Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 11, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | First Foods Group, Inc. | |
Entity Central Index Key | 0001648903 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Jun. 30, 2020 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Common Stock Shares Outstanding | 21,741,104 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash | $ 198,508 | $ 24,353 |
Accounts receivable, net | 424 | 13,487 |
Inventory, net | 51,575 | 10,556 |
Merchant cash advances, net of allowance $554,479 and $97,495, respectively | 159,996 | 877,457 |
Prepaid expenses and other current assets | 96,765 | 56,935 |
Deferred merchant advance commissions | 1,394 | 15,290 |
TOTAL CURRENT ASSETS | 508,662 | 998,078 |
Property and equipment, net | 224,051 | 0 |
Operating lease right-of-use assets | 267,704 | 0 |
TOTAL ASSETS | 1,000,417 | 998,078 |
CURRENT LIABILITIES | ||
Accounts payable and accrued liabilities | 832,631 | 751,675 |
Deferred revenue | 200,205 | 193,163 |
Loans, net | 257,400 | 165,270 |
Related party loans, net | 631,947 | 620,623 |
Operating lease liabilities | 57,891 | 0 |
TOTAL CURRENT LIABILITIES | 1,980,074 | 1,730,731 |
Loans, net - long term | 895,501 | 483,240 |
Operating lease liabilities - long term | 209,813 | 0 |
TOTAL LIABILITIES | 3,085,388 | 2,213,971 |
Commitments and contingencies | 0 | 0 |
FIRST FOODS GROUP, INC. DEFICIT: | ||
Common stock: $0.001 par value,100,000,000 shares authorized, 21,557,771 and 20,313,771 shares issued and outstanding, respectively | 21,558 | 20,314 |
Additional paid-in capital | 9,931,793 | 9,116,998 |
Accumulated deficit | (11,947,102) | (10,293,260) |
Total First Foods Group, Inc. Deficit | (1,992,618) | (1,154,815) |
Noncontrolling interests | (92,353) | (61,078) |
Total deficit | (2,084,971) | (1,215,893) |
TOTAL LIABILITIES AND DEFICIT | 1,000,417 | 998,078 |
Series A Convertible Preferred Stock [Member] | ||
FIRST FOODS GROUP, INC. DEFICIT: | ||
Preferred stock value | 0 | 0 |
Series B Convertible Preferred Stock [Member] | ||
FIRST FOODS GROUP, INC. DEFICIT: | ||
Preferred stock value | 473 | 473 |
Series C Convertible Preferred Stock [Member] | ||
FIRST FOODS GROUP, INC. DEFICIT: | ||
Preferred stock value | $ 660 | $ 660 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Merchant cash advances, net of allowance | $ 554,479 | $ 97,495 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 21,557,771 | 20,313,771 |
Common stock, shares outstanding | 21,557,771 | 20,313,771 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, shares authorized | 1 | 1 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 1 | 1 |
Preferred stock, shares outstanding | 1 | 1 |
Preferred stock, liquidation preference shares | 577,005 | 577,005 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, shares authorized | 4,999,999 | 4,999,999 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 473,332 | 473,332 |
Preferred stock, shares outstanding | 473,332 | 473,332 |
Preferred stock, liquidation preference shares | 160,000 | 160,000 |
Series C Convertible Preferred Stock [Member] | ||
Preferred stock, shares authorized | 3,000,000 | 3,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 660,000 | 660,000 |
Preferred stock, shares outstanding | 660,000 | 660,000 |
Preferred stock, liquidation preference shares | 165,000 | 165,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
REVENUES | ||||
Product sales, net | $ 8,778 | $ 31,545 | $ 12,383 | $ 31,545 |
Merchant cash advance income, net | 15,933 | 41,916 | 109,302 | 156,753 |
Total Revenues | 24,711 | 73,461 | 121,685 | 188,298 |
OPERATING EXPENSES | ||||
Cost of product sales | 4,703 | 20,983 | 5,451 | 20,983 |
Professional fees | 17,896 | 25,615 | 30,327 | 54,847 |
General and administrative | 358,176 | 391,340 | 968,062 | 790,248 |
Provision for merchant cash advances | 76,853 | (6,099) | 479,885 | 22,239 |
Total Operating Expenses | 457,628 | 431,839 | 1,483,725 | 888,317 |
LOSS FROM OPERATIONS | (432,917) | (358,378) | (1,362,040) | (700,019) |
OTHER INCOME (EXPENSE) | ||||
Other income | 1,000 | 0 | 1,000 | 0 |
Interest expense | (170,704) | (27,914) | (324,077) | (52,864) |
Loss before income taxes | (602,621) | (386,292) | (1,685,117) | (752,883) |
Provision for income taxes | 0 | 0 | 0 | 0 |
NET LOSS | (602,621) | (386,292) | (1,685,117) | (752,883) |
Non-controlling interest share of loss | 17,926 | 10,580 | 31,275 | 17,627 |
Dividends on preferred stock | 0 | (4,950) | 0 | (9,900) |
Net loss attributed to shareholders of First Foods Group, Inc. | $ (584,695) | $ (380,662) | $ (1,653,842) | $ (745,156) |
BASIC AND DILUTED LOSS PER COMMON SHARE ATTRIBUTABLE TO FIRST FOODS GROUP, INC. STOCKHOLDERS | $ (0.03) | $ (0.02) | $ (0.08) | $ (0.04) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING ATTRIBUTABLE TO FIRST FOODS GROUP, INC. STOCKHOLDERS | 21,226,672 | 17,952,371 | 20,916,568 | 17,887,548 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Deficit (Unaudited) - USD ($) | Total | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total First Foods Group, Inc. deficit [Member] | Non-controlling Interests |
Balance, shares at Dec. 31, 2018 | 1,133,333 | 17,709,087 | |||||
Balance, amount at Dec. 31, 2018 | $ (528,246) | $ 1,133 | $ 17,709 | $ 7,081,559 | $ (7,637,029) | $ (536,628) | $ 8,382 |
Common stock issued to consultants for services, shares | 7,500 | ||||||
Common stock issued to consultants for services, amount | 1,500 | $ 0 | $ 8 | 1,492 | 0 | 1,500 | 0 |
Warrants issued for director services | 71,553 | 0 | 0 | 71,553 | 0 | 71,553 | 0 |
Net loss | (366,591) | 0 | 0 | 0 | (359,544) | (359,544) | (7,047) |
Warrants issued for consultant services | 25,385 | $ 0 | $ 0 | 25,385 | 0 | 25,385 | 0 |
Common stock issued for services, shares | 100,000 | ||||||
Common stock issued for services, amount | 30,000 | $ 0 | $ 100 | 29,900 | 0 | 30,000 | 0 |
Common stock issued for loans payable, shares | 50,000 | ||||||
Common stock issued for loans payable, amount | 7,125 | $ 0 | $ 50 | 7,075 | 0 | 7,125 | 0 |
Dividend on preferred stock | (4,950) | $ 0 | $ 0 | (4,950) | 0 | (4,950) | 0 |
Balance, shares at Mar. 31, 2019 | 1,133,333 | 17,866,587 | |||||
Balance, amount at Mar. 31, 2019 | (764,224) | $ 1,133 | $ 17,867 | 7,212,014 | (7,996,573) | (765,559) | 1,335 |
Balance, shares at Dec. 31, 2018 | 1,133,333 | 17,709,087 | |||||
Balance, amount at Dec. 31, 2018 | (528,246) | $ 1,133 | $ 17,709 | 7,081,559 | (7,637,029) | (536,628) | 8,382 |
Warrants issued in lieu of deferred compensation | 0 | ||||||
Net loss | (752,883) | ||||||
Balance, shares at Jun. 30, 2019 | 1,133,333 | 18,055,502 | |||||
Balance, amount at Jun. 30, 2019 | (1,031,701) | $ 1,133 | $ 18,056 | 7,330,640 | (8,372,285) | (1,022,456) | (9,245) |
Balance, shares at Mar. 31, 2019 | 1,133,333 | 17,866,587 | |||||
Balance, amount at Mar. 31, 2019 | (764,224) | $ 1,133 | $ 17,867 | 7,212,014 | (7,996,573) | (765,559) | 1,335 |
Common stock issued to consultants for services, shares | 176,415 | ||||||
Common stock issued to consultants for services, amount | 40,250 | $ 0 | $ 176 | 40,074 | 0 | 40,250 | 0 |
Common stock issued with loans payable, shares | 12,500 | ||||||
Common stock issued with loans payable, amount | 3,688 | $ 0 | $ 13 | 3,675 | 0 | 3,688 | 0 |
Warrants issued for director services | 72,348 | 0 | 0 | 72,348 | 0 | 72,348 | 0 |
Net loss | (386,292) | 0 | 0 | 0 | (375,712) | (375,712) | (10,580) |
Warrants issued for consultant services | 7,479 | 0 | 0 | 7,479 | 0 | 7,479 | 0 |
Dividend on preferred stock | (4,950) | $ 0 | $ 0 | (4,950) | 0 | (4,950) | 0 |
Balance, shares at Jun. 30, 2019 | 1,133,333 | 18,055,502 | |||||
Balance, amount at Jun. 30, 2019 | (1,031,701) | $ 1,133 | $ 18,056 | 7,330,640 | (8,372,285) | (1,022,456) | (9,245) |
Balance, shares at Dec. 31, 2019 | 1,133,333 | 20,313,771 | |||||
Balance, amount at Dec. 31, 2019 | (1,215,893) | $ 1,133 | $ 20,314 | 9,116,998 | (10,293,260) | (1,154,815) | (61,078) |
Common stock issued to consultants for services, shares | 400,000 | ||||||
Common stock issued to consultants for services, amount | 96,000 | $ 0 | $ 400 | 95,600 | 0 | 96,000 | 0 |
Common stock issued for related party loan, shares | 25,000 | ||||||
Common stock issued for related party loan, amount | 5,000 | $ 0 | $ 25 | 4,975 | 0 | 5,000 | 0 |
Common stock issued with loans payable, shares | 224,000 | ||||||
Common stock issued with loans payable, amount | 54,132 | $ 0 | $ 224 | 53,908 | 0 | 54,132 | 0 |
Warrants issued for director services | 197,348 | 0 | 0 | 197,348 | 0 | 197,348 | 0 |
Warrants issued with loan payable | 20,717 | 0 | 0 | 20,717 | 0 | 20,717 | 0 |
Warrants issued in lieu of deferred compensation | 250,000 | 0 | 0 | 250,000 | 0 | 250,000 | 0 |
Net loss | (1,082,496) | $ 0 | $ 0 | 0 | (1,069,147) | (1,069,147) | (13,349) |
Balance, shares at Mar. 31, 2020 | 1,133,333 | 20,962,771 | |||||
Balance, amount at Mar. 31, 2020 | (1,675,192) | $ 1,133 | $ 20,963 | 9,739,546 | (11,362,407) | (1,600,765) | (74,427) |
Balance, shares at Dec. 31, 2019 | 1,133,333 | 20,313,771 | |||||
Balance, amount at Dec. 31, 2019 | (1,215,893) | $ 1,133 | $ 20,314 | 9,116,998 | (10,293,260) | (1,154,815) | (61,078) |
Warrants issued in lieu of deferred compensation | 250,000 | ||||||
Net loss | (1,685,117) | ||||||
Balance, shares at Jun. 30, 2020 | 1,133,333 | 21,557,771 | |||||
Balance, amount at Jun. 30, 2020 | (2,084,971) | $ 1,133 | $ 21,558 | 9,931,793 | (11,947,102) | (1,992,618) | (92,353) |
Balance, shares at Mar. 31, 2020 | 1,133,333 | 20,962,771 | |||||
Balance, amount at Mar. 31, 2020 | (1,675,192) | $ 1,133 | $ 20,963 | 9,739,546 | (11,362,407) | (1,600,765) | (74,427) |
Common stock issued to consultants for services, shares | 150,000 | ||||||
Common stock issued to consultants for services, amount | 25,350 | $ 0 | $ 150 | 25,200 | 0 | 25,350 | 0 |
Common stock issued for related party loan, shares | 445,000 | ||||||
Common stock issued for related party loan, amount | 95,144 | $ 0 | $ 445 | 94,699 | 0 | 95,144 | 0 |
Warrants issued for director services | 72,348 | 0 | 0 | 72,348 | 0 | 72,348 | 0 |
Net loss | (602,621) | $ 0 | $ 0 | 0 | (584,695) | (584,695) | (17,926) |
Balance, shares at Jun. 30, 2020 | 1,133,333 | 21,557,771 | |||||
Balance, amount at Jun. 30, 2020 | $ (2,084,971) | $ 1,133 | $ 21,558 | $ 9,931,793 | $ (11,947,102) | $ (1,992,618) | $ (92,353) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Loss | $ (1,685,117) | $ (752,883) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Non-employee stock based compensation | 121,350 | 104,615 |
Employee stock based compensation | 269,696 | 143,901 |
Amortization of debt discount | 219,320 | 16,401 |
Depreciation and amortization expense | 12,741 | 0 |
Change in merchant allowance | 456,984 | 0 |
Provision for merchant cash advances | 479,885 | 22,239 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 13,063 | (31,545) |
Inventory | (11,205) | 0 |
Merchant cash advances | (219,408) | 259,814 |
Deferred merchant advance commissions | 13,896 | 21,113 |
Prepaid expenses and other current assets | (21,606) | (21,433) |
Accounts payable and accrued liabilities | 342,919 | 265,000 |
Deferred revenue | 7,042 | (81,985) |
Net cash used in operating activities | (440) | (54,763) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of equipment | (156,605) | 0 |
Net cash used in investing activities | (156,605) | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Dividend payment | 0 | (18,150) |
Proceeds from loans | 301,200 | 75,000 |
Repayment of loans | (50,000) | 0 |
Proceeds from related party loans | 80,000 | 0 |
Net cash provided by financing activities | 331,200 | 56,850 |
NET INCREASE IN CASH | 174,155 | 2,087 |
CASH AT BEGINNING OF PERIOD | 24,353 | 30,426 |
CASH AT END OF PERIOD | 198,508 | 32,513 |
NON-CASH FINANCING ACTIVITIES: | ||
Common stock issued with related party loans | 100,144 | 0 |
Common stock issued with loans | 54,132 | 10,813 |
Warrants issued with loans | 20,717 | 0 |
Warrants issued in lieu of deferred compensation | 250,000 | 0 |
Purchase of assets and settlement of accrued expenses through issuance of loan payable | 140,188 | 0 |
Right-of-use assets obtained in exchange for liabilities | 267,704 | 0 |
CASH PAID FOR: | ||
Interest | 54,900 | 40,848 |
Income taxes | $ 0 | $ 0 |
BUSINESS SUMMARY OF SIGNIFICANT
BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY | 6 Months Ended |
Jun. 30, 2020 | |
BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY | |
NOTE 1 - BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY | Nature of Business First Foods Group, Inc. (the “Company” or “First Foods”) is a smaller reporting company focused on developing its specialty chocolate product line and participating in merchant cash advances (“MCA”) through its 1 st On August 31, 2017, the Company formed Holy Cacao, Inc., a Nevada corporation (“Holy Cacao”). Holy Cacao has 100 shares of no par value common stock authorized, issued and outstanding with 85 shares owned by the Company and 15 shares owned by non-controlling interests. Holy Cacao is dedicated to producing, packaging, distributing and selling specialty chocolate products, including specialty chocolate products infused with a hemp-based ingredient in accordance with the Company’s understanding of the Agricultural Act of 2014 (the “2014 Farm Bill”) and/or the Agriculture Improvement Act of 2018 (the “2018 Farm Bill,” and together with the 2014 Farm Bill, collectively, the “Farm Bill”), which renders the production of hemp in compliance with the provisions of the Farm Bill federally lawful. The Company has not been, is not, and has no current plans to be involved in producing, packaging, distributing or selling any product that is infused with a marijuana-based ingredient, although it intends to revisit the matter as regulations change in jurisdictions in which it operates. The Company is also dedicated to licensing its intellectual property (“IP”), including its name, brand, and packaging, to third parties. The Company may license its IP to third parties that may produce, package, and distribute hemp-based products pursuant with the Company’s understanding of the Farm Bill. The Company may license its IP to third parties that may produce, package, and distribute marijuana-based products, but only as such licensing is legal. On February 27, 2019, the United States Patent and Trademark Office (the “USPTO”) approved Holy Cacao’s trademark brand, “The Edibles’ Cult.” On November 26, 2019, the USPTO approved Holy Cacao’s trademark brand, “Purely Irresistible.” The Company has submitted multiple applications to the USPTO for additional brand names, including “Mystere” and “Southeast Edibles” among others. On February 5, 2019, the Company signed a Consulting Agreement with a consultant to assist in the manufacturing, packaging and distribution of the Company’s chocolate product line. On March 26, 2019, the Company signed a Facility Access and Wholesale Production Purchase and Sale Agreement that allows it to