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EX-32.1 - CERTIFICATION - SinglePoint Inc.sing_ex321.htm
EX-31.2 - CERTIFICATION - SinglePoint Inc.sing_ex312.htm
EX-31.1 - CERTIFICATION - SinglePoint Inc.sing_ex311.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period ended March 31, 2020

 

Commission File No. 000-53425

 

Singlepoint Inc.

(Name of small business issuer in its charter)

 

Nevada

 

26-1240905

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

2999 North 44th Street Suite 530

Phoenix, AZ 85018

(Address of principal executive offices)

 

(855) 711-2009

(Issuer’s telephone number)

 

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

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

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 12b-2 of the Exchange Act). Yes ☐     No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of May 20, 2020, the Company had 1,803,070,015 outstanding shares of its common stock, par value $0.0001.

 

 

 

  

Special Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2, of Part I of this report include forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by forward-looking statements.

 

In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “proposed,” “intended,” or “continue” or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other “forward-looking” information. There may be events in the future that we are not able to accurately predict or control. Before you invest in our securities, you should be aware that the occurrence of any of the events described in this Quarterly Report could substantially harm our business, results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities could decline and you could lose all or part of your investment. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report to conform these statements to actual results.

 

 
2

Table of Contents

  

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

4

 

Consolidated Balance Sheets (unaudited)

 

4

 

Consolidated Statements of Operations (unaudited)

 

5

 

Consolidated Statements of Stockholders’ Deficit (unaudited)

 

6

 

Consolidated Statements of Cash Flows (unaudited)

 

8

 

Notes to Consolidated Financial Statements (unaudited)

 

9

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

23

 

Item 4.

Controls and Procedures

 

23

 

PART II – OTHER INFORMATION

 

Item 1.

Legal Proceedings

 

24

 

Item 1A.

Risk Factors

 

24

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

24

 

Item 3.

Defaults Upon Senior Securities

 

24

 

Item 4.

Mine Safety Disclosures

 

24

 

Item 5.

Other Information

 

24

 

Item 6.

Exhibits

 

25

 

Signatures

 

26

 

 
3

Table of Contents

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

SINGLEPOINT INC. AND SUBSIDIARIES

 CONDENSED CONSOLIDATED BALANCE SHEETS

 (Unaudited)

 

 

 

 

 

 

 

March 31,

2020

 

 

December 31,

2019

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash

 

$ 222,579

 

 

$ 110,128

 

Accounts receivable

 

 

19,719

 

 

 

49,228

 

Prepaid expenses

 

 

24,878

 

 

 

24,427

 

Inventory

 

 

68,439

 

 

 

74,663

 

 

 

 

 

 

 

 

 

 

Total Current Assets

 

 

335,615

 

 

 

258,446

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS:

 

 

 

 

 

 

 

 

Property, net (Note 5)

 

 

122,490

 

 

 

136,931

 

Investment, at cost (Note 3)

 

 

60,000

 

 

 

60,000

 

Goodwill (Note 3)

 

 

1,966,340

 

 

 

1,966,340

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$ 2,484,445

 

 

$ 2,421,717

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable, including related party (Note 8)

 

$ 166,618

 

 

$ 167,939

 

Accrued expenses, including accrued officer salaries (Note 8)

 

 

1,089,817

 

 

 

843,136

 

Current portion of convertible notes payable, net of debt discount (Note 4)

 

 

2,004,653

 

 

 

2,070,898

 

Capital lease obligations, current portion (Note 5)

 

 

60,712

 

 

 

58,738

 

Advances from related party (Note 8)

 

 

1,098,644

 

 

 

878,515

 

Derivative liability

 

 

4,098,210

 

 

 

2,813,150

 

 

 

 

 

 

 

 

 

 

Total Current Liabilities

 

 

8,518,654

 

 

 

6,832,376

 

 

 

 

 

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

 

 

Capital lease obligations, net of current portion (Note 5)

 

 

83,029

 

 

 

98,881

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

8,601,683

 

 

 

6,931,257

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Undesignated preferred stock, par value $0.0001; 40,000,000 shares authorized; no shares issued and outstanding

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Class A convertible preferred stock, par value $0.0001; 60,000,000 shares authorized; 54,200,000 shares issued and outstanding as of March 31, 2020 and December 31, 2019

 

 

5,420

 

 

 

5,420

 

 

 

 

 

 

 

 

 

 

Common stock, par value $0.0001; 5,000,000,000 shares authorized; 1,745,314,333 and 1,698,279,820 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively

 

 

174,531

 

 

 

169,828

 

 

 

 

 

 

 

 

 

 

Additional paid-in capital

 

 

72,560,784

 

 

 

72,210,393

 

Accumulated deficit

 

 

(78,672,601 )

 

 

(76,752,170 )

Total Singlepoint, Inc. stockholders' deficit

 

 

(5,931,866 )

 

 

(4,366,529 )

Non-controlling interest

 

 

(185,372 )

 

 

(143,011 )

Total Stockholders' Deficit

 

 

(6,117,238 )

 

 

(4,509,540 )

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Deficit

 

$ 2,484,445

 

 

$ 2,421,717

 

 

 

 

 

 

 

 

 

 

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

 

 
4

Table of Contents

 

SINGLEPOINT INC. AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

March 31,

2020

 

 

March 31,

2019

 

 

 

 

 

 

 

 

REVENUE

 

$ 1,075,222

 

 

$ 262,890

 

 

 

 

 

 

 

 

 

 

Cost of Revenue

 

 

765,608

 

 

 

187,261

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

309,614

 

 

 

75,629

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

Consulting fees

 

 

137,016

 

 

 

67,442

 

Professional and legal fees

 

 

74,818

 

 

 

103,843

 

Investor relations

 

 

43,784

 

 

 

112,439

 

General and administrative

 

 

690,972

 

 

 

295,025

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

946,590

 

 

 

578,749

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(636,976 )

 

 

(503,120 )

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

Interest expense

 

 

(127,330 )

 

 

(73,194 )

Amortization of debt discounts

 

 

(448,290 )

 

 

(73,394 )

Loss on settlement of debt

 

 

(41,264 )

 

 

-

 

Loss on change in fair value of derivative liability

 

