shares under this agreement, which shares were valued at $5,000.
Three Months Ended March 31, 2022
In January 2022, the Company entered into a consulting agreement with a third party, pursuant to which it is obligated to issue $7,500 of its common stock for each month of the six-month term of such agreement. Subsequent to March 31, 2022, the Company issued a total of 1,500,000 shares of its common stock pursuant to this agreement, which shares were valued at $22,500, in the aggregate, and are included in the Company’s accounts payable at March 31, 2022.
Common Stock Issued for Debt Conversions
Talos Victory Fund, LLC. During the three months ended March 31, 2023, the Talos Note #1 was repaid in full through conversion into shares of the Company’s common stock, as follows:
Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares |
| |||
$ | 106,500 |
|
| $ | 0.001 |
|
|
| 106,500,000 |
|
Total Converted: $106,500 |
|
|
|
|
|
| Total Shares: 106,500,000 |
|
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Mast Hill Fund, L.P. During the three months ended March 31, 2023, $36,650 in principal and $5,250 in fees on the Mast Hill Note #1 was repaid through conversion into shares of the Company’s common stock, as follows:
Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares |
| |||
$ | 36,650 |
|
| $ | 0.001 |
|
|
| 41,900,000 |
|
| Total Converted: $36,650 |
|
|
|
|
|
|
| Total Shares: 41,900,000 |
|
Boot Capital, LLC. During the three months ended March 31, 2023, $17,700 in principal on the Boot Capital Note #1 was repaid through conversion into shares of the Company’s common stock, as follows:
Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares |
| |||
$ | 6,250 |
|
| $ | 0.0003 |
|
|
| 20,833,333 |
|
| 5,725 |
|
|
| 0.00024 |
|
|
| 23,854,167 |
|
| 5,725 |
|
|
| 0.00024 |
|
|
| 23,854,167 |
|
| Total Converted: $17,700 |
|
|
|
|
|
|
| Total Shares: 68,541,667 |
|
NOTE 7. WARRANTS
At March 31, 2023, the Company had reserved 421,282,935 shares of its common stock for the following outstanding warrants:
Outstanding as of December 31, 2022 | 421,282,935 | |||
Granted | --- | |||
Exchanged for common shares | --- | |||
Outstanding as of March 31, 2023 | 421,282,935 |
NOTE 8. NEW MITEXSTREAM AGREEMENT
In February 2021, Black Bird entered into a Manufacturing, Sales and Distribution License Agreement (the “New MiteXstream Agreement”) with a related party, Touchstone Enviro Solutions, Inc., which replaced a prior similar agreement (the “Original MiteXstream Agreement”) and served to expand Black Bird’s rights with respect to MiteXstream, an EPA-registered biopesticide. The New MiteXstream Agreement contains the following important provisions as compared to the Original MiteXstream Agreement:
New MiteXstream Agreement | Original MiteXstream Agreement | ||
Term | December 31, 2080 | Initial terms of 10 years, with one 10-year renewal term | |
Territory | Worldwide Exclusive (1) | United States and Canada | |
Royalty | $10.00 per gallon manufactured | Effective royalty of an estimated $50 per gallon | |
Minimums | 2,500 gallons of concentrate manufactured per year (2) | $20,000 of product per year | |
Sublicensing | Right to sublicense granted | No right to sublicense | |
Trademarks | For no extra consideration, rights granted to use “MiteXstream” and “Harnessing the Power of Water” | For no extra consideration, rights granted to use “MiteXstream” |
(1) Exclusivity ends and becomes non-exclusive, if the minimum of 2,500 gallons per year is not met. (2) The minimum (2,500 gallons per year) is deemed to have been satisfied through December 31, 2022. |
The disinterested Directors of the Company approved the New MiteXstream Agreement.
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9. INTANGIBLE ASSET
The Company had an intangible asset related to the purchase of product distribution assets in the amount of $190,000, which is for a customer list and was being amortized over 18 months. The Company recorded amortization expense in the amount of $0 and $31,667 for the periods ended March 31, 2023 and 2022, respectively. As of December 31, 2022, the intangible asset had been completely amortized.
10. CONVERTIBLE PROMISSORY NOTES – THIRD PARTIES
Tri-Bridge Ventures LLC. In April 2020, the Company obtained a loan in the amount of $25,000 from Tri-Bridge Ventures LLC. In consideration of such loan, the Company issued a $25,000 face amount convertible promissory note (the “Tri-Bridge Note”) bearing interest at 10% per annum, with principal and interest due in January 2021. Tri-Bridge Note is convertible into shares of the Company’s common stock at the rate of one share for each $0.001$.001 of debt converted anytime after August 30, 2020.
In May 2022,During the Tri-Bridge Note #1 was partially repaid through conversion into shares of the Company’s common stock, as follows:
Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares |
| |||
$ | 15,146 |
|
| $ | 0.001 |
|
|
| 15,146,188 |
|
Total Converted: $15,146 |
|
|
|
|
|
| Total Shares: 15,146,188 |
|
In Julyyear ended December 31, 2022, the Tri-Bridge Note #1 was repaid in full through conversion into shares of the Company’s common stock, as follows:stock.
Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares |
| |||
$ | 9,854 |
|
| $ | 0.001 |
|
|
| 9,853,810 |
|
Total Converted: $9,854 |
|
|
|
|
|
| Total Shares: 9,853,810 |
|
At September 30,March 31, 2023 and 2022, and December 31, 2021, accrued interest on the Tri-Bridge Note was $-0- and $4,178,$4,370, respectively.
EMA Financial, LLC. In December 2020, the Company obtained a loan from EMA Financial, LLC which netted us $50,000 in proceeds. In consideration of such loan, the Company issued a $58,600 face amount convertible promissory note (the “EMA Note”), with OID of $4,100, bearing interest at 10% per annum, with principal and interest due in September 2021. The Company had the right to repay the EMA Note at a premium ranging from 120% to 145% of the face amount. The EMA Note was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 60% of the market price of the Company’s common stock on the date of issuance of the EMA Note and the date of conversion, any time after June 15, 2021.
In June 2021, the EMA Note was repaid in full in the amount of $93,697.70, as follows: $58,600 in principal; $3,499.30 in interest; and $31,598.40 as a prepayment premium.
