Post-Qualification Amendment No. 4
File No: 024-11260
PART II - OFFERING CIRCULAR
Dated October 22, 2021
PURSUANT TO REGULATION A
OF THE SECURITIES ACT OF 1933
TPT Global Tech, Inc.
501 West Broadway, Suite 800
San Diego, CA 92101
(619) 301-4200
$38,000,000
7,600,000 Series D Preferred 6% Cumulative Dividend Convertible
Stock
at $5.00 per Share
Minimum Investment: 100 Shares ($500)
FORM 1-A: TIER 2
EXPLANATORY NOTE
This is a Post-Qualification Amendment
No. 4 to an Offering Statement on Form 1-A
(“Offering Statement”) filed by TPT Global Tech, Inc.
(the “Company”). The Offering Statement was originally
filed by the Company on July 2, 2020 and was amended by the Company
on August 28, 2020. The Offering Statement, as amended by
pre-qualification amendment, was qualified by the U.S. Securities
and Exchange Commission (the “SEC”) on September 11,
2020. Post-Qualification Amendments No.
1, No. 2, and No. 3 were filed with the
SEC on December 17, 2020, August 6, 2021, and
September 22, 2021, respectively. The purpose of this
Post-Qualification Amendment No. 4 is to (i) to
amend Plan of Distribution sections on pages 4 and 85, (ii)
filing an amended Placement Agent Warrant as Exhibit 4.16 and (iii)
mailing address edits to Exhibit “A” Subscription
Agreement.
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS
UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED
OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR
COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SELLING LITERATURE.
THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM
REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT
MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED
HEREUNDER ARE EXEMPT FROM REGISTRATION.
GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE
AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF
YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO
ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY
REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE
THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF
REGULATION A FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU
TO REFER TO WWW.INVESTOR.GOV.
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Price
to public
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Commissions
(1)
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Proceeds
to Company (2)
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Per
share
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$5.00
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$0.40(1)
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$4.60
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Total
(3):
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$38,000,000
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$3,040,000(1)
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$34,960,000
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The
minimum investment amount is 100 shares or $500. The offering has
been made and initially is expected to continue to be made directly
to investors on a best efforts basis. In the future, the shares may
be offered through broker-dealers who are registered with the
Financial Industry Regulatory Authority (“FINRA”), or
through other independent referral sources. This offering will
terminate on June 30, 2022, unless extended by us for up to an
additional 90 days or terminated sooner by us in our discretion
regardless of the amount of capital raised (the “Sales
Termination Date”). There is no minimum capital required from
this offering and therefore no subscription escrow account will be
established for it. The proceeds of this offering may be deposited
directly into the Company’s operating account for immediate
use by it, with no obligation to refund subscriptions.
(1)
The shares are
offered on a “best-efforts” basis by our officers,
directors and employees
; however, we may engage broker-dealers who are
registered with the Financial Industry Regulatory Authority
(“FINRA”). No commissions or other compensation will be
paid to our officers, directors or employees. On May 21, 2020, we
engaged CIM Securities, LLC (“CIM”) to assist us in the
Offering by acting as our placement agent. As of November 11, 2020,
the Company and CIM entered into a Placement Agent Fee Agreement
which replaced the earlier engagement. Effective June 30, 2021, we
agreed to amendments of certain provisions of such
Agreement. Under such Agreement CIM is to receive a 6%
commission and a 2% non-accountable expense allowance with respect
to the subscriptions we accept that were solicited by CIM. Upon
conclusion of the Offering, we will issue to CIM (or its designees)
warrants to purchase Series D Preferred shares at a price of $6
(120% of the offering price) as additional compensation for its
services. The number of shares purchasable under such warrants will
equal to 6% of the number of shares issued in the placement
pursuant to the solicitation of CIM. The warrants will not become
exercisable until 180 days after issuance and will expire four (4)
years from date of commencement of the Offering. We may engage
additional broker-dealers, who are registered with FINRA, or CIM
may appoint as sub-agents other FINRA member firms to solicit
subscriptions in the Offering. We will indemnify participating
broker-dealers and other parties with respect to disclosures made
in the Offering Circular.
(2)
The commissions
will only be paid to FINRA member firms engaged by us or CIM and
the Total commissions and non-accountable expenses of $3,040,000
assumes that we accept $38,000,000 in subscriptions solicited by
such FINRA member firms. The amounts shown are after commissions
and non-accountable expenses but before deducting organization and
other offering costs to us, which include legal, accounting,
printing, due diligence, marketing, consulting, referral fees,
selling and other costs incurred in the offering of the shares. See
“USE OF PROCEEDS” and “PLAN OF
DISTRIBUTION.”
(3)
The shares are
being offered pursuant to Regulation A of Section 3(b) of the
Securities Act of 1933, as amended, for Tier 2 offerings. The
shares are only issued to purchasers who satisfy the requirements
set forth in Regulation A. We have the option in our sole
discretion to accept less than the minimum investment from a
limited number of subscribers. “TERMS OF THE
OFFERING.”
THIS
OFFERING CIRCULAR IS NOT KNOWN TO CONTAIN AN UNTRUE STATEMENT OF A
MATERIAL FACT, NOR TO OMIT MATERIAL FACTS WHICH IF OMITTED, WOULD
MAKE THE STATEMENTS HEREIN MISLEADING. IT CONTAINS A FAIR SUMMARY
OF THE MATERIAL TERMS OF DOCUMENTS PURPORTED TO BE SUMMARIZED
HEREIN. HOWEVER, THIS IS A SUMMARY ONLY AND DOES NOT PURPORT TO BE
COMPLETE. ACCORDINGLY, REFERENCE SHOULD BE MADE TO THE
CERTIFICATION OF RIGHTS, PREFERENCES AND PRIVILEGES AND OTHER
DOCUMENTS REFERRED TO HEREIN, COPIES OF WHICH ARE ATTACHED HERETO
OR WILL BE SUPPLIED UPON REQUEST, FOR THE EXACT TERMS OF SUCH
AGREEMENTS AND DOCUMENTS.
_____________________________________
THIS
OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN
ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS CONCERNING THE COMPANY OTHER THAN THOSE
CONTAINED IN THIS OFFERING CIRCULAR, AND IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON.
_____________________________________
PROSPECTIVE
INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS OFFERING
CIRCULAR, OR OF ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE
COMPANY OR ANY OF ITS EMPLOYEES, AGENTS OR AFFILIATES, AS
INVESTMENT, LEGAL, FINANCIAL OR TAX ADVICE. EACH INVESTOR SHOULD
CONSULT HIS OWN COUNSEL, ACCOUNTANT AND OTHER PROFESSIONAL ADVISORS
AS TO LEGAL, TAX AND OTHER RELATED MATTERS CONCERNING HIS
INVESTMENT.
JURISDICTIONAL (NASAA) LEGENDS
FOR RESIDENTS OF ALL STATES: THE PRESENCE OF A LEGEND FOR ANY GIVEN
STATE REFLECTS ONLY THAT A LEGEND MAY BE REQUIRED BY THAT STATE AND
SHOULD NOT BE CONSTRUED TO MEAN AN OFFER OR SALE MAY BE MADE IN A
PARTICULAR STATE. IF YOU ARE UNCERTAIN AS TO WHETHER OR NOT OFFERS
OR SALES MAY BE LAWFULLY MADE IN ANY GIVEN STATE, YOU ARE HEREBY
ADVISED TO CONTACT THE COMPANY. THE SECURITIES DESCRIBED IN THIS
OFFERING CIRCULAR HAVE NOT BEEN REGISTERED UNDER ANY STATE
SECURITIES LAWS (COMMONLY CALLED "BLUE SKY" LAWS).
TABLE OF CONTENTS
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2
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8
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9
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42
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66
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66
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67
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67
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77
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80
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81
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84
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85
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86
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86
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87
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88
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SUBSCRIPTION
DOCUMENTS
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A
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SUMMARY OF RISK
FACTORS
The
purchase of shares of our Series D Preferred 6% Cumulative Dividend
Convertible Stock involves substantial risks. Each prospective
investor should carefully consider the following risk factors, in
addition to any other risks associated with this investment and
should consult with his own legal and financial
advisors.
Cautionary Statements
The
discussions and information in this Offering Circular may contain
both historical and forward-looking statements. To the extent that
the Offering Circular contains forward-looking statements regarding
the financial condition, operating results, business prospects, or
any other aspect of our business, please be advised that our actual
financial condition, operating results, and business performance
may differ materially from that projected or estimated by us in
forward-looking statements. We have attempted to identify, in
context, certain of the factors we currently believe may cause
actual future experience and results to differ from our current
expectations. The differences may be caused by a variety of
factors, including but not limited to:
●
Lack of market
acceptance of our Media
Content Hub for Domestic and International syndication
Technology/Telecommunications company.
●
Inability to
finance the company due to a lack of private capital and cash
flow.
●
Delays in obtaining
critical components from suppliers.
●
Intense
competition, including entry of new competitors.
●
Lack of demand for
our Media Content Hub for
Domestic and International syndication
Technology/Telecommunications company.
●
Adverse federal,
state, and local government regulation.
●
Contraction of the
market due to government policy or consumer
preference.
●
Unexpected costs
and operating deficits.
●
Lower sales and
revenue than forecast.
●
Default on leases
or other indebtedness.
●
Loss of suppliers
and supply.
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Price increases for
capital, supplies and materials.
●
Inadequate capital
and financing.
●
Failure to obtain
customers, loss of customers and failure to obtain new
customers.
●
The risk of
litigation and administrative proceedings involving us or our
employees.
●
Loss of or
inability to obtain government licenses and permits.
●
Adverse publicity
and news coverage.
●
Inability to carry
out marketing and sales plans.
●
Loss of key
executives.
●
Losses from theft
that cannot be recovered.
●
Other specific
risks that may be alluded to in this Offering Circular or in other
reports issued by us or third-party publishers.
●
Our operating
history makes it difficult to evaluate our future business
prospects and to make decisions based on our historical
performance.
●
We may not be
successful in implementing important strategic initiatives, which
may have a material adverse impact on our business and financial
results.
●
Effectively
managing our growth into new geographic areas will be
challenging.
●
Key employees are
essential to growing our business.
●
Insiders have
substantial control over us, and they could delay or prevent a
change in our corporate control even if our other stockholders
wanted it to occur.
●
There may not be
sufficient liquidity in the market for our securities in order for
investors to sell their securities.
INVESTMENT SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements appearing elsewhere
or incorporated by reference in this Offering
Circular.
TPT Global Tech, Inc.
A maximum of $38,000,000
(7,600,000 shares of Series D Preferred 6% Cumulative Dividend
Convertible Stock @ $5.00 per share)
OFFERING PERIOD: September 11, 2020 to June 30, 2022
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The
Issuer
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TPT
Global Tech, Inc. is a Florida corporation with our principal
office at 501 West Broadway, Suite 800, San Diego, CA 92101,
telephone (619) 301-4200. Unless the context otherwise requires,
all references to “we,” “us,” “our
Company,” “TPT Global,” “TPT,” or
“Company” refer collectively to TPT Global Tech,
Inc.
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Business
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TPT Global Tech, Inc. operates as a technology-based company with
divisions providing telecommunications, medical technology and
product distribution, media content for domestic and international
syndication as well as technology solutions. We offer Software as a Service (SaaS),
Technology Platform as a Service (PAAS), Cloud-based Unified
Communication as a Service (UCaaS) and carrier-grade performance
and support for businesses over our private IP MPLS fiber and
wireless network in the United States. Our cloud-based UCaaS
services allow businesses of any size to enjoy all the latest
voice, data, media and collaboration features in today's global
technology markets. We also operate as a Master Distributor for
Nationwide Mobile Virtual network Operators (MVNO) and Independent
Sales Organization (ISO) as a Master Distributor for Pre-Paid
Cellphone services, Mobile phones, Cellphone Accessories and Global
Roaming Cellphones. See the “Business Overview” herein
for more details.
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Securities
Offered (the “Offering”)
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A
Maximum of 7,600,000 shares of Series D Preferred 6% Cumulative
Dividend Convertible Stock @ $5.00 per share ($38,000,000).
Dividends may be paid in cash or in registered common stock at the
market price on the date of the dividend accrual.
The
subscribed shares will be “restricted securities” as
defined in Rule 144 of the Securities and Exchange
Commission.
The
discussion in this Memorandum for the Offering pertains to the
Series D Preferred Stock of the Company, and the Amended
Certificate Of Designations, Preferences and Rights of Series D
Preferred Stock 6% Cumulative Annual Dividend is incorporated
herein by this reference, and the terms of the Certificate shall
take precedence over any discussions herein contained and shall
govern in the event of any conflict with the terms discussed in
this document. Investors are advised to review the terms of the
Certificate in detail to understand the nature of the investment
and its parameters.
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Offering
Period
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The
Offering will remain open from date hereof until June 30, 2022
unless the Company’s Board of Directors authorizes ending
this Offering.
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Registration
and Trading Status
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Our
common stock is currently quoted on the OTCQB under the symbol
“TPTW”.
The
Company's common stock is registered with the Securities and
Exchange Commission (“SEC”). www.sec.gov
The
Series D Preferred Stock offered hereby is NOT registered under either Securities
Act of 1933 or Section 12(g) under the Securities Exchange Act of
1934 and is NOT quoted or traded in any venue.
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TPT
Global Tech, Inc. Background
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We were
originally incorporated in 1988 in the state of Florida. TPT
Global, Inc., a Nevada corporation formed in June 2014, merged with
Ally Pharma US, Inc., a Florida corporation, (“Ally
Pharma”, formerly known as Gold Royalty Corporation) in a
“reverse merger” wherein Ally Pharma issued 110,000,000
shares of Common Stock, or 80% ownership, to the owners of TPT
Global, Inc. and Ally Pharma changed its name to TPT Global Tech,
Inc. In 2014, we acquired all the assets of K Telecom and Wireless
LLC (“K Telecom”) and Global Telecom International, LLC
(“Global Telecom”). Effective January 31, 2015, we
completed our acquisition of 100% of the outstanding stock of
Copperhead Digital Holdings, Inc. (“Copperhead
Digital”) and Subsidiaries, TruCom, LLC
(“TruCom”), Nevada Utilities, Inc. (“Nevada
Utilities”) and CityNet Arizona, LLC (“CityNet”).
In October 2015, we acquired the assets of both Port2Port, Inc.
(“Port2Port”) and Digithrive, Inc.
(“Digithrive”). Effective September 30, 2016, we
acquired 100% ownership in San Diego Media, Inc.
(“SDM”). In December 2016, we acquired the Lion Phone
technology. In October and November 2017, we entered into
agreements to acquire Blue Collar, Inc. (“Blue
Collar”), and certain assets of Matrixsites, Inc.
(“Matrixsites”) which we have completed. On May 7, 2019
we completed the acquisition of a majority of the assets of
SpeedConnect, LLC, which assets were conveyed into our wholly owned
subsidiary TPT SpeedConnect, LLC (“TPT SC” or
“TPT SpeedConnect”) which was formed on April 16, 2019.
On January 8, 2020 we formed TPT Federal, LLC (“TPT
Federal”). On March 30, 2020 we formed TPT MedTech, LLC
(“TPT MedTech”) and on June 6, 2020 we formed
InnovaQor, Inc (“InnovaQor”). In July and August 2020, the Company
formed Quiklab 1 LLC, QuikLAB 2, LLC, QuikLAB 3, LLC and QuikLAB 4,
LLC where the Company owns 80% (as agreed per the operating
agreement) of all outside equity investments. Effective August 1,
2020 we closed on the acquisition of 75% of The Fitness Container,
LLC (“Aire Fitness”). In July 2020, we invested in a
Hong Kong company called TPT Global Tech Asia Limited of which we
own 78%, and during 2020, InnovaQor did a reverse merger with
Southern Plains of which there ended up being a non controlling
interest of 6% as of March 31, 2021 and December 31, 2020. The name
of InnovaQor remained for the merged entities but was changed to
TPT Strategic, Inc. on March 21, 2021.
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Offering
Size
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At TPT
Global Tech’s sole discretion, this Offering can raise up to
a maximum of $38,000,000. TPT Global Tech, Inc. reserves the right
to discontinue the offering at any time it, in the sole discretion
of management, and/or deem it has raised sufficient funds to
implement their business plan (see Use of Proceeds).
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Closings
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No
minimum number of Series D Shares need be sold in order for the
Company to close on the sale of any of the Series D Shares. The
Company may close in multiple closings at the discretion of the
Company, and proceeds will be immediately available to the
Company.
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Use of
Proceeds
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The
Company intends to use the proceeds of this Offering for those
purposes shown on page 9 under “Use of Proceeds”, as
well as support of general and administrative expenses and general
working capital.
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Commissions
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TPT
Global Tech, Inc. is using Placement Agents, licensed
Broker-Dealers, and paying commissions on this Offering up to the
amount of $3,040,000 (6% of the amount raised by such Placement
Agent plus 2% non-accountable expenses).
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Placement
Agent
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We may
use a FINRA member broker-dealer as a Placement Agent and it may
syndicate with other participating dealers.
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Placement
Agent Fees
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The
shares are offered on a “best-efforts” basis by our
officers, directors and employees; however, we may engage
broker-dealers who are registered with the Financial Industry
Regulatory Authority (“FINRA”). No commissions or other
compensation will be paid to our officers, directors or employees.
On May 21, 2020, we engaged CIM Securities, LLC (“CIM”)
to assist us in the Offering by acting as our placement agent. As
of November 11, 2020, the Company and CIM entered into a Placement
Agent Fee Agreement which replaced the earlier engagement. Under
such agreement CIM is to receive a 6% commission and a 2%
non-accountable expense allowance with respect to the subscriptions
we accept that were solicited by CIM.
Upon conclusion of
the Offering, we will issue to CIM, or its
designees, warrants to purchase the Series D Preferred shares
in an amount equivalent to 6% of the amount of Series D
Preferred Shares issued in the Offering which were issued pursuant
to the solicitation of CIM or its sub-agents, if
any. Such warrants will be exercisable for a period of four
years from commencement of this Offering (the “Termination
Date”) and will have an exercise price of $6.00 per
share, (120% of the offering price of the Series
D Preferred shares). The warrants will not; however,
be exercisable in the 180 days following issuance (i.e. locked up).
The restriction begins on the date of commencement of
sales. Further, any Series D Preferred Shares issued upon
exercise of the warrants may not be converted into shares of common
stock after the Termination Date.
Effective June 30,
2021, we agreed to amendments of certain provisions of such
Agreement. Copies of such Agreement and Amendments are filed
as Exhibits to the Offering Statement of which this Offering
Circular is a part.
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Investor
Suitability
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The
Offering will be made to persons who are both non-accredited and
accredited investors (defined under Rule 501(a) of Regulation D
promulgated under the Securities Act).
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Capitalization
of the Company
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As of
June 30, 2021, we had authorized 1,000,000,000 shares of Common
Stock, of which 879,029,038 common shares are issued and
outstanding. As of October 15, 2021, there are
1,250,000,000 shares of Common Stock authorized and
908,029,038 shares of common stock outstanding.
100,000,000
shares of TPT Global Tech, Inc. Preferred Stock have been
authorized, of which shares had been designated as 1,000,000 Series
A Preferred Stock, 3,000,000 Series B Preferred Stock, 3,000,000
Series C Preferred Stock and 10,000,000 Series D Preferred
Stock.
Series A Preferred
Stock- In February 2015, the Company designated 1,000,000
shares of Preferred Stock as Series A Preferred Stock. The Series A
Preferred Stock has a liquidation preference immediately after any
Senior Securities, as defined, and of an amount per share equal to
amounts payable owing, including contingency amounts where Holders
of the Series A have personally guaranteed obligations of the
Company, to the Holders of the Series A Preferred Stock on the
books and records of the Company divided by the number of shares of
Series A Preferred Stock outstanding. Holders of the Series A
Preferred Stock shall, collectively have the right to convert all
of their Series A Preferred Stock when conversion is elected into
that number of shares of Common Stock of the Company, determined by
the following formula: 60% of the issued and outstanding Common
Shares as computed immediately after the transaction for
conversion. The Series A Preferred Stock, collectively, shall have
the right to vote as if converted prior to the vote to an amount of
shares equal to 60% of the then outstanding Common Stock of the
Company. 1,000,000 shares of Series A Preferred stock are issued
and outstanding as of June 30, 2021 and October 15,
2021 to our founder, Stephen J. Thomas, III.
Series B Preferred Stock - In February 2015, the Company
designated 3,000,000 shares of Preferred Stock as Series B
Convertible Preferred Stock. There are 2,588,693 shares of Series B
Convertible Preferred Stock outstanding as of June 30, 2021 and
October 15, 2021. The Series B Preferred Stock has a liquidation
preference immediately after any Senior Securities, as defined and
currently the Series A Preferred Stock, and of an amount equal to
$2.00 per share. Holders of the Series B Preferred Stock have a
right to convert all or any part of the Series B Preferred Shares
and will receive an equal amount of common shares at the conversion
price of $2.00 per share. The Series B Preferred Stockholders
have a right to vote on any matter with holders of Common Stock and
shall have a number of votes equal to that number of Common Shares
on a one to one basis.
Series C Preferred
Stock- In May 2018, the Company designated 3,000,000 shares
of Preferred Stock as Series C Convertible Preferred Stock. There
are no shares of Series C Convertible Preferred Stock outstanding
as of June 30, 2021 and October 15, 2021.
(Certain debt ($922,181) is
convertible to Series C Preferred Stock). The Series C
Preferred Stock has a liquidation preference immediately after any
Senior Securities, as defined and currently the Series A and B
Preferred Stock, and of an amount equal to $2.00 per share. Holders
of the Series C Preferred Stock have a right to convert all or any
part of the Series C Preferred Shares and will receive and equal
number of common shares at the conversion price of $0.15 per share
(i.e. 1 for 1 conversion). The Series C Preferred Stockholders have
a right to vote on any matter with holders of Common Stock and
shall have a number of votes equal to that number of Common Shares
on a one to one basis (as if converted to common).
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Series D Preferred Stock– In 2019, the Company
previously authorized (20,000,000) Series D 8% Cumulative Dividend
Convertible Preferred Stock for which no shares were issued. On
June 15, 2020 and September 15, 2021, the Company authorized
amendments to the Certificate of Designation whereby the authorized
amount is ten million (10,000,000) Series D 6% Cumulative Dividend
Convertible Preferred Stock which has the following
features:
(i) 6%
Cumulative Annual Dividends payable on the purchase value in cash
or common stock of the Company at the discretion of the Board and
payment is also at the discretion of the Board, which may decide to
cumulate to future years; (ii) Any time after 12 months from
issuance an option to convert to common stock at the election of
the holder @ 75% of the 30 day average market closing price (for
previous 30 business days) divided into $5.00; (iii) Automatic
conversion of the Series D Preferred Stock shall occur without
consent of holders upon any national exchange listing approval and
the registration effectiveness of common stock underlying the
conversion rights. The automatic conversion to common from Series D
Preferred shall be @75% of the 30 day average market closing price
(for previous 30 business days) divided into $5.00, which shall be
post-reverse split as may be necessary for any Exchange listing
(iv) Registration Rights – the Company has granted Piggyback
Registration Rights for common stock underlying conversion rights
in the event it files any other Registration Statement (other than
an S-1 that the Company may file for certain conversion common
shares for the convertible note financing that was arranged and
funded in 2019). Further, the Company will file and pursue to
effectiveness a Registration Statement or offering statement for
common stock underlying the Automatic Conversion event triggered by
an exchange listing. (v) Liquidation Rights - $5.00 per share plus
any accrued unpaid dividends – subordinate to Series A, B,
and C Preferred Stock receiving full liquidation under the terms of
such series. The Company has redemption rights for the first year
following the Issuance Date to redeem all or part of the principal
amount of the Series D Preferred Stock at between 115% and
140%.
If all
of the $38,000,000 in Series D Preferred Stock in this offering
were subscribed for, the Company would have 7,600,000 Series D
Preferred Stock issued from this offering in addition to shares
already outstanding of 46,649 shares outstanding, of which 36,649
were purchase by the Company’s CEO Stephen J.
Thomas.
Effective
October 14, 2017, we adopted the 2017 TPT Global Tech, Inc. Stock
Option and Award Incentive Plan (the "Plan"). The Plan provides for
grants of nonqualified stock options and other stock awards,
including warrants, to designated employees, officers, directors,
advisors and independent contractors. A maximum of 20,000,000
shares of our common stock were reserved for options and other
stock awards under the Plan.
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Voting
Rights
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Holders
of Series D Preferred Stock shall vote as a single Class on any
matter that would alter the rights and privileges of the Series D
Preferred Stock and together with the Common Stock on an
as-converted basis as computed on the date of the meeting notice
(excluding the automatic conversion) on other matters. Our Chief
Executive Officer, through his ownership of the Series A Preferred
Stock which guarantees no less than 60% ownership upon exercise,
will continue to hold voting control of the Company after this
Offering even assuming the maximum number of shares of this
Offering are sold.
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Anti-Dilution
Provisions
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None,
except for the Series D which include a provision that the
conversion to common from Series D Preferred shall be @75% of the 30 day average market closing price
(for previous 30 business days) divided into $5.00, which
shall be post-reverse split as may be necessary for any Exchange
listing.
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Automatic
Conversion
|
The
Series D Shares shall automatically convert into shares of Common
Stock upon the Company’s consummation of listing on a
National Exchange on the basis discussed under
“Capitalization.”
For
purposes of clarity, an automatic conversion shall take place if
the underlying shares of Common Stock are covered by an effective
registration statement on Form S-1 (or Offering Statement on Form
1-A) filed by the Company with the SEC, at or prior to the time of
Exchange listing.
|
|
Optional
Conversion
|
The
holder may convert at any time after 12 months from issuance to
common stock based upon $5.00 divided by 75% of the 30-day average
market closing price to result in number of common shares issued.
As of October 15, 2021, given the closing market value for the
previous 30 days, 75% of the average market value would be
approximately $0.021 and the issuable common shares upon conversion
assuming of all Series D Preferred Shares were outstanding would be
approximately 2.4 billion. This would have a significant dilutive
effect on the existing shareholders.
|
|
Piggyback
Registration
|
Whenever
the Company proposes to register any shares of its Common Stock
under the Securities Act (other than a registration effected solely
to implement an employee benefit plan or a transaction to which
Rule 145 of the Securities Act is applicable, or a Registration
Statement on Form S-4, S-8 or any successor form thereto or another
form not available for registering the Registrable Securities for
sale to the public or an S-1 or 1-A Offering Statement for current
convertible debt holders which was funded in 2019), whether for its
own account or for the account of one or more stockholders of the
Company and the form of Registration Statement or Offering
Statement to be used may be used for any registration or offering
of Registrable Securities (a “Piggyback Registration or
Offering”), the Company shall include in such registration
(or 1-A Offering Statement) all Registrable Securities. The Company
may postpone or withdraw the filing or the effectiveness of a
Piggyback Registration or Offering at any time in its sole
discretion.
|
|
Optional
Redemption
|
The
Company will have the right, at the
Company’s option, to redeem all or any portion of the shares
of Series D Preferred Stock, exercisable on not more than three (3)
Trading Days (as defined herein) prior written notice to the
Holders, in full payment as follows:
1.
(115%) The period beginning on the date of the issuance of shares
of Series D Preferred Stock (the “Issuance Date”) and
ending on the date which is sixty (60) days following the Issuance
Date.
2. (120%)
The period beginning on the date which is sixty-one (61) days
following the Issuance Date and ending on the date which is one
hundred twenty (120) days following the Issuance Date.
3.
(125%) The period beginning on the date which is one hundred
twenty-one (121) days following the Issuance Date and ending on the
date which is one hundred eighty (180) days following the Issuance
Date.
4.
(130%) The period beginning on the date that is one hundred
eighty-one (181) days from the Issuance Date and ending two hundred
forty (240) days following the Issuance Date.
5.
(135%) The period beginning on the date that is two hundred
forty-one (241) days from the Issuance Date and ending three
hundred (300) days following the Issuance Date.
6.
(140%) The period beginning on the date that is three hundred one
(301) days from the Issuance Date and ending three hundred sixty
(360) days following the Issuance Date.
|
Investment Analysis
Management
believes that we have strong economic prospects by virtue of the
following dynamics of the industry and us:
1.
Management believes
that the trends for growth in the technology industry are favorable
as global technology is expected to continue to be
popular.
2.
Management believes
that demand for additional technology will increase in the
future.
3.
We offer VML
technology for which we plan to expand marketing. Management
believes SaaS ViewMe Live (VML) could become a leading Digital
Media Mobile TV technology platform in the business-to-business and
business-to-consumer markets. Our proprietary software platform can
reach a worldwide audience of approximately one billion mobile
viewers. VML addresses global mobile distribution of LIVE and Video
on Demand (“VOD”) content, including uses in the
medical field, as a white label Software as a Service
(“SaaS”).
There
is no assurance that we will be profitable, or that the
industry’s favorable dynamics will not be outweighed in the
future by unanticipated losses, adverse regulatory developments and
other risks. Investors should carefully consider the various risk
factors before investing in the shares. Commerce in the technology
industry is extremely competitive, inherently speculative and
highly regulated. See “RISK FACTORS.”
The Offering
Series D Preferred
6% Cumulative Dividend Convertible Stock offered by us
7,600,000 shares
Common
Stock outstanding as of October 15,
2021 908,029,038 shares
Common
Stock to be outstanding after the offering (1)
908,029,038 shares
(1)
There are no common
shares being sold in this offering.
USE OF PROCEEDS
The
maximum gross proceeds from the sale of the shares of our Series D
Preferred 6% Cumulative Dividend Convertible Stock are $38,000,000.
The proceeds from the total offering are expected to be
approximately $38,000,000, including brokerage commissions of
$3,040,000 and $200,000 for payment of offering expenses including
printing, mailing, legal and accounting costs, filing fees and
other expenses that may be incurred. The estimate of the budget for
offering costs is an estimate only and the actual offering costs
may differ from those expected by management. The estimated use of
the net proceeds of this offering is as follows, assuming 100%,
75%, 50% and 25% of this offering is subscribed, as illustrated in
the following table for different levels of total capital from this
offering:
Summarized Estimated Use of Net Proceeds
|
|
100%
|
75%
|
50%
|
25%
|
|
Equipment
purchases
|
$14,000,000
|
$11,000,000
|
$8,000,000
|
$3,000,000
|
|
Debt
restructuring
|
7,300,000
|
6,000,000
|
4,500,000
|
2,500,000
|
|
Product
advancement
|
2,250,000
|
2,250,000
|
2,000,000
|
1,000,000
|
|
Acquisitions
|
500,000
|
500,000
|
500,000
|
500,000
|
|
Working capital,
including marketing
|
10,710,000
|
6,320,000
|
2,380,000
|
1,690,000
|
|
Brokerage
commissions
|
3,040,000
|
2,280,000
|
1,520,000
|
760,000
|
|
Offering
expenses
|
200,000
|
150,000
|
100,000
|
50,000
|
|
Total
Offering Proceeds
|
$38,000,000
|
$28,500,000
|
$19,000,000
|
$9,500,000
|
We may
reallocate the estimated use of proceeds among the various
categories or for other uses if management deems such a
reallocation to be appropriate. We cannot assure that the capital
budget will be sufficient to satisfy our operational needs, or that
we will have sufficient capital to fund our business. See
“BUSINESS” and “RISK FACTORS.”
BUSINESS
Company Overview
We were
originally incorporated in 1988 in the state of Florida. TPT
Global, Inc., a Nevada corporation formed in June 2014, merged with
Ally Pharma US, Inc., a Florida corporation, (“Ally
Pharma”, formerly known as Gold Royalty Corporation) in a
“reverse merger” wherein Ally Pharma issued 110,000,000
shares of Common Stock, or 80% ownership, to the owners of TPT
Global, Inc. and Ally Pharma changed its name to TPT Global Tech,
Inc. In 2014, we acquired all the assets of K Telecom and Wireless
LLC (“K Telecom”) and Global Telecom International, LLC
(“Global Telecom”). Effective January 31, 2015, we
completed our acquisition of 100% of the outstanding stock of
Copperhead Digital Holdings, Inc. (“Copperhead
Digital”) and Subsidiaries, TruCom, LLC
(“TruCom”), Nevada Utilities, Inc. (“Nevada
Utilities”) and CityNet Arizona, LLC (“CityNet”).
In October 2015, we acquired the assets of both Port2Port, Inc.
(“Port2Port”) and Digithrive, Inc.
(“Digithrive”). Effective September 30, 2016, we
acquired 100% ownership in San Diego Media, Inc.
(“SDM”). In December 2016, we acquired the Lion Phone
technology. In October and November 2017, we entered into
agreements to acquire Blue Collar, Inc. (“Blue
Collar”), and certain assets of Matrixsites, Inc.
(“Matrixsites”) which we have completed. On May 7, 2019
we completed the acquisition of a majority of the assets of
SpeedConnect, LLC, which assets were conveyed into our wholly owned
subsidiary TPT SpeedConnect, LLC (“TPT SC” or
“TPT SpeedConnect”) which was formed on April 16, 2019.
On January 8, 2020 we formed TPT Federal, LLC (“TPT
Federal”). On March 30, 2020 we formed TPT MedTech, LLC
(“TPT MedTech”) and on June 6, 2020 we formed
InnovaQor, Inc (“InnovaQor”). In July and August 2020, the Company
formed Quiklab 1 LLC, QuikLAB 2, LLC, QuikLAB 3, LLC and QuikLAB 4,
LLC where the Company owns 80% (as agreed per the operating
agreement) of all outside equity investments. Effective August 1,
2020 we closed on the acquisition of 75% of The Fitness Container,
LLC (“Aire Fitness”). In July 2020, we invested in a
Hong Kong company called TPT Global Tech Asia Limited of which we
own 78%, and during 2020, InnovaQor did a reverse merger with
Southern Plains of which there ended up being a non controlling
interest of 6% as of June 30, 2021 and December 31, 2020. The name
of InnovaQor remained for the merged entities but was changed to
TPT Strategic, Inc. on March 21, 2021.
We are based in San Diego, California, and operate
as a technology-based company with
divisions providing telecommunications, medical technology and
product distribution, media content for domestic and international
syndication as well as technology solutions. We operate as a Media Content Hub for
Domestic and International syndication,
Technology/Telecommunications company using our own proprietary Global Digital Media TV and
Telecommunications infrastructure platform and also provide
technology solutions to businesses domestically and worldwide. We
offer Software as a Service (SaaS), Technology Platform as a
Service (PAAS), Cloud-based Unified Communication as a Service
(UCaaS) and carrier-grade performance and support for businesses
over our private IP MPLS fiber and wireless network in the United
States. Our cloud-based UCaaS services allow businesses of any size
to enjoy all the latest voice, data, media and collaboration
features in today's global technology markets. We also operate as a
Master Distributor for Nationwide Mobile Virtual Network Operators
(MVNO) and Independent Sales Organization (ISO) as a Master
Distributor for Pre-Paid Cellphone services, Mobile phones,
Cellphone Accessories and Global Roaming
Cellphones.
Key Divisions:
TPT SpeedConnect: ISP and Telecom
The
Company completed the acquisition of substantially all of the
assets of SpeedConnect LLC (“SpeedConnect”) for $1.75
million, including the assumption of all contracts and liabilities
pertinent to operations and conveyed them into a wholly-owned
subsidiary TPT SpeedConnect. SpeedConnect was founded in 2002 and
operates as a national, predominantly rural, wireless
telecommunications residential and commercial Internet Service
Provider (ISP). TPT SpeedConnect’s primary business model is
subscription based, monthly reoccurring revenues, from wireless
delivered, high-speed Internet connections utilizing its company
built and owned national network. SpeedConnect also resells
third-party satellite Internet, DSL Internet, IP telephony and DISH
TV products. This Acquisition closed on May 7, 2019.
SpeedConnect was a privately-held Broadband Wireless Access (BWA)
provider. Today, TPT SpeedConnect is one of the nation’s
largest rural wireless broadband Internet providers which serves
approximately 11,000 residential and commercial wireless broadband
Internet customers, in Arizona, Idaho, Illinois, Iowa, Michigan,
Montana, Nebraska, South Dakota and Texas.
SpeedConnect
is a full-service ISP. The company’s main back office is run
by company employees, and includes, network management, network
monitoring and maintenance, significant allocations of registered
address in public IP4 and IP6 space, employee based customer
service, installation services, automated resources and application
based scheduling and tracking, paper, ACH, credit card, and email
billing, warehousing, fulfillment, integrated customer premise
provisioning, walled garden collections and customer self-restarts,
bandwidth usage tracking, integrated, secure, and deep financial
and operations dash board reporting, collections, accounting,
payables, owned and licensed backhaul, intelligent bandwidth
management, consumption rated billing, customer payment portals,
and all wrapped in a mature, first hit on all search engines,
Internet Brand. The company today services approximately 11,000
residential and commercial Internet customers over its 220-cellular
tower foot-print across 10 Midwestern States.
Today’s
urban ISP landscape is highly competitive and dominated by some of
the world’s largest going concerns. Names like Comcast,
AT&T, Cox, Charter and DISH are household words. Home Internet
service has become synonymous with Cable. However, this is limited
to the high-density top 100 markets. Beyond that the competition
becomes more small licensed free wireless providers and satellite.
Wire-line providers, unless backed with government subsidies, do
not build beyond 15 homes per street mile. SpeedConnect services
both rural and non-rural areas, and historically has done well in
both marketplaces, however the margins are improved in the more
rural areas due to reduced voluntary and involuntary customer
attrition.
TPT
SpeedConnect’s key suppliers include but are not limited to;
Great Lakes Data Systems, Juniper, ZTE, Huawei, Cisco, Sandvine,
American Tower, SBA Tower, Crown Castle, CenturyLink, SuddenLink,
South Dakota Networks, 123 dot net, Genesee Telephone, Air
Advantage Fiber, Iron Mountain, ConVergence, CDW, Talley, Tessco,
Bursma Electronics, DragonWave, Ceragon Networks, Telrad, Arris,
AP, APD, Plante Morran, Fifth Third, Sprint and
others.
Blue Collar Production Division
Our
production division, Blue Collar Productions (formerly Blue Collar,
Inc.), creates original live action and animated content
productions and has produced hundreds of hours of material for the
television, theatrical, home entertainment and new media markets.
Mr. Rowen, our CEO of Blue Collar, works closely with major
television networks, cable channels and film studios to produce
home entertainment products.
The
Documentary film group at Blue Collar recently completed a film on
the cultural impact of Goodfellas: 20 Years Later that featured Martin
Scorsese, Robert DeNiro, Lorraine Bracco, Leonardo DiCaprio and
many others. They have also produced a series of film anthologies
for Turner Classic Movies. Blue Collar is currently in production
on Built To Fail, which is
a look at the history of street wear. The film features Tommy
Hilfiger, Russell Simmons and a host of notable street wear
designers. They are also in pre-production on The 29 Club, a look at notable
musicians who all tragically died at age 29; Memories in Music, which is an in-depth
study of the impact of memory through music on Alzheimer’s
patients and Faces of
Vegas, an exploration into the culture of Las Vegas,
Nevada.
Blue
Collar Productions currently has the feature film Looking For Alaska, based on the John
Green novel, producing for Paramount Pictures. The company produced
for a pilot for MTV for a possible series, “My Jam”
aired in the Fall of 2016. Blue Collar has also produced two
seasons of “Caribbean’s Next Top Model
Season.”
Blue
Collar Productions designs branding and marketing campaigns and has
had contracts with some of the world’s largest companies
including PepsiCo, Intel, HP, WalMart and many other Fortune 500
companies. Additionally, they create motion picture, television and
home entertainment marketing campaigns for studios including Sony,
DreamWorks, Twentieth Century Fox, Universal Studios, Paramount
Studios, and Warner Brothers.
The CEO
of this division, Mr. Rowen, has worked with filmmakers including
Steven Spielberg, Ron Howard, Brett Ratner and James Cameron. Mr.
Rowen also has very close working relationships with actors
including Tom Hanks, Brad Pitt, Julia Roberts, Robert Downey, Jr.,
Denzel Washington, Ryan Gosling, Sofia Vergara, Mariska Hargitay
and many others.
Prior
to starting Blue Collar Productions, Mr. Rowen functioned as the
head of home entertainment production for DreamWorks SKG from 1997
to 2000. He also serves as the President of Long Leash
Entertainment, an aggregator of entertainment based intellectual
property and creator of high-end entertainment
content.
San Diego Media Division
San
Diego Media, Inc. (“SDM”)
is an established Southern California based software engineering
and Internet e-commerce marketing services company that provides
enterprise-class integrated solutions for manufacturers, retailers,
and distributors focused on developing solutions for companies
seeking online growth and profitability.
Founded
in 1999, historically the primary market offering has been
MaxEXP®, a proven stable, productivity-enabling proprietary
eCommerce platform, built on open-standards technology that
empowers companies to deploy and manage eCommerce offerings at
lower cost and at less time than required to deploy more
conventional high-end solutions — and, we believe, all
without sacrificing the essential merchandising functionality,
customizability, extensibility, scalability, security, and
performance that much more expensive solutions provide. MaxEXP
supports both B2B and B2C functionality simultaneously which few
other eCommerce solutions will provide successfully
out-of-the-box.
These
early engagements have enabled SDM to solidify and refine the core
SDM technology architecture and to enhance the platform with
market-driven merchandising features and functionality. SDM has
made significant R&D investments in operational infrastructure
including sophisticated monitoring systems, comprehensive security,
time-tracking, client management tools, and continuous compliance
with the demanding payment card industry (PCI)
standards.
SDM has
complemented these systems with a full range of automated and
enterprise-class capabilities for fully integrating with
customer’s legacy systems, call centers, fulfillment houses,
and other critical business process applications.
SDM has
complimented its technologies with a wider range of professional
internet and marketing services that enables client success, to
create successful business relationships over
long-term.
As the
market has changed through the years SDM has continued to innovate
and expand its strategic and technology development partnerships;
these include, MIndTouch, BigCommerce, Avalara, CPC Strategies,
eBridge, Imperva Incapsula, Chris Chase Design. SDM’s newest
client is based in Singapore and it represents its most innovative
use of technologies to date.
TPT MedTech, LLC – Medical Division
TPT
MedTech believes it is strategically positioned to take advantage
of the current trend in Point of Care Testing (“POCT”)
by aligning itself with the exponential growth of smart devices
equipped with mobile healthcare (mH), which may revolutionize
personalized healthcare monitoring and management, thereby paving
the way for next-generation POCT.
The
rapid turnaround times, improved decision times, and time-critical
decision-making of TPT MedTech QuikLAB can result in total savings
between 8-20% of laboratory costs for facilities that implement POC
testing. The savings realized due to the decreased cost of waiting
for results can be as much as $260 USD per patient. For those that
use and implement POC testing, waiting can improve by as much as 46
minutes per patient real-time scenarios—and days in standard
laboratory settings. Management believes TPT MedTech
QuikLAB is uniquely positioned to serve this growing
market.
SANIQuik is
a decontamination and sanitizing unit that TPT MedTech
intends to co-market with the QuikLAB
mobile laboratory as an integrated solution to certain issues
arising from the COVID-19 pandemic. SANIQuik uses
hypochlorous acid as a spray mist. This chemical has been safely
used on many food products for decades. Hypochlorous acid does not
cause irritation to eyes and skin. Even if it were ingested it
causes no harm. Because it is so safe, it is the ideal sanitizer
for direct food sanitation and food contact surfaces. It is also
ideal in healthcare where it is used for wound cleansing, eye
drops, and patient room disinfection replacing toxic chemicals such
as bleach and quaternary ammonium salts. Hypochlorous acid is FDA,
USDA, and EPA approved to minimize microbial food safety hazards of
fresh-cut fruits and vegetables. (See https://www.hypochlorousacid.com/about.)
TPT
MedTech believes the SANIQuik external sanitation is safe,
effective and flexible for its utilization with options for users.
TPT MedTech intends to provide optional masks to users as they
approach the SANIQuik. The mask provides a cover around inhalation
of the mist. External sanitation is safe and effective, providing
an additional routine to hand washing and facial
coverings.
TPT
MedTech has developed a business model which markets SANIQuik as a
novel product within the Personal Protective Equipment (PPE)
industry. This PPE distribution model is focused in the Federal
procurement space (Veteran’s Administration, Department of
Defense, Federal Emergency Management Agency, Centers for Disease
Control, National Guard) as well as vendor to the top 20 National
Hospital Group Purchasing Organizations (GPO).
TPT MedTech will be requesting Emergency Use Authorization (EUA)
from the FDA for SANIQuik during the COVID-19 pandemic, which has
been granted to other sanitizing units. SANIQuik already has the
European CE mark. For attorney fees and consultants, we
are estimating $50,000 for the EUA.
Copperhead Digital Holdings, LLC /TruCom, LLC–
CLEC–Phoenix, Arizona
Our
TruCom division, a subsidiary of Copperhead Digital Holdings, LLC,
is a Facilities Based Competitive Local Exchange Carrier (CLEC)
headquartered in Phoenix, AZ. Founded in 2006 (as Copperhead
Digital Carrier) for the purpose of operating a state-of-the-art
Fiber Optic Network constructed by and acquired from Adelphia
Communications, TruCom now operates its own carrier class Fiber
Optic Network, state-of-the-art Wireless Point-to-Point network,
and Patent Pending proprietary
“Bulletproof”™
technology seamlessly integrating the two.
TruCom
offers Phone, Internet, Fiber Optic, Wireless, Hosted PBX, Wi-Fi,
Wi-Max, Engineering, Cabling, Wiring and Cloud services. With a
penchant for pushing the envelope, TruCom has pioneered innovative,
hosted firewall and managed MPLS service technologies (SuperCore
MPLS™) and was the Industry first to engineer patent-pending
failover services utilizing our own fiber optic and wireless
networks to guarantee business continuity and service uptime.
Located in multiple Local Serving Offices and Points of Presence
(POP’s) in the primary Data Centers in the market,
TruCom’s extensive Fiber Optic Network runs through the heart
of the most densely populated corridors of the Greater Phoenix
Metro Area. Their Wireless Point to Point and Point to Multipoint
Network is fed by the infinitely scalable capacity of the Fiber
Optic Network and consists of more than 16 Major Access Points.
This footprint not only provides coverage throughout the metro
area, but also spans into outlying Cities, often providing the only
carrier grade solution available in the region.
K Telecom and Global Telecom- GSM Distribution
K
Telecom and Global Telecom are located in the Northwest of the
United States and sell and distribute GSM Cell Phone and Prepaid
GSM Services for MVNO’s (Mobile Virtual Network Operators)
through approximately 100 brick and mortar retail store-front
locations in Washington and Oregon.
Technology Company Overview
Our Company was formed as the successor of two US Corporations,
Ally Pharma US, a Pharmaceutical technology research company
founded in 1988 and TPT Global Inc. a Media Content, Voice and
Data, Interconnect and International gateway provider. TPT Global
Tech is headquartered in San Diego, California and operates as a
holding company for its Media, Smartphone, Network, Content and
SaaS (Software as a Services) domestic and international
businesses.
Historically
and through key acquisitions we launched Telecommunications
wholesale and retail operations in the United States and
Internationally. These first acquisitions with their Customer
Bases, Distribution Channels and Technology are the base for our
organic growth strategy and provide opportunities to cross sell our
platforms and New Media Technology products and services
Domestically and Internationally.
We are based in San Diego, California and operate
as a technology-based company with
divisions providing telecommunications, medical technology and
product distribution, media content for domestic and international
syndication as well as technology solutions. We operate as a Media Content Hub for
Domestic and International syndication,
Technology/Telecommunications company using on our own proprietary
Global Digital Media TV and Telecommunications infrastructure
platform and we also provides technology solutions to businesses
worldwide. We offer Software as a Service (SaaS), Technology
Platform as a Service (PAAS), Cloud-based Unified Communication as
a Service (UCaaS) and carrier-grade performance and support for
businesses over our private IP MPLS fiber and wireless network in
the United States. Our cloud-based UCaaS services allow businesses
of any size to enjoy all the latest voice, data, media and
collaboration features in today's global technology markets. We
also operate as a Master Distributor for Nationwide Mobile Virtual
Network Operators (MVNO) and Independent Sales Organization (ISO)
as a Master Distributor for Pre-Paid Cellphone services, Mobile
phones, Cellphone Accessories and Global Roaming
Cellphones.
Our
technologies “Gathers Big Data” to predict our
customers’ viewing and spending habits. We then deliver
Products and Services to support that estimated demand and share
advertising revenues with our Content, Digital Media and Linear
Broadcast Partners worldwide.
Each of
our four divisions contributes to the launch of our global Content
delivery platform “ViewMe Live” and creates cross
pollinating revenue opportunities and a closed Global E-commerce
Eco environment which we believe will help us execute our short-
and long-term corporate objectives. Our Content Division which
consists of Blue Collar Productions (our TV and Film content
Production company) creates original content and in some cases
third party content. Once Content has been produced we will then
broadcast and delivered that content over our proprietary Mobile TV
Platform on our proprietary Trucom Telecommunication Network
infrastructure domestically and internationally.
Our
corporate goal is to work within our four in house divisions
(Smartphone, Network, Content and SaaS) to launch hardware sales
and build a viewer subscriber base domestically and
internationally. This edge device deployment would deliver free
Content, free Linear Broadcast feeds and Social Media features on
our Free proprietary Mobile app platform with the anticipation to
aggregate and showcase our original and third-party Content,
Digital Media and Linear broadcast feeds from and too the four
corners of the Globe.
All of
the back technology or features for ViewMe Live have been developed
and we anticipate spending an additional $2,000,000 USD to complete
the front-end features which we believe, depending on our funding
event, will be six to twelve months.
We have
generated revenues in 2020 and 2019, primarily through operating as
a Facilities Based Telecommunications Competitive Local Exchange
Carrier (“CLEC”) in Arizona and as a Broadband Internet
provider. The company currently operates an approximate 58 miles
Fiber optic ring throughout the greater Phoenix valley offering
such services as Basic Residential Phone service, Basic Business
phone service, POT’s lines, Basic Fiber Broadband Internet
services, Wireless Internet Services, Toll Free 800 services, EFax,
Erate, Dedicated T-1 Services, Auto Attendant, SIP Trunks, Mobile
and Voip services. These services will continue for the foreseeable
future weighted heavily towards offering more Wireless Internet
services and the Fiber Ring will be transformed into a Private Test
facility to be offered for rent to businesses needing a private
network to test new products for proof of concept purposes.
Since the acquisition of the assets of
SpeedConnect in 2019, we operate as a Broadband Wireless Access
(BWA) provider and are considered one of the nation’s largest
rural wireless broadband Internet providers serving approximately
11,000 residential and commercial wireless broadband Internet
customers, in Arizona, Idaho, Illinois, Iowa, Michigan, Montana,
Nebraska, South Dakota and Texas.
We, and
our related acquired companies are seeking to be an innovative
Media-Telecom/CUBS (Cloud Unified Businesses Services) company and
one of the first to combine recurring Telecom, Media and
Data/Cloud Services revenue under one roof, then bring all
relevant data from those services into a proprietary telecom
infrastructure and information matrix platform capable of
delivering a “Daily and Intelligent Dashboard” to our
Domestic and International customers. Such a planned cohesive
combination of services and information from a single provider has
been heretofore nonexistent. We intend to pioneer an integrate
communication services and information technology suites to empower
individuals and companies with vital communications, Smartphone,
Network, Content, SaaS (Software as A Service), New Media
Technology products and services, and valuable relevant diagnostic
information both Domestically and
Internationally.
We are
currently able to deliver a live Global TV Broadcast and Social
Media Platform utilizing a Mobile App technology on our proprietary
Content Delivery Network. We plan to expand our Cloud Unified
Business Services (CUBS) technology-based business services
unifying multiple services from the cloud.
CUBS (Cloud Unified Business Services) - We are a CUBS
provider, acquiring customers and then cross selling additional
products and services through our proprietary Wrap Around
Relationship Marketing (WARM) system, intending to make the
customers very sticky.
Planned Activities
Big Data & Predictive Analytics - Our capability to
utilize our proprietary aggregation platform to gather data from
our hardware and software edge device (End Users) deployments
positions the Company to be a leader in predictive
analytics.
Cross-Sales – Our growth strategy through
complimentary acquisitions may create opportunities to cross and
sell its New Generation, New Media technology products and services
to a growing customer base across multiple distribution channels,
both domestically and internationally.
Market Launch - Through our acquisition of ViewMe Live from
Matrixsites, we have acquired the live backend broadcast Network
technology for our Global Mobile TV and Social Media platform.
Subject to raising capital ($2,000,000) from our fund-raising
activities we believe we are six to twelve months from completing
the frontend development component to launch its “ViewMe
Live” Mobile APP delivery platform.
Liquidity and Capital Resource Needs
The
maximum proceeds from this Offering are $38,000,000 which is
anticipated to provide net proceeds of approximately $35,000,000.
Our estimate of uses for these proceeds are the
following:
|
Equipment purchase
and manufacturing
|
$14,000,000
|
|
Product
advancement
|
2,250,000
|
|
Acquisitions
|
500,000
|
|
Debt
Restructuring
|
7,300,000
|
|
Working capital,
including marketing
|
10,710,000
|
|
Brokerage
commissions
|
3,040,000
|
|
Offering
expenses
|
200,000
|
|
|
$38,000,000
|
Although
the items set forth above indicate management’s present
estimate of our use of the net proceeds from this Offering,
we may reallocate the proceeds or
utilize them for other corporate purposes. Our actual use of
proceeds may vary from these estimates because of a number of
factors, including whether we are successful in completing future
acquisitions, whether we obtain additional funding, what other
obligations have been incurred by us, the operating results of our
initial acquisition activities, and whether we are able to operate
profitably. If our need for working capital increases, we may seek
additional funds through loans or other financing. There are no
commitments for any such financing, and there can be no assurance
that these funds may be obtained in the future if the need
arises. The
company is trying to source $5M in debt for both debt payback and
equipment financing aside from this Offering Circular. This
is shown in this document together with this offering in the
capital and working capital activity.
RECENT ACQUISITIONS/FORMATIONS OF OPERATING
DIVISIONS/SUBSIDIARIES
The Fitness Container, LLC (DBA Aire Fitness)
On June
1, 2020, the Company signed an agreement for the acquisition of a
majority interest in San Diego based manufacturing company, The
Fitness Container, LLC dba “Aire Fitness” (www.airefitness.com), for
500,000 shares of common stock in TPT, vesting and issuable after
the common stock reaches at least a $1.00 per share closing price
in trading, a $500,000 promissory note payable primarily out of
future capital raising and a 10% gross profit royalty from sales of
drive through lab operations for the first year. Aire Fitness, in
which TPT owns 75% is a California LLC founded in 2014 focused on
custom designing, manufacturing, and selling high-end turnkey
outdoor fitness studios and mobile medical testing labs. Aire
Fitness has contracted with YMCAs, Parks and Recreation
departments, Universities and Country Clubs which are currently
using its mobile gyms. Aire Fitness’ existing and
future clients will be able to take advantage of TPT’s
upcoming Broadband, TV and Social Media platform to offer virtual
classes utilizing the company’s mobile gyms. The agreement
included an employment agreement for Mario Garcia, former principal
owner, which annual employment is to be at $120,000 plus customary
employee benefits. This agreement was closed August 1,
2020.
TPT Strategic Merger with Southern Plains
On
August 1, 2020, InnovaQor
(name changed to TPT Strategic, Inc.), a wholly-owned subsidiary of
the Company, entered into a Merger Agreement with the publicly
traded company Southern Plains Oil Corp. (OTC PINK: SPLN prior to
Merger Agreement).
During 2020, TPT Strategic authorized a Series A Super Majority
Preferred Stock valued at $350,000 by management and issued to a
third party in exchange for legal services. Effective September 30,
2020, the Series A Super Majority Preferred Stock was exchanged
with TPT for a note payable of $350,000 payable in cash or common
stock (see Note 5(2)). As such, as of September 30, 2020, the
Company, for accounting purposes, took control of the merged TPT
Strategic and reflected in it’s consolidated balance sheet
the non-controlling interest of $219,058 in the liabilities under a
license agreement valued at $3,500,000. This $3,500,000 was
recorded as a Note Payable and expensed on InnovaQor’s books.
During the six months ended June 30,
2021, the license agreement was cancelled and the non-controlling
interest reversed.
QuikLAB Mobile Laboratory
In July and August 2020, the Company formed Quiklab 1 LLC, QuikLAB
2, LLC, QuikLAB 3, LLC and QuikLAB 4, LLC. It is the intent to use
these entities as vehicles into which third parties would invest
and participate in owning QuikLAB Mobile Laboratories. As of
December 31, 2020, Quiklab 1 LLC, QuikLAB 2, LLC and QuikLAB 3, LLC
have received an investment of $460,000, of which Stephen Thomas
and Rick Eberhardt, CEO and COO of the Company, have invested
$100,000 in QuikLAB 2, LLC. The third-party investors and Mr.
Thomas and Mr. Eberhart, will benefit from owning
20% of QuikLAB Mobile Laboratories specific to their
investments.
TPT Strategic Merger with Education System Management
On June 22, 2021, TPT Strategic and the Company signed a merger
agreement with Education Systems Management, LLC
(“EDSM”) to create a merged public entity. TPT
Strategic will become a non-controlling interest to TPTW after the
merger and after fund raising efforts at an estimated 28%. Both TPT
Strategic and the Company will enter into a software development
agreement for the development of a standalone backend and front-end
telemedicine technology platform which is not to exceed $3.5M in
cost. It is also the intent that current TPT shareholders will
receive TPT Strategic stock of 2.5M common shares as a dividend
after the merger is complete and appropriate shares are registered
with the SEC under a registration rights agreement. Closing was
expected on or before August 1, 2021, or as agreed by all parties.
The parties have verbally agreed to close as soon as possible and
are working towards this.
Our Business Methods
Centralized Platform and New Generation Network
We are
now operating a next-generation broadband network reselling other
companies’ networks on a wholesale arbitrage basis (buying
and reselling other companies’ capacity) on our centralized
VIVO Platform. We are interconnected to U.S. and International
carriers to date. Once funded, we intend to deploy our own
in-country networks in the targeted emerging markets. This will
enable us to be able to provide better quality termination and
increase our operating margins. We believe our platform will
produce substantial operational cost savings. Because of our
pricing advantage, we are able to offer our clients products and
services at an attractive pricing structure, creating a strong
competitive advantage. Based on our low network operating costs and
low-cost infrastructure, we believe we may penetrate emerging
markets with little network build-out and at a reasonable price.
Management believes that our service offerings will be well
received in emerging markets based on existing relationships and
pricing structure, which will enable us to set the industry
standard with little competition.
Once we
establish in-country networks, we will be able to market Phones,
Networks, Content and SaaS products targeted to specific subgroups
that coincide with the country/region where we have a network in
place or a strategic partnership network in place.
Use of Incumbent Networks
Under
formal agreements we can privately brand and resell incumbent
carriers’ underlying broadband networks, while deploying our
own Wimax/Wi-Fi/GSM service plans and mobile handsets.
As a
true value add, our VIVO billing platform allows us to manage the
billing and routing, offering our customers a seamless, branded
network from anywhere we maintain a relationship. By way of
incumbent operator networks, we can sell and market to retail and
wholesale customers without the high infrastructure costs
associated with deploying our own network. If and when the revenues
justify the cost of constructing our own network, we plan to
investigate adding a wireless Broadband/ GSM network and transfer
our customer base in a final step to reduce costs of goods sold
long-term.
Wholesale Termination
Wholesale
termination is the reselling of excess network capacity on a
reciprocal basis to other telecom carriers both domestically and
internationally. Due to the large number of carrier relationships
we have in the US and abroad, we believe we can immediately
increase our wholesale termination in each country in which we have
a license to operate. This wholesale activity generates additional
cash flow immediately if successfully implemented. Wholesale
termination is a low risk, low margin business.
Service Description
Our
next-generation wireless Broadband/GSM network relies on
non-line-of-sight technology. This will provide a level of
performance comparable to that delivered by evolving Worldwide
Interoperability of Microwave Access (WiMAX) standards. The cost
advantage equates to substantial reductions of fixed costs as
compared to building traditional, legacy, and switched
networks.
Our
products and marketing strategy unifies the various features
available in today’s telecommunication environment
including:
●
Significant
international broadband capacity
●
High quality VoIP
communication
●
Cellular/GSM and
Wi-Fi wireless convergence
●
IPTV, Content
Applications and Financial Services Products
●
Remote network
management
●
Sophisticated
Prepaid, Wholesale and Retail billing
●
CRM management; and
Intranet Build-out, back office management and
reporting.
Our Business Segments
Our
business segment consists generally of providing strategic, legacy
and data integration products and services to small, medium and
enterprise business, wholesale and governmental customers,
including other communication providers. Our strategic products and
services offered to these customers include our collocation,
hosting, broadband, VoIP, information technology and other
ancillary services. Our services offered to these customers
primarily include local and long-distance voice, inducing the sale
of unbundled network elements (“UNEs”), switched access
and other ancillary services. Our product offerings include the
sale of telecommunications equipment located on customers’
premises and related products and professional services, all of
which are described further below.
Our
products and services include local and long-distance voice,
broadband, Ethernet, collocation, hosting (including cloud hosting
and managed hosting), data integration, video, network, public
access, VoIP, information technology and other ancillary
services.
We
offer our customers the ability to bundle together several products
and services. For example, we offer integrated and unlimited local
and long-distance voice services. Our customers can also bundle two
or more services such as broadband, video (including through our
strategic partnerships), voice services. We believe our customers
value the convenience and price discounts associated with receiving
multiple services through a single company.
Most of
our products and services are provided using our telecommunications
network, which consists of voice and data switches, copper cables,
fiber-optic cables and other equipment.
Described
in greater detail below are our key products and
services.
TPT SpeedConnect
On May
7, 2019, the Company completed the acquisition of substantially all
of the assets of SpeedConnect LLC (“SpeedConnect”) for
$1.75 million, including the assumption of all contracts and
liabilities pertinent to operations and conveyed them into a wholly
owned subsidiary TPT SpeedConnect. The Acquisition closed on May 7,
2019. SpeedConnect was founded in 2002 by its CEO John Arthur Ogren
and is in its 17th year of operations as a national, predominantly
rural, wireless telecommunications residential and commercial
Internet Service Provider (ISP). TPT SpeedConnect’s primary
business model is subscription based, monthly reoccurring revenues,
from wireless delivered, high-speed Internet connections utilizing
its company built and owned national network. SpeedConnect also
resells third-party satellite Internet, DSL Internet, IP telephony
and DISH TV products.
SpeedConnect
is a privately-held Broadband Wireless Access (BWA) provider.
Today, TPT SpeedConnect is one of the nation’s largest rural
wireless broadband Internet providers which serves approximately
11,000 residential and commercial wireless broadband Internet
customers, in Arizona, Idaho, Illinois, Iowa, Michigan, Montana,
Nebraska, South Dakota and Texas.
TPT
SpeedConnect is a full-service ISP. The company’s Frankenmuth
Michigan back office is run by company employees, and includes
network management, network monitoring and maintenance, significant
allocations of registered address in public IP4 and IP6 space,
employee based customer service, installation services, automated
resources and application based scheduling and tracking, paper,
ACH, credit card, and email billing, warehousing, fulfillment,
integrated customer premise provisioning, walled garden collections
and customer self-restarts, bandwidth usage tracking, integrated,
secure, and deep financial and operations dash board reporting,
collections, accounting, payables, owned and licensed backhaul,
intelligent bandwidth management, consumption rated billing,
customer payment portals, and all wrapped in a mature, first hit on
all search engines, Internet Brand. The company today services
approximately 11,000 residential and commercial Internet customers
over its 220-cellular tower footprint across 10 Midwestern
States.
Today’s
urban ISP landscape is highly competitive and dominated by some of
the world’s largest going concerns. Names like Comcast,
AT&T, Cox, Charter and DISH are household words. Home Internet
service has become synonymous with Cable. However, this is limited
to the high-density top 100 markets. Beyond that the competition
becomes more small licensed free wireless providers and satellite.
Wire-line providers, unless backed with government subsidies, do
not build beyond 15 homes per street mile. SpeedConnect services
both rural and non-rural areas, and historically has done well in
both marketplaces, however the margins are improved in the more
rural areas due to reduced voluntary and involuntary customer
attrition.
TPT
SpeedConnect’s key suppliers include but are not limited to;
Great Lakes Data Systems, Juniper, ZTE, Huawei, Cisco, Sandvine,
American Tower, SBA Tower, Crown Castle, CenturyLink, SuddenLink,
South Dakota Networks, 123 dot net, Genesee Telephone, Air
Advantage Fiber, Iron Mountain, ConVergence, CDW, Talley, Tessco,
Bursma Electronics, DragonWave, Ceragon Networks, Telrad, Arris,
AP, APD, Plante Morran, Fifth Third, Sprint and
others.
Blue Collar Production Division
Our
production division, Blue Collar Productions (formerly Blue Collar,
Inc.), creates original live action and animated content
productions. Blue Collar creates original live action and animated
content and has produced hundreds of hours of material for the
television, theatrical, home entertainment and new media
markets.
San Diego Media
San
Diego Media, Inc. (“SDM”) is an established Southern
California based software engineering and Internet e-commerce
marketing services company that provides enterprise-class
integrated solutions for manufacturers, retailers, and distributors
focused on developing solutions for companies seeking online growth
and profitability. The primary market offering has been
MaxEXP®, a proven stable, productivity-enabling proprietary
eCommerce platform, built on open-standards technology that
empowers companies to deploy and manage eCommerce offerings at
lower cost and at less time than required to deploy more
conventional high-end solutions.
TPT MedTech, LLC – Medical Division
TPT
MedTech believes it is strategically positioned to take advantage
of the current trend in Point of Care Testing (“POCT”)
by aligning itself with the exponential growth of smart devices
equipped with mobile healthcare (mH), which may revolutionize
personalized healthcare monitoring and management, thereby paving
the way for next-generation POCT.
The
rapid turnaround times, improved decision times, and time-critical
decision-making of TPT MedTech QuikLAB can result in total savings
between 8-20% of laboratory costs for facilities that implement POC
testing. The savings realized due to the decreased cost of waiting
for results can be as much as $260 USD per patient. For those that
use and implement POC testing, waiting can improve by as much as 46
minutes per patient real-time scenarios—and days in standard
laboratory settings. Management believes TPT MedTech
QuikLAB is uniquely positioned to serve this growing
market.
SANIQuik is
a decontamination and sanitizing unit that TPT MedTech
intends to co-market with the QuikLAB
mobile laboratory as an integrated solution to certain issues
arising from the COVID-19 pandemic. SANIQuik uses
hypochlorous acid as a spray mist. This chemical has been safely
used on many food products for decades. Hypochlorous acid does not
cause irritation to eyes and skin. Even if it were ingested it
causes no harm. Because it is so safe, it is the ideal sanitizer
for direct food sanitation and food contact surfaces. It is also
ideal in healthcare where it is used for wound cleansing, eye
drops, and patient room disinfection replacing toxic chemicals such
as bleach and quaternary ammonium salts. Hypochlorous acid is FDA,
USDA, and EPA approved to minimize microbial food safety hazards of
fresh-cut fruits and vegetables. (See https://www.hypochlorousacid.com/about.)
TPT
MedTech believes the SANIQuik external sanitation is safe,
effective and flexible for its utilization with options for users.
TPT MedTech intends to provide optional masks to users as they
approach the SANIQuik. The mask provides a cover around inhalation
of the mist. External sanitation is safe and effective, providing
an additional routine to hand washing and facial
coverings.
TPT
MedTech has developed a business model which markets SANIQuik as a
novel product within the Personal Protective Equipment (PPE)
industry. This PPE distribution model is focused in the Federal
procurement space (Veteran’s Administration, Department of
Defense, Federal Emergency Management Agency, Centers for Disease
Control, National Guard) as well as vendor to the top 20 National
Hospital Group Purchasing Organizations (GPO).
TPT MedTech will be requesting Emergency Use Authorization (EUA)
from the FDA for SANIQuik during the COVID-19 pandemic, which has
been granted to other sanitizing units. SANIQuik already has the
European CE mark. For attorney fees and consultants, we
are estimating $50,000 for the EUA.
Copperhead Digital Holdings, LLC / TruCom, LLC–
CLEC–Phoenix, Arizona
Our
TruCom division, a subsidiary of Copperhead Digital Holdings, LLC,
is a Facilities Based Competitive Local Exchange Carrier (CLEC)
headquartered in Phoenix, AZ. Founded in 2006 (as Copperhead
Digital Carrier) for the purpose of operating a state-of-the-art
Fiber Optic Network constructed by and acquired from Adelphia
Communications, TruCom now operates its own carrier class Fiber
Optic Network, state-of-the-art Wireless Point-to-Point network,
and Patent Pending proprietary
“Bulletproof”™
technology seamlessly integrating the two.
TruCom
offers Phone, Internet, Fiber Optic, Wireless, Hosted PBX, Wi-Fi,
Wi-Max, Engineering, Cabling, Wiring and Cloud services. TruCom
offers hosted firewall and managed MPLS service technologies
(SuperCore MPLS™). The company currently operates an
approximate 58 miles Fiber optic ring throughout the greater
Phoenix valley offering such services as Basic Residential Phone
service, Basic Business phone service, POT’s lines, Basic
Fiber Broadband Internet services, Wireless Internet Services, Toll
Free 800 services, EFax, Erate, Dedicated T-1 Services, Auto
Attendant, SIP Trunks, Mobile and Voip services.
K Telecom and Global Telecom- GSM Distribution
K
Telecom and Global Telecom are located in the Northwest of the
United States and sell and distribute GSM Cell Phone and Prepaid
GSM Services for MVNO’s (Mobile Virtual Network Operators)
through approximately 100 brick and mortar retail store-front
locations in Washington and Oregon.
Media Content
We operate as a Media Content Hub for Domestic and International
syndication, Technology/Telecommunications company using on our own
proprietary Global Digital Media TV and Telecommunications
infrastructure platform and we also provides technology solutions
to businesses worldwide. We offer Software as a Service (SaaS),
Technology Platform as a Service (PAAS), Cloud-based Unified
Communication as a Service (UCaaS) and carrier-grade performance
and support for businesses over our private IP MPLS fiber and
wireless network in the United States. Our cloud-based UCaaS
services allow businesses of any size to enjoy all the latest
voice, data, media and collaboration features in today's global
technology markets. We also operate as a Master Distributor for
Nationwide Mobile Virtual Network Operators (MVNO) and Independent
Sales Organization (ISO) as a Master Distributor for Pre-Paid
Cellphone services, Mobile phones, Cellphone Accessories and Global
Roaming Cellphones.
Our
technologies “Gathers Big Data” to predict our
customers’ viewing and spending habits. We then deliver
Products and Services to support that estimated demand and share
advertising revenues with our Content, Digital Media and Linear
Broadcast Partners worldwide.
Each of
our four divisions contributes to the launch of our global Content
delivery platform “ViewMe Live” and creates cross
pollinating revenue opportunities and a closed Global E-commerce
Eco environment which we believe will help us execute our short and
long term corporate objectives. Our Content Division which consists
of Blue Collar Productions (our TV and Film content Production
company) creates original content and in some cases third party
content. Once Content has been produced we will then broadcast and
delivered that content over our proprietary Mobile TV Platform on
our proprietary Trucom Telecommunication Network infrastructure
domestically and internationally.
CUBS (Cloud Unified Business Services) –
We are a CUBS provider (Cloud Unified Businesses Services) company and
one of the first to combine recurring Telecom, Media and
Data/Cloud Services revenue under one roof, then bring all
relevant data from those services into a proprietary telecom
infrastructure and information matrix platform capable of
delivering a “Daily and Intelligent Dashboard” to our
Domestic and International customers. Such a planned cohesive
combination of services and information from a single provider has
been heretofore nonexistent. We intend to pioneer an integrate
communication services and information technology suites to empower
individuals and companies with vital communications, Smartphone,
Network, Content, SaaS (Software as A Service), New Media
Technology products and services, and valuable relevant diagnostic
information both Domestically and
Internationally.
We are
currently able to deliver a live Global TV Broadcast and Social
Media Platform utilizing a Mobile App technology on our proprietary
Content Delivery Network. We plan to expand our Cloud Unified
Business Services (CUBS) technology-based business services
unifying multiple services from the cloud.
CORPORATE ORGANIZATION CHART
OTCQB Stock Symbol
Currently
there is a limited public trading market for our stock on OTCQB
under the symbol “TPTW.”
RECENT DEVELOPMENTS
QuikLAB
Mobile Laboratory
In July
and August 2020, the Company formed Quiklab 1 LLC, QuikLAB 2, LLC,
QuikLAB 3, LLC and QuikLAB 4, LLC. It is the intent to use these
entities as vehicles into which third parties would invest and
participate in owning QuikLAB Mobile Laboratories. As of December
31, 2020, Quiklab 1 LLC, QuikLAB 2, LLC and QuikLAB 3, LLC have
received an investment of $460,000, of which Stephen Thomas and
Rick Eberhardt, CEO and COO of the Company, have invested $100,000
in QuikLAB 2, LLC. The third party investors and Mr. Thomas and Mr.
Eberhart, will benefit from owning 20% of QuikLAB Mobile
Laboratories specific to their investments.
Financing
Arrangements
On July
23, 2021, the Company entered into an Agreement for the Purchase
and Sale of Future Receipts (“Lendora Factoring
Agreement”). The balance to be purchased and sold is $299,800
for which the Company received $190,000, net of fees. Under the
Lendora Factoring Agreement, the Company is to pay $18,737.5 per
week for 16 weeks at an effective interest rate of approximately
36% annually. The Lendora Factoring Agreement includes a guaranty
by the CEO of the Company, Stephen J. Thomas III.
On July 23, 2021, the Company entered into a consolidation
agreement for the Purchase and Sale of Future Receipts with Lendora
Capital (“Lendora Consolidation Agreement”). The
balance to be purchased and sold gave consideration for all then
outstanding factoring agreements such as the NewCo Factoring
Agreements, the NewCo Factoring Agreement #3 and the Lendora
Factoring Agreement and amounted to $1,522,984 for which the
Company had outstanding balances totaling $1,016,000. Payments
under this Lendora Consolidation Agreement supercedes all other
factoring agreement payments and includes $ 31,728.85 per week, at
an effective interest rate of approximately 36% annually, for 48
weeks. The Lendora Consolidation Agreement includes a guaranty by
the CEO of the Company, Stephen J. Thomas III.
