UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from _______ to _______.
Commission file number
(Exact name of registrant as specified in its charter)
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(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Smaller reporting company
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Emerging growth company |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No
As of August 9, 2021, the registrant had
GLOBAL ARENA HOLDING, INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements |
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3 |
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Condensed Consolidated Balance Sheets at June 30, 2021 (Unaudited) and December 31, 2020 |
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4 |
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Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited) |
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Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Period Ended June 30, 2021 and 2020 (Unaudited) |
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Condensed Consolidated Statements of Cash Flows for the Six months ended June 30, 2021 and 2020 (Unaudited) |
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8 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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9 |
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
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23 |
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Item 3. Quantitative and Qualitative Disclosure About Market Risk |
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Item 4. Controls and Procedures |
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PART II - OTHER INFORMATION
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Item 1. Legal Proceedings |
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31 |
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Item 1A. Risk Factors |
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31 |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
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31 |
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Item 3. Defaults Upon Senior Securities |
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31 |
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Item 4. Mine Safety Disclosures |
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31 |
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Item 5. Other Information |
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31 |
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Item 6. Exhibits |
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32 |
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Signatures |
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32 |
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PART I - FINANCIAL INFORMATION
This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934. These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider,” or similar expressions are used.
Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.
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GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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June 30, |
December 31, |
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2021 |
2020 |
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(unaudited) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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Total current assets |
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Deposits for proposed acquisitions |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current Liabilities: |
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Accounts payable |
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Accrued expenses |
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Convertible promissory notes payable, |
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net of debt discount of $ |
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Promissory notes payable |
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Deferred revenue |
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Derivative liability |
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Total current liabilities |
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STOCKHOLDERS' DEFICIT |
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Global Arena Holdings, Inc. |
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Preferred stock, $ |
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Series B preferred stock; |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total Global Arena Holdings, Inc. stockholders’ deficit |
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Noncontrolling interest |
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Total stockholders’ deficit |
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
$ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2021 |
2020 |
2021 |
2020 |
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Revenues: |
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Services |
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Operating expenses: |
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Salaries and benefits |
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Marketing and advertising |
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Software development |
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Professional fees |
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General and administrative |
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Printing |
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Total operating expenses |
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Loss from operations |
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Other expenses: |
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Interest expense and financing costs |
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Change in fair value of derivative liability |
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Gain on settlement of debt |
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Total other expenses |
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Income (loss) before provision for taxes |
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Provision for income taxes |
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Net loss |
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Net loss attributed to noncontrolling interest |
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Net loss attributed to Global Arena Holding, Inc. |
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Weighted average shares outstanding - basic and diluted |
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Earnings (loss) per share - basic and diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
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Series B Preferred Stock |
Common Stock |
Additional Paid-in |
Accumulated |
Total Global Stockholders' |
Noncontrolling |
Total Stockholders’ |
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Shares |
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Capital |
Deficit |
Deficit |
Interest |
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Balance, December 31, 2020 |
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Issuance of common stock for convertible debt and accrued interest |
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Issuance of common stock for debt settlement |