Power Up Lending Group Ltd. In January 2021, the Company obtained a loan from Power Up Lending Group Ltd. which netted the Company $52,000 in proceeds. In consideration of such loan, the Company issued a $55,500 face amount convertible promissory note (“Power Up Note #1”) bearing interest at 12% per annum, with principal and interest due in January 2022. The Company had the right to repay the Power Up Note #1 at a premium ranging from 125% to 145% of the face amount. The Power Up Note #1 was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 61% of the market price of the Company’s common stock on the date of issuance of the Power Up Note #1 and the date of conversion, any time after July 14, 2021.
During July 2021, the Power Up Note #1 was repaid in full through conversion into shares of the Company’s common stock, as follows:
Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares |
| |||
$ | 15,000 |
|
| $ | 0.0162 |
|
|
| 925,926 |
|
$ | 20,000 |
|
| $ | 0.0143 |
|
|
| 1,398,601 |
|
$ | 20,500 |
|
| $ | 0.0143 |
|
|
| 1,666,434 |
|
Total Converted: $55,500 |
|
|
|
|
|
| Total Shares: 3,990,961 |
|
SE Holdings, LLC. In February 2021, the Company obtained a loan from SE Holdings LLC which netted the Company $106,000 in proceeds. In consideration of such loan, the Company issued a $121,000 face amount promissory note (the “SE Holdings Note”), with OID of $15,000, bearing interest at 9% per annum, with principal and interest payable in eight equal monthly payments of $15,125 beginning in July 2021. The Company had the right to repay the SE Holdings Note at any time. Should the Company have been in default on SE Holdings Note, the SE Holdings Note would have become convertible into shares of the Company’s common stock at a conversion price equal to the lesser of the lowest closing bid price of the Company’s commons stock for the trading day immediately preceding either (a) the delivery of a notice of default, (b) the delivery of a notice of conversion resulting from such default or (c) the issue date of the SE Holdings Note. In addition, the Company issued 2,000,000 shares of its common stock to SE Holdings as a commitment fee, which shares were valued at $0.065 with a 50% discount per share, or $65,000, in the aggregate.
Through September 2021, the Company had repaid $45,375 of the SE Holdings Note, in accordance with the terms of the SE Holdings Note. In October 2021, the remaining balance of the SE Holdings Note, $75,625, was repaid by the Company.
Power Up Lending Group Ltd. In February 2021, the Company obtained a loan from Power Up Lending Group Ltd. which netted the Company $43,500 in proceeds. In consideration of such loan, the Company issued a $43,500 face amount convertible promissory note (“Power Up Note #2”) bearing interest at 12% per annum, with principal and interest due in January 2022. The Company had the right to repay the Power Up Note #2 at a premium ranging from 125% to 145% of the face amount. The Power Up Note #2 was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 61% of the market price of the Company’s common stock on the date of issuance of the Power Up Note #2 and the date of conversion, any time after August 17, 2021.
During August and September 2021, the Power Up Note #2 was repaid in full through conversion into shares of the Company’s common stock, as follows:
Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares | |||
$ | 15,000 |
|
| $ | 0.0137 |
|
| 1,094,891 | |
$ | 20,000 |
|
| $ | 0.0093 |
|
| 2,150,538 | |
$ | 11,110 | * |
| $ | 0.0081 |
|
| 1,371,605 | |
Total Converted: 46,110 |
|
|
|
|
|
| Total Shares: 4,617,034 | ||
* This amount includes $2,610 of interest. |
|
|
|
Power Up Lending Group Ltd. In April 2021, the Company obtained a loan from Power Up Lending Group Ltd. which netted the Company $68,750 in proceeds. In consideration of such loan, the Company issued a $68,750 face amount convertible promissory note (“Power Up Note #3”) bearing interest at 12% per annum, with principal and interest due in April 2022. The Company had the right to repay the Power Up Note #3 at a premium ranging from 125% to 145% of the face amount. The Power Up Note #3 was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 61% of the market price of the Company’s common stock on the date of issuance of the Power Up Note #3 and the date of conversion, any time after October 22, 2021.
In September 2021, the Power Up Note #3 was repaid in full by the Company, as follows: $68,750.00 in principal, $27,500.00 in additional principal as a prepayment premium and $5,063.01 in interest, a total repayment amount of $101,313.01.
Power Up Lending Group Ltd. In August 2021, the Company obtained a loan from Power Up Lending Group Ltd. which netted the Company $78,750 in proceeds. In consideration of such loan, the Company issued a $78,750 face amount convertible promissory note (“Power Up Note #4”) bearing interest at 12% per annum, with principal and interest due in August 2022. The Company had the right to repay the Power Up Note #4 at a premium ranging from 125% to 145% of the face amount. The Power Up Note #4 was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 61% of the market price of the Company’s common stock on the date of issuance of the Power Up Note #4 and the date of conversion, any time after October 22, 2021.
In September 2021, the Power Up Note #4 was repaid in full by the Company, as follows: $78,750.00 in principal, $15,750.00 in additional principal as a prepayment premium and $5,393.84 in interest, a total repayment amount of $99,893.84.
FirstFire Global Opportunities Fund LLC. In September 2021, the Company obtained a loan from FirstFire Global Opportunities Fund LLC which netted the Company $125,000 in proceeds. In consideration of such loan, the Company issued a $250,000 face amount convertible promissory note (“FirstFire Note”), with OID of $125,000, due in September 2022. The Company had the right to repay the FirstFire Note at anytime, with a 20%, or $50,000, reduction in principal owed if repaid in full on or before November 30, 2021. The FirstFire Note was convertible into shares of the Company’s common stock at a conversion price equal to $0.015 per share, any time after December 1, 2021.
Prior to November 30, 2021, the FirstFire Note was repaid in full by the Company, in the amount of $200,000 (which included a $50,000 reduction in principal owed, due to the FirstFire Note’s being repaid in full on or before November 30, 2021).
Tiger Trout Capital Puerto Rico, LLC. In September 2021, the Company obtained a loan from Tiger Trout Capital Puerto Rico, LLC which netted the Company $250,000 in proceeds. In consideration of such loan, the Company issued a $500,000 face amount convertible promissory note (“Tiger Trout Note”), with OID of $250,000, with principal due in September 2022. The Company has the right to repay the Tiger Trout Note at anytime, with a 10%, or $50,000, reduction in principal owed if repaid in full on or before November 30, 2021. The Tiger Trout Note is convertible into shares of the Company’s common stock at a conversion price equal to $0.015 per share, any time after December 1, 2021.
