BYOC 10-Q
Beyond Commerce, Inc. (BYOC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarter ended:
Or
For the Transition Period from ___________ to____________
Commission File Number:
(Exact name of registrant as specified in its charter) |
| ||
(State or Other Jurisdiction of |
| (I.R.S. Employer |
Incorporation or Organization) |
| Identification No.) |
(Address of Principal Executive Offices) |
(
(
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
None |
| None |
| None |
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 requirement for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically a 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).
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 | ☐ |
☐ | 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 12(b)-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. At November 11, 2021, the registrant had
Table of Contents
| 2 |
| Table of Contents |
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Beyond Commerce, Inc.
UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED
September 30, 2021 AND 2020
| 3 |
| Table of Contents |
BEYOND COMMERCE, INC.
TABLE OF CONTENTS
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CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2021 AND DECEMBER 31, 2020 (Unaudited) |
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
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| 9 |
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| 4 |
| Table of Contents |
BEYOND COMMERCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
|
| September 30, |
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| December 31, |
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ASSETS |
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Current assets: |
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Cash & cash equivalents |
| $ |
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| $ |
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Accounts receivable, net |
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Other current assets |
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Total current assets |
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Operating Lease right of use asset |
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Property, equipment, and software - net |
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Intangible asset- net |
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Goodwill |
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Total assets: |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current liabilities: |
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Accounts payable |
| $ |
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Operating Lease Liability, current |
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Accrued Interest |
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Accrued payroll & related items |
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Accrued loss contingency |
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Derivative liability |
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Short-term borrowings – net of discount |
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Short-term borrowings- related party |
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Total current liabilities |
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Long-term borrowings – net of discount |
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Operating lease liability, noncurrent |
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Total liabilities |
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Commitments and Contingencies |
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Stockholders Equity: |
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Preferred stock series A, $ |
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Preferred stock Series B, $ |
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Preferred Stock series C, $ |
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Common stock, $ |
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Additional paid in capital |
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Accumulated deficit |
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Deficit attributable to Beyond Commerce, Inc stockholder |
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Equity attributable to noncontrolling interest |
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Total stockholders’ deficit |
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Total liabilities and stockholders’ deficit |
| $ |
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| $ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
| Table of Contents |
BEYOND COMMERCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS PERIODS ENDED SEPTEMBER 30, 2021 AND 2020
(Unaudited)
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| For the three months ended September 30, |
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| For the three months ended September 30, |
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| For the nine months ended September 30, |
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| For the nine months ended September 30, |
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Revenues |
| $ |
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| $ |
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| $ |
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| $ |
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Operating expenses |
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Cost of revenue |
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Selling, general and administrative |
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Payroll expense |
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Professional Fees |
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Depreciation and amortization |
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Total operating expenses |
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Loss from operations |
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Non-operating income (expense) |
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Interest expense |
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Amortization of debt discount |
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Derivative related expenses |
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Change in derivative liability |
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Loss on extinguishment of debt |
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Gain on forgiveness of PPP Loan |
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Total non-operating income (expense) |
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Loss from continuing operations before income tax |
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Income from discontinued operation, net of tax |
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Provision for income tax |
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Consolidated net loss |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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Amounts Attributable to Noncontrolling and Controlling Interest |
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Consolidated net income (loss) attributable to: |
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Noncontrolling interest |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Consolidated net loss, controlling interest |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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Net income (loss) per common share-basic and diluted |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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Weighted average shares of capital outstanding – basic and diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
| Table of Contents |
BEYOND COMMERCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE AND -MONTHS PERIODS ENDED SEPTEMBER 30, 2021 AND 2020
(Unaudited)
|
| 2021 |
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| 2020 |
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Net (loss) |
| $ | ( | ) |
| $ | ( | ) |
(Income) from discontinued operations |
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| ( | ) | |
Cash flows from operating activities: |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock issued for services |
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Loss on derivative |
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Amortization of debt discount |
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Loss on extinguishment of debt |
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Gain on forgiveness of PPP loan |
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Interest default and accretion addition to notes payable |
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Depreciation and amortization |
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Change in derivative liability |
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Changes in assets and liabilities: |
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(Increase) decrease in accounts receivable |
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(Increase) decrease in other current assets |
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Increase (decrease) in accounts payable |
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Increase (decrease) in payroll liabilities |
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Increase (decrease) in other current liabilities |
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Net cash provided by (used in) in operating activities. |
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Cash flows from investing activities : |
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Acquisition of property and equipment |
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Net cash used in investing activities |
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Cash flows from financing activities: |
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Cash receipts from note payable |
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Proceeds from sale of preferred stock series C |
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Payment on note payable |
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Net cash provided by (used in) financing activities |
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Net increase (decrease) in cash and cash equivalents |
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| ( | ) | |
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Cash and cash equivalents, beginning balance |
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Cash and cash equivalents, ending balance |
| $ |
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| $ |
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Supplemental Disclosure of Cash Flow Information: |
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Cash Paid For: |
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Interest |
| $ |
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| $ |
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Income taxes |
| $ |
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| $ |
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Summary of Non-Cash Investing and Financing Information: |
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Stock issued for conversion of debt |
| $ |
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| $ |
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Stock issued for conversion of Series C preferred stock |
| $ |
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| $ |
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Stock issued for warrant settlement |
| $ |
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| $ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 7 |
| Table of Contents |
BEYOND COMMERCE, INC.
