Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Aug. 22, 2022 | Sep. 30, 2019 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2020 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 000-1609139 | ||
Entity Registrant Name | INNERSCOPE HEARING TECHNOLOGIES, INC. | ||
Entity Central Index Key | 0001609139 | ||
Entity Tax Identification Number | 46-3096516 | ||
Entity Incorporation, State or Country Code | NV | ||
Entity Address, Address Line One | 2151 Professional Drive | ||
Entity Address, Address Line Two | Second Floor | ||
Entity Address, City or Town | Roseville | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 95661 | ||
City Area Code | 833 | ||
Local Phone Number | 788-0506 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | No | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Elected Not To Use the Extended Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 4,752,400 | ||
Entity Common Stock, Shares Outstanding | 7,662,715,566 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash | $ 3,349 | $ 4,459 |
Accounts receivable, allowance for doubtful accounts | 12,429 | 51,160 |
Accounts receivable from related party | ||
Employee advances | 3,000 | 3,750 |
Prepaid assets | 73,249 | |
Inventory | 4,671 | 18,781 |
Total current assets | 23,449 | 151,399 |
Security deposits | 4,863 | 12,752 |
Domain name | 3,000 | 3,000 |
Intangible assets, net of accumulated amortization | 879,336 | |
Property and equipment, net of accumulated depreciation | 60,203 | 72,241 |
Operating leases right-of-use assets, net | 364,062 | 846,132 |
Investment in undivided interest in real estate | 1,227,733 | 1,210,526 |
Total assets | 1,683,310 | 3,175,386 |
Current Liabilities: | ||
Bank overdraft | 271 | 2,631 |
Accounts payable and accrued expenses | 1,841,300 | 1,316,185 |
Accounts payable to related party | 662,178 | 266,419 |
Notes payable - stockholder | 95,800 | 95,800 |
Current portion of convertible notes payable, net of discounts | 3,255,598 | 2,390,481 |
Note payable, other and related party | 118,786 | 106,942 |
Customer deposits | 10,925 | 21,505 |
Current portion of note payable- undivided interest in real estate | 22,150 | 20,708 |
Derivative liabilities | 4,046,401 | 3,515,055 |
Operating lease liabilities, current portion | 365,587 | 299,794 |
Total current liabilities | 10,418,996 | 8,035,520 |
Long term portion of note payable- undivided interest in real estate | 938,003 | 952,884 |
PPP loan | 262,445 | |
Operating lease liabilities, Less current portion | 416,788 | 731,496 |
Total liabilities | 12,036,232 | 9,719,900 |
Stockholders' Deficit: | ||
Series A preferred stock, par value $0.0001, -0- (2020) and -0- (2019) | ||
Series B preferred stock, par value $0.0001, 900,000 (2020) and 900,000 (2019) shares authorized, and 900,000 (2020) and 900,000 (2019) shares issued and outstanding | 90 | 90 |
Common stock, $0.0001 par value; 14,975,000,000 (2020) and 14,975,000,000 (2019) shares authorized and 3,628,422,042 (2020) and 342,118,136 (2019) shares issued and outstanding | 362,845 | 34,212 |
Common stock to be issued, $0.0001 par value, 2,412,671 (2020) and 2,412,671 (2019) shares | 241 | 241 |
Additional paid-in capital | 8,534,062 | 7,717,411 |
Accumulated deficit | (19,250,160) | (14,296,468) |
Total stockholders' deficit | (10,352,922) | (6,544,514) |
Total Liabilities and Stockholders' Equity | $ 1,683,310 | $ 3,175,386 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 25,000,000 | 25,000,000 |
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 14,975,000,000 | 14,975,000,000 |
Common Stock, Shares, Issued | 3,628,422,042 | 342,118,136 |
Common Stock, Shares, Outstanding | 3,628,422,042 | 342,118,136 |
Common Stock, Shares Subscribed but Unissued | 2,412,671 | 2,412,671 |
Series A Preferred Stock [Member] | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Series B Preferred Stock [Member] | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 900,000 | 900,000 |
Preferred Stock, Shares Issued | 900,000 | 900,000 |
Preferred Stock, Shares Outstanding | 900,000 | 900,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | ||
Revenues, other | $ 166,111 | $ 802,109 |
Revenues, related party | 45,000 | |
Total revenues | 166,111 | 847,109 |
Cost of sales | ||
Cost of sales, other | 68,768 | 496,736 |
Total cost of sales | 68,768 | 496,736 |
Gross profit | 97,343 | 350,374 |
Operating Expenses: | ||
Compensation and benefits | 661,840 | 1,575,395 |
Advertising and promotion | 19,762 | 485,407 |
Professional fees | 114,476 | 763,157 |
Rent, including related party | 322,879 | 424,613 |
Investor relations | 14,796 | 193,696 |
Depreciation and Amortization expense | 123,646 | 150,024 |
Other general and administrative | 69,188 | 502,908 |
Total operating expenses | 1,326,587 | 4,095,200 |
Loss from operations | (1,229,244) | (3,744,826) |
Other Income (Expense): | ||
Derivative income (loss) | (1,066,904) | (647,633) |
Gain on equity investment | 30,646 | 15,083 |
Amortization of debt discount | (1,222,965) | (2,954,879) |
Loss on debt extinguishment | (52,702) | |
Loss on lease termination | (201,283) | (146,337) |
Other income (expenses) | 181 | (6,742) |
Loss on intangibles | (775,000) | |
Interest expense and finance charges | (489,123) | (386,303) |
Total other income (expense), net | (3,724,448) | (4,179,513) |
Loss before income tax | (4,953,692) | (7,924,339) |
Income tax provision | ||
Net Loss | $ (4,953,692) | $ (7,924,339) |
Basic and diluted income (loss) per share | $ 0 | $ (0.02) |
Basic and diluted | 2,769,472,382 | 486,708,071 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Deferred Compensation, Share-based Payments [Member] | AOCI Attributable to Parent [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2018 | $ 90 | $ 12,042 | $ (235,694) | $ 637 | $ 4,836,556 | $ (6,372,129) | $ (1,758,498) |
Shares, Outstanding, Beginning Balance at Dec. 31, 2018 | 900,000 | 120,425,344 | 6,376,848 | ||||
Amortization of deferred stock compensation | 235,694 | 235,694 | |||||
Issuance of stock for services | $ 1,258 | $ (396) | 439,804 | 440,666 | |||
Stock Issued During Period, Shares, Issued for Services | 12,576,313 | 3,961,177 | |||||
Stock Issued During Period, Shares, Issued for Services | (12,576,313) | (3,961,177) | |||||
Related party contribution | 12,048 | 12,048 | |||||
Debt conversion and retirement of derivative liabilities | $ 20,912 | 2,429,003 | 2,449,915 | ||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | 209,116,478 | ||||||
Net loss for the period ended December 31, 2020 | (7,924,339) | (7,924,339) | |||||
Ending balance, value at Dec. 31, 2019 | $ 90 | $ 34,212 | $ 241 | 7,717,411 | (14,296,468) | (6,544,514) | |
Shares, Outstanding, Ending Balance at Dec. 31, 2019 | 900,000 | 342,118,135 | 2,415,671 | ||||
Related party contribution | |||||||
Debt conversion and retirement of derivative liabilities | $ 328,633 | 816,651 | 1,145,284 | ||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | 3,286,303,906 | ||||||
Net loss for the period ended December 31, 2020 | (4,953,692) | (4,953,692) | |||||
Ending balance, value at Dec. 31, 2020 | $ 90 | $ 362,845 | $ 241 | $ 8,534,062 | $ (19,250,160) | $ (10,352,922) | |
Shares, Outstanding, Ending Balance at Dec. 31, 2020 | 900,000 | 3,628,422,041 | 2,415,671 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ 4,953,692 | $ 7,924,339 |
Adjustments to reconcile net loss to net cash used in operations: | ||
Depreciation and amortization | 123,646 | 150,024 |
Gain/Loss on settlement of debt | 44,852 | |
Loss on lease termination | (11,020) | 5,426 |
Loss on ROU asset | 204,416 | 167,938 |
Discount amortization | 1,172,111 | 2,850,033 |
Derivative loss (gain) | 1,066,904 | 647,633 |
Stock-based compensation | 440,667 | |
Loss on intangibles | 775,000 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 38,732 | (45,048) |
Inventory | 14,110 | 72,729 |
Pre-paids and other current asset | 73,999 | 369,930 |
Related party receivable | 203,325 | |
Security deposit | 7,889 | (1,696) |
Accounts payable | 570,077 | (130,405) |
Customer deposits | (10,580) | (35,193) |
Related party advances | 395,759 | 231,310 |
Changes in lease liability | 39,761 | 11,790 |
Net cash used in operating activities | (523,534) | (2,925,941) |
Cash flows from investing activities: | ||
Changes in intangibles | ||
Purchase/Sale of office and computer equipment | (7,272) | (49,614) |
Equity investment | (9,561) | |
Net cash used in investing activities | (7,272) | (59,175) |
Cash flows from financing activities: | ||
Proceeds from related party contribution | 12,048 | |
Payments/Proceeds from convertible notes payable | 269,611 | 2,854,250 |
Proceeds/payments from notes payable | 32,820 | |
Bank overdraft | (2,360) | 2,631 |
Proceeds from pay check protection program loan | 262,445 | |
Net cash provided by financing activities | 529,696 | 2,901,749 |
Net decrease in cash and cash equivalents | (1,110) | (83,367) |
Cash and cash equivalents, beginning of year | 4,459 | 87,826 |
Cash and cash equivalents, end of year | 3,349 | 4,459 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | ||
Cash paid for income taxes | ||
Schedule of non-cash Investing or Financing Activity: | ||
Reclassification of derivative liabilities upon principal repayments of convertible notes | 684,355 | 1,322,092 |
Conversion of notes payable and accrued interest in common stock | 460,929 | 1,127,823 |
Operating lease right-of-use assets and liabilities | $ 1,038,580 |
NOTE 1 _ ORGANIZATION
NOTE 1 – ORGANIZATION | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NOTE 1 – ORGANIZATION | NOTE 1 – ORGANIZATION Business InnerScope Hearing Technologies, Inc. (“Company”, “InnerScope”) is a Nevada Corporation incorporated on June 15, 2012, with its principal place of business in Roseville, California. The Company was originally named InnerScope Advertising Agency, Inc. and was formed to provide advertising and marketing services to retail establishments in the hearing device industry. On August 25, 2017, the Company changed its name to InnerScope Hearing Technologies, Inc. to better reflect the Company’s current direction as a hearing health technology company that manufactures, develops, distributes, and sells numerous innovative hearing health-related products, hearing treatments, and hearing solutions direct to consumer (DTC) with a scalable business model. |
NOTE 2 _ SUMMARY OF SIGNIFICANT
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America ("US GAAP"). The consolidated financial statements of the Company include the consolidated accounts of InnerScope and its’ wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Emerging Growth Companies The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act 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. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to take advantage of the benefits of this extended transition period. 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 estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include the fair value of the derivative liabilities. Cash and Cash Equivalents The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. The Company held no cash equivalents as of December 31, 2020 and 2019. Cash balances may, at certain times, exceed federally insured limits. If the amount of a deposit at any time exceeds the federally insured amount at a bank, the uninsured portion of the deposit could be lost, in whole or in part, if the bank were to fail. No losses have been recognized as a result of these excess amounts. Accounts receivable The Company records accounts receivable at the time products and services are delivered. An allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience. As of December 31, 2020 and 2019, management’s evaluation required the establishment of an allowance for uncollectible receivables of $27,991 and $27,615, respectively. Sales Concentration and Credit Risk Following is a summary of customers who accounted for more than ten percent (10%) of the Company’s revenues for the years ended December 31, 2020 and 2019, and accounts receivable balances as of December 31, 2020 and 2019: December 31, Accounts Receivable as of Accounts Receivable as of 2020 2019 December 31, 2020 December 31, 2019 % % Customer A 28 5 0 41 Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the first in first out (FIFO) method. Provision for potentially obsolete or slow-moving inventory is made based on management analysis or inventory levels and future sales forecasts. As of December 31, 2020, and 2019, management’s analysis did not require any provisions to be recognized. Intangible Assets Costs for intangible assets are accounted for through the capitalization of those costs incurred in connection with developing or obtaining such assets. Capitalized costs are included in intangible assets in the consolidated balance sheets. On October 3, 2018, the Company entered into a Manufacturing Design and Marketing Agreement (the “Agreement”) with Zounds Hearing, Inc., a Delaware corporation (“Zounds”), whereby, Zounds as the Subcontractor will provide design, technology, manufacturing and supply chain services to the Company (see Note 13) for a period of ten years. The Company will pay Zounds One Million ($1,000,000) for the right to use proprietary technology (the “Technology Access Fee”). As of December 31, 2018, the Company has capitalized the $1,000,000 Technology Access Fee as an intangible asset on the consolidated balance sheets. The Technology Access Fee will be amortized over the term of the Agreement. The Company also acquired intangible assets from an asset purchase agreement (see Note 4). During the year ended December 31, 2020, the Company determined that they do not expect to realize any benefit in the foreseeable future, therefore, have recorded an impairment of $775,000. Property and Equipment Property and equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful lives of the assets. The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. The estimated useful lives of property and equipment are as follows: Computer equipment 3 years Machinery and equipment 5 years Furniture and fixtures 5 years Leasehold improvements 3-5 years The Company's property and equipment consisted of the following at December 31, 2020, and 2019: December 31, 2020 December 31, 2019 Computer and equipment $ 4,272 $ 4,272 Leasehold improvements 12,222 12,222 Machinery and equipment 45,411 38,139 Furniture and equipment 39,152 39,152 101,057 93,785 Accumulated depreciation (40,854 ) (21,544 ) Property and equipment, net $ 60,203 $ 72,241 Depreciation expense of $19,310 and $25,453 was recorded for the years ended December 31, 2020 and 2019, respectively. Investment in Undivided Interest in Real Estate The Company accounts for its’ investment in undivided interest in real estate using the equity method, as the Company is severally liable only for the indebtedness incurred with its interest in the property. The Company includes its allocated portion of net income or loss in Other income (expense) in its Statement of Operations, with the offset to the equity investment account on the balance sheet. For the years ended December 31, 2020 and 2019, the Company recognized a gains of $30,646 and $15,083, respectively. As of December 31, 2020, and 2019, the carrying value of the Company’s investment in undivided interest in real estate was $1,227,733 and $1,210,526, respectively (see Note 9). Fair Value of Financial Instruments The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that mark et participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities. Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 - Unobservable inputs reflecting the Company's assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. The carrying amounts of the Company's financial assets and liabilities, such as cash, prepaid expenses, accounts receivable, accounts payable and accrued expenses, certain notes payable and notes payable - related party, approximate their fair values because of the short maturity of these instruments. The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2020, and 2019, for each fair value hierarchy level: December 31, 2019 Level 1 Level 2 Level 3 Total Derivative liabilities $ — $ — $ 3,515,055 $ 3,515,055 $ — $ — $ 3,515,055 $ 3,515,055 December 31, 2020 Level 1 Level 2 Level 3 Total Derivative liabilities $ — $ — $ 4,046,401 $ 4,046,401 $ — $ — $ 4,046,401 $ 4,046,401 Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under ASC 815 "Derivatives and Hedging" to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 "Debt with Conversion and Other Options" for consideration of any beneficial conversion feature. Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of it financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based simple derivative financial instruments, the Company uses the Monte Carlo simulations to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re- assessed at the end of each reporting period. Debt Issue Costs and Debt Discount The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense through the maturity of the debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately expensed. Any unamortized debt issue costs and debt discount are presented net of the related debt on the consolidated balance sheets. Original Issue Discount For certain convertible debt issued, the Company may provide the debt holder with an original issue discount. The original issue discount would be recorded to debt discount, reducing the face amount of the note and is amortized to interest expense through the maturity of the debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately expensed. Any unamortized original issue discounts are presented net of the related debt on the consolidated balance sheets. Revenue Recognition Effective January 1, 2018, the Company adopted ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”) and all the related amendments. The Company elected to adopt this guidance using the modified retrospective method. The adoption of this guidance did not have a material effect on the Company’s financial position, results of operations or cash flows. The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company’s contracts with customers are generally on a purchase order basis and represent obligations that are satisfied at a point in time, as defined in the new guidance, generally upon delivery or has services are provided. Accordingly, revenue for each sale is recognized when the Company has completed its performance obligations, Any costs incurred before this point in time, are recorded as assets to be expensed during the period the related revenue is recognized. The Company accepts prepayments on hearing aids and records the amount received as customer deposits on its’ balance sheet. When the Company delivers the hearing aid to the customer, revenue is recognized as well as the corresponding cost of sales. As of December 31, 2020 and 2019, the Company had received $21,505 and $10,925 of customer deposits, where revenue will be recognized when the hearing aids are delivered to the customer. Income Taxes The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties. Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. Advertising and Marketing Expenses The Company expenses advertising and marketing costs as incurred. For the years ended December 31, 2020 and 2019, advertising and marketing expenses were $19,762 and $485,407, respectively. Earnings (Loss) Per Share The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net loss by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. As of December 31, 2020, and 2019, the Company’s outstanding convertible debt is convertible into approximately 4,650,854,286 and 155,226,039 shares of common stock, respectively. This amount is not included in the computation of dilutive loss per share because their impact is antidilutive. Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (for “emerging growth company” beginning after December 15, 2020). The Company will be evaluating the impact this standard will have on the Company’s consolidated financial statements. The FASB recently issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to reduce complexity in applying GAAP to certain financial instruments with characteristics of liabilities and equity. The guidance in ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, which requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives. In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract. The amendments in ASU 2020-06 further revise the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. The amendments in ASU 2020-06 are effective for public entities for fiscal years beginning after December 15, 2021, with early adoption permitted (for “emerging growth company” beginning after December 15, 2023). The Company will be evaluating the impact this standard will have on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases (ASU 2018-10), which provides narrow amendments to clarify how to apply certain aspects of the new lease standard, and ASU No. 2018-11, Leases (Topic 842)—Targeted Improvements (ASU 2018-11), which addressed implementation issues related to the new lease standard. These and certain other lease-related ASUs have generally been codified in ASC 842. ASC 842 supersedes the lease accounting requirements in ASC Topic 840, Leases (ASC 840). ASC 842 establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases. Under ASC 842, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 was effective for annual reporting periods beginning after December 15, 2018 and interim periods within that reporting period (for “emerging growth company” from January 1, 2020). The Company adopted ASC 842 on January 1, 2019 using the effective date transition method. The Company elected the practical expedient to not record short-term leases on its consolidated balance sheet. |
NOTE 3 _ GOING CONCERN AND MANA
NOTE 3 – GOING CONCERN AND MANAGEMENT’S PLANS | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NOTE 3 – GOING CONCERN AND MANAGEMENT’S PLANS | NOTE 3 – GOING CONCERN AND MANAGEMENT’S PLANS The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which assumes the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company experienced a net loss of $ 4,953,692 10,395,547 19,250,160 |
NOTE 4 _ INTANGIBLE ASSETS, NET
NOTE 4 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
NOTE 4 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | NOTE 4 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) The Company’s intangible assets consist of a customer list and non-compete acquired in 2018 and a Technology Access Fee required to be paid by the Company in connection with a manufacturing design and marketing agreement executed with a supplier (see Note 11). During the year ended December 31, 2020, the Company determined that it was unable to substantiate the actual fair value of the technology that was acquired so has chosen to impair the full amount. These intangible assets are amortized over their estimated useful lives as indicated below. The estimated useful lives of property and equipment are as follows: Customer List 2 years Non-compete 2 years Technology Access Fee 10 years The Company's intangibles consisted of the following at December 31, 2020, and 2019: December 31, 2020 December 31, 2019 Customer List $ 300 $ 300 Non-Compete 12,708 12,708 Technology Access Fee — 1,000,000 Intellectual Property 3,000 3,000 Intangibles 16,008 1,016,008 Accumulated amortization (13,008 ) (133,672 ) Intangibles, net $ 3,000 $ 882,336 The Company recognized $104,336 and $124,571 of amortization expense during the years ended December 31, 2020 and 2019. |
NOTE 5 _ NOTE PAYABLE, STOCKHOL
NOTE 5 – NOTE PAYABLE, STOCKHOLDER | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
NOTE 5 – NOTE PAYABLE, STOCKHOLDER | NOTE 5 – NOTE PAYABLE, STOCKHOLDER A summary of the activity for the years ended December 31, 2020, and 2019, of amounts the Company’s CEO (stockholder) loaned the Company and amounts repaid is as follows: December 31, 2020 December 31, 2019 Beginning Balance $ 95,800 $ 95,800 Amounts loaned/repaid — — Ending Balance $ 95,800 $ 95,800 The ending balance amount is due on demand, carries interest at 8% per annum and is included Accounts payable and accrued expenses on the consolidated balance sheets included herein. |
NOTE 6 _ NOTE PAYABLE
NOTE 6 – NOTE PAYABLE | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
NOTE 6 – NOTE PAYABLE | NOTE 6 – NOTE PAYABLE In October of 2018, the Company entered into a Business Loan Agreement (the “October BLA”) for $47,215 with a third- party, whereby the Company received $35,500 on October 10, 2018. The October BLA requires the Company to make the first six monthly payments of principal and interest of $4,467 per month, and then $3,402 for months seven through t12. The note carries a 33% interest rate and matures on October 28, 2019. The Company paid the note in full during the year ending December 31, 2019. In July of 2019, the Company entered into a Loan Agreement for $60,000 with a third- party. The loan weekly payments of $1,538. In November of 2019, the Company entered into a Loan Agreement for $87,000 with a third- party, whereby the Company received loan of $790. In December of 2019, the Company entered into a Loan Agreement for $21,750 with a third- party. The loan of $255. |
NOTE 7 _ RELATED PARTY TRANSACT
NOTE 7 – RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
NOTE 7 – RELATED PARTY TRANSACTIONS | NOTE 7 – RELATED PARTY TRANSACTIONS As of December 31, 2020, we had $662,178 of the amount payable to related parties as compared to $266,419 as of December 31, 2019. The balance primarily represents advance payable to shareholders and management of the Company on behalf of the Company. On January 1, 2019, the Company agreed to increase compensation to $ $150,000 per year for the Company’s CFO. Year ended Year ended Description December 31, 2020 December 31, 2019 CEO $ 225,000 $ 225,000 CFO 150,000 150,000 Total $ 375,000 $ 375,000 On June 14, 2017, the Company entered into a five-year lease with LLC1 for approximately 6,944 square feet and a monthly rent of $12,000 (Note 11). On May 9, 2017, the Company and LLC1 purchased certain real property from an unaffiliated party. The Company and LLC1 have agreed that the Company purchased and owns 49% of the building and LLC1 purchased and owns 51% of the building. The contracted purchase price for the building was $2,420,000 and the total amount paid at closing was $2,501,783 including, fees, insurance, interest and real estate taxes. The Company paid for their building interest by delivering cash at closing of $209,971 and being a co-borrower on a note in the amount of $2,057,000, of which the Company has agreed with LLC1 to pay $1,007,930 (see Note 9). |
NOTE 8_ INVESTMENT IN UNDIVIDED
NOTE 8– INVESTMENT IN UNDIVIDED INTEREST IN REAL ESTATE | 12 Months Ended |
Dec. 31, 2020 | |
Real Estate [Abstract] | |
NOTE 8– INVESTMENT IN UNDIVIDED INTEREST IN REAL ESTATE | NOTE 8– INVESTMENT IN UNDIVIDED INTEREST IN REAL ESTATE On May 9, 2017, the Company and LLC1 purchased certain real property from an unaffiliated party. The Company and LLC1 have agreed that the Company purchased and owns 49% of the building and LLC1 purchased and owns 51% of the building. The contracted purchase price for the building was $2,420,000 and the total amount paid at closing was $2,501,783 including, fees, insurance, interest and real estate taxes. The Company paid for their building interest by delivering cash at closing of $209,971 and being a co-borrower on a note with and initial amount of $2,057,000, of which the Company has agreed with LLC1 to pay $1,007,930 (see Note 9). The Company accounts for its investment in undivided interest in real estate as an equity method investment and recognizes its proportionate share of profits and losses. For the years ended December 31, 2020, and 2019, a net gain of $30,646 and $15,736, respectively, is included on the Statements of Operations. As of December 31, 2020, the carrying value of the Company’s investment in undivided interest in real estate was $1,227,733. The consolidated balance sheets as of December 31, 2020, and 2019 and the statement of operations for the years ended December 31, 2020, and 2019, for the real property is as follows: Current assets: 2020 2019 Cash $ 25,144 $ — Accounts Receivable 125,698 106,163 Due from InnerScope 138,360 79,934 Prepaid expenses and other current assets 8,848 — Total current assets 298,050 186,097 Land and Building, net 2,267,156 2,310,722 Other Assets, net 43,729 45,943 Total assets $ 2,608,935 $ 2,542,762 Accounts Payable $ 119,446 $ 72,475 Current portion of mortgage payable 22,150 20,708 Other current liabilities 37,399 16,104 Total current liabilities 178,995 109,287 Mortgage payable, long-term 1,937,345 1,966,215 Security deposits 3,283 13,064 Total liabilities 2,119,623 2,088,566 Total equity 489,312 454,196 Total liabilities and equity $ 2,608,935 $ 2,542,762 2020 2019 Rental income $ 243,986 $ 297,383 Expenses: Property taxes 30,185 29,605 Depreciation and amortization 45,780 50,940 Insurance 9,559 18,783 Repairs and maintenance — 6,202 Utilities and other 45,654 68,156 Interest expenses 77,692 113,858 Total expenses 208,870 287,544 Net income (loss) $ 35,116 $ 9,839 |
NOTE 9_ CONVERTIBLE NOTES PAYAB
NOTE 9– CONVERTIBLE NOTES PAYABLE - UNDIVIDED INTEREST IN REAL ESTATE | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
NOTE 9– CONVERTIBLE NOTES PAYABLE - UNDIVIDED INTEREST IN REAL ESTATE | NOTE 9– CONVERTIBLE NOTES PAYABLE - UNDIVIDED INTEREST IN REAL ESTATE On May 9, 2017, the Company and LLC1 purchased certain real property from an unaffiliated party. The Company and LLC1 have agreed that the Company purchased and owns 49% of the building and LLC1 purchased and owns 51% of the building. The contracted purchase price for the building was $2,420,000 and the total amount paid at closing was $2,501,783 including, fees, insurance, interest and real estate taxes. The Company is a co-borrower on a $2,057,000 Small Business Administration Note (the “SBA Note”). The SBA Note carries a 25-year term, with an initial interest rate of 6% per annum, adjustable to the Prime interest rate plus 2% (6.75% as of December 31, 20120, and is secured by a first position Deed of Trust and business assets located at the property. The Company initially recorded a liability of $1,007,930 for its portion of the SBA Note, with the offset being to Investment in undivided interest in real estate on the consolidated balance sheets presented herein. As of December 31, 2020, the Company’s current and long-term portion of the SBA Note is $0 and $960,153, respectively. Future principal payments for the Company’s portion are: Twelve months ending December 31, Amount 2021 $ 22,150 2022 23,516 2023 24,966 2024 26,500 2025 28,118 Thereafter 834,903 Total $ 960,153 On March 2, 2018, the Company completed the closing of a private placement financing transaction (the “Transaction”) when a third-party investor purchased a convertible note (the “Convertible Note”). The Convertible Note carries a 10% annual interest rate and is in the principal amount of $50,000. Principal and interest was due and payable March 2, 2019, and the Note is convertible into shares of the Company’s common stock at any time after one hundred eighty (180) days, at a conversion price (the “Conversion Price”) equal to seventy-five percent (75%) of the average closing price of the Company’s common stock for the ten (10) days immediately preceding the conversion, representing a twenty-five percent (25%) discount. The embedded conversion feature included in the note resulted in an initial debt discount of $13,399, and an initial derivative liability of $13,399. During the years ended December 31, 2020 and 2019, amortization of the debt discount of $- 0- and $13,399 was charged to interest expense, respectively. During the year ending December 31, 2019, convertible note principal plus their accrued interest totaling $52,514 were converted into 1,239,161 shares of common stock. On March 27, 2018, the Company completed the closing of a private placement financing transaction (the “Transaction”) when a third-party investor purchased a convertible note (the “Convertible Note”). The Convertible Note carries a 10% annual interest rate and is in the principal amount of $25,000. Principal and interest was due and payable March 27, 2019, and the Note is convertible into shares of the Company’s common stock at any time after one hundred eighty (180) days, at a conversion price (the “Conversion Price”) equal to seventy-five percent (75%) of the average closing price of the Company’s common stock for the ten (10) days immediately preceding the conversion, representing a twenty-five percent (25%) discount. The embedded conversion feature included in the note resulted in an initial debt discount of $6,736, and an initial derivative liability of $6,736. During the year ending December 31, 2019, convertible note principal plus their accrued interest totaling $26,260 were converted into 716,124 shares of common stock. On May 11, 2018, the Company issued a convertible promissory note (the “Note”), with a face value of $100,000, maturing on May 11, 2019, and stated interest of 10% to a third-party investor. The note is convertible at any time after the funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 62% of the lowest trading price for the 20 days prior to conversion. The note was funded on May 16, 2018, when the Company received proceeds of $75,825, after disbursements to vendors and for the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $95,000, an initial derivative expense of $60,635 and an initial derivative liability of $155,635. During the year ended December 31, 2018, the investor converted $50,000 of principal and $1,831 of interest into 5,184,572 shares of common stock. During the year ended December 31, 2019, the