Beyond Commerce, Inc 10-Q for FY2020 Q2
Beyond Commerce, Inc. (BYOC)
About this 10-Q
Beyond Commerce, Inc filed this 10-Q on August 14, 2020, covering the quarter ended June 30, 2020 (FY2020 Q2).
Headline figures
Quarter ended June 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $782.01K
- down 35.6% from $1.21M a year earlier
- Net loss
- $2.14M
- compared with a net loss of $5.17M a year earlier
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: June 30, 2020
Or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ___________ to____________
Commission File Number: 000-52490
Beyond Commerce, Inc.
(Exact name of registrant as specified in its charter)
Nevada |
| 98-0512515 |
(State or Other Jurisdiction of |
| (I.R.S. Employer |
Incorporation or Organization) |
| Identification No.) |
|
|
|
3773 Howard Hughes Pkwy, Suite 500 Las Vegas, Nevada 89169 (Address of Principal Executive Offices) | ||
| ||
(702) 675-8022
(Registrant’s telephone number, including area code)
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. Yes ☒ No ☐
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). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”
1
“accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | 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 ☐ No ☒
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. At August 13, 2020, the registrant had 2,987,681,061 shares of common stock outstanding.
2
Table of Contents
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)4
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS32
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.36
ITEM 4. CONTROLS AND PROCEDURES36
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.38
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.39
ITEM 4. MINE SAFETY DISCLOSURES.39
3
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Beyond Commerce, Inc.
UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE THREE- AND SIX-MONTH PERIODS ENDED
June 30, 2020 & 2019
4
BEYOND COMMERCE, INC.
TABLE OF CONTENTS
| Page |
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2020 & DECEMBER 31, 2019 (Unaudited) | 6 |
7 | |
8 | |
9 | |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) | 11 |
5
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
| June 30, |
|
| December 31, |
| |||
|
| 2020 |
|
| 2019 |
| |||
ASSETS |
|
|
|
|
|
| |||
Current assets: |
|
|
|
|
|
| |||
Cash & cash equivalents |
| $ | 302,702 |
|
| $ | 585,339 |
| |
Accounts receivable, net |
|
| 1,140,659 |
|
|
| 1,347,813 |
| |
Assets held for sale, current |
|
| - |
|
|
| 113,470 |
| |
Other current assets |
|
| 70,446 |
|
|
| 24,229 |
| |
Total current assets |
|
| 1,513,807 |
|
|
| 2,070,851 |
| |
Assets held for sale, long-term |
|
| - |
|
|
| 2,695,085 |
| |
Property, equipment, and software - net |
|
| 46,923 |
|
|
| 37,468 |
| |
Intangible asset- net |
|
| 2,898,331 |
|
|
| 3,137,083 |
| |
Goodwill |
|
| 1,299,144 |
|
|
| 1,299,144 |
| |
|
|
|
|
|
|
|
|
| |
|
| $ | 5,758,205 |
|
|
| 9,239,631 |
| |
|
|
|
|
|
|
|
|
| |
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
| |
Current liabilities: |
|
|
|
|
|
|
|
| |
Accounts payable |
| $ | 726,356 |
|
| $ | 597,777 |
| |
Other current liabilities |
|
| 409,344 |
|
|
| 149,873 |
| |
Accrued payroll & related items |
|
| 1,053,301 |
|
|
| 1,015,180 |
| |
Derivative liability |
|
| 424,748 |
|
|
| 1,433,403 |
| |
Short-term borrowings – net of discount |
|
| 3,253,249 |
|
|
| 2,714,762 |
| |
Liabilities of assets held for sale, current |
|
| - |
|
|
| 2,109,850 |
| |
Short-term borrowings- related party |
|
| 54,000 |
|
|
| 54,000 |
| |
Total current liabilities |
|
| 5,920,998 |
|
|
| 8,074,845 |
| |
|
|
|
|
|
|
|
|
| |
Long-term borrowings – net of discount |
|
| 3,172,909 |
|
|
| 3,119,785 |
| |
Liabilities of assets held for sale, long-term |
|
| - |
|
|
| 1,048,795 |
| |
Total liabilities |
|
| 9,093,907 |
|
|
| 12,243,425 |
| |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
Mezzanine Equity: |
|
|
|
|
|
|
|
| |
Preferred stock series A, $0.001 par value of 249,999,900 shares authorized and 249,999,900 and 249,999,900 shares issued and outstanding, respectively. |
|
| 250,000 |
|
|
| 250,000 |
| |
Preferred stock series B, $0.001 par value of 20 shares authorized and 20 and no shares issued and outstanding, respectively. |
|
| - |
|
|
| - |
| |
Stockholders Equity: |
|
|
|
|
|
|
|
| |
Common stock, $0.001 par value, 3,000,000,000 shares authorized, 2,517,681,061 and 1,495,004,678 issued and outstanding as of June 30, 2020 and at December 31, 2019, respectively. |
|
| 2,517,680 |
|
|
| 1,495,004 |
| |
Additional paid in capital |
|
| 44,580,576 |
|
|
| 43,347,152 |
| |
Accumulated deficit |
|
| (50,787,793) |
|
|
| (48,227,200) |
| |
Deficit attributable to Beyond Commerce, Inc stockholder |
|
| (3,439,537) |
|
|
| (3,135,044) |
| |
Equity attributable to noncontrolling interest |
|
| 103,835 |
|
|
| 131,250 |
| |
Total stockholders' deficit |
|
| (3,335,702) |
|
|
| (3,003,794) |
| |
|
|
|
|
|
|
|
|
| |
Total liabilities and stockholders' deficit |
| $ | 5,758,205 |
|
| $ | 9,239,631 |
| |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE & SIX-MONTH ENDED JUNE 30,
UNAUDITED
|
| For the three months ended June 30, |
|
| For the three months ended June 30, |
|
| For the six months ended June 30, |
|
| For the six months ended June 30, | |||||||||||||||
Revenues |
| $ | 782,009 |
|
| $ 1,213,928 |
| $ | 2,029,599 |
|
| $ |
1,677,842 |
| ||||||||||||
|
|
|
|
|
|
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|
|
|
|
|
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|
|
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| ||||||||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Cost of revenue |
|
| 248,017 |
|
|
| 343,030 |
|
|
| 670,437 |
|
|
| 455,084 |
| ||||||||||
Selling, general and administrative |
|
| 348,117 |
|
|
| 324,643 |
|
|
| 652,152 |
|
|
| 445,686 |
| ||||||||||
Payroll expense |
|
| 588,057 |
|
|
| 665,647 |
|
|
| 1,257,166 |
|
|
| 942,368 |
| ||||||||||
Professional Fees |
|
| 213,582 |
|
|
| 363,871 |
|
|
| 463,741 |
|
|
| 493,162 |
| ||||||||||
Depreciation and amortization |
|
| 124,206 |
|
|
| 160,296 |
|
|
| 247,646 |
|
|
| 213,887 |
| ||||||||||
Total operating expenses |
|
| 1,521,979 |
|
|
| 1,857,487 |
|
|
| 3,291,142 |
|
|
| 2,550,187 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Loss from operations |
|
| (739,970) |
|
|
| (643,559) |
|
|
| (1,261,543) |
|
|
| (872,345) |
| ||||||||||
|
|
|
|
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|
|
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|
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| ||||||||||
Non-operating income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Interest expense |
|
| (646,354) |
|
|
| (190,163) |
|
|
| (903,747) |
|
|
| (405,574) |
| ||||||||||
Amortization of debt discount |
|
| (249,823) |
|
|
| (419,410) |
|
|
| (548,651) |
|
|
| (988,867) |
| ||||||||||
Derivative related expenses |
|
| (1,130,476) |
|
|
| (464,501) |
|
|
| (1,252,075) |
|
|
| (1,586,500) |
| ||||||||||
Change in derivative liability |
|
| 623,399 |
|
|
| (3,461,569) |
|
|
| 1,027,308 |
|
|
| (5,079,981) |
| ||||||||||
Total non-operating income (expense) |
|
| (1,403,254) |
|
|
| (4,535,643) |
|
|
| (1,677,165) |
|
|