RECONCILIATION OF STOCKHOLDERS’ DEFICIT
(Unaudited)
|
| Common Stock |
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| Series A & B Preferred Stock |
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| Non-Controlling |
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| Additional Paid in |
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| Accumulated |
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| Stockholders’ |
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| Shares |
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| Par Value |
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| Shares |
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| Par Value |
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| Interest |
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| Capital |
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| Deficit |
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| Deficit |
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Balance, December 31, 2019 |
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| $ |
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| 269.9999 |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | |||||
Common stock issued for debt conversion |
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| - |
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Extinguishment of derivative liabilities on conversion |
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| - |
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| - |
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| - |
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Net loss |
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| - |
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| - |
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Balance, March 31, 2020 |
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| $ |
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| 269.9999
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | |||||
Common stock issued for debt conversion |
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| - |
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Extinguishment of derivative liabilities on conversion |
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| - |
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| - |
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Net loss |
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| - |
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| - |
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Balance, June 30, 2020 |
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| $ |
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| 269.9999 |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | |||||
Common stock issued for debt conversion |
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| - |
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Extinguishment of derivative liabilities on conversion |
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| - |
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| - |
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Stock issued for services |
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| - |
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Net loss |
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| - |
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| - |
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Balance, September 30, 2020 |
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| $ |
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| 282.99993 |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | |||||
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| Common Stock |
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| Series A |
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| Series B |
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| Series C |
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| Non-Controlling |
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| Additional Paid in |
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| Accumulated |
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| Stockholders’ |
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| Shares |
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| Par Value |
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| Shares |
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| Par Value |
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| Shares |
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| Par Value |
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| Shares |
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| Par Value |
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| Interest |
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| Capital |
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| Deficit |
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| Deficit |
| ||||||||||||
Balance, January 1, 2020 |
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| $ |
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| 249.9999 |
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| - |
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| $ | - |
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| - |
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| $ | - |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | |||||
Common stock for debt conversion |
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| - |
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| - |
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| - |
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| - |
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| - |
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| - |
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Preferred stock Series C issued |
|
| - |
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| - |
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| - |
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Preferred Series B Issuance |
|
| - |
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| - |
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| - |
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Extinguishment of Debt |
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| - |
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| - |
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| - |
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Extinguishment of derivative liabilities on conversion |
|
| - |
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| - |
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| - |
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| ||||||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
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|
|
| - |
|
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|
|
| - |
|
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|
| ( | ) |
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| ( | ) |
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| ( | ) | |||||
Balance, March 31, 2021 |
|
|
|
| $ |
|
|
| 249.9999 |
|
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|
|
| $ |
|
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|
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| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||||||||
Common stock issued for Preferred Stock conversion |
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|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) | |||||
Balance, June 30, 2021 |
|
|
|
| $ |
|
|
| 249.9999 |
|
|
|
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||||||||
Common stock issued for Preferred Stock conversion |
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||||||
Common stock issued for warrants |
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Preferred stock Series B issued for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) | |||||||||
Balance, September 30, 2021 |
|
|
|
| $ |
|
|
| 249.9999 |
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | (67,473,753 | ) |
| $ | ( | ) | |||||||||
| 8 |
| Table of Contents |
BEYOND COMMERCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Beyond Commerce, Inc. (the “Company”, “we” and “our”), has a planned business objective to develop, acquire, and deploy disruptive strategic software technology and market-changing business models through selling our own products and the acquisitions of existing companies. We plan to offer a cohesive digital product and services platform to provide our future clients with a single point of contact for all their Internet Marketing Technology and Services (IMT&S) and Information Management (IM) initiatives.
Basis of Presentation
The condensed consolidated financial statements and the notes thereto for the periods ended September 30, 2021 and 2020 included herein include the accounts of the Company, its wholly-owned subsidiaries Service 800 Inc., Customer Centered Strategies, LLC (“CCS”), which the Company has an 80% investment interest, and PathUX and IDriveYourCar (which have both been discontinued as of April 24, 2020, see Note 4 – Discontinued Operations).
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. All significant intercompany accounts and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).
NOTE 2. SELECTED ACCOUNTING POLICIES
Interim Financial Statements
These unaudited condensed consolidated financial statements as of and for the three (3) and nine (9) months ended September 30, 2021 and 2020, respectively, reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the accounting principles generally accepted in the United States of America.
These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 2020 and 2019, respectively, which are included in the Company’s December 31, 2020 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission on April 15, 2021. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the three (3) and nine (9) months ended September 30, 2021 are not necessarily indicative of results for the entire year ending December 31, 2021.
Use of Estimates
The preparation of consolidated financial statements and accompanying notes in conformity with GAAP 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Estimates are used in the determination of depreciation and amortization and the valuation for non-cash issuances of equity instruments, income taxes, and contingencies, among others. Actual results could differ materially from these estimates.
| 9 |
| Table of Contents |
BEYOND COMMERCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Cash and Cash Equivalents
The Company classifies as cash and cash equivalents amounts on deposit in banks and cash temporarily in various instruments with original maturities of nine months or less at the time of purchase. The Company’s cash management system is currently integrated within several banking institutions.
Fair Value of Financial Instruments
The carrying value of the current assets and liabilities approximate fair value due to their relatively short maturities.
Fair Value Measurements
Statement of financial accounting standard FASB Topic 820, Disclosures about Fair Value of Financial Instruments, requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for assets and liabilities qualifying as financial instruments are a reasonable estimate of fair value.
The Company applies the fair value hierarchy as established by GAAP. Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure the fair value as follows.
| · | Level 1 – quoted prices in active markets for identical assets or liabilities. |
|
|
|
| · | Level 2 – other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date. |
|
|
|
| · | Level 3 – significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date. |
|
| September 30, 2021 Fair Value Measurements |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total Fair Value |
| ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Derivative Liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
| December 31, 2020 Fair Value Measurements |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total Fair Value |
| ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Derivative Liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Derivative liability as of December 31, 2020 |
| $ |
| |
Change in derivative liability during the period |
|
| ( | ) |
Reclassed to additional paid in capital for notes converted into shares of common stock |
|
| ( | ) |
Loss on derivative liability on conversion |
|
|
| |
|
|
|
|
|
Reclass to accrued loss contingency |
|
| ( | ) |
Balance at September 30, 2021 |
| $ |
|
Management considers all of its derivative liabilities to be Level 3 liabilities.
| 10 |
| Table of Contents |
BEYOND COMMERCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Revenue Recognition
The Company recognizes revenue in accordance with FASB ASC Subtopic 606-10, Revenue Recognition. We recognize revenue as we transfer control of deliverables (products, solutions and services) to our customers in an amount reflecting the consideration to which we expect to be entitled. To recognize revenue, we apply the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. We account for a contract based on the terms and conditions the parties agree to, the contract has commercial substance and collectability of consideration is probable. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience.
