TWOH 10-Q
Two Hands Corp (TWOH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from _________ to __________
Commission File Number:
(Exact name of registrant as specified in its charter)
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| Incorporation or Organization) | Identification No.) | |
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| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate
by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
| Large accelerated filer | ¨ | Accelerated filer | ¨ |
| x | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
¨
| 1 |
Securities registered under Section 12(b) of the Act:
| Title of each class | Name of each exchange on which registered |
| N/A | N/A |
Securities registered under Section 12(g) of the Act:
(Title of class)
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of May 13, 2022, the issuer had shares of its common stock issued and outstanding, par value $0.0001 per share.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-Q contains "forward-looking statements" that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in our Form 10-K filed on March 31, 2022, and other filings we make with the Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.
The following discussion and analysis of financial condition and results of operations is based upon and should be read in conjunction with our audited financial statements and related notes thereto included elsewhere in this report, and in our Form 10-K filed on March 31, 2022.
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TWO HANDS CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2022
TABLE OF CONTENTS
| PART I | PAGE | |
| Item 1. | Financial Statements (Unaudited) | 5 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 30 |
| Item 4. | Controls and Procedures | 30 |
| PART II | ||
| Item 1. | Legal Proceedings | 32 |
| Item 1A. | Risk Factors | 32 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 32 |
| Item 3. | Defaults Upon Senior Securities | 32 |
| Item 4. | Mining Safety Disclosures | 32 |
| Item 5. | Other Information | 32 |
| Item 6. | Exhibits | 33 |
| Signatures | 34 |
| 4 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
| TWO HANDS CORPORATION |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
March 31, 2022 | December 31, 2021 | |||||||
| ASSETS | (Unaudited) | |||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| VAT taxes receivable | ||||||||
| Inventory | ||||||||
| Prepaid expense | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Due to related party | ||||||||
| Notes payable | ||||||||
| Current portion of operating lease right-of-use liability | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Promissory note | ||||||||
| Promissory notes - related party | ||||||||
| Non-redeemable convertible notes, net | ||||||||
| Operating lease right-of-use liability, net of current portion | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Temporary equity | ||||||||
| Series A convertible preferred stock; $ par value; shares designated, and shares issued and outstanding, respectively | ||||||||
| Series B convertible preferred stock; $ par value; shares designated, and shares issued and outstanding, respectively | ||||||||
| Series C convertible preferred stock; $ par value; shares designated, shares and shares issued and outstanding, respectively | ||||||||
| Series D convertible preferred stock; $ par value; shares designated, shares and shares issued and outstanding, respectively | ||||||||
| Total temporary equity | ||||||||
| Stockholder's deficit | ||||||||
| Preferred stock; $ par value; shares authorized, issued and outstanding | ||||||||
| Common stock; $ par value; shares authorized, and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Common stock to be issued | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders' deficit | $ | $ | ||||||
| The accompanying footnotes are an integral part of these unaudited financial statements. | ||||||||
| 5 |
| TWO HANDS CORPORATION |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) |
| (Unaudited) |
| For the three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Sales | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Amortization of debt discount and interest expense | ( | ) | ( | ) | ||||
| Loss on settlement of debt | ( | ) | ( | ) | ||||
| Initial derivative expense | ( | ) | ||||||
| Change in fair value of derivative liabilities | ||||||||
| Total other income (expense) | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive income (loss) | ||||||||
| Foreign exchange loss | ( | ) | ||||||
| Total other comprehensive loss | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per common share - basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding - basic and diluted | ||||||||
| The accompanying footnotes are an integral part of these unaudited financial statements. | ||||||||
| 6 |
| TWO HANDS CORPORATION | ||||||||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT | ||||||||||||||||||||||||||||
| For the three months ended March 31, 2022 and 2021 | ||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||
| Common Stock | Common Stock to be | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders' | |||||||||||||||||||||||
| Shares | Amount | Issued | Capital | Income | Deficit | Deficit | ||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Stock issued for conversion of non-redeemable convertible notes | ||||||||||||||||||||||||||||
| Foreign exchange loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Common Stock | Common Stock to be | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders' | |||||||||||||||||||||||
| Shares | Amount | Issued | Capital | Income | Deficit | Deficit | ||||||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Stock issued for conversion of non-redeemable convertible notes | ||||||||||||||||||||||||||||
| Stock issued for conversion of convertible notes | ||||||||||||||||||||||||||||
| Stock issued for consulting | ||||||||||||||||||||||||||||
| Stock issued for officer and director compensation | ||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| The accompanying footnotes are an integral part of these unaudited financial statements. | ||||||||||||||||||||||||||||
| 7 |
| TWO HANDS CORPORATION |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Unaudited) |
| For the three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss | ||||||||
| to cash used in operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Amortization of debt discount | ||||||||
| Loss on settlement of debt | ||||||||
| Initial derivative expense | ||||||||
| Change in fair value of derivative liabilities | ( | ) | ||||||
| Reduction in ROU liability | ( | ) | ||||||
| Change in operating assets and liabilities | ||||||||
| Accounts and taxes receivable | ( | ) | ( | ) | ||||
| Prepaid expense | ||||||||
| Inventory | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Net cash used in investing activities | ||||||||
| Cash flow from financing activities | ||||||||
| Advances by related party | ||||||||
| Repayment of advances to related party | ( | ) | ( | ) | ||||
| Proceeds from notes payable | ||||||||
| Proceeds from promissory notes | ||||||||
| Proceeds from non-redeemable convertible | ||||||||
| Proceeds from convertible notes | ||||||||
| Net cash provided by financing activities | ||||||||
| Change in foreign exchange | ||||||||
| Net change in cash | ( | ) | ||||||
| Cash, beginning of the period | ||||||||
| Cash, end of the period | $ | $ | ||||||
| Cash paid during the year | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Stock issued to settle accounts payable and accrued liabilities | $ | $ | ||||||
| Stock issued to settle non-redeemable convertible notes | $ | $ | ||||||
| Stock issued to settle convertible notes | $ | $ | ||||||
| Initial debt discount from derivative | $ | $ | ||||||
| Transfer of notes payable to promissory notes | $ | $ | ||||||
| Transfer of due to related party to promissory notes - related party | $ | $ | ||||||
| The accompanying footnotes are an integral part of these unaudited financial statements. | ||||||||
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TWO HANDS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Two Hands Corporation (the "Company") was incorporated in the state of Delaware on April 3, 2009 and on July 26, 2016, changed its name from Innovative Product Opportunities Inc. to Two Hands Corporation.
The Two Hands co-parenting application launched on July 2018 and the Two Hands Gone application launched In February 2019. The Company ceased work on these applications in 2021.
The gocart.city online consumer grocery delivery application was released in early June 2020 and Cuore Food Services commenced sale of dry goods and produce to other businesses in July 2020.