use a fully staffed and fully equipped state of the art manufacturing facility to produce its specialty chocolate product line and sell it to manufacturing and wholesaling companies. On March 1, 2020, the Company’s Board of Directors made a strategic decision to broaden the appeal of its hemp-based chocolate products to a wider base of customers, who are particularly discerning about the cleanliness of the Company’s manufacturing facility and quality of its hemp-based chocolate products, by successfully obtaining worldwide Kosher certification from the Union of Orthodox Jewish Congregations of America, Kashruth Division (the “OU”), which is the largest and most recognized certification of its kind in the world. On March 9, 2020, the Company retained Tartikov Beth Din (“BD”) to allow BD to supervise the hemp-based chocolate products produced by the Company in accordance with OU certification standards. On July 13, 2020, Michael Kaplan was appointed to the Board of Directors and, as of August 1, 2020, accepted the role of Chief Marketing Officer with authority to oversee the Company’s sales and marketing operations, and responsibility for developing oversight processes and procedures. On August 4, 2020 the Company retained Moises Davidovits as its full-time chocolatier. Mr. Davidovits is a third-generation chocolatier who is responsible for the manufacturing, packaging and distribution of the Company’s chocolate product line, as well as the formulation of all of the Company’s proprietary chocolate recipes. On October 25, 2017, the Company entered into a contract with TIER Merchant Advances LLC (“TIER”) to participate in the purchase of future receivables from qualified TIER merchants for the purpose of generating near-term and long-term revenue for the Company. On November 8, 2018, the Company also began providing cash advances directly to merchants. Liquidity and Going Concern The Company’s unaudited condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States of America (“GAAP”) applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, the Company will need, among other things, additional capital resources. As of June 30, 2020, the Company had approximately $257,000 in third-party short-term debt that is due within the next twelve months. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its operating expenses and seeking equity and/or debt financing. However, neither any members of management nor any significant shareholders are currently committed to invest funds with us and; therefore, we cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The Company does not have sufficient cash flow for the next twelve months from the date of this report. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. In December 2019, a novel strain of coronavirus surfaced. The spread of COVID-19 around the world in the first quarter of 2020 has caused significant volatility in U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies. The Company’s financial position, operations and cash flows as of June 30, 2020 have been adversely affected, and may be further affected in the future, by the recent and ongoing outbreak of the coronavirus disease 2019 (COVID-19) which in March 2020, was declared a pandemic by the World Health Organization. The ultimate disruption which may be caused by the outbreak is uncertain; however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows. Possible areas that may be materially affected include, but are not limited to, disruption to the Company’s labor workforce, unavailability of products and supplies used in operations, and the decline in value of assets held by the Company. As of June 30, 2020 and through the filing date of the financial statements, the Company has continued to collect receivables from its cash advances but has experienced an increase in payment delinquencies and has had two customers renegotiate the terms of their cash advances due to COVID-19. The Company has taken a reserve allowance on its MCA’s. Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Basis of Presentation The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these unaudited condensed consolidated financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read in conjunction with the Company’s annual consolidated financial statements included within the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on March 25, 2020. In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the six months ended June 30, 2020 may not be indicative of results for the full year. The noncontrolling interest represents the proportionate share of the proceeds received and also the income and loss pickup from the fifteen-percent sale of equity interest in our wholly owned subsidiary; Holy Cacao. Principles of Consolidation The unaudited condensed consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiary in conformity with GAAP. All intercompany accounts and transactions have been eliminated in consolidation. Cash and Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of twelve months or less to be cash equivalents. At June 30, 2020 and December 31, 2019, the Company had no cash equivalents. The Company’s cash is held with financial institutions, and the account balances may exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit at times. Accounts are insured by the FDIC up to $250,000 per financial institution. The Company has not experienced any losses in such accounts with these financial institutions. Merchant Cash Advances The Company participates in the merchant cash advance industry by directly advancing sums to a merchant or a merchant advance provider, TIER, who in turn advances sums to merchants or other merchant cash advance providers. Each reporting period, the Company reviews the carrying value of these advances and determines whether an impairment reserve is necessary. At June 30, 2020, the Company reserved an amount equal to 78% of the outstanding merchant cash advance balance at period end based on the potential impact of COVID 19. In addition, during the six months ended June 30, 2020 the Company wrote off 21 merchant advances for a total of $22,901. These expenses are included in provision for merchant cash advances expense on the accompanying unaudited condensed consolidated statements of operations. Revenue Recognition We completed, related to our merchant cash advance business line, our assessment of the impact of ASC 606 and determined that we recognize revenue in accordance with ASC 860, Transfers and Servicing Product sales are measured based on consideration specified in a contract with a customer that we expect to receive in exchange for goods, net of any variable considerations (e.g. rights to return product, sales incentives, etc.). The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer. These criteria are assumed to have been met upon delivery of the products requested by the customer to the customer’s carrier. The Company applied the practical expedient available under ASC 606 to disregard determining significant financing components, if the good is transferred and payment is received within one year. When a merchant cash advance is purchased, the Company records a merchant cash advance participation receivable for the purchase price. The purchase price consists of the merchant cash advance principal plus an up-front commission that is amortized over the term of the merchant cash advance. The amount of the commission is negotiated between the Company and TIER for each contract. The standard commission is 15% of the merchant cash advance principal but can be reduced depending upon the credit worthiness of the merchant. The average commission paid by the Company since inception has been approximately 7%. If a merchant cash advance contract is signed in one period, but not paid until a subsequent period, a corresponding liability is established in the current period. At the time the Company participates in a merchant cash advance, the Company records a deferred revenue liability, which is the total future receivable due to the Company less the principal amount of the merchant cash advance. Revenue is recognized and the deferred liability is reduced over the term of the merchant cash advance. TIER maintains a bank account on behalf of the Company. Each day, TIER receives payment, reflected in the bank account, for each merchant cash advance TIER has purchased on behalf of the Company from various merchant cash advance providers. The Company reduces its merchant cash advance balance by the cash received, which is net of platform fees. Platform fees are a daily charge associated with the ACH service and the financial and reporting management software platform provided by TIER. The platform fees are also negotiated between the Company and TIER for each contract but are typically 4% of the daily merchant cash advance principal amount. For each merchant cash advance entered into by the Company, TIER receives a daily payment as payments are made on the advance, for each merchant cash advance TIER has purchased on behalf of the Company from various merchant cash advance providers. The Company reduces its merchant cash advance balance by the cash received, which is net of a 2% commission to TIER. Inventory Inventory, consisting of raw materials, work in process and products available for sale, are accounted for using the first-in, first-out method, and are valued at the lower of cost or net realizable value. This valuation requires management to make judgements based on currently available information, about the likely method of disposition, such as through sales to individual customers and returns. The Company has no allowance for inventory reserves. Inventory consisted of the following as of June 30, 2020 and December 31, 2019: June 30, December 31, 2020 2019 Raw Materials $ 41,463 $ 2,854 Work in Process 1,550 5,410 Finished Goods 8,562 2,292 Total $ 51,575 $ 10,556 Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense when incurred, while renewals and betterments that materially extend the life of an asset are capitalized. When assets are sold, retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheets and any resulting gain or loss is reflected in the unaudited condensed consolidated statements of operations and members’ deficit in the period realized. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets, which are as follows: Property – Leasehold Improvements 4 years Equipment 5 years Impairment of Long-Lived Assets Long-lived assets are comprised of property and equipment. The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset or group of assets may not be recoverable. If these circumstances exist, recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to future undiscounted net cash flows expected to be generated by the asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. There were no impairments to long-lived assets for the six months ended June 30, 2020 and 2019. Research and Development The Company’s policy is to engage market and branding consultants to research and develop specialty chocolate products, including chocolate products infused with a hemp-based ingredient, and packaging targeted to particular states within the US. The research and development costs for the three months ended June 30, 2020 and 2019, were $27,500 and $18,510, respectively. The research and development costs for the six months ended June 30, 2020 and 2019, were approximately $32,000 and $33,510, respectively. These expenses are included in general and administrative expenses on the accompanying unaudited condensed consolidated statements of operations. Deferred Financing Costs The Company records origination and other expenses related to its debt obligations as deferred financing costs. These expenses are deferred and amortized over the life of the related debt instrument. In accordance with Accounting Standards Update (“ASU”) No. 2015-03, deferred finance costs, net of accumulated amortization have been included as a contra to the corresponding loans in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively. Stock Based Compensation The Company measures and recognizes compensation expense for all stock-based payments at fair value over the requisite service period. The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options and warrants. For restricted stock grants, fair value is determined as the closing price of our common stock on the date of grant. Equity-based compensation expense is recorded in administrative expenses based on the classification of the employee or vendor. The determination of fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price, as well as by assumptions regarding a number of subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Income Taxes The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2020 and December 31, 2019, the Company had a full valuation allowance against deferred tax assets. With the historical change in ownership, the Company is subject to certain NOL limitations under Section 382 of the Internal Revenue Code. Per Share Data In accordance with “ASC-260 - Earnings per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive shares outstanding as of June 30, 2020 and 2019 because their effect would be antidilutive. The Company had 1,499,750 and 403,750 warrants to purchase common stock outstanding at June 30, 2020 and 2019, respectively. The Company had 4,470,000 and 3,370,000 warrants to purchase Series B preferred stock outstanding at June 30, 2020 and 2019, respectively. The Company has outstanding one (1) Series A preferred share that is convertible into five (5) shares of the Company’s common stock. Additionally, the Company has 473,332 Series B preferred shares, and 660,000 Series C preferred shares outstanding that are convertible into 2,366,660 and 660,000 shares of common stock at June 30, 2020 and 2019, respectively. The warrants and preferred stock were not included in the Company’s weighted average number of common shares outstanding because they would be anti-dilutive. Fair Value of Financial Instruments Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value. The carrying value of cash, merchant cash advances, prepaid expenses, accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments. Management is of the opinion that the Company is not exposed to significant market or credit risks arising from these financial instruments. Advertising and Promotion Advertising and promotion costs are expensed as incurred. Advertising and promotion costs recognized in the unaudited condensed consolidated statements of operations for the three months ended June 30, 2020 and 2019, were approximately $5,700 and $34,150, respectively and approximately $21,000 and $44,900, respectively, for the six months ended June 30, 2020 and 2019. Non-Controlling Interests in Condensed Consolidated Financial Statements In June 2011, the FASB issued ASC 810-10-65-1, to clarify that a non-controlling (minority) interest in a subsidiary is an ownership interest in the entity that should be reported as equity in the condensed consolidated financial statements. It also requires consolidated net income to include the amounts attributable to both the parent and non-controlling interest, with disclosure on the face of the unaudited condensed consolidated income statement of the amounts attributed to the parent and to the non-controlling interest. In accordance with ASC 810-10-45-21, those losses attributable to the parent and the non-controlling interest in subsidiaries may exceed their interests in the subsidiary’s equity. The excess and any further losses attributable to the parent and the non-controlling interest shall be attributed to those interests even if that attribution results in a deficit non-controlling interest balance. During the year ended December 31, 2017, the Company entered into a subscription agreement for the sale of a ten-percent equity interest in its wholly owned subsidiary, Holy Cacao, for $200,000 in cash proceeds, in the aggregate. During the year ended December 31, 2019, 5% equity was issued to a service provider due to the completion of Holy Cacao’s first sale of its product, as per the agreement with the service provider. The Company’s periodic reporting now includes the results of operations of Holy Cacao, with the fifteen-percent ownership reported as noncontrolling interests. For the three and six months ended June 30, 2020, the cost of goods sold was approximately $4,700 and $5,500, respectively, and the operating expense for Holy Cacao was $122,000 and $215,000, respectively. There was approximately $8,800 and $12,400 of revenue for Holy Cacao for the three and six months ended June 30, 2020, respectively. The Company conducts business as two operating segments, First Foods and Holy Cacao. The Company does not distinguish between the two segments and has only one reportable segment based on quantitative thresholds. The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses” to improve information on credit losses for financial assets and net investment in leases that are not accounted for at fair value through net income. ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. In April 2019 and May 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” and ASU No. 2019-05, “Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief” which provided additional implementation guidance on the previously issued ASU. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective date for public filers that are considered small reporting companies (“SRC”) as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since the Company is an SRC, implementation is not needed until January 1, 2023. The Company will continue to evaluate the effect adopting ASU 2016-13 will have on the Company’s unaudited condensed consolidated financial statements. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2020 | |
RELATED PARTY TRANSACTIONS | |
NOTE 2 - RELATED PARTY TRANSACTIONS | Employment Agreement On March 1, 2017, Mark J. Keeley assumed the role of Chief Financial Officer (“CFO”). Pursuant to his Employment Agreement, the CFO shall receive $20,833 per month. Additionally, Mr. Keeley earns an additional $40,000 per year for his role as a Director of the Company. On March 18, 2020, the Company issued its CFO and Director warrants to purchase 500,000 shares of Series B Preferred Stock in lieu of $250,000 of deferred salary (see Note 6). As of June 30, 2020 and December 31, 2019, the Company has accrued $204,667 and $329,167, respectively, in relation to the employment agreements and $18,766 and $16,953, respectively, in relation to the payroll tax liability. Consulting Agreements On February 27, 2017, Harold Kestenbaum assumed the role of Chairman of the Board of Directors and Interim Chief Executive Officer (“Interim CEO”). Mr. Kestenbaum earns $40,000 per year for his role as Chairman of the Board. As of June 30, 2020, the Company has accrued a total of $40,000. As of June 30, 2020, the Company has two consulting agreements with R and W Financial (a company owned by a director) in which the first agreement is for $5,000 a month and the second is for $4,250 every two weeks. Both agreements are for an indefinite period of time and are subject to cancellation by either party with written notice of 30 days and 10 days, respectively. The outstanding balance as of June 30, 2020 was $52,713. Related Party Loans June 30, 2020 December 31, 2019 1. Note payable at 12%, matures 10/31/2020 {a} * $ 100,000 $ 100,000 2. Non-interest bearing note payable, matures on 4/25/2021 * 179,813 179,813 3. Note payable at 12%, matures 9/13/2020. The Company has recorded debt discount and amortized it over the applicable life of the debt. {b} * 100,000 100,000 4. Note payable at 12%, matures 4/9/2021. The Company has recorded debt discount and amortized it over the applicable life of the debt. {c} * 250,000 250,000 5. Non-interest bearing note payable, matures on 11/15/2020. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. {d} * 80,000 - Unamortized debt discount (77,866 ) (9,190 ) Total $ 631,947 $ 620,623 ___________________ {a} - On April 22, 2020, the Company extended the note to October 31, 2020 based on the same terms and conditions. {b} - On June 28, 2020, the Company extended the note to September 13, 2020 based on the same terms and conditions. In association with this and prior extensions the company issued 35,000 and 25,000 shares of common stock, respectively, with a total fair value of $10,544, which will be recorded a debt discount and amortized over the life of the loan. {c} - On April 10, 2020, the Company extended the note to April 9, 2021 based on the same terms and conditions. In association with the extension the company issued 250,000 shares of common stock with a fair value of $60,000, which will be recorded a debt discount and amortized over the life of the loan. {d} - On June 28, 2020, the Company issued a non-interest bearing promissory note of $80,000. In connection with this note the company issued 160,000 shares of common stock with a fair value of $29,600, which was recorded as a debt discount and amortized over the life of the loan. * - unsecured note During the three months ended June 30, 2020 and 2019, the Company recorded $21,081 and $1,830 of interest expense related to the amortization of debt discount and $13,463 and $4,763 of regular interest, respectively. During the six months ended June 30, 2020 and 2019, the Company recorded $31,468 and $3,640 of interest expense related to the amortization of debt discount and $26,926 and $9,447 of regular interest, respectively. As of June 30, 2020 and December 31, 2019, accrued interest was $33,667 and $21,753, respectively. All of the above transactions were approved by disinterested directors. Director Agreements On May 10, 2018, the directors of the Company were awarded share-based compensation for the service period of May 10, 2018 through December 31, 2020, as a one-time award of the ability to purchase a particular amount of warrants, ranging from 80,000 to 400,000 (collectively the “Warrants”) with the following terms: • Number and Type – Each Director is entitled to a one-time award of Warrants for the number of shares of Series B Preferred Stock of the Company. Each share of Series B Preferred Stock shall have voting rights equal to five (5) votes per share. Each share of Series B Preferred Stock is convertible into five (5) shares of the Company’s Common Stock (the “Common Stock”), including liquidation preference over Common Stock. • Duration – The Warrants entitle each Director to purchase the Series B Preferred Stock from the Company, after January 1, 2019 and before December 31, 2027. • Purchase Price - The purchase price is $0.60 per share of Series B Preferred Stock. • Cashless Exercise - If on the date the Director surrenders all or a portion of the Warrants for the purchase of Series B Preferred Stock or the equivalent number of shares of Common Stock, the per share market value of one share of Common Stock is greater than the exercise price of the equivalent Warrant, in lieu of exercising the Warrant by payment of cash, the Director may exercise the Warrant by a cashless exercise and shall receive a ratably lower number of shares of Series B Preferred Stock or the equivalent number of shares of Common Stock. • Vesting - The Warrants are subject to a 32-month period whereby the Warrants vest in equal monthly increments from May 10, 2018 through December 31, 2020. Any unvested warrants are forfeited, if the Director ceases to be a Director. The Company issued warrants with respect to 1,280,000 Series B Preferred Stock, in the aggregate. The Company will expense the fair value of these warrants in the amount of $768,000 ratably during the years ended December 31, 2018, 2019 and 2020. For the three months ended June 30, 2020 and 2019, the Company recorded $72,348 as compensation expense related to the warrants. For the six months ended June 30, 2020 and 2019, the Company recorded $144,696 and $143,901 as compensation expense related to the warrants, respectively. On February 26, 2019, the Company entered into director agreements with each of the Directors of the Company. Pursuant to the agreements, each Director may be compensated with share-based and/or cash-based compensation. The Directors’ compensation for the period January 1, 2019 through December 31, 2019 was $10,000 per quarter per Director to be paid on a date determined by the Board of Directors. In addition, the Directors were able to receive a one-time award of the ability to purchase a particular amount of warrants, as determined by the Board of Directors. On January 1, 2020, the director agreements were renewed with the same terms. As of June 30, 2020 and December 31, 2019 the Company has accrued $240,000 and $160,000, respectively, in relation to the director agreements. On December 31, 2019, three of the Directors of the Company were awarded share-based compensation for services performed during the service period of January 1, 2019 through December 31, 2019, as a one-time award to each purchase 200,000 warrants (collectively the “Warrants”) with the following terms: • Number and Type – Each Director is entitled to a one-time award of Warrants for the number of shares of Series B Preferred Stock of the Company. Each share of Series B Preferred Stock shall have voting rights equal to five (5) votes per share. Each share of Series B Preferred Stock is convertible into five (5) shares of the Company’s common stock, including liquidation preference over common stock. • Duration – The Warrants entitle each Director to purchase the Series B Preferred Stock from the Company after December 31, 2019 and before December 30, 2029. • Purchase Price - The purchase price is $1.20 per share of Series B Preferred Stock. These warrants have a price protection clause which was triggered, resulting in the exercise price of the warrants being adjusted to an exercise price of $0.75. The effect was immaterial. • Cashless Exercise - If on the date the Director surrenders all or a portion of the Warrants for the purchase of Series B Preferred Stock or the equivalent number of shares of Common Stock, the per share market value of one share of Common Stock is greater than the exercise price of the equivalent Warrant, in lieu of exercising the Warrant by payment of cash, the Director may exercise the Warrant by a cashless exercise and shall receive a ratably lower number of shares of Series B Preferred Stock or the equivalent number of shares of Common Stock. • Vesting - The Warrants are fully vested at issuance. The Company issued warrants with respect to 600,000 Series B Preferred Stock, in the aggregate. The Company expensed the fair value of these warrants in the amount of $720,000 for the year ended December 31, 2019. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2020 | |
PROPERTY AND EQUIPMENT | |
NOTE 3- PROPERTY AND EQUIPMENT | Property and equipment, net consists of the following: June 30, December 31, Leasehold improvements $ 40,000 $ - Equipment 196,792 - Less: Accumulated depreciation and amortization (12,741 ) - Total $ 224,051 $ - |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 6 Months Ended |
Jun. 30, 2020 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
NOTE 4 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | Accounts payable and accrued liabilities consist of the following: June 30, 2020 December 31, 2019 Accounts payable $ 451,100 $ 305,679 Interest 73,109 24,136 Salaries 262,933 386,121 Other 45,489 35,739 Total $ 832,631 $ 751,675 |
LOAN AND LONG-TERM LOANS
LOAN AND LONG-TERM LOANS | 6 Months Ended |
Jun. 30, 2020 | |
RELATED PARTY TRANSACTIONS | |
NOTE 5 - LOAN AND LONG-TERM LOANS | June 30, 2020 December 31, 2019 1. Note payable at 12%, matures 7/20/2020. In connection with the original issuance, as well as subsequent extension, the Company has recorded debt discount and amortized it over the applicable life of the debt. {a} * $ 50,000 $ 100,000 2. Note payable at 12%, matures 1/22/2021. In connection with the original issuance, as well as subsequent extension, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 18,000 18,000 3. Note payable at 12%, matures 7/8/2020. In connection with the original issuance, as well as subsequent extension, the Company has recorded debt discount and amortized it over the applicable life of the debt. {b} * 50,000 50,000 4. Note payable at 12%, matures 6/11/2021. In connection with the original issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 25,000 25,000 5. Note payable at 12%, matures 7/21/2021. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 250,000 250,000 6. Note payable at 12%, matures 10/1/2021. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 410,000 410,000 7. Note payable at 12%, matures 10/15/2021. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 140,000 140,000 8. Note payable at 12%, matures 10/30/2021. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 200,000 200,000 9. Note payable at 12%, matures 7/9/2021. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 60,000 - 10. Note payable at 12%, matures 1/28/2022. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 96,000 - 11. Note payable at 3.75%, matures 6/25/2050. ** 150,000 - 12. Non-interest bearing note payable, matures on 9/30/2021. {c} * 140,188 - Unamortized debt discount (436,287) (544,490) Total 1,152,901 648,510 Less: short term loans, net 257,400 165,270 Total long-term loans, net $ 895,501 $ 483,240 ________________ {a} - On July 24, 2020, the Company extended the note to July 20, 2021 based on the same terms and conditions. In association with the extension the company issued 50,000 shares of common stock with a fair value on $17,500, which will be recorded a debt discount and amortized over the new life of the loan. {b} - On July 8, 2020, the Company extended the note to January 8, 2022 based on the same terms and conditions. In association with the extension the company issued 50,000 shares of common stock with a fair value on $16,000, which will be recorded a debt discount and amortized over the new life of the loan. {c} - On June 23, 2020, the Company issued a non-interest bearing promissory note for $140,188. In exchange for this note the Company received $80,187 of equipment and leasehold improvement, $29,814 of inventory, $18,224 of prepaid expenses and $11,963 of settlement of accrued expenses. * - unsecured note **- secured note and collateralized by all tangible and intangible personal property During the three months ended June 30, 2020 and 2019, the Company recorded $95,705 and $6,515 of interest expense related to the amortization of debt discount and $38,863 and $12,654 of regular interest, respectively. During the six months ended June 30, 2020 and 2019, the Company recorded $187,852 and $12,761 of interest expense related to the amortization of debt discount and $76,959 and $24,874 of regular interest, respectively. As of June 30, 2020 and December 31, 2019, accrued interest was $39,442 and $2,383, respectively. |