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Allocated value of warrants and beneficial conversion feature related to issuance of convertible debt |
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Net loss |
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Balance, March 31, 2021 |
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Allocated value of warrants and beneficial conversion feature related to issuance of convertible debt |
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Net loss |
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Balance, June 30, 2021 |
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GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (continued_
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Series B Preferred Stock | Common Stock |
Additional Paid-in |
Accumulated |
Total Global |
Noncontrolling |
Total Stockholders’ |
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Shares |
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Capital |
Deficit |
Deficit |
Interest |
Deficit |
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Balance, December 31, 2019 |
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Issuance of common stock for convertible debt and accrued interest |
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Fair value of stock options issued for Series B Preferred Stock |
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Allocated value of warrants and beneficial conversion feature related to issuance of convertible debt |
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Net loss |
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Balance, March 31, 2020 |
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Issuance of common stock for convertible debt and accrued interest |
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Issuance of common stock for services |
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Allocated value of warrants and beneficial conversion feature related to issuance of convertible debt |
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Net loss |
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Balance, June 30, 2020 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
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Six Months Ended June 30, |
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2021 |
2020 |
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OPERATING ACTIVITIES: |
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Net loss |
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Adjustments to reconcile net loss to |
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net cash used in operating activities: |
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Amortization of debt discount |
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Change in fair value of derivative liability |
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Gain on settlement of debt |
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Common stock issued for services |
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Change in assets and liabilities: |
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Deferred revenue |
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FINANCING ACTIVITIES: |
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Proceeds from convertible promissory notes payable |
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Repayment of convertible promissory notes payable |
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Net cash used in financing activities |
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
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CASH AND CASH EQUIVALENTS, BEGINNING BALANCE |
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CASH AND CASH EQUIVALENTS, ENDING BALANCE |
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CASH PAID FOR: |
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Interest |
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Income taxes |
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NON-CASH INVESTING AND FINANCING ACTIVITIES: |
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Allocated value of warrants and beneficial conversion features related to debt |
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Debt converted to common stock |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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GLOBAL ARENA HOLDING, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1 - ORGANIZATION
Organization and Business
Global Arena Holding, Inc. (formerly, “Global Arena Holding Subsidiary Corp.”) (“GAHI”), was formed in February 2009, in the state of Delaware. GAHI and its subsidiaries (the “Company”) was previously a financial services firm and currently is focusing on the following businesses through these subsidiaries:
On February 25, 2015, Global Election Services, Inc. (GES) formed on February 25, 2015, provides comprehensive technology-enabled paper absentee/mail ballot and internet election services to organizations such as craft and trade organizations, labor unions, political parties, co-operatives and housing organizations, associations and professional societies, universities, and political organizations.
GES has developed proprietary election software for a data storage and retrieval registration system to determine voter eligibility and prevent duplicate votes with In-Person digital signature capture, as well as proprietary election software for scanning/tabulation utilizing advanced OMR/OCR/Barcode imaging software featuring de-skewing, de-speckling and image correction. This system provides three types of audit capabilities. The hardware includes high speed optical scanners that are hard lined to a computer with all Wi-Fi disabled so the entire tabulation utilizing process occurs offline, eliminating the opportunity for hacking. GES is also working with multiple vendors and has made investments in companies that are developing Blockchain Technology for a data storage and retrieval registration system, tabulation of paper Absentee/Mail Ballots; and internet voting.
The Company has also signed a letter of Intent to acquire the assets of Election Services Solutions including all clients, contracts and employment contracts. The closing of this transaction will occur upon the approval of certain corporate actions at the 2021 annual meeting.
On May 20, 2015 the Company incorporated a new wholly owned entity in the State of Delaware called “GAHI Acquisition Corp.” This entity was incorporated at the time to be the merger subsidiary for the acquisition of Blockchain Technologies Corp. (BTC) and other software system development.
On May 20, 2015 the Company entered into an agreement and plan of merger with BTC. Under this agreement, BTC would have merged with GAHI Acquisition, and GAHI Acquisition, would have been the surviving corporation. As consideration for the merger, the Company was to reserve a number of shares equal to 1/3 the total issued and outstanding of the Company to be issued to BTC shareholders at closing. On October 20, 2015, the parties agreed to extend the closing date of the merger to December 15, 2015. This agreement expired on December 15, 2015.
Concurrently, on October 20, 2015, the Company paid $
On March 28, 2017 the United States Patent Office issued patents to BTC covering Election Intellectual Property, US Patent #9,608,829, Issued March 28, 2017. As an equity shareholder in BTC only, GAHC and GES have not used the BTC US Patent. Any use of the patent would require a new negotiation, and new contract with BTC.