The majority of the Company’s revenue is generated by the completion of a survey. Revenue is recognized and customers are billed at the point in time a survey occurs or when a related service is complete. The Company may require a deposit from new customers for set up costs or as down payments. These amounts are not significant to the financial statements.
Valuation of Derivative Instruments
ASC 815 “Derivatives and Hedging” requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option pricing formula. Upon conversion of a note where the embedded conversion option has been bifurcated and accounted for as a derivative liability, the Company records the shares at fair value, relieves all related notes, derivatives and debt discounts, and recognizes a net gain or loss on debt extinguishment.
|
| September 30, 2021 Derivative Liability |
| |
Expected term |
|
| ||
Exercise price |
| $ |
| |
Expected volatility |
|
| % | |
Expected dividends |
| None |
| |
Risk-free rate |
|
| % | |
Reclassifications
We may make certain reclassifications to prior period amounts to conform with the current year’s presentation. These reclassifications did not have a material effect on our condensed consolidated statement of financial position, results of operations or cash flows.
Recent Accounting Pronouncements
The Company reviews all of the Financial Accounting Standard Board’s updates periodically to ensure the Company’s compliance of its accounting policies and disclosure requirements to the Codification Topics.
The FASB has issued ASU No. 2019–12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new guidance is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of ASC 740. The guidance also improves consistent application by clarifying and amending existing guidance from ASC 740. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods therein and is to be applied on a retrospective, modified retrospective or prospective approach, depending on the specific amendment. Early adoption is permitted. The adoption of the new guidance did not change anything in the consolidated financial statements and therefore had no material impact.
| 11 |
| Table of Contents |
BEYOND COMMERCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In August 2020, the Financial Accounting Standards Board (“FASB”) issued a new standard (ASU 2020-06) to reduce the complexity of accounting for convertible debt and other equity-linked instruments. The ASU simplifies accounting for convertible instruments by removing major separation models required under current Generally Accepted Accounting Principles (GAAP). Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted earnings per share (EPS) calculation in certain areas. As a result, the new standard may affect net income and EPS, and therefore performance measures, and increase debt levels which may impact debt covenant compliance.
ASU 2020-06 is effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the standard will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption will be permitted.
The Company will continue to monitor these emerging issues to assess any potential future impact on its financial statements. The Company has taken the position that any future standards will not be disclosed to the extent they are not material to our operations.
NOTE 3. GOING CONCERN
The Company's financial statements are prepared using GAAP, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. Because of recent events, the Company cannot state with certainty of its ability to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
The Company has suffered losses from operations and has a working capital deficit, and negative cash flows from operations which raise substantial doubt about its ability to continue as a going concern. Management is taking steps to raise additional funds to address its operating and financial cash requirements to continue operations in the next twelve months. Management has devoted a significant amount of time in attempting to raise capital from additional debt and equity financing. Due to its nominal revenues, the Company’s ability to continue as a going concern is dependent upon raising additional funds through debt and equity financing and generating revenue, including through the acquisition of Service 800 and CCS or through a merger transaction with a well-capitalized entity. There are no assurances the Company will receive the necessary funding or generate revenue necessary to fund operations. If we are unable to obtain additional funds, or if the funds cannot be obtained on terms favorable to us, we will be required to delay, scale back or eliminate our plans to continue to develop and expand our operations or in the extreme situation, cease operations altogether.
NOTE 4. DISCONTINUED OPERATIONS
PathUX, LLC
On April 24, 2020, the Company entered into a Settlement and Release Agreement whereby, effective as of April 1, 2020, the purchase agreement between the former shareholders of PathUX and IDriveYourCar dated May 31, 2019 was effectively unwound, with all assets and liabilities returned to such former shareholders.
| 12 |
| Table of Contents |
BEYOND COMMERCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Income (loss) from discontinued operations, net of tax and the loss on sale of discontinued operations, net of tax, of the PathUX business which is presented in total as discontinued operations, net of tax in the Company’s Consolidated Statements of Operations for the period ended September 30, 2020 is as follows:
|
| 2020 |
| |
Total net sales |
| $ |
| |
Cost of sales |
|
|
| |
Operating, selling, general and administrative expenses |
|
|
| |
Amortization of software |
|
|
| |
Income (loss) from discontinued operations |
|
| ( | ) |
Gain on sale of discontinued operations |
|
|
| |
Income tax provision |
|
|
| |
Discontinued operations, net of tax |
|
|
| |
As the sale was finalized shortly after close of the first quarter 2020, the current balance sheet no longer reflects these operations.
