Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 23, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | TEO Foods Inc. | |
Entity Central Index Key | 0001612188 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity an Emerging Growth Company? | true | |
Is Entity a Small Business? | true | |
Entity Ex Transition Period | false | |
Is Entity's Reporting Status Current? | Yes | |
Entity Shell Company | false | |
Entity File Number | 333-226801 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | NV | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 12,622,245 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and Cash Equivalents | $ 110,169 | $ 194,864 |
Accounts receivables, net | 68,872 | 10,463 |
License and royalty income receivable | 5,649 | 0 |
Inventories, net | 35,373 | 164,229 |
Related party receivables , net | 16,788 | 0 |
Taxes receivable, net | 364,115 | 446,972 |
Prepaid and Other Assets | 12,338 | 67,749 |
Total Current Assets | 613,304 | 884,277 |
Property and equipment , net | 37,361 | 87,117 |
Royalty Agreement | 31,929 | 0 |
Total assets | 682,594 | 971,394 |
Current liabilities | ||
Accounts payable and accrued expenses | 878,035 | 828,755 |
Related Party Payables | 274 | 274 |
License Fee Payable - Related Party | 648,000 | 693,000 |
Notes Payable | 100,000 | 100,000 |
Convertible notes payable - current portion | 220,000 | 220,000 |
Total Current Liabilities | 1,846,309 | 1,842,029 |
TOTAL LIABILITIES | 1,846,309 | 1,842,029 |
Stockholders' deficit | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 9,022,900 shares issued and outstanding | 9,023 | 9,023 |
Common stock , $0.001 par value, 490,000,000 shares authorized, 12,622,245 issued and outstanding, respectively | 12,623 | 12,623 |
Additional paid-in capital | 277,229 | 277,229 |
Accumulated Deficit | (1,660,475) | (1,285,459) |
Other Comprehensive Income | 197,885 | 115,949 |
Total stockholders' deficit | (1,163,715) | (870,635) |
Total liabilities and stockholders' deficit | $ 682,594 | $ 971,394 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Stockholders' equity (deficit): | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock shares, authorized | 10,000,000 | 10,000,000 |
Preferred stock shares, issued | 9,022,900 | 9,022,900 |
Preferred stock shares, outstanding | 9,022,900 | 9,022,900 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock shares, authorized | 490,000,000 | 490,000,000 |
Common stock shares, issued | 12,622,245 | 12,622,245 |
Common stock shares, outstanding | 12,622,245 | 12,622,245 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Unaudited Statements Of Operations | ||||
Sales | $ 28,625 | $ 472,473 | $ 322,695 | $ 1,771,889 |
Cost of Sales | (32,420) | (437,113) | (281,415) | (1,467,209) |
Gross profit | (3,795) | 35,360 | 41,280 | 304,680 |
Operating expenses | ||||
Payroll | 36,494 | 102,180 | 175,833 | 380,206 |
General and administrative expenses | 50,366 | 70,666 | 103,918 | 295,178 |
Rent and Lease | 20,226 | 23,827 | 61,622 | 79,624 |
Professional Fees | 18,725 | 25,695 | 51,480 | 92,852 |
Advertising and Marketing | 38 | (5,226) | 1,507 | 40,191 |
Depreciation | 2,450 | 5,474 | 9,769 | 14,403 |
Total Operating Expenses | 128,299 | 222,616 | 404,129 | 902,454 |
Operating loss | (132,094) | (187,256) | (362,849) | (597,774) |
Other Income (Expense) | ||||
Licensing and royalty income | 5,630 | 0 | 13,432 | 0 |
Interest income | 84 | 0 | 238 | 0 |
Interest expense | (6,483) | (5,066) | (19,363) | (52,389) |
Gain on bargain purchase | 0 | 0 | 0 | 222,217 |
Other income (expense) | (1,714) | (86,371) | (14,474) | 161,631 |
Total other income (expense) | (2,483) | (91,437) | (20,167) | 331,459 |
Net income (loss) before income taxes | (134,577) | (278,693) | (383,016) | (266,315) |
Income tax expense | 0 | 0 | 0 | (26,230) |
Net income (loss) | (134,577) | (278,693) | (383,016) | (292,545) |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustments | (33,869) | 84,262 | 81,936 | 138,842 |
Comprehensive income (loss) | $ (168,446) | $ (194,431) | $ (301,080) | $ (153,703) |
Earnings (loss) per common share - Basic | $ (0.011) | $ (0.013) | $ (0.030) | $ (0.015) |
Earnings (loss) per common share - Diluted | $ .00 | $ .00 | $ .00 | $ .00 |
Weighted average number common shares outstanding - basic | 12,622,245 | 21,622,245 | 12,622,245 | 19,972,337 |
Weighted average number common shares outstanding - diluted | 0 | 0 | 0 | 0 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (383,016) | $ (292,545) |
Adjustments to reconcile net loss to net | ||
Deprecation expense | 9,769 | 14,403 |
Provision for bad debt | (162,903) | 0 |
Gain on bargain purchase | 0 | (222,217) |
Change in Operating Assets and Liabilities: | ||
Accounts receivable | 123,784 | 129,665 |
Royalty and licensing income receivable | (5,649) | 0 |
Receivable from related parties | (16,788) | (68,180) |
Inventories | 128,856 | 159,884 |
Tax receivables | 82,856 | (278,382) |
Prepaid and other assets | 55,411 | (20,520) |
Accounts payable and accrued expenses | 49,280 | 654,777 |
Deferred tax liability | 0 | 26,230 |
Net cash provided (used) in operating activities | (118,400) | 103,115 |
Cash flows from investing activities | ||
Cash received in Targa acquisition | 0 | 6,504 |
Purchase of property and equipment | (3,231) | (32,309) |
Net cash provided (used) in investing activities | (3,231) | (25,805) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock | 0 | 7,500 |
Proceeds from convertible notes payable | 0 | 120,000 |
Principal reduction in convertible notes payable | 0 | (50,000) |
Payment of deemed dividend to TEO Inc. for license | (45,000) | (159,000) |
Net cash (used) in financing activities | (45,000) | (81,500) |
Effect of foreign currency exchange translation | 81,936 | 138,842 |
Net decrease for period | (84,695) | 134,652 |
Cash at beginning of period | 194,864 | 2,139 |
Cash at end of period | 110,169 | 136,791 |
Disclosure of non-cash investment and finance activities | ||
Elimination of convertible notes by offset against notes receivables | 0 | 739,110 |
Conversion of preferred shares into common | 0 | 360,824 |
Property and equipment exchanged for royalty agreement | $ 31,929 | $ 0 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (Unaudited) - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Comprehensive Gain( loss) | Total |
