Bergio International, Inc. - Quarter Report: 2019 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2019

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 333-150029

BERGIO INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware

27-1338257

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

12 Daniel Road E.

Fairfield, NJ 07004

(973) 227-3230

(Address of principal executive offices)

(Registrant’s telephone number,

including area code)

Securities registered pursuant to Section 12(g) of the Act:	Common Stock $.00001 par value
	(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer	[X]	Smaller reporting company	[X]
		Emerging growth company	[ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of August 30, 2019 there were 5,391,410,729 shares outstanding of the registrant’s common stock.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures about Market Risk	19
Item 4. Controls and Procedures	19
PART II - OTHER INFORMATION	20
Item 1. Legal Proceedings.	20
Item 1A. Risk Factors.	20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	20
Item 3. Defaults upon Senior Securities.	20
Item 4. Mine Safety Disclosure.	20
Item 5. Other Information.	20
Item 6. Exhibits.	20
SIGNATURES	21

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

BERGIO INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

			March 31, 2019		December 31, 2018
			(unaudited)
ASSETS:
Current assets:
		Cash	$	-	$	-
		Accounts receivable, net of allowance for doubtful accounts of $-0- at March 31, 2019 and $-0- at December 31, 2018		25,598		39,354
		Inventories		1,221,586		1,215,981
		Total current assets		1,247,184		1,255,335

	Property and equipment, net			149,548		173,057
	Operating lease right-of-use assets			73,733		-
	Investment in unconsolidated affiliate			5,828		5,828

	Total assets		$	1,476,293	$	1,434,220

LIABILITIES AND STOCKHOLDERS’ DEFICIT:
	Current Liabilities:
		Accounts payable and accrued liabilities	$	302,055	$	279,027
		Loan payable		132,260		125,000
		Convertible debt		419,568		419,568
		Advances from Principal Executive Officer and accrued interest		280,012		251,112
		Operating lease liabilities - current		10,678		-
		Total current liabilities		1,144,573		1,074,707

Long-term Liabilities:
		Deferred compensation - CEO- long-term portion		820,571		795,571
		Advances from Principal Executive Officer and accrued interest		179,429		204,429
		Operating lease liabilities - long-term		63,055		-
		Total long-term liabilities		1,063,055		1,000,000

		Total Liabilities		2,207,628		2,074,707

	Commitments and contingencies			-		-

	Stockholders' deficit
		Series A preferred stock - $0.00001 par value, 51 Shares Authorized, 51 and 51 shares issued and outstanding		-		-
		Common stock, $0.00001 par value; 6,000,000,000 shares authorized, 5,391,410,729 and 5,391,410,729 issued and outstanding, respectively		53,912		53,912
		Additional paid-in capital		7,931,013		7,931,013
		Accumulated deficit		(8,716,260)		(8,625,412)
		Total stockholders' deficit		(731,335)		(640,487)

	Total liabilities and stockholders' deficit		$	1,476,293	$	1,434,220

The accompanying notes are an integral part of these consolidated financial statements.

BERGIO INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended March 31,
	2019		2018

Sales, net	$	137,109	$	65,669

Cost of sales		38,946		52,911

Gross profit		98,163		12,758

Operating expenses:
Selling, general and administrative expenses		160,220		110,130
Total operating expenses		160,220		110,130

Income (loss) from operations		(62,057)		(97,372)

Other income (expense)
Interest expense		(28,791)		(27,462)
Gain on extinguishment of debt		-		-
Total other income (expense)		(28,791)		(27,462)

Loss before provision for income taxes		(90,848)		(124,834)

Provision for income taxes		-		-

Net loss	$	(90,848)	$	(124,834)

Net loss per common share:
Basic and Diluted	$	(0.00)	$	(0.00)

Weighted average common shares outstanding :
Basic and Diluted		5,391,410,725		4,706,380,724

The accompanying notes are an integral part of these consolidated financial statements.