| (8,060,859) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Loss from continuing operations before income tax |
|
| (2,143,224) |
|
|
| (5,179,202) |
|
|
| (2,938,708) |
|
|
| (8,933,204) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Income from discontinued operation, net of tax |
|
| - |
|
|
| 11,194 |
|
|
| 350,700 |
|
|
| 11,194 |
| ||||||||||
Provision for income tax |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Consolidated net loss |
| $ | (2,143,224) |
|
| $ | (5,168,008) |
|
| $ | (2,588,008) |
|
| $ | (8,922,010) |
| ||||||||||
|
|
|
|
|
|
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| ||||||||||
Amounts Attributable to Noncontrolling and Controlling Interest |
|
|
|
|
|
| ||||||||||||||||||||
Consolidated net income (loss) attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Noncontrolling interest | $ |
| (7,215) |
|
| $ | - |
|
| $ | (27,415) |
|
| $ | - |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Consolidated net loss, controlling interest | $ |
| (2,136,009) |
|
| $ | (5,168,008) |
|
| $ | (2,560,593) |
|
| $ | (8,922,010) |
| ||||||||||
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| ||||||||||
Net income (loss) per common share-basic and diluted |
| $ | (0.00) |
|
| $ | (0.01) |
|
| $ | (0.00) |
|
| $ | (0.01) |
| ||||||||||
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| ||||||||||
Weighted average shares of capital outstanding –(basic and diluted) |
|
| 1,906,073,735 |
|
|
| 1,140,710,865 |
|
|
| 1,725,314,701 |
|
|
| 1,092,248,763 |
| ||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIODS ENDED JUNE 30,
(Unaudited)
|
|
|
|
|
|
|
| 2020 |
|
| 2019 |
Net loss | $ | (2,588,008) |
| $ | (8,922,010) |
Income from discontinued operations |
| 350,700 |
|
| 11,194 |
Cash flows from operating activities: |
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
Stock issued for services |
| - |
|
| 303,925 |
Loss on derivative |
| 1,812,208 |
|
| 1,775,356 |
Amortization of debt discount |
| 548,651 |
|
| 988,867 |
Depreciation and amortization |
| 247,647 |
|
| 213,887 |
Change in derivative liability |
| (1,027,308) |
|
| 5,079,918 |
Changes in assets and liabilities: |
|
|
|
|
|
(Increase) decrease in accounts receivable |
| 207,154 |
|
| 200,932 |
(Increase) decrease in other current assets |
| (48,337) |
|
| 15,619 |
Increase (decrease) in accounts payable |
| 129,190 |
|
| (341,910) |
Increase (decrease) in payroll liabilities |
| 38,121 |
|
| 371,549 |
Increase (decrease) in other current liabilities |
| 285,194 |
|
| 366,205 |
Net cash provided by (used in) in operating activities. | $ | (746,188) |
| $ | 41,144 |
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
Acquisition of property and equipment |
| (16,230) |
|
| (2,209,074) |
Cash acquired in acquisition |
| - |
|
| 195,039 |
Net cash used in investing activities | $ | (16,230) |
|
| (2,014,035) |
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
Repayment of Convertible Notes |
| (40,000) |
|
| - |
Cash receipts from notes payable |
| 519,781 |
|
| 2,000,000 |
Net cash provided (used in) by financing activities |
| 479,781 |
|
| 2,000,000 |
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
| (282,637) |
|
| 27,109 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning balance |
| 585,339 |
|
| 79,890 |
Cash and cash equivalents, ending balance | $ | 302,702 |
| $ | 106,999 |
Supplemental Disclosure of Cash Flow Information: |
|
|
|
|
|
Cash Paid For: |
|
|
|
|
|
Interest | $ | - |
| $ | - |
Income taxes | $ | - |
| $ | - |
Summary of Non-Cash Investing and Financing Information: |
|
|
|
|
|
Stock issued for conversion of debt | $ | 1,022,676 |
| $ | 1,248,393 |
Notes issued in relation to Service 800 acquisition | $ | - |
| $ | 2,000,000 |
Purchase Price holdback note on Service 800 acquisition | $ | - |
| $ | 210,000 |
Purchase price allocation note on Service 800 acquisition | $ | - |
| $ | 1,233,828 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8
BEYOND COMMERCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ DEFICIT
(Unaudited)
Preferred Stock | Common Stock | Additional | Accumulated | Stockholders' | |||
| Par Value | Shares | Shares | Par Value | Paid in Capital | Deficit | Equity |
Balance, December 31, 2018 | $ 1,017,450 | $ 250,000,000 | 1,017,450,000 | $ 250,000 | $ 27,599,349 | $ (42,762,860) | $ (13,895,881) |
Extinguishment of derivative liabilities on conversion | - | - | - | - | 3,872,545 | - | 3,872,545 |
Warrants issued with debt | - | - | - | - | 696,850 | - | 696,850 |
Common stock issued for debt conversion | 62,472 | - | 62,472,003 | - | 998,014 | - | 1,060,486 |
Common stock issued for interest conversion | 5,508 | - | 5,507,873 | - | 90,399 | - | 95,907 |
Net loss |
|
|
|
|
| (3,754,002) | (3,754,002) |
Balance, March 31, 2019 | $ 1,085,430 | - | 1,085,429,876 | $ 250,000 | $ 33,257,157 | $ (46,516,682) | $ (11,924,095) |
Common stock issued for debt conversion | 64,842 | - | 64,482,327 | - | 12,538 | - | 77,020 |
Common stock issued for interest | 12,536 | - | 12,537,673 | - | 2,442 | - | 14,980 |
Stock issued for acquisition | 70,000 | - | 70,000,000 | - | 357,000 | - | 427,000 |
Stock Issued for services | 10,825 | - | 10,825,000 | - | 293,100 | - | 303,925 |
Extinguishment of derivative liabilities on conversion | - | - | - | - | 464,501 | - | 464,501 |
Net loss |
|
|
|
|
| (5,168,008) | (5,168,008) |
Balance, June 30, 2019 | $1,243,274 | 250,000,000 | 1,243,274,876 | $ 250,000 | $ 34,386,738 | $ (51,684,690) | $ (15,804,677) |
9
|
| Series A&B Preferred Stock |
| Commonn Stock | Non-Controlling |
| Additional | Accumulated | Stockholders' | |
|
| Shares | Par Value | Shares | Par Value | Interest |
| Paid in Capital | Deficit | Deficit |
Balance, December 31, 2019 | 249,999,920 | $ 250,000 | 1,495,004,678 | $ 1,495,004 | $ 131,250 | $ - | $ 43,347,152 | $ (48,227,200) | $ (3,003,794) | |
Common stock issued for debt conversion |
| - | - | 132,910,000 | 132,910 |
|
| - | - | 132,910 |
Extinguishment of derivative liabilities on conversion | - | - | - | - |
|
| 132,005 | - | 132,005 | |
Net loss |
| - | - | - | - | (20,200) |
| - | (424,584) | (444,784) |
Balance, March 31, 2020 | 249,999,920 | $ 250,000 | 1,627,914,678 | $ 1,627,914 | $ 111,050 |
| $ 43,479,157 | $ (48,651,784) | $ (3,183,663) | |
Common stock issued for debt conversion |
| - | - | 889,766,383 | 889,766 |
|
| - | - | 889,766 |
Extinguishment of derivative liabilities on conversion | - | - | - | - |
|
| 1,101,419 | - | 1,101,419 | |
Net loss |
| - | - | - | - | (7,215) |
| - | (2,136,009) | (2,143,224) |
Balance, June 30, 2020 | 249,999,250 | $ 250,000 | 2,517,681,061 | $ 2,517,680 | $ 103,835 |
| $ 44,580,576 | $ (50,787,793) | $ (3,335,702) | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10
BEYOND COMMERCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Beyond Commerce, Inc. (the “Company”,” BCI” and “we”), 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 June 30, 2020 and 2019 included herein include the accounts of the Company, its wholly-owned subsidiaries Service 800 Inc., Path UX and IDriveYourCar (which have been discontinued) and Customer Centered Strategies, LLC, which the Company has an 80% investment interest. These financial statements have been prepared by management and are unaudited.
Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These condensed consolidated financial statements should be read in conjunction with the financial statements and the notes thereto for the fiscal year ended December 31, 2019.
11
BEYOND COMMERCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE 2. SELECTED ACCOUNTING POLICIES
Interim Financial Statements
These unaudited condensed consolidated financial statements as of and for the six (6) months ended June 30, 2020 and 2019, 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, 2019 and 2018, respectively, which are included in the Company’s December 31, 2019 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission on April 14 , 2020. 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 six (6) months ended June 30, 2020 are not necessarily indicative of results for the entire year ending December 31, 2020.
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.
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 six months or less at the time of purchase. The Company’s cash management system is currently integrated within several banking institution.
Fair Value of Financial Instruments
12
BEYOND COMMERCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
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.
|
| June 30, 2020 Fair Value Measurements |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total Fair |
| ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities |
| $ |
|
|
| $ | - |
|
| $ | 424,748 |
|
| $ | 424,748 |
|
Total |
| $ |
|
|
| $ | - |
|
| $ | 424,748 |
|
| $ | 424,748 |
|
|
| December 31, 2019 Fair Value Measurements |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total Fair |
| ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities |
| $ |
|
|
| $ | - |
|
| $ | 1,433,403 |
|
| $ | 1,433,403 |
|
Total |
| $ |
|
|
| $ | - |
|
| $ | 1,433,403 |
|
| $ | 1,433,403 |
|
Derivative liability as of December 31, 2019 | $1,433,403 |
Change in derivative liability during the period | (1,008,655) |
Balance at June 30, 2020 | $424,748 |
13
BEYOND COMMERCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
Equipment, Furniture and fixtures | 5-7 years |
Software | 16-60 months |
Vehicles | 7 years |
When retired or otherwise disposed, the carrying value and accumulated depreciation of the property and equipment is removed from its respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Expenditures for maintenance and repairs which do not extend the useful lives of the related assets are expensed as incurred.
14
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.
Management used the following inputs to value the Derivative Liabilities for the six months ended June 30, 2020:
| June 30, 2020 Derivative Liability |
Expected term | 4 months to 1 year |
Exercise price | $ 0.00015-$0.001 |
Expected volatility | 184%-236 % |
Expected dividends | None |
Risk-free rate | 0.12% to 0.20 % |
15
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
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 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.
16
BEYOND COMMERCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE 3. GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles, 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. The accompanying consolidated financial statements for June 30, 2020 and 2019 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, 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 recent acquisition of Service 800 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
Furthermore, the 31,500,000 shares of Beyond Commerce’s restricted common stock issued to Robert Bisson on June 4, 2019, the 31,500,000 shares of Beyond Commerce’s restricted common stock issued to Christian Schine on June 4, 2019, and the 7,000,000 shares of Beyond Commerce’s restricted common stock issued to Ryan Rich on June 4, 2019, were released from any further claims. As Beyond Commerce had not paid any additional funds to the previous owners of PathUX and the extension period had expired, the Company has forfeited the 70,000,000 shares valued at $427,000 which were reflected in the December 31, 2019 financial statements.
17
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 three and six months ended June 30, 2020 and 2019, are as follows:
|
| Three months ended June 30, |
| |||||
|
| 2020 |
|
| 2019 |
| ||
|
|
|
|
|
|
| ||
Total net sales |
| $ | - |
|
| $ | 71,043 |
|
Cost of sales |
|
| - |
|
|
| 55,428 |
|
Operating, selling, general and administrative expenses |
|
| - |
|
|
| 4,421 |
|
Amortization of software |
|
| - |
|
|
| - |
|
Income (loss) from discontinued operations |
|
| - |
|
|
| 11,194 |
|
Gain on sale of discontinued operations |
|
| - |
|
|
| - |
|
Income tax provision |
|
| - |
|
|
| - |
|
Discontinued operations, net of tax |
|
| - |
|
|
| 11,194 |
|
|
| Six months ended June 30, |
| |||||
|
| 2020 |
|
| 2019 |
| ||
|
|
|
|
|
|
| ||
Total net sales |
| $ | 219,867 |
|
| $ | 71,043 |
|
Cost of sales |
|
| 147,829 |
|
|
| 55,428 |
|
Operating, selling, general and administrative expenses |
|
| 91,134 |
|
|
| 4,421 |
|
Amortization of software |
|
| 134,686 |
|
|
| - |
|
Income (loss) from discontinued operations |
|
| (153,781) |
|
|
| 11,194 |
|
Gain on sale of discontinued operations |
|
| 504,482 |
|
|
| - |
|
Income tax provision |
|
| - |
|
|
| - |
|
Discontinued operations, net of tax |
|
| 350,700 |
|
|
| 11,194 |
|
The following table presents the amounts reported in the Consolidated Condensed Balance Sheets as held for sale related to the PathUX Assets as of December 31, 2019. As the sale was finalized shortly after close of the first quarter 2020, the current balance sheet no longer reflects these operations.
|
|
|
| December 31, |
| |
|
|
|
| 2019 |
| |
Current assets |
|
|
|
|
| |
Cash & cash equivalents |
|
|
| $ | 95,470 |
|
Accounts receivable - net |
|
|
|
| 18,000 |
|
Total current assets |
|
|
|
| 113,470 |
|
Proprietary Software, net |
|
|
|
| 972,289 |
|
Intangible asset |
|
|
|
| 1,722,796 |
|
Assets held for sale |
|
|
| $ | 2,808,555 |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
| $ | 159,255 |
|
Contingent acquisition liability - short term |
|
|
|
| 1,951,205 |
|
Contingent acquisition liability - long term |
|
|
|
| 1,048,795 |
|
Liabilities of assets held for sale |
|
|
| $ | 3,159,255 |
|
18
NOTE 5 - PROPERTY, SOFTWARE AND COMPUTER EQUIPMENT
Property and equipment at June 30, 2020 and December 31, 2019 consisted of the following:
|
| June 30, 2020 |
|
| December 31, 2019 |
Office and computer equipment | $ | 25,003 |
| $ | 22,214 |
Furniture and fixtures |
| 17,888 |
|
| 4,448 |
Software |
| 20,822 |
|
| 20,822 |
Total property, software and computer equipment |
| 63,713 |
|
| 47,484 |
Less: accumulated depreciation |
| (16,790) |
|
| (10,016) |
| $ | 46,923 |
| $ | 37,468 |
Depreciation expense for the three and six month periods ended June 30, 2020 was $3,769 and $6,774, respectively compared to $ 9,014 and $10,016 for the same periods in 2019, respectively.