 

(708,932 )

 

 

(616,983 )

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

(1,325,816 )

 

 

(763,571 )

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

 

 

(1,962,792 )

 

 

(1,266,691 )

 

 

 

 

 

 

 

 

 

Income taxes

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

 

(1,962,792 )

 

 

(1,266,691 )

 

 

 

 

 

 

 

 

 

Loss (income) attributable to non-controlling interests

 

 

42,361

 

 

 

(662 )

 

 

 

 

 

 

 

 

 

NET LOSS ATTRIBUTABLE TO SINGLEPOINT, INC. STOCKHOLDERS

 

$ (1,920,431 )

 

$ (1,267,353 )

 

 

 

 

 

 

 

 

 

Net loss per share - basic

 

$ (0.00 )

 

$ (0.00 )

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic

 

 

1,717,758,784

 

 

 

1,282,900,570

 

 

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

 

 
5

Table of Contents

 

SINGLEPOINT INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

For the Three Months Ended March 31, 2020 and the Year Ended December 31, 2019

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Preferred Stock Par Value $0.0001

 

 

 Common Stock Par Value $0.0001

 

 

 Additional

 

 

 

 

 Non-

 

 

 Total

 

 

 

Number of Shares

 

 

Amount

 

 

Number of Shares

 

 

Amount

 

 

paid-in Capital

 

 

Accumulated

Deficit

 

 

controlling

Interest

 

 

Stockholders'

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

 

50,950,000

 

 

$ 5,095

 

 

 

1,236,319,023

 

 

$ 123,632

 

 

$ 63,940,510

 

 

$ (68,846,438 )

 

$ (89,163 )

 

$ (4,866,364 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares for services

 

 

 

 

 

 

 

 

 

 

26,983,333

 

 

 

2,698

 

 

 

371,352

 

 

 

 

 

 

 

 

 

 

 

374,050

 

Issuance of common shares for services previously accrued

 

 

 

 

 

 

 

 

 

 

8,000,000

 

 

 

800

 

 

 

799,200

 

 

 

 

 

 

 

 

 

 

 

800,000

 

Issuance of common shares for acquisition

 

 

 

 

 

 

 

 

 

 

156,058,751

 

 

 

15,606

 

 

 

1,950,735

 

 

 

 

 

 

 

 

 

 

 

1,966,341

 

Issuance of common shares for principal and accrued interest on convertible notes

 

 

 

 

 

 

 

 

 

 

135,418,713

 

 

 

13,542

 

 

 

555,958

 

 

 

 

 

 

 

 

 

 

 

569,500

 

Issuance of preferred shares for services

 

 

10,000,000

 

 

 

1,000

 

 

 

 

 

 

 

 

 

 

 

3,099,000

 

 

 

 

 

 

 

 

 

 

 

3,100,000

 

Conversion of preferred shares

 

 

(6,750,000 )

 

 

(675 )

 

 

135,500,000

 

 

 

13,550

 

 

 

(12,875 )

 

 

 

 

 

 

 

 

 

 

-

 

Settlement of derivative liability due to debt conversion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,506,513

 

 

 

 

 

 

 

 

 

 

 

1,506,513

 

Disposal of subsidiary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

109,153

 

 

 

109,153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,905,732 )

 

 

(163,001 )

 

 

(8,068,733 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2019

 

 

54,200,000

 

 

$ 5,420

 

 

 

1,698,279,820

 

 

$ 169,828

 

 

$ 72,210,393

 

 

$ (76,752,170 )

 

$ (143,011 )

 

$ (4,509,540 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares for services

 

 

 

 

 

 

 

 

 

 

15,000,000

 

 

 

1,500

 

 

 

116,500

 

 

 

 

 

 

 

 

 

 

 

118,000

 

Issuance of common shares for principal and accrued interest on convertible notes

 

 

 

 

 

 

 

 

 

 

32,034,513

 

 

 

3,203

 

 

 

75,218

 

 

 

 

 

 

 

 

 

 

 

78,421

 

Settlement of derivative liability due to debt conversion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

158,673

 

 

 

 

 

 

 

 

 

 

 

158,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,920,431 )

 

 

(42,361 )

 

 

(1,962,792 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2020

 

 

54,200,000

 

 

$ 5,420

 

 

 

1,745,314,333

 

 

$ 174,531

 

 

$ 72,560,784

 

 

$ (78,672,601 )

 

$ (185,372 )

 

$ (6,117,238 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 
6

Table of Contents

 

SINGLEPOINT INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

For the Three Months Ended March 31, 2019

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock Par Value $0.0001

 

 

Common Stock Par Value $0.0001

 

 

Additional

 

 

 

 

Non-

 

 

Total

 

 

 

Number of Shares

 

 

Amount

 

 

Number of Shares

 

 

Amount

 

 

paid-in Capital

 

 

Accumulated

Deficit

 

 

controlling

Interest

 

 

Stockholders'

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

 

50,950,000

 

 

$ 5,095

 

 

 

1,236,319,023

 

 

$ 123,632

 

 

$ 63,940,510

 

 

$ (68,846,438 )

 

$ (89,163 )

 

$ (4,866,364 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares for services previously accrued

 

 

 

 

 

 

 

 

 

 

8,000,000

 

 

 

800

 

 

 

799,200

 

 

 

 

 

 

 

 

 

 

 

800,000

 

Issuance of common shares for principal and accrued interest on convertible notes

 

 

 

 

 

 

 

 

 

 

44,531,249

 

 

 

4,453

 

 

 

195,046

 

 

 

 

 

 

 

 

 

 

 

199,499

 

Conversion of preferred shares

 

 

(1,750,000 )

 

 

(175 )

 

 

10,500,000

 

 

 

1,050

 

 

 

(875 )

 

 

 

 

 

 

 

 

 

 

-

 

Settlement of derivative liability due to debt conversion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

682,481

 

 

 

 

 

 

 

 

 

 

 

682,481

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,267,353 )

 

 

662

 

 

 

(1,266,691 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2019

 

 

49,200,000

 

 

$ 4,920

 

 

 

1,299,350,272

 

 

$ 129,935

 

 

$ 65,616,362

 

 