BERGIO INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER’S DEFICIT

FOR THE PERIODS ENDED MARCH 31, 2019 AND 2018

(Unaudited)

	Common Stock			Additional Paid in		Accumulated		Total Stockholders’
	Shares	Amount		Capital		Deficit		Deficit

Balance at January 1, 2019	5,391,410,725	$	53,912	$	7,931,013	$	(8,625,412)	$	(640,487)

Net loss	-		-		-		(90,848)		(90,848)

Balance at March 31 ,2019	5,391,410,725	$	53,912	$	7,931,013	$	(8,716,260)	$	(731,335)

	Common Stock			Additional Paid in		Accumulated		Total Stockholders’
	Shares	Amount		Capital		Deficit		Deficit

Balance at January 1, 2018	4,622,047,391	$	46,218	$	7,881,784	$	(8,208,098)	$	(280,096)

Issuance of stock for debt conversion	230,000,000		2,300		13,340		-		15,640

Net loss	-		-		-		(124,834)		(124,834)

Balance at March 31 ,2018	4,852,047,391	$	48,518	$	7,895,124	$	(8,332,932)	$	(389,290)

	Preferred Stock
	Shares	Amount
Balance at January 1, 2019	51	$ -

	-	-

Balance at March 31, 2019	51	$ -

	Preferred Stock
	Shares	Amount
Balance at January 1, 2018	51	$ -

	-	-

Balance at March 31, 2018	51	$ -

The accompanying notes are an integral part of these consolidated financial statements.

BERGIO INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2019		2018
Operating activities:
Net loss	$	(90,848)	$	(124,834)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-controlling interest		-		-
Depreciation and amortization		26,609		25,285
Amortization of debt discount and deferred financing costs		-		-
Gain on extinguishment of debt		-		-
Change in fair value of derivative liabilities		-		-
Provision for bad debts		-		-

Changes in operating assets and liabilities:
Decrease in accounts receivable		13,756		51,965
(Increase) decrease in inventory		(5,605)		(18,083)
Increase in deferred compensation		25,000		40,986
Increase in accounts payable and accrued liabilities		23,028		8,020
Net cash used in operating activities		(8,060)		(16,661)

Investing activities:
Capital expenditures		(3,100)		-
Net used in investing activities		(3,100)		-

Financing activities:
Advances of bank lines of credit, net		-		(14,700)
Proceeds from loans		7,260		-
Advances from Principal Executive Officer, net		3,900		9,640
Net used in financing activities		11,160		(5,060)

Net change in cash		-0-		(21,721)

Cash - beginning of periods		-0-		21,721

Cash - end of periods	$	-0-	$	-0-

Supplemental disclosures of cash flow information:
Cash paid for interest	$	-	$	-
Cash paid for income taxes	$	-	$	-

Supplemental disclosure of non-cash investing and financing activities:
Issuance of common stock for convertible debt and accrued interest	$	-	$	16,640

Supplemental disclosure of non-cash financing activities:

Upon adoption of ASC 842, Leases, on January 1, 2019 the Company recorded $75,340 of right-use assets and related operating leases liabilities.

The accompanying notes are an integral part of these consolidated financial statements.

BERGIO INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 - Nature of Operations and Basis of Presentation

Bergio International, Inc. (the “Company”) was incorporated in the State of Delaware on July 24, 2007 under the name Alba Mineral Exploration, Inc. On October 21, 2009, as a result of a Share Exchange Agreement, the corporation’s name was changed to Bergio International, Inc. The Company is engaged in the product design, manufacturing, distribution of fine jewelry primarily in the United States and is headquartered in Fairfield, New Jersey.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary consisting of normal recurring adjustments to present fairly the financial position of the Company as of March 31, 2019, the results of operations for the three months ended March 31, 2019 and 2018, and statements of cash flows for the three months ended March 31, 2019 and 2018. These results are not necessarily indicative of the results to be expected for the full year. The financial statements have been prepared in accordance with the requirements of Form 10-Q and consequently do not include disclosures normally made in an Annual Report on Form 10-K. The December 31, 2018 balance sheet included herein was derived from the audited financial statements included in the Company’s Annual Report on Form 10-K as of that date. Accordingly, the financial statements included herein should be reviewed in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission (“SEC”) on August 21, 2019 “Annual Report”).

Note 2 - Going Concern

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern.

The Company has suffered recurring losses, and has an accumulated deficit of $8,716,260 as of March 31, 2019. As of March 31 2019, the Company had $419,568 in convertible debentures which are currently due and the Company is currently negotiating terms with the holders of these debentures. At March 31, 2019, the Company also had a stockholders’ deficit of $731,335. These factors raise substantial doubt about the Company's ability to continue as a going concern. The recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheet is dependent upon continued operations of the Company, which in turn, is dependent upon the Company's ability to raise capital and/or generate positive cash flows from operations.

