TRAQIQ, INC. - FORM 10-Q

Attached files

file	filename
EX-32.1 - TRAQIQ, INC.	ex32-2.htm
EX-32.1 - TRAQIQ, INC.	ex32-1.htm
EX-31.2 - TRAQIQ, INC.	ex31-2.htm
EX-31.1 - TRAQIQ, INC.	ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 000-56148

TRAQIQ, INC.

(Exact Name of Registrant as Specified in Its Charter)

California		30-0580318
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

14205 SE 36th Street, Suite 100, Bellevue, WA		98006
(Address of Principal Executive Office)		(Zip Code)

(425) 818-0560

(Registrant’s Telephone Number, Including Area Code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None.

Title of Each Class		Trading Symbol		Name of Each Exchange on which registered

Securities registered pursuant to Section 12(g) of the Exchange Act:

Common Stock, $.0001 par value per share

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act [ ] Yes [X] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [ ] Yes [X] No

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. [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). [ ] Yes [X] 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. See the definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, “smaller reporting company” and “emerging growth” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ]	Smaller reporting company [X]
	Emerging growth company [X]

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

The number of shares of the Registrant’s common stock, $0.0001 par value per share, outstanding as of May 7, 2021, was 31,095,575.

Documents incorporated by reference:

None

TRAQIQ, INC

INDEX

		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	39

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 3.	Defaults Upon Senior Securities	40

Item 4.	Mine Safety Disclosures	40

Item 5.	Other Information	40

Item 6.	Exhibits	40

Signatures		41

FORWARD-LOOKING STATEMENTS

Except for any historical information contained herein, the matters discussed in this quarterly report on Form 10-Q contain certain “forward-looking statements’’ within the meaning of the federal securities laws. This includes statements regarding our future financial position, economic performance, results of operations, business strategy, budgets, projected costs, plans and objectives of management for future operations, and the information referred to under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

These forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,’’ “will,’’ “expect,’’ “intend,’’ “estimate,’’ “anticipate,’’ “believe,’’ “continue’’ or similar terminology, although not all forward-looking statements contain these words. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, you are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. Important factors that may cause actual results to differ from projections include, for example:

	●	the success or failure of management’s efforts to implement our business plan;

	●	our ability to fund our operating expenses;

	●	our ability to compete with other companies that have a similar business plan;

	●	the effect of changing economic conditions impacting our plan of operation; and

	●	our ability to meet the other risks as may be described in future filings with the Securities and Exchange Commission (the “SEC”).

Unless otherwise required by law, we also disclaim any obligation to update our view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this quarterly report on Form 10-Q.

When considering these forward-looking statements, you should keep in mind the cautionary statements in this quarterly report on Form 10-Q and in our other filings with the SEC. We cannot assure you that the forward-looking statements in this quarterly report on Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may prove to be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time-frame, or at all.

Item 1. Financial Statements

	Page No.

Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020	5

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended March 31, 2021 and 2020 (unaudited)	6

Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2021 and 2020 (unaudited)	7

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 (unaudited)	8

Notes to Condensed Consolidated Financial Statements (unaudited)	9

TRAQIQ, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

MARCH 31, 2021 (UNAUDITED) AND DECEMBER 31, 2020

IN US$

	MARCH 31,			DECEMBER 31,
	2021			2020
	(UNAUDITED)
ASSETS
Current Assets:
Cash	$	47,699		$	29,658
Accounts receivable, net		441,248			521,618
Note receivable - related party		-			227,877
Prepaid expenses and other current assets		607,891			322,286

Total Current Assets		1,096,838			1,101,439

Fixed assets, net		37,786			36,373
Intangible assets, net		582,339			444,584
Goodwill		6,519,347			-
Restricted cash		28,570			28,746
Long-term investment		1,440			40,603
Right-of-use asset		122,483			126,118
Other assets		3,177			3,196

Total Non-current Assets		7,295,142			679,620

TOTAL ASSETS	$	8,391,980		$	1,781,059

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES
Current Liabilities:
Accounts payable and accrued expenses	$	1,821,954		$	1,163,505
Cash overdraft		253,148			188,721
Accrued payroll and related taxes		447,514			327,084
Accrued taxes and duties payable		73,020			46,577
Derivative liability		818,875			-
Contingent consideration - Rohuma		1,383,954			-
Contingent consideration - Mimo		656,179			-
Current portion - lease liability		9,987			8,779
Current portion - long-term debt - related parties		1,855,836			1,843,399
Current portion - long-term debt		280,800			133,761
Current portion - convertible notes payable, net of discounts		256,666			-
Current portion - convertible debt - long-term debt - related and unrelated parties		85,084			241,334

Total Current Liabilities		7,943,017			3,953,160

Long-term debt, net of current portion		53,199			59,856
Lease liability, net of current portion		121,306			125,219