NOTE 6 – INTANGIBLE ASSETS
Intangible net assets of the Company at June 30, 2020 and December 31, 2019 are summarized as follows:
|
| June 30, December 31, | |||||
|
| 2020 |
|
| 2019 | ||
Tradename-Trademarks |
| $ | 474,327 |
|
| $ | 501,692 |
Assembled Workforce |
|
| 351,473 |
|
|
| 371,751 |
IP/Technology |
|
| 129,067 |
|
|
| 146,667 |
Customer Base |
|
| 1,368,527 |
|
|
| 1,449,205 |
Non-Competition agreements |
|
| 75,367 |
|
|
| 131,892 |
Customer Relationships - CCS |
|
| 499,570 |
|
|
| 535,876 |
Total intangible assets |
| $ | 2,898,331 |
|
| $ | 3,137,083 |
Amortization expense for the three and six month periods ended June 30, 2020 was $120,436 and $240,872, respectively compared to $103,371 and $137,987 for the same periods in 2019, respectively.
NOTE 7. OTHER CURRENT LIABILITIES
Other current liabilities consist of the following:
|
| June 30, |
|
| December 31, |
| ||
|
| 2020 |
|
| 2019 |
| ||
Accrued interest - notes |
| $ | 409,344 |
|
| $ | 149,873 |
|
Total other current liabilities |
| $ | 409,344 |
|
| $ | 149,873 |
|
19
NOTE 8. SHORT- AND LONG-TERM BORROWINGS
Short-term and Long-term borrowings, consist of the following: |
| June 30, |
|
| December 31, |
| ||
Short term debt; |
| 2020 |
|
| 2019 |
| ||
Convertible Promissory Notes, bearing an annual interest rate of 15% secured, due 02/14/2019 |
|
| 10,000 |
|
|
| 50,000 |
|
Convertible Promissory Notes, bearing an annual interest rate of 12% secured, due 08/27/2019 |
|
| 149,247 |
|
|
| 199,181 |
|
Short-Term Note – Jean Mork Bredeson cash deficit holdback, 15%, past due |
|
| 210,000 |
|
|
| 210,000 |
|
Short-Term Note – Jean Mork Bredeson purchase allocation, 15%, past due |
|
| 1,401,695 |
|
|
| 1,381,914 |
|
Funding from the Payroll Protection Program, annual interest of 1%, due 04/24/2022 |
|
| 500,000 |
|
|
| - |
|
Convertible Promissory Notes, bearing an annual interest rate of 8% secured, due 08/07/2020 |
|
| 1,054,420 |
|
|
| 1,467,869 |
|
Total short-term debt |
|
| 3,325,362 |
|
|
| 3,308,964 |
|
|
|
|
|
|
|
|
|
|
Long term debt; |
|
|
|
|
|
|
|
|
Convertible Promissory Notes, bearing an annual interest rate of 5.0%, due 12/31/22 |
|
| 350,000 |
|
|
| 350,000 |
|
Promissory Note – Jean Mork Bredeson, interest rate 5.5%, due 2/28/2022 |
|
| 2,100,000 |
|
|
| 2,100,000 |
|
Senior Secured Redeemable Debenture, bearing an annual interest rate of 16%, due 12/31/2021 |
|
| 900,000 |
|
|
| 900,000 |
|
Total short-term and long-term borrowings, before debt discount |
|
| 6,675,362 |
|
|
| 6,658,964 |
|
Less debt discount |
|
| (249,204) |
|
|
| (824,417) |
|
Total short-term and long-term borrowings, net |
| $ | 6,426,158 |
|
| $ | 5,834,547 |
|
Short-term and Long-term borrowings, consist of the following: |
|
|
|
|
|
|
|
|
Short-term borrowings – net of discount |
|
| $ | 3,253,249 |
|
| 2,714,762 |
|
Long-term borrowings – net of discount |
|
|
| 3,172,909 |
|
| 3,119,785 |
|
Total Short-Term and long term borrowings – net of discount |
|
| $ | 6,426,158 |
|
| 5,834,547 |
|
20
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 $2,717,391 (of which $217,391 was retained by Discover as an original issue discount) (the “Debenture”), in exchange for $500,000 cash consideration and a promissory note issued to BYOC in the amount of $2,000,000 (the “Note”).
The Debenture is subject to interest at a rate of 8.0% per annum and can be converted into shares of the Company’s common stock at a price equal to the lower of (i) $0.15 per share of common stock, and (ii) if there has never been a trigger event (as defined in the Debenture), (A) the average of the 5 lowest individual trades of the shares of common stock, less $0.01 per share, or following any such trigger event, (B) 60% of the foregoing. However, at no time can the debenture be converted at a price below $0.001 per share.
During the fiscal year 2019, Discover Growth Fund LLC issued the additional $2,000,000 to the Company and converted $1,249,522 of the aggregate debt. During the six months ended June 30, 2020, Discover Growth Fund LLC converted $413,449 of their outstanding debt.
On September 14, 2018, the Company issued a short-term convertible note payable for $50,000. The note was originally due on February 14, 2019 and bears interest at a rate of 15% per annum. The note is convertible into shares of common stock at $0.10 per share. The company is currently negotiating an extension with the noteholder and has paid $40,000 of the outstanding debt, leaving a remaining principal balance due of $10,000. This note is currently past due and is being negotiated to cure, nevertheless this note has no default provisions.
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 $250,000. The lender was Auctus Fund LLC. The notes have a maturity of August 27, 2019 and interest rate of 12% per annum and are convertible at a price of 60% of the lowest trading price on the primary trading market on which the Company’s Common Stock is then listed for the twenty-five (25) trading days immediately prior to conversion. Additionally , If the stock price falls below par value , additional shares will be issued at the lower conversion rate so that stocks continue to be issued at par value. The note may be prepaid but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash. The Company is currently negotiating an extension with the noteholder as it is currently past due. As a result of a default provision, the interest rate has increased to 24%. The Company during 2019 issued 112,829,802 shares of its common stock which reduced the principal by $50,819 and paid interest of $25,035
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 $2,100,000 three-year 5.5% promissory note. Interest only payments are required during the first year of the note. The $2,100,000 promissory note is personally guaranteed by George Pursglove which in turn will be Geordan Pursglove since the passing of the former Chief Executive Officer.
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 $1,401,695 as of June 30, 2020. Although holdbacks did not initially include interest obligations, we agreed to begin accruing interest at 10% in June 2019, and then 15% in October 2019 if we past an agreed repayment date.
