Freedom Internet Group Inc. - Quarter Report: 2021 July (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: July 31, 2021

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

Commission File Number: 000-56149

Freedom Internet Group Inc.

(Exact name of registrant as specified in its charter)

Puerto Rico	66-0910894
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

151 Calle San Francisco, Suite 200

San Juan, Puerto Rico

00901

(Address of principal executive offices)

(Zip Code)

855-422-4200

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes þ 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 þ		Smaller reporting company ☑
		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 þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 11,132,208 shares of common stock outstanding and subscribed as of September 13, 2021.

Freedom Internet Group Inc.

Table of Contents

	Page
PART I – FINANCIAL INFORMATION	F-1
Item 1. Financial Statements:	F-1
Condensed Balance Sheets (unaudited)	F-1
Condensed Statements of Operations (unaudited)	F-2
Condensed Statements of Stockholders’ Equity (Deficit) (unaudited)	F-3
Condensed Statements of Cash Flows (unaudited)	F-4
Notes to Condensed Financial Statements (unaudited)	F-5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3. Quantitative and Qualitative Disclosures About Market Risk	13
Item 4. Controls and Procedures	13
PART II – OTHER INFORMATION	14
Item 1. Legal Proceedings.	14
Item 1A. Risk Factors.	14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3. Defaults Upon Senior Securities	16
Item 4. Mine Safety Disclosures	16
Item 5. Other Information.	16
Item 6. Exhibits	16
SIGNATURES	17

PART I – FINANCIAL INFORMATION

FREEDOM INTERNET GROUP INC.

CONDENSED BALANCE SHEETS

As of July 31, 2021 (unaudited) and October 31, 2020

	July 31, 2021 (Unaudited)	October 31, 2020
ASSETS
Cash and cash equivalents	`$585,880`	`$1,035,120`
Prepaid expenses	`2,667`	`16,667`
Cryptocurrencies	`148,362`	`-`
Total Current Assets	`736,909`	`1,051,787`

Royalty interests, net of accumulated amortization of $84,605 and $44,500, respectively	`771,070`	`686,175`

Total assets	`$1,507,979`	`$1,737,962`

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Accounts payable and accrued liabilities	`$24,909`	`$26,474`
Total current liabilities	`24,909`	`26,474`

Non-current Liabilities
PPP loans	`-`	`11,300`

Total Liabilities	`24,909`	`37,774`

COMMITMENTS AND CONTINGENCIES

Stockholders’ Equity
Preferred Stock; $0.01 par value; 5,000,000 shares authorized; none issued and outstanding	`-`	`-`
Common stock; $0.01 par value; 200,000,000 shares authorized, 9,230,400 shares issued and outstanding	`92,304`	`92,304`
Common stock subscribed	`19,017`	`19,017`
Additional paid in capital	`2,240,447`	`2,240,447`
Accumulated deficit	`(868,698)`	`(651,580)`
Total Stockholders’ Equity	`1,483,070`	`1,700,188`
Total Liabilities and Stockholders’ Equity	`$1,507,979`	`$1,737,962`

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

F-1

FREEDOM INTERNET GROUP, INC.

CONDENSED STATEMENTS OF OPERATIONS

For the three and nine months ended July 31, 2021 and 2020

(unaudited)

	For the Three Months Ended		For the Nine Months Ended
	July 31,		July 31,
	2021	2020	2021	2020

Revenues
Royalties (net)	$ 17,353	$ 40,103	$ 59,723	$ 61,636

Operating Expenses
Advertising	46	9,487	7,014	12,032
Professional and consulting	42,095	27,710	133,349	183,743
Salaries and payroll taxes	29,931	29,931	90,772	77,910
Rent expense	75	125	225	575
Amortization of royalty interests	14,250	15,417	40,105	42,625
Other expenses	6,681	696	20,902	17,565
Total Operating Expenses	93,078	83,366	292,367	334,450

Loss from operations	(75,725)	(43,263)	(232,644)	(272,814)

Other Income
Interest expense	-	-	-	(48)
Interest income	3,541	181	3,899	6,488
Other	70	6,736	327	7,331
Forgiveness of PPP Loans	11,300	-	11,300	-
Total other income	14,911	6,917	15,526	13,771
Net Loss	$ (60,814)	$ (36,346)	$ (217,118)	$ (259,043)