$ (70,113,791 )

 

$ (88,501 )

 

$ (4,451,075 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 
7

Table of Contents

  

SINGLEPOINT INC. AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

March 31,

2020

 

 

March 31,

2019

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss attributable to Singlepoint, Inc. stockholders

 

$ (1,920,431 )

 

$ (1,267,353 )

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

Gain (loss) attributable to non-controlling interests

 

 

(42,361 )

 

 

662

 

Common stock issued for services

 

 

118,000

 

 

 

-

 

Depreciation

 

 

14,441

 

 

 

-

 

Amortization of debt discounts

 

 

448,290

 

 

 

73,394

 

(Gain) loss on change in fair value of derivatives

 

 

708,932

 

 

 

616,983

 

(Gain) loss on debt settlement

 

 

41,264

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

29,509

 

 

 

(16,970 )

Prepaid expenses

 

 

(451 )

 

 

(14,409 )

Inventory

 

 

6,224

 

 

 

(5,746 )

Accounts payable

 

 

(1,321 )

 

 

(14,160 )

Accrued expenses

 

 

201,933

 

 

 

168,622

 

 

 

 

 

 

 

 

 

 

NET CASH USED IN OPERATING ACTIVITIES

 

 

(395,971 )

 

 

(458,977 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from advances from related party

 

 

226,800

 

 

 

23,445

 

Payments on advances to related party

 

 

-

 

 

 

-

 

Payments on convertible notes payable

 

 

(25,000 )

 

 

-

 

Payments on capital lease obligations

 

 

(13,878 )

 

 

-

 

Proceeds from issuance of convertible notes

 

 

320,500

 

 

 

750,000

 

 

 

 

 

 

 

 

 

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

508,422

 

 

 

773,445

 

 

 

 

 

 

 

 

 

 

NET CHANGE IN CASH

 

 

112,451

 

 

 

314,468

 

 

 

 

 

 

 

 

 

 

Cash at beginning of period

 

 

110,128

 

 

 

68,781

 

 

 

 

 

 

 

 

 

 

Cash at end of period

 

$ 222,579

 

 

$ 383,249

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

 

 

 

 

 

 

 

 

Interest paid

 

$ -

 

 

$ -

 

Income tax paid

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Common stock issued for accrued interest

 

$ 3,185

 

 

$ -

 

Original issue discount from issuance of notes payable

 

$ 39,500

 

 

$ 75,000

 

Common stock issued for conversion of debt and accrued interest

 

$ 78,421

 

 

$ 199,499

 

Recognition of debt discount attributable to derivative liability

 

$ 734,801

 

 

$ -

 

Derivative liability settlements

 

$ 158,673

 

 

$ -

 

Conversion of preferred stock to common stock

 

$ -

 

 

$ 1,050

 

Issuance of common stock previously accrued

 

$ -

 

 

$ 800,000

 

Derivative liability recognized from convertible debt

 

$ 873,176

 

 

$ -

 

 

 

 

 

 

 

 

 

 

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

 

 
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SINGLEPOINT INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

 

Corporate History

 

Carbon Credits International Inc. (“CCII”), which was formed on October 15, 2007 as a Nevada corporation, was the result of a spin off from Carbon Credits Industries, Inc. (“CCI”), its former parent issuer, on October 17, 2007. On December 23, 2011, CCII entered into a merger agreement with Lifestyle Wireless, Inc. (“LWI”), a Washington Corporation, with CCII remaining as the surviving company. The effective date of the merger was January 10, 2012. On July 1, 2013, CCII changed its name to Singlepoint Inc. (“Singlepoint” or “the Company”). On May 14, 2019, the Company established a subsidiary, Singlepoint Direct Solar LLC (“SDS”), completing the acquisition of certain assets of Direct Solar LLC and AI Live Transfers LLC (See Note 3). The Company owns Fifty One Percent (51%) of the membership interests of SDS.

 

Business

 

The Company looks to acquire businesses and build brands based on technology solutions we believe will increase efficiencies across various markets. We strive to create long-term value for our shareholders by helping our partner companies to increase their market penetration, grow revenue and improve cash flow. We currently have three subsidiaries, Singlepoint Direct Solar LLC (“SDS”, 51% interest), Discount Garden Supply, Inc. (“DIGS”, 90% interest), and ShieldSaver, LLC (“ShieldSaver”, 51% interest).

 

Going Concern

 

The financial statements have been prepared assuming that the Company will continue as a going concern. As of March 31, 2020, the Company has yet to achieve profitable operations and is dependent on its ability to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company’s ability to continue in existence is dependent on the Company’s ability to develop the Company’s businesses and to achieve profitable operations. Since the Company does not anticipate achieving profitable operations and/or adequate cash flows in the near term, management will continue to pursue additional equity financing through private placements of the Company’s common stock.

 

NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission including Form 10-Q and Regulation S-X. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly state the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been omitted pursuant to such rules and regulations. These financial statements and the information included under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the audited financial statements and explanatory notes for the year ended December 31, 2019 as disclosed in our Form 10-K filed with the Securities and Exchange Commission on March 31, 2020. The results of the three months ended March 31, 2020 (unaudited) are not necessarily indicative of the results to be expected for the pending full year ending December 31, 2020.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of Singlepoint, DIGS, SDS and ShieldSaver as of March 31, 2020 and December 31, 2019, and for the three months ended March 31, 2020 and 2019 (with the accounts of Jiffy Auto Glass (“JAG”), a former subsidiary, included in the three months ended March 31, 2019).  All significant intercompany transactions have been eliminated in consolidation.

 

 
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Revenues

 

It is the Company’s policy that revenue from product sales or services will be recognized in accordance with ASC 606 “Revenue from Contracts with Customers”. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In applying the new revenue recognition model to contracts with customers, an entity: (1) identifies the contract(s) with a customer; (2) identifies the performance obligations in the contract(s); (3) determines the transaction price; (4) allocates the transaction price to the performance obligations in the contract(s); and (5) recognizes revenue when (or as) the entity satisfies a performance obligation. The accounting standards update applies to all contracts with customers except those that are within the scope of other topics in the FASB Accounting Standards Codification.