Effective
October 6 to October 13, 2021, the Company consummated a Securities
Purchase Agreements dated October 6, 2021, with First Fire
Global Opportunities Fund LLC (“First Fire”), Cavalry
Investment Fund, LLC (Cavalry Investment Fund and Cavalry Fund 1,
LLC (“Cavalry Fund 1”) (all together referred to as
“Investors”) for the purchase of $2,174,000
convertible promissory notes (“Convertible Promissory
Notes”). These Convertible Promissory Notes are due nine
months from funding, have an original issue discount of 8% and
interest rate at 10% per annum (default, as defined, at 24%). There
is a mandatory conversion in the event a Nasdaq Listing prior to
nine months from funding for which the Investors principal and
interest balances will be converted at a price equal to 25%
discount to the opening price on the first day the Company trades
on Nasdaq. There is also a voluntary conversion of all principal
and accrued interest at the discretion of the Investor at the lower
of $0.025 or 75% of the two lowest trade prices during the fifteen
consecutive trading day period ending on the trading day
immediately prior to the applicable conversion date. The Investors
were given registration rights. The Convertible Promissory Notes
may be prepaid in whole or in part of the outstanding balances at
115 % prior to maturity. 250,000,000 common shares of the Company
have been reserved with the transfer agent for possible conversion.
Warrants, expiring 5 years from issuance, were issued to exercise
up to 165,000,000 warrants to purchase 165,000,000 common shares at
110% of the opening price on the first day the Company trades on
the Nasdaq exchange. The use of proceeds will be for working
capital and to pay off existing debt.
Stock Purchase Agreement
On May
28, 2021, the Company entered into a Common Stock Purchase
Agreement (“Purchase Agreement”) and Registration
Rights Agreement (“Registration Rights Agreement”) with
White Lion Capital, LLC, a Nevada limited liability company
(“White Lion”). Under the terms of the Purchase
Agreement, White Lion agreed to provide the Company with up to
$5,000,000 upon effectiveness of a registration statement on Form
S-1 (the “Registration Statement”) filed with the U.S.
Securities and Exchange Commission (the “Commission”).
A Form S-1 was filed on June 30, 2021 regarding this transaction.
Subsequent Amendments to Forms S-1 related to this transaction were
filed on July 6, 2021 and July 14, 2021. The registrations
statement was declared effective July 19, 2021.
The
Company has the discretion to deliver purchase notice to White Lion
and White Lion will be obligated to purchase shares of the
Company’s common stock, par value $0.001 per share (the
“Common Stock”) based on the investment amount
specified in each purchase notice. The maximum amount of the
Purchase Notice shall be the lesser
of: (i) 200% of the Average Daily Trading Volume or (ii) the
Investment Limit divided by the highest closing price of the Common
Stock over the most recent five (5) Business Days including the
respective Purchase Date. Notwithstanding the forgoing, the
Investor may waive the Purchase Notice Limit at any time to allow
the Investor to purchase additional shares under a Purchase
Notice. Pursuant to the Purchase Agreement, White Lion and
its affiliates will not be permitted to purchase and the Company
may not put shares of the Company’s Common Stock to White
Lion that would result in White Lion’s beneficial ownership
equaling more than 9.99% of the Company’s outstanding Common
Stock. The price of each purchase share shall be equal to
eighty-five percent (85%) of the Market Price (as defined in the
Purchase Agreement). Purchase Notices may be delivered by the
Company to White Lion until the earlier of seven (7) months (until
December 31, 2021) or the date on which White Lion has purchased an
aggregate of $5,000,000 worth of Common Stock under the terms of
the Purchase Agreement.
Under
the Registration Rights Agreement with White Lion, the Company has
given purchase notices for 29,000,000 shares of common stock and
has received proceeds of $649,470, net of expenses.
|
Amendments
to Articles of Incorporation or Bylaws
|
On September 15, 2021, the Board of Directors of TPT Global Tech,
Inc. (the “Company”) in accordance with the provisions
of the Certificate of Incorporation, as amended, and by-laws
of the Company amended the Certificate of Incorporation around the
voluntary and involuntary conversion features of the Series D
Preferred Stock. Those voluntary and involuntary conversion
features, as well as other features of the Series D Preferred Stock
include the following, as amended:
(i) 6%
Cumulative Annual Dividends payable on the purchase value in cash
or common stock of the Company at the discretion of the Board and
payment is also at the discretion of the Board, which may decide to
cumulate to future years; (ii) Any time after 12 months from
issuance an option to convert to common stock at the election of
the holder @ 75% of the 30 day average market closing price (for
previous 30 business days) divided into $5.00; (iii) Automatic
conversion of the Series D Preferred Stock shall occur without
consent of holders upon any national exchange listing approval and
the registration effectiveness of common stock underlying the
conversion rights. The automatic conversion to common from Series D
Preferred shall be @75% of the 30 day
average market closing price (for previous 30 business days)
divided into $5.00, which shall be post-reverse split as may
be necessary for any Exchange listing (iv) Registration Rights
– the Company has granted Piggyback Registration Rights for
common stock underlying conversion rights in the event it files any
other Registration Statement (other than an S-1 that the Company
may file for certain conversion common shares for the convertible
note financing that was arranged and funded in 2019). Further, the
Company will file and pursue to effectiveness a Registration
Statement or offering statement for common stock underlying the
Automatic Conversion event triggered by an exchange listing. (v)
Liquidation Rights - $5.00 per share plus any accrued unpaid
dividends – subordinate to Series A, B, and C Preferred Stock
receiving full liquidation under the terms of such series. The
Company has redemption rights for the first year following the
Issuance Date to redeem all or part of the principal amount of the
Series D Preferred Stock at between 115% and 140%.
On September 16, 2021, the Board of Directors of the Company
also in accordance with the provisions of the Certificate of
Incorporation, as amended, and by-laws of the Company amended the
Certificate of Incorporation to increase the authorized number of
common shares by TWO HUNDRED FIFTY MILLION (250,000,000) which
increase will then make the total authorized common shares to be
ONE BILLION TWO HUNDRED AND FIFTY MILLION (1,250,000,000) with all
common shares having the then existing rights powers and privileges
as per the existing amended Certificate of Incorporate and By laws
of the Company.
Legal and Debt
Settlements
On March 18, 2019,
the Company issued to an Investor a convertible promissory note in
the principal amount of $600,000.00 (the “Auctus Promissory
Note”) and Warrant Agreement (the “Auctus Warrant
Agreement”) pursuant to that certain securities purchase
agreement dated March 18, 2019 (the “Auctus SPA”) with
Auctus Fund, LLC (“Auctus”). Pursuant to claims by
Auctus that the Company had not complied with terms of the Auctus
SPA, the Company and Auctus entered into a settlement agreement
dated October 13, 2021 where by the Company would pay $763,231.97
and allow Auctus to exercise its right to exercise 15,000,000
warrants to purchase 15,000,000 shares of common stock. Auctus
agreed to limit the sale of common shares of the Company to
2,000,000 during each respective calendar week. As of June 30,
2021, the Company had recorded approximately $1,700,000 in accrued
principal and interest and an additional derivative liability of
approximately $3,800,000.
A
lawsuit was filed in Michigan by the one of the former owners of
SpeedConnect, LLC, John Ogren. Mr. Ogren claimed he was
owed back wages related to the acquisition agreement wherein the
Company acquired the assets of SpeedConnect, LLC and kept him on
through a consulting agreement. The Company’s position was
that he ultimately resigned in writing and was not due any back
wages. In August 2021, Mr. Ogren was awarded $334,908 in back wages
by an Arbitrator. This amount has been included in accounts payable
as of June 30, 2021 and expensed in the statement of operations as
other expenses in the six months ended June 30, 2021. Mr. Ogren and
the Company have agreed to a settlement whereby the Company would
pay $120,000 within 14 days of a written agreement with four
monthly payments of $20,000 starting on December 5, 2021 through
March 2, 2022.
CORPORATE MARKETING STRATEGY
Our
corporate strategy in expanding our operations and potential
product and service streams is as follows.
MARKETING
OBJECTIVE:
Establish
our brand as a competitive service and product provider in the
communications industry.
ADVERTISING
OBJECTIVE:
To
create top of mind brand awareness and emotional relevance
resulting: TPT Global Tech, Inc. being the preferred and requested
product line of products in the industry.
SALES
& MERCHANDISING OBJECTIVES:
Our
distributor will use direct selling efforts. Their efforts will be
supported with our marketing, advertising, and merchandising
programs. The primary task will be to increase the sales through
retail channels.
PURSUE
BRAND RECOGNITION THROUGHOUT THE UNITED STATES
The
first marketing objective must be to refine our brand and secure
our place in the minds of the consumers. This will be accomplished
through the execution of an integrated branding, identity and
services marketing programs. The goals for this segment will be an
enhanced brand identity, a brand applications and a digital assets
suite.
MARKETING STRATEGY
Our
plan includes a direct sales program targeting businesses, small
business and home office users of communications. The direct sales
efforts will be supported with third party marketing integration.
To further enhance the sales process, we will offer an offering
program including services and product sheets, coupons, point of
sale materials (banners, shelf talkers, and end cap displays and
danglers) and internet marketing programs.
Based
on the above benefit scenarios, we plan to seize the following
opportunities:
● Build superior
brand recognition and become recognized as a category
leader.
● Expand the US
distribution into all states.
● Establish
distribution internationally.
● Establish and
manage a knowledgeable team of account executives with industry
experience.
● Create a retail
merchandising program that will build a strong market
share.
The
purpose of our marketing efforts is to move the product sales from
their current position into the rapid growing
“popularity” stage. Our strategy includes the following
marketing programs: Branding; Merchandising; Direct; Display
Advertising; Media; Public Relations; Publicity; Events; Investor
Relations; Metrics Dashboard; and, Personal Sales. Our objective is
to gain the sales momentum required to reach the “brand
preference” stage of product growth as soon as possible. This
is the stage where we plan sales grow at a steady and stabilized
pace.
THE DIRECT MARKETING PROGRAM
A
complete direct marketing program including direct mail, blast
email and URLs may be used to introduce the products to new
customers and secure leads for the sales team. We plan to employ
the services of a database marketing company to leverage techniques
to target prospective clients and reinforce product messages
throughout the selling process. This process will commence with the
modeling of our existing customer data and the analysis of the
results using sophisticated analytic tools. Cross-channel marketing
will be utilized in conjunction with the direct marketing including
social marketing. Our focus of this marketing medium will be
relevance and timing, which only this medium can provide full
control over and the ability to fully quantify the
results.
THE MEDIA MARKETING PROGRAM
We
intend to test several media options to determine which, if any,
effectively drive sales and sales leads. The mediums being consider
include outdoor advertising, both static and mobile, magazine ads,
and radio spots. Other media to be explored are direct mail post
cards and emails to opt in viewers.
THE PUBLIC RELATIONS/PUBLICITY PROGRAM
We plan
to employ the services of a public relations firm to build a
corporate profile to keep the name and the services and products in
front of consumers. A third-party PR firm will be responsible for
writing and publishing press releases, coordinating event marketing
and managing investor relations.
We
employ marketing, sales and customer service personnel on an as
needed basis for specific events to build brand awareness. We use a
range of marketing strategies and tactics to build our brand and
increase sales, including point-of-sale materials, event
sponsorship, in-store and on-premise promotions, public relations,
and a variety of other traditional and non-traditional marketing
techniques to support the sales of all of our
products.
We
believe that a marketing mix of event promotions, social media,
print advertising in local media and internet advertising providing
information and samples of our products at social events is a
strategy that may help increase sales.
TARGET CUSTOMER
We plan
to profile our existing customers and create a sophisticated data
model to mathematically and statistically identify our
“ideal” customer. Further the model will be used to
learn exactly how the target customer wishes to be communicated
with and marketed to.
THE INTERNATIONAL MARKET
We plan
to market our product internationally. Many of the current products
offered by us have features for the international community. This
will be a secondary but strong focus by our marketing
team.
EXPERIENCED MANAGEMENT
Our
senior management team has over 30 years of experience in the
various consumer product industries and has a proven track record
of creating value both organically and through strategic
acquisitions. Our management intends to utilize the best available
and fit-for-purpose technology and experienced contractors to
improve production and expand distribution.
CORPORATE STRATEGY
Our Goals
Our
primary goal is to continue to grow our business by improving value
to our current customers and vendors. In providing a high-quality
network we intend to continue to grow our business. Additionally,
we intend to purchase established telecommunications and technology
companies that will immediately generate and increase traffic
(revenue) to our Company’s retail and wholesale network.
Companies that we are strategically aligned with have in their core
business synergistic retail products and services that include, but
are not limited to, Telecom Cloud Services Media, Merchant
Services/Mobile Banking, Cloud Services and Media (e.g.
credit/debit card processing, check/ACH payment processing,
ecommerce/merchant processing, web hosting, voice, data, GSM/Wi-Fi
Mobile, Mobile Money Transfers, IPTV, VOD and Live Mobile
Broadcasting, Prepaid Calling Card and PIN-less Prepaid services).
If we acquire a strategic partner as a subsidiary, we believe we
will have the ability to aggregate their analogous technology
platforms onto our proprietary Software Access System operating
platform for integration and efficiency.
We
intend to work our media to accelerate cohesively in the mobile
technology sectors: LIVE Broadcast, Video on Demand (VOD) Apps, and
Digital Video Magazine (DVM) Apps. While “white
labeling” our technologies as SaaS, our primary focus is what
we believe is the first Global Cyber LIVE Mobile TV broadcast
network, ViewMe Live. The ViewMe Live Network™ is a 24-hour
LIVE worldwide mobile TV network, delivered via iOS and Android
apps. The ViewMe Live Network™ presents a diversity of Linear
Broadcast Channels (Domestically and International), coupled with
Social Media Platforms with combined functions that compete with
some of the largest and most powerful Digital Media platforms, to
connected audiences who live a mobile-centric life.
Network Services
Domestic
and Global Telecommunications offerings include: Mobile TV, Phone,
Internet, Fiber Optic, Wireless, Hosted PBX, Wi-Fi, Wi-Max,
Engineering, Cabling, Wiring and Cloud services. Our
telecommunications division has pioneered innovative, hosted
firewall and managed MPLS service technologies (SuperCore MPLS) and
was the industry’s first to engineer patent-pending
Bulletproof™ failover services utilizing our own fiber optic
and wireless networks to guarantee business continuity and service
uptime.
As a retail and business media and telecommunications
provider operating a high-speed Fiber Optic Network and Wireless
Network in the USA at a cost competitive rate for new technologies,
we are growing our operations through sales of our core voice &
data connectivity products to small and midsized business clients.
We have a growth strategy through acquisitions in order to increase
regional operations and deploy more technologies to niche &
underserved markets. Unified Cloud Services, Unified Communications
(UC) or Unified Communications/Collaboration (UCC) has been a topic
of interest to users looking to evolve from a disorderly
combination of media, voice, email and message communications to
something more structured. Our goal is to target existing and new
small and medium businesses (“SMBs”) to transition
their older voice system businesses, expand their software collaboration
offerings, and most recently build cloud service offerings.
Cloud solution gives our customers the flexibility to support a
myriad of mobile devices as part of their hardware strategy,
whether it's launching a bring-your-own-device initiative,
implementing a one-to-one program or equipping SMBs with mobile
computing carts full of tablets, netbooks, or notebooks in a
secured environment.
Scalability and Cost Efficiency
Our
proprietary Software Access System platform currently runs our
global operations. In short, it does this by connecting our
customer base with the most profitable vendor route while
calculating least cost routing, analyzing route quality, and
respecting “dipping” protocols. Based on the demand, we
have the ability to scale to meet the needs of our customers.
Comparable “off the shelf” software systems in the
marketplace can cost in the hundreds of thousands of dollars just
to purchase, not to mention expensive service contracts, which may
continue in perpetuity after the original purchase. Our proprietary
platform, in which we have invested and have developed over several
years, allows us to operate a global network with better efficiency
which we believe differentiates us from other competitors in the
marketplace.
We believe our competitive advantages are:
●
We believe our
ViewMe Live products and services are close to being ready to
launch globally
●
We offer 3-15
seconds latency Cellular – 1-5 on Wi-Fi
●
We offer
Proprietary Optimizing / Stabilizing software
●
We offer
Multi-Channel LIVE and Video on Demand worldwide
●
We offer Patent
Pending real time dynamic failover solution called
Bulletproof™
●
We offer our own
proprietary voice switching and management platform running least
cost routing and real time financial analytics
●
We have over 175
existing USA and International Telephone companies already
interconnected to our telecom switches. These customers and vendors
are ready made strategic technology distribution partners for our
Telecom, Media, and Cloud Services products
Our Strategy
Our
business, marketing, and sales strategy is structured
around:
●
Pursuing selective,
strategic, distribution relationships combined with cash positive
acquisitions to build immediate revenue streams and increase our
Company’s network footprint.
●
Utilize the
expanded network to offer our Company’s service thereby
increasing marginal revenues through the low risk offering of
wholesale termination and prepaid services through existing
distribution channels, retail stores and E-Commerce both
domestically and internationally.
●
Pursuing markets
within countries where there is a lower concentration of
communications services that will result in initial higher pricing
and potential for gross profit.
●
Providing low cost,
pricing leading VoIP/GSM value added services through our
Company’s next-generation centralized software platform and
network.
●
Partnering and
developing joint ventures with incumbent networks or government
agencies to penetrate local emerging markets in order to build and
operate Intranet Network Infrastructures that would move data over
a secured network servicing government buildings and agencies,
including police, military, hospitals and schools.
Our Intended Marketing Plan and Product Roll Out for 2021 and
2022
●
Satellite radio
syndication simulcast with over 25 million domestic U.S.
listeners
●
Connected TV
partner with over 18 million viewers worldwide.
●
Airline
entertainment partnership with over 12 million international
viewers.
●
Supported by an
international public relations firm.
●
Comprehensive
social media marketing campaign involving popular bloggers and
podcasters
Our
sales and marketing approach to our business and consumer customers
emphasizes customer-oriented sales, marketing and service. Our
marketing plans include marketing our products and services
primarily through direct sales representatives, inbound call
centers, local retail stores, telemarketing and third parties,
including retailers, satellite television providers, door to door
sales agents and digital marketing firms. We support our
distribution with digital marketing, direct mail, bill inserts,
newspaper and television advertising, website promotions, public
relations activities and sponsorship of community events and sports
venues.
Similarly,
our sales and marketing approach to our business customers includes
a commitment to provide comprehensive communications and IT
solutions for business, wholesale and governmental customers of all
sizes, ranging from small offices to select enterprise customers.
We strive to offer our business customers stable, reliable, secure
and trusted solutions. Our marketing plans include marketing our
products and services primarily through digital advertising, direct
sales representatives, inbound call centers, telemarketing and
third parties, including telecommunications agents, system
integrators, value-added resellers and other telecommunications
firms. We support our distribution through digital advertising,
events, television advertising, website promotions and public
relations.
Marketing Designs
We have
designed our services and products offered to be:
●
Portable. We offer the ability to
access our network from anywhere within our coverage area without
being restricted to a specific location.
●
Simple. Our services are easy to
install. After connecting our modem to an ATA or computer and a
power source, our wireless broadband service is immediately
available and requires no software installation.
●
Fast. We offer speeds that typically
exceed legacy cellular networks and are competitive with fixed
broadband offerings.
●
A Good Value. We generally price our
services competitively because our costs to build and operate our
network are significantly lower than the networks operated by many
of our competitors.
With
the popularity of social media, people are demanding fast broadband
connectivity on an increasingly mobile basis. We believe that our
services meet this demand and will market this in our efforts to
increase our subscriber growth rate.
OUR COMPANY STRENGTHS
We
believe the following competitive strengths enable us to meet the
demand for simple, reliable and portable wireless broadband
connectivity:
●
First mover. We are the
first company we are aware of to launch a Global Cyber Mobile TV
and Social Media Network that incorporates functional feature of
the largest Digital Media companies in the world.
●
High barriers to entry. Our
issued and pending patents, as well as our proprietary Media
platforms and Naked Eye 3D technology trade secrets give us a
strong intellectual property position that we believe creates a
significant barrier to entry for potential competitors.
●
Broad range of applications for our
platform. This allows us to build a deep new product
pipeline that creates multiple paths to build a large and
profitable business.
● Multi-billion-dollar addressable market.
U.S. digital advertising revenues rose to $26.2 billion in the
third quarter of 2018, solidifying 2018’s claim as
the highest-spending first three quarters on record, according to
the latest IAB Internet Advertising Revenue Report released today
by IAB and prepared
by PwC US. Digital spend for Q3 2018 estimates increased 20.6
percent over Q3 2017. In total, marketers spent $75.8 billion
during 2018’s first three quarters—22 percent
more than they had spent during the same period a year ago.
https://iab.com/wp-content/uploads/2019/02/IAB_Internet-Ad-Revenue-Report-Q3-2018_2019-02-14_FINAL-1.pdf
●
Diverse revenue streams including
Digital Media partnerships. We anticipate generating
significant revenue from our Digital Media platforms. Our Linear
Broadcast partners will play a large part in generating revenues
from the sale of mobile and social media advertising.
●
Strong senior leadership
team. Our founders and senior leaders have experience in
building and operating several companies in our business areas. We
have phone, network, content, SaaS, product development, and
commercialization experience that has enabled us to establish
market leadership positions for the companies where we previously
were employed.
●
Differentiated Services. We
believe our service is unique because of our combination of our
Worldwide Operational Platform, Worldwide Affiliates, Cutting Edge
Technology, Portability, Simplicity and Speed to Market with a
competitive domestic and International Price Structure. We believe
this combination of factors differentiates our subscriber’s
experience when compared to broadband services provided by DSL,
cable modem, wireless third-generation or 3G, networks.
●
Strong Spectrum Position. We
use unlicensed and licensed spectrum (in Arizona), which avoids
radio frequency interference that hinders competitors using
non-licensed spectrum, such as WiFi network operators. Access to
spectrum is a fundamental barrier to entry for the delivery of
high-quality wireless communications. Through our partnerships, we
believe that we have access to the second largest spectrum position
in our band within the United States.
●
Advanced, Scalable
Technology. Because we intend
to design our own software and equipment, we can refine our product
development roadmap to meet our subscriber’s needs. We
believe our NLOS, IP-based Ethernet architecture and compression
technology confers competitive advantages since it simplifies both
network deployment and customer use while supporting a broad range
of potential premium services.
●
Efficient Economic Model. We
believe our individual market economic model is characterized by
low fixed capital and operating expenditures relative to other
wireless and wire line broadband service providers. We believe our
individual market model is highly scalable and replicable across
our markets. As our capabilities evolve, we expect to generate
incremental revenue streams from our subscriber base by developing
and offering premium products and services.
●
Experienced Management Team.
Stephen J. Thomas, our Founder, Chairman, and Chief Executive
Officer, has been an active entrepreneur, operator and investor in
the industry for more than 17 years in VoIP and wireless
communications industry. He previously served as Director of
Network Optimization/Validation for WorldxChange,
Inc. and CEO and President of New Orbit Communications, Inc., which
focused on International Operator Services in United States,
Mexico, El Salvador and Guatemala.
FUTURE PLANS
Our ViewMe Live Technology Plan
We
offer VML technology for which we plan to expand marketing. We
believe SaaS ViewMe Live (VML) could become a leading Digital Media
Mobile TV technology platform in the business-to-business and
business-to-consumer markets. Our proprietary software platform can
reach a worldwide audience of approximately one billion mobile
viewers. VML addresses global mobile distribution of LIVE and Video
on Demand (“VOD”) content as a white label Software as
a Service (“SaaS”).
VML OTT
live streaming technology is similar to what you see with satellite
TV such as Dish Network and DirecTV, as well as cable companies.
Almost all currently existing live streaming cannot do live
broadcast streaming at this level and usually has anywhere from 1
minute to 10 minute delays or continuous buffering, never loading
the video. With VML, there is the ability to have
“worldwide” access for a live streaming event equal to
standard television broadcasting with tens of millions of
simultaneous users. We believe that VML is the first technology to
be able to achieve this level of live streaming. In emerging
countries that do not have fiber, cable and satellite TV, access to
VML is simple and cost effective, as long as there is a cellular
connection on a 3G network or higher (regardless of provider)[1].
VML aims to provide uninterrupted live streaming on mobile devices
without buffering, crashes, pixilation, or audio and video syncing
issues. One practical application of this technology is that a
viewer can move from a Wi--Fi connection to a 3G connection without
interruption. VML has a unique user interface with multi-channel
access and built-in social media, and we believe it is unlike
anything currently on the market. VML also has the capability to do
a Live Linear Broadcast with VOD.VML’s technology has the
potential to reduce web content pirating since high quality TV
broadcast is now easily accessed worldwide on mobile
devices.
[1]
Subject to the laws and regulations of each country.
Currently,
we believe we are the only company that does all the above in the
industry and we believe VML has the potential to expand our
technologies and applications even further.
The
hottest technology in the over the top (“OTT”) market
and the biggest challenge in the OTT market is “Live Linear
Channel Broadcasting” and “Live Event
Broadcasting” to equal standard television broadcasting on
cable and satellite TV. This type of technology is superior to
video on demand (VOD) streaming technology in both acquisition and
delivery. The growth of OTT video delivery has been significant. In
the past year alone, OTT has grown to $35 billion in global
revenue, with $17 billion coming from emerging markets source
Digital TV Research. ViewMe Live (“VML”) has many
technology advantages including: Artificial Intelligence
(“AI”); the ability to simultaneously access millions
of users simultaneously with virtually no latency equivalent to
standard television broadcasting; global distribution (without
interruption) on cellular and Wi-Fi; and a fully interactive menu
user interface and worldwide advertising brokers in
place.
VML’s
content delivery network (“CDN”) can potentially reach
tens of millions of mobile devices (tablets and smartphones) and
has the potential to scale to one billion video streams globally.
It loads content within seconds, not only for Wi-Fi, but also more
importantly, on cellular networks that are 3G and higher.
VML’s core technology is fully developed and is able to
support clients on a turnkey native mobile app in less than 60
days. We have already achieved major milestones as the
world’s largest private conduit build out for global
deployment of LIVE and VOD streaming content. Our OTT live
streaming technology is unique and proprietary. Here are some
highlights on how VML can help from telecommunication companies to
TV station broadcasters to digital film libraries.
VML has
the ability to create a “Master Network Mobile App”
that can allow for a multiple channel build out, each with its own
unique Pay Per View charge (optional). This means a company can
have a live event channel per country with a different price per
user based on the economics of that country. VML has unlimited
channel build out (e.g. a company could have 50 channels or 1000
channels). Any telecommunications company can have professional
looking displays and user interfaces for mobile with VML, similar
to what the large telecommunications companies provide. A Master
Network App also allows a network to expand into other categories
by country (e.g. additional sports categories for various sports by
country). Expansion can focus on audience aggregation for sports
and other forms of entertainment categories. Pay-Per View is an
option for these expanded categories as well. We have built-in
worldwide ad brokers for pre---roll commercial ads so that revenue
can be generated as soon as possible. There is also potential to
upsell to existing advertisers and sponsors and it can be brand
specific by country.
VOICOPS
APP
Spurned from our VML technology, the Company will Beta launch its Gaming Social Media App
“VOICOPS”. “VOICOPS” as the company’s
first gaming-focused APP and will offer a REAL-TIME
Looking-for-Group (LFG) function providing a speedy way for gamers
to group-up live in games and with audio “Chat ROOMS”.
The Gaming Social Media App also allows for unlimited users to join
the audience mode to listen-in on the action from each team.
“VOICOPS” features several built-in social media
functions for gamers to post articles, videos of game-play, and
links to YouTube videos.
The initial gaming-focused platform “VOICOPS” will
feature during its Beta launch will be Amazon’s highly
anticipated Med Evil New World video game. Amazon is expected to
release its Beta version late September, 2021 and TPT is planning
its “VOICOPS” Beta launch just before to coincide with
the Mid Evil New World’s launch.
The primary benefit of “VOICOPS” will be the ease of
finding audio or chat GROUP featured LIVE and real-time gaming
platforms around the world. The Med Evil New World game
currently does not have any features to handle this kind of in-game
interaction.
Most video game platforms do not offer
this level of functionality. “VOICOPS” users will
uniquely be able to open a public or private live audio room and
show it in real time by server and LFG Looking For Group, Player VS
Player, Dungeons, Questing, etc.
The “VOICOPS” app offers a live news feed where all the
users can post articles, YouTube videos, photos about the games
they enjoy and be a part of the Med Evil New World Community.
YouTube content creators can also post YouTube video links and
reach a larger viewing audience that are focused on the
game’s content. Companies (Guilds) can set up a presence
in the company’s “VOICOPS” app and offer
recruiting, meetings with live audio, live presentations and plan
large attacks on other factions.
TPT MedTech
The
point-of-care diagnostics or testing (POCD or POCT) market is
projected to reach USD $46.7 billion by 2024 from USD $28.5 billion
in 2019, at a CAGR of 10.4%. Factors such as the high prevalence of
infectious diseases in developing countries, increasing incidence
of target conditions, growing government support, and rising
preference for home healthcare across the globe are driving the
growth of the market. However, product recalls, a lack of alignment
with test results obtained from laboratories, stringent &
time-consuming approval policies, and a reluctance to change
existing diagnostic practices are expected to restrain market
growth. https://www.marketsandmarkets.com/Market-Reports/point-of-care-diagnostic-market-106829185.html
The
global COVID-19 diagnostics market size was valued at USD 5.2
billion in 2020 and is expected to grow at a compound annual growth
rate (CAGR) of 5.96% from 2021 to 2027. The COVID-19 diagnostic
tests are critical in the management of the current pandemic for
accurate diagnosis as well as to tackle the spread of the
infection. As a result, with the growing demand, these tests are
being made available with over 600 SARS-CoV-2 diagnostic tests
either approved or in the development phase for clinical use.
Therefore, an increase in need for developing diagnostic tests is
anticipated to drive the market growth. For efficient and accurate
COVID-19 diagnosis, clinicians need a portable or an on-site
diagnostic test for real-time management of patients in minimal
time. This has encouraged the adoption of Point-of-Care testing
(POCT) for diagnosis, primarily aimed at reducing the assay
duration from hours to a few minutes. https://www.grandviewresearch.com/industry-analysis/covid-19-diagnostics-market.
https://www.marketwatch.com/press-release/covid-19-diagnostics-market-by-development-trends-investigation-2020-and-forecast-to-2027-2020-06-17
TPT
MedTech believes it is strategically positioned to take advantage
of the current trend in POCT by aligning itself with the
exponential growth of smart devices equipped with mobile healthcare
(mH), which may revolutionize personalized healthcare monitoring
and management, thereby paving the way for next-generation
POCT.
The
rapid turnaround times, improved decision times, and time-critical
decision-making of TPT MedTech QuikLAB can result in total savings
between 8-20% of laboratory costs for facilities that implement POC
testing. The savings realized due to the decreased cost of waiting
for results can be as much as $260 USD per patient. For those that
use and implement POC testing, waiting can improve by as much as 46
minutes per patient real-time scenarios—and days in standard
laboratory settings. Management believes TPT MedTech
QuikLAB is uniquely positioned to serve this growing
market.
SANIQuik is a decontamination and sanitizing unit that TPT
MedTech intends to co-market with the
QuikLAB mobile laboratory as an integrated solution to certain
issues arising in the COVID-19 pandemic. SANIQuik uses
hypochlorous not cause irritation to eyes and skin. Even if it were
ingested it causes no harm. Because it is so safe, it is the ideal
sanitizer for direct food sanitation and food contact surfaces. It
is also ideal in healthcare where it is used for wound cleansing,
eye drops, and patient room disinfection replacing toxic chemicals
such as bleach and quaternary ammonium salts. Hypochlorous acid is
FDA, USDA, and EPA approved to minimize microbial food safety
hazards of fresh-cut fruits and vegetables. (See
https://www.hypochlorousacid.com/about.)
TPT
MedTech believes the SANIQuik external sanitation is safe,
effective and flexible for its utilization with options for users.
TPT MedTech intends to provide optional masks to users as they
approach the SANIQuik. The mask provides a cover around inhalation
of the mist. External sanitation is safe and effective, providing
an additional routine to hand washing and facial
coverings.
TPT
MedTech has developed a business model which markets SANIQuik as a
novel product within the Personal Protective Equipment (PPE)
industry. This PPE distribution model is focused in the Federal
procurement space (Veteran’s Administration, Department of
Defense, Federal Emergency Management Agency, Centers for Disease
Control, National Guard) as well as vendor to the top 20 National
Hospital Group Purchasing Organizations (GPO).
TPT MedTech will be requesting Emergency Use Authorization (EUA)
from the FDA for SANIQuik during the COVID-19 pandemic, which has
been granted to other sanitizing units. SANIQuik already has the
European CE mark. For attorney fees and consultants, we
are estimating $50,000 for the EUA.
Mobile Device Viewer Market Expansion
In
general, viewers are consuming more content via mobile TV
distribution, while rapidly abandoning expensive subscriptions from
standard satellite TV and cable networks. The rise of high-quality
content on low-cost platforms, such as mobile devices, continues to
negatively impact the standard TV industry. The media business is
being forced to evolve and adjust to massive disruptions in content
distribution methods. Traditional media models are functionally
broken and will continue to be disrupted by technology, which is
driven by the needs of the younger generation. The future of media
is dependent on new technology platforms. These platform models
(e.g. smart TV, connected TV boxes, mobile TV devices) are the
future of content distribution. Google, through YouTube, has
changed the face of video content distribution. Amazon continues to
disrupt the book industry. Apple has redefined music and
application distribution. And Microsoft is continuing to change the
engagement model and distribution of content through its Xbox TV
game console.
We
believe mobile delivery has a growing appeal to advertisers and
subscribers. As brands continue to shift budgets to mobile
advertising, they must reassess their approach to
customer acquisition to ensure they continue to reach
potential customers effectively.
Digital ad spend grew 12% in 2020 despite hit from pandemic. Source
CNBC/IAB
The Interactive Advertising Bureau (IAB) said the top 10 companies
held a 78.1% share of the revenues in 2020, with overall revenues
of that group alone exceeding $109 billion. The top 10 companies
accounted for a 75.9% share of revenues in 2018, rising to 76.6% in
2019. The IAB said companies ranked 11th to 25th account for just
6.2% of revenues, while smaller companies make up 15.7%. The
IAB stated that spending during the third and fourth quarters of
2020 was up by 11.7% and 28.7% year-over-year,
respectively.
Social media ad revenues reached $41.5 billion in 2020, the report
said, making up nearly 30% of all internet ad revenue. Digital
video saw 20.6% year-over-year growth, increasing its share of
total internet ad revenue by 1.3% to reach 18.7%. Programmatic
ad revenue also increased by 24.9% to reach $14.2 billion in
2020.
Content Mining Plan
Once
our planned SaaS media applications, smart phones and tablets are
launched into the domestic and international markets, content
analytics or marketing data will be gathered from these devices.
The data generated from these applications and devices will give us
an advantage insight into our subscribers viewing and buying
habits. Once data has been scrubbed of personally identifying
information, we plan to be able to create original or lease content
from broadcast partners to service what our analytics are telling
us to produce (or license), with the intent on moving us closer
towards predictive analytics. Predictive analytics is being able to
predict what our customer likes based on their viewing habits and
then produce that content targeted to our subscriber and then
“push” that new (or licensed) content to
them.
Lion Smart Phone Product
We are
currently seeking a manufacturer for our Lion Smart Phone. Our
Management believes our patent pending Lion smart phone is the
first Full HD Naked Eye 3D
smart phone ever launched in the United States. Lion
Universe’s mobile 3D technology is patent pending. The smart
phone will be distributed through our wholly-owned subsidiary
K-TEL, in their existing brick and mortar distribution channel in
the Northwest expanding into other areas. It is anticipated that a
national and international roll out will soon follow. TPTW is
building industry leading personal cellular phones designed for a
wide appeal. With a business model built on innovation and progress
starting with the Lion Phone technology, we intend to produce
high-quality and easy-to-use cellular phones. Our Lion Phone was
designed for consumers looking for portable and affordable
cutting-edge technology. Our first-generation phones come equipped
with full high definition resolution screen for better viewing. We
believe this Full HD Naked Eye 3D smart Phone is perfect for
watching movies, playing games, even editing photos or
videos.
Whether
that is looking at photos, playing music, emailing or surfing the
web, our management believes consumers want more from their phones.
We believe our Lion Phone raises the bar for cellular phones. For
the first time ever, cellular users can enjoy quality 3D viewing
with the naked eyes no glasses required enjoying full high
definition video with smooth playback.
Our
Management believes consumers have been waiting for a way to watch
their favorite movies in 3D, with the convenience of their phone
and gamers can have the leisure of playing their games without
taking head gear with them. Our Lion Universe Technology strives to
give customers the best possible experience with our Full HD Naked
Eye 3D smart phone in the US and Global markets.
We
understand the longer we wait the less advantage we might have in
our efforts to market this phone as the marketplace moves very
quickly. We intend to begin marketing this phone in 2022 as capital
is available.
Our differentiation from web streaming
We are
not a website-based video streaming technology. VML is strictly a
native mobile app focused on video streaming technology for mobile
platforms. We are not a dashboard-based video content company where
users upload content; we are a complete turnkey SaaS application. A
survey released in May 2015, sponsored by Level 3 Communications,
stated, “Offering both VOD and Live Linear channels will be
critical for OTT providers to entice new prospects and gain market
share. This trend is a critical one. For existing OTT providers,
offering a VOD service may not be enough to maintain, much less
grow, market share.” The trend towards adding live linear
channel content has the potential to become “table
stakes” in the OTT game over the next several years, with
both breaking news and live sports content leading the way in terms
of interest for OTT service providers adding live linear
channels.
SaaS White Label
We plan
to white label our suite of SaaS technologies for yearly licensing
and monthly maintenance fees. The prospective user base for the
SaaS White Label Suite is extensive as there are more than 200,000
TV broadcasters worldwide alone, and many of them are seeking to
migrate to the vast mobile video streaming market space. The
sizeable population of potential SaaS clients includes standard
television broadcasters in every country, direct marketing
companies, low-powered antenna broadcasters (such as universities
and churches), IPTV broadcasters, and large content (film and TV)
providers that are seeking to further monetize their properties for
worldwide syndication.
The
SaaS suite includes full app development on Apple iOS, Google
Android and Roku connected boxes, user interface (menu system),
advertising broker network for pre---roll commercial ads (from date
of launch), 24/7 LIVE monitoring of inbound and outbound signals,
data analytics, seamless updating to all platforms, Amazon web
service (AWS) blade servers, and coverage up to the first 20
million streams. The white label product is offered to
stand--alone.
User Interface
In a
preprogrammed live linear broadcast application, viewers have free
access via a playlist by category and have the ability to
“catch--up” with what they may have missed in the LIVE
broadcast, regardless of its original airdate. The video-on-demand
(VOD) feature provides the opportunity to access additional viewers
and monetize past content. After several years in development, we
believe that VML has a significant first to market advantage and that no
other companies currently have a comparable commercialized
offering.
Our Plan for Strategic Partnering with Telecommunication &
Media Companies
Currently
in the world, viewers usually need to have a contract with a cable
provider (e.g. AT&T, Cox, Xfinity, Spectrum, or Cablevision in
the U.S.) or satellite TV provider (e.g. DirecTV and DISH Network
in the U.S.) and be in range of a residential or business Wi-Fi to
be able to watch over the top (OTT) content on a connected TV
device, website or mobile access. VML is capable of offering a
nearly unlimited number of channels to mobile users virtually
anywhere and everywhere, with global reach, far exceeding two U.S.
satellite companies (DirecTV and DISH Network), which have 500+
channels each and are only available in the U.S.
We
believe VML will immediately appeal to any channel that is
currently on DirecTV and DISH Network for global mobile linear
broadcast participation, simply because these platforms are only
available in the U.S. market.
VML can
provide low--powered TV stations (after found in churches and
universities), along with high--powered stations, the ability to
reach the entire global market. Other potential users are owners of
libraries of digitized content, and LIVE event venues such as music
concerts, sporting events, festivals, beauty pageants, summer and
winter Olympic Games, award shows, red carpet events, trade shows
and conventions. Enthusiasts can produce their own show in any area
and could launch their own channels for travel, food, spirits,
sports, outdoor recreation, retro TV shows, children, cartoons,
comedy, drama, reality, education, automobiles, health,
corporations, shopping, soap opera, game shows, dating, religion,
etc., providing extensive possibilities for media expansion.
Content providers will not be limited by the major TV networks and
film studios for distribution rights.
We have targeted Telecommunication and Media Company Opportunities
to offer:
●
Turn key mobile app
for telecommunication and media companies for immediate
distribution of TV broadcasts on terrestrial, cable and satellite
for free or as subscription.
●
Turn key mobile app
for free or pay per view live events.
●
Turn key mobile app
for digital libraries of content providers.
●
Reseller program
with territorial rights.
●
Worldwide analytics
on mobile TV content provided to help with target marketing for
products and services.
●
Transitions to the
automotive industry car play systems.
●
Option to
pre---load Master Network App on telecommunication company’s
mobile devices such as smart phones and tablets.
●
Pre-load the SaaS
white label clients on telecommunication company mobile
devices.
Geo Fencing Available (The ability to offer broadcast territories
by region or regional Networks)
Our Plan to Act as a Reseller with Territorial Rights
–
●
Value Added
Reseller (VAR) to telecommunication and media
companies.
●
Exclusive rights
for a country or region for reselling the white label
opportunity.
●
Offer to
Telecommunication and media companies OTT digital content as a
channel or network.
●
Offer 1 to 1000
channels by territory.
●
Approach emerging
markets as capital resources permit.
PLAN OF OPERATIONS
Our Capital Budget for the next 12 months
Liquidity and Capital Resource
Needs
|
Equipment purchase
and manufacturing (1)
|
$14,000,000
|
|
Product
advancement
|
2,250,000
|
|
Acquisitions
|
500,000
|
|
Debt
restructuring
|
7,300,000
|
|
Working capital
(1)
|
10,710,000
|
|
Brokerage
commissions
|
3,040,000
|
|
Offering
expenses
|
200,000
|
|
|
$38,000,000
|
_____________
(1)
It is
expected the use of this working capital and funds for equipment
purchases will extend into 2022.
MILESTONES
Our two
quarters of operations for 2021 were consistent with operations
after the acquisition of the assets of SpeedConnect, LLC for 2019
and 2020. We intend to expend significant funds after our intended
funding event equally over the ensuing four quarters as outlined
above.
CYBER RISKS
Like
other large telecommunications companies, we are a constant target
of cyber-attacks of varying degrees, which has caused us to spend
increasingly more time and money to deal with increasingly
sophisticated attacks. Some of the attacks may result in security
breaches, and we periodically notify our customers, our employees
or the public of these breaches when necessary or appropriate. None
of these resulting security breaches to date have materially
adversely affected our business, results of operations or financial
condition.
We rely
on several other communications companies to provide services or
products for our offerings. We may lease a significant portion of
our core fiber network from our competitors and other third
parties. Many of these leases will lapse in future years. Our
future ability to provide services on the terms of our current
offerings will depend in part upon our ability to renew or replace
these leases, agreements and arrangements on terms substantially
similar to those currently in effect.
For
additional information regarding our systems, network, cyber risks,
capital expenditure requirements and reliance upon third parties,
see "Risk Factors."
COMPETITION, COMPETITORS, REGULATION AND TAXATION
Competition
General
We
compete in a rapidly evolving and highly competitive market, and we
expect intense competition to continue. In addition to competition
from larger national telecommunications providers, we are facing
increasing competition from several other sources, including cable
and satellite companies, wireless providers, technology companies,
cloud companies, broadband providers, device providers, resellers,
sales agents and facilities-based providers using their own
networks as well as those leasing parts of our network.
Technological advances and regulatory and legislative changes have
increased opportunities for a wide range of alternative
communications service providers, which in turn have increased
competitive pressures on our business. These alternate providers
often face fewer regulations and have lower cost structures than we
do. In addition, the communications industry has, in recent years,
experienced substantial consolidation, and some of our competitors
in one or more lines of our business are generally larger, have
stronger brand names, have more financial and business resources
and have broader service offerings than we currently
do.
Wireless
telephone services are a significant source of competition with our
legacy carrier services. It is increasingly common for customers to
completely forego use of traditional wireline phone service and
instead rely solely on wireless service for voice services. We
anticipate this trend will continue, particularly as our older
customers are replaced over time with younger customers who are
less accustomed to using traditional wireline voice services.
Technological and regulatory developments in wireless services,
Wi-Fi, and other wired and wireless technologies have contributed
to the development of alternatives to traditional landline voice
services. Moreover, the growing prevalence of electronic mail, text
messaging, social networking and similar digital non-voice
communications services continues to reduce the demand for
traditional landline voice services. These factors have led to a
long-term systemic decline in the number of our wireline voice
service customers.
The
Telecommunications Act of 1996, which obligates carriers to permit
competitors to interconnect their facilities to the carrier's
network and to take various other steps that are designed to
promote competition, imposes several duties on a carrier if it
receives a specific request from another entity which seeks to
connect with or provide services using the carrier's network. In
addition, each carrier is obligated to (i) negotiate
interconnection agreements in good faith, (ii) provide
nondiscriminatory "unbundled" access to all aspects of the
carrier's network, (iii) offer resale of its
telecommunications services at wholesale rates and (iv) permit
competitors, on terms and conditions (including rates) that are
just, reasonable and nondiscriminatory, to collocate their physical
plant on the carrier's property, or provide virtual colocation if
physical colocation is not practicable. Current FCC rules require
carriers to lease a network element only in those situations where
competing carriers genuinely would be impaired without access to
such network elements, and where the unbundling would not interfere
with the development of facilities-based competition.
As a
result of these regulatory, consumer and technological
developments, carriers also face competition from competitive local
exchange carriers, or CLECs, particularly in densely populated
areas. CLECs provide competing services through reselling a
carrier’s local services, through use of a carrier's
unbundled network elements or through their own
facilities.
Technological
developments have led to the development of new products and
services that have reduced the demand for our traditional services,
as noted above, or that compete with traditional carrier services.
Technological improvements have enabled cable television companies
to provide traditional circuit-switched telephone service over
their cable networks, and several national cable companies have
aggressively marketed these services. Similarly, companies
providing VoIP services provide voice communication services over
the Internet which compete with our traditional telephone service
and our own VoIP services. In addition, demand for our broadband
services could be adversely affected by advanced wireless data
transmission technologies being deployed by wireless providers and
by certain technologies permitting cable companies and other
competitors to deliver faster average broadband transmission speeds
than ours.
Similar
to us, many cable, technology or other communications companies
that previously offered a limited range of services are now
offering diversified bundles of services, either through their own
networks, reselling arrangements or joint ventures. As such, a
growing number of companies are competing to serve the
communications needs of the
same
customer base. Such activities will continue to place downward
pressure on the demand for and pricing of our
services.
As
customers increasingly demand high-speed connections for
entertainment, communications and productivity, we expect the
demands on our network will continue to increase over the next
several years. To succeed, we must continue to invest in our
networks or engage partners to ensure that they can deliver
competitive services that meet these increasing bandwidth and speed
requirements. In addition, network reliability and security are
increasingly important competitive factors in our
business.
Additional
information about competitive pressures is located under the
heading “Risk Factors.”
Competitors
In
connection with providing strategic services to our business
customers, which includes our small, medium and enterprise
business, wholesale and governmental customers, we compete against
other telecommunication providers, as well as other regional and
national carriers, other data transport providers, cable companies,
CLECs and other enterprises, some of whom are substantially larger
than us. Competition is based on price, bandwidth, quality and
speed of service, promotions and bundled offerings. In providing
broadband services, we compete primarily with cable companies,
wireless providers, technology companies and other broadband
service providers. We face competition in Ethernet based services
in the wholesale market from cable companies and fiber-based
providers.
Our
competitors for providing integrated data, broadband, voice
services and other data services to our business customers range
from small to mid-sized businesses. Due to the size of some of
these companies, our competitors may be able to offer more
inexpensive solutions to our customers. To compete, we focus on
providing sophisticated, secure and performance-driven services to
our business customers through our infrastructure.
The
number of companies providing business services has grown and
increased competition for these services, particularly with respect
to smaller business customers. Many of our competitors for
strategic services are not subject to the same regulatory
requirements as we are and therefore they are able to avoid
significant regulatory costs and obligations.
Government Regulation
Overview
As
discussed further below, our operations are subject to significant
local, state, federal and foreign laws and
regulations.
We are
subject to the significant regulations by the FCC, which regulates
interstate communications, and state utility commissions, which
regulate intrastate communications. These agencies (i) issue rules
to protect consumers and promote competition, (ii) set the rates
that telecommunication companies charge each other for exchanging
traffic, and (iii) have traditionally developed and administered
support programs designed to subsidize the provision of services to
high-cost rural areas. In most states, local voice service,
switched and special access services and interconnection services
are subject to price regulation, although the extent of regulation
varies by type of service and geographic region. In addition, we
are required to maintain licenses with the FCC and with state
utility commissions. Laws and regulations in many states restrict
the manner in which a licensed entity can interact with affiliates,
transfer assets, issue debt and engage in other business
activities. Many acquisitions and divestitures may require approval
by the FCC and some state commissions. These agencies typically
have the authority to withhold their approval, or to request or
impose substantial conditions upon the transacting parties in
connection with granting their approvals.
The
following description discusses some of the major industry
regulations that may affect our traditional operations, but
numerous other regulations not discussed below could also impact
us. Some legislation and regulations are currently the subject of
judicial, legislative and administrative proceedings which could
substantially change the manner in which the telecommunications
industry operates and the amount of revenues we receive for our
services.
Neither
the outcome of these proceedings, nor their potential impact on us,
can be predicted at this time. For additional information, see
"Risk Factors."
The
laws and regulations governing our affairs are quite complex and
occasionally in conflict with each other. From time to time, we are
fined for failing to meet applicable regulations or service
requirements.
Federal Regulation
General
We are
required to comply with the Communications Act of 1934. Among other
things, this law requires our local exchange carriers to offer
various of our legacy services at just and reasonable rates and on
non-discriminatory terms. The Telecommunications Act of 1996
materially amended the Communications Act of 1934, primarily to
promote competition.
The FCC
regulates interstate services we provide, including the special
access charges we bill for wholesale network transmission and the
interstate access charges that we bill to long-distance companies
and other communications companies in connection with the
origination and termination of interstate phone calls.
Additionally, the FCC regulates a number of aspects of our business
related to privacy, homeland security and network infrastructure,
including our access to and use of local telephone numbers and our
provision of emergency 911 services. The FCC has responsibility for
maintaining and administering support programs designed to expand
nationwide access to communications services (which are described
further below), as well as other programs supporting service to
low-income households, schools and libraries, and rural health care
providers. Changes in the composition of the five members of the
FCC or its Chairman can have significant impacts on the regulation
of our business.
In
recent years, our operations and those of other telecommunications
carriers have been further impacted by legislation and regulation
imposing additional obligations on us, particularly with regards to
providing voice and broadband service, bolstering homeland
security, increasing disaster recovery requirements, minimizing
environmental impacts and enhancing privacy. These laws include the
Communications Assistance for Law Enforcement Act, and laws
governing local telephone number portability and customer
proprietary network information requirements. In addition, the FCC
has heightened its focus on the reliability of emergency 911
services. The FCC has imposed fines on us and other companies for
911 outages and has adopted new compliance requirements for
providing 911 service. We are incurring capital and operating
expenses designed to comply with the FCC's new requirements and
minimize future outages. All of these laws and regulations may
cause us to incur additional costs and could impact our ability to
compete effectively against companies not subject to the same
regulations.
Over
the past several years, the FCC has taken various actions and
initiated certain proceedings designed to comprehensively evaluate
the proper regulation of the provisions of data services to
businesses. As part of its evaluation, the FCC has reviewed the
rates, terms and conditions under which these services are
provided. The FCC's proceedings remain pending, and their ultimate
impact on us is currently unknown.
Telephony Services
We
operate traditional telecommunications services in our Arizona
subsidiary, and those services are largely governed under rules
established for CLECs under the Communications Act. The
Communications Act entitles our CLEC subsidiary to certain rights,
but as telecommunications carriers, it also subjects them to
regulation by the FCC and the states. Their designation as
telecommunications carriers also results in other regulations that
may affect them and the services they offer.
Interconnection and Intercarrier Compensation
The
Communications Act requires telecommunications carriers to
interconnect directly or indirectly with other telecommunications
carriers. Under the FCC's intercarrier compensation rules, we are
entitled, in some cases, to compensation from carriers when they
use our network to terminate or originate calls and in other cases
are required to compensate another carrier for using its network to
originate or terminate traffic. The FCC and state regulatory
commissions, including those in the states in which we operate,
have adopted limits on the amounts of compensation that may be
charged for certain types of traffic. As noted above, the FCC has
determined that intercarrier compensation for all terminating
traffic will be phased down over several years to a "bill-and-keep"
regime, with no compensation between carriers for most terminating
traffic by 2018 and is considering further reform that could reduce
or eliminate compensation for originating traffic as
well.
Universal Service
Our
CLEC subsidiary is required to contribute to the Universal Service
Fund (“USF”). The amount of universal service
contribution required of us is based on a percentage of revenues
earned from interstate and international services provided to end
users. We allocate our end user revenues and remit payments to the
universal service fund in accordance with FCC rules. The FCC has
ruled that states may impose state universal service fees on CLEC
telecommunications services
State Regulation
Our
CLEC subsidiary telecommunications services are subject to
regulation by state commissions in each state where we provide
services. In order to provide our services, we must seek approval
from the state regulatory commission or be registered to provide
services in each state where we operate and may at times require
local approval to construct facilities. Regulatory obligations vary
from state to state and include some or all of the following
requirements: filing tariffs (rates, terms and conditions); filing
operational, financial, and customer service reports; seeking
approval to transfer the assets or capital stock of the broadband
communications company; seeking approval to issue stocks, bonds and
other forms of indebtedness of the broadband communications
company; reporting customer service and quality of service
requirements; outage reporting; making contributions to state
universal service support programs; paying regulatory and state
Telecommunications Relay Service and E911 fees; geographic
build-out; and other matters relating to competition.
Other Regulations
Our
CLEC subsidiary telecommunications services are subject to other
FCC requirements, including protecting the use and disclosure of
customer proprietary network information; meeting certain notice
requirements in the event of service termination; compliance with
disabilities access requirements; compliance with CALEA standards;
outage reporting; and the payment of fees to fund local number
portability administration and the North American Numbering Plan.
As noted above, the FCC and states are examining whether new
requirements are necessary to improve the resiliency of
communications networks. Communications with our customers are also
subject to FCC, FTC and state regulations on telemarketing and the
sending of unsolicited commercial e-mail and fax messages, as well
as additional privacy and data security requirements.
Broadband
Regulatory Classification. Broadband
Internet access services were traditionally classified by the FCC
as "information services" for regulatory purposes, a type of
service that is subject to a lesser degree of regulation than
"telecommunications services." In 2015, the FCC reversed this
determination and classified broadband Internet access services as
"telecommunications services." This reclassification has subjected
our broadband Internet access service to greater regulation,
although the FCC did not apply all telecommunications service
obligations to broadband Internet access service. The 2015 Order
could have a material adverse impact on our business as it may
justify additional FCC regulation or support efforts by States to
justify additional regulation of broadband Internet access
services. In December 2017, the FCC adopted an order that in large
part reverses the 2015 Order and reestablishes the "information
service" classification for broadband Internet access service. The
2017 Order has not yet gone into effect, however, and the 2015
Order will remain binding until the 2017 Order takes effect. The
2017 Order is expected to be subject to legal challenge that may
delay its effect or overturn it.
Net Neutrality, and Current Status. The 2015 Order also
established a new "Open Internet" framework that expanded
disclosure requirements on Internet service providers ("ISPs") such
as cable companies, prohibited blocking, throttling, and paid
prioritization of Internet traffic on the basis of the content, and
imposed a "general conduct standard" that prohibits unreasonable
interference with the ability of end users and edge providers to
reach each other. The FCC's 2017 Order eliminates these rules
except for certain disclosure requirements (see the official
release summary from the FCC below). Additionally, Congress and
some states are considering legislation that may codify "network
neutrality" rules.
The
Federal Communications Commission has made the following official
release about the Restoring Internet Freedom Order:
"The
FCC's Restoring Internet Freedom Order, which took effect on June
11, (2018) provides a framework for protecting an open Internet
while paving the way for better, faster and cheaper Internet access
for consumers. It replaces unnecessary, heavy-handed regulations
that were developed way back in 1934 with strong consumer
protections, increased transparency, and common-sense rules that
will promote investment and broadband deployment. The FCC's
framework for protecting Internet freedom has the following key
parts:
1. Consumer Protection
The
Federal Trade Commission will police and take action against
Internet service providers for anticompetitive acts or unfair and
deceptive practices. The FTC is the nation's premier consumer
protection agency, and until the FCC stripped it of jurisdiction
over Internet service providers in 2015, the FTC protected
consumers consistently across the Internet economy.
2. Transparency
A
critical part of Internet openness involves Internet service
providers being transparent about their business practices. That's
why the FCC has imposed enhanced transparency requirements.
Internet service providers must publicly disclose information
regarding their network management practices, performance, and
commercial terms of service. These disclosures must be made via a
publicly available, easily accessible company website or through
the FCC's website. This will discourage harmful practices and help
regulators target any problematic conduct. These disclosures also
support innovation, investment, and competition by ensuring that
entrepreneurs and other small businesses have the technical
information necessary to create and maintain online content,
applications, services, and devices.
Internet
Service Providers must clearly disclose their network management
practices on their own web sites or with the FCC. For more
information about these disclosures, you can visit
https://www.fcc.gov/isp- disclosures.
Removes Unnecessary Regulations to Promote Broadband
Investment
The
Internet wasn't broken in 2015, when the previous FCC imposed
1930s-era regulations (known as "Title II") on Internet service
providers. And ironically, these regulations made things worse by
limiting investment in high-speed networks and slowing broadband
deployment. Under Title II, broadband network investment dropped
more than 5.6% -- the first time a decline has happened outside of
a recession. The effect was particularly serious for smaller
Internet service providers (fixed wireless companies, small-town
cable operators, municipal broadband providers, electric
cooperatives, and others) that don't have the resources or lawyers
to navigate a thicket of complex rules "
The
items listed in this internet Order are for carriers such as
Century Link, which is our contract internet provider, and we are
in compliance with the areas that we are responsible for which are
few. We generate the last mile of internet service, but we are
actually a reseller of Century Link services as they provide the
bandwidth to us.
Access for Persons
with Disabilities. The FCC's rules
require us to ensure that persons with disabilities have access to
"advanced communications services" ("ACS"), such as electronic
messaging and interoperable video conferencing. They also require
that certain pay television programming delivered via Internet
Protocol include closed captioning and require entities
distributing such programming to end users to pass through such
captions and identify programming that should be
captioned.
Other
Regulation. The 2015 Order also
subjected broadband providers' Internet traffic exchange rates and
practices to potential FCC oversight and created a mechanism for
third parties to file complaints regarding these matters. In
addition, our provision of Internet services also subjects us to
the limitations on use and disclosure of user communications and
records contained in the Electronic Communications Privacy Act of
1986. Broadband Internet access service is also subject to other
federal and state privacy laws applicable to electronic
communications.
Additionally,
providers of broadband Internet access services must comply with
CALEA, which requires providers to make their services and
facilities accessible for law enforcement intercept requests.
Various other federal and state laws apply to providers of services
that are accessible through broadband Internet access service,
including copyright laws, telemarketing laws, prohibitions on
obscenity, and a ban on unsolicited commercial e-mail, and privacy
and data security laws. Online content we provide is also subject
to some of these laws.
Other
forms of regulation of broadband Internet access service currently
being considered by the FCC, Congress or state legislatures include
consumer protection requirements, cyber security requirements,
consumer service standards, requirements to contribute to universal
service programs and requirements to protect personally
identifiable customer data from theft. Pending and future
legislation in this area could adversely affect our operations as
an Internet service provider and our relationship with our Internet
customers.
Additionally,
from time to time the FCC and Congress have considered whether to
subject broadband Internet access services to the federal Universal
Service Fund ("USF") contribution requirements. Any contribution
requirements adopted for Internet access services would impose
significant new costs on our broadband Internet service. At the
same time, the FCC is changing the manner in which Universal
Service funds are distributed. By focusing on broadband and
wireless deployment, rather than traditional telephone service, the
changes could assist some of our competitors in more effectively
competing with our service offerings.
VoIP Services
We
provide telephony services using VoIP technology ("interconnected
VoIP"). The FCC has adopted several regulations for interconnected
VoIP services, as have several states, especially as it relates to
core customer and safety issues such as e911, local number
portability, disability access, outage reporting, universal service
contributions, and regulatory reporting requirements. The FCC has
not, however, formally classified interconnected VoIP services as
either information services or telecommunications services. In this
vacuum, some states have asserted more expansive rights to regulate
interconnected VoIP services, while others have adopted laws that
bar the state commission from regulating VoIP service.
Universal
Service. Interconnected VoIP services
must contribute to the USF used to subsidize communication services
provided to low income households, to customers in rural and high
cost areas, and to schools, libraries, and rural health care
providers. The amount of universal service contribution required of
interconnected VoIP service providers is based on a percentage of
revenues earned from interstate and international services provided
to end users. We allocate our end user revenues and remit payments
to the universal service fund in accordance with FCC rules. The FCC
has ruled that states may impose state universal service fees on
interconnected VoIP providers.
Local Number
Portability. The FCC requires
interconnected VoIP service providers and their "numbering
partners" to ensure that their customers have the ability to port
their telephone numbers when changing providers. We also contribute
to federal funds to meet the shared costs of local number
portability and the costs of North American Numbering Plan
Administration.
Intercarrier
Compensation. In an October 2011
reform order and subsequent clarifying orders, the FCC revised the
regime governing payments among providers of telephony services for
the exchange of calls between and among different networks
("intercarrier compensation") to, among other things, explicitly
include interconnected VoIP. In that Order, the FCC determined that
intercarrier compensation for all terminating traffic, including
VoIP traffic exchanged in TDM format, will be phased down over
several years to a "bill-and-keep" regime, with no compensation
between carriers for most terminating traffic by 2018. The FCC is
considering further reform in this area, which could reduce or
eliminate compensation for originating traffic as
well.
Other
Regulation. Interconnected VoIP
service providers are required to provide enhanced 911 emergency
services to their customers; protect customer proprietary network
information from unauthorized disclosure to third parties; report
to the FCC on service outages; comply with telemarketing
regulations and other privacy and data security requirements;
comply with disabilities access requirements and service
discontinuance obligations; comply with call signaling
requirements; and comply with CALEA standards. In August 2015, the
FCC adopted new rules to improve the resiliency of the
communications network. Under the new rules, providers of telephony
services, including interconnected VoIP service providers, must
make available eight hours of standby backup power for consumers to
purchase at the point of sale. The rules also require that
providers inform new and current customers about service
limitations during power outages and steps that consumers can take
to address those risks.
For additional information about these matters, see “Risk
Factors.”
Medical
Division
The
Center for Medicare & Medicaid Services (“CMS”)
regulates all of our mobile laboratory testing activities performed
on humans in the United States through Clinical Laboratory
Improvement Amendments (‘CLIA’) which covers
approximately 260,000 laboratory entities. We obtain CLIA licenses
where necessary to operate our mobile laboratories. We also hire
staffing agencies that work the health care industry with the
appropriate health care workers to operate the mobile laboratories,
which agencies and workers are regulated by state and local
agencies like the agency for Health Care Administration in Florida
(“AHCA”). Each state and local jurisdiction has their
own agency or regulatory organization that we follow and adhere to
their laws and guidelines in relation operating our mobile testing
facilities.
LICENSES
Arizona
CLEC license in Phoenix area. License #20090393 which expires 2023
and is renewable every seven years.
TITLE TO PROPERTIES
None.
BACKLOG OF ORDERS
We
currently have no backlogs of orders for sales, at this
time.
GOVERNMENT CONTRACTS
We have
no government contracts.
COMPANY SPONSORED RESEARCH AND DEVELOPMENT
We are
not conducting any research.
NUMBER OF PERSONS EMPLOYED
We have
approximately 50 employees who work approximately 45 hours per
week. All officers work approximately 60 hours per week. Directors
work as needed.
WEBSITE
Our
corporate website address is www.tptglobaltech.com.
DESCRIPTION OF PROPERTY
Description of properties/assets
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(a)
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Real
Estate.
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None.
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(b)
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Title
to properties.
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None.
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(c)
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Patents,
Trade Names, Trademarks and Copyrights
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See
below.
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Our
executive offices are located in San Diego, California. We do not
own any real property, but lease and office space consisting of
approximately 5,000 sq. ft. among all of our corporate and
subsidiary locations. We believe that substantially all of our
property and equipment is in good condition, subject to normal wear
and tear, and that our facilities have sufficient capacity to meet
the current needs of our business.
Patents, trade names, trademarks and copyrights
Either
directly or through our subsidiaries, we have rights in various
patents, trade names, trademarks, copyrights and other intellectual
property necessary to conduct our business. Our services often use
the intellectual property of others, including licensed software.
We also occasionally license our intellectual property to others as
we deem appropriate.
We
periodically receive offers from third parties to purchase or
obtain licenses for patents and other intellectual property rights
in exchange for royalties or other payments. We also periodically
receive notices, or are named in lawsuits, alleging that our
products or services infringe on patents or other intellectual
property rights of third parties. In certain instances, these
matters can potentially adversely impact our operations, operating
results or financial position. For additional information, see
“Risk Factors”.
RISK FACTORS
The
purchase of shares of our Series D Preferred 6% Cumulative Dividend
Convertible Stock involves substantial risks. Each prospective
investor should carefully consider the following risk factors, in
addition to any other risks associated with this investment and
should consult with his own legal and financial
advisors.
Cautionary Statements
The
discussions and information in this Offering Circular may contain
both historical and forward-looking statements. To the extent that
the Offering Circular contains forward-looking statements regarding
the financial condition, operating results, business prospects, or
any other aspect of our business, please be advised that our actual
financial condition, operating results, and business performance
may differ materially from that projected or estimated by us in
forward-looking statements. We have attempted to identify, in
context, certain of the factors we currently believe may cause
actual future experience and results to differ from our current
expectations. The differences may be caused by a variety of
factors, including but not limited to adverse economic conditions,
lack of market acceptance, unrecoverable losses from theft, intense
competition for customers, supplies, and government grants,
including entry of new competitors, adverse federal, state, and
local government regulation, unexpected costs and operating
deficits, lower sales and revenues than forecast, default on leases
or other indebtedness, loss of suppliers, loss of supply, loss of
distribution and service contracts, price increases for capital,
supplies and materials, inadequate capital, inability to raise
capital or financing, failure to obtain customers, loss of
customers and failure to obtain new customers, the risk of
litigation and administrative proceedings involving us or our
employees, loss of government licenses and permits or failure to
obtain them, higher than anticipated labor costs, the possible
acquisition of new businesses or products that result in operating
losses or that do not perform as anticipated, resulting in
unanticipated losses, the possible fluctuation and volatility of
our operating results and financial condition, adverse publicity
and news coverage, the failure of business acquisitions to be
successful or profitable, inability to carry out marketing and
sales plans, loss of key executives, changes in interest rates,
inflationary factors, and other specific risks that may be alluded
to in this Offering Circular or in other reports issued us or third
party publishers.
RISKS RELATED TO TPT GLOBAL’S BUSINESS
Many of our competitors are better established and have resources
significantly greater than we have, which may make it difficult to
attract and retain subscribers.
We will
compete with other providers of telephony service, many of which
have substantially greater financial, technical and marketing
resources, larger customer bases, longer operating histories,
greater name recognition and more established relationships in the
industry. In addition, a number of these competitors may combine or
form strategic partnerships. As a result, our competitors may be
able to offer, or bring to market earlier, products and services
that are superior to our own in terms of features, quality, pricing
or other factors. Our failure to compete successfully with any of
these companies would have a material adverse effect on our
business and the trading price of our common stock.
The
market for broadband and VoIP services is highly competitive, and
we compete with several other companies within a single
market:
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cable
operators offering high-speed Internet connectivity services and
voice communications;
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incumbent
and competitive local exchange carriers providing DSL services over
their existing wide, metropolitan and local area
networks;
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3G
cellular, PCS and other wireless providers offering wireless
broadband services and capabilities, including developments in
existing cellular and PCS technology that may increase network
speeds or have other advantages over our services;
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internet
service providers offering dial-up Internet
connectivity;
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municipalities
and other entities operating free or subsidized WiFi
networks;
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providers
of VoIP telephony services;
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wireless
Internet service providers using licensed or unlicensed
spectrum;
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satellite
and fixed wireless service providers offering or developing
broadband Internet connectivity and VoIP telephony;
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electric
utilities and other providers offering or planning to offer
broadband Internet connectivity over power
lines; and
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resellers
providing wireless Internet service by “piggy-backing”
on DSL or WiFi networks operated by others.
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Moreover,
we expect other existing and prospective competitors, particularly
if our services are successful; to adopt technologies or business
plans similar to ours or seek other means to develop a product
competitive with our services. Many of our competitors are
well-established and have larger and better developed networks and
systems, longer-standing relationships with customers and
suppliers, greater name recognition and greater financial,
technical and marketing resources than we have. These competitors
can often subsidize competing services with revenues from other
sources, such as advertising, and thus may offer their products and
services at lower prices than ours. These or other competitors may
also reduce the prices of their services significantly or may offer
broadband connectivity packaged with other products or services. We
may not be able to reduce our prices or otherwise alter our
services correspondingly, which would make it more difficult to
attract and retain subscribers.
Our Acquisitions could result in operating difficulties, dilution
and distractions from our core business.
We have
evaluated, and expect to continue to evaluate, potential strategic
transactions, including larger acquisitions. The process of
acquiring and integrating a company, business or technology is
risky, may require a disproportionate amount of our management or
financial resources and may create unforeseen operating
difficulties or expenditures, including:
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difficulties
in integrating acquired technologies and operations into our
business while maintaining uniform standards, controls, policies
and procedures;
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increasing
cost and complexity of assuring the implementation and maintenance
of adequate internal control and disclosure controls and
procedures, and of obtaining the reports and attestations that are
required of a company filing reports under the Securities Exchange
Act;
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difficulties
in consolidating and preparing our financial statements due to poor
accounting records, weak financial controls and, in some cases,
procedures at acquired entities based on accounting principles not
generally accepted in the United States, particularly those
entities in which we lack control; and
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the
inability to predict or anticipate market developments and capital
commitments relating to the acquired company, business or
technology.
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Acquisitions of and joint ventures with companies organized outside
the United States often involve additional risks,
including:
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difficulties,
as a result of distance, language or culture differences, in
developing, staffing and managing foreign operations;
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lack of
control over our joint ventures and other business
relationships;
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currency
exchange rate fluctuations;
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longer
payment cycles;
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credit
risk and higher levels of payment fraud;
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foreign
exchange controls that might limit our control over, or prevent us
from repatriating, cash generated outside the United
States;
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potentially
adverse tax consequences;
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expropriation
or nationalization of assets;
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differences
in regulatory requirements that may make it difficult to offer all
of our services;
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unexpected
changes in regulatory requirements;
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trade
barriers and import and export restrictions; and
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political
or social unrest and economic instability.
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The
anticipated benefit of any of our acquisitions or investments may
never materialize. Future investments, acquisitions or dispositions
could result in potentially dilutive issuances of our equity
securities, the incurrence of debt, contingent liabilities or
amortization expenses, or write-offs of goodwill, any of which
could harm our financial condition. Future investments and
acquisitions may require us to obtain additional equity or debt
financing, which may not be available on favorable terms, or at
all.
Our substantial indebtedness and our current default status and any
restrictive debt covenants could limit our financing options and
liquidity position and may limit our ability to grow our
business.
Our
indebtedness could have important consequences to the holders of
our common stock, such as:
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we may
not be able to obtain additional financing to fund working capital,
operating losses, capital expenditures or acquisitions on terms
acceptable to us or at all;
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we may
be unable to refinance our indebtedness on terms acceptable to us
or at all;
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if
substantial indebtedness continues it could make us more vulnerable
to economic downturns and limit our ability to withstand
competitive pressures; and
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cash
flows from operations are currently negative and may continue to be
so, and our remaining cash, if any, may be insufficient to operate
our business.
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paying
dividends to our stockholders;
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incurring,
or cause certain of our subsidiaries to incur, additional
indebtedness;
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permitting
liens on or conduct sales of any assets pledged as
collateral;
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selling
all or substantially all of our assets or consolidate or merge with
or into other companies;
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repaying
existing indebtedness; and
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engaging
in transactions with affiliates.
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As of
June 30, 2021, the total debt or financing arrangements was
$16,700,079, of which approximately $8,057,917 or 23% of total
current liabilities is past due. As of June 30, 2021, the Company
had financing lease liability-related
amounts of $851,559.
During 2020, the holders of approximately $4,700,000 of existing
financing arrangements agreed to exchange their debt and accrued
interest for Series D Preferred Stock through a separate $12
Million Private Placement, conditioned on the Company raising at
least $12,000,000 in a separate Form 1-A Offering. Our inability to
renegotiate our indebtedness may cause lien holders to obtain
possession of a good portion of our assets which would
significantly alter our ability to generate revenues and obtain any
additional financing.
We may experience difficulties in constructing, upgrading and
maintaining our network, which could adversely affect customer
satisfaction, increase subscriber turnover and reduce our
revenues.
Our
success depends on developing and providing products and services
that give subscribers a high-quality internet connectivity and VoIP
experience. If the number of subscribers using our network and the
complexity of our products and services increase, we will require
more infrastructure and network resources to maintain the quality
of our services. Consequently, we expect to make substantial
investments to construct and improve our facilities and equipment
and to upgrade our technology and network infrastructure. If we do
not implement these developments successfully, or if we experience
inefficiencies, operational failures or unforeseen costs during
implementation, the quality of our products and services could
decline.