STOCKHOLDERS' DEFICIT
STOCKHOLDERS' DEFICIT | 6 Months Ended |
Jun. 30, 2020 | |
STOCKHOLDERS' DEFICIT | |
NOTE 6 - STOCKHOLDERS' DEFICIT | On January 9, 2019, the Company issued 50,000 shares of common stock based on the fair market value on the date of issuance, in connection with third party note 1. (See Note 5). On March 26, 2019, the Company signed a Facility Access and Wholesale Production Purchase and Sale Agreement for a term of twelve (12) months, which was extended through June 23, 2020, with an unrelated party to use the party’s leased commercial chocolate product manufacturing facility in exchange for paying the following: (a) the full amount of the party’s lease obligations of $6,433 per month plus taxes and common area maintenance fees through May 31, 2019 and $6,626 per month plus taxes and common area maintenance fees for 12 months through March 31, 2020; The contract auto renewed for the subsequent year. (b) 66.6% of the party’s expenses related to payroll for employees that make the Company’s product; and (c) 66.6% of the party’s operating expenses specifically related to the Company’s product including utilities, equipment, maintenance and insurance expenses. On February 5, 2019, the Company also issued 100,000 shares of the Company’s common stock based on the fair market value on the date of issuance, as a charitable contribution to a non-profit entity in support of the entity’s environmental regeneration efforts. On June 23, 2020, the Company entered into a new lease agreement and the above-mentioned agreement is now inactive. See Note 7. On January 10, 2020, the Company issued 60,000 shares of common stock based on the fair market value on the date of issuance, in connection with third party note 9. (See Note 5). On January 21, 2020, the Company issued 50,000 shares of the Company’s common stock based on the fair market value on the date of issuance, in connection with the amendment of the third party note 1. (see Note 5). On January 23, 2020, the Company issued 18,000 shares of the Company’s common stock based on the fair market value on the date of issuance, in connection with the amendment of the third party note 2. (see Note 5). On January 29, 2020, the Company issued 96,000 shares of the Company’s common stock based on the fair market value on the date of issuance, in connection with third party note 10. (see Note 5). On March 6, 2020, the Company entered into a six-month agreement with a strategic investment consultant. The investment consultant was awarded 400,000 shares of the Company’s common stock based on the fair market value on the date of issuance. On March 13, 2020 and June 28, 2020, the Company issued 25,000 and 35,000 shares of the Company’s common stock based on the fair market value on the date of issuance, respectively, in connection with the extension of the maturity date of related party note 3. (see Note 2). On May 6, 2020, the Company issued 250,000 shares of the Company’s common stock based on the fair market value on the date of issuance, in connection with the extension of the maturity date of related party note 4. (see Note 2). On May 13, 2020, the Company entered into a three-month agreement with a consultant. The Consultant was awarded 150,000 shares of the Company’s common stock based on the fair market value on the date of issuance. On June 15, 2020, the Company issued 160,000 shares of common stock based on the fair market value on the date of issuance in connection related party note 5. (see Note 2). Warrant Activity Common Stock Warrants On February 5, 2019, the Company signed a Consulting Agreement for a six (6) month term with a consultant to run the day-to-day manufacturing, packaging and distribution of the Company’s chocolate product line. The Consulting Agreement has a $7,000 monthly fee. In addition, the Company issued a warrant to the Consultant to purchase 60,000 shares of the Company’s common stock at the closing market price of $0.30 on February 5, 2019 with a term of three (3) years. The Company valued these warrants using the Black-Scholes option pricing model with the following inputs: exercise price of $0.30; fair market value of underlying stock of $0.30; expected term of 3 years; risk free rate of 2.50%; volatility of 388.56%; and dividend yield of 0%. The total fair value of these warrants is $17,988 and was expensed at issuance. The six-month Consulting Agreement ended on August 5, 2019 and was extended on a monthly basis through December 5, 2019, after which time the consultant was retained by R and W Financial to continue his services as a consultant for the company through R and W Financial. See Note 10 for subsequent issuance of warrants. On January 29, 2020, the Company issued a promissory note of $96,000 (see Note 5). In connection with this note the Company issued warrants to purchase 96,000 shares of the Company’s common stock with an exercise price of $0.22 per share. The warrants are valued at $20,717 based on the Black Scholes Model and included in the debt discount. The warrants are fully vested as of the issue dates with an exercise term of three (3) years. A summary of the Company’s warrants to purchase common stock activity is as follows: Number of Warrants (in common shares) Weighted Average Exercise Price Outstanding, December 31, 2018 343,750 $ 0.08 Granted 1,060,000 0.31 Exercised - - Forfeited or cancelled - - Outstanding, December 31, 2019 1,403,750 $ 0.26 Granted 96,000 0.22 Exercised - - Forfeited or cancelled - - Outstanding, June 30, 2020 1,499,750 $ 0.25 As of June 30, 2020, 1,499,750 warrants for common stock were exercisable and the intrinsic value of these warrants was $27,638, there is no remaining expense and the weighted average remaining contractual life was 1.96 years for warrants outstanding. As of June 30, 2019, 388,125 warrants for common stock were exercisable and the intrinsic value of these warrants was $66,281. As of June 30, 2019, the weighted average remaining contractual life was 2.13 years for warrants outstanding and the remaining expense is approximately $1,315 over the remaining amortization period which is 1 month. Preferred Stock Warrants On March 18, 2020, the Company issued its CFO and Director warrants to purchase 500,000 shares of Series B Preferred Stock in lieu of $250,000 of deferred salary. The warrants have an exercise price of $0.75 per share, are fully vested at issuance, and are exercisable from March 18, 2020 through March 17, 2030. The fair value of these warrants was $375,000 and the additional $125,000 over the deferred salary amount was recorded as compensation expense during the six months ended June 30, 2020. As a result of this issuance, the price protection clause on the director’s warrants issued on December 31, 2019 was triggered resulting in the warrants being reset to an exercise price of $0.75, and the effect was immaterial. A summary of the Company’s warrants to purchase Series B Preferred Stock activity is as follows: Number of Warrants (in Series B Preferred Stock) Weighted Average Exercise Price Outstanding, December 31, 2018 3,370,000 $ 0.57 Granted 600,000 1.20 Outstanding, December 31, 2019 3,970,000 $ 0.67 Granted 500,000 0.75 Exercised - - Forfeited or cancelled - - Outstanding, June 30, 2020 4,470,000 $ 0.68 As of June 30, 2020, 4,230,000 warrants for Series B preferred stock were exercisable and the intrinsic value of these warrants was $714,060, the weighted average remaining contractual life was 7.89 years for warrants outstanding and the remaining expense is $146,286 over the remaining amortization period which is 6 months. As of June 30, 2019, 2,650,000 warrants for Series B preferred stock were exercisable and the intrinsic value of these warrants was $2,212,100. As of June 30, 2019, the weighted average remaining contractual life was 8.25 years for warrants outstanding and the remaining expense is $437,267 over the remaining amortization period which is 1.50 years. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2020 | |
LEASES | |
NOTE 7 - LEASES | On June 23, 2020, the Company entered into an operating lease agreement with terms of 4 years, and an option to extend for three years, comprising of office and warehouse space. This option is included in the lease term when it is reasonably certain that the option will be exercised and failure to exercise such option will result in economic penalty and as such the option to extend for the three-year term is not included in the below calculation. The assets and liabilities from operating leases are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s secured incremental borrowing rates or implicit rates, when readily determinable. Short-term leases, which have an initial term of 12 months or less, are not recorded on the unaudited consolidated balance sheet. The Company’s operating lease does not provide an implicit rate that can readily be determined. Therefore, the Company uses a discount rate based on our incremental borrowing rate, which is determined using the average interest rate of our long-term debt as of June 23, 2020. The Company’s weighted-average remaining lease term relating to its operating leases is 3.83 years, with a weighted-average discount rate of 12.00%. The Company incurred no lease expense or operating cash flow during the three and six months ended June 30, 2020 due to the start of the lease on June 23, 2020 and payments starting on July 1, 2020. The company does not include the non-lease components that are associated with the lease and accounts for them outside of the lease in accordance with ASC Topic 842 Leases The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of June 30, 2020. Maturity of Lease Liability Remainder of 2020 $ 43,612 2021 85,860 2022 86,881 2023 89,487 2024 30,122 Total undiscounted operating lease payments $ 335,962 Less: Imputed interest 68,258 Present value of operating lease liabilities $ 267,704 |
COMMITMENTS
COMMITMENTS | 6 Months Ended |
Jun. 30, 2020 | |
COMMITMENTS | |
NOTE 8 - COMMITMENTS | On July 16, 2018, the Company entered into a consulting agreement with a service provider that contains the following terms: · A $6,000 per month advance of Holy Cacao equity distribution will be awarded every month Holy Cacao earns a net profit over a period of twenty-four (24) consecutive months following the initial product launch and production sale. · 300,000 warrants for shares of the Company’s common stock will be awarded after each of two consecutive twelve (12) month periods in which Holy Cacao earns a net profit from gross annual product sales of at least $1M. Each of the two 300,000 warrant awards will vest equally over a twelve (12) month period. On August 14, 2019, the Company entered into an agreement with a CFN Media. In consideration for the services and deliverables provided by CFN Media, the Company will make three (3) cash payments to CFN Media totaling $30,000. Payments will be made in accordance with the following staged schedule: “Stage 1” - $10,000 due upon the signing of the agreement for the Stage 1 services and deliverables: the interview, lead generation system and two (2) articles, including syndication, distribution and placement. This payment has been made. “Stage 2” - $10,000 due upon the Company’s receipt of CFN Media’s invoice issued after CFN Media’s completion of Stage 1 and the Company’s confirmation they are ready to continue with Stage 2, which will include CFN Media’s delivery of two (2) Articles with the embedded interview and lead generation, as well as syndication, distribution and placement of services and deliverables. “Stage 3” - $10,000 due upon the Company’s receipt of CFN Media’s invoice issued after CFN Media’s completion of Stage 2 and the Company’s confirmation they are ready to continue with Stage 3, which will include CFN Media’s delivery of two (2) Articles with the embedded interview and lead generation, as well as syndication, distribution and placement of services and deliverables. On October 10, 2019, the Company signed a master distribution agreement with CBD Unlimited, Inc., which is a public company and a master distributor, to distribute the Company’s hemp-based chocolate products. The term of this agreement is four years. The agreement includes the issuance of 250,000 shares of the Company’s common stock at the closing market price of $0.26 per share as of the date of the agreement. In the event that this agreement is terminated by FIFG within twelve months of signing of this agreement, a claw back provision can be invoked by FIFG whereby the Shares shall be returned to FIFG. Additionally, FIFG shall pay the distributor a commission for its services hereunder amounting to applicable percentage of the sales price of any sales or sales contract with a customer. On January 14, 2020, the Company entered into an agreement with a Sales Consultant to further the business purpose of the Company. In consideration for the services provided by the Consultant, the Consultant shall be paid a fee of ten percent (10%) of each of the Consultant’s sales of the Company’s product. |
CONCENTRATION RISKS
CONCENTRATION RISKS | 6 Months Ended |
Jun. 30, 2020 | |
CONCENTRATION RISKS | |