In July 2021, the Company made the strategic decision to focus exclusively on the grocery market through three on-demand branches of its grocery businesses: gocart.city, Grocery Originals, and Cuore Food Services.
| i) | gocart.city is the Company’s online delivery marketplace, allowing consumers to shop online and have their groceries delivered. |
| ii) | Grocery Originals is the Company’s brick-and-mortar grocery store located in Mississauga Ontario at the site of the Company’s warehouse. |
| iii) | Cuore Food Services is the Company’s wholesale food distribution branch. |
The operations of the business are carried on by Two Hands Canada Corporation, a wholly-owned subsidiary of the Company, incorporated under the laws of Canada on February 7, 2014.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Two Hands Corporation have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission requirements for interim financial statements. Therefore, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2021 of Two Hands Corporation in our Form 10-K filed on March 31, 2022.
The interim financial statements present the balance sheets, statements of operations and comprehensive income (loss), stockholders’ deficit and cash flows of Two Hands Corporation. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States.
The interim financial information is unaudited. In the opinion of management, all adjustments necessary to present fairly the financial position as of March 31, 2022 and the results of operations and cash flows presented herein have been included in the financial statements. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results of operations for the full year.
COVID-19
The recent outbreak of the coronavirus COVID-19 has spread across the globe and is impacting worldwide economic activity. Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures have had and will continue to have a material adverse impact on global economic conditions as well as on the Company's business activities. The extent to which COVID-19 may impact the Company's business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in the Canada, United States and other countries to contain and treat the disease. These events are highly uncertain and, as such, the Company cannot determine their financial impact at this time. No adjustments have been made to the amounts reported in these condensed consolidated financial statements as a result of this matter.
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GOING CONCERN
The Company's financial statements are prepared in
accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and
the liquidation of liabilities in the normal course of business. During the three months ended March 31, 2022, the Company incurred a
net loss of $
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Two Hands Canada Corporation. All intercompany transactions and balances have been eliminated in consolidation.
USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
ACCOUNTS RECEIVABLE
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Accounts receivable are reduced by an allowance for doubtful accounts, which is the Company’s best estimate of the amount of credit losses inherent in its existing accounts receivable. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. The Company writes off accounts receivable against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
The allowance for doubtful accounts at March 31, 2022
and December 31, 2021 is $
INVENTORY
Inventory consisting of groceries and dry goods are measured at the lower of cost and net realizable value. Cost is determined pursuant
to the first-in first out (“FIFO”) method. The cost of inventory includes the purchase price, shipping and handling costs incurred to bring the inventories to their present location and condition. Inventory with a short shelf life that is not utilized within the planned period are immediately expensed in the statement of operations. Estimated gross profit rates are used to determine the cost of goods sold in interim periods. Any significant adjustment that results from the reconciliation with annual physical inventory is disclosed.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense when incurred, while renewals and betterments that materially extend the life of an asset are capitalized.
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The costs of assets sold, retired, or otherwise disposed of, and the related allowance for depreciation, are eliminated from the accounts, and any resulting gain or loss is recognized in the results from operations. Depreciation is provided over the estimated useful lives of the assets, which are as follows:
Computer equipment
In the year of acquisition, one half the normal rate of depreciation is provided.
REVENUE RECOGNITION
In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation. We recognize revenue for the sale of our products upon delivery to a customer.
During the three months ended March 31, 2022 and 2021,
the Company had revenue of $
RESEARCH AND DEVELOPMENT COSTS
Software development costs are included in research
and development and are expensed as incurred. FASB ASC Topic 350 Intangibles—Goodwill and Other requires that software development
costs incurred subsequent to reaching technological feasibility be capitalized, if material. If the process of developing a new product
or major enhancement does not include a detailed program design, technological feasibility is determined only after completion of a working
model. To date, the period between achieving technological feasibility and the general availability of such software has been short, and
the software development costs qualifying for capitalization have been insignificant. The Company recorded research and development expense
of $
LEASES
Under ASC 842, a right-of-use asset and lease liability is recorded for all leases and the statement of operations reflects the lease expense for operating leases and amortization/interest expense for financing leases.
The Company does not apply the recognition requirements in the standard to a lease that at commencement date has a lease term of twelve months or less and does not contain a purchase option that it is reasonably certain to exercise and to not separate lease and related non-lease components. Options to extend the leases are not included in the minimum lease terms unless they are reasonably certain to be exercised.
The Company leases an automobile under non-cancelable operating lease. Right-of-use assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
DEBT DISCOUNT AND DEBT ISSUANCE COSTS
Debt discounts and debt issuance costs incurred in connection with the issuance of convertible notes are capitalized and amortized to interest expense based on the related debt agreements using the effective interest rate method. Unamortized discounts are netted against convertible notes.
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DERIVATIVE LIABILITY
In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Paragraph 815-15-25-1 the conversion feature and certain other features are considered embedded derivative instruments, such as a conversion reset provision, a penalty provision and redemption option, which are to be recorded at their fair value as its fair value can be separated from the convertible note and its conversion is independent of the underlying note value. The Company records the resulting discount on debt related to the conversion features at initial transaction and amortizes the discount using the effective interest rate method over the life of the debt instruments. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.
In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.
The Company follows ASC Section 815-40-15 (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.
The Company evaluates its convertible debt, options, warrants or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 810-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then that the related fair value is reclassified to equity.
The Company utilizes the binomial option pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The binomial option pricing model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time equal to the remaining contractual term of the instrument granted.
On October 1, 2021, the Company adopted a sequencing policy under Accounting Standards Codification (“ASC”) 815-40-35 Derivatives and Hedging (“ASC 815”) whereby in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities convertible or exchangeable for a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuances of securities to the Company’s employees or directors are not subject to the sequencing policy.
INCOME TAXES
The Company accounts for income taxes in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("FASB ASC") 740, Income Taxes. Under the assets and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.
Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding for the period increased to include the number of additional common shares that would have been outstanding if potentially dilutive securities had been issued. On March 31, 2022 and 2021, we excluded the common stock issuable upon conversion of non-redeemable convertible notes, convertible notes, Series A Stock, Series B Stock, Series C Stock, Series D Stock and common stock to be issued of shares and shares, respectively, as their effect would have been anti-dilutive.
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FOREIGN CURRENCY TRANSLATION
The consolidated financial statements are presented in United States dollars. The functional currency of the consolidated entities are determined by evaluating the economic environment each entity. The functional currency of Two Hands Corporation is the United States dollar. Foreign exchange translation adjustments are reported as gains or losses resulting from foreign currency transactions and are included in results of operations.
The functional currency of its Company’s Canadian subsidiary, Two Hands Canada Corporation, to the Canadian dollar from United States dollar. The change in functional currency is due to the increase of Canadian dollar dominated activities over time including sales, operating costs and share subscriptions. The change in functional currency is accounted for prospectively. Two Hands Canada Corporation maintains its accounts in the Canadian dollar. Assets and liabilities are translated to United States dollars at year-end exchange rates. Income and expenses are transaction at averages exchange rate during the year. Foreign currency transaction adjustments are reported as other comprehensive income, a component of equity in the consolidated balance sheet.
The Company accounts for stock incentive awards issued to employees and non-employees in accordance with FASB ASC 718, Stock Compensation. Accordingly, stock-based compensation is measured at the grant date, based on the fair value of the award. Stock-based awards to employees are recognized as an expense over the requisite service period, or upon the occurrence of certain vesting events. Additionally, stock-based awards to non-employees are expensed over the period in which the related services are rendered.
FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC Topic 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
Included in the ASC Topic 820 framework is a three level valuation inputs hierarchy with Level 1 being inputs and transactions that can be effectively fully observed by market participants spanning to Level 3 where estimates are unobservable by market participants outside of the Company and must be estimated using assumptions developed by the Company. The Company discloses the lowest level input significant to each category of asset or liability valued within the scope of ASC Topic 820 and the valuation method as exchange, income or use. The Company uses inputs which are as observable as possible and the methods most applicable to the specific situation of each company or valued item.
The Company’s financial instruments such as cash, accounts receivable, accounts payable and accrued liabilities, non-redeemable convertible notes, notes payable, due to related parties and promissory notes are reported at cost, which approximates fair value due to the short-term nature of these financial instruments.
RECENT ACCOUNTING PRONOUNCEMENTS
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2023, which means it will be effective for our fiscal year beginning January 1, 2014. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the impact of ASU 2020-06 on our consolidated financial statements.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
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NOTE 3 – NON-REDEEMABLE CONVERTIBLE NOTES
| 14 |
| 15 |
On January 20, 2021, the Company entered into a Side
Letter Agreement (“Note”) with Francesco Bisignano for cash proceeds of $
NOTE 4 – LEASES
The Company entered into an operating lease agreement
on October 14, 2021 for an automobile, resulting in the recording of an initial liability and corresponding right-of-use asset of $
The Company’s operating leases expires in 2025. The following shows the undiscounted cash flows for the remaining periods under operating lease at March 31, 2022:
| Periods ending December 31, | Operating Lease Commitments | |||||
| 2022 | $ | |||||
| 2023 | ||||||
| 2024 | ||||||
| 2025 | ||||||
| Total operating lease commitments | ||||||
| Less: imputed interest | ( | ) | ||||
| Total right-of-use liability | $ | |||||
The Company’s discounted current right-of-use
lease liability and discounted non-current right-of-use lease liability at March 31, 2022 is $
NOTE 5 – NOTES PAYABLE
As of March 31, 2022 and December 31, 2021, notes
payable due to Stuart Turk, Jordan Turk and The Cellular Connection Limited, a corporation controlled by Stuart Turk, totaling $
During the three months ended March 31, 2021, $
NOTE 6 – PROMISSORY NOTES
Promissory Notes
As of March 31, 2022 and December 31, 2021, promissory
notes of $
During the three months ended March 31, 2021, the
Company issued promissory notes of $
Promissory Note – Related Party
As of March 31, 2022, promissory note – related
party of $
| 16 |
During the three months ended March 31, 2022, the
Company issued promissory notes – related party of $
NOTE 7 – CONVERTIBLE NOTES
Power Up Lending Group Ltd.
On July 13, 2020 the Company
entered into a Securities Purchase Agreement with Power Up Lending Group Ltd. (“Holder”) relating to the issuance and sale
of a Senior Convertible Note (the “Note”) with an original principal amount of $
On September 11, 2020 the
Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd. (“Holder”) relating to the issuance
and sale of a Senior Convertible Note (the “Note”) with an original principal amount of $
Redstart Holdings Corp.
On February 23, 2021, the
Company entered into a Securities Purchase Agreement with Redstart Holdings Corp. (“Holder”) relating to the issuance and
sale of a Convertible Note (the “Note”) with an original principal amount of $
Geneva Roth Remark Holdings Inc.
On May 27, 2021, the Company
entered into a Securities Purchase Agreement with Geneva Roth Remark Holdings Inc. (“Holder”) relating to the issuance and
sale of a Convertible Note (the “Note”) with an original principal amount of $
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NOTE 8 - CONVERTIBLE PROMISSORY NOTE DERIVATIVE LIABILITIES
The Convertible Promissory Notes with Power Up Lending Group Ltd., Redstart Holdings Corp. and Geneva Roth Remark Holdings Inc. with issue dates of July 13, 2020, September 11, 2020, February 23, 2021 and May 27, 2021 are accounted for under ASC 815. The variable conversion price is not considered predominantly based on a fixed monetary amount settleable with a variable number of shares due to the volatility and trading volume of the Company’s common stock. The Company’s convertible promissory note derivative liabilities have been measured at fair value on December 31, 2020, February 23, 2021, May 27, 2021 and December 2, 2021 using the binomial model.
The inputs into the binomial models are as follows:
| December 31, 2020 | February 23, 2021 | May 27, 2021 | December 2, 2021 | |
| Closing share price | $ | $ | $ | $ |
| Conversion price | $ |
$ |
$ |
$ |
| Risk free rate | ||||
| Expected volatility | ||||
| Dividend yield | ||||
| Expected life |
The fair value of the convertible promissory note
derivative liability relating to the Notes issued to Power Up Lending Group Ltd., Redstart Holdings Corp. and Geneva Roth Remark Holdings
Inc on July 13, 2020, September 11, 2020, February 23, 2021 and May 27, 2021 is $
NOTE 9 – RELATED PARTY TRANSACTIONS
As of March 31, 2022 and December 31, 2021,
advances and accrued salary of $
During the three months ended March 31, 2022,
the Company issued advances due to related party for $
During the three months ended March 31, 2021,
the Company issued advances due to related party for $
Employment Agreements
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On March 31, 2022, there were (post-split) shares of common stock due Nadav Elituv under the employment agreement.
Stock-based compensation – salaries expense related to these employment agreements for the three months ended March 31, 2022 and 2021 is $ and $, respectively. Stock-based compensation – salaries expense was recognized ratably over the requisite service period.
NOTE 10 – PREFERRED STOCK
On August 6, 2013, the Company filed a Certificate
of Designation with the Delaware Secretary of State thereby designating two hundred thousand () shares as Series A Convertible
Preferred Stock (“Series A Stock”).
On December 12, 2019, the Company filed a Certificate
of Designation with the Delaware Secretary of State thereby designating one hundred thousand () shares as Series B Convertible
Preferred Stock (“Series B Stock”). After a one year holding period,
On October 7, 2020, the Company filed a Certificate
of Designation with the Delaware Secretary of State thereby designating thirty thousand (30,000) shares as Series C Convertible Preferred
Stock, par value $0.001 per share (“Series C Stock”). Each share of Series C Stock (i) has a liquidation value of $100, subject
to various anti-dilution protections (ii) is convertible into shares of common stock of the Company six months after the date of issuance
at a price of $ per share, subject to various anti-dilution protections (iii) on conversion will receive an aggregate number of shares
of common stock as is determined by dividing the liquidation value by the conversion price. Series C Stock are non-voting. On June 24,
2021, the board of directors approved the increase in the number of designated shares of Series C Convertible Preferred Stock from 5,000
to 30,000 and reduction of the conversion price from $0.0035 per share to $
On September 1, 2021, the Company filed a Certificate
of Designation with the Delaware Secretary of State thereby designating two hundred thousand () shares as Series D Convertible
Preferred Stock, par value $0.001 per share (“Series D Stock”).
On March 26, 2022, the Company issued
shares of Series A Convertible Preferred Stock with a fair value of $
NOTE 11 - STOCKHOLDERS' EQUITY
The Company is authorized to issue an aggregate of common shares with a par value of $ per share and shares of preferred stock with a par value of $0.0001 per share.