We may
experience quality deficiencies, cost overruns and delays on
construction, maintenance and upgrade projects, including the
portions of those projects not within our control or the control of
our contractors. The construction of our network requires the
receipt of permits and approvals from numerous governmental bodies,
including municipalities and zoning boards. Such bodies often limit
the expansion of transmission towers and other construction
necessary for our business. Failure to receive approvals in a
timely fashion can delay system rollouts and raise the cost of
completing construction projects. In addition, we typically are
required to obtain rights from land, building and tower owners to
install our antennas and other equipment to provide service to our
subscribers. We may not be able to obtain, on terms acceptable to
us, or at all, the rights necessary to construct our network and
expand our services.
We also
face challenges in managing and operating our network. These
challenges include operating, maintaining and upgrading network and
customer premises equipment to accommodate increased traffic or
technological advances, and managing the sales, advertising,
customer support, billing and collection functions of our business
while providing reliable network service at expected speeds and
VoIP telephony at expected levels of quality. Our failure in any of
these areas could adversely affect customer satisfaction, increase
subscriber turnover, increase our costs, decrease our revenues and
otherwise have a material adverse effect on our business,
prospects, financial condition and results of
operations.
If we do not obtain and maintain rights to use licensed spectrum in
one or more markets, we may be unable to operate in these markets,
which could adversely affect our ability to execute our business
strategy.
Even
though we have established license agreements, growth requires that
we plan to provide our services obtaining additional licensed
spectrum both in the United States and internationally, we depend
on our ability to acquire and maintain sufficient rights to use
licensed spectrum by obtaining our own licenses or long-term
spectrum leases, in each of the markets in which we operate or
intend to operate. Licensing is the short-term solution to
obtaining the necessary spectrum as building out spectrum is a long
and difficult process that can be costly and require a
disproportionate amount of our management resources. We may not be
able to acquire, lease or maintain the spectrum necessary to
execute our business strategy.
Using
licensed spectrum, whether owned or leased, poses additional risks
to us, including:
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inability
to satisfy build-out or service deployment requirements upon which
our spectrum licenses or leases are, or may be,
conditioned;
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increases
in spectrum acquisition costs;
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adverse
changes to regulations governing our spectrum rights;
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the
risk that spectrum we have acquired or leased will not be
commercially usable or free of harmful interference from licensed
or unlicensed operators in our or adjacent bands;
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with
respect to spectrum we will lease in the United States, contractual
disputes with or the bankruptcy or other reorganization of the
license holders, which could adversely affect our control over the
spectrum subject to such license;
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failure
of the FCC or other regulators to renew our spectrum licenses as
they expire; and
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invalidation
of our authorization to use all or a significant portion of our
spectrum, resulting in, among other things, impairment charges
related to assets recorded for such spectrum.
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If we fail to establish and maintain an effective system of
internal control, we may not be able to report our financial
results accurately or to prevent fraud. Any inability to report and
file our financial results accurately and timely could harm our
business and adversely impact the trading price of our common
stock.
Effective
internal control is necessary for us to provide reliable financial
reports and prevent fraud. If we cannot provide reliable financial
reports or prevent fraud, we may not be able to manage our business
as effectively as we would if an effective control environment
existed, and our business, brand and reputation with investors may
be harmed.
In
addition, reporting a material weakness may negatively impact
investors’ perception of us. We have allocated, and will
continue to allocate, significant additional resources to remedy
any deficiencies in our internal control. There can be no
assurances that our remedial measures will be successful in curing
the any material weakness or that other significant deficiencies or
material weaknesses will not arise in the future.
Interruption or failure of our information technology and
communications systems could impair our ability to provide our
products and services, which could damage our reputation and harm
our operating results.
We have
experienced service interruptions in some markets in the past and
may experience service interruptions or system failures in the
future. Any unscheduled service interruption adversely affects our
ability to operate our business and could result in an immediate
loss of revenues. If we experience frequent or persistent system or
network failures, our reputation and brand could be permanently
harmed. We may make significant capital expenditures to increase
the reliability of our systems, but these capital expenditures may
not achieve the results we expect.
Our
products and services depend on the continuing operation of our
information technology and communications systems. Any damage to or
failure of our systems could result in interruptions in our
service. Interruptions in our service could reduce our revenues and
profits, and our brand could be damaged if people believe our
network is unreliable. Our systems are vulnerable to damage or
interruption from earthquakes, terrorist attacks, floods, fires,
power loss, telecommunications failures, computer viruses, computer
denial of service attacks or other attempts to harm our systems,
and similar events. Some of our systems are not fully redundant,
and our disaster recovery planning may not be adequate. The
occurrence of a natural disaster or unanticipated problems at our
network centers could result in lengthy interruptions in our
service and adversely affect our operating results.
The industries in which we operate are continually evolving, which
makes it difficult to evaluate our future prospects and increases
the risk of your investment. Our products and services may become
obsolete, and we may not be able to develop competitive products or
services on a timely basis or at all.
The
markets in which we and our customers compete are characterized by
rapidly changing technology, evolving industry standards and
communications protocols, and continuous improvements in products
and services. Our future success depends on our ability to enhance
current products and to develop and introduce in a timely manner
new products that keep pace with technological developments,
industry standards and communications protocols, compete
effectively on the basis of price, performance and quality,
adequately address end-user customer requirements and achieve
market acceptance. There can be no assurance that the deployment of
wireless networks will not be delayed or that our products will
achieve widespread market acceptance or be capable of providing
service at competitive prices in sufficient volumes. In the event
that our products are not timely and economically developed or do
not gain widespread market acceptance, our business, results of
operations and financial condition would be materially adversely
affected. There can also be no assurance that our products will not
be rendered obsolete by the introduction and acceptance of new
communications protocols.
The
broadband services industry is characterized by rapid technological
change, competitive pricing, frequent new service introductions and
evolving industry standards and regulatory requirements. We believe
that our success depends on our ability to anticipate and adapt to
these challenges and to offer competitive services on a timely
basis. We face a number of difficulties and uncertainties
associated with our reliance on technological development, such
as:
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competition
from service providers using more traditional and commercially
proven means to deliver similar or alternative
services;
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competition
from new service providers using more efficient, less expensive
technologies, including products not yet invented or
developed;
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uncertain
consumer acceptance;
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realizing
economies of scale;
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responding
successfully to advances in competing technologies in a timely and
cost-effective manner;
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migration
toward standards-based technology, requiring substantial capital
expenditures; and
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existing,
proposed or undeveloped technologies that may render our wireless
broadband and VoIP telephony services less profitable or
obsolete.
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As the
products and services offered by us and our competitors develop,
businesses and consumers may not accept our services as a
commercially viable alternative to other means of delivering
wireless broadband and VoIP telephony services.
If we are unable to successfully develop and market additional
services and/or new generations of our services offerings or market
our services and product offerings to a broad number of customers,
we may not remain competitive.
Our
future success and our ability to increase net revenue and earnings
depend, in part, on our ability to develop and market new
additional services and/or new generations of our current services
offerings and market our existing services offerings to a broad
number of customers. However, we may not be able to, among other
things:
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successfully
develop or market new services or product offerings or enhance
existing services offerings;
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educate third-party
sales organizations adequately for them to promote and sell our
services offerings;
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develop, market and
distribute existing and future services offerings in a
cost-effective manner; or
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operate the
facilities needed to provide our services offerings.
If we
fail to develop new service offerings, or if we incur unexpected
expenses or delays in product development or integration, we may
lose our competitive position and incur substantial additional
expenses or may be required to curtail or terminate all or part of
our present planned business operations.
Our
failure to do any of the foregoing could have a material adverse
effect on our business, financial condition and results of
operations. In addition, if any of our current or future services
offerings contain undetected errors or design defects or do not
work as expected for our customers, our ability to market these
services offerings could be substantially impeded, resulting in
lost sales, potential reputation damage and delays in obtaining
market acceptance of these services offerings. We cannot assure you
that we will continue to successfully develop and market new or
enhanced applications for our services offerings. If we do not
continue to expand our services offerings portfolio on a timely
basis or if those products and applications do not receive market
acceptance, become regulatory restricted, or become obsolete, we
will not grow our business as currently expected.
We operate in a very competitive environment.
There
are three types of competitors for our service
offerings.
(1)
The
value-added resellers and other vendors of hardware and software
for on-site installation do not typically have an offering similar
to our cloud-based services. However, they are the primary historic
service suppliers to our targeted customers and will actively work
to defend their customer base.
(2)
There
are a number of providers offering services, but they typically
offer only one or two applications of their choosing instead of our
offering which bundles customer’s chosen
services.
(3)
There
are a few providers that offer more than two applications from the
cloud. However currently, these providers typically offer only
those applications they have chosen.
Our
industry is characterized by rapid change resulting from
technological advances and new services offerings. Certain
competitors have substantially greater capital resources, larger
customer bases, larger sales forces, greater marketing and
management resources, larger research and development staffs and
larger facilities than our and have more established reputations
with our target customers, as well as distribution channels that
are entrenched and may be more effective than ours. Competitors may
develop and offer technologies and products that are more
effective, have better features, are easier to use, are less
expensive and/or are more readily accepted by the marketplace than
our offerings. Their products could make our technology and service
offerings obsolete or noncompetitive. Competitors may also be able
to achieve more efficient operations and distribution than ours may
be able to and may offer lower prices than we could offer
profitably. We may decide to alter or discontinue aspects of our
business and may adopt different strategies due to business or
competitive factors or factors currently unforeseen, such as the
introduction by competitors of new products or services
technologies that would make part or all of our service offerings
obsolete or uncompetitive.
In
addition, the industry could experience some consolidation. There
is also a risk that larger companies will enter our
markets.
If we fail to maintain effective relationships with our major
vendors, our services offerings and profitability could
suffer.
We use
third party providers for services. In addition, we purchase
hardware, software and services from external suppliers.
Accordingly, we must maintain effective relationships with our
vendor base to source our needs, maintain continuity of supply, and
achieve reasonable costs. If we fail to maintain effective
relationships with our vendor base, this may adversely affect our
ability to deliver the best products and services to our customers
and our profitability could suffer.
Any failure of the physical or electronic security that resulted in
unauthorized parties gaining access to customer data could
adversely affect our business, financial condition and results of
operations.
We use
commercial data networks to service customers cloud based services
and the associated customer data. Any data is subject to the risk
of physical or electronic intrusion by unauthorized parties. We
have a multi-homed firewalls and Intrusion Detection / Prevention
systems to protect against electronic intrusion and two physical
security levels in our networks. Our policy is to close all
external ports as a default. Robust anti-virus software runs on all
client servers. Systems have automated monitoring and alerting for
unusual activity. We also have a Security Officer who monitors
these systems. We have better security systems and expertise than
our clients can afford separately but any failure of these systems
could adversely affect our business growth and financial
condition.
Demand for our service offerings may decrease if new government
regulations substantially increase costs, limit delivery or change
the use of Internet access and other products on which our service
offerings depend.
We are
dependent on Internet access to deliver our service offerings. If
new regulations are imposed that limit the use of the Internet or
impose significant taxes on services delivered via the Internet it
could change our cost structure and/or affect our business model.
The significant changes in regulatory costs or new limitations on
Internet use could impact our ability to operate as we anticipate,
could damage our reputation with our customers, disrupt our
business or result in, among other things, decreased net revenue
and increased overhead costs. As a result, any such failure could
harm our business, financial condition and results of
operations.
Our
securities, as offered hereby, are highly speculative and should be
purchased only by persons who can afford to lose their entire
investment in us. Each prospective investor should carefully
consider the following risk factors, as well as all other
information set forth elsewhere in this prospectus, before
purchasing any of the shares of our common stock.
Increasing regulation of our Internet-based products and services
could adversely affect our ability to provide new products and
services.
On
February 26, 2015, the FCC adopted a new "network neutrality"
or Open Internet order (the "2015 Order") that:
(1) reclassified broadband Internet access service as a Title
II common carrier service, (2) applied certain existing Title
II provisions and associated regulations; (3) forbore from
applying a range of other existing Title II provisions and
associated regulations, but to varying degrees indicated that this
forbearance may be only temporary and (4) issued new rules
expanding disclosure requirements and prohibiting blocking,
throttling, paid prioritization and unreasonable interference with
the ability of end users and edge providers to reach each other.
The 2015 Order also subjected broadband providers' Internet traffic
exchange rates and practices to potential FCC oversight and created
a mechanism for third parties to file complaints regarding these
matters. The 2015 Order could limit our ability to efficiently
manage our cable systems and respond to operational and competitive
challenges. In December 2017, the FCC adopted an order (the "2017
Order") that in large part reverses the 2015 Order. The 2017 Order
has not yet gone into effect, however, and the 2015 Order will
remain binding until the 2017 Order takes effect. The 2017 Order is
expected to be subject to legal challenge that may delay its effect
or overturn it. Additionally, Congress and some states are
considering legislation that may codify "network neutrality"
rules.
Offering telephone services may subject us to additional regulatory
burdens, causing us to incur additional costs.
We
offer telephone services over our broadband network and continue to
develop and deploy interconnected VoIP services. The FCC has ruled
that competitive telephone companies that support VoIP services,
such as those that we offer to our customers, are entitled to
interconnect with incumbent providers of traditional
telecommunications services, which ensures that our VoIP services
can operate in the market. However, the scope of these
interconnection rights are being reviewed in a current FCC
proceeding, which may affect our ability to compete in the
provision of telephony services or result in additional costs. It
remains unclear precisely to what extent federal and state
regulators will subject VoIP services to traditional telephone
service regulation. Expanding our offering of these services may
require us to obtain certain authorizations, including federal and
state licenses. We may not be able to obtain such authorizations in
a timely manner, or conditions could be imposed upon such licenses
or authorizations that may not be favorable to us. The FCC has
already extended certain traditional telecommunications
requirements, such as E911 capabilities, Universal Service Fund
contribution, Communications Assistance for Law Enforcement Act
("CALEA"), measures to protect Customer Proprietary Network
Information, customer privacy, disability access, number porting,
battery back-up, network outage reporting, rural call completion
reporting and other regulatory requirements to many VoIP providers
such as us. If additional telecommunications regulations are
applied to our VoIP service, it could cause us to incur additional
costs and may otherwise materially adversely impact our operations.
In 2011, the FCC released an order significantly changing the rules
governing intercarrier compensation for the origination and
termination of telephone traffic between interconnected carriers.
These rules have resulted in a substantial decrease in interstate
compensation payments over a multi-year period. The FCC is
currently considering additional reforms that could further reduce
interstate compensation payments. Further, although the FCC
recently declined to impose additional regulatory burdens on
certain point to point transport ("special access") services
provided by cable companies, that FCC decision has been appealed by
multiple parties. If those appeals are successfully, there could be
additional regulatory burdens and additional costs placed on these
services.
We may engage in acquisitions and other strategic transactions and
the integration of such acquisitions and other strategic
transactions could materially adversely affect our business,
financial condition and results of operations.
Our
business has grown significantly as a result of acquisitions,
including the Acquisitions, which entail numerous risks
including:
●distraction
of our management team in identifying potential acquisition
targets, conducting due diligence and negotiating acquisition
agreements;
●difficulties
in integrating the operations, personnel, products, technologies
and systems of acquired businesses;
●difficulties
in enhancing our customer support resources to adequately service
our existing customers and the customers of acquired
businesses;
●the
potential loss of key employees or customers of the acquired
businesses;
●unanticipated
liabilities or contingencies of acquired
businesses;
●unbudgeted
costs which we may incur in connection with pursuing potential
acquisitions which are not consummated;
●failure to
achieve projected cost savings or cash flow from acquired
businesses, which are based on projections that are inherently
uncertain;
●fluctuations
in our operating results caused by incurring considerable expenses
to acquire and integrate businesses before receiving the
anticipated revenues expected to result from the acquisitions;
and
●difficulties
in obtaining regulatory approvals required to consummate
acquisitions.
We also
participate in competitive bidding processes, some of which may
involve significant cable systems. If we are the winning bidder in
any such process involving significant cable systems or we
otherwise engage in acquisitions or other strategic transactions in
the future, we may incur additional debt, contingent liabilities
and amortization expenses, which could materially adversely affect
our business, financial condition and results of operations. We
could also issue substantial additional equity which could dilute
existing stockholders.
If our
acquisitions do not result in the anticipated operating
efficiencies, are not effectively integrated, or result in costs
which exceed our expectations, our business, financial condition
and results of operations could be materially adversely
affected.
Significant unanticipated increases in the use of
bandwidth-intensive Internet-based services could increase our
costs.
The
rising popularity of bandwidth-intensive Internet-based services
poses risks for our broadband services. Examples of such services
include peer-to-peer file sharing services, gaming services and the
delivery of video via streaming technology and by download. If
heavy usage of bandwidth-intensive broadband services grows beyond
our current expectations, we may need to incur more expenses than
currently anticipated to expand the bandwidth capacity of our
systems or our customers could have a suboptimal experience when
using our broadband service. In order to continue to provide
quality service at attractive prices, we need the continued
flexibility to develop and refine business models that respond to
changing consumer uses and demands and to manage bandwidth usage
efficiently. Our ability to undertake such actions could be
restricted by regulatory and legislative efforts to impose
so-called "net neutrality" requirements on broadband communication
providers like us that provide broadband services. For more
information, see "Regulation—Broadband."
We operate in a highly competitive business environment which could
materially adversely affect our business, financial condition,
results of operations and liquidity.
We
operate in a highly competitive, consumer-driven industry and we
compete against a variety of broadband, pay television and
telephony providers and delivery systems, including broadband
communications companies, wireless data and telephony providers,
satellite-delivered video signals, Internet-delivered video content
and broadcast television signals available to residential and
business customers in our service areas. Some of our competitors
include AT&T and its DirecTV subsidiary, CenturyLink, DISH
Network, Frontier and Verizon. In addition, our pay television
services compete with all other sources of leisure, news,
information and entertainment, including movies, sporting or other
live events, radio broadcasts, home-video services, console games,
print media and the Internet.
In some
instances, our competitors have fewer regulatory burdens, easier
access to financing, greater resources, greater operating
capabilities and efficiencies of scale, stronger brand-name
recognition, longstanding relationships with regulatory authorities
and customers, more subscribers, more flexibility to offer
promotional packages at prices lower than ours and greater access
to programming or other services. This competition creates pressure
on our pricing and has adversely affected, and may continue to
affect, our ability to add and retain customers, which in turn
adversely affects our business, financial condition and results of
operations. The effects of competition may also adversely affect
our liquidity and ability to service our debt. For example, we face
intense competition from Verizon and AT&T, which have network
infrastructure throughout our service areas. We estimate that
competitors are currently able to sell a fiber-based triple play,
including broadband, pay television and telephony services, and may
expand these and other service offerings to our potential
customers.
Our
competitive risks are heightened by the rapid technological change
inherent in our business, evolving consumer preferences and the
need to acquire, develop and adopt new technology to differentiate
our products and services from those of our competitors, and to
meet consumer demand. We may need to anticipate far in advance
which technology we should use for the development of new products
and services or the enhancement of existing products and services.
The failure to accurately anticipate such changes may adversely
affect our ability to attract and retain customers, which in turn
could adversely affect our business, financial condition and
results of operations. Consolidation and cooperation in our
industry may allow our competitors to acquire service capabilities
or offer products that are not available to us or offer similar
products and services at prices lower than ours. For example,
Comcast and Charter Communications have agreed to jointly explore
operational efficiencies to speed their respective entries into the
wireless market, including in the areas of creating common
operating platforms and emerging wireless technology platforms. In
addition, changes in the regulatory and legislative environments
may result in changes to the competitive landscape.
In
addition, certain of our competitors own directly or are affiliated
with companies that own programming content or have exclusive
arrangements with content providers that may enable them to obtain
lower programming costs or offer exclusive programming that may be
attractive to prospective subscribers. For example, DirecTV has
exclusive arrangements with the National Football League that give
it access to programming we cannot offer. AT&T also has an
agreement to acquire Time Warner, which owns a number of cable
networks, including TBS, CNN and HBO, as well as Warner Bros.
Entertainment, which produces television, film and home-video
content. AT&T's and DirecTV's potential access to Time Warner
programming could allow AT&T and DirecTV to offer competitive
and promotional packages that could negatively affect our ability
to maintain or increase our existing customers and revenues. DBS
operators such as DISH Network and DirecTV also have marketing
arrangements with certain phone companies in which the DBS
provider's pay television services are sold together with the phone
company's broadband and mobile and traditional phone
services.
Most
broadband communications companies, which already have wired
networks, an existing customer base and other operational functions
in place (such as billing and service personnel), offer DSL
services. We believe DSL service competes with our broadband
service and is often offered at prices lower than our Internet
services. However, DSL is often offered at speeds lower than the
speeds we offer. In addition, DSL providers may currently be in a
better position to offer Internet services to businesses since
their networks tend to be more complete in commercial areas. They
may also increasingly have the ability to combine video services
with telephone and Internet services offered to their customers,
particularly as broadband communications companies enter into
co-marketing agreements with other service providers. In addition,
current and future fixed and wireless Internet services, such as
3G, 4G and 5G fixed and wireless broadband services and Wi-Fi
networks, and devices such as wireless data cards, tablets and
smartphones, and mobile wireless routers that connect to such
devices, may compete with our broadband services.
Our
telephony services compete directly with established broadband
communications companies and other carriers, including wireless
providers, as increasing numbers of homes are replacing their
traditional telephone service with wireless telephone service. We
also compete against VoIP providers like Vonage, Skype, GoogleTalk,
Facetime, WhatsApp and magicJack that do not own networks but can
provide service to any person with a broadband connection, in some
cases free of charge. In addition, we compete against ILECs, other
CLECs and long-distance voice-service companies for large
commercial and enterprise customers. While we compete with the
ILECs, we also enter into interconnection agreements with ILECs so
that our customers can make and receive calls to and from customers
served by the ILECs and other telecommunications providers. Federal
and state law and regulations require ILECs to enter into such
agreements and provide facilities and services necessary for
connection, at prices subject to regulation. The specific price,
terms and conditions of each agreement, however, depend on the
outcome of negotiations between us and each ILEC. Interconnection
agreements are also subject to approval by the state regulatory
commissions, which may arbitrate negotiation impasses. These
agreements, like all interconnection agreements, are for limited
terms and upon expiration are subject to renegotiation, potential
arbitration and approval under the laws in effect at that
time.
We also
face competition for our advertising sales from traditional and
non-traditional media outlets, including television and radio
stations, traditional print media and the Internet.
We face significant risks as a result of rapid changes in
technology, consumer expectations and behavior.
The
broadband communications industry has undergone significant
technological development over time and these changes continue to
affect our business, financial condition and results of operations.
Such changes have had, and will continue to have, a profound impact
on consumer expectations and behavior. Our video business faces
technological change risks as a result of the continuing
development of new and changing methods for delivery of programming
content such as Internet-based delivery of movies, shows and other
content which can be viewed on televisions, wireless devices and
other developing mobile devices. Consumers' video consumption
patterns are also evolving, for example, with more content being
downloaded for time-shifted consumption. A proliferation of
delivery systems for video content can adversely affect our ability
to attract and retain subscribers and the demand for our services
and it can also decrease advertising demand on our delivery
systems. Our broadband business faces technological challenges from
rapidly evolving wireless Internet solutions. Our telephony service
offerings face technological developments in the proliferation of
telephony delivery systems including those based on Internet and
wireless delivery. If we do not develop or acquire and successfully
implement new technologies, we will limit our ability to compete
effectively for subscribers, content and advertising. We cannot
provide any assurance that we will realize, in full or in part, the
anticipated benefits we expect from the introduction of new
technologies, or that any new technologies will be rolled out
across our footprint in the timeframe we anticipate. In addition,
we may be required to make material capital and other investments
to anticipate and to keep up with technological change. These
challenges could adversely affect our business, financial condition
and results of operations.
Our revenues and growth may be constrained due to demand exceeding
capacity of our systems or our inability to develop
solutions.
We
anticipate generating revenues in the future from broadband
connectivity, other Internet services, and broadband and in the
cloud services. Demand and market acceptance for these recently
introduced services and products delivered over the Internet is
uncertain. Critical issues concerning the use of the Internet, such
as ease of access, security, reliability, cost and quality of
service, exist and may affect the growth of Internet use or the
attractiveness of conducting commerce online. In addition, the
Internet and online services may not be accepted as viable for a
number of reasons, including potentially inadequate development of
the necessary network infrastructure or delayed development of
enabling technologies and performance improvements. To the extent
that the Internet and online services continue to experience
significant growth, there can be no assurance that the
infrastructure of the Internet and online services will prove
adequate to support increased user demands. In addition, the
Internet or online services could lose their viability due to
delays in the development or adoption of new standards and
protocols required to handle increased levels of Internet or online
service activity. Changes in, or insufficient availability of,
telecommunications services to support the Internet or online
services also could result in slower response times and adversely
affect usage of the Internet and online services generally and us
in particular. If use of the Internet and online services does not
continue to grow or grows more slowly than expected, if the
infrastructure for the Internet and online services does not
effectively support growth that may occur, or if the Internet and
online services do not become a viable commercial marketplace, our
business could be adversely affected.
Certain
aspects of our VoIP telephony services differ from traditional
telephone service. The factors that may have this effect
include:
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our
subscribers may experience lower call quality than they experience
with traditional wireline telephone companies, including static,
echoes and transmission delays;
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our
subscribers may experience higher dropped-call rates than they
experience with traditional wireline telephone
companies; and
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a power
loss or Internet access interruption causes our service to be
interrupted.
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Additionally,
our VoIP emergency calling service is significantly more limited
than the emergency calling services offered by traditional
telephone companies. Our VoIP emergency calling service can only
transmit to a dispatcher at a public safety answering point, or
PSAP, the location information that the subscriber has registered
with us, which may at times be different from the actual location
at the time of the call. As a result, our emergency calling systems
may not assure that the appropriate PSAP is reached and may cause
significant delays, or even failures, in callers’ receipt of
emergency assistance. Our failure to develop or operate an adequate
emergency calling service could subject us to substantial
liabilities and may result in delays in subscriber adoption of our
VoIP telephony services or all of our services, abandonment of our
services by subscribers, and litigation costs, damage awards and
negative publicity, any of which could harm our business,
prospects, financial condition or results of
operations.
If our
subscribers do not accept the differences between our VoIP
telephony services and traditional telephone service, they may not
adopt or keep our VoIP telephony services or our other services, or
may choose to retain or return to service provided by traditional
telephone companies. Because VoIP telephony services represent an
important aspect of our business strategy, failure to achieve
subscribers’ acceptance of our VoIP telephony services may
adversely affect our prospects, results of operations and the
trading price of our shares.
We rely on contract manufacturers and a limited number of
third-party suppliers to produce our network equipment and to
maintain our network sites. If these companies fail to perform, we
may have a shortage of components and may be required to suspend
our network deployment and our product and service
introduction.
We
depend on contract manufacturers, to produce and deliver
acceptable, high quality products on a timely basis. We also depend
on a limited number of third parties to maintain our network
facilities. If our contract manufacturer or other providers do not
satisfy our requirements, or if we lose our contract manufacturers
or any other significant provider, we may have an insufficient
network services for delivery to subscribers, we may be forced to
suspend portions of our wireless broadband network, enrollment of
new subscribers, and product sales and our business, prospects,
financial condition and operating results may be
harmed.
We rely on highly skilled executives and other personnel. If we
cannot retain and motivate key personnel, we may be unable to
implement our business strategy.
We will
be highly dependent on the scientific, technical, and managerial
skills of certain key employees, including technical, research and
development, sales, marketing, financial and executive personnel,
and on our ability to identify, hire and retain additional
personnel. To accommodate our current size and manage our
anticipated growth, we must expand our employee base. Competition
for key personnel, particularly persons having technical expertise,
is intense, and there can be no assurance that we will be able to
retain existing personnel or to identify or hire additional
personnel. The need for such personnel is particularly important
given the strains on our existing infrastructure and the need to
anticipate the demands of future growth. In particular, we are
highly dependent on the continued services of our senior management
team, which currently is composed of a small number of individuals.
We do not maintain key-man life insurance on the life of any
employee. The inability of us to attract, hire or retain the
necessary technical, sales, marketing, financial and executive
personnel, or the loss of the services of any member of our senior
management team, could have a material adverse effect on
us.
Our
future success depends largely on the expertise and reputation of
our founder, Chairman and Chief Executive Officer Stephen J.
Thomas, Richard Eberhardt, and the other members of our senior
management team. In addition, we intend to hire additional highly
skilled individuals to staff our operations. Loss of any of our key
personnel or the inability to recruit and retain qualified
individuals could adversely affect our ability to implement our
business strategy and operate our business.
We are
currently managed by a small number of key management and operating
personnel. Our future success depends, in part, on our ability to
recruit and retain qualified personnel. Failure to do so likely
would have an adverse impact on our business and the trading price
of our common stock.
If our data security measures are breached, subscribers may
perceive our network and services as not secure.
Our
network security and the authentication of the subscriber’s
credentials are designed to protect unauthorized access to data on
our network. Because techniques used to obtain unauthorized access
to or to sabotage networks change frequently and may not be
recognized until launched against a target, we may be unable to
anticipate or implement adequate preventive measures against
unauthorized access or sabotage. Consequently, unauthorized parties
may overcome our encryption and security systems and obtain access
to data on our network, including on a device connected to our
network. In addition, because we operate and control our network
and our subscribers’ Internet connectivity, unauthorized
access or sabotage of our network could result in damage to our
network and to the computers or other devices used by our
subscribers. An actual or perceived breach of network security,
regardless of whether the breach is our fault, could harm public
perception of the effectiveness of our security measures, adversely
affect our ability to attract and retain subscribers, expose us to
significant liability and adversely affect our business
prospects.
Our activities outside the United States could disrupt our
operations.
We
intend to invest in various international companies and spectrum
opportunities through acquisitions and strategic alliances as these
opportunities arise. Our activities outside the United States
operate in environments different from the one we face in the
United States, particularly with respect to competition and
regulation. Due to these differences, our activities outside the
United States may require a disproportionate amount of our
management and financial resources, which could disrupt our U.S.
operations and adversely affect our business.
In a
number of international markets, we face substantial competition
from local service providers that offer or may offer their own
wireless broadband or VoIP telephony services and from other
companies that provide Internet connectivity services. We may face
heightened challenges in gaining market share, particularly in
certain European countries, where a large portion of the population
already has broadband Internet connectivity and incumbent companies
already have a dominant market share in their service areas.
Furthermore, foreign providers of competing services may have a
substantial advantage over us in attracting subscribers due to a
more established brand, greater knowledge of local
subscribers’ preferences and access to significant financial
or strategic resources.
In
addition, foreign regulatory authorities frequently own or control
the incumbent telecommunications companies operating under their
jurisdiction. Established relationships between government-owned or
government-controlled telecommunications companies and their
traditional local providers of telecommunications services often
limit access of third parties to these markets. The successful
expansion of our international operations in some markets will
depend on our ability to locate, form and maintain strong
relationships with established local communication services and
equipment providers. Failure to establish these relationships or to
market or sell our products and services successfully could limit
our ability to attract subscribers to our services.
We may be unable to protect our intellectual property, which could
reduce the value of our services and our brand.
Our
ability to compete effectively depends on our ability to protect
our proprietary technologies, system designs and manufacturing
processes. We may not be able to safeguard and maintain our
proprietary rights. We rely on patents, trademarks and policies and
procedures related to confidentiality to protect our intellectual
property. Some of our intellectual property, however, is not
covered by any of these protections.
We could be subject to claims that we have infringed on the
proprietary rights of others, which claims would likely be costly
to defend, could require us to pay damages and could limit our
ability to use necessary technologies in the
future.
Our
competitors may independently develop or patent technologies or
processes that are substantially equivalent or superior to ours.
These competitors may claim that our services and products infringe
on these patents or other proprietary rights. Defending against
infringement claims, even merit less ones, would be time consuming,
distracting and costly. If we are found to be infringing
proprietary rights of a third party, we could be enjoined from
using such third party’s rights and be required to pay
substantial royalties and damages and may no longer be able to use
the intellectual property on acceptable terms or at all. Failure to
obtain licenses to intellectual property could delay or prevent the
development, manufacture or sale of our products or services and
could cause us to expend significant resources to develop or
acquire non-infringing intellectual property.
Our business depends on our brand, and if we do not maintain and
enhance our brand, our ability to attract and retain subscribers
may be impaired and our business and operating results
harmed.
We
believe that our brand is a critical part of our business.
Maintaining and enhancing our brand may require us to make
substantial investments with no assurance that these investments
will be successful. If we fail to promote and maintain our brands,
or if we incur significant expenses in this effort, our business,
prospects, operating results and financial condition may be harmed.
We anticipate that maintaining and enhancing our brand will become
increasingly important, difficult and expensive.
We are subject to extensive regulation.
Our
acquisition, lease, maintenance and use of spectrum licenses are
extensively regulated by federal, state, local, and foreign
governmental entities. A number of other federal, state, local and
foreign privacy, security and consumer laws also apply to our
business. These regulations and their application are subject to
continual change as new legislation, regulations or amendments to
existing regulations are adopted from time to time by governmental
or regulatory authorities, including as a result of judicial
interpretations of such laws and regulations. Current regulations
directly affect the breadth of services we are able to offer and
may impact the rates, terms and conditions of our services.
Regulation of companies that offer competing services, such as
cable and DSL providers and incumbent telecommunications carriers,
also affects our business indirectly.
We are
also subject to regulation because we provide VoIP telephony
services. As an “interconnected” VoIP provider, we are
required under FCC rules, to comply with the Communications
Assistance for Law Enforcement Act, or CALEA, which requires
service providers to build certain capabilities into their networks
and to accommodate wiretap requests from law enforcement
agencies.
In
addition, the FCC or other regulatory authorities may in the future
restrict our ability to manage subscribers’ use of our
network, thereby limiting our ability to prevent or address
subscribers’ excessive bandwidth demands. To maintain the
quality of our network and user experience, we manage the bandwidth
used by our subscribers’ applications, in part by restricting
the types of applications that may be used over our network. Some
providers and users of these applications have objected to this
practice. If the FCC or other regulatory authorities were to adopt
regulations that constrain our ability to employ bandwidth
management practices, excessive use of bandwidth-intensive
applications would likely reduce the quality of our services for
all subscribers. Such decline in the quality of our services could
harm our business.
In
certain of our international markets, the services provided by our
business may require receipt of a license from national, provincial
or local regulatory authorities. Where required, regulatory
authorities may have significant discretion in granting the
licenses and in the term of the licenses and are often under no
obligation to renew the licenses when they expire.
The
breach of a license or applicable law, even if inadvertent, can
result in the revocation, suspension, cancellation or reduction in
the term of a license or the imposition of fines. In addition,
regulatory authorities may grant new licenses to third parties,
resulting in greater competition in territories where we already
have rights to licensed spectrum. In order to promote competition,
licenses may also require that third parties be granted access to
our bandwidth, frequency capacity, facilities or services. We may
not be able to obtain or retain any required license, and we may
not be able to renew a license on favorable terms, or at
all.
Our
wireless broadband and VoIP telephony services may become subject
to greater state or federal regulation in the future. The scope of
the regulations that may apply to VoIP telephony services providers
and the impact of such regulations on providers’ competitive
position are presently unknown.
Our Chairman and Chief Executive Officer is also our largest
stockholder, and as a result he can exert control over us and has
actual or potential interests that may diverge from
yours.
Mr. Thomas
may have interests that diverge from those of other holders of our
common stock and he owns our super majority voting Series A stock.
As a result, Mr. Thomas may vote the shares he owns or otherwise
cause us to take actions that may conflict with your best interests
as a stockholder, which could adversely affect our results of
operations and the trading price of our common stock.
Through
his control, Mr. Thomas can control our management, affairs
and all matters requiring stockholder approval, including the
approval of significant corporate transactions, a sale of our
company, decisions about our capital structure and, the composition
of our board of directors.
COVID-19 effects on the economy may negatively affect our Company
business.
In December 2019, COVID-19 emerged and has subsequently spread
worldwide. The World Health Organization has declared COVID-19 a
pandemic resulting in federal, state and local governments and
private entities mandating various restrictions, including travel
restrictions, restrictions on public gatherings, stay at home
orders and advisories and quarantining of people who may have been
exposed to the virus.
As the COVID-19 pandemic is complex and rapidly evolving, the
Company's business may be negatively affected for a sustained time
frame. At this point, we cannot reasonably estimate the duration
and severity of this pandemic, which could have a material adverse
impact on our business, results of operations, financial position
and cash flows.
Our officers and directors
may have conflicts of interests as to corporate opportunities which
we may not be able or allowed to participate
in.
Presently
there is no requirement contained in our Articles of Incorporation,
Bylaws, or minutes which requires officers and directors of our
business to disclose to us business opportunities which come to
their attention. Our officers and directors do, however, have a
fiduciary duty of loyalty to us to disclose to us any business
opportunities which come to their attention, in their capacity as
an officer and/or director or otherwise. Excluded from this duty
would be opportunities which the person learns about through his
involvement as an officer and director of another company. We have
no intention of merging with or acquiring business opportunity from
any affiliate or officer or director.
We have agreed to indemnification of officers and directors as is
provided by Florida Statutes.
Florida
Statutes provide for the indemnification of our directors,
officers, employees, and agents, under certain circumstances,
against attorney’s fees and other expenses incurred by them
in any litigation to which they become a party arising from their
association with or activities our behalf. We will also bear the
expenses of such litigation for any of our directors, officers,
employees, or agents, upon such person’s promise to repay us
therefore if it is ultimately determined that any such person shall
not have been entitled to indemnification. This indemnification
policy could result in substantial expenditures by us that we will
be unable to recoup.
Our directors’ liability to us and shareholders is
limited.
Florida
Statutes exclude personal liability of our directors and our
stockholders for monetary damages for breach of fiduciary duty
except in certain specified circumstances. Accordingly, we will
have a much more limited right of action against our directors that
otherwise would be the case. This provision does not affect the
liability of any director under federal or applicable state
securities laws.
We may not be able to successfully implement our business strategy
without substantial additional capital. Any such failure may
adversely affect the business and results of
operations.
Unless
we can generate revenues sufficient to implement our Business Plan,
we will need to obtain additional financing through debt or bank
financing, or through the sale of shareholder interests to execute
our Business Plan. We expect to need at least $38,000,000 in the
next twelve months in capital or loans to complete our plans and
operations for which this offering is intended to provide funds. We
may not be able to obtain this financing at all. We have not sought
commitments for this financing, and we have no terms for either
debt or equity financing, and we realize that it may be difficult
to obtain on favorable terms. Moreover, if we issue additional
equity securities to support our operations, Investor holdings may
be diluted. Our business plans are at risk if we cannot continually
achieve additional capital raising to complete our
plans.
We are reliant, in part, on third party sales organizations, which
may not perform as we expect.
We,
from time to time rely on the sales force of third-party sales
organizations with support from our own selling resources. The
third-party relationships and internal organization are not fully
developed at this time and must be developed. We may not be able to
hire effective inside salespeople to help our third-party sales
organizations close sales. There is no assurance that any
approaches will improve sales. Further, using only a direct sales
force would be less cost-effective than our plan to use third-party
sales organizations. In addition, a direct sales model may be
ineffective if we were unable to hire and retain qualified sales
people and if the sales force fails to complete sales. Moreover,
even if we successfully implement our business strategy, we may not
have positive operating results. We may decide to alter or
discontinue aspects of our business strategy and may adopt
different strategies due to business or competitive
factors.
Our growth may be affected adversely if our sales of products and
services are negatively affected by competition or other
factors.
The
growth of our business is dependent, in large part, upon the
development of sales for our services and product offerings. Market
opportunities that we expect to exist may not develop as expected,
or at all. For example, a substantial percentage of our service
offerings is oriented around data access. If lower cost
alternatives are developed, our sales would decrease and our
operating results would be negatively affected. Moreover, even if
market opportunities develop as expected, new technologies and
services offerings introduced by competitors may significantly
limit our ability to capitalize on any such market opportunity. Our
failure to capitalize on expected market opportunities would
adversely affect revenue growth.
The
lack of operating history and the rapidly changing nature of the
market in which we compete make it difficult to accurately forecast
revenues and operating results. We anticipate that revenues and
operating results might fluctuate in the future due to a number of
factors including the following:
●
the timing of sales
for current services and products offerings
●
the timing of new
product implementations
●
unexpected delays
in introducing new services and products offerings
●
increased expense
related to sales and marketing, product development or
administration
●
the mix of products
and our services offerings
●
costs related to
possible acquisitions of technology or business.
●
costs of providing
services
We may be unable to compete with larger, more established
competitors.
The
market for providing network delivered service solutions is
competitive. We expect competition to intensify in the future. Many
of our potential competitors have longer operating histories,
larger customer bases, greater recognition and significantly
greater resources. As a result, competitors may be able to respond
more quickly to emerging technologies and changes in customer
requirements than we can. The continuous and timely introduction of
competitively priced services offerings into the market is critical
to our success, and there can be no assurance that we will be able
to introduce such services offerings. We may not be able to compete
successfully against competitors, and the competitive pressures we
face may have an adverse effect on our business.
RISKS RELATING TO OUR INTELLECTUAL PROPERTY AND POTENTIAL
LITIGATION
We may not be able to protect our intellectual property and
proprietary rights.
There
can be no assurances that we will be able to obtain intellectual
property protection that will effectively prevent any competitors
from developing or marketing the same or a competing technology. In
addition, we cannot predict whether we will be subject to
intellectual property litigation the outcome of which is subject to
uncertainty and which can be very costly to pursue or defend. We
will attempt to continue to protect our proprietary designs and to
avoid infringing on the intellectual property of third parties.
However, there can be no assurance that we will be able to protect
our intellectual property or avoid suits by third parties claiming
intellectual property infringement.
If our patents and other intellectual property rights do not
adequately protect our service offering, we may lose market share
to competitors and be unable to operate our business
profitably.
Patents
and other proprietary rights are anticipated to be of value to our
future business, and our ability to compete effectively with other
companies depends on the proprietary nature of our current or
future technologies. We also rely upon trade secrets, know-how,
continuing technological innovations and licensing opportunities to
develop, maintain, and strengthen our competitive position. We
cannot assure you that any future patent applications will result
in issued patents, that any patents issued or licensed to us will
not be challenged, invalidated or circumvented or that the rights
granted there under will provide a competitive advantage to us or
prevent competitors from entering markets which we currently serve.
Any required license may not be available to us on acceptable
terms, if at all or may become invalid if the licensee’s
right to such technology become challenged and/or revoked. In
addition, some licenses may be non-exclusive, and therefore
competitors may have access to the same technologies as we do.
Furthermore, we may have to take legal action in the future to
protect our trade secrets or know-how, or to defend them against
claimed infringement of the rights of others. Any legal action of
that type could be costly and time-consuming to us, and we cannot
assure you that such actions will be successful. The invalidation
of key patents or proprietary rights which we own or unsuccessful
outcomes in lawsuits to protect our intellectual property may have
a material adverse effect on our business, financial condition and
results of operations.
We may in the future become subject to claims that some, or the
entire service offering violates the patent or intellectual
property rights of others, which could be costly and disruptive to
us.
We
operate in an industry that is susceptible to patent litigation. As
a result, we or the parties we license technology from may become
subject to patent infringement claims or litigation. Further, one
or more of our future patents or applications may become subject to
interference proceedings declared by the U.S. Patent and Trademark
Office, (“USPTO”) or the foreign equivalents thereof to
determine the priority of claims to inventions. The defense of
intellectual property suits, USPTO interference proceedings or the
foreign equivalents thereof, as well as related legal and
administrative proceedings, are both costly and time consuming and
may divert management's attention from other business concerns. An
adverse determination in litigation or interference proceedings to
which we may become a party could, among other things:
● subject us to
significant liabilities to third parties, including treble
damages;
● require disputed
rights to be licensed from a third party for royalties that may be
substantial;
● require us to cease
using such technology; or
● prohibit us from
selling certain of our service offerings.
Any of
these outcomes could have a material adverse effect on our
business, financial condition and results of
operations.
RISKS RELATING TO OUR COMMON STOCK (IF THE SERIES D
PREFERRED IS CONVERTED TO COMMON STOCK)
Our common stock will in all likelihood be thinly traded and as a
result you may be unable to sell at or near ask prices or at all if
you need to liquidate your shares, after any conversion from
Preferred Stock.
The
shares of our common stock may be thinly-traded on the OTC Market,
meaning that the number of persons interested in purchasing our
common shares at or near ask prices at any given time may be
relatively small or non-existent. This situation is attributable to
a number of factors, including the fact that we are a small company
which is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that
generate or influence sales volume, and that even if we came to the
attention of such persons, they tend to be risk-averse and would be
reluctant to follow an unproven, early stage company such as ours
or purchase or recommend the purchase of any of our Securities
until such time as we became more seasoned and viable. As a
consequence, there may be periods of several days or more when
trading activity in our Securities is minimal or non-existent, as
compared to a seasoned issuer which has a large and steady volume
of trading activity that will generally support continuous sales
without an adverse effect on Securities price. We cannot give you
any assurance that a broader or more active public trading market
for our common Securities will develop or be sustained, or that any
trading levels will be sustained. Due to these conditions, we can
give investors no assurance that they will be able to sell their
shares at or near ask prices or at all if they need money or
otherwise desire to liquidate their securities of our
Company.
The regulation of penny stocks by SEC and FINRA may discourage the
tradability of our common stock or other securities.
We are
a “penny stock” company. Our common stock currently
trades on the OTCQB under the symbol “TPTW” and will be
subject to a Securities and Exchange Commission rule that imposes
special sales practice requirements upon broker-dealers who sell
such securities to persons other than established customers or
accredited investors. For purposes of the rule, the phrase
“accredited investors” means, in general terms,
institutions with assets in excess of $5,000,000, or individuals
having a net worth in excess of $1,000,000 or having an annual
income that exceeds $200,000 (or that, when combined with a
spouse’s income, exceeds $300,000). For transactions covered
by the rule, the broker-dealer must make a special suitability
determination for the purchaser and receive the purchaser’s
written agreement to the transaction prior to the sale.
Effectively, this discourages broker-dealers from executing trades
in penny stocks. Consequently, the rule will affect the ability of
purchasers in this offering to sell their securities in any market
that might develop therefore because it imposes additional
regulatory burdens on penny stock transactions.
In
addition, the Securities and Exchange Commission has adopted a
number of rules to regulate “penny stocks". Such rules
include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6,
15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as
amended. Because our securities constitute “penny
stocks” within the meaning of the rules, the rules would
apply to us and to our securities. The rules will further affect
the ability of owners of shares to sell our securities in any
market that might develop for them because it imposes additional
regulatory burdens on penny stock transactions.
Shareholders
should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent
years from patterns of fraud and abuse. Such patterns include (i)
control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer;
(ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii)
“boiler room” practices involving high-pressure sales
tactics and unrealistic price projections by inexperienced sales
persons; (iv) excessive and undisclosed bid-ask differentials and
markups by selling broker-dealers; and (v) the wholesale dumping of
the same securities by promoters and broker-dealers after prices
have been manipulated to a desired consequent investor losses. Our
management is aware of the abuses that have occurred historically
in the penny stock market. Although we do not expect to be in a
position to dictate the behavior of the market or of broker-dealers
who participate in the market, management will strive within the
confines of practical limitations to prevent the described patterns
from being established with respect to our securities.
Inventory
in penny stocks have limited remedies in the event of violations of
penny stock rules. While the courts are always available to seek
remedies for fraud against us, most, if not all, brokerages require
their customers to sign mandatory arbitration agreements in
conjunctions with opening trading accounts. Such arbitration may be
through an independent arbiter. Investors may file a complaint with
FINRA against the broker allegedly at fault, and FINRA may be the
arbiter, under FINRA rules. Arbitration rules generally limit
discovery and provide more expedient adjudication, but also provide
limited remedies in damages usually only the actual economic loss
in the account. Investors should understand that if a fraud case is
filed against a company in the courts it may be vigorously defended
and may take years and great legal expenses and costs to pursue,
which may not be economically feasible for small
investors.
That
absent arbitration agreements related to brokerage accounts,
specific legal remedies available to investors of penny stocks
include the following:
If a
penny stock is sold to the investor in violation of the
requirements listed above, or other federal or states securities
laws, the investor may be able to cancel the purchase and receive a
refund of the investment.
If a
penny stock is sold to the investor in a fraudulent manner, the
investor may be able to sue the persons and firms that committed
the fraud for damages.
The
fact that we are a penny stock company will cause many brokers to
refuse to handle transactions in the stocks, and may discourage
trading activity and volume, or result in wide disparities between
bid and ask prices. These may cause investors significant
illiquidity of the stock at a price at which they may wish to sell
or in the opportunity to complete a sale. Investors will have no
effective legal remedies for these illiquidity issues.
We will pay no dividends
in the foreseeable future on common stock.
We have
not paid dividends on our common stock and do not anticipate paying
such dividends in the foreseeable future. The Series D Preferred
Stock will be paid 6% per annum on a cumulative basis, in cash or
in registered common stock
Rule 144 sales of stock in the future may have a depressive effect
on our stock price.
All of
the outstanding shares of common stock held by our present
officers, directors, and affiliate stockholders are
“restricted securities” within the meaning of Rule 144
under the Securities Act of 1933, as amended. As restricted Shares,
common shares may be resold only pursuant to an effective
registration statement or under the requirements of Rule 144 or
other applicable exemptions from registration under the Act and as
required under applicable state securities laws. Rule 144 provides
in essence that a person who has held restricted securities for six
months, under certain conditions, sell every three months, in
brokerage transactions, a number of shares that does not exceed the
greater of 1.0% of a company’s outstanding common stock or
the average weekly trading volume during the four calendar weeks
prior to the sale. There is no limit on the amount of restricted
securities that may be sold by a non-affiliate after the owner has
held the restricted securities for a period of six months. A sale
under Rule 144 or under any other exemption from the Act, if
available, or pursuant to subsequent registration of shares of
common stock of present stockholders, may have a depressive effect
upon the price of the common stock in any market that may
develop.
Any sales of our common stock, if in significant amounts, are
likely to depress the future market price of our
securities.
Assuming
all of the shares of common stock held by the selling security
holders registered recently in a Form S-1 that became effective in
2019 and for which a Post Effective Amendment was filed July 16,
2021 are sold, we would have 26,607,309 new shares that are freely
tradable and therefor available for sale, in market or private
transactions.
Unrestricted
sales of 26,607,309 shares of stock by these selling stockholders
could have a huge negative impact on our share price, and the
market for our shares.
Any new potential investors will suffer a disproportionate risk and
there will be immediate dilution of existing investor’s
investments.
Our
present shareholders have acquired their securities at a cost
significantly less than that which the investors purchasing hereto
will pay for their stock holdings or at which future purchasers in
the market may pay. Therefore, any new potential investors will
bear most of the risk of loss.
We can issue future series of shares of preferred stock without
shareholder approval, which could adversely affect the rights of
common shareholders.
Our
Articles of Incorporation permit our Board of Directors to
establish the rights, privileges, preferences and restrictions,
including voting rights, of future series of stock and to issue
such stock without approval from our shareholders. The rights of
holders of common stock may suffer as a result of the rights
granted to holders of preferred stock that may be issued in the
future. In addition, we could issue preferred stock to prevent a
change in control of our Company, depriving common shareholders of
an opportunity to sell their stock at a price in excess of the
prevailing market price.
Sales of common stock resulting from issuances of common stock for
conversions by our convertible noteholders or Rule 144 sales in the
future will have a depressive effect on our common stock
price.
Most of
our convertible noteholders have rights to convert their notes at
significant discounts to the market prices as shown in the schedule
below, for sale under the requirements of Rule 144 or other
applicable exemptions from registration under the Act and perhaps
under registration statements which the company is preparing to
file in the next thirty days. Rule 144 provides in essence that a
person who has held restricted securities for six months, or is
deemed to have held them due to the issuance by the Company of
convertible notes under certain conditions, may sell those shares
in brokerage transactions. There is no limit on the amount of
restricted securities that may be sold by a non-affiliate after the
owner has held the restricted securities for a period of six
months. A sale under Rule 144 or under any other exemption from the
Act, if available, or pursuant to subsequent registration of shares
of common stock of present stockholders underlying the convertible
notes, will have a depressive effect upon the price of the common
stock in the market, since they are issued at a discount to
market-often 50-60% of the lowest bid for differing periods, and
sales can be expected at some discounted prices, with larger than
normal volumes. We have also issued warrants that allow for the
purchase of shares at significant discounts to the market prices,
often 50% of the ten day low bids, or other highly discounted
rates, which would allow the holders of those warrants to sell
shares into the market at a profit over their discounted price,
which could have the effect of depressing the price of the shares
in the market.
We are an “emerging
growth company,” and any decision on our part to comply only
with certain reduced disclosure requirements applicable to
“emerging growth companies” could make our Shares less
attractive to investors.
We are
an “emerging growth company,” as defined in the JOBS
Act, and, for as long as we continue to be an “emerging
growth company,” we expect and fully intend to take advantage
of exemptions from various reporting requirements applicable to
other public companies but not to “emerging growth
companies,” including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a
nonbinding advisory vote on executive compensation and Member
approval of any golden parachute payments not previously approved.
We could be an “emerging growth company” for up to five
years, or until the earliest of (i) the last day of the first
fiscal year in which our annual gross revenues exceed $1 billion,
(ii) the date that we become a “large accelerated
filer” as defined in Rule 12b-2 under the Exchange Act, which
would occur if the market value of our securities that are held by
non-affiliates exceeds $700 million as of the last business day of
our most recently completed second fiscal quarter, or (iii) the
date on which we have issued more than $1 billion in
non-convertible debt during the preceding three year
period.
In
addition, Section 107 of the JOBS Act also provides that an
“emerging growth company” can take advantage of the
extended transition period provided in Section 7(a)2(B) of the
Securities Act for complying with new or revised accounting
standards. In other words, an “emerging growth company”
can delay the adoption of certain accounting standards until those
standards would otherwise apply to private companies. We have
elected to opt into the extended transition period for complying
with the revised accounting standards. We have elected to rely on
these exemptions and reduced disclosure requirements applicable to
“emerging growth companies” and expect to continue to
do so.
We can give no assurance of success or profitability to our
investors.
Cash
flows generated from operating activities were not enough to
support all working capital requirements for the six months ended
June 30, 2021 and 2020. We incurred $3,884,250 and $3,495,988,
respectively, in losses, and we used $304,761 and $318,895,
respectively, in cash from operations for the six months ended June
30, 2021 and 2020. Cash flows from financing activities were
$589,504 and $506,735 for the six months ended June 30, 2021 and
2020, respectively. These factors raise substantial doubt about the
ability of the Company to continue as a going concern for a period
of one year from the issuance of these financial statements. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
In December 2019, COVID-19 emerged and has subsequently spread
worldwide. The World Health Organization has declared COVID-19 a
pandemic resulting in federal, state and local governments and
private entities mandating various restrictions, including travel
restrictions, restrictions on public gatherings, stay at home
orders and advisories and quarantining of people who may have been
exposed to the virus. After close monitoring and responses and
guidance from federal, state and local governments, in an effort to
mitigate the spread of COVID-19, around March 18, 2020 for a period
of time, the Company closed its Blue Collar office in Los Angeles
and its TPT SpeedConnect offices in Michigan, Idaho and
Arizona. Most employees were working remotely, however this
was not possible with certain employees and all subcontractors that
work for Blue Collar. The Company has opened up most of it
operations and continues to monitor developments, including
government requirements and recommendations at the national, state,
and local level to evaluate possible extensions to all or part of
such closures.
The Company has taken advantage of the stimulus offerings and
received $722,200 in April 2020 and $680,500 in February 2021 and
believes it has used these funds as is prescribed by the stimulus
offerings to have the entire amounts forgiven. The Company has
been approved for forgiveness of all
loans it has received and has received confirmation of forgiveness
of all but $147,800 for which it continues to believe will also be
forgiven. The Company will try and take advantage of
additional stimulus as it is available and is also in the process
of trying to raise debt and equity financing, some of which may
have to be used for working capital shortfalls if revenues continue
to decline because of the COVID-19 closures.
On May
28, 2021, the Company entered into a Common Stock Purchase
Agreement (“Purchase Agreement”) and Registration
Rights Agreement (“Registration Rights Agreement”) with
White Lion Capital, LLC, a Nevada limited liability company
(“White Lion”). Under the terms of the Purchase
Agreement, White Lion agreed to provide the Company with up to
$5,000,000 upon effectiveness of a registration statement on Form
S-1 (the “Registration Statement”) filed with the U.S.
Securities and Exchange Commission (the “Commission”).
A Form S-1 was filed on June 30, 2021 regarding this transaction.
Subsequent Amendments to Forms S-1 related to this transaction were
filed on July 6, 2021 and July 14, 2021. The registrations
statement was declared effective July 19, 2021.
The
Company has given purchase notices for 29,000,000 shares of common
stock under the Purchase Agreement and has received proceeds of
$649,470, net of expenses.
In
order for us to continue as a going concern for a period of one
year from the issuance of these financial statements, we will need
to obtain additional debt or equity financing and look for
companies with cash flow positive operations that we can acquire.
There can be no assurance that we will be able to secure additional
debt or equity financing, that we will be able to acquire cash flow
positive operations, or that, if we are successful in any of those
actions, those actions will produce adequate cash flow to enable us
to meet all our future obligations. Most of our existing financing
arrangements are short-term. If we are unable to obtain additional
debt or equity financing, we may be required to significantly
reduce or cease operations.
We may in the future issue more shares which could cause a loss of
control by our present management and current
stockholders.
We may
issue further shares as consideration for the cash or assets or
services out of our authorized but unissued common stock that
would, upon issuance, represent a majority of the voting power and
equity of our Company. The result of such an issuance would be
those new stockholders and management would control our Company,
and persons unknown could replace our management at this time. Such
an occurrence would result in a greatly reduced percentage of
ownership of our Company by our current shareholders, which could
present significant risks to investors.
Sales of common stock resulting from issuances of common stock for
conversions by our convertible noteholders or Rule 144 sales in the
future will have a depressive effect on our common stock
price.
Most of
our convertible noteholders have rights to convert their notes at
significant discounts to the market prices as shown in the schedule
below, for sale under the requirements of Rule 144 or other
applicable exemptions from registration under the Act and perhaps
under registration statements which the company is preparing to
file in the next thirty days. Rule 144 provides in essence that a
person who has held restricted securities for six months or is
deemed to have held them due to the issuance by the Company of
convertible notes under certain conditions, may sell those shares
in brokerage transactions. There is no limit on the amount of
restricted securities that may be sold by a non-affiliate after the
owner has held the restricted securities for a period of six
months. A sale under Rule 144 or under any other exemption from the
Act, if available, or pursuant to subsequent registration of shares
of common stock of present stockholders underlying the convertible
notes, will have a depressive effect upon the price of the common
stock in the market, since they are issued at a discount to
market-often 50-60% of the lowest bid for differing periods, and
sales can be expected at some discounted prices, with larger than
normal volumes. We have also issued preferred stock and options and
warrants that allow for the purchase of shares at significant
discounts to the market prices, often 50% of the ten-day low bids,
or other highly discounted rates, which would allow the holders of
those warrants to sell shares into the market at a profit over
their discounted price, which could have the effect of depressing
the price of the shares in the market.
As of
June 30, 2021, we had the following convertible promissory notes,
preferred stock and options and warrants outstanding that are
convertible into common shares as follows:
|
|
2021
|
|
Convertible
Promissory Notes
|
421,447,906
|
|
Series A Preferred
Stock (1)
|
1,279,184,625
|
|
Series B Preferred
Stock
|
2,588,693
|
|
Series D Preferred
Stock (2)
|
21,050,993
|
|
Stock Options and
Warrants
|
3,333,333
|
|
|
1,727,605,549
|
________________
(1)
Holder of the
Series A Preferred Stock which is Stephen J. Thomas, is guaranteed
60% of outstanding common stock upon conversion. The Company would
have to authorize additional shares for this to occur as only
1,000,000,000 shares are currently authorized.
(2)
Holders of the
Series D Preferred Stock may decide after 12 months to convert to
common stock @ 75% of the 30-day average market closing price (for
previous 30 business days) divided into $5.00. There is also an
automatic conversion of the Series D Preferred Stock without
consent of holders upon any national exchange listing approval and
the registration effectiveness of common stock underlying the
conversion rights. The automatic conversion to common from Series D
Preferred shall be on the same conversion basis.
Stock Options
|
|
Options
Outstanding
|
Vested
|
Vesting
Period
|
Exercise
Price Outstanding and Exercisable
|
Expiration
Date
|
|
December 31,
2019
|
3,000,000
|
3,000,000
|
12 to 18
months
|
$0.10
|
3-1-20 to
3-21-21
|
|
Expired
|
(2,000,000)
|
|
|
|
|
|
December 31,
2020
|
1,000,000
|
1,000,000
|
12
months
|
$0.10
|
3-21-21
|
|
Expired
|
(1,000,000)
|
|
|
|
|
|
June 30,
2021
|
—
|
—
|
—
|
—
|
—
|
On
October 14, 2017, the Board of Directors and majority stockholders
of TPT approved the 2017 TPT Global Tech, Inc. Stock Option and
Award Incentive Plan (“the 2017 Plan.”) There are
20,000,000 shares of our common stock reserved under the 2017
Plan.
Warrants
As of June 30, 2021, there were 3,333,333 warrants outstanding that
expire in five years or in the year ended December 31, 2024. As
part of the Convertible Promissory Notes payable – third
party issuance in Note 5 to the Consolidated Financial Statements,
the Company issued 3,333,333 warrants to purchase 3,333,333 common
shares of the Company at 70% of the current market price. Current
market price means the average of the three lowest trading
prices for our common stock during the ten-trading day period
ending on the latest complete trading day prior to the date of the
respective exercise notice.
The
exercise of the options, warrants, convertible promissory notes and
Series A and B Series Preferred Stock into shares of our common
stock could have a dilutive effect to the holdings of our existing
shareholders.
Our Stock prices in the Market may be volatile.
The
value of our Common stock following this offering may be highly
volatile and could be subject to fluctuations in price in response
to various factors, some of which are beyond our control. These
factors include:
●
quarterly
variations in our results of operations or those of our
competitors;
●
announcements by us
or our competitors of acquisitions, new products, significant
contracts, commercial relationships or capital
commitments;
●
disruption to our
operations or those of other sources critical to our network
operations;
●
the emergence of
new competitors or new technologies;
●
our ability to
develop and market new and enhanced products on a timely
basis;
●
seasonal or other
variations in our subscriber base;
●
commencement of, or
our involvement in, litigation;
●
availability of
additional spectrum;
●
dilutive issuances
of our stock or the stock of our subsidiaries, or the incurrence of
additional debt;
●
changes in our
board or management;
●
adoption of new or
different accounting standards;
●
changes in
governmental regulations or in the status of our regulatory
approvals;
●
changes in earnings
estimates or recommendations by securities analysts;
●
announcements
regarding WiMAX and other technical standards; and
●
general economic
conditions and slow or negative growth of related
markets.
In
addition, the stock market in general, and the market for shares of
technology companies in particular, has experienced price and
volume fluctuations that have often been unrelated or
disproportionate to the operating performance of those companies.
We expect the value of our common stock will be subject to such
fluctuations.
RISKS RELATING TO THIS OFFERING AND OWNERSHIP
OF THE COMPANY’S SERIES D PREFERRED STOCK
Investment in this Series D Preferred Stock bears a risk due to its
subordinate nature to the Series A, B, and C Preferred shares, in
the event of liquidation, or certain other events.
The
Series D Preferred shares are subordinate to the Rights and
Privileges of the Series A, B, and C Preferred stock of the
Company, which provide that they are prior in rank as to certain
liquidation rights, voting rights and conversion rights, as
described on page 78 hereof. Effectively this means that
Series D may not receive $5.00 per share if the liquidation
preferences of the prior series use up the available proceeds upon
liquidation of the assets of the Company, and after payment of the
debts of the Company.
Further,
the Series A holds supermajority voting rights (currently held by
our CEO Stephen Thomas) can control the Company, and has a
liquidation privilege of an amount per share equal to amounts
payable owing, including contingency amounts where Holders of the
Series A have personally guaranteed obligations of the Company, to
the Holders of the Series A Preferred Stock on the books and
records of the Company divided by the number of shares of Series A
Preferred Stock outstanding (1,000,000 shares), and can convert the
1,000,000 shares to 60% of the common stock of the Company at any
time. Series B (2,588,693 shares) holds conversion rights to
common shares at $2.00 per share, and a liquidation preference of
$2.00 per share, and the right to vote the shares along with common
on a one for one basis. Series C have a liquidation
preference of $2.00 per share, and a right to convert to common
stock at $.15 divided into $2.00, at any time, and equal voting
rights with the common stock, such that the Series C votes on an as
converted to common basis. No Series C have been sold at date
hereof. Series D have a liquidation preference of $5.00 per share,
and a right to convert to common stock after eighteen months at 80%
of the thirty day average market closing price divided into $5.00
and equal voting rights with the common stock, such that the Series
D votes on an as converted to common basis. During the six months
ended June 30, 2021, 46,649 shares of Series D Preferred Share were
purchased for $233,244 of which Stephen Thomas, CEO of the Company,
acquired 36,649 for $183,244. The remainder of the shares purchased
as of June 30, 2021 were purchased by a third party.
Effectively
this means that Series D shares would be subordinate up to
approximately $10,000,000 in liquidation preferences, and could not
have any effective voting voice in a shareholder's meeting, and
conversion rights substantially less than the prior series of
Preferred Shares, all of which constitute risks to the Series D
investors.
There is a limited public market for common shares of the
Company.
Our common stock is currently quoted on the OTCQB under the symbol
“TPTW”. Because we are quoted on the OTCQB, our
securities may be less liquid, receive less coverage by security
analysts and news media, and generate lower prices than might
otherwise be obtained if they were listed on a national securities
exchange.
No public market for our Series D securities.
There
is currently no public market for our Series D securities, which
are convertible to common stock. We are a public company, quoted on
the OTCQB, but there can be no assurance that a liquid market for
our common stock will be established, or if established, sustained
for sufficient time for the Series D shareholders to convert and
achieve liquidity upon conversion to common stock. Fluctuation in
market price of our common stock may occur due to many factors,
including:
●
General market conditions and other factors related to the economy
or otherwise, including factors unrelated to our operating
performance or the operating performance of our competitors. These
conditions might include people’s expectations, favorable or
unfavorable, as to the likely growth of our industry
sector;
●
The introduction of new products or product enhancements by us or
our competitors;
●
Disputes or other developments with respect to intellectual
property rights or other potential legal actions;
●
Sales of large blocks of our common stock, including sales by our
executive officers and directors;
●
The acquisition or divestiture of businesses, products, assets or
technology;
●
Litigation, including intellectual property litigation;
and
●
Changes in earnings estimates or recommendations by us or by
securities analysts.
In
addition, securities of companies with smaller capitalization have
experienced substantial volatility in the past, often based on
factors unrelated to the financial performance or prospects of the
companies involved. These factors include global economic
developments and market perceptions of the attractiveness of
certain industries. There can be no assurance that continuing
fluctuations in price will not occur.
Investors are at risk that no automatic conversion of the Series D
Preferred Stock may ever happen which would be triggered by an
Exchange listing.
The Series D preferred stock provides for two types of conversions
to common stock, one a voluntary conversion at the election of the
holder, which could occur in increments over time, and a second
that would occur automatically in the event of an exchange listing
approval, and the registration of the underlying common shares to
be issued in the conversion, of all shares of the Series D to
common stock, in bulk, and without any further consent of the
holder. Our company may never be able to achieve the exchange
listing approval, on any exchange, and therefore there will be no
conversion to common under the automatic conversion terms of the
Series D Preferred stock, and the investors will not have any
benefit of exchange listing for the common stock, as it cannot be
assured. In addition, the common stock to which the Series D
Preferred Stock converts will be required to be registered in order
for it to trade upon the occurrence of any exchange listing, which
may not be achieved for many reasons.
Investors are at risk of loss of their investment due to the
Unsecured nature of the Series D Preferred Stock.
The Series D Preferred stock is an equity instrument and is not a
loan for which any collateral is pledged, so the investors will be
entirely reliant upon the success of our Company and its management
to carry out operations in a profitable manner, which is not
assured. Investors cannot rely upon any security interest in
the assets of the company for coverage of their
investment.
Investors in Series D Preferred Stock are at Risk in that Series D
is subordinate in liquidation to Series A, B, and C Preferred
Stock.
Series A, B, and C Preferred Stock have superior liquidation rights
in event of liquidation of the Company. Series A has a $1,000,000
liquidation payout, for instance. Chances are that Series D
would not
receive any proceeds upon liquidation
of assets of the Company due to prior Series liquidation
rights.
Investors are at risk in that if they elect to convert their Series
D Preferred stock to common stock, it may be that there is no
effective registration statement for the underlying common
stock.
In order for investors to receive registered common stock under the
conversion rights, our Company must file and make effective a
registration statement for the common stock underlying the
conversion rights of the Series D Preferred Stock. The
Company has granted a “piggy back” registration right
for the common shares underlying the conversion rights in the
Designation of Rights and Privileges for the Series D Preferred
Stock, and the Company must remain in full compliance with all of
its reporting obligations under the rules and regulations
promulgated by the Securities Exchange Commission, and make
effective a Registration Statement for the common shares underlying
the conversion rights in the event of optional
conversion.
Because this Offering will be conducted on a "best efforts" basis
and there is no minimum requirement of Series D Shares to be sold
in order to close, there can be no assurance that we can raise the
money we need.
The
Series D Shares in this Offering are being offered for sale on a
"best efforts" and there is no minimum offering amount of Series D
Shares that need to be subscribed for before we close or before the
Offering expires. Once placed, purchases are irrevocable by the
subscribers. There is no specific minimum number or amount of
Series D Shares that we must sell to receive and use the net
proceeds from this Offering, and we cannot assure you that all or
any portion of the Series D Shares in this Offering will be sold.
In the event we do not raise sufficient proceeds from this Offering
to adequately fund our operations, we could curtail our
forward-looking performance plans, or we could wrap up operations
and pay back our debt. In that case, the liquidity and value of
your Series D Shares will be adversely affected and you could lose
some or all of your investment in the Series D Shares. The Series D
Shares are restricted and are illiquid. The Series D Shares sold in
this Offering have not been registered under the Securities Act or
under any state securities laws. The Company is under no obligation
to register any of the securities in this Offering. Any subsequent
sales of the Series D Shares by investors in this Offering may only
be permissible if there is an effective registration statement or
an exemption from the applicable federal and state registration
provisions is available at the time of the proposed sale. The
Company cannot guarantee to any investor that such an exemption
will be available. Consequently, owners of the Series D Shares may
have to hold their investment indefinitely and may not be able to
liquidate their investments in the Company or pledge them as
collateral for a loan in the event of an emergency.
We have arbitrarily set the offering price of the Series D
Shares.
The
price of the Series D Shares offered has been arbitrarily
established by the Company’s management, considering such
matters as the state of the Company’s business development
and the general condition of the industry in which it operates. The
Offering price bears little relationship to the assets, net worth,
or any other objective criteria of value applicable to the
Company.
The shares are “restricted securities” and will be
subject to substantial restrictions on their sale or
transfer.
The
Company does not intend to register the shares of Series D
Preferred Stock offered hereby with the SEC in the near future but
may register common shares underlying the conversion rights of the
Series D Preferred Stock. Unless the Company successfully registers
the shares under the 1933 Act or applicable state securities laws,
the shares will be “restricted securities” under the
1933 Act. This means that Investors must purchase and hold them for
investment purposes only, and that the shares are subject to
substantial limitations on resale or other transfer. As a result,
Investors must bear the economic risk of an investment in the
shares for an indefinite period of time.
The Company has broad discretion in the use of the proceeds of this
offering and may apply the proceeds in ways with which you do not
agree.
The
Company intends to use the net proceeds from this offering as shown
in the “Use of Proceeds” at page 9, and to satisfy
working capital needs. The Company has not, however, determined the
exact allocation of these net proceeds among the various uses
described in this document. The expected use of net proceeds from
this offering represents the Company’s current intentions
based upon its present plans and business conditions; however,
there may be circumstances where a reallocation of funds is
necessary. The amount and timing of the Company’s actual
expenditures depend on numerous contingencies, including regulatory
or competitive developments, and strategic opportunities. For
example, in the event the Company identifies opportunities that the
Company believes are in the best interest of its shareholders, the
Company may use a portion of the net proceeds from this offering to
reinforce or broaden its services offering line, which may occur
through the strategic acquisition of or investment in,
complementary business, technologies, services, or products. The
Company’s management will have broad discretion over the use
and investment of these net proceeds, and, accordingly, you will
have to rely upon the judgment of the Company’s management
with respect to the use of these net proceeds, with only limited
information concerning management's specific intentions. You will
not have the opportunity, as part of your investment decision, to
assess whether the Company uses the net proceeds from this offering
appropriately.
The Company can issue shares of preferred stock without shareholder
approval, which could adversely affect the rights of Series D
Preferred shareholders.
The
Company’s Articles of Incorporation permit its Board of
Directors to establish the rights, privileges, preferences and
restrictions, including voting rights, of future series of stock
and to issue such stock without approval from the Company’s
shareholders. The rights of holders of Series D Preferred Stock may
suffer as a result of the rights granted to holders of preferred
stock that may be issued in the future subject to limitations
contained in the Series D Preferred Stock Designation of Rights and
Privileges. In addition, the Company could issue preferred stock to
prevent a change in control of the Company, potentially depriving
Series D Preferred shareholders of an opportunity to sell their
stock at a price in excess of their investment price.
The Company does not intend to declare dividends on its common
stock although Series D Preferred is entitled to an 6% per annum
dividend.
The
Company currently intends to retain all future earnings for the
operation and expansion of its business and will not pay dividends
on common stock. Any payment of cash dividends on Series D
Preferred Stock will depend upon results of operations, earnings,
capital requirements, financial condition, future prospects,
contractual restrictions and other factors deemed relevant by the
Board of Directors. Therefore, you should not expect to receive
dividend income from shares of the Company’s Series D
Preferred Stock.
DIVIDEND POLICY
We have
not declared or paid any cash dividends and do not intend to pay
cash dividends in the near future on our shares of common stock.
Cash dividends, if any, that may be paid in the future to holders
of common stock will be payable when, as and if declared by our
board of directors, based upon the board’s assessment of our
financial condition, our earnings, our need for funds, whether any
preferred stock is outstanding, to the extent the preferred stock
has a prior claim to dividends, and other factors including any
applicable laws. We are not currently a party to any agreement
restricting the payment of dividends.