During the ninethree months ended September 30,March 31, 2022, the Company repaid in full the remaining $200,000 balance of the Tiger Trout Note.
1800 Diagonal Lending LLC. In March 2022, the Company obtained a loan from Sixth Street Lending LLC, who later assigned the loan to an affiliated company, 1800 Diagonal Lending LLC, which netted the Company $200,000 in proceeds. In consideration of such loan, the Company issued a $228,200 face amount promissory note (the “1800 Diagonal Note #1”), with OID of $24,450 recorded as a debt discount and a one-time interest charge of $25,102, with principal and interest payable in 10 equal monthly payments of $25,330.20 beginning in May 2022. The Company has the right to repay the 1800 Diagonal Note #1 at any time, without penalty. Should the Company become in default on the 1800 Diagonal Note #1, the 1800 Diagonal Note #1 becomes convertible into shares of the Company’s common stock at a conversion price equal to 75% multiplied by the lowest trading price of the Company’s common stock during the 10 trading days prior to the applicable conversion date.
As of September 30, 2022, the Company was current in its repayment obligations under theThe 1800 Diagonal Note #1 andwas paid in full during the 1800 Diagonal Note #1 had a remaining balance of $126,651 at September 30, 2022.three months ended March 31, 2023.
Talos Victory Fund, LLC. In May 2002, the Company obtained a loan from Talos Victory Fund, LLC which netted the Company $107,780 in proceeds. In consideration of such loan, the Company issued a $135,000 face amount promissory note (the “Talos Note #1”), with OID of $13,500 recorded as a debt discount, commissions of $9,720 and legal fees of $4,000. The Talos Note #1 is due in May 2023 and is convertible into shares of the Company’s common stock at any time at a conversion price of $0.005 per share, subject to a 4.99% equity blocker.
In August 2022, $7,000 in accrued interest onDuring the three months ended March 31, 2023, the Talos Note #1 was repaid in full through conversion into shares of the Company’s common stock, as follows:
Amount Converted | Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares |
| Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares |
| ||||
$ | 7,000 |
|
| $ | 0.001 |
|
| 7,000,000 |
| 106,500 |
|
| $ | 0.001 |
|
| 106,500,000 |
| ||
Total Converted: $7,000 |
|
|
|
|
| Total Shares: 7,000,000 |
| |||||||||||||
| Total Converted: $106,500 |
|
|
|
|
| Total Shares: 106,500,000 |
|
At September 30, 2022,March 31, 2023, the Talos Note #1 had a remaining balance of $135,000$-0- and $106,500, respectively.
Mast Hill Fund, L.P. In May 2022,2002, the Company obtained a loan from Mast Hill Fund, L.P. which netted the Company $200,000 in proceeds. In consideration of such loan, the Company issued a $250,000 face amount promissory note (the “Mast Hill Note #1”), with OID of $25,000 recorded as a debt discount, commissions of $18,000 and legal fees of $7,000. The Mast Hill Note #1 is due in May 2023 and is convertible into shares of the Company’s common stock at any time at a conversion price of $0.005 per share, subject to a 4.99% equity blocker.
In December 2022, the Mast Hill Note #1 was amended to increase the principal by $100,000, which amount represents financing fees. Also in December 31, 2022, the Company repaid $100,000 in principal of the Mast Hill Note #1.
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During the three months ended March 31, 2023, $36,650 in principal and $5,250 in fees on the Mast Hill Note #1 was repaid through conversion into shares of the Company’s common stock, as follows:
Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares |
| |||
$ | 36,650 |
|
| $ | 0.001 |
|
|
| 41,900,000 |
|
Total Converted: $36,650 |
|
|
|
|
|
| Total Shares: 41,900,000 |
|
At September 30,March 31, 2023, and December 31, 2022, the Mast Hill Note #1 had a remaining balance of $250,000.$240,500 .
GS Capital Partners, LLC. In June 2022, we obtained a loan from GS Capital Partners, LLC which netted our company $63,650 in proceeds. In consideration of such loan, we issued a $70,000 face amount promissory note (the “GS Capital Note #1”), with OID of $6,500 recorded as a debt discount, a finder’s fee of $4,900 and legal fees of $3,000, with principal and interest payable in 10 equal monthly payments of $7,840 beginning in September 2022. The Company has the right to repay the GS Capital Note #1 at any time, without penalty. Should the Company become in default on the GS Capital Note #1, the GS Capital Note #1 becomes convertible into shares of the Company’s common stock at a conversion price equal to 70% multiplied by the lowest trading price of the Company’s common stock during the 10 trading days prior to the applicable conversion date.
As of September 30, 2022,March 31, 2023, the Company was currentdelinquent in its repayment obligations under the GS Capital Note #1 and the#1. The GS Capital Note #1 had a remaining balance of $70,560$28,000 and $42,000 at September 30, 2022.March 31, 2023, and December 31, 2022, respectively.
Boot Capital, LLC. In August 2022, the Company obtained a loan from Boot Capital, LLC which netted the Company $56,000 in proceeds. In consideration of such loan, the Company issued a $61,600 face amount promissory note (the “Boot Capital Note #1”), with OID of $5,600 recorded as a debt discount, commissions of $3,360 and legal fees of $2,500. The Boot Capital Note #1 is due in August 2023 and is convertible into shares of the Company’s common stock at any time after 180 days of issuance at a conversion price at a 40% discount to the then-market price of the Company’s common stock, subject to a 4.99% equity blocker.
During the three months ended March 31, 2023, $17,700 in principal on the Boot Capital Note #1 was repaid through conversion into shares of the Company’s common stock, as follows:
Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares |
| |||
$ | 6,250 |
|
| $ | 0.0003 |
|
|
| 20,833,333 |
|
| 5,725 |
|
|
| 0.00024 |
|
|
| 23,854,167 |
|
| 5,725 |
|
|
| 0.00024 |
|
|
| 23,854,167 |
|
| Total Converted: $17,700 |
|
|
|
|
|
|
| Total Shares: 68,541,667 |
|
At September 30,March 31, 2023, and December 31, 2022, the Boot Capital Note #1 had a remaining balance of $61,600.$43,900 and $61,600, respectively.