Beginning Balance, Shares at Dec. 31, 2018 | 9,022,900 | 10,334,745 | ||||
Beginning Balance, Value at Dec. 31, 2018 | $ 9,023 | $ 10,335 | $ 47,017 | $ (1,030,694) | $ (964,319) | |
Stock issued in Targa acquisition, Shares | 2,250,000 | |||||
Stock issued in Targa acquisition, Value | $ 2,250 | 222,750 | 225,000 | |||
Stock Issued for Cash, Shares | 37,500 | |||||
Stock Issued for Cash, Value | $ 38 | 7,462 | 7,500 | |||
Foreign Currency Translation Adjustments | 29,330 | 29,330 | ||||
Net loss | 98,673 | 98,673 | ||||
Ending Balance, Shares at Mar. 31, 2019 | 9,022,900 | 12,622,245 | ||||
Ending Balance, Value at Mar. 31, 2019 | $ 9,023 | $ 12,623 | 277,229 | (932,021) | 29,330 | (603,816) |
Foreign Currency Translation Adjustments | 25,350 | 25,350 | ||||
Net loss | (112,525) | (112,525) | ||||
Ending Balance, Shares at Jun. 30, 2019 | 9,022,900 | 12,622,245 | ||||
Ending Balance, Value at Jun. 30, 2019 | $ 9,023 | $ 12,623 | 277,229 | (1,044,546) | 54,680 | (690,991) |
Foreign Currency Translation Adjustments | 84,162 | 84,162 | ||||
Net loss | (278,693) | (278,693) | ||||
Ending Balance, Shares at Sep. 30, 2019 | 9,022,900 | 12,622,245 | ||||
Ending Balance, Value at Sep. 30, 2019 | $ 9,023 | $ 12,623 | 277,229 | (1,323,239) | 138,842 | (885,522) |
Beginning Balance, Shares at Dec. 31, 2019 | 9,022,900 | 12,622,245 | ||||
Beginning Balance, Value at Dec. 31, 2019 | $ 9,023 | $ 12,623 | 277,229 | (1,285,459) | 115,949 | (870,635) |
Foreign Currency Translation Adjustments | (25,751) | (25,751) | ||||
Net loss | (146,150) | (146,150) | ||||
Ending Balance, Shares at Mar. 31, 2020 | 9,022,900 | 12,622,245 | ||||
Ending Balance, Value at Mar. 31, 2020 | $ 9,023 | $ 12,623 | 277,229 | (1,431,609) | 90,198 | (1,042,536) |
Foreign Currency Translation Adjustments | 141,556 | 141,556 | ||||
Net loss | (94,289) | (94,289) | ||||
Ending Balance, Shares at Jun. 30, 2020 | 9,022,900 | 12,622,245 | ||||
Ending Balance, Value at Jun. 30, 2020 | $ 9,023 | $ 12,623 | 277,229 | (1,525,898) | 231,754 | (995,269) |
Foreign Currency Translation Adjustments | (33,869) | (33,869) | ||||
Net loss | (134,577) | (134,577) | ||||
Ending Balance, Shares at Sep. 30, 2020 | 9,022,900 | 12,622,245 | ||||
Ending Balance, Value at Sep. 30, 2020 | $ 9,023 | $ 12,623 | $ 277,229 | $ (1,660,475) | $ 197,885 | $ (1,163,715) |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION TEO Foods Inc. (“Company”) was incorporated in the state of Nevada on December 27, 2012. On December 29, 2017, the Company filed an amendment to its articles of incorporation increasing its authorized capital to a total of 500,000,000 shares consisting of 490,000,000 shares designated as Common Stock, par value $0.001 per share, and 10,000,000 shares designated as Preferred Stock, par value $0.001 per share. The Company’s principal activity is to produce and sell food packaged products for retail sale in the frozen, refrigerated and shelf stable categories. The Company has a license to use the TEO name and logo on food products it sells and to apply the TEO pasteurization/sterilization processes to its products for improved shelf life and safety. Effective January 1, 2019, the Company executed a Stock Purchase Agreement (“SPA”) with NERYS USA Inc. (“Nerys USA”). The Company issued the closing payments as described in Note 4. Pursuant to the terms of the SPA, Commercial Targa S.A. de C.V. (“Targa”) became a wholly owned subsidiary of the Company. In January 2020, the Company created BC TEO Foods S.A. de C.V. (“BC TEO Foods”), a new 100% owned subsidiary in Mexico. The Company is in the process of setting up new production facilities to be operated by this subsidiary. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to form 10-Q and Article 8 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. Notes to the unaudited consolidated financial statements that would substantially duplicate the disclosure contained in the audited consolidated financial statements for the fiscal year ending December 31, 2019 have been omitted. These interim consolidated financial statements are condensed and should be read in conjunction with audited consolidated financial statements and the footnotes thereto for the fiscal year ended December 31, 2019 included in the Company’s 10-K as filed with the Securities and Exchange commission on May 29, 2020. The Company consolidates the financial statements of its wholly-owned subsidiaries and all intercompany transactions and account balances have been eliminated in consolidation. All amounts referred to in the notes to the consolidated financial statements are in United States Dollars ($) unless stated otherwise. Cash and Cash Equivalents The Company considers all highly liquid debt instruments and other short-term investments with a maturity date of three months or less, when purchased, to be cash equivalents. Foreign Currency Translation The Company subsidiary’s primary functional currency is the Mexican peso, but it’s reporting currency is the U.S. dollar. The balance sheet accounts are translated at exchange rates in effect at the end of the period and income statement accounts are translated at average exchange rates for the period. Translation gains and losses are included as a separate component of stockholders’ deficit. Accounts Receivable Accounts receivable are reported at the customers’ outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. The allowance for doubtful accounts at September 30, 2020 and December 31, 2019 were $363,765 and $475,287, respectively. Inventory and Cost of Sales Inventories are stated at the lower of cost or realizable value, using the average cost method. When an impairment indicator suggests that the carrying amounts of inventories might not be recoverable, the Company reviews such carrying amounts and estimates the net realizable value based on the most reliable evidence available at that time. An impairment loss is recorded if the net realizable value is less than the carrying value. Impairment indicators considered for these purposes are, among others, obsolescence, decrease in market prices, damage and a firm commitment to sell. Property and Equipment Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income. Impairment of Long-Lived and Intangible Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluate whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the Company uses market