Total Non-current Liabilities		174,505			185,075

Total Liabilities		8,117,522			4,138,235

Commitments and contingencies		-			-

STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock, par value, $0.0001, 10,000,000 shares authorized, Series A Convertible Preferred, 50,000 and 50,000 shares issued and outstanding, respectively		5			5
Common stock, par value, $0.0001, 300,000,000 shares authorized, 31,094,575 and 27,297,960 issued and outstanding, respectively		3,109			2,730
Additional paid in capital		4,445,026			117,261
Accumulated deficit		(4,196,717	)		(2,504,893	)
Accumulated other comprehensive income (loss)		21,582			27,721

Total Stockholders’ Equity (Deficit) before Non-controlling Interest		273,005			(2,357,176	)
Non-controlling interest		1,453			-

Total Stockholders’ Equity (Deficit)		274,458			(2,357,176	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	8,391,980		$	1,781,059

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

TRAQIQ, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (UNAUDITED)

IN US$

	THREE MONTHS ENDED
	MARCH 31,
	2021			2020

REVENUE	$	382,386		$	291,061
COST OF REVENUE		223,832			139,138
GROSS PROFIT (LOSS)		158,554			151,923


OPERATING EXPENSES
Salaries and salary related costs		148,431			46,425
Professional fees		151,425			59,882
Rent expense		7,786			33,009
Depreciation and amortization expense		16,718			12,730
General and administrative expenses (including stock-based compensation)		835,724			34,758

Total Operating Expenses		1,160,084			186,804

OPERATING LOSS		(1,001,530	)		(34,881	)

OTHER INCOME (EXPENSE)
Bargain purchase gain		-			-
Change in fair value of derivative liability		(505,007	)		-
PPP forgiveness and other income		10,073			-
Interest expense, net of interest income		(145,633	)		(83,184	)
Total other income (expense)		(640,567	)		(83,184	)

NET LOSS BEFORE PROVISION FOR INCOME TAXES		(1,642,097	)		(118,065	)

Provision for income taxes		48,274			809

NET LOSS		(1,690,371	)		(118,874	)
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST		(1,453	)		-

NET LOSS ATTRIBUTABLE TO CONTROLLING INTEREST	$	(1,691,824	)	$	(118,874	)

Other comprehensive income (loss)
Foreign currency translations adjustment		(6,139	)		(26,160	)
Comprehensive income (loss)	$	(1,697,963	)	$	(145,034	)

Net loss per share - basic and diluted	$	(0.06	)	$	(0.00	)

Weighted average common shares outstanding - basic and diluted		29,781,450			27,297,960

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

TRAQIQ, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

IN US $

	Series A Preferred				Common Stock				Additional Paid-In Capital -		Accumulated			Accumulated Other Comprehensive			Non- controlling
	Shares		Amount		Shares		Amount		Common		Deficit			Income (Loss)			Interest		Total

Balance - January 1, 2020		50,000	$	5		27,297,960	$	2,730	$	12,623	$	(1,896,984	)	$	21,244		$	-	$	(1,860,382	)

Net loss for the period		-		-		-		-		-		(118,874	)		(26,160	)		-		(145,034	)

Balance - March 31, 2020		50,000	$	5		27,297,960	$	2,730	$	12,623	$	(2,015,858	)	$	(4,916	)	$	-	$	(2,005,416	)

Balance - January 1, 2021		50,000	$	5		27,297,960	$	2,730	$	117,261	$	(2,504,893	)	$	27,721		$	-	$	(2,357,176	)

Shares of stock issued for cash		-		-		570,000		57		455,943		-			-			-		456,000

Shares of stock issued for conversion of notes payable and accrued interest		-		-		264,338		26		224,661		-			-			-		224,687

Shares of stock issued for services rendered		-		-		400,000		40		436,345		-			-			-		436,385

Shares of stock issued for acquisition of Rohuma (first tranche) -		-		-		2,562,277		256		2,049,565		-			-			-		2,049,821

Stock-based compensation on granting of options		-		-		-		-		108,341		-			-			-		108,341

Stock-based compensation - warrants granted for consulting -		-		-		-		-		68,642		-			-			-		68,642

Warrants earned for acquisition of Mimo		-		-		-		-		984,268		-			-			-		984,268

Net loss for the period		-		-		-		-		-		(1,691,824	)		(6,139	)		1,453		(1,696,510	)

Balance - March 31, 2021		50,000	$	5		31,094,575	$	3,109	$	4,445,026	$	(4,196,717	)	$	21,582		$	1,453	$	274,458

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

TRAQIQ, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

IN US$

	2021			2020
CASH FLOW FROM OPERATING ACTIVITIES
Net loss	$	(1,691,824	)	$	(118,874	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Change in non-controlling interest		1,453			-
Bad debt expense		104,863			-
Forgiveness of debt		(10,087	)		-
Depreciation and amortization		16,718			12,730
Lease cost, net of repayment		979			3,449
Foreign currency (gain) loss		1,142			(9,970	)
Stock-based compensation		176,983			-
Common stock issued for services rendered		436,385			-
Change in fair value of derivative liability		505,007			-
Amortization of discounts on debt		55,534			-
Changes in assets and liabilities
Accounts receivable		35,274			(64,314	)
Prepaid expenses and other current assets		(151,992	)		(47,658	)
Other assets		-			-
Accounts payable and accrued expenses		(128,959	)		91,532
Accrued payroll and payroll taxes		18,803			2,108
Accrued duties and taxes		686			19,939
Deferred revenue		-			-
Total adjustments		1,062,789			7,816
Net cash (used in) operating activities		(629,035	)		(111,058	)