It is our intention to establish Bergio as a holding company for the purpose of establishing retails stores worldwide. Our branded product lines are products and/or collections designed by our designer and CEO Berge Abajian and will be the centerpiece of our retail stores. We also intend to complement our own quality-designed jewelry with other products and our own specially-designed handbags. This is in line with our strategy and belief that a brand name can create an association with innovation, design and quality which helps add value to the individual products as well as facilitate the introduction of new products. It is our intention to open elegant stores in “high-end” areas and provide excellent service in our stores which will be staffed with knowledgeable professionals. We also intend to sell our products on a wholesale basis to limited customers.

These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

BERGIO INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 3 - Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, and include the Company and its wholly-owned subsidiary. All significant inter-company accounts and transactions have been eliminated.

During the three months ended March 31, 2019, there have been no other material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s Annual Report.

The Company evaluated subsequent events, which are events or transactions that occurred after March 31, 2019 through the issuance of the accompanying financial statements.

Note 4 - Net Loss per Share

Basic earnings (loss) per share includes no dilution and is computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive earnings per share reflect the potential dilution of securities that could occur through the effect of common shares issuable upon the exercise of stock options, warrants and convertible securities. Basic net loss per share equaled the diluted loss per share for the three months ended March 31, 2019 and 2018, since the effect of shares potentially issuable upon the exercise or conversion was anti-dilutive. Equity instruments that may dilute earnings per share in the future are listed in Note 7 below. For the three months ended March 31, 2019, 6,162,876,190 shares issuable upon the conversion of convertible debt were not included in the computation of diluted net loss because their inclusion would be anti-dilutive. For the three months ended March 31, 2018, 6,423,092,857 shares issuable upon the conversion of convertible debt were not included in the computation of diluted net loss because their inclusion would be anti-dilutive.

The following table sets forth the computation of earnings per share:

	Three Months Ended March 31,
	2019		2018
Basic net loss per share computation:
Net loss	$	(90,848)	$	(124,834)
Weighted-average common shares outstanding		5,391,410,725		4,706,380,724
Basic net loss per share	$	(0.00)	$	(0.00)

Diluted net loss per share computation:
Net loss	$	(90,848)	$	(124,834)
Weighted-average common shares outstanding		5,391,410,525		4,706,380,724
Incremental shares attributable to the shares issuable upon conversion of convertible debt		-		-
Total adjusted weighted-average shares		5,391,410,525		4,706,380,724
Diluted net loss per share	$	(0.00)	$	(0.00)

BERGIO INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5 - New Authoritative Accounting Guidance

The Financial Accounting Standards Board “FASB” issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606 which superseded nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Topic 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others. The impact of the adoption of ASU 2014-09 on the Company's condensed consolidated financial statements is as follows:

The Company's revenue is primarily generated from the sale of finished products to customers (primarily through the retail, e-commerce or wholesale channels). The Company's performance obligations underlying such sales, and the timing of revenue recognition related thereto, remain substantially unchanged following the adoption of this ASU.

In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard is effective on January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company adopted the new standard on January 1, 2019 and use the effective date as the date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company elects the ‘package of practical expedients’, which permits the Company not to reassess under the new standard prior conclusions about lease identification, lease classification and initial direct costs. The Company determined that this standard will have a material effect on the Company’s financial statements. While the Company continues to assess all of the effects of adoption, the Company currently believes the most significant effects relate to the recognition of new ROU assets and lease liabilities on the Company’s balance sheet for the Company’s real estate operating leases. On adoption, the Company recognized additional operating lease liabilities of $75,340 with corresponding ROU assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases.

No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s condensed consolidated financial statements.

BERGIO INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 6 - Convertible Debt

Fife, Typenex and Iliad

In December 2012, the Company entered into a $325,000 convertible note with Fife consisting of three tranches to be drawn down with the first tranche totaling $125,000, including $25,000 in loan costs and additional two tranches totaling $200,000. The note bears a 5% annual interest rate and matures eighteen months from the date of issuance. The note is convertible into shares of the Company’s common stock based on 70% of the average of the three lowest closing prices of the common stock for the proceeding 15 consecutive trading days immediately prior to the conversion. During 2013, the conversion price was fixed at $0.005 per share. As of December 31, 2012, the Company only drew down the first tranche totaling $125,000. On February 11, 2013, April 5, 2013, April 23, 2013, and July 1, 2013, the Company drew down an additional $250,000.