quotes, if available, or an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether or not the asset values are recoverable. The Company did not recognize impairment on its long-lived assets during the periods ended September 30, 2020 or 2019. Identified intangible assets are reviewed for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company’s only intangible asset consist of the royalty agreement discussed in Note 8. Beneficial Conversion Feature of Convertible Notes Payable The Company considers whether a beneficial conversion feature ("BCF") exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note. The BCF of a convertible note is a reduction of the carrying amount of the convertible note, as a debt discount, and is credited to additional paid-in-capital. Such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense. A contingent beneficial conversion feature in a convertible note payable with conversion terms that change upon the occurrence of a future event (ex: fair value of the underlying stock declines after the note issuance date) is recognized when the contingency is resolved. As of September 30, 2020, the Company has not recognized any beneficial conversion features on its convertible debt. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“Topic 606”). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the company expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount: i. Identification of the promised goods in the contract; ii. Determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; iii. Measurement of the transaction price, including the constraint of variable consideration; iv. Allocation of the transaction price of the performance obligations; and v. Recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer. Once a contract is determined to be within the scope of Topic 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligations when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time typically upon delivery. The Company primarily sells packaged food products to its customers. The Company’s performance obligation is satisfied when the goods have been delivered, which is at a point in time. Use of Estimates The preparation of financial statements in conformity with GAAP 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 amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Fair Value of Financial Instruments Fair value is defined as the price that would be received in the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has categorized all investments recorded at fair value based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: ● Level 1: Quoted prices in active markets for identical assets or liabilities that the organization has the ability to access at the reporting date. ● Level 2: Inputs other than quoted prices included in Level 1, which are either observable or that can be derived from or corroborated by observable data as of the reporting date. ● Level 3: Inputs include those that are significant to the fair value of the asset or liability and are generally less observable from objective resources and reflect the reporting entity's assumptions about the assumptions market participants would use in pricing the asset or liability. The Company's financial instruments consist of advances from related party, notes payable, convertible notes payable and license fee payable. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of the respective instruments. Loss Per Share of Common Stock Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. The calculation of diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Securities with anti-dilutive effects on net earnings (loss) per share are excluded. As of September 30, 2020, none of the convertible preferred shares or convertible debt were included in the calculation of diluted weighted average shares as they were anti-dilutive. As of September 30, 2020, preferred shares convertible to 90,229,000 common shares were included in the diluted weighted average shares; however, notes convertible into a maximum of 4,710,000 common shares were excluded from the calculation of loss per common share as the notes are anti-dilutive. Accounting Pronouncements Recently Adopted and Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “ Leases |
GOING CONCERN
GOING CONCERN | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | NOTE 3 – GOING CONCERN These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has suffered recurring losses from operations and has insufficient working capital as of September 30, 2020 to develop its business plan and meet its obligation of the next 12 months. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders, the Company's ability to obtain necessary equity or debt financing to continue operations, and ultimately the Company's ability to generate profit from sales of packaged food products. These consolidated financial statements do not include any adjustments to classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company plans to obtain funds for operations through continued financial support from its stockholders, debt and private offerings of its equity. |
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
STOCK PURCHASE AGREEMENT | NOTE 4 – STOCK PURCHASE AGREEMENT On July 30, 2018, the Company entered into a SPA with NERYS USA Inc. to purchase all of the issued and outstanding equity of Commercial Targa S.A. de C.V. ("Targa"). The Company acquired Targa to expand its operations with the sale of packaged food products. Effective January 1, 2019, the transaction closed with an adjusted purchase price consisting of $160,000 in cash, $220,000 and $552,000 in secured convertible promissory notes and 11,250,000 common shares valued at $.10 per share. In addition, an earn-out provision was added which, if certain conditions are met, would require an additional secured convertible promissory note of $310,000 and the issuance of an additional 3,750,000 common shares. In May of 2019, the SPA was amended resulting in the earn-out provision being eliminated, the $220,000 (which had a principal balance remaining of $170,000) and $552,000 secured convertible notes payable, plus accrued interest, issued as part of the purchase price being assigned to Targa in exchange for an equal reduction of amounts owed to Targa by Nerys USA. In addition, Nerys USA assumed