CASH FLOWS FROM INVESTING ACTIVITIES
Cash received in acquisition of Mimo		43,384			-
Cash received in acquisition of Rohuma		5,997			-
Advances of note receivable - related party		-			-
Acquisition of fixed assets		-			(2,109	)
Net cash provided by (used in) provided by investing activities		49,381			(2,109	)

CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in cash overdraft		62,605			40,626
Proceeds from the issuance of common stock		456,000			-
Proceeds from convertible notes		515,000			-
Proceeds from long-term debt - related parties		24,101			68,878
Repayment of long-term debt - related parties		(366,943	)		(8,500	)
Proceeds from long-term debt		-			8,100
Repayments of long-term debt		(93,244	)		(14,692	)
Net cash provided by financing activities		597,519			94,412

NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH		17,865			(18,755	)

CASH AND RESTRICTED CASH - BEGINNING OF PERIOD		58,404			191,721

CASH AND RESTRICTED CASH - END OF PERIOD	$	76,269		$	172,966

CASH PAID DURING THE PERIOD FOR:
Interest expense	$	12,379		$	19,273
Income taxes	$	43,697		$	946

SUMMARY OF NON-CASH ACTIVITIES:
Acquisition of Rohuma:
Accounts receivable	$	4,179		$	-
Prepaid and other current assets		8,943			-
Fixed assets		4,512			-
Investment		1,440			-
Accounts payable and accrued expenses		(58,153	)		-
Accrued duties and taxes		(2,688	)		-
Long-term debt - related parties		(37,776	)		-
Long-term debt		(10,000	)		-
Cash overdraft		(2,980	)		-
Cash		6,027			-

Total net assets acquired		(86,496	)		-

Consideration per Share Exchange Agreement		3,433,776			-

Goodwill/(Bargain Purchase Gain)	$	3,520,272		$	-

Acquisition of Mimo Technologies:
Accounts receivable	$	58,692		$	-
Prepaid and other current assets		272,872			-
Fixed and intangible assets		153,186			-
Accounts payable and accrued expenses		(708,833	)		-
Accrued payroll and related taxes		(104,750	)		-
Accrued duties and taxes		(28,213	)		-
Long-term debt - related parties		(343,118	)		-
Long-term debt		(236,712	)		-
Comprehensive income		(42,735	)		-
Cash		43,851			-

Total net assets acquired		(935,760	)		-

Consideration per Share Exchange Agreement		2,063,315			-

Goodwill/(Bargain Purchase Gain)	$	2,999,075		$	-

Common stock issued for conversion of long-term debt, related and unrelated parties	$	224,688		$	-

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

TRAQIQ, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN US$)

(UNAUDITED)

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS

TraQiQ, Inc. (along with its wholly owned subsidiaries, referred to herein as the “Company”) was incorporated in the State of California on September 9, 2009 as Thunderclap Entertainment, Inc. On July 14, 2017, Thunderclap Entertainment, Inc. changed its name to TraQiQ, Inc. On July 19, 2017, the Company entered into a Share Exchange Agreement (“Share Exchange”) with the stockholders of OmniM2M, Inc. (“OmniM2M”) and TraQiQ Solutions, Inc. dba Ci2i Services, Inc. (formerly Ci2i Services, Inc. – amended November 6, 2019) (“Ci2i”) whereby the stockholders of Omni and Ci2i exchanged all of their respective shares, representing 100% ownership in OmniM2M and Ci2i in exchange for 12,000,000 shares of the Company’s common stock, respectively. The OmniM2M Shareholders and the Ci2i Shareholders have each been issued their respective 12,000,000 shares on a pro rata basis based on their respective holdings in OmniM2M and Ci2i in the Share Exchange Agreement. The Share Exchange was accounted for as a reverse merger whereas Ci2i is considered the accounting acquirer and TraQiQ,Inc. is considered the accounting acquiree. For accounting purposes, the acquisition of Omni is recorded at historical cost in accordance with Accounting Standard Codification (“ASC”) 805-50-25-2 as this is considered an acquisition of entities under common control as the management of the Company and Omni control the activities of the respective companies. Prior to the merger with Ci2i and acquisition of Omni, the Company was considered a shell company under Rule 12b-2 of the Exchange Act. On December 1, 2017, The Company entered into a Share Purchase Agreement (the “Share Exchange Agreement”) with Ajay Sikka (“Sikka”), the sole shareholder of Transport IQ, Inc. whereby Sikka agreed to sell all of the shares in TransportIQ, Inc. (“TransportIQ”) in exchange for $18,109, in the form of cancellation of all of the debt of TransportIQ that is owed to the Company. The transaction became effective upon the execution of the Share Exchange Agreement by Sikka and the Company; and Transport IQ, Inc, is now a wholly-owned subsidiary of the Company. Because TransportIQ was commonly controlled and owned, the transaction was recorded at the historical carrying value of TransportIQ’s assets and liabilities.