Net loss per common share - basic and diluted	$ (0.01)	$ (0.00)	$ (0.02)	$ (0.03)

Weighted average shares outstanding - basic	9,230,400	9,230,400	9,230,400	9,230,400
Weighted average shares outstanding - diluted	9,230,400	9,230,400	9,230,400	9,230,400

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

F-2

FREEDOM INTERNET GROUP INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY(DEFICIT)

For the three and nine months ended July 31, 2020 and for the three and nine months ended July 31, 2021

(unaudited)

	Preferred Stock		Common Stock		Common Stock	Additional	Accumulated	Total Stockholders’
	Shares	Amount	Shares	Amount	Subscribed	Paid-in Capital	Deficit	Equity (Deficit)
Balance November 1, 2019	`-`	`$-`	`9,230,400`	`$92,304`	`$-`	`$(61,536)`	`$(167,700)`	`$(136,932)`

Net loss	`-`	`-`	`-`	`-`	`-`	`-`	`(126,290)`	`(126,290)`

Balance January 31, 2020 (unaudited)	`-`	`-`	`9,230,400`	`92,304`	`-`	`(61,536)`	`(293,990)`	`(263,222)`

Net loss							`(96,410)`	`(96,410)`

Balance, April 30, 2020 (unaudited)	`-`	`$-`	`9,230,400`	`$92,304`		`$(61,536)`	`$(390,400)`	`$(359,632)`

Common stock – subscribed in private placement					`14,375`			`14,375`

Warrants issued						`625`		`625`

Net loss							`(36,346)`	`(36,346)`

Balance, July 31, 2020 (unaudited)	`-`	`$-`	`9,230,400`	`$92,304`	`$14,375`	`($60,911)`	`$(426,746)`	`$(380,978)`

Balance November 1, 2020	`-`	`$-`	`9,230,400`	`92,304`	`19,017`	`2,240,447`	`(651,580)`	`1,700,188`

Net loss	`-`	`-`	`-`	`-`	`-`	`-`	`(48,297)`	`(48,297)`

January 31, 2021 (unaudited)	`-`	`-`	`9,230,400`	`92,304`	`19,017`	`2,240,447`	`(699,877)`	`1,651,891`

Net loss							`(108,007)`	`(108,007)`

Balance, April 30, 2021 (unaudited)	`-`	`$-`	`9,230,400`	`$92,304`	`$19,017`	`$2,240,447`	`$(807,884)`	`$1,543,884`

Net loss							`(60,814)`	`(60,814)`

Balance, July 31, 2021 (unaudited)	`-`	`$-`	`9,230,400`	`$92,304`	`$19,017`	`$2,240,447`	`$(868,698)`	`$1,483,070`

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

F-3

FREEDOM INTERNET GROUP, INC.

CONDENSED STATEMENTS OF CASH FLOWS

For the nine months ended July 31, 2021 and 2020

(unaudited)

	For the nine months ended July 31, 2021	For the nine months ended July 31, 2020
Cash flows from operating activities:
Net loss	$ (217,118)	$ (259,043)
Adjustments to reconcile net loss to net cash used in operating activities:
Other income – forgiveness of PPP loans	(11,300)	-
Amortization of royalty interests	40,105	42,625
Due from related party	-	2,839
Prepaid expenses	14,000	5,000
Accounts payable and accrued liabilities	(1,565)	15,626
Net cash used in operating activities	(175,878)	(192,953)

Cash flows from investing activities
Purchase of royalty interest	(125,000)	(430,000)
Purchase of cryptocurrencies	(148,362)	-
Net cash used in investing activities	(273,362)	(430,000)

Cash flows from financing activities
Proceeds from paycheck protection program	-	7,400
Stock subscriptions	-	14,375
Sale of warrants	-	625
Net cash provided by financing activities	-	22,400

Net change in cash and cash equivalents	(449,240)	(600,553)
Cash and cash equivalents, at beginning of period	1,035,120	1,179,497
Cash and cash equivalents, at end of period	$ 585,880	$ 578,944

Supplemental cash flow information:
Interest paid	$ -	$ 48
Income taxes paid	$ -	$ -

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

F-4

FREEDOM INTERNET GROUP INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

On November 15, 2018, (commencement of operations) Freedom Internet Group Inc. (the “Company” or “We”) was organized in Puerto Rico to provide Internet-focused entrepreneurs with business consulting services, centralized management services and revenue-based financing. The Company is engaged in the business of acquiring, holding and managing royalty interests derived from Internet based businesses, referred to as operators. Royalty interests are passive (non-operating) agreements that provide the Company with contractual rights to revenue produced from operators.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. The accompanying interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information under Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the Company’s opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine-months ended July 31, 2021, are not necessarily indicative of the results for the full year. While management of the Company believes that the disclosures presented herein are adequate and not misleading, these interim financial statements should be read in conjunction with the audited financial statements and the footnotes thereto for the period ended October 31, 2020.