On March 21, 2022, pursuant to stockholder consent, our Board of Directors authorized an amendment (the "Amendment") to our Certificate of Incorporation, as amended, to affect a reverse stock split of the issued and outstanding shares of our common stock, par value $0.0001, on a 1 for 1,000 basis. We filed the Amendment with the Delaware Secretary of State on March 21, 2022. On April 25, 2022 the Financial Industry Regulatory Authority, Inc. notified us that the reverse stock split would take effect on April 27, 2022. All common stock share and per-share amounts for all periods presented in these consolidated financial statements have been adjusted retroactively to reflect the reverse stock split.
During the three months ended March 31, 2022, the
Company elected to convert $
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Common stock to be issued
On March 31, 2022 and December 31, 2021, the Company
had an obligation to issue shares of common stock valued at $ and shares of common stock valued at $336,000, respectively,
for stock-based compensation – consulting services. These shares relate to an agreement dated August 1, 2020 for services to be
provided from August 1, 2020 to July 31, 2022 whereby the Company shall pay shares of Common Stock of the Company with a fair value
of $
On March 31, 2022, there were (post-split) shares of common stock due to Nadav Elituv under his employment agreement.
NOTE 12 - SUBSEQUENT EVENTS
On April 14, 2022, the
On April 27, 2022, the Company issued
(post-split) shares of common stock with a fair value of $
On April 28, 2022, the Holders of Series B Stock elected to convert shares of Series B Stock into (post-split) shares of common stock.
On May 4, 2022, the Holders of Series D Stock elected to convert shares of Series D Stock into (post-split) shares of common stock.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Two Hands Corporation (the "Company") was incorporated in the state of Delaware on April 3, 2009 and on July 26, 2016, changed its name from Innovative Product Opportunities Inc. to Two Hands Corporation.
The Two Hands co-parenting application launched on July 2018 and the Two Hands Gone application launched In February 2019. The Company ceased work on these applications in 2021.
The gocart.city online consumer grocery delivery application was released in early June 2020 and Cuore Food Services commenced sale of dry goods and produce to other businesses in July 2020.
In July 2021, the Company made the strategic decision to focus exclusively on the grocery market through three on-demand branches of its grocery businesses: gocart.city, Grocery Originals, and Cuore Food Services. All three of such branches of the Company’s business share industry standard warehouse storage space and inventory. The Company’s inventory is updated continuously and generally consists of produce, meats, pantry items, bakery & pastry goods, gluten-free goods, and organic items, acquired from various different suppliers in Canada and internationally, with whom the Company and its principals have cultivated long-term relationships.
gocart.city
gocart.city is the Company’s online delivery marketplace, allowing consumers to shop online and have their groceries delivered. The gocart.city online platform stores all inventory in the Company’s warehouse located at its head office in Mississauga. The aim of gocart.city is to deliver fresh and high-quality food products directly to retail consumers throughout Southern Ontario. The Company recently engaged local renowned chef, Grace DiFede, to curate a new line of meal kits and bundles to sell on the gocart.city platform alongside the Company’s other grocery essentials.
The gocart.city platform is available online and through applications for handheld devices supporting iOS or Android. The features and functions of gocart.city include customers having the ability to search for products by category and name, customers saving items in their cart and being able to share their cart with others, and being able to opt-in to digital weekly alerts that provide information on promotions and discounts on certain products. gocart.city also includes standard payment options for customers, such as PayPal, American Express and Visa.
The Company also employs a social media manager to oversee and increase engagement with customers by using platforms such as Facebook, Twitter, Instagram and Google. The ads that are posted on these platforms are generic branding related to the Company, as well as the promotion of particular sale items. Moreover, the Company has agreements with SRAX, Inc. and Adfuel Media Inc. to boost such engagement.
Grocery Originals
Grocery Originals is the Company’s brick-and-mortar grocery store located in Mississauga Ontario at the site of the Company’s warehouse. Grocery Originals was originally intended for curbside pickup but has expanded into a full service store, that includes a deli, cold storage, a stone pizza oven, and offering a wide variety of fresh and specialty meals curated by Grace Di Fede.
Cuore Food Services
Cuore Food Services is the Company’s wholesale food distribution branch. Cuore Food Services uses inventory from the Company’s warehouse as well as inventory it acquires on an ad hoc basis, and focuses on bulk delivery of goods to food service business such as restaurants, hotels, event planning/hosting businesses. Orders distributed through Cuore Food Services can be made over the phone or online through a different front-end of the gocart.city platform.
The operations of the business are carried on by I8 Interactive Corporation, a wholly-owned subsidiary of the Company, incorporated under the laws of Canada on February 7, 2014.
Management's Plan of Operation
The Company is focused exclusively on the grocery market through three on-demand branches of its grocery businesses: gocart.city, Grocery Originals, and Cuore Food Services.
The performance of the Company’s business during the COVID-19 pandemic illustrates the flexibility of its model as the Company was able to meet heightened demand with an assortment of products that met customer preferences. The Company is still early-on in its development but sees a highly scalable business with lower corporate fixed costs, providing protection in the event of an economic downturn.
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Products and Services
The Company plans to continue to expand it reach to additional customers and geographies across Canada and continue to enhance its product offering with fresh, natural and organic foods.
Mobile Application
V2 of the gocart.city mobile application will be a subsequent release. The Company plans to further expand the features of the mobile application. Following the completion of V2 of the mobile application, the Company will consider user behaviour and plans to expand the functionality and features of the mobile application on an on-going basis going forward.
Operations and Logistics
The company plans to expand storage and warehousing, expand warehouse staff, add more delivery trucks and expand the delivery area.
Sales and Marketing
The Company plans on utilizing and leveraging its agreement with SRAX, Inc. and Adfuel Media Inc. to market its grocery delivery application and services and expand its footprint in the Ontario region and beyond as its customer base grows.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the Financial Statements and accompanying notes. Estimates are used for, but not limited to, the accounting for the allowance for doubtful accounts, inventories, impairment of long-term assets, stock-based compensation, income taxes and loss contingencies. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.
We believe the following critical accounting policies, among others, may be impacted significantly by judgment, assumptions and estimates used in the preparation of the Financial Statements:
GOING CONCERN
The Company's financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the three months ended March 31, 2022, the Company incurred a net loss of $1,353,597 and used cash in operating activities of $273,817, and on March 31, 2022, had stockholders’ deficit of $4,405,898. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a period one year from the date that the financial statements are issued. The Company will be dependent upon the raising of additional capital through placement of its common stock in order to implement its business plan. There can be no assurance that the Company will be successful in this situation. The Company is unable to predict the effect, if any, that the coronavirus COVID-19 global pandemic may have on its access to the financing markets. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might result from this uncertainty. We are currently funding our operations by way of cash advances from our Chief Executive Officer, note holders, shareholders and others. On April 14, 2022, the Company entered into a binding Grid Promissory Note and Credit Facility Agreement (the “Line of Credit”) with The Cellular Connection Ltd. Pursuant to the Line of Credit, the Company can borrow from the Lender up to CAD$750,000 in principal in increments of at least CAD$50,000 upon five business days’ notice. The funds due for repayment on May 1, 2024, and the principal bears interest at 8% per annum, payable monthly. As at the date of this Form 10-Q, no funds have been borrowed by the Company pursuant to the Line of Credit. There can be no assurances that we will be able to receive further commitments, loans or advances from them or other persons in the future.