TraQiQ Solutions, Inc.

This entity was formed about over 15 years ago and has most recently been providing technology solutions, predominantly in the business intelligence and data analytics arenas. The Company has been a vendor to Microsoft for over 10 years and has done work with many Microsoft product and business groups, including Microsoft Azure and Microsoft Media planning. Ci2i has worked closely with customers where a wide variety of analytics solutions were built.

Ci2i’s cloud solutions and analytics services comprise software development, program management, project management, and business analytics services.

TraQiQ Solutions, Private Limited

On May 16, 2019, the Company entered into a Share Exchange Agreement with Mann-India Technologies Private Ltd., an Indian Corporation (“Mann”). On January 2, 2020, Mann changed its name to TRAQIQ Solutions Private Limited (“TRAQ Pvt Ltd”). Pursuant to the Share Exchange Agreement with Mann, the Company acquired 100% of the shares of Mann and assumed certain net liabilities in exchange for warrants exercisable over a five-years to purchase 1,329,272 shares of common stock of the Company valued at $268. The warrants will be exercisable as follows: (i) 100,771 warrants immediately; (ii) 859,951 warrants exercisable one-year after the date of closing, which was extended to March 31, 2021; and (iii) 368,550 warrants exercisable two-years after the date of closing. This transaction is being recorded as a business combination under ASC 805.

The warrants that are exercisable in one-year and two-years are conditioned upon TRAQ Pvt Ltd. achieving certain revenue figures and pre-tax profit percentages. TRAQ Pvt Ltd. must achieve target revenue of $1.1 million (US$) and pre-tax profit of 25% (US$). Should TRAQ Pvt Ltd. be unable to achieve these criteria, the warrants will be reduced proportionately.

Mann-India Private limited was renamed to TraQiQ Solutions Private Limited shortly after acquisition by TraQiQ Inc.

The warrants that are exercisable in one-year (which were extended to March 31, 2021) and two-years are conditioned upon TRAQ Pvt Ltd. achieving certain revenue figures and pre-tax profit percentages. TRAQ Pvt Ltd. must achieve target revenue of $1.1 million (US$) and pre-tax profit of 25% (US$). Should TRAQ Pvt Ltd. be unable to achieve these criteria, the warrants will be reduced proportionately.

TRAQ Pvt Ltd. was established in May 2000 and is headquartered in New Delhi, India. TRAQ Pvt Ltd. is a leading software development company which, with the advent of technology, has evolved as a mature and fast-growing company committed to provide reliable and cost-effective software solutions across industries all over the world.

TRAQ Pvt Ltd. has its own experienced team of software developers dedicated towards developing various kinds of customized software.

TraQ Pvt Ltd. has been doing business around the world for over 15 years, with particular emphasis on Latin America and India. The customer list includes large enterprise Finance and Insurance companies across Latin America. The company’s product portfolio has evolved rapidly and now includes enterprise ready solutions for payment processing, mobile wallets, micro lending solutions and digital transformation.

TraQSuite is a distribution platform that allows users to setup task-based networks rapidly – target customers, facilitate/validate transactions, track/manage task workers, manage funds and run the entire distribution network. It includes the following functions:

Targeting

TraQSuite analyzes your customers’ omni-channel behaviors and transactions. Using artificial intelligence technology, the software analyzes online activity and delivers real-time, automated recommendations and personalized content, including such items as personalized, always-updated coupons, funds, tickets and loyalty cards.

Transactions

The digital transactions functions of the software enable users to manage and control finances and virtually store and use financial assets including G2P, B2P, welfare, salary, cards and micro banking like loans and insurance. The software includes back-end payment processing and a front-end digital wallet that allows users with and without bank accounts to buy products and services and pay with their mobile devices, settling transactions across multiple vendors, currencies and locations.

Last mile

The Last-Mile software module is designed to allow logistics and delivery operations to manage large numbers of workers in multiple locations that are delivering products and services to users. It both tracks the task workers and provides validation for the transactions. The mobile applications enable data sharing and validation and also measure customer satisfaction.

Integration

TraQSuite also includes software designed to integrate the TraQSuite tools with existing business software.

Learning

TraQLearn is an eLearning software platform that includes modules and dashboards for students, teachers and administrators and tools to help with targeted learning.

Effective December 31, 2020, Ci2i acquired the net assets of OmniM2M and TransportIQ, and then dissolved those entities in January 2021. The value of those transactions were for the assumed liabilities of Omni and TransportIQ, and no cash was exchanged. These acquisitions did not constitute accounting for discontinued operations under ASC 205 as the two entities were acquired by a subsidiary of the Company and were not disposed of.