The accounting and reporting policies of the Company conform with accounting principles generally accepted in the United States of America, and, as such, include amounts based on judgments, estimates, and assumptions made by management that affect the reported amounts of assets and liabilities and 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 from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Royalty Interests

Royalty interests are passive (non-operating) agreements that provide us with contractual rights to a percentage of revenue produced from companies we provide funds to. The Company amortizes the cost of royalty interests over the estimated life of the cash flows produced by the agreement, which is initially estimated at 15 years. Royalty interests are considered a long-lived asset that is required to be reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The Company evaluates its royalty agreements at subsequent reporting periods to determine if a change in the underlying agreement or cash flows warrants a change in the estimate. Impairment exists for the royalty interests if the carrying amount exceeds the estimate of future net undiscounted cash flows expected to be generated by such assets. An impairment charge is required to be recognized if the carrying amount of the asset, or asset group, exceeds its fair value.

F-5

Revenue Recognition

The Company recognizes revenue under royalty interest agreements when earned and collection is reasonably assured.

The Company recognizes revenue from royalty interest agreements under ASC 606-10-55-65 which apply to sales-based or usage-based royalties. Guidance under this section stipulates that revenue recognition should be based when the later of the following events occur: (1) the subsequent sales occur or (2) the performance obligation to which some or all for the sales-based royalty has been allocated has been satisfied or partially satisfied. The Company deems collection efforts to be the key performance obligation being satisfied, and therefore has adopted the approach of recognizing revenue based on customer collections. The operators that are parties to the royalty agreements, are typically structured to report and pay percentages of revenue earned over quarterly or monthly periods, some of which do not line up with the quarterly reporting period of the Company.

Income Taxes

Income taxes are accounted for under the asset-and-liability method. 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 and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years 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 income in the period that includes the enactment date. A valuation allowance is established for deferred tax assets that, based on management’s evaluation, are not expected to be realized. As of the balance sheet date, the Company maintains a full valuation allowance against their deferred tax asset.

Tax benefits of uncertain tax positions are recorded only where the position is “more likely than not” to be sustained based on their technical merits. The amount recognized is the amount that represents the largest amount of tax benefit that is greater than 50% likely of being ultimately realized. A liability is recognized for any benefit claimed or expected to be claimed, in a tax return in excess of the benefit recorded in the financial statements, along with any interest and penalty (if applicable) in such excess. The Company has no uncertain tax positions as of July 31, 2021.

Cryptocurrencies

The Company made an investment in cryptocurrencies, including bitcoin, during the nine months ended July 31, 2021 of $146,000. Such amounts are included in current assets at original cost in the accompanying balance sheets.

Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.

NOTE 3 - ROYALTY INTERESTS

The Company recorded total amortization expense related to royalty agreements of $40,105 and $42,625, for the nine-month periods ended July 31, 2021 and 2020, respectively.

F-6

Additional royalty interests acquired during the nine months ended July 31, 2021 were the following:

Artist Holdings, LLC

On February 16, 2021, the Company acquired a royalty interest from Artist Holdings, LLC, a limited liability company formed in the State of Arizona. Artist Holdings provides their clients tools and tutorials on creating their art and platforms to buy art pieces from artists. The Company purchased a royalty interest from Artist Holdings for $50,000, which provides us with a perpetual 12.5% of all future net sales generated by Artist Holdings through its websites, training programs, and art brokerage. We have received a personal guarantee for royalty payments due by the principal shareholder of Artist Holdings.

RhymeMakers, LLC

On February 19, 2021, the Company acquired a royalty interest from RhymeMakers, LLC, a limited liability company formed in the State of Wyoming. RhymeMakers provides their clients tools and tutorials on how to rap. We purchased a royalty interest from RhymeMakers for $75,000, which provides us with a perpetual 15% of all net sales generated by RhymeMakers through the website www.rhymemakers.com, thinkific, YouTube and all other sources. Royalty payments are due quarterly. We have received a personal guarantee for royalty payments due by the principal shareholder of RhymeMakers.