 

The Company incurs costs associated with product distribution, such as freight and handling costs. The Company has elected to treat these costs as fulfillment activities and recognizes these costs at the same time that it recognizes the underlying product revenue. As this policy election is in line with the Company’s previous accounting practices, the treatment of shipping and handling activities under Topic 606 did not have any impact on the Company’s results of operations, financial condition and/or financial statement disclosures. In accordance with the new guidance, the Company recognizes revenue at an amount that reflects the consideration that the Company expects to be entitled to receive in exchange for transferring goods or services to its customers. The Company’s policy is to record revenue when control of the goods transfers to the customer.

 

Revenue Sharing

 

In addition to selling the Company’s products to customers, the Company recognizes revenues by sharing commissions with Independent Sales Organizations as an agent on a net basis.

 

These revenues do not comprise a material amount of the Company’s net sales.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with the original maturities of ninety days or less at the time of purchase to be cash equivalents. The Company maintains deposits in financial institutions which are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company had no deposits in excess of amounts insured by the FDIC as of March 31, 2020.

 

Convertible Instruments

 

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with the Accounting Standards Committee (“ASC”) 815 “Derivatives and Hedging”. It provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is marked-to-market at each balance sheet date and recorded as 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 other expense. Upon conversion or exercise of a derivative financial instrument, the instrument is marked to fair value at the conversion date and is reclassified to equity. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of notes redemption

 

Income Taxes

 

The Company accounts for its income taxes in accordance with ASC 740 “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. The Company has a net operating loss carryforward, however, due to the uncertainty of realization, the Company has provided a full valuation allowance for deferred tax assets resulting from this net operating loss carryforward.

 

 
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Earnings (loss) Per Common Share

 

Basic loss per common share has been calculated based upon the weighted average number of common shares outstanding during the period in accordance with the ASC 260-10, “Earnings per Share”. Common stock equivalents are not used in the computation of loss per share, as their effect would be antidilutive. Diluted EPS includes the effect from potential issuance of common stock, including stock issuable pursuant to the assumed exercise of warrants and conversion of convertible notes and Class A Preferred Stock. Dilutive EPS is computed by dividing net income (loss) by the sum of the weighted average number of common stock outstanding, and the dilutive shares.

 

The following table summarizes the number of shares of common stock issuable pursuant to our convertible securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive even though the exercise price could be less than the average market price of the common shares:

 

 

 

Three Months

Ended

 

 

Three Months

Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

Series A Preferred Stock

 

 

1,355,000,000

 

 

 

1,230,000,000

 

Convertible notes

 

 

1,396,084,483

 

 

 

229,585,686

 

Warrants

 

 

10,000,000

 

 

 

10,000,000

 

Potentially dilutive securities

 

 

2,761,084,483

 

 

 

1,469,585,686

 

 

Use of Estimates in the Preparation of Financial Statements

 

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

 

Fair Value Measurements

 

On January 1, 2011, the Company adopted guidance which defines fair value, establishes a framework for using fair value to measure financial assets and liabilities on a recurring basis, and expands disclosures about fair value measurements. Beginning on January 1, 2011, the Company also applied the guidance to non-financial assets and liabilities measured at fair value on a non-recurring basis, which includes goodwill and intangible assets. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:

 

Level 1 - Valuation is based upon unadjusted quoted market prices for identical assets or liabilities in accessible active markets.

 

Level 2 - Valuation is based upon quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable in the market.

 

Level 3 - Valuation is based on models where significant inputs are not observable. The unobservable inputs reflect a company’s own assumptions about the inputs that market participants would use.

 

The Company’s financial instruments consist of cash, accounts receivable, investments, accounts payable, convertible notes payable, advances from related parties, and derivative liabilities. The estimated fair value of cash, accounts receivable, investments, accounts payable, convertible notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments.

 

Certain non-financial assets are measured at fair value on a nonrecurring basis. Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic impairment tests.

 

 
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The Company’s derivative liabilities have been valued as Level 3 instruments.

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of convertible notes derivative liability – March 31, 2020

 

$

 

 

$

 

 

$ 4,098,210

 

 

$ 4,098,210

 

  

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of convertible notes derivative liability – December 31, 2019

 

$

 

 

$

 

 

$ 2,813,150

 

 

$ 2,813,150

 

 

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of December 31, 2019 and March 31, 2020:

 

 

 

Derivative

Liability

 

Balance, December 31, 2019

 

 

2,813,150

 

Additions recognized as debt discount

 

 

734,801

 

Derivative liability settlements

 

 

(158,673 )

Mark-to-market at March 31, 2020

 

 

708,932

 

Balance, March 31, 2020

 

$ 4,098,210

 

 

 

 

 

 

Net loss for the year included in earnings relating to the liabilities held at March 31, 2020

 

$ 708,932

 

 

Recently Issued Accounting Pronouncements

 

Leases

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement are dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease are disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard was effective for our interim and annual periods beginning January 1, 2019 and was applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. We adopted this standard on January 1, 2019. The adoption of this standard resulted in a charge of approximately $14,000 to general and administrative expense for the year ended December 31, 2019.

 

There were various other accounting standards and interpretations issued recently, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows. Management has evaluated these new pronouncements through March 31, 2020.

 

Subsequent Events

 

Other than the events described in Note 11, there were no subsequent events that required recognition or disclosure. The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission.

 

 
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NOTE 3 – INVESTMENTS, ACQUISITIONS AND GOODWILL

 

Investments

 

The Company records its investments using the cost method. If cost exceeds fair value, an impairment loss is recognized unless the impairment is considered temporary.

 

The Company had total investments of $60,000 as of March 31, 2020 and December 31, 2019, respectively.

 

2019 Asset Acquisition – Direct Solar LLC/ AI Live Transfers LLC

 

On May 14, 2019, the Company, via the formation of SDS, completed the acquisition of certain assets of Direct Solar LLC and AI Live Transfers LLC (the “Acquired Assets”). The Company owns Fifty One Percent (51%) of the membership interests of SDS. In connection with the acquisition of these assets the Company issued an aggregate of 156,058,751 shares of common stock. The Company agreed that it shall reinvest into SDS its portion of distributions of Net Cash Flow (as defined in the Operating Agreement of SDS), if any, up to Two Hundred and Fifty Thousand ($250,000) Dollars per quarter, up to a total of Seven Hundred and Fifty Thousand ($750,000) Dollars.  SDS has not made any distributions and no amounts have been reinvested as of March 31, 2020.