CAPITALIZATION
The
following table sets forth as of December 31, 2020 and June 30,
2021 (i) our capitalization (both mezzanine equity and equity) and
(ii) our capitalization (mezzanine equity and equity) as adjusted
to reflect the sale of 7,600,000 Series D Preferred Convertible
shares at a purchase price of $5.00 per share in this offering, and
the application of the estimated proceeds from this offering as
described under “USE OF PROCEEDS.”
|
|
December 31,
2020
|
June
30, 2021
|
Net
Proceeds
|
June
30, 2021 As adjusted
|
|
Mezzanine
Equity
|
$4,794,473
|
$ 5,027,717
|
$34,960,000
|
$ 39,987,717
|
|
Stockholder’s
Equity (Deficit):
|
|
|
|
|
|
Preferred
Stock
|
$—
|
$ —
|
$—
|
$ —
|
|
Common
Stock
|
$865,565
|
$ 879,030
|
—
|
$ 879,030
|
|
Subscriptions
Payable (Receivable)
|
$125,052
|
$ (3,265)
|
—
|
$ (3,265)
|
|
Additional Paid in
Capital
|
$11,462,940
|
$ 11,919,070
|
—
|
$ 11,919,070
|
|
Accumulated
Deficit
|
$(40,902,944)
|
$ (44,787,194)
|
—
|
$ (44,787,194)
|
|
TPT Equity
(Deficit)
|
$(28,449,387)
|
$ (31,992,359)
|
$—
|
$ (31,992,359)
|
|
Non-Controlling
Interests
|
$(61,142)
|
$ 88,642
|
$—
|
$ 88,642
|
|
Total Equity
(Deficit)
|
$(28,510,529)
|
$ (31,903,717)
|
$—
|
$ (31,903,717)
|
DILUTION
As of
June 30, 2021, the net tangible book value of TPT Global Tech, Inc.
was ($36,568,818) or approximately ($0.042) per share of common
stock. See “CAPITALIZATION.” Net tangible book value
per share consists of stockholders’ equity (deficit) adjusted
for right of use assets, intangible assets, goodwill and other
assets, divided by the total number of shares of common stock
outstanding. Without giving effect to any changes in such net
tangible book value after June 30, 2021, the pro forma net tangible
book value at June 30, 2021 would have been $(1,608,818) or
approximately ($0.002) per share. Thus, as of June 30, 2021, the
net tangible book value per share of common stock owned by our
current stockholders would have increased by approximately $0.04
without any additional investment on their part and the purchasers
of the shares will incur an immediate dilution of approximately
($4.99) per share from the offering price. “Dilution”
means the difference between the private placement price and the
net tangible book value per share after giving effect this
offering. The following table illustrates the dilution which
investors participating in this offering will incur and the benefit
to current stockholders as a result of this offering. The dilution
calculations are based on a $0.50 exercise price (illustrative and
not actual as of June 30, 2021) as part of the conversion
calculation resulting in 76,000,000 new common shares.
|
Price per Series D
Preferred Convertible Share (1)
|
$5.00
|
|
|
|
|
Net Tangible Book
Value per Share
before Offering of
Series D Preferred Convertible Shares
|
$(0.042)
|
|
|
|
|
Increase in Net
Tangible Book Value
Per Share from
Offering of Series D Preferred Convertible Shares
|
$0.040
|
|
|
|
|
Net Tangible Book
Value
Per Share after
Offering of Series D Preferred Convertible
Shares
|
$(0.002)
|
|
|
|
|
Dilution of Net
Tangible Book Value per Share
of Series D
Preferred Convertible Share from Offering
|
$(4.99)
|
___________________________________
(1)
Does not include
deduction of estimated offering expenses.
There
may be further dilution with the Company’s $12 Million
Private Placement. As of June 30, 2021, the holders of
approximately $4,700,000 of existing financing arrangements agreed
to exchange their debt and accrued interest for Series D Preferred
Stock through a separate $12 Million Private Placement of Series D
Preferred Stock, conditioned on the Company raising at least
$12,000,000 in this Offering.
MANAGEMENT
Executive Officers and Directors of TPT Global Tech,
Inc.
The following table sets forth information as to persons who
currently serve as our directors or executive officers, including
their ages as of October 15, 2021.
|
Name
|
Age
|
Position
|
Term
|
|
Stephen
J. Thomas, III
|
57
|
President,
Chief Executive Officer and Chairman of the Board
|
Annual
|
|
Richard
Eberhardt
|
63
|
Chief
Operating Officer and Director
|
Annual
|
|
Arkady
Shkolnik
|
57
|
Director
|
Annual
|
|
Reginald
Thomas
|
56
|
Director
|
Annual
|
|
John F.
Wharton
|
63
|
Director
|
Annual
|
|
Gary
Cook
|
63
|
Chief
Financial Officer
|
Annual
|
Our officers are elected by the board of directors at the first
meeting after each annual meeting of our stockholders and hold
office until their successors are duly elected and qualified under
our bylaws.
The directors named above will serve until the next annual meeting
of our stockholders. Thereafter, directors will be elected for
one-year terms at the annual stockholders' meeting. Officers will
hold their positions at the pleasure of the board of directors
absent any employment agreement. There is no arrangement or
understanding between our directors and officers and any other
person pursuant to which any director or officer was or is to be
selected as a director or officer.
BIOGRAPHICAL INFORMATION
Stephen J. Thomas, III – President, Chief Executive Officer
and Chairman of the Board
Mr.
Thomas was appointed President, CEO and Chairman of the Board of
TPT Global Tech, Inc. on August 11, 2014. Previously, Mr. Thomas
was Manager of TPT Group, LLC (2015-2017) and Director of TPT
Group, Inc. (2011-2014). Mr. Thomas was founder, CEO and Director
of Trans Pacific Telecom, Inc. from 2000-2011 and prior to that was
president and CEO of New Orbit Communications (1999-2001). In 2002,
as CEO of Trans Pacific Telecom Group, Mr. Thomas was featured on
CBS MarketWatch for winning “Product of the Year Award for
2002” VIVOware at the Internet Telephony Conference and Expo
an event focused on voice, video, fax and data convergence. During
his employment with New Orbit, Mr. Thomas worked extensively
throughout Latin America, gaining extensive expertise and resources
in the international telecom marketplace. Mr. Thomas has also
served as Director of Network Optimization/Validation for
WorldxChange Communications, one of the largest privately held
facilities-based telecommunications company with headquarters in
San Diego, California and international operations all over the
globe. His responsibilities included Cost Assurance for expenses.
As a matter of disclosure, in 2005 Mr. Thomas was an ISP equipment
provider to Access Point Africa (“APA”). APA allowed
its license to expire in Sierra Leone, and as a result APA and
several individuals were alleged to have violated the Sierra Leone
Telecommunications Act by operating an unlicensed internet access
point. Mr. Thomas was charged as well as for the offense which
bears a fine of up to $3,000 but the charge is unresolved at this
time, but he intends to resolve it in the next several
months.
Mr.
Thomas attended Northeastern University majoring in Finance and
Management (1984 to 1987).
Richard Eberhardt- Executive Vice- President and
Director
Mr.
Eberhardt was appointed Executive Vice-President and Director of
TPT Global Tech, Inc. on October 10, 2014. Mr. Eberhardt resigned
as Executive Vice-President on December 15, 2020 and was
simultaneously appointed as Chief Operating Officer. Mr. Eberhardt
also serves as Chief Executive Officer of Copperhead Digital
Holdings, LLC, a wholly-owned subsidiary of TPT Global, Inc.
Previously, Mr. Eberhardt served CEO/COO of Pacific Bio Medical, a
Durable Medical Equipment provider, located in Phoenix, Arizona
(2008-2012). From 2012-2015, Mr. Eberhardt served as Consultant and
Sales Director for two telecommunications companies, Fathom Voice
and Ipitomy located in Indiana and Florida, respectively. Founding
member of a telecommunications firm, WorldxChange, located in San
Diego, CA. (1989-2001) With WorldxChange, he researched, designed,
and implemented start-up business sales and marketing models
resulting in wholesale, commercial, and consumer revenue channels.
He opened and operated offices in approximately 23 countries. He
created and managed channels with 25K+ agents and $15M in monthly
revenue.
We
believe his management experience is valuable to our company
because he is an experienced sales and business development
executive with strong business acumen and more than thirty years of
experience leading sales and marketing operations. He has managed
growth and revenue expansion through effective management of
accounts and consultative sales approach that aligns the interests
of all parties.
He has
sought, and negotiated, partnerships and asset management
agreements across multiple channels, including wholesale telecom
providers (AT&T, Verizon, Global Crossing, and Worldcom). He
has managed structured methodologies that combined strengths of
marketing, sales, and operations to reduce redundancies, improve
order-processing times, and streamline business flow. He has
experience in reviving product lines with rebranding and
repackaging, as well as created communications bundles, and
incentive programs to maximize existing client penetration and
drive vertical growth.
Arkady Shkolnik – Director
Mr.
Shkolnik was appointed a Director of TPT Global Tech, Inc. on
August 15, 2018. Mr. Shkolnik has over 25 years of senior-level
management experience in the Semiconductor, Wireless and
Telecommunications industry. He is currently VP EMEA of Sales with
Qualcomm (2010 – present). In addition to being a leader at
Qualcom, Mr. Shkolnik served on the Board of Advisors at Zeevo
Technology, Inc, (2009 to 2012) leading up to their acquisition by
Broadcom and brings extensive experience in global business
development, sales, marketing, product management and strategic
account management to TPT Global’s already diverse board.
From 2006 until 2010, Mr. Shkolnik was Vice President, EMEA Sales
& Business Development of PacketVideo Corporation. Previous
experience includes Executive Vice President, Sales & Business
Development of Quorum Systems (2005-2006), Vice President, Sales
& Business Development of Broadcom (acquired by Widcomm) from
2000-2005, and Director of Sales, North America Wireless ASIC
Business Unit at Philips Semiconductors/VLSI Technology from
1991-2000.
Mr.
Shkolnik has developed and managed strategic OEM and semiconductor
relationships globally. Aligning sales and marketing functions with
corporate objectives, he has negotiated and secured over ~100
License, Technology and CSA agreements with customers such as
Samsung, LG, Sony, Panasonic, HTC, BlackBerry, Microsoft, IBM, HP,
Dell, Compaq, Logitech, TDK, Acer, TI, Philips, STM, Broadcom, CSR,
Toyota, Panasonic, ZTE, and others.
Mr.
Shkolnik attended Temple University where he received a Bachelor of
Applied Science (B.A.Sc.), Electrical and Electronics Engineering
Skills & Endorsements (1984).
Reginald Thomas – Director
Mr.
Thomas was appointed a Director of TPT Global Tech, Inc. on August
15, 2018. He has over 20 years of experience working for technology
companies where he is an accomplished business leader driving world
class customer and partner experiences though the delivery of
innovative software products and solutions for leading global
companies. Specific results include:
Cisco:
(July 2018 - present) As Partner Delivery Executive he supports 3
of Cisco’s largest Multi-National Partners- IBM US IBM
Canada, and Presidio. He aligned these Partners go to market
strategy with Cisco’s shifting business strategy to influence
more than $15M in services sales in the last 14
months.
Cisco:
(2007 - 2017) As the Sr. Product Manager he owned Cisco’s
Services Portal strategy, the UX Strategy, the build, and adoption
of Cisco’s Services Portal. Under his direction it grew from
2 to 24 integrated service offers delivering a seamless customer
and partner experience.
Openwave:
(2001 - 2007) IT Director of Program Management- through his
leadership he designed the foundation for the Program Management
Office that managed the upgrades to mission critical databases
requiring the management of highly technical resources; multiple
applications delivery from concept to development, companywide roll
outs for ERP systems, and Merger & Acquisition
consolidation.
Lucent
/Avaya: (1997 - 2001) E- Commerce Product and Strategy Lead where
he had global responsibility for Lucent’s online Partner
Portal. He e- enabled Lucent to transition $10M of Distributor
order revenue to a seamless online experience realizing significant
savings in the cost per order.
Mr.
Thomas graduated from the University of Connecticut in 1988 with a
BS in Business.
John (General) F. Wharton -Director
Effective August 31, 2021, the Board of Directors of the Company
appointed Major General John F. Wharton (“General
Wharton”), former Commanding General of U.S Army Research,
Development and Engineering Command who has been leading the
Company’s Global Defense Division, as a director of the
Company. Concurrently, General Wharton was appointed as Chairman of
the Company’s subsidiary, TPT Global Defense Systems,
LLC.
General Wharton has served the Nation for more than three decades
and has extensive experience in leadership, technology,
acquisition, and logistics. He retired from active military duty on
September 30, 2016. He is currently a public and private sector
advisor to numerous industries, universities, and governments. In
his last military assignment, he was responsible for 75% ($6.2
billion) of the Army's annual R&D budget and led more than
13,000 scientists, engineers and support personnel.
General Wharton has been providing guidance and expertise for
TPT’s Global Defense Division and has already been actively
helping the Company across internal industry verticals in his
capacity as a member of the Global Tech Advisory Board. His work
with the Company’s telecoms, satellite, 5G and radar
technologies units as well as his proactive involvement and
contacts have resulted in expanded opportunities for domestic and
international government contracts across geographies ranging from
Europe, the Middle East, India, Africa and the Caribbean posturing
TPT for future growth.
General Wharton graduated from the United States Military Academy
in West Point, New York in 1981. In addition, his education
includes the Quartermaster Basic and Advanced Courses, the
Inspector General's Course, the Command and General Staff College.
He also holds a Master of Science degree in national security and
strategic studies from the Naval War College.
Gary Cook – Chief Financial Officer
Mr. Cook was appointed Chief Financial Officer of TPT Global Tech,
Inc. on November 1, 2017. Mr. Cook has served as Chief Financial
Officer, Secretary or Treasurer for several small to medium size
public and private companies in various industries for over 25
years including providing Chief Financial Officer services for
several companies on a contract basis (2008-2017), in addition to
full time employment with eVision USA.com, Inc. (1996-2002),
Cognigen Networks, Inc. (2003-2008), and SolaRover, Inc.
(2009-2015). Prior to this, Mr. Cook worked in the auditing
department for KPMG in both the New Orleans, LA and Denver, CO
offices for 12 years.
His experience includes companies from start-ups to
multimillion-dollar international operating companies in the
internet marketing, software development, medical device,
alternative energy, telecommunications, securities broker/dealer,
private equity and manufacturing industries. While working with
KPMG, Mr. Cook worked in other industries such as oil & gas,
oil & gas services, cable, theatre exhibition, mining, banking,
construction and not-for-profit.
Mr.
Cook has a broad experience
in accounting, finance, human resources, legal, insurance,
contracts, banking relations, shareholder relations, internal
controls, SEC matters, financial reporting and other corporate
administrative and governance matters for both private and public
companies. Mr. Cook has held Series 7, 24, 27 and 63 licenses from
FINRA, successor to the NASD.
Mr.
Cook attended and graduated from Brigham Young University between
1979 and 1982. He is a certified public accountant and licensed
with the State of Colorado.
KEY EMPLOYEES OF SUBSIDIARIES
Steve Caudle - CEO Cloud Services
Steve
Caudle has been in the technology field for 31 years and brings
significant operations and technology development experiences to
TPT Global Tech, Inc. Mr. Caudle began his career at the IBM
“Think Tank” and Fairchild/National Semiconductor
located in Silicon Valley California. Steve then moved on to work
for the Department of Defense for eighteen years and specialized in
code writing and software applications. Steve moved to the private
sector and was the Chief Information Officer (CIO) at North Face
Corporation and then moved to become the Executive VP of ZDTV
(renamed TechTV) and then became C-NET now owned by
CBS.
Robert
Haas, CEO of Levi Strauss, contracted Mr. Caudle as an executive
consultant where he was placed in charge of relocating their data
center from San Francisco, California to Dallas, Texas
(1988).
Subsequently,
Mr. Caudle joined ESST, where he was the CIO. ESST was a public
company. Steve Caudle then joined Mr. Fred Chan, CEO of ESST in
starting a new company called Vialta, Inc. Mr. Caudle was again the
CIO and the number two person in charge of Vialta. Vialta designed
DVD laser decoder chips that were used in many DVD players in the
world. Vialta grew the company from 3 employees to over 4,000 in
just five months and over $1.2 billion in revenue while he was
there.
Upon
leaving Vialta, Mr. Caudle started his own software development
company called Matrixsites. Matrixsites has developed software and
applications for a variety of companies such as Federal Express,
Wells Fargo Bank, Bank of America, Apple, Pixar, ITV Guide and
China Mobile.
Mr.
Caudle received his Bachelor of Science Degree in Electrical
Engineering from San Jose State University in 1977 and holds one
U.S. Patent.
Mark Rowen- CEO Media Division
Mark
Rowen is a seasoned executive with over 25 years in the film and
television business. In 2000, Mr. Rowen founded Blue Collar
Productions, Inc., an entity with which we entered into an
acquisition agreement in November 2017 and amended in February
2018, where he remains President today. Blue Collar is a leader in
the creation of original live action and animated content and has
produced hundreds of hours of material for the television,
theatrical, home entertainment and new media markets. Mr. Rowen
works closely with all of the major television networks, cable
channels and film studios to produce home entertainment
products.
Mr.
Rowen also works with a wide array of notable filmmakers including
Steven Spielberg, Ron Howard, Brett Ratner and James Cameron to
name a few. Mr. Rowen also has very close working relationships
with actors including Tom Hanks, Brad Pitt, Julia Roberts, Robert
Downey, Jr., Denzel Washington, Ryan Gosling, Sofia Vergara,
Mariska Hargitay and many others.
Prior
to starting Blue Collar Productions, Mr. Rowen functioned as the
head of home entertainment production for DreamWorks SKG from 1997
to 2000. He also serves as the President of Long Leash
Entertainment, an aggregator of entertainment based intellectual
property and creator of high-end entertainment
content.
Mr.
Rowen is a graduate of the University of California, Los Angeles.
He is also actively involved in charitable organizations including
Stand Up 2 Cancer,
The Joyful Heart
Foundation, Save The
Children, and other philanthropic endeavors in the
arts.
Executive Compensation
The
following table sets forth the compensation paid to our officers
for the six months ended June 30, 2021, and for the years ended
December 31, 2020, 2019, and 2018.
(REMAINDER OF PAGE LEFT BLANK
INTENTIONALLY)
SUMMARY EXECUTIVES COMPENSATION TABLE
In Dollars
|
Name &
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock awards
($)
|
Option awards
($)
|
Non-equity incentive
plan compensation ($)
|
Non-qualified
deferred compensation earnings ($)
|
All
other compensation ($)
|
Total ($)
(2)
|
||
|
Stephen J. Thomas,
III CEO and President
|
2021
|
114,582
|
—
|
—
|
—
|
—
|
—
|
—
|
|
114,582
|
|
|
|
2020
|
262,083
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
262,083
|
(2)
|
|
|
2019
|
175,000
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
175,000
|
(2)
|
|
|
2018
|
98,790
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
98,790
|
(2)
|
|
Richard Eberhardt,
COO
|
2021
|
68,750
|
—
|
—
|
—
|
—
|
—
|
5,352
|
(3)
|
74,102
|
|
|
|
2020
|
169,250
|
—
|
—
|
—
|
—
|
—
|
—
|
|
169,250
|
(2)
|
|
|
2019
|
110,242
|
—
|
—
|
—
|
—
|
—
|
—
|
|
110,242
|
(2)
|
|
|
2018
|
21,115
|
—
|
—
|
—
|
—
|
—
|
—
|
|
21,115
|
(2)
|
|
Gary Cook,
CFO
|
2021
|
91,667
|
—
|
—
|
—
|
—
|
—
|
—
|
|
91,667
|
|
|
|
2020
|
219,167
|
—
|
—
|
—
|
—
|
—
|
—
|
|
219,167
|
(2)
|
|
|
2019
|
112,150
|
—
|
—
|
—
|
—
|
—
|
—
|
|
112,150
|
(2)
|
|
|
2018
|
45,100
|
—
|
—
|
—
|
—
|
—
|
—
|
|
45,100
|
(2)
|
|
Stacie Stricker,
Secretary and Controller (4)
|
2020
|
135,000
|
—
|
—
|
—
|
—
|
—
|
—
|
|
135,000
|
(2)
|
|
|
2019
|
80,750
|
—
|
—
|
—
|
—
|
—
|
—
|
|
80,750
|
(2)
|
|
|
2018
|
52,850
|
—
|
—
|
—
|
—
|
—
|
—
|
|
52,850
|
(2)
|
______________________
(1)
The
Company entered into a lease for living space which is occupied by
Stephen Thomas, Chairman, CEO and President of the Company. Mr.
Thomas lives in the space and uses it as his corporate office. The
Company has paid approximately $15,000, $30,000 and $30,857 in rent
and utility payments for the six months ended June 30, 2021, and
the years ended December 31, 2020 and 2019, respectively. No
portion of the payments on this lease have been included in amounts
shown in compensation to Mr. Stephen Thomas and has approximated
$30,000 to $40,000 a year in 2015-2018.
(2)
These amounts do
not include compensation that has been accrued on the books of the
Company in accordance with employment agreements and other previous
contract work performed but has not been paid because of the lack
of cash flows. Accrued but unpaid compensation as of June 30, 2021
is as follows: Stephen J. Thomas, III - $0; Richard Eberhardt -
$171,440; and Gary Cook - $164,696.
(3)
Represents a
monthly car allowance paid by the Company.
(4)
Ms. Stricker
resigned as an employee of the Company in March 2021.
Employment Agreements
The
initial term for our three executive employees employment
agreements have expired and they are now working under an extended
period which primarily calls for a 30-day notice for any changes or
termination. The Board is working to revise the executive
employment agreements. Below is a summary of current terms for our
three executives which is, for the most part, an extension of their
prior employment agreements, as well as those consulting agreements
for the outside directors. The prior employment agreements were
approved by our board based upon recommendations conducted by the
board.
|
Name
|
|
Position
|
|
Annual
Compensation
|
|
Stephen
J. Thomas, III (1)
|
|
Chief
Executive Officer
|
|
$250,000
|
|
|
|
|
|
|
|
Richard
Eberhardt (2)
|
|
Chief
Operating Officer
|
|
$150,000
|
|
|
|
|
|
|
|
Gary
Cook (3)
|
|
Chief
Financial Officer
|
|
$200,000
|
|
|
|
|
|
|
|
Arkady
Shkolnik (4)
|
|
Director
|
|
$100,000
|
|
|
|
|
|
|
|
Reginald
Thomas (5)
|
|
Director
|
|
$40,000
|
|
|
|
|
|
|
|
General
John F Wharton (6)
|
|
Director
|
|
$180,000
|
(1)
Pursuant to an employment agreement dated November 1, 2017, and now
in an extended period, Mr. Thomas receives a base salary of
$250,000 per year. In addition to the base salary, Mr. Thomas is
eligible to receive performance bonuses as to be determined by our
Board of Directors. The agreement had a three-year term that ended
on October 31, 2020 and now is in an extended period.
Upon an
affirmative vote of not less than two-thirds of the Board of
Directors, the employment may be terminated without further
liability on the part of our Company. Cause is considered to be an
act or acts of serious dishonesty fraud, or material and deliberate
injury related to our business, including personal enrichment at
the expense of our Company. If there is a termination for cause the
benefits of any bonus for the period preceding termination would be
forfeit.
In
addition, the agreement provides for Mr. Thomas to be able to
terminate the agreement for Good Reason. Good Reason is considered
to be (1) an adverse change in his status or position as CEO, (2) a
reduction in base salary, or (3) action by us that adversely
affected his participation in the benefits.
(2)
Pursuant to an employment agreement dated November 1, 2017 and now
in an extended period, Mr. Eberhardt receives a base salary of
$150,000 per year. In addition to the base salary, Mr. Eberhardt is
eligible to receive performance bonuses as to be determined by our
Board of Directors. The agreement had a three-year term that
expired on October 31, 2020 and now is in an extended
period.
Upon an
affirmative vote of not less than two-thirds of the Board of
Directors, the employment may be terminated without further
liability on the part of our Company. Cause is considered to be an
act or acts of serious dishonesty fraud, or material and deliberate
injury related to our business, including personal enrichment at
the expense of our Company. If there is a termination for cause the
benefits of any bonus for the period preceding termination would be
forfeit.
In
addition, the agreement provides for Mr. Eberhardt to be able to
terminate the agreement for Good Reason. Good Reason is considered
to be (1) an adverse change in his status or position as CEO, (2) a
reduction in base salary, or (3) action by us that adversely
affected his participation in the benefits.
(3)
Pursuant to an employment agreement dated November 1, 2017, and now
in an extended period, Mr. Cook receives a base salary of $200,000
per year. In addition to the base salary, Mr. Cook is eligible to
receive performance bonuses as to be determined by our Board of
Directors. The agreement had a three-year term and expired on
October 31, 2020 and now is in an extended period.
Upon an
affirmative vote of not less than two-thirds of the Board of
Directors, the employment may be terminated without further
liability on the part of our Company. Cause is considered to be an
act or acts of serious dishonesty fraud, or material and deliberate
injury related to our business, including personal enrichment at
the expense of our Company. If there is a termination for cause the
benefits of any bonus for the period preceding termination would be
forfeit.
In
addition, the agreement provides for Mr. Cook to be able to
terminate the agreement for Good Reason. Good Reason is considered
to be (1) an adverse change in his status or position as CEO, (2) a
reduction in base salary, or (3) action by us that adversely
affected his participation in the benefits.
(4) In
accordance with an Independent Director Agreement with the Company
for his services as a director, Mr. Shkolnik is to receive $25,000
per quarter and 5,000,000 shares of restricted common stock valued
at approximately $687,500 vesting quarterly over twenty-four
months. The quarterly cash payments of $25,000 will be paid in
unrestricted common shares if the Company has not been funded
adequately to make such payments.
(5) In
accordance with an Independent Director Agreement with the Company
for his services as director, Mr. Thomas is to receive $10,000 per
quarter and 1,000,000 shares of restricted common stock valued at
approximately $119,000 vesting quarterly over twenty-four months.
The quarterly payment of $10,000 may be suspended by the Company if
the Company has not been adequately funded.
(6) In
accordance with an agreement with General Wharton, the Company is
to pay General Wharton $8,000 per month for months one and two,
$10,000 per months for months three and four and $15,000 per month
thereafter starting August 1, 2021 for a term of three years with
mutual agreement of additional years. Either General Wharton or the
Company can terminate the agreement upon notice of three months by
either party. In addition, General Wharton is to receive 3,000,000
shares of common stock of the Company vested over two years, fully
vested, as defined, for a major contract or funding event that he
generates.
Compensation Committee Interlocks and Insider
Participation
Our
board of directors in our entirety acts as the compensation
committee for TPT Global Tech, Inc.
OPTION/WARRANT GRANTS IN THE LAST FISCAL YEAR
On
October 14, 2017, the Board of Directors and majority stockholders
of TPT approved the 2017 TPT Global Tech, Inc. Stock Option and
Award Incentive Plan (“the 2017 Plan.”) There are
20,000,000 shares of our common stock reserved under the 2017
Plan.
As of
June 30, 2021, there were no options outstanding to purchase shares
of common stock of the Company.
During
the year ended December 31, 2020, 3,333,333 warrants were issued to
purchase 3,333,333 shares of common stock in conjunction with
financing arrangements entered into. See Note 8 of the consolidated
financial statements.
Option/Warrant Grants In The Last Interim and Fiscal
Year
On
October 14, 2017, the Board of Directors and majority stockholders
of TPT approved the 2017 TPT Global Tech, Inc. Stock Option and
Award Incentive Plan (“the 2017 Plan.”) There are
20,000,000 shares of our common stock reserved under the 2017
Plan.
As of June 30, 2021, there were 3,333,333 warrants outstanding that
expire in five years or in the year ended December 31, 2024. As
part of the Convertible Promissory Notes payable – third
party issuance in Note 5, the Company issued 3,333,333 warrants to
purchase 3,333,333 common shares of the Company at 70% of the
current market price. Current market price means the average
of the three lowest trading prices for our common stock during the
ten-trading day period ending on the latest complete trading day
prior to the date of the respective exercise notice.
Outstanding Equity Awards At Interim and Fiscal Year
End
The
following table sets forth certain information concerning
outstanding equity awards held by our appointed executive officers
for the six months ended June 30, 2021, and for the years ended
December 31, 2020 and 2019 (the "Named Executive
Officers"):
|
|
Option
Awards
|
Stock
awards
|
|||||||
|
Name
|
Number
of securities underlying unexercised options (#)
exercisable
|
Number
of securities underlying unexercised options (#)
unexercisable
|
Equity
incentive plan awards: Number of securities underlying unexercised
unearned options
(#)
|
Option
exercise price
($)
|
Option
expiration date
|
Number
of shares or units of stock that have not vested
(#)
|
Market
value of shares of units of stock that have not vested
($)
|
Equity
incentive plan awards: Number of unearned shares, units or other
rights that have not vested (#)
|
Equity
incentive plan awards: Market or payout value of unearned shares,
units or other rights that have not vested
($)
|
|
Stephen J. Thomas,
III, CEO and Chairman (1)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
Richard Eberhardt,
Executive VP
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
Gary Cook,
CFO
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
______________________
(1)
Does not
contemplate the Series A Preferred Stock held 100% by Stephen J.
Thomas, III which guarantees the holder to 60% of the outstanding
common stock in shares when converted and 60% of any vote prior to
or after conversion. As of June 30, 2021, approximately
1,279,184,625 additional common shares would be issued if Mr.
Thomas were to convert his Series A Preferred Stock holdings to
common stock. The Company would have to authorize more shares as
there are only 1,000,000,000 shares authorized
currently.
BOARD OF DIRECTORS COMPENSATION
All of
our officers and/or directors will continue to be active in other
companies. All officers and directors have retained the right to
conduct their own independent business interests.
The
term of office for each Director is one (1) year, or until his/her
successor is elected at our annual meeting and qualified. The term
of office for each of our Officers is at the pleasure of the Board
of Directors.
The
Board of Directors has no nominating, auditing committee or a
compensation committee. Therefore, the selection of person or
election to the Board of Directors was neither independently made
nor negotiated at arm's length.
At this
time, our Directors do not receive cash compensation for serving as
members of our Board of Directors.
Only
our outside Directors receive cash compensation for serving as
members of our Board of Directors.
The
following table sets forth certain information concerning
compensation paid to our directors for services as directors, but
not including compensation for services as officers reported in the
"Summary Executives’ Compensation Table" during the six
months ended June 30, 2021, and the years ended December 31, 2020,
2019, and 2018:
|
Name
|
Year
|
Fees
earned or paid in cash ($)
|
Stock awards
($)
|
Option awards
($)
|
Non-equity incentive
plan compensation ($)
|
Non-qualified
deferred compensation earnings ($)
|
All
other compensation ($)
|
Total
($)
|
|
Stephen J.
Thomas, III (1)
|
2021
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
2020
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
2019
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
2018
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
Richard Eberhardt
(2)
|
2021
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
2020
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
2019
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
2018
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
Arkady Shkolnik
(3)
|
2021
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
2020
|
100,000
|
201,979
|
—
|
—
|
—
|
—
|
301,979
|
|
|
2019
|
100,000
|
346,250
|
—
|
—
|
—
|
—
|
446,250
|
|
|
2018
|
37,500
|
144,271
|
—
|
—
|
—
|
—
|
181,771
|
|
Reginald Thomas
(3)
|
2021
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
2020
|
40,000
|
35,000
|
—
|
—
|
—
|
—
|
75,000
|
|
|
2019
|
40,000
|
60,000
|
—
|
—
|
—
|
—
|
100,000
|
|
2018
|
15,000
|
25,000
|
—
|
—
|
—
|
—
|
40,000
|
|
|
General John F
Wharton (4)
|
2021
|
---
|
---
|
---
|
---
|
---
|
---
|
---
|
________
(1)
Mr.
Thomas is also an officer and as such he receives the compensation
as disclosed in the Executive Compensation Table.
(2)
Mr.
Eberhardt is also an officer and as such he receives the
compensation as disclosed in the Executive Compensation
Table.
(3)
In
August 2018, a majority of the outstanding voting shares of the
Company voted through a consent resolution to support a consent
resolution of the Board of Directors of the Company to add two new
directors to the Board. As such, Arkady Shkolnik and Reginald
Thomas were added as members of the Board of Directors. The total
members of the Board of Directors after this addition is four. In
accordance with agreements with the Company for his services as a
director, Mr. Shkolnik is to receive $25,000 per quarter and
5,000,000 shares of restricted common stock valued at approximately
$687,500 vesting quarterly over twenty-four months. The quarterly
cash payments of $25,000 will be paid in unrestricted common shares
if the Company has not been funded adequately to make such
payments. Mr. Thomas is to receive $10,000 per quarter and
1,000,000 shares of restricted common stock valued at approximately
$119,000 vesting quarterly over twenty-four months. The quarterly
payment of $10,000 may be suspended by the Company if the Company
has not been adequately funded. Both the 5,000,000 and 1,000,000
shares granted were issued during the year ended December 31, 2020
and are no longer reflected in subscriptions payable as of December
31, 2020 or June 30, 2021.
(4)
General Wharton was
appointed a Director effective August 1, 2021. In accordance with
an agreement with General Wharton, the Company is to pay General
Wharton $8,000 per month for months one and two, $10,000 per months
for months three and four and $15,000 per month thereafter starting
August 1, 2021 for a term of three years with mutual agreement of
additional years. Either General Wharton or the Company can
terminate the agreement upon notice of three months by either
party. In addition, General Wharton is to receive 3,000,000 shares
of common stock of the Company vested over two years, fully vested,
as defined, for a major contract or funding event that he
generates.
Director Independence
Our board of directors undertook our annual review of the
independence of the directors and considered whether any director
had a material relationship with us or our management that could
compromise his ability to exercise independent judgment in carrying
out his responsibilities. As a result of this review, the board of
directors affirmatively determined that none of our directors are
“independent” as such term is used under the rules and
regulations of the Securities and Exchange Commission.
Limitation of Liability and Indemnification of Officers and
Directors
The Florida Statutes requires us to indemnify officers and
directors for any expenses incurred by any officer or director in
connection with any actions or proceedings, whether civil,
criminal, administrative, or investigative, brought against such
officer or director because of his or her status as an officer or
director, to the extent that the director or officer has been
successful on the merits or otherwise in defense of the action or
proceeding. The Florida Statutes permits a corporation to indemnify
an officer or director, even in the absence of an agreement to do
so, for expenses incurred in connection with any action or
proceeding if such officer or director acted in good faith and in a
manner in which he or she reasonably believed to be in or not
opposed to the best interests of us and such indemnification is
authorized by the stockholders, by a quorum of disinterested
directors, by independent legal counsel in a written opinion
authorized by a majority vote of a quorum of directors consisting
of disinterested directors, or by independent legal counsel in a
written opinion if a quorum of disinterested directors cannot be
obtained.
The Florida Statutes prohibits indemnification of a director or
officer if a final adjudication establishes that the officer's or
director's acts or omissions involved intentional misconduct,
fraud, or a knowing violation of the law and were material to the
cause of action. Despite the foregoing limitations on
indemnification, the Florida Statutes may permit an officer or
director to apply to the court for approval of indemnification even
if the officer or director is adjudged to have committed
intentional misconduct, fraud, or a knowing violation of the
law.
The Florida Statutes also provides that indemnification of
directors is not permitted for the unlawful payment of
distributions, except for those directors registering their dissent
to the payment of the distribution.
According to our bylaws, we are authorized to indemnify our
directors to the fullest extent authorized under Florida Law
subject to certain specified limitations.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the “Act”) may be permitted to
directors, officers and persons controlling us pursuant to the
foregoing provisions or otherwise, we are advised that, in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
PRINCIPAL
SHAREHOLDERS
The
following table sets forth information regarding beneficial
ownership of our common stock as of October 15, 2021 and as
adjusted to reflect the sale of shares of our common stock offered
by this Offering Circular, by:
●
each of our
directors and the named executive officers;
●
all of our
directors and executive officers as a group; and
●
each person or
group of affiliated persons known by us to be the beneficial owner
of more than 5% of our outstanding shares of common
stock.
Beneficial
ownership and percentage ownership are determined in accordance
with the rules of the Securities and Exchange Commission and
includes voting or investment power with respect to shares of
stock. This information does not necessarily indicate beneficial
ownership for any other purpose.
Unless
otherwise indicated, such as the case with voting percentages, and
subject to applicable community property laws, to our knowledge,
each stockholder named in the following table possesses sole voting
and investment power over their shares of common stock, except for
those jointly owned with that person’s spouse. Percentage of
beneficial ownership before the offering is based on 908,029,038 shares of common stock
outstanding as of October 15, 2021.
OFFICERS AND DIRECTORS
|
Title of Class
|
|
Name
and Address of Beneficial Owner (1)
|
Amount
and Nature of Beneficial Owner
|
Percent
of Class Outstanding (2)
|
Number
of Common Shares & Warrants if fully exercised
|
Percent
of Class including Warrants(5)
|
Percent
of Class including all classes of voting stock (6)
|
Percent
Assuming 100% Conversion of 7,600,000 Series D
Shares(7)
|
|
Common
Stock
|
|
Stephen J. Thomas,
III, Chairman, President, Chief Executive Officer and
Director
|
13,890,573(3)
|
1.53%
|
13,890,573
|
1.53%
|
60%
|
1.41%
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Richard Eberhardt,
Director and Chief Operating Officer
|
17,000,000
|
1.87%
|
17,000,000
|
1.87%
|
.76%
|
1.73%
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Arkady Shkolnik,
Director
|
5,000,000(4)
|
.55%
|
5,000,000
|
.55%
|
.22%
|
.51%
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Reginald Thomas,
Director
|
1,165,000(4)
|
.13%
|
1,165,000
|
.13%
|
.05%
|
.12%
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
General John
F.Wharton
|
250,000(4)
|
.03%
|
250,000
|
.03%
|
.00%
|
.03%
|
|
Common
Stock
|
|
Gary Cook, Chief
Financial Officer
|
5,006,281
|
.55%
|
5,006,281
|
.55%
|
.26%
|
.51%
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares
|
|
All Directors and
Executive Officers as a Group (6 persons)
|
42,311,854
|
4.66%
|
42,311,854
|
4.66%
|
61.29%
|
4.31%
|
(1)
The
Address for the above individuals and entities is c/o 501 West
Broadway, Suite 800, San Diego, CA 92101.
(2)
Based
upon 908,029,038 shares issued
and outstanding as of October 15, 2021.
(3)
Based
upon 908,029,038 shares issued and outstanding as of October
15, 2021. Does not contemplate the Series A Preferred Stock
held 100% by Stephen J. Thomas, III which guarantees the holder to
60% of the outstanding common stock in shares when converted and
60% of any vote prior to or after conversion. As of June 30, 2021,
approximately 1,279,184,625 additional common shares would be
issued if Mr. Thomas were to convert his Series A Preferred Stock
holdings to common stock. The Company would have to authorize more
shares as there are only 1,000,000,000 shares authorized
currently.
(4)
In
August 2018, the Company added two new directors to the Board.
Arkady Shkolnik and Reginald Thomas were added as members of the
Board of Directors. The total members of the Board of Directors
after this addition is four. In accordance with agreements with the
Company for his services as a director, Mr. Shkolnik received
5,000,000 shares of restricted common stock and Mr. Thomas received
1,000,000 shares of restricted common stock Effective August 1,
2021 the Company added another director to the Board, General John
Wharton who is to receive 3,000,000 shares of common stock of the
Company vested over two years.
(5)
Assuming
full exercise of any stock options or warrants.
(6)
Calculated
using voting shares from all classes of common and preferred voting
shares.
(7)
Assumes
$0.50 per share exercise price after conversion calculation
resulting in 76,000,000 new common shares.
GREATER THAN 5% STOCKHOLDERS
|
Title
of Class
|
|
Name
of Beneficial Owner
|
Amount
and Nature of Beneficial Owner
|
Percent
of Class Outstanding (2)
|
Number
of Common Shares & Warrants if fully exercised
|
Percent
of Class including Warrants(4)
|
Percent
of Class including all classes of voting stock (5)
|
Percent
Assuming 100% Conversion of 7,600,000 Series D Shares
|
|
Common
Stock
|
|
Stephen J. Thomas,
III, Chairman, President, Chief Executive Officer and Director
(1)
|
13,890,573
|
1.53%
|
3,890,573
|
1.53%
|
60%
|
1.41%
|
|
|
|
|
|
|
|
|
|
|
(1)
The
Address for the above individuals and entities is c/o 501 West
Broadway, Suite 800, San Diego, CA 92101.
(2)
Based
upon shares issued and outstanding as of October 15,
2021.
(3)
Does
not contemplate the Series A Preferred Stock held 100% by Stephen
J. Thomas, III which guarantees the holder to 60% of the
outstanding common stock in shares when converted and 60% of any
vote prior to or after conversion. As of June 30, 2021,
approximately 1,279,184,625 additional common shares would be
issued if Mr. Thomas were to convert his Series A Preferred Stock
holdings to common stock as there are only 1,000,000,000 shares
authorized currently.
(4)
Assuming full
exercise of any stock options or warrants.
(5)
Calculated using
voting shares from all classes of common and preferred voting
shares.
Rule 13d-3 under the Securities Exchange Act of 1934 governs the
determination of beneficial ownership of securities. That rule
provides that a beneficial owner of a security includes any person
who directly or indirectly has or shares voting power and/or
investment power with respect to such security. Rule 13d-3 also
provides that a beneficial owner of a security includes any person
who has the right to acquire beneficial ownership of such security
within sixty days, including through the exercise of any option,
warrant or conversion of a security. Any securities not outstanding
which are subject to such options, warrants or conversion
privileges are deemed to be outstanding for the purpose of
computing the percentage of outstanding securities of the class
owned by such person. Those securities are not deemed to be
outstanding for the purpose of computing the percentage of the
class owned by any other person. Included in this table are only
those derivative securities with exercise prices that we believe
have a reasonable likelihood of being “in the money”
within the next sixty days.
BENEFICIAL
OWNERSHIP OF EACH CLASS OF VOTING SECURITIES
The
following table reflects the beneficial ownership of each class of
voting securities as of June 30, 2021.
|
|
Equivalent Voting Shares
|
Equivalent
Voting Percentage
|
Voting
Rights
|
|
Series A Preferred
Stock
|
1,279,184,625
|
60.00%
|
Shall have the
right to vote as if converted prior to any vote at
60%.
|
|
Series B Preferred
Stock
|
2,588,693
|
0.1%
|
Shall have the
right to vote equal to the number of common shares on a one-to-one
basis.
|
|
Series C Preferred
Stock
|
—
|
—
|
Shall have the
right to vote equal to the number of common shares on a one-to-one
basis.
|
|
Series D Preferred
Stock
|
21,050,993
|
0.96%
|
Shall have the
right to vote on an as-converted basis
|
|
Common
Stock
|
879,029,038
|
38.94%
|
|
|
|
2,181,853,289
|
100.00
|
|
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN
TRANSACTIONS
Other
than the stock transactions discussed herein, we have not entered
into any transaction nor are there any proposed transactions in
which any of our founders, directors, executive officers,
stockholders or any members of the immediate family of any of the
foregoing had or are to have a direct or indirect material interest
except as follows:
Accounts Payable and Accrued Expenses
There
are amounts outstanding due to related parties of the Company of
$1,342,038 and $1,339,352, respectively, as of June 30, 2021 and
December 31, 2020 related to amounts due to employees, management
and members of the Board of Directors according to verbal and
written agreements that have not been paid as of period end which
are included in accounts payable and accrued expenses on the
balance sheet. See Note 8 to the Consolidated Financial
Statements.
As is
mentioned in Note 7 to the Consolidated Financial
Statements, Reginald Thomas was appointed to the Board of
Directors of the Company in August 2018. Mr. Thomas is the brother
to the CEO Stephen J. Thomas III. According to an agreement with
Mr. Reginald Thomas, he is to receive $10,000 per quarter and
1,000,000 shares of restricted common stock valued at approximately
$120,000 vesting quarterly over twenty-four months. The quarterly
payment of $10,000 may be suspended by the Company if the Company
has not been adequately funded.
Leases
See
Note 8 of the Consolidated Financial Statements for June 30, 2021
for office lease used by CEO.
Debt Financing and Amounts Payable
As of
June 30, 2021, there are amounts due to management/shareholders
included in financing arrangements, of which $88,520 is payable
from the Company to Stephen J. Thomas III, CEO of the Company. See
Note 5 of the Consolidated Financial Statements.
Revenue Transactions and Accounts Receivable
During
the six months ended June 30, 2021 and 2020, Blue Collar provided
production services to an entity controlled by the Blue Collar CEO
(355 LA, LLC or “355”) for which it recorded revenues
of $0 and $235,149, respectively, and had accounts receivable
outstanding as of June 30, 2021 and December 31, 2020 of $0 and $0,
respectively, which is included in accounts receivable on the
consolidated balance sheet. 355 was formed in October 2019 by the
CEO of Blue Collar for the purpose of production of certain
additional footage for a 355 customer. 355 has opportunity to
engage with other production relationships outside of using Blue
Collar.
Other Agreements
On
April 17, 2018, the CEO of the Company, Stephen Thomas, signed an
agreement with New Orbit Technologies, S.A.P.I. de C.V., a Mexican
corporation, (“New Orbit”), majority owned and
controlled by Stephen Thomas, related to a license agreement for
the distribution of TPT licensed products, software and services
related to Lion Phone and ViewMe Live within Mexico and Latin
America (“License Agreement”). The License Agreement
provides for New Orbit to receive a fully paid-up, royalty-free,
non-transferable license for perpetuity with termination only under
situations such as bankruptcy, insolvency or material breach by
either party and provides for New Orbit to pay the Company fees
equal to 50% of net income generated from the applicable
activities. The transaction was approved by the Company’s
Board of Directors in June 2018. There has been no activity on this
agreement.
DESCRIPTION
OF CAPITAL STOCK
Common
Stock
We are presently authorized to issue one billion
two hundred fifty million (1,250,000,000) shares of our $0.001 par
value common stock. A total of Nine Hundred Eight Million,
Twenty-Nine Thousand, Thirty-Eight (908,029,038) common shares are issued and
outstanding as of October 15,
2021.
Common Shares
All common shares are equal to each other with respect to voting,
liquidation, and dividend rights. Special shareholders' meetings
may be called by the officers or director, or upon the request of
holders of at least one-tenth (1/10th) of the outstanding shares.
Holders of shares are entitled to one vote at any shareholders'
meeting for each share they own as of the record date fixed by the
board of directors. There is no quorum requirement for
shareholders' meetings. Therefore, a vote of the majority of the
shares represented at a meeting will govern even if this is
substantially less than a majority of the shares outstanding.
Holders of shares are entitled to receive such dividends as may be
declared by the board of directors out of funds legally available
therefore, and upon liquidation are entitled to participate pro
rata in a distribution of assets available for such a distribution
to shareholders. There are no conversion, pre-emptive or other
subscription rights or privileges with respect to any shares.
Reference is made to our Articles of Incorporation and our By-Laws
as well as to the applicable statutes of the State of Florida for a
more complete description of the rights and liabilities of holders
of shares. It should be noted that the board of directors without
notice to the shareholders may amend the By-Laws. Our shares do not
have cumulative voting rights, which means that the holders of more
than fifty percent (50%) of the shares voting for election of
directors may elect all the directors if they choose to do so. In
such event, the holders of the remaining shares aggregating less
than fifty percent (50%) of the shares voting for election of
directors may not be able to elect any director.
Preferred shares
As of
October 15, 2021, we had authorized one hundred
million (100,000,000) shares of Preferred Stock, of which certain
shares had been designated as Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock.
Series A Convertible Preferred Stock
In
February 2015, the Company designated 1,000,000 shares of Preferred
Stock as Series A Preferred Stock.
The
Series A Preferred Stock was designated in February 2016, has a par
value of $.001, is redeemable at the Company’s option at $100
per share, is senior to any other class or series of outstanding
Preferred Stock or Common Stock and does not bear dividends. The
Series A Preferred Stock has a liquidation preference immediately
after any Senior Securities, as defined and amended, of an amount
equal to amounts payable owing, including contingency amounts where
Holders of the Series A have personally guaranteed obligations of
the Company. Holders of the Series A Preferred Stock shall,
collectively have the right to convert all of their Series A
Preferred Stock when conversion is elected into that number of
shares of Common Stock of the Company, determined by the following
formula: 60% of the issued and outstanding Common Shares as
computed immediately after the transaction for conversion. For
further clarification, the 60% of the issued and outstanding common
shares includes what the holders of the Series A Preferred Stock
may already hold in common shares at the time of conversion. The
Series A Preferred Stock, collectively, shall have the right to
vote as if converted prior to the vote to a number of shares equal
to 60% of the outstanding Common Stock of the Company.
In
February 2015, the Board of Directors authorized the issuance of
1,000,000 shares of Series A Preferred Stock to Stephen Thomas,
Chairman, CEO and President of the Company, valued at $3,117,000
for compensation expense. These shares remain outstanding as of
October 15, 2021.
Series B Convertible Preferred Stock
In
February 2015, the Company designated 3,000,000 shares of Preferred
Stock as Series B Convertible Preferred Stock. There are 2,588,693
shares of Series B Convertible Preferred Stock outstanding as of
October 15, 2021.
The
Series B Preferred Stock was designated in February 2015, has a par
value of $.001, is not redeemable, is senior to any other class or
series of outstanding Preferred Stock, except the Series A
Preferred Stock, or Common Stock and does not bear dividends. The
Series B Preferred Stock has a liquidation preference immediately
after any Senior Securities, as defined and currently the Series A
Preferred Stock, and of an amount equal to $2.00 per share. Holders
of the Series B Preferred Stock have a right to convert all or any
part of the Series B Preferred Shares and will receive and equal
number of common shares at the conversion price of $2.00 per share.
The Series B Preferred Stockholders have a right to vote on any
matter with holders of Common Stock and shall have a number of
votes equal to that number of Common Shares on a one to one
basis.
Series C Convertible Preferred Stock
In May
2018, the Company designated 3,000,000 shares of Preferred Stock as
Series C Convertible Preferred Stock.
The
Series C Preferred Stock was designated in May 2018, has a par
value of $.001, is not redeemable, is senior to any other class or
series of outstanding Preferred Stock, except the Series A and
Series B Preferred Stock, or Common Stock and does not bear
dividends. The Series C Preferred Stock has a liquidation
preference immediately after any Senior Securities, as defined and
currently the Series A and B Preferred Stock, and of an amount
equal to $2.00 per share. Holders of the Series C Preferred Stock
have a right to convert all or any part of the Series C Preferred
Shares and will receive an equal number of common shares at the
conversion price of $0.15 per share. The Series C Preferred
Stockholders have a right to vote on any matter with holders of
Common Stock and shall have a number of votes equal to that number
of Common Shares on a one to one basis.
There
are no shares of Series C Convertible Preferred Stock outstanding
as of October 15, 2021. There are approximately
$922,181 in convertible notes payable convertible into Series C
Convertible Preferred Stock which compromise some of the common
stock equivalents calculated in the Consolidated Financial
Statements.
Series
D Convertible Preferred Stock
In
2019, the Company previously authorized (20,000,000) Series D 8%
Cumulative Dividend Convertible Preferred Stock for which no shares
were issued. On June 15, 2020 and September 15, 2021, the Company
authorized amendments to the Certificate of Designation whereby the
authorized amount is ten million (10,000,000) Series D 6%
Cumulative Dividend Convertible Preferred Stock which has the
following features:
(i) 6%
Cumulative Annual Dividends payable on the purchase value in cash
or common stock of the Company at the discretion of the Board and
payment is also at the discretion of the Board, which may decide to
cumulate to future years; (ii) Any time after 12 months from
issuance an option to convert to common stock at the election of
the holder @ 75% of the 30 day average market closing price (for
previous 30 business days) divided into $5.00; (iii) Automatic
conversion of the Series D Preferred Stock shall occur without
consent of holders upon any national exchange listing approval and
the registration effectiveness of common stock underlying the
conversion rights. The automatic conversion to common from Series D
Preferred shall be @75% of the 30 day
average market closing price (for previous 30 business days)
divided into $5.00, which shall be post-reverse split as may
be necessary for any Exchange listing (iv) Registration Rights
– the Company has granted Piggyback Registration Rights for
common stock underlying conversion rights in the event it files any
other Registration Statement (other than an S-1 that the Company
may file for certain conversion common shares for the convertible
note financing that was arranged and funded in 2019). Further, the
Company will file and pursue to effectiveness a Registration
Statement or offering statement for common stock underlying the
Automatic Conversion event triggered by an exchange listing. (v)
Liquidation Rights - $5.00 per share plus any accrued unpaid
dividends – subordinate to Series A, B, and C Preferred Stock
receiving full liquidation under the terms of such series. The
Company has redemption rights for the first year following the
Issuance Date to redeem all or part of the principal amount of the
Series D Preferred Stock at between 115% and 140%.
During
the six months ended June 30, 2021, 46,649 shares of Series D
Preferred Stock were purchased for $233,244 of which
Stephen Thomas, CEO of the Company, acquired 36,649 for $183,244.
The remainder of the shares purchased as of June 30, 2021 were
purchased by a third party. As such, as of October 15, 2021 there
are 46,649 shares of Series D Preferred Shares
outstanding.
During
the year ended December 31, 2020, the related party holders of
approximately $4,700,000 of existing financing arrangements agreed
to exchange their debt and accrued interest for 940,800 Series D
Preferred Stock through a separate $12 Million Private Placement of
Series D Preferred Stock (“$12 Million Private
Placement”), conditioned on the Company raising at least
$12,000,000. To date, this condition has not been met.
Options & Warrants
Effective
October 14, 2017, we adopted the 2017 TPT Global Tech, Inc. Stock
Option and Award Incentive Plan (the "Plan"). The Plan provides for
grants of nonqualified stock options and other stock awards,
including warrants, to designated employees, officers, directors,
advisors and independent contractors. A maximum of 20,000,000
shares of our common stock were reserved for options and other
stock awards under the Plan. We have the ability to issue either
options or warrants under the Plan.
Stock Options
|
|
Options
Outstanding
|
Vested
|
Vesting
Period
|
Exercise
Price Outstanding and Exercisable
|
Expiration
Date
|
|
December 31,
2019
|
3,000,000
|
3,000,000
|
12 to 18
months
|
$0.10
|
3-1-20 to
3-21-21
|
|
Expired
|
(2,000,000)
|
|
|
|
|
|
December 31,
2020
|
1,000,000
|
1,000,000
|
12
months
|
$0.10
|
3-21-21
|
|
Expired
|
(1,000,000)
|
|
|
|
|
|
June 30,
2021
|
—
|
—
|
—
|
—
|
—
|
Warrants
As of June 30, 2021, there were 3,333,333 warrants outstanding that
expire in five years or in the year ended December 31, 2024. As
part of the Convertible Promissory Notes payable – third
party issuance in Note 5, the Company issued 3,333,333 warrants to
purchase 3,333,333 common shares of the Company at 70% of the
current market price. Current market price means the average
of the three lowest trading prices for our common stock during the
ten-trading day period ending on the latest complete trading day
prior to the date of the respective exercise notice.
Transfer Agent
The transfer agent for our securities is Clear Trust, with offices
at 16540 Pointe Village Dr., Suite 210, Lutz, Florida 33558, Phone
(813) 235-4490.
Market Information
Our
common stock, par value $0.001, is listed for quotation in the
OTCQB under the symbol “TPTW.”
|
|
|
2021
|
|
2020
|
|
2019
|
|
2018
|
||||||||||||||||||||||||||
|
Quarter
Ended
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||||||||||||
|
|
March
31
|
|
|
$
|
0.10
|
|
|
$
|
0.03
|
|
|
$
|
0.011
|
|
|
$
|
0.0007
|
|
|
$
|
0.119
|
|
|
$
|
0.0211
|
|
|
$
|
0.2172
|
|
|
$
|
0.069
|
|
|
|
June
30
|
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
|
$
|
0.037
|
|
|
$
|
0.002
|
|
|
$
|
0.198
|
|
|
$
|
0.0511
|
|
|
$
|
0.20
|
|
|
$
|
0.0701
|
|
|
|
September
30
|
|
|
$
|
0.07
|
|
|
$
|
0.01
|
|
|
$
|
0.093
|
|
|
$
|
0.024
|
|
|
$
|
0.14
|
|
|
$
|
0.0432
|
|
|
$
|
0.192
|
|
|
$
|
0.0263
|
|
|
|
December
31
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.06
|
|
|
$
|
0.021
|
|
|
$
|
0.072
|
|
|
$
|
0.0035
|
|
|
$
|
0.1184
|
|
|
$
|
0.0211
|
|
Stockholders
As of
October 15, 2021, we have 434 shareholders of record
of our common stock. Sales under Rule 144 are also subject to
manner of sale provisions and notice requirements and to the
availability of current public information about us. Under Rule
144, a person who has not been an affiliate at any time during the
three months preceding a sale, and who has beneficially owned the
shares proposed to be sold for at least 6 months, is entitled to
sell shares without complying with the manner of sale, volume
limitation or notice provisions of Rule 144.
As of
October 15, 2021, our shareholders hold
908,029,038 shares.
TERMS OF THE OFFERING
Securities Offered
We are
offering up to 7,600,000 shares of Series D 6% Cumulative Dividend
Convertible Preferred Stock for a purchase price of $5.00 per share
with a minimum purchase requirement of 100 shares ($500). As of the
filing of this Offering, we have sold no shares of our common stock
in this offering. Accordingly, the maximum remaining amount of this
offering is up to $38,000,000. We will have the unrestricted right
to reject tendered subscriptions for any reason and to accept less
than the minimum investment from a limited number of subscribers.
In the event the shares available for sale are oversubscribed, they
will be sold to those investors subscribing first, provided they
satisfy the applicable investor suitability standards. See
“INVESTOR SUITABILITY STANDARDS.”
The
purchase price for the shares will be payable in full upon
subscription. We have no required minimum offering amount for this
offering and therefore there is no escrow agent.
Subscription Period
The
offering of shares will terminate on June 30, 2022, unless we
extend the offering for up to an additional 90 days or terminate
the offering sooner in our sole discretion regardless of the amount
of capital raised (the “Sales Termination Date”). The
Sales Termination Date may occur prior to June 30, 2022 if
subscriptions for the maximum number of shares have been received
and accepted by us before such date. Subscriptions for shares must
be received and accepted by us on or before such date to qualify
the subscriber for participation in TPT Global Tech,
Inc.
Subscription Procedures
All subscription
checks should be sent to TPT Global Tech, Inc., Attention: Stephen
Thomas at the following address: 501 West Broadway, Suite 800, San
Diego, CA 92101. In such case, subscription checks should be made
payable to “TPT Global Tech, Inc.” If a subscription is
rejected, all funds will be returned to subscribers within ten days
of such rejection without deduction or interest. Upon acceptance by
us of a subscription, a confirmation of such acceptance will be
sent to the subscriber.
Investor Eligibility Standards
Shares
will be sold only to a person if the aggregate purchase price paid
by such person is no more than 10% of the greater of such
person’s annual income or net worth, not including the value
of his primary residence, as calculated under Rule 501 of
Regulation D promulgated under Section 4(a)(2) of the Securities
Act of 1933, as amended. See the Purchaser Qualification
Questionnaire in the Subscription Documents in Exhibit A to this
Offering Circular. In the case of sales to fiduciary accounts
(Keogh Plans, Individual Retirement Accounts (IRAs) and Qualified
Pension/Profit Sharing Plans or Trusts), the above suitability
standards must be met by the fiduciary account, the beneficiary of
the fiduciary account, or by the donor who directly or indirectly
supplies the funds for the purchase of shares. Investor suitability
standards in certain states may be higher than those described in
this Offering Circular. These standards represent minimum
suitability requirements for prospective investors, and the
satisfaction of such standards does not necessarily mean that an
investment in the Company is suitable for such
persons.
Each
investor must represent in writing that he/she meets the applicable
requirements set forth above and in the Subscription Agreement,
including, among other things, that (i) he/she is purchasing the
shares for his/her own account and (ii) he/she has such knowledge
and experience in financial and business matters that he/she is
capable of evaluating without outside assistance the merits and
risks of investing in the shares, or he/she and his/her purchaser
representative together have such knowledge and experience that
they are capable of evaluating the merits and risks of investing in
the shares. Broker-dealers and other persons participating in the
offering must make a reasonable inquiry in order to verify an
investor’s suitability for an investment in us. Transferees
of shares will be required to meet the above suitability
standards.
Shares
may not be offered, sold, transferred, or delivered, directly or
indirectly, to any person who (i) is named on the list of
“specially designated nationals” or “blocked
persons” maintained by the U.S. Office of Foreign Assets
Control (“OFAC”) at
www.ustreas.gov/offices/enforcement/ofac/sdn or as otherwise
published from time to time, (ii) an agency of the government of a
Sanctioned Country, (iii) an organization controlled by a
Sanctioned Country, or (iv) is a person residing in a Sanctioned
Country, to the extent subject to a sanctions program administered
by OFAC. A “Sanctioned Country” means a country subject
to a sanctions program identified on the list maintained by OFAC
and available at www.ustreas.gov/offices/enforcement/ofac/sdn or as
otherwise published from time to time. Furthermore, shares may not
be offered, sold, transferred, or delivered, directly or
indirectly, to any person who (i) has more than fifteen percent
(15%) of its assets in Sanctioned Countries or (ii) derives more
than fifteen percent (15%) of its operating income from investments
in, or transactions with, sanctioned persons or Sanctioned
Countries.
Interim Investments
Company
funds not needed on an immediate basis to fund our operations may
be invested in government securities, money market accounts,
deposits or certificates of deposit in commercial banks or savings
and loan associations, bank repurchase agreements, funds backed by
government securities, short-term commercial paper, or in other
similar interim investments.
Transfer Agent and Registrar
The transfer agent and registrar for our securities is Clear Trust,
with offices at 16540 Pointe Village Dr., Suite 210, Lutz, Florida
33558, Phone (813) 235-4490.
PLAN OF DISTRIBUTION
The
shares are being offered on a “best-efforts” basis by
our officers, directors and employees; however, we may engage
broker-dealers who are registered with the Financial Industry
Regulatory Authority (“FINRA”). No commissions or other
compensation will be paid to our officers, directors or
employees.
Engagement Agreement
On May
21, 2020, the Company entered into an Engagement Agreement with CIM
Securities, LLC, a Colorado Limited Liability Company
(“CIM”), paying to CIM a retainer of
$15,000.
Placement Agent Agreement
On
November 11, 2020, the Company and CIM replaced the earlier
engagement with a Placement Agent Fee Agreement. Effective June 30,
2021, we agreed to amendments of certain provisions of such
Agreement. Copies of such Agreement and Amendments are
filed as Exhibits to the Offering Statement of which this Offering
Circular is a part. CIM has agreed to solicit subscriptions
for Shares in the Offering and CIM may appoint other FINRA member
broker-dealers to act as sub-agents to solicit subscriptions in the
Offering.
Compensation
We
agreed to pay CIM a commission equal to six percent
(6%) amount paid to us from the subscriptions solicited
by CIM or its sub-agents. CIM may allot from such
payment all or a portion of such commission to the sub-agent that
solicited an accepted subscription.
We
shall pay CIM a non-accountable expense allowance equal
to two percent (2%) amount paid to us from the
subscriptions solicited by CIM or its sub-agents. The
payment of this expense allowance and the commissions shall be paid
in connection with each acceptance of subscriptions by us. Under
the initial Engagement Agreement, $15,000 was paid to CIM as a
deposit which will be credited against the non-accountable expense
allowance.
Upon conclusion of
the Offering, we will issue to CIM, or its
designees, warrants to purchase the Series D Preferred shares
in an amount equivalent to 6% of the amount of Series D
Preferred Shares issued in the Offering which were issued pursuant
to the solicitation of CIM or its sub-agents, if
any. Such warrants will be exercisable for a period of four
years from commencement of this Offering (the “Termination
Date”) and will have an exercise price of $6.00 per
share, (120% of the offering price of the Series
D Preferred shares). The warrants will not; however,
be exercisable in the 180 days following issuance (i.e. locked
up). Further, any Series D Preferred Shares issued upon
exercise of the warrants may not be converted into shares of common
stock after the Termination Date.
Registration
Right of Warrant to Placement Agent
Should the Company
intend to file a registration statement within four years from the
commencement of the Offering of Series D Shares for which warrant
is issued and such Registration Statement relates to the class of
shares issuable or issued upon exercise of such warrants, the
Company is to provide the holders of such warrants written notice
of such intended filing. Such holders shall have ten business days
to provide notice to the Company of the holder’s election to
include such shares in such registration statement. This
participatory rights is the only registration rights associated
with such Warrants.
REPORTS TO
SHAREHOLDERS
For tax
and accounting purposes, our fiscal year ends on December
31st of
each year and all financial information will be prepared in
accordance with the accrual method of accounting. The books and
records of account will be kept at our address. We will furnish
each shareholder, within 120 days after the end of each fiscal
year, our audited financial statements in an Annual Report on Form
10-K filed with the Securities Exchange Commission, and within 90
days after the 31st of December of each
fiscal year, our unaudited financial statements in a Quarterly
Report on Form 10-Q, also filed with the Securities Exchange
Commission.
ADDITIONAL INFORMATION
This
Offering Circular does not purport to restate all of the relevant
provisions of the documents referred to or pertinent to the matters
discussed herein, all of which must be read for a complete
description of the terms relating to an investment in us. Such
documents are available for inspection during regular business
hours at our office by appointment, and upon written request,
copies of documents not annexed to this Offering Circular will be
provided to prospective investors. Each prospective investor is
invited to ask questions of, and receive answers from, our
representatives. Each prospective investor is invited to obtain
such information concerning us and this offering, to the extent we
possess the same or can acquire it without unreasonable effort or
expense, as such prospective investor deems necessary to verify the
accuracy of the information referred to in this Offering Circular.
Arrangements to ask such questions or obtain such information
should be made by contacting the Company at
stephen@tptglobaltech.com. We reserve the right, however, in our
sole discretion, to condition access to information that management
deems proprietary in nature, on the execution by each prospective
investor of appropriate confidentiality agreements prior to having
access to such information.
The
Offering of the Series D Preferred Convertible Stock is made solely
by this Offering Circular and the exhibits hereto. The prospective
investors have a right to inquire about and request and receive any
additional information they may deem appropriate or necessary to
further evaluate this offering and to make an investment decision.
Our representatives may prepare written responses to such inquiries
or requests if the information requested is available. The use of
any documents other than those prepared and expressly authorized by
us in connection with this offering is not permitted and should not
be relied upon by any prospective investor.
ONLY
INFORMATION OR REPRESENTATIONS CONTAINED HEREIN MAY BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY US. NO PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS OFFERING CIRCULAR IN CONNECTION WITH THE
OFFER BEING MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY US. INVESTORS ARE CAUTIONED NOT TO RELY UPON ANY INFORMATION NOT
EXPRESSLY SET FORTH IN THIS OFFERING CIRCULAR. THE INFORMATION
PRESENTED IS AS OF THE DATE ON THE COVER HEREOF UNLESS ANOTHER DATE
IS SPECIFIED, AND NEITHER THE DELIVERY OF THIS OFFERING CIRCULAR
NOR ANY SALE HEREUNDER SHALL CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION PRESENTED SUBSEQUENT TO SUCH
DATES(S).
FINANCIAL STATEMENTS
The
financial statements of TPT Global Tech, Inc. for the years ended
December 31, 2020 and 2019, have been audited by Sadler, Gibb and
Associates, LLC, certified public accountants. The
Company’s fiscal year ends on December 31st of each
year.
The following is a complete list of the financial statements
attached hereto:
(a)
Unaudited Condensed Consolidated Financial Statements for the three
and six months ended June 30, 2021; and
(b) Audited Financial Statements for the years
ended December 31, 2020 and December 31, 2019.
TPT GLOBAL TECH, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND
NOTES
Table of Contents
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE
AND SIX MONTHS ENDED JUNE 30, 2021
|
F-2
|
|
|
|
|
|
F-4
|
|
|
|
|
|
F-5
|
|
|
|
|
|
F-7
|
|
|
|
|
|
F-8
– F-32
|
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED BALANCE
SHEETS
ASSETS
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
CURRENT
LIABILITIES
|
|
|
|
Accounts payable
and accrued expenses
|
$9,664,153
|
$7,866,140
|
|
Deferred
revenue
|
432,588
|
341,789
|
|
Customer
liability
|
338,725
|
338,725
|
|
Current
portion of loans, advances and factoring agreements
|
1,678,756
|
2,308,753
|
|
Convertible
notes payable, net of discounts
|
1,711,098
|
1,711,098
|
|
Notes
payable - related parties, net of discounts
|
10,635,444
|
10,559,796
|
|
Convertible
notes payable – related parties, net of
discounts
|
922,181
|
922,481
|
|
Derivative
liabilities
|
4,783,379
|
5,265,139
|
|
Current portion of
operating lease liabilities
|
3,603,167
|
2,682,722
|
|
Financing lease
liabilities
|
182,890
|
184,939
|
|
Financing lease
liabilities – related party
|
668,669
|
654,633
|
|
Total
current liabilities
|
34,621,050
|
32,836,215
|
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
Loans,
advances and factoring agreements, net of current portion
and discounts
|
1,752,600
|
843,577
|
|
Operating
lease liabilities, net of current portion
|
2,989,218
|
2,872,952
|
|
Total
non-current liabilities
|
4,741,818
|
3,716,529
|
|
Total
liabilities
|
39,362,868
|
36,552,744
|
|
|
|
|
|
Commitments and
contingencies
|
—
|
—
|
See accompanying notes to condensed consolidated financial
statements.
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
See accompanying notes to condensed consolidated financial
statements.
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
For the three
months ended June 30,
|
For the six months
ended June 30,
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
REVENUES:
|
|
|
|
|
|
Products
|
$8,140
|
$16,940
|
$10,630
|
$28,091
|
|
Services
|
2,571,040
|
2,739,831
|
5,280,900
|
5,804,653
|
|
Total
Revenues
|
2,579,180
|
2,756,771
|
5,291,530
|
5,832,744
|
|
|
|
|
|
|
|
COST OF
SALES:
|
|
|
|
|
|
Products
|
8,140
|
14,400
|
10,640
|
27,300
|
|
Services
|
2,181,501
|
1,628,260
|
4,340,655
|
3,710,377
|
|
Total Costs of
Sales
|
2,189,641
|
1,628,260
|
4,351,295
|
3,737,677
|
|
Gross
profit
|
389,539
|
1,114,111
|
940,235
|
2,095,067
|
|
EXPENSES:
|
|
|
|
|
|
Sales and
marketing
|
104,768
|
39,107
|
109,025
|
65,007
|
|
Professional
|
337,098
|
410,755
|
747,119
|
754,722
|
|
Payroll and
related
|
727,648
|
584,136
|
1,388,315
|
1,246,138
|
|
General and
administrative
|
529,597
|
421,869
|
1,199,806
|
884,712
|
|
Research and
development
|
—
|
1,000,000
|
—
|
1,000,000
|
|
Depreciation
|
164,342
|
259,964
|
319,703
|
517,367
|
|
Amortization
|
184,655
|
182,735
|
369,310
|
365,470
|
|
Total
expenses
|
2,048,108
|
2,898,566
|
4,133,278
|
4,833,416
|
|
Loss from
operations
|
(1,658,569)
|
(1,784,455)
|
(3,193,043)
|
(2,738,349)
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
Derivative gain
(expense)
|
189,274
|
3,496,653
|
374,549
|
(400,019)
|
|
Gain (loss) on debt
extinguishment
|
—
|
1,252,131
|
—
|
1,252,131
|
|
Gain (loss) on debt
conversions
|
—
|
(206,775
|
—
|
(775,650)
|
|
Interest
expense
|
(409,243)
|
(287,344)
|
(800,122)
|
(834,101)
|
|
Other
expense
|
(334,908)
|
—
|
(334,908)
|
—
|
|
Total
other income (expenses)
|
(554,877)
|
4,254,665
|
(760,481)
|
(757,639)
|
|
|
|
|
|
|
|
Net income (loss)
before income taxes
|
(2,213,446)
|
2,470,210
|
(3,953,524)
|
(3,495,988)
|
|
Income
taxes
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
BEFORE NON-CONTROLLING INTERESTS
|
(2,213,446)
|
2,470,210
|
(3,953,524)
|
(3,495,988)
|
|
|
|
|
|
|
|
NET
LOSS ATTRIBUTABLE TO NON- CONTROLLING
INTERESTS
|
(42,248)
|
—
|
(69,274)
|
—
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO TPT GLOBAL TECH, INC. SHAREHOLDERS
|
$(2,171,198)
|
$2,470,210
|
$(3,884,250)
|
$(3,495,988)
|
|
|
|
|
|
|
|
Income (loss)
per common share: Basic and diluted
|
$(0.00)
|
$0.00
|
$(0.00)
|
$(0.01)
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
Basic and
diluted
|
877,523,814
|
839,198,568
|
874,187,627
|
614,826,873
|
See accompanying notes to condensed consolidated financial
statements.