STOCK-BASED COMPENSATION
The Company accounts for stock incentive awards issued to employees and non-employees in accordance with FASB ASC 718, Stock Compensation. Accordingly, stock-based compensation is measured at the grant date, based on the fair value of the award. Stock-based awards to employees are recognized as an expense over the requisite service period, or upon the occurrence of certain vesting events. Additionally, stock-based awards to non-employees are expensed over the period in which the related services are rendered.
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DERIVATIVE LIABILITY
In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Paragraph 815-15-25-1 the conversion feature and certain other features are considered embedded derivative instruments, such as a conversion reset provision, a penalty provision and redemption option, which are to be recorded at their fair value as its fair value can be separated from the convertible note and its conversion is independent of the underlying note value. The Company records the resulting discount on debt related to the conversion features at initial transaction and amortizes the discount using the effective interest rate method over the life of the debt instruments. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.
In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.
The Company follows ASC Section 815-40-15 (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.
The Company evaluates its convertible debt, options, warrants or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 810-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then that the related fair value is reclassified to equity.
The Company utilizes the binomial option pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The binomial option pricing model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time equal to the remaining contractual term of the instrument granted.
On October 1, 2021, the Company adopted a sequencing policy under Accounting Standards Codification (“ASC”) 815-40-35 Derivatives and Hedging (“ASC 815”) whereby in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities convertible or exchangeable for a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuances of securities to the Company’s employees or directors are not subject to the sequencing policy.
REVENUE RECOGNITION
In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation. We recognize revenue for the sale of our products upon delivery to a customer.
RECENT ACCOUNTING PRONOUNCEMENTS
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2023, which means it will be effective for our fiscal year beginning January 1, 2014. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the impact of ASU 2020-06 on our consolidated financial statements.
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Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
COMPARISON OF RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
Sales, Cost of goods sold, Gross profit:
| Three months ended March 31, | Change | |||||||||||||||
2022 $ | 2021 $ | $ | % | |||||||||||||
| Sales | 199,039 | 189,157 | 9,882 | 5 | ||||||||||||
| Cost of goods sold | 178,525 | 170,610 | 7,915 | 5 | ||||||||||||
| Gross profit | 20,514 | 18,547 | 1,967 | 11 | ||||||||||||
| Gross profit % | 10.3 | % | 9.8 | % | ||||||||||||
Breakdown of sales by branch:
| Three months ended March 31, | Change | |||||||||||||||
2022 $ | 2021 $ | $ | % | |||||||||||||
| gocart.city – online delivery | 66,628 | 55,042 | 11,586 | 21 | ||||||||||||
| Grocery Originals and Cuore Food Service – retail and wholesale distribution | 132,411 | 134,115 | (1,704 | ) | (1 | ) | ||||||||||
| Total sales | 199,039 | 189,157 | 9,882 | 5 | ||||||||||||
The gocart.city grocery delivery application was released in early June 2020 and gocart.city wholesale commenced sale of dry goods and produce to other businesses in July 2020. Our current gross profit is within expectations of the Company as we provide incentives such as coupons to obtain new customers.
Operating expenses:
| Three months ended March 31, | Change | |||||||||||||||
2022 $ | 2021 $ | $ | % | |||||||||||||
| Salaries and benefits | 62,806 | 82,268 | (19,462 | ) | (24 | ) | ||||||||||
| Occupancy expense | 28,645 | 15,097 | 13,548 | 90 | ||||||||||||
| Advertising and travel | 47,118 | 11,237 | 35,881 | 319 | ||||||||||||
| Auto expenses | 12,017 | 3,073 | 8,944 | 291 | ||||||||||||
| Consulting | 424,144 | 680,011 | (255,867 | ) | (38 | ) | ||||||||||
| Depreciation and Amortization | 2,959 | 430 | 2,529 | 588 | ||||||||||||
| Design | 0 | 5,317 | (5,317 | ) | (100 | ) | ||||||||||
| Office and general expenses | 74,733 | 18,413 | 56,320 | 306 | ||||||||||||
| Professional fees | 82,321 | 41,143 | 41,178 | 100 | ||||||||||||
| Freight and delivery | 25,170 | — | 25,170 | — | ||||||||||||
| Total operating expenses | 759,913 | 856,989 | (97,076 | ) | (11 | ) | ||||||||||
Our total operating expenses for the three months ended March 31, 2022 was $759,913, compared to $856,989 for the three months ended March 31, 2021, respectively. The decrease in total operating expense is primarily due to a decrease in stock-based compensation paid to officers, directors and consultants.
Total operating expense includes stock-based compensation for the three months ended March 31, 2022 and 2021 which comprises of 0 and 30,000 shares of common stock issued valued at $0 and $270,000, respectively for consulting services.
Total operating expense also includes stock-based compensation for the three months ended March 31, 2022 and 2021 which comprises of 0 and 4,000 shares of common stock issued valued at $0, and $112,500, respectively, for salaries and compensation for our officers and directors.
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Salaries and benefits for the three months ended March 31, 2022, comprise primarily of stock issued to Nadav Elituv, our Chief Executive Officer with a fair value of $4,200.
Salaries and benefits for the three months ended March 31, 2021, include stock issued to officers and directors with a fair value of $20,350 and accrued but unpaid salary to Nadav Elituv, our Chief Executive Officer, of $37,600.
Advertising and travel includes expenses for online advertising, website, meals and entertainment.
For the three months ended March 31, 2022, consulting comprises primarily stock-based compensation expense (i) $272,682 for the expenditure of advertising credits with SRAX, Inc. (ii) $64,727 for consulting fees and (iii) $82,535 paid to contractors to manage our grocery business.
For the three months ended March 31, 2021, consulting comprises primarily stock-based compensation expense (i) $313,042 for the expenditure of advertising credits with SRAX, Inc. and (ii) $334,726 for consulting fees and startup costs.
The increase in office and general expense is due to rent and administrative costs at our 1035 Queensway East, Mississauga, Ontario, Canada location and fees and penalties paid to the Ontario Securities Commission. There are no comparable expenses in 2021.
Professional fees comprise of audit, legal, filing fees and contract accountant. The increase in professional fees is primarily due to legal fees related to the prospectus dated April 21, 2022 filed with Ontario Securities Commission and British Columbia Securities Commission.
Other income (expense):
| Three months ended March 31, | Change | |||||||||||||||
2022 $ | 2021 $ | $ | % | |||||||||||||
| Amortization of debt discount and interest expense | (30,198 | ) | (69,899 | ) | 39,701 | (57 | ) | |||||||||
| Loss on settlement of debt | (584,000 | ) | (1,939,577 | ) | 1,355,577 | (70 | ) | |||||||||
| Initial derivative expense | — | (112,116 | ) | 112,116 | (100 | ) | ||||||||||
| Change in fair value of derivative liabilities | — | 68,613 | (68,613 | ) | (100 | ) | ||||||||||
| Total operating expenses | (614,198 | ) | (2,052,979 | ) | 1,438,781 | (70 | ) | |||||||||
Amortization of debt discount and interest expense for the three months ended March 31, 2022 was $30,198, compared to $68,899 for the three months ended March 31, 2021. Amortization of debt discount and interest expense relates to the issuance of non-redeemable convertible notes, convertible notes and promissory notes.