and settled an account payable balance due from Targa against amounts Targa owed to Nerys USA. The assignment of the Nerys notes to Targa resulted in a $722,000 reduction in the convertible notes payable and reduction in liabilities for the accrued interest transferred of $17,110. This also resulted in an equal reduction of $739,110 of Related Party Receivable and Notes Receivable due to Targa from Nerys USA. In addition, $360,824 of Related Party Payables to Nerys USA were offset against Related Party Receivables from Nerys USA to Targa. The Company entered into a Release Back Agreement effective December 31, 2019, whereby certain brands acquired pursuant to the SPA with NERYS USA were transferred back in exchange for cancellation of nine million common shares the Company originally issued pursuant to the SPA currently held by the transferee. Due to the state of operations of Targa, along with the economic impact of U.S. tariffs, the Company believes it has acquired Targa for less than the estimated fair value of its net assets. In accordance with ASC 805, Business Combinations, the Company has conducted an evaluation to determine the fair value of Targa’s identifiable assets acquired and based on that evaluation the estimated fair value was $2,515,364 ($6,504 in cash, $1,992,112 in receivables, $382,237 in inventory, $21,833 in prepaid and other assets and $112,678 in property and equipment). This evaluation includes allowances for obsolete inventory, related party receivables that have become doubtful, non-related party receivables that have become doubtful, and tax credits that have become doubtful. The Company did not assign additional value on customer relationships and know-how. Evaluation of the relationships indicated that they were in jeopardy at the time of acquisition and post-acquisition operations were necessary to stabilize existing placements. Evaluation of know-how existing at the time of acquisition did not identify any unique or proprietary processes. The identifiable liabilities were $1,125,835 ($637,754 in accounts payable and accrued expenses and $488,081 in related party payables), resulting in a net value of $1,389,529. The purchase price was modified by subsequent amendments and the resulting consideration had an estimated fair value of $1,157,000. The resulting consideration consisted of cash, promissory notes and common shares. The Company has recorded a bargain purchase gain on the acquisition of Targa totaling $232,529, which is included in other income (expense) on the consolidated statements of operations and comprehensive income. The Company has reviewed its procedures used to identify and measure the assets acquired, the liabilities assumed and the consideration transferred and concluded that the procedures followed and the resulting measurements were appropriate. The Company also performed a review and determined that the business combination did not include any transactions that should be accounted for separately from the business combination. |
INVENTORY
INVENTORY | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 5 – INVENTORY Inventories consists of raw materials and finished goods located in the Company’s warehouse in Tijuana, Mexico. At September 30, 2020 and December 31, 2019 Inventories were $35,373 and $164,229, respectively, which includes an allowance of approximately $0 and $111,320 for obsolescence and shrinkage as of September 30, 2020 and December 31, 2019, respectively. |
TAX RECEIVABLES
TAX RECEIVABLES | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
TAX RECEIVABLES | NOTE 6 – TAX RECEIVABLES Tax Receivables represent credits from the Mexican taxing authority. Targa has accumulated IVA tax payments that exceeded its IVA tax liabilities over the past several years. The Company has applied for refunds of these accumulated overpayments and began receiving the first refunds in September of 2019. The net tax receivable balance at September 30, 2020 and December 31, 2019 of $364,115 and $446,972, respectively is net of a reserve for the possible uncollectable portion of the tax credits totaling $136,164 and $175,599, respectively. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 7 – PROPERTY AND EQUIPMENT At September 30, 2020 and December 31, 2019, property and equipment consisted of the following: 2020 2019 Furniture and fixtures $ 356 $ 1,810 Machinery and equipment 56,474 65,709 Transportation equipment 12,953 39,274 69,783 106,793 Less accumulated depreciation (32,422 ) (19,676 $ 37,361 $ 87,117 Depreciation expense for the three months ended September 30, 2020 and 2019 was $2,450 and $5,474, respectively. The estimated useful lives of fixed assets range from 3 to 10 years. |
ROYALTY AND LICENSE AGREEMENT
ROYALTY AND LICENSE AGREEMENT | 9 Months Ended |
Sep. 30, 2020 | |
Research and Development [Abstract] | |
ROYALTY AND LICENSE AGREEMENT | NOTE 8 – ROYALTY AND LICENSE AGREEMENT On September 30, 2017, the Company entered into a Master Agreement with TEO Inc. ("TEO"). TEO is the founder and majority controlling shareholder of the Company. The Master Agreement provides the Company a license to use the TEO name and logo on food products it sells and to apply TEO's pasteurization/sterilization processes to its products for improved shelf life and safety. Additional provisions provide the Company production rights to TEO's pasteurizer/sterilizer and rights to lease its own system when certain sales/production increase. Pursuant to the master agreement, the Company agreed to pay an initial $1 million fee in installments with $100,000 due on September 30, 2018, $300,000 due on December 31, 2018 and the remaining $600,000 due in 12 equal monthly payments with the first payment due on January 31, 2019. TEO Inc. has agreed to maintain the license through December 31, 2019 and accrue and accept payments due as funds are available. Commencing January 1, 2020, a use/royalty and service fee of 5.5% of the Company's gross revenue for food sales processed using TEO's intellectual property is payable quarterly. The ongoing licensing is maintained by meeting minimum annual use/royalty and service fees. The Company may pay for the difference between the actual use and the minimum to maintain the license. The annual minimum is listed as follows: Year Minimum Service Fee 2020 $ 500,000 2021 750,000 2022 1,000,000 Thereafter Increase 10% per year As a result of TEO being the majority shareholder of the Company and TEO's basis in the license being $0, the Company recorded a deemed dividend of $1 million for the initial fee payable to TEO. As of September 30, 2020, and December 31, 2019, the outstanding balance of the license fee payable was $648,000 and $693,000, respectively. For the nine months ended September 30, 2020 and 2019, the Company made payments toward the license of $45,000 and $48,000, respectively. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 9 – NOTES PAYABLES On July 31, 2018, the Company issued a note for $100,000 in principal bearing interest at 8% maturing on October 31, 2018. This note was subsequently amended to extend the maturity date to December 31, 2020. As of September 30, 2020, and December 31, 2019, the outstanding principal balance of the note was $100,000. On December 10, 2018, the Company issued a note for $34,000 in principal bearing interest at 8% maturing on June 10, 2019. This note was subsequently amended to extend the maturity date to December 31, 2019. The note and accrued interest were fully paid in 2019. Interest charged to operations for the nine months ended September 30, 2020 and 2019 totaled $6,000 and $8,040, respectively. Accrued interest at September 30, 2020 and December 31, 2019 which is included in the balance of accounts payable and accrued expenses totaled $14,679 and $8,679, respectively. Convertible Note Payable On June 28, 2018, the Company issued a note for $100,000. The note is for a two-year term and bears an 8% interest rate, due at maturity. The note is convertible into common shares at a 20% discount to the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share. On November 20, 2018 the Company issued a note for $220,000. The note was for a two-year term and bore an 8% interest rate, due at maturity. The note was convertible into common shares at a 20% discount to the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share. In February of 2019, the Company made a payment on the principal of $50,000 and in May of 2019, the note was settled (see Note 4). On January 31, 2019 the Company issued a note for $552,000. The note was for a two-year term and bore an 8% interest rate, due at maturity. The note was convertible into common shares at a 20% discount to the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share. In May of 2019, the note was settled (see Note 4). On February 4, 2019, the Company entered into a purchase agreement with one investor for the purchase of up to an aggregate of $350,000 in convertible notes payable in three payments commencing with the first in the amount of $120,000 on February 4, 2019, the second on April 1, 2019 in the amount of $110,000 and the third on June 1, 2019 in the amount of $120,000. The investor did not make the second purchase on April 1, 2019 or the third purchase on June 1, 2019. The purchase provisions of the agreement have expired with only the first purchase executed. The $120,000 note purchased in February can be converted to common stock at $0.20 per share or the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share and converts automatically upon certain conditions. The note bears no interest until September 30, 2019 and then bears 8% interest, if not converted to common stock. The note matures on September 30, 2020. As of September 30, 2020 and 2019, there is not a quoted bid price available as the Company’s shares are not listed on any exchanges. As the minimum conversion rate at the time of issuance is greater than or equal to the current stock value based on other similar transactions, these notes are not deemed to have an embedded derivative associated with them. The principal balance of convertible debt at September 30, 2020 and December 31, 2019 amounted to $220,000 which matured on June 30, 2020. Interest charged to operations for the nine months ended September 30, 2020 and 2019 totaled $13,200 and $17,483, respectively. Accrued interest at September 30, 2020 and December 31, 2019, which is included in the balance of accounts payable and accrued expenses, totaled $30,116 and $16,916, respectively. |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
EQUITY | NOTE 10 – EQUITY Preferred Stock Each share of Class A Preferred Stock may be converted by the holder upon request of the holder into 10 shares of common stock. Each holder is entitled to 100 votes for each share of Class A Preferred Stock held on the record date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company (and written actions of stockholders in lieu of meetings) with respect to any and all matters presented to the stockholders of the Company for their action or consideration. The holders are entitled to dividends, if any, as declared by the Company and participate pari passu with the common stock of the Company at the conversion rate. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 11 - INCOME TAXES Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards 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. The U.S. federal income tax rate is 21%. The provision for Federal income tax consists of the following September 30, 2020 and 2019: Federal income tax (expense) benefit attributable to: September 30, 2020 September 30, 2019 Current Operations $ 80,433 $ (55,926 ) Less: valuation allowance (80,433 ) 55,926 Net provision for Federal income taxes $ — $ — The cumulative tax effect at the expected rate of 21% of significant items comprising our net deferred tax amount is as follows: Deferred tax asset attributable to: September 30, 2020 December 31, 2019 Net operating loss carryover $ 104,870 $ 24,436 Less: valuation allowance (104,870 ) (24,436 ) Net deferred tax asset $ — $ — At September 30, 2020, the Company had net operating loss carry forwards of approximately $499,379 that may be offset against future taxable income. No tax benefit has been reported in the September 30, 2020 or December 31, 2019 consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years. ASC 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. ASC 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than- not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of September 30, 2020 and 2019, the Company had no accrued interest or penalties related to uncertain tax positions. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 - RELATED PARTY TRANSACTIONS The Company has various related party receivables and payables derived from normal operating activities. These balances are non-interest bearing and are periodically settled as cash flow permits. In addition, at September 30, 2020 and December 31, 2019, the Company had revolving receivables from related parties of $398,840 and $356,798, respectively. The Company established a reserve for uncollectable related party trade receivables September 30, 2020 and December 31, 2019 of $398,840 and $356,798, respectively. As of September 30, 2020 and December 31, 2019, the Company had notes receivable from related parties of $264,029 and $555,116, respectively. The Company established a reserve for uncollectable related party notes receivables as of September 30, 2020 and December 31, 2019 of $264,029 and $555,116, respectively. Master License Agreement On September 30, 2017, the Company entered into a Master Agreement with TEO, the founder and majority controlling shareholder of the Company. See Note 8. |
ROYALTY AND LICENSE AGREEMENTS
ROYALTY AND LICENSE AGREEMENTS | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
ROYALTY AND LICENSE AGREEMENT | NOTE 13 –ROYALTY AND LICENSE AGREEMENT Effective April 1, 2020, the Company entered into an agreement whereby it assigned half and licensed half of the Nerys Brand for cheese products in Mexico, along with certain production equipment and facilities that the Company did not intend to transfer to its new facility for production, to a third party. In exchange, the Company receives a portion of net revenue from all products sold, which includes bulk meats and other products, by the acquirer, a royalty on all NERYS cheese products sold in Mexico of $0.01 per pound and will also receive five percent of the proceeds of any sale of the related acquirer’s business. As of September 30, 2020, the Company has received a total of $13,431 in licensing and royalty revenue from this agreement. The Company valued the royalty agreement at the book value of the assets transferred of $31,929, which approximates the fair value and is recorded as an intangible asset on the balance sheet. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 14 – COMMITMENTS AND CONTINGENCIES During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with FASB ASC 450-20-50, Contingencies |
CONCENTRATIONS
CONCENTRATIONS | 9 Months Ended |
Sep. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | NOTE 15 – CONCENTRATIONS Cash Deposit The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At September 30, 2020 and December 31, 2019, no cash balances exceeded the federally insured limit. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 16 - SUBSEQUENT EVENTS The Company has evaluated subsequent events for recognition and disclosure through November 23, 2020 which is the date the financial statements were available to be issued. No other matters were identified affecting the accompanying consolidated financial statements and related disclosures. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to form 10-Q and Article 8 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. Notes to the unaudited consolidated financial statements that would substantially duplicate the disclosure contained in the audited consolidated financial statements for the fiscal year ending December 31, 2019 have been omitted. These interim consolidated financial statements are condensed and should be read in conjunction with audited consolidated financial statements and the footnotes thereto for the fiscal year ended December 31, 2019 included in the Company’s 10-K as filed with the Securities and Exchange commission on May 29, 2020. The Company consolidates the financial statements of its wholly-owned subsidiaries and all intercompany transactions and account balances have been eliminated in consolidation. All amounts referred to in the notes to the consolidated financial statements are in United States Dollars ($) unless stated otherwise. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid debt instruments and other short-term investments with a maturity date of three months or less, when purchased, to be cash equivalents. |
Foreign Currency Translation | Foreign Currency Translation The Company subsidiary’s primary functional currency is the Mexican peso, but it’s reporting currency is the U.S. dollar. The balance sheet accounts are translated at exchange rates in effect at the end of the period and income statement accounts are translated at average exchange rates for the period. Translation gains and losses are included as a separate component of stockholders’ deficit. |
Accounts Receivable | Accounts Receivable Accounts receivable are reported at the customers’ outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. The allowance for doubtful accounts at September 30, 2020 and December 31, 2019 were $363,765 and $475,287, respectively. |
Inventory and Cost of Sales | Inventory and Cost of Sales Inventories are stated at the lower of cost or realizable value, using the average cost method. When an impairment indicator suggests that the carrying amounts of inventories might not be recoverable, the Company reviews such carrying amounts and estimates the net realizable value based on the most reliable evidence available at that time. An impairment loss is recorded if the net realizable value is less than the carrying value. Impairment indicators considered for these purposes are, among others, obsolescence, decrease in market prices, damage and a firm commitment to sell. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income. |
Impairment of Long-Lived and Intangible Assets | Impairment of Long-Lived and Intangible Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluate whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the Company uses market quotes, if available, or an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether or not the asset values are recoverable. The Company did not recognize impairment on its long-lived assets during the periods ended September 30, 2020 or 2019. Identified intangible assets are reviewed for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company’s only intangible asset consist of the royalty agreement discussed in Note 8. |