NOTE 9 - CONCENTRATION RISKS | The Company recognizes the concentration of its merchant cash advances, which could inherently create a potential risk to future working capital in the event that the Company is not able to collect all, or a majority, of the outstanding merchant cash advances. The Company actively mitigates its portfolio concentration risk by monitoring its merchant cash advance provider’s ability to participate in merchant cash advances from alternative providers and spreading merchant cash advance participation across various merchants. As of June 30, 2020, the Company’s receivables from merchant cash advances included $108,208 from two merchants ($34,964 and $73,244), representing 68% of the Company’s merchant cash advances. The Company earned $7,228 of MCA income from the same two merchants ($5,116 and $2,112), representing 45% of the Company’s MCA income for the three months ended June 30, 2020. The Company earned $82,447 of MCA income from the same two merchants ($57,181 and $25,266), representing 75% of the Company’s MCA income for the six months ended June 30, 2020. As of December 31, 2019, the Company’s receivables from merchant cash advances included $713,124 from two merchants ($179,853 and $533,271), representing 91% of the Company’s merchant cash advances. The Company earned $13,350 of MCA income from one merchant, representing 32% of the Company’s MCA income for the three months ended June 30, 2019. The Company earned $46,839 of MCA income from two merchants ($25,852 and $20,987), representing 30% of the Company’s MCA income for the six months ended June 30, 2019. As of June 30, 2020, there was no accounts payable concentration other than amounts owed to related parties which makes up 65% of the balance. As of December 31, 2019, there was no accounts payable concentration other than amounts owed to related parties which makes up 61% of the balance. For the three months ended June 30, 2020, the Company had purchase concentrations of 90% from one vendor. For the six months ended June 30, 2020, the Company had purchase concentrations of 73% and 14% from two vendors. For the three and six months ended June 30, 2019, the Company had purchase concentrations of 100% from one vendor. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2020 | |
SUBSEQUENT EVENTS | |
NOTE 10 - SUBSEQUENT EVENTS | On July 19, 2020, the Company issued 50,000 shares of the Company’s common stock based on the fair market value on the date of issuance, in connection with the amendment of the third party note 3. (see Note 5). On July 13, 2020, our Board of Directors appointed Michael Kaplan to the Board of Directors. Mr. Kaplan is currently not expected to be named as a member of any committees of our Board of Directors. Mr. Kaplan’s compensation as a director for the initial twelve months will consist of one million (1,000,000) warrants which will vest at the rate of 83,333 warrants per month for the initial eleven months and the balance in the twelfth month, provided he is a director on each vesting date, with the initial tranche vesting on the day he takes office and then on each monthly anniversary of such date thereafter. Each Warrant will be exercisable for 36 months after it vests and will be exercisable at a price of $0.18 per share. The warrants are valued at $177,200 based on the Black Scholes Model. If he remains in office beyond twelve months, commencing with month thirteen, his compensation will be similar to the majority of the directors then in office. Prior to Mr. Kaplan’s appointment to the Board of Directors, on July 7, 2020 we entered into (i) a Subscription Agreement with Mr. Kaplan to sell to him one million (1,000,000) shares of common stock at a purchase price of $0.20 per share for a total purchase price of $200,000, which shares shall be purchased in twelve (12) equal monthly installments of 83,333 shares (the last installment to cover 83,337 shares) with the initial purchase occurring on the date thereof and subsequent instalments on each monthly anniversary thereafter (ii) a Consulting Agreement with Mr. Kaplan to award him, as full compensation for two (2) years of service, warrants to purchase two million (2,000,000) shares of common stock at an exercise price of $0.18 per share, which was the closing price of our common stock on such date, and (iii) an arrangement with Mr. Kaplan that in the event he raises outside investment in the Company in the amount of $500,000 - $2,000,000, he will receive one warrant for each dollar he so raises. The warrants to purchase two million shares of common stock are valued at $354,400 based on the Black Scholes Model. The warrants shall vest upon the occurrence to the Company of the following milestone events through the efforts of the consultant: No. of Warrants Milestone 100,000 Acceptance by the Company of a full go-to market strategy for the Company’s products. 100,000 Acceptance by the Company of a social marketing platform and PR strategy and onboarding of such. 300,000/500,000 300,000 for each MULO retailer that is onboarded - regardless of store count carrying the product; and 500,000, if the onboarded MULO is a national chain. 300,000 Deliverance of full due diligence package for each potential acquisition for which the Company requests the consultant perform due diligence 500,000 Upon the closing of any acquisition which the consultant brought to the Company and provided due diligence. 500,000 Additional compensation in board seat agreement. If terminated with cause by the Company, the consultant shall not thereafter be entitled to any form of compensation and shall be paid a buyout fee in the amount of 250,000 fully vested warrants. If terminated without cause by the Company, all unvested warrants shall be accelerated and vest in one-half the time it was previously scheduled to vest. Effective August 1, 2020, Mr. Kaplan will also have the title Chief Marketing Officer with authority to oversee the Company’s sales and marketing operations, and responsibility for developing oversight processes and procedures. On July 24, 2020, the Company issued 50,000 shares of the Company’s common stock based on the fair market value on the date of issuance, in connection with the amendment of the third party note 1. (see Note 5). On July 31, 2020, the Company issued a warrant to purchase 100,000 shares of the Company’s common stock to a consultant for services. The warrants are valued at $31,500 based on the Black Scholes Model. On August 4, 2020, the Company signed an Employment Agreement for a term of three. The employee, Mr. Moises Davidovits, will assist with the manufacturing, packaging and distribution of the Company’s chocolate product line. The Employment Agreement has a $7,000 monthly salary. In addition, the Company issued a warrant to Mr. Davidovits to purchase 300,000 shares of the Company’s common stock with a term of three (3) years. The warrants are valued at $97,470 based on the Black Scholes Model. In addition, he will receive a warrant to purchase 300,000 of the Company’s common stock for each of the two remaining years under the Employment Agreement with an exercise price equal to the closing market price of the Company’s common stock on the first day of each of such two annual employment periods. The warrants will be subject to a 12-month period whereby the warrants will vest in equal monthly increments for each year of the employment period. Each of the warrants will be exercisable within a three-year period from the date of issue. Once per quarter, Mr. Davidovits may waive the right to receive 25,000 warrants and receive in exchange for $5,000 worth of shares of the Company’s common stock. In the event Mr. Davidovits’ employment is terminated by the Company without cause, he shall be entitled to receive severance in an amount equal to the lesser of three month’s salary or the amount of salary otherwise payable until the termination date. He additionally shall be entitled to retain all warrants scheduled to vest within the following six months. |
BUSINESS SUMMARY OF SIGNIFICA_2
BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY (Policies) | |
Nature of Business | First Foods Group, Inc. (the “Company” or “First Foods”) is a smaller reporting company focused on developing its specialty chocolate product line and participating in merchant cash advances (“MCA”) through its 1 st On August 31, 2017, the Company formed Holy Cacao, Inc., a Nevada corporation (“Holy Cacao”). Holy Cacao has 100 shares of no par value common stock authorized, issued and outstanding with 85 shares owned by the Company and 15 shares owned by non-controlling interests. Holy Cacao is dedicated to producing, packaging, distributing and selling specialty chocolate products, including specialty chocolate products infused with a hemp-based ingredient in accordance with the Company’s understanding of the Agricultural Act of 2014 (the “2014 Farm Bill”) and/or the Agriculture Improvement Act of 2018 (the “2018 Farm Bill,” and together with the 2014 Farm Bill, collectively, the “Farm Bill”), which renders the production of hemp in compliance with the provisions of the Farm Bill federally lawful. The Company has not been, is not, and has no current plans to be involved in producing, packaging, distributing or selling any product that is infused with a marijuana-based ingredient, although it intends to revisit the matter as regulations change in jurisdictions in which it operates. The Company is also dedicated to licensing its intellectual property (“IP”), including its name, brand, and packaging, to third parties. The Company may license its IP to third parties that may produce, package, and distribute hemp-based products pursuant with the Company’s understanding of the Farm Bill. The Company may license its IP to third parties that may produce, package, and distribute marijuana-based products, but only as such licensing is legal. On February 27, 2019, the United States Patent and Trademark Office (the “USPTO”) approved Holy Cacao’s trademark brand, “The Edibles’ Cult.” On November 26, 2019, the USPTO approved Holy Cacao’s trademark brand, “Purely Irresistible.” The Company has submitted multiple applications to the USPTO for additional brand names, including “Mystere” and “Southeast Edibles” among others. On February 5, 2019, the Company signed a Consulting Agreement with a consultant to assist in the manufacturing, packaging and distribution of the Company’s chocolate product line. On March 26, 2019, the Company signed a Facility Access and Wholesale Production Purchase and Sale Agreement that allows it to use a fully staffed and fully equipped state of the art manufacturing facility to produce its specialty chocolate product line and sell it to manufacturing and wholesaling companies. On March 1, 2020, the Company’s Board of Directors made a strategic decision to broaden the appeal of its hemp-based chocolate products to a wider base of customers, who are particularly discerning about the cleanliness of the Company’s manufacturing facility and quality of its hemp-based chocolate products, by successfully obtaining worldwide Kosher certification from the Union of Orthodox Jewish Congregations of America, Kashruth Division (the “OU”), which is the largest and most recognized certification of its kind in the world. On March 9, 2020, the Company retained Tartikov Beth Din (“BD”) to allow BD to supervise the hemp-based chocolate products produced by the Company in accordance with OU certification standards. On July 13, 2020, Michael Kaplan was appointed to the Board of Directors and, as of August 1, 2020, accepted the role of Chief Marketing Officer with authority to oversee the Company’s sales and marketing operations, and responsibility for developing oversight processes and procedures. On August 4, 2020 the Company retained Moises Davidovits as its full-time chocolatier. Mr. Davidovits is a third-generation chocolatier who is responsible for the manufacturing, packaging and distribution of the Company’s chocolate product line, as well as the formulation of all of the Company’s proprietary chocolate recipes. On October 25, 2017, the Company entered into a contract with TIER Merchant Advances LLC (“TIER”) to participate in the purchase of future receivables from qualified TIER merchants for the purpose of generating near-term and long-term revenue for the Company. On November 8, 2018, the Company also began providing cash advances directly to merchants. |
Liquidity and Going Concern | The Company’s unaudited condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States of America (“GAAP”) applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, the Company will need, among other things, additional capital resources. As of June 30, 2020, the Company had approximately $257,000 in third-party short-term debt that is due within the next twelve months. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its operating expenses and seeking equity and/or debt financing. However, neither any members of management nor any significant shareholders are currently committed to invest funds with us and; therefore, we cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The Company does not have sufficient cash flow for the next twelve months from the date of this report. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. In December 2019, a novel strain of coronavirus surfaced. The spread of COVID-19 around the world in the first quarter of 2020 has caused significant volatility in U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies. The Company’s financial position, operations and cash flows as of June 30, 2020 have been adversely affected, and may be further affected in the future, by the recent and ongoing outbreak of the coronavirus disease 2019 (COVID-19) which in March 2020, was declared a pandemic by the World Health Organization. The ultimate disruption which may be caused by the outbreak is uncertain; however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows. Possible areas that may be materially affected include, but are not limited to, disruption to the Company’s labor workforce, unavailability of products and supplies used in operations, and the decline in value of assets held by the Company. As of June 30, 2020 and through the filing date of the financial statements, the Company has continued to collect receivables from its cash advances but has experienced an increase in payment delinquencies and has had two customers renegotiate the terms of their cash advances due to COVID-19. The Company has taken a reserve allowance on its MCA’s. |
Use of Estimates | The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these unaudited condensed consolidated financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read in conjunction with the Company’s annual consolidated financial statements included within the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on March 25, 2020. In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the six months ended June 30, 2020 may not be indicative of results for the full year. The noncontrolling interest represents the proportionate share of the proceeds received and also the income and loss pickup from the fifteen-percent sale of equity interest in our wholly owned subsidiary; Holy Cacao. |
Principles of Consolidation | The unaudited condensed consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiary in conformity with GAAP. All intercompany accounts and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | The Company considers all highly liquid temporary cash investments with an original maturity of twelve months or less to be cash equivalents. At June 30, 2020 and December 31, 2019, the Company had no cash equivalents. The Company’s cash is held with financial institutions, and the account balances may exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit at times. Accounts are insured by the FDIC up to $250,000 per financial institution. The Company has not experienced any losses in such accounts with these financial institutions. |