 

The total value of common stock issued for the purchase of the Acquired Assets was $1,966,340 on the issuance date and was allocated to goodwill based on the workforce acquired. The total purchase price for the Acquired Assets was allocated as follows:

 

Goodwill

 

$ 1,966,340

 

Current assets

 

 

-

 

Current liabilities

 

 

-

 

Total net assets acquired

 

$ 1,966,340

 

The purchase price consists of the following:

 

 

 

 

Cash

 

 

-

 

Common Stock

 

 

1,966,340

 

Total purchase price

 

$ 1,966,340

 

 

Total revenue of $1,038,363, net loss of $98,638, and contributed net loss of $50,305 after non-controlling interest related to SDS for the three months ended March 31, 2020 are included in the Company’s accompanying consolidated statement of operations.

 

 
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Goodwill

 

The following table presents details of the Company’s goodwill as of March 31, 2020 and December 31, 2019:

 

 

 

SDS

 

Balances at December 31, 2018:

 

$ -

 

Aggregate goodwill acquired

 

 

1,966,340

 

Impairment losses

 

 

-

 

Balances at December 31, 2019:

 

 

1,966,340

 

Aggregate goodwill acquired

 

 

-

 

Impairment losses

 

 

-

 

Balances at March 31, 2020:

 

$ 1,966,340

 

 

The Company periodically reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Specifically, a goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units.

 

The Company used the discounted cash flow method for the impairment testing as of March 31, 2020. The Company performed discounted cash flow analysis projected over four years to estimate the fair value of the reporting unit, using management’s best judgement as to revenue growth rates and expense projections. This analysis indicated cash flows (and discounted cash flows) greater than the book value of goodwill. The Company determined there were no indicators of impairment in goodwill during the three months ended March 31, 2020.

 

The goodwill as of March 31, 2020 is provisional pending the finalization of the fair valuation of acquired assets.

 

 
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Proforma Information (unaudited)

 

SDS

 

The following unaudited pro forma information presents the consolidated results of the Company’s operations and the results of the acquisition of the Acquired Assets as if the May 14, 2019 acquisition had been consummated on January 1, 2019. Such unaudited pro forma information is based on historical unaudited financial information with respect to the Acquired Assets acquisition and does not include operational or other charges which might have been affected by the Company. The unaudited pro forma information for the three months ended March 31, 2019 presented below is for illustrative purposes only and is not necessarily indicative of the results which would have been achieved or results which may be achieved in the future:

 

 

 

Three Months

Ended

March 31,

 

 

 

2019

 

Net revenue

 

$ 682,717

 

Net loss

 

$ (1,274,224 )

 

 
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NOTE 4 - CONVERTIBLE NOTES PAYABLE

 

Convertible notes payable consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

2020

 

 

December 31,

2019

 

 

 

 

 

 

 

 

Convertible note payable with an accredited investor dated October 31, 2017, with interest at 0%, due October 31, 2017, convertible at $0.007 per share. This note is currently in default.

 

$ 10,500

 

 

$ 10,500

 

 

 

 

 

 

 

 

 

 

Convertible note payable to investor (the “CVP Note”) dated October 10, 2017, with interest at 10%, an Original Issue Discount (“OID”) of $70,000, due October 6, 2019, convertible into shares of the Company’s common stock at a discount of 60% of the average of the three lowest closing bid prices of the Company’s common stock during the 20 trading days prior to conversion. The CVP Note provides for additional tranches of a maximum of $3,970,000, which includes OID of 10%. The note includes a warrant to purchase 5,000,000 shares of the Company’s common stock at a price of $0.10 per share. The CVP Note is secured by substantially all assets of the Company. The investor converted a total of $444,500 of principal and accrued interest of this note into 105,875,646 shares of the Company’s common stock and was repaid $40,000 by the Company during the year ended December 31, 2019. Additionally, the investor converted a total of $78,420 of principal and accrued interest of this note into 32,034,513 shares of the Company’s common stock and was repaid $25,000 by the Company during the three months ended March 31, 2020, resulting in repayment in full by March 2020.

 

 

-

 

 

 

100,235

 

 

 

 

 

 

 

 

 

 

Convertible note payable to investor (the “UAHC Note”) dated October 10, 2017, with interest at 10%, an OID of $70,000, due October 6, 2019, convertible into shares of the Company’s common stock at a discount of 60% of the average of the three lowest closing bid prices of the Company’s common stock during the 20 trading days prior to conversion. The UAHC Note includes a warrant to purchase 5,000,000 shares of the Company’s common stock at a price of $0.10 per share. The UAHC Note is secured by substantially all assets of the Company. The investor converted a total of $125,000 of principal and accrued interest of this note into 29,543,067 shares of the Company’s common stock and was repaid $50,000 by the Company during the year ended December 31, 2019. This note is currently in default.

 

 

619,490

 

 

 

619,490

 

 

 

 

 

 

 

 

 

 

Convertible note payable to investor (the “Iliad Note”) dated November 5, 2018 totaling $500,000, plus OID of $225,000 and legal fees of $20,000. The Iliad Note bears interest at 10% and matures on November 5, 2020. Total available under note is $5,520,000, including $500,000 OID (and $20,000 in legal fees taken on first $500,000 tranche). The Iliad Note is convertible into shares of the Company’s common stock after 180 days at a discount of 35% of the average of the three lowest closing bid prices of the Company’s common stock during the 20 trading days prior to conversion. The Company borrowed $1,925,000 (including OID of $175,000) under this note during the year ended December 31, 2019. The Iliad Note is secured by substantially all assets of the Company.

 

 

2,495,000

 

 

 

2,495,000

 

 

 

 

 

 

 

 

 

 

Convertible note payable to investor (the “GSC Note”) dated March 11, 2020 totaling $320,500, plus OID of $30,000 and legal fees of $9,500. The GSC Note bears interest at 10% and matures on March 6, 2021. Total available under note is $1,440,000, including $120,000 OID (and $9,500 in legal fees taken on first $320,500 tranche). The GSC Note is convertible into shares of the Company’s common stock at any time at a discount of 25% of the lowest closing bid price of the Company’s common stock during the 10 trading days prior to conversion.