Mast Hill Fund, L.P. In September 2022, the Company obtained a loan from Mast Hill Fund, L.P. which netted the Company $130,500 in proceeds. In consideration of such loan, the Company issued a $145,000 face amount senior secured promissory note (the “Mast Hill Note #2”), with OID of $14,500 recorded as a debt discount, commissions of $10,440 and legal fees of $3,000. The Mast Hill Note #2 is due in September 2023 and is convertible into shares of the Company’s common stock at any time at a conversion price of $0.0025 per share, subject to a 4.99% equity blocker.
At September 30,March 31, 2023, and December 31, 2022, the Mast Hill Note #2 had a remaining balance of $145,000.
6. COMMON STOCK1800 Diagonal Lending LLC.
Common Stock Issued for Debt Conversions
Nine Months Ended September 30, 2022
In MayNovember 2022, the Tri-BridgeCompany obtained a loan from 1800 Diagonal Lending LLC which netted the Company $100,000 in proceeds. In consideration of such loan, the Company issued a $103,750 face amount convertible promissory note (“1800 Diagonal Note #1 was partially repaid through conversion#2”) bearing interest at 10% per annum, with principal and interest due in November 2023. The Company has the right to repay the 1800 Diagonal Note #2 at a premium ranging from 120% to 125% of the face amount. The 1800 Diagonal Note #2 is convertible into shares of the Company’s common stock as follows:
Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares |
| |||
$ | 15,146 |
|
| $ | 0.001 |
|
|
| 15,146,188 |
|
Total Converted: $15,146 |
|
|
|
|
|
| Total Shares: 15,146,188 |
|
In July 2022,at a conversion price equal to 65% multiplied by the Tri-Bridge Note #1 was repaid in full through conversion into sharesaverage of the two lowest trading prices of the Company’s common stock as follows:
Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares |
| |||
$ | 9,854 |
|
| $ | 0.001 |
| �� |
| 9,853,810 |
|
Total Converted: $9,854 |
|
|
|
|
|
| Total Shares: 9,853,810 |
|
In August 2022, $7,000 in accrued interest onduring the Talos Note #1 was repaid through15 trading days prior to the applicable conversion into shares of the Company’s common stock, as follows:
Amount Converted |
|
| Conversion Price Per Share |
|
| Number Shares |
| |||
$ | 7,000 |
|
| $ | 0.001 |
|
|
| 7,000,000 |
|
Total Converted: $7,000 |
|
|
|
|
|
| Total Shares: 7,000,000 |
|
Common Stock Issued for Cashdate, any time after May 7, 2023.
Nine Months Ended September 30, 2022
During the nine months ended September 30,At March 31, 2023, and December 31, 2022, the Company did not issued shares1800 Diagonal Note #2 had a remaining balance of common stock for cash.
Nine Months Ended September 30, 2022
During the nine months ended September 30, 2021, the Company sold a total of 6,437,500 shares of its common stock for a total of $245,000, or an average of $0.038 per share, under its first Regulation A Offering (SEC File No. 024-11215). Also, during the nine months ended September 30, 2021, the Company sold a total of 51,700,000 shares of its common stock for a total of $775,500, or $0.015 per share, under its second Regulation A Offering (SEC File No. 024-11621).
Common Stock Issued for Services
Nine Months Ended September 30, 2022
In January 2022, the Company entered into a consulting agreement with a third party, pursuant to which it is obligated to issue $7,500 of its common stock for each month of the six-month term of such agreement. During the nine months ended September 30, 2022, the Company issued a total of 2,300,000 shares of its common stock pursuant to this agreement, which shares were valued at $34,500. At September 30, 2022, the Company was obligated to issue $22,500 in shares of its common stock pursuant to this agreement, which amount is included in the Company’s accounts payable at September 30, 2022.
In April 2022, the Company entered into an executive services agreement with its Executive Vice President, William J. LoBell, pursuant to which it is obligated to issue 1,000,000 shares of its common stock upon execution of such agreement, then 500,000 shares of its common stock on each of July 1, 2022, October 1, 2022, January 1, 2023, and April 1, 2023. At September 30, 2022, the Company was obligated to issue a total of 1,500,000 shares of its common stock pursuant to this agreement, the total value of which, $25,000, is included in the Company’s accounts payable at September 30, 2022.
Nine Months Ended September 30, 2021
In September 2021, the Company entered into a consulting agreement with a third party, pursuant to which it is obligated to issue $3,000 of its common stock for each month of the three-month term of such agreement, in arrears.
In July 2021, the Company entered into a consulting agreement with a third party, pursuant to which it is obligated to issue 167,000 shares of its common stock for each month of the six-month term of such agreement, a total of 1,002,000 shares, which shares were valued at $0.039 per share, or $39,078, in the aggregate.
In June 2021, the Company issued 500,000 shares of common stock to its Chief Financial Officer and Director, William E. Sluss, as a retention bonus, which shares were valued at $0.03 per share, or $15,000, in the aggregate.
In May 2021, the Company issued 8,000,000 shares of common stock to a third-party consultant pursuant to a consulting agreement, which shares were valued at $0.0313 per share, or $250,400, in the aggregate. The term of the consulting agreement expires in May 2022.
In April 2021, the Company issued 450,000 shares of common stock to a third-party consultant pursuant to a consulting agreement, which shares were valued at $0.03 per share, or $13,500, in the aggregate. The term of the consulting agreement expired in June 2021.
In February 2021, the Company issued 2,000,000 shares of its common stock to a third party as a commitment fee, which shares were valued at $0.065 with a 50% discount per share, or $65,000, in the aggregate.
Pursuant to a consulting agreement, in January, February and March 2021, the Company issued a total of 150,000 shares (50,000 shares each month) of its common stock to a third-party consultant, which shares were valued at $0.0406 per share ($2,030, in the aggregate), $0.0534 per share ($2,670, in the aggregate) and $0.0436 per share ($2,180, in the aggregate), respectively.
Common Stock Issued for Warrant Exercise
In August 2022, the Company issued 5,062,500 shares of common stock upon the exercise of a portion of the Talos Warrants. The exercise of the Talos Warrants was on a cashless basis.
Cancellation of Common Stock
In August 2022, pursuant to two Exchange Agreements, a total of 99,063,659 shares of common stock were cancelled and returned to the status of authorized and unissued in exchange for a total of 28,500 shares of Series A Preferred Stock. (See Note 7 Preferred Stock and Note 9. Securities Exchange Agreements).