Merchant Cash Advances | The Company participates in the merchant cash advance industry by directly advancing sums to a merchant or a merchant advance provider, TIER, who in turn advances sums to merchants or other merchant cash advance providers. Each reporting period, the Company reviews the carrying value of these advances and determines whether an impairment reserve is necessary. At June 30, 2020, the Company reserved an amount equal to 78% of the outstanding merchant cash advance balance at period end based on the potential impact of COVID 19. In addition, during the six months ended June 30, 2020 the Company wrote off 21 merchant advances for a total of $22,901. These expenses are included in provision for merchant cash advances expense on the accompanying unaudited condensed consolidated statements of operations. |
Revenue Recognition | We completed, related to our merchant cash advance business line, our assessment of the impact of ASC 606 and determined that we recognize revenue in accordance with ASC 860, Transfers and Servicing Product sales are measured based on consideration specified in a contract with a customer that we expect to receive in exchange for goods, net of any variable considerations (e.g. rights to return product, sales incentives, etc.). The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer. These criteria are assumed to have been met upon delivery of the products requested by the customer to the customer’s carrier. The Company applied the practical expedient available under ASC 606 to disregard determining significant financing components, if the good is transferred and payment is received within one year. When a merchant cash advance is purchased, the Company records a merchant cash advance participation receivable for the purchase price. The purchase price consists of the merchant cash advance principal plus an up-front commission that is amortized over the term of the merchant cash advance. The amount of the commission is negotiated between the Company and TIER for each contract. The standard commission is 15% of the merchant cash advance principal but can be reduced depending upon the credit worthiness of the merchant. The average commission paid by the Company since inception has been approximately 7%. If a merchant cash advance contract is signed in one period, but not paid until a subsequent period, a corresponding liability is established in the current period. At the time the Company participates in a merchant cash advance, the Company records a deferred revenue liability, which is the total future receivable due to the Company less the principal amount of the merchant cash advance. Revenue is recognized and the deferred liability is reduced over the term of the merchant cash advance. TIER maintains a bank account on behalf of the Company. Each day, TIER receives payment, reflected in the bank account, for each merchant cash advance TIER has purchased on behalf of the Company from various merchant cash advance providers. The Company reduces its merchant cash advance balance by the cash received, which is net of platform fees. Platform fees are a daily charge associated with the ACH service and the financial and reporting management software platform provided by TIER. The platform fees are also negotiated between the Company and TIER for each contract but are typically 4% of the daily merchant cash advance principal amount. For each merchant cash advance entered into by the Company, TIER receives a daily payment as payments are made on the advance, for each merchant cash advance TIER has purchased on behalf of the Company from various merchant cash advance providers. The Company reduces its merchant cash advance balance by the cash received, which is net of a 2% commission to TIER. |
Inventory | Inventory, consisting of raw materials, work in process and products available for sale, are accounted for using the first-in, first-out method, and are valued at the lower of cost or net realizable value. This valuation requires management to make judgements based on currently available information, about the likely method of disposition, such as through sales to individual customers and returns. The Company has no allowance for inventory reserves. Inventory consisted of the following as of June 30, 2020 and December 31, 2019: June 30, December 31, 2020 2019 Raw Materials $ 41,463 $ 2,854 Work in Process 1,550 5,410 Finished Goods 8,562 2,292 Total $ 51,575 $ 10,556 |
Property and Equipment | Property and equipment are stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense when incurred, while renewals and betterments that materially extend the life of an asset are capitalized. When assets are sold, retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheets and any resulting gain or loss is reflected in the unaudited condensed consolidated statements of operations and members’ deficit in the period realized. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets, which are as follows: Property – Leasehold Improvements 4 years Equipment 5 years |
Impairment of Long-Lived Assets | Long-lived assets are comprised of property and equipment. The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset or group of assets may not be recoverable. If these circumstances exist, recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to future undiscounted net cash flows expected to be generated by the asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. There were no impairments to long-lived assets for the six months ended June 30, 2020 and 2019. |
Research and Development | The Company’s policy is to engage market and branding consultants to research and develop specialty chocolate products, including chocolate products infused with a hemp-based ingredient, and packaging targeted to particular states within the US. The research and development costs for the three months ended June 30, 2020 and 2019, were $27,500 and $18,510, respectively. The research and development costs for the six months ended June 30, 2020 and 2019, were approximately $32,000 and $33,510, respectively. These expenses are included in general and administrative expenses on the accompanying unaudited condensed consolidated statements of operations. |
Deferred Financing Costs | The Company records origination and other expenses related to its debt obligations as deferred financing costs. These expenses are deferred and amortized over the life of the related debt instrument. In accordance with Accounting Standards Update (“ASU”) No. 2015-03, deferred finance costs, net of accumulated amortization have been included as a contra to the corresponding loans in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively. |
Stock Based Compensation | The Company measures and recognizes compensation expense for all stock-based payments at fair value over the requisite service period. The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options and warrants. For restricted stock grants, fair value is determined as the closing price of our common stock on the date of grant. Equity-based compensation expense is recorded in administrative expenses based on the classification of the employee or vendor. The determination of fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price, as well as by assumptions regarding a number of subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. |
Income Taxes | The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2020 and December 31, 2019, the Company had a full valuation allowance against deferred tax assets. With the historical change in ownership, the Company is subject to certain NOL limitations under Section 382 of the Internal Revenue Code. |
Per Share Data | In accordance with “ASC-260 - Earnings per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive shares outstanding as of June 30, 2020 and 2019 because their effect would be antidilutive. The Company had 1,499,750 and 403,750 warrants to purchase common stock outstanding at June 30, 2020 and 2019, respectively. The Company had 4,470,000 and 3,370,000 warrants to purchase Series B preferred stock outstanding at June 30, 2020 and 2019, respectively. The Company has outstanding one (1) Series A preferred share that is convertible into five (5) shares of the Company’s common stock. Additionally, the Company has 473,332 Series B preferred shares, and 660,000 Series C preferred shares outstanding that are convertible into 2,366,660 and 660,000 shares of common stock at June 30, 2020 and 2019, respectively. The warrants and preferred stock were not included in the Company’s weighted average number of common shares outstanding because they would be anti-dilutive. |
Fair Value of Financial Instruments | Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value. The carrying value of cash, merchant cash advances, prepaid expenses, accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments. Management is of the opinion that the Company is not exposed to significant market or credit risks arising from these financial instruments. |
Advertising and Promotion | Advertising and promotion costs are expensed as incurred. Advertising and promotion costs recognized in the unaudited condensed consolidated statements of operations for the three months ended June 30, 2020 and 2019, were approximately $5,700 and $34,150, respectively and approximately $21,000 and $44,900, respectively, for the six months ended June 30, 2020 and 2019. |
Non-Controlling Interests in Consolidated Financial Statements | In June 2011, the FASB issued ASC 810-10-65-1, to clarify that a non-controlling (minority) interest in a subsidiary is an ownership interest in the entity that should be reported as equity in the condensed consolidated financial statements. It also requires consolidated net income to include the amounts attributable to both the parent and non-controlling interest, with disclosure on the face of the unaudited condensed consolidated income statement of the amounts attributed to the parent and to the non-controlling interest. In accordance with ASC 810-10-45-21, those losses attributable to the parent and the non-controlling interest in subsidiaries may exceed their interests in the subsidiary’s equity. The excess and any further losses attributable to the parent and the non-controlling interest shall be attributed to those interests even if that attribution results in a deficit non-controlling interest balance. During the year ended December 31, 2017, the Company entered into a subscription agreement for the sale of a ten-percent equity interest in its wholly owned subsidiary, Holy Cacao, for $200,000 in cash proceeds, in the aggregate. During the year ended December 31, 2019, 5% equity was issued to a service provider due to the completion of Holy Cacao’s first sale of its product, as per the agreement with the service provider. The Company’s periodic reporting now includes the results of operations of Holy Cacao, with the fifteen-percent ownership reported as noncontrolling interests. For the three and six months ended June 30, 2020, the cost of goods sold was approximately $4,700 and $5,500, respectively, and the operating expense for Holy Cacao was $122,000 and $215,000, respectively. There was approximately $8,800 and $12,400 of revenue for Holy Cacao for the three and six months ended June 30, 2020, respectively. The Company conducts business as two operating segments, First Foods and Holy Cacao. The Company does not distinguish between the two segments and has only one reportable segment based on quantitative thresholds. The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker. |
Recent Accounting Pronouncements | From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses” to improve information on credit losses for financial assets and net investment in leases that are not accounted for at fair value through net income. ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. In April 2019 and May 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” and ASU No. 2019-05, “Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief” which provided additional implementation guidance on the previously issued ASU. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective date for public filers that are considered small reporting companies (“SRC”) as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since the Company is an SRC, implementation is not needed until January 1, 2023. The Company will continue to evaluate the effect adopting ASU 2016-13 will have on the Company’s unaudited condensed consolidated financial statements. |
BUSINESS SUMMARY OF SIGNIFICA_3
BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY (Tables) | |
Schedule of inventory | June 30, December 31, 2020 2019 Raw Materials $ 41,463 $ 2,854 Work in Process 1,550 5,410 Finished Goods 8,562 2,292 Total $ 51,575 $ 10,556 |
Schedule of estimated useful life of assets | Property – Leasehold Improvements 4 years Equipment 5 years |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
RELATED PARTY TRANSACTIONS (Tables) | |
Schedule of related party Loan | June 30, 2020 December 31, 2019 1. Note payable at 12%, matures 10/31/2020 {a} * $ 100,000 $ 100,000 2. Non-interest bearing note payable, matures on 4/25/2021 * 179,813 179,813 3. Note payable at 12%, matures 9/13/2020. The Company has recorded debt discount and amortized it over the applicable life of the debt. {b} * 100,000 100,000 4. Note payable at 12%, matures 4/9/2021. The Company has recorded debt discount and amortized it over the applicable life of the debt. {c} * 250,000 250,000 5. Non-interest bearing note payable, matures on 11/15/2020. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. {d} * 80,000 - Unamortized debt discount (77,866 ) (9,190 ) Total $ 631,947 $ 620,623 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
PROPERTY AND EQUIPMENT (Tables) | |
Schedule of Property and equipment | June 30, December 31, Leasehold improvements $ 40,000 $ - Equipment 196,792 - Less: Accumulated depreciation and amortization (12,741 ) - Total $ 224,051 $ - |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | |
Schedule of accounts payable and accrued liabilities | June 30, 2020 December 31, 2019 Accounts payable $ 451,100 $ 305,679 Interest 73,109 24,136 Salaries 262,933 386,121 Other 45,489 35,739 Total $ 832,631 $ 751,675 |
LOANS AND LONG-TERM LOANS (Tabl
LOANS AND LONG-TERM LOANS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
LOANS AND LONG-TERM LOANS (Tables) | |