Rohuma, LLC

On January 22, 2021, the Company entered into a Share Exchange Agreement with Rohuma, LLC, a Delaware limited liability company (“Rohuma”) and its members, whereby the Rohuna members agreed to exchange all of their respective membership interests in Rohuma in exchange for 4,292,220 shares of common stock, of which the first tranche of shares were issued on March 1, 2021 totaling 2,562,277 shares, with the remaining value reflected as contingent consideration until the shares vest at which time they will be issued. The transaction was valued at $3,433,776 ($0.80 per share). Rohuma has an Indian affiliate that is owned 99% by Rohuma and 1% by its founding member. Rohuma controls this entity and the 1% ownership by the member is now less than 1% upon acquisition by the Company. This amount is reflected as a non-controlling interest.

Rohuma dba Kringle.ai is a California based software solutions company that enables digital and mobile commerce by providing enterprise class applications that cover loyalty and rewards products, payments, online ordering, distribution logistics for retail and more. Kringle analyzes customers’ omni-channel behaviors and transactions. Using AI for digital commerce, Kringle is able to deliver real time, automated 1:1 recommendations and personalized content across all customer touch points.

Mimo Technologies Private Limited

On February 17, 2021, the Company entered into a Share Exchange Agreement with Mimo Technologies Private Ltd., and Indian corporation (“Mimo”) and its shareholders, whereby the Mimo shareholders agreed to exchange all of their respective shares in Mimo in exchange for warrants to purchase 1,367,539 shares of the Company’s common stock. Of these warrants, 820,524 were earned at the date of acquisition, with the remaining 547,015 expected to be earned over the next two years from grant based on revenue goals for Mimo. The warrants have a term of three years and an exercise price of $0.001 and value in the amount of $1,640,447, of which $984,268 is reflected in additional paid in capital, with the remaining $656,179 reflected as contingent consideration. In addition to the issuance of the warrants, TRAQ Pvt Ltd, wrote off $258,736 in amounts due from a note receivable, $123,778 in accounts receivable and $40,354 in a debenture from Mimo. The Company acquired over 99% of Mimo with the remaining percentage of less than 1% reflected as a non-controlling interest.

Mimo provides delivery and task worker solutions across India. Mimo works with Banking, Financial, Logistics and Distribution companies, to take their products and services to semi-urban and rural India. Mimo trains the agents in each Product or Service through an online and classroom training platform. The company powers the gig economy task workers throughout the country and provides a very valuable source of employment for young people who may or may not have a high school diploma.

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

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the regulations of the United States Securities and Exchange Commission. The condensed consolidated financial statements and accompanying notes are the representations of the Company’s management, who are responsible for their integrity and objectivity. In their opinion, such financial information includes all adjustments considered necessary for a fair presentation at such date and the operating results and cash flows for such periods.

These condensed consolidated financial statements should be read in conjunction with a reading of the Company’s consolidated financial statements and notes thereto included in Form 10-K filed with the SEC on March 22, 2021. Interim results of operations for the three months ended March 31, 2021 are not necessarily indicative of future results for the full year.

Consolidation

The condensed consolidated financial statements include the accounts of TraQiQ, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The Company applies the guidance of Topic 810 Consolidation of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) to determine whether and how to consolidate another entity. Pursuant to ASC paragraph 810-10-15-10, all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—are consolidated except when control does not rest with the parent.

Pursuant to ASC paragraph 810-10-15-8, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree.

Noncontrolling Interests

In accordance with ASC 810-10-45 Noncontrolling Interests in Consolidated Financial Statements, the Company classifies noncontrolling interests as a component of equity within the consolidated balance sheet. In January 2021, the acquisition of Rohuma resulted in a less than 1% non-controlling interest of the Indian affiliate of that company. In February 2021, the acquisition of Mimo resulted in a less than 1% non-controlling interest of that company.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. These estimates include, but are not limited to, management’s estimate of provisions required for non-collectible accounts receivable, depreciative lives of our assets, determination of technological feasibility, and valuation allowances of our deferred tax assets. Actual results could differ from those estimates.

Foreign Currency Transactions

The Company accounts for foreign currency transactions in accordance with ASC 830, “Foreign Currency Matters” (“ASC 830”), specifically the guidance in subsection ASC 830-20, “Foreign Currency Transactions”. The U.S. dollar is the functional and reporting currency for the Company and its subsidiaries other than TRAQ Pvt Ltd. whose functional currency is the Indian Rupee. Pursuant to ASC 830, monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting gains or losses upon settlement reported in foreign exchange gain (loss) in the computation of net income (loss). Gains or losses resulting from translation adjustments are reported under accumulated other comprehensive income (loss).

Reclassification

Certain prior period amounts have been reclassified to conform with current period presentation with no effect on the Company’s net loss, total assets, liabilities equity or cash flows.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less of $47,699 and $29,658 as of March 31, 2021 and December 31, 2020, respectively.

Restricted Cash

The Company’s restricted cash balance consists of time deposits with financial institutions which are valued at cost and approximate fair value. Interest earned on these deposits in included in interest income. The carrying value of our restricted cash at March 31, 2021 and December 31, 2020 was $28,570 and $28,746, respectively. The balances consist of time deposits pledged with financial institutions for a Line of Credit facility taken from Andhra Bank, issuance of overdraft limit.