7. PREFERRED STOCK
In August 2022, pursuant to two Exchange Agreements a total of 28,500 shares of Series A Preferred Stock were issued in exchange for a total of 99,063,659 shares of common stock, which shares of common stock were cancelled and returned to the status of authorized and unissued. (See Note 9. Securities Exchange Agreements and Note 12 Amendments to Articles of Incorporation).
8. WARRANTS
Talos Victory Fund, LLC. In connection with the Talos Note #1, we issued to Talos Victory Fund 7,593,750 cashless warrants (the “Talos Note #1 Warrants”) with an exercise price of $0.008 per share. In August 2022, the Company issued 5,062,500 shares of common stock upon the exercise of a portion of the Talos Note #1 Warrants. The exercise of the Talos Note #1 Warrants was on a cashless basis.$103,750.
Mast Hill Fund, L.P. In December 2022, the Company obtained a loan from Mast Hill Fund, L.P. which netted the Company $179,650 in proceeds. In consideration of such loan, the Company issued a $223,000 face amount senior secured promissory note (the “Mast Hill Note #3”), with OID of $22,300 recorded as a debt discount, commissions of $16,050 and legal fees of $5,000. The Mast Hill Note #3 is due in December 2023 and is convertible into shares of our common stock at any time at a conversion price of $0.001 per share, subject to a 4.99% equity blocker. In connection with the Mast Hill Note #1,#3, we issued to Mast Hill Fund 14,062,500223,000,000 cashless warrants (the “Mast Hill Fund Note #1 Warrants”) with an exercise price of $0.008$.001 per share. In August 2022, the CompanyAdditionally, we issued 9,375,000 shares of common stock upon the exercise of a portion of the Mast Hill Fund Note #1 Warrants. The exercise of the Mast Hill Fund Note #1 Warrants was on a11,468,572 cashless basis.
Additionally, in connection with the Mast Hill Note #2, the company issued to Mast Hill Fund 40,000,000 cashless warrants (the “Mast Hill Fund Note #2 Warrants”) with an exercise price of $0.0055$0.0014 per share. The relative fair value associated with the warrants is $13,368 and has been recordedshare to Darbie, as a debt discount and will be amortized over the life of the note.
GS Capital Partners, LLC. In connection with the GS Capital Note #1, we issued to GS Capital 4,000,000 cashless warrants (the “GS Capital Warrants”) with an exercise price of $0.008 per share. The relative fair value associated with the warrants is $4,449 and has been recorded as a debt discount and will be amortized over the life of the note.
J.H. Darbie & Co. As a placement agent fee in connection with the Talos Note #1, in May 2022, the Company issued to J.H. Darbie & Co. (“Darbie”) 1,215,000 cashless warrants (the “Darbie Placement #1 Warrants”) with an exercise price of $0.008 per share.
As a placement agent fee, in connection with the Mast Hill Note #1, in May 2022, the Company issued to Darbie 2,250,000 cashless warrants (the “Darbie Placement #2 Warrants”) with an exercise price of $0.008 per share. The relative fair value associated with the warrants is $3,485 and has been recorded as a debt discount and will be amortized over the life of the note.
As a placement agent fee in connection with the Mast Hill Note #2, in September 2022, the Company issued to Darbie 2,130,613 cashless warrants (the “Darbie Placement #3 Warrants”) with an exercise price of $0.0049 per share. The relative fair value associated with the warrants is $2,072 and has been recorded as a debt discount and will be amortized over the life of the note.
9. SECURITIES EXCHANGE AGREEMENTS
In August 2022, the Company entered into six separate securities exchange agreements (collectively, the “Exchange Agreements”) with its officers and directors: (a) Fabian G. Deneault (the “Deneault Agreement”), President and a Director of the Company, (b) Newlan & Newlan, Ltd. (the “Newlan Agreement”), a law firm owned by Eric Newlan, Vice President, Secretary and a Director of the Company, and L. A Newlan, Jr., a Director of the Company, (c) William E. Sluss (the “Sluss Agreement”), Chief Financial Officer and a Director of the Company, (d) EFT Holdings, Inc. (the “EFT Holdings Agreement”), a company controlled by Jack Jie Qin, a Director of the Company, (e) EF2T, Inc. (the “EF2T Agreement”), a company owned by Mr. Qin, and (f) Astoria LLC (the “Astoria Agreement”), a company controlled by Mr. Qin.#3.
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Pursuant to the Exchange Agreements, the Company is to issue a total of 42,000 shares of its Series A Preferred Stock, in exchange for a total of 123,972,996 shares of its common stock, as follows:
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As of September 30,At March 31, 2023, and December 31, 2022, the Deneault Agreement and the Newlan AgreementMast Hill Note #3 had been completed, such that a totalremaining balance of 28,500 shares of Series A Preferred Stock had been issued in exchange for a total of 99,063,659 shares of common stock, which shares of common stock were cancelled and returned to the status of authorized and unissued.$223,000.
10. RELATED PARTY TRANSACTIONS1800 Diagonal Lending LLC.
Common Stock Issued for Services
In April 2022,January 2023, we obtained a loan from 1800 Diagonal Lending LLC, which netted the Company entered into an executive services agreement with its Executive Vice President, William J. LoBell, pursuant to which it is obligated to issue 1,000,000 shares of its common stock upon execution$125,330.20 in proceeds. In consideration of such agreement, then 500,000 shares of its common stock on each of July 1, 2022, October 1, 2022, January 1, 2023, and April 1, 2023. At September 30, 2022,loan, the Company was obligatedissued a $144,569.20 face amount promissory note (the “1800 Diagonal Note #3”), with OID of $15,489, a one-time interest charge of $17,348.30, legal fees of $3,000 and $750 in due diligence fees, with principal and interest payable in 10 equal monthly payments of $16,191.75 beginning in February 2023. The Company has the right to issue a total of 1,500,000 shares of its common stock pursuant to this agreement,repay the total value of which, $34,500, is included in the Company’s accounts payable1800 Diagonal Note #3 at September 30, 2022.
Advances from Related Parties
Nine Months Ended September 30, 2022
During the nine months ended September 30, 2022,any time, without penalty. Should the Company obtained $70,500become in advances from Touchstone Enviro Solutions, Inc. (“Touchstone”), a company owned by three of the Company’s officers and directors, Fabian G. Deneault, L. A. Newlan, Jr. and Eric Newlan. The funds were used to make paymentdefault on the 1800 Diagonal Note #1 and for working capital. Such funds were obtained as#3, the 1800 Diagonal Note #3 becomes convertible into shares of the Company’s common stock at a loan on open account, accrue no interest and are due on demand. At September 30, 2022,conversion price equal to 75% multiplied by the Company owed Touchstone $70,500.