On December 31, 2019, Beyond Commerce, Inc., a Nevada corporation (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
21
Company a senior secured redeemable debenture having an initial principal amount of $900,000 and an interest rate of 16% per annum (the “Initial Debenture”). 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 December 31, 2021.
TCA Beyond Commerce entered into a Membership Interest Purchase Agreement (the “Membership Interest Purchase Agreement”), whereby TCA Beyond Commerce acquired 100% of the authorized and issued membership interests of CCS from its sole member (the “CCS Seller”). TCA Beyond Commerce acquired the membership interests for a purchase price of $525,000 (the “CCS Purchase Price”), with $175,000 to be paid in cash and the remaining $350,000 to be paid through TCA Beyond Commerce’s issuance of a convertible promissory note with an original principal of $350,000 and a conversion feature that provides the CCS Seller with the right to convert outstanding principal and accrued interest into shares of the Company’s common stock at a price based on the 10-day trailing average price of the Company’s stock. The cash maturity date is December 31, 2022.
On April 24, 2020 the Company through its Service 800 Inc subsidiary, received $500,000 in funding in conjunction with a promissory note under the Payroll Protection Program is made pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). After sixty (60) days from the date the Loan is funded, but not more than twenty-four (24) weeks from the date the Loan is funded, Borrower shall apply to Bank for loan forgiveness. If the SBA confirms full and complete forgiveness of the unpaid balance of the Loan, and reimburses Bank for the total outstanding balance, principal and interest, Borrower’s obligations under the Loan will be deemed fully satisfied and paid in full. If the SBA does not confirm forgiveness of the Loan, or only partly confirms forgiveness of the Loan, or Borrower fails to apply for loan forgiveness, Borrower will be obligated to repay to the Bank the total outstanding balance remaining due under the Loan, including principal and interest, and in such case, Bank will establish the terms for repayment of the Loan Balance in a separate documentation to be provided to Borrower, which letter will set forth the Loan Balance, the amount of each monthly payment, the interest rate (not in excess of a fixed rate of one per cent (1.00% per annum), the term of the Loan, and the maturity date of two (2) years from the funding date of the Loan. No principal or interest payments will be due prior to the end of the Deferment Period. Because we anticipate the note being forgiven within the next year it is classified as short term
22
NOTE 9. COMMON STOCK, WARRANTS AND PAID IN CAPITAL
Common Stock
During the six months ended June 30, 2020 the Company issued 1,022,676,383 shares valued at $1,022,676 for the conversion of certain debt and accrued interest into shares of our stock.
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
We are authorized to issue up to 250,000,000 shares of our “blank check” preferred stock, par value of $0.001. Effective July 27, 2017, we designated 250,000,000 of our “blank check” preferred shares as Series A Preferred Stock, all of which are issued and outstanding. Each share of Series A Preferred Stock entitles its holder to (i) cumulative, non-participating dividends in preference and priority to any declaration or payment of a dividend on any of the Company’s common stock, at a rate of 12% per annum, and (ii) three times (3x) voting preference over common stock. As of June 30, 2020, and December 31, 2019, there were 249,999,900 and 249,999,900 issued and outstanding shares of Series A preferred stock.
Following cancellation of 100 shares of Series A preferred stock, such 100 shares of preferred stock were returned to treasury, increasing the number of shares of authorized undesignated preferred stock from 0 to 100. The Board designated 51 of such 100 shares as Series B Preferred. Each share of Series B Preferred carries approximately 1% of the voting power, but these shares do not have any economic rights. The Board issued on October 2, 2019, 20 shares of the Series B Preferred to Geordan Pursglove. An additional 13 shares of Series B Preferred was issued to Geordan Pursglove on August 4, 2020. The remaining 18 shares of Series B Preferred are authorized but unused. There are 49 shares of authorized but undesignated preferred stock. The value of the October 2, 2019 transaction is $293,000 based on an independent valuation of the transaction.
23
BEYOND COMMERCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
Warrants
The Company entered into an agreement in 2018 in conjunction with convertible notes payable to issue seven (7) warrants to purchase shares of the Company’s common stock which have an exercise price of $0.15 or 65% of the three lowest trading days within a 20-day market price timeframe, whichever is lower. The warrants also contain certain cashless exercise features. The issuance of these warrants is predicated on the completion of the funding requirements within the terms of the security agreement; however, these funding requirements were never met. The Company is currently negotiating a settlement with respect to any warrants.
Pursuant to the terms of the Discover Growth Fund SPA, we issued to Discover warrant to purchase up to 16,666,667 shares of our common stock upon the subsequent funding of the remaining $2,000,000 which occurred on February 28, 2019, exercisable beginning on the nine (9) month anniversary from the date of issuance for a period of three (3) years at an exercise price of $0.15 per share (the “Warrant”). In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model and based on the relative fair value of the warrant and cash received, we recorded a debt discount on the note principle of $696,850. Management used the following inputs to value the Discover Warrants by Expected Term – 3 years, Exercise Price - $0.15, Expected Volatility- 388.94%, Expected dividends – None, and Risk-Free Rate – 2.54%
As of June 30, 2020, these warrants have vested.
NOTE 10. COMMITMENTS AND CONTINGENCIES
Legal Matters
A complaint against us, 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. The Company believes these claims to be unfounded and the Company is continuing to vigorously defend itself against this lawsuit. 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.
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 $120 for this lease. In February of 2020 the Company moved its Service 800, Inc. subsidiary to 110 Cheshire Lane, Minnetonka Minnesota 55305. Service 800 leases 3,210 square feet of office space under an operating lease agreement with Carlson Center East LLC. The lease, which expires in February 2021, requires base monthly rents of $4,160, plus operating expenses.
24
BEYOND COMMERCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE 11. RELATED PARTIES
As of June 30, 2020, 206,249,900 shares of BCI’s Series A Convertible 12% Cumulative Preferred stock are held by The 2GP Group LLC, an entity controlled by Geordan Pursglove, President, CEO and Director. The Series A Convertible 12% Cumulative Preferred stock include a three times (3x) voting preference.
During the fourth quarter 2019 the Company canceled 100 shares of Series A preferred stock, such 100 shares of preferred stock were returned to treasury, increasing the number of shares of authorized undesignated preferred stock from 0 to 100. The Board designated 51 of such 100 shares as Series B Preferred. Each share of Series B Preferred carries approximately 1% of the voting power, but these shares do not have any economic rights. On October 2, 2019, the Board issued 20 shares of the Series B Preferred to Geordan Pursglove. An additional 13 shares of Series B Preferred was issued to Geordan Pursglove on August 4, 2020. The remaining 18 shares of Series B Preferred are authorized but unused. There are 49 shares of authorized but undesignated preferred stock. The value of the 2019 transaction is $293,000 based on an independent valuation of the transaction.
On May 8, 2019, the Company issued a short-term convertible note payable to a board member for $54,000. The note had a sixty- day term which was due on July 8, 2019 and bears interest at a rate of 15% per annum. The company is currently negotiating an extension with the noteholder as it is currently past due, however the note has no default provisions.