Accounts Receivable and Concentration of Credit Risk

The Company considers accounts receivable, net of allowance for returns and doubtful accounts, to be fully collectible. The allowance is based on management’s estimate of the overall collectability of accounts receivable, considering historical losses and economic conditions. Based on these same factors, individual accounts are charged off against the allowance when management determines those individual accounts are uncollectible.

Credit extended to customers is generally uncollateralized. Past-due status is based on contractual terms. Management has determined that an allowance of $104,864 and $0 was required for the outstanding accounts receivable as of March 31, 2021 and December 31, 2020, respectively.

Property and Equipment and Long-Lived Assets

Fixed assets are stated at cost. Depreciation on fixed assets are computed using the straight-line method over the estimated useful lives of the assets, which range from three to ten years.

FASB Codification Topic 360 “Property, Plant and Equipment” (ASC 360), requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The application of ASC 360 has not materially affected the Company’s reported earnings, financial condition or cash flows.

Intangible assets with definite useful lives are stated at cost less accumulated amortization. Intangible assets represent purchased intangible of TRAQ Pvt Ltd. which includes customer relationships and trademarks. The Company amortizes these intangible assets on a straight-line basis over their estimated useful lives of 15 years. OmniM2M has had and currently does have computer software development underway, however, has determined that the costs associated with this development, currently do not meet the requirements for capitalization under ASC 985-20-25. OmniM2M will continue to monitor the development of such software in relationship to the requirements under the ASC in the future to determine if capitalization is warranted.

The Company has adopted Accounting Standard Update (“ASU”) 2017-04 Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. The adoption of this ASU did not have a material impact on our consolidated financial statements. The Company reviews recoverability of long-lived assets on a periodic basis whenever events and changes in circumstances have occurred which may indicate a possible impairment. The assessment for potential impairment is based primarily on the Company’s ability to recover the carrying value of its long-lived assets from expected future cash flows from its operations on an undiscounted basis. If such assets are determined to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets.

The Company will assess the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable at the time they do have intangible assets. Factors the Company considers to be important which could trigger an impairment review include the following:

1. Significant underperformance relative to expected historical or projected future operating results;

2. Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and

3. Significant negative industry or economic trends.

When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company will measure any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. Management has determined that no impairment of long-lived assets is required for the periods ended March 31, 2021 and December 31, 2020.

Capitalized Software Costs

In accordance with the relevant FASB accounting guidance regarding the development of software to be sold, leased, or marketed, the Company expenses such costs as they are incurred until technological feasibility has been established, at and after which time these costs are capitalized until the product is available for general release to customers. Once the technological feasibility is established per ASC 985-20, the Company capitalizes costs associated with the acquisition or development of major software for internal and external use in the balance sheet.

Costs incurred to enhance the Company’s software products, after general market release of the services using the products, is expensed in the period they are incurred.

The Company only capitalizes subsequent additions, modifications or upgrades to internally developed software to the extent that such changes allow the software to perform a task it previously did not perform. The Company expenses software maintenance and training costs as incurred. The Company acquired $146,065 in software costs in the Mimo transaction.

Revenue Recognition

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), specifically ASC 606-10-50-12. This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted the updated guidance effective January 1, 2018 using the full retrospective method, however the new standard did not have a material impact on its consolidated financial position and consolidated results of operations, as it did not change the manner or timing of recognizing revenue.

Professional Service Revenue

TRAQ Pvt Ltd. derives a large part of its revenues from professional and support services, which includes revenue generated from software development projects and associated fees for consulting, implementation, training, and project management provided to customers using their systems. Revenue from arrangements with customers is recognized based on the Company’s satisfaction of distinct performance obligations identified in each agreement, generally at a point in time as discussed in ASC 606. In instances where multiple performance obligations are identified, the Company allocates the transaction price to each performance obligation based on relative selling prices of each distinct product or service, and recognizes revenue related to each performance obligation at the points in time that each performance obligation is satisfied. The Company’s performance obligation includes providing customization of software’s, selling of licenses, where the Company typically satisfies its performance obligations prior to the submission of invoices to the customer for such services. The Company’s performance obligation for consulting and technical support is delivered on as the work is being performed, which is satisfied prior to invoicing.

The Company generally collects payment within 30 to 60 days of completion of the performance obligation and there are no agency relationships.

Software development arrangements involving significant customization, modification or production are accounted for in accordance with the appropriate technical accounting guidance issued by the FASB using the percentage-of- completion method. The Company recognizes revenue using periodic reported actual hours worked as a percentage of total expected hours required to complete the project arrangement and applies the percentage to the total arrangement fee.

Unbilled revenue represents earnings in excess of billings as at the end of the reporting period. Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenues in the statements of operations.

TRAQ Pvt Ltd. has deferred the revenue and costs attributable to certain process transition activities with respect to its customers where such activities do not represent the culmination of a separate earnings process. Such revenue and costs are subsequently recognized ratably over the period in which the related services are performed. Further, the deferred costs are limited to the amount of the deferred revenues.