investor converted $50,000 of principal and $3,564 of interest into 5,539,273 shares of common stock. On May 23, 2018, the Company issued a convertible promissory note (the “Note”), with a face value of $60,000, maturing on February 22, 2019, and stated interest of 12% to a third-party investor. The note is convertible at any time after the funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 65% of the lowest trading price for the 20 days prior to conversion. The note was funded on May 30, 2018, when the Company received proceeds of $57,000, after the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $57,000, an initial derivative expense of $48,033 and an initial derivative liability of $105,033. During the year ended December 31, 2019, the investor converted $51,275 of principal and $9,838 of interest into 7,909,037 shares of common stock. On November 2, 2018, the Company issued a convertible redeemable note with a face value of $280,500 (the “Note”), and a back-end convertible redeemable note for $280,000 each. The notes mature on November 2, 2019, and a stated interest of 8% to a third-party investor. The note is convertible at any time after funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note was funded on November 2, 2018, when the Company received proceeds of $225,500, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $225,500, an initial derivative expense of $148,544 and an initial derivative liability of $398,544. For the year ended December 31, 2019, amortization of the debt discount of $225,500 was charged to interest expense. The Company also recorded a debt issue discount of $55,500 and amortized $55,500 to interest expense for the year ended December 31, 2019. During the year ending December 31, 2019, an additional penalty of $28,050 was added to the principal of the note due to failure to pay off the note on time. As of December 31, 2020 and 2019, the outstanding note balance is $308,550 and $308,550, respectively outstanding note balance is $-0- and $-0-, respectively. On December 4, 2018, the Company issued a convertible redeemable note (the “Note”) with a face value of $158,333 maturing on December 4, 2019, and a stated interest of 8% to a third-party investor. The note is convertible at any time after funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note was funded on December 4, 2018, when the Company received proceeds of $137,500, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $137,500, an initial derivative expense of $87,293 and an initial derivative liability of $224,793. For the year ended December 31, 2019, amortization of the debt discount of $137,500 was charged to interest expense. The Company also recorded a debt issue discount of $20,900 and amortized the full amount to interest expense for the year ended December 31, 2019. During the year ending December 31, 2019, the note holder converted principal amount of $158,333 and accrued interest in the amount of $9,909, resulting in zero balance as of December 31, 2019. On December 4, 2018, the Company issued to a third-party investor a convertible redeemable note (the “Note”) with a face value of $230,000 and a back-end convertible redeemable note for $230,000. The notes mature on December 4, 2019, have a stated interest of 8% and each note is convertible at any time following the funding of such note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note was funded on December 4, 2018, when the Company received proceeds of $218,000, after disbursements for the lender’s transaction costs, fees and expenses, resulting in debt issue discount of $12,000. The embedded conversion feature included in the note resulted in an initial debt discount of $218,000, an initial derivative expense of outstanding note balance is $-0- and $5,000 respectively outstanding note balance is $-0- and $115,000, respectively. On December 24, 2018, the Company issued to a third-party investor a convertible redeemable note (the “Note”) with a face value of $195,000. The note matures on December 24, 2019, have a stated interest of 8% and each note is convertible at any time following the funding of such note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note was funded on December 26, 2018, when the Company received proceeds of $160,000, after disbursements for the lender’s transaction costs, fees and expenses, resulting in debt issue discount of $35,000. The embedded conversion feature included in the note resulted in an initial debt discount of $160,000, an initial derivative expense of $92,464 and an initial derivative liability of $269,464. For the year ended December 31, 2019, amortization of the debt discount of $195,000 was charged to interest expense. During the year ending December 31, 2020, the Company converted a principal of $4,150 and accrued interest of $1,521. As of December 31, 2020 and 2019, the outstanding note balance is $190,850 and $195,000 respectively On January 22, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $245,000 and two back-end convertible redeemable notes for $122,500 each. The notes mature on January 22, 2020, have a stated interest of 8%. Each Note is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The initial Note was funded on January 22, 2019, when the Company received proceeds of $200,000, after disbursements for the lender's transaction costs, fees, and expenses, resulting in $45,000 debt issue discount. The embedded conversion feature included in the Note resulted in an initial debt discount of $200,000, an initial derivative expense of $134,208, and an initial derivative liability of $334,208. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $14,767 and $230,233 was charged to interest expense, respectively. As of December 31, 2020 and 2019, the outstanding note balance is $245,000 and $245,000, respectively outstanding note balance is $122,500 and $122,500, respectively outstanding note balance is $122,500 and $122,500, respectively On February 22, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $116,667. The Note matures on February 22, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on February 22, 2019, when the Company received proceeds of $90,000 after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $26,667. The embedded conversion feature included in the Note resulted in an initial debt discount of $90,000, an initial derivative expense of $36,138, and an initial derivative liability of $126,138. During the years ended December 31, 2020 and 2019, amortization of the debt discount of $16,941 and $99,726 was charged to interest expense, respectively. As of December 31, 2020 and 2019, the outstanding note balance is $38,917 and $38,917, respectively. On March 8, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $133,333. The Note matures on March 8, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on March 8, 2019, when the Company received proceeds of $106,200, after disbursements for the lender's transaction costs, fees, and expenses. The embedded conversion feature included in the Note resulted in an initial debt discount of $106,200, debt issues discount of $27,133, an initial derivative expense of $82,538, and an initial derivative liability of $188,738. During the years ended December 31, 2020 and 2019, amortization of the debt discount of $24,772 and $108,561 was charged to interest expense, respectively. During the year ending December 31, 2020, the Company converted a principal of $133,333 and accrued interest of $20,900. As of December 31, 2020 and 2019, the outstanding note balance is $-0- and $133,333, respectively. On March 20, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $89,085 and a back-end convertible redeemable note for $89,085. The notes mature on March 20, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The initial Note was funded on March 20, 2019, when the Company received proceeds of $75,000 after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $14,085. The embedded conversion feature included in the Note resulted in an initial debt discount of $75,000, an initial derivative expense of $48,913, and an initial derivative liability of $123,913. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $19,472 and $69,613 was charged to interest expense, respectively. As of December 31, 2020 and 2019, the outstanding note balance is $-0- and $133,333, respectively. outstanding note balance is $89,085 and $89,085, respectively Also, on March 20, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $89,085 and a back-end convertible redeemable note for $89,085. The notes mature on March 20, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The initial Note was funded on March 20, 2019, when the Company received proceeds of $75,000 after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $14,085. The embedded conversion feature included in the Note resulted in an initial debt discount of $75,000, an initial derivative expense of $48,913, and an initial derivative liability of $123,913. During the years ended December 31, 2020 and 2019, amortization of the debt discount of $19,472 and $69,613 was charged to interest expense, respectively. During the year ending December 31, 2020, a penalty of $16,517 was added to the principal balance due to failure to pay off the note on time. During the year ending December 31, 2020, the Company converted a principal of $6,500 and accrued interest of $549. As of December 31, 2020 and 2019, the outstanding note balance is $99,102 and $89,085, respectively. outstanding note balance is $89,085 and $89,085, respectively On April 12, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $208,000. The Note matures on April 12, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on April 12, 2019, when the Company received proceeds of $175,000, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $33,000. The embedded conversion feature included in the Note resulted in an initial debt discount of $175,000, an initial derivative expense of $104,450, and an initial derivative liability of $279,450. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $58,536 and $149,464 was charged to interest expense, respectively. As of December 31, 2020 and 2019, the outstanding note balance is $208,000 and $208,000, respectively. Also, on April 12, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $208,000. The Note matures on April 12, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on April 12, 2019, when the Company received proceeds of $175,000, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $33,000. The embedded conversion feature included in the Note resulted in an initial debt discount of $175,000, an initial derivative expense of $104,450, and an initial derivative liability of $279,450. During the year ending December 31, 2020, a penalty of $41,600 was added to the principal balance due to failure to pay off the note on time. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $58,536 and $149,464 was charged to interest expense, respectively. As of December 31, 2020 and 2019, the outstanding note balance is $249,600 and $208,000, respectively. On May 15, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $208,000. The Note matures on May 15, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on May 15, 2019, when the Company received proceeds of $175,000, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $33,000. The embedded conversion feature included in the Note resulted in an initial debt discount of $175,000, an initial derivative expense of $104,082, and an initial derivative liability of $279,082. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $77,290 and $130,710 was charged to interest expense, respectively. As of December 31, 2020 and 2019, the outstanding note balance is $208,000 and $208,000, respectively. Also, on May 15, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $167,352. The Note matures on May 15, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on May 15, 2019, when the Company received proceeds of $140,250, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $27,102. The embedded conversion feature included in the Note resulted in an initial debt discount of $140,250, an initial derivative expense of $85,329, and an initial derivative liability of $225,579. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $62,185 and $105,167 was charged to interest expense, respectively. As of December 31, 2020 and 2019, the outstanding note balance is $167,352 and $167,352, respectively. On June 13, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $119,000. The Note matures on June 13, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on June 13, 2019, when the Company received proceeds of $100,000, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $19,000. The embedded conversion feature included in the Note resulted in an initial debt discount of $100,000, an initial derivative expense of $49,779, and an initial derivative liability of $149,779. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $53,648 and $65,352 was charged to interest expense, respectively. As of December 31, 2020 and 2019, the outstanding note balance is $119,000 and $119,000, respectively. Also, on June 13, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $119,000. The Note matures on June 13, 2020, has a stated interest of 8%, and convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on June 13, 2019, when the Company received proceeds of $100,000, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $19,000. The embedded conversion feature included in the Note resulted in an initial debt discount of $100,000, an initial derivative expense of $49,779, and an initial derivative liability of $149,779. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $53,648 and $105,167 was charged to interest expense, respectively. As of December 31, 2020 and 2019, the outstanding note balance is $119,000 and $119,000, respectively. On July 1, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $183,975. The Note matures on July 1, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on July 1, 2019, when the Company received proceeds of $150,000, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $33,975. The embedded conversion feature included in the Note resulted in an initial debt discount of $150,000, an initial derivative expense of $65,783, and an initial derivative liability of $215,783. During the year ending December 31, 2020, the Company converted a principal of $121,475and accrued interest of $6,376. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $91,988 and $91,988 was charged to interest expense, respectively. As of December 31, 2020 and 2019, the outstanding note balance is $62,500 and $183,975, respectively. On August 9, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $122,650. The Note matures on August 9, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on August 9, 2019, when the Company received proceeds of $100,000, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $11,150. The embedded conversion feature included in the Note resulted in an initial debt discount of $100,000, an initial derivative expense of $18,522, and an initial derivative liability of $118,522. . During the year ended December 31, 2020 and 2019, amortization of the debt discount of $79,255 and $43,395 was charged to interest expense, respectively. As of December 31, 2020 and 2019, the outstanding note balance is $122,650 and $122,650, respectively. On September 12, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $160,000. The Note matures on September 12, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on September 12, 2019, when the Company received proceeds of $130,050, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $29,950. The embedded conversion feature included in the Note resulted in an initial debt discount of $130,050, an initial derivative expense of $25,433, and an initial derivative liability of $155,483. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $111,913 and $48,087 was charged to interest expense, respectively. As of December 31, 2020 and 2019, the outstanding note balance is $160,000 and $160,000, respectively. On October 3, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $75,000. The Note matures on October 3, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on October 3, 2019, when the Company received proceeds of $60,645, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $14,355. The embedded conversion feature included in the Note resulted in an initial debt discount of $60.645, an initial derivative expense of $74,404, and an initial derivative liability of $135,049. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $56,762 and $18 238 was charged to interest expense, respectively. During the year ending December 31, 2020, the Company converted a principal of $21,250. As of December 31, 2020 and 2019, the outstanding note balance is $53,750 and $75,000, respectively. On November 1, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $100,000. The Note matures on November 1, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on November 1, 2019, when the Company received proceeds of $79,650, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $20,350. The embedded conversion feature included in the Note resulted in an initial debt discount of $79,650, an initial derivative expense of $50,171, and an initial derivative liability of $129,821. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $79,781and $20,219 was charged to interest expense, respectively. As of December 31, 2020 and 2019, the outstanding note balance is $100,000 and $100,000, respectively. On November 1, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $56,000. The Note matures on November 1, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on November 1, 2019, when the Company received proceeds of $50,000, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $6,000. The embedded conversion feature included in the Note resulted in an initial debt discount of $50,000, an initial derivative expense of $17,328, and an initial derivative liability of $67,328. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $46,820 and $9,180 was charged to interest expense, respectively. During the year ending December 31, 2020, the Company converted a principal of $9,256. As of December 31, 2020 and 2019, the outstanding note balance is $46,744 and $100,000, respectively. On December 24, 2019, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $33,000. The Note matures on November 1, 2020, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on December 24, 2019, when the Company received proceeds of $30,000, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $3,000. The embedded conversion feature included in the Note resulted in an initial debt discount of $30,000, an initial derivative expense of $9,670, and an initial derivative liability of $39,670. During the year ended December 31, 2020 and 2019, amortization of the debt discount of $32,369 and $631 was charged to interest expense, respectively. of December 31, 2020 and 2019, the outstanding note balance is $33,000 and $33,000, respectively. On January 23, 2020, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $22,000. The Note matures on January 23, 2021, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on January 23, 2020, when the Company received proceeds of $20,000, after disbursements for the lender's transaction costs, fees, and expenses, resulting in debt issue discount of $2,000. The embedded conversion feature included in the Note resulted in an initial debt discount of $20,000, an initial derivative expense of $15,101, and an initial derivative liability of $35,101. During the year ended December 31, 2020, amortization of the debt discount of $20,617 was charged to interest expense, respectively. As of December 31, 2020, the outstanding note balance is $22,000. On January 30, 2020, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $60,000. The Note matures on January 30, 2021, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on January 30, 2020, when the Company received proceeds of $50,000, after disbursements for the lender's t |
NOTE 10 _ DERIVATIVE LIABILITIE
NOTE 10 – DERIVATIVE LIABILITIES | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
NOTE 10 – DERIVATIVE LIABILITIES | NOTE 10 – DERIVATIVE LIABILITIES The Company determined that the conversion features of the convertible notes represented embedded derivatives since the Notes are convertible into a variable number of shares upon conversion. Accordingly, the notes are not considered to be conventional debt under EITF 00-19 and the embedded conversion feature is bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of these derivative instruments is recorded as liabilities on the consolidated balance sheet with the corresponding amount recorded as a discount to each Note, with any excess of the fair value of the derivative component over the face amount of the note recorded as an expense on the issue date. Such discounts are amortized from the date of issuance to the maturity dates of the Notes. The change in the fair value of the derivative liabilities are recorded in other income or expenses in the condensed consolidated statements of operations at the end of each period, with the offset to the derivative liabilities on the balance sheet. The Company valued the derivative liabilities at issuance, December 31, 2020, and December 31, 2019, at $412,801 and $4,745,194, respectively. The Company used the multinomial lattice v A summary of the activity related to derivative liabilities during the year ended December 31, 2020, and 2019, is as follows: December 31, 2020 December 31, 2019 Beginning Balance $ 3,515,055 $ 1,807,404 Initial derivative liability 412,801 4,745,194 Fair value change 1,198,529 (942,398 ) Reclassification for principal payments and conversions (1,079,984 ) (2,095,145 ) Ending Balance $ 4,046,401 $ 3,515,055 Derivative liability expense of $1,016,050 for the year ended December 31, 2020, consisted of the initial derivative expense of $213,151 and the above loss on changes in gain on change in |
NOTE 11_ COMMITMENTS AND CONTIN
NOTE 11– COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 11– COMMITMENTS AND CONTINGENCIES | NOTE 11– COMMITMENTS AND CONTINGENCIES Lease Agreements On June 14, 2017, the company entered into a five-year lease with LLC1 for approximately 6,944 square feet and a monthly rent of $12,000 with a related party (Note 7). On September 10, 2018, pursuant to the Amos Audiology acquisition, the Company assumed a lease dated December 1, 2017 and expiring April 30, 2023, in Walnut Creek, California. Lease payments in the first year of the lease are $3, 988 per month and increase by 3% on December 1 each new lease year. As of December 31, 2018, the Company was in arrears of $25,182 (including late fees) in lease payments and has agreed with the landlord to pay the arrears in seven monthly payments of $3,597 in addition to the monthly lease payments for January 2019 through July 2019. Settlement fees were fully paid during the year ending December 31, 2019. On October 15, 2018, the Company entered into a lease to operate a retail hearing aid clinic in Roseville, California expiring December 31, 2023. Initial lease payments of $3,102 began on January 1, 2019, and increase by 3% on January 1 each new lease year. Upon adoption of ASC 842, the Company recognized $160,623 of right-to-use assets as operating leases and operating lease obligations. The Company abandoned the lease location in November of 2020, therefore, a ROU asset loss was recognized in the amount of $106,419 during year ending December 31, 2020. No changes to operating lease liability have been made until the settlement has been reached. On November 18, 2019, the Company entered into a lease to operate a retail hearing aid clinic in Walnut Creek, expiring in October of 2022. Initial lease payments of $3,930 began on December 1, 2019, and increase by 3% on December 1 each new lease year. Upon adoption of ASC 842, the Company recognized $129,281 of right-to-use assets as operating leases and operating lease obligations. The Company abandoned the lease location in April of 2021. On December 1, 2018, the Company entered into a lease to operate a retail hearing aid clinic in Sacramento, California expiring March 31, 2024. Initial lease payments of $3,002 began on April 1, 2019, and increase by 3.33% on April 1, 2020 and 2021, and by 3% on April 1, 2022. Upon adoption of ASC 842, the Company recognized $149,507 of right-to-use assets as operating leases and operating lease obligations. The Company abandoned the lease location in November of 2020, therefore, a ROU asset loss was recognized in the amount of $102,312 during year ending December 31, 2020. No changes to operating lease liability have been made until the settlement has been reached. Subsequent to year ending December 31, 2020, the Company reached the settlement where the Company agreed to make either one time payment of $44,000 or make fourteen monthly payments of $3,220. On February 1, 2019, the Company entered into a lease to operate a retail hearing aid clinic in Elk Grove, California expiring January 31, 2024. Initial lease payments of $2,307 began on February 1, 2019, and increase by an average of 2.6% on February 1, each new lease year. Upon adoption of ASC 842, the Company recognized $116,153 of right-to-use assets as operating leases and operating lease obligations. The Company terminated the lease in March of 2021 where the Company agreed to pay $23,911 in order to settle the lease. On May 31, 2019, the Company entered into a lease to operate a retail hearing aid clinic in Greenhaven, California expiring June 30, 2022. Initial lease payments of $1,450 began on July 1, 2019, and increase by 5% on July 1, each new lease year. Upon adoption of ASC 842, the Company recognized $48,512 of right-to-use assets as operating leases and operating lease obligations. The Company terminated the lease in November of 2020, therefore, a ROU asset loss was recognized in the amount of $27,041, during year ending December 31, 2020. No changes to operating lease liability have been made until the settlement has been reached. Subsequent to year ending December 31, 2021, the Company made a final payout of $6,000, upon which the lease was settled. On April 15, 2019, the Company entered into a lease to operate a retail hearing aid clinic in Pleasanton, California expiring April of 2024. Initial lease payments of $3,551 began on May 1, 2019, and increase by 3% on May 1 each new lease year. Upon adoption of ASC 842, the Company recognized $185,068 of right-to-use assets as operating leases and operating lease obligations. The Company abandoned the lease location in December of 2019, therefore, a ROU asset loss was recognized in the amount of $153,589 during year ending December 31, 2019. No changes to operating lease liability have been made until the settlement has been reached. On February 1, 2019, the Company entered into a lease to operate a retail hearing aid clinic in Fremont, California expiring February 28, 2021. Initial lease payments of $2,019 began on March 1, 2019, and increases by 3% on March 1, 2020. The Company terminated the lease in 2019 and agreed to make a payment of $4,038 in order to settle the lease. On June 1, 2019, the Company entered into a lease to operate a retail hearing aid clinic in Hayward, California expiring June of 2021. Initial lease payments of $1,816 began on June 1, 2019, and increase by 3% on June 1 each new lease year. Upon adoption of ASC 842, the Company recognized $34,486 of right-to-use assets as operating leases and operating lease obligations. The Company abandoned the lease location in December of 2019, therefore, a ROU asset loss was recognized in the amount of $14,348 during year ending December 31, 2019. No changes to operating lease liability have been made until the settlement has been reached. The operating lease expense for the year ending December 31, 2020 and 2019 was $322,879 and $424,613, respectively. These leases will expire between 2021 and 2023. The weighted average discount rate used for these leases were 8% (average borrowing rate of the Company). Future principal payments for the Company’s portion are: For the twelve months ending December 31, Amount 2021 $ 360,815 2022 156,548 2023 89,208 2024 — Thereafter — Total $ 606,571 Consulting Agreements On October 3, 2018, the Company entered into a Manufacturing Design and Marketing Agreement (the “Agreement”) with Zounds, whereby, Zounds will provide design, technology, manufacturing and supply chain services to the Company, to enable the Company to manufacture comparable hearing aids and related components and accessories to be sold under the Company’s exclusive brand names (the “Manufacturer’s Products”) through the Company’s various marketing and distribution channels. The Company will pay Zounds One Million ($1,000,000) (the “Technology Access Fee”). The Technology Access Fee, as amended will be paid in eight (8) installments of $75,000 each, in four- week intervals until $600,000 is paid and $400,000 is to be paid as Product Surcharges based on $200 per unit manufactured for up to the first 2,000 units. Once $400,000 of Product Surcharges are paid said per unit surcharge will be discontinued. As of December 31, 2018, the Company has paid $183,200 towards the Technology Access Fee and as of December 31, 2018, $816,800 is included in accounts payable and accrued expenses. |
NOTE 12_ INCOME TAXES
NOTE 12– INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
NOTE 12– INCOME TAXES | NOTE 12– INCOME TAXES The Tax Cuts and Jobs Act (the “Act”) enacted on December 22, 2017 reduces the US federal corporate tax rate from 35% to 21% and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. As of December 31, 2020, the Company has not completed the accounting for the tax effects of enactment of the Act; however, as described below, it has made a reasonable estimate of the effects on existing deferred tax balances. These amounts are provisional and subject to change. The provision for income taxes is calculated at US corporate tax rate of approximately 21% (2019: 21%) as follows: 2020 2019 Expected income tax recovery from net loss $ 1,040,275 $ 1,663,974 Tax effect of expenses not deductible for income tax: Annual effect of book/tax difference (523,142 ) (890,866 ) Change in valuation allowance (517,133 ) (773,108 ) — — Deferred tax assets Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Net deferred tax assets consist of the following components as of December 31: 2020 2019 Tax effect of NOL carryover $ 2,594,396 $ 2,077,264 Less valuation allowance (2,594,396 ) (2,077,264 ) — — At December 31, 2020, the Company performed a comprehensive analysis of its tax estimates and revised comparative figures accordingly, which had no net impact on deferred tax recorded. The Company had net operating loss carry forwards of approximately $2,594,396 (2019: $2,077,264) that may be offset against future taxable income from the year by 2040. No tax benefit has been reported in the December 31, 2020 and 2019 consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. The Company is taxed in the United States at the Federal level. All tax years since inception are open to examination because no tax returns have been filed. |
NOTE 13 _ STOCKHOLDERS_ EQUITY
NOTE 13 – STOCKHOLDERS’ EQUITY | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
NOTE 13 – STOCKHOLDERS’ EQUITY | NOTE 13 – STOCKHOLDERS’ EQUITY Preferred Stock The Company has 25,000,000 authorized shares of $0.0001 preferred stock. Series A Preferred Stock On June 4, 2018, the Company filed in the State of Nevada a Certificate of Designation of a series of preferred stock, the Series A Preferred Stock. 9,510,000 shares were designated as Series A Preferred Stock. The Series A Preferred Stock has mandatory conversion rights, whereby each share of Series A Preferred Stock will convert two (2) shares of common stock upon the Company filing Amended and Restated Articles of Incorporation with the Secretary of State of Nevada, increasing the authorized shares of common stock. The Series A Preferred Stock has voting rights on an is if converted basis. The Series A Preferred Stock does not have any right to dividends. On June 4, 2018 the Company issued 3,170,000 shares of Series A Preferred Stock each to Matthew, Mark and Kimberly, in exchange for each of them cancelling and returning to treasury 6,340,000 shares of common stock. The issuances were made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, and Rule 506(b) promulgated thereunder, as the shareholders are accredited investors, there was no general solicitation, and the transaction did not involve a public offering. On August 8, 2018, Matthew, Mark and Kim each converted 3,170,000 shares of Series A Preferred Stock for 6,340,000 shares of common stock each. The common stock issued replaced the 19,020,000 shares in the aggregate that the Moore’s cancelled in June 2018. As of December 31, 2020 and 2019, there were no shares of Series A Preferred Stock issued and outstanding. Series B Preferred Stock Common Stock The Company has 490,000,000 authorized shares of $0.0001 common stock. On January 30, 2020, the Company increased a number of authorized common shares to 14,975,000,000. As of December 31, 2020, and December 31, 2019, there are 3,628,422,041 and 342,118,135, respectively, shares of common stock outstanding. During the year ending December 31, 2019, the Company issued 12,576,313 shares of common stock as part of compensation for services for a total value of $440,666 During the year ending December 31, 2019, the Company issued 209,116,478 shares of common stock for partial conversion of principal and accrued interest. During the year ending December 31, 2019, Company’s management made a contribution of $12,048. No shares have been issued. During the year ending December 31, 2020, the Company issued 3,286,303,906 shares of common stock for partial conversion of principal and accrued interest. Common Stock to be issued As of December 31, 2018, the Company recorded 1,838,564 shares of common stock to be issued for the conversion of $100,000 of principal and $2,456 of accrued interest, for a total of $102,456. Shares have been issued during year ending December 31, 2019. On October 13, 2018, the Company recorded 1,000,000 shares of restricted common stock to be issued to Erchonia . On December 7, 2018, the Company recorded 3,125,000 shares of common stock to be issued pursuant to the Media Consulting Agreement. 1,712,329 of common shares have been issued during the year ending December 31, 2019. On December 31, 2018, the Company recorded 410,284 shares of common stock to be issued pursuant to the CSMA. Shares have been issued during year ending December 31, 2019. As of December 31, 2020 and issued. |