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The Company has determined that the initial investment of Blockchain Technologies Corp. will be written off. The Company’s Board of Directors cancelled all transactions previously proposed but never acted on concerning GAHI Acquisition. GAHI Acquisition will remain a subsidiary for the exclusive use of any future transactions involving Blockchain Technologies Corporation.
The Company, GAHI, and GES do not trade crypto currency, nor participate in Initial Coin Offerings.
On June 15, 2019, GES entered into a Term Sheet to create a joint venture with TrueVote, Inc. TrueVote, Inc. is building a comprehensive end-to-end, de-centralized, completely digital voting system. This will be based on traditional, proven database methodologies, and layered with a "checksum" that's posted on the Blockchain, proving all data is immutable and unalterable. This design will ensure that every vote is transparently counted and verifiable. The Company is currently renegotiating this contract. Under the terms of the current agreement, GES will invest $
On November 19, 2019, the Company incorporated a new wholly owned entity in the State of Delaware called Tidewater Energy Group Inc. The Board of Directors appointed John S. Matthews and Jason Old as Board members. The Company was formed to explore opportunities in the oil, gas, mineral and energy business. Tidewater Energy Group Inc. has
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the financial condition of the Company and its operating results for the respective periods. The condensed consolidated balance sheet at December 31, 2020 has been derived from the Company's audited consolidated financial statements. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission. The results for the six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021.
Going Concern
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates the continuation of the Company as a going concern. The Company has generated recurring losses from operations and cash flow deficits from its operations since inception and has had to continually borrow to continue operating. In addition, certain of the Company’s debt is in default as of June 30, 2021. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The continued operations of the Company are dependent upon its ability to raise additional capital, obtain additional financing and/or acquire or develop a business that generates sufficient positive cash flows from operations. The Company continues to raise funds from the issuance of additional convertible promissory note. Management is hopeful that with their ability to raise additional funds that the Company should be able to continue as a going concern.
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The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of GAHI and its wholly-owned and majority owned subsidiaries, GES, GAHI Acquisition Corp and Tidewater Energy Group, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.
Noncontrolling Interest
The Company follows ASC Topic 810, Consolidation, which governs the accounting for and reporting of non-controlling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance.
The net income (loss) attributed to the NCI is separately designated in the accompanying condensed consolidated statements of operations and comprehensive loss.
Basic and Diluted Earnings (Loss) Per Share
Earnings per share is calculated in accordance with the ASC 260-10, Earnings Per Share. Basic earnings-per-share is based upon the weighted average number of common shares outstanding. Diluted earnings-per-share is based on the assumption that all dilutive convertible notes, stock options and warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive.
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2020 |
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Options |
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Warrants |
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Convertible notes |
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Total |
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Management Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates reflected in the consolidated financial statements include, but are not limited to, share-based compensation, and assumptions used in valuing derivative liabilities. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all demand and time deposits and all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Convertible Debt
Convertible debt is accounted for under FASB ASC 470, Debt – Debt with Conversion and Other Options. The Company records a beneficial conversion feature (“BCF”) related to the issuance of convertible debt that has conversion features at fixed or adjustable rates that are in-the-money when issued and records the relative fair value of any warrants issued with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to the warrants and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion features, both of which are credited to additional paid-in capital. The Company calculates the fair value of warrants issued with the convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing stock options, except that the contractual life of the warrant is used.
Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value of the BCF and warrants are recorded as a debt discount and is accreted over the expected term of the convertible debt as interest expense.
The Company accounts for modifications of its embedded conversion features in accordance with the ASC which requires the modification of a convertible debt instrument that changes the fair value of an embedded conversion feature and the subsequent recognition of interest expense or the associated debt instrument when the modification does not result in a debt extinguishment.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives pursuant to ASC 815, Derivatives and Hedging. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The Company uses the Black-Scholes-Merton model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
Revenue Recognition
The Company recognizes revenue in accordance with FASB ASC 606, Revenue From Contracts with Customers. The Company earns revenues through various services it provides to its clients. GES’s income is recognized at the presentation date of the certification of the election results. The payments received in advance are recorded as deferred revenue on the balance sheet. Should an election not proceed, all non-refundable deferred revenue will be recognized as revenue.