Schedule of maturities of long term debt | June 30, 2020 December 31, 2019 1. Note payable at 12%, matures 7/20/2020. In connection with the original issuance, as well as subsequent extension, the Company has recorded debt discount and amortized it over the applicable life of the debt. {a} * $ 50,000 $ 100,000 2. Note payable at 12%, matures 1/22/2021. In connection with the original issuance, as well as subsequent extension, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 18,000 18,000 3. Note payable at 12%, matures 7/8/2020. In connection with the original issuance, as well as subsequent extension, the Company has recorded debt discount and amortized it over the applicable life of the debt. {b} * 50,000 50,000 4. Note payable at 12%, matures 6/11/2021. In connection with the original issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 25,000 25,000 5. Note payable at 12%, matures 7/21/2021. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 250,000 250,000 6. Note payable at 12%, matures 10/1/2021. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 410,000 410,000 7. Note payable at 12%, matures 10/15/2021. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 140,000 140,000 8. Note payable at 12%, matures 10/30/2021. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 200,000 200,000 9. Note payable at 12%, matures 7/9/2021. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 60,000 - 10. Note payable at 12%, matures 1/28/2022. In connection with the issuance, the Company has recorded debt discount and amortized it over the applicable life of the debt. * 96,000 - 11. Note payable at 3.75%, matures 6/25/2050. ** 150,000 - 12. Non-interest bearing note payable, matures on 9/30/2021. {c} * 140,188 - Unamortized debt discount (436,287) (544,490) Total 1,152,901 648,510 Less: short term loans, net 257,400 165,270 Total long-term loans, net $ 895,501 $ 483,240 |
STOCKHOLDERS' DEFICIT (Tables)
STOCKHOLDERS' DEFICIT (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
STOCKHOLDERS' DEFICIT | |
Schedule of common stock activity | Number of Warrants (in common shares) Weighted Average Exercise Price Outstanding, December 31, 2018 343,750 $ 0.08 Granted 1,060,000 0.31 Exercised - - Forfeited or cancelled - - Outstanding, December 31, 2019 1,403,750 $ 0.26 Granted 96,000 0.22 Exercised - - Forfeited or cancelled - - Outstanding, June 30, 2020 1,499,750 $ 0.25 |
Schedule of Series B Preferred Stock activity | Number of Warrants (in Series B Preferred Stock) Weighted Average Exercise Price Outstanding, December 31, 2018 3,370,000 $ 0.57 Granted 600,000 1.20 Outstanding, December 31, 2019 3,970,000 $ 0.67 Granted 500,000 0.75 Exercised - - Forfeited or cancelled - - Outstanding, June 30, 2020 4,470,000 $ 0.68 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
LEASES | |
Schedule of operating lease | Maturity of Lease Liability Remainder of 2020 $ 43,612 2021 85,860 2022 86,881 2023 89,487 2024 30,122 Total undiscounted operating lease payments $ 335,962 Less: Imputed interest 68,258 Present value of operating lease liabilities $ 267,704 |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
SUBSEQUENT EVENTS | |
Schedule of occurrence of milestone event | No. of Warrants Milestone 100,000 Acceptance by the Company of a full go-to market strategy for the Company’s products. 100,000 Acceptance by the Company of a social marketing platform and PR strategy and onboarding of such. 300,000/500,000 300,000 for each MULO retailer that is onboarded - regardless of store count carrying the product; and 500,000, if the onboarded MULO is a national chain. 300,000 Deliverance of full due diligence package for each potential acquisition for which the Company requests the consultant perform due diligence 500,000 Upon the closing of any acquisition which the consultant brought to the Company and provided due diligence. 500,000 Additional compensation in board seat agreement. |
BUSINESS SUMMARY OF SIGNIFICA_4
BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY (Details) - USD ($) | Jun. 30, 2020 | Jun. 23, 2020 | Dec. 31, 2019 |
BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY (Tables) | |||
Raw Materials | $ 41,463 | $ 2,854 | |
Work in Process | 1,550 | 5,410 | |
Finished Goods | 8,562 | 2,292 | |
Total | $ 51,575 | $ 29,814 | $ 10,556 |
BUSINESS SUMMARY OF SIGNIFICA_5
BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY (Details1) | 6 Months Ended |
Jun. 30, 2020 | |
Property ? Leasehold Improvements [Member] | |
Property and equipment estimated useful life | 4 years |
Equipment [Member] | |
Property and equipment estimated useful life | 5 years |
BUSINESS SUMMARY OF SIGNIFICA_6
BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Mar. 18, 2020 | Dec. 31, 2019 | |
Common stock shares outstanding | 21,557,771 | 100,000,000 | 21,557,771 | 100,000,000 | 20,313,771 | |||
Cash, FDIC insured amount | $ 250,000 | $ 250,000 | $ 250,000 | $ 250,000 | ||||
Short term debt third party | $ 257,000 | $ 257,000 | $ 257,000 | $ 257,000 | ||||
Series B preferred shares, outstanding | 473,332 | 660,000 | 473,332 | 660,000 | ||||
Series C preferred shares, outstanding | 2,366,660 | 660,000 | 2,366,660 | 660,000 | ||||
Common stock shares issuable upon conversion of convertible preferred stock | 2,366,660 | 2,366,660 | ||||||
Research and development costs | $ 27,500 | $ 18,510 | $ 32,000 | $ 33,510 | ||||
Reserve stock split | The Company has outstanding one (1) Series A preferred share that is convertible into five (5) shares of the Company’s common stock | |||||||
Advertising and promotion costs | 5,700 | 34,150 | $ 21,000 | 44,900 | ||||
Amount of merchant advances written off | $ 12,328 | |||||||
Average commission paid by Company, rate | 7.00% | |||||||
Standard commission for merchant cash advance principal, percent | 15.00% | |||||||
Operating Expense | $ 457,628 | $ 431,839 | $ 1,483,725 | 888,317 | ||||
Revenue | $ 24,711 | $ 73,461 | $ 121,685 | $ 188,298 | ||||
Series B Convertible Preferred Stock [Member] | CFO and Director [Member] | ||||||||
Class of warrants or rights outstanding | 800,000 | 800,000 | ||||||
Warrants outstanding to purchase common shares | $ 250,000 | |||||||
Warrant [Member] | ||||||||
Class of warrants or rights outstanding | 1,499,750 | 403,750 | 1,499,750 | 403,750 | ||||
Warrant [Member] | Series B Convertible Preferred Stock [Member] | ||||||||
Warrants outstanding to purchase common shares | $ 4,470,000 | $ 3,370,000 | $ 4,470,000 | $ 3,370,000 | ||||
TIER Merchant Advances LLC [Member] | ||||||||
Standard commission for merchant cash advance principal, percent | 4.00% | |||||||
Daily merchant cash advance, principal amount, | $ 22,901 | |||||||
Holy Cacao [Member] | ||||||||
Standard commission for merchant cash advance principal, percent | 4.00% | |||||||
Per Share | $ 5 | $ 5 | ||||||
Cost of good sold | 5,500 | $ 4,700 | ||||||
Operating Expense | $ 122,000 | 215,000 | $ 8,800 | $ 12,400 | ||||
Common stock shares owned by company | 200,000 | |||||||
Cost of goods sold and operating expenses | $ 93,482 | $ 748 | ||||||
Revenue | $ 3,605 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Discount | $ 80,000 | $ 0 |
Unamortized debt discount | (77,866) | (9,190) |
Related party loans, net | 631,947 | 620,623 |
Obvia LLC [Member] | ||
Related party loans, gross | 100,000 | 100,000 |
R&W Financial [Member] | Subsequent Event [Member] | ||
Related party loans, gross | 179,813 | 179,813 |
Mayer Weiss [Member] | ||
Related party loans, gross | 100,000 | 100,000 |
Shareholder [Member] | ||
Related party loans, gross | $ 250,000 | $ 250,000 |
RELATED PARTY TRANSACTIONS (D_2
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||||
Mar. 18, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Sep. 13, 2020 | Jul. 24, 2020 | Jul. 08, 2020 | Jun. 28, 2020 | Apr. 10, 2020 | Mar. 13, 2020 | Jan. 23, 2020 | Mar. 31, 2019 | Oct. 11, 2018 | |
Amortization of debt discount | $ 219,320 | $ 16,401 | |||||||||||||
Interest expense | $ 170,704 | $ 27,914 | $ 324,077 | 52,864 | |||||||||||
Common stock shares issued | 21,557,771 | 21,557,771 | 20,313,771 | 50,000 | 50,000 | ||||||||||
Debt discount | $ (77,866) | $ (77,866) | $ (9,190) | ||||||||||||
Director Agreements [Member] | |||||||||||||||
Accrued interest | $ 240,000 | 160,000 | $ 240,000 | 160,000 | 14,034 | ||||||||||
Common stock shares issued | 600,000 | 600,000 | 25,000 | 35,000 | 250,000 | 250,000 | |||||||||
Debt Discount | $ 10,544 | $ 10,544 | $ 60,000 | ||||||||||||
Officer's compensation | 10,000 | ||||||||||||||
warrants Addtionial | 200,000 | 200,000 | |||||||||||||
Accrued compensation | $ 144,696 | $ 143,901 | $ 144,696 | $ 143,901 | $ 160,000 | $ 72,348 | |||||||||
Warrants purchased | 80,000 | 80,000 | 400,000 | ||||||||||||
Purchase price | $ 1.20 | $ 1.20 | |||||||||||||
Warrant exercise price | $ 0.75 | $ 0.75 | |||||||||||||
Promissory Notes One [Member] | |||||||||||||||
Common stock shares issued | 18,000 | 250,000 | |||||||||||||
Maturity date | Jul. 20, 2020 | ||||||||||||||
Mayer Weiss [Member] | |||||||||||||||
Common stock shares issued | 35,000 | 25,000 | |||||||||||||
Promissory Note [Member] | Mayer Weiss [Member] | |||||||||||||||
Purchase price per share | $ 0.20 | $ 0.20 | |||||||||||||
Accrued interest | $ 33,667 | $ 33,667 | $ 21,753 | ||||||||||||
Amortization of debt discount | 13,463 | $ 4,763 | 26,926 | $ 9,447 | |||||||||||
Interest expense | 21,081 | 1,830 | 31,468 | 3,640 | |||||||||||
Series B Convertible Preferred Stock [Member] | Warrant [Member] | |||||||||||||||
Fair value warrants | 720,000 | 720,000 | |||||||||||||
Warrant issued | 1,280,000 | 600,000 | |||||||||||||
Director [Member] | Mr. Keeley [Member] | Employment agreement [Member] | March 1, 2017 [Member] | |||||||||||||||
Accrued interest | 204,667 | 204,667 | 329,167 | ||||||||||||
Deferred salary | 250,000 | ||||||||||||||
Payroll Tax Liabilities | 18,766 | 18,766 | 16,953 | ||||||||||||
Purchase ability of warrants | 50,000 | 50,000 | |||||||||||||
Additional annual salary | $ 40,000 | $ 20,833 | $ 40,000 | $ 20,833 | |||||||||||
Director [Member] | Series B Convertible Preferred Stock [Member] | |||||||||||||||
Purchase price per share | $ 0.60 | $ 0.60 | |||||||||||||
CFO and Director [Member] | Series B Convertible Preferred Stock [Member] | |||||||||||||||
Warrants issued to related party | 500,000 | ||||||||||||||
Hershel Weiss [Member] | Non-Interest Bearing Loan [Member] | R&W Financial [Member] | |||||||||||||||
Common stock shares issued | 160,000 | 160,000 | 250,000 | ||||||||||||
Debt discount | $ 29,600 | $ 29,600 | |||||||||||||
Principal balance for loan | 80,000 | $ 80,000 | $ 179,813 | ||||||||||||
Maturity date | Apr. 25, 2021 | ||||||||||||||
Chairman of the Board [Member] | Employment agreement [Member] | Mr. Kestenbaum [Member] | |||||||||||||||
Salary under employment agreement | 5,000 | $ 5,000 | |||||||||||||
Additional agreement amount | 4,250 | 4,250 | |||||||||||||
Outstanding balance | 52,713 | 52,713 | |||||||||||||
Accrued compensation | $ 40,000 | $ 40,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Jun. 30, 2020 | Jun. 23, 2020 | Dec. 31, 2019 |
PROPERTY AND EQUIPMENT | |||
Leasehold improvements | $ 40,000 | $ 0 | |
Equipment | 196,792 | 0 | |
Less: Accumulated depreciation | (12,741) | 0 | |
Total | $ 224,051 | $ 29,814 | $ 0 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Interest | $ 54,900 | $ 40,848 | |
Accounts Payable and Accrued Liabilities [Member] | |||
Accounts payable | 451,100 | $ 305,679 | |
Interest | 73,109 | 24,136 | |
Salaries | 262,933 | 386,121 | |
Other | 45,489 | 35,739 | |
Total expenses | $ 832,631 | $ 751,675 |
LOANS AND LONGTERM LOANS (Detai
LOANS AND LONGTERM LOANS (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Non-Interest bearing note payable | $ 140,188 | |
Note Payable | 150,000 | $ 18,000 |
Unamortized debt discount | (436,287) | (544,490) |
Long term loans | 1,152,901 | 648,510 |
Less: short term loans, net | 257,400 | 165,270 |
Total long-term loans, net | 895,501 | 483,240 |
Promissory Note Nine [Member] | ||
Note Payable | 96,000 | 96,000 |
Long term loans, gross | 96,000 | 0 |
Promissory Note Six [Member] | ||
Note Payable | 140,000 | 140,000 |
Long term loans, gross | 140,000 | 140,000 |
Promissory Note Five [Member] | ||
Long term loans, gross | 410,000 | 410,000 |
Promissory Note Eight [Member] | ||
Long term loans, gross | 60,000 | 0 |
Promissory Note Seven [Member] | ||
Note Payable | 200,000 | 200,000 |
Long term loans, gross | 200,000 | 200,000 |
Promissory Note Four [Member] | ||
Note Payable | 250,000 | 250,000 |
Long term loans, gross | 250,000 | 250,000 |
Promissory Notes [Member] | ||
Long term loans, gross | 18,000 | 18,000 |
Promissory Notes One [Member] | ||
Note Payable | 50,000 | 50,000 |
Long term loans, gross | 50,000 | 100,000 |
Promissory Note Two [Member] | ||
Note Payable | 50,000 | |
Long term loans, gross | 50,000 | 50,000 |
Promissory Note Three [Member] | ||
Long term loans, gross | $ 25,000 | $ 25,000 |
LOANS AND LONGTERM LOANS (Det_2
LOANS AND LONGTERM LOANS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||||||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jul. 24, 2020 | Jul. 08, 2020 | Jun. 23, 2020 | Jan. 29, 2020 | Jan. 23, 2020 | Dec. 31, 2019 | Oct. 11, 2018 | |
Non-Interest bearing note payable | $ 140,188 | $ 140,188 | |||||||||
Interest Expense | 95,705 | $ 6,515 | 187,852 | $ 12,761 | |||||||
Amortization of debt discount | 38,863 | $ 12,654 | 76,959 | $ 24,874 | |||||||
Inventory | 51,575 | 51,575 | $ 29,814 | $ 10,556 | |||||||
Company Recieved | 80,187 | ||||||||||
Equipment and leasehold improvment | 224,051 | 224,051 | 29,814 | 0 | |||||||
Prepaid Expense | $ 11,963 | ||||||||||
Accrued Interest | $ 39,442 | $ 39,442 | $ 2,383 | ||||||||
Common Stock share issued | 21,557,771 | 21,557,771 | 50,000 | 50,000 | 20,313,771 | ||||||
Common stock With Fair value | $ 17,500 | $ 16,000 | |||||||||
Total long-term loans, net | $ 895,501 | $ 895,501 | $ 483,240 | ||||||||
Long term loans | 1,152,901 | 1,152,901 | 648,510 | ||||||||
Unamortized debt discount | 80,000 | 80,000 | 0 | ||||||||
Less: short term loans, net | 257,400 | 257,400 | 165,270 | ||||||||
Note Payable | 150,000 | 150,000 | 18,000 | ||||||||
Promissory Note Eight [Member] | |||||||||||
Note Payable | $ 60,000 | $ 60,000 | 60,000 | ||||||||
Maturity Date | Jul. 9, 2021 | ||||||||||
Debt interest rate | 12.00% | 12.00% | |||||||||
Promissory Note Three [Member] | |||||||||||
Maturity Date | Jun. 11, 2021 | ||||||||||
Debt interest rate | 12.00% | 12.00% | |||||||||
Principal balance | $ 25,000 | $ 25,000 | 25,000 | ||||||||
Promissory Notes Third [member] | |||||||||||
Note Payable | $ 18,000 | $ 18,000 | 18,000 | ||||||||
Maturity Date | Jan. 22, 2021 | ||||||||||
Debt interest rate | 12.00% | 12.00% | |||||||||
Promissory Note Nine [Member] | |||||||||||
Note Payable | $ 96,000 | $ 96,000 | 96,000 | ||||||||
Maturity Date | Jan. 28, 2022 | ||||||||||
Debt interest rate | 12.00% | 12.00% | |||||||||
Promissory Notes One [Member] | |||||||||||
Common Stock share issued | 18,000 | 250,000 | |||||||||
Note Payable | $ 50,000 | $ 50,000 | 50,000 | ||||||||