NOTE 14 _ RISKS AND UNCERTAINTI
NOTE 14 – RISKS AND UNCERTAINTIES | 12 Months Ended |
Dec. 31, 2020 | |
Note 14 Risks And Uncertainties | |
NOTE 14 – RISKS AND UNCERTAINTIES | NOTE 14 – RISKS AND UNCERTAINTIES The Company's business and operations are sensitive to general business and economic conditions in the United States. A host of factors beyond the Company's control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, local competition or changes in consumer taste. These adverse conditions could affect the Company's financial condition and the results of its operations. In December 2020, a novel strain of coronavirus (COVID-19) was reported in Wuhan, China and has spread throughout the United States and the rest of the world. The World Health Organization has declared the outbreak to constitute a “Public Health Emergency of International Concern.” This contagious disease outbreak, which has not been contained, and is disrupting supply chains and affecting production and sales across a range of industries in United States and other companies as a result of quarantines, facility closures, and travel and logistics restrictions in connection with the outbreak, as well as the worldwide adverse effect to workforces, economies, and financial markets, leading to a global economic downturn. As a result, the Company experienced a negative impact to its operating results. Regarding future operations, the related financial impact and duration cannot be reasonably estimated at this time. |
NOTE 15 _ BUSINESS ACQUISITION
NOTE 15 – BUSINESS ACQUISITION | 12 Months Ended |
Dec. 31, 2020 | |
Business Combination and Asset Acquisition [Abstract] | |
NOTE 15 – BUSINESS ACQUISITION | NOTE 15 – BUSINESS ACQUISITION ASC Topic 805, "Business Combinations," requires that all business combinations be accounted for using the acquisition method and that certain identifiable intangible assets acquired in a business combination be recognized as assets apart from goodwill. ASC Topic 350, "Intangibles-Goodwill and Other" ("ASC 350"), requires goodwill and other identifiable intangible assets with indefinite useful lives not to be amortized, such as trade names, but instead tested at least annually for impairment and be written down if impaired. ASC 350 requires that goodwill be allocated to its respective reporting unit and that identifiable intangible assets with finite lives be amortized over their useful lives. On November 22, 2021, the Company purchased Hearing Assist II, LLC. The Company acquired 100% interest in the entity for a total consideration of 591,209,963 common shares valued at $8,513,423 on the day of purchase. As part of the acquisition, the Company assumed assets in the amount of $15,713,000, consisting of trademarks, domains, customer lists, customer contracts, licenses, royalties, other contracts, and assumed liabilities in the amount of $7,199,678. This acquisition was accounted for using the acquisition method of accounting. The fair value of assets, liabilities and intangible assets and the purchase price allocation as of November 22, 2021 was as follows: Allocation of Purchase Price $ Assets Cash 44,850 Accounts Receivable 789,009 Inventory 2,243,947 Other assets 83,163 Property and equipment 93,632 Total assets 3,254,601 Liabilities Accounts payable 4,303,622 Accrued expenses and other current liabilities 2,460,785 Other current liabilities 2,659,855 Long-term liabilities 1,560,510 Total liabilities 10,984,772 Net liabilities (7,730,171 ) Intangible Asset: Hearing Aid 3,000,000 Intangible Asset: Customer Database 7,374,450 Intangible Asset: Loyalties 5,338,550 Goodwill 530,594 Total net assets acquired 8,513,423 The purchase consideration of 591,209,963 of the Company’s common stock valued as detailed below: Number of Common Stock 591,209,963 Market price on the date of issuance 0.0144 Purchase consideration $ 8,513,423 The following unaudited pro forma consolidated statements of operations for the years ended December 31, 2020 present the Company’s results of operations as adjusted to give effect to the FYE 2021 Transaction as if it had occurred at the beginning of the period. The accompanying unaudited pro forma consolidated balance sheet as of December 31, 2020 presents the Company’s financial position as if the FYE Transaction had occurred on December 31, 2020. The unaudited pro forma information below is provided for information purposes only and is not necessarily indicative of what the actual financial position or results of operations of the Company would have been had the transaction actually occurred on the dates indicated, nor does it purport to indicate the future financial position or results of operations of the Company. The pro forma adjustments are based upon available information and assumptions believed to be reasonable in the circumstances. There can be no assurance that such information and assumptions will not change from those reflected in the unaudited pro forma condensed financial statements and notes thereto. INNERSCOPE HEARING TECHNOLOGIES, INC. PRO FORMA CONSOLIDATED BALANCE SHEETS (Unaudited) Historical InnerScope Hearing Technologies, Inc. Acquisition Pro forma combined As of December 31, 2020 of Hearing Assist II, LLC Pro forma adjustments As of December 31, 2020 ASSETS Current Assets: Cash $ 3,349 $ 177,834 — $ 181,183 Accounts receivable, allowance for doubtful accounts 12,429 1,832,042 — 1,844,471 Employee advances 3,000 — — 3,000 Prepaid assets — 103,190 — 103,190 Inventory 4,671 2,242,409 — 2,247,080 Total current assets 23,450 4,355,475 — 4,378,925 — Security deposits 4,863 — — 4,863 Domain name 3,000 — — 3,000 Other assets — 63,260 63,260 Intangible assets, net of accumulated amortization — — (a) 4,410,947 4,410,947 Property and equipment, net of accumulated depreciation 60,203 78,977 — 139,180 Operating leases right-of-use assets, net 364,062 — — 364,062 Investment in undivided interest in real estate 1,227,733 — — 1,227,733 Total assets $ 1,683,311 $ 4,497,712 $ 4,410,947 $ 10,591,970 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Bank overdraft 269 — — 269 Accounts payable and accrued expenses 1,841,302 5,828,561 — 7,669,863 Accounts payable to related party 662,178 — — 662,178 Notes payable - stockholder 95,800 — — 95,800 Current portion of convertible notes payable, net of discounts 3,255,598 — — 3,255,598 Note payable, other & related party 118,786 — — 118,786 Customer deposits 10,925 — — 10,925 Other current liabilities — — — — Current portion of note payable- undivided interest in real estate 22,150 — — 22,150 Derivative liabilities 4,046,401 — — 4,046,401 Operating lease liabilities, current portion 365,587 — — 365,587 Total current liabilities $ 10,418,996 $ 5,828,561 $ — $ 16,247,557 EIDL loan — 150,000 — 150,000 Long term portion of note payable- undivided interest in real estate 938,003 — — 938,003 PPP loan 262,445 — — 262,445 Other long-term liabilities 11,528 — 11,528 Long-term loan — 1,844,020 — 1,844,020 Operating lease liabilities, Less current portion 416,788 — — 416,788 Total liabilities $ 12,036,232 $ 7,834,109 $ — $ 19,870,341 Commitments and contingencies Stockholders' Deficit: Members' Capital — 4,112,476 (a) (4,112,476 ) — Preferred stock, $0.0001 par value; 25,000,000 shares authorized; Series A preferred stock, par value $0.0001, -0- (2020) 90 — — 90 Series B preferred stock, par value $0.0001, 900,000 (2020) shares authorized, and 900,000 (2020) shares issued and outstanding — — — — Common stock, $0.0001 par value; 14,975,000,000 (2020) shares authorized and 3,628,422,042 (2020) shares issued and outstanding 362,846 — (a) 59,121 421,967 Common stock to be issued, $0.0001 par value, 2,412,671 (2020) shares 242 — — 242 Additional paid-in capital 8,534,062 — (a) 8,454,302 16,988,364 Accumulated deficit (19,250,161 ) (7,448,873 ) — (26,699,034 ) Total stockholders' deficit (10,352,921 ) (3,336,397 ) 4,400,947 (9,288,371 ) Total Liabilities and Shareholder Equity $ 1,683,311 $ 4,497,712 $ 4,400,947 $ 10,581,970 INNERSCOPE HEARING TECHNOLOGIES, INC. PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Historical InnerScope Hearing Technologies, Inc. Acquisition Pro forma combined As of December 31, 2020 of Hearing Assist II, LLC Pro forma adjustments As of December 31, 2020 Revenues: Revenues, other $ 166,111 $ 15,753,402 $ — $ 15,919,513 Total revenues 166,111 15,753,402 — 15,919,513 Cost of sales Cost of sales, other 68,768 7,781,088 — 7,849,856 Total cost of sales 68,768 7,781,088 — 7,849,856 — Gross profit $ 97,343 $ 7,972,314 $ — $ 8,069,657 Operating Expenses: Compensation and benefits 661,840 383,625 — 1,045,465 Advertising and promotion 19,762 6,893,439 — 6,913,201 R&D expense 276,926 — 276,926 Professional fees 114,476 193,168 — 307,644 Rent, including related party 322,879 129 — 323,008 Investor relations 14,796 — — 14,796 Depreciation and Amortization expense 123,646 109,695 — 233,341 Other general and administrative 69,188 765,795 — 834,983 Total operating expenses $ 1,326,585 $ 8,622,777 $ — $ 9,949,362 Loss from operations $ (1,229,243 ) $ (650,463 ) $ — $ (1,879,706 ) Other Income (Expense): Other income Derivative income (loss) (1,066,904 ) — — (1,066,904 ) Gain (loss) on equity investment 30,646 6,889 — 37,535 Amortization of debt discount (1,222,965 ) — — (1,222,965 ) Gain/Loss on debt extinguishment — 6,000 — 6,000 Gain/Loss on lease termination (201,283 ) — — (201,283 ) Other income (expenses) 181 — — 181 Loss on intangibles (775,000 ) — — (775,000 ) Gain/Loss on assets disposal — (59,093 ) — (59,093 ) Interest expense and finance charges (489,123 ) (448,678 ) — (937,801 ) Total other income (expense), net $ (3,724,447 ) $ (494,882 ) $ — $ (4,219,329 ) Loss before income tax $ (4,953,690 ) $ (1,145,345 ) $ — $ (6,099,035 ) — Income tax provision — — — Net Loss $ (4,953,690 ) $ (1,145,345 ) $ — $ (6,099,035 ) Basic and diluted income (loss) per share (0.00 ) (0.00 ) Weighted average number of common shares outstanding Basic and diluted 2,769,472,382 2,769,472,382 The unaudited pro forma consolidated financial statements give effect to the following adjustment: a. Adjustments to eliminate Hearing Assist II, LLC members’ capital and record issuance of an aggregate of approximately 591,209,963 shares of InnerScope common stock to the Hearing Assist II, LLC members, par value $0.001, in exchange for 100% of equity interests of Hearing Assist II, LLC held by the Hearing Assist II, LLC members in accordance with the Exchange Agreement dated November 22, 2021. |
NOTE 16 _ SUBSEQUENT EVENTS
NOTE 16 – SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
NOTE 16 – SUBSEQUENT EVENTS | NOTE 16 – SUBSEQUENT EVENTS From January 1, 2021, through June 30, 2022, the Company received conversion notices for the issuance of 2,856,563,078 shares of common stock for conversion of From January 1, 2021, through June 30, 2022, the Company issued 52,124,378 as part of compensation for services based on the market price of the common s From January 1, 2021, through June 30, 2022, the Company issued 65,000,000 for cash for a total value of $650,000. From January 1, 2021, through June 30, 2022, the Company issued 127,653,805 to settle payables in the amount of $651,034. On February 5, 2021, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $195,000. The Note matures on February 5, 2022, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on February 5, 2021, when the Company received proceeds of $176,000 after disbursements for the lender's transaction costs, fees, and expenses. On February 25, 2021, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $165,000. The Note matures on February 25, 2022, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on February 25, 2021, when the Company received proceeds of $155,000 after disbursements for the lender's transaction costs, fees, and expenses. On April 6, 2021, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $165,000. The Note matures on April 6, 2022, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on April 6, 2021, when the Company received proceeds of $155,000 after disbursements for the lender's transaction costs, fees, and expenses. On July 7, 2021, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $165,000. The Note matures on July 6, 2022, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on July 7, 2021, when the Company received proceeds of $155,000 after disbursements for the lender's transaction costs, fees, and expenses. On August 25, 2021, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $165,000. The Note matures on August 25, 2022, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on August 25, 2021, when the Company received proceeds of $155,000 after disbursements for the lender's transaction costs, fees, and expenses. On September 20, 2021, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $165,000. The Note matures on September 20, 2022, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on October 13, 2021, when the Company received proceeds of $155,000 after disbursements for the lender's transaction costs, fees, and expenses. On October 13, 2021, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $330,000. The Note matures on October 13, 2022, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on October 13, 2021, when the Company received proceeds of $310,000 after disbursements for the lender's transaction costs, fees, and expenses. On November 9, 2021, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $266,000. The Note matures on November 9, 2022, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on November 9, 2021, when the Company received proceeds of $250,000 after disbursements for the lender's transaction costs, fees, and expenses. On November 15, 2021, the Company sold 30 million shares for aggregate proceeds of $300,000, of which a portion of the proceeds was utilized to pay principal and interest on an outstanding convertible loan in the aggregate amount of approximately $70,000. On December 21, 2021, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $266,000. The Note matures on December 21, 2022, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on December 21, 2021, when the Company received proceeds of $200,000 after disbursements for the lender's transaction costs, fees, and expenses. On January 13, 2022, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $158,000. The Note matures on January 13, 2023, has a stated interest of 8%, and is convertible at any time following the funding of such Note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The Note was funded on January 13, 2021, when the Company received proceeds of $150,000 after disbursements for the lender's transaction costs, fees, and expenses. The loan was fully forgiven during period end March 31, 2022. On January 28, 2022, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $262,000. The Note matures October 28, 2022, has a stated interest of 8%, and is convertible at any time following the funding of such Note at a set price of $0.01 per shares. The Note was funded on January 28, 2022, when the Company received proceeds of $250,000 after disbursements for the lender's transaction costs, fees, and expenses. On February 28, 2022, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $262,000. The Note matures November 18, 2022, has a stated interest of 8%, and is convertible at any time following the funding of such Note at a set price of $0.01 per shares. The Note was funded on February 28, 2022,, when the Company received proceeds of $250,000 after disbursements for the lender's transaction costs, fees, and expenses. On March 11, 2022, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $262,000. The Note matures December 11, 2022, has a stated interest of 8%, and is convertible at any time following the funding of such Note at a set price of $0.01 per shares. The Note was funded on March 11, 2022, when the Company received proceeds of $250,000 after disbursements for the lender's transaction costs, fees, and expenses. On March 30, 2022, the Company issued to a third-party investor a convertible redeemable