NOTE 5. SHORT- AND LONG-TERM BORROWINGS
Short-term and Long-term borrowings, consist of the following: |
| September 30, |
|
| December 31, |
| ||
Short term debt; |
| 2021 |
|
| 2020 |
| ||
Convertible Promissory Notes, bearing an annual interest rate of 12% secured, due 08/27/2019 |
| $ |
|
| $ |
| ||
Short-Term Note – Jean Mork Bredeson cash deficit holdback, 15%, past due |
|
|
|
|
|
| ||
Short-Term Note – Jean Mork Bredeson purchase allocation, 15%, past due |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Funding from the Payroll Protection Program, annual interest of 1%, due 04/24/2022 |
|
|
|
|
|
| ||
Convertible Promissory Notes, bearing an annual interest rate of 8% secured, due 08/07/2020 |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total short-term debt |
| $ |
|
| $ |
| ||
Long term debt; |
|
|
|
|
|
| ||
Convertible Promissory Notes, bearing an annual interest rate of 5.0%, due 12/31/22 |
|
|
|
|
|
| ||
Funding from the SBA Program, annual interest of 3.75%, due 03/30/2051 |
|
|
|
|
|
| ||
Promissory Note – Jean Mork Bredeson, interest rate 5.5%, due 2/28/2022 |
|
|
|
|
|
| ||
Senior Secured Redeemable Debenture, bearing an annual interest rate of 16%, due 12/31/2021, long term |
|
|
|
|
|
| ||
Total short-term and long-term borrowings, before debt discount |
|
|
|
|
|
| ||
Less debt discount |
|
| ( | ) |
|
| ( | ) |
Total short-term and long-term borrowings, net |
| $ |
|
| $ |
| ||
Short-term and Long-term borrowings, consist of the following: |
|
|
|
|
|
|
|
|
Short-term borrowings – net of discount |
| $ |
|
| $ |
| ||
Long-term borrowings – net of discount |
|
|
|
|
|
| ||
Total Short-Term and long term borrowings – net of discount |
| $ |
|
| $ |
| ||
On August 7, 2018, we entered into a securities purchase agreement (“SPA”) with Discover Growth Fund, LLC (“Discover”), pursuant to which we issued a senior secured redeemable convertible debenture in the principal amount of $
| 13 |
| Table of Contents |
BEYOND COMMERCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
During the fiscal year 2019, Discover Growth Fund LLC issued the additional $
On March 19, 2021, the Company entered into a securities exchange agreement (the “Exchange Agreement”) with an existing institutional investor (the “Investor”), whereby, in exchange for the Investor returning to the Company for cancellation the Senior Secured Redeemable Convertible Debenture, issued by the Company on August 7, 2018, which was convertible into Common Stock at a variable conversion price. The Company is issuing to the Investor
On November 27, 2018, the Company received funding in conjunction with a convertible promissory note and a security purchase agreement dated November 27, 2018, in the amount of $
Effective February 28, 2019 as a component of the closing of the business combination between Beyond Commerce, Inc. and Service 800, Jean Mork Bredeson, Founder and President of Service 800, the Company issued a $
As a component of the Service 800 transaction, in lieu of the entire cash payment of $2,100,000 being made to Ms. Bredeson, a $210,000 amount was to be withheld until May 30, 2019 and continues to be outstanding. This note does not carry any interest obligations. Also, as all cash and accounts receivables at the effective date of the closing were to be retained by Ms. Bredeson, this allocation of cash is to be distributed quarterly on a non interest basis as true-ups are derived, which amounted to $
On December 31, 2019, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with TCA Special Situations Credit Strategies ICAV, an Irish collective asset vehicle (the “Buyer” or “TCA ICAV”), and TCA Beyond Commerce, LLC, a Wyoming limited liability company (“TCA Beyond Commerce”), pursuant to which the Buyer purchased from the Company a senior secured redeemable debenture having an initial principal amount of $
The Initial Debenture, and any future debentures that may be purchased by Buyer pursuant to the Securities Purchase Agreement (the “Additional Debentures”), is secured through an unconditional and continuing security interest in all of the assets and properties, including after acquired assets, of the Company and each of its subsidiaries, which are acting as guarantors with respect to the Company’s obligations under the Initial Debenture and any Additional Debentures, pursuant to that certain Security Agreement, dated December 31, 2019, entered into by the Company and TCA Beyond Commerce in favor of the Buyer (the “Security Agreement”). In addition, Geordan Pursglove, the Company’s CEO, delivered a personal guaranty with respect to the Company’s obligations under the Securities Purchase Agreement. The maturity date on this security is
| 14 |
| Table of Contents |
BEYOND COMMERCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In May 2020, the SEC appointed a Receiver to close down the TCA Global Master Fund, L.P. over allegations of accounting fraud. The amount recorded by the Company as being owed to TCA was based on TCA’s application of prior payments made by the Company. The Company believes that prior payments of principal and interest may have been applied to unenforceable investment banking and other fees and charges. It is the Company’s position that the amount owed to TCA is less than the amount set forth above.
TCA Beyond Commerce entered into a Membership Interest Purchase Agreement (the “Membership Interest Purchase Agreement”), whereby TCA Beyond Commerce acquired
On April 24, 2020, the Company through its Service 800 Inc. subsidiary received $
On February 8, 2021, the Company through its Service 800 Inc. subsidiary, received $
| 15 |
| Table of Contents |
BEYOND COMMERCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On March 30, 2021 the Company through its Service 800 Inc. subsidiary, received $
NOTE 6. COMMON STOCK AND PREFERRED STOCK
On March 2, 2021, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment effecting the amendment and restatement of its Articles of Incorporation (the “Amended and Restated Articles”). The Amended and Restated Articles reflected amendments that effected (i) the increase of the number of shares of common stock that the Company is authorized to issue to ten billion (
On August 20, 2021, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment effecting the amendment and restatement of its Articles of Incorporation (the “Amended and Restated Articles”). The Amended and Restated Articles reflected amendments that effected the increase of the number of shares of common stock that the Company is authorized to issue to thirty billion (
Common Stock
As of September 30, 2021, our authorized capital stock consisted of
During the nine months ended, September 30, 2021, the Company issued
Holders of common stock are entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law, the holders of our common stock possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are present in person or represented by proxy. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation. Our Articles of Incorporation do not provide for cumulative voting in the election of directors. Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.
Preferred Stock
In March 2021, we approved authorization to issue up to 60,000,400 shares of preferred stock, which are designated Series A, B, C and undesignated Preferred Stock. As of November 14, 2021, we have 249.9999 shares of Series A Preferred Stock issued and outstanding.
We have designated
| 16 |
| Table of Contents |
BEYOND COMMERCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Series A Preferred Stock will, with respect to each holder of the Series A Preferred Stock, be entitled to three million (3,000,000) votes for each share of Series A Preferred Stock standing in his, her or its name on the books of the corporation. Each share of Series A Preferred Stock is convertible, at the option of the holder, into one million shares of Common Stock. The Series A Preferred Stock is entitled, in the event of any voluntary liquidation, dissolution or winding up of the Corporation, to receive payment or distribution of a preferential amount before any payments or distributions are received by any class or series of common stock. Subject to the prior or equal rights of the holders of all classes of stock at the time outstanding having prior or equal rights as to dividends and ranking ahead of the Common Stock, the holders of the Series A Preferred Stock shall be entitled to therefore receive, when and as declared by the Board of Directors, out of any assets of the Corporation legally available, such dividends as may be declared from time to time by the Board of Directors.