TRAQ Pvt Ltd. has now started offering an integrated solution for supply chain and last mile. This product called “TraQSuite” is now offered in multiple markets as a cloud-based subscription offering. This is a significant improvement from the earlier professional services business.

Software Solution Revenue

Revenue from arrangements with customers is recognized based on the Company’s satisfaction of distinct performance obligations identified in each agreement, generally at a point in time as discussed in ASC 606. In instances where multiple performance obligations are identified, the Company allocates the transaction price to each performance obligation based on relative selling prices of each distinct product or service, and recognizes revenue related to each performance obligation at the points in time that each performance obligation is satisfied. The Company’s performance obligation includes providing connectivity to software, generally through a monthly subscription, where the Company typically satisfies its performance obligations prior to the submission of invoices to the customer for such services. The Company’s performance obligation for hardware components that are purchased by the customer in connection with the solution is delivery of the purchased device, which is satisfied prior to invoicing. The Company provides a twelve-month warranty on their hardware. All units deployed by the Company are past the twelve-month period, thus the Company has not accrued for a warranty liability. The Company generally collects payment within 30 to 60 days of completion of the performance obligation and there are no agency relationships.

The following is a summary of revenue for the three months ended March 31, 2021 and 2020, disaggregated by type:

	2021		2020
Professional Services Revenue	$	365,548	$	243,977
Software Solution Revenue		16,838		47,084
	$	382,386	$	291,061

Costs of Services Provided

Costs of services provided consist of data processing costs, customer support costs including personnel costs to maintain the Company’s proprietary databases, costs to provide customer call center support, hardware and software expense associated with transaction processing systems and exchanges, telecommunication and computer network expense, and occupancy costs associated with facilities where these functions are performed. Depreciation expense is not included in costs of services provided.

Lease Obligations

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of operating lease liabilities and operating lease liabilities, less current portion in the Company’s consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. For leases in which the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are accounted for separately.

Income Taxes

Income taxes are accounted under the asset and liability method. The current charge for income tax expense is calculated in accordance with the relevant tax regulations applicable to entity. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for operating loss 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 income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Uncertain Tax Positions

The Company follows ASC 740-10, “Accounting for Uncertainty in Income Taxes”. This requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. Management evaluates their tax positions on an annual basis.

TraQiQ, Inc., TraQiQ Solutions, OmniM2M and TransportIQ file a consolidated income tax return in the U.S. federal tax jurisdiction and various state tax jurisdictions. TRAQ Pvt Ltd. files income tax returns in all India tax jurisdictions. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they were filed. The India tax returns of TRAQ Pvt Ltd. are subject to examination by the India Income Tax Department and India state taxing authority, generally for 12 months after the relevant tax year, 24 months after the relevant tax year in case transfer pricing provisions are applicable.

Fair Value of Financial Instruments

ASC 825, “Financial Instruments,” requires the Company to disclose estimated fair values for its financial instruments. The carrying amount of cash, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses, stockholder advances, short term financing and convertible debt approximate fair value because of the short-term maturity of those instruments. The Company does not utilize derivative instruments.

Fair Value Measurements

ASC 820 “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure about fair value measurements.

The following provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which fair value is observable:

Level 1- fair value measurements are those derived from quoted prices (unadjusted in active markets for identical assets or liabilities);

Level 2- fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3- fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Financial instruments classified as Level 1 - quoted prices in active markets include cash.

These consolidated financial instruments are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment to estimation. Valuations based on unobservable inputs are highly subjective and require significant judgments. Changes in such judgments could have a material impact on fair value estimates.

In addition, since estimates are as of a specific point in time, they are susceptible to material near-term changes. Changes in economic conditions may also dramatically affect the estimated fair values.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management for the respective periods. The respective carrying value of certain financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, investments, short-term notes payable, accounts payable and accrued expenses.

Derivative Financial Instruments

Derivatives are recorded on the consolidated balance sheet at fair value. The conversion features of the convertible instruments are embedded derivatives and are separately valued and accounted for on the consolidated balance sheet with changes in fair value recognized during the period of change as a separate component of other income/expense. Fair values for exchange-traded securities and derivatives are based on quoted market prices. The pricing model we use for determining the fair value of our derivatives are binomial pricing models. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management’s judgment and may impact net income (loss).

With the issuance of the July 2017 FASB ASU 2017-11, “Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815),” which addresses the complexity of accounting for certain financial instruments with down round features, the Company has chosen the early adopt retroactively the amendments in Part I of the standard whereby fair value derivative liabilities previously recognized were derecognized in the current and comparative periods. Under the amendments included in this update, the Company is no longer required to record changes in fair value during the period of change as a separate component of other income (expense) in the consolidated Statements of Operations.

The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, “Debt—Debt with Conversion and Other Options”), including related EPS guidance (in Topic 260).

The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect.