note (the "Note") with a face value of $262,000. The Note matures December 31, 2022, has a stated interest of 8%, and is convertible at any time following the funding of such Note at a set price of $0.01 per shares. The Note was funded on March 30, 2022, when the Company received proceeds of $250,000 after disbursements for the lender's transaction costs, fees, and expenses. On April 29, 2022, the Company issued to a third-party investor a conventional note payable(the "Note") with a face value of $262,000. The Note matures April 29, 2023, has a stated interest of 8% The Note was funded on April 29, 2022, when the Company received proceeds of $262,000 after disbursements for the lender's transaction costs, fees, and expenses. On June 8, 2022, the Company issued to a third-party investor a conventional note payable(the "Note") with a face value of $162,500. The Note matures June 8, 2023, has a stated interest of 8%. The Note was funded on June 8, 2022, when the Company received proceeds of $150,000 after disbursements for the lender's transaction costs, fees, and expenses. On June 13, 2022, the Company issued to a third-party investor a conventional note payable (the "Note") with a face value of $265,625. The Note matures June 13, 2023, has a stated interest of 8% The Note was funded on June 13, 2022, when the Company received proceeds of $255,000 after disbursements for the lender's transaction costs, fees, and expenses. On June 21, 2022, the Company issued to a third-party investor a conventional note payable (the "Note") with a face value of $91,750. The Note matures June 21, 2023, has a stated interest of 8% The Note was funded on June 21, 2022, when the Company received proceeds of $85,000 after disbursements for the lender's transaction costs, fees, and expenses. On June 23, 2022, the Company issued to a third-party investor a conventional note payable (the "Note") with a face value of $113,335. The Note matures June 23, 2023, has a stated interest of 8% The Note was funded on June 23, 2022, when the Company received proceeds of $105,000 after disbursements for the lender's transaction costs, fees, and expenses. On May 24, 2022, the Company issued to a third-party investor a conventional note payable (the "Note") with a face value of $600,000. The Note matures May 24, 2023, has a stated interest of 10%. The Note was funded on May 24, 2022, when the Company received proceeds of $600,000. The note is secured by all company’s assets. On May 24, 2022, the Company issued to a third-party investor a conventional note payable (the "Note") with a face value of $600,000. The Note matures May 24, 2023, has a stated interest of 10%. During period end June 30, 2022, Company received funds in the amount of $300,000. Second half of the note amount was received subsequently to period end. The note is secured by the real property. On November 22, 2021, the Company purchased Hearing Assist II, LLC. The Company acquired 100% interest in the entity for a total consideration of 591,209,963 common shares valued at $8,513,423 on the day of purchase. As part of the acquisition, the Company assumed assets in the amount of $15,713,000, consisting of trademarks, domains, customer lists, customer contracts, licenses, royalties, other contracts, and liabilities in the amount of $7,199,678 On September 30, 2021, the Company entered into an Asset Purchase agreement with iHear Medical, Inc. pursuant to which the Company received a number of intangible assets, equipment, customer database and inventory for a total consideration of 400,000 preferred series C shares and $1,000,000 convertible note. Preferred shares valued at $666,667 on the day of purchase. As part of the acquisition, the Company assumed assets in the amount of $1,666,667, consisting of inventory, equipment, customer lists, patents and other technology-based intangibles. The Company has evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission. The Company has determined that there are no other such events that warrant disclosure or recognition in the financial statements, except as stated herein. |
NOTE 2 _ SUMMARY OF SIGNIFICA_2
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America ("US GAAP"). The consolidated financial statements of the Company include the consolidated accounts of InnerScope and its’ wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Emerging Growth Companies | Emerging Growth Companies The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act 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. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to take advantage of the benefits of this extended transition period. |
Use of Estimates | 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 estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include the fair value of the derivative liabilities. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. The Company held no cash equivalents as of December 31, 2020 and 2019. Cash balances may, at certain times, exceed federally insured limits. If the amount of a deposit at any time exceeds the federally insured amount at a bank, the uninsured portion of the deposit could be lost, in whole or in part, if the bank were to fail. No losses have been recognized as a result of these excess amounts. |
Accounts receivable | Accounts receivable The Company records accounts receivable at the time products and services are delivered. An allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience. As of December 31, 2020 and 2019, management’s evaluation required the establishment of an allowance for uncollectible receivables of $27,991 and $27,615, respectively. |
Sales Concentration and Credit Risk | Sales Concentration and Credit Risk Following is a summary of customers who accounted for more than ten percent (10%) of the Company’s revenues for the years ended December 31, 2020 and 2019, and accounts receivable balances as of December 31, 2020 and 2019: December 31, Accounts Receivable as of Accounts Receivable as of 2020 2019 December 31, 2020 December 31, 2019 % % Customer A 28 5 0 41 |
Inventory | Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the first in first out (FIFO) method. Provision for potentially obsolete or slow-moving inventory is made based on management analysis or inventory levels and future sales forecasts. As of December 31, 2020, and 2019, management’s analysis did not require any provisions to be recognized. |
Intangible Assets | Intangible Assets Costs for intangible assets are accounted for through the capitalization of those costs incurred in connection with developing or obtaining such assets. Capitalized costs are included in intangible assets in the consolidated balance sheets. On October 3, 2018, the Company entered into a Manufacturing Design and Marketing Agreement (the “Agreement”) with Zounds Hearing, Inc., a Delaware corporation (“Zounds”), whereby, Zounds as the Subcontractor will provide design, technology, manufacturing and supply chain services to the Company (see Note 13) for a period of ten years. The Company will pay Zounds One Million ($1,000,000) for the right to use proprietary technology (the “Technology Access Fee”). As of December 31, 2018, the Company has capitalized the $1,000,000 Technology Access Fee as an intangible asset on the consolidated balance sheets. The Technology Access Fee will be amortized over the term of the Agreement. The Company also acquired intangible assets from an asset purchase agreement (see Note 4). During the year ended December 31, 2020, the Company determined that they do not expect to realize any benefit in the foreseeable future, therefore, have recorded an impairment of $775,000. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful lives of the assets. The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. The estimated useful lives of property and equipment are as follows: Computer equipment 3 years Machinery and equipment 5 years Furniture and fixtures 5 years Leasehold improvements 3-5 years The Company's property and equipment consisted of the following at December 31, 2020, and 2019: December 31, 2020 December 31, 2019 Computer and equipment $ 4,272 $ 4,272 Leasehold improvements 12,222 12,222 Machinery and equipment 45,411 38,139 Furniture and equipment 39,152 39,152 101,057 93,785 Accumulated depreciation (40,854 ) (21,544 ) Property and equipment, net $ 60,203 $ 72,241 Depreciation expense of $19,310 and $25,453 was recorded for the years ended December 31, 2020 and 2019, respectively. |
Investment in Undivided Interest in Real Estate | Investment in Undivided Interest in Real Estate The Company accounts for its’ investment in undivided interest in real estate using the equity method, as the Company is severally liable only for the indebtedness incurred with its interest in the property. The Company includes its allocated portion of net income or loss in Other income (expense) in its Statement of Operations, with the offset to the equity investment account on the balance sheet. For the years ended December 31, 2020 and 2019, the Company recognized a gains of $30,646 and $15,083, respectively. As of December 31, 2020, and 2019, the carrying value of the Company’s investment in undivided interest in real estate was $1,227,733 and $1,210,526, respectively (see Note 9). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that mark et participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities. Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 - Unobservable inputs reflecting the Company's assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. The carrying amounts of the Company's financial assets and liabilities, such as cash, prepaid expenses, accounts receivable, accounts payable and accrued expenses, certain notes payable and notes payable - related party, approximate their fair values because of the short maturity of these instruments. The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2020, and 2019, for each fair value hierarchy level: December 31, 2019 Level 1 Level 2 Level 3 Total Derivative liabilities $ — $ — $ 3,515,055 $ 3,515,055 $ — $ — $ 3,515,055 $ 3,515,055 December 31, 2020 Level 1 Level 2 Level 3 Total Derivative liabilities $ — $ — $ 4,046,401 $ 4,046,401 $ — $ — $ 4,046,401 $ 4,046,401 |
Embedded Conversion Features | Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under ASC 815 "Derivatives and Hedging" to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 "Debt with Conversion and Other Options" for consideration of any beneficial conversion feature. |
Derivative Financial Instruments | Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of it financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based simple derivative financial instruments, the Company uses the Monte Carlo simulations to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re- assessed at the end of each reporting period. |
Debt Issue Costs and Debt Discount | Debt Issue Costs and Debt Discount The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense through the maturity of the debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately expensed. Any unamortized debt issue costs and debt discount are presented net of the related debt on the consolidated balance sheets. |
Original Issue Discount | Original Issue Discount For certain convertible debt issued, the Company may provide the debt holder with an original issue discount. The original issue discount would be recorded to debt discount, reducing the face amount of the note and is amortized to interest expense through the maturity of the debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately expensed. Any unamortized original issue discounts are presented net of the related debt on the consolidated balance sheets. |
Revenue Recognition | Revenue Recognition Effective January 1, 2018, the Company adopted ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”) and all the related amendments. The Company elected to adopt this guidance using the modified retrospective method. The adoption of this guidance did not have a material effect on the Company’s financial position, results of operations or cash flows. The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company’s contracts with customers are generally on a purchase order basis and represent obligations that are satisfied at a point in time, as defined in the new guidance, generally upon delivery or has services are provided. Accordingly, revenue for each sale is recognized when the Company has completed its performance obligations, Any costs incurred before this point in time, are recorded as assets to be expensed during the period the related revenue is recognized. The Company accepts prepayments on hearing aids and records the amount received as customer deposits on its’ balance sheet. When the Company delivers the hearing aid to the customer, revenue is recognized as well as the corresponding cost of sales. As of December 31, 2020 and 2019, the Company had received $21,505 and $10,925 of customer deposits, where revenue will be recognized when the hearing aids are delivered to the customer. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties. Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. |
Advertising and Marketing Expenses | Advertising and Marketing Expenses The Company expenses advertising and marketing costs as incurred. For the years ended December 31, 2020 and 2019, advertising and marketing expenses were $19,762 and $485,407, respectively. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net loss by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. As of December 31, 2020, and 2019, the Company’s outstanding convertible debt is convertible into approximately 4,650,854,286 and 155,226,039 shares of common stock, respectively. This amount is not included in the computation of dilutive loss per share because their impact is antidilutive. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (for “emerging growth company” beginning after December 15, 2020). The Company will be evaluating the impact this standard will have on the Company’s consolidated financial statements. The FASB recently issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to reduce complexity in applying GAAP to certain financial instruments with characteristics of liabilities and equity. The guidance in ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, which requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives. In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract. The amendments in ASU 2020-06 further revise the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. The amendments in ASU 2020-06 are effective for public entities for fiscal years beginning after December 15, 2021, with early adoption permitted (for “emerging growth company” beginning after December 15, 2023). The Company will be evaluating the impact this standard will have on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases (ASU 2018-10), which provides narrow amendments to clarify how to apply certain aspects of the new lease standard, and ASU No. 2018-11, Leases (Topic 842)—Targeted Improvements (ASU 2018-11), which addressed implementation issues related to the new lease standard. These and certain other lease-related ASUs have generally been codified in ASC 842. ASC 842 supersedes the lease accounting requirements in ASC Topic 840, Leases (ASC 840). ASC 842 establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases. Under ASC 842, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 was effective for annual reporting periods beginning after December 15, 2018 and interim periods within that reporting period (for “emerging growth company” from January 1, 2020). The Company adopted ASC 842 on January 1, 2019 using the effective date transition method. The Company elected the practical expedient to not record short-term leases on its consolidated balance sheet. |
NOTE 2 _ SUMMARY OF SIGNIFICA_3
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedules of Concentration of Risk, by Risk Factor [Table Text Block] | December 31, Accounts Receivable as of Accounts Receivable as of 2020 2019 December 31, 2020 December 31, 2019 % % Customer A 28 5 0 41 |
Property, Plant and Equipment [Table Text Block] | December 31, 2020 December 31, 2019 Computer and equipment $ 4,272 $ 4,272 Leasehold improvements 12,222 12,222 Machinery and equipment 45,411 38,139 Furniture and equipment 39,152 39,152 101,057 93,785 Accumulated depreciation (40,854 ) (21,544 ) Property and equipment, net $ 60,203 $ 72,241 |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | December 31, 2019 Level 1 Level 2 Level 3 Total Derivative liabilities $ — $ — $ 3,515,055 $ 3,515,055 $ — $ — $ 3,515,055 $ 3,515,055 December 31, 2020 Level 1 Level 2 Level 3 Total Derivative liabilities $ — $ — $ 4,046,401 $ 4,046,401 $ — $ — $ 4,046,401 $ 4,046,401 |
NOTE 4 _ INTANGIBLE ASSETS, N_2