During the third quarter, Mr. Pursglove was issued nine (
We have designated
With respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series B Preferred Stock shall vote together with the holders of Common Stock without regard to class, except as to those matters on which separate class voting is required by applicable law or the Corporation’s Articles of Incorporation or by-laws. Such concentrated control of the Company may adversely affect the price of our common stock. A stockholder that acquires common stock will not have an effective voice in the management of the Company.
We have designated
The Series C Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank: (a) pari passu with the Corporation’s Common Stock, $0.001 par value per share (“Common Stock”); (b) junior to all other series of Preferred Stock, as such may be designated as of the date of this Designation, or which may be designated by the Corporation after the date of this Designation (the “Other Preferred”), and (c) junior to all existing and future indebtedness of the Corporation.
Holders of the Series C Preferred Stock shall vote on all matters requiring a vote of the shareholders of the Corporation, together with the holders of shares of Common Stock and other classes of Preferred Stock entitled to vote, as a single class. Subject to the applicable beneficial ownership limitation, each Holder shall be entitled to the whole number of votes equal to the number of shares of Common Stock into which such holder’s Preferred Shares would be convertible using the record date for determining the stockholders of the Corporation eligible to vote on such matters as the date as of which the number of Conversion Shares is calculated. Holders of the Series C Preferred Stock will also be entitled to vote as a separate class with respect to any matter as to which such voting rights are required by applicable law.
| 17 |
| Table of Contents |
BEYOND COMMERCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
During the first quarter of 2021, the Company issued
On July 7, 2021,
On July 22, 2021,
On August 5, 2021,
On August 20, 2021,
On September 14, 2021,
On September 22, 2021,
On September 29, 2021,
NOTE 7. COMMITMENTS AND CONTINGENCIES
Legal Matters
A complaint against the Company, dated February 5, 2020, has been filed in Hennepin County, Minnesota, by Jean Mork Bredeson, the former President and former owner of Service 800, making certain claims related to the Company's acquisition of Service 800, seeking in excess of $1.6 million in damages. On March 16, 2020, the Company and Service 800 filed an answer, counterclaim and third-party claim against Ms. Bredeson and defendants Allen Bredeson and Jeff Schwedinger, former employees of Service 800. Answers and Affirmative and Additional Defenses to Third Party Claims were filed by Ms. Bredeson on April 7, 2020 and by Mr. Schwedinger on April 9, 2020 and, on April 24, 2020, Ms. Bredeson filed a Motion to Dismiss. The Court denied in full Ms. Bredeson’s motion to dismiss or for a more definite statement. Subsequently, using a wholly owned entity she controls, Ms. Bredeson filed another matter, captioned Green Valley Associates Inc. vs Service 800 Inc., 27-CV-20-13800. Although Ms. Bredeson is seeking to have the matters handled by separate judges, the Company is seeking consolidation of the two matters before Judge Klein, the judge who denied Ms. Bredeson's motion to dismiss. Ms. Bredeson also has since filed, and then withdrawn, other motions, without allowing them to reach Judge Klein. The discovery process remains ongoing, and we expect the matter will continue for another six months before substantive motions can be filed. An early attempt at mediation was unsuccessful, but another attempt at the end of discovery may be more fruitful. In the interim, the Company is continuing to vigorously defend itself against this lawsuit.
The Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 5, states that a firm must distinguish between losses that are probable, reasonably probable or remote. If a contingent liability is deemed probable, it must be directly reported in the financial statements. In July 2010, the FASB issued ASC 450-20 that updated the Standard and uses “probable,” “reasonably possible,” and “remote” to determine the likelihood of the future event that will confirm a loss, an impairment of an asset, or the incurrence of a liability.
| 18 |
| Table of Contents |
BEYOND COMMERCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Accrual of a loss contingency is required when (1) it is probable that a loss has been incurred at the date of the financial statements and (2) the amount can be reasonably estimated. No accrual has been made in the above matter as the determination is that a loss is not probable as of September 30, 2021 nor can a loss be reasonably estimated.
A complaint against the Company, dated June 9, 2021, has been filed in Salt Lake County, Utah, by Iliad Research and Trading, L.P. (“Iliad”), a former noteholder, that claims a Notice of Exercise of Warrant was delivered and the Company failed to timely deliver the Warrant shares.
A complaint against the Company, dated July 29, 2021, has been filed in the United States District Court of Nevada, by Discover Growth Fund, LLC, (“Discover”), a current stockholder, for claims related to the issuance of shares of Series C Preferred Stock to Discover during the first quarter of 2021. On August 20, 2021, the Company and Discover reached a Settlement Agreement whereby the Company will issue
Accrual of a loss contingency is required when (1) it is probable that a loss has been incurred at the date of the financial statements and (2) the amount can be reasonably estimated. An accrual of a loss contingency has been made in the above matter as the determination is that a loss is probable as of September 30, 2021 and the loss is reasonably estimated to be $
In addition to the above, from time to time, we may be involved in litigation in the ordinary course of business. Other than as set forth above, we are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations.
Other than as set forth above, to our knowledge, 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 our executive officers or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or any of our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
Operating Lease
We currently lease virtual office space at 3773 Howard Hughes Parkway, Suite: 500 Las Vegas, NV 89169. We pay an annual fee of $
The public entity guidance in ASU 2016-02, Leases (Topic 842) requires lessees to recognize substantially all leases on their balance sheets as lease liabilities with a corresponding right-of-use asset. Our accounting policy is to keep leases with an initial term of 12 months or less off of the balance sheet.
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BEYOND COMMERCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company leases office space under an operating lease. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments under the lease. Operating lease, right-of-use assets, and liabilities are recognized at the lease commencement date based on the present value of lease payments over the reasonably certain lease term. The implicit rates with the Company’s operating leases are generally not determinable and the Company uses its incremental borrowing rate at the lease commencement date to determine the present value of its lease payments. The determination of the Company’s incremental borrowing rate requires judgement. The company determines its incremental borrowing rate for each lease using its then-current borrowing rate. Certain of the Company’s leases may include options to extend or terminate the lease. The Company establishes the number of renewal options periods used in determining the operating lease term based upon its assessment at the inception of the operating lease. The option to renew the lease may be automatic, at the option of the Company, or mutually agreed to between the landlord and the Company. Once the facility lease term has begun, the present value of the aggregate future minimum lease payments is recorded as a right-of-use asset.