25
NOTE 12. 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 2,998,335,175 and 1,864,741,994 shares of the Company’s common stock are not included in the computation, along with 249,999,900 and 250,000,000 of the Company’s preferred stock, for the six months ended June 30, 2020 and 2019, respectively. These shares are not included as they would be antidilutive. Additionally, there are 16,666,667 and 16,666,667 warrants that are exercisable into shares of stock as of June 30, 2020 and 2019, and there is an outstanding issue with Iliad, a former noteholder that claims warrants as being issued and outstanding that could result in 154,150,198 and 16,723,842 shares being issued as of June 30, 2020 and 2019. The Company is currently in negotiations over the issue. As warrants are exercisable above the current market rate, they would be excluded from any dilutive share calculations.
The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations for the three and six-month period ended June 30, 2020 and 2019:
|
| Six-month period ended June 30, |
|
| Three-month period ended June 30, | ||||||
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
Loss from continuing operations | $ | (2,938,708) |
| $ | (8,933,204) |
| $ | (2,938,708) |
| $ | (2,938,708) |
Income from discontinued operations |
| 350,700 |
|
| 11,194 |
|
| - |
|
| 11,914 |
Consolidated net loss | $ | (2,588,008) |
| $ | (8,922,010) |
| $ | (2,136,009) |
| $ | (5,168,008) |
Weighted average shares used for diluted earnings per share |
| 1,725,314,701 |
|
| 1,092,248,763 |
|
| 1,906,073,735 |
|
| 1,140,710,865 |
Incremental Diluted Shares |
| -* |
|
| -* |
|
| -* |
|
| -* |
Weighted Average shares used for diluted earnings per share |
| 1,725,314,701 |
|
| 1,092,248,763 |
|
| 1,906,073,735 |
|
| 1,140,710,865 |
Net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted: continuing operations | $ | (0.00) |
| $ | (0.01) |
| $ | (0.00) |
| $ | (0.01) |
Basic and Diluted: discontinued operations | $ | 0.00 |
| $ | 0.00 |
|
| - |
| $ | 0.00 |
Total Basic and Diluted | $ | (0.00) |
| $ | (0.01) |
| $ | (0.00) |
| $ | (0.01) |
*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).
26
BEYOND COMMERCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE 13. PROFORMA ACQUISITION FINANCIAL INFORMATION
Description of the Transactions
Service 800, Inc.
On March 4, 2019 Jean Mork Bredeson, Founder and President of Service 800, Inc., received $1,890,000 in cash, a short-term cash hold back of $210,000 and $2,100,000 in a three-year 5.5% promissory note. The $2,100,000 promissory note is personally guaranteed by the estate of George Pursglove whose executor is Geordan Pursglove Beyond Commerce’s President, CEO. On July 18, 2018 Jean Mork Bredeson received 2,000,000 shares of Beyond Commerce’s restricted common stock, and directed the issuance of 3,000,000 additional shares to three other individuals as part of the business combination as follows: On July 18, 2018, Allen Bredeson, Vice President of Marketing and Client Relations, received 1,000,000 shares of Beyond Commerce’s restricted common stock, Derick White, Vice President of Sales received 1,000,000 shares of Beyond Commerce’s restricted common stock, and Jeff Schwendinger, Vice President of Operations received 1,000,000 shares of Beyond Commerce’s restricted common stock. The effective date of this business combination between Beyond Commerce and Service 800, is February 28, 2019, when Beyond Commerce received 100% of Service 800 stock, assets consisting of the company’s website, customer lists, current customer base, and customer’s in the company’s pipeline and proprietary software.
The fair value of the purchase consideration issued to Service 800 Inc. was allocated to the net tangible assets acquired. The Company accounted for the Acquisition as the purchase of a business under GAAP under the acquisition method of accounting, and the assets and liabilities acquired were recorded as the acquisition date, at their respective fair values and consolidated with those of the Company. The fair value of the net assets acquired was approximately $3,881,241. The excess of the aggregate fair value of the net tangible assets has been allocated to goodwill of $1,299,144. The company wrote down the asset value of Service 800, Inc. by approximately $635,000 attributable to the value of the shares of stock issued to certain employees of Service 800, Inc. as the belief this was not considered an essential component of the transaction and not valued accordingly.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on external evaluations at the date of acquisition:
Value of considered paid: |
|
|
|
Cash at Closing |
| $ | 2,100,000 |
Promissory Note - discounted |
|
| 1,781,241 |
Assets acquired |
|
| 3,881,241 |
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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.
Furthermore, the 31,500,000 shares of Beyond Commerce’s restricted common stock issued to Robert Bisson on June 4, 2019, the 31,500,000 shares of Beyond Commerce’s restricted common stock issued to Christian Schine on June 4, 2019, and the 7,000,000 shares of Beyond Commerce’s restricted common stock issued to Ryan Rich on June 4, 2019, were released from any further claims. As Beyond Commerce had not paid any additional funds to the previous owners of PathUX and the extension period had expired, the Company has forfeited the 70,000,000 shares valued at $427,000 which were reflected in the December 31, 2019 financial statements.
Customer Centered Strategies, LLC. (CCS)
On December 31, 2019 TCA Beyond Commerce, a joint venture which is 80% owned by Beyond Commerce entered into a Membership Interest Purchase, whereby TCA Beyond Commerce acquired 100% of the authorized and issued membership interests of CCS from its sole member. TCA Beyond Commerce acquired the membership interests for a purchase price $525,000 (the “CCS Purchase Price”), with $175,000 to be paid in cash and the remaining $350,000 to be paid through TCA Beyond Commerce’s issuance of a convertible promissory note with an original principal of $350,000 and a conversion feature that provides the CCS with the right to convert outstanding principal and accrued interest into shares of the Company’s common stock at a price based on the 10-day trailing average price of the Company’s stock.
In addition to the CCS purchase price, the CCS and Service 800, Inc., entered into an employment agreement whereby the CCS will be employed by Service 800 as Vice President of Operations and Technologies for a period of six months.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on internal company evaluations at the date of acquisition:
Assets Acquired: |
|
|
|
|
Cash |
| $ | 37,597 |
|
Accounts receivable |
|
| 155,626 |
|
Prepaid expense |
|
| 2,500 |
|
Intangible asset – customer list |
|
| 535,877 |
|
Assets acquired |
| $ | 731,600 |
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 37,817 |
|
Other current liabilities |
|
| 37,534 |
|
Liabilities assumed |
| $ | 75,350 |
|
|
|
|
|
|
Net assets acquired |
| $ | 656,250 |
|
Fair value of consideration given: |
|
|
|
|
Cash |
| $ | 175,000 |
|
Convertible note – 5% |
|
| 350,000 |
|
Minority interest |
|
| 131,250 |
|
Total |
| $ | 626,250 |
|
28
The following unaudited pro forma consolidated results of operations have been prepared as if the acquisition of Service 800, Inc. and Customer Centered Strategies occurred on January 1, 2019:
|
| Six Months ended |
| |||||
|
| June 30, |
| |||||
|
| 2020 |
|
| 2019 |
| ||
Net Revenues |
| $ | 2,029,599 |
|
|
| $ 2,519,869 |
|
Net (loss) income from operations |
|
| (2,560,593) |
|
|
| (8,928,913) |
|
Net (loss) income per share from operations |
|
| (0.00) |
|
|
| (0.01) |
|
Weighted average number of shares – basic and diluted |
|
|
|
|
|
| 1,092,248,763 |
|
NOTE 14. SUBSEQUENT EVENTS
Issuance of Additional Shares
In July 2020, 4,700,000 shares were issued to Auctus for conversion of principal and interest of $470,000.