On June 5, 2014, the Company, Fife, Typenex and Iliad Research and Trading, LLP (“Iliad”) entered into an Assignment and Assumption Agreement and Note Purchase Agreement (the “Note Purchase Agreement”) whereby Iliad acquired all of Fife’s and Typenex’s right, title, obligations and interest in, to and arising under the Company Notes (as defined in the Note Purchase Agreement) and the Note Purchase Documents (as defined in the Note Purchase Agreement).

On October 17, 2014, the Company entered into a financing arrangement with Iliad to provide additional financing in the amount of up to $450,000 through the issuance of a Secured Convertible Promissory Note (the “Note”). The Company agreed to cover Iliad’s legal, accounting and other related fees in the amount of $5,000, which is included in the principal balance of the Note. The Note will accrue interest at the rate of 8% per annum until the Note is paid in full. Monies are to be drawn in eight tranches with the initial tranche in the amount of $105,000, and the remaining balance of $350,000 in seven tranches of $50,000 each. The Company drew down the initial tranche on October 17, 2014. The Note has a maturity date of July 17, 2016. The Company continues to negotiate with the lender.

Beginning six months after October 17, 2014 and on the same day each month thereafter, the Company shall make an installment payment, based upon the unpaid balance. At the option of the Company, payments may be made in cash or by converting the installment amount into shares of the Company’s common stock. The conversion price is equal to the lesser of (i) $0.0005 per share and (ii) 67.5% of the average of the three lowest closing bid prices in the 15 trading days immediately preceding the conversion. The Company has the right to prepay the Note at 135% of the outstanding balance at the time of prepayment. During the three months ended March31, 2019, there were no conversions. The outstanding balances at March 31, 2019 and December 31, 2018 were $19,393 and $19,393, respectively with accrued interest of $1,878 and $1,457 at March 31, 2019 and December 31, 2018, respectively.

During the year ended December 31, 2014, the Company drew down an additional $314,703. During the three months ended March 31, 2019, there were no conversions. The outstanding balances at March 31, 2019 and December 31, 2018 were $329,175 and $329,175 respectively, with accrued interest of $116,619 and $104,823 at March 31, 2019 and December 31, 2018, respectively.

BERGIO INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 6 - Convertible Debt (continued)

Vis Vires Group, Inc.

On March 11, 2015, the Company entered into an 8% convertible note in the amount of $38,000 with Vis Vires Group, Inc. (“Vis Vires”). The principal and accrued interest is payable on or before November 6, 2015. At the option of the Company, but not before six months from the date of issuance, the holder may elect to convert all or part of the convertible into the Company’s common stock. The note is convertible into shares of the Company’s common stock at a price equal to 60% of the average of the three lowest trading prices during the 10 days prior to the date of conversion or $0.00009, whichever is greater. During the three months ended March 31, 2019, there were no conversions. The Company is currently in default, and interest accrues at the default interest rate of 22%. The outstanding balance at March 31, 2019 and December 31, 2018 was $38,000 with accrued interest of $12,475 and $12,051 at March 31, 2019 and December 31, 2018, respectively. The Company is currently negotiating an extension to this note.

On April 30, 2015, the Company entered into an 8% convertible note in the amount of $33,000 with Vis Vires. The principal and accrued interest is payable on or before November 6, 2015. At the option of the Company, but not before six months from the date of issuance, the holder may elect to convert all or part of the convertible into the Company’s common stock. The note is convertible into shares of the Company’s common stock at a price equal to 60% of the average of the three lowest trading prices during the 10 days prior to the date of conversion or $0.00009, whichever is greater. During the three months ended March 31, 2019, there were no conversions. The Company is currently in default, and interest accrues at the default interest rate of 22%. The outstanding balance at March 31, 2019 and December 31, 2018 was $33,000 with accrued interest of $10,304 and $9,644 at March 31, 2019 and December 31, 2018, respectively. The Company is currently negotiating an extension to this note.

As of March 31, 2019 and December 31, 2018, total convertible debt was $419,568 and $419,568, respectively.