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For the three and six months ended June 30, 2021 and
2020
(Unaudited)
|
|
Series
A
Preferred
Stock
|
Series
B
Preferred
Stock
|
Common
Stock
|
|
|
|
|
|
|||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Subscriptions
Payable (Receivable)
|
Additional Paid-in
Capital
|
Accumulated
Deficit
|
Non-Controlling
Interest
|
Total
Stockholders’ Deficit
|
|
Balance as of March
31, 2021
|
—
|
$—
|
—
|
$—
|
873,064,371
|
$873,065
|
$207,845
|
$11,582,882
|
$(42,615,996)
|
$130,890
|
$(29,821,314)
|
|
Common stock issued
for services or subscription payable
|
—
|
—
|
—
|
—
|
5,964,667
|
5,965
|
(211,110)
|
336,203
|
—
|
—
|
131,058
|
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(2,171,198)
|
(42,248)
|
(2,213,446)
|
|
Balance as of June
30, 2021
|
—
|
$—
|
—
|
$—
|
879,029,038
|
$879,030
|
$(3,265)
|
$11,919,070
|
$(44,787,194)
|
$88,642
|
$(31,903,717)
|
|
|
Series
A
Preferred
Stock
|
Series
B
Preferred
Stock
|
Common
Stock
|
|
|
|
|
|
|||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Subscriptions
Payable (Receivable)
|
Additional Paid-in
Capital
|
Accumulated
Deficit
|
Non-Controlling
Interest
|
Total
Stockholders’ Deficit
|
|
Balance as of
December 31, 2020
|
—
|
$—
|
—
|
$—
|
865,564,371
|
$865,565
|
$125,052
|
$11,462,940
|
$(40,902,944)
|
$(61,142)
|
$(28,510,529)
|
|
Common stock
issued for services or subscription payable
|
—
|
—
|
—
|
—
|
5,964,667
|
5,965
|
(128,317)
|
336,203
|
—
|
—
|
213,836
|
|
Issuance of shares
in exchange for debt
|
—
|
—
|
—
|
—
|
7,500,000
|
7,500
|
—
|
339,000
|
—
|
—
|
346,500
|
|
TPT Strategic
license cancellation
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(219,058)
|
—
|
219,058
|
—
|
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(3,884,250)
|
(69,274)
|
(3,953,524)
|
|
Balance as of June
30, 2021
|
—
|
$—
|
—
|
$—
|
879,029,038
|
$879,030
|
$(3,265)
|
$11,919,070
|
$(44,787,194)
|
$88,642
|
$(31,903,717)
|
|
|
Series
A
Preferred
Stock
|
Series
B
Preferred
Stock
|
Common
Stock
|
|
|
|
||||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Subscriptions
Payable
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
|
|
Balance as of March
31, 2020
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
737,324,774
|
$737,325
|
$675,818
|
$14,473,982
|
$(38,797,291)
|
$22,906,577)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
issuable for director services
|
—
|
—
|
—
|
—
|
—
|
—
|
101,562
|
—
|
—
|
101,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of
preferred stock as mezzanine
|
(1,000,000)
|
(1,000)
|
(2,588,693)
|
(2,589)
|
—
|
—
|
—
|
(4,790,884)
|
—
|
(4,794,473)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for convertible promissory notes
|
—
|
—
|
—
|
—
|
120,237,597
|
120,238
|
—
|
276,013
|
—
|
396,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
$2,470,210
|
$2,470,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June
30, 2020
|
—
|
$—
|
—
|
$—
|
857,562,371
|
$857,563
|
$777,380
|
$9,959,111
|
$(36,327,081)
|
$(24,733,027)
|
|
|
Series
A
Preferred
Stock
|
Series
B
Preferred
Stock
|
Common
Stock
|
|
|
|
||||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Subscriptions
Payable
|
Additional
Paid-in Capital
|
Accumulated
Deficit
|
Total
|
|
Balance as of
December 31, 2019
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
177,629,939
|
$177,630
|
$574,256
|
$13,279,749
|
$(32,831,093)
|
$(18,795,869)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
issuable for director services
|
—
|
—
|
—
|
—
|
—
|
—
|
203,124
|
—
|
—
|
203,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of
preferred stock as mezzanine
|
(1,000,000)
|
(1,000)
|
(2,588,693)
|
(2,589)
|
----
|
—
|
—
|
(4,790,884)
|
—
|
(4,794,473)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
issued for convertible promissory notes
|
—
|
—
|
—
|
—
|
679,932,432
|
679,933
|
—
|
1,470,246
|
—
|
2,150,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
$(3,495,988)
|
$(3,495,988)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June
30, 2020
|
—
|
$—
|
—
|
$—
|
857,562,371
|
$857,563
|
$777,380
|
$9,959,111
|
$(36,327,081)
|
$(24,733,027)
|
See
accompanying notes to condensed consolidated financial
statements.
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
For the six months
ended June 30,
|
|
|
|
2021
|
2020
|
|
Cash flows from
operating activities:
|
|
|
|
Net
loss
|
$(3,953,524)
|
$(3,495,988)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation
|
319,703
|
517,367
|
|
Amortization
|
369,310
|
365,470
|
|
Amortization of
debt discounts
|
346,067
|
450,661
|
|
Promissory note
issued for research and development
|
—
|
1,000,000
|
|
Loss on conversion
of notes payable
|
—
|
775,650
|
|
Derivative (gain)
expense
|
(374,549)
|
400,019
|
|
Gain on
extinguishment of debt
|
|
(1,252,131)
|
|
Share-based
compensation: Common stock
|
209,685
|
203,124
|
|
Changes in
operating assets and liabilities:
|
|
|
|
Accounts
receivable
|
(396,559)
|
269,109
|
|
Accounts receivable
related party
|
—
|
|
|
Prepaid expenses
and other assets
|
116,271
|
(33,895)
|
|
Deposits and other
assets
|
72,476
|
—
|
|
Accounts payable
and accrued expenses
|
1,709,486
|
375,847
|
|
Net change in
operating lease right of use assets and liabilities
|
1,190,074
|
75,634
|
|
Other
liabilities
|
90,799
|
30,238
|
|
Net cash used in
operating activities
|
$(304,761)
|
$(318,895)
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchase of
equipment
|
$(198,753)
|
$(271,138)
|
|
Net cash used in
investing activities
|
$(198,753)
|
$(271,138)
|
|
|
|
—
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from sale
of Series D Preferred Stock
|
$233,244
|
$—
|
|
Proceeds from
convertible notes, loans and advances
|
1,771,685
|
1,311,800
|
|
Payment on
convertible loans, advances and factoring agreements
|
(1,460,898)
|
(619,227)
|
|
Proceeds on
convertible notes and amounts payable – related
parties
|
48,224
|
2,400
|
|
Payments on
convertible notes and amounts payable
– related parties
|
(702)
|
(188,238)
|
|
Payments on
financing lease liabilities
|
(2,049)
|
—
|
|
Net cash provided
by financing activities
|
$589,504
|
$506,735
|
|
|
|
|
|
Net change in
cash
|
$85,978
|
$(83,298)
|
|
Cash and cash
equivalents - beginning of period
|
$19,309
|
$192,172
|
|
|
|
|
|
Cash and cash
equivalents - end of period
|
$105,299
|
$108,874
|
See accompanying notes to condensed consolidated financial
statements.
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -
CONTINUED
(Unaudited)
Supplemental Cash Flow Information:
Cash
paid for:
|
|
2021
|
2020
|
|
Interest
|
$34,353
|
$88,736
|
|
Taxes
|
$—
|
$—
|
Non-Cash Investing and Financing Activities:
|
|
2021
|
2020
|
|
Debt discount on
factoring agreement
|
$—
|
$216,720
|
|
Operating lease
liabilities and right of use assets
|
—
|
|
|
Common stock issued
in exchange for payable and note
|
$457,211
|
$2,258,637
|
|
TPT Strategic, Inc.
merger – Non-controlling interest in intercompany liabilities
rescinded
|
$(219,058)
|
$—
|
|
Convertible
preferred Series A and B reclassified to mezzanine
equity
|
|
$4,790,884
|
See accompanying notes to condensed consolidated financial
statements.
TPT Global Tech, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
JUNE
30, 2021
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Nature of Operations
The
Company was originally incorporated in 1988 in the state of
Florida. TPT Global, Inc., a Nevada corporation formed in June
2014, merged with Ally Pharma US, Inc., a Florida corporation,
(“Ally Pharma”, formerly known as Gold Royalty
Corporation) in a “reverse merger” wherein Ally Pharma
issued 110,000,000 shares of Common Stock, or 80% ownership, to the
owners of TPT Global, Inc. in exchange for all outstanding common
stock of TPT Global Inc. and Ally Pharma agreed to change its name
to TPT Global Tech, Inc. (jointly referred to as “the
Company” or “TPTG”).
The
following acquisitions have resulted in entities which have been
consolidated into TPTG. In 2014 the Company acquired all the assets
of K Telecom and Wireless LLC (“K Telecom”) and Global
Telecom International LLC (“Global Telecom”). Effective
January 31, 2015, TPTG completed its acquisition of 100% of the
outstanding stock of Copperhead Digital Holdings, Inc.
(“Copperhead Digital”) and Subsidiaries, TruCom, LLC
(“TruCom”), Nevada Utilities, Inc. (“Nevada
Utilities”) and CityNet Arizona, LLC (“CityNet”).
Effective September 30, 2016, the company acquired 100% ownership
in San Diego Media Inc. (“SDM”). In October 2017, we
entered into agreements to acquire Blue Collar, Inc. (“Blue
Collar”) which closed as of September 1, 2018. On May 7, 2019
we completed the acquisition of a majority of the assets of
SpeedConnect, LLC, which assets were conveyed into our wholly owned
subsidiary TPT SpeedConnect, LLC (“TPT SC” or
“TPT SpeedConnect”) which was formed on April 16, 2019.
On January 8, 2020 we formed TPT Federal, LLC (“TPT
Federal”). On March 30, 2020 we formed TPT MedTech, LLC
(“TPT MedTech”) and on June 6, 2020 we formed
InnovaQor, Inc (“InnovaQor”). In July and August 2020, the Company
formed Quiklab 1 LLC, QuikLAB 2, LLC, QuikLAB 3, LLC and QuikLAB 4,
LLC where TPT MedTech owns 80% (as agreed per the operating
agreement) of all outside equity investments. Effective August 1,
2020 we closed on the acquisition of 75% of The Fitness Container,
LLC (“Air Fitness”). In July 2020, we invested in a
Hong Kong company called TPT Global Tech Asia Limited of which we
own 78%, and during 2020, InnovaQor did a reverse merger with
Southern Plains of which there ended up being a non controlling
interest of 6% as of June 30, 2021 and December 31, 2020. The name
of InnovaQor remained for the merged entities but was changed to
TPT Strategic, Inc. on March 21, 2021.
We are based in San Diego, California, and operate as a
technology-based company with
divisions providing telecommunications, medical technology and
product distribution, media content for domestic and international
syndication as well as technology solutions. We operate on our own proprietary
Global Digital Media TV and Telecommunications infrastructure
platform and also provide technology solutions to businesses
domestically and worldwide. We offer Software as a Service (SaaS),
Technology Platform as a Service (PAAS), Cloud-based Unified
Communication as a Service (UCaaS) and carrier-grade performance
and support for businesses over our private IP MPLS fiber and
wireless network in the United States. Our cloud-based UCaaS
services allow businesses of any size to enjoy all the latest
voice, data, media and collaboration features in today's global
technology markets. We also operate as a Master Distributor for
Nationwide Mobile Virtual Network Operators (MVNO) and Independent
Sales Organization (ISO) as a Master Distributor for Pre-Paid
Cellphone services, Mobile phones, Cellphone Accessories and Global
Roaming Cellphones.
Significant Accounting Policies
Please
refer to Note 1 of the Notes to the Consolidated Financial
Statements in the Company's most recent Form 10-K for all
significant accounting policies of the Company, with the exception
of those discussed below.
Basis of Presentation
The
accompanying unaudited condensed consolidated financial statements
have been prepared according to the instructions to Form 10-Q and
Section 210.8-03(b) of Regulation S-X of the Securities and
Exchange Commission (“SEC”) and, therefore, certain
information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles
generally accepted in the United States of America
(“GAAP”) have been omitted.
In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three months ended
June 30, 2021 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2021.
These
condensed consolidated financial statements should be read in
conjunction with the Company’s consolidated financial
statements for the year ended December 31, 2020. The condensed
consolidated balance sheet as of June 30, 2021, has been derived
from the consolidated financial statements at that date, but does
not include all of the information and footnotes required by
GAAP.
Our
condensed consolidated financial statements include the accounts of
K Telecom and Global, Copperhead Digital, SDM, Blue Collar, TPT
SpeedConnect, TPT Federal, TPT MedTech, InnovaQor, Quiklab 1,
QuikLAB 2, QuikLAB 3, QuikLAB 4, Aire Fitness and TPT Global Tech
Asia Limited. The consolidated financial statements also give
effects to non-controlling interests of the QuikLABs of 20%, Aire
Fitness of 25%, TPT Global Tech Asia Limited of 22% and InnovaQor
of 6%, where appropriate. All intercompany accounts and
transactions have been eliminated in consolidation.
Revenue Recognition
We have
applied ASC 606, revenue from Contracts with Customers, to all
contracts as of the date of initial application and as such, have
used the following criteria described below in more detail for each
business unit:
Identify the contract with the
customer.
Identify the performance
obligations in the contract.
Determine the transaction
price.
Allocate the transaction price
to performance obligations in the contract.
Recognize revenue when or as we satisfy a performance
obligation.
Reserves are recorded as a reduction in net sales and are not
considered material to our consolidated statements of income for
the three months ended June 30, 2021 and 2020. In addition, we
invoice our customers for taxes assessed by governmental
authorities such as sales tax and value added taxes, where
applicable. We present these taxes on a net
basis.
The
Company’s revenue generation for the six months ended June
30, 2021 and 2020 came from the following sources disaggregated by
services and products, which sources are explained in detail
below.
|
|
For the six months
ended
June 30,
2021
|
For the six months
ended
June 30,
2020
|
|
TPT
SpeedConnect
|
$4,050,224
|
$5,264,486
|
|
Blue
Collar
|
711,454
|
526,092
|
|
TPT
MedTech
|
457,108
|
—
|
|
San Diego Media and
other
|
7,032
|
14.075
|
|
Aire
Fitness
|
55,083
|
—
|
|
Total Services
Revenue
|
$5,280,900
|
$5,804,653
|
|
K Telecom-Product
Revenue
|
10,630
|
28,091
|
|
Total
Revenue
|
$5,291,530
|
$5,832,744
|
TPT SpeedConnect: ISP and Telecom Revenue
TPT
SpeedConnect is a rural Internet provider operating in 10
Midwestern States under the trade name SpeedConnect. TPT SC’s
primary business model is subscription based, pre-paid monthly
reoccurring revenues, from wireless delivered, high-speed internet
connections. In addition, the company resells third-party satellite
and DSL internet and IP telephony services. Revenue generated from
sales of telecommunications services is recognized as the
transaction with the customer is considered closed and the customer
receives and accepts the services that were the result of the
transaction. There are no financing terms or variable transaction
prices. Due date is detailed on monthly invoices distributed to
customer. Services billed monthly in advance are deferred to the
proper period as needed. Deferred revenue are contract liabilities
for cash received before performance obligations for monthly
services are satisfied. Deferred revenue at June 30, 2021 and
December 31, 2020 are $306,578 and $292,847, respectively. Certain
of our products require specialized installation and equipment. For
telecom products that include installation, if the installation
meets the criteria to be considered a separate element, product
revenue is recognized upon delivery, and installation revenue is
recognized when the installation is complete. The Installation
Technician collects the signed quote containing terms and
conditions when installing the site equipment at customer
premises.
Revenue
for installation services and equipment is billed separately from
recurring ISP and telecom services and is recognized when equipment
is delivered and installation is completed. Revenue from ISP and
telecom services is recognized monthly over the contractual period,
or as services are rendered and accepted by the
customer.
The
overwhelming majority of our revenue continues to be recognized
when transactions occur. Since installation fees are generally
small relative to the size of the overall contract and because most
contracts are for two years or less, the impact of not recognizing
installation fees over the contract is immaterial.
Blue Collar: Media Production Services
Blue
Collar creates original live action and animated content
productions and has produced hundreds of hours of material for the
television, theatrical, home entertainment and new media markets.
Blue Collar designs branding and marketing campaigns and has had
agreements with some of the world’s largest companies
including PepsiCo, Intel, HP, WalMart and many other Fortune 500
companies. Additionally, they create motion picture, television and
home entertainment marketing campaigns for studios including Sony,
DreamWorks, Twentieth Century Fox, Universal Studios, Paramount
Studios, and Warner Brothers. With regard to revenue recognition,
Blue Collar receives an agreement from each client to perform
defined work. Some agreements are written, some are verbal. Work
may include creation of marketing materials and/or content
creation. Some work may be short term and take weeks to create and
some work may be longer and take months to create. There are
instances where customer agreements segregate identifiable
obligations (like filming on site vs. film editing and final
production) with separate transaction pricing. The performance
obligation is generally satisfied upon delivery of such film or
production products, at which time revenue is recognized. There are
no financing terms or variable transaction prices.
SDM: Ecommerce, Email Marketing and Web Design
Services
SDM
generates revenue by providing ecommerce, email marketing and web
design solutions to small and large commercial businesses, complete
with monthly software support, updates and maintenance. Services
are billed monthly. There are no financing terms or variable
transaction prices. Platform infrastructure support is a prepaid
service billed in monthly recurring increments. The services are
billed a month in advance and due prior to services being rendered.
The revenue is deferred when invoiced and booked in the month the
service is provided. There is no deferred revenue at June 30, 2021
and December 31, 2020. Software support services (including
software upgrades) are billed in real time, on the first of the
month. Web design service revenues are recognized upon completion
of specific projects. Revenue is booked in the month the services
are rendered and payments are due on the final day of the month.
There are usually no contract revenues that are deferred until
services are performed.
TPT MedTech: Medical Testing Revenue
TPT
MedTech operates in the Point of Care Testing (“POCT”)
market by primarily offering mobile medical testing facilities and
software equipped for mobile devices to monitor and manage
personalized healthcare. Services used from our mobile medical
testing facilities are billing through credit cards at the time of
service. Revenue is generated from our software platform as users
sign up for our mobile healthcare monitor and management
application and tests are performed. If medical testing is in one
our own owned facilities, the usage of the software application is
included in the testing fees. If the testing is in a non-owned
outside contracted facility, fees are generated from the usage of
the software application on a per test basis and billed
monthly.
TPT
MedTech also offers two products. One is to build and sell its
mobile testing facilities called QuikLABs designed for mobile
testing. This is used by TPT MedTech for its own testing services.
The other is a sanitizing unit called SANIQuik which is used as a
safe and flexible way to sanitize providing an additional routine
to hand washing and facial coverings. The SANIQuik has not yet been
approved for sale in the United States but has in some parts of the
European community. Revenues from these products are recognized
when a product is delivered, the sales transaction considered
closed and accepted by a customer. Deferred revenue at June 30,
2021 and December 31, 2020 are $126,011 and $48,943, respectively.
There are no financing terms or variable transaction prices for
either of these products.
Copperhead Digital: ISP and Telecom Revenue
Copperhead
Digital operated as a regional internet and telecom services
provider operating in Arizona under the trade name Trucom. Although
there are currently no customers and it will take capital to reopen
this revenue stream, Copperhead Digital operated as a wireless
telecommunications Internet Service Provider (“ISP”)
facilitating both residential and commercial accounts. Copperhead
Digital’s primary business model was subscription based,
pre-paid monthly reoccurring revenues, from wireless delivered,
high-speed internet connections. In addition, the company resold
third-party satellite and DSL internet and IP telephony services.
Revenue generated from sales of telecommunications services was
recognized as the transaction with the customer is considered
closed and the customer received and accepted the services that
were the result of the transaction. There are no financing terms or
variable transaction prices. Due date was detailed on monthly
invoices distributed to customer. Services billed monthly in
advance were deferred to the proper period as needed. Deferred
revenue was contract liabilities for cash received before
performance obligations for monthly services are satisfied. Certain
of its products required specialized installation and equipment.
For telecom products that included installation, if the
installation met the criteria to be considered a separate element,
product revenue was recognized upon delivery, and installation
revenue was recognized when the installation was complete. The
Installation Technician collected the signed quote containing terms
and conditions when installing the site equipment at customer
premises.
Revenue
for installation services and equipment was billed separately from
recurring ISP and telecom services and was recognized when
equipment was delivered, and installation was completed. Revenue
from ISP and telecom services was recognized monthly over the
contractual period, or as services were rendered and accepted by
the customer.
The
overwhelming majority of revenue was recognized when transactions
occurred. Since installation fees were generally small relative to
the size of the overall contract and because most contracts were
for a year or less, the impact of not recognizing installation fees
over the contract was immaterial.
K Telecom: Prepaid Phones and SIM Cards Revenue
K
Telecom generates revenue from reselling prepaid phones, SIM cards,
and rechargeable minute traffic for prepaid phones to its customers
(primarily retail outlets). Product sales occur at the
customer’s locations, at which time delivery occurs and cash
or check payment is received. The Company recognizes the revenue
when they receive payment at the time of delivery. There are no
financing terms or variable transaction prices.
Basic and Diluted Net Loss Per Share
The
Company computes net income (loss) per share in accordance with ASC
260, “Earning per Share”. ASC 260 requires presentation
of both basic and diluted earnings per share (“EPS”) on
the face of the income statement. Basic EPS is computed by dividing
net income (loss) available to common shareholder (numerator) by
the weighted average number of shares outstanding (denominator)
during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period using the
treasury stock method for options and warrants and using the
if-converted method for preferred stock and convertible notes. In
computing diluted EPS, the average stock price for the period is
used in determining the number of shares assumed to be purchased
from the exercise of stock options or warrants. Diluted EPS
excludes all dilutive potential shares if their effect is
anti-dilutive. As of June 30, 2021, the Company had shares that
were potentially common stock equivalents as follows:
|
Convertible
Promissory Notes
|
421,447,906
|
|
Series A Preferred
Stock (1)
|
1,279,184,625
|
|
Series B Preferred
Stock
|
2,588,693
|
|
Series D Preferred
Stock (2)
|
21,050,993
|
|
Stock Options and
Warrants
|
3,333,333
|
|
|
1,727,605,549
|
___________
(3)
Holder of the
Series A Preferred Stock which is Stephen J. Thomas, is guaranteed
60% of outstanding common stock upon conversion. The Company would
have to authorize additional shares for this to occur as only
1,000,000,000 shares are currently authorized.
(4)
Holders of the
Series D Preferred Stock may decide after 18 months to convert to
common stock @ 80% of the 30 day average market closing price (for
previous 30 business days) divided into $5.00. There is also an
automatic conversion of the Series D Preferred Stock without
consent of holders upon any national exchange listing approval and
the registration effectiveness of common stock underlying the
conversion rights. The automatic conversion to common from Series D
Preferred shall be on a one for one basis.
Financial Instruments and Fair Value of Financial
Instruments
Our
primary financial instruments at June 30, 2021 and December 31,
2020 consisted of cash equivalents, accounts receivable, accounts
payable, notes payable and derivative liabilities. We apply fair
value measurement accounting to either record or disclose the value
of our financial assets and liabilities in our financial
statements. Fair value is defined as the exchange price that would
be received for an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants
on the measurement date. A fair value hierarchy requires an entity
to maximize the use of observable inputs, where available, and
minimize the use of unobservable inputs when measuring fair
value.
Described
below are the three levels of inputs that may be used to measure
fair value:
Level 1 Quoted prices in active
markets for identical assets or liabilities.
Level 2 Observable inputs other
than Level 1 prices, such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or
other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the
assets or liabilities.
Level 3 Unobservable inputs that
are supported by little or no market activity and that are
significant to the fair value of the assets or
liabilities.
We
consider our derivative financial instruments as Level 3. The
balances for our derivative financial instruments as of June 30,
2021 are the following:
|
Derivative
Instrument
|
Fair Value
|
|
Fair value of
Auctus Convertible Promissory Note
|
$3,785,589
|
|
Fair value of EMA
Financial Convertible Promissory Note
|
988,799
|
|
Fair value of
Warrants issued with the derivative instruments
|
8,991
|
|
|
$4,783,379
|
Recently Adopted 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)"
("ASU 2020-06"). ASU 2020-06 simplifies the accounting for certain
financial instruments with characteristics of liabilities and
equity, including convertible instruments and contracts on an
entity's own equity. The ASU is part of the FASB's simplification
initiative, which aims to reduce unnecessary complexity in U.S.
GAAP. The ASU's amendments are effective for fiscal years beginning
after December 15, 2023, and interim periods within those fiscal
years, with early adoption permissible for fiscal years beginning
after December 15, 2020. The Company early adopted ASU 2060-06 on
January 1, 2021, which had no material impact on its financial
statements.
Management
has reviewed recently issued accounting pronouncements and have
determined there are not any that would have a material impact on
the condensed consolidated financial statements.
NOTE 2 – ACQUISITIONS
The Fitness Container, LLC (DBA Aire Fitness)
On June
1, 2020, the Company signed an agreement for the acquisition of a
majority interest in San Diego based manufacturing company, The
Fitness Container, LLC dba “Aire Fitness” (www.airefitness.com), for
500,000 shares of common stock in TPT, vesting and issuable after
the common stock reaches at least a $1.00 per share closing price
in trading, a $500,000 promissory note payable primarily out of
future capital raising and a 10% gross profit royalty from sales of
drive through lab operations for the first year. Aire Fitness, in
which TPT owns 75% is a California LLC founded in 2014 focused on
custom designing, manufacturing, and selling high-end turnkey
outdoor fitness studios and mobile medical testing labs. Aire
Fitness has contracted with YMCAs, Parks and Recreation
departments, Universities and Country Clubs which are currently
using its mobile gyms. Aire Fitness’ existing and
future clients will be able to take advantage of TPT’s
upcoming Broadband, TV and Social Media platform to offer virtual
classes utilizing the company’s mobile gyms. The agreement
included an employment agreement for Mario Garcia, former principal
owner, which annual employment is to be at $120,000 plus customary
employee benefits. This agreement was closed August 1,
2020.
The Company evaluated this acquisition in accordance with ASC
805-10-55-4 to discern whether the assets and operations of the
assets purchased met the definition of a business. The company
concluded that there are processes and sufficient inputs into
outputs. Accordingly, the Company accounted for this transaction as
a business combination and allocated the purchase price as
follows:
Included
in the consolidated statement of operations for the six months
ended June 30, 2021 is $55,083 in revenues and $116,202 of net
losses.
TPT Strategic Merger with Southern Plains
On
August 1, 2020, InnovaQor
(name changed to TPT Strategic, Inc.), a wholly-owned subsidiary of
the Company, entered into a Merger Agreement with the publicly
traded company Southern Plains Oil Corp. (OTC PINK: SPLN prior to
Merger Agreement).
During 2020, TPT Strategic authorized a Series A Super Majority
Preferred Stock valued at $350,000 by management and issued to a
third party in exchange for legal services. Effective September 30,
2020, the Series A Super Majority Preferred Stock was exchanged
with TPT for a note payable of $350,000 payable in cash or common
stock (see Note 5(2)). As such, as of September 30, 2020, the
Company, for accounting purposes, took control of the merged TPT
Strategic and reflected in it’s consolidated balance sheet
the non-controlling interest of $219,058 in the liabilities under a
license agreement valued at $3,500,000. This $3,500,000 was
recorded as a Note Payable and expensed on InnovaQor’s books.
During the six months ended June 30, 2021, the license agreement
was cancelled and the non controlling interest
reversed.
NOTE 3 – GOING CONCERN
The
accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going
concern.
Cash
flows generated from operating activities were not enough to
support all working capital requirements for the six months ended
June 30, 2021 and 2020. Financing activities described below have
helped with working capital and other capital
requirements.
We
incurred $3,884,250 and $3,495,988, respectively, in losses, and we
used $304,761 and $318,895, respectively, in cash from operations
for the six months ended June 30, 2021 and 2020. We calculate the
net cash used by operating activities by decreasing, or increasing
in case of gain, our let loss by those items that do not require
the use of cash such as depreciation, amortization, promissory note
issued for research and development, note payable issued for legal
fees, derivative expense or gain, gain on extinguishment of debt,
loss on conversion of notes payable, impairment of goodwill and
long-loved assts and share-based compensation which totaled to a
net $870,216 for 2021 and $2,460,160 for 2020.
In
addition, we report increases and reductions in liabilities as uses
of cash and deceases assets and increases in liabilities as sources
of cash, together referred to as changes in operating assets and
liabilities. For the six months ended June 30, 2021, we had a net
increase in our assets and liabilities of $2,778,546 primarily from
an increase in accounts payable from lag of payments for accounts
payable for cash flow considerations and an increase in the
balances from our operating lease liabilities. For the six months
ended June 30, 2021, we had a net increase to our assets and
liabilities of $716,933 for similar reasons.
Cash
flows from financing activities were $589,504 and $506,735 for the
six months ended June 30, 2021 and 2020, respectively. For the six
months ended June 30, 2021, these cash flows were generated
primarily from proceeds from sale of Series D Preferred Stock of
$233,244, proceeds from convertible notes, loans and advances of
$1,771,685 offset by payment on convertible loans, advances and
factoring agreements of $1,460,898. For the six months ended June
30, 2020, cash flows from financing activities primarily came from
proceeds from convertible notes, loans and advances of $1,311,800
offset by payments on convertible loans, advances and factoring
agreements of $619,227 and payments on convertible notes and
amounts payable – related parties of $188,238.
Cash
flows used in investing activities were $198,753 and $271,138,
respectively, for the six months ended June 30, 2021 and 2020.
These cash flows were used for the purchase of
equipment.
These
factors raise substantial doubt about the ability of the Company to
continue as a going concern for a period of one year from the
issuance of these financial statements. The financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
In December 2019, COVID-19 emerged and has subsequently spread
worldwide. The World Health Organization has declared COVID-19 a
pandemic resulting in federal, state and local governments and
private entities mandating various restrictions, including travel
restrictions, restrictions on public gatherings, stay at home
orders and advisories and quarantining of people who may have been
exposed to the virus. After close monitoring and responses and
guidance from federal, state and local governments, in an effort to
mitigate the spread of COVID-19, around March 18, 2020 for a period
of time, the Company closed its Blue Collar office in Los Angeles
and its TPT SpeedConnect offices in Michigan, Idaho and
Arizona. Most employees were working remotely, however this
was not possible with certain employees and all subcontractors that
work for Blue Collar. The Company has opened up most of it
operations and continues to monitor developments, including
government requirements and recommendations at the national, state,
and local level to evaluate possible extensions to all or part of
such closures.
The Company has taken advantage of the stimulus offerings and
received $722,200 in April 2020 and $680,500 in February 2021 and
believes it has used these funds as is prescribed by the stimulus
offerings to have the entire amounts forgiven. The Company has
applied for forgiveness of the original stimulus of $722,200. The
forgiveness process for stimulus funded in February 2021 has not
begun. The Company will try and take advantage of additional
stimulus as it is available and is also in the process of trying to
raise debt and equity financing, some of which may have to be used
for working capital shortfalls if revenues continue to decline
because of the COVID-19 closures.
On May
28, 2021, the Company entered into a Common Stock Purchase
Agreement (“Purchase Agreement”) and Registration
Rights Agreement (“Registration Rights Agreement”) with
White Lion Capital, LLC, a Nevada limited liability company
(“White Lion”). Under the terms of the Purchase
Agreement, White Lion agreed to provide the Company with up to
$5,000,000 upon effectiveness of a registration statement on Form
S-1 (the “Registration Statement”) filed with the U.S.
Securities and Exchange Commission (the “Commission”).
A Form S-1 was filed on June 30, 2021 regarding this transaction.
Subsequent Amendments to Forms S-1 related to this transaction were
filed on July 6, 2021 and July 14, 2021. The registrations
statement was declared effective July 19, 2021.
In
August 2021, the Company has given purchase notices for 9,000,000
shares of common stock under the Purchase Agreement and has
received proceeds of $83,420, net of expenses.
In
order for us to continue as a going concern for a period of one
year from the issuance of these financial statements, we will need
to obtain additional debt or equity financing and look for
companies with cash flow positive operations that we can acquire.
There can be no assurance that we will be able to secure additional
debt or equity financing, that we will be able to acquire cash flow
positive operations, or that, if we are successful in any of those
actions, those actions will produce adequate cash flow to enable us
to meet all our future obligations. Most of our existing financing
arrangements are short-term. If we are unable to obtain additional
debt or equity financing, we may be required to significantly
reduce or cease operations.
NOTE 4 – PROPERTY AND EQUIPMENT
Property
and equipment and related accumulated depreciation as of June 30,
2021 and December 31, 2020 are as follows:
|
|
2021
|
2020
|
|
Property and
equipment:
|
|
|
|
Telecommunications
fiber and equipment
|
$2,652,751
|
$2,530,167
|
|
Film production
equipment
|
369,903
|
369,903
|
|
Medical
equipment
|
209,499
|
133,329
|
|
Office furniture
and equipment
|
86,899
|
86,899
|
|
Leasehold
improvements
|
18,679
|
18,679
|
|
Total
property and equipment
|
3,337,731
|
3,138,977
|
|
Accumulated
depreciation
|
(2,024,648)
|
(993,380)
|
|
Property and
equipment, net
|
$2,024,648
|
$2,145,597
|
Depreciation
expense was $319,703 and $517,367 for the six months ended June 30,
2021 and 2020, respectively.
NOTE 5 – DEBT FINANCING ARRANGEMENTS
Financing
arrangements as of June 30, 2021 and December 31, 2020 are as
follows:
|
|
2021
|
2020
|
|
Loans and advances
(1)
|
$2,744,042
|
$2,517,200
|
|
Convertible notes
payable (2)
|
1,711,098
|
1,711,098
|
|
Factoring
agreements (3)
|
687,314
|
635,130
|
|
Debt – third
party
|
$5,142,454
|
$4,863,428
|
|
|
|
|
|
Line of credit,
related party secured by assets (4)
|
$3,043,390
|
$3,043,390
|
|
Debt– other
related party, net of discounts (5)
|
7,450,000
|
7,423,334
|
|
Convertible debt
– related party (6)
|
922,181
|
922,481
|
|
Shareholder debt
(7)
|
142,054
|
93,072
|
|
Debt –
related party
|
$11,557,625
|
$11,482,277
|
|
|
|
|
|
Total financing
arrangements
|
$16,700,079
|
$16,345,705
|
|
|
|
|
|
Less current
portion:
|
|
|
|
Loans, advances and
factoring agreements – third party
|
$(1,678,756)
|
$(2,308,753)
|
|
Convertible notes
payable third party
|
(1,711,098)
|
(1,711,098
|
|
Debt –
related party, net of discount
|
(10,635,444)
|
(10,559,796)
|
|
Convertible notes
payable– related party
|
(922,181)
|
(922,481)
|
|
|
(14,947,479)
|
(15,502,128)
|
|
Total long term
debt
|
$1,752,600
|
$843,577
|
__________
(1) The
terms of $40,000 of this balance are similar to that of the Line of
Credit which bears interest at adjustable rates, 1 month Libor plus
2%, 2.10% as of June 30, 2021, and is secured by assets of the
Company, was due August 31, 2020, as amended, and included 8,000
stock options as part of the terms which options expired December
31, 2019 (see Note 7).
$400,500
is a line of credit that Blue Collar has with a bank, bears
interest at Prime plus 1.125%, 4.38% as of June 30, 2021, and was
due March 25, 2021.
$360,000
is a bank loan dated May 28, 2019, amended May 20, 2021 which bears
interest at Prime plus 6%, 9.25% as of June 30, 2021, is interest
only for the first year following the amendment, there after
beginning in June of 2022 payable monthly of principal and interest
until the due date of May 1, 2024. The bank loan is collateralized
by assets of the Company.
$722,220
and $680,500 represent loans under the COVID-19 Pandemic Paycheck
Protection Program (“PPP”) originated in April 2020 and
February 2021, respectively. The Company believes that it has used
the funds as prescribed by the stimulus offerings to have the
entire amounts forgiven. The Company
has applied for forgiveness of the original stimulus of $722,200.
The forgiveness process for stimulus funded in February 2021 has
not begun. If any of the PPP loans are not forgiven then,
per the PPP, the unforgiven loan amounts will be payable monthly
over a five-year period of which payments are to begin no later
than 10 months after the covered period as defined at a 1% annual
interest rate.
On June 4, 2019, the Company consummated a Securities Purchase
Agreement with Odyssey Capital Funding, LLC.
(“Odyssey”) for the purchase of a $525,000 Convertible
Promissory Note (“Odyssey Convertible Promissory
Note”). The Odyssey Convertible Promissory Note was due June
3, 2020, paid interest at the rate of 12% ( 24% default) per annum
and gave the holder the right from time to time, and at any time
during the period beginning six months from the issuance date to
convert all of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price was 55% multiplied by the average of
the two lowest trading prices for the common stock during the
previous 20 trading days prior to the applicable conversion date.
The Odyssey Convertible Promissory Note could be prepaid in full at
125% to 145% up to 180 days from origination. Through June 3, 2020,
Odyssey converted $49,150 of principal and $4,116 of accrued
interest into 52,961,921 shares of common stock of the Company. On
June 8, 2020, Odyssey agreed to convert the remaining principal and
accrued interest balance on the Odyssey Convertible Promissory Note
of $475,850 and $135,000, respectively, to a term loan payable in
six months in the form of a balloon payment, earlier if the Company
has a funding event, bearing simple interest on the unpaid balance
of 0% for the first three months and then 10% per annum thereafter.
This loan is in default. The Company is negotiating with Odyssey
for repayment.
Effective
September 30, 2020, we entered into a Purchase Agreement by which
we agreed to purchase the 500,000 outstanding Series A Preferred
shares of TPT Strategic, our majority owned subsidiary, in an
agreed amount of $350,000 in cash or common stock, if not paid in
cash, at the five day average price preceding the date of the
request for effectiveness after the filing of a registration
statement on Form S-1. This was modified December 28 and 29, 2020,
to provide for registration of 7,500,000 common shares for resale
at the market price. Any balance due on notes will be calculated
after an accounting for the net sales proceeds from sale of the
stock by February 28, 2021 and may be paid in cash or stock
thereafter. The Series A Preferred shares were purchased from the
Michael A. Littman, Atty. Defined Benefit Plan. The $350,000 was
originally recorded as a Note Payable as of December 31, 2020 but
then reclassified to equity and derivative liability when the
7,500,000 shares were issued during January 2021. See Note 7 for
discussion on settlement agreement with Mr. Littman for any
resulting liability that may arise after the sale of these
shares.
The
remaining balances generally bear interest at approximately 10%,
have maturity dates that are due on demand or are past due, are
unsecured and are classified as current in the balance
sheets.
(2) During
2017, the Company issued convertible promissory notes in the amount
of $67,000 (comprised of $62,000 from two related parties and
$5,000 from a former officer of CDH), all which were due May 1,
2020 and bear 6% annual interest (12% default interest rate). The
convertible promissory notes are convertible, as amended, at $0.25
per share. These convertible promissory notes were not repaid May
1, 2020 and may be considered in default.
During
2019, the Company consummated Securities Purchase Agreements dated
March 15, 2019, April 12, 2019, May 15, 2019, June 6, 2019 and
August 22, 2019 with Geneva Roth Remark Holdings, Inc.
(“Geneva Roth”) for the purchase of convertible
promissory notes in the amounts of $68,000, $65,000, $58,000,
$53,000 and $43,000 (“Geneva Roth Convertible Promissory
Notes”). The Geneva Roth Convertible Promissory Notes are due
one year from issuance, pays interest at the rate of 12% (principal
amount increases 150%-200% and interest rate increases to 24% under
default) per annum and gives the holder the right from time to
time, and at any time during the period beginning 180 days from the
origination date to the maturity date or date of default to convert
all or any part of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price is 61% multiplied by the average of
the two lowest trading prices for the common stock during the
previous 20 trading days prior to the applicable conversion date.
The Geneva Roth Convertible Promissory Notes may be prepaid in
whole or in part of the outstanding balance at 125% to 140% up to
180 days from origination. Geneva Roth converted a total of
$244,000 of principal and $8,680 of accrued interest through June
30, 2021 from its various Securities Purchase Agreements into
125,446,546 shares of common stock of the Company leaving no
outstanding principal balances as of June 30, 2021. On February 13,
2020, the August 22, 2019 Securities Purchase Agreement was repaid
for $63,284, including a premium and accrued interest.
On March 25, 2019, the Company consummated a Securities Purchase
Agreement dated March 18, 2019 with Auctus Fund, LLC.
(“Auctus”) for the purchase of a $600,000 Convertible
Promissory Note (“Auctus Convertible Promissory Note”).
The Auctus Convertible Promissory Note is due December 18, 2019,
pays interest at the rate of 12% (24% default) per annum and gives
the holder the right from time to time, and at any time during the
period beginning 180 days from the origination date or at the
effective date of the registration of the underlying shares of
common stock, which the holder has registration rights for, to
convert all of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price is the lessor of the lowest trading
price during the previous 25 trading days prior the date of the
Auctus Convertible Promissory Note or 50% multiplied by the average
of the two lowest trading prices for the common stock during the
previous 25 trading days prior to the applicable conversion date.
The Auctus Convertible Promissory Note may be prepaid in full at
135% to 150% up to 180 days from origination. Auctus converted
$33,180 of principal and $142,004 of accrued interest into
376,000,000 shares of common stock of the Company prior to June 30,
2021. 2,000,000 warrants were issued in conjunction with the
issuance of this debt. See Note 7.
On June 6, 2019, the Company consummated a Securities Purchase
Agreement with JSJ Investments Inc. (“JSJ”) for the
purchase of a $112,000 Convertible Promissory Note (“JSJ
Convertible Promissory Note”). The JSJ Convertible Promissory
Note is due June 6, 2020, pays interest at the rate of 12% per
annum and gives the holder the right from time to time, and at any
time during the period beginning 180 days from the origination date
to convert all of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price is the lower of the market price, as
defined, or 55% multiplied by the average of the two lowest trading
prices for the common stock during the previous 20 trading days
prior to the applicable conversion date. The JSJ Convertible
Promissory Note may be prepaid in full at 135% to 150% up to 180
days from origination. JSJ converted $43,680 of principal into
18,500,000 shares of common stock of the Company prior to June 30,
2021. In addition, on February 25, 2020 the Company repaid for
$97,000, including a premium and accrued interest, for all
remaining principal and accrued interest balances as of that day.
333,333 warrants were issued in conjunction with the issuance of
this debt. See Note 7.
On June 11, 2019, the Company consummated a Securities Purchase
Agreement with EMA Financial, LLC. (“EMA”) for the
purchase of a $250,000 Convertible Promissory Note (“EMA
Convertible Promissory Note”). The EMA Convertible Promissory
Note is due June 11, 2020, pays interest at the rate of 12%
(principal amount increases 200% and interest rate increases to 24%
under default) per annum and gives the holder the right from time
to time to convert all of the outstanding balance into common stock
of the Company limited to 4.99% of the outstanding common stock of
the Company. The conversion price is 55% multiplied by the lowest
traded price for the common stock during the previous 25 trading
days prior to the applicable conversion date. The EMA Convertible
Promissory Note may be prepaid in full at 135% to 150% up to 180
days from origination. Prior to June 30, 2021, EMA converted
$35,366 of principal into 147,700,000 shares of common stock of the
Company. 1,000,000 warrants were issued in conjunction with the
issuance of this debt. See Note 7.
The
Company is in default under its derivative financial instruments
and received notice of such from Auctus and EMA for not reserving
enough shares for conversion and for not having filed a Form S-1
Registration Statement with the Securities and Exchange Commission.
It was the intent of the Company to pay back all derivative
securities prior to the due dates but that has not occurred in the
case of Auctus or EMA. As such, the Company is currently in
negotiations with Auctus and EMA relative to extending due dates
and changing terms on the Notes. The Company has been named in a
lawsuit by EMA for failing to comply with a Securities Purchase
Agreement entered into in June 2019. See Note 8 Other Commitments
and Contingencies.
On February 14, 2020, the Company agreed to a Secured Promissory
Note with a third party for $90,000. The Secured Promissory Note
was secured by the assets of the Company and was due June 14, 2020
or earlier in case the Company is successful in raising other
monies and carried an interest charge of 10% payable with the
principal. The Secured Promissory Note was also convertible at the
option of the holder into an equivalent amount of Series D
Preferred Stock. The Secured Promissory Note also included a
guaranty by the CEO of the Company, Stephen J. Thomas III. This
Secured Promissory Note was paid off in June 2020, including $9,000
of interest in June and $1,000 in July 2020.
(3) The
Factoring Agreement with full recourse, due February 29, 2020, as
amended, was established in June 2016 with a company that is
controlled by a shareholder and is personally guaranteed by an
officer of the Company. The Factoring Agreement is such that the
Company pays a discount of 2% per each 30-day period for each
advance received against accounts receivable or future billings.
The Company was advanced funds from the Factoring Agreement for
which $101,244 and $101,244 in principal remained unpaid as of June
30, 2021 and December 31, 2020, respectively.
On May
8, 2019, the Company entered into a factoring agreement with
Advantage Capital Funding (“2019 Factoring agreement”).
$500,000, net of expenses, was funded to the Company with a promise
to pay $18,840 per week for 40 weeks until a total of $753,610 is
paid which occurred in February 2020.
On February 21, 2020, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts (“2020 Factoring
Agreement”). The balance to be purchased and sold is $716,720
for which the Company received $500,000, net of fees. Under the
2020 Factoring Agreement, the Company was to pay $14,221 per week
for 50 weeks at an effective interest rate of approximately 43%
annually. However, due to COVID-19 the payments under the 2020
Factoring Agreement were reduced temporarily, to between $9,000 and
$11,000 weekly. All deferred payments, $39,249 as of June 30, 2021,
were subsequently paid.
On November 13, 2020, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts (“2020 NewCo Factoring
Agreement”). The balance to be purchased and sold is $326,400
for which the Company received $232,800, net of fees. Under the
2020 NewCo Factoring Agreement, the Company was to pay $11,658 per
week for 28 weeks at an effective interest rate of approximately
36% annually. The 2020 NewCo Factoring Agreement has been paid back
in total.
On December 11, 2020, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts with Samson MCA LLC
(“Samson Factoring Agreement”). The balance to be
purchased and sold is $162,500 for which the Company received
$118,625, net of fees. Under the Samson Factoring Agreement, the
Company was to pay $8,125 per week for 20 weeks at an effective
interest rate of approximately 36%. The Samson Factoring Agreement
has been paid back in total.
On December 11, 2020, the Company entered into a consolidation
agreement for the Purchase and Sale of Future Receipts with QFS
Capital (“QFS Factoring Agreement”). The balance to be
purchased and sold is $976,918 for which the Company receives
weekly payments of $29,860 for 20 weeks and then $21,978 for 4
weeks and then $11,669 in the last week of receipts all totaling
$696,781 net of fees. During the same time, the Company is required
to pay weekly $23,087 for 42 weeks at an effective interest rate of
approximately 36% annually. The QFS Factoring Agreement includes a
guaranty by the CEO of the Company, Stephen J. Thomas
III.
On June
7 and June 14, 2021, the Company entered into two Agreements for
the Purchase and Sale of Future Receipts (“NewCo Factoring
Agreements”). The balance to be purchased and sold is
$199,500 each for which the Company received $144,750 each, net of
fees. Under the NewCo Factoring Agreement, the Company is to pay
$5,542 each per week for 36 weeks at an effective interest rate of
approximately 36% annually. The NewCo Factoring Agreements include
a guaranty by the CEO of the Company, Stephen J. Thomas
III.
On June
28, 2021, the Company entered into an Agreement for the Purchase
and Sale of Future Receipts (“NewCo Factoring Agreement
#3”). The balance to be purchased and sold is $133,000 for
which the Company received $100,000. Under the NewCo Factoring
Agreement, the Company is to pay $3,695 per week for 36 weeks at an
effective interest rate of approximately 36% annually. The NewCo
Factoring Agreement #3 includes a guaranty by the CEO of the
Company, Stephen J. Thomas III.
(4) The
Line of Credit originated with a bank and was secured by the
personal assets of certain shareholders of Copperhead Digital.
During 2016, the Line of Credit was assigned to the Copperhead
Digital shareholders, who subsequent to the Copperhead Digital
acquisition by TPTG became shareholders of TPTG, and the secured
personal assets were used to pay off the bank. The Line of Credit
bears a variable interest rate based on the 1 Month LIBOR plus
2.0%, 2.14% as of June 30, 2021, is payable monthly, and is secured
by the assets of the Company. 1,000,000 shares of Common Stock of
the Company have been reserved to accomplish raising the funds to
pay off the Line of Credit. Since assignment of the Line of Credit
to certain shareholders, which balance on the date of assignment
was $2,597,790, those shareholders have loaned the Company $445,600
under the similar terms and conditions as the line of credit but
most of which were also given stock options totaling $85,120 which
expired as of December 31, 2019 (see Note 8) and was due, as
amended, August 31, 2020. The Company is in negotiations to
refinance this Line of Credit.
During
the years ended December 31, 2019 and 2018, those same shareholders
and one other have loaned the Company money in the form of
convertible loans of $136,400 and $537,200, respectively, described
in (2) and (6).
(5)
$350,000 represents cash due to the prior owners of the technology
acquired in December 2016 from the owner of the Lion Phone which is
due to be paid as agreed by TPTG and the former owners of the Lion
Phone technology and has not been determined.
$4,000,000
represents a promissory note included as part of the consideration
of ViewMe Live technology acquired in 2017, later agreed to as
being due and payable in full, with no interest with $2,000,000
from debt proceeds and the remainder from proceeds from the second
Company public offering.
$1,000,000
represents a promissory note which was entered into on May 6, 2020
for the acquisition of Media Live One Platform from
Steve and Yuanbing Caudle for the further development of software.
This was expensed as research and development in 2020. This $1,000,000 promissory note
is non-interest bearing, due after funding has been received
by the Company from its various investors and other sources. Mr.
Caudle is a principal with the Company’s ViewMe
technology.
On
September 1, 2018, the Company closed on its acquisition of Blue
Collar. Part of the acquisition included a promissory note of
$1,600,000 and interest at 3% from the date of closure. The
promissory note is secured by the assets of Blue
Collar.
$500,000
represents a Note Payable related to the acquisition of 75% of Aire
Fitness, payable by February 1, 2021 or as mutually agreed out of
future capital raising efforts or net profits. The Note Payable has
not been paid and does not accrue interest.
(6)
During 2016, the Company acquired SDM which consideration included
a convertible promissory note for $250,000 due February 29, 2019,
as amended, does not bear interest, unless delinquent in which the
interest is 12% per annum, and is convertible into common stock at
$1.00 per share. The SDM balance is $182,381 as of June 30, 2021.
As of June 30, 2021, this convertible promissory note is
delinquent.
During
2018, the Company issued convertible promissory notes in the amount
of $537,200 to related parties and $10,000 to a non-related party
which bear interest at 6% (11% default interest rate), are due 30
months from issuance and are convertible into Series C Preferred
Stock at $1.00 per share.
(7) The
shareholder debt represents funds given to TPTG or subsidiaries by
officers and managers of the Company as working capital. There are
no written terms of repayment or interest that is being accrued to
these amounts and they will only be paid back, according to
management, if cash flows support it. They are classified as
current in the balance sheets.
During
the year ended December 31, 2020, the holders of approximately
$4,700,000 of existing financing arrangements agreed to exchange
their debt and accrued interest for Series D Preferred Stock
through a separate $12 Million Private Placement of Series D
Preferred Stock (“$12 Million Private Placement”),
conditioned on the Company raising at least $12,000,000. To date,
this condition has not been met.
See
Lease financing arrangements in Note 8.
NOTE 6 -DERIVATIVE FINANCIAL INSTRUMENTS
The Company previously adopted the provisions of ASC subtopic
825-10, Financial
Instruments (“ASC
825-10”). ASC 825-10 defines fair value as the price that
would be received from selling an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. When determining the fair value measurements
for assets and liabilities required or permitted to be recorded at
fair value, the Company considers the principal or most
advantageous market in which it would transact and considers
assumptions that market participants would use when pricing the
asset or liability, such as inherent risk, transfer restrictions,
and risk of nonperformance. ASC 825-10 establishes a fair value
hierarchy that requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring
fair value.
The derivative liability as of June 30, 2021, in the amount of
$4,783,379 has a level 3 classification under ASC
825-10.
The following table provides a summary of changes in fair value of
the Company’s Level 3 financial liabilities as of June 30,
2021.
|
|
Debt
Derivative Liabilities
|
|
Balance, December
31, 2019
|
$8,836,514
|
|
Change in
derivative liabilities from conversion of notes
payable
|
(1,144,290)
|
|
Change in
derivative liabilities from the Odyssey conversion to a term
loan
|
(1,286,762)
|
|
Change in fair
value of derivative liabilities for the period – derivative
expense
|
(1,140,323
|
|
Balance, December
31, 2020
|
$5,265,139
|
|
Initial fair value
of derivative liabilities during the period
|
77,897
|
|
Reclassification of
certain derivative liabilities
|
(185,108)
|
|
Change in fair
value of derivative liabilities for period – derivative
expense
|
(374,549)
|
|
Balance, June 30,
2021
|
$4,783,379
|
Convertible notes payable and warrant derivatives
– The Company issued
convertible promissory notes which are convertible into common
stock, at holders’ option, at a discount to the market price
of the Company’s common stock. The Company has identified the
embedded derivatives related to these notes relating to certain
anti-dilutive (reset) provisions. These embedded derivatives
included certain conversion features. The accounting treatment of
derivative financial instruments requires that the Company record
fair value of the derivatives as of the inception date of debenture
and to fair value as of each subsequent reporting
date.
As of June 30, 2021, the Company marked to market the fair value of
the debt derivatives and determined a fair value of $4,783,379
($4,774,388 from the convertible notes and $8,991 from warrants) in
Note 5 (2) above. The Company recorded a gain from change in fair
value of debt derivatives of $374,549 for the six months ended June
30, 2021. The fair value of the embedded derivatives was determined
using Monte Carlo simulation method based on the following
assumptions: (1) dividend yield of 0%, (2) expected volatility of
129.2% to 292.3%, (3) weighted average risk-free interest rate of
0.5% to 0.46% (4) expected life of 0.25 to 2.947 years, and (5) the
quoted market price of $0.039 to $0.039 for the Company’s
common stock.
NOTE 7 - STOCKHOLDERS' DEFICIT
Preferred Stock
As of
June 30, 2021, we had authorized 100,000,000 shares of Preferred
Stock, of which certain shares had been designated as Series A
Preferred Stock, Series B Preferred Stock, Series C and Series D
Preferred Stock.
During
the prior year ended December 31, 2020, the Series A Preferred
Stock and the Series B Preferred Stock were reclassified as
mezzanine equity as a result of the Company not having enough
authorized common shares to be able to issue common shares upon
their conversion. The Series C and D Preferred Stock are also
classified as mezzanine equity for the same reason.
Series A Convertible Preferred Stock
In
February 2015, the Company designated 1,000,000 shares of Preferred
Stock as Series A Preferred Stock. In February 2015, the Board of
Directors authorized the issuance of 1,000,000 shares of Series A
Preferred Stock to Stephen Thomas, Chairman, CEO and President of
the Company, valued at $3,117,000 for compensation
expense.
The
Series A Preferred Stock was designated in February 2016, has a par
value of $.001, is redeemable at the Company’s option at $100
per share, is senior to any other class or series of outstanding
Preferred Stock or Common Stock and does not bear dividends. The
Series A Preferred Stock has a liquidation preference immediately
after any Senior Securities, as defined and amended, of an amount
equal to amounts payable owing, including contingency amounts where
Holders of the Series A have personally guaranteed obligations of
the Company. Holders of the Series A Preferred Stock shall,
collectively have the right to convert all of their Series A
Preferred Stock when conversion is elected into that number of
shares of Common Stock of the Company, determined by the following
formula: 60% of the issued and outstanding Common Shares as
computed immediately after the transaction for conversion. For
further clarification, the 60% of the issued and outstanding common
shares includes what the holders of the Series A Preferred Stock
may already hold in common shares at the time of conversion. The
Series A Preferred Stock, collectively, shall have the right to
vote as if converted prior to the vote to a number of shares equal
to 60% of the outstanding Common Stock of the Company.
During
the year ended December 31, 2020, the Series A Preferred Stock was
reclassified as mezzanine equity as a result of the Company not
having enough authorized common shares to be able to issue common
shares upon their conversion.
Series B Convertible Preferred Stock
In
February 2015, the Company designated 3,000,000 shares of Preferred
Stock as Series B Convertible Preferred Stock.
The
Series B Preferred Stock was designated in February 2015, has a par
value of $.001, is not redeemable, is senior to any other class or
series of outstanding Preferred Stock, except the Series A
Preferred Stock, or Common Stock and does not bear dividends. The
Series B Preferred Stock has a liquidation preference immediately
after any Senior Securities, as defined and currently the Series A
Preferred Stock, and of an amount equal to $2.00 per share. Holders
of the Series B Preferred Stock have a right to convert all or any
part of the Series B Preferred Shares and will receive and equal
number of common shares at the conversion price of $2.00 per share.
The Series B Preferred Stockholders have a right to vote on any
matter with holders of Common Stock and shall have a number of
votes equal to that number of Common Shares on a one to one
basis.
There
are 2,588,693 shares of Series B Convertible Preferred Stock
outstanding as of June 30, 2021. During the year ended December 31,
2020, the Series B Preferred Stock was reclassified as mezzanine
equity as a result of the Company not having enough authorized
common shares to be able to issue common shares upon their
conversion.
Series C Convertible Preferred Stock
In May
2018, the Company designated 3,000,000 shares of Preferred Stock as
Series C Convertible Preferred Stock.
The
Series C Preferred Stock has a par value of $.001, is not
redeemable, is senior to any other class or series of outstanding
Preferred Stock, except the Series A and Series B Preferred Stock,
or Common Stock and does not bear dividends. The Series C Preferred
Stock has a liquidation preference immediately after any Senior
Securities, as defined and currently the Series A and B Preferred
Stock, and of an amount equal to $2.00 per share. Holders of the
Series C Preferred Stock have a right to convert all or any part of
the Series C Preferred Shares and will receive an equal number of
common shares at the conversion price of $0.15 per share. The
Series C Preferred Stockholders have a right to vote on any matter
with holders of Common Stock and shall have a number of votes equal
to that number of Common Shares on a one to one basis.
There
are no shares of Series C Convertible Preferred Stock outstanding
as of June 30, 2021. There are approximately $678,500 in
convertible notes payable convertible into Series C Convertible
Preferred Stock which compromise some of the common stock
equivalents calculated in Note 1.
Series D Convertible Preferred Stock
On June 15, 2020, the Company amended its Series D Designation from
January 14, 2020. This Amendment changed the number of shares to
10,000,000 shares of the authorized 100,000,000 shares of the
Company's $0.001 par value preferred stock as the Series D
Convertible Preferred Stock ("the Series D Preferred
Shares.")
Series
D Preferred shares have the following features: (i) 6% Cumulative
Annual Dividends payable on the purchase value in cash or common
stock of the Company at the discretion of the Board and payment is
also at the discretion of the Board, which may decide to cumulate
to future years; (ii) Any time after 18 months from issuance an
option to convert to common stock at the election of the holder @
80% of the 30 day average market closing price (for previous 30
business days) divided into $5.00. ; (iii) Automatic conversion of
the Series D Preferred Stock shall occur without consent of holders
upon any national exchange listing approval and the registration
effectiveness of common stock underlying the conversion rights. The
automatic conversion to common from Series D Preferred shall be on
a one for one basis, which shall be post-reverse split as may be
necessary for any Exchange listing (iv) Registration Rights –
the Company has granted Piggyback Registration Rights for common
stock underlying conversion rights in the event it files any other
Registration Statement (other than an S-1 that the Company may file
for certain conversion common shares for the convertible note
financing that was arranged and funded in 2019). Further, the
Company will file, and pursue to effectiveness, a Registration
Statement or offering statement for common stock underlying the
Automatic Conversion event triggered by an exchange listing. (v)
Liquidation Rights - $5.00 per share plus any accrued unpaid
dividends – subordinate to Series A, B, and C Preferred Stock
receiving full liquidation under the terms of such series. The
Company has redemption rights for the first year following the
Issuance Date to redeem all or part of the principal amount of the
Series D Preferred Stock at between 115% and 140%.
During
the six months ended June 30, 2021, 46,649 shares of Series D
Preferred Share were purchased for $233,244 of which Stephen
Thomas, CEO of the Company, acquired 36,649 for $183,244. The
remainder of the shares purchased as of June 30, 2021 were
purchased by a third party.
During
the year ended December 31, 2020, the related party holders of
approximately $4,700,000 of existing financing arrangements agreed
to exchange their debt and accrued interest for 940,800 Series D
Preferred Stock through a separate $12 Million Private Placement of
Series D Preferred Stock (“$12 Million Private
Placement”), conditioned on the Company raising at least
$12,000,000. To date, this condition has not been met.
Common Stock
As of
June 30, 2021, we had authorized 1,000,000,000 shares of Common
Stock, of which 879,029,038 common shares are issued and
outstanding.
Common Stock Purchase Agreement
On May
28, 2021, the Company entered into a Common Stock Purchase
Agreement (“Purchase Agreement”) and Registration
Rights Agreement (“Registration Rights Agreement”) with
White Lion Capital, LLC, a Nevada limited liability company
(“White Lion”). Under the terms of the Purchase
Agreement, White Lion agreed to provide the Company with up to
$5,000,000 upon effectiveness of a registration statement on Form
S-1 (the “Registration Statement”) filed with the U.S.
Securities and Exchange Commission (the “Commission”).
A Form S-1 was filed on June 30, 2021 regarding this transaction.
Subsequent Amendments to Forms S-1 related to this transaction were
filed on July 6, 2021 and July 14, 2021. The registrations
statement was declared effective July 19, 2021.
The
Company has the discretion to deliver purchase notice to White Lion
and White Lion will be obligated to purchase shares of the
Company’s common stock, par value $0.001 per share (the
“Common Stock”) based on the investment amount
specified in each purchase notice. The maximum amount of the
Purchase Notice shall be the lesser
of: (i) 200% of the Average Daily Trading Volume or (ii) the
Investment Limit divided by the highest closing price of the Common
Stock over the most recent five (5) Business Days including the
respective Purchase Date. Notwithstanding the forgoing, the
Investor may waive the Purchase Notice Limit at any time to allow
the Investor to purchase additional shares under a Purchase
Notice. Pursuant to the Purchase Agreement, White Lion and
its affiliates will not be permitted to purchase and the Company
may not put shares of the Company’s Common Stock to White
Lion that would result in White Lion’s beneficial ownership
equaling more than 9.99% of the Company’s outstanding Common
Stock. The price of each purchase share shall be equal to
eighty-five percent (85%) of the Market Price (as defined in the
Purchase Agreement). Purchase Notices may be delivered by the
Company to White Lion until the earlier of seven (7) months (until
December 31, 2021) or the date on which White Lion has purchased an
aggregate of $5,000,000 worth of Common Stock under the terms of
the Purchase Agreement.
In
August 2021, the Company has given purchase notices for 9,000,000
shares of common stock under the Purchase Agreement and has
received proceeds of $83,420, net of expenses. There are another
10,000,000 shares that have been moved to escrow in the name of
White Lion waiting for the next purchase notices.
Subscription (Receivable) Payable
As of
June 30, 2021, the Company has recorded $(3,265) in stock
subscription receivable which represents shares receivable under
prior terminated acquisition agreement of 3,096,181 shares of
common stock.
During
2018, a note payable of $2,000 was forgiven for 16,667 common
shares. 2,000 of these shares were issued during the year ended
December 31, 2020. The remainder were issued during the six months
ended June 30, 2021.
During
the year ended December 31, 2020, the Company signed consulting
agreements related to their activities with TPT Global Tech and TPT
MedTech with three third parties for which we agreed to issue
4,450,000 shares of restricted common stock. 300,000 of these
shares were valued at fair value and expensed in the statement of
operations for $16,200. The other 4,150,000 shares were value at
their value of $275,975 which is being amortized over 10 months of
service starting on the date of the agreement of September 1, 2020.
$165,586 has been amortized into the statement of operations for
the six months ended June 30, 2021.
In
2018, Arkady Shkolnik and Reginald Thomas (family member of CEO)
were added as members of the Board of Directors. In accordance with
agreements with the Company for his services as a director, Mr.
Shkolnik is to receive $25,000 per quarter and 5,000,000 shares of
restricted common stock valued at approximately $692,500 vesting
quarterly over twenty-four months. The quarterly cash payments of
$25,000 will be paid in unrestricted common shares if the Company
has not been funded adequately to make such payments. Mr. Thomas is
to receive $10,000 per quarter and 1,000,000 shares of restricted
common stock valued at approximately $120,000 vesting quarterly
over twenty-four months. The quarterly payment of $10,000 may be
suspended by the Company if the Company has not been adequately
funded. As of June 30, 2021, $215,500 and $75,000 has been accrued
as accounts payable in the balance sheet for Mr. Shkolnik and Mr.
Thomas, respectively. For the six months ended June 30, 2021 and
2020, $0 and $203,124, respectively, have been expensed under these
agreements.
Effective
November 1, 2017, the Company entered into an agreement to acquire
Hollywood Rivera, LLC (“HRS”). In March 2018, the HRS
acquisition was rescinded and 3,625,000 shares of common stock,
which were issued as part of the transaction, are being returned by
the recipients. As such, as of June 30, 2021 the 3,265,000 shares
for the HRS transaction are reflected as subscriptions receivable
based on their par value.
Common Stock Issued During Six Months ended June 30,
2021
Effective
September 30, 2020, we entered into a Purchase Agreement by which
we agreed to purchase the 500,000 outstanding Series A Preferred
shares of InnovaQor, Inc., our majority owned subsidiary, in an
agreed amount of $350,000 in cash or common stock, if not paid in
cash, at the five day average price preceding the date of the
request for effectiveness after the filing of a registration
statement on Form S-1. This was modified December 28 and 29, 2020,
to provide for registration of 7,500,000 common shares for resale
at the market price. Any balance due on notes will be calculated
after an accounting for the net sales proceeds from sale of the
stock by February 28, 2021 and may be paid in cash or stock
thereafter. The Series A Preferred shares are being purchased from
the Michael A. Littman, Atty. Defined Benefit Plan.
Effective
September 30, 2020, we entered into a Settlement Agreement to
settle outstanding legal fees due to date in the amount of $74,397
(as assigned to the Michael A. Littman Atty. Defined Benefit Plan.)
The number of shares to be issued in consideration is to be
computed at the five day average price as specified under Rule 474
under the Securities Act of 1933 for the 5 days preceding the date
of the request for acceleration of the effective date of this
registration of our common shares to be issued. (This may also be
fully settled by payment of the sum of $74,397 in cash at any time
prior to the issuance of the shares of stock of the Company.) This
was modified December 28 and 29, 2020, to provide for registration
of 7,500,000 common shares for resale at the market price. Any
balance due on notes will be calculated after an accounting for the
net sales proceeds from sale of the stock by February 28, 2021 and
may be paid in cash or stock thereafter.
The
7,500,000 shares identified in these agreements with Mr. Littman
were issued during the six months ended June 30, 2021 and included
in a Form S-1 filed and declared effective in January 2021.
We were informed by Mr. Littman that
all the shares issued under these agreements have been sold
resulting in a shortfall of $185,107 which has been included in
accounts payable at June 30, 2021.
Another 5,964,667 common shares were issued during the six months
ended June 30, 2021 which primarily related to services rendered
for consulting arrangements with the Company. During the three and
six months ended June 31, 2021, $127,441 and $209,685 were included
in the statement of operations as expenses related to these stock
issuances.
Stock Options
|
|
Options
Outstanding
|
Vested
|
Vesting
Period
|
Exercise
Price Outstanding and Exercisable
|
Expiration
Date
|
|
December 31,
2019
|
3,000,000
|
3,000,000
|
12 to
18 months
|
$0.10
|
3-1-20 to
3-21-21
|
|
Expired
|
(2,000,000)
|
|
|
|
|
|
December 31,
2020
|
1,000,000
|
1,000,000
|
12
months
|
$0.10
|
3-21-21
|
|
Expired
|
(1,000,000)
|
|
|
|
|
|
June 30,
2021
|
—
|
—
|
—
|
—
|
|
Warrants
As of June 30, 2021, there were 3,333,333 warrants outstanding that
expire in five years or in the year ended December 31, 2024. As
part of the Convertible Promissory Notes payable – third
party issuance in Note 5, the Company issued 3,333,333 warrants to
purchase 3,333,333 common shares of the Company at 70% of the
current market price. Current market price means the average
of the three lowest trading prices for our common stock during the
ten-trading day period ending on the latest complete trading day
prior to the date of the respective exercise notice.
The warrants issued were considered derivative liabilities valued
at $8,991 of the total $4,783,379 derivative liabilities as of June
30, 2021. See Note 6.
Common Stock Reservations
The
Company has reserved 1,000,000 shares of Common Stock of the
Company for the purpose of raising funds to be used to pay off debt
described in Note 5.
We have
reserved 20,000,000 shares of Common Stock of the Company to grant
to certain employee and consultants as consideration for services
rendered and that will be rendered to the Company.
There
are Transfer Agent common stock reservations that have been
approved by the Company relative to the outstanding derivative
financial instruments, the outstanding Form S-1 Registration
Statement and general treasury of approximately 90,000,000 common
shares.
Non-Controlling Interests
QuikLAB Mobile Laboratories
In July and August 2020, the Company formed Quiklab 1 LLC, QuikLAB
2, LLC, QuikLAB 3, LLC and QuikLAB 4, LLC. It is the intent to use
these entities as vehicles into which third parties would invest
and participate in owning QuikLAB Mobile Laboratories. As of
December 31, 2020, Quiklab 1 LLC, QuikLAB 2, LLC and QuikLAB 3, LLC
have received an investment of $460,000, of which Stephen Thomas
and Rick Eberhardt, CEO and COO of the Company, have invested
$100,000 in QuikLAB 2, LLC. The third party investors and Mr.
Thomas and Mr. Eberhart, will benefit from owning 20% of QuikLAB
Mobile Laboratories specific to their investments. The Company owns
the other 80% ownership in the QuickLAB Mobile Laboratories. The
net loss attributed to the non-controlling interests from the
QuikLAB Mobile Laboratories included in the statement of operations
for the three and six months ended June 30, 2021 is $18,841 and
$40,223, repectively.
Other Non-Controlling Interests
TPT Strategic, Aire Fitness and TPT Asia are other non-controlling
interests in which the Company owns 94%, 75% and 78%, respectively.
There is very little activity in any of these entities. The net
loss attributed to these non-controlling interests included in the
statement of operations for the three and six months ended June 30,
2021 is $23,407 and $29,051, respectively.
TPT Strategic did a reverse merger with Southern Plains of which
there ended up being a non-controlling interest ownership of 6% as
of December 31, 2020. As a result, $219,058 in the non-controlling
interest in liabilities of a license agreement valued at $3,500,000
was reflected in the consolidated balance sheet as of December 31,
2020. This was reversed during the six months ended June 30, 2021
when the liabilities under the license agreement were terminated by
mutual agreement.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Accounts Payable and Accrued Expenses
|
Accounts
payable:
|
2021
|
2020
|
|
Related
parties (1)
|
$1,342,038
|
$1,339,352
|
|
General
operating
|
5,508,346
|
3,965,135
|
|
Accrued interest on
debt (2)
|
1,721,047
|
1,328,939
|
|
Credit card
balances
|
173,406
|
173,972
|
|
Accrued payroll and
other expenses
|
217,178
|
296,590
|
|
Taxes and fees
payable
|
641,555
|
641,012
|
|
Unfavorable lease
liability
|
60,582
|
121,140
|
|
Total
|
$9,664,153
|
$7,866,140
|
_______________
(1)
Relates
to amounts due to management and members of the Board of Directors
according to verbal and written agreements that have not been paid
as of period end.
(2)
Portion
relating to related parties is $785,559 and $679,380 for June 30,
2021 and December 31, 2020, respectively
Operating lease obligations
The Company adopted Topic 842 on January 1, 2019. The Company
elected to adopt this standard using the optional modified
retrospective transition method and recognized a cumulative-effect
adjustment to the consolidated balance sheet on the date of
adoption. Comparative periods have not been restated. With the
adoption of Topic 842, the Company’s consolidated balance
sheet now contains the following line items: Operating lease
right-of-use assets, Current portion of operating lease liabilities
and Operating lease liabilities, net of current
portion.
As all the existing leases subject to the new lease standard were
previously classified as operating leases by the Company, they were
similarly classified as operating leases under the new standard.
The Company has determined that the identified operating leases did
not contain non-lease components and require no further allocation
of the total lease cost. Additionally, the agreements in place did
not contain information to determine the rate implicit in the
leases, so we used our estimated incremental borrowing rate as the
discount rate. Our weighted average discount rate is 10.0% and the
weighted average lease term of 4.54 years.
We have various non-cancelable lease agreements for certain of our
tower locations with original lease periods expiring between 2021
and 2044. Our lease terms may include options to extend or
terminate the lease when it is reasonably certain we will exercise
that option. Certain of the arrangements contain escalating rent
payment provisions. Our Michigan main office lease and an equipment
lease described below and leases with an initial term of twelve
months have not been recorded on the consolidated balance sheets.
We recognize rent expense on a straight-line basis over the lease
term.
As of June 30, 2021 and December 31, 2020, operating lease
liabilities arising from operating leases were $6,592,385 and
$5,555,674, respectively. During the six months ended June 30,
2021, cash paid for amounts included for the measurement of lease
liabilities was $565,506 and the Company recorded lease expense in
the amount of $1,370,787 in cost of sales.
The Company entered into an operating lease agreement for location
rights for certain QuikLABS. The operating lease agreement started
October 1, 2020 and goes for three years at $9,798 per month. In
addition, the Company entered an operating agreement to lease
colocation space for 5 years. This operating agreement started
October 1, 2020 for 7,140 per month.
The following is a schedule showing the future minimum lease
payments under operating leases by years and the present value of
the minimum payments as of June 30, 2021.
|
2021
|
$2,703,312
|
|
2022
|
1,855,230
|
|
2023
|
1,290,039
|
|
2024
|
960,126
|
|
2025
|
601,834
|
|
Thereafter
|
157,306
|
|
Total operating
lease liabilities
|
7,567,849
|
|
Amount representing
interest
|
(975,464)
|
|
Total net present
value
|
$6,592,385
|
Office lease used by CEO
The
Company entered into a lease of 12 months or less for living space
which is occupied by Stephen Thomas, Chairman, CEO and President of
the Company. Mr. Thomas lives in the space and uses it as his
corporate office. The company has paid $15,00 and $15,000 in rent
and utility payments for this space for the six months ended June
30, 2021 and 2020, respectively.
Financing lease obligations
Future
minimum lease payments are as follows:
|
2021
|
$864,025
|
|
2022
|
10,780
|
|
2023
|
—
|
|
2024
|
—
|
|
2025
|
—
|
|
Thereafter
|
—
|
|
Total financing
lease liabilities
|
874,805
|
|
Amount representing
interest
|
(23,246)
|
|
Total future
payments (1)(2)
|
$851,559
|
____________________
(1)
Included is a
Telecom Equipment Lease is with an entity owned and controlled by
shareholders of the Company and was due August 31, 2020, as
amended.