Lease expense is recognized on a straight-line basis over the term of the lease. There are no options to extend or terminate the leases. The Company has no other leases yet to commence.
NOTE 8. RELATED PARTIES
During the first quarter, Mr. Pursglove received three (
On May 8, 2019, the Company issued a short-term convertible note payable for $54,000 to a member of the Board of Directors. The note had a
On July 19, 2021, the Company issued a convertible promissory note (the “Note”) in favor of Geordan G. Pursglove, the Company’s Chairman and Chief Executive Officer, in the principal amount of $
NOTE 9. NET INCOME (LOSS) PER SHARE OF COMMON STOCK
The Company follows ASC 260-10, which requires presentation of basic and diluted Earnings per Share (“EPS”) on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying consolidated financial statements, basic net income (loss) per share of common stock is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the year. Basic net income (loss) per common share is based upon the weighted average number of common shares outstanding during the period. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
Convertible debt that is convertible into
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BEYOND COMMERCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations for the three and nine - month periods ended September 30, 2021 and 2020:
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| Nine-month period ended September 30, |
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| Three-month period ended September 30, |
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| 2021 |
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| 2020 |
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| 2021 |
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| 2020 |
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Loss from continuing operations |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Income from discontinued operations |
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Consolidated net loss |
| $ | (8,791,919 | ) |
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| $ | (1,454,674 | ) |
| $ | ( | ) |
Weighted average shares used for diluted earnings per share |
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Incremental Diluted Shares |
| * |
| - | * |
| * |
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Weighted Average shares used for diluted earnings per share |
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Net income (loss) per share: |
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Basic and Diluted: continuing operations |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Basic and Diluted: discontinued operations |
| $ | - |
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| $ |
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| $ |
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| $ | - |
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Total Basic and Diluted loss per share |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
* The shares associated with convertible debt, preferred stock, stock options and stock warrants are not included because the inclusion would be anti-dilutive (i.e., reduce the net loss per common share).
NOTE 10. SUBSEQUENT EVENTS
On October 5, 2021,
On October 8, 2021,
On October 13, 2021,
On October 15, 2021,
On October 18, 2021,
On October 19, 2021,
On October 20, 2021,
On October 29, 2021,
On November 11, 2021,
A complaint against the Company, dated July 29, 2021, has been filed in the United States District Court of Nevada, by Discover Growth Fund, LLC. (“Discover”), a current stockholder for claims related to the issuance of shares of Series C Preferred Stock to Discover during the first quarter of 2021. On August 20, 2021, the Company and Discover reached a Settlement Agreement whereby the Company will issue
On October 25, 2021, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with Discover Growth Fund, LLC. (“Discover”), a current stockholder, for cash proceeds of $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors currently known to management could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions. Factors that could cause differences include, but are not limited to, expected market demand for our products, fluctuations in pricing for our products, and competition. 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 throughout, the words “may”, “will”, “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 are intended to identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and we caution you that these statements are not guarantees of future performance or events and are subject to risks, assumptions, and other factors.
The following discussion provides information that management believes is relevant to an assessment and understanding of our past financial condition and plan of operations. The discussion below should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this annual report.
About Beyond Commerce
Beyond Commerce, Inc. was formed as a Nevada corporation on January 12, 2006.
We plan to operate within two markets: (1) the Business-to-Business Internet Marketing Technology and Services market and (2) the Information Management market. Our goal is to develop proprietary software for digital transformation of clients’ existing content. We believe our planned platform, strategy, and suite of software products and services will provide secure and scalable information control solutions for global companies. We believe our planned software will assist organizations in finding, utilizing, and sharing business information between devices in ways that are intuitive, efficient and productive. We believe that our business model will ensure that information will remain secure and private, as necessitated by the current market climate.
In addition, we plan to provide solutions which facilitate the exchange of information and data transactions between supply chain participants, such as manufacturers, retailers, distributors and financial institutions. The goal is to automate potential client internal processes thereby increasing productivity and lowering costs. We plan to develop proprietary algorithms which it will embed in the planned software to enable clients to access data and gain insight into their business, through that data, leading to improved internal decision making.
We plan to offer the proposed software through traditional on-premise solutions, SaaS as a cloud based solution, or a combination of on-premise, SaaS or cloud based solutions. We plan to work with our clients and their needs as to which delivery method they prefer. We believe giving clients a choice and flexibility will help us to obtain long-term client value.
RESULTS OF OPERATIONS
Through our Service 800 Inc. subsidiary, many of our clients, such as GE Healthcare, Audiology System, Inc., 3M Healthcare, Johnson & Johnson Vision Care, Albany Molecular Research Inc., Sakura Finetek, Abbott Diagnostics, Biosense Webster, a Johnson & Johnson Company and Medtronic to name a few took the time during the pandemic to begin strategic planning with Service 800 to grow their business with the Company through renewals, expansion, and developing better ways to grow our programs with each and every one of them for the future. This select market segment continues to be a major source of revenue for the Company as we expand our services within this business segment. Renewals have been strong during the last nine months, and we anticipate revenue getting back in line with exceeding our expectations as we progress further into the year. All renewals that have taken place are on a minimum of a one to two-year term with an auto renewal taking place when the contract expires. The pandemic helped our customers recognize the value that Service 800 brings to its clients in the form of providing valuable information to not only help their growth within their own companies, but also help them be better providers to their customers as well. We continue to look forward to growth into each division of these companies and expansion to exceed expectations that have been set. We value these customers and seek to achieve positive growth we have set for the remainder of the year and moving onwards for future years to come.
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For the Three months Months ended Ended September 30, 2021 and September 30, 2020.
Revenue
Revenue generated for the three months ended September 30, 2021 was $1,024,501 compared to $983,155 from the comparable three-month period in 2020.