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Share-Based Compensation
The Company records stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. FASB ASC Topic 718 requires companies to measure compensation cost for stock-based compensation at fair value at the grant date and recognize the expense over the requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.
Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurement defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.
Fair Value Measurements
The Company applies the provisions of ASC 820-10, Fair Value Measurements and Disclosures. ASC 820-10 defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows:
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Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. |
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Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
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• |
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
Cash, accounts payable and accrued expenses and deferred revenue – The carrying amounts reported in the consolidated balance sheets for these items are a reasonable estimate of fair value due to their short term nature.
Promissory notes payable and convertible promissory notes payable – Promissory notes payable and convertible promissory notes payable are recorded at amortized cost. The carrying amount approximates their fair value.
The Company uses Level 2 inputs for its valuation methodology for the beneficial conversion feature and warrant derivative liabilities as their fair values were determined by using the Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives.
The following table presents the Company’s assets and liabilities required to be reflected within the fair value hierarchy as of June 30, 2021 and December 31, 2020.
|
|
|
Fair Value |
|
Fair Value Measurements at |
|||||
|
|
As of |
|
June 30, 2021 |
||||||
|
Description |
|
June 30, 2021 |
|
Using Fair Value Hierarchy |
|||||
|
|
|
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|
Beneficial conversion feature |
$ |
|
$ |
|
$ |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
|
$ |
|
$ |
|
$ |
|
|
| 13 |
|
Fair Value |
Fair Value Measurements at |
||||||||
|
|
|
As of |
|
December 31, 2020 |
|||||
|
Description |
|
December 31, 2020 |
Using Fair Value Hierarchy |
||||||
|
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|||
|
Beneficial conversion feature |
$ |
|
$ |
|
$ |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
||
|
Total |
$ |
|
$ |
|
$ |
|
$ |
|
|
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.
Recently Issued Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company is currently evaluation the impact this ASU will have on its consolidated financial statements.
Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
| 14 |
NOTE 3– ACQUISITION DEPOSITS
On May 10, 2019, the Company entered into an asset purchase agreement with Election Services Solutions, LLC (the “APA”). Under the APA, the Company will purchase
On November 19, 2019, the Company incorporated a new wholly owned entity in the State of Delaware called Tidewater Energy Group Inc. The Board of Directors appointed John S. Matthews and Jason Old as Board members. The Company was formed to explore opportunities in the oil, gas, mineral and energy business. Tidewater Energy Group Inc. has
NOTE 4– ACCRUED EXPENSES
Accrued expenses at June 30, 2021 and December 31, 2020 consisted of the following:
|
|
June 30, |
December 31, |
||||||
|
|
2021 |
2020 |
||||||
|
Accrued interest |
$ | $ | ||||||
|
Accrued compensation |
||||||||
|
Other accrued expenses |
||||||||
|
|
$ | $ |
NOTE 5 - PROMISSORY NOTES PAYABLE
In March 2014, the Company issued two promissory notes for a total of $
| 15 |
NOTE 6 - CONVERTIBLE PROMISSORY NOTES PAYABLE
Convertible promissory notes payable at June 30, 2021 and December 31, 2020 consist of the following:
|
|
June 30, |
December 31, |
||||||
|
|
2021 |
2020 |
||||||
|