Note 7 - Advances from Principal Executive Officer and Accrued Interest

The Company also receives periodic advances from its principal executive officer based upon the Company’s cash flow needs. At March 31, 2019 and December 31, 2017 $459,441 and $455,541, respectively, was due to such officer, including accrued interest. Interest expense is accrued at an average annual market rate of interest which was 5.25% and 5.25% at March 31, 2019 and December 31, 2018, respectively. Interest expense due to such officer was $15,491 for the three months ended March 31, 2019 as compared to $10,118 for the three months ended March 31, 2018, respectively. Accrued interest was $165,484 and $149,993 at March 31, 2019 and December 31, 2018, respectively. No terms for repayment have been established. As a result, the amount is classified as a current liability.

On September 30, 2018, the Principal Executive Office signed an agreement with the Company extending payment of $179,429 of this amount due until January 31, 2020 as a result of the financial situation of the Company. As such, the $179,429 was classified as a long-term liability and $280,012 was classified as a current liability at March 31, 2019.

Effective February 28, 2010, the Company entered into an employment agreement with its CEO. The agreement, which is for a five year term, provides for an initial base salary of $175,000 per year with a 3% annual increase thereafter (the “Base Salary”). The CEO is also entitled to certain bonuses based on net profits before taxes and other customary benefits, as defined in the agreement. In addition, since it is understood that the Company is employing the CEO during a time of economic decline throughout the U.S. and at times and from time to time, the Company may not be in a position to pay the full amount of Base Salary owed the CEO it is understood and agreed to by the Board, that as long as the Company is unable to pay the CEO the full amount of his Base Salary that the Board shall issue to him, from time to time, an amount of shares that will allow him to remain in possession of fifty-one percent (51%) of the Company’s then outstanding shares of common stock. Such issuances shall be made to the CEO at any time when his total share holdings are reduced to an amount less than fifty-one percent (51%) as a result of issuance of shares of common stock made on behalf of the Company.

BERGIO INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 7 - Advances from Principal Executive Officer and Accrued Interest (continued)

Effective September 1, 2011, the Company and CEO entered into an Amended and Restated Employment Agreement (the “Amended Agreement”) which primarily retains the term and compensation of the original agreement. The Amended Agreement, however, removes the section which previously provided for the issuance of Company common stock to the CEO, from time to time, when the Company is unable to pay the CEO the full amount of his Base Salary (as defined in the Amended Agreement) which would allow the CEO to maintain a fifty-one percent (51%) share of the Company’s outstanding common stock. However, the CEO does have the right to request all or a portion of his unpaid Base Salary be paid with the Company’s restricted common stock. In addition, the Amended Agreement provides for the issuance of 51 shares of newly authorized Series A Preferred Stock to be issued to the CEO. As defined in the Certificate of Designations, Preferences and Rights of the Series A Preferred Stock, each share of Series A Preferred Stock has voting rights such that the holder of 51 shares of Series A Preferred Stock will effectively maintain majority voting control of the Company. Effective November 3, 2011, the CEO notified the Company that for the one year period, retroactive from April 1, 2011, through December 31, 2012, he would reduce his Base Salary to $100,000. The reduction in base compensation was subsequently extended to December 31, 2013. The CEO is currently deferring his salary to conserve cash. Deferred wages due to the CEO amounted to $820,571 and $795,571 for the periods ended March 3, 2019 and December 31, 2018, respectively.

On September 30, 2018, the Principal Executive Officer signed an agreement with the Company extending payment of $820,571 until January 31, 2020 as a result of the financial situation of the Company. As such, the $820,571 was classified as a long-term liability.

Effective January 1, 2019, the Principal Executive Officer agreed to reduce his salary to $100,000 as a result of the financial situation of the Company.

Note 8 - Loan Payable

The Company receives periodic advances from an investor based upon the Company’s cash flow needs. There is no written loan agreement between the Company and the lender as the Company is negotiating the terms of the agreement. No repayment terms have yet been established. As a result, the amount is classified as a current liability. The balances due to this investor were $136,260 at March 31, 2019 and $125,000 at December 31, 2018.

Note 9 - Litigation

We are currently not 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.