Operating Expenses
For three months ended September 30, 2021, operating expenses were $1,540,241 and for the three months ended September 30, 2020, operating expenses were $1,654,956. This decrease is in part attributable to a reduction in payroll expense of $20,898 due to Service 800 increasing the organization structure and changing the mix of employees, an offsetting increase in professional fees of $40,722, a decrease in general and administrative costs of $76,685, a decrease in cost of revenue of $39,013 and a decrease in depreciation and amortization expense of $18,841 during the three months ended September 30, 2021 compared to the same period ending September 30, 2020.
Non-Operating Income (Expense)
The Company reported non-operating income expense of $943,521 for the three months ended September 30, 2021, as compared to $7,057,648 for the three months ended September 30, 2020, attributable principally to the reduction in derivative liability related expenses of $6,123,139 offset in part by a loss on extinguishment of debt of $1,131,856. There were increases of $628,403 due to the gain on forgiveness of Paycheck Protection Program loans and a decrease in interest expense of $448,890.
Net Income (loss)
For three months ended September 30, 2021, the Company incurred a net loss of $1,459,261 as compared to a net loss of $7,729,449 for the three months ended September 30, 2020, which was primarily due to the reduction in derivative related expenses.
For the Nine Months Ended September 30, 2021 and September 30, 2020.
Revenue
Revenue generated for the nine months ended September 30, 2021 was $3,258,619 compared to $3,012,754 for the comparable nine-month period in 2020 nine months ended September 30, 2020.
Operating Expenses
For the nine months ended September 30, 2021, operating expenses were $5,135,496 and for the nine months ended September 30, 2020, operating expenses were $4,946,098. This increase is in part attributable to an increase in payroll expenses of $225,066 from $1,897,723 to $2,122,789 for the nine months ended September 30, 2020 and 2021, respectively, due to the Service 800 increasing the organizational structure and changing the mix of employees. Cost of revenue increased slightly by $11,614, and professional fees increased by $353,158. General and administrative expenses decreased by $344,774 due to continued efforts to reduce overhead expenses, and depreciation and amortization expense decreased by $55,666.
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Non-Operating Income (Expense)
The Company reported non-operating expense of $6,928,746 for the nine months ended September 30, 2021, as compared to $8,734,813 for the nine months ended September 30, 2020, a decrease of $1,806,067 attributable in part to a decrease in derivative related expenses of $4,134,510, a reduction in the amortization of debt discount of $541,078, a decrease in interest expense of $1,085,520 due to settlements and debt forgiveness of the Payroll Protection Program loans of $1,133,514. The Company incurred a loss on the extinguishment of debt in the amount of $5,088,555 recognized during the nine months ended September 30, 2021.
Net Income (loss)
For nine months ended September 30, 2021, the Company incurred a net loss of $8,805,623 as compared to a net loss of $10,317,457 for nine months end September 30, 2020, which was primarily due to the reduction in changes to the derivative liability and derivative related expenses, interest expense and debt forgiveness during the current period ended September 30, 2021 compared to the prior year comparative period. The reduction was offset in part by a loss on the extinguishment of debt.
Purchase of Significant Equipment
We do not anticipate the purchase or sale of any plant or significant equipment during the next twelve (12) months.
Going Concern
There is substantial doubt about our ability to continue as a going concern.
As of September 30, 2021, we had an accumulated deficit of $67,437,753 and a working capital deficit of $4,870,536. These conditions raise substantial doubt about our ability to continue as a going concern. We intend to continue relying upon the issuance of debt and equity securities to finance our operations. In this regard, we are restricted by the number of shares available for issuance in an equity financing, and we will likely need to increase our authorized capital in order to take advantage of such financing. However, there can be no assurance that we will be successful in obtaining shareholder approval to increase our authorized capital, that we will be successful in raising the funds necessary to maintain operations, or that a self-supporting level of operations will ever be achieved. The likely outcome of these future events is indeterminable. Our financial statements do not include any adjustment to reflect the possible future effect on the recoverability and classification of the assets or the amounts and classification of liabilities that may result should we cease to continue as a going concern.
Liquidity and Capital Resources
Our ability to continue as a going concern is dependent on our ability to raise additional capital and implement our business plan. Since inception, we have been funded by related parties through capital investment and borrowing of funds.
We had total current assets of $1,274,772 and $1,276,871 as of September 30, 2021 and December 31, 2020, respectively. Current assets would consist primarily of cash and accounts receivable. The Company had a $67,437,753 accumulated deficit on its balance sheet as of September 30, 2021.
We had total current liabilities of $6,145,308 and $7,025,541 as of September 30, 2021 and December 31, 2020, respectively. Current liabilities consisted primarily of the derivative liability, accounts payable, accrued payroll and payroll taxes, related party debt, conventional and convertible debt, lease liability, accrued loss contingency, and accrued interest. In the current nine months there were increases in accrued interest of $192,761, in accrued loss contingency of $871,656 related to litigation and in convertible notes short-term to a related party of $1,446,000. There were decreases in accounts payable of $339,354, accrued payroll and payroll liabilities of $1,275,908 due to the exchange of accrued payroll by an officer to a convertible note, and in short term borrowings of $1,198,555. A change in the value of derivative liability corresponding to an existing note decreased by $581,569.
We had a working capital deficit of $4,870,536 and $5,748,670 as of September 30, 2021 and December 31, 2020, respectively.
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Cash Flow from Operating Activities
For the nine months ended September 30, 2021 and 2020, cash used in operating activities was $1,464,373 and $920,073 respectively. This increase of cash used is attributable to the reduction in accounts payable and payroll related liabilities offset in part by noncash transactions relating to stock issuances, conversations and depreciation expense.
Cash Flow from Investing Activities
For the nine months ended September 30, 2021 and 2020, cash used in investing activities was $0 and $16,230, respectively.
Cash Flow from Financing Activities
For the nine months ended September 30, 2021 and 2020, cash provided by financing activities was $1,683,684 and $446,015, respectively mainly attributable to proceeds from the sale of preferred stock of $1,000,000, proceeds from SBA loan of $150,000, and proceeds from a Payroll Protection Program loan of $625,000 during the nine months ended September 30, 2021.