NOTE 4 - NOTE PAYABLE

On July 1, 2020 and September 21, 2020, the Company closed on two loans for $7,400 and $3,900 (the “PPP loans”) from a commercial bank, pursuant to the Paycheck Protection Program (“PPP”) administered by the Small Business Administration (the “SBA”) pursuant to the CARES Act.

All or a portion of the PPP loans may be forgiven by the lender upon application by the Company beginning 60 days after the loan approval and upon documentation of expenditures in accordance with the requirements set forth by the SBA pursuant to the CARES Act..

During the three months ended July 31, 2021, the outstanding balance of $11,300 was forgiven and is presented in other income.

NOTE 5 – COMMON STOCK

Stock Dividend

On November 2, 2020, our Board of Directors effectuated a three-for-one stock split of our common stock in the form of a stock dividend (the “Stock Split”), so that each stockholder of record as of the close of business on November 2, 2020 received two (2) additional shares of common stock for each share of common stock held by such stockholder. This resulted in 6,153,600 additional shares of common stock being issued to the current shareholders and 1,267,872 shares set aside for the common stock subscribed for the private placement and the SAFE instrument conversions. After the stock dividend and reclassification of common stock subscribed to common stock, the company will have 11,132,208 shares outstanding. No effect on the par value of the shares occurred and remains at $0.01. All current and prior period amounts related to shares outstanding, price per share and earnings per share in the Company’s financial statements and accompanying notes have been restated to give retroactive presentation related to the stock split.

Common Stock – Subscribed

In June 2020, the Company, through a private offering, offered an aggregate of $1,800,000 of units, each unit consists of a subscription for 300 shares of Company $0.01 par value common stock and a warrant to purchase an additional 300 shares of Company common stock at an exercise price of $2.67 per share. Units are offered, at a purchase price of $600 per unit. Through October 31, 2020, the Company sold 848.4 units, or a subscription for 254,511 shares of common stock for an aggregate purchase price of $509,000. The subscription included detachable warrants to purchase an additional 254,511 shares at $2.67 per share with a term ending on December 31, 2021.

F-7

At July 31, 2021, warrants outstanding are as follows:

	Warrant Shares	Weighted Average Exercise Price
Balance at October 31, 2020	254,511	$ 2.67
Granted	-	-
Forfeit or cancelled	-	-
Exercised	-	-
Balance at July 31, 2021	254,511	$ 2.67

The fair value of the warrants on the date of issue was $19,857 and was determined using the Black-Scholes option pricing model with the following assumptions:

Expected Life		1.27 - 1.42 years
Volatility		28% *
Dividend Yield		0% **
Risk Free Interest Rate		0.11% - 0.14% ***

*The volatility rate is based on the average volatility rate of comparable publicly traded companies

**The Company has no history or expectation of paying cash dividends on its common stock

***The risk-free interest rate is based on the U.S Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus disease (“COVID-19”) as a pandemic, which continues to spread throughout the U.S. COVID-19 is having an unprecedented impact on the U.S economy as federal, state, and local governments react to this public health crisis.

The impacts of the current COVID-19 pandemic are broad reaching and the impacts on the Company’s licensing royalty interests is to date unknown. Due to the COVID-19 outbreak, there is significant uncertainty surrounding the potential impact on the Company’s future results of operations and cash flows and its ability to raise capital. Continued impacts of the pandemic could materially adversely affect the Company’s near-term and long-term revenues, earnings, liquidity, and cash flows as the Company’s customers and /or licensees may request temporary relief, delay or not make scheduled payments on their royalty commitments.

NOTE 7 – SUBSEQUENT EVENT

On August 24, 2021, the Company entered into a settlement agreement with a prior service provider that resolved all outstanding disputes in exchange for a $105,000 payment from the service provider. On September 7, 2021, the Company received $94,500 directly and $10,500 was withheld for tax purposes

F-8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Information

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “we believe,” “we intend,” “may,” “should,” “will,” “could” and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements.

Examples of forward-looking statements include:

·the timing of the development of future products;

·projections of costs, revenue, earnings, capital structure and other financial items;

·statements of our plans and objectives;

·statements regarding the capabilities of our business operations;

·statements of expected future economic performance;

·statements regarding competition in our market; and

·assumptions underlying statements regarding us or our business.

The ultimate correctness of these forward-looking statements depends upon several known and unknown risks and events. We discuss our known material risks under “Risk Factors” in our most recently filed Annual Report on Form 10-K/A filed on February 23, 2021; , and under Part II, Item 1A. “Risk Factors” contained in this report on Form 10-Q.However, readers should carefully review the risk factors set forth in other reports or documents we file from time to time with the Securities and Exchange Commission, particularly any future Annual Reports on Form 10- K, any Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K. Many factors could cause our actual results to differ materially from the forward-looking statements. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

We caution you that actual outcomes and results may differ materially from what is expressed, implied, or forecast by our forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

Overview and Principal Services

We are engaged in the business of acquiring, holding and managing royalty interests derived from Internet based businesses. Royalty interests are passive (non-operating) agreements that provide us with contractual rights to revenue produced from our operators. The revenue generated by our operators is typically from physical or digital product sales, subscriptions and advertising.

Our purchase of royalty interests enables entrepreneurs to raise non-dilutive capital and retain control of their businesses. When we enter into royalty interest agreements, our primary objectives are to generate revenue streams from our operators and increase our corporate cash flow. In some cases, we may also generate a premium on our original purchase price if a royalty interest is redeemed by an operator or third-party such as a buyer of an operator. We plan to acquire royalty interests that can generate a 15% to 30% internal rate of return, although there can be no guarantee that we will achieve this target.

Royalty interests are purchased for a fixed amount of capital in exchange for pre-determined royalty payments. Depending on the unique agreement, (i) royalty payments can be made monthly, quarterly or annually, (ii) royalty payments can be made in perpetuity or for a limited amount of time, (iii) royalty payment calculations can change during the term of the royalty interest agreement based on certain performance metrics or time and (iv) royalty payments can be calculated off gross revenue of our operators, or off net-revenue, which accounts for certain defined adjustments to gross revenue, or off unit sales.

We primarily intend to negotiate royalty interests directly from operators, but we may also acquire existing royalty interests from third parties. A key element of our business model is the building of a diversified portfolio of high-quality royalty interests from Internet based businesses.

We currently, and generally at any time, have royalty interest acquisition opportunities in various stages of active review. At this time, we cannot provide assurance that any of the possible transactions under review by us will be concluded successfully.

Unless the context otherwise requires, all references to “our Company,” “we,” “our” or “us” and other similar terms means Freedom Internet Group Inc.

Strategy

We look for businesses operated by managers, referred to as operators, and acquire a passive interest so that we can participate in the revenue generated by paying up front for the royalty interest.

We use a series of quantitative, qualitative, financial, and legal criteria by which we evaluate the potential acquisition of royalty interests. We plan to acquire assets with an income focus, and our target is to acquire assets generating uncorrelated income of 15% to 30% internal rate of return, although there can be no guarantee that we will achieve this target. Among the factors considered are: (1) the business track record of revenue and earnings; (2) the type of business that generates royalties; (3) the experience and skill of the active management team of the business; (4) our assessment of the longevity and staying power of the underlying business; and (5) the potential for revenue growth and capital appreciation.

We have established our business model based on the premise that acquiring non-operating, passive royalty interests in businesses can produce above average returns. The key elements of our business model and growth strategy are as follows:

1.Focus on non-operating royalty interests in high-quality Internet based businesses.

2.Negotiate new royalty interest agreements with operators.

3.Acquire pre-existing royalty interests from third parties.

4.Partner with experienced managers that have a proven track record.

5.Provide flexible royalty interest acquisition terms that work for operators and us.

Results of Operations for the three months ended July 31, 2021 and 2020

	Three months ended July 31, 2021	Three months ended July 31, 2020	Variance
Revenues	$17,353	$40,103	$(22,750)
Operating Expenses:
Advertising and Marketing	46	9,487	(9,441)
Professional and consulting fees	42,095	27,710	14,385
Salaries and payroll taxes	29,931	29,931	-
Rent expense	75	125	(50)
Amortization of Royalty Interests	14,250	15,417	(1,167)
Other expenses	6,681	696	5,985
Total Operating expenses	93,078	83,366	9,712
Other income	14,911	6,917	7,994
Net loss	$(60,814)	$(36,346)	$(24,468)

Revenues: We generated $17,353 and $40,103 of revenues for the three months ended July 31, 2021 and 2020, respectively. Our revenues came from collection from royalty interests of 2 operators. We currently have royalty interests associated with 5 active operators. Operators pay royalties quarterly, based on their operational revenue. Revenue generated each quarter varies depending on the operators’ revenue earned.

Operating Expenses: Overall operating expenses increased to $93,078 for the three months ended July 31, 2021 as compared to $83,366 for the three months ended July 31, 2020, generally because of increasing our professional and consulting fees by $14,385. Our net loss increased from $36,346 to $60,814 primarily due to the reduction in Royalty revenue recognized and the increase in the professional and consulting fees, offset by a general decrease in advertising and marketing.

Results of Operations for the nine months ended July 31, 2021 and 2020

	Nine months ended July 31, 2021	Nine months ended July 31, 2020	Variance
Revenues	$59,723	$61,636	$(1,913)
Operating Expenses:
Advertising and Marketing	7,014	12,032	(5,018)
Professional and consulting fees	133,349	183,743	(50,394)
Salaries and payroll taxes	90,772	77,910	12,862
Rent expense	225	575	(350)
Amortization of Royalty Interests	40,105	42,625	(2,520)
Other expenses	20,902	17,565	3,337
Total Operating expenses	292,367	334,450	(42,083)
Other income	15,526	13,771	1,755
Net loss	$(217,118)	$(259,043)	$41,925

Revenues: We generated $59,723 and $61,636 of revenues for the nine months ended July 31, 2021 and 2020, respectively. Our revenues came from collection from royalty interests of 2 operators. We currently have royalty interests associated with 5 active operators. Operators pay royalties quarterly, based on their operational revenue. Revenue generated each quarter varies depending on the operators’ revenue earned.

Operating Expenses: Overall operating expenses decreased to $292,367 for the nine months ended July 31, 2021 as compared to $334,450 for the nine months ended July 31, 2020, generally because of decreasing our professional and consulting fees by $50,394; decreasing our advertising and marketing by $5,018 offset by increases in salaries for our founders of $12,862 and an increase in other expenses of $3,337. Our net loss decreased from $259,043 to $217,118 primarily due to the decrease in professional and consulting fee, decrease in revenue collected, decrease in advertising offset by an increase in salaries for our founders.

Liquidity and Capital Resources

Our balance sheet as of July 31, 2021 as compared to October 31, 2020 reflects a decrease of cash assets of $449,240 due primarily to a net loss of $217,118 offset by non-cash amortization of royalty interests of $40,105 and amortization of prepaid assets. We purchased an additional $125,000 in royalty interests that we hope to start generating revenue over the next twelve months and invested in an account backed by cryptocurrencies in the amount of $148,362 during the nine months ended July 31, 2021. We currently have enough cash on hand to fund ongoing operations without the present need to raise additional capital for the next 12 months.

No assurance can be given that we will obtain access to capital markets in the future or that adequate financing to satisfy the cash requirements of implementing our business strategies will be available on acceptable terms. Our inability to gain access to capital markets or obtain acceptable financing could have a material adverse effect upon the results of our operations and financial condition. Our failure to raise additional funds if needed in the future will adversely affect our business operations, which may require us to suspend our operations.

It is likely that our operating losses will increase in the future and it is very possible we will never achieve or sustain profitability. We may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall or other unanticipated changes in our industry. Any failure by us to accurately make predictions would have a material adverse effect on our business, results of operations and financial condition.

COVID-19

The impacts of the current COVID-19 pandemic are broad reaching and the impacts on the Company’s licensing royalty interests is to date is unknown. Due to the COVID-19 outbreak, there is significant uncertainty surrounding the potential impact on the Company’s future results of operations and cash flows and its ability to raise capital. Continued impacts of the pandemic could materially adversely affect the Company’s near-term and long-term revenues, earnings, liquidity, and cash flows as the Company’s customers and /or licensees may request temporary relief, delay or not make scheduled payments on their royalty commitments.

Critical Accounting Policies

Our critical accounting policies, including the assumptions and judgments underlying them, are disclosed in the Notes to the Financial Statements. We have consistently applied these policies in all material respects.

Revenue Recognition

The Company recognized revenue from royalty interest agreements under ASC 606-10-55-65 which apply to sales-based or Usage-Based royalties. Guidance under this section stipulates that revenue recognition should be based when the later of the following events occur: (1) the subsequent sales occur or (2) the performance obligation to which some or all for the sales-based royalty has been allocated has been satisfied or partially satisfied. The Company deems collection efforts to be the key performance obligation being satisfied, and therefore has adopted the approach of recognizing revenue based on customer collections. The operators that are parties to the royalty agreements, are typically structured to report and pay percentages of revenue earned over quarterly or monthly periods, some of which do not line up with the quarterly reporting period of the Company.

Royalty Interests

agreements at subsequent reporting periods to determine if a change in the underlying agreement or cash flows warrants a change in the estimate. Impairment exists for the royalty interests if the carrying amount exceeds the estimates of future net undiscounted cash flows expected to be generated by such assets. An impairment charge is required to be recognized if the carrying amount of the asset, or asset group, exceeds its fair value.

Off-Balance Sheet Arrangements

As of July 31, 2021, we do not have an interest in any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of July 31, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost- benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of July 31, 2021, our Principal Executive Officer and Principal Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level, due to material weaknesses identified including (i) lack of written documentation of internal control policies and procedures and (ii) lack of segregation of duties.

In connection with management’s assessment of our internal control over financial reporting, we identified the following material weaknesses in our internal control over financial reporting as of July 31, 2021:

·We do not have written documentation of our internal control policies and procedures.

·Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. To the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. As of July 31, 2021, the initiation of transactions and recording of transactions are performed by Ronald Rosenfarb, our Chief Operating Officer.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during the three months ended July 31, 2021 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.

Not Applicable.

ITEM 1A. RISK FACTORS.

During the nine months ended July 31, 2021, our Company made an investment in cryptocurrencies, including bitcoin, of $148,362.

GENERAL RISKS RELATED TO OWNING CRYPTOCURRIENCIES

The prices of cryptocurrencies are extremely volatile.

Fluctuations in the price of cryptocurrencies could subject our cryptocurrency holdings to significant price volatility. The price of cryptocurrencies is affected by many factors beyond our control including global supply and demand, the expected future price, inflation expectations, interest rates, currency exchange rates, fiat currency withdrawal and deposit policies at virtual token exchanges, interruptions in service or failures of such exchanges, investment and trading activities of large holders of cryptocurrencies, government monetary policies, regulatory measures that restrict the use of cryptocurrencies and global political, economic or financial events. In addition, a decrease in the price of one cryptocurrency may cause volatility in the entire cryptocurrency industry, including the cryptocurrencies we hold. For example, a security breach that affects investor or user confidence in Bitcoin may affect the industry as a whole and may also cause the price of other cryptocurrencies to fluctuate dramatically.

The regulatory regime governing cryptocurrencies is still developing, and regulatory changes or actions may alter the nature of an investment in cryptocurrencies.

The regulation of cryptocurrencies and cryptocurrency exchanges are currently under-developed and likely to rapidly evolve and vary significantly among U.S. and non-U.S. jurisdictions, and are subject to significant uncertainty. As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies, with certain governments deeming them illegal while others have allowed their use and trade. Various legislative and executive bodies in the United States, and other countries, are, or are considering, enacting laws, regulations, guidance, or other actions, which could adversely impact the value of our cryptocurrency holdings.

The development and acceptance of transactions in cryptocurrencies are subject to a variety of factors that are difficult to evaluate.

The use of cryptocurrencies to buy and sell goods and services and complete transactions is part of a new and rapidly evolving industry, and the continued growth of this industry and the use of cryptocurrencies is subject to a high degree of uncertainty. The slowing or stopping of the development or acceptance of cryptocurrencies could have a material adverse effect on our plan of business, and we cannot assure you this will not occur. Factors that could affect the expansion or contraction of the use of cryptocurrencies include, but are not limited to:

·Continued worldwide growth in the adoption and use of cryptocurrencies;

·Governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of cryptocurrency systems;

·The maintenance and development of the open-source software protocol on which many cryptocurrencies are dependent;

·The availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

·General economic conditions and the regulatory environment relating to cryptocurrencies; and

·Negative consumer sentiment and perception of cryptocurrencies in general.

We cannot predict with certainty any outcome regarding use of cryptocurrencies, and any of the above factors may have a material adverse effect on the value of our cryptocurrency holdings.

Our cryptocurrency holdings may be subject to loss, damage, theft or restriction on access, which could decrease the value of our cryptocurrency holdings.

A private key, or a combination of private keys, is necessary to control the cryptocurrency holdings stored in our digital wallet(s). Accordingly, any loss of the requisite private keys will result in loss of our cryptocurrency holdings, and they likely would not be recoverable. Moreover, any third party that gains access to such private keys, including by gaining access to login credentials of a hosted wallet service, could steal our cryptocurrency holdings. Any errors or malfunctions caused by or otherwise related to our digital wallet to receive and store cryptocurrencies, including failure to properly maintain or secure such digital wallet, may also result in our complete loss of our cryptocurrency holdings. If we lose access to our cryptocurrency holdings, we could suffer a complete loss of their value.

If part or all of our cryptocurrency holdings are lost, stolen or destroyed under circumstances rendering a party liable to our Company, the responsible party may not have the financial resources sufficient to satisfy our claim. For example, as to a particular event of loss, the only source of recovery for us might be the responsible third parties (e.g., a thief or terrorist), any of which may not have the financial resources (including liability insurance coverage) to satisfy a valid claim of our Company. Furthermore, we are not aware of any U.S. or foreign governmental, regulatory, investigative, or prosecutorial authority or mechanism through which to bring an action or complaint regarding missing or stolen cryptocurrencies. Consequently, we may be unable to replace missing cryptocurrencies or seek reimbursement for any erroneous transfer or theft of our cryptocurrency holdings. To the extent that we are unable to seek redress for such action, error or theft, such loss could decrease the value of our Company’s assets.

Cryptocurrencies are subject to risks of uninsured losses.

Unlike bank accounts or accounts at some other financial institutions, cryptocurrencies are uninsured unless you specifically obtain private insurance to insure them, which we have not done, nor presently intend to do. Thus, in the event of loss or loss of utility value, there is no public insurer, such as the Federal Deposit Insurance Corporation, or private insurance arranged by our Company, to offer recourse to us.

Trading or holding cryptocurrencies could expose us to various cyber security risks.

Trading platforms and third-party service providers may be vulnerable to hacking or other malicious activity. As with any computer code generally, flaws in cryptocurrency codes may be exposed to such negative activities. Several errors and defects have been found previously, including those that disabled some functionality for users of cryptocurrency trading platforms and exposed such users’ personal information. Flaws in and exploitations of the source code allowing malicious actors to take or create money have previously occurred, and our Company is not immune to such events.

The tax treatment of cryptocurrencies is uncertain, and developments in tax laws could impact the tax treatment of our cryptocurrency holdings.

The tax characterization of cryptocurrencies is uncertain and transactions involving digital currencies or tokens, are relatively new. It is possible that the Internal Revenue Service (“IRS”) may challenge our Company’s intended treatment of our cryptocurrency holdings, and that the tax consequences of purchasing or holding cryptocurrencies could differ materially from those anticipated by our Company. Federal or state legislation may be enacted, or guidance may be issued, by the IRS (or other governmental authorities), possibly with retroactive effect, impacting our tax obligations with respect to our cryptocurrency holdings. Future changes in the tax laws (or future administrative or judicial interpretations) could materially and negatively impact our tax treatment with respect to cryptocurrencies.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Not Applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not Applicable.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5. OTHER INFORMATION.

Not Applicable.

ITEM 6. EXHIBITS.

SEC Reference Number	Title of Document	Location
10.1	Artist Holdings LLC Royalty Agreement	Incorporated by reference to our Form 10-Q filed on June 14, 2021
10.2	RhymeMakers LLC	Incorporated by reference to our Form 10-Q filed on June 14, 2021
31.1	Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Executive Officer of the Company	Filed herewith
31.2	Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Financial Officer of the Company	Filed herewith
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Executive Officer of the Company	Filed herewith
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Financial Officer of the Company	Filed herewith
101	XBRL data files of Condensed Financial Statements and Notes contained in this Quarterly Report on Form 10-Q

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on September 13, 2021

	Freedom Internet Group Inc. Registrant

	By:	/s/ Alton Chapman
		Alton Chapman
		Principal Executive Officer

		/s/ Noah Rosenfarb
		Noah Rosenfarb
		Principal Financial Officer