(2)
Also included are
leases under Xroads Equipment Agreements with a third party that
allows the Company to pay between $10,780 and $11,288 per month,
including interest, starting between November 16, 2020 and February
22, 2021 for eleven months with a $1 value acquisition price at the
termination of the leases.
Other Commitments and Contingencies
Employment Agreements
The
Company has employment agreements with certain employees of SDM, K
Telecom and Aire Fitness. The agreements are such that SDM, K
Telecom and Aire Fitness, on a standalone basis in each case, must
provide sufficient cash flow to financially support the financial
obligations within the employment agreements.
On May
6, 2020, the Company entered into an agreement to employ Ms. Bing
Caudle as Vice President of Product Development of the Media One
Live platform for an annual salary of $250,000 for five years,
including customary employee benefits. The payment is guaranteed
for five years whether or not Ms. Caudle is dismissed with
cause.
Litigation
We have
been named in a lawsuit by EMA Financial, LLC (“EMA”)
for failing to comply with a Securities Purchase Agreement entered
into in June 2019. More specifically, EMA claims the Company failed
to honor notices of conversion, failed to establish and maintain
share reserves, failed to register EMA shares and by failed to
assure that EMA shares were Rule 144 eligible within 6 months. EMA
has claimed in excess of $650,975 in relief. The Company has filed
an answer and counterclaim. The Company does not believe at this
time that any negative outcome would result in more than the
$725,452 it has recorded on its balance sheet as of June 30,
2021.
A
lawsuit was filed in Michigan by the one of the former owners of
SpeedConnect, LLC, John Ogren. Mr. Ogren claimed he was
owed back wages related to the acquisition agreement wherein the
Company acquired the assets of SpeedConnect, LLC and kept him on
through a consulting agreement. The Company’s position was
that he ultimately resigned in writing and was not due any back
wages. In August 2021, Mr. Ogren was awarded $334,908 in back
wages by an Arbitrator. This amount has been included in accounts
payable as of June 30, 2021 and expensed in the statement of
operations as other expenses in the six months ended June 30,
2021.
The
Company has been named in a lawsuit, Robert Serrett vs. TruCom,
Inc., by a former employee who was terminated by management in
2016. The employee was working under an employment agreement but
was terminated for breach of the agreement. The former employee is
suing for breach of contract and is seeking around $75,000 in back
pay and benefits. We recently learned that Mr. Serrett received a
default judgement in Texas on May 15, 2018 for $70,650 plus $3,500
in attorney fees and 5% interest and court costs. However, he
has made no attempt that we are aware of to obtain a sister state
judgment in Arizona, where Trucom resides, or to try and enforce
the judgement and collect. Management believes it has good
and meritorious defenses and does not belief the outcome of the
lawsuit will have any material effect on the financial position of
the Company.
We are
not currently involved in any litigation that we believe could have
a material adverse effect on our financial condition or results of
operations. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the
knowledge of the executive officers of our company or any of our
subsidiaries, threatened against or affecting our company, our
common stock, any of our subsidiaries or of our companies or our
subsidiaries’ officers or directors in their capacities as
such, in which an adverse decision could have a material adverse
effect. We anticipate that we (including current and any future
subsidiaries) will from time to time become subject to claims and
legal proceedings arising in the ordinary course of business. It is
not feasible to predict the outcome of any such proceedings and we
cannot assure that their ultimate disposition will not have a
materially adverse effect on our business, financial condition,
cash flows or results of operations.
Customer Contingencies
The
Company has collected $338,725 from one customer in excess of
amounts due from that customer in accordance with the
customer’s understanding of the appropriate billings
activity. The customer has filed a written demand for repayment by
the Company of these amounts. Management believes that the customer
agreement allows them to keep the amounts under dispute. Given the
dispute, the Company has reflected the amounts in dispute as a
customer liability on the consolidated balance sheet as of June 30,
2021 and December 31, 2020.
Stock Contingencies
The
Company has convertible debt, preferred stock, options and warrants
outstanding for which common shares would be required to be issued
upon exercise by the holders. As of June 30, 2021, the following
shares would be issued:
|
Convertible
Promissory Notes
|
421,447,906
|
|
Series A Preferred
Stock (1)
|
1,279,184,625
|
|
Series B Preferred
Stock
|
2,588,693
|
|
Series D Preferred
Stock (2)
|
21,050,993
|
|
Stock Options and
Warrants
|
3,333,333
|
|
|
1,727,605,549
|
___________
(1)
Holder of the
Series A Preferred Stock which is Stephen J. Thomas, is guaranteed
60% of outstanding common stock upon conversion. The Company would
have to authorize additional shares for this to occur as only
1,000,000,000 shares are currently authorized.
(2)
Holders of the
Series D Preferred Stock may decide after 18 months to convert to
common stock @ 80% of the 30 day average market closing price (for
previous 30 business days) divided into $5.00. There is also an
automatic conversion of the Series D Preferred Stock without
consent of holders upon any national exchange listing approval and
the registration effectiveness of common stock underlying the
conversion rights. The automatic conversion to common from Series D
Preferred shall be on a one for one basis.
During
the fourth quarter of 2020, the related party holders of
approximately $4,700,000 of existing financing arrangements agreed
to exchange their debt and accrued interest for Series D Preferred
Stock through a separate $12 Million Private Placement, conditioned
on the Company raising at least $12,000,000 in a separate Form 1-A
Offering.
Part of
the consideration in the acquisition of Aire Fitness was the
issuance of 500,000 restricted common shares of the Company vesting
and issuable after the common stock reaches at least a $1.00 per
share closing price in trading. To date, this has not occurred but
may happen in the future upon which the Company will issue 500,000
common shares to the non-controlling interest owners of Aire
Fitness.
NOTE 9 – RELATED PARTY ACTIVITY
Accounts Payable and Accrued Expenses
There
are amounts outstanding due to related parties of the Company of
$1,342,038 and $1,339,352, respectively, as of June 30, 2021 and
December 31, 2020 related to amounts due to employees, management
and members of the Board of Directors according to verbal and
written agreements that have not been paid as of period end which
are included in accounts payable and accrued expenses on the
balance sheet. See Note 8.
As is
mentioned in Note 7, Reginald Thomas was appointed to the Board of
Directors of the Company in August 2018. Mr. Thomas is the brother
to the CEO Stephen J. Thomas III. According to an agreement with
Mr. Reginald Thomas, he is to receive $10,000 per quarter and
1,000,000 shares of restricted common stock valued at approximately
$120,000 vesting quarterly over twenty-four months. The quarterly
payment of $10,000 may be suspended by the Company if the Company
has not been adequately funded.
Leases
See
Note 8 for office lease used by CEO.
Debt Financing and Amounts Payable
As of
June 30, 2021, there are amounts due to management/shareholders
included in financing arrangements, of which $88,520 is payable
from the Company to Stephen J. Thomas III, CEO of the Company. See
note 5.
Revenue Transactions and Accounts Receivable
During
the six months ended June 30, 2021, Blue Collar provided production
services to an entity controlled by the Blue Collar CEO (355 LA,
LLC or “355”) for which it recorded revenues of $0 and
$235,149, respectively, and had accounts receivable outstanding as
of June 30, 2021 and December 31, 2020 of $0 and $0, respectively,
which is included in accounts receivable on the consolidated
balance sheet. 355 was formed in October 2019 by the CEO of Blue
Collar for the purpose of production of certain additional footage
for a 355 customer. 355 has opportunity to engage with other
production relationships outside of using Blue Collar.
Other Agreements
On
April 17, 2018, the CEO of the Company, Stephen Thomas, signed an
agreement with New Orbit Technologies, S.A.P.I. de C.V., a Mexican
corporation, (“New Orbit”), majority owned and
controlled by Stephen Thomas, related to a license agreement for
the distribution of TPT licensed products, software and services
related to Lion Phone and ViewMe Live within Mexico and Latin
America (“License Agreement”). The License Agreement
provides for New Orbit to receive a fully paid-up, royalty-free,
non-transferable license for perpetuity with termination only under
situations such as bankruptcy, insolvency or material breach by
either party and provides for New Orbit to pay the Company fees
equal to 50% of net income generated from the applicable
activities. The transaction was approved by the Company’s
Board of Directors in June 2018. There has been no activity on this
agreement.
NOTE 10 – GOODWILL AND INTANGIBLE ASSETS
Goodwill
and intangible assets are comprised of the following:
June
30, 2021
|
|
Gross carrying amount
(1)
|
Accumulated
Amortization
|
Net Book Value
|
Useful Life
|
|
Customer
Base
|
$938,000
|
$(259,065)
|
$678,935
|
3-10
|
|
Developed
Technology
|
4,595,600
|
(1,872,287)
|
2,723,313
|
9
|
|
Film
Library
|
957,000
|
(213,200)
|
743,800
|
11
|
|
Trademarks and
Tradenames
|
132,000
|
(32,535)
|
99,465
|
12
|
|
Favorable
leases
|
95,000
|
(67,840)
|
27,160
|
3
|
|
Other
|
76,798
|
(3,840)
|
72,958
|
10
|
|
|
6,794,398
|
(2,448,767)
|
4,345,631
|
|
|
|
|
|
|
|
|
Goodwill
|
$768,091
|
$—
|
$768,091
|
|
Amortization
expense was $369,310 and $365,470 for the six months ended June 30,
2021 and 2020, respectively.
December 31, 2020
|
|
Gross carrying
amount
|
Accumulated
Amortization
|
Net Book Value
|
Useful Life
|
|
Customer
Base
|
$938,000
|
(207,771)
|
$730,229
|
3-10
|
|
Developed
Technology
|
4,595,600
|
(1,616,975)
|
2,978,625
|
9
|
|
Film
Library
|
957,000
|
(177,100)
|
779,900
|
11
|
|
Trademarks and
Tradenames
|
132,000
|
(26,731)
|
105,269
|
12
|
|
Favorable
leases
|
95,000
|
(50,880)
|
44,120
|
3
|
|
Other
|
76,798
|
---
|
76,798
|
|
|
Total intangible
assets, net
|
$6,794,398
|
(2,079,457)
|
$4,714,941
|
|
|
|
|
|
|
|
|
Goodwill
|
$768,091
|
—
|
$768,091
|
|
Remaining
amortization of the intangible assets is as following for the next
five years and beyond:
|
2021
|
$389,744
|
|
2022
|
730,059
|
|
2023
|
719,859
|
|
2024
|
719,859
|
|
2025
|
719,859
|
|
Thereafter
|
1,066,251
|
|
|
$4,345,631
|
NOTE 11 – SEGMENT REPORTING
ASC 280, “Segment Reporting”, establishes standards for
reporting information about operating segments on a basis
consistent with the Company's internal organizational structure as
well as information about geographical areas, business segments and
major customers in financial statements for details on the
Company's business segments.
The Company's chief operating decision maker (“CODM”)
has been identified as the CEO who reviews the financial
information of separate operating segments when making decisions
about allocating resources and assessing performance of the group.
Based on management's assessment, the Company considers its most
significant segments for 2021 and 2020 are those in which it is
providing Broadband Internet through TPT SpeedConnect and Media
Production services through Blue Collar Medical Testing services
through TPT MedTech and QuikLABs.
The following tables present summary information by segment for the
three months ended June 30, 2021 and 2020
respectively:
|
2021
|
|
|
|
|
|
|
|
TPT
SpeedConnect
|
Blue
Collar
|
TPT
MedTech and QuikLABS
|
Corporate and
other
|
Total
|
|
Revenue
|
$1,959,818
|
$511,454
|
$81,458
|
$26,490
|
$2,579,180
|
|
Cost of
sales
|
$(1,520,612)
|
$(212,565)
|
$(384,233)
|
$(72,231)
|
$(2,189,641)
|
|
Net income
(loss)
|
$(355,593)
|
$134,320
|
$(610,830)
|
$(1,339,095)
|
$(2,171,198)
|
|
Total
assets
|
$9,473,626
|
$1,242,360
|
$483.597
|
$1,287,285
|
$12,486,868
|
|
Depreciation and
amortization
|
$(153,093)
|
$(27,834)
|
$—
|
$(168,070)
|
$(348,997)
|
|
Derivative
gain
|
$—
|
$—
|
$—
|
$189,274
|
$189,274
|
|
Interest
expense
|
$(145,465)
|
$(6,071)
|
$—
|
$(257,707)
|
$(409,243)
|
|
2020
|
|
|
|
|
|
|
TPT
SpeedConnect
|
Blue
Collar
|
Corporate
and other
|
Total
|
|
Revenue
|
$2,556,832
|
$172,687
|
$27,252
|
$2,756,771
|
|
Cost of
revenue
|
$(1,510,706)
|
$(140,743)
|
$23,189
|
$(1,628,260)
|
|
Net income
(loss)
|
$455,583
|
$(187,860)
|
$2,202,487
|
$2,470,210
|
|
Total
assets
|
$6,941,344
|
$420,298
|
$8,084,489
|
$15,446,131
|
|
Depreciation and
amortization
|
$(112,794)
|
$(37,112)
|
$(292,793)
|
$(442,699)
|
|
Derivative
expense
|
$—
|
$—
|
$3,496,653
|
$3,496,653
|
|
Interest
expense
|
$(26,449)
|
$(9,426)
|
$251,469
|
$(287,344)
|
The
following tables present summary information by segment for the six
months ended June 30, 2021 and 2020 respectively:
|
2021
|
|
|
|
|
|
|
|
TPT
SpeedConnect
|
Blue
Collar
|
TPT
MedTech and QuikLABS
|
Corporate and
other
|
Total
|
|
Revenue
|
$4,050,224
|
$711,454
|
$457,108
|
$72,744
|
$5,291,530
|
|
Cost of
sales
|
$(3,138,744)
|
$(335,830)
|
$(766,208)
|
$(110,513)
|
$(4,351,295)
|
|
Net income
(loss)
|
$(600,055)
|
$30,906
|
$(1,051,268)
|
$(2,263,833)
|
$(3,884,250)
|
|
Total
assets
|
$9,473,626
|
$1,242,360
|
$483.597
|
$1,287,285
|
$12,486,868
|
|
Depreciation and
amortization
|
$(301,640)
|
$(55,668)
|
$—
|
$(331,705)
|
$(689,013)
|
|
Derivative
gain
|
$—
|
$—
|
$—
|
$374,549
|
$374,549
|
|
Interest
expense
|
$(335,934)
|
$(14,343)
|
$—
|
$(449,845)
|
$(800,122)
|
|
2020
|
|
|
|
|
|
|
TPT
SpeedConnect
|
Blue
Collar
|
Corporate
and other
|
Total
|
|
Revenue
|
$5,264,486
|
$526,092
|
$42,166
|
$5,832,744
|
|
Cost of
revenue
|
$3,228,092
|
$288,838
|
$220,747
|
$3,737,677
|
|
Net income
(loss)
|
$742,373
|
$(245,955)
|
$(2,992,406)
|
$(2,495,988)
|
|
Depreciation and
amortization
|
$239,988
|
$64,946
|
$577,903
|
$882,837
|
|
Derivative
expense
|
$—
|
$—
|
$400,019
|
$400,019
|
|
Interest
expense
|
$80,453
|
$19,644
|
$734,004
|
$834,101
|
NOTE 12 – SUBSEQUENT EVENTS
Stock Purchase Agreement
On May
28, 2021, the Company entered into a Common Stock Purchase
Agreement (“Purchase Agreement”) and Registration
Rights Agreement (“Registration Rights Agreement”) with
White Lion Capital, LLC, a Nevada limited liability company
(“White Lion”). Under the terms of the Purchase
Agreement, White Lion agreed to provide the Company with up to
$5,000,000 upon effectiveness of a registration statement on Form
S-1 (the “Registration Statement”) filed with the U.S.
Securities and Exchange Commission (the “Commission”).
A Form S-1 was filed on June 30, 2021 regarding this transaction.
Subsequent Amendments to Forms S-1 related to this transaction were
filed on July 6, 2021 and July 14, 2021. The registrations
statement was declared effective July 19, 2021.
The
Company has the discretion to deliver purchase notice to White Lion
and White Lion will be obligated to purchase shares of the
Company’s common stock, par value $0.001 per share (the
“Common Stock”) based on the investment amount
specified in each purchase notice. The maximum amount of the
Purchase Notice shall be the lesser
of: (i) 200% of the Average Daily Trading Volume or (ii) the
Investment Limit divided by the highest closing price of the Common
Stock over the most recent five (5) Business Days including the
respective Purchase Date. Notwithstanding the forgoing, the
Investor may waive the Purchase Notice Limit at any time to allow
the Investor to purchase additional shares under a Purchase
Notice. Pursuant to the Purchase Agreement, White Lion and
its affiliates will not be permitted to purchase and the Company
may not put shares of the Company’s Common Stock to White
Lion that would result in White Lion’s beneficial ownership
equaling more than 9.99% of the Company’s outstanding Common
Stock. The price of each purchase share shall be equal to
eighty-five percent (85%) of the Market Price (as defined in the
Purchase Agreement). Purchase Notices may be delivered by the
Company to White Lion until the earlier of seven (7) months (until
December 31, 2021) or the date on which White Lion has purchased an
aggregate of $5,000,000 worth of Common Stock under the terms of
the Purchase Agreement.
In
August 2021, the Company has given purchase notices for 9,000,000
shares of common stock under the Purchase Agreement and has
received proceeds of $83,420, net of expenses. There are another
10,000,000 shares that have been moved to escrow in the name of
White Lion waiting for the next purchase
notices.
Financing Arrangements
On July
23, 2021, the Company entered into an Agreement for the Purchase
and Sale of Future Receipts (“Lendora Factoring
Agreement”). The balance to be purchased and sold is $299,800
for which the Company received $190,000, net of fees. Under the
Lendora Factoring Agreement, the Company is to pay $18,737.5 per
week for 16 weeks at an effective interest rate of approximately
36% annually. The Lendora Factoring Agreement includes a guaranty
by the CEO of the Company, Stephen J. Thomas III.
On July 23, 2021, the Company entered into a consolidation
agreement for the Purchase and Sale of Future Receipts with Lendora
Capital (“Lendora Consolidation Agreement”). The
balance to be purchased and sold gave consideration for all then
outstanding factoring agreements such as the NewCo Factoring
Agreements, the NewCo Factoring Agreement #3 and the Lendora
Factoring Agreement and amounted to 1,522,984 for which the Company
had outstanding balances totaling $1,016,000. Payments under this
Lendora Consolidation Agreement supercedes all other factoring
agreement payments and includes $ 31,728.85 per week, at an
effective interest rate of approximately 36% annually, for 48
weeks. The QFS Factoring Agreement includes a guaranty by the CEO
of the Company.
Litigation
A
lawsuit was filed in Michigan by the one of the former owners of
SpeedConnect, LLC, John Ogren. Mr. Ogren claimed he was
owed back wages related to the acquisition agreement wherein the
Company acquired the assets of SpeedConnect, LLC and kept him on
through a consulting agreement. The Company’s position
was that he ultimately resigned in writing and was not due any back
wages. In August 2021, Mr. Ogren was awarded $334,908 in back wages
by an Arbitrator. This amount has been included in accounts payable
as of June 30, 2021 and expensed in the statement of operations as
other expenses in the six months ended June 30, 2021.
Subsequent
events were reviewed through the date the financial statements were
issued.
TPT GLOBAL TECH, INC.
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
Table of Contents
Audited Consolidated Financial Statements for the years ended
December 31, 2020 and 2019
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the
Shareholders and the Board of Directors of TPT Global Tech,
Inc.:
Opinion on the Financial Statements
We have
audited the accompanying consolidated balance sheets of TPT Global
Tech, Inc. (“the Company”) as of December 31, 2020 and
2019, the related consolidated statements of operations,
stockholders’ deficit, and cash flows for each of the years
in the two-year period ended December 31, 2020 and the related
notes (collectively referred to as the “financial
statements”). In our opinion, the financial statements
referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2020 and 2019,
and the results of its operations and its cash flows for each of
the years in the two-year period ended December 31, 2020, in
conformity with accounting principles generally accepted in the
United States of America.
Explanatory Paragraph Regarding Going Concern
The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note
3 to the financial statements, the Company has suffered recurring
losses from operations and has insufficient cash flows from
operations to support working capital requirements. These factors
raise substantial doubt about the Company’s ability to
continue as a going concern. Management's plans in regard to these
matters are also described in Note 3. The financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
Basis for Opinion
These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a
public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting.
As part of our audit, we are required to obtain an understanding of
internal control over financial reporting, but not for the purpose
of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining on a test basis, evidence
regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our
opinion.
Critical Audit Matters
The
critical audit matters communicated below are matters arising from
the current-period audit of the consolidated financial statements
that were communicated or required to be communicated to the audit
committee and that: (1) relate to accounts or disclosures that are
material to the financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The
communication of a critical audit matter does not alter in any way
our opinion on the financial statements, taken as a whole, and we
are not, by communicating the critical audit matters below,
providing a separate audit opinion on the critical audit matters or
on the accounts or disclosures to which it relates.
Long-Lived
Asset Impairment Assessment
Critical Audit Matter Description
As
described in Note 1 to the consolidated financial statements, the
Company performs impairment testing for its long-lived assets when
events or changes in circumstances indicate that its carrying
amount may not be recoverable and exceeds its fair value. Due to
challenging industry and economic conditions, the Company tested
its long-lived assets during the year ended December 31,
2020.
We
identified the evaluation of the impairment analysis for long-lived
assets as a critical audit matter because of the significant
estimates and assumptions management used in the related cash flow
analysis. Performing audit procedures to evaluate the
reasonableness of these estimates and assumptions required a high
degree of auditor judgment and an increased extent of
effort.
How the Critical Audit Matter Was Addressed in the
Audit
Our
audit procedures related to the following:
●
Testing
management’s process for developing the recoverability
test.
●
Evaluating the
appropriateness of the cash flow model used by
management.
●
Testing the
completeness and accuracy of underlying data used in the
recoverability test.
●
Evaluating the
significant assumptions used by management related to revenues,
gross margin, other operating expenses, income taxes and long-term
growth rate to discern whether they are reasonable considering (i)
the current and past performance of the entity; (ii) the
consistency with external market and industry data; and (iii)
whether these assumptions were consistent with evidence obtained in
other areas of the audit.
●
Professionals with
specialized skill and knowledge were utilized by the Firm to assist
in the evaluation of the cash flow model and assumptions used by
management in the related recoverability test.
Goodwill
Impairment Assessment
Critical Audit Matter Description
As
described in Note 1 to the consolidated financial statements, the
Company tests goodwill for impairment annually at the reporting
unit level, or more frequently, if events or circumstances indicate
it is more likely than not that the fair value of a reporting unit
is less than its carrying amount. Reporting units are tested for
impairment by comparing the estimated fair value of each reporting
unit with its carrying amount. If the carrying amount of a
reporting unit exceeds its estimated fair value, an impairment loss
is recorded based on the difference between the fair value and
carrying amount, not to exceed the associated carrying amount of
goodwill. The Company’s annual impairment test occurred on
December 31, 2020.
We
identified the evaluation of the impairment analysis for goodwill
as a critical audit matter because of the significant estimates and
assumptions management used in the discounted cash flow analysis
performed by management to determine fair value of the reporting
unit. Performing audit procedures to evaluate the reasonableness of
these estimates and assumptions required a high degree of auditor
judgment and an increased extent of effort.
How the Critical Audit Matter Was Addressed in the
Audit
Our
audit procedures related to the following:
●
Testing
management’s process for developing the fair value
estimate.
●
Evaluating the
appropriateness of the discounted cash flow model used by
management.
●
Testing the
completeness and accuracy of underlying data used in the fair value
estimate.
●
Evaluating the
significant assumptions used by management related to revenues,
gross margin, other operating expenses, long term growth rate, and
discount rate to discern whether they are reasonable considering
(i) the current and past performance of the entity; (ii) the
consistency with external market and industry data; and (iii)
whether these assumptions were consistent with evidence obtained in
other areas of the audit.
●
Professionals with
specialized skill and knowledge were utilized by the Firm to assist
in the evaluation of the discounted cash flow model and discount
rate assumptions.
Business
Acquisition
Description of the Critical Audit Matter
As
described in Note 2 to the consolidated financial statements, the
Company acquired 75% ownership of Aire Fitness for a total purchase
price of $610,585. The Company accounted for this acquisition as a
business combination. Accordingly, the purchase price was allocated
to the assets acquired and liabilities assumed at fair value as of
the transaction date. The Company utilized a third-party valuation
specialist to assist in determining the fair value of the
consideration granted and identifiable intangible assets acquired
in the acquisition. We identified the estimation of the fair value
of the consideration transferred, assets acquired, and liabilities
assumed in the acquisition as a critical audit matter.
We
identified the valuation of the consideration transferred, assets
acquired, and liabilities assumed as a critical audit matter
because of the significant estimates and assumptions management
made to determine the fair value of certain of these assets. This
required a high degree of auditor judgment and an increased extent
of effort when performing audit procedures to evaluate the
reasonableness of the valuation methodology applied and the
assumptions used such as forecasted sales growth rates, cash flows,
and estimated discount rates. In addition, the audit effort
involved the use of professionals with specialized skill and
knowledge.
How the Critical Audit Matter Was Addressed in the
Audit
Our
audit procedures related to the following:
●
We evaluated
management’s and the valuation specialist’s
identification of assets acquired and liabilities
assumed.
●
We obtained
management’s purchase price allocation detailing fair values
assigned to acquired tangible and intangible assets.
●
We obtained the
valuation report prepared by the valuation specialist engaged by
management to assist in the purchase price allocation, including
determination of fair values assigned to acquired intangible
assets, and examined valuation methods used and qualifications of
the specialist.
●
We examined the
completeness and accuracy of the underlying data supporting the
significant assumptions and estimates used in the valuation report,
including historical and projected financial
information.
●
We evaluated the
accuracy and completeness of the financial statement presentation
and disclosure of the acquisitions.
●
Professionals with
specialized skill and knowledge were utilized by the Firm to assist
in the evaluation of the valuation models deployed by
management.
Determination
and Valuation of Derivative Liabilities
Critical Audit Matter Description
As
described further in Note 6 of the consolidated financial
statements, during the year ended December 31, 2020 and in prior
periods, the Company issued convertible notes and warrants that
required management to assess whether the conversion features of
the convertible notes required bifurcation and separate valuation
as a derivative liability and whether the warrants required
accounting as derivative liabilities. The Company determined that
the conversion features of certain of its convertible notes and
certain warrants issued in financing arrangements required to be
accounted for as derivative liabilities due to: (1) certain
conversion features did not contain an explicit limit on the number
of shares to be delivered in share settlement; and (2) the fact the
Company could not assert it had sufficient authorized but unissued
shares available to settle certain instruments considering all
other stock-based commitments. The derivative liabilities were
recorded at fair value when issued and subsequently re-measured to
fair value upon settlement or at the end of each reporting period.
The Company utilized valuation models to determine the fair value
of the derivative liabilities depending on the features embedded in
the instruments. These models use certain assumptions related to
exercise price, term, expected volatility, and risk-free interest
rate.
We
identified auditing the determination and valuation of the
derivative liabilities as a critical audit matter due to the
significant judgements used by the Company in determining whether
the embedded conversion features and warrants required derivative
accounting treatment and the significant judgements used in
determining the fair value of the derivative liabilities. Auditing
the determination and valuation of the derivative liabilities
involved a high degree of auditor judgement, and specialized skills
and knowledge were needed.
How the Critical Audit Matter Was Addressed in the
Audit
Our
audit procedures included the following, among others:
●
We inspected and
reviewed debt agreements, warrant agreements, conversion notices,
and settlement agreements to evaluate the Company's determination
of whether derivative accounting was required, including assessing
and evaluating management's application of relevant accounting
standards to such transactions.
●
We evaluated the
reasonableness and appropriateness of the choice of valuation model
used for each specific derivative instrument.
●
We tested the
reasonableness of the assumptions used by the Company in the
valuation models, including exercise price, term, expected
volatility, and risk-free interest rate.
●
We tested the
accuracy and completeness of data used by the Company in developing
the assumptions used in the valuation models.
●
We developed an
independent expectation for comparison to the Company's estimate,
which included developing our own valuation model and
assumptions.
●
We evaluated the
accuracy and completeness of the Company's presentation of these
instruments in the financial statements and related disclosures in
Note 6, including evaluating whether such disclosures were in
accordance with relevant accounting standards.
●
Professionals with
specialized skill and knowledge were utilized by the Firm to assist
in the evaluation of the valuation models deployed by
management.
/s/ Sadler, Gibb & Associates, LLC
We have served as the Company’s auditor since
2016.
Draper, UT
April 15, 2021
TPT Global Tech, Inc.
CONSOLIDATED BALANCE SHEETS
ASSETS
|
|
December 31,
|
|
|
|
2020
|
2019
|
|
CURRENT
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$19,309
|
$192,172
|
|
Accounts
receivable, net
|
164,818
|
379,805
|
|
Prepaid expenses
and other current assets
|
180,362
|
48,648
|
|
Total current
assets
|
364,489
|
620,625
|
|
NON-CURRENT
ASSETS
|
|
|
|
Property and
equipment, net
|
2,145,597
|
4,423,148
|
|
Operating lease
right of use assets
|
4,732,459
|
3,886,045
|
|
Intangible assets,
net
|
4,714,941
|
5,369,083
|
|
Goodwill
|
768,091
|
1,050,366
|
|
Deposits and other
assets
|
111,111
|
104,486
|
|
Total non-current
assets
|
12,472,199
|
14,833,128
|
|
TOTAL
ASSETS
|
$12,836,688
|
$15,453,753
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
CURRENT
LIABILITIES
|
|
|
|
Accounts payable
and accrued expenses
|
$7,866,140
|
$6,543,635
|
|
Deferred
revenue
|
341,789
|
305,741
|
|
Customer
liability
|
338,725
|
338,725
|
|
Current portion of
loans, advances and factoring agreements
|
2,308,753
|
344,758
|
|
Current portion of
convertible notes payable, net of discounts
|
1,711,098
|
2,101,649
|
|
Notes payable
– related parties, net of discounts
|
10,559,796
|
9,297,078
|
|
Current portion of
convertible notes payable – related party, net
of discounts
|
922,481
|
534,381
|
|
Derivative
liabilities
|
5,265,139
|
8,836,514
|
|
Current portion of
operating lease liabilities
|
2,682,722
|
1,921,843
|
|
Financing lease
liabilities
|
184,939
|
—
|
|
Financing lease
liability – related party
|
654,633
|
626,561
|
|
Total
current liabilities
|
32,836,215
|
30,850,885
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
Long term
portion:
|
|
|
|
Loans, advances and
factoring agreements, net of current portion and
discounts
|
843,577
|
1,000,500
|
|
Convertible notes
payable – related parties, net of current portion and
discounts
|
---
|
388,500
|
|
Operating lease
liabilities, net of current portion
|
2,872,952
|
2,009,737
|
|
Total
non-current liabilities
|
3,716,529
|
3,398,737
|
|
Total
liabilities
|
36,552,744
|
34,249,622
|
|
|
|
|
|
Commitments and
contingencies
|
—
|
—
|
See accompanying notes to consolidated financial
statements.
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
|
STOCKHOLDER’S
DEFICIT
|
|
|
|
PREFERRED STOCK,
$.001 PAR VALUE 100,000,000 SHARES AUTHORIZED:
|
|
|
|
|
|
|
|
Convertible
Preferred Series A, 1,000,000 designated - 1,000,000 shares issued
and outstanding as of December 31, 2020 and 2019,
respectively
|
---
|
1,000
|
|
Convertible
Preferred Series B, 3,000,000 designated - 2,588,693 shares issued
and outstanding as of December 31, 2020 and 2019,
respectively
|
---
|
2,589
|
|
Convertible
Preferred Series C – 3,000,000 shares designated, zero shares
issued and outstanding as of December 31, 2020 and 2019,
respectively
|
—
|
—
|
|
Convertible Preferred Series D – 20,000,000 shares
designated, zero shares issued and outstanding as of December 31,
2020 and 2019, respectively
|
—
|
—
|
|
Common stock, $.001
par value, 1,000,000,000 shares authorized, 865,564,371 and
177,629,939 as of December 31, 2020 and 2019,
respectively
|
865,565
|
177,630
|
|
Subscriptions
payable
|
125,052
|
574,256
|
|
Additional paid-in
capital
|
11,462,940
|
13,279,749
|
|
Accumulated
deficit
|
(40,902,944)
|
(32,831,093)
|
|
Total TPT Global
Tech, Inc. Stockholders’ deficit
|
(28,449,387)
|
(18,795,869)
|
|
Non-controlling
interests
|
(61,142)
|
---
|
|
Total stockholders'
deficit
|
(28,510,529)
|
(18,795,869)
|
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
$12,836,688
|
$15,453,753
|
See accompanying notes to consolidated financial
statements.
TPT Global Tech, Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
For the years ended December
31,
|
|
|
|
2020
|
2019
|
|
|
|
|
|
REVENUES:
|
|
|
|
Products
|
$39,391
|
$53,605
|
|
Services
|
11,054,779
|
10,158,772
|
|
Total
Revenues
|
11,094,170
|
10,212,377
|
|
|
|
|
|
COST OF
SALES:
|
|
|
|
Products
|
38,455
|
55,470
|
|
Services
|
7,155,038
|
5,856,531
|
|
Total Costs of
Sales
|
7,193,493
|
5,912,001
|
|
Gross
profit
|
3,900,677
|
4,300,376
|
|
OPERATING
EXPENSES:
|
|
|
|
Sales and
marketing
|
178,539
|
55,882
|
|
Professional
|
2,077,770
|
1,888,047
|
|
Payroll and
related
|
2,502,461
|
1,513,050
|
|
General and
administrative
|
1,857,608
|
1,542,886
|
|
Research and
development
|
1,000,000
|
---
|
|
Impairment of
goodwill and long-lived assets
|
2,702,996
|
949,872
|
|
Depreciation
|
1,054,702
|
591,069
|
|
Amortization
|
730,940
|
868,622
|
|
Total
operating expenses
|
12,105,016
|
7,409,428
|
|
|
|
|
|
Loss from
operations
|
(8,204,339)
|
(3,109,052)
|
|
|
|
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
Derivative gain
(expense)
|
1,140,323
|
(7,476,908)
|
|
Gain on debt
extinguishment
|
1,252,131
|
---
|
|
Gain (loss) on debt
conversions
|
(775,650)
|
138,815
|
|
Interest
expense
|
(1,531,733)
|
(3,581,020)
|
|
Total
other income (expense)
|
85,071
|
(10,919,113)
|
|
|
|
|
|
Net loss before
income taxes
|
(8,119,268)
|
(14,028,165)
|
|
Income
taxes
|
—
|
—
|
|
Net loss before
non-controlling interests
|
(8,119,268)
|
$(14,028,165)
|
|
Net loss
attributable to non-controlling interests
|
47,417
|
---
|
|
Net loss
attributable to TPT Global Tech, Inc. Shareholders
|
$(8,071,851)
|
(14,028,165)
|
|
|
|
|
|
Loss per common
shares-basic and diluted
|
$(0.01)
|
$(0.10)
|
|
|
|
|
|
Weighted-average
common shares outstanding-basic and diluted
|
740,163,898
|
141,594,930
|
|
|
|
|
See accompanying notes to consolidated financial
statements.
TPT Global Tech, Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For the years ended December 31, 2020 and 2019
|
|
Series
A
Preferred
Stock
|
Series
B
Preferred
Stock
|
Common
Stock
|
|
|
|
|||||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Subscriptions
Payable
|
Additional Paid-in
Capital
|
Accumulated
Deficit
|
Non-Controlling
Interest
|
Total
Stockholders’ Deficit
|
|
Balance as of
December 31, 2018
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
136,953,904
|
$136,954
|
$168,006
|
$12,567,881
|
$(18,802,928)
|
$---
|
$(5,926,498)
|
|
Common stock
issuable for director services
|
|
|
|
|
|
|
406,250
|
|
|
|
406,250
|
|
Stock options
issued for services
|
|
|
|
|
|
|
|
140,668
|
|
|
140,668
|
|
Common stock issued
for convertible promissory notes
|
|
|
|
|
40,676,035
|
40,676
|
|
571,200
|
|
|
611,876
|
|
Net
Loss
|
|
|
|
|
|
|
|
|
(14,028,165)
|
|
(14,028,165)
|
|
Balance as of
December 31, 2019
|
1,000,000
|
$1,000
|
2,588,693
|
$2,589
|
177,629,939
|
$177,630
|
$574,256
|
$13,279,749
|
$(32,831,093)
|
$—
|
$(18,795,869)
|
|
Common stock issued
for services
|
—
|
—
|
—
|
—
|
7,002,000
|
7,002
|
(812,773)
|
859,771
|
—
|
—
|
54,000
|
|
Common stock
issuable for services
|
---
|
---
|
---
|
---
|
---
|
---
|
363,569
|
---
|
---
|
---
|
363,569
|
|
Equity interest in
QuikLABS issued for cash
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
368,000
|
—
|
92,000
|
460,000
|
|
Acquisition of Aire
Fitness
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
113,333
|
113,333
|
|
Common stock issued
for settlement of liability
|
—
|
—
|
—
|
—
|
1,000,000
|
1,000
|
—
|
57,000
|
—
|
—
|
58,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of
preferred stock as mezzanine
|
(1,000,000)
|
(1,000)
|
(2,588,693)
|
(2,589)
|
----
|
—
|
—
|
(4,790,884)
|
—
|
—
|
(4,794,473)
|
|
Common stock issued
for convertible promissory notes
|
—
|
—
|
—
|
—
|
679,932,432
|
679,933
|
—
|
1,470,246
|
—
|
---
|
2,150,179
|
|
InnovaQor
merger
|
---
|
---
|
---
|
---
|
---
|
---
|
---
|
219,058
|
---
|
(219,058)
|
---
|
|
Net
Loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(8,071,851)
|
(47,417)
|
(8,119,268)
|
|
Balance as of
December 31, 2020
|
—
|
$—
|
—
|
$—
|
865,564,371
|
$865,565
|
$125,052
|
$11,462,940
|
$(40,902,944)
|
$(61,142)
|
$(28,510,529)
|
See accompanying notes to consolidated financial
statements.
TPT Global Tech, Inc.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
For the years ended
December 31,
|
|
|
|
2020
|
2019
|
|
Cash flows from
operating activities:
|
|
|
|
Net
loss
|
$(8,119,268)
|
$(14,028,165)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation
|
1,054,702
|
591,069
|
|
Amortization
|
730,940
|
868,622
|
|
Amortization
of debt discounts
|
738,794
|
2,797,185
|
|
Promissory
note issued for research and development
|
1,000,000
|
—
|
|
Note
payable issued for legal fees
|
350,000
|
---
|
|
Gain
on conversion of notes payable
|
775,650
|
(138,815)
|
|
Derivative
expense (gain)
|
(1,140,323)
|
7,476,908
|
|
Gain
on extinguishment of debt
|
(1,252,131)
|
---
|
|
Impairment
of goodwill and long-lived assets
|
2,702,996
|
949,877
|
|
Share-based
compensation: Common stock (issued and payable)
|
417,649
|
406,250
|
|
Stock
options
|
---
|
140,668
|
|
Changes
in operating assets and liabilities:
|
|
|
|
Accounts
receivable
|
254,022
|
(330,883)
|
|
Prepaid
expenses and other assets
|
(138,339)
|
57,340
|
|
Accounts payable and accrued expenses
|
1,314,086
|
766,867
|
|
Other
liabilities
|
43,969
|
69,291
|
|
Net
change in operating lease assets and liabilities
|
777,680
|
45,535
|
|
Net
cash used in operating activities
|
(489,573)
|
(328,251)
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Acquisition
of property and equipment
|
(424,560)
|
(103,515)
|
|
Purchase
of intangibles
|
(76,798)
|
---
|
|
Payment
for business acquisitions, net of cash acquired
|
460
|
(798,386)
|
|
Net
cash used in investing activities
|
(500,898)
|
(901,901)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds
from sale of non-controlling interests in QuikLABS
|
460,000
|
—
|
|
Proceeds
from convertible notes and notes payable – related
parties
|
2,400
|
293,707
|
|
Proceeds
from convertible notes, loans and advances
|
1,753,204
|
2,613,047
|
|
Payments
on convertible loans, advances and factoring
agreements
|
(1,169,330)
|
(1,440,139)
|
|
Payments
on convertible notes and amounts payable – related
parties
|
(212,256)
|
(50,720)
|
|
Payments
on financing lease liabilities
|
(16,410)
|
(25,357)
|
|
Net
cash provided by financing activities
|
817,608
|
1,390,538
|
|
|
|
|
|
Net change in
cash
|
(172,863)
|
160,386
|
|
Cash and cash
equivalents – beginning of period
|
192,172
|
31,786
|
|
|
|
|
|
Cash and cash
equivalents – end of period
|
$19,309
|
$192,172
|
|
|
|
|
See accompanying notes to consolidated financial
statements.
TPT Global Tech, Inc.
CONSOLIDATED STATEMENTS
OF CASH FLOWS - CONTINUED
Supplemental Cash Flow Information:
Cash
used for:
|
|
2020
|
2019
|
|
Interest
expense
|
$—
|
$—
|
|
Taxes
|
$—
|
$—
|
Non-Cash Investing and Financing Activity:
|
|
2020
|
2019
|
|
Debt discount on
factoring agreement
|
$634,341
|
$2,011,600
|
|
Acquisition of
assets of SpeedConnect – Liabilities assumed
|
$---
|
$1,894,964
|
|
Operating lase
liabilities and right of use assets
|
$---
|
$5,003,178
|
|
Common stock issued
for conversion of convertible notes
|
$2,258,637
|
—
|
|
Convertible
Preferred Series A and B reclassified to mezzanine
equity
|
$4,790,884
|
$—
|
|
Acquisition of Aire
Fitness – Liabilities assumed
|
$610,919
|
$—
|
|
Purchase of
property and equipment under finance leases
|
$201,349
|
$---
|
|
InnovaQor Merger-
non controlling interest
|
$219,058
|
$---
|
See accompanying notes to consolidated financial
statements.
TPT Global Tech, Inc.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2020
NOTE
1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature
of Operations
The
Company was originally incorporated in 1988 in the state of
Florida. TPT Global, Inc., a Nevada corporation formed in June
2014, merged with Ally Pharma US, Inc., a Florida corporation,
(“Ally Pharma”, formerly known as Gold Royalty
Corporation) in a “reverse merger” wherein Ally Pharma
issued 110,000,000 shares of Common Stock, or 80% ownership, to the
owners of TPT Global, Inc. in exchange for all outstanding common
stock of TPT Global Inc. and Ally Pharma agreed to change its name
to TPT Global Tech, Inc. (jointly referred to as “the
Company” or “TPTG”).
The
following acquisitions have resulted in entities which have been
consolidated into TPTG. In 2014 the Company acquired all the assets
of K Telecom and Wireless LLC (“K Telecom”) and Global
Telecom International LLC (“Global Telecom”). Effective
January 31, 2015, TPTG completed its acquisition of 100% of the
outstanding stock of Copperhead Digital Holdings, Inc.
(“Copperhead Digital”) and Subsidiaries, TruCom, LLC
(“TruCom”), Nevada Utilities, Inc. (“Nevada
Utilities”) and CityNet Arizona, LLC (“CityNet”).
Effective September 30, 2016, the company acquired 100% ownership
in San Diego Media Inc. (“SDM”). In October 2017, we
entered into agreements to acquire Blue Collar, Inc. (“Blue
Collar”) which closed as of September 1, 2018. On May 7, 2019
we completed the acquisition of a majority of the assets of
SpeedConnect, LLC, which assets were conveyed into our wholly owned
subsidiary TPT SpeedConnect, LLC (“TPT SC” or
“TPT SpeedConnect”) which was formed on April 16, 2019.
On January 8, 2020 we formed TPT Federal, LLC (“TPT
Federal”), on March 7, 2020 we acquired 75% interest in
Bridget Internet, LLC (“Bridge Internet” or
“BIC”). On March 30, 2020 we formed TPT MedTech, LLC
(“TPT MedTech”) and on June 6, 2020 we formed
InnovaQor, Inc (“InnovaQor”). In July and August 2020, the Company
formed Quiklab 1 LLC, QuikLAB 2, LLC, QuikLAB 3, LLC and QuikLAB 4,
LLC where TPT MedTech owns 80% (as agreed per the operating
agreement) of all outside equity investments. Effective August 1,
2020 we closed on the acquisition of 75% of The Fitness Container,
LLC (“Air Fitness”). In July 2020, we invested in a
Hong Kong company called TPT Global Tech Asia Limited of which we
own 78%, and during 2020, InnovaQor did a reverse merger with
Southern Plains of which there ended up being a non controlling
interest of 6% as of December 31, 2020. The name of InnovaQor
remained for the merged entities but was changed to TPT Strategic,
Inc. on March 21, 2021.
We are based in San Diego, California, and operate as a
technology-based company with
divisions providing telecommunications, medical technology and
product distribution, media content for domestic and international
syndication as well as technology solutions. We operate on our own proprietary
Global Digital Media TV and Telecommunications infrastructure
platform and also provide technology solutions to businesses
domestically and worldwide. We offer Software as a Service (SaaS),
Technology Platform as a Service (PAAS), Cloud-based Unified
Communication as a Service (UCaaS) and carrier-grade performance
and support for businesses over our private IP MPLS fiber and
wireless network in the United States. Our cloud-based UCaaS
services allow businesses of any size to enjoy all the latest
voice, data, media and collaboration features in today's global
technology markets. We also operate as a Master Distributor for
Nationwide Mobile Virtual Network Operators (MVNO) and Independent
Sales Organization (ISO) as a Master Distributor for Pre-Paid
Cellphone services, Mobile phones, Cellphone Accessories and Global
Roaming Cellphones.
SIGNIFICANT
ACCOUNTING POLICIES
Principles of Consolidation
Our
consolidated financial statements include the wholly-owned accounts
of K Telecom and Global, Copperhead Digital, SDM, Blue Collar, TPT
SpeedConnect, TPT Federal, BIC, TPT MedTech, InnovaQor, Quiklab 1,
QuikLAB 2, QuikLAB 3, QuikLAB 4, Aire Fitness and TPT Global Tech
Asia Limited. The consolidated financial statements also give
effects to non-controlling interests of the QuikLABs of 20%, Aire
Fitness of 25%, TPT Global Tech Asia Limited of 22% and InnovaQor
of 6%, where appropriate. All intercompany accounts and
transactions have been eliminated in consolidation.
Reclassifications
Certain
amounts presented in previously issued financial statements have
been reclassified in these financial statements. During 2019,
impairment expense of $949,872 was recorded in Other Income
(Expense) in the statement of operations and has been reclassified
to Operating Expenses to be consistent with the current period
presentation.
Revenue Recognition
On
January 1, 2018, we adopted the new accounting standard ASC
606, Revenue from Contracts
with Customers, and all of the related amendments
(“new revenue standard”). We recorded the change, which
was immaterial, related to adopting the new revenue standard using
the modified retrospective method. Under this method, we recognized
the cumulative effect of initially applying the new revenue
standard as an adjustment to the opening balance of retained
earnings. This results in no restatement of prior periods, which
continue to be reported under the accounting standards in effect
for those periods. We expect the impact of the adoption of the new
revenue standard to continue to be immaterial on an ongoing basis.
We have applied the new revenue standard to all contracts as of the
date of initial application and as such, have used the following
criteria described below in more detail for each business
unit:
Identify the contract with the
customer.
Identify the performance
obligations in the contract.
Determine the transaction
price.
Allocate the transaction price
to performance obligations in the contract.
Recognize revenue when or as we satisfy a performance
obligation.
Reserves are recorded as a reduction in net sales and are not
considered material to our consolidated statements of income for
the years ended December 31, 2020 and 2019. In addition, we
invoice our customers for taxes assessed by governmental
authorities such as sales tax and value added taxes, where
applicable. We present these taxes on a net
basis.
The
Company’s revenue generation for the years ended December 31,
2020 and 2019 came from the following sources disaggregated by
services and products, which sources are explained in detail
below.
|
|
For the year
ended
December 31,
2020
|
For the year
ended
December 31,
2019
|
|
TPT
SpeedConnect
|
$9,958,770
|
$8,002,875
|
|
Blue
Collar
|
1,051,120
|
1,941,955
|
|
San Diego
Media
|
14,405
|
23,683
|
|
TPT
MedTech
|
30,484
|
---
|
|
Copperhead
Digital
|
---
|
189,511
|
|
Other
|
---
|
749
|
|
Total Services
Revenues
|
$11,054,779
|
$10,158,772
|
|
K Telecom –
Product Revenue
|
39,391
|
53,605
|
|
Total
Revenue
|
$11,094,170
|
$10,212,377
|
TPT SpeedConnect: ISP and Telecom Revenue
TPT
SpeedConnect is a rural Internet provider operating in 10
Midwestern States under the trade name SpeedConnect. TPT SC’s
primary business model is subscription based, pre-paid monthly
reoccurring revenues, from wireless delivered, high-speed internet
connections. In addition, the company resells third-party satellite
and DSL internet and IP telephony services. Revenue generated from
sales of telecommunications services is recognized as the
transaction with the customer is considered closed and the customer
receives and accepts the services that were the result of the
transaction. There are no financing terms or variable transaction
prices. Due date is detailed on monthly invoices distributed to
customer. Services billed monthly in advance are deferred to the
proper period as needed. Deferred revenue are contract liabilities
for cash received before performance obligations for monthly
services are satisfied. Deferred revenue for TPT SpeedConnect at
December 31, 2020 and 2019 are $292,847 and $305,741, respectively.
Certain of our products require specialized installation and
equipment. For telecom products that include installation, if the
installation meets the criteria to be considered a separate
element, product revenue is recognized upon delivery, and
installation revenue is recognized when the installation is
complete. The Installation Technician collects the signed quote
containing terms and conditions when installing the site equipment
at customer premises.
Revenue
for installation services and equipment is billed separately from
recurring ISP and telecom services and is recognized when equipment
is delivered and installation is completed. Revenue from ISP and
telecom services is recognized monthly over the contractual period,
or as services are rendered and accepted by the
customer.
The
overwhelming majority of our revenue continues to be recognized
when transactions occur. Since installation fees are generally
small relative to the size of the overall contract and because most
contracts are for two years or less, the impact of not recognizing
installation fees over the contract is immaterial.
Blue Collar: Media Production Services
Blue
Collar creates original live action and animated content
productions and has produced hundreds of hours of material for the
television, theatrical, home entertainment and new media markets.
Blue Collar designs branding and marketing campaigns and has had
agreements with some of the world’s largest companies
including PepsiCo, Intel, HP, WalMart and many other Fortune 500
companies. Additionally, they create motion picture, television and
home entertainment marketing campaigns for studios including Sony,
DreamWorks, Twentieth Century Fox, Universal Studios, Paramount
Studios, and Warner Brothers. With regard to revenue recognition,
Blue Collar receives an agreement from each client to perform
defined work. Some agreements are written, some are verbal. Work
may include creation of marketing materials and/or content
creation. Some work may be short term and take weeks to create and
some work may be longer and take months to create. There are
instances where customer agreements segregate identifiable
obligations (like filming on site vs. film editing and final
production) with separate transaction pricing. The performance
obligation is generally satisfied upon delivery of such film or
production products, at which time revenue is recognized. There are
no financing terms or variable transaction prices.
SDM: Ecommerce, Email Marketing and Web Design
Services
SDM
generates revenue by providing ecommerce, email marketing and web
design solutions to small and large commercial businesses, complete
with monthly software support, updates and maintenance. Services
are billed monthly. There are no financing terms or variable
transaction prices. Platform infrastructure support is a prepaid
service billed in monthly recurring increments. The services are
billed a month in advance and due prior to services being rendered.
The revenue is deferred when invoiced and booked in the month the
service is provided. There is no deferred revenue at December 31,
2020 and 2019. Software support services (including software
upgrades) are billed in real time, on the first of the month. Web
design service revenues are recognized upon completion of specific
projects. Revenue is booked in the month the services are rendered
and payments are due on the final day of the month. There are
usually no contract revenues that are deferred until services are
performed.
TPT MedTech: Medical Testing Revenue
TPT
MedTech operates in the Point of Care Testing (“POCT”)
market by primarily offering mobile medical testing facilities and
software equipped for mobile devices to monitor and manage
personalized healthcare. Services used from our mobile medical
testing facilities are billing through credit cards at the time of
service. Revenue is generated from our software platform as users
sign up for our mobile healthcare monitor and management
application and tests are performed. If medical testing is in one
our own owned facility, the usage of the software application is
included in the testing fees. If the testing is in a non-owned
outside contracted facility, fees are generated from the usage of
the software application on a per test basis and billed
monthly.
TPT
MedTech also offers two products. One is to build and sell its
mobile testing facilities called QuikLABs designed for mobile
testing. This is used by TPT MedTech for its own testing services.
The other is a sanitizing unit called SANIQuik which is used as a
safe and flexible way to sanitize providing an additional routine
to hand washing and facial coverings. The SANIQuik has not yet been
approved for sale in the United States but has in some parts of the
European community. Revenues from these products are recognized
when a product is delivered, the sales transaction considered
closed and accepted by a customer. There are no financing terms or
variable transaction prices for either of these
products.
Copperhead Digital: ISP and Telecom Revenue
Copperhead
Digital operated as a regional internet and telecom services
provider operating in Arizona under the trade name Trucom. Although
there are currently no customers and it will take capital to reopen
this revenue stream, Copperhead Digital operated as a wireless
telecommunications Internet Service Provider (“ISP”)
facilitating both residential and commercial accounts. Copperhead
Digital’s primary business model was subscription based,
pre-paid monthly reoccurring revenues, from wireless delivered,
high-speed internet connections. In addition, the company resold
third-party satellite and DSL internet and IP telephony services.
Revenue generated from sales of telecommunications services was
recognized as the transaction with the customer is considered
closed and the customer received and accepted the services that
were the result of the transaction. There are no financing terms or
variable transaction prices. Due date was detailed on monthly
invoices distributed to customer. Services billed monthly in
advance were deferred to the proper period as needed. Deferred
revenue was contract liabilities for cash received before
performance obligations for monthly services are satisfied. Certain
of its products required specialized installation and equipment.
For telecom products that included installation, if the
installation met the criteria to be considered a separate element,
product revenue was recognized upon delivery, and installation
revenue was recognized when the installation was complete. The
Installation Technician collected the signed quote containing terms
and conditions when installing the site equipment at customer
premises.
Revenue
for installation services and equipment was billed separately from
recurring ISP and telecom services and was recognized when
equipment was delivered, and installation was completed. Revenue
from ISP and telecom services was recognized monthly over the
contractual period, or as services were rendered and accepted by
the customer.
The
overwhelming majority of revenue was recognized when transactions
occurred. Since installation fees were generally small relative to
the size of the overall contract and because most contracts were
for a year or less, the impact of not recognizing installation fees
over the contract was immaterial.
K Telecom: Prepaid Phones and SIM Cards Revenue
K
Telecom generates revenue from reselling prepaid phones, SIM cards,
and rechargeable minute traffic for prepaid phones to its customers
(primarily retail outlets). Product sales occur at the
customer’s locations, at which time delivery occurs and cash
or check payment is received. The Company recognizes the revenue
when they receive payment at the time of delivery. There are no
financing terms or variable transaction prices.
Share-based
Compensation
The
Company is required to measure and recognize compensation expense
for all share-based payment awards (including stock options) made
to employees and directors based on estimated fair value.
Compensation expense for equity-classified awards is measured at
the grant date based on the fair value of the award and is
recognized as an expense in earnings over the requisite service
period.
The
Company records compensation expense related to non-employees that
are awarded stock in conjunction with selling goods or services and
recognizes compensation expenses over the vesting period of such
awards.
Income Taxes
Deferred
tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the year in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
our income tax provision in the period of enactment.
We
recognize deferred tax assets to the extent that we believe that
these assets are more likely than not to be realized. In making
such a determination, we consider all available positive and
negative evidence, including future reversal of existing taxable
temporary differences, projected future taxable income,
tax-planning strategies, and results of recent operations,
including taxable income in carryback periods. If we determine that
we would be able to realize our deferred tax assets in the future
in excess of their net recorded amount, we would make an adjustment
to the deferred tax asset valuation allowance, which would reduce
our income tax provision.
We
account for uncertain tax positions using a
“more-likely-than-not” recognition threshold. We
evaluate uncertain tax positions on a quarterly basis and consider
various factors, including, but not limited to, changes in tax law,
the measurement of tax positions taken or expected to be taken in
tax returns, the effective settlement of matters subject to audit,
new audit activity and changes in facts or circumstances related to
a tax position.
It is
our policy to record costs associated with interest and penalties
related to tax in the selling, general and administrative line of
the consolidated statements of operations.
Cash and Cash Equivalents
The
Company considers all investments with a maturity date of three
months or less when purchased to be cash equivalents. There are no
cash equivalents as of December 31, 2020 and 2019.
Accounts Receivable
We
establish an allowance for potential uncollectible accounts
receivable. All accounts receivable 60 days past due are considered
uncollectible unless there are circumstances that support
collectability. Those circumstances are documented. As of December
31, 2020 and 2019, the allowance for uncollectible accounts
receivable was $762,815 and $881,676, respectively. Receivables are
charged off when collection efforts cease.
Property and Equipment
Property
and equipment are stated at cost or fair value if acquired as part
of a business combination. Depreciation is computed by the
straight-line method and is charged to operations over the
estimated useful lives of the assets. Maintenance and repairs are
charged to expense as incurred. The carrying amount of accumulated
depreciation of assets sold or retired are removed from the
accounts in the year of disposal and any resulting gain or loss in
s included in results of operations. The estimated useful lives of
property and equipment are telecommunications network - 5 years,
telecommunications equipment - 7 to 10 years, and computers and
office equipment - 3 years.
Goodwill
Goodwill
relates to amounts that arose in connection with our various
business combinations and represents the difference between the
purchase price and the fair value of the identifiable tangible and
intangible net assets when accounted for using the acquisition
method of accounting. Goodwill is not amortized, but it is subject
to periodic review for impairment.
We test goodwill balances for impairment on an annual basis as of
December 31st or whenever impairment indicators arise. We
utilize several reporting units in evaluating goodwill for
impairment using a quantitative assessment, which uses a
combination of a guideline public company market-based approach and
a discounted cash flow income-based approach. The quantitative
assessment considers whether the carrying amount of a reporting
unit exceeds its fair value, in which case an impairment charge is
recorded to the extent the reporting unit’s carrying value
exceeds its fair value. Based on our impairment testing, we
recorded impairment charges of $853,366 and $70,995 of goodwill
during the years ended December 31, 2020 and 2019,
respectively.
Intangible Assets
Our
intangible assets consist primarily of customer relationships,
developed technology, favorable leases, trademarks and the film
library. The majority of our intangible assets were recorded in
connection with our various business combinations. Our intangible
assets are recorded at fair value at the time of their acquisition.
Intangible assets are amortized over
their estimated useful life on a straight-line basis. Estimated
useful lives are determined considering the period the assets are
expected to contribute to future cash flows. We evaluate the
recoverability of our intangible assets periodically and take into
account events or circumstances that warrant revised estimates of
useful lives or that indicate impairment
exists.
Business Acquisitions
Our
business acquisitions have historically been made at prices above
the fair value of the assets acquired and liabilities assumed,
resulting in goodwill or some identifiable intangible asset.
Significant judgment is required in estimating the fair value of
intangible assets and in assigning their respective useful lives.
The fair value estimates are based on available historical
information and on future expectations and assumptions deemed
reasonable by management but are inherently uncertain.
We
generally employ the income method to estimate the fair value of
intangible assets, which is based on forecasts of the expected
future cash flows attributable to the respective assets.
Significant estimates and assumptions inherent in the valuations
reflect a consideration of other marketplace participants and
include the amount and timing of future cash flows (including
expected growth rates and profitability), the underlying product
life cycles, economic barriers to entry, a brand’s relative
market position and the discount rate applied to the cash flows.
Unanticipated market or macroeconomic events and circumstances may
occur, which could affect the accuracy or validity of the estimates
and assumptions.
Net
assets acquired are recorded at their fair value and are subject to
adjustment upon finalization of the fair value analysis.
Long-Lived Assets
We periodically review the carrying amount of our depreciable
long-lived assets for impairment which include property and
equipment and intangible assets. An asset is considered
impaired when estimated future cash flows are less than the
carrying amount of the asset. In the event the carrying amount
of such asset is not considered recoverable, the asset is adjusted
to its fair value. Fair value is generally determined based on
discounted future cash flow. As of December 31, 2020, we adjusted
the net book value to zero for the net book value of the equipment
of Copperhead Digital as it became doubtful with no customers that
the estimated future cash flows would recover the net book value.
We recorded impairment expenses of $1,849,630 and $878,877,
respectively, for the years ended December 31, 2020 and
2019.
Basic and Diluted Net Loss Per Share
The
Company computes net income (loss) per share in accordance with ASC
260, “Earning per Share””. ASC 260 requires
presentation of both basic and diluted earnings per share
(“EPS”) on the face of the income statement. Basic EPS
is computed by dividing net income (loss) available to common
shareholder (numerator) by the weighted average number of shares
outstanding (denominator) during the period. Diluted EPS gives
effect to all dilutive potential common shares outstanding during
the period using the treasury stock method and convertible
preferred stock using the if-converted method. In computing diluted
EPS, the average stock price for the period is used in determining
the number of shares assumed to be purchased from the exercise of
stock options or warrants. Diluted EPS excludes all dilutive
potential shares if their effect is anti-dilutive. As of December
31, 2020 and 2019, the Company had shares that were potentially
common stock equivalents as follows:
|
|
2020
|
2019
|
|
Convertible
Promissory Notes
|
175,316,748
|
1,506,387,647
|
|
Series A Preferred
Stock (1)
|
1,243,987,624
|
199,728,891
|
|
Series B Preferred
Stock
|
2,588,693
|
2,588,693
|
|
Stock Options and
warrants
|
4,333,333
|
6,333,333
|
|
|
1,426,226,398
|
1,715,038,564
|
_____________________
(1)
Holder of the
Series A Preferred Stock which is Stephen J. Thomas, is guaranteed
60% of the then outstanding common stock upon conversion. The
Company would have to authorize additional shares for this to occur
as only 1,000,000,000 shares are currently authorized.
Concentration of Credit Risk, Off-Balance Sheet Risks and Other
Risks and Uncertainties
Financial
instruments that potentially subject us to concentration of credit
risk primarily consist of cash and cash equivalents and accounts
receivable. We invest our excess cash primarily in high quality
securities and limit the amount of our credit exposure to any one
financial institution. We do not require collateral or other
securities to support customer receivables; however, we perform
on-going credit evaluations of our customers and maintain
allowances for potential credit losses.
As of
December 31, 2020 and 2019, two customer accounts receivable
balances were 78% and 91%, respectively, of our aggregate accounts
receivable from revenues.
Financial Instruments and Fair Value of Financial
Instruments
Our
primary financial instruments at December 31, 2020 and 2019
consisted of cash equivalents, accounts receivable, accounts
payable and debt. We apply fair value measurement accounting to
either record or disclose the value of our financial assets and
liabilities in our financial statements. Fair value is defined as
the exchange price that would be received for an asset or paid to
transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. A
fair value hierarchy requires an entity to maximize the use of
observable inputs, where available, and minimize the use of
unobservable inputs when measuring fair value.
Described
below are the three levels of inputs that may be used to measure
fair value:
Level 1 Quoted prices in active markets for identical
assets or liabilities.
Level 2 Observable inputs other than Level 1
prices, such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that
are observable or can be corroborated by observable market data for
substantially the full term of the assets or
liabilities.
Level 3 Unobservable inputs that are supported by
little or no market activity and that are significant to the fair
value of the assets or liabilities.
We
consider our derivative financial instruments as Level 3. The
balances for our derivative financial instruments as of December
31, 2020 are the following:
|
Derivative
Instrument
|
Fair
Value
|
|
Fair value of
Auctus Convertible Promissory Note
|
$4,227,656
|
|
Fair value of EMA
Financial Convertible Promissory Note
|
1,001,780
|
|
Fair value of
Warrants issued with the derivative instruments
|
35,703
|
|
|
$5,265,139
|
Research and Development
Our
research and development programs focus on telecommunications
products and services. Research and development costs are expensed
as incurred. Any payments received from external parties to fund
our research and development activities reduce the recorded
research and development expenses.
Advertising Costs
Advertising
costs are expensed as incurred. The Company incurred advertising
costs of zero for the years ended December 31, 2020 and 2019,
respectively.
Use of Estimates
The
preparation of financial statements in conformity with United
States generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ materially from those
estimates. The Company’s consolidated financial statements
reflect all adjustments that management believes are necessary for
the fair presentation of their financial condition and results of
operations for the periods presented.
Derivative Financial Instruments
Derivative
financial instruments, as defined in ASC 815, “Accounting for
Derivative Financial Instruments and Hedging Activities”,
consist of financial instruments or other contracts that contain a
notional amount and one or more underlying (e.g. interest rate,
security price or other variable), require no initial net
investment and permit net settlement. Derivative financial
instruments may be free-standing or embedded in other financial
instruments. Further, derivative financial instruments are
initially, and subsequently, measured at fair value and recorded as
liabilities or, in rare instances, assets.
The
Company does not use derivative financial instruments to hedge
exposures to cash-flow, market or foreign-currency risks. However,
the Company had issued financial instruments including convertible
promissory notes payable with features during 2019 that were either
(i) not afforded equity classification, (ii) embody risks not
clearly and closely related to host contracts, or (iii) may be
net-cash settled by the counterparty. As required by ASC 815, in
certain instances, these instruments are required to be carried as
derivative liabilities, at fair value, in our financial
statements.
The
Company estimates the fair values of derivative financial
instruments using the Monte Carlo model. Estimating fair values of
derivative financial instruments requires the development of
significant and subjective estimates (such as volatility, estimated
life and interest rates) that may, and are likely to, change over
the duration of the instrument with related changes in internal and
external market factors. In addition, option-based techniques are
highly volatile and sensitive to changes in the trading market
price of our common stock, which has a high-historical volatility.
Since derivative financial instruments are initially and
subsequently carried at fair values, the Company’s operating
results will reflect the volatility in these estimate and
assumption changes.
The Company issued convertible promissory notes which are
convertible into common stock, at holders’ option, at a
discount to the market price of the Company’s common stock.
The Company has identified the embedded derivatives related to
these notes relating to certain anti-dilutive (reset) provisions.
These embedded derivatives included certain conversion features.
The accounting treatment of derivative financial instruments
requires that the Company record fair value of the derivatives as
of the inception date of debenture and to fair value as of each
subsequent reporting date.
As of December 31, 2020, the Company marked to market the fair
value of the debt derivatives and determined a fair value of
$5,265,139 ($5,229,436 from the convertible notes and $35,703 from
the warrants) in Note 6. The Company recorded a gain from change in
fair value of debt derivatives of $1,140,323 for the year ended
December 31, 2020. The fair value of the embedded derivatives was
determined using Monte Carlo simulation method based on the
following assumptions: (1) dividend yield of 0%, (2) expected
volatility of 190.9% to 350.8%, (3) weighted average risk-free
interest rate of 0.09% to 0.12% (4) expected life of 0.25 to 1.4
years, and (5) the quoted market price of $0.03 for the
Company’s common stock.
Recently Adopted Accounting Pronouncements
In June
2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee
Share-Based Payment Accounting, which amends ASC 718, Compensation
– Stock Compensation. This ASU requires that most of the
guidance related to stock compensation granted to employees be
followed for non-employees, including the measurement date,
valuation approach, and performance conditions. The expense is
recognized in the same period as though cash were paid for the good
or service. The effective date is the first quarter of fiscal year
2020, with early adoption permitted, including in interim periods.
The ASU has been adopted using a modified-retrospective transition
approach. The adoption is not considered to have a material effect
on the consolidated financial statements.
Management
has reviewed other recently issued accounting pronouncements and
have determined there are not any that would have a material impact
on the condensed consolidated financial statements.
NOTE 2 – ACQUISITIONS
SpeedConnect Asset Acquisition
Effective April 2, 2019, the Company entered into an Asset Purchase
Agreement with SpeedConnect, LLC (“SpeedConnect”) to
acquire substantially all of the assets of SpeedConnect. On May 7,
2019, the Company closed the transaction underlying the Asset
Purchase Agreement with SpeedConnect to acquire substantially all
of the assets of SpeedConnect for $2 million and the assumption of
certain liabilities. The Asset Purchase Agreement required a
deposit of $500,000 made in April and an additional $500,000
payment to close. The additional $500,000 was paid and all other
conditions were met to effectuate the sale of substantially all of
the assets of SpeedConnect to the Company. As part of the closing,
the Company entered into a Promissory Note to pay SpeedConnect
$1,000,000 in two equal installments of $500,000 plus applicable
interest at 10% per annum with the first installment payable within
30 days of closing and the second installment payable within 60
days of closing (but no later than July 6, 2019). The Company paid
off the Promissory Note by June 11, 2019 and by amendment dated May
7, 2019, SpeedConnect forgave $250,000 of the Promissory
Note.
The
Company treated the asset acquisition as a business combination and
has allocated the fair market value to assets received in excess of
goodwill.
Purchase
Price Allocation:
Included
in the consolidated statement of operations for the year ended
December 31, 2019 are the results of operations for TPT
SpeedConnect for the period May 8, 2019 to December 31, 2019 as
follows:
|
|
2019
|
|
Revenue
|
$8,002,875
|
|
Cost of
Sales
|
4,826,475
|
|
Gross
Profit
|
3,176,400
|
|
Expenses
|
(1,999,221)
|
|
Interest
Expense
|
—
|
|
Income
taxes
|
—
|
|
Net
Income
|
$1,177,179
|
The Fitness Container, LLC (DBA Aire Fitness)
On June
1, 2020, the Company signed an agreement for the acquisition of a
majority interest in San Diego based manufacturing company, The
Fitness Container, LLC dba “Aire Fitness” (www.airefitness.com), for
500,000 shares of common stock in TPT, vesting and issuable after
the common stock reaches at least a $1.00 per share closing price
in trading, a $500,000 promissory note payable primarily out of
future capital raising and a 10% gross profit royalty from sales of
drive through lab operations for the first year. Aire Fitness, in
which TPT owns 75% is a California LLC founded in 2014 focused on
custom designing, manufacturing, and selling high-end turnkey
outdoor fitness studios and mobile medical testing labs. Aire
Fitness has contracted with YMCAs, Parks and Recreation
departments, Universities and Country Clubs which are currently
using its mobile gyms. Aire Fitness’ existing and
future clients will be able to take advantage of TPT’s
upcoming Broadband, TV and Social Media platform to offer virtual
classes utilizing the company’s mobile gyms. The agreement
included an employment agreement for Mario Garcia, former principal
owner, which annual employment is to be at $120,000 plus customary
employee benefits. This agreement was closed August 1,
2020.
The Company evaluated this acquisition in accordance with ASC
805-10-55-4 to discern whether the assets and operations of the
assets purchased met the definition of a business. The company
concluded that there are processes and sufficient inputs into
outputs. Accordingly, the Company accounted for this transaction as
a business combination and allocated the purchase price as
follows:
Included
in the consolidated statement of operations for the year ended
December 31, 2020 is $56,300 of expenses which primarily related to
payroll expenses. The were no outside revenues generated by Aire
Fitness recorded From August 1, 2020 through December 31,
2020.
Had the
acquisitions of TPT SpeedConnect and Aire Fitness occurred on
January 1, 2019, condensed proforma results of operations for the
years ended December 31, 2020 and 2019 would be as
follows:
|
|
2020
|
2019
|
|
Revenue
|
11,191,709
|
$11,630,775
|
|
Cost of
Sales
|
7,270,166
|
6,513,624
|
|
Gross
Profit
|
3,921,543
|
$5,117,151
|
|
Expenses
|
(12,305,652)
|
(7,844,692)
|
|
Other income
(expense)
|
85,071
|
(10,875,850)
|
|
Net
Loss
|
(8,299,039)
|
$(13,603,991)
|
|
Loss per
share
|
(0.01)
|
$(0.10)
|
EPIC Reference Labs, Inc. Acquisition
On August 6, 2020, TPT MedTech signed a binding letter of intent
with Rennova to acquire EPIC Reference Labs, Inc.
(“EPIC”), wholly owned subsidiary of Rennova, for
$750,000, comprised of a deposit of $25,000 within five days of
signing and the remainder due either from 20% of net proceeds
received from fund raising that the Company had initiated and as
evidenced by SEC Filings or a minimum payment of $25,000 per month
until paid in full. The first $25,000 payment was made and was
accounted for as a deposit in the consolidated balance sheet. All
defined laboratory equipment and a $100,000 lease deposit were to
be excluded from the sales price. All liabilities incurred up to
signing were to be discharged. Receivables existing at signing were
to be 100% ownership of Rennova. There were no other significant
assets. This acquisition would allow TPT MedTech to own a license
to operate medical testing facilities.
TPT MedTech and Rennova subsequently agreed that the acquisition
would be of an asset acquisition of substantially all of the assets
of EPIC instead of acquiring the stock of EPIC, but that all other
terms were to be consistent with the binding letter of
intent. Until the change of
ownership of the assets was complete, Rennova started operating the
laboratory under a management agreement dated August 6, 2020
between TPT MedTech, LLC and Rennova. There are approximately
$19,000 of expenses in our consolidated statement of operations
under the management agreement.
Subsequently, TPT MedTech decided that it would not acquire the
assets of EPIC and terminated its relationship with EPIC. The
$25,000 deposit was then expensed to the statement of operations
for the year ended December 31, 2020.
Rennova Acquisition Agreement
Effective
December 31, 2020, the Company completed its
acquisition agreement (“Rennova Acquisition Agreement”)
with Rennova Health, Inc. (“Rennova”), an owner
and operator of rural hospitals in Tennessee, and InnovaQor, to
merge Rennova’s software and genetic testing interpretation
divisions, Health Technology Solutions, Inc. (HTS) and Advanced
Molecular Services Group, Inc., (AMSG) and their subsidiaries into
InnovaQor. After closing, these entities were to operate as wholly
owned subsidiaries of InnovaQor which then would have been
controlled by Rennova. Closing was subject to a number of customary
conditions for a transaction of this nature and was intended to
happen on or before January 31, 2020.