Contractual Obligations
As a “smaller reporting company,” we are not required to provide tabular disclosure of contractual obligations.
Inflation
Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future.
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, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.
Seasonality
In the past, our operating results and operating cash flows historically have not been subject to seasonal variations. This pattern may change, however, in the event that we succeed in bringing our planned products to market.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis, we evaluate past judgments and our estimates, including those related to allowance for doubtful accounts, allowance for inventory write-downs and write offs, deferred income taxes, provision for contractual obligations and our ability to continue as a going concern. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Note 2 to the consolidated financial statements, presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, describes the critical accounting estimates and policies used in preparation of our consolidated financial statements. There were no significant changes in our critical accounting estimates during the nine months ended September 30, 2021.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation S-K.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, 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 Exchange Act 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. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2021. Based on the evaluation of our disclosure controls and procedures as of September 30, 2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls were not effective.
As funds become available to us, we expect to implement additional measures to improve disclosure controls and procedures such as implementing and documenting our internal controls procedures.
Changes in internal controls over financial reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
Limitations on the Effectiveness of Controls
A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The Company’s management, including its Principal Executive Officer and its Principal Financial Officer, do not expect that the Company’s controls will prevent or detect all errors and all fraud. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
These inherent limitations include the realities that judgments in decision-making can be faulty, and these breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls 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. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A complaint against the Company, dated February 5, 2020, has been filed in Hennepin County, Minnesota, by Jean Mork Bredeson, the former President and former owner of Service 800, making certain claims related to the Company's acquisition of Service 800, seeking in excess of $1.6 million in damages. On March 16, 2020, the Company and Service 800 filed an answer, counterclaim and third-party claim against Ms. Bredeson and defendants Allen Bredeson and Jeff Schwedinger, former employees of Service 800. Answers and Affirmative and Additional Defenses to Third Party Claims were filed by Mr. Bredeson on April 7, 2020 and by Mr. Schwedinger on April 9, 2020 and, on April 24, 2020, Ms. Bredeson filed a Motion to Dismiss. The Court denied in full Ms. Bredeson’s motion to dismiss or for a more definite statement. Subsequently, using a wholly owned entity she controls, Ms. Bredeson filed another matter, captioned Green Valley Associates Inc. vs Service 800 Inc., 27-CV-20-13800. Although Ms. Bredeson is seeking to have the matters handled by separate judges, the Company is seeking consolidation of the two matters before Judge Klein, the judge who denied Ms. Bredeson's motion to dismiss. Ms. Bredeson also has since filed, and then withdrawn, other motions, without allowing them to reach Judge Klein. The discovery process remains ongoing, and we expect the matter will continue for another six months before substantive motions can be filed. An early attempt at mediation was unsuccessful, but another attempt at the end of discovery may be more fruitful. In the interim, the Company is continuing to vigorously defend itself against this lawsuit.
A complaint against the Company, dated July 29, 2021, has been filed in the United States District Court of Nevada, by Discover Growth Fund, LLC. (“Discover”), a current stockholder for claims related to the issuance of shares of Series C Preferred Stock to Discover during the first quarter of 2021. On August 20, 2021, the Company and Discover reached a Settlement Agreement whereby the Company will issue 72,638 shares of Preferred Series C stock to Discover. This Settlement Agreement is conditioned upon obtaining a court order approving the settlement between the parties. The court has scheduled a hearing for the approval on November 19, 2021.
In addition to the above, from time to time, we may be involved in litigation in the ordinary course of business. Other than as set forth above, we are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. Other than as set forth above, to our knowledge, 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 our executive officers or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or any of our subsidiaries' officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect
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, filed with the U.S Securities and Exchange Commission on April 15, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Other than described below, there were no unregistered sales of equity securities that were not otherwise disclosed in a current report on Form 8-K.
On July 7, 2021, 16,000 shares of Series C Convertible Preferred Stock were converted to 160,000,000 shares of common stock.
On July 22, 2021, 16,000 shares of Series C Convertible Preferred Stock were converted to 160,000,000 shares of common stock.
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On August 05, 2021, 16,000 shares of Series C Convertible Preferred Stock were converted to 160,000,000 shares of common stock.
On August 20, 2021, 16,000 shares of Series C Convertible Preferred Stock were converted to 160,000,000 shares of common stock.
On September 14, 2021, 16,000 shares of Series C Convertible Preferred Stock were converted to 160,000,000 shares of common stock.
On September 22, 2021, 29,000 shares of Series C Convertible Preferred Stock were converted to 290,000,000 shares of common stock.
On September 29, 2021, 22,000 shares of Series C Convertible Preferred Stock were converted to 220,000,000 shares of common stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
A Convertible Promissory Note, bearing an annual interest rate of 12% secured, due 08/27/2019August 27, 2019 remains outstanding and is in default. There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any other indebtedness of the Company.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION
There is no other information required to be disclosed under this item which was not previously disclosed.
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ITEM 6. EXHIBITS.
Exhibit Number |
| Exhibit Description |
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| Herewith |
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31.1 |
| Rule 13a-14(a) Certification of Principal Executive Officer. |
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31.2 |
| Rule 13a-14(a) Certification of Principal Financial Officer. |
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32.1* |
| Section 1350 Certification of Principal Executive Officer. |
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32.2* |
| Section 1350 Certification of Principal Financial Officer. |
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101.INS |
| XBRL Instance. |
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101.XSD |
| XBRL Schema. |
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101.PRE |
| XBRL Presentation. |
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101.CAL |
| XBRL Calculation. |
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101.DEF |
| XBRL Definition. |
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101.LAB |
| XBRL Label. |
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* In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not deemed filed for purposes of Section 18 of the Exchange Act.
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| Table of Contents |
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.
| Beyond Commerce, Inc. |
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November 12, 2021 | By: | /s/ Geordan Pursglove |
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| Geordan Pursglove, President/CEO and Director (Principal Executive Officer) |
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