 

 

360,000

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total convertible notes payable

 

 

3,484,990

 

 

 

3,225,225

 

Less debt discounts

 

 

(1,480,337 )

 

 

(1,154,327 )

Convertible notes payable, net

 

 

2,004,653

 

 

 

2,070,898

 

Less current portion of convertible notes, net

 

 

(2,004,653 )

 

 

(2,070,898 )

Long-term convertible notes payable, net

 

$ -

 

 

$ -

 

 

Aggregate maturities of long-term debt as of March 31, 2020 are due in future years as follows:

 

2020

 

$ 2,004,653

 

 

 

$ 2,004,653

 

  

Total amortization of debt discounts was $448,290 and $73,394 for the three months ended March 31, 2020 and 2019, respectively. Accrued interest on the above notes payable totaled $320,752 and $227,352 as of March 31, 2020 and December 31, 2019, respectively. Interest expense for the above notes payable for the three months ended March 31, 2020 and 2019 was $96,585 and $74,194, respectively.

 

 
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NOTE 5 – OBLIGATIONS UNDER CAPITAL LEASE

 

The Company leases approximately 1,400 square feet of office space at 2999 North 44th Street, Phoenix, Arizona 85018 at a monthly rent of $3,270 through January 31, 2023 at a monthly base rent of $3,618, increasing to $3,688 and $3,758 per month during the second and third year of the lease, respectively.

 

On July 2, 2019, the Company executed a lease agreement for an industrial building space in California for 24 months at base rent of $2,400 per month through June 30, 2021.

 

The above leases are classified as capital leases under ASC 842 which the Company adopted in 2019. The following is a summary of property held under these capital leases at March 31, 2020 and December 31, 2019:

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

Office and warehouse facilities

 

$ 224,037

 

 

$ 224,037

 

Accumulated amortization

 

 

(101,547 )

 

 

(87,106 )

 

 

 

 

 

 

 

 

 

Total

 

$ 122,490

 

 

$ 136,931

 

 

Future maturities of obligations under capital leases are as follows:

 

Twelve months ending March 31,

 

 

 

2021

 

$ 72,359

 

2022

 

 

51,594

 

2023

 

 

37,575

 

 

 

 

 

 

Total minimum lease payments

 

 

161,528

 

Amounts representing interest

 

 

(17,787 )

 

 

$ 143,741

 

 

NOTE 6 - DERIVATIVE LIABILITY

 

Derivative Liability- Debt

 

The fair value of the described embedded derivative on all convertible debt was valued at $4,098,210 and $2,813,150 at March 31, 2020 and December 31, 2019, respectively, which was determined using the Black Scholes Pricing Model with the following assumptions:

 

Dividend yields

 

 

0 %

Term

 

0 – 2.0 year

 

Volatility

 

79.7%–94.4.0

%

Risk free rate:

 

0.17–1.59

%

 

For the years ended March 31, 2020 and December 31, 2019, the Company adjusted the recorded fair value of the derivative liability on debt to market resulting in non-cash, non-operating loss of $708,932 and $616,983 for the three months ended March 31, 2020 and 2019, respectively.

 

Note 2 contains a summary of changes in fair value of the Company’s Level 3 financial liabilities as of March 31, 2020.

 

 
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NOTE 7 - STOCKHOLDERS’ DEFICIT

 

On January 30, 2020, the Company amended its Articles of Incorporation and authorized 5,000,000,000 shares of common stock (previously 2,000,000,000 shares) and 100,000,000 shares of preferred stock (previously 60,000,000 shares), of which 60,000,000 shares are designated as Class A Convertible Preferred Stock and 40,000,000 shares of preferred stock remain undesignated. The Company has retroactively reflected this amendment as of December 31, 2019.

 

Class A Convertible Preferred Shares

 

As of March 31, 2020 and December 31, 2019, the Company had authorized 100,000,000 shares, respectively, of preferred stock, $0.0001 per value per share, of which 60,000,000 shares are designated as Series A Convertible Preferred Stock (“Class A Stock”) with $0.0001 par value per share, of which 54,200,000 shares were issued and outstanding as of March 31, 2020 and December 31, 2019, respectively. As of March 31, 2020 and December 31, 2019, a total of 40,000,000 shares of preferred stock remain undesignated and unissued.

 

Each share of Class A Stock is convertible at any time into 25 shares of common stock, totaling 1,355,000,000 shares of common stock assuming full conversion of all outstanding shares. No dividends are payable unless declared by the Board of Directors. Each share of Class A Stock votes with the shares of Common Stock and is entitled to 50 votes per share and ranks senior to all other classes of stock in liquidation in the amount of $1 per share.

   

Common Shares

 

As of March 31, 2020, the Company’s authorized common stock was 5,000,000,000 shares, at $0.0001 par value per share, with 1,745,314,333 and 1,698,279,820 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively.

 

Shares issued during the three months ended March 31, 2020

 

During the three months ended March 31, 2020, the Company issued an aggregate of 32,034,513 shares of common stock to an investor for the conversion of a total of $78,421 of convertible debt and accrued interest.

 

On January 13, 2020, the Company issued 10,000,000 shares of common stock to a consultant for services with a fair value of $88,000, or $0.0088 per share.

 

On March 12, 2020, the Company issued 5,000,000 shares of common stock to a consultant for services with a fair value of $30,000, or $0.0060 per share.

 

 
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NOTE 8 - RELATED PARTY TRANSACTIONS

 

Accrued Officer Compensation

 

As of March 31, 2020 and December 31, 2019, a total of $668,611 and $588,611, respectively, was accrued for unpaid officer wages due the Company’s CEO and President under their respective employment agreements.

 

Other

 

The Company’s CEO has advanced the Company funds since 2017, with a balance due of $960,700 and $735,000, respectively, plus accrued interest of $121,622 and $96,273 as of March 31, 2020 and December 31, 2019, respectively. These balances accrue interest at 12% beginning on October 1, 2018, are unsecured and due on demand. Total interest expense on the advances totaled $25,349 and $8,568 for the three months ended March 31, 2020 and 2019, respectively.