InnovaQor
had previously completed a license agreement giving it certain
rights to assets and technology from the Company’s
proprietary live streaming communication technology. As part of the
license agreement InnovaQor and TPT had agreed on a development
project to create a next generation telehealth type platform. It
was intended to combine the TPT and Rennova assets and technology
into a smart phone and computer accessible healthcare platform to
facilitate a patient’s immediate access to healthcare and
their local hospital or doctors office, for initial consultation,
scheduling of appointments and follow on care and other added value
services that may be one off or recurring.
Rennova
had agreed to complete the necessary steps and SEC filings with the
intent to facilitate TPT shareholders receiving approximately
2,500,000 shares in InnovaQor, and Rennova’s shareholders
receiving approximately $5M of Preference shares which were be
converted to common shares. As described in the Rennova Acquisition
Agreement, TPT, or its assigns, was to retain direct ownership of a
further 3,500,000 shares and Rennova and retain ownership of an
additional $17.5M of preference shares with certain conversion
rights and restrictions, making it the contolling entity of
InnovaQor.
Rennova
terminated the Rennova Acquisition Agreement effective March 5,
2021 and the Company agreed to this termination with both parties
not able to come to agreement of final terms.
InnovaQor Merger with Southern Plains
On
August 1, 2020, InnovaQor,
a wholly-owned subsidiary of the Company, entered into a Merger
Agreement with the publicly traded company Southern Plains Oil
Corp. (OTC PINK: SPLN prior to Merger Agreement). The SPLN Merger
moved the Company’s subsidiary InnovaQor one step closer to
completing a recently executed Asset Purchase Agreement with
Rennova Health, Inc. The Merger also positioned InnovaQor to trade
on the OTC Market, which InnovaQor is now traded under INOQ. The
Company was to receive 6,000,000 common shares as part of the
Merger Agreement out of a total of 6,400,667 common shares
outstanding.
During August, InnovaQor authorized a Series A Super Majority
Preferred Stock valued at $350,000 by management and issued to a
third party in exchange for legal services. Effective September 30,
2020, the Series A Super Majority Preferred Stock was exchanged
with TPT for a note payable of $350,000 payable in cash or common
stock (see Note 5(1)). As such, as of September 30, 2020, the
Company, for accounting purposes, took control of the merged
InnovaQor and reflected in it’s consolidated balance the
consolidated balance sheet of InnovaQor which assets and
liabilities were di minimus. The merger was a reverse merger with
Southern Plains of which there ended up being a non controlling
interest of 6% as of December 31, 2020. The name of InnovaQor
remained for the merged entities but was changed to TPT Strategic,
Inc. on March 21, 2021.
A License Agreement that was originally signed between the Company
and InnovaQor for software development but rescinded March 30, 2021
and the issuance of 6,000,000 shares of common stock were
cancelled.
Bridge Internet Acquisition
On
March 6, 2020, the Company executed an Acquisition and Purchase
Agreement (“Agreement”) dated March 6, 2020 with Bridge
Internet, LLC (“Bridge Internet”), a Delaware Limited
Liability Company. On December 23, 2020, the Company and prior
owner agreed to terminate the agreement.
The
Agreement stated that the Company had acquired 75% of Bridge
Internet for 8,000,000 shares of common stock of TPT Global Tech,
Inc., 4,000,000 common shares issued to Sydney “Trip”
Camper immediately and 4,000,000 common shares would vest equally
over two years. As sufficient funding was raised by the Company,
defined as approximately $3,000,000, marketing funds of up to
$200,000 per quarter for the next year were to be provided. Sydney
“Trip” Camper, would retain the remaining 25% of Bridge
Internet and stay on as the CEO. This Agreement was terminated as
if there were no agreement. Any monies paid as contractor payments
by the Company are to be maintained and the Company is to have no
liabilities related to Bridge Internet of any sort.
NOTE
3 – GOING CONCERN
The
accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going
concern.
Cash
flows generated from operating activities were not enough to
support all working capital requirements for the years ended
December 31, 2020 and 2019. Financing activities described below
have helped with working capital and other capital
requirements.
We
incurred $8,119,268 and $14,028,165, respectively, in losses, and
we used $489,573 and $328,251, respectively, in cash for operations
for the years ended December 31, 2020 and 2019. We calculate the
net cash used by operating activities by decreasing, or increasing
in case of gain, our let loss by those items that do not require
the use of cash such as depreciation, amortization, promissory note
issued for research and development, note payable issued for legal
fees, derivative expense or gain, gain on extinguishment of debt,
loss on conversion of notes payable, impairment of goodwill and
long-loved assts and share-based compensation which totaled to a
net $5,378,277 for 2020 and $13,091,764 for 2019.
In
addition, we report increases and reductions in liabilities as uses
of cash and deceases assets and increases in liabilities as sources
of cash, together referred to as changes in operating assets and
liabilities. For the year ended December 31, 2020, we had a net
increase in our assets and liabilities of $2,251,418 primarily from
an increase in accounts payable from lag of payments for accounts
payable for cash flow considerations and an increase in the
balances from our operating lease liabilities. For the year ended
December 31, 2019 we had a net increase to our assets and
liabilities of $608,150 for similar reasons.
Cash
flows from financing activities were $817,608 and $1,390,538 for
the years ended December 31, 2020 and 2019, respectively. For the
year ended December 30, 2020, these cash flows were generated
primarily from proceeds from proceeds from sale of non-controlling
interests in QuikLABS of $460,000, proceeds from convertible notes,
loans and advances of $1,753,204 offset by payment on convertible
loans, advances and factoring agreements of $1,169,330 and payments
on convertible notes and amounts payable – related parties of
$212,256. For the year ended December 31, 2019, cash flows from
financing activities primarily came from proceeds from convertible
notes, loans and advances of $2,613,047 offset by payments on
convertible loans, advances and factoring agreements of
$1,440,139.
Cash
flows used in investing activities were $500,898 and $901,901,
respectively, for the years ended December 31, 2020 and 2019. For
the year ended December 31, 2020 these cash flows were used
primarily for the acquisition of property and equipment of $424,560
and the purchase of intangibles of $76,798. For the year ended
December 31, 2019 cash flows for investing activities were used to
acquire property and equipment and the payment for business
acquisitions.
These
factors raise substantial doubt about the ability of the Company to
continue as a going concern for a period of one year from the
issuance of these financial statements. The financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
In December 2019, COVID-19 emerged and has subsequently spread
worldwide. The World Health Organization has declared COVID-19 a
pandemic resulting in federal, state and local governments and
private entities mandating various restrictions, including travel
restrictions, restrictions on public gatherings, stay at home
orders and advisories and quarantining of people who may have been
exposed to the virus. After close monitoring and responses and
guidance from federal, state and local governments, in an effort to
mitigate the spread of COVID-19, around March 18, 2020 for a period
of time, the Company closed its Blue Collar office in Los Angeles
and its TPT SpeedConnect offices in Michigan, Idaho and
Arizona. Most employees were working remotely, however this
is not possible with certain employees and all subcontractors that
work for Blue Collar. The Company continues to monitor
developments, including government requirements and recommendations
at the national, state, and local level to evaluate possible
extensions to all or part of such closures.
The Company has taken advantage of the stimulus offerings and
received $722,200 in April 2020 and $680,500 in February 2021 and
believes it has used these funds as is prescribed by the stimulus
offerings to have the entire amounts forgiven. The Company has
applied for forgiveness of the original stimulus of $722,200. The
forgiveness process for stimulus funded in February 2021 has not
begun. The Company will try and take advantage of additional
stimulus as it is available and is also in the process of trying to
raise debt and equity financing, some of which may have to be used
for working capital shortfalls if revenues continue to decline
because of the COVID-19 closures.
In
order for us to continue as a going concern for a period of one
year from the issuance of these financial statements, we will need
to obtain additional debt or equity financing and look for
companies with cash flow positive operations that we can acquire.
There can be no assurance that we will be able to secure additional
debt or equity financing, that we will be able to acquire cash flow
positive operations, or that, if we are successful in any of those
actions, those actions will produce adequate cash flow to enable us
to meet all our future obligations. Most of our existing financing
arrangements are short-term. If we are unable to obtain additional
debt or equity financing, we may be required to significantly
reduce or cease operations.
NOTE 4 – PROPERTY AND EQUIPMENT
Property
and equipment and related accumulated depreciation as of December
31, 2020 and 2019 are as follows:
|
|
2020
|
2019
|
|
Property and
equipment:
|
|
|
|
Telecommunications
fiber and equipment
|
$2,530,167
|
5,203,000
|
|
Film production
equipment
|
369,903
|
369,903
|
|
Medical
equipment
|
133,329
|
---
|
|
Office furniture
and equipment
|
86,899
|
85,485
|
|
Leasehold
improvements
|
18,679
|
18,679
|
|
Total
Property ad equipment
|
3,138,977
|
5,677,067
|
|
Accumulated
depreciation
|
(993,380)
|
(1,253,919)
|
|
Property and
equipment, net
|
$2,145,597
|
4,423,148
|
Depreciation
expense was $1,054,702 and $591,069 for the years ended December
31, 2020 and 2019, respectively.
During
the year ended December 31, 2019, the Company had a change in
useful life for its telecommunications fiber and equipment related
to Copperhead Digital resulting from managements evaluation of its
remaining useful life in light of the decrease in revenues for
which it was being used. The useful life was decreased from its
original 20 years when it was acquired in 2015 to five years.
Subsequently, as of December 31, 2020, management adjusted the net book
value of this equipment to zero as it became doubtful with no
customers that the estimated future cash flows would recover the
net book value. This resulted in an expense for impairment of
$1,849,630 to the statement of operations for the year ended
December 31, 2020.
NOTE 5 – DEBT FINANCING ARRANGEMENTS
Financing
arrangements as of December 31, 2020 and 2019 are as
follows:
|
|
2020
|
2019
|
|
Loans and advances
(1)
|
$2,517,200
|
$1,121,640
|
|
Convertible notes
payable (2)
|
1,711,098
|
2,101,649
|
|
Factoring
agreements (3)
|
635,130
|
223,618
|
|
Debt – third
party
|
$4,863,428
|
$3,446,907
|
|
|
|
|
|
Line of credit,
related party secured by assets (4)
|
$3,043,390
|
3,043,390
|
|
Debt– other
related party, net of discounts (5)
|
7,423,334
|
5,950,000
|
|
Convertible debt
– related party (6)
|
922,481
|
922,881
|
|
Shareholder debt
(7)
|
93,072
|
303,688
|
|
Debt –
related party
|
$11,482,277
|
$10,219,959
|
|
|
|
|
|
Total financing
arrangements
|
$16,345,705
|
$13,666,866
|
|
|
|
|
|
Less current
portion:
|
|
|
|
Loans, advances and
factoring agreements – third party
|
$(2,308,753)
|
$(344,758)
|
|
Convertible notes
payable third party
|
(1,711,098)
|
(2,101,649
|
|
Debt –
related party, net of discount
|
(10,559,796)
|
(9,297,078)
|
|
Convertible notes
payable– related party
|
(922,481)
|
(534,381)
|
|
|
(15,502,128)
|
(12,277,866)
|
|
Total long term
debt
|
$843,577
|
$1,389,000
|
_____________________________
(1) The
terms of $40,000 of this balance are similar to that of the Line of
Credit which bears interest at adjustable rates, 1 month LIBOR plus
2%, 2.2% as of December 31, 2020, and is secured by assets of the
Company, was due August 31, 2020, as amended, and included 8,000
stock options as part of the terms which options expired December
31, 2019 (see Note 7).
$500,500
is a line of credit that Blue Collar has with a bank, bears
interest at Prime plus 1.125%, 4.38% as of December 31, 2020, and
is due March 25, 2021. The Company is working with the bank on an
extension of the due date.
$363,558
is a bank loan dated May 28, 2019 which bears interest at Prime
plus 6%, 9.25% as of December 31, 2020, was interest only for the
first year, thereafter beginning in June of 2020 payable monthly of
principal and interest of $22,900 until the due date of May 1,
2022. The bank loan is collateralized by assets of the
Company.
$722,220
represents loans under the COVID-19 Pandemic Paycheck Protection
Program (“PPP”) originated in April of 2020. The
Company believes that it has used the funds such that 100% will be
forgiven. The applications for forgiveness have been submitted to
the Small Business Administration. If any of the PPP loans are not
forgiven then, per the PPP, the unforgiven loan amounts will be
payable monthly over a five-year period of which payments are to
begin no later than 10 months after the covered period as defined
at a 1% annual interest rate.
On June 4, 2019, the Company consummated a Securities Purchase
Agreement with Odyssey Capital Funding, LLC.
(“Odyssey”) for the purchase of a $525,000 Convertible
Promissory Note (“Odyssey Convertible Promissory
Note”). The Odyssey Convertible Promissory Note was due June
3, 2020, paid interest at the rate of 12% (24% default) per annum
and gave the holder the right from time to time, and at any time
during the period beginning six months from the issuance date to
convert all of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price was 55% multiplied by the average of
the two lowest trading prices for the common stock during the
previous 20 trading days prior to the applicable conversion date.
The Odyssey Convertible Promissory Note could be prepaid in full at
125% to 145% up to 180 days from origination. Through June 3, 2020,
Odyssey converted $49,150 of principal and $4,116 of accrued
interest into 52,961,921 shares of common stock of the Company. On
June 8, 2020, Odyssey agreed to convert the remaining principal and
accrued interest balance on the Odyssey Convertible Promissory Note
of $475,850 and $135,000, respectively, to a term loan payable in
six months in the form of a balloon payment, earlier if the Company
has a funding event, bearing simple interest on the unpaid balance
of 0% for the first three months and then 10% per annum thereafter.
This loan is in default. The Company is negotiating with Odyssey
for repayment.
Effective
September 30, 2020, we entered into a Purchase Agreement by which
we agreed to purchase the 500,000 outstanding Series A Preferred
shares of InnovaQor, Inc., our majority owned subsidiary, in an
agreed amount of $350,000 in cash or common stock, if not paid in
cash, at the five day average price preceding the date of the
request for effectiveness after the filing of a registration
statement on Form S-1. This was modified December 28 and 29, 2020,
to provide for registration of 7,500,000 common shares for resale
at the market price. Any balance due on notes will be calculated
after an accounting for the net sales proceeds from sale of the
stock by February 28, 2021 and may be paid in cash or stock
thereafter. The Series A Preferred shares are being purchased from
the Michael A. Littman, Atty. Defined Benefit Plan. The $350,000 is
included as a Note Payable as of December 31, 2020 and bears no
interest.
The
remaining balances generally bear interest at approximately 10%,
have maturity dates that are due on demand or are past due, are
unsecured and are classified as current in the balance
sheets.
(2) During
2017, the Company issued convertible promissory notes in the amount
of $67,000 (comprised of $62,000 from two related parties and
$5,000 from a former officer of CDH), all which were due May 1,
2020 and bear 6% annual interest (12% default interest rate). The
convertible promissory notes are convertible, as amended, at $0.25
per share. These convertible promissory notes were not repaid May
1, 2020, and are delinquent. The Company is working to renegotiate
these promissory notes.
During
2019, the Company consummated Securities Purchase Agreements dated
March 15, 2019, April 12, 2019, May 15, 2019, June 6, 2019 and
August 22, 2019 with Geneva Roth Remark Holdings, Inc.
(“Geneva Roth”) for the purchase of convertible
promissory notes in the amounts of $68,000, $65,000, $58,000,
$53,000 and $43,000 (“Geneva Roth Convertible Promissory
Notes”). The Geneva Roth Convertible Promissory Notes are due
one year from issuance, pays interest at the rate of 12% (principal
amount increases 150%-200% and interest rate increases to 24% under
default) per annum and gives the holder the right from time to
time, and at any time during the period beginning 180 days from the
origination date to the maturity date or date of default to convert
all or any part of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price is 61% multiplied by the average of
the two lowest trading prices for the common stock during the
previous 20 trading days prior to the applicable conversion date.
The Geneva Roth Convertible Promissory Notes may be prepaid in
whole or in part of the outstanding balance at 125% to 140% up to
180 days from origination. Geneva Roth converted a total of
$244,000 of principal and $8,680 of accrued interest through
September 30, 2020 from its various Securities Purchase Agreements
into 125,446,546 shares of common stock of the Company leaving no
outstanding principal balances as of September 30, 2020. On
February 13, 2020, the August 22, 2019 Securities Purchase
Agreement was repaid for $63,284, including a premium and accrued
interest.
On March 25, 2019, the Company consummated a Securities Purchase
Agreement dated March 18, 2019 with Auctus Fund, LLC.
(“Auctus”) for the purchase of a $600,000 Convertible
Promissory Note (“Auctus Convertible Promissory Note”).
The Auctus Convertible Promissory Note is due December 18, 2019,
pays interest at the rate of 12% (24% default) per annum and gives
the holder the right from time to time, and at any time during the
period beginning 180 days from the origination date or at the
effective date of the registration of the underlying shares of
common stock, which the holder has registration rights for, to
convert all of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price is the lessor of the lowest trading
price during the previous 25 trading days prior the date of the
Auctus Convertible Promissory Note or 50% multiplied by the average
of the two lowest trading prices for the common stock during the
previous 25 trading days prior to the applicable conversion date.
The Auctus Convertible Promissory Note may be prepaid in full at
135% to 150% up to 180 days from origination. Auctus converted
$33,180 of principal and $142,004 of accrued interest into
376,000,000 shares of common stock of the Company prior to December
31, 2020. 2,000,000 warrants were issued in conjunction with the
issuance of this debt. See Note 8.
On June 6, 2019, the Company consummated a Securities Purchase
Agreement with JSJ Investments Inc. (“JSJ”) for the
purchase of a $112,000 Convertible Promissory Note (“JSJ
Convertible Promissory Note”). The JSJ Convertible Promissory
Note is due June 6, 2020, pays interest at the rate of 12% per
annum and gives the holder the right from time to time, and at any
time during the period beginning 180 days from the origination date
to convert all of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price is the lower of the market price, as
defined, or 55% multiplied by the average of the two lowest trading
prices for the common stock during the previous 20 trading days
prior to the applicable conversion date. The JSJ Convertible
Promissory Note may be prepaid in full at 135% to 150% up to 180
days from origination. JSJ converted $43,680 of principal into
18,500,000 shares of common stock of the Company prior to December
31, 2020. In addition, on February 25, 2020 the Company repaid for
$97,000, including a premium and accrued interest, for all
remaining principal and accrued interest balances as of that day.
333,333 warrants were issued in conjunction with the issuance of
this debt. See Note 8.
On June 11, 2019, the Company consummated a Securities Purchase
Agreement with EMA Financial, LLC. (“EMA”) for the
purchase of a $250,000 Convertible Promissory Note (“EMA
Convertible Promissory Note”). The EMA Convertible Promissory
Note is due June 11, 2020, pays interest at the rate of 12%
(principal amount increases 200% and interest rate increases to 24%
under default) per annum and gives the holder the right from time
to time to convert all of the outstanding balance into common stock
of the Company limited to 4.99% of the outstanding common stock of
the Company. The conversion price is 55% multiplied by the lowest
traded price for the common stock during the previous 25 trading
days prior to the applicable conversion date. The EMA Convertible
Promissory Note may be prepaid in full at 135% to 150% up to 180
days from origination. Prior to December 31, 2020, EMA converted
$35,366 of principal into 147,700,000 shares of common stock of the
Company. 1,000,000 warrants were issued in conjunction with the
issuance of this debt. See Note 8.
The
Company is in default under its derivative financial instruments
and received notice of such from Auctus and EMA for not reserving
enough shares for conversion and for not having filed a Form S-1
Registration Statement with the Securities and Exchange Commission.
It was the intent of the Company to pay back all derivative
securities prior to the due dates but that has not occurred in case
of Auctus or EMA. As such, the Company is currently in negotiations
with Auctus and EMA and relative to extending due dates and
changing terms on the Notes. The Company has been named in a
lawsuit by EMA for failing to comply with a Securities Purchase
Agreement entered into in June 2019. See Note 9 Other Commitments
and Contingencies.
On February 14, 2020, the Company agreed to a Secured Promissory
Note with a third party for $90,000. The Secured Promissory Note
was secured by the assets of the Company and was due June 14, 2020
or earlier in case the Company is successful in raising other
monies and carried an interest charge of 10% payable with the
principal. The Secured Promissory Note was also convertible at the
option of the holder into an equivalent amount of Series D
Preferred Stock. The Secured Promissory Note also included a
guaranty by the CEO of the Company, Stephen J. Thomas III. This
Secured Promissory Note was paid off in June 2020, including $9,000
of interest in June and $1,000 in July 2020.
(3)
$101,244 of the Factoring Agreements is with full recourse, due
February 29, 2020, as amended, was established in June 2016 with a
company that is controlled by a shareholder and is personally
guaranteed by an officer of the Company. This Factoring Agreement
is such that the Company pays a discount of 2% per each 30-day
period for each advance received against accounts receivable or
future billings. The Company was advanced funds from this Factoring
Agreement for which $101,244 and $101,244 in principal remained
unpaid as of December 31, 2020 and December 31, 2019,
respectively.
On May
8, 2019, the Company entered into a factoring agreement with
Advantage Capital Funding (“2019 Factoring agreement”).
$500,000, net of expenses, was funded to the Company with a promise
to pay $18,840 per week for 40 weeks until a total of $753,610 was
paid which occurred in February 2020.
On February 21, 2020, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts (“2020 Factoring
Agreement”). The balance to be purchased and sold is $716,720
for which the Company received $500,000, net of fees. Under the
2020 Factoring Agreement, the Company was to pay $14,221 per week
for 50 weeks at an effective interest rate of approximately 43%
annually. However, due to COVID-19 the payments under the 2020
Factoring Agreement were reduced temporarily, to between $9,000 and
$11,000 weekly, of which $144,119 in payments have been deferred to
be paid at the end of the 50-week term. The 2020 Factoring
Agreement includes a guaranty by the CEO of the Company, Stephen J.
Thomas III.
On November 13, 2020, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts (“2020 NewCo Factoring
Agreement”). The balance to be purchased and sold is $326,400
for which the Company received $232,800, net of fees. Under the
2020 NewCo Factoring Agreement, the Company is to pay $11,658 per
week for 28 weeks at an effective interest rate of approximately
36% annually. The 2020 NewCO Factoring Agreement includes a
guaranty by the CEO of the Company, Stephen J. Thomas
III.
On December 11, 2020, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts with Samson MCA LLC
(“Samson Factoring Agreement”). The balance to be
purchased and sold is $162,500 for which the Company received
$118,625, net of fees. Under the Samson Factoring Agreement, the
Company is to pay $8,125 per week for 20 weeks at an effective
interest rate of approximately 36%. The Samson Factoring Agreement
includes a guaranty by the CEO of the Company, Stephen J. Thomas
III.
On December 11, 2020, the Company entered into a consolidation
agreement for the Purchase and Sale of Future Receipts with QFS
Capital (“QFS Factoring Agreement”). The balance to be
purchased and sold is $976,918 for which the Company receives
weekly payments of $29,860 for 20 weeks and then $21,978 for 4
weeks and then $11,669 in the last week of receipts all totaling
$696,781 net of fees. During the same time, the Company is required
to pay weekly $23,087 for 42 weeks at an effective interest rate of
approximately 36% annually. The QFS Factoring Agreement includes a
guaranty by the CEO of the Company, Stephen J. Thomas
III.
(4) The
Line of Credit originated with a bank and was secured by the
personal assets of certain shareholders of Copperhead Digital.
During 2016, the Line of Credit was assigned to the Copperhead
Digital shareholders, who subsequent to the Copperhead Digital
acquisition by TPTG became shareholders of TPTG, and the secured
personal assets were used to pay off the bank. The Line of Credit
bears a variable interest rate based on the 1 Month LIBOR plus
2.0%, 2.14% as of December 31, 2020, is payable monthly, and is
secured by the assets of the Company. 1,000,000 shares of Common
Stock of the Company have been reserved to accomplish raising the
funds to pay off the Line of Credit. Since assignment of the Line
of Credit to certain shareholders, which balance on the date of
assignment was $2,597,790, those shareholders have loaned the
Company $445,600 under the similar terms and conditions as the line
of credit but most of which were also given stock options totaling
$85,120 which expired as of December 31, 2019 (see Note 8) and was
due, as amended, August 31, 2020. The Company is in negotiations to
refinance this Line of Credit.
During
the years ended December 31, 2019 and 2018, those same shareholders
and one other have loaned the Company money in the form of
convertible loans of $136,400 and $537,200, respectively, described
in (2) and (6).
(5)
$350,000 represents cash due to the prior owners of the technology
acquired in December 2016 from the owner of the Lion Phone which is
due to be paid as agreed by the Company and the former owners of
the Lion Phone technology and has not been determined.
$4,000,000
represents a promissory note included as part of the consideration
of ViewMe Live technology acquired in 2017, later agreed to as
being due and payable in full, with no interest with $2,000,000
from debt proceeds and the remainder from proceeds from a second
Company public offering.
$1,000,000
represents a promissory note which was entered into on May 6, 2020
for the acquisition of Media Live One Platform from
Steve and Yuanbing Caudle for the further development of software.
This was expensed as research and development in the year ended
December 31, 2020. This
$1,000,000 promissory note is non-interest bearing, due
after funding has been received by the Company from its various
investors and other sources. Mr. Caudle is a principal with the
Company’s ViewMe technology.
On
September 1, 2018, the Company closed on its acquisition of Blue
Collar. Part of the acquisition included a promissory note of
$1,600,000 and interest at 3% from the date of closure. The
promissory note is secured by the assets of Blue
Collar.
$473,334,
net of a discount of $26,666 represents a Note Payable related to
the acquisition of 75% of Aire Fitness, payable six months from the
date of the note or as agreed by the Company out of future capital
raising efforts and does not accrue interest.
(6)
During 2016, the Company acquired SDM which consideration included
a convertible promissory note for $250,000 due February 29, 2019,
as amended, does not bear interest, unless delinquent in which the
interest is 12% per annum, and is convertible into common stock at
$1.00 per share. The SDM balance is $181,981 as of December 31,
2020. As of March 1, 2020, this convertible promissory note is
delinquent.
During
2018, the Company issued convertible promissory notes in the amount
of $537,200 to related parties and $10,000 to a non-related party
which bear interest at 6% (11% default interest rate), are due 30
months from issuance and are convertible into Series C Preferred
Stock at $1.00 per share. Because the Series C Preferred Stock has
a conversion price of $0.15 per share, the issuance of Series C
Preferred Stock promissory notes will cause a beneficial conversion
feature of approximately $38,479 upon exercise of the convertible
promissory notes.
(7) The
shareholder debt represents funds given to TPTG or subsidiaries by
officers and managers of the Company as working capital. There are
no written terms of repayment or interest that is being accrued to
these amounts and they will only be paid back, according to
management, if cash flows support it. They are classified as
current in the balance sheets.
During
the year ended December 31, 2020, the holders of approximately
$4,700,000 of existing financing arrangements agreed to exchange
their debt and accrued interest for Series D Preferred Stock
through a separate $12 Million Private Placement of Series D
Preferred Stock (“$12 Million Private Placement”),
conditioned on the Company raising at least $12,000,000. To date,
this condition has not been met.
See
Lease financing arrangement in Note 9.
NOTE 6 – DERIVATIVE FINANCIAL INSTRUMENTS
The Company previously adopted the provisions of ASC subtopic
825-10, Financial
Instruments (“ASC
825-10”). ASC 825-10 defines fair value as the price that
would be received from selling an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. When determining the fair value measurements
for assets and liabilities required or permitted to be recorded at
fair value, the Company considers the principal or most
advantageous market in which it would transact and considers
assumptions that market participants would use when pricing the
asset or liability, such as inherent risk, transfer restrictions,
and risk of nonperformance. ASC 825-10 establishes a fair value
hierarchy that requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring
fair value.
The derivative liability as of December 31, 2020, in the amount of
$5,265,139 has a level 3 classification under ASC
825-10.
The following table provides a summary of changes in fair value of
the Company’s Level 3 financial liabilities as of December
31, 2020.
|
|
Debt
Derivative Liabilities
|
|
Balance,
December 31, 2018
|
$—
|
|
Debt discount from
initial derivative
|
1,774,000
|
|
Initial fair value
of derivative liabilities
|
2,601,631
|
|
Change in
derivative liability from conversion of notes payable
|
(407,654)
|
|
Change in fair
value of derivative liabilities at end of period
|
4,868,537
|
|
Balance, December
31, 2019
|
$8,836,514
|
|
Change in
derivative liabilities from conversion of notes
payable
|
(1,144,290)
|
|
Change in
derivative liabilities from the Odyssey conversion to a term
loan
|
(1,286,762)
|
|
Change in fair
value of derivative liabilities at end of period – derivative
expense
|
(1,140,323)
|
|
Balance, December
31, 2020
|
$5,265,139
|
Convertible notes payable and warrant derivatives
– The Company issued
convertible promissory notes which are convertible into common
stock, at holders’ option, at a discount to the market price
of the Company’s common stock. The Company has identified the
embedded derivatives related to these notes relating to certain
anti-dilutive (reset) provisions. These embedded derivatives
included certain conversion features. The accounting treatment of
derivative financial instruments requires that the Company record
fair value of the derivatives as of the inception date of debenture
and to fair value as of each subsequent reporting
date.
As of December 31, 2020, the Company marked to market the fair
value of the debt derivatives and determined a fair value of
$5,265,139 comprised of $5,229,436 from the convertible notes (Note
5) and $35,703 from the warrants (Note 8). The Company recorded a
gain from change in fair value of debt derivatives of $1,140,323
for the year ended December 31, 2020. The fair value of the
embedded derivatives was determined using Monte Carlo simulation
method based on the following assumptions: (1) dividend yield of
0%, (2) expected volatility of 190.9% to 350.8%, (3) weighted
average risk-free interest rate of 0.09% to 0.12% (4) expected life
of 0.25 to 1.4 years, and (5) the quoted market price of $0.03 for
the Company’s common stock.
See
Financing lease arrangements in Note 9.
NOTE 7 - INCOME TAXES
The
following table sets forth the components of the Company’s
income tax expense (benefit) for the years ended December 31, 2020
and 2019:
|
Current:
|
2020
|
2019
|
|
Federal State and
local
|
$—
|
—
|
|
Total
Current
|
$—
|
—
|
|
Deferred:
|
|
|
|
Federal State and
local benefit
|
$(1,705,046)
|
(2,945,915)
|
|
Net operating loss,
net of state tax effect
|
(60,546)
|
(107,011)
|
|
Meals and
entertainment
|
4,459
|
4,506
|
|
Stock based
expenses
|
87,706
|
124,124
|
|
Impairment
|
567,629
|
199,473
|
|
Amortization
|
153,497
|
182,411
|
|
Derivative
expense
|
239,468
|
--
|
|
Other
|
---
|
61,472
|
|
Change in
allowance
|
712,833
|
2,480,939
|
|
Total
Benefit
|
$—
|
—
|
The
following table sets forth a reconciliation of the Company’s
income tax expense (benefit) as the federal statutory rate to
recorded income tax expense (benefit) for the years ended December
31, 2020 and 2019:
|
|
2020
|
2019
|
|
Income tax at
Federal statutory rate
|
21%
|
21%
|
|
Change in valuation
allowance
|
(21%)
|
(21%)
|
|
Stock based
compensation
|
(0%)
|
(0%)
|
|
Net operating loss,
net of state tax effect
|
(1%)
|
(1%)
|
|
Other
|
(1%)
|
(1%)
|
|
Total
|
—
|
—
|
The
following table sets forth the components of the Company’s
deferred income taxes as of December 31, 2020 and
2019:
|
Current deferred
tax assets (liabilities):
|
2020
|
2019
|
|
Valuation
allowance
|
$—
|
—
|
|
Total current
deferred tax asset (liability)
|
$—
|
—
|
|
|
|
|
|
Noncurrent deferred
tax assets (liabilities):
|
|
|
|
Derivative (gain)
expense
|
$1,330,683
|
1,570,151
|
|
Intangible assets
amortization
|
956,355
|
802,857
|
|
Net operating loss
carry forwards
|
2,752,287
|
2,140,224
|
|
Stock base
compensation
|
1,743,527
|
1,655,821
|
|
Other
|
99,034
|
—
|
|
Less; Valuation
allowance
|
$(6,881,886)
|
(6,169,052)
|
|
Total noncurrent
deferred tax asset (liability)
|
—
|
—
|
|
|
|
|
|
Total deferred tax
asset (liability)
|
$—
|
—
|
The
Company has approximately $13,100,000 and $10,000,000 of net
operating loss carry forwards as of December 31, 2020 and 2019,
respectively, which expire in varying amounts, if unused. Because
of the change in ownership of more than 50% of the Company in
accordance with Section 382 of the IRS Code, these net operating
loss carry forwards may be significantly limited to use in future
periods.
NOTE
8 - STOCKHOLDERS' DEFICIT
Preferred
Stock
As of
December 31, 2020, we had authorized 100,000,000 shares of
Preferred Stock, of which certain shares had been designated as
Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock.
Series A Convertible Preferred Stock
The
Company designated 1,000,000 shares of Preferred Stock as Series A
Preferred Stock. In February 2015, the Board of Directors
authorized the issuance of 1,000,000 shares of Series A Preferred
Stock to Stephen Thomas, Chairman, CEO and President of the
Company, valued at $3,117,000 for compensation expense. These
shares are outstanding as of December 31, 2020.
The
Series A Preferred Stock has a par value of $.001, is redeemable at
the Company’s option at $100 per share, is senior to any
other class or series of outstanding Preferred Stock or Common
Stock and does not bear dividends. The Series A Preferred Stock has
a liquidation preference immediately after any Senior Securities,
as defined and amended, of an amount equal to amounts payable
owing, including contingency amounts where Holders of the Series A
have personally guaranteed obligations of the Company. Holders of
the Series A Preferred Stock shall, collectively have the right to
convert all of their Series A Preferred Stock when conversion is
elected into that number of shares of Common Stock of the Company,
determined by the following formula: 60% of the issued and
outstanding Common Shares as computed immediately after the
transaction for conversion. For further clarification, the 60% of
the issued and outstanding common shares includes what the holders
of the Series A Preferred Stock may already hold in common shares
at the time of conversion. The Series A Preferred Stock,
collectively, shall have the right to vote as if converted prior to
the vote to a number of shares equal to 60% of the outstanding
Common Stock of the Company.
During
the year ended December 31, 2020, the Series A Preferred Stock was
reclassified as mezzanine equity as a result of the Company not
having enough authorized common shares to be able to issue common
shares upon their conversion.
Series B Convertible Preferred Stock
In
February 2015, the Company designated 3,000,000 shares of Preferred
Stock as Series B Convertible Preferred Stock.
The
Series B Preferred Stock was designated in February 2015, has a par
value of $.001, is not redeemable, is senior to any other class or
series of outstanding Preferred Stock, except the Series A
Preferred Stock, or Common Stock and does not bear dividends. The
Series B Preferred Stock has a liquidation preference immediately
after any Senior Securities, as defined and currently the Series A
Preferred Stock, and of an amount equal to $2.00 per share. Holders
of the Series B Preferred Stock have a right to convert all or any
part of the Series B Preferred Shares and will receive and equal
number of common shares at the conversion price of $2.00 per share.
The Series B Preferred Stockholders have a right to vote on any
matter with holders of Common Stock and shall have a number of
votes equal to that number of Common Shares on a one-to- one
basis.
There
are 2,588,693 shares of Series B Convertible Preferred Stock
outstanding as of December 31, 2020. During the year ended December
31, 2020, the Series B Preferred Stock was reclassified as
mezzanine equity as a result of the Company not having enough
authorized common shares to be able to issue common shares upon
their conversion.
Series C Convertible Preferred Stock
In May
2018, the Company designated 3,000,000 shares of Preferred Stock as
Series C Convertible Preferred Stock.
The
Series C Preferred Stock has a par value of $.001, is not
redeemable, is senior to any other class or series of outstanding
Preferred Stock, except the Series A and Series B Preferred Stock,
or Common Stock and does not bear dividends. The Series C Preferred
Stock has a liquidation preference immediately after any Senior
Securities, as defined and currently the Series A and B Preferred
Stock, and of an amount equal to $2.00 per share. Holders of the
Series C Preferred Stock have a right to convert all or any part of
the Series C Preferred Shares and will receive an equal number of
common shares at the conversion price of $0.15 per share. The
Series C Preferred Stockholders have a right to vote on any matter
with holders of Common Stock and shall have a number of votes equal
to that number of Common Shares on a one-to-one basis.
There
are no shares of Series C Convertible Preferred Stock outstanding
as of December 31, 2020. There are approximately $688,500 in
convertible notes payable convertible into Series C Convertible
Preferred Stock which compromise some of the common stock
equivalents calculated in Note 1.
Series D Convertible Preferred Stock
On June 15, 2020, the Company amended its Series D Designation from
January 14, 2020. This Amendment changed the number of shares to
10,000,000 shares of the authorized 100,000,000 shares of the
Company's $0.001 par value preferred stock as the Series D
Convertible Preferred Stock ("the Series D Preferred
Shares.").
Series
D Preferred shares have the following features: (i) 6% Cumulative
Annual Dividends payable on the purchase value in cash or common
stock of the Company at the discretion of the Board and payment is
also at the discretion of the Board, which may decide to cumulate
to future years; (ii) Any time after 18 months from issuance an
option to convert to common stock at the election of the holder @
80% of the 30 day average market closing price (for previous 30
business days) divided into $5.00. ; (iii) Automatic conversion of
the Series D Preferred Stock shall occur without consent of holders
upon any national exchange listing approval and the registration
effectiveness of common stock underlying the conversion rights. The
automatic conversion to common from Series D Preferred shall be on
a one for one basis, which shall be post-reverse split as may be
necessary for any Exchange listing (iv) Registration Rights –
the Company has granted Piggyback Registration Rights for common
stock underlying conversion rights in the event it files any other
Registration Statement (other than an S-1 that the Company may file
for certain conversion common shares for the convertible note
financing that was arranged and funded in 2019). Further, the
Company will file, and pursue to effectiveness, a Registration
Statement or offering statement for common stock underlying the
Automatic Conversion event triggered by an exchange listing. (v)
Liquidation Rights - $5.00 per share plus any accrued unpaid
dividends – subordinate to Series A, B, and C Preferred Stock
receiving full liquidation under the terms of such series. The
Company has redemption rights for the first year following the
Issuance Date to redeem all or part of the principal amount of the
Series D Preferred Stock at between 115% and 140%.
As of
December 31, 2020, there are no Series D Preferred shares
outstanding as amended.
During
the year ended December 31, 2020, the related party holders of
approximately $4,700,000 of existing financing arrangements agreed
to exchange their debt and accrued interest for 940,800 Series D
Preferred Stock through a separate $12 Million Private Placement of
Series D Preferred Stock (“$12 Million Private
Placement”), conditioned on the Company raising at least
$12,000,000. To date, this condition has not been met.
Common
Stock
As of
December 31, 2020, we had authorized 1,000,000,000 shares of Common
Stock, of which 865,564,371 common shares are issued and
outstanding.
Common Stock Issued for Conversion of Debt
During
the year ended December 31, 2020, the Company issued 679,932,432 of
common shares for $232,430 of principal and $104,300 of interest,
resulting in a loss on conversion of $775,650. In addition, the
Company issued 1,000,000 common shares in exchange for $58,000 of
legal liabilities.
Common Stock Issued for Expenses and Liabilities
The
Company also entered into a twelve-month general consulting
agreement with a third party to provide general business advisory
services to be rendered through March 30, 2019 for 1,000,000
restricted shares of common stock and 1,000,000 options to purchase
restricted common shares at $0.10 per share for 36 months from the
time of grant. The fair value of the common shares granted was
based on the Company’s stock price of $0.155 per share, or
$155,000 of which $0 and $34,444 was expensed during the period for
the portion of service term complete as of December 31, 2020 and
2019.
In
addition, in the year ended December 31, 2020 1,000,000 shares were
issued to a consultant as a bonus for IR consulting services
performed which the Company recorded $58,000 of compensation
expense. These shares were valued at their fair value on the day
they were granted for which the Company recorded $54,000 in the
statement of operations as share-based compensation.
Subscription Payable
As of
December 31, 2020, the Company has recorded $125,052 in stock
subscription payable, which equates to the fair value on the date
of commitment, of the Company’s commitment to issue the
following common shares:
|
Unissued shares for
conversion of debt
|
14,667
|
|
Unissued shares for
TPT MedTech consulting agreements
|
300,000
|
|
Unissued shares for
TPT consulting agreements
|
4,150,000
|
|
Shares receivable
under terminated acquisition agreement
|
(3,096,181)
|
|
Net
commitment
|
(1,368,486)
|
During
the years ended December 31, 2018, 16,667 of common shares were
subscribed to for a note payable on the balance sheet of $2,000.
2,000 of these shares were issued during the year ended December
31, 2020.
During
the year ended December 31, 2020, the Company signed consulting
agreements related to their activities with TPT Global Tech and TPT
MedTech with three third parties for which we agreed to issue
4,450,000 shares of restricted common stock. 300,000 of these
shares were valued at fair value and expensed in the statement of
operations for $16,200. The other 4,150,000 shares were value at
their value of $275,975 which is being amortized over 10 months of
service starting on the date of the agreement of September 1, 2020.
$110,390 has been amortized into the statement of operations as of
December 31, 2020.
In
2018, Arkady Shkolnik and Reginald Thomas (family member of CEO)
were added as members of the Board of Directors. In accordance with
agreements with the Company for his services as a director, Mr.
Shkolnik is to receive $25,000 per quarter and 5,000,000 shares of
restricted common stock valued at approximately $692,500 vesting
quarterly over twenty-four months. The quarterly cash payments of
$25,000 will be paid in unrestricted common shares if the Company
has not been funded adequately to make such payments. Mr. Thomas is
to receive $10,000 per quarter and 1,000,000 shares of restricted
common stock valued at approximately $120,000 vesting quarterly
over twenty-four months. The quarterly payment of $10,000 may be
suspended by the Company if the Company has not been adequately
funded. As of December 31, 2020, $215,500 and $75,000 has been
accrued as accounts payable in the balance sheet for Mr. Shkolnik
and Mr. Thomas, respectively. For the year ended December 31, 2020
and 2019, $236,978 and $409,688, respectively, have been expensed
under these agreements. Both the 5,000,000 and 1,000,000 shares
granted were issued during the year ended December 31, 2020 and are
no longer reflected in subscriptions payable as of December 31,
2020.
Effective
November 1, 2017, the Company entered into an agreement to acquire
Holly wood Rivera, LLC and HRS Mobile LLC (“HRS”). In
March 2018, the HRS acquisition was rescinded and 3,096,181 shares
of common stock which were issued as consideration are being
returned by the recipients. As such, as of December 31, 2020 the
shares for the HRS transaction are reflected as subscriptions
receivable based on their par value.
Common Stock Issued Subsequent to December 31, 2020
Effective
September 30, 2020, we entered into a Purchase Agreement by which
we agreed to purchase the 500,000 outstanding Series A Preferred
shares of InnovaQor, Inc., our majority owned subsidiary, in an
agreed amount of $350,000 in cash or common stock, if not paid in
cash, at the five day average price preceding the date of the
request for effectiveness after the filing of a registration
statement on Form S-1. This was modified December 28 and 29, 2020,
to provide for registration of 7,500,000 common shares for resale
at the market price. Any balance due on notes will be calculated
after an accounting for the net sales proceeds from sale of the
stock by February 28, 2021 and may be paid in cash or stock
thereafter. The Series A Preferred shares are being purchased from
the Michael A. Littman, Atty. Defined Benefit Plan.
Effective
September 30, 2020, we entered into a Settlement Agreement to
settle outstanding legal fees due to date in the amount of $74,397
(as assigned to the Michael A. Littman Atty. Defined Benefit Plan.)
The number of shares to be issued in consideration is to be
computed at the five day average price as specified under Rule 474
under the Securities Act of 1933 for the 5 days preceding the date
of the request for acceleration of the effective date of this
registration of our common shares to be issued. (This may also be
fully settled by payment of the sum of $74,397 in cash at any time
prior to the issuance of the shares of stock of the Company.) This
was modified December 28 and 29, 2020, to provide for registration
of 7,500,000 common shares for resale at the market price. Any
balance due on notes will be calculated after an accounting for the
net sales proceeds from sale of the stock by February 28, 2021 and
may be paid in cash or stock thereafter.
The
7,500,000 shares identified in these agreements with Mr. Littman
were issued subsequent to December 31, 2020 and included in a Form
S-1 filed in January 2021. To date, we
understand the shares have not been sold and thus there is no
calculated shortfall as outlined above.
Stock Options
|
|
Options
Outstanding
|
Vested
|
Vesting
Period
|
Exercise
Price Outstanding and Exercisable
|
Expiration
Date
|
|
December 31,
2018
|
3,093,120
|
1,954,230
|
100% at issue and
12 to 18 months
|
$0.05 to $0.22
|
12-31-19 to
3-21-21
|
|
Expired
|
(93,120)
|
|
|
$0.05 to $0.22
|
12-31-19
|
|
December 31,
2019
|
3,000,000
|
3,000,000
|
12 to 18
months
|
$0.10
|
3-1-20 to
3-21-21
|
|
Expired
|
(2,000,000)
|
|
|
|
|
|
December 31,
2020
|
1,000,000
|
1,000,000
|
12
months
|
$0.10
|
3-21-21
|
During
the year ended December 31, 2018, the Company entered into
consulting arrangements primarily for legal work and general
business support that included the issuance of stock options to
purchase 3,000,000 options to purchase common shares at $0.10 per
share. 2,000,000 of these expired. The remaining 1,000,000 are
fully vested as of December 31, 2020 but expired after year end.
The Black-Scholes options pricing model was used to value the stock
options. The inputs included the following:
|
(1)
|
Dividend
yield of 0%
|
|
(2)
|
expected
annual volatility of 307% - 311%
|
|
(3)
|
discount
rate of 2.2% to 2.3%
|
|
(4)
|
expected
life of 2 years, and
|
|
(5)
|
estimated
fair value of the Company’s common $0.125 to $0.155 per
share.
|
Additionally,
93,120 options expired in 2019. Expense recorded in the years ended
December 31, 2020 and 2019 was $0 and $0 related to stock options.
No further expense will be incurred to the consolidated statement
of operations for the existing stock options.
Warrants
As of
December 31, 2020, there were 3,333,333 warrants outstanding that
expire in five years or in the year ended December 31, 2024. As
part of the Convertible Promissory Notes payable – third
party issuance in Note 5, the Company issued 3,333,333 warrants to
purchase 3,333,333 common shares of the Company at 70% of the
current market price. Current market price means the average of the
three lowest trading prices for our common stock during the
ten-trading day period ending on the latest complete trading day
prior to the date of the respective exercise notice. However, if a
required registration statement, registering the underlying shares
of the Convertible Promissory Notes, is declared effective on or
before June 11, 2019 to September 11, 2019, then, while such
Registration Statement is effective, the current market price shall
mean the lowest volume weighted average price for our common stock
during the ten-trading day period ending on the last complete
trading day prior to the conversion date.
The
warrants issued were considered derivative liabilities valued at
$35,703 of the total $5,265,436 derivative liabilities as of
December 31, 2020. See Note 6.
Common Stock Reservations
The
Company has reserved 1,000,000 shares of Common Stock of the
Company for the purpose of raising funds to be used to pay off debt
described in Note 5.
We have
reserved 20,000,000 shares of Common Stock of the Company to grant
to certain employee and consultants as consideration for services
rendered and that will be rendered to the Company.
Non-Controlling Interests
QuikLAB
Mobile Laboratories
In July
and August 2020, the Company formed Quiklab 1 LLC, QuikLAB 2, LLC,
QuikLAB 3, LLC and QuikLAB 4, LLC. It is the intent to use these
entities as vehicles into which third parties would invest and
participate in owning QuikLAB Mobile Laboratories. As of December
31, 2020, Quiklab 1 LLC, QuikLAB 2, LLC and QuikLAB 3, LLC have
received an investment of $460,000, of which Stephen Thomas and
Rick Eberhardt, CEO and COO of the Company, have invested $100,000
in QuikLAB 2, LLC. The third party investors and Mr. Thomas and Mr.
Eberhart, will benefit from owning 20% of QuikLAB Mobile
Laboratories specific to their investments. The Company owns the
other 80% ownership in the QuickLAB Mobile Laboratories. The net
loss attributed to the non-controlling interests from the QuikLAB
Mobile Laboratories included in the statement of operations for the
year ended December 31, 2020 is $30,536.
Other Non-Controlling Interests
InnovaQor,
Aire Fitness and TPT Asia are other non-controlling interests in
which the Company owns 94%, 75% and 78%, respectively. There is
very little activity in any of these entities. The net loss
attributed to these non-controlling interests included in the
statement of operations for the year ended December 31, 2020 is
$16,881.
InnovaQor
did a reverse merger with Southern Plains of which there ended up
being a non-controlling interest ownership of 6% as of December 31,
2020. As a result, $219,058 in the non-controlling interest in
liabilities of a license agreement valued at $3,500,000 was
reflected in the consolidated balance sheet as of December 31,
2020.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Accounts Payable and Accrued Expenses
|
Accounts
payable:
|
2020
|
2019
|
|
Related
parties (1)
|
$1,339,352
|
$1,141,213
|
|
General
operating
|
3,965,135
|
3,342,952
|
|
Accrued interest on
debt (2)
|
1,328,939
|
793,470
|
|
Credit card
balances
|
173,972
|
183,279
|
|
Accrued payroll and
other expenses
|
296,590
|
207,108
|
|
Taxes and fees
payable
|
641,012
|
633,357
|
|
Unfavorable lease
liability
|
121,140
|
242,256
|
|
Total
|
$7,866,140
|
$6,543,635
|
_____________
(1)
(2)
Relates
to amounts due to management and members of the Board of Directors
according to verbal and written agreements that have not been paid
as of period end. Portion relating to
related parties is $679,380 and $481,942 for December 31, 2020 and
2019, respectively.
Operating lease obligations
The
Company adopted Topic 842 on January 1, 2019. The Company elected
to adopt this standard using the optional modified retrospective
transition method and recognized a cumulative-effect adjustment to
the consolidated balance sheet on the date of adoption. Comparative
periods have not been restated. With the adoption of Topic 842, the
Company’s consolidated balance sheet now contains the
following line items: Operating lease right-of-use assets, Current
portion of operating lease liabilities and Operating lease
liabilities, net of current portion.
As all
the existing leases subject to the new lease standard were
previously classified as operating leases by the Company, they were
similarly classified as operating leases under the new standard.
The Company has determined that the identified operating leases did
not contain non-lease components and require no further allocation
of the total lease cost. Additionally, the agreements in place did
not contain information to determine the rate implicit in the
leases, so we used our estimated incremental borrowing rate as the
discount rate. Our weighted average discount rate is 10.0% and the
weighted average lease term of 4.2 years.
We have
various non-cancelable lease agreements for certain of our tower
locations with original lease periods expiring between 2021 and
2044. Our lease terms may include options to extend or terminate
the lease when it is reasonably certain we will exercise that
option. Certain of the arrangements contain escalating rent payment
provisions. Our Michigan main office lease and an equipment lease
described below and leases with an initial term of twelve months
have not been recorded on the consolidated balance sheets. We
recognize rent expense on a straight-line basis over the lease
term.
As of
December 31, 2020, operating lease right-of-use assets and
liabilities arising from operating leases were $4,732,459 and
$5,555,674, respectively. During the year ended December 31, 2020,
cash paid for amounts included for the measurement of lease
liabilities was $2,506,924 and the Company recorded lease expense
in the amount of $2,846,068 in cost of sales.
The
Company entered into an operating lease agreement for location
rights for certain QuikLABS. The operating lease agreement start
October 1, 2020 and goes for three years at $9,798 per month. In
addition, the Company entered an operating agreement to lease
colocation space for 5 years. This operating agreement starts
October 1, 2020 for 7,140 per month.
The
following is a schedule showing the future minimum lease payments
under operating leases by years and the present value of the
minimum payments as of December 31, 2020.
|
2021
|
$2,790,694
|
|
2022
|
1,545,075
|
|
2023
|
1,002,903
|
|
2024
|
668,474
|
|
2025
|
354,398
|
|
Thereafter
|
93,242
|
|
Total operating
lease liabilities
|
6,454,785
|
|
Amount representing
interest
|
(899,111)
|
|
Total net present
value
|
$5,555,674
|
Office lease used by CEO
During
the years ended December 31, 2020 and 2019, the Company entered
into a lease of 12 months or less for living space which is
occupied by Stephen Thomas, Chairman, CEO and President of the
Company. Mr. Thomas lives in the space and uses it as his corporate
office. The Company has paid $30,000 and $30,857 in rent and
utility payments for this space for the year ended December 31,
2020 and 2019, respectively.
Financing lease obligations
Future
minimum lease payments are as follows:
|
2021
|
$864,025
|
|
2022
|
10,780
|
|
2023
|
—
|
|
2024
|
—
|
|
2025
|
—
|
|
Thereafter
|
—
|
|
Total financing
lease liabilities
|
874,805
|
|
Amount representing
interest
|
(35,233)
|
|
Total future
payments (1)(2)
|
$839,572
|
____________________
(1)
Included is a
Telecom Equipment Lease is with an entity owned and controlled by
shareholders of the Company and was due August 31, 2020, as
amended.
(2)
Also included are
leases under Xroads Equipment Agreements with a third party that
allows the Company to pay between $11,288 and $11,780 per month,
including interest, starting between November 16, 2020 and February
22, 2021 for eleven months with a $1 value acquisition price at the
termination of the leases.
Other Commitments and Contingencies
Employment Agreements
The
Company has employment agreements with certain employees of SDM, K
Telecom and Aire Fitness. The agreements are such that SDM, K
Telecom and Aire Fitness, on a standalone basis in each case, must
provide sufficient cash flow to financially support the financial
obligations within the employment agreements.
On May
6, 2020, the Company entered into an agreement to employ Ms. Bing
Caudle as Vice President of Product Development of the Media One
Live platform for an annual salary of $250,000 for five years,
including customary employee benefits. The payment is guaranteed
for five years whether or not Ms. Caudle is dismissed with
cause.
Litigation
We have
been named in a lawsuit by EMA Financial, LLC (“EMA”)
for failing to comply with a Securities Purchase Agreement entered
into in June 2019. More specifically, EMA claims the Company failed
to honor notices of conversion, failed to establish and maintain
share reserves, failed to register EMA shares and by failed to
assure that EMA shares were Rule 144 eligible within 6 months. EMA
has claimed in excess of $7,614,967 in relief. The Company has
filed a motion in response for which EMA has filed a motion to
dismiss. The Company does not believe at this time that any
negative outcome would result in more than the $593,120 it has
recorded on its balance sheet as of December 31, 2020.
A
lawsuit was filed in Michigan by the one of the former owners of
SpeedConnect, LLC, John Ogren. Mr. Ogren claims he is
owed back wages related to the acquisition agreement wherein the
Company acquired the assets of SpeedConnect, LLC and kept him on
through a consulting agreement. He ultimately resigned in
writing and now claims that even though he resigned he should still
have been paid. Mr. Ogren is claiming wages of $354,178 plus
interest, fees and costs. The consulting agreement called for
arbitration. We understand that Mr. Ogren is in the process
of dismissing the lawsuit and that he wants to pursue his claim
through arbitration. Management does not believe the Company
has any liability in this claim and will pursue its defenses
vigorously.
The
Company has been named in a lawsuit, Robert Serrett vs. TruCom,
Inc., by a former employee who was terminated by management in
2016. The employee was working under an employment agreement but
was terminated for breach of the agreement. The former employee is
suing for breach of contract and is seeking around $75,000 in back
pay and benefits. We recently learned that Mr. Serrett received a
default judgement in Texas on May 15, 2018 for $70,650 plus $3,500
in attorney fees and 5% interest and court costs. However, he
has made no attempt that we are aware of to obtain a sister state
judgment in Arizona, where Trucom resides, or to try and enforce
the judgement and collect. Management believes it has good
and meritorious defenses and does not belief the outcome of the
lawsuit will have any material effect on the financial position of
the Company.
We are
not currently involved in any litigation that we believe could have
a material adverse effect on our financial condition or results of
operations. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the
knowledge of the executive officers of our company or any of our
subsidiaries, threatened against or affecting our company, our
common stock, any of our subsidiaries or of our companies or our
subsidiaries’ officers or directors in their capacities as
such, in which an adverse decision could have a material adverse
effect. We anticipate that we (including current and any future
subsidiaries) will from time to time become subject to claims and
legal proceedings arising in the ordinary course of business. It is
not feasible to predict the outcome of any such proceedings and we
cannot assure that their ultimate disposition will not have a
materially adverse effect on our business, financial condition,
cash flows or results of operations.
Customer Contingencies
The
Company has collected $338,725 from one customer in excess of
amounts due from that customer in accordance with the
customer’s understanding of the appropriate billings
activity. The customer has filed a written demand for repayment by
the Company of these amounts. Management believes that the customer
agreement allows them to keep the amounts under dispute. Given the
dispute, the Company has reflected the amounts in dispute as a
customer liability on the consolidated balance sheet as of December
31, 2020 and 2019.
Stock Contingencies
The
Company issued 7,500,000 shares of stock to Mr. Littman in
accordance with its December 28 and 29, 2020 agreements as
described in Note 8. These shares were included in a Form S-1 filed
by the Company on January 15, 2021. To date, we understand the
shares have not been sold and thus there is no calculated shortfall
as outlined in Note 8, but this may happen, which shortfall, if it
occurs, is unknown at this time.
The
Company has convertible debt, preferred stock, options and warrants
outstanding for which common shares would be required to be issued
upon exercise by the holders. As of December 31, 2020, the
following shares would be issued:
|
Convertible
Promissory Notes
|
175,316,748
|
|
Series A Preferred
Stock (1)
|
1,243,987,624
|
|
Series B Preferred
Stock
|
2,588,693
|
|
Stock Options and
warrants
|
4,333,333
|
|
|
1,426,226,398
|
_______________
(1)
Holder of the Series A Preferred Stock which is Stephen J. Thomas,
is guaranteed 60% of the then outstanding common stock upon
conversion. The Company would have to authorize additional shares
for this to occur as only 1,000,000,000 shares are currently
authorized.
During
the fourth quarter of 2020, the related party holders of
approximately $4,700,000 of existing financing arrangements agreed
to exchange their debt and accrued interest for Series D Preferred
Stock through a separate $12 Million Private Placement, conditioned
on the Company raising at least $12,000,000 in a separate Form 1-A
Offering.
Part of
the consideration in the acquisition of Aire Fitness was the
issuance of 500,000 restricted common shares of the Company vesting
and issuable after the common stock reaches at least a $1.00 per
share closing price in trading. To date, this has not occurred but
may happen in the future upon which the Company will issue 500,000
common shares to the non-controlling interest owners of Aire
Fitness.
NOTE 10 – RELATED PARTY ACTIVITY
Accounts Payable and Accrued Expenses
There
are amounts outstanding due to related parties of the Company of
$1,339,352 and $1,141,213, respectively, as of December 31, 2020
and 2019 related to amounts due to employees, management and
members of the Board of Directors according to verbal and written
agreements that have not been paid as of period end which are
included in accounts payable and accrued expenses on the balance
sheet. See Note 9.
As is
mentioned in Note 8, Reginald Thomas was appointed to the Board of
Directors of the Company in August 2018. Mr. Thomas is the brother
to the CEO Stephen J. Thomas III. According to an agreement with
Mr. Reginald Thomas, he is to receive $10,000 per quarter and
1,000,000 shares of restricted common stock valued at approximately
$120,000 vesting quarterly over twenty-four months. The quarterly
payment of $10,000 may be suspended by the Company if the Company
has not been adequately funded.
Leases
See
Note 9 for office lease used by CEO.
Debt Financing and Amounts Payable
As of
December 31, 2020, there are amounts due to management/shareholders
of $93,072 included in financing arrangements, of which $88,922 is
payable from the Company to Stephen J. Thomas III, CEO of the
Company. See note 5.
Revenue Transactions and Accounts Receivable
During
the years ended December 31, 2020 and 2019, Blue Collar provided
production services to an entity controlled by the Blue Collar CEO
(355 LA, LLC or “355”) for which it recorded revenues
of $385,988 and $707,263, respectively, and had accounts receivable
outstanding as of December 31, 2020 and 2019 of $0 and $169,439,
respectively, which is included in accounts receivable on the
consolidated balance sheet. 355 was formed in October 2019 by the
CEO of Blue Collar for the purpose of production of certain
additional footage for a 355 customer. 355 has opportunity to
engage with other production relationships outside of using Blue
Collar.
Other Agreements
On
April 17, 2018, the CEO of the Company, Stephen Thomas, signed an
agreement with New Orbit Technologies, S.A.P.I. de C.V., a Mexican
corporation, (“New Orbit”), majority owned and
controlled by Stephen Thomas, related to a license agreement for
the distribution of TPT licensed products, software and services
related to Lion Phone and ViewMe Live within Mexico and Latin
America (“License Agreement”). The License Agreement
provides for New Orbit to receive a fully paid-up, royalty-free,
non-transferable license for perpetuity with termination only under
situations such as bankruptcy, insolvency or material breach by
either party and provides for New Orbit to pay the Company fees
equal to 50% of net income generated from the applicable
activities. The transaction was approved by the Company’s
Board of Directors in June 2018. There has been no activity on this
agreement.
NOTE 11 – GOODWILL AND INTANGIBLE ASSETS
Goodwill
and intangible assets are comprised of the following:
December 31, 2020
|
|
Gross carrying
amount
|
Accumulated
Amortization
|
Net Book Value
|
Useful Life
|
|
Customer
Base
|
$938,000
|
(207,771)
|
$730,229
|
3-10
|
|
Developed
Technology
|
4,595,600
|
(1,616,975)
|
2,978,625
|
9
|
|
Film
Library
|
957,000
|
(177,100)
|
779,900
|
11
|
|
Trademarks and
Tradenames
|
132,000
|
(26,731)
|
105,269
|
12
|
|
Favorable
leases
|
95,000
|
(50,880)
|
44,120
|
3
|
|
Other
|
76,798
|
—
|
76,798
|
|
|
Total intangible
assets, net
|
$6,794,398
|
(2,079,457)
|
$4,714,941
|
|
|
|
|
|
|
|
|
Goodwill
|
$768,091
|
—
|
$768,091
|
—
|
Amortization
expense was $730,940 and $548,205 for the year ended December 31,
2020 and 2019, respectively.
December 31, 2019
|
|
Gross carrying
amount
|
Accumulated
Amortization
|
Net Book Value
|
Useful Life
|
|
Customer
Base
|
$1,197,200
|
(364,383)
|
$832,817
|
3-10
|
|
Developed
Technology
|
4,595,600
|
(1,106,351)
|
3,489,249
|
9
|
|
Film
Library
|
957,000
|
(104,900)
|
852,100
|
11
|
|
Trademarks and
Tradenames
|
132,000
|
(15,123)
|
116,877
|
12
|
|
Favorable
leases
|
95,000
|
(16,960)
|
78,040
|
3
|
|
Total intangible
assets, net
|
$6,976,800
|
(2,707,717)
|
$5,369,083
|
|
|
|
|
|
|
|
|
Goodwill
|
$1,050,366
|
—
|
$1,050,366
|
—
|
Amortization
expense was $730,940 and $868,622 for year ended December 31, 2020
and 2019, respectively. Increases from the prior year are from the
acquisition of the SpeedConnect assets. See more details on this
acquisition in Note 2 to these consolidated financial statements.
During the year ended December 31, 2019, the Company’s
evaluation of goodwill and intangible assets resulted in
impairments for Copperhead Digital to goodwill of $70,995 and for
developed technology of $600,000 resulting in impairment expense of
$70,995 and $272,213, respectively. During this same period an
impairment of the developed technology intangible of $910,000 for
the Lion Phone resulted in impairment expense of $606,664. There
was no impairment considered necessary as of December 31, 2020 for
intangibles. There was, however, impairment expense of $853,366 for
Blue Collar to Goodwill during the year ended December 31,
2020.
Remaining
amortization of the intangible assets is as following for the next
five years and beyond:
|
2021
|
$753,779
|
|
2022
|
730,059
|
|
2023
|
719,859
|
|
2024
|
719,859
|
|
2025
|
719,859
|
|
Thereafter
|
1,071,526
|
|
|
$4,714,941
|
NOTE 12 – SEGMENT REPORTING
ASC
280, “Segment Reporting”, establishes standards for
reporting information about operating segments on a basis
consistent with the Company's internal organizational structure as
well as information about geographical areas, business segments and
major customers in financial statements for details on the
Company's business segments.
The
Company's chief operating decision maker (“CODM”) has
been identified as the CEO who reviews the financial information of
separate operating segments when making decisions about allocating
resources and assessing performance of the group. Based on
management's assessment, the Company considers its most significant
segments for 2020 and 2019 are those in which it is providing
Broadband Internet through TPT SpeedConnect and Media Production
services through Blue Collar Medical Testing services through TPT
MedTech and QuikLABs.
The
following table presents summary information by segment for the
twelve months ended December 31, 2020 and 2019,
respectively:
|
2020
|
|
|
|
|
|
|
|
TPT
SpeedConnect
|
Blue
Collar
|
TPT MedTech and
QuikLABS
|
Corporate and
other
|
Total
|
|
Revenue
|
$9,958,770
|
$1,051,120
|
$30,484
|
$53,796
|
$11,094,170
|
|
Cost of
revenue
|
$(6,367,474)
|
$(437,936)
|
$(68,884)
|
$(319,199)
|
$(7,193,493)
|
|
Net income
(loss)
|
$983,673
|
$(166,110)
|
$(747,485)
|
$(8,189,346)
|
$(8,119,268)
|
|
Total
assets
|
$7,010,444
|
$370,554
|
$11,850
|
$5,443,840
|
$12,836,688
|
|
Depreciation and
amortization
|
$(531,254)
|
$(111,336)
|
$(3,583)
|
$(1,139,470)
|
$(1,785,643)
|
|
Impairment of long
lived assets and goodwill
|
$—
|
$(853,366)
|
$—
|
$(1,849,630)
|
$(2,702,996)
|
|
Derivative gain
(expense)
|
$—
|
$—
|
$—
|
$1,140,323
|
$1,140,323
|
|
Interest
expense
|
$(242,693)
|
$(36,507)
|
$(800)
|
$(1,251,733)
|
$(1,531,733)
|
NOTE 13 – SUBSEQUENT EVENTS
Stock Issuance
The
Company issued 7,500,000 shares of stock to Mr. Littman in
accordance with its December 28 and 29, 2020 agreements as
described in Note 8. These shares were included in a Form S-1 filed
by the Company on January 15, 2021. To date, we understand the
shares have not been sold and thus there is no calculated shortfall
as outlined in Note 8.
On
April 5, the Company granted 1,500,000 restricted commons shares to
a consultant as a bonus for services rendered. The Company will
record $44,100 as expense in the statement of operations during the
year ended December 31, 2021 represented the calculation fair value
on the date of grant.
COVID-19
The
Company has taken advantage of the stimulus offerings and received
$722,200 in April 2020 and $680,500 in February 2021 and believes
it has used these funds as is prescribed by the stimulus offerings
to have the entire amounts forgiven. The Company has applied
for forgiveness of the original stimulus of $722,200. The
forgiveness process for stimulus funded in February 2021 has not
begun. The Company will try and take advantage of additional
stimulus as it is available and is also in the process of trying to
raise debt and equity financing, some of which may have to be used
for working capital shortfalls if revenues continue to decline
because of the COVID-19 closures.
Rennova Acquisition Agreement
Rennova
terminated the Rennova Acquisition Agreement described in Note 2
effective March 5, 2021 and the Company agreed to this termination
with both parties not able to come to agreement of final
terms.
InnovaQor
InnovaQor
changed its name to TPT Strategic, Inc. on March 21, 2021. On March
30, 2021, a License Agreement, originally signed between the
Company and InnovaQor for software development, was rescinded and
the issuance of 6,000,000 shares of common stock to the Company
were cancelled.
On
April 5, 2021, the Board of Directors granted 1,500,000 restricted
common shares of the Company to a consultant as a bonus for past
services. This grant was valued by the Company at $44,100 and will
be expensed in the year ending December 31, 2021.
Subsequent
events were reviewed through the date the financial statements were
issued.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
You should read the following discussion and analysis of our
financial condition and results of our operations together with our
financial statements and related notes appearing at the end of this
Offering Circular. This discussion contains forward-looking
statements reflecting our current expectations that involve risks
and uncertainties. Actual results and the timing of events may
differ materially from those contained in these forward-looking
statements due to a number of factors, including those discussed in
the section entitled “Risk Factors” and elsewhere in
this Offering Circular.
Based
on our financial history since inception, our auditor has expressed
substantial doubt as to our ability to continue as a going concern.
As reflected in the accompanying financial statements, as of
June 30, 2021, we had an accumulated deficit totaling
($44,787,194). This raises substantial doubts about
our ability to continue as a going concern.
We
generate revenues primarily through telecommunications and Internet
services and as a provider of ecommerce and cloud solutions in the
western United States.
Our
plan of operations for the next 12 months is as
follows:
MILESTONES
Estimate of Liquidity and Capital Resource Needs
|
Equipment purchase
and manufacturing
|
$14,000,000
|
|
Product
advancement
|
2,250,000
|
|
Acquisitions
|
500,000
|
|
Debt
Restructuring
|
7,300,000
|
|
Working capital,
including marketing
|
10,710,000
|
|
Brokerage
commissions
|
3,040,000
|
|
Offering
expenses
|
200,000
|
|
|
$38,000,000
|
Although
the items set forth above indicate management’s present
estimate of our liquidity and capital resource needs, we may have difference needs or utilize
corporate liquidity and capital resources for other corporate
purposes. Our actual use of liquidity and capital resources
may vary from these estimates because of a number of factors,
including whether we are successful in completing future
acquisitions, whether we obtain additional funding, what other
obligations have been incurred by us, the operating results of our
initial acquisition activities, and whether we are able to operate
profitably. If our need for liquidity and capital resources
increases, we may seek additional funds through any financing
opportunity available to us. There are no current commitments for
any such financing opportunity, and there can be no assurance that
these funds may be obtained in the future if the need
arises.
RESULTS OF OPERATIONS
For the Three Months Ended June 30, 2021 Compared to the Three
Months Ended June 30, 2020
During
the three months ended June 30, 2021, we recognized total revenues
of $2,579,180 compared to the prior period of $2,756,771. The
decrease is largely attributable to the decrease in internet
customers from attrition.
Gross
profit for the three months ended June 30, 2021 was $389,539
compared to $1,114,111 for the prior period. The decrease of is
largely attributable to the decrease in internet customer from
attrition, which attrition was the primary factor in the reduction
in the profit margin for the period as compared to the prior
period. It is also attributable to the continued expenses related
to TPT MedTech far exceeding the current revenues.
During
the three months ended June 30, 2021, we recognized $2,048,107 in
operating expenses compared to $2,898,566 for the prior period. The
decrease was in large part attributable to increased research and
development expense in the prior period of $1,000,000.
Derivative
gain of $189,274 and $3,496,653 result from the accounting for
derivative financial instruments during the three months ended June
30, 2021 and 2020, respectively.
Interest
expense increased for the three months ended June 30, 2021 compared
to the prior period by $202,468. The increase comes largely from
the true up of interest expense on some of the Company’s
derivative securities.
During
the three months ended June 30, 2021, we recognized a net loss of
$2,171,198 compared to net income of $2,470,210 for the prior
period. The difference was in large part from the derivative gain
and other reasons outlined above.
For the Six Months Ended June 30, 2021 Compared to the Six Months
Ended June 30, 2020
During
the six months ended June 30, 2021, we recognized total revenues of
$5,291,530 compared to the prior period of $5,832,744. The decrease
is largely attributable to the decrease in internet customers from
attrition.
Gross
profit for the six months ended June 30, 2021 was $940,235 compared
to $2,095,067 for the prior period. The decrease is largely
attributable to the decrease in internet customer from attrition,
which attrition was the primary factor in the reduction in the
profit margin for the period as compared to the prior period. It is
also attributable to the continued expenses related to TPT MedTech
far exceeding the current revenues.
During
the six months ended June 30, 2021, we recognized $4,133,278 in
operating expenses compared to $4,833,416 for the prior period. The
decrease was in large part attributable to the research and
development expenses in the prior period of $1,000,000 offset
partially by an increase in TPT MedTech
expenses.
Derivative
gain of $374,549 and derivative expense of $400,019 result from the
accounting for derivative financial instruments during the six
months ended June 30, 2021 and 2020, respectively.
Interest
expense decreased for the six months ended June 30, 2021 compared
to the prior period by $33,977. The decrease is largely from the
derivative debt being in default of the increased penalty amounts
that were accounted for in the prior period versus this
period.
During
the six months ended June 30, 2021, we recognized a net loss of
$3,884,250 compared to $3,495,988 for the prior
period.
LIQUIDITY
AND CAPITAL RESOURCES
Cash
flows generated from operating activities were not enough to
support all working capital requirements for the six months ended
June 30, 2021 and 2020. Financing activities described below have
helped with working capital and other capital
requirements.
We
incurred $3,884,250 and $3,495,988, respectively, in losses, and we
used $304,761 and $318,895, respectively, in cash from operations
for the six months ended June 30, 2021 and 2020. We calculate the
net cash used by operating activities by decreasing, or increasing
in case of gain, our let loss by those items that do not require
the use of cash such as depreciation, amortization, promissory note
issued for research and development, note payable issued for legal
fees, derivative expense or gain, gain on extinguishment of debt,
loss on conversion of notes payable, impairment of goodwill and
long-loved assts and share-based compensation which totaled to a
net $870,216 for 2021 and $2,460,160 for 2020.
In
addition, we report increases and reductions in liabilities as uses
of cash and deceases assets and increases in liabilities as sources
of cash, together referred to as changes in operating assets and
liabilities. For the six months ended June 30, 2021, we had a net
increase in our assets and liabilities of $2,778,546 primarily from
an increase in accounts payable from lag of payments for accounts
payable for cash flow considerations and an increase in the
balances from our operating lease liabilities. For the six months
ended June 30, 2021, we had a net increase to our assets and
liabilities of $716,933 for similar reasons.