Note 10 - Operating Lease Liability

The Company leases retail space at two different locations. One lease has monthly payments from $1,350 to $1,665 which expire in May 2024. The second lease has a contingent rental based on 10% of sales. Contingent rentals are not included in operating lease liabilities. The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The Company used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date. The Company estimated its incremental borrowing rate based on its credit quality, line of credit agreement and by comparing interest rates available in the market for similar borrowings. The Company used a discount rate of 10% at March 31, 2019.

BERGIO INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 10 - Operating Lease Liability (continued)

The following table reconciles the undiscounted future minimum lease payments (displayed by year in aggregate) under non-cancelable operating leases with terms more than one year to the total operating lease liabilities on the consolidated balance sheet as of March 31, 2019:

2019 remainder	$	12,670
2020		17,460
2021		18,180
2022		18,900
2023 and thereafter		26,360
Total minimum lease payments		93,570
Less amounts representing interest		(19,837)
Present value of net minimum lease payments		73,733
Less current portion		(10,678)
Long-term capital lease obligation	$	63,055

Disclosures related to periods prior to adoption of ASU 2016-02

The Company adopted ASU 2016-842 using the retrospective method at January 1, 2019 as noted in Note 5”New Authoritative Accounting Guidance”. As required, the following disclosure is provided for periods prior to adoption. Minimum operating lease commitments as of December 31, 2018 that have initial or remaining lease terms in excess of one year as follows:

	Years Ended December 31, 2018
2019	5,400(1)

(1)The above amount does not include contingent rentals which may be paid under lease agreement with Ocean Resort Casino. This rental is based upon 10% of gross sales at this location.

(2)Lease renewal for the first retail space did not get executed until April 2019, and, as such, rental obligations are not included in the above amounts as of December 31, 2018.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This quarterly report on Form 10-Q and other reports (collectively, the “Filings”) filed by Bergio International, Inc. (“Bergio” or the “Company”) from time to time with the U.S. Securities and Exchange Commission (the “SEC”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks contained in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on xxxxxx, relating to the Company’s industry, the Company’s operations and results of operations, and any businesses that the Company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

Plan of Operation

The Bergio brand is our most important asset. The Bergio brand is associated with high-quality, handcrafted and individually designed pieces with European sensibility, Italian craftsmanship and a bold flair for the unexpected. Bergio, is one of the most coveted brands of fine jewelry. Established in 1995, Bergio’s signature innovative design, coupled with extraordinary diamonds and precious stones, earned the company recognition as a highly sought-after purveyor of rare and exquisite treasures from around the globe.

When designer and CEO, Berge Abajian, creates a collection, he looks well beyond the drawing board. Berge focuses on the woman who will ultimately wear his pieces, bringing to creation a magnificent piece of jewelry that reflects the beauty and vitality a woman possesses. Bergio creations are a seamless blend of classic elegance and subtle flair, adding to a woman’s charm while never overpowering her.

It is our intention to establish Bergio as a holding company for the purpose of establishing retails stores worldwide. Our branded product lines are products and/or collections designed by our designer and CEO Berge Abajian and will be the centerpiece of our retail stores. We also intend to complement our own quality-designed jewelry with other products and our own specially designed handbags. This is in line with our strategy and belief that a brand name can create an association with innovation, design and quality which helps add value to the individual products as well as facilitate the introduction of new products.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Plan of Operation (continued)

It is our intention to open elegant stores in “high-end” areas and provide excellent service in our stores which will be staffed with knowledgeable professionals.

We also intend to sell our products on a wholesale basis to limited customers.

We have spent over $3 million in branding the Bergio name through tradeshows, trade advertising, national advertising and billboard advertising since launching the line in 1995.

Our products consist of a wide range of unique styles and designs made from precious metals such as, gold, platinum, and Karat gold, as well as diamonds and other precious stones. We currently design and produce approximately 100 to 150 product styles. Current retail prices for our products range from $400 to $200,000. We have manufacturing control over our line as a result of having a manufacturing facility in New Jersey as well as subcontracts with facilities located in Italy.

On March 5, 2014, the Company formed a wholly-owned subsidiary called Crown Luxe, Inc. in the State of Delaware (“Crown Luxe”). Crown Lux was established to operate the Company’s first retail store, which was opened in Bergen County, New Jersey in the fourth quarter of 2014.

During the fall of 2018, we opened our second retail store at the new Ocean Resort Casino in Atlantic City, New Jersey. We are also contemplating the opening of new stores in future.