Beneficial Conversion Feature of Convertible Notes Payable | Beneficial Conversion Feature of Convertible Notes Payable The Company considers whether a beneficial conversion feature ("BCF") exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note. The BCF of a convertible note is a reduction of the carrying amount of the convertible note, as a debt discount, and is credited to additional paid-in-capital. Such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense. A contingent beneficial conversion feature in a convertible note payable with conversion terms that change upon the occurrence of a future event (ex: fair value of the underlying stock declines after the note issuance date) is recognized when the contingency is resolved. As of September 30, 2020, the Company has not recognized any beneficial conversion features on its convertible debt. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“Topic 606”). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the company expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount: i. Identification of the promised goods in the contract; ii. Determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; iii. Measurement of the transaction price, including the constraint of variable consideration; iv. Allocation of the transaction price of the performance obligations; and v. Recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer. Once a contract is determined to be within the scope of Topic 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligations when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time typically upon delivery. The Company primarily sells packaged food products to its customers. The Company’s performance obligation is satisfied when the goods have been delivered, which is at a point in time. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP 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 amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received in the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has categorized all investments recorded at fair value based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: ● Level 1: Quoted prices in active markets for identical assets or liabilities that the organization has the ability to access at the reporting date. ● Level 2: Inputs other than quoted prices included in Level 1, which are either observable or that can be derived from or corroborated by observable data as of the reporting date. ● Level 3: Inputs include those that are significant to the fair value of the asset or liability and are generally less observable from objective resources and reflect the reporting entity's assumptions about the assumptions market participants would use in pricing the asset or liability. The Company's financial instruments consist of advances from related party, notes payable, convertible notes payable and license fee payable. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of the respective instruments. |
Loss Per Share of Common Stock | Loss Per Share of Common Stock Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. The calculation of diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Securities with anti-dilutive effects on net earnings (loss) per share are excluded. As of September 30, 2020, none of the convertible preferred shares or convertible debt were included in the calculation of diluted weighted average shares as they were anti-dilutive. As of September 30, 2020, preferred shares convertible to 90,229,000 common shares were included in the diluted weighted average shares; however, notes convertible into a maximum of 4,710,000 common shares were excluded from the calculation of loss per common share as the notes are anti-dilutive. |
Accounting Pronouncements Recently Adopted and Recent Accounting Pronouncements | Accounting Pronouncements Recently Adopted and Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “ Leases |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | At September 30, 2020 and December 31, 2019, property and equipment consisted of the following: 2020 2019 Furniture and fixtures $ 356 $ 1,810 Machinery and equipment 56,474 65,709 Transportation equipment 12,953 39,274 69,783 106,793 Less accumulated depreciation (32,422 ) (19,676 $ 37,361 $ 87,117 |
ROYALTY AND LICENSE AGREEMENT (
ROYALTY AND LICENSE AGREEMENT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Research and Development [Abstract] | |
The annual minimum use/royalty and service fee | The annual minimum is listed as follows: Year Minimum Service Fee 2020 $ 500,000 2021 750,000 2022 1,000,000 Thereafter Increase 10% per year |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Provision for income tax | The provision for Federal income tax consists of the following September 30, 2020 and 2019: Federal income tax (expense) benefit attributable to: September 30, 2020 September 30, 2019 Current Operations $ 80,433 $ (55,926 ) Less: valuation allowance (80,433 ) 55,926 Net provision for Federal income taxes $ — $ — |
Deferred tax asset | The cumulative tax effect at the expected rate of 21% of significant items comprising our net deferred tax amount is as follows: Deferred tax asset attributable to: September 30, 2020 December 31, 2019 Net operating loss carryover $ 104,870 $ 24,436 Less: valuation allowance (104,870 ) (24,436 ) Net deferred tax asset $ — $ — |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Authorized capital | $ 500,000,000 | |
Common stock shares, authorized | 490,000,000 | 490,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Preferred stock shares, authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narartive) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Allowance for doubtful accounts | $ 363,765 | $ 475,287 |
Beneficial conversion features | $ 0 | |
Preferred shares [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 90,229,000 | |
Convertible Note [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 4,710,000 |
STOCK PURCHASE AGREEMENT (Detai
STOCK PURCHASE AGREEMENT (Details Narrative) - USD ($) | 1 Months Ended | ||
Jan. 31, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | |
Secured convertible promissory notes | $ 220,000 | $ 220,000 | |
Stock Purchase Agreement [Member] | |||
Cash | $ 160,000 | ||
Secured convertible promissory notes | $ 772,000 | ||
Common Share | 11,250,000 | ||
Share Price | $ .10 | ||
Additional secured convertible promissory note issued | $ 310,000 | ||