Duringlowest trading price of the nine months ended September 30, 2022,Company’s common stock during the Company obtained an advance from its President, Fabian G. Deneault, in10 trading days prior to the amount of $10,000. The funds were used for marketing expenses. Such funds were obtained as a loan on open account, accrue no interest and are due on demand. At September 30, 2022, the Company owed Mr. Deneault $10,000.applicable conversion date.
At September 30, 2022,March 31, 2023, the Company owed Atonia LLC $4,470was current in principal and EF2T, Inc. $773.
Nine Months Ended September 30, 2021
Duringits payment obligations under the nine months ended September 30, 2021, the Company obtained an advance from one of its officers and directors, Eric Newlan, as follows:
In June 2021, Mr. Newlan advanced the sum of $93,732.70 to the Company. The funds were used to repay the EMA Financial1800 Diagonal Note (the total repayment amount was $93,697.70: $61,119.80 in principal; $3,499.30 in interest; and $29,078.60 as a prepayment premium). Such funds were obtained as a loan on open account, accrue no interest and are due on demand. At September 30, 2021, such loan had been repaid in full.
At September 30, 2021, the Company owed Atonia LLC $4,470 in principal and EF2T, Inc. $773.
Stock Issued for Bonus
In June 2021, the Company issued 500,000 shares of common stock to its Chief Financial Officer and Director, William E. Sluss, as a retention bonus, which shares were valued at $.03 per share, or $15,000, in the aggregate.
New Mitexstream Agreement
In February 2021, Black Bird entered into a Manufacturing, Sales and Distribution License Agreement (the “New MiteXstream Agreement”) with a related party, Touchstone Enviro Solutions, Inc., which replaced a prior similar agreement (the “Original MiteXstream Agreement”) and served to expand Black Bird’s rights with respect to MiteXstream, an EPA-registered biopesticide. The New MiteXstream Agreement contains the following important provisions as compared to the Original MiteXstream Agreement:
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The disinterested Directors of the Company approved the New MiteXstream Agreement.
Facility Lease
In May 2020, a Company subsidiary, Black Bird Potentials, Inc. (“BBPotentials”), entered into a facility lease with Grizzly Creek Farms, LLC, an entity owned by one of the Company’s directors, Fabian G. Deneault, with respect to approximately 2,000 square feet of manufacturing space located in Ronan, Montana. Monthly rent under such lease was $1,500#3 and the initial term1800 Diagonal Note #3 had a remaining balance of such lease expired in December 2025. This lease was terminated effective April 1, 2021. Since such date, Mr. Deneault permits BB Potentials to utilize the leased facility for storage, at no charge.$115,655.
11. LOANS PAYABLE – RELATED PARTIESSTOCKHOLDER RECEIVABLE
Nine Months Ended September 30, 2022
During the nine months ended September 30, 2022, the Company obtained no loans from related parties.
Nine Months Ended September 30, 2021
During the nine months ended September 30, 2021, the Company obtained an advance from one of its officers and directors, Eric Newlan, as follows:
In June 2021, Mr. Newlan advanced the sum of $93,732.70 to the Company. The funds were used to repay the EMA Financial Note (the total repayment amount was $93,697.70: $61,119.80 in principal; $3,499.30 in interest; and $29,078.60 as a prepayment premium). Such funds were obtained as a loan on open account, accrue no interest and are due on demand. At September 30, 2021, such loan had been in full.
At September 30, 2021,March 31, 2023 and 2022, cash relating to a stockholder receivable of Black Bird for $1,000, which stockholder receivable became a part of the Company’s outstanding common stock history, upon its acquisition of Black Bird. The stockholder receivable relates to 42,885 shares of Company owed Atonia LLC $4,470 in principal and EF2T, Inc. $773.common stock.
12. AMENDMENTS OF ARTICLES OF INCORPORATION
Certificates of Amendment
In January 2020, the Company amendedfiled a Certificate of Amendment to its Articles of Incorporation to change its corporate name to “Black Bird Potentials Inc.” and submitted such filing to FINRA for approval thereof. FINRA did not approve such filing, due to an extended passage of time from the Company’s initial filing and its being late in filing certain periodic reports.
In April 2021, the Company amended its Articles of Incorporation to change its corporate name to “Black Bird Biotech, Inc.”
In February 2021, the Company amended its Articles of Incorporation to increase the number of authorized shares of its common stock to 325,000,000. The Company also amended its Articles of Incorporation subsequent to March 31, 2021.
In April 2022, the Company amended its Articles of Incorporation to increase the number of authorized shares of common stock to 750,000,000 and to authorize 50,000,000 shares of preferred stock.
In November 2022, the Company amended its Articles of Incorporation to increase the number of authorized shares of common stock to 2,500,000,000 shares.
Certificate of Designation – Series A Preferred Stock
In August 2022, the Company filed with the State of Nevada a Certificate of Designation (the “Certificate of Designation”), which established a Series A Preferred Stock with the following rights, preferences, powers, restrictions and limitations:
Designation, Amount and Par Value. The series of Preferred Stock shall be designated as Series A Preferred Stock and the number of shares so designated shall be Forty-Two Thousand (42,000). Each share of the Series A Preferred Stock shall have a par value of $0.001.
Fractional Shares. The Series A Preferred Stock may be issued in fractional shares.
Voting Rights. The holders of the Series A Preferred Stock shall, as a class, have rights in all matters requiring shareholder approval to a number of votes equal to two (2) times the sum of:
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Dividends. The Series A Preferred Stock shall be treated pari passu with the Company’s common stock, except that the dividend on each share of Series A Preferred Stock shall be equal to the amount of the dividend declared and paid on each share of the Company’s common stock multiplied by the Conversion Rate, as that term is defined herein.
Liquidation. Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, payments to the holders of Series A Preferred Stock shall be treated pari passu with the Company’s common stock, except that the payment on each share of Series A Preferred Stock shall be equal to the amount of the payment on each share of the Company’s common stock multiplied by the Conversion Rate, as that term is defined herein.
Conversion and Adjustments.