The Company has instituted various cost saving measures to conserve cash and has worked with its debtors in an attempt to negotiate the debt terms. The Company has been also investigating various strategies to increase sales and expand its business. The Company is in negotiations with some potential partners, but, at this time, there is nothing concrete, but the Company remains positive about its prospects. However, there is no assurance that the Company will be successful in its endeavors or that it will be able to increase its business.

Our future operations are contingent upon increasing revenues and raising capital for on-going operations and expansion of our product lines. Because we have a limited operating history, you may have difficulty evaluating our business and future prospects.

Results of Operations

Overview

	Three Months Ended
	March 31, 2019	March 31, 2018	Increase (Decrease)	Percent Increase (Decrease)
Sales, net	$ 137,109	$ 65,669	$ 71,440	108.8%

Gross profit	$ 98,163	$ 12,758	$ 85,405	669.4%

Gross profit as a % of sales	71.6%	19.4%

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Results of Operations (continued)

Overview (continued)

This was a good first quarter for the Company as retail sales grow with the addition of our new store at the Ocean Resort in Atlantic City, NJ. The Company continues to position itself for the future to take advantage of the Bergio brand and establish a chain of retail stores worldwide. Our branded product lines are products and/or collections designed by our designer and CEO Berge Abajian and will be the centerpiece of our retail stores. We also intend to complement our own quality-designed jewelry with other products and our own specially-designed handbags. This is in line with our strategy and belief that a brand name can create an association with innovation, design and quality which helps add value to the individual products as well as facilitate the introduction of new products. It is our intention to open elegant stores in “high-end” areas and provide excellent service in our stores which will be staffed with knowledgeable professionals. Our initial store in northern New Jersey has not done as well as we had hoped and the wholesale market has also not been favorable as we spend our limited resources in building our high-end retail operations.

The Company continues to pursue additional financing opportunities. Financing discussions have been taking place with various parties, but the Company has no firm commitment from any party to provide additional funding at this time. Moreover, there is no assurance that sufficient funding will be available, or if available, that its terms will be favorable to the Company. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Sales

Net sales for the three months ended March 31, 2019 increased $71,440 (108.8%) to $137,109 as compared to $65,669 for the three months ended March 31, 2018. This increase is primarily to the growth in our retail operations related to the opening of our new store at the Ocean Resort in Atlantic City, NJ.

Gross Profit

Gross profit for the three months ended March 31, 2019 increased $85,405 (669.4%) to $98,163 as compared to $12,758 for the three months ended March 31, 2018. This increase primarily is a result of the high sales attributed to the increase in our retail operations as well as the higher margins.

Selling, General & Administrative Expenses

Total selling, general and administrative expenses increased $50,090 (45.5%) to $160,220 for the three months ended March 31, 2019 as compared to $110,130 for the three months ended March 31, 2018. This increase in mainly attributed to selling and administrative expenses associated with the opening of the new store at Ocean Resort in Atlantic City, NJ as well as an increase in professional fees.

Loss from Operations

As a result of the above, we had a loss from operations of $62,057 for the three months ended March 31, 2019 as compared to a loss from operations of $97,372 for the three months ended March 31, 2018.

Other Expense

For the three ended March 31, 2019, the Company had Other Expense of $28,791 as compared to Other Expense of $27,462 for the three months ended March 31, 2018 as a result of an increase in interest expense.

Net Loss

As a result of the above, we had a net loss of $90,848 for the three months ended March 31, 2019 as compared to a net loss of $124,834 for the three months ended March 31, 2018.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Liquidity and Capital Resources

The following table summarizes working capital at September 30, 2018, compared to December 31, 2017:

	March 31, 2019		December 31, 2018		Increase/ (Decrease)

Current Assets	$	1,247,184	$	1,255,335	$	(8,151)

Current Liabilities	$	1,144,573	$	1,074,707	$	69,866

Working Capital	$	102,611	$	180,628	$	(78,017)

Working capital was $102,611 at March 31, 2019 as compared to $180,628 at December 31, 2018. This decrease in working capital is primarily attributed to an increase in accounts payable and accrued liabilities and Advances from Principal Executive Officer and accrued interest.

During the three months ended March 31, 2019, the Company’s principal sources and uses of funds were as follows:

Cash used in operating activities: For the three months ended March 31, 2019, the Company used $8,060 in cash for operations as compared to using $16,661 in cash for operations for the three months ended March 31, 2018. This decrease in cash used in operations is primarily attributed to lower operating loss offset mostly by the lower change in accounts receivable.