Maturity Date | Jul. 20, 2020 | ||||||||||
Debt interest rate | 12.00% | 12.00% | |||||||||
Promissory Note Seven [Member] | |||||||||||
Note Payable | $ 200,000 | $ 200,000 | 200,000 | ||||||||
Maturity Date | Oct. 30, 2021 | ||||||||||
Debt interest rate | 12.00% | 12.00% | |||||||||
Promissory Note Six [Member] | |||||||||||
Note Payable | $ 140,000 | $ 140,000 | 140,000 | ||||||||
Maturity Date | Oct. 15, 2021 | ||||||||||
Debt interest rate | 12.00% | 12.00% | |||||||||
Promissory Note Four [Member] | |||||||||||
Note Payable | $ 250,000 | $ 250,000 | 250,000 | ||||||||
Maturity Date | Jul. 21, 2021 | ||||||||||
Debt interest rate | 12.00% | 12.00% | |||||||||
Promissory Note Two [Member] | |||||||||||
Note Payable | $ 50,000 | $ 50,000 | |||||||||
Maturity Date | Jul. 8, 2020 | ||||||||||
Debt interest rate | 12.00% | 12.00% | |||||||||
Promissory note | $ 96,000 | ||||||||||
Promissory Note Five [Member] | |||||||||||
Maturity Date | Oct. 1, 2021 | ||||||||||
Debt interest rate | 12.00% | 12.00% | |||||||||
Promissory note | $ 410,000 | $ 410,000 | $ 410,000 |
STOCKHOLDERS DEFICIT (Details)
STOCKHOLDERS DEFICIT (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Weighted Average Exercise Price [Member] | ||
Outstanding, beginning | $ 0.26 | $ 0.08 |
Weighted average exercise price, granted | 0.22 | 0.31 |
Weighted average exercise price, exercised | 0 | 0 |
Forfeited or cancelled | 0 | 0 |
Outstanding, ending | $ 0.25 | $ 0.26 |
Warrant [Member] | ||
Warrant outstanding, beginning | 1,403,750 | 343,750 |
Warrant, granted | 96,000 | 1,060,000 |
Warrant, exercised | ||
Forfeited or cancelled | ||
Warrant outstanding, ending | 1,499,750 | 1,403,750 |
STOCKHOLDERS DEFICIT (Details 1
STOCKHOLDERS DEFICIT (Details 1) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Weighted Average Exercise Price [Member] | ||
Outstanding, beginning | $ 0.67 | $ 0.57 |
Weighted average exercise price, granted | 0.75 | 1.20 |
Weighted average exercise price, exercised | 0 | 0 |
Forfeited or cancelled | 0 | 0 |
Outstanding, ending | $ 0.68 | $ 0.67 |
Warrant [Member] | ||
Warrant outstanding, beginning | 1,403,750 | 343,750 |
Warrant, granted | 96,000 | 1,060,000 |
Warrant, exercised | ||
Forfeited or cancelled | ||
Warrant outstanding, ending | 1,499,750 | 1,403,750 |
Warrant [Member] | Series B Convertible Preferred Stock [Member] | ||
Warrant outstanding, beginning | 3,970,000 | 3,370,000 |
Warrant, granted | 500,000 | 600,000 |
Warrant, exercised | ||
Forfeited or cancelled | ||
Warrant outstanding, ending | 4,470,000 | 3,970,000 |
STOCKHOLDERS DEFICIT (Details N
STOCKHOLDERS DEFICIT (Details Narrative) - USD ($) | Feb. 05, 2019 | Mar. 18, 2020 | Mar. 06, 2020 | Mar. 26, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jul. 24, 2020 | Jul. 08, 2020 | Jun. 28, 2020 | Jun. 15, 2020 | May 13, 2020 | May 06, 2020 | Mar. 13, 2020 | Jan. 29, 2020 | Jan. 23, 2020 | Jan. 21, 2020 | Jan. 10, 2020 | Dec. 31, 2019 | Jan. 09, 2019 | Oct. 11, 2018 |
Common stock shares issued | 100,000 | 160,000 | 150,000 | 250,000 | 96,000 | 60,000 | 50,000 | |||||||||||||
Common Stock share issued | 21,557,771 | 50,000 | 50,000 | 20,313,771 | ||||||||||||||||
Series B Convertible Preferred Stock [Member] | CFO and Director [Member] | ||||||||||||||||||||
Fair value of warrants | $ 375,000 | |||||||||||||||||||
Warrants exercise price | $ 0.75 | |||||||||||||||||||
Warrants issued upon shares purchased | 500,000 | |||||||||||||||||||
Warrant issued in lieu of deferred salary | $ 250,000 | |||||||||||||||||||
Compensation expenses | $ 125,000 | |||||||||||||||||||
Consulting Agreement [Member] | ||||||||||||||||||||
Fair market value of underlying stock | $ 0.30 | |||||||||||||||||||
Risk free rate | 2.50% | |||||||||||||||||||
Volatility | 388.56% | |||||||||||||||||||
Dividend yield | 0.00% | |||||||||||||||||||
Expected term | 3 years | |||||||||||||||||||
Fair value of warrants | $ 17,988 | |||||||||||||||||||
Consulting fee periodic payment | $ 7,000 | |||||||||||||||||||
Frequency of periodic payment | Monthly | |||||||||||||||||||
Warrant issued upon shares purchased | 60,000 | |||||||||||||||||||
Exercise price per share | $ 0.30 | |||||||||||||||||||
Wholesale Production Purchase and Sale Agreement [Member] | ||||||||||||||||||||
Lease obligations per month | $ 6,433 | |||||||||||||||||||
Maintenance fees per month | $ 6,626 | |||||||||||||||||||
Payroll expenses percentage | 66.60% | |||||||||||||||||||
Operating expenses percentage | 66.60% | |||||||||||||||||||
Mayer Weiss [Member] | ||||||||||||||||||||
Common Stock share issued | 35,000 | 25,000 | ||||||||||||||||||
Strategic advisory consultant [Member] | ||||||||||||||||||||
Common stock shares awarded under agreement, shares | 400,000 | |||||||||||||||||||
Term of agreement | 6 months | |||||||||||||||||||
Promissory Note Two [Member] | ||||||||||||||||||||
Exercise price of warrants | $ 0.22 | |||||||||||||||||||
Fair value of warrant under debt discount | $ 20,717 | |||||||||||||||||||
Promissory note | $ 96,000 | |||||||||||||||||||
Warrants issued | 96,000 | |||||||||||||||||||
Promissory Notes One [Member] | ||||||||||||||||||||
Common Stock share issued | 18,000 | 250,000 | ||||||||||||||||||
Promissory Notes [Member] | ||||||||||||||||||||
Common Stock share issued | 50,000 | |||||||||||||||||||
Weighted Average Exercise Price [Member] | ||||||||||||||||||||
Warrants expenses | $ 146,286 | $ 437,267 | ||||||||||||||||||
Amortization period | 6 months | 1 year 5 months 30 days | ||||||||||||||||||
Intrinsic value warrants | $ 714,060 | $ 2,212,100 | ||||||||||||||||||
Exercised | 4,230,000 | 2,650,000 | ||||||||||||||||||
Weighted average remaining contractual life | 7 years 10 months 21 days | 8 years 2 months 30 days | ||||||||||||||||||
Warrant [Member] | ||||||||||||||||||||
Weighted average remaining contractual life | 1 year 11 months 16 days | 2 years 1 month 17 days | ||||||||||||||||||
Number of warrants outstanding | 1,499,750 | 388,125 | ||||||||||||||||||
Intrinsic value | $ 27,638 | $ 66,281 | ||||||||||||||||||
Warrants expenses | $ 1,315 | |||||||||||||||||||
Amortization period | 1 month | |||||||||||||||||||
Warrant [Member] | Series B Convertible Preferred Stock [Member] | ||||||||||||||||||||
Warrant issued in lieu of deferred salary | $ 4,470,000 | $ 3,370,000 |
LEASES (Details)
LEASES (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
STOCKHOLDERS' DEFICIT | ||
Remainder of 2020 | $ 43,612 | |
2021 | 85,860 | |
2022 | 86,881 | |
2023 | 89,487 | |
2024 | 30,122 | |
Total undiscounted operating lease payments | 335,962 | |
Less: Imputed interest | 68,258 | |
Present value of operating lease liabilities | $ 267,704 | $ 0 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 1 Months Ended |
Jun. 23, 2020 | |
STOCKHOLDERS' DEFICIT | |
Conditional extended term, Description | Company entered into an operating lease agreement with terms of 4 years, and an option to extend for three years. |
Operating Lease, Weighted Average Discount Rate, Percent | 12.00% |
Operating lease term, duration | 3 years 9 months 29 days |
COMMITMENTS (Details Narrative)
COMMITMENTS (Details Narrative) - USD ($) | Aug. 14, 2019 | Oct. 10, 2019 | Jul. 16, 2018 | Jan. 14, 2020 | Feb. 05, 2019 |
CFNMedia [Member] | Stage 1 [Member] | |||||
Description of payment | “Stage 1” - $10,000 due upon the signing of the agreement for the Stage 1 services and deliverables: the interview, lead generation system and two (2) articles, including syndication, distribution and placement. This payment has been made. | ||||
CFNMedia [Member] | Stage 2 [Member] | |||||
Description of payment | “Stage 2” - $10,000 due upon the Company’s receipt of CFN Media’s invoice issued after CFN Media’s completion of Stage 1 and the Company’s confirmation they are ready to continue with Stage 2, which will include CFN Media’s delivery of two (2) Articles with the embedded interview and lead generation, as well as syndication, distribution and placement of services and deliverables. | ||||
Cash payment | $ 30,000 | ||||
CFNMedia [Member] | Stage 3 [Member] | |||||
Description of payment | “Stage 3” - $10,000 due upon the Company’s receipt of CFN Media’s invoice issued after CFN Media’s completion of Stage 2 and the Company’s confirmation they are ready to continue with Stage 3, which will include CFN Media’s delivery of two (2) Articles with the embedded interview and lead generation, as well as syndication, distribution and placement of services and deliverables | ||||
CBD Unlimited [Member] | |||||
Common stock shares issued | 250,000 | ||||
Market price, per shares | $ 0.26 | ||||
Consulting Agreement [Member] | |||||
Market price, per shares | $ 0.30 | ||||
Terms of service provider, Description | A $6,000 per month advance of Holy Cacao equity distribution will be awarded every month Holy Cacao earns a net profit over a period of twenty-four (24) consecutive months following the initial product launch and production sale. 300,000 warrants for shares of the Company’s common stock will be awarded after each of two consecutive twelve (12) month periods in which Holy Cacao earns a net profit from gross annual product sales of at least $1M. Each of the two 300,000 warrant awards will vest equally over a twelve (12) month period. | ||||
Sales Consultant[Member] | |||||
Commission on sale of products | 10.00% |
CONCENTRATION RISKS (Details Na
CONCENTRATION RISKS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Advance cash receivables | $ 108,208 | $ 108,208 | $ 713,124 | ||
Percentage of cash advances receivables | 68.00% | 75.00% | |||
MCA income | $ 7,228 | $ 82,447 | $ 46,839 | 13,350 | |
Percentage of MCA income | 45.00% | 32.00% | |||
Merchant One [Member] | |||||
Advance cash receivables | $ 34,964 | 34,964 | 179,853 | ||
MCA income | 5,116 | 57,181 | $ 25,852 | ||
Merchant Two [Member] | |||||
Advance cash receivables | 73,244 | 73,244 | $ 533,271 | ||
MCA income | $ 2,112 | $ 25,266 | $ 20,987 | ||
Purchase [Member] | Vendor One [Member] | |||||
Concentration risk percentage | 90.00% | 100.00% | 73.00% | 100.00% | |
Purchase [Member] | Vendor Two [Member] | |||||
Concentration risk percentage | 14.00% |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] | 6 Months Ended |
Jun. 30, 2020shares | |
Milestone Event Six [Member] | |
Occurrence of event, Description | Additional compensation in board seat agreement. |
Number of warrants | 500,000 |
Milestone Event Five [Member] | |
Occurrence of event, Description | Upon the closing of any acquisition which the consultant brought to the Company and provided due diligence. |
Number of warrants | 500,000 |
Milestone Event Four [Member] | |
Occurrence of event, Description | Deliverance of full due diligence package for each potential acquisition for which the Company requests the consultant perform due diligence |
Number of warrants | 300,000 |
Milestone Event Three [Member] | |
Occurrence of event, Description | 300,000 for each MULO retailer that is onboarded - regardless of store count carrying the product; and 500,000, if the onboarded MULO is a national chain. |
Milestone Event Three [Member] | Maximum [Member] | |
Number of warrants | 500,000 |
Milestone Event Three [Member] | Minimum [Member] | |
Number of warrants | 300,000 |
Milestone Event Two [Member] | |
Occurrence of event, Description | Acceptance by the Company of a social marketing platform and PR strategy and onboarding of such. |
Number of warrants | 100,000 |
Milestone Event One [Member] | |
Occurrence of event, Description | Acceptance by the Company of a full go-to market strategy for the Company’s products. |
Number of warrants | 100,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Aug. 04, 2020 | Jul. 13, 2020 | Jul. 31, 2020 | Jul. 24, 2020 | Jul. 19, 2020 | Jun. 30, 2020 |
Subsequent Event [Member] | Third Party [Member] | ||||||
Common stock shares issued | 50,000 | 50,000 | ||||
Consultant [Member] | ||||||
Warrants Issued During Period, Value, Warrants | $ 31,500 | |||||
Issuance of warrants, Shares | 100,000 | |||||
Conditions of vesting of warrants in order of termination, Description | If terminated with cause by the Company, the consultant shall not thereafter be entitled to any form of compensation and shall be paid a buyout fee in the amount of 250,000 fully vested warrants. If terminated without cause by the Company, all unvested warrants shall be accelerated and vest in one-half the time it was previously scheduled to vest. | |||||
Moises Davidovits [Member] | ||||||
Employment agreement, Description | Mr. Moises Davidovits, will assist with the manufacturing, packaging and distribution of the Company’s chocolate product line. The Employment Agreement has a $7,000 monthly salary. In addition, the Company issued a warrant to Mr. Davidovits to purchase 300,000 shares of the Company’s common stock with a term of three (3) years. The warrants are valued at $97,470 based on the Black Scholes Model. In addition, he will receive a warrant to purchase 300,000 of the Company’s common stock for each of the two remaining years under the Employment Agreement with an exercise price equal to the closing market price of the Company’s common stock on the first day of each of such two annual employment periods. | |||||
Mr. Kaplan [Member] | Subsequent Event [Member] | ||||||
Warrants Issued During Period, Value, Warrants | $ 177,200 | |||||
Subscription of warrants conditions to related party, Description | (i) a Subscription Agreement with Mr. Kaplan to sell to him one million (1,000,000) shares of common stock at a purchase price of $0.20 per share for a total purchase price of $200,000, which shares shall be purchased in twelve (12) equal monthly installments of 83,333 shares (the last installment to cover 83,337 shares) with the initial purchase occurring on the date thereof and subsequent instalments on each monthly anniversary thereafter (ii) a Consulting Agreement with Mr. Kaplan to award him, as full compensation for two (2) years of service, warrants to purchase two million (2,000,000) shares of common stock at an exercise price of $0.18 per share, which was the closing price of our common stock on such date, and (iii) an arrangement with Mr. Kaplan that in the event he raises outside investment in the Company in the amount of $500,000 - $2,000,000, he will receive one warrant for each dollar he so raises. The warrants to purchase two million shares of common stock are valued at $354,400 based on the Black Scholes Model. | |||||
Warrants to be issued as compensation to related party | 1,000,000 | |||||
Warrants exercisable after vesting | 36 months | |||||
Warrants Exercisable price | $ 0.18 | |||||
Procedure of vesting of warrants, description | Warrants which will vest at the rate of 83,333 warrants per month for the initial eleven months and the balance in the twelfth month, provided he is a director on each vesting date, with the initial tranche vesting on the day he takes office and then on each monthly anniversary of such date thereafter. |