Additional common shares issued | 3,750,000 | ||
Identifiable assets acquired | $ 2,515,364 | ||
Cash | 6,504 | ||
Receivables | 1,992,112 | ||
Inventory | 382,237 | ||
Prepaid and other assets | 21,833 | ||
Property and equipment | 112,678 | ||
Identifiable liabilities | 1,125,835 | ||
Accounts payable and accrued expenses | 637,754 | ||
Related party payables | 488,081 | ||
Net value | 1,389,529 | ||
Purchase price | 1,157,000 | ||
Bargain Purchase Gain | $ 232,529 |
INVENTORY (Details Narrative)
INVENTORY (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Inventory raw materials and finished goods | $ 35,373 | $ 164,229 |
Shrinkage | $ 0 | $ 111,320 |
TAX RECEIVABLES (Details Narrat
TAX RECEIVABLES (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Notes to Financial Statements | ||
Taxes receivable, net | $ 364,115 | $ 446,972 |
Tax credits | $ 136,164 | $ 175,599 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment, Gross | $ 69,783 | $ 106,793 |
Less accumulated depreciation | (32,422) | (19,676) |
Property, Plant and Equipment, net | 37,361 | 87,117 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment, Gross | 356 | 1,810 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment, Gross | 56,474 | 65,709 |
Transportation Equipment [Member] | ||
Property, Plant and Equipment, Gross | $ 12,953 | $ 39,274 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Depreciation expense | $ 2,450 | $ 5,474 | $ 9,769 | $ 14,403 |
Minimum [Member] | ||||
Estimated useful live | 3 years | |||
Maximum [Member] | ||||
Estimated useful live | 10 years |
ROYALTY AND LICENSE AGREEMENT_2
ROYALTY AND LICENSE AGREEMENT (Details) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Research and Development [Abstract] | |
2020 | $ 500,000 |
2021 | 750,000 |
2022 | $ 1,000,000 |
Thereafter | Increase 10% per year |
ROYALTY AND LICENSE AGREEMENT_3
ROYALTY AND LICENSE AGREEMENT (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Research and Development [Abstract] | |||
License fee payable | $ 648,000 | $ 693,000 | |
Deemed dividend | 1,000,000 | ||
Payyment of license fee | $ 45,000 | $ 48,000 |
NOTES PAYABLES (Details Narrati
NOTES PAYABLES (Details Narrative) - USD ($) | Dec. 10, 2018 | Feb. 28, 2019 | Jan. 31, 2019 | Nov. 20, 2018 | Jul. 31, 2018 | Jun. 28, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Note payable | $ 100,000 | $ 100,000 | $ 100,000 | ||||||||
Convertible Note Payable | 220,000 | $ 220,000 | 220,000 | ||||||||
Convertible notes payable description | On February 4, 2019, the Company entered into a purchase agreement with one investor for the purchase of up to an aggregate of $350,000 in convertible notes payable in three payments commencing with the first in the amount of $120,000 on February 4, 2019, the second on April 1, 2019 in the amount of $110,000 and the third on June 1, 2019 in the amount of $120,000. The investor did not make the second purchase on April 1, 2019 or the third purchase on June 1, 2019. The purchase provisions of the agreement have expired with only the first purchase executed. The $120,000 note purchased in February can be converted to common stock at $0.20 per share or the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share and converts automatically upon certain conditions. The note bears no interest until June 30, 2019 and then bears 8% interest, if not converted to common stock. The note matures on June 30, 2020. | ||||||||||
Interest expenses | 6,483 | $ 5,066 | $ 19,363 | $ 52,389 | |||||||
8% Notes Payable [Member] | |||||||||||
Principal amount | $ 100,000 | ||||||||||
Interest rate | 8.00% | ||||||||||
Maturity date | Dec. 31, 2020 | ||||||||||
Note payable | 100,000 | 100,000 | 100,000 | ||||||||
8% Notes Payable [Member] | |||||||||||
Principal amount | $ 34,000 | ||||||||||
Interest rate | 8.00% | ||||||||||
Maturity date | Jun. 10, 2019 | ||||||||||
Interest expenses | 6,000 | 8,040 | |||||||||
Accrued interest | 14,679 | 14,679 | 8,679 | ||||||||
8% Convertible Note Payable [Member] | |||||||||||
Interest rate | 8.00% | 8.00% | 8.00% | ||||||||
Convertible Note Payable | $ 552,000 | $ 220,000 | $ 100,000 | 220,000 | 220,000 | 220,000 | |||||
Principal payment | $ 50,000 | ||||||||||
Interest expenses | 13,200 | $ 17,483 | |||||||||
Accrued interest | $ 30,116 | $ 30,116 | $ 16,916 |
EQUITY (Details Narrative)
EQUITY (Details Narrative) | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Preferred Stock voting rights | Each holder is entitled to 100 votes for each share of Class A Preferred Stock held on the record date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company |
Preferred Stock | Each share of Class A Preferred Stock may be converted by the holder upon request of the holder into 10 shares of common stock. |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Federal income tax (expense) benefit attributable to: | ||
Current Operations | $ 80,433 | $ (55,926) |
Less: valuation allowance | (80,433) | 55,926 |
Net provision for Federal income taxes | $ 0 | $ 0 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Deferred tax asset attributable to: | ||
Net operating loss carryover | $ 104,870 | $ 24,436 |
Less: valuation allowance | (104,870) | (24,436) |
Net deferred tax asset | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||||
Federal income tax rate | 21.00% | ||||
Net operating loss carry forwards | $ 499,379 | $ 499,379 | |||
Income Tax Expense (Benefit) | $ 0 | $ 0 | $ 0 | $ 26,230 | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Related Party Transactions [Abstract] | ||
Receivable from related parties | $ 398,840 | $ 356,798 |
Notes Receivable, related Party | 264,029 | 555,116 |
Reserve for uncollectable related party trade receivables | 398,840 | 356,798 |
Reserve for uncollectable related party notes receivables | $ 264,029 | $ 555,116 |
ROYALTY AND LICENSE AGREEMENTS
ROYALTY AND LICENSE AGREEMENTS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Licensing and royalty revenue | $ 28,625 | $ 472,473 | $ 322,695 | $ 1,771,889 | |
Royalty agreement | 31,929 | 31,929 | $ 0 | ||
Royalty Agreements [Member] | |||||
Licensing and royalty revenue | 13,431 | ||||
Royalty agreement | $ 31,929 | $ 31,929 |
CONCENTRATIONS (Details Narrati
CONCENTRATIONS (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Risks and Uncertainties [Abstract] | ||
Federally insured limit | $ 0 | $ 0 |