 

As of March 31, 2020 and December 31, 2019, a total of $16,619, respectively, was due our CEO and our President and is included in accounts payable. 

 

As of March 31, 2020 and December 31, 2019, a total of $16,322 and $15,222, respectively, was due to the founder of DIGS for advances to DIGS.

 

As of March 31, 2020 and December 31, 2019, a total of $0 and $2,892, respectively, was due the founder of DIGS and is included in accounts payable.

 

In March 2020, the board of directors authorized the conversion of amounts payable to the Company’s officers to the Company’s common stock. The amounts are convertible at the option of the officer at a conversion price of $0.01 per share.  As of the date of this report, no officer has converted any monies owed into shares of the Company’s common stock.

  

NOTE 9 – COMMITMENTS AND CONTINGENCIES

 

Employment Agreements

 

In May 2018 the Company entered into an employment agreement with Mr. Lambrecht. The agreement provided that Mr. Lambrecht would serve as CEO and CFO of the Company for a term of three years at an annual salary of Two Hundred Twenty Thousand Dollars ($220,000), and an incentive bonus as determined by the board of directors. The agreement shall automatically be renewed for additional three-year periods unless either party has provided written termination of this Agreement at least 90 days prior to the expiration of such term.

 

In May 2018 the Company entered into an employment agreement with Mr. Ralston. The agreement provided that Mr. Ralston would serve as President of the Company for a term of three years at an annual salary of One Hundred Thousand Dollars ($100,000), and an incentive bonus as determined by the board of directors. The agreement shall automatically be renewed for additional three-year periods unless either party has provided written termination of this Agreement at least 90 days prior to the expiration of such term.

 

In January 2020, the Company entered into an employment agreement with Corey Lambrecht, to serve as the Chief Financial Officer of the Company effective January 1, 2020. The following is a summary of the material terms of the employment agreement (all capitalized terms not otherwise defined herein are defined in the employment agreement): term is for a period of one year; salary is Eighty Thousand Dollars ($80,000.00) per year; if employment is terminated as a result of his death or Disability, the Company shall pay the Base Salary and any accrued but unpaid Bonus and expense reimbursement amounts through the date of his Death or Disability and a lump sum payment equal to $40,000 (at the time his Death or Disability occurs) within 30 days of his Death or Disability; If employment is terminated by the Board for Cause, then the Company shall pay the Base Salary and Bonus earned through the date of his termination; If employment is terminated upon the occurrence of a Change of Control or within six (6) months thereafter, the Company (or its successor, as applicable) shall (i) continue to pay to the Base Salary for a period of six (6) months following such termination, (ii) pay any accrued and any earned but unpaid Bonus, (iii) pay the Bonus he would have earned had he remained with the Company for six (6) months from the date which such termination occurs, and (iv) pay expense reimbursement amounts through the date of termination.

 

Equity Incentive Plan

 

On January 30, 2020, the Company adopted the 2019 Equity Incentive Plan (the “Plan”) to provide additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons.  As of the date of this report the Company has not issued any awards under the Plan.

 

 
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NOTE 10 - REVENUE CLASSES AND CONCENTRATIONS

 

Selected financial information for the Company’s operating revenue for disaggregated revenue purposes are as follows:

 

 

 

Three Months

Ended

March 31,

 

 

Three Months

Ended

March 31,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

Retail

 

$ 11,315

 

 

$ 41,971

 

Distribution

 

 

13,903

 

 

 

-

 

Services

 

 

1,050,004

 

 

 

220,919

 

Total

 

$ 1,075,222

 

 

$ 262,890

 

 

Three customers represented approximately 61%, 19% and 12%, respectively, of the Company’s accounts receivable balance as of March 31, 2020. Two customers represented approximately 70% and 17%, respectively, of the Company’s accounts receivable balance as of December 31, 2019.  No customer comprised more than 10% of the Company’s revenue for three months ended March 31, 2020 or 2019.  

 

NOTE 11 - SUBSEQUENT EVENTS

 

In April 2020, the Company issued 17,755,682 shares of common stock to an investor for the conversion of $50,000 of convertible debt.

 

In April 2020, the President converted 1,600,000 shares of Class A stock for 40,000,0000 shares of the Company’s common stock.

 

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Overview

 

Singlepoint Inc. (hereinafter the “Company”, “Our”, “We” or “Us”) is a technology and acquisition company with a focus on acquiring companies that will benefit from the injection of growth capital and technology integration. Our portfolio companies include solar installation, mobile payments, ancillary cannabis services and blockchain solutions. We built our portfolio by acquiring an interest in undervalued companies, thereby providing a rich, diversified holding base. We acquire and work with key company management to grow successful candidate companies.

 

Plan of Operation

 

Our portfolio companies include solar installations, mobile payments, ancillary cannabis services and blockchain solutions. We have developed and released applications mainly in the mobile payments market. The Company has been able to place and develop programs directed towards providing business efficiencies to underserved markets such as the cannabis businesses. The Company has acquired a majority interest in companies as well as invested in others for equity.

 

Critical Accounting Policies

 

Our significant accounting policies are more fully described in the notes to our financial statements included herein for the period ended March 31, 2020.

 

New and Recently Adopted Accounting Pronouncements

 

Any new and recently adopted accounting pronouncements are more fully described in Note 2 to our financial statements included herein for the period ended March 31, 2020.

 

Results of Operations

 

Financial Condition and Changes in Financial Condition

 

Overall Operating Results:

 

Comparison of the Three Months Ended March 31, 2020 with the Three Months Ended March 31, 2019

 

Revenue. For the three months ended March 31, 2020, we generated revenues of $1,075,222 as compared to $262,890 for the three months ended March 31, 2019. The increase of revenue was due primarily to the integration of our SDS subsidiary acquired in May of 2019.

 

Cost of Revenues. For the three months ended March 31, 2020 cost of revenue increased to $765,608 from $187,261 for the three months ended March 31, 2019. The increase was mainly due to the integration of our SDS subsidiary acquired in May of 2019.