NOTE 4 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Indefinite-Lived Intangible Assets [Table Text Block] | December 31, 2020 December 31, 2019 Customer List $ 300 $ 300 Non-Compete 12,708 12,708 Technology Access Fee — 1,000,000 Intellectual Property 3,000 3,000 Intangibles 16,008 1,016,008 Accumulated amortization (13,008 ) (133,672 ) Intangibles, net $ 3,000 $ 882,336 |
NOTE 5 _ NOTE PAYABLE, STOCKH_2
NOTE 5 – NOTE PAYABLE, STOCKHOLDER (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | December 31, 2020 December 31, 2019 Beginning Balance $ 95,800 $ 95,800 Amounts loaned/repaid — — Ending Balance $ 95,800 $ 95,800 |
NOTE 7 _ RELATED PARTY TRANSA_2
NOTE 7 – RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions [Table Text Block] | Year ended Year ended Description December 31, 2020 December 31, 2019 CEO $ 225,000 $ 225,000 CFO 150,000 150,000 Total $ 375,000 $ 375,000 |
NOTE 8_ INVESTMENT IN UNDIVID_2
NOTE 8– INVESTMENT IN UNDIVIDED INTEREST IN REAL ESTATE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Real Estate [Abstract] | |
Schedule of Real Estate Properties [Table Text Block] | Current assets: 2020 2019 Cash $ 25,144 $ — Accounts Receivable 125,698 106,163 Due from InnerScope 138,360 79,934 Prepaid expenses and other current assets 8,848 — Total current assets 298,050 186,097 Land and Building, net 2,267,156 2,310,722 Other Assets, net 43,729 45,943 Total assets $ 2,608,935 $ 2,542,762 Accounts Payable $ 119,446 $ 72,475 Current portion of mortgage payable 22,150 20,708 Other current liabilities 37,399 16,104 Total current liabilities 178,995 109,287 Mortgage payable, long-term 1,937,345 1,966,215 Security deposits 3,283 13,064 Total liabilities 2,119,623 2,088,566 Total equity 489,312 454,196 Total liabilities and equity $ 2,608,935 $ 2,542,762 2020 2019 Rental income $ 243,986 $ 297,383 Expenses: Property taxes 30,185 29,605 Depreciation and amortization 45,780 50,940 Insurance 9,559 18,783 Repairs and maintenance — 6,202 Utilities and other 45,654 68,156 Interest expenses 77,692 113,858 Total expenses 208,870 287,544 Net income (loss) $ 35,116 $ 9,839 |
NOTE 9_ CONVERTIBLE NOTES PAY_2
NOTE 9– CONVERTIBLE NOTES PAYABLE - UNDIVIDED INTEREST IN REAL ESTATE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Guarantor Obligations [Table Text Block] | Twelve months ending December 31, Amount 2021 $ 22,150 2022 23,516 2023 24,966 2024 26,500 2025 28,118 Thereafter 834,903 Total $ 960,153 |
Convertible Debt [Table Text Block] | December 31, 2020 December 31, 2019 Principal balance $ 3,286,270 $ 3,402,117 Unamortized discounts (30,672 ) (1,011,636 ) Ending balance, net $ 3,255,598 $ 2,390,481 |
NOTE 10 _ DERIVATIVE LIABILIT_2
NOTE 10 – DERIVATIVE LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments [Table Text Block] | December 31, 2020 December 31, 2019 Beginning Balance $ 3,515,055 $ 1,807,404 Initial derivative liability 412,801 4,745,194 Fair value change 1,198,529 (942,398 ) Reclassification for principal payments and conversions (1,079,984 ) (2,095,145 ) Ending Balance $ 4,046,401 $ 3,515,055 |
NOTE 11_ COMMITMENTS AND CONT_2
NOTE 11– COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | For the twelve months ending December 31, Amount 2021 $ 360,815 2022 156,548 2023 89,208 2024 — Thereafter — Total $ 606,571 |
NOTE 12_ INCOME TAXES (Tables)
NOTE 12– INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | 2020 2019 Expected income tax recovery from net loss $ 1,040,275 $ 1,663,974 Tax effect of expenses not deductible for income tax: Annual effect of book/tax difference (523,142 ) (890,866 ) Change in valuation allowance (517,133 ) (773,108 ) — — |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | 2020 2019 Tax effect of NOL carryover $ 2,594,396 $ 2,077,264 Less valuation allowance (2,594,396 ) (2,077,264 ) — — |
NOTE 15 _ BUSINESS ACQUISITION
NOTE 15 – BUSINESS ACQUISITION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | Allocation of Purchase Price $ Assets Cash 44,850 Accounts Receivable 789,009 Inventory 2,243,947 Other assets 83,163 Property and equipment 93,632 Total assets 3,254,601 Liabilities Accounts payable 4,303,622 Accrued expenses and other current liabilities 2,460,785 Other current liabilities 2,659,855 Long-term liabilities 1,560,510 Total liabilities 10,984,772 Net liabilities (7,730,171 ) Intangible Asset: Hearing Aid 3,000,000 Intangible Asset: Customer Database 7,374,450 Intangible Asset: Loyalties 5,338,550 Goodwill 530,594 Total net assets acquired 8,513,423 |
Schedule of Noncash or Part Noncash Acquisitions [Table Text Block] | Number of Common Stock 591,209,963 Market price on the date of issuance 0.0144 Purchase consideration $ 8,513,423 |
Business Acquisition, Pro Forma Information [Table Text Block] | INNERSCOPE HEARING TECHNOLOGIES, INC. PRO FORMA CONSOLIDATED BALANCE SHEETS (Unaudited) Historical InnerScope Hearing Technologies, Inc. Acquisition Pro forma combined As of December 31, 2020 of Hearing Assist II, LLC Pro forma adjustments As of December 31, 2020 ASSETS Current Assets: Cash $ 3,349 $ 177,834 — $ 181,183 Accounts receivable, allowance for doubtful accounts 12,429 1,832,042 — 1,844,471 Employee advances 3,000 — — 3,000 Prepaid assets — 103,190 — 103,190 Inventory 4,671 2,242,409 — 2,247,080 Total current assets 23,450 4,355,475 — 4,378,925 — Security deposits 4,863 — — 4,863 Domain name 3,000 — — 3,000 Other assets — 63,260 63,260 Intangible assets, net of accumulated amortization — — (a) 4,410,947 4,410,947 Property and equipment, net of accumulated depreciation 60,203 78,977 — 139,180 Operating leases right-of-use assets, net 364,062 — — 364,062 Investment in undivided interest in real estate 1,227,733 — — 1,227,733 Total assets $ 1,683,311 $ 4,497,712 $ 4,410,947 $ 10,591,970 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Bank overdraft 269 — — 269 Accounts payable and accrued expenses 1,841,302 5,828,561 — 7,669,863 Accounts payable to related party 662,178 — — 662,178 Notes payable - stockholder 95,800 — — 95,800 Current portion of convertible notes payable, net of discounts 3,255,598 — — 3,255,598 Note payable, other & related party 118,786 — — 118,786 Customer deposits 10,925 — — 10,925 Other current liabilities — — — — Current portion of note payable- undivided interest in real estate 22,150 — — 22,150 Derivative liabilities 4,046,401 — — 4,046,401 Operating lease liabilities, current portion 365,587 — — 365,587 Total current liabilities $ 10,418,996 $ 5,828,561 $ — $ 16,247,557 EIDL loan — 150,000 — 150,000 Long term portion of note payable- undivided interest in real estate 938,003 — — 938,003 PPP loan 262,445 — — 262,445 Other long-term liabilities 11,528 — 11,528 Long-term loan — 1,844,020 — 1,844,020 Operating lease liabilities, Less current portion 416,788 — — 416,788 Total liabilities $ 12,036,232 $ 7,834,109 $ — $ 19,870,341 Commitments and contingencies Stockholders' Deficit: Members' Capital — 4,112,476 (a) (4,112,476 ) — Preferred stock, $0.0001 par value; 25,000,000 shares authorized; Series A preferred stock, par value $0.0001, -0- (2020) 90 — — 90 Series B preferred stock, par value $0.0001, 900,000 (2020) shares authorized, and 900,000 (2020) shares issued and outstanding — — — — Common stock, $0.0001 par value; 14,975,000,000 (2020) shares authorized and 3,628,422,042 (2020) shares issued and outstanding 362,846 — (a) 59,121 421,967 Common stock to be issued, $0.0001 par value, 2,412,671 (2020) shares 242 — — 242 Additional paid-in capital 8,534,062 — (a) 8,454,302 16,988,364 Accumulated deficit (19,250,161 ) (7,448,873 ) — (26,699,034 ) Total stockholders' deficit (10,352,921 ) (3,336,397 ) 4,400,947 (9,288,371 ) Total Liabilities and Shareholder Equity $ 1,683,311 $ 4,497,712 $ 4,400,947 $ 10,581,970 INNERSCOPE HEARING TECHNOLOGIES, INC. PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Historical InnerScope Hearing Technologies, Inc. Acquisition Pro forma combined As of December 31, 2020 of Hearing Assist II, LLC Pro forma adjustments As of December 31, 2020 Revenues: Revenues, other $ 166,111 $ 15,753,402 $ — $ 15,919,513 Total revenues 166,111 15,753,402 — 15,919,513 Cost of sales Cost of sales, other 68,768 7,781,088 — 7,849,856 Total cost of sales 68,768 7,781,088 — 7,849,856 — Gross profit $ 97,343 $ 7,972,314 $ — $ 8,069,657 Operating Expenses: Compensation and benefits 661,840 383,625 — 1,045,465 Advertising and promotion 19,762 6,893,439 — 6,913,201 R&D expense 276,926 — 276,926 Professional fees 114,476 193,168 — 307,644 Rent, including related party 322,879 129 — 323,008 Investor relations 14,796 — — 14,796 Depreciation and Amortization expense 123,646 109,695 — 233,341 Other general and administrative 69,188 765,795 — 834,983 Total operating expenses $ 1,326,585 $ 8,622,777 $ — $ 9,949,362 Loss from operations $ (1,229,243 ) $ (650,463 ) $ — $ (1,879,706 ) Other Income (Expense): Other income Derivative income (loss) (1,066,904 ) — — (1,066,904 ) Gain (loss) on equity investment 30,646 6,889 — 37,535 Amortization of debt discount (1,222,965 ) — — (1,222,965 ) Gain/Loss on debt extinguishment — 6,000 — 6,000 Gain/Loss on lease termination (201,283 ) — — (201,283 ) Other income (expenses) 181 — — 181 Loss on intangibles (775,000 ) — — (775,000 ) Gain/Loss on assets disposal — (59,093 ) — (59,093 ) Interest expense and finance charges (489,123 ) (448,678 ) — (937,801 ) Total other income (expense), net $ (3,724,447 ) $ (494,882 ) $ — $ (4,219,329 ) Loss before income tax $ (4,953,690 ) $ (1,145,345 ) $ — $ (6,099,035 ) — Income tax provision — — — Net Loss $ (4,953,690 ) $ (1,145,345 ) $ — $ (6,099,035 ) Basic and diluted income (loss) per share (0.00 ) (0.00 ) Weighted average number of common shares outstanding Basic and diluted 2,769,472,382 2,769,472,382 |
Customers who accounted for mor
Customers who accounted for more than ten percent of the Company's revenues and accounts receivable balances (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Customer Concentration 1 Risk [Member] | ||
Product Information [Line Items] | ||
Concentration Risk, Percentage | 28% | 5% |
Customer Concentration 2 Risk [Member] | ||
Product Information [Line Items] | ||
Concentration Risk, Percentage | 0% | 41% |
Property and equipment (Details
Property and equipment (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Computer and equipment | $ 4,272 | $ 4,272 |
Leasehold improvements | 12,222 | 12,222 |
Machinery and equipment | 45,411 | 38,139 |
Furniture and equipment | 39,152 | 39,152 |
Accumulated depreciation | (40,854) | (21,544) |
Property and equipment, net | $ 60,203 | $ 72,241 |
Financial instruments measured
Financial instruments measured at fair value on a recurring basis (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Defined Benefit Plan Disclosure [Line Items] | |||
Derivative liabilities | $ 4,046,401 | $ 3,515,055 | $ 1,807,404 |
4,046,401 | 3,515,055 | ||
Fair Value, Inputs, Level 1 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Derivative liabilities | |||
Fair Value, Inputs, Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Derivative liabilities | |||
Fair Value, Inputs, Level 3 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Derivative liabilities | 4,046,401 | 3,515,055 | |
$ 4,046,401 | $ 3,515,055 |
NOTE 3 _ GOING CONCERN AND MA_2
NOTE 3 – GOING CONCERN AND MANAGEMENT’S PLANS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Net Income (Loss) Attributable to Parent | $ (4,953,692) | $ (7,924,339) |
Banking Regulation, Total Capital, Actual | (10,395,547) | |
Retained Earnings (Accumulated Deficit) | $ (19,250,160) | $ (14,296,468) |
Intangibles (Details)
Intangibles (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Customer List | $ 300 | $ 300 |
Non-Compete | 12,708 | 12,708 |
Technology Access Fee | 1,000,000 | |
Intellectual Property | 3,000 | 3,000 |
Intangibles | 16,008 | 1,016,008 |
Accumulated amortization | (13,008) | (133,672) |
Intangibles, net | $ 3,000 | $ 882,336 |
Amounts stockholder loaned the
Amounts stockholder loaned the Company and amounts repaid (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Payables and Accruals [Abstract] | ||
Beginning Balance | $ 95,800 | $ 95,800 |
Amounts loaned/repaid | ||
Ending Balance | $ 95,800 | $ 95,800 |
Expenses to officers (Details)
Expenses to officers (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | ||
Salary and Wage, Officer, Excluding Cost of Good and Service Sold | $ 375,000 | $ 375,000 |
Chief Executive Officer [Member] | ||
Related Party Transaction [Line Items] | ||
Salary and Wage, Officer, Excluding Cost of Good and Service Sold | 225,000 | 225,000 |
Chief Financial Officer [Member] | ||
Related Party Transaction [Line Items] | ||
Salary and Wage, Officer, Excluding Cost of Good and Service Sold | $ 150,000 | $ 150,000 |
Consolidated balance sheets and
Consolidated balance sheets and statement of operations for the real property (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Current assets: | |||
Due from InnerScope | |||
Prepaid expenses and other current assets | 73,249 | ||
Total current assets | 23,449 | 151,399 | |
Land and Building, net | 60,203 | 72,241 | |
Total assets | 1,683,310 | 3,175,386 | |
Total current liabilities | 10,418,996 | 8,035,520 | |
Total liabilities | 12,036,232 | 9,719,900 | |
Total equity | (10,352,922) | (6,544,514) | $ (1,758,498) |
Total liabilities and equity | 1,683,310 | 3,175,386 | |
Expenses: | |||
Depreciation and amortization | 123,646 | 150,024 | |
Total expenses | 1,326,587 | 4,095,200 | |
Net income (loss) | (4,953,692) | (7,924,339) | |
Partially Owned Properties [Member] | |||
Current assets: | |||
Cash | 25,144 | ||
Accounts Receivable | 125,698 | 106,163 | |
Due from InnerScope | 138,360 | 79,934 | |
Prepaid expenses and other current assets | 8,848 | ||
Total current assets | 298,050 | 186,097 | |
Land and Building, net | 2,267,156 | 2,310,722 | |
Other Assets, net | 43,729 | 45,943 | |
Total assets | 2,608,935 | 2,542,762 | |
Accounts Payable | 119,446 | 72,475 | |
Current portion of mortgage payable | 22,150 | 20,708 | |
Other current liabilities | 37,399 | 16,104 | |
Total current liabilities | 178,995 | 109,287 | |
Mortgage payable, long-term | 1,937,345 | 1,966,215 | |
Security deposits | 3,283 | 13,064 | |
Total liabilities | 2,119,623 | 2,088,566 | |
Total equity | 489,312 | 454,196 | |
Total liabilities and equity | 2,608,935 | 2,542,762 | |
Rental income | 243,986 | 297,383 | |
Expenses: | |||
Property taxes | 30,185 | 29,605 | |
Depreciation and amortization | 45,780 | 50,940 | |
Insurance | 9,559 | 18,783 | |
Repairs and maintenance | 6,202 | ||
Utilities and other | 45,654 | 68,156 | |
Interest expenses | 77,692 | 113,858 | |
Total expenses | 208,870 | 287,544 | |
Net income (loss) | $ 35,116 | $ 9,839 |
Future principal payments for t
Future principal payments for the Company's portion of real property (Details) - Payment Guarantee [Member] | 12 Months Ended |
Dec. 31, 2020 USD ($) | |
Guarantor Obligations [Line Items] | |
$ 22,150 | |
23,516 | |
24,966 | |
26,500 | |
28,118 | |
834,903 | |
$ 960,153 |
Summary of convertible note bal
Summary of convertible note balances (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
Principal balance | $ 3,286,270 | $ 3,402,117 |
Unamortized discounts | (30,672) | (1,011,636) |
Ending balance, net | $ 3,255,598 | $ 2,390,481 |
Summary of activity related to
Summary of activity related to derivative liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Beginning Balance | $ 3,515,055 | $ 1,807,404 |
Initial derivative liability | 412,801 | 4,745,194 |
Fair value change | 1,198,529 | (942,398) |
Reclassification for principal payments and conversions | (1,079,984) | (2,095,145) |
Ending Balance | $ 4,046,401 | $ 3,515,055 |
Future principal payments for o
Future principal payments for operating lease expenses (Details) | Dec. 31, 2020 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
$ 360,815 | |
156,548 | |
89,208 | |
$ 606,571 |
Provision for income taxes (Det
Provision for income taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Expected income tax recovery from net loss | $ 1,040,275 | $ 1,663,974 |
Annual effect of book/tax difference | (523,142) | (890,866) |
Change in valuation allowance | (517,133) | (773,108) |
Net deferred tax assets (Detail
Net deferred tax assets (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Tax effect of NOL carryover | $ 2,594,396 | $ 2,077,264 |
Less valuation allowance | (2,594,396) | (2,077,264) |
Fair value of assets, liabiliti
Fair value of assets, liabilities and intangible assets and purchase price allocation (Details) - USD ($) | Nov. 22, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Assets | |||
Inventory | $ 4,671 | $ 18,781 | |
Property and equipment, net of accumulated depreciation | 60,203 | 72,241 | |
Total assets | 1,683,310 | 3,175,386 | |
Liabilities | |||
Total liabilities | $ 12,036,232 | $ 9,719,900 | |
Allocation Of Purchase Price [Member] | |||
Assets | |||
Cash | $ 44,850 | ||
Accounts Receivable | 789,009 | ||
Inventory | 2,243,947 | ||
Other assets | 83,163 | ||
Property and equipment, net of accumulated depreciation | 93,632 | ||
Total assets | 3,254,601 | ||