Conversion Rate. The Series A Preferred Stock shall be convertible into shares of the Company’s common stock, as follows:
Each 1,000 shares of Series A Preferred Stock shall be convertible at any time into a number of shares of the Company’s common stock that equals one percent (1.00%) of the number of issued and outstanding shares of the Company’s common stock outstanding on the date of conversion (the “Conversion Rate”).
No Partial Conversion. A holder of shares of Series A Preferred Stock shall be required to convert all of such holder’s shares of Series A Preferred Stock, should any such holder exercise his, her or its rights of conversion.
Adjustment for Merger and Reorganization, etc. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Company’s common stock (but not the Series A Preferred Stock) is converted into or exchanged for securities, cash or other property, then each share of Series A Preferred Stock shall be deemed to have been converted into shares of the Company’s common stock at the Conversion Rate.
Protection Provisions. So long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without first obtaining the unanimous written consent of the holders of Series A Preferred Stock, alter or change the rights, preferences or privileges of the Series A Preferred Stock so as to affect adversely the holders of Series A Preferred Stock.
Waiver. Any of the rights, powers or preferences of the holders of the Series A Preferred Stock may be waived by the affirmative consent or vote of the holders of at least a majority of the shares of Series A Preferred Stock then outstanding.
No Other Rights or Privileges. Except as specifically set forth herein, the holder(s) of the shares of Series A Preferred Stock shall have no other rights, privileges or preferences with respect to the Series A Preferred Stock.
13. RELATED PARTY TRANSACTIONS
Three Months Ended March 31, 2023 During the three months ended March 31, 2023, the Company obtained $25,046 in advances from related parties. Three Months Ended March 31, 2022 During the three months ended March 31, 2022, the Company obtained no advances from related parties. New Mitexstream Agreement
In February 2021, Black Bird entered into a Manufacturing, Sales and Distribution License Agreement (the
The disinterested Directors of the Company approved the New MiteXstream
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During the three months ended March 31, 2023, the Company obtained $25,046 in advances from Eric Newlan, Vice President and a As of March 31, 2022, the Company owed $68,800 to Touchstone Enviro Solutions, Inc. (“ As of March 31, 2022, the Company owed $4,400 to Fabian G. Deneault, President and a Director of the Company. Such amount accrues no interest and is due on demand. As of March 31, 2023, the Company owed Astonia LLC $5,242 in Three Months Ended March 31, 2022 During the three months ended March 31, 2022, the Company did not obtain any loans from related parties. As of March 31, 2022, the Company owed Astonia LLC $5,242 in
15.
The Company Future minimum lease payments under the
In January 2023, the Company entered into a lease for
16.
Mast Hill Fund, L.P. Subsequent to March 31, 2023, $15,060 in interest on the Mast Hill Note #2 has been repaid through conversion
Loans From a Related Party Subsequent to March 31, 2023, the
Other
Management has evaluated subsequent events through
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Basis of Presentation
This Management’s Discussion and Analysis of Financial Condition and Results of Operations section includes financial results of our company, Black Bird Biotech, Inc., including its subsidiaries, Black Bird Potentials Inc. (BB Potentials), Big Sky American Dist., LLC (Big Sky American) and Black Bird Hemp Manager, LLC, for the
Cautionary Statement
The following discussion and analysis should be read in conjunction with our financial statements and related notes,
Our actual results may differ materially from those anticipated in the following discussion, as a result of a variety of risks and
Implications of Being an Emerging Growth Company
We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1.07 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
Critical Accounting Policies
In
Overview and Outlook
Through BB Potentials, our company is the exclusive worldwide manufacturer and distributor of MiteXstream, an EPA-registered plant-based biopesticide (EPA Reg. No. 95366-1) effective in the eradication of mites and similar pests, including spider mites, a pest that destroys crops, especially cannabis, hops, coffee, and house plants, as well as molds and mildew. Also through BB Potentials, we manufacture and sell CBD products, including CBD Oils, gummies and pet treats, and CBD-infused personal care products, under the Grizzly Creek Naturals brand name. Big Sky American distributes our Grizzly Creek Naturals products, as well as an array of other consumer retail products, in Western Montana. In addition, for 2020 and 2021, BB Potentials was a licensed grower of industrial hemp under the Montana Hemp Pilot Program and, in connection therewith, established “Black Bird American Hemp” as the brand name under which these efforts were to be conducted. For the foreseeable future, we have suspended our hemp-related efforts.
Principal Factors Affecting Our Financial Performance
Our future operating results can be expected to be primarily affected by the following factors:
Results of Operations
During Interim
During Interim
During Interim
We expect that our revenues will increase from quarter to quarter beginning with the
Further, because of our relative current lack of capital and the current lack of brand name awareness of MiteXstream and Grizzly Creek Naturals, we cannot predict the levels of our future revenues. However, our management believes that MiteXstream will become the most dynamic, fastest growing part of our business.
Plans for
Substantially all of our available capital, financial and human, will be devoted to increasing sales of MiteXstream. Through our marketing consulting agreement with Spire+, we
Financial Condition, Liquidity and Capital Resources
Our company’s current cash position of approximately
Capital
Regulation A Offerings. In May 2020, our company filed an Offering Statement on Form 1-A (File No. 054-11215) (the “Reg A #1”) with the SEC with respect to 70,000,000 shares of common stock, as amended, which was qualified by the SEC on August 4, 2020. During the year ended December 31, 2021, we sold a total of 4,875,000 shares of common stock for a total of $195,000 in cash, under the Reg A #1, which expired by its terms on August 4, 2021. At the end of August 2021, our company filed a second Offering Statement on Form 1-A (File No. 024-11621) (the “Reg A #2”) with the SEC with respect to 100,000,000 shares of common stock, as amended, which was qualified by the SEC on September 9, 2021. During the year ended December 31, 2021, we sold a total of 93,033,333 shares of common stock for a total of $1,395,500 in cash, under the Reg A #2.
Third-Party Loans.