Impact of Disease Outbreak and Management’s Plans
On March 11, 2020, the World Health Organization declared the outbreak of a respiratory disease caused by a new coronavirus as a “pandemic”. First identified in late 2019 and known now as COVID-19, the outbreak has impacted thousands of individuals worldwide. In response, many countries have implemented measures to combat the outbreak which have impacted global business operations.
Majority of the states within the United States have issued a stay at home order to its residents. Accordingly, the Company’s revenues associated with our business model has drastically declined through date of the financial statements and its results of operations, cash flows and financial condition have been negatively impacted by the pandemic.
The impact of the disease outbreak, as of the date of the financial statements, remains highly fluid and uncertain. The Company is unable to predict, with any sort of certainty the timing for the end of the restrictions. Accordingly, the financial impact on the results of operations, cash flows and financial condition cannot be reasonably estimated at this time. No impairments were recorded as of the balance sheet date; however, due to significant uncertainty surrounding the situation, management's judgment regarding this could change in the future.
The Company continues to maintain the business working with customers to fit their needs - We are also offering COVID19 type services. We have clients in the medical field and are offering to do survey work for them regarding their response for the COVID outbreak so they can document how they are doing as a company. We are in touch with our customers daily, we have even discussed switching them from phone calls to web surveys until this has passed. Along with the above the Company Service 800 was approved for $500,000 from the Paycheck Protection funds to assist in maintaining our employee base.
29
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 Filings, 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 in the State of Nevada 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.
30
RESULTS OF OPERATIONS FOR THE THREE- AND SIX-MONTH PERIODS
Through our Service 800 Inc subsidiary many of our clients; 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 pandemic to begin strategic planning with Service 800 to grow their business with the company by renewals, expansion, and 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 three 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. During the pandemic, it made our customers realize the value that Service 800 brings to the clients in the form of providing valuable information to not only help their growth within their own companies, it also helps 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 are looking for all of the positive growth we have set for the remainder of the year and moving onwards to future years to come.
Three months ended June 30, 2020 and June 30, 2019.
Revenue
Revenue generated for the three months ended June 30, 2020 was $782,009 as we began reporting revenue being created from both the Service 800 acquisition and Customer Centered Strategies which were include for the entire quarter, however, our customer based growth was paused momentarily in response to the Covid-19 situation. This compares to compared to $1,213,928 revenue from the comparable three-month period in 2019.
Operating Expenses
For three months end June 30, 2020, operating expenses were $1,521,979 and for the three months ended June 30,2019, operating expenses were $1,857,487. This significant decrease is mainly attributable to cost reduced in reaction to the Covid-19 issues, reduction in office rent and related expenses as many of our employees preferred to work from home and the reduction of certain officers’ salaries. There was a $95,013 decrease in cost of goods sold compared to $343,030 in the comparable period attributable to the decrease in revenue. Payroll decreased to $588,057 from $665,647 during the three months ended June 30, 2020 and 2019, respectively, due to the Service 800 employee right sizing, and general and administrative costs increased to $348,117 from $324,643 due to the Service expenses related to our office relation in Minnesota.
Non-operating income (expense)
The Company reported non-operating expense of $1,403,254 during the three months ended June 30, 2020, as compared to a loss of $4,535,643 during the three months ended June 30, 2019, attributable to the changes in the derivative liability and debt fees associated with our convertible notes.
Net Income (loss)
For three months end June 30, 2020, the Company incurred a net loss of $2,136,009 as compared to a net loss of $5,168,008 for three months end June 30 2019, which was primarily due to derivative-related income from the changes in liability and debt fees associated with our convertible notes.
31
Six months ended June 30, 2020 and June 30, 2019.
Revenue
Revenue generated for the six months ended June 30, 2020 was $2,029,599 as we began reporting revenue being created from both the Service 800 and Customer Centered Strategies acquisition which was closed in 2019 for the full six months, compared to $1,677,842 revenue from the comparable six month period in 2019.
Operating Expenses
For six months end June 30, 2020, operating expenses were $3,291,142 and for the six months ended June 30, 2019, operating expenses were $2,550,187. This significant increase is mainly attributable to the Service 800 and Customer Centered Strategies acquisitions and the related costs associated with these operations. There was a $215,353 increase in cost of goods sold compared to $455,084 in the comparable period. Payroll increased $314,798 from $942,368 to $1,257,166 during the six months ended June 30, 2020 and 2019, respectively, due to the Service 800 and PathUX employee addition, and general and administrative costs increased $108,332 once again due to the Service 800 and Customer Centered Strategies additions. The decrease in professional fees as the Company reduced these types of expenditures by $33,759 due to less utilization.
Non-operating income (expense)
The Company reported non-operating expense of $1,677,165 during the six months ended June 30, 2020, a decrease of $6,383,694 compared to $8,060,859 during the six months ended June 30, 2019, mainly attributable to the changes in the derivative liability and debt fees associated with our convertible notes, along with an increase in interest expense of $498,173 due to the increase in debt level.
Net Income (loss)
For six months end June 30, 2020, the Company incurred a net loss of $2,560,593 as compared to a net loss of $8,922,010 for six months end June 30, 2019, which was primarily due to a loss on derivative related income from the changes in liability and debt fees associated with our convertible notes. As of June 30, 2020, the Company had an accumulated deficit of $50,787,793 and as of December 31, 2019, the Company had an accumulated deficit of $48,227,200.
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 June 30, 2020, we had an accumulated deficit of $50,787,793. Since we discontinued operations in 2012 the continuity of our future operations is dependent upon our ability to increase sales and brand awareness. 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 there can be no assurance 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.
32
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 $1,513,807 and $2,070,851 as of June 30, 2020 and December 31, 2019, respectively. Current assets would consist primarily of cash, accounts receivable and current assets held for sale of $0 and $113,470 as of June 30, 2020 and December 31, 2019, respectively. The Company had a $50,787, 793 accumulated deficit on its balance sheet as of June 30, 2020.
We had total current liabilities of $5,920,998 and $8,074,845 as of June 30, 2020 and December 31, 2019, respectively. Current liabilities consisted primarily of the derivative liability, accounts payable, accrued payroll and payroll taxes, contingent acquisition liabilities, related party debt, convertible debt and interest, and the accrued interest, and current liabilities associated with the sale of PathUX of $0 and $2,109,850, respectively as of June 30, 2020 and December 31, 2019. The increase in our current liabilities is attributable to accrued interest, salary accruals and short-term debt incurred as part of the Service 800 and Customer Centered Strategies.
We had a working capital deficit of $4,407,191 and $6,003,994 as of June 30, 2020 and December 31, 2019, respectively. The decrease of $1,596,803 for the period as of June 30, 2020 compared to December 31, 2019 was due to an increase in short term borrowings and disposal of discontinued operations.
Cash Flow from Operating Activities
For the six months ended June 30, 2020 and 2019, cash used in operating activities was $746,188 and cash provided by operations of $41,144 respectively. This decrease is attributable to the Service 800 and Customer Centered Strategies acquisitions.
Cash Flow from Investing Activities
For the six months ended June 30, 2020 and 2019, cash provided used in investing activities was $16,230 and $2,014,035 respectively, which represents cash used in the Service 800 and Customer Centered Strategies acquisition transactions.