 

Consulting fees. For the three months ended March 31, 2020, consulting fees increased to $137,016 from $67,442 for the three months ended March 31, 2019, primarily due to the issuance of stock issued for services of $118,000 during the three months ended March 31, 2020.

 

Investor Relations. For the three months ended March 31, 2020, investor relations expense decreased to $43,784 from $112,439 for the three months ended March 31, 2019, primarily as a result of decreased use of investor relations services.

 

General and Administrative Expenses. Our general and administrative expenses increased to $690,972 for the three months ended March 31, 2020 from $295,025 for the three months ended March 31, 2019. The increase was primarily a result of the integration of our SDS subsidiary acquired in May of 2019.

 

Other Income (Expense).

For the three months ended March 31, 2020, other expense was $1,325,816, compared to other expense of $763,571 for the three months ended March 31, 2019. The increase in other expense was primarily due an increase in interest expense and amortization of debt discounts as a result of an increase in convertible notes payable.

 

Net Loss. The Company’s net loss attributable to Singlepoint stockholders was $1,920,431 compared to $1,267,353 for the three months ended March 31, 2020 and 2019, respectively. The increase in net loss was mainly due to an increase in general and administrative expenses as a result of the integration of our SDS subsidiary acquired in May of 2019, as well as an increase in interest and amortization expense as a result of increased notes payable.

 

 
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Liquidity and Capital Resources

 

We are an early stage company and have generated insufficient revenue to date. We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

 

The Company had $222,579 in cash as of March 31, 2020. The Company has negative working capital of approximately $8 million, and total stockholders’ deficit of approximately $6 million as of March 31, 2020.  As of March 31, 2020, the Company has yet to achieve profitable operations, and while the Company hopes to achieve profitable operations in the future, if not it may need to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s principal sources of liquidity have been cash provided by operating activities, as well as its ability to raise capital. The Company’s operating results for future periods are subject to numerous uncertainties and it is uncertain if the Company will be able to become profitable and continue growth for the foreseeable future. If management is not able to increase revenue and/or manage operating expenses, the Company may not be able to maintain profitability. The Company’s ability to continue in existence is dependent on the Company’s ability to achieve profitable operations.

 

To continue operations for the next 12 months we will have a cash need of approximately $2.5 million. Should we not be able to fulfill our cash needs through the increase of revenue we will need to raise money through outside investors through convertible notes, debt or similar instrument(s), including but not limited to the current outstanding convertible notes. Except as mentioned above, the Company has no committed external source of funds, and there is no guarantee we would be able to raise such funds. The Company plans to pay off current liabilities through sales and increasing revenue through sales of Company services and or products, or through financing activities as mentioned above.

 

Operating Activities

 

Cash flow used in operating activities – Net cash used in operating activities was $395,971 for the three months ended March 31, 2020 primarily as a result of our net loss attributable to Singlepoint stockholders of $1,837,279, partially offset by non-cash debt discount amortization expense of $448,290, shares of common stock issued for services of $118,000, a non-cash loss of $708,932 related to loss on change in fair value of derivatives and an increase in accrued expenses of $201,933. Net cash used in operating activities for the three months ended March 31, 2019 was $458,977, primarily as a result of our net loss attributable to Singlepoint shareholders of $1,267,353, partially offset by non-cash debt discount amortization expense of $73,394, loss on change in fair value of derivatives of $616,983, and an increase in accrued expenses of $168,622.

 

Investing Activities

 

Cash flow used in investing activities – There was no cash used or provided by investing activities for the three months ended March 31, 2020 or 2019.

 

Financing Activities

 

Cash flow from financing activities – During the three months ended March 31, 2020, our financing activities provided cash of $508,422 primarily from proceeds from advances from related party of $226,800 and proceeds from the issuance of convertible notes of $320,500. During the three months ended March 31, 2019, our financing activities provided cash of $773,445 from proceeds from advances from related party of $23,445 and proceeds from the issuance of convertible notes of $750,000. 

 

 
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Off Balance Sheet Arrangements

 

We do not have any significant 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, capital expenditures or capital resources that is material to investors.

 

Recent Accounting Pronouncements

 

During the three months ended March 31, 2020, there were no accounting standards and interpretations issued which are expected to have a material impact on the Company’s financial position, operations or cash flows.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We have performed an evaluation under the supervision and with the participation of our management, including our President and Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and procedures, (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2020. Based on that evaluation, our management, including our President and CEO and CFO, concluded that our disclosure controls and procedures were not effective as of March 31, 2020 to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer, as appropriate to allow timely decisions regarding required disclosure due to the material weaknesses described below.

 

Based on our evaluation under the framework described above, our management concluded that we had “material weaknesses” (as such term is defined below) in our control environment and financial reporting process consisting of the following as of the Evaluation Date:

 

 

1)

inadequate segregation of duties consistent with control objectives

 

A “material weakness” is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

 

A system of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

 

Changes in Internal Control over Financial Reporting

 

During the quarter ended March 31, 2020, there were no changes in our internal control over financial reporting identified in connection with management’s evaluation of the effectiveness of our internal control over the financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

 

 
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Table of Contents

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

Neither the Company nor its property is a party to any pending legal proceeding.

 

Item 1A. Risk Factors

 

The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

During the three months ended March 31, 2020, the Company issued an aggregate of 32,034,513 shares of common stock to an investor for the conversion of a total of $78,421 of convertible debt and accrued interest.

 

In issuing the securities set forth above, we relied on the registration exemption provided for in Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

 

 
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Table of Contents

 

Item 6. Exhibits

 

 

 

 

Exhibit Number

 

Name of Exhibit

 

 

 

31.1

 

Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (1)

 

31.2

 

Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (1)

 

32.1

 

Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002. (1)

 

101.INS

 

XBRL Instance Document

101.SCH

 

XBRL Taxonomy Extension Schema

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase

101.LAB

 

XBRL Taxonomy Extension Label Linkbase

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase

________________

(1) Filed herewith.  In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act except to the extent that the registrant specifically incorporates it by reference.

 

 
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SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

SINGLEPOINT INC.

 

Dated: May 20, 2020

By:

/s/ Gregory P. Lambrecht

 

Gregory P. Lambrecht

 

Chief Executive Officer, Director

 

 
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