During the three months ended March 31, 2022 and 2021, the Company elected to convert $101,000 and $68,085 of principal and interest of a non-redeemable convertible note into 1,010,000 and 452,324 shares of common stock of the Company resulting in a loss on settlement of debt of $584,000 and $1,896,536, respectively.
During the three months ended March 31, 2022 and 2021, the holders of the convertible notes also elected to convert 0 shares and 63,672 shares of the Company with a fair value of $0 and $218,127 resulting in a loss on settlement of debt of $0 and $43,041, respectively.
Initial derivative expense of $112,116 for the three months ended March 31, 2021 represents the difference between the fair value of the total embedded derivative liability of $262,116 and the cash received of $150,000 for the convertible note issued on February 23, 2021.
During the three months ended March 31, 2022 and 2021, the gain (loss) due to the change in fair value of derivative liabilities was $0 and $68,613, respectively.
Net loss for the period:
| Three months ended March 31, | Change | |||||||||||||||
2022 $ | 2021 $ | $ | % | |||||||||||||
| Net loss for the period | (1,353,597 | ) | (2,891,421 | ) | 1,537,824 | (53 | ) | |||||||||
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Our net loss for three months ended March 31, 2022 was $1,353,597, compared to $2,891,421 for the three months ended March 31, 2021, respectively. Our losses during the three months ended March 31, 2022 and 2021 are primarily due to costs associated with professional fees, our transfer agent, investor relations, stock-based compensation paid to officers, directors and consultants, loss on settlement of debt and the issuance of a convertible notes.
QUARTERLY RESULTS OF OPERATIONS
The following is a summary of selected quarterly information that has been derived from the financial statements of the Company. This summary should be read in conjunction with the consolidated financial statements of the Company.
| Quarter Ended | March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | ||||||||||||||||||||||||
| Sales | $ | 199,039 | $ | 324,748 | $ | 241,417 | $ | 174,774 | $ | 189,157 | $ | 96,194 | $ | 54,838 | $ | 7,993 | ||||||||||||||||
| Gross profit | $ | 20,514 | $ | 19,117 | $ | 39,808 | $ | 19,808 | $ | 18,547 | $ | 16,320 | $ | 2,344 | $ | 1,956 | ||||||||||||||||
| Operating expenses | $ | (759,913 | ) | $ | (1,270,225 | ) | $ | (693,259 | ) | $ | (446,806 | ) | $ | (856,989 | ) | $ | (836,932 | ) | $ | (1,626,144 | ) | $ | (1,195,530 | ) | ||||||||
| Other income (expense) | $ | (614,198 | ) | $ | (2,155,703 | ) | $ | (7,397,246 | ) | $ | (1,560,110 | ) | $ | (2,052,979 | ) | $ | (626,383 | ) | $ | (629,210 | ) | $ | (320,193 | ) | ||||||||
| Net loss for the period | $ | (1,353,597 | ) | $ | (3,406,811 | ) | $ | (8,050,697 | ) | $ | (1,987,108 | ) | $ | (2,891,421 | ) | $ | (1,446,995 | ) | $ | (2,253,010 | ) | $ | (1,513,767 | ) | ||||||||
| Basic and diluted net loss per share | $ | (0.20 | ) | $ | (0.63 | ) | $ | (2.68 | ) | $ | (1.26 | ) | $ | (2.99 | ) | $ | (2.64 | ) | $ | (11.83 | ) | $ | (22.15 | ) | ||||||||
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 2022
Cash flows used in operating activities
| Three months ended March 31, | Change | |||||||||||||||
2022 $ | 2021 $ | $ | % | |||||||||||||
| Net cash used in operating activities | (273,817 | ) | (100,122 | ) | (173,695 | ) | 171 | |||||||||
Our net cash used in operating activities for the three months ended March 31, 2022 and 2021 is $273,817 and $100,122, respectively. Our net loss for the three months ended March 31, 2022 of $1,353,597 was the main contributing factor for our negative cash flow. We were able to mostly offset the cash used in operating activities by using our stock to pay for expenses such as amortization of prepaid expense of $337,409, stock-based compensation of $4,200, amortization of debt discount of $30,198 and loss on debt settlement of $584,000.
Cash flows used in investing activities
| Three months ended March 31, | Change | |||||||||||||||
2022 $ | 2021 $ |
$ |
% | |||||||||||||
| Net cash used in investing activities | — | — | — | — | ||||||||||||
Our net cash (used in) provided by investing activities for the three months ended March 31, 2022 and 2021 is $0 and $0, respectively.
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Cash flows from financing activities
| Three months ended March 31, | Change | |||||||||||||||
2022 $ | 2021 $ | $ | % | |||||||||||||
| Net cash from financing activities | 10,920 | 190,598 | (179,678 | ) | (95 | ) | ||||||||||
Our net cash provided by financing activities for the three months ended March 31, 2022 is $10,920 and $190,598, respectively. Cash from financing activities in 2022 is primarily due to net advances from related party. Cash from financing activities in 2021 is primarily due to the issuance of convertible notes, non-redeemable notes and promissory notes.
As of March 31, 2022, we had cash of $273,856, working capital of $405,343 and total liabilities of $1,325,122. We believe our current cash balance is sufficient to fund our operations during the next 12 months because (i) on April 14, 2022, the Company entered into a binding Grid Promissory Note and Credit Facility Agreement (the “Line of Credit”) with The Cellular Connection Ltd. Pursuant to the Line of Credit, the Company can borrow from the Lender up to CAD$750,000 in principal in increments of at least CAD$50,000 upon five business days’ notice. The funds due for repayment on May 1, 2024, and the principal bears interest at 8% per annum, payable monthly. As at the date of this Form 10-Q, no funds have been borrowed by the Company pursuant to the Line of Credit (ii) the Company does not expect significant cash outlays for advertising in the next year as there are $291,995 in advertising credits with SRAX, Inc. included in prepaid expense (iii) certain debt holders agreed to extend the maturity of certain debt previously classified as current liabilities to December 31, 2025 and (iv) we expect to reduce the cash expended on contractors in the next year as we plan to pay them in shares of the Company.
Our working capital as of March 31, 2022 and December 31, 2021 is as follows:
March 31, 2022 | December 31, 2021 | |||||||
| Current assets | $ | 964,473 | $ | 1,608,848 | ||||
| Current liabilities | 559,130 | 552,998 | ||||||
| Working capital | $ | 405,343 | $ | 1,055,850 | ||||
The Company is continuing to focus improving cash flows from operations by reducing incentives to customers, by making purchases from different suppliers, accelerating the collection of accounts receivable, managing accounts payable balances and by paying our officers, directors, consultants and staff with our stock.
The Company’s financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the three months ended March 31, 2022, the Company incurred a net loss of $1,353,597 and used cash in operating activities of $273,817 and on December 31, 2021, had stockholders’ deficit of $4,083,380. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The Company’s independent registered public accounting firm, in their report on the Company’s financial statements for the year ended December 31, 2021, expressed substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.