Tri-Bridge Ventures LLC. In April 2020, the Company obtained a loan in the amount of $25,000 from Tri-Bridge Ventures LLC. In consideration of such loan, the Company issued a $25,000 face amount convertible promissory note (the “Tri-Bridge Note”) bearing interest at 10% per annum, with principal and interest due in January 2021. Tri-Bridge Note is convertible into shares of the Company’s common stock at the rate of one share for each $.001 of debt converted anytime after August 30, 2020.
during 2022. At
Tiger Trout Capital Puerto Rico, LLC. In September 2021, the Company obtained a loan from Tiger Trout Capital Puerto Rico, LLC which netted the Company $250,000 in proceeds. In consideration of such loan, the Company issued a $500,000 face amount convertible promissory note (“Tiger Trout Note”), with OID of $250,000, with principal due in September 2022. During the
1800 Diagonal Lending LLC. In March 2022, the Company obtained a loan from Sixth Street Lending LLC, who later assigned the loan to an affiliated company, 1800 Diagonal Lending LLC, which netted the Company $200,000 in proceeds. In consideration of such loan, the Company issued a $228,200 face amount promissory note (the “1800 Diagonal Note #1”), with OID of $24,450 recorded as a debt discount and a one-time interest charge of $25,102, with principal and interest payable in 10 equal monthly payments of $25,330.20 beginning in May 2022. The Company has the right to repay the 1800 Diagonal Note #1 at any time, without penalty. Should the Company become in default on the 1800 Diagonal Note #1, the 1800 Diagonal Note #1 becomes convertible into shares of the Company’s common stock at a conversion price equal to 75% multiplied by the lowest trading price of the Company’s common stock during the 10 trading days prior to the applicable conversion date.
Talos Victory Fund, LLC. In May 2002, the Company obtained a loan from Talos Victory Fund, LLC which netted the Company $107,780 in proceeds. In consideration of such loan, the Company issued a $135,000 face amount promissory note (the “Talos Note #1”), with OID of $13,500 recorded as a debt discount, commissions of $9,720 and legal fees of $4,000. The Talos Note #1 is due in May 2023 and is convertible into shares of the Company’s common stock at any time at a conversion price of
During the three months ended March 31, 2023, the remaining balance of the Talos Note #1 was repaid in full through conversion into shares of the Company’s common stock, as follows:
At
Mast Hill Fund, L.P. In May In
During the three months ended March 31, 2023, $36,650 in principal and $5,250 in fees on the Mast Hill Note #1 was repaid through conversion into shares of the Company’s common stock, as follows:
At
GS Capital Partners, LLC. In June 2022, we obtained a loan from GS Capital Partners, LLC which netted our company $63,650 in proceeds. In consideration of such loan, we issued a $70,000 face amount promissory note (the “GS Capital Note #1”), with OID of $6,500 recorded as a debt discount, a finder’s fee of $4,900 and legal fees of $3,000, with principal and interest payable in 10 equal monthly payments of $7,840 beginning in September 2022. The Company has the right to repay the GS Capital Note #1 at any time, without penalty. Should the Company become in default on the GS Capital Note #1, the GS Capital Note #1 becomes convertible into shares of the Company’s common stock at a conversion price equal to 70% multiplied by the lowest trading price of the Company’s common stock during the 10 trading days prior to the applicable conversion date.
As of
Subsequent to March 31, 2023, $8,700 in principal and $960 in interest on the Boot Capital Note #1 has been repaid through conversion into shares of the Company’s common stock, as follows:
Boot Capital, LLC. In August 2022, the Company obtained a loan from Boot Capital, LLC which netted the Company $56,000 in proceeds. In consideration of such loan, the Company issued a $61,600 face amount promissory note (the “Boot Capital Note #1”), with OID of $5,600 recorded as a debt discount, commissions of $3,360 and legal fees of $2,500. The Boot Capital Note #1 is due in August 2023 and is convertible into shares of the Company’s common stock at any time after 180 days of issuance at a conversion price at a 40% discount to the then-market price of the Company’s common stock, subject to a 4.99% equity blocker.
During the three months ended March 31, 2023, $17,700 in principal on the Boot Capital Note #1 was repaid through conversion into shares of the Company’s common stock, as follows:
At
Mast Hill Fund, L.P.In September 2022, the Company obtained a loan from Mast Hill Fund, L.P. which netted the Company $130,500 in proceeds. In consideration of such loan, the Company issued a $145,000 face amount
At
Subsequent to March 31, 2023, $15,060 in interest on the Mast Hill Note #2 has been repaid through conversion into shares of the Company’s common stock, as follows:
1800 Diagonal Lending LLC.
At March 31, 2023, and December 31, 2022, the 1800 Diagonal Note #2 had a remaining balance of $103,750 and $103,750, respectively.
At March 31, 2023, and December 31, 2022, the Mast Hill Note #3 had a remaining balance of $223,000 and $223,000, respectively. 1800 Diagonal Lending LLC. At March 31, 2023, the Company was current in its payment obligations under the 1800 Diagonal Note #3 and Related-Party Loans. During the three months ended March 31, 2023, the Company obtained $25,531 in advances from Eric Newlan, Vice President and a Director of the Company. Such funds were obtained as a loan on open account, accrue no interest and are due on demand.
As of March 31, 2022, As of March 31, 2023, the Company owed Astonia LLC $5,242 in principal and $556 in accrued and unpaid interest.
Inflation
Seasonality
Our Big Sky American operations are subject to seasonal fluctuation, with the months of May through September providing approximately 70% of Big Sky American’s sales revenues. We expect that our operating results with respect to MiteXstream will be impacted, in an indeterminate measure, by the seasonality of farming operations, including cannabis grow operations. However, we are currently unable to predict the level to which such seasonality will impact our MiteXstream business.
Off Balance Sheet Arrangements
As of
Contractual Obligations
In May 2020, BB Potentials entered into a facility lease with Grizzly Creek Farms, LLC, an entity owned by one our Directors, Fabian G. Deneault, with respect to approximately 2,000 square feet of manufacturing space located in Ronan, Montana. Monthly rent under such lease was $1,500 and the initial term of such lease expired in December 2025. This lease was terminated effective April 1, 2021. Since such date, Mr. Deneault permits BB Potentials to utilize the previously-leased facility for storage, at no charge.
Capital Expenditures
We made no capital expenditures during the
COVID-19 On January 30, 2020, the World Health Organization declared the COVID-19 (coronavirus) outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. The virus and actions taken to mitigate its spread have had and are expected to continue to have a broad adverse impact on the economies and financial markets of many countries, including the geographical areas in which our company operates.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. Management is responsible for establishing and maintaining adequate disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in its reports filed pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely and reliable financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America.
As of the quarter ended
Based on that evaluation, we concluded that our disclosure controls and procedures over financial reporting were not effective as of
Changes in Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting during the quarter ended
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
We have no pending legal or administrative proceedings.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
_______________________ * Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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