Liabilities | |||
Accounts payable | 4,303,622 | ||
Accrued expenses and other current liabilities | 2,460,785 | ||
Other current liabilities | 2,659,855 | ||
Long-term liabilities | 1,560,510 | ||
Total liabilities | 10,984,772 | ||
Net liabilities | (7,730,171) | ||
Intangible Asset: Hearing Aid | 3,000,000 | ||
Intangible Asset: Customer Database | 7,374,450 | ||
Intangible Asset: Loyalties | 5,338,550 | ||
Goodwill | 530,594 | ||
Total net assets acquired | $ 8,513,423 |
Pruchase consideration of the C
Pruchase consideration of the Company's common stock value (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Nov. 22, 2021 | |
Business Combination and Asset Acquisition [Abstract] | ||
[custom:MarketPriceOfCommonStockOnDateOfIssuanceAcquisition-0] | $ 0.0144 | |
Purchase consideration | $ 8,513,423 |
Unaudited pro forma condensed f
Unaudited pro forma condensed financial statements (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Current Assets: | |||
Employee advances | $ 3,000 | $ 3,750 | |
Prepaid assets | 73,249 | ||
Inventory | 4,671 | 18,781 | |
Total current assets | 23,449 | 151,399 | |
Domain name | 3,000 | 3,000 | |
Intangible assets, net of accumulated amortization | 3,000 | 882,336 | |
Property and equipment, net of accumulated depreciation | 60,203 | 72,241 | |
Operating leases right-of-use assets, net | 364,062 | 846,132 | |
Investment in undivided interest in real estate | 1,227,733 | 1,210,526 | |
Current Liabilities: | |||
Bank overdraft | 271 | 2,631 | |
Accounts payable and accrued expenses | 1,841,300 | 1,316,185 | |
Accounts payable to related party | 662,178 | 266,419 | |
Current portion of convertible notes payable, net of discounts | 3,255,598 | 2,390,481 | |
Note payable, other & related party | 118,786 | 106,942 | |
Customer deposits | 10,925 | 21,505 | |
Current portion of note payable- undivided interest in real estate | 22,150 | 20,708 | |
Derivative liabilities | 4,046,401 | 3,515,055 | $ 1,807,404 |
Operating lease liabilities, current portion | 365,587 | 299,794 | |
Total current liabilities | 10,418,996 | 8,035,520 | |
Long term portion of note payable- undivided interest in real estate | 938,003 | 952,884 | |
Operating lease liabilities, Less current portion | 416,788 | 731,496 | |
Total liabilities | 12,036,232 | 9,719,900 | |
Stockholders' Deficit: | |||
Common stock, $0.0001 par value; 14,975,000,000 (2020) shares authorized and 3,628,422,042 (2020) shares issued and outstanding | 362,845 | 34,212 | |
Common stock to be issued, $0.0001 par value, 2,412,671 (2020) shares | 241 | 241 | |
Additional paid-in capital | 8,534,062 | 7,717,411 | |
Accumulated deficit | (19,250,160) | (14,296,468) | |
Total stockholders' deficit | (10,352,922) | (6,544,514) | $ (1,758,498) |
Revenues: | |||
Total revenues | 166,111 | 847,109 | |
Cost of sales | |||
Total cost of sales | 68,768 | 496,736 | |
Gross profit | 97,343 | 350,374 | |
Operating Expenses: | |||
Compensation and benefits | 661,840 | 1,575,395 | |
Advertising and promotion | 19,762 | 485,407 | |
Professional fees | 114,476 | 763,157 | |
Investor relations | 14,796 | 193,696 | |
Depreciation and Amortization expense | 123,646 | 150,024 | |
Other general and administrative | 69,188 | 502,908 | |
Total operating expenses | 1,326,587 | 4,095,200 | |
Loss from operations | (1,229,244) | (3,744,826) | |
Other Income (Expense): | |||
Derivative income (loss) | (1,066,904) | (647,633) | |
Gain (loss) on equity investment | 30,646 | 15,083 | |
Amortization of debt discount | 1,222,965 | 2,954,879 | |
Gain/Loss on debt extinguishment | (52,702) | ||
Gain/Loss on lease termination | (201,283) | (146,337) | |
Other income (expenses) | (3,724,448) | (4,179,513) | |
Loss on intangibles | (775,000) | ||
Total other income (expense), net | 181 | (6,742) | |
Loss before income tax | (4,953,692) | (7,924,339) | |
Income tax provision | |||
Net loss for the period ended December 31, 2020 | $ (4,953,692) | $ (7,924,339) | |
Basic and diluted income (loss) per share | $ 0 | $ (0.02) | |
Basic and diluted | 2,769,472,382 | 486,708,071 | |
Company [Member] | |||
Current Assets: | |||
Cash | $ 3,349 | ||
Accounts receivable, allowance for doubtful accounts | 12,429 | ||
Employee advances | 3,000 | ||
Prepaid assets | |||
Inventory | 4,671 | ||
Total current assets | 23,450 | ||
Security deposits | 4,863 | ||
Domain name | 3,000 | ||
Other assets | |||
Intangible assets, net of accumulated amortization | |||
Property and equipment, net of accumulated depreciation | 60,203 | ||
Operating leases right-of-use assets, net | 364,062 | ||
Investment in undivided interest in real estate | 1,227,733 | ||
Total assets | 1,683,311 | ||
Current Liabilities: | |||
Bank overdraft | 269 | ||
Accounts payable and accrued expenses | 1,841,302 | ||
Accounts payable to related party | 662,178 | ||
Notes payable - stockholder | 95,800 | ||
Current portion of convertible notes payable, net of discounts | 3,255,598 | ||
Note payable, other & related party | 118,786 | ||
Customer deposits | 10,925 | ||
Other current liabilities | |||
Current portion of note payable- undivided interest in real estate | 22,150 | ||
Derivative liabilities | 4,046,401 | ||
Operating lease liabilities, current portion | 365,587 | ||
Total current liabilities | 10,418,996 | ||
EIDL loan | |||
Long term portion of note payable- undivided interest in real estate | 938,003 | ||
PPP loan | 262,445 | ||
Long-term loan | |||
Operating lease liabilities, Less current portion | 416,788 | ||
Total liabilities | 12,036,232 | ||
Stockholders' Deficit: | |||
Members' Capital | |||
Series A preferred stock, par value $0.0001, -0- (2020) | 90 | ||
Series B preferred stock, par value $0.0001, 900,000 (2020) shares authorized, and 900,000 (2020) shares issued and outstanding | |||
Common stock, $0.0001 par value; 14,975,000,000 (2020) shares authorized and 3,628,422,042 (2020) shares issued and outstanding | 362,846 | ||
Common stock to be issued, $0.0001 par value, 2,412,671 (2020) shares | 242 | ||
Additional paid-in capital | 8,534,062 | ||
Accumulated deficit | (19,250,161) | ||
Total stockholders' deficit | (10,352,921) | ||
Total Liabilities and Shareholder Equity | 1,683,311 | ||
Revenues: | |||
Total revenues | 166,111 | ||
Cost of sales | |||
Cost of sales, other | 68,768 | ||
Total cost of sales | 68,768 | ||
Gross profit | 97,343 | ||
Operating Expenses: | |||
Compensation and benefits | 661,840 | ||
Advertising and promotion | 19,762 | ||
Professional fees | 114,476 | ||
Rent, including related party | 322,879 | ||
Investor relations | 14,796 | ||
Depreciation and Amortization expense | 123,646 | ||
Other general and administrative | 69,188 | ||
Total operating expenses | 1,326,585 | ||
Loss from operations | (1,229,243) | ||
Other Income (Expense): | |||
Derivative income (loss) | (1,066,904) | ||
Gain (loss) on equity investment | 30,646 | ||
Amortization of debt discount | (1,222,965) | ||
Gain/Loss on debt extinguishment | |||
Gain/Loss on lease termination | (201,283) | ||
Other income (expenses) | 181 | ||
Loss on intangibles | (775,000) | ||
Gain/Loss on assets disposal | |||
Interest expense and finance charges | (489,123) | ||
Total other income (expense), net | (3,724,447) | ||
Loss before income tax | (4,953,690) | ||
Income tax provision | |||
Net loss for the period ended December 31, 2020 | $ (4,953,690) | ||
Basic and diluted income (loss) per share | $ 0 | ||
Basic and diluted | 2,769,472,382 | ||
Acquisition [Member] | |||
Current Assets: | |||
Cash | $ 177,834 | ||
Accounts receivable, allowance for doubtful accounts | 1,832,042 | ||
Employee advances | |||
Prepaid assets | 103,190 | ||
Inventory | 2,242,409 | ||
Total current assets | 4,355,475 | ||
Security deposits | |||
Domain name | |||
Other assets | 63,260 | ||
Intangible assets, net of accumulated amortization | |||
Property and equipment, net of accumulated depreciation | 78,977 | ||
Operating leases right-of-use assets, net | |||
Investment in undivided interest in real estate | |||
Total assets | 4,497,712 | ||
Current Liabilities: | |||
Bank overdraft | |||
Accounts payable and accrued expenses | 5,828,561 | ||
Accounts payable to related party | |||
Notes payable - stockholder | |||
Current portion of convertible notes payable, net of discounts | |||
Note payable, other & related party | |||
Customer deposits | |||
Other current liabilities | |||
Current portion of note payable- undivided interest in real estate | |||
Derivative liabilities | |||
Operating lease liabilities, current portion | |||
Total current liabilities | 5,828,561 | ||
EIDL loan | 150,000 | ||
Long term portion of note payable- undivided interest in real estate | |||
PPP loan | |||
Other long-term liabilities | 11,528 | ||
Long-term loan | 1,844,020 | ||
Operating lease liabilities, Less current portion | |||
Total liabilities | 7,834,109 | ||
Stockholders' Deficit: | |||
Members' Capital | 4,112,476 | ||
Series A preferred stock, par value $0.0001, -0- (2020) | |||
Series B preferred stock, par value $0.0001, 900,000 (2020) shares authorized, and 900,000 (2020) shares issued and outstanding | |||
Common stock, $0.0001 par value; 14,975,000,000 (2020) shares authorized and 3,628,422,042 (2020) shares issued and outstanding | 0 | ||
Common stock to be issued, $0.0001 par value, 2,412,671 (2020) shares | |||
Additional paid-in capital | |||
Accumulated deficit | (7,448,873) | ||
Total stockholders' deficit | (3,336,397) | ||
Total Liabilities and Shareholder Equity | 4,497,712 | ||
Revenues: | |||
Total revenues | 15,753,402 | ||
Cost of sales | |||
Cost of sales, other | 7,781,088 | ||
Total cost of sales | 7,781,088 | ||
Gross profit | 7,972,314 | ||
Operating Expenses: | |||
Compensation and benefits | 383,625 | ||
Advertising and promotion | 6,893,439 | ||
R&D expense | 276,926 | ||
Professional fees | 193,168 | ||
Rent, including related party | 129 | ||
Investor relations | |||
Depreciation and Amortization expense | 109,695 | ||
Other general and administrative | 765,795 | ||
Total operating expenses | 8,622,777 | ||
Loss from operations | (650,463) | ||
Other Income (Expense): | |||
Derivative income (loss) | |||
Gain (loss) on equity investment | 6,889 | ||
Amortization of debt discount | |||
Gain/Loss on debt extinguishment | 6,000 | ||
Gain/Loss on lease termination | |||
Other income (expenses) | |||
Loss on intangibles | |||
Gain/Loss on assets disposal | (59,093) | ||
Interest expense and finance charges | (448,678) | ||
Total other income (expense), net | (494,882) | ||
Loss before income tax | (1,145,345) | ||
Income tax provision | |||
Net loss for the period ended December 31, 2020 | (1,145,345) | ||
Scenario, Adjustment [Member] | |||
Current Assets: | |||
Cash | |||
Accounts receivable, allowance for doubtful accounts | |||
Employee advances | |||
Prepaid assets | |||
Inventory | |||
Total current assets | |||
Security deposits | |||
Domain name | |||
Intangible assets, net of accumulated amortization | 4,410,947 | ||
Property and equipment, net of accumulated depreciation | |||
Operating leases right-of-use assets, net | |||
Investment in undivided interest in real estate | |||
Total assets | 4,410,947 | ||
Current Liabilities: | |||
Bank overdraft | |||
Accounts payable and accrued expenses | |||
Accounts payable to related party | |||
Notes payable - stockholder | |||
Current portion of convertible notes payable, net of discounts | |||
Note payable, other & related party | |||
Customer deposits | |||
Other current liabilities | |||
Current portion of note payable- undivided interest in real estate | |||
Derivative liabilities | |||
Operating lease liabilities, current portion | |||
Total current liabilities | |||
EIDL loan | |||
Long term portion of note payable- undivided interest in real estate | |||
PPP loan | |||
Other long-term liabilities | |||
Long-term loan | |||
Operating lease liabilities, Less current portion | |||
Total liabilities | |||
Stockholders' Deficit: | |||
Members' Capital | (4,112,476) | ||
Series A preferred stock, par value $0.0001, -0- (2020) | |||
Series B preferred stock, par value $0.0001, 900,000 (2020) shares authorized, and 900,000 (2020) shares issued and outstanding | |||
Common stock, $0.0001 par value; 14,975,000,000 (2020) shares authorized and 3,628,422,042 (2020) shares issued and outstanding | 59,121 | ||
Common stock to be issued, $0.0001 par value, 2,412,671 (2020) shares | |||
Additional paid-in capital | 8,454,302 | ||
Accumulated deficit | |||
Total stockholders' deficit | 4,400,947 | ||
Total Liabilities and Shareholder Equity | 4,400,947 | ||
Revenues: | |||
Total revenues | |||
Cost of sales | |||
Cost of sales, other | |||
Total cost of sales | |||
Gross profit | |||
Operating Expenses: | |||
Compensation and benefits | |||
Advertising and promotion | |||
R&D expense | |||
Professional fees | |||
Rent, including related party | |||
Investor relations | |||
Depreciation and Amortization expense | |||
Other general and administrative | |||
Total operating expenses | |||
Loss from operations | |||
Other Income (Expense): | |||
Derivative income (loss) | |||
Gain (loss) on equity investment | |||
Amortization of debt discount | |||
Gain/Loss on debt extinguishment | |||
Gain/Loss on lease termination | |||
Other income (expenses) | |||
Loss on intangibles | |||
Gain/Loss on assets disposal | |||
Interest expense and finance charges | |||
Total other income (expense), net | |||
Loss before income tax | |||
Net loss for the period ended December 31, 2020 | |||
Pro Forma [Member] | |||
Current Assets: | |||
Cash | 181,183 | ||
Accounts receivable, allowance for doubtful accounts | 1,844,471 | ||
Employee advances | 3,000 | ||
Prepaid assets | 103,190 | ||
Inventory | 2,247,080 | ||
Total current assets | 4,378,925 | ||
Security deposits | 4,863 | ||
Domain name | 3,000 | ||
Other assets | 63,260 | ||
Intangible assets, net of accumulated amortization | 4,410,947 | ||
Property and equipment, net of accumulated depreciation | 139,180 | ||
Operating leases right-of-use assets, net | 364,062 | ||
Investment in undivided interest in real estate | 1,227,733 | ||
Total assets | 10,591,970 | ||
Current Liabilities: | |||
Bank overdraft | 269 | ||
Accounts payable and accrued expenses | 7,669,863 | ||
Accounts payable to related party | 662,178 | ||
Notes payable - stockholder | 95,800 | ||
Current portion of convertible notes payable, net of discounts | 3,255,598 | ||
Note payable, other & related party | 118,786 | ||
Customer deposits | 10,925 | ||
Other current liabilities | |||
Current portion of note payable- undivided interest in real estate | 22,150 | ||
Derivative liabilities | 4,046,401 | ||
Operating lease liabilities, current portion | 365,587 | ||
Total current liabilities | 16,247,557 | ||
EIDL loan | 150,000 | ||
Long term portion of note payable- undivided interest in real estate | 938,003 | ||
PPP loan | 262,445 | ||
Other long-term liabilities | 11,528 | ||
Long-term loan | 1,844,020 | ||
Operating lease liabilities, Less current portion | 416,788 | ||
Total liabilities | 19,870,341 | ||
Stockholders' Deficit: | |||
Members' Capital | |||
Series A preferred stock, par value $0.0001, -0- (2020) | 90 | ||
Series B preferred stock, par value $0.0001, 900,000 (2020) shares authorized, and 900,000 (2020) shares issued and outstanding | |||
Common stock, $0.0001 par value; 14,975,000,000 (2020) shares authorized and 3,628,422,042 (2020) shares issued and outstanding | 421,967 | ||
Common stock to be issued, $0.0001 par value, 2,412,671 (2020) shares | 242 | ||
Additional paid-in capital | 16,988,364 | ||
Accumulated deficit | (26,699,034) | ||
Total stockholders' deficit | (9,288,371) | ||
Total Liabilities and Shareholder Equity | 10,581,970 | ||
Revenues: | |||
Total revenues | 15,919,513 | ||
Cost of sales | |||
Cost of sales, other | 7,849,856 | ||
Total cost of sales | 7,849,856 | ||
Gross profit | 8,069,657 | ||
Operating Expenses: | |||
Compensation and benefits | 1,045,465 | ||
Advertising and promotion | 6,913,201 | ||
R&D expense | 276,926 | ||
Professional fees | 307,644 | ||
Rent, including related party | 323,008 | ||
Investor relations | 14,796 | ||
Depreciation and Amortization expense | 233,341 | ||
Other general and administrative | 834,983 | ||
Total operating expenses | 9,949,362 | ||
Loss from operations | (1,879,706) | ||
Other Income (Expense): | |||
Derivative income (loss) | (1,066,904) | ||
Gain (loss) on equity investment | 37,535 | ||
Amortization of debt discount | (1,222,965) | ||
Gain/Loss on debt extinguishment | 6,000 | ||
Gain/Loss on lease termination | (201,283) | ||
Other income (expenses) | 181 | ||
Loss on intangibles | (775,000) | ||
Gain/Loss on assets disposal | (59,093) | ||
Interest expense and finance charges | (937,801) | ||
Total other income (expense), net | (4,219,329) | ||
Loss before income tax | (6,099,035) | ||
Income tax provision | |||
Net loss for the period ended December 31, 2020 | $ (6,099,035) | ||
Basic and diluted income (loss) per share | $ 0 | ||
Basic and diluted | 2,769,472,382 |