Over the next 12 months we expect to expend approximately $384,000 in cash to implement our business plan.
| Cash Required to Implement of Business Plan | ||||
| Estimated remaining prospectus costs | $ | 50,000 | ||
| Mobile application development | 2,000 | |||
| Operations and Logistics | 40,000 | |||
| General and Administration | 289,000 | |||
| Total Estimated Cash Expenditures | $ | 381,000 | ||
We hope to be able to compensate our independent contractors with stock-based compensation, which will not require us to use our cash, although there can be no assurances that we will be successful in these efforts.
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We believe we have sufficient cash to pay for our business plan and to pay for our other overhead costs for the next twelve months because on April 14, 2022, the Company entered into a binding Line of Credit with The Cellular Connection Ltd. Pursuant to the Line of Credit, the Company can borrow from the Lender up to CAD$750,000 in principal. If required, we expect to be able to secure additional capital through advances from our Chief Executive Officer, note holders, shareholders and others in order to pay expenses such as organizational costs, filing fees, accounting fees and legal fees, however, we do not have any written or oral agreements with any other third parties which require them to fund our operations. Although there can be no assurances that we will be able to obtain such funds in the future, the Company has been able to secure financing to continue operations since its inception on April 3, 2009. We are currently quoted on OTC Pink. The Company is unable to predict the effect, if any, that the coronavirus COVID-19 global pandemic may have on its access to the financing markets. If we need additional capital in the next twelve months and if we cannot raise such capital on acceptable terms, we may have to curtail our operations or terminate our business entirely.
The inability to obtain financing or generate sufficient cash from operations could require us to reduce or eliminate expenditures for developing products and services, or otherwise curtail or discontinue our operations, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, to the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If we raise additional funds through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of our common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we will seek to compensate providers of services by issuing stock in lieu of cash, which may also result in dilution to existing stockholders.
We are currently funding our operations by way of cash advances from our Chief Executive Officer, note holders, shareholders and others. We hope to be able to compensate our independent contractors with stock-based compensation, which will not require us to use our cash, although there can be no assurances that we will be successful in these efforts. On April 14, 2022, the Company entered into a binding Line of Credit with The Cellular Connection Ltd. Pursuant to the Line of Credit, the Company can borrow from the Lender up to CAD$750,000 in principal. We believe our current cash balance and the Line of Credit is sufficient to fund our operations during the next 12 months The loans from our Chief Executive Officer, note holders, shareholders and others are unsecured and non-interest bearing and have no set terms of repayment. Our common stock started trading over the counter and has been quoted on the Over-The Counter Bulletin Board since February 17, 2011. The stock currently trades under the symbol “TWOH.OB.”
Commitments for future capital expenditures at March 31, 2022 is as follows:
| Payments Due by Period | ||||||||||||||||||||
| Contractual obligations | Total $ | Less than 1 year $ | 1 - 3 years $ | 4 – 5 years $ | After 5 years $ | |||||||||||||||
| Accounts payable and accrued liabilities | 530,286 | 530,286 | — | — | — | |||||||||||||||
| Debt | 320,642 | 20,163 | — | 300,479 | — | |||||||||||||||
| Non-redeemable convertible notes | 442,249 | — | — | 442,249 | — | |||||||||||||||
| Financial lease Obligations | — | — | — | — | — | |||||||||||||||
| Operating leases(1) | 31,945 | 8,681 | 23,264 | — | — | |||||||||||||||
| Purchase obligations | — | — | — | — | — | |||||||||||||||
| Total contractual obligations | 1,325,122 | 559,130 | 23,264 | 742,728 | — | |||||||||||||||
Notes:
| (1) | Leases for retail space, equipment and warehousing is currently month to month. Deliveries are currently outsourced. |
OPERATING CAPITAL AND CAPITAL EXPENDITURE REQUIREMENTS
We are currently funding our operations by way of cash advances from our Chief Executive Officer, note holders, shareholders and others. We hope to be able to compensate our independent contractors with stock-based compensation, which will not require us to use our cash, although there can be no assurances that we will be successful in these efforts. On April 14, 2022, the Company entered into a binding Line of Credit with The Cellular Connection Ltd. Pursuant to the Line of Credit, the Company can borrow from the Lender up to CAD$750,000 in principal. We believe our current cash balance and the Line of Credit is sufficient to fund our operations during the next 12 months The loans from our Chief Executive Officer, note holders, shareholders and others are unsecured and non-interest bearing and have no set terms of repayment. Our common stock started trading over the counter and has been quoted on the Over-The Counter Bulletin Board since February 17, 2011. The stock currently trades under the symbol “TWOH.OB.”
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RELATED PARTY TRANSACTIONS
Three months ended March 31, 2022 and 2021
Due to Related Party
As of March 31, 2022 and December 31, 2021, advances and accrued salary of $14,054 and $39,985, respectively, were due to Nadav Elituv, the Company's Chief Executive Officer. The balance is non-interest bearing, unsecured and have no specified terms of repayment.
During the three months ended March 31, 2022, the Company issued advances due to related party for $48,102 of expenses paid on behalf of the Company and advances due to related party were repaid by the Company with $37,182 in cash. In addition, the Company accrued salary of $47,744 due to Nadav Elituv for the three months ended March 31, 2022 and issued a promissory note for $85,285 to settle due to related party.
During the three months ended March 31, 2021, the Company issued advances due to related party for $18,203 of expenses paid on behalf of the Company and advances due to related party were repaid by the Company with $20,505 in cash. In addition, the Company accrued salary of $37,800 for the three months ended March 31, 2021 and issued 30,000 shares of Class Convertible Preferred Stock with a fair value of $110,000 to settled compensation due on March 31, 2021.
Promissory Notes – Related Party
As of March 31, 2022, promissory note – related party of $85,285 (principal $85,285 and interest of $0) and $0, respectively, were outstanding. The promissory notes – related party bear interest of 10% per annum, are unsecured, mature on December 31, 2025 and are due to 2130555 Ontario Limited, a Company controlled by Nadav Elituv, the Company's Chief Executive Officer.
During the three months ended March 31, 2022, the Company issued promissory notes – related party of $85,285 to settle accrued liabilities for consulting fees due to 2130555 Ontario Limited.
Our policy with regard to transactions with related persons or entities is that such transactions must be on terms no less favorable than could be obtained from non-related persons.
The above related party transactions are not necessarily indicative of the amounts that would have been incurred had a comparable transaction been entered into with an independent party. The terms of these transactions were more favorable than would have been attained if the transactions were negotiated at arm's length.
PROPOSED TRANSACTIONS
The Company is not anticipating any transactions.
CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION
Refer to Note 2 in the condensed consolidated financial statements for the three months ended March 31, 2022 and Note 2 in the condensed consolidated financial statement for the three months ended March 31, 2022 for information on accounting policies.
FINANCIAL INSTRUMENTS
The main risks of the Company’s financial instrument are exposed to are credit risk, market risk, foreign exchange risk, and liquidity risk.
Credit risk
The Company’s credit risk is primarily attributable to trade receivables. Trade receivables comprise of amounts due from other businesses from the sale of groceries and dry goods. The Company mitigates credit risk through approvals, limits and monitoring. The amounts disclosed in the consolidated balance sheet are net of allowances for expected credit losses, estimated by the Company’s management based on past experience and specific circumstances of the customer. The Company manages credit risk for cash by placing deposits at major Canadian financial institutions.
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Market risk
Market risk is the risk that changes in market prices and interest rates will affect the Company’s net earnings or the value of financial instruments. These risks are generally outside the control of the Company. The objective of the Company is to mitigate market risk exposures within acceptable limits, while maximizing returns. The Company’s market risk consists of risks from changes in foreign exchange rates, interest rates and market prices that affect its financial liabilities, financial assets and future transactions.
Refer to Note 2 in the condensed consolidated financial statements for the three months March 31, 2022 and Note 2 in the condensed consolidated financial statements.
Foreign Exchange risk
Our revenue is derived from operations in Canada. Our consolidated financial statements are presented in U.S. dollars and our liabilities other than trade payable are primarily due in U.S. dollars. The revenue we earn in Canadian dollars is adversely impacted by the increase in the value of the U.S. dollar relative to the Canadian dollar.
Liquidity risk
Liquidity risk relates to the risk the Company will encounter difficulty in meeting its obligations associated with financial liabilities. The financial liabilities on our consolidated balance sheets consist of accounts payable and accrued liabilities, due to related party, notes payable, convertible notes, net, derivative liabilities, promissory notes, promissory notes – related party and non-redeemable convertible notes, Management monitors cash flow requirements and future cash flow forecasts to ensure it has access to funds through its existing cash and from operations to meet operational and financial obligations. The Company believes it has sufficient liquidity to meet its cash requirements for the next twelve months.
OUTSTANDING SHARE DATA
As of May 13, 2022, the following securities were outstanding:
Common stock: 105,015,558 shares
Series A Convertible Preferred Stock: 200,000
Series B Convertible Preferred Stock: 17,000
Series C Convertible Preferred Stock: 10,000
Series D Convertible Preferred Stock: 0
OFF-BALANCE SHEET TRANSACTIONS
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a Smaller Reporting Company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.
ITEM 4T. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company's management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.
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We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending December 31, 2022, subject to obtaining additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our 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.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect on our operations or finances. We are not aware of any pending or threatened litigation against our Company or our officers and directors in their capacity as such that could have a material impact on our operations or finances.
ITEM 1A. RISK FACTORS
A smaller reporting company is not required to provide the information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
During the three months ended March 31, 2022, the Company elected to convert $101,000 of principal and interest of a non-redeemable convertible note into 1,010,000 shares of common stock of the Company with a fair value of $685,000.
During the three months ended March 31, 2022, the Company issued 10,500 shares of Series A Convertible Preferred Stock with a fair value of $4,200 to Nadav Elituv, the Company's Chief Executive Officer.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
During the quarter ended March 31, 2022, we did not have any defaults upon senior securities.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
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ITEM 6. EXHIBITS
| Incorporated by reference | ||||||
| Exhibit | Exhibit Description | Filed herewith | Form | Period ending | Exhibit | Filing date |
| 3.1 | Certificate of Incorporation, dated April 3, 2009 | S-1 | 3.1 | 6/22/2010 | ||
| 3.2 | Bylaws, dated April 3, 2009 | S-1 | 3.2 | 6/22/2010 | ||
| 3.3 | Certificate of Amendment to the Certificate of Incorporation, dated August 8, 2013 | 10-Q | 6/30/2013 | 3.3 | 8/14/2013 | |
| 3.4 | Certificate of Amendment to the Certificate of Incorporation, dated July 27, 2016 | 8-K | 9/1/2016 | 3.1 | 9/1/2016 | |
| 3.5 | Certificate of Amendment to the Certificate of Incorporation, dated August 27, 2018 | 8-K | 9/10/2018 | 3.1 | 9/10/2018 | |
| 3.6 | Certificate of Amendment to the Certificate of Incorporation, dated November 18, 2019 | 8-K | 12/12/2019 | 3.1 | 12/12/2019 | |
| 3.7 | Certificate of Amendment to the Certificate of Incorporation, dated July 16, 2021 | 8-K | 7/16/2021 | 3.1 | 7/22/2021 | |
| 3.8 | Certificate of Amendment to the Certificate of Incorporation, dated January 3, 2022 | 8-K | 1/3/2022 | 3.1 | 1/6/2022 | |
| 3.9 | Certificate of Amendment to the Certificate of Incorporation, As Amended, dated March 21, 2022 |
8-K | 4/25/2022 | 3.1 | 4/26/2022 | |
| 4.1 | Specimen Stock Certificate | S-1 | 4.1 | 6/22/2010 | ||
| 4.2 | Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock, dated August 6, 2013 | 10-Q | 6/30/2013 | 4.2 | 8/14/2013 | |
| 4.3 | Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock, dated December 12, 2019 |
8-K
|
12/12/2019
|
3.1
|
12/19/2019
| |
| 4.4 | Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated October 7, 2020 | 8-K | 10/07/2020 | 3.1 | 10/08/2020 | |
| 4.5 | Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated June 24, 2021 | 8-K | 6/24/2021 | 3.1 | 7/1/2021 | |
| 4.6 | Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock, dated September 1, 2021 | 8-K | 9/1/2021 | 3.1 | 9/1/2021 | |
| 4.7 | Amended and Restated Designation of Series A Convertible Preferred Stock of Two Hands Corporation, dated April 21, 2022 |
8-K | 4/21/2022 | 3.1 | 4/26/2022 | |
| 10.1 | Innovative Product Opportunities Inc. Trust Agreement | S-1 | 10.1 | 6/22/2010 | ||
| Side Letter Agreement, The Cellular Connection Ltd., dated January 8, 2018 | 10-K | 12/31/2017 | 10.2 | 3/29/2018 | ||
| Side Letter Agreement, Stuart Turk, dated January 8, 2018 | 10-K | 12/31/2017 | 10.3 | 3/29/2018 | ||
| Side Letter Agreement, Jordan Turk, dated April 12, 2018 | 10-Q | 3/31/2018 | 10.4 | 5/21/2018 | ||
| Side Letter Agreement, Jordan Turk, dated May 10, 2018 | 10-Q | 3/31/2018 | 10.5 | 5/21/2018 | ||
| 10.6 | Side Letter Agreement, Jordan Turk, dated September 13, 2018 | 10-K |
12/31/2018
|
10.6 | 4/1/2019 | |
| 10.7 | Side Letter Agreement, The Cellular Connection Ltd., dated January 31, 2019 | 10-K | 12/31/2018 | 10.7 | 4/1/2019 | |
| 10.8 | Side Letter Agreement, Stuart Turk, dated January 31, 2019 | 10-K | 12/31/2018 | 10.8 | 4/1/2019 | |
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||
| 32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||
| 101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data Files as its XBRL tags are embedded within the Inline XBRL document | X | ||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | ||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Definition | X | ||||
| 104 | Cover page formatted as Inline XBRL and contained in Exhibit 101 | X | ||||
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
TWO HANDS CORPORATION | |
| May 18, 2022 |
By: /s/ Nadav Elituv Nadav Elituv, President, Chief Executive Officer and Director (Principal Executive Officer) |
|
By: /s/ Steven Gryfe Steven Gryfe, Chief Financial Officer (Principal Financial and Accounting Officer) |
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