Cash
flows from financing activities were $589,504 and $506,735 for the
six months ended June 30, 2021 and 2020, respectively. For the six
months ended June 30, 2021, these cash flows were generated
primarily from proceeds from sale of Series D Preferred Stock of
$233,244, proceeds from convertible notes, loans and advances of
$1,771,685 offset by payment on convertible loans, advances and
factoring agreements of $1,460,898. For the six months ended June
30, 2020, cash flows from financing activities primarily came from
proceeds from convertible notes, loans and advances of $1,311,800
offset by payments on convertible loans, advances and factoring
agreements of $619,227 and payments on convertible notes and
amounts payable – related parties of $188,238.
Cash
flows used in investing activities were $198,753 and $271,138,
respectively, for the six months ended June 30, 2021 and 2020.
These cash flows were used for the purchase of
equipment.
These
factors raise substantial doubt about the ability of the Company to
continue as a going concern for a period of one year from the
issuance of these financial statements. The financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
In December 2019, COVID-19 emerged and has subsequently spread
worldwide. The World Health Organization has declared COVID-19 a
pandemic resulting in federal, state and local governments and
private entities mandating various restrictions, including travel
restrictions, restrictions on public gatherings, stay at home
orders and advisories and quarantining of people who may have been
exposed to the virus. After close monitoring and responses and
guidance from federal, state and local governments, in an effort to
mitigate the spread of COVID-19, around March 18, 2020 for a period
of time, the Company closed its Blue Collar office in Los Angeles
and its TPT SpeedConnect offices in Michigan, Idaho and
Arizona. Most employees were working remotely, however this
was not possible with certain employees and all subcontractors that
work for Blue Collar. The Company has opened up most of it
operations and continues to monitor developments, including
government requirements and recommendations at the national, state,
and local level to evaluate possible extensions to all or part of
such closures.
The Company has taken advantage of the stimulus offerings and
received $722,200 in April 2020 and $680,500 in February 2021 and
believes it has used these funds as is prescribed by the stimulus
offerings to have the entire amounts forgiven. The Company has
applied for forgiveness ofall
it has received and has received confirmation of forgiveness of all
loans but $147,800 for which it continues to believe will also be
forgiven. The Company will try and take advantage of
additional stimulus as it is available and is also in the process
of trying to raise debt and equity financing, some of which may
have to be used for working capital shortfalls if revenues continue
to decline because of the COVID-19 closures.
On May
28, 2021, the Company entered into a Common Stock Purchase
Agreement (“Purchase Agreement”) and Registration
Rights Agreement (“Registration Rights Agreement”) with
White Lion Capital, LLC, a Nevada limited liability company
(“White Lion”). Under the terms of the Purchase
Agreement, White Lion agreed to provide the Company with up to
$5,000,000 upon effectiveness of a registration statement on Form
S-1 (the “Registration Statement”) filed with the U.S.
Securities and Exchange Commission (the “Commission”).
A Form S-1 was filed on June 30, 2021 regarding this transaction.
Subsequent Amendments to Forms S-1 related to this transaction were
filed on July 6, 2021 and July 14, 2021. The registrations
statement was declared effective July 19, 2021.
To
date, the Company has given purchase notices for 29,000,000 shares
of common stock under the Purchase Agreement and has received
proceeds of $649,470, net of expenses.
In
order for us to continue as a going concern for a period of one
year from the issuance of these financial statements, we will need
to obtain additional debt or equity financing and look for
companies with cash flow positive operations that we can acquire.
There can be no assurance that we will be able to secure additional
debt or equity financing, that we will be able to acquire cash flow
positive operations, or that, if we are successful in any of those
actions, those actions will produce adequate cash flow to enable us
to meet all our future obligations. Most of our existing financing
arrangements are short-term. If we are unable to obtain additional
debt or equity financing, we may be required to significantly
reduce or cease operations.
Ongoing Assessment of the Impact of COVID-19
Companies have undertaken and are generally in the process of
making a diverse range of operational adjustments in response to
the effects of COVID-19. These adjustments are numerous and include
a transition to telework; supply chain and distribution
adjustments; and suspending or modifying certain operations to
comply with health and safety guidelines to protect employees,
contractors, and customers, including in connection with a
transition back to the workplace. These types of adjustments may
have an effect on a company that would be material to an investment
or voting decision, and affected companies should carefully
consider their obligations to disclose this information to
investors. Companies also are undertaking a diverse and sometimes
complex range of financing activities in response to the effects of
COVID-19 on their businesses and markets. These activities may
involve obtaining and utilizing credit facilities, accessing public
and private markets, implementing supplier finance programs, and
negotiating new or modified customer payment terms. The SEC has
required a discussion of COVID-19 related considerations, specific
facts and circumstances and make disclosures to address the
following questions;
●
What
are the material operational challenges that management and the
Board of Directors are monitoring and evaluating?
●
We
have been challenged by the gathering restrictions under state and
local rules and lack of events due to cancellation specifically
related to our Blue Collar operations.
●
How
and to what extent have you altered your operations, such as
implementing health and safety policies for employees, contractors,
and customers, to deal with these challenges, including challenges
related to employees returning to the workplace?
●
We
have allowed our employees to work from home and are using contract
service providers where appropriate. Blue Collar was completely
shut down for a period of time but has implemented health and
safety policies for employees, contractors and customers to be able
to resume some of their operations.
●
How
are the changes impacting or reasonably likely to impact your
financial condition and short- and long-term
liquidity?
●
The
changes have impaired our Blue Collar operations significantly in
the prior year but which operations are rebounding in
2021.
●
How
is your overall liquidity position and outlook
evolving?
●
We
have raised limited funds to help our liquidity position but hope
our outlook is bright primarily through a pending private placement
and current discussions with other funding
opportunities.
●
To
the extent COVID-19 is adversely impacting your revenues, consider
whether such impacts are material to your sources and uses of
funds, as well as the materiality of any assumptions you make about
the magnitude and duration of COVID-19’s impact on your
revenues. Are any decreases in cash flow from operations having a
material impact on your liquidity position and
outlook?
●
COVID-19
reduced our historical revenues in 2020. The bans on events and
gatherings were very material to our Blue Collar operations. Blue
Collar in 2021 is rebounding from those declines.
●
Have
you accessed revolving lines of credit or raised capital in the
public or private markets to address your liquidity
needs?
●
We
have raised some limited funds through private sources but have
mainly relied on PPP funding and cash flows from those parts of our
business with positive cash flows.
●
Have
COVID-19 related impacts affected your ability to access your
traditional funding sources on the same or reasonably similar terms
as were available to you in recent periods?
●
No.
●
Have
you provided additional collateral, guarantees, or equity to obtain
funding?
●
No.
●
Have
there been material changes in your cost of capital?
●
No.
●
How
has a change, or a potential change, to your credit rating impacted
your ability to access funding?
●
No.
●
Do your
financing arrangements contain terms that limit your ability to
obtain additional funding? If so, is the uncertainty of additional
funding reasonably likely to result in your liquidity decreasing in
a way that would result in you being unable to maintain current
operations?
●
No.
●
Are
you at material risk of not meeting covenants in your credit and
other agreements?
●
No.
●
If
you include metrics, such as cash burn rate or daily cash use, in
your disclosures, are you providing a clear definition of the
metric and explaining how management uses the metric in managing or
monitoring liquidity?
●
Not
Applicable.
●
Are
there estimates or assumptions underlying such metrics the
disclosure of which is necessary for the metric not to be
misleading?
●
No.
●
Have
you reduced your capital expenditures and if so, how?
●
No.
●
Have
you reduced or suspended share repurchase programs or dividend
payments?
●
No.
●
Have
you ceased any material business operations or disposed of a
material asset or line of business?
●
No.
●
Have
you materially reduced or increased your human capital resource
expenditures?
●
Yes,
we have reduced staff for Blue Collar and are using more
contractors for current work.
●
Are
any of these measures temporary in nature, and if so, how long do
you expect to maintain them?
●
These
measures were temporary and are starting to be
changed.
●
What
factors will you consider in deciding to extend or curtail these
measures?
●
We
are opening up and allow operations as much as
possible.
●
What
is the short- and long-term impact of these reductions on your
ability to generate revenues and meet existing and future financial
obligations?
●
There
is no impact of these reductions upon our ability to generate
revenues or meet financial obligations.
●
Are
you able to timely service your debt and other
obligations?
●
Yes,
for most debt instruments.
●
Have
you taken advantage of available payment deferrals, forbearance
periods, or other concessions? What are those concessions and how
long will they last?
●
Yes.
●
Do you foresee any liquidity challenges once those
accommodations end?
●
Possibly,
if creditors demand all deferrals at once rather than payment over
time as indicated.
●
Have
you altered terms with your customers, such as extended payment
terms or refund periods, and if so, how have those actions
materially affected your financial condition or
liquidity?
●
We
have not altered terms with customers.
●
Did
you provide concessions or modify terms of arrangements as a
landlord or lender that will have a material impact?
●
No.
●
Have
you modified other contractual arrangements in response to COVID-19
in such a way that the revised terms may materially impact your
financial condition, liquidity, and capital resources?
●
Possibly,
if creditors demand all deferrals at once rather than payment over
time as indicated.
●
Are
you relying on supplier finance programs, otherwise referred to as
supply chain financing, structured trade payables, reverse
factoring, or vendor financing, to manage your cash
flow?
●
Yes.
●
Have
these arrangements had a material impact on your balance sheet,
statement of cash flows, or short- and long-term liquidity and if
so, how?
●
No.
●
What
are the material terms of the arrangements?
●
Most
vendors situations now provide up to 30 days terms; but a good
portion has now returned to normal payment terms.
●
Did
you or any of your subsidiaries provide guarantees related to these
programs?
●
No.
●
Do
you face a material risk if a party to the arrangement terminates
it?
●
No.
●
What
amounts payable at the end of the period relate to these
arrangements, and what portion of these amounts has an intermediary
already settled for you?
●
There
have been no settlements. Most related to up to 30 days with
telecommunications vendors and payments are being included in
planned cash flows.
●
Have
you assessed the impact material events that occurred after the end
of the reporting period, but before the financial statements were
issued, have had or are reasonably likely to have on your liquidity
and capital resources and considered whether disclosure of
subsequent events in the financial statements and known trends or
uncertainties in MD&A is required?
●
There are no material events occurring after the
end of the reporting period but before financial statements were
issued which would have any affect on liquidity or capital
resources and there are no new
trends or uncertainties needed to be
disclosed.
Government Assistance – The Coronavirus Aid, Relief, and
Economic Security Act (CARES Act)
The CARES Act includes financial assistance for companies in the
form of loans and tax relief in the form of deferred or
reduced payments and potential refunds. Companies receiving
federal assistance must consider the short- and long-term impact of
that assistance on their financial condition, results of
operations, liquidity, and capital resources, as well as the
related disclosures and critical accounting estimates and
assumptions. We have not received any financial assistance from the
banks or any government agency.
●
How
does a loan impact your financial condition, liquidity and capital
resources?
●
We
have no government loans, except PPP loans for which
$1,254,900 has been forgiven.
●
What
are the material terms and conditions of any assistance you
received, and do you anticipate being able to comply with
them?
●
PPP
loans only of which $1,254,900 have been
forgiven.
●
Do
those terms and conditions limit your ability to seek other sources
of financing or affect your cost of capital?
●
No.
●
Do
you reasonably expect restrictions, such as maintaining certain
employment levels, to have a material impact on your revenues or
income from continuing operations or to cause a material change in
the relationship between costs and revenues?
●
No.
●
Once
any such restrictions lapse, do you expect to change your
operations in a material way?
●
No.
●
Are
you taking advantage of any recent tax relief, and if so, how does
that relief impact your short- and long-term
liquidity?
●
We
are using payroll tax deferrals allowed by the tax relief
programs.
●
Do
you expect a material tax refund for prior periods?
●
No.
●
Does
the assistance involve new material accounting estimates or
judgments that should be disclosed or materially change a prior
critical accounting estimate?
●
No.
●
What
accounting estimates were made, such as the probability a loan will
be forgiven, and what uncertainties are involved in applying the
related accounting guidance?
●
We
have had $1,254,900 in PPP loans forgiven and we
anticipate forgiveness of our other PPP loans. All PPP loans have
been disclosed as loans through June 30, 2021 at which time we did
not know of any forgiveness.
A Company’s Ability to Continue as a Going
Concern
The SEC has advised that Management should consider whether
conditions and events, taken as a whole, raise substantial doubt
about the company’s ability to meet its obligations as they
become due within one year after the issuance of the financial
statements. There is substantial doubt about a company’s
ability to continue as a going concern due to continuation of the
COVID-19 pandemic and we make the following
disclosure:
●
Are
there conditions and events that give rise to the substantial doubt
about the company’s ability to continue as a going
concern?
●
Yes.
There was concern about our ability to continue as a going concern
prior to COVID 19, however the continuation of COVID-19
restrictions may hamper Blue Collar from operating and generating
revenues at full capacity.
●
For
example, have you defaulted on outstanding
obligations?
●
Yes,
but not because of COVID-19.
●
Have
you faced labor challenges or a work stoppage?
●
No.
●
What
are your plans to address these challenges?
●
At
the point of allowing full operations for Blue Collar and film
production companies to fully operate will be the complete
turnaround for these revenues.
●
Have
you implemented any portion of those plans?
●
No,
it’s a matter of allowing Blue Collar to fully operate and
trying to raise money and fund operational plans.
Financing
arrangements as of June 30, 2021 and December 31, 2020 are as
follows:
|
|
2021
|
2020
|
|
Loans and advances
(1)
|
$2,744,042
|
$2,517,200
|
|
Convertible notes
payable (2)
|
1,711,098
|
1,711,098
|
|
Factoring
agreements (3)
|
687,314
|
635,130
|
|
Debt – third
party
|
$5,142,454
|
$4,863,428
|
|
|
|
|
|
Line of credit,
related party secured by assets (4)
|
$3,043,390
|
$3,043,390
|
|
Debt– other
related party, net of discounts (5)
|
7,450,000
|
7,423,334
|
|
Convertible debt
– related party (6)
|
922,181
|
922,481
|
|
Shareholder debt
(7)
|
142,054
|
93,072
|
|
Debt –
related party
|
$11,557,625
|
$11,482,277
|
|
|
|
|
|
Total financing
arrangements
|
$16,700,079
|
$16,345,705
|
|
|
|
|
|
Less current
portion:
|
|
|
|
Loans, advances and
factoring agreements – third party
|
$(1,678,756)
|
$(2,308,753)
|
|
Convertible notes
payable third party
|
(1,711,098)
|
(1,711,098
|
|
Debt –
related party, net of discount
|
(10,635,444)
|
(10,559,796)
|
|
Convertible notes
payable– related party
|
(922,181)
|
(922,481)
|
|
|
(14,947,479)
|
(15,502,128)
|
|
Total long term
debt
|
$1,752,600
|
$843,577
|
__________
(1) The
terms of $40,000 of this balance are similar to that of the Line of
Credit which bears interest at adjustable rates, 1 month Libor plus
2%, 2.10% as of June 30, 2021, and is secured by assets of the
Company, was due August 31, 2020, as amended, and included 8,000
stock options as part of the terms which options expired December
31, 2019 (see Note 7).
$400,500
is a line of credit that Blue Collar has with a bank, bears
interest at Prime plus 1.125%, 4.38% as of June 30, 2021, and was
due March 25, 2021.
$360,000
is a bank loan dated May 28, 2019, amended May 20, 2021 which bears
interest at Prime plus 6%, 9.25% as of June 30, 2021, is interest
only for the first year following the amendment, there after
beginning in June of 2022 payable monthly of principal and interest
until the due date of May 1, 2024. The bank loan is collateralized
by assets of the Company.
$722,220
and $680,500 represent loans under the COVID-19 Pandemic Paycheck
Protection Program (“PPP”) originated in April 2020 and
February 2021, respectively. The Company believes that it has used
the funds as prescribed by the stimulus offerings to have the
entire amounts forgiven. The Company
has applied for forgiveness of the original stimulus of $722,200.
The forgiveness process for stimulus funded in February 2021 has
not begun. If any of the PPP loans are not forgiven then,
per the PPP, the unforgiven loan amounts will be payable monthly
over a five-year period of which payments are to begin no later
than 10 months after the covered period as defined at a 1% annual
interest rate.
On June 4, 2019, the Company consummated a Securities Purchase
Agreement with Odyssey Capital Funding, LLC.
(“Odyssey”) for the purchase of a $525,000 Convertible
Promissory Note (“Odyssey Convertible Promissory
Note”). The Odyssey Convertible Promissory Note was due June
3, 2020, paid interest at the rate of 12% (24% default) per annum
and gave the holder the right from time to time, and at any time
during the period beginning six months from the issuance date to
convert all of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price was 55% multiplied by the average of
the two lowest trading prices for the common stock during the
previous 20 trading days prior to the applicable conversion date.
The Odyssey Convertible Promissory Note could be prepaid in full at
125% to 145% up to 180 days from origination. Through June 3, 2020,
Odyssey converted $49,150 of principal and $4,116 of accrued
interest into 52,961,921 shares of common stock of the Company. On
June 8, 2020, Odyssey agreed to convert the remaining principal and
accrued interest balance on the Odyssey Convertible Promissory Note
of $475,850 and $135,000, respectively, to a term loan payable in
six months in the form of a balloon payment, earlier if the Company
has a funding event, bearing simple interest on the unpaid balance
of 0% for the first three months and then 10% per annum thereafter.
This loan is in default. The Company is negotiating with Odyssey
for repayment.
Effective
September 30, 2020, we entered into a Purchase Agreement by which
we agreed to purchase the 500,000 outstanding Series A Preferred
shares of TPT Strategic, our majority owned subsidiary, in an
agreed amount of $350,000 in cash or common stock, if not paid in
cash, at the five day average price preceding the date of the
request for effectiveness after the filing of a registration
statement on Form S-1. This was modified December 28 and 29, 2020,
to provide for registration of 7,500,000 common shares for resale
at the market price. Any balance due on notes will be calculated
after an accounting for the net sales proceeds from sale of the
stock by February 28, 2021 and may be paid in cash or stock
thereafter. The Series A Preferred shares were purchased from the
Michael A. Littman, Atty. Defined Benefit Plan. The $350,000 was
originally recorded as a Note Payable as of December 31, 2020 but
then reclassified to equity and derivative liability when the
7,500,000 shares were issued during January 2021. See Note 7 for
discussion on settlement agreement with Mr. Littman for any
resulting liability that may arise after the sale of these
shares.
The
remaining balances generally bear interest at approximately 10%,
have maturity dates that are due on demand or are past due, are
unsecured and are classified as current in the balance
sheets.
(2) During
2017, the Company issued convertible promissory notes in the amount
of $67,000 (comprised of $62,000 from two related parties and
$5,000 from a former officer of CDH), all which were due May 1,
2020 and bear 6% annual interest (12% default interest rate). The
convertible promissory notes are convertible, as amended, at $0.25
per share. These convertible promissory notes were not repaid May
1, 2020 and may be considered in default.
During
2019, the Company consummated Securities Purchase Agreements dated
March 15, 2019, April 12, 2019, May 15, 2019, June 6, 2019 and
August 22, 2019 with Geneva Roth Remark Holdings, Inc.
(“Geneva Roth”) for the purchase of convertible
promissory notes in the amounts of $68,000, $65,000, $58,000,
$53,000 and $43,000 (“Geneva Roth Convertible Promissory
Notes”). The Geneva Roth Convertible Promissory Notes are due
one year from issuance, pays interest at the rate of 12% (principal
amount increases 150%-200% and interest rate increases to 24% under
default) per annum and gives the holder the right from time to
time, and at any time during the period beginning 180 days from the
origination date to the maturity date or date of default to convert
all or any part of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price is 61% multiplied by the average of
the two lowest trading prices for the common stock during the
previous 20 trading days prior to the applicable conversion date.
The Geneva Roth Convertible Promissory Notes may be prepaid in
whole or in part of the outstanding balance at 125% to 140% up to
180 days from origination. Geneva Roth converted a total of
$244,000 of principal and $8,680 of accrued interest through June
30, 2021 from its various Securities Purchase Agreements into
125,446,546 shares of common stock of the Company leaving no
outstanding principal balances as of June 30, 2021. On February 13,
2020, the August 22, 2019 Securities Purchase Agreement was repaid
for $63,284, including a premium and accrued interest.
On March 25, 2019, the Company consummated a Securities Purchase
Agreement dated March 18, 2019 with Auctus Fund, LLC.
(“Auctus”) for the purchase of a $600,000 Convertible
Promissory Note (“Auctus Convertible Promissory Note”).
The Auctus Convertible Promissory Note is due December 18, 2019,
pays interest at the rate of 12% (24% default) per annum and gives
the holder the right from time to time, and at any time during the
period beginning 180 days from the origination date or at the
effective date of the registration of the underlying shares of
common stock, which the holder has registration rights for, to
convert all of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price is the lessor of the lowest trading
price during the previous 25 trading days prior the date of the
Auctus Convertible Promissory Note or 50% multiplied by the average
of the two lowest trading prices for the common stock during the
previous 25 trading days prior to the applicable conversion date.
The Auctus Convertible Promissory Note may be prepaid in full at
135% to 150% up to 180 days from origination. Auctus converted
$33,180 of principal and $142,004 of accrued interest into
376,000,000 shares of common stock of the Company prior to June 30,
2021. 2,000,000 warrants were issued in conjunction with the
issuance of this debt. See Note 7.
On June 6, 2019, the Company consummated a Securities Purchase
Agreement with JSJ Investments Inc. (“JSJ”) for the
purchase of a $112,000 Convertible Promissory Note (“JSJ
Convertible Promissory Note”). The JSJ Convertible Promissory
Note is due June 6, 2020, pays interest at the rate of 12% per
annum and gives the holder the right from time to time, and at any
time during the period beginning 180 days from the origination date
to convert all of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price is the lower of the market price, as
defined, or 55% multiplied by the average of the two lowest trading
prices for the common stock during the previous 20 trading days
prior to the applicable conversion date. The JSJ Convertible
Promissory Note may be prepaid in full at 135% to 150% up to 180
days from origination. JSJ converted $43,680 of principal into
18,500,000 shares of common stock of the Company prior to June 30,
2021. In addition, on February 25, 2020 the Company repaid for
$97,000, including a premium and accrued interest, for all
remaining principal and accrued interest balances as of that day.
333,333 warrants were issued in conjunction with the issuance of
this debt. See Note 7.
On June 11, 2019, the Company consummated a Securities Purchase
Agreement with EMA Financial, LLC. (“EMA”) for the
purchase of a $250,000 Convertible Promissory Note (“EMA
Convertible Promissory Note”). The EMA Convertible Promissory
Note is due June 11, 2020, pays interest at the rate of 12%
(principal amount increases 200% and interest rate increases to 24%
under default) per annum and gives the holder the right from time
to time to convert all of the outstanding balance into common stock
of the Company limited to 4.99% of the outstanding common stock of
the Company. The conversion price is 55% multiplied by the lowest
traded price for the common stock during the previous 25 trading
days prior to the applicable conversion date. The EMA Convertible
Promissory Note may be prepaid in full at 135% to 150% up to 180
days from origination. Prior to June 30, 2021, EMA converted
$35,366 of principal into 147,700,000 shares of common stock of the
Company. 1,000,000 warrants were issued in conjunction with the
issuance of this debt. See Note 7.
The
Company is in default under its derivative financial instruments
and received notice of such from Auctus and EMA for not reserving
enough shares for conversion and for not having filed a Form S-1
Registration Statement with the Securities and Exchange Commission.
It was the intent of the Company to pay back all derivative
securities prior to the due dates but that has not occurred in the
case of Auctus or EMA. As such, the Company is currently in
negotiations with Auctus and EMA relative to extending due dates
and changing terms on the Notes. The Company has been named in a
lawsuit by EMA for failing to comply with a Securities Purchase
Agreement entered into in June 2019. See Note 8 Other Commitments
and Contingencies.
On February 14, 2020, the Company agreed to a Secured Promissory
Note with a third party for $90,000. The Secured Promissory Note
was secured by the assets of the Company and was due June 14, 2020
or earlier in case the Company is successful in raising other
monies and carried an interest charge of 10% payable with the
principal. The Secured Promissory Note was also convertible at the
option of the holder into an equivalent amount of Series D
Preferred Stock. The Secured Promissory Note also included a
guaranty by the CEO of the Company, Stephen J. Thomas III. This
Secured Promissory Note was paid off in June 2020, including $9,000
of interest in June and $1,000 in July 2020.
(3) The
Factoring Agreement with full recourse, due February 29, 2020, as
amended, was established in June 2016 with a company that is
controlled by a shareholder and is personally guaranteed by an
officer of the Company. The Factoring Agreement is such that the
Company pays a discount of 2% per each 30-day period for each
advance received against accounts receivable or future billings.
The Company was advanced funds from the Factoring Agreement for
which $101,244 and $101,244 in principal remained unpaid as of June
30, 2021 and December 31, 2020, respectively.
On May
8, 2019, the Company entered into a factoring agreement with
Advantage Capital Funding (“2019 Factoring agreement”).
$500,000, net of expenses, was funded to the Company with a promise
to pay $18,840 per week for 40 weeks until a total of $753,610 is
paid which occurred in February 2020.
On February 21, 2020, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts (“2020 Factoring
Agreement”). The balance to be purchased and sold is $716,720
for which the Company received $500,000, net of fees. Under the
2020 Factoring Agreement, the Company was to pay $14,221 per week
for 50 weeks at an effective interest rate of approximately 43%
annually. However, due to COVID-19 the payments under the 2020
Factoring Agreement were reduced temporarily, to between $9,000 and
$11,000 weekly. All deferred payments, $39,249 as of June 30, 2021,
were subsequently paid.
On November 13, 2020, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts (“2020 NewCo Factoring
Agreement”). The balance to be purchased and sold is $326,400
for which the Company received $232,800, net of fees. Under the
2020 NewCo Factoring Agreement, the Company was to pay $11,658 per
week for 28 weeks at an effective interest rate of approximately
36% annually. The 2020 NewCo Factoring Agreement has been paid back
in total.
On December 11, 2020, the Company entered into an Agreement for the
Purchase and Sale of Future Receipts with Samson MCA LLC
(“Samson Factoring Agreement”). The balance to be
purchased and sold is $162,500 for which the Company received
$118,625, net of fees. Under the Samson Factoring Agreement, the
Company was to pay $8,125 per week for 20 weeks at an effective
interest rate of approximately 36%. The Samson Factoring Agreement
has been paid back in total.
On December 11, 2020, the Company entered into a consolidation
agreement for the Purchase and Sale of Future Receipts with QFS
Capital (“QFS Factoring Agreement”). The balance to be
purchased and sold is $976,918 for which the Company receives
weekly payments of $29,860 for 20 weeks and then $21,978 for 4
weeks and then $11,669 in the last week of receipts all totaling
$696,781 net of fees. During the same time, the Company is required
to pay weekly $23,087 for 42 weeks at an effective interest rate of
approximately 36% annually. The QFS Factoring Agreement includes a
guaranty by the CEO of the Company, Stephen J. Thomas
III.
On June
7 and June 14, 2021, the Company entered into two Agreements for
the Purchase and Sale of Future Receipts (“NewCo Factoring
Agreements”). The balance to be purchased and sold is
$199,500 each for which the Company received $144,750 each, net of
fees. Under the NewCo Factoring Agreement, the Company is to pay
$5,542 each per week for 36 weeks at an effective interest rate of
approximately 36% annually. The NewCo Factoring Agreements include
a guaranty by the CEO of the Company, Stephen J. Thomas
III.
On June
28, 2021, the Company entered into an Agreement for the Purchase
and Sale of Future Receipts (“NewCo Factoring Agreement
#3”). The balance to be purchased and sold is $133,000 for
which the Company received $100,000. Under the NewCo Factoring
Agreement, the Company is to pay $3,695 per week for 36 weeks at an
effective interest rate of approximately 36% annually. The NewCo
Factoring Agreement #3 includes a guaranty by the CEO of the
Company, Stephen J. Thomas III.
(4) The
Line of Credit originated with a bank and was secured by the
personal assets of certain shareholders of Copperhead Digital.
During 2016, the Line of Credit was assigned to the Copperhead
Digital shareholders, who subsequent to the Copperhead Digital
acquisition by TPTG became shareholders of TPTG, and the secured
personal assets were used to pay off the bank. The Line of Credit
bears a variable interest rate based on the 1 Month LIBOR plus
2.0%, 2.14% as of June 30, 2021, is payable monthly, and is secured
by the assets of the Company. 1,000,000 shares of Common Stock of
the Company have been reserved to accomplish raising the funds to
pay off the Line of Credit. Since assignment of the Line of Credit
to certain shareholders, which balance on the date of assignment
was $2,597,790, those shareholders have loaned the Company $445,600
under the similar terms and conditions as the line of credit but
most of which were also given stock options totaling $85,120 which
expired as of December 31, 2019 (see Note 8) and was due, as
amended, August 31, 2020. The Company is in negotiations to
refinance this Line of Credit.
During
the years ended December 31, 2019 and 2018, those same shareholders
and one other have loaned the Company money in the form of
convertible loans of $136,400 and $537,200, respectively, described
in (2) and (6).
(5)
$350,000 represents cash due to the prior owners of the technology
acquired in December 2016 from the owner of the Lion Phone which is
due to be paid as agreed by TPTG and the former owners of the Lion
Phone technology and has not been determined.
$4,000,000
represents a promissory note included as part of the consideration
of ViewMe Live technology acquired in 2017, later agreed to as
being due and payable in full, with no interest with $2,000,000
from debt proceeds and the remainder from proceeds from the second
Company public offering.
$1,000,000
represents a promissory note which was entered into on May 6, 2020
for the acquisition of Media Live One Platform from
Steve and Yuanbing Caudle for the further development of software.
This was expensed as research and development in 2020. This $1,000,000 promissory note
is non-interest bearing, due after funding has been received
by the Company from its various investors and other sources. Mr.
Caudle is a principal with the Company’s ViewMe
technology.
On
September 1, 2018, the Company closed on its acquisition of Blue
Collar. Part of the acquisition included a promissory note of
$1,600,000 and interest at 3% from the date of closure. The
promissory note is secured by the assets of Blue
Collar.
$500,000
represents a Note Payable related to the acquisition of 75% of Aire
Fitness, payable by February 1, 2021 or as mutually agreed out of
future capital raising efforts or net profits. The Note Payable has
not been paid and does not accrue interest.
(6)
During 2016, the Company acquired SDM which consideration included
a convertible promissory note for $250,000 due February 29, 2019,
as amended, does not bear interest, unless delinquent in which the
interest is 12% per annum, and is convertible into common stock at
$1.00 per share. The SDM balance is $182,381 as of June 30, 2021.
As of June 30, 2021, this convertible promissory note is
delinquent.
During
2018, the Company issued convertible promissory notes in the amount
of $537,200 to related parties and $10,000 to a non-related party
which bear interest at 6% (11% default interest rate), are due 30
months from issuance and are convertible into Series C Preferred
Stock at $1.00 per share.
(7) The
shareholder debt represents funds given to TPTG or subsidiaries by
officers and managers of the Company as working capital. There are
no written terms of repayment or interest that is being accrued to
these amounts and they will only be paid back, according to
management, if cash flows support it. They are classified as
current in the balance sheets.
During
the year ended December 31, 2020, the holders of approximately
$4,700,000 of existing financing arrangements agreed to exchange
their debt and accrued interest for Series D Preferred Stock
through a separate $12 Million Private Placement of Series D
Preferred Stock (“$12 Million Private Placement”),
conditioned on the Company raising at least $12,000,000. To date,
this condition has not been met.
See
Lease financing arrangements in Note 8.
Derivative Financial Instruments
The Company previously adopted the provisions of ASC subtopic
825-10, Financial
Instruments (“ASC
825-10”). ASC 825-10 defines fair value as the price that
would be received from selling an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. When determining the fair value measurements
for assets and liabilities required or permitted to be recorded at
fair value, the Company considers the principal or most
advantageous market in which it would transact and considers
assumptions that market participants would use when pricing the
asset or liability, such as inherent risk, transfer restrictions,
and risk of nonperformance. ASC 825-10 establishes a fair value
hierarchy that requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring
fair value.
The derivative liability as of June 30, 2021, in the amount of
$4,783,379 has a level 3 classification under ASC
825-10.
The following table provides a summary of changes in fair value of
the Company’s Level 3 financial liabilities as of June 30,
2021.
|
|
Debt
Derivative Liabilities
|
|
Balance, December
31, 2019
|
$8,836,514
|
|
Change in
derivative liabilities from conversion of notes
payable
|
(1,144,290)
|
|
Change in
derivative liabilities from the Odyssey conversion to a term
loan
|
(1,286,762)
|
|
Change in fair
value of derivative liabilities for the period – derivative
expense
|
(1,140,323
|
|
Balance, December
31, 2020
|
$5,265,139
|
|
Initial fair value
of derivative liabilities during the period
|
77,897
|
|
Reclassification of
certain derivative liabilities
|
(185,108)
|
|
Change in fair
value of derivative liabilities for period – derivative
expense
|
(374,549)
|
|
Balance, June 30,
2021
|
$4,783,379
|
Convertible notes payable and warrant derivatives
– The Company issued
convertible promissory notes which are convertible into common
stock, at holders’ option, at a discount to the market price
of the Company’s common stock. The Company has identified the
embedded derivatives related to these notes relating to certain
anti-dilutive (reset) provisions. These embedded derivatives
included certain conversion features. The accounting treatment of
derivative financial instruments requires that the Company record
fair value of the derivatives as of the inception date of debenture
and to fair value as of each subsequent reporting
date.
As of June 30, 2021, the Company marked to market the fair value of
the debt derivatives and determined a fair value of $4,783,379
($4,774,388 from the convertible notes and $8,991 from warrants) in
Note 5 (2) above. The Company recorded a gain from change in fair
value of debt derivatives of $374,549 for the six months ended June
30, 2021. The fair value of the embedded derivatives was determined
using Monte Carlo simulation method based on the following
assumptions: (1) dividend yield of 0%, (2) expected volatility of
129.2% to 292.3%, (3) weighted average risk-free interest rate of
0.5% to 0.46% (4) expected life of 0.25 to 2.947 years, and (5) the
quoted market price of $0.039 to $0.039 for the Company’s
common stock.
CRITICAL ACCOUNTING POLICIES
Revenue Recognition
We have
applied ASC 606, revenue from Contracts with Customers, to all
contracts as of the date of initial application and as such, have
used the following criteria described below in more detail for each
business unit:
Identify the contract with the
customer.
Identify the performance
obligations in the contract.
Determine the transaction
price.
Allocate the transaction price
to performance obligations in the contract.
Recognize revenue when or as we satisfy a performance
obligation.
Reserves are recorded as a reduction in net sales and are not
considered material to our consolidated statements of
income In addition, we invoice our customers for taxes
assessed by governmental authorities such as sales tax and value
added taxes, where applicable. We present these taxes on a net
basis.
TPT SpeedConnect: ISP and Telecom Revenue
TPT
SpeedConnect is a rural Internet provider operating in 10
Midwestern States under the trade name SpeedConnect. TPT SC’s
primary business model is subscription based, pre-paid monthly
reoccurring revenues, from wireless delivered, high-speed internet
connections. In addition, the company resells third-party satellite
and DSL internet and IP telephony services. Revenue generated from
sales of telecommunications services is recognized as the
transaction with the customer is considered closed and the customer
receives and accepts the services that were the result of the
transaction. There are no financing terms or variable transaction
prices. Due date is detailed on monthly invoices distributed to
customer. Services billed monthly in advance are deferred to the
proper period as needed. Deferred revenue are contract liabilities
for cash received before performance obligations for monthly
services are satisfied. Certain of our products require specialized
installation and equipment. For telecom products that include
installation, if the installation meets the criteria to be
considered a separate element, product revenue is recognized upon
delivery, and installation revenue is recognized when the
installation is complete. The Installation Technician collects the
signed quote containing terms and conditions when installing the
site equipment at customer premises.
Revenue
for installation services and equipment is billed separately from
recurring ISP and telecom services and is recognized when equipment
is delivered and installation is completed. Revenue from ISP and
telecom services is recognized monthly over the contractual period,
or as services are rendered and accepted by the
customer.
The
overwhelming majority of our revenue continues to be recognized
when transactions occur. Since installation fees are generally
small relative to the size of the overall contract and because most
contracts are for two years or less, the impact of not recognizing
installation fees over the contract is immaterial.
Copperhead Digital: ISP and Telecom Revenue
Copperhead
Digital is a regional internet and telecom services provider
operating in Arizona under the trade name Trucom. Copperhead
Digital operates as a wireless telecommunications Internet Service
Provider (“ISP”) facilitating both residential and
commercial accounts. Copperhead Digital’s primary business
model is subscription based, pre-paid monthly reoccurring revenues,
from wireless delivered, high-speed internet connections. In
addition, the company resells third-party satellite and DSL
internet and IP telephony services. Revenue generated from sales of
telecommunications services is recognized as the transaction with
the customer is considered closed and the customer receives and
accepts the services that were the result of the transaction. There
are no financing terms or variable transaction prices. Due date is
detailed on monthly invoices distributed to customer. Services
billed monthly in advance are deferred to the proper period as
needed. Deferred revenue are contract liabilities for cash received
before performance obligations for monthly services are satisfied.
Certain of our products require specialized installation and
equipment. For telecom products that include installation, if the
installation meets the criteria to be considered a separate
element, product revenue is recognized upon delivery, and
installation revenue is recognized when the installation is
complete. The Installation Technician collects the signed quote
containing terms and conditions when installing the site equipment
at customer premises.
Revenue
for installation services and equipment is billed separately from
recurring ISP and telecom services and was recognized when
equipment was delivered and installation was completed. Revenue
from ISP and telecom services was recognized monthly over the
contractual period, or as services were rendered and accepted by
the customer.
The
overwhelming majority of our revenue was recognized when
transactions occur. Since installation fees were generally small
relative to the size of the overall contract and because most
contracts are for a year or less, the impact of not recognizing
installation fees over the contract is immaterial.
K Telecom: Prepaid Phones and SIM Cards Revenue
K
Telecom generates revenue from reselling prepaid phones, SIM cards,
and rechargeable minute traffic for prepaid phones to its customers
(primarily retail outlets). Product sales occur at the
customer’s locations, at which time delivery occurs and cash
or check payment is received. The Company recognizes the revenue
when they receive payment at the time of delivery. There are no
financing terms or variable transaction prices.
SDM: Ecommerce, Email Marketing and Web Design
Services
SDM
generates revenue by providing ecommerce, email marketing and web
design solutions to small and large commercial businesses, complete
with monthly software support, updates and maintenance. Services
are billed monthly. There are no financing terms or variable
transaction prices. Platform infrastructure support is a prepaid
service billed in monthly recurring increments. The services are
billed a month in advance and due prior to services being rendered.
The revenue is deferred when invoiced and booked in the month the
service is provided. Software support services (including software
upgrades) are billed in real time, on the first of the month. Web
design service revenues are recognized upon completion of specific
projects. Revenue is booked in the month the services are rendered
and payments are due on the final day of the month. There are
usually no contract revenues that are deferred until services are
performed.
Blue Collar: Media Production Services
Blue
Collar creates original live action and animated content
productions and has produced hundreds of hours of material for the
television, theatrical, home entertainment and new media markets.
Blue Collar designs branding and marketing campaigns and has had
agreements with some of the world’s largest companies
including PepsiCo, Intel, HP, WalMart and many other Fortune 500
companies. Additionally, they create motion picture, television and
home entertainment marketing campaigns for studios including Sony,
DreamWorks, Twentieth Century Fox, Universal Studios, Paramount
Studios, and Warner Brothers. With regard to revenue recognition,
Blue Collar receives an agreement from each client to perform
defined work. Some agreements are written, some are verbal. Work
may include creation of marketing materials and/or content
creation. Some work may be short term and take weeks to create and
some work may be longer and take months to create. There are
instances where customer agreements segregate identifiable
obligations (like filming on site vs. film editing and final
production) with separate transaction pricing. The performance
obligation is generally satisfied upon delivery of such film or
production products, at which time revenue is recognized. There are
no financing terms or variable transaction prices.
TPT MedTech: Medical Testing Revenue
TPT
MedTech operates in the Point of Care Testing (“POCT”)
market by primarily offering mobile medical testing facilities and
software equipped for mobile devices to monitor and manage
personalized healthcare. Services used from our mobile medical
testing facilities are billing through credit cards at the time of
service. Revenue is generated from our software platform as users
sign up for our mobile healthcare monitor and management
application and tests are performed. If medical testing is in one
our own owned facilities, the usage of the software application is
included in the testing fees. If the testing is in a non-owned
outside contracted facility, fees are generated from the usage of
the software application on a per test basis and billed
monthly.
TPT
MedTech also offers two products. One is to build and sell its
mobile testing facilities called QuikLABs designed for mobile
testing. This is used by TPT MedTech for its own testing services.
The other is a sanitizing unit called SANIQuik which is used as a
safe and flexible way to sanitize providing an additional routine
to hand washing and facial coverings. The SANIQuik has not yet been
approved for sale in the United States but has in some parts of the
European community. Revenues from these products are recognized
when a product is delivered, the sales transaction considered
closed and accepted by a customer. There are no financing terms or
variable transaction prices for either of these
products.
Use of Estimates
The
preparation of financial statements in conformity with United
States generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ materially from those
estimates. The Company’s consolidated financial statements
reflect all adjustments that management believes are necessary for
the fair presentation of their financial condition and results of
operations for the periods presented.
Share-based Compensation
We are
required to measure and recognize compensation expense for all
share-based payment awards (including stock options) made to
employees and directors based on estimated fair value. Compensation
expense for equity-classified awards is measured at the grant date
based on the fair value of the award and is recognized as an
expense in earnings over the requisite service period.
We
record compensation expense related to non-employees that are
awarded stock in conjunction with selling goods or services and
recognize compensation expenses over the vesting period of such
awards.
Income Taxes
Deferred
tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the year in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
our income tax provision in the period of enactment.
We
recognize deferred tax assets to the extent that we believe that
these assets are more likely than not to be realized. In making
such a determination, we consider all available positive and
negative evidence, including future reversal of existing taxable
temporary differences, projected future taxable income,
tax-planning strategies, and results of recent operations,
including taxable income in carryback periods. If we determine that
we would be able to realize our deferred tax assets in the future
in excess of their net recorded amount, we would make an adjustment
to the deferred tax asset valuation allowance, which would reduce
our income tax provision.
We
account for uncertain tax positions using a
“more-likely-than-not” recognition threshold. We
evaluate uncertain tax positions on a quarterly basis and consider
various factors, including, but not limited to, changes in tax law,
the measurement of tax positions taken or expected to be taken in
tax returns, the effective settlement of matters subject to audit,
new audit activity and changes in facts or circumstances related to
a tax position.
It is
our policy to record costs associated with interest and penalties
related to tax in the selling, general and administrative line of
the consolidated statements of operations.
Goodwill and Intangible Assets
Goodwill
relates to amounts that arose in connection with our various
business combinations and represents the difference between the
purchase price and the fair value of the identifiable tangible and
intangible net assets when accounted for using the acquisition
method of accounting. Goodwill is not amortized, but it is subject
to periodic review for impairment.
We test goodwill balances for impairment on an annual basis as
of December 31st
or whenever impairment indicators
arise. We utilize several reporting units in evaluating
goodwill for impairment using a quantitative assessment, which uses
a combination of a guideline public company market-based approach
and a discounted cash flow income-based approach. The quantitative
assessment considers whether the carrying amount of a reporting
unit exceeds its fair value, in which case an impairment charge is
recorded to the extent the reporting unit’s carrying value
exceeds its fair value.
Our
intangible assets consist primarily of customer relationships,
developed technology, favorable leases trademarks and the film
library. The majority of our intangible assets were recorded in
connection with our various business combinations. Our intangible
assets are recorded at fair value at the time of their acquisition.
Intangible assets are amortized over
their estimated useful life on a straight-line basis. Estimated
useful lives are determined considering the period the assets are
expected to contribute to future cash flows. We evaluate the
recoverability of our intangible assets periodically and take into
account events or circumstances that warrant revised estimates of
useful lives or that indicate impairment
exists.
Business Acquisitions
Our
business acquisitions have historically been made at prices above
the fair value of the assets acquired and liabilities assumed,
resulting in goodwill or some identifiable intangible asset.
Significant judgment is required in estimating the fair value of
intangible assets and in assigning their respective useful lives.
The fair value estimates are based on available historical
information and on future expectations and assumptions deemed
reasonable by management but are inherently uncertain.
We
generally employ the income method to estimate the fair value of
intangible assets, which is based on forecasts of the expected
future cash flows attributable to the respective assets.
Significant estimates and assumptions inherent in the valuations
reflect a consideration of other marketplace participants and
include the amount and timing of future cash flows (including
expected growth rates and profitability), the underlying product
life cycles, economic barriers to entry, a brand’s relative
market position and the discount rate applied to the cash flows.
Unanticipated market or macroeconomic events and circumstances may
occur, which could affect the accuracy or validity of the estimates
and assumptions.
Net
assets acquired are recorded at their fair value and are subject to
adjustment upon finalization of the fair value analysis.
Research and Development
Our
research and development programs focus on telecommunications
products and services. Research and development costs are expensed
as incurred. Any payments received from external parties to fund
our research and development activities reduce the recorded
research and development expenses.
Cash and Cash Equivalents
The
Company considers all investments with a maturity date of three
months or less when purchased to be cash equivalents.
Accounts Receivable
We
establish an allowance for potential uncollectible accounts
receivable. All accounts receivable 60 days past due are considered
uncollectible unless there are circumstances that support
collectability. Those circumstances are documented.
Property and Equipment
Property
and equipment are stated at cost or fair value if acquired as part
of a business combination. Depreciation is computed by the
straight-line method and is charged to operations over the
estimated useful lives of the assets. Maintenance and repairs are
charged to expense as incurred. The carrying amount of accumulated
depreciation of assets sold or retired are removed from the
accounts in the year of disposal and any resulting gain or loss in
s included in results of operations. The estimated useful lives of
property and equipment are telecommunications network - 5 years,
telecommunications equipment - 7 to 10 years, and computers and
office equipment - 3 years.
Long-Lived Assets
We periodically review the carrying amount of our depreciable
long-lived assets for impairment which include property and
equipment and intangible assets. An asset is considered
impaired when estimated future cash flows are less than the
carrying amount of the asset. In the event the carrying amount
of such asset is not considered recoverable, the asset is adjusted
to its fair value. Fair value is generally determined based on
discounted future cash flow.
Basic and Diluted Net Loss Per Share
The
Company computes net income (loss) per share in accordance with ASC
260, “Earning per Share.” ASC 260 requires presentation
of both basic and diluted earnings per share (“EPS”) on
the face of the income statement. Basic EPS is computed by dividing
net income (loss) available to common shareholder (numerator) by
the weighted average number of shares outstanding (denominator)
during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period using the
treasury stock method and convertible preferred stock using the
if-converted method. In computing diluted EPS, the average stock
price for the period is used in determining the number of shares
assumed to be purchased from the exercise of stock options or
warrants. Diluted EPS excludes all dilutive potential shares if
their effect is anti-dilutive.
Concentration of Credit Risk, Off-Balance Sheet Risks and Other
Risks and Uncertainties
Financial
instruments that potentially subject us to concentration of credit
risk primarily consist of cash and cash equivalents and accounts
receivable. We invest our excess cash primarily in high quality
securities and limit the amount of our credit exposure to any one
financial institution. We do not require collateral or other
securities to support customer receivables; however, we perform
on-going credit evaluations of our customers and maintain
allowances for potential credit losses.
Financial Instruments and Fair Value of Financial
Instruments
Our
primary financial instruments consist of cash equivalents, accounts
receivable, accounts payable and debt. We apply fair value
measurement accounting to either record or disclose the value of
our financial assets and liabilities in our financial statements.
Fair value is defined as the exchange price that would be received
for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in
an orderly transaction between market participants on the
measurement date. A fair value hierarchy requires an entity to
maximize the use of observable inputs, where available, and
minimize the use of unobservable inputs when measuring fair
value.
Described
below are the three levels of inputs that may be used to measure
fair value:
Level 1 Quoted prices in active markets for identical
assets or liabilities.
Level 2 Observable inputs other than Level 1
prices, such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that
are observable or can be corroborated by observable market data for
substantially the full term of the assets or
liabilities.
Level 3 Unobservable inputs that are supported by
little or no market activity and that are significant to the fair
value of the assets or liabilities.
Advertising Costs
Advertising
costs are expensed as incurred.
Derivative Financial Instruments
Derivative
financial instruments, as defined in ASC 815, “Accounting for
Derivative Financial Instruments and Hedging Activities”,
consist of financial instruments or other contracts that contain a
notional amount and one or more underlying (e.g. interest rate,
security price or other variable), require no initial net
investment and permit net settlement. Derivative financial
instruments may be free-standing or embedded in other financial
instruments. Further, derivative financial instruments are
initially, and subsequently, measured at fair value and recorded as
liabilities or, in rare instances, assets.
The
Company does not use derivative financial instruments to hedge
exposures to cash-flow, market or foreign-currency risks. However,
the Company had issued financial instruments including convertible
promissory notes payable with features during 2019 that were either
(i) not afforded equity classification, (ii) embody risks not
clearly and closely related to host contracts, or (iii) may be
net-cash settled by the counterparty. As required by ASC 815, in
certain instances, these instruments are required to be carried as
derivative liabilities, at fair value, in our financial
statements.
The
Company estimates the fair values of derivative financial
instruments using the Monte Carlo model. Estimating fair values of
derivative financial instruments requires the development of
significant and subjective estimates (such as volatility, estimated
life and interest rates) that may, and are likely to, change over
the duration of the instrument with related changes in internal and
external market factors. In addition, option-based techniques are
highly volatile and sensitive to changes in the trading market
price of our common stock, which has a high-historical volatility.
Since derivative financial instruments are initially and
subsequently carried at fair values, the Company’s operating
results will reflect the volatility in these estimate and
assumption changes.
The Company issued convertible promissory notes which are
convertible into common stock, at holders’ option, at a
discount to the market price of the Company’s common stock.
The Company has identified the embedded derivatives related to
these notes relating to certain anti-dilutive (reset) provisions.
These embedded derivatives included certain conversion features.
The accounting treatment of derivative financial instruments
requires that the Company record fair value of the derivatives as
of the inception date of debenture and to fair value as of each
subsequent reporting date.
PART
III – EXHIBITS
|
Exhibit
Number
|
Description
|
|
|
3.1
|
(1)
|
|
|
3.2
|
(1)
|
|
|
3.3
|
(1)
|
|
|
3.4
|
(1)
|
|
|
3.5
|
(1)
|
|
|
3.6
|
(1)
|
|
|
3.7
|
(1)
|
|
|
3.8
|
|
|
|
3.9
|
(1)
|
|
|
3.10
|
(1)
|
|
|
3.11
|
(1)
|
|
|
3.12
|
(1)
|
|
|
3.13
|
(1)
|
|
|
3.14
|
(1)
|
|
|
3.15
|
(1)
|
|
|
3.16
|
(1)
|
|
|
3.17
|
(1)
|
|
|
3.18
|
(1)
|
|
|
3.19
|
(1)
|
|
|
3.20
|
(1)
|
|
|
3.21
|
(1)
|
|
|
3.22
|
(11)
|
|
|
3.23
|
(11)
|
|
|
3.24
|
(11)
|
|
|
3.25
|
(13)
|
|
|
3.26
|
(13)
|
|
|
3.27
|
(13)
|
|
|
3.28
|
(13)
|
|
|
3.29
|
(13)
|
|
|
3.30
|
(13)
|
|
|
3.31
|
(13)
|
|
|
4.1
|
(1)
|
|
|
4.2
|
(1)
|
|
|
4.3
|
(1)
|
|
|
4.4
|
(1)
|
|
|
4.5
|
(1)
|
|
4.6
|
(1)
|
|
|
4.7
|
(2)
|
|
|
4.8
|
(2)
|
|
|
4.9
|
(3)
|
|
|
4.10
|
Promissory Note - MatrixSites,
Inc. (10.31.17)
|
(3)
|
|
4.11
|
(3)
|
|
|
4.12
|
(9)
|
|
|
4.13
|
(11)
|
|
|
4.14
|
(14)
|
|
|
4.15
|
(15)
|
|
| 4.16 | Amended Form of Placement Warrant | File Herewith |
|
6.1
|
(1)
|
|
|
6.2
|
(1)
|
|
|
6.3
|
(1)
|
|
|
6.4
|
(1)
|
|
|
6.5
|
(1)
|
|
|
6.6
|
(1)
|
|
|
6.7
|
(1)
|
|
|
6.8
|
(1)
|
|
|
6.9
|
(1)
|
|
|
6.10
|
(1)
|
|
|
6.11
|
(1)
|
|
|
6.12
|
(1)
|
|
|
6.13
|
(1)
|
|
|
6.14
|
(1)
|
|
|
6.15
|
(2)
|
|
|
6.16
|
(2)
|
|
|
6.17
|
(3)
|
|
|
6.18
|
(3)
|
|
|
6.19
|
(3)
|
|
|
6.20
|
(3)
|
|
|
6.21
|
(3)
|
|
|
6.22
|
(3)
|
|
|
6.23
|
(4)
|
|
|
6.24
|
(4)
|
|
|
6.25
|
(5)
|
|
|
6.26
|
(6)
|
|
|
6.27
|
(6)
|
|
|
6.28
|
(6)
|
|
|
6.29
|
(7)
|
|
|
6.30
|
(8)
|
|
|
6.31
|
(10)
|
|
6.33
|
(13)
|
|
|
6.34
|
(13)
|
|
|
6.35
|
(13)
|
|
|
6.36
|
(14)
|
|
|
6.37
|
(14)
|
|
|
6.38
|
(15)
|
|
|
11.1
|
Consent of
Independent Certified Public Accountants
|
Filed
Herewith
|
|
12.1
|
Filed
Herewith
|
|
|
15.1
|
(14)
|
|
|
15.2
|
(1)
|
|
|
15.3
|
(1)
|
_______________________-
(1)
Incorporated by reference from the exhibits included in the
Company’s Registration Statement on Form S-1 dated December
15, 2017.
(2)
Incorporated by reference from the exhibits included in the
Company’s Registration Statement on Form S-1/A dated February
23, 2018.
(3)
Incorporated by reference from the exhibits included in the
Company’s Registration Statement on Form S-1/A dated October
1, 2018.
(4)
Incorporated by reference from the exhibits included in the
Company’s Registration Statement on Form S-1/A dated November
5, 2018.
(5)
Incorporated by reference from the exhibits included in the
Company’s Form 8-K dated March 19, 2019.
(6)
Incorporated by reference from the exhibits included in the
Company’s Form 8-K dated March 25, 2019.
(7)
Incorporated by reference from the exhibits included in the
Company’s Form 8-K dated April 3, 2019.
(8)
Incorporated by reference from the exhibits included in the
Company’s Form 8-K dated March 3, 2020.
(9)
Incorporated by reference from the exhibits included in the
Company’s Form 8-K dated March 10, 2020.
(10)
Incorporated by reference from the exhibits included in the
Company’s Form 8-K dated March 19, 2020.
(11)
Incorporated by reference from the exhibits included in the
Company’s Form 1-A dated July 2, 2020.
(12)
Incorporated by reference from the exhibits included in the
Company’s Form 8-K dated June 10, 2020.
(13)
Incorporated by reference from the exhibits included in the
Company’s Form 1-A/A dated August 27, 2020.
(14)
Incorporated by reference from the exhibits included in the
Company’s Form 1-A POS dated August 5, 2021.
(15)
Incorporated by reference from the exhibits included in the
Company’s Form 1-A POS dated September 22,
2021.
SIGNATURES
Pursuant
to the requirements of Regulation A, the issuer certifies that it
has reasonable grounds to believe that it meets all of the
requirements for filing on Form 1-A, Post-Effective Amendment No.
4, and has duly caused this offering statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the City of San Diego, State of California, on October
22, 2021.
(Exact name of
issuer as specified in its
charter):
TPT Global Tech,
Inc.
By (Signature and
Title):
/s/ Stephen J. Thomas III,
Stephen
J. Thomas, III, CEO, President and Chairman of the
Board
(Principal
Executive Officer)
This
offering statement has been signed by the following persons in the
capacities and on the dates indicated.
(Signature):
/s/ Gary L. Cook
(Title):
Gary L. Cook, Chief
Financial Officer (Principal Financial Officer, Principal
Accounting Officer)
(Date):
October
22, 2021
|
/s/
Stephen J. Thomas, III
|
|
October
22, 2021
|
|
Stephen
J. Thomas, III, CEO, President, and Chairman of the
Board
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Gary L. Cook
|
|
October
22, 2021
|
|
Gary
L. Cook, Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Richard Eberhardt
|
|
October
22, 2021
|
|
Richard
Eberhardt, Director
|
|
|
|
|
|
|
|
/s/
Arkady Shkolnik
|
|
October
22, 2021
|
|
Arkady
Shkolnik, Director
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Reginald Thomas
|
|
October
22, 2021
|
|
Reginald
Thomas, Director
|
|
|
|
|
|
|
|
|
|
|
|
/s/
General John F. Wharton
|
|
October
22, 2021
|
|
General
John F. Wharton, Director
|
|
|
EXHIBIT A
SUBSCRIPTION
DOCUMENTS
TPT GLOBAL TECH, INC.
a Florida Corporation
7,600,000 Shares of Series D Preferred 6% Cumulative Dividend
Convertible Stock
at $5.00 Per Share
Minimum Investment: 100 Shares ($500)
INSTRUCTIONS FOR SUBSCRIPTION
To Subscribe
1.
Subscription
Agreement
Please
execute the signature page and return with the Purchaser
Questionnaire.
2.
Purchaser
Questionnaire
Please
complete and return with your executed Subscription
Agreement.
3.
Please make check
payable to: TPT Global Tech, Inc.
4.
Please mail
subscription documents and checks to:
TPT Global
Tech, Inc.
Attn:
Stephen Thomas
501 West
Broadway, Suite 800
San Diego,
CA 92101
SUBSCRIPTION AGREEMENT
Name of
Investor:
(Print)
Stephen
J. Thomas, III, CEO
TPT
Global Tech, Inc.
Re:
TPT GLOBAL TECH, INC. – 7,600,000 Shares of Series D Preferred 6% Cumulative
Dividend Convertible Stock (the “Series D Preferred
Convertible Shares”)
Gentlemen:
1. Subscription.
The undersigned hereby tenders this subscription and applies to
purchase the number of Series D Preferred Convertible Shares in TPT
Global Tech, Inc., a Florida corporation (the
“Company”) indicated below, pursuant to the terms of
this Subscription Agreement. The purchase price of each Series D
Preferred Convertible Share is five dollars ($5.00), payable in
cash in full upon subscription. The undersigned further sets forth
statements upon which you may rely to determine the suitability of
the undersigned to purchase the Series D Preferred Convertible
Shares. The undersigned understands that the Series D Preferred
Convertible Shares are being offered pursuant to the Offering
Circular, dated October 22, 2021 and its exhibits (the
“Offering Circular”). In connection with this
subscription, the undersigned represents and warrants that the
personal, business and financial information contained in the
Purchaser Questionnaire is complete and accurate and presents a
true statement of the undersigned’s financial
condition.
2. Representations
and Understandings. The undersigned hereby makes the
following representations, warranties and agreements and confirms
the following understandings:
(i) The undersigned has
received a copy of the Offering Circular, has reviewed it
carefully, and has had an opportunity to question representatives
of the Company and obtain such additional information concerning
the Company as the undersigned requested.
(ii) The
undersigned has sufficient experience in financial and business
matters to be capable of utilizing such information to evaluate the
merits and risks of the undersigned’s investment, and to make
an informed decision relating thereto; or the undersigned has
utilized the services of a purchaser representative and together
they have sufficient experience in financial and business matters
that they are capable of utilizing such information to evaluate the
merits and risks of the undersigned’s investment, and to make
an informed decision relating thereto.
(iii) The
undersigned has evaluated the risks of this investment in the
Company, including those risks particularly described in the
Offering Circular, and has determined that the investment is
suitable for him. The undersigned has adequate financial resources
for an investment of this character, and at this time he could bear
a complete loss of his investment without a change in lifestyle.
The undersigned understands that any projections which may be made
in the Offering Circular are mere estimates and may not reflect the
actual results of the Company’s operations.
(iv) The
undersigned understands that the Shares are not being registered
under the Securities Act of 1933, as amended (the “1933
Act”) on the ground that the issuance thereof is exempt under
Regulation A of Section 3(b) of the 1933 Act, and that reliance on
such exemption is predicated in part on the truth and accuracy of
the undersigned’s representations and warranties, and those
of the other purchasers of Series D Preferred Convertible
Shares.
(v) The undersigned
understands that the Shares are not being registered under the
securities laws of certain states on the basis that the issuance
thereof is exempt as an offer and sale not involving a registerable
public offering in such state, since the Series D Preferred
Convertible Shares are “covered securities” under the
National Securities Market Improvement Act of 1996. The undersigned
understands that reliance on such exemptions is predicated in part
on the truth and accuracy of the undersigned’s
representations and warranties and those of other purchasers of
Shares. The undersigned covenants not to sell, transfer or
otherwise dispose of a Series D Preferred Convertible Share unless
such Series D Preferred Convertible Share has been registered under
the applicable state securities laws, or an exemption from
registration is available.
(vi) The
amount of this investment by the undersigned does not exceed 10% of
the greater of the undersigned’s net worth, not including the
value of his/her primary residence, or his/her annual income in the
prior full calendar year, as calculated in accordance with Rule 501
of Regulation D promulgated under Section 4(a)(2) of the Securities
Act of 1933, as amended, or the undersigned is an “accredited
investor,” as that term is defined in Rule 501 of Regulation
D promulgated under Section 4(a)(2) of the Securities Act of 1933,
as amended (see the attached Purchaser Questionnaire), or is the
beneficiary of a fiduciary account, or, if the fiduciary of the
account or other party is the donor of funds used by the fiduciary
account to make this investment, then such donor, who meets the
requirements of net worth, annual income or criteria for being an
“accredited investor.”
(vii) The
undersigned has no need for any liquidity in his investment and is
able to bear the economic risk of his investment for an indefinite
period of time. The undersigned has been advised and is aware that:
(a) there is no public market for the Series D Preferred
Convertible Shares and a public market for the Series D Preferred
Convertible Shares may not develop; (b) it may not be possible to
liquidate the investment readily; and (c) the Series D Preferred
Convertible Shares have not been registered under the 1933 Act and
applicable state law and an exemption from registration for resale
may not be available.
(viii) All
contacts and contracts between the undersigned and the Company
regarding the offer and sale to him of Series D Preferred
Convertible Shares have been made within the state indicated below
his signature on the signature page of this Subscription Agreement
and the undersigned is a resident of such state.
(ix) The
undersigned has relied solely upon the Offering Circular and
independent investigations made by him or his purchaser
representative with respect to the Series D Preferred Convertible
Shares subscribed for herein, and no oral or written
representations beyond the Offering Circular have been made to the
undersigned or relied upon by the undersigned.
(x) The undersigned
agrees not to transfer or assign this subscription or any interest
therein.
(xi) The
undersigned hereby acknowledges and agrees that, except as may be
specifically provided herein, the undersigned is not entitled to
withdraw, terminate or revoke this subscription.
(xii) If
the undersigned is a partnership, corporation or trust, it has been
duly formed, is validly existing, has full power and authority to
make this investment, and has not been formed for the specific
purpose of investing in the Series D Preferred Convertible Shares.
This Subscription Agreement and all other documents executed in
connection with this subscription for Series D Preferred
Convertible Shares are valid, binding and enforceable agreements of
the undersigned.
(xiii) The
undersigned meets any additional suitability standards and/or
financial requirements which may be required in the jurisdiction in
which he resides, or is purchasing in a fiduciary capacity for a
person or account meeting such suitability standards and/or
financial requirements, and is not a minor.
(xiv) Issuer-Directed
Offering; No Underwriter. The undersigned acknowledges and agrees
that CIM Securities, LLC has been engaged to serve as an
accommodating broker-dealer and Placement Agent and to provide
placement services. The undersigned acknowledges that CIM
Securities, LLC is distributing the Offering Circular but is not
making any oral representations concerning the Offering. CIM
Securities, LLC conducted limited due diligence on this Offering,
but the undersigned should not rely solely on CIM Securities, LLC
involvement in this Offering.
3. Indemnification.
The undersigned hereby agrees to indemnify and hold harmless the
Company and all of its affiliates, attorneys, accountants,
employees, officers, directors, Shareholders and agents from any
liability, claims, costs, damages, losses or expenses incurred or
sustained by them as a result of the undersigned’s
representations and warranties herein or in the Purchaser
Questionnaire being untrue or inaccurate, or because of a breach of
this agreement by the undersigned. The undersigned hereby further
agrees that the provisions of Section 3 of this Subscription
Agreement will survive the sale, transfer or any attempted sale or
transfer of all or any portion of the Series D Preferred
Convertible Shares. The undersigned hereby grants to the Company
the right to setoff against any amounts payable by the Company to
the undersigned, for whatever reason, of any and all damages, costs
and expenses (including, but not limited to, reasonable
attorney’s fees) which are incurred by the Company or any of
its affiliates as a result of matters for which the Company is
indemnified pursuant to Section 3 of this Subscription
Agreement.
4. Taxpayer
Identification Number/Backup Withholding Certification.
Unless a subscriber indicates to the contrary on the Subscription
Agreement, he will certify that his taxpayer identification number
is correct and, if not a corporation, IRA, Keogh, or Qualified
Trust (as to which there would be no withholding), he is not
subject to backup withholding on interest or dividends. If the
subscriber does not provide a taxpayer identification number
certified to be correct or does not make the certification that the
subscriber is not subject to backup withholding, then the
subscriber may be subject to twenty-eight percent (28%) withholding
on interest or dividends paid to the holder of the Series D
Preferred Convertible Shares.
5. Foreign
Investors. The undersigned hereby represents and warrants
that the undersigned is not (i) named on the list of
“specially designated nationals” or “blocked
persons” maintained by the U.S. Office of Foreign Assets
Control (“OFAC”) at
www.ustreas.gov/offices/enforcement/ofac/sdn or as otherwise
published from time to time, (ii) an agency of the government of a
Sanctioned Country, (iii) an organization controlled by a
Sanctioned Country, (iv) a person residing in a Sanctioned Country,
to the extent subject to a sanctions program administered by OFAC,
(v) a person who owns more than fifteen percent (15%) of its assets
in Sanctioned Countries, or (vi) a person who derives more than
fifteen percent (15%) of its operating income from investments in,
or transactions with, sanctioned persons or Sanctioned Countries. A
“Sanctioned Country” means a country subject to a
sanctions program identified on the list maintained by OFAC and
available at www.ustreas.gov/offices/enforcement/ofac/sdn or as
otherwise published from time to time.
6. Governing
Law. This Subscription Agreement will be governed by and
construed in accordance with the laws of the State of Florida. The
venue for any legal action under this Agreement will be in the
proper forum in the County of Dade, State of Florida.
7. Acknowledgement
of Risks Factors. The undersigned has carefully reviewed and
thoroughly understands the risks associated with an investment in
the Series D Preferred Convertible Shares as described in the
Offering Circular. The undersigned acknowledges that this
investment entails significant risks.
The
undersigned has (have) executed this Subscription Agreement on this
day of
,
20 ,
at
.
|
SUBSCRIBER
(1)
_____________________________________
Signature
_____________________________________
(Print
Name of Subscriber)
_____________________________________
(Street
Address)
_____________________________________
(City,
State and Zip Code)
_____________________________________
(Social
Security or Tax Identification Number)
|
SUBSCRIBER
(2)
_____________________________________
Signature
_____________________________________
(Print
Name of Subscriber)
_____________________________________
(Street
Address)
_____________________________________
(City,
State and Zip Code)
_____________________________________
(Social
Security or Tax Identification Number)
|
Number
of Series D Preferred Convertible Shares ____________
Dollar
Amount of Series D Preferred Convertible Shares (At $5.00 per
Share) ____________________________
PLEASE
MAKE CHECKS PAYABLE TO: “TPT
GLOBAL TECH, INC.”
MANNER IN WHICH TITLE IS TO BE HELD:
SUBSCRIPTION ACCEPTED:
TPT GLOBAL TECH, INC.
|
By:
____________________
|
________________________________
|
|
Stephen J. Thomas,
III, CEO
|
DATE
|
TPT GLOBAL TECH, INC.
PURCHASER QUESTIONNAIRE
Stephen
J. Thomas, III, CEO
TPT
Global Tech, Inc.
Re:
TPT GLOBAL TECH, INC.
Gentlemen:
The
following information is furnished to you in order for you to
determine whether the undersigned is qualified to purchase shares
of Series D Preferred 6% Cumulative Dividend Convertible Stock (the
“Series D Preferred Convertible Shares”) in the above
referenced Company pursuant to Section 3(b) of the Securities Act
of 1933, as amended (the “Act”), Regulation A
promulgated thereunder, and appropriate provisions of applicable
state securities laws. I understand that you will rely upon the
following information for purposes of such determination, and that
the Series D Preferred Convertible Shares will not be registered
under the Act in reliance upon the exemption from registration
provided by Section 3(b) of the Act, Regulation A, and appropriate
provisions of applicable state securities laws.
ALL
INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. However, I agree that you may present this
questionnaire to such parties as you deem appropriate if called
upon to establish that the proposed offer and sale of the Series D
Preferred Convertible Shares is exempt from registration under the
Act or meets the requirements of applicable state securities
laws.
I
hereby provide you with the following representations and
information:
1.
Name:
______________________________
2.
Residence Address
& Telephone No: ______________________________
3.
Mailing
Address: ______________________________
3a.
Email Address: ______________________________
4.
Employer and
Position: ______________________________
5.
Business Address
& Telephone No: ______________________________
6.
Business or
Professional Education & Degree: ______________________________
7.
Prior Investments
of Purchaser:
Amount
(Cumulative) $
______________________ (initial
appropriate category below):
|
Capital Stock:
|
☐
None
(Initial)
|
☐ Up to $50,000
(Initial)
|
☐ $50,000 to $250,000
(Initial)
|
☐ Over $250,000
(Initial)
|
|
Bonds:
|
☐ None
(Initial)
|
☐ Up to
$50,000
(Initial)
|
☐ $50,000 to $250,000
(Initial)
|
☐ Over $250,000
(Initial)
|
|
Other:
|
☐ None
(Initial)
|
☐ Up to
$50,000
(Initial)
|
☐ $50,000 to $250,000
(Initial)
|
☐ Over $250,000
(Initial)
|
8.
Based on the
definition of an “Accredited Investor” which appears
below, I assert I am an “Accredited
Investor”:
☐
Yes
☐
No
(initial appropriate category)
I
understand that the representations contained in this section are
made for the purpose of qualifying me as an accredited investor as
the term is defined by the Securities and Exchange Commission for
the purpose of selling securities to me. I hereby represent that
the statement or statements initialed below are true and correct in
all respects. I am an Accredited Investor because I fall within one
of the following categories (initial appropriate
category):
☐
A natural person
whose individual net worth, or joint net worth with that
person’s spouse, at the time of his purchase exceeds
$1,000,000, not
including the value of the person’s primary
residence;
☐
A natural person
who had an individual income in excess of $200,000 in each of the
two most recent years and who reasonably expects an income in
excess of $200,000 in the current year;
☐
My spouse and I
have had joint income for the most two recent years in excess of
$300,000 and we expect our joint income to be in excess of $300,000
for the current year;
☐
Any organization
described in Section 501(c)(3) of the Internal Revenue Code, or any
corporation, Massachusetts Business Trust or Fund not formed for
the specific purpose of acquiring the securities offered, with
total assets in excess of $5,000,000;
☐
A bank as defined
in Section 3(a)(2) of the Securities Act whether acting in its
individual or fiduciary capacity; insurance company as defined in
Section 2(12) of the Securities Act, investment company registered
under the Investment Company Act of 1940 or a business development
company as defined in Section 2(1)(48) of that Act; or Small
Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958;
☐
A private business
development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940;
☐
An employee benefit
plan within the meaning of Title I of the Employee Retirement
Income Security Act of 1974, if the investment decision is to be
made by a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess
of $5,000,000;
☐
An entity in which
all of the equity owners are Accredited Investors under the above
paragraph.
9.
Financial
Information:
(a)
My net worth
(not including the
net value of my primary residence) is
$_________________
(b) My
gross annual income during the preceding two years
was:
$_________________
(2020)
$_________________
(2019)
(c) My
anticipated gross annual income in 2021 is $
_______________.
(d)
(1) ☐
(initial here) I have such
knowledge and experience in financial, tax and business matters
that I am capable of utilizing the information made available to me
in connection with the offering of the Series D Preferred
Convertible Shares to evaluate the merits and risks of an
investment in the Series D Preferred Convertible Shares, and to
make an informed investment decision with respect to the Series D
Preferred Convertible Shares. I do not desire to utilize a
Purchaser Representative in connection with evaluating such merits
and risks. I understand, however, that the Company may request that
I use a Purchaser Representative.
(2)
☐ (initial
here) I intend to use the services of the following named
person(s) as Purchaser Representative(s) in connection with
evaluating the merits and risks of an investment in the Series D
Preferred Convertible Shares and hereby appoint such person(s) to
act as my Purchaser Representative(s) in connection with my
proposed purchase of Series D Preferred Convertible
Shares.
List
name(s) of Purchaser Representative(s), if applicable.
__________________________________
10.
Except as indicated
below, any purchases of the Series D Preferred Convertible Shares
will be solely for my account, and not for the account of any other
person or with a view to any resale or distribution
thereof.
11.
I represent to you
that the information contained herein is complete and accurate and
may be relied upon by you. I understand that a false representation
may constitute a violation of law, and that any person who suffers
damage as a result of a false representation may have a claim
against me for damages. I will notify you immediately of any
material change in any of such information occurring prior to the
closing of the purchase of Series D Preferred Convertible Shares,
if any, by me.
Name (Please
Print): ______________________________
Signature
______________________________
Telephone
Number ______________________________
Social Security or
Tax I.D. Number ______________________________
Executed at:
______________________________
on this
________ day of _________________________________,
20________
-112-