Cash Flow from Financing Activities
For the six months ended June 30, 2020 and 2019, cash provided by financing activities was $479,781 and $2,000,000, respectively, which represents cash from the Discover Growth Fund LLC.
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.
33
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. generally accepted accounting principles. 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, 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, 2019, describe the significant accounting estimates and policies used in preparation of our consolidated financial statements. There were no significant changes in our critical accounting estimates during the six months ended June 30, 2020.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We do not hold any derivative instruments and do not engage in any hedging activities.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures.
We carried out an evaluation, under the supervision and with the participation of management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2020. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. Based on the evaluation described above, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report because we did not document our Sarbanes-Oxley Act Section 404 internal controls and procedures.
34
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 disclosure 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 that breakdowns can occur because of simple error or mistake. 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.
35
A complaint against us, 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. The Company believes these claims to be unfounded and the Company is continuing to vigorously defend itself against this lawsuit. 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 Company is preparing its responses to such filings.
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.
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, 2020.
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 April 14, 2020, the Company issued 30,720,000 shares of common stock to Discover Group Fund LLC following the conversion of debt and interest held by Discover Group Fund LLC.
On May 6, 2020, the Company issued 30,000,000 shares of common stock to Discover Group Fund LLC following the conversion of debt and interest held by Discover Group Fund LLC.
On May 6, 2020, the Company issued 31,280,000 shares of common stock to Auctus Fund LLC following the conversion of debt and interest held by Auctus Fund LLC.
On May 12,2020, the Company issued 32,930,000 shares of common stock to Discover Group Fund LLC following the conversion of debt and interest held by Discover Group Fund LLC.
On May 13, 2020, the Company issued 30,000,000 shares of common stock to Auctus Fund LLC following the conversion of debt and interest held by Auctus Fund LLC.
On May 19,2020, the Company issued 65,550,000 shares of common stock to Discover Group Fund LLC following the conversion of debt and interest held by Discover Group Fund LLC.
36
On May 20, 2020, the Company issued 60,000,000 shares of common stock to Auctus Fund LLC following the conversion of debt and interest held by Auctus Fund LLC.
On May 29,2020, the Company issued 70,116,383 shares of common stock to Discover Group Fund LLC following the conversion of debt and interest held by Discover Group Fund LLC.
On June 2, 2020, the Company issued 90,000,000 shares of common stock to Auctus Fund LLC following the conversion of debt and interest held by Auctus Fund LLC.
On June 8, 2020, the Company issued 72,670,000 shares of common stock to Discover Group Fund LLC following the conversion of debt and interest held by Discover Group Fund LLC.
On June 10, 2020, the Company issued 100,000,000 shares of common stock to Auctus Fund LLC following the conversion of debt and interest held by Auctus Fund LLC.
On June 15, 2020, the Company issued 76,500,000 shares of common stock to Discover Group Fund LLC following the conversion of debt and interest held by Discover Group Fund LLC.
On June 17, 2020, the Company issued 100,000,000 shares of common stock to Auctus Fund LLC following the conversion of debt and interest held by Auctus Fund LLC.
On June 25, 2020, the Company issued 100,000,000 shares of common stock to Auctus Fund LLC following the conversion of debt and interest held by Auctus Fund LLC.
On July 6, 2020, the Company issued 100,000,000 shares of common stock to Auctus Fund LLC following the conversion of debt and interest held by Auctus Fund LLC.
On July 9, 2020, the Company issued 130,622,200 shares of common stock to Auctus Fund LLC following the conversion of debt and interest held by Auctus Fund LLC.
On July 15, 2020, the Company issued 137,140,300 shares of common stock to Auctus Fund LLC following the conversion of debt and interest held by Auctus Fund LLC.
On July 22, 2020, the Company issued 102,237,500 shares of common stock to Auctus Fund LLC following the conversion of debt and interest held by Auctus Fund LLC.
Except where noted, all the securities discussed in this Part II, Item 2 were issued in reliance on the exemption under Section 4(a)(2) of the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
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 indebtedness of the Company.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
37
There is no other information required to be disclosed under this item which was not previously disclosed.
38
Exhibit Number |
| Exhibit Description |
| Form |
| Exhibit |
| Filing |
| Herewith |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1 |
| Rule 13a-14(a) Certification of Principal Executive Officer. |
|
|
|
|
|
|
| X |
|
|
|
|
|
|
|
|
|
|
|
31.2 |
| Rule 13a-14(a) Certification of Principal Financial Officer. |
|
|
|
|
|
|
| X |
|
|
|
|
|
|
|
|
|
|
|
32.1* |
|
|
|
|
|
|
|
| X | |
|
|
|
|
|
|
|
|
|
|
|
32.2* |
|
|
|
|
|
|
|
| X | |
|
|
|
|
|
|
|
|
|
|
|
101.INS |
| XBRL Instance. |
|
|
|
|
|
|
| X |
|
|
|
|
|
|
|
|
|
|
|
101.XSD |
| XBRL Schema. |
|
|
|
|
|
|
| X |
|
|
|
|
|
|
|
|
|
|
|
101.PRE |
| XBRL Presentation. |
|
|
|
|
|
|
| X |
|
|
|
|
|
|
|
|
|
|
|
101.CAL |
| XBRL Calculation. |
|
|
|
|
|
|
| X |
|
|
|
|
|
|
|
|
|
|
|
101.DEF |
| XBRL Definition. |
|
|
|
|
|
|
| X |
|
|
|
|
|
|
|
|
|
|
|
101.LAB |
| XBRL Label. |
|
|
|
|
|
|
| X |
* 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.
39
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Beyond Commerce, Inc. | |
|
|
|
Dated: August 13, 2020 | By: | /s/ Geordan Pursglove |
|
| Geordan Pursglove, |
40
EXHIBIT 31.1
CERTIFICATION
I, Geordan Pursglove, certify that:
1. I have reviewed this Form 10-Q of Beyond Commerce, Inc. for the period ended June 30, 2020;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
Date: August 13, 2020
By: | /s/ Geordan Pursglove |
| |
| Geordan Pursglove |
| |
| Principal Executive Officer |
| |
|
| ||
EXHIBIT 31.2
CERTIFICATION
I, Geordan Pursglove, certify that:
1. I have reviewed this Form 10-Q of Beyond Commerce, Inc. for the period ended June 30, 2020;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
Date: August 13, 2020
By: | /s/ Geordan Pursglove |
|
| Geordan Pursglove |
|
| Principal Financial Officer |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of Beyond Commerce, Inc. (the “Company”), on Form 10-Q for the period ended June 30, 2020, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Geordan Pursglove, Principal Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
(2)The information contained in such Quarterly Report on Form 10-Q for the period ended June 30, 2020, fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 13, 2020
By: | /s/ Geordan Pursglove |
|
| Geordan Pursglove |
|
| Principal Executive Officer |
|
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of Beyond Commerce, Inc. (the “Company”), on Form 10-Q for the period ended June 30, 2020, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Geordan Pursglove, Principal Financial Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
(2)The information contained in such Quarterly Report on Form 10-Q for the period ended June 30, 2020, fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 13, 2020
By: | /s/ Geordan Pursglove |
|
| Geordan Pursglove |
|
| Principal Financial Officer |
|