Convertible promissory notes with interest rates ranging from |
$ | $ | ||||||
|
Convertible promissory notes with interest rates ranging from |
||||||||
|
Convertible promissory notes with interest at |
||||||||
|
Total convertible promissory notes payable |
||||||||
|
Unamortized debt discount |
( |
) | ( |
) | ||||
|
Convertible promissory notes payable, net discount |
||||||||
|
Less current portion |
( |
) | ( |
) | ||||
|
Long-term portion |
$ | $ |
A rollforward of the convertible promissory notes payable from December 31, 2020 to June 30, 2021 is below:
|
Convertible promissory notes payable, December 31, 2020 |
$ | |||
|
Issued for cash |
||||
|
Issued for original issue discount |
||||
|
Conversion to common stock |
( |
) | ||
|
Issuance of common stock for debt settlement |
( |
) | ||
|
Debt discount related to new convertible promissory notes |
( |
) | ||
|
Amortization of debt discounts |
||||
|
Convertible promissory notes payable, June 30, 2021 |
$ |
On March 15, 2021, the Company entered into a note settlement agreement with an investor whereby the investor agreed to settle certain convertible notes and accrued interest for the payment of $
| 16 |
NOTE 7 - DERIVATIVE FINANCIAL INSTRUMENTS
Certain of the Company’s convertible promissory notes payable are convertible into shares of the Company’s common stock at a percentage of the market price on the date of conversion. The Company has determined that the variable conversion rate is an embedded derivative instrument. The Company uses the Black-Scholes valuation method to value the derivative instruments at inception and on subsequent valuation dates. Weighted average assumptions used to estimate fair values are as follows:
|
|
June 30, |
December 31, |
||||||
|
|
2021 |
2020 |
||||||
|
Risk-free interest rate |
% | % | ||||||
|
Expected life of the options (Years) |
||||||||
|
Expected volatility |
% | % | ||||||
|
Expected dividend yield |
% | % | ||||||
|
|
||||||||
|
Fair Value |
$ | $ | ||||||
|
|
A rollfoward of the derivative liability from December 31, 2020 to June 30, 2021 is below:
|
Derivative liabilities, December 31, 2020 |
$ | |||
|
Relieved with debt settlement agreement |
( |
) | ||
|
Change in fair value of derivative liabilities |
||||
|
Derivative liabilities, June 30, 2021 |
$ | |||
|
|
NOTE 8 - STOCKHOLDERS’ DEFICIT
Series B Preferred Stock
Pursuant to the Company’s Certificate of Incorporation, the Company has authorized 2,000,000 shares of $0.001 par value Preferred Stock. The Company has designated 250,000 of the 2,000,000 shares as Series B Preferred Stock.
During the year ended December 31, 2017, the Company sold
Common Stock
On April 28, 2016, the stockholders approved an amendment to the Company’s articles of incorporation to increase the number of authorized common shares from
| 17 |
On October 11, 2019, the Company’s shareholders approved an increase of the Company’s authorized shares to Two Billion (
During the six months ended June 30, 2021, the Company issued
During the six months ended June 30, 2020, the Company issued
Option Activity
A summary of the option activity is presented below:
|
|
Weighted |
|||||||||||||||
|
|
Weighted | Average | ||||||||||||||
|
|
Average | Remaining | Aggregate | |||||||||||||
|
|
Number of |
Exercise |
Contractual |
Intrinsic |
||||||||||||
|
|
Options |
Price ($) |
Life (in years) |
Value ($) |
||||||||||||
|
Outstanding, December 31, 2020 |
||||||||||||||||
|
Granted |
||||||||||||||||
|
Exercised |
||||||||||||||||
|
Forfeited/Canceled |
( |
) | ||||||||||||||
|
Outstanding, June 30, 2021 |
|
|||||||||||||||
|
Exercisable, June 30, 2021 |
The exercise price for options outstanding at June 30, 2021 is as follows:
|
Outstanding and Exercisable |
|||
|
Number of |
Exercise |
||
|
Options |
Price | ||
|
|
$ | ||
|
|
|||
Warrant Activity
A summary of warrant activity is presented below:
|
|
Weighted |
|||||||||||||||
|
|
Weighted | Average | ||||||||||||||
|
|
Average | Remaining | Aggregate | |||||||||||||
|
|
Number of |
Exercise |
Contractual |