Cash provided by investing activities: For the three months ended March 31, 2019, the Company used $3,100 in cash for investing activities as compared to using no cash in investing activities for the three months ended March 31, 2018 as a result of the small purchase of capital assets.

Cash used in financing activities: Net cash provided by financing activities for the three months ended March 31, 2019 was $11,160 as compared to using $5,060 for the three months ended March 31, 2018. This increase is primarily the result of an increase in loans payable and advances from the Principal Executive Officer.

Our indebtedness is comprised of loans payable, convertible debt, and advances from a stockholder/officer intended to provide capital for the ongoing manufacturing of our jewelry line, in advance of receipt of the payment from our retail distributors.

Convertible Debt

From time to time the Company enters into certain financing agreements for convertible debt. For the most part, the Company settles these obligations with the Company’s common stock. As of March 31, 2019, the Company had outstanding convertible debt in the amount of $419,568.

Satisfaction of Our Cash Obligations for the Next 12 Months

A critical component of our operating plan impacting our continued existence is to efficiently manage our retail operations and successfully develop new lines through our Company or through possible acquisitions and/or mergers as well as opening new retail stores. Our ability to obtain capital through additional equity and/or debt financing, and joint venture partnerships will also be important to our expansion plans. In the event we experience any significant problems assimilating acquired assets into our operations or cannot obtain the necessary capital to pursue our strategic plan, we may have to reduce the growth of our operations. This may materially impact our ability to increase revenue and continue our growth.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Satisfaction of Our Cash Obligations for the Next 12 Months (continued)

The Company has suffered recurring losses, and has an accumulated deficit of $8,679,360 as of March 31, 2019. As of March 31 2019, the Company had $402,768 in convertible debentures which are currently due and the Company is currently negotiating terms with the holders of these debentures. At March 31, 2019, the Company also had a stockholders’ deficit of $694,435. These factors raise substantial doubt about the Company's ability to continue as a going concern. The recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheet is dependent upon continued operations of the Company, which in turn, is dependent upon the Company's ability to raise capital and/or generate positive cash flows from operations.

Research and Development

We are not anticipating significant research and development expenditures in the near future.

Expected Purchase or Sale of Plant and Significant Equipment

We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.

Significant Changes in the Number of Employees

We currently have 2 full-time employees and 1 part-time employee. Our current employees are sales and marketing personnel. No personnel are covered by a collective bargaining agreement. We use the services of independent consultants and contractors from time to time when needed. We will increase the number employees as we open new stores.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, results or operations, liquidity, capital expenditures or capital resources that is deemed material.

Critical Accounting Policies

Our critical accounting policies are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report. There have been no changes in our critical accounting policies. Our significant accounting policies are described in our notes to the 2017 consolidated financial statements included in our Annual Report.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We do not hold any derivative instruments and do not engage in any hedging activities.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports we file pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”), to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide a reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Management designed the disclosure controls and procedures to provide reasonable assurance of achieving the desired control objectives.

We carried out an evaluation, under the supervision and with the participation of our management, including our PEO and PFO, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based upon that evaluation, the PEO and PFO concluded that the Company’s disclosure controls and procedures were not effective.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Item 1A. Risk Factors.

We believe there are no changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on August 21, 2019.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of the Company’s equity securities during the quarter ended March 31, 2019.

Item 3. Defaults upon Senior Securities.

There has been no default in payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company.

Item 4. Mine Safety Disclosure.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

Exhibit No.		Description
31.1		Certification of Principal Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of 2002*

31.2		Certification of Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of 2002*

32.1		Certification of Principal Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2		Certification of Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101.INS		XBRL Instance Document *
101.SCH		XBRL Taxonomy Extension Schema *
101.CAL		XBRL Taxonomy Extension Calculation Linkbase *
101.DEF		XBRL Taxonomy Extension Definition Linkbase *
101.LAB		XBRL Taxonomy Extension Label Linkbase *
101.PRE		XBRL Taxonomy Extension Presentation Linkbase *

* Filed herewith

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BERGIO INTERNATIONAL, INC.


Date: August 30, 2019	By:	/s/ Berge Abajian
		Name: Berge Abajian
		Title: Chief Executive Officer
		(Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer)