TAUTACHROME INC. - Quarter Report: 2021 September (Form 10-Q)

^{SECURITIES AND EXCHANGE COMMISSION}

^{WASHINGTON, D.C. 20549}

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

FOR THE TRANSITION PERIOD FROM ___________ TO _____________.

Commission file number: 000-55721

Securities registered pursuant to section 12(b) of the Act:

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 ☒      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 ☒      No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.

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 ☒

The number of shares of the registrant’s common stock outstanding as of October 26, 2021, was 4,561,078,768.

TAUTACHROME, INC.

FORM 10-Q

INDEX

PART I – FINANCIAL INFORMATION

ITEM 1 – CONSOLIDATED FINANCIAL STATEMENTS

TAUTACHROME, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

TAUTACHROME, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

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

TAUTACHROME, INC.

Consolidated Statement of Changes in Stockholders’ Deficit

December 31, 2019 to September 30, 2021

(Unaudited)

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

TAUTACHROME, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

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

TAUTACHROME, INC.

 NOTES TO UNAUDITED FINANCIAL STATEMENTS

 SEPTEMBER 30, 2021

Note 1 – Organization and Nature of Business

History

Tautachrome, Inc. was formed in Delaware on June 5, 2006 as Caddystats, Inc., was renamed Roadships Holdings Inc. on March 4, 2009, and on November 2, 2015 was again renamed to its current name Tautachrome Inc. (hereinafter referred to as “Tautachrome,” the “Company,” “we” or “us”).

The Company’s accounting year end is December 31.

Our Business

Tautachrome operates in the internet applications space, uniquely exploiting the technologies of the Augmented Reality (AR) sector, the smartphone trusted imagery sector and the crypto currency and NFT fintech sectors, with granted and pending patents in all these sectors.

The Company has completed development of a fully integrated mobile commerce platform, the ARknet platform (“ARknet”). ARknet aims to harness Web 3.0’s deployment of open, permissionless and implicitly trustful networks, where software is developed openly in full view of the world, users don’t need permission from anybody else to participate, and the network itself allows users to trustfully interact with anybody, publicly or privately.

The ARknet platform is able to host consumers and their social interaction and businesses selling to those consumers, all implemented through AR interfaces called Arks. The Company has just begun supporting the creation and sale of blockchain non fungible tokens (NFTs) representing unique digital imagery assets consisting of pictures, videos, Arks and such other digital things belonging to and/or developed by ARknet platform participants. In addition, the Company has high-speed blockchain technologies in development that will use digital currencies to make purchases faster and easier.

Recently added ARknet platform features include:

MainSt.shopping allows business users to quickly create virtual stores on the ARknet Platform using our comprehensive “How To” tutorial at www.MainSt.Shopping. Patterned after the Amazon model, shoppers on MainSt use a single sign-on to gain access to all the products of every store on MainSt.

Non-Fungible Tokens (NFTs) The ARknet platform allows users to create and market NFTs of any of their digital creations from imagery, to writings to entire Arks.

Travelpin. With Travelpin users can capture imagery and attach it directly to a specific location on the Travelpin digital map. Users can view public Travelpins from other travelers and see honest reviews, photos, and comments, significantly enhancing the travel experience.

Eternals Memorials. Arknet memorials allow users to geolocate Arks at headstones of deceased loved ones, containing such digital records as users may wish to place there as an eternal memory of the person. Using the Arknet app, family and friends can view a memorial while at the headstone, or can use the app’s teleportation feature to view it from any remote location.

3D Imaging for Businesses User products. Store samples may be sent to us for high quality 3D scanning. The ARknet platform allows business users to use these 3D scanned files to display their products to their customers. Seeing products as AR objects in their own home, in 3D, is excellent way to please customers and make sales. Additional discussion of the business can be found in our Form 10-K filing as of December 31, 2020 and filed with the Securities and Exchange Commission.

Since its public announcement on September 25, 2017 (via SEC form 8-K) that it would be using its Twitter site (@Tautachrome_Inc) (https://twitter.com/tautachrome_inc) to post important Company information, and finding this method of publicizing important Company information both fast and effective, the Company has continued to use this means of public communication, supplemented when required with Current Reports via SEC Form 8-Ks. Shareholders are advised to follow us on Twitter to be current on the Company’s disclosures in conformity with Regulation FD.

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

Consolidated Financial Statements

In the opinion of management, the accompanying financial statements includes all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the period ended September 30, 2021. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in our audited financial statements for the period ended December 31, 2020, as reported in Form 10-K filed with the SEC on March 30, 2021.

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.

Principles of Consolidation

Our consolidated financial statements include the accounts of Tautachrome, Inc. and all majority-owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation.

Long-Lived Assets, Intangible Assets and Impairment

The Company’s long-lived assets and amortizable intangible assets are tested for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The Company assesses the recoverability of such assets by determining whether their carrying value can be recovered through undiscounted future operating cash flows, including its estimates of revenue driven by assumed market segment share and estimated costs. If impairment is indicated, the Company measures the amount of such impairment by comparing the fair value to the carrying value.

Revenue Recognition

The Company sells credits in exchange for cash. These credits can be redeemed for ARks which are geo-location objects downloadable into various digital devices. We recognize revenues once the customer has redeemed previously-purchased credits in exchange for ARks. Until that point, any cash received in exchange for credits is accounted for as liabilities.

The company recognizes revenues in accordance with ASC 606 – Revenue From Contracts with Customers which proscribes a five-step process in evaluating the revenue recognition process:

Step 1: Identify the contract with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Net Loss Per Share

Basic and diluted net loss per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the year. The per share amounts include the dilutive effect of common stock equivalents in years with net income.

Note 3 – Going Concern

In the third quarter 2019, we began operations with our ARknet platform, and in October we acquired assets to enter the business ARk vertical in our market. We will require additional capital to exploit this vertical and to commercialize others. There is no guarantee that we will be able acquire the capital to exploit and commercialize the ARknet markets we envision so as to generate positive cash flows from operations. For these reasons, substantial doubt exists as to Tautachrome’s ability to continue as a going concern. No adjustment has been made to these financial statements for the outcome of this uncertainty.

Management intends to raise additional capital, partly through convertible debt, partly through the direct sale of equity and partly through partnerships with businesses with whom we will provide exclusive use of ARknet techniques in their arenas of operation. We will commit those funds to further refine and develop our ARknet platform. In addition, we intend to market our products through Google and Facebook.

Note 4 – Related Party Transactions

For the nine months ended September 30, 2021, we accrued $3,674 of interest to the 22^nd Trust (the “Trust”), the trustee of whom is Sonny Nugent, the son of our major shareholder and former Chief Executive Officer, Micheal Nugent. The outstanding balances of unpaid principal and interest at September 30, 2021 were $99,708 and $33,965, respectively. The outstanding balances of unpaid principal and interest at December 31, 2020 were $99,762 and $30,553, respectively.

According to our agreement with Mr. Nugent, we accrue interest on all unpaid amounts at 5%. Principal and interest are callable at any time. If principal and interest are called and not repaid, the loan is considered in default after which interest is accrued at 10%.

On July 11, 2019, our CEO and Board Chairman contributed $13,750 to the company which was accounted for as additional paid in capital.

Convertible note payable, related party

On May 5, 2013 (and on August 8, 2013 with an enlargement amendment) the Company entered into a no interest demand-loan agreement with our current Chairman, Jon N. Leonard under which the Company may borrow such money from Dr. Leonard as Dr. Leonard in his sole discretion is willing to loan.

The terms of the note provide that at the Company’s option, the Company may make repayments in stock, at a fixed share price of $1.00 per share. Also, because this loan is a no-interest loan, an imputed interest expense of $177 was recorded as additional paid-in capital for the nine months ended September 30, 2021. The Company evaluated Dr. Leonard’s note for the existence of a beneficial conversion feature and determined that none existed.

During the nine months ended September 30, 2021, we repaid $21,548 to Dr. Leonard. Dr. Leonard also paid company expenses of $6,000. At September 30, 2021, the balanced owed Dr. Leonard is $967.

Ending balances in related party accounts payable is $674,399.

For ending balances in this category, see Note 7.

Note 5 – Notes and Interest Receivable

On June 8, 2021 we lent Akumen Industries Corp. (“Akumen”) $150,000 at with interest at 5% (10% penalty rate) for seven days in exchange for a promise to provide $3 million in equity capital. As of the balance sheet date, repayment of this note has been delayed. Since the note is overdue, we have reserved the entirety of the balance of $150,760 to bad debt expense.

Note 6 – Capital

During the year ended December 31, 2020 we issued 616,014,358 common shares. The explanation of the nature of those issuances can be found in Note 4 of the financial statements included in our Form 10-K filed with the Securities and Exchange Commission as of December 31, 2020 and filed on March 30, 2021 and herewith included by reference.

During the nine months ended September 30, 2021, we issued:

During the nine months ended September 30, 2021, we had the following stock payable transactions:

The explanation of the balances resulting from stock payable transactions during the year ended December 31, 2020 can be found in Note 4 of the financial statements included in our Form 10-K filed with the Securities and Exchange Commission as of December 31, 2020 and filed on March 30, 2021 and herewith included by reference.

Preferred Stock

In September, 2020 we issued 290,397 Series F Preferred shares in retirement of twelve convertible promissory notes to Arknet. In so doing, we reduced our liability to them in the amount of $610,500 of principal and $14,735 in interest. Each share of Series F preferred is convertible into 1,000 shares of common stock. This series of preferred shares have the following rights, limitations, restrictions and privileges:

No other changes occurred to the balances of our preferred stock for the nine months ended September 30, 2021.

Imputed Interest

Certain of our promissory notes bear no nominal interest. We therefore imputed interest expense and increased Additional Paid in Capital. For the nine months ended September 30, 2021, we imputed $8,048 of such interest. For the same period in 2020, we imputed $10,518.

Note 7 – Debt

Loans from related parties

At September 30, 2021 we owed $103,539 in related-party loans consisting of $98,539 to the 22^nd Trust and $5,000 owed to a related-party Board member .

Convertible notes payable – related party, net

Short-term portion - At September 30, 2021, we owed $70,942 of related-party notes which are convertible into common stock, of which $69,973 is owed to David LaMountain, Our Chief Operating Officer and $969 to Dr. Jon Leonard, our Chief Executive Officer. As of September 30, 2021, all discounts on this items had been fully amortized. During the nine months ended September 30, 2021, we amortized $26,316 of discounts to interest expense from this category.

Long-term portion - Additionally at September 30, 2021, we owed $40,000 to ArKnet. Unamortized discounts at September 30, 2021 was $28,632. During the nine months ended September 30, 2021, we amortized $4,034 from this category.

Short-term convertible notes payable – third-party, net

Unpaid principal on short-term convertible notes payable at September 30, 2021 was $2,049,390, net of discounts of $664,590 (or $1,384,800).

We have three convertible promissory notes which are in default at June 30, 2021 totaling $32,000. There are no discount balances on these notes.

During the nine months ended September 30, we issued 220,978,521 shares to convert five outstanding convertible notes. We reduced unpaid principal by $910,000 and unpaid interest by $38,446. There was no gain or loss related to the conversions.

During the nine months ended September 30, 2021, we issued the following promissory notes:

During the nine months ended September 30, 2021, we amortized $753,672 to interest expense from this category.

Short-term notes payable

At September 30, 2021, we owed AU$22,000 (US$15,902) to three Australian investors on promissory notes which contain no conversion privileges.

Long-term convertible notes payable, net

There are no long-term convertible notes payable as all convertible notes have been reclassified either to short-term or in-default.

Imputed Interest

Certain of our promissory notes bear no nominal interest. We therefore imputed interest expense and increased Additional Paid in Capital. For the nine months ended September 30, 2021, we imputed $8,048 of such interest. Of this amount, $177 is imputed on amounts owed to Jon Leonard, our Chief Executive Officer, and $7,871 was imputed on twenty eight outstanding loans in Australia.

Derivative liabilities

The above-referenced convertible promissory notes were analyzed in accordance with EITF 07–05 and ASC 815. EITF 07–5, which is effective for fiscal years beginning after December 15, 2009, and interim periods within those fiscal years. The objective of EITF 07–5 is to provide guidance for determining whether an equity–linked financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception under Paragraph 11(a) of ASC 815 which would enable a derivative instrument to be accounted for under the accrual method. The classification of a non–derivative instrument that falls within the scope of EITF 00–19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock. A non–derivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted for as a liability. The EITF reached a consensus that would establish a two–step approach in determining whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument’s contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument’s settlement provisions.

Derivative financial instruments should be recorded as liabilities in the consolidated balance sheet and measured at fair value. For purposes of this engagement and report, we utilized fair value as the basis for formulating our opinion which has been defined by the Financial Accounting Standards Board (“FASB”) as “the amount for which an asset (or liability) could be exchanged in a current transaction between knowledgeable, unrelated willing parties when neither party is acting under compulsion”. The FASB has provided guidance that its definition of fair value is consistent with the definition of fair market value in IRS Rev. Rule 59–60.

The Company issued certain fixed-rate convertible Subscription Notes from 2015 through September 30, 2021 in the United States and Australia These convertible notes have become tainted (“The Tainted Notes”) as a result of the issuance of convertible promissory notes issued in the United States since there is a possibility (however remote) that the Company would not have enough shares in the Treasury to satisfy all possible conversions.

The Convertible Note derivatives were valued as of issuance; conversion; redemption/settlement; and each quarterly period from March 31, 2018 through September 30, 2021. The following assumptions were used for the valuation of the derivative liability related to the Notes:

We recorded the initial derivative as both a derivative liability and a debt discount (or initial reduction in carrying value of the debt). We then amortized the debt discounts using the Effective Interest Method which recognizes the cost of borrowing at a constant interest rate throughout the contractual term of the obligation. The effective interest rates on instruments issued during the nine months ended September 30, 2021 ranged from 49% to 132%.

At each reporting date, we determine the fair market value for each derivative associated with each of the above instruments.

Changes in outstanding derivative liabilities are as follows:

Note 8 – Litigation

McRae Lawsuit

On October 10, 2017, the Company received a letter from the lawyer of Eric L McRae (“McRae”) a person whose association with the Company was terminated by the Company on June 16, 2017. The letter demanded payment of 850,000,000 unrestricted Tautachrome common shares to forestall his filing a laundry list of complaints in a variety of government agencies including with the US District Court in Kansas with complaints of contract breaches and fraud by silence, with the EEOC with complaints of termination by racial discrimination, with the OSHA with complains of termination for reasons of his being a whistleblower under Sarbanes-Oxley provisions, and with various regulatory agencies with accusations of an unspecified nature.

This history of the legal proceedings in this case are described in Note 7 to the financial statements filed with Form 10-K on March 30, 2020 and are herewith included by reference.

On May 5, 2020 the Company settled with the McRae estate for 50million common shares. We valued the shares at the settlement date (May 5, 2020 on which date our closing price was $0.0029) and recorded a Gain on Litigation in the amount of $105,000, a reduction of the amount of the liability to $145,000 as a result of that revaluation. We issued the shares on May 18, 2020.

Note 9 – Income Taxes

Deferred income taxes reflect the tax consequences on future years of differences between the tax bases:

In assessing the realizability of future tax assets, management considers whether it is more likely than not that some portion or all of the future tax assets will not be realized. The ultimate realization of future tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of future tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Management has provided for a valuation allowance on all of its losses as there is no assurance that future tax benefits will be realized.

Our tax loss carry-forwards will begin to expire in 2030.

Note 10 – Subsequent Events

Subsequent events have been evaluated through the date of this report.

ITEM 2- MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including: any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. “Forward-looking statements” may include the words “may,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan” or “anticipate” and other similar words.

Although we believe that the expectations reflected in our “forward-looking statements” are reasonable, actual results could differ materially from those projected or assumed. Our future financial condition and results of operations, as well as any “forward-looking statements”, are subject to change and to inherent risks and uncertainties, such as those disclosed in this report. In light of the significant uncertainties inherent in the “forward-looking statements” included in this report, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. Except for its ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any “forward-looking statement”. Accordingly, the reader should not rely on “forward-looking statements”, because they are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by the “forward-looking statements”.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited financial statements, including the notes to those financial statements, included elsewhere in this report.

Overview

We are an early stage internet applications company, engaged in advanced technology and business development in the internet applications space. We have incurred general and administrative costs, marketing expenses and research and development costs since we commenced our current operations in May 2015, against minimal revenue.

The continuing operations of the Company are dependent upon our ability to raise adequate financing and to commence profitable operations in the future. The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through loans from related parties. We believe that actions presently being taken to obtain additional funding may provide the opportunity for the Company to continue as a going concern. There is no guarantee, however, that the Company will be successful in achieving these objectives.

Results of Operations - Nine months ended September 30, 2021 versus 2020

We had minimal revenues for the nine months ended September 30, 2021 and 2020 as we are currently launching the platform.

We had general and administrative expenses of $2,648,982 for the nine months ended September 30, 2021 versus $445,053 for the same period in 2020. The reason for the vast increase is that we entered into a contract with an internet marketer whose fee was payable all in stock (see Note 7) on which we expensed $1,980,000. Without that charge to expense, general and administrative expenses for the nine months ended September 30, 2021 would have been $668,982.

As explained in Note 5, we fully reserved a loan we made to Akumen Industries, Inc. resulting in bad debt expense of $150,760. There was no such expense in 2020.

We had depreciation expense of $10,863 for the nine months ended September 30, 2020 as opposed to $0 for the previous year. The depreciation expense is due to our acquiring, in October, 2020, a hand-held self-positioning white light scanner system that we use to showcase products on our website.

Our research and development expenses increased due to increased development activity during the nine months ended September 30, 2021 versus 2020. R&D costs were $812,680 and $636,805, respectively.

During the nine months ended September 30, 2020, we had a gain on litigation from the McRae settlement of $105,000. We had no such gain in 2021.

We had a decrease in interest expense from $928,059 during the period ending September 30, 2020 to $889,289 in the same period in 2021. Most of the decrease is attributable to larger discount amortization in 2020 than in 2021.

We had losses on changes in the fair values of our derivatives of $201,952 and 994,307 for the nine months ended September 30, 2021 and 2020, respectively. See Note 7 to the financial statements for a calculation of these amounts.

During the nine months ended September 30, 2021, we had a foreign exchange gain of $58,038 versus a loss of $15,673 during the same period in 2020, all of which are currency translation effects resulting from the fluctuation of exchange rate differences between the U.S. and Australian dollars.

Our net comprehensive losses of $4,656,530 and $2,951,560 during the nine months ended September 30, 2021 and 2020 are a result of the above items.

Results of Operations - Three months ended June 30, 2021 versus 2020

We had minimal revenues for the three months ended September 30, 2021 and 2020 as we are just launching our product.

We had general and administrative expenses of $192,513 for the three months ended September 30, 2021 versus $153,285 for the same period in 2020. Most of the increase is attributable to increases in professional services (an increase of $13,000) and promotional activities (an increase of $25,000).

We had depreciation expense of $3,621 for the three months ended September 30, 2020 as opposed to $0 for the previous year. The depreciation expense is due to our acquiring, in October, 2020, a hand-held self-positioning white light scanner system that we use to showcase products on our website.

Our research and development expenses increased due to increased development activity during the three months ended September 30, 2021 versus 2020. R&D costs were $382,571 and $303,982, respectively.

Our interest expense increased from $206,596 to $230,237 for the three months ended September 30, 2020 and 2021, respectively. The increase is mostly due to higher amortization of debt discounts in the current year.

We had a gain on changes in the value of our derivatives for the three months ended September 30, 2021 of $2,060,330 versus a loss in the amount of $2,064,184 for the same period in 2020. The vast change is mostly due to a drop in our stock price.

During the three months ended September 30, 2021, we had a foreign exchange gain of $29,718 versus a loss of $31,810 during the same period in 2020, all of which are currency translation effects resulting from the fluctuation of exchange rate differences between the U.S. and Australian dollars.

The above resulted in a net comprehensive income of $1,281,108 for the three months ended September 30, 2021 versus as net comprehensive loss of $2,759,253 for the same period in 2020.

Liquidity and Capital Resources

Our financial statements have been prepared on a going concern basis that contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

At September 30, 2020, the Company had 332,043 in current assets and current liabilities totaling $4,925,677 resulting in negative working capital of $4,593,634. We are currently seeking financing to attain our business goals, but there is no guarantee that we will obtain such financing or, upon obtaining it, that we will be able to invest in productive assets that will result in positive cash flows from operations.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, we had negative cash flows from operations, recurring losses, and negative working capital at September 30, 2021. These conditions raise substantial doubt as to our ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Management intends to finance these deficits by making additional shareholder notes and seeking additional outside financing through either debt or sales of its common stock.

Plan of Operation

Our immediate term plans for operations is discussed extensively in Item 7 – Management’s Discussion and Analysis or Plan of Operation included in our Form 10-K as of December 31, 2020, filed with the Securities and Exchange Commission on March 30, 2021 and is herein incorporated by reference.

ITEM 3 - QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A smaller reporting company is not required to provide the information required by this item.

ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based upon the evaluation of our officers and directors of our disclosure controls and procedures as of September 30, 2021, the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”), our Chief Executive Officer has concluded that as of the Evaluation Date that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure. Our management concluded that our disclosure controls and procedures were not effective as a result of material weaknesses in our internal control over financial reporting. We are a small organization with only a few employees. Under these circumstances it is impossible to completely segregate duties. We do not expect our internal controls to be effective until such time as we are able to begin full operations and even then, there are no assurances that our disclosure controls will be adequate in future periods.

Change In Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the nine months ended September 30, 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

We may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect on our operations or finances. We are not aware of any pending or threatened litigation against us, other than that described in Note 8, or our officers and directors in their capacity as such that could have a material impact on our operations or finances.

ITEM 2 – UNREGISTERED SALE OF EQUITY SECURITIES

A portion of the securities were issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), by reason of the exemption from registration afforded by the provisions of Section 4(a)(2) thereof, and Rule 506(b) of Regulation D promulgated thereunder, as a transaction by an issuer not involving any public offering. The investors did not enter into any of the transactions with the Company as a result of or subsequent to any advertisement, article, notice, or other communication published in any newspaper, magazine, or similar media or broadcast on television or radio, or presented at any seminar or meeting. Each investor was also afforded the opportunity to ask questions of management and to receive answers concerning the terms and conditions of the transaction. No selling commissions were paid in connection with these transactions.

A portion of the securities were issued without registration under the Securities Act, by reason of the exemption from registration afforded by Rule 903 of Regulation S promulgated thereunder. In determining that the issuance of certain of such securities qualified for exemption in reliance on Regulation S, the Company relied on the following facts: each recipient represented that it is not a “U.S. Person” within the meaning of Regulation S under the Securities Act and that he, she or it would not sell the shares in the U.S. for a period of at least one year after purchase.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 – OTHER INFORMATION

Not applicable.

ITEM 6 - EXHIBITS

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.