Under current GAAP, an equity-linked financial instrument with a down round feature that otherwise is not required to be classified as a liability under the guidance in Topic 480 is evaluated under the guidance in Topic 815, “Derivatives and Hedging,” to determine whether it meets the definition of a derivative. If it meets that definition, the instrument (or embedded feature) is evaluated to determine whether it is indexed to an entity’s own stock as part of the analysis of whether it qualifies for a scope exception from derivative accounting.

Generally, for warrants and conversion options embedded in financial instruments that are deemed to have a debt host (assuming the underlying shares are readily convertible to cash or the contract provides for net settlement such that the embedded conversion option meets the definition of a derivative), the existence of a down round feature results in an instrument not being considered indexed to an entity’s own stock. This results in a reporting entity being required to classify the freestanding financial instrument or the bifurcated conversion option as a liability, which the entity must measure at fair value initially and at each subsequent reporting date.

The amendments in this Update revise the guidance for instruments with down round features in Subtopic 815-40, “Derivatives and Hedging—Contracts in Entity’s Own Equity,” which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception from derivative accounting. An entity still is required to determine whether instruments would be classified in equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities and embedded conversion options with down round features are no longer bifurcated.

For entities that present EPS in accordance with Topic 260, and when the down round feature is included in an equity-classified freestanding financial instrument, the value of the effect of the down round feature is treated as a dividend when it is triggered and as a numerator adjustment in the basic EPS calculation. This reflects the occurrence of an economic transfer of value to the holder of the instrument, while alleviating the complexity and income statement volatility associated with fair value measurement on an ongoing basis. Convertible instruments are unaffected by the Topic 260 amendments in this Update.

Those amendments in Part I of this Update are a cost savings relative to current GAAP. This is because, assuming the required criteria for equity classification in Subtopic 815-40 are met, an entity that issued such an instrument no longer measures the instrument at fair value at each reporting period (in the case of warrants) or separately accounts for a bifurcated derivative (in the case of convertible instruments) on the basis of the existence of a down round feature. For convertible instruments with embedded conversion options that have down round features, applying specialized guidance such as the model for contingent beneficial conversion features rather than bifurcating an embedded derivative also reduces cost and complexity. Under that specialized guidance, the issuer recognizes the intrinsic value of the feature only when the feature becomes beneficial instead of bifurcating the conversion option and measuring it at fair value each reporting period.

The amendments in Part II of this Update replace the indefinite deferral of certain guidance in Topic 480 with a scope exception. This has the benefit of improving the readability of the Codification and reducing the complexity associated with navigating the guidance in Topic 480.

For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in Part 1 of this Update should be applied in either of the following ways:

	1.	retrospectively to outstanding financial instruments with a down round feature by means of a cumulative-effect adjustment to the statement of financial position as of the beginning of the first fiscal year and interim period(s) in which the pending content that links to this paragraph is effective; or

	2.	retrospectively to outstanding financial instruments with a down round feature for each prior reporting period presented in accordance with the guidance on accounting changes in paragraphs 250-10-45-5 through 45-10.

The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect.

Earnings (Loss) Per Share of Common Stock

Basic net income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as convertible notes, preferred stock, stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented.

Related Party Transactions

Parties are considered to be related to the Company if the parties directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal stockholders of the Company, its management, members of the immediate families of principal stockholders of the Company and its management and other parties with which the Company may deal where one-party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as compensation or distribution to related parties depending on the transaction.

Retirement Benefits to Employees

Defined Contribution Plan

In India, the employees receive benefits from a provident fund, where the employer and employees each make monthly contributions to the plan at a pre-determined rate to the Regional Provident Fund Commissioner. Employer’s contributions to the fund is charged as an expense in the Statements of Operations.

Defined Benefit Plan

In accordance with the Payment of Gratuity Act, 1972, applicable for Indian companies, TRAQ Pvt Ltd. provides for a lump sum payment to eligible employees, at retirement or termination of employment based on the last drawn salary and years of employment with the Company. Current service costs for defined benefit plans are accrued in the period to which they relate. The liability in respect of defined benefit plans is calculated annually by TRAQ Pvt Ltd. TRAQ Pvt Ltd. records annual amounts relating to its defined benefit plans based on calculations that incorporate various actuarial and other assumptions, including discount rates, mortality, assumed rates of return, compensation increases and turnover rates. TRAQ Pvt Ltd. reserves its assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when it is appropriate to do so. TRAQ Pvt Ltd.’s obligation in respect of the gratuity plan, which is a defined benefit plan, is provided for based on actuarial valuation.

Other Long-Term Employee Benefits

TRAQ Pvt Ltd.’s net obligation in respect of leave encashment is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The discount rate is based on the prevailing market yields of Indian government securities at the reporting date that have maturity dates approximating the terms of TRAQ Pvt Ltd.’s obligations. The calculation is performed using the projected unit credit method. Any actuarial gains or losses are recognized.

Investments

The Company’s investments are in debt and equity instruments. These investments are accounted for in accordance with ASC 320 Investments – Debt Securities and ASC 321 Investments – Equity Securities. Interest earned under such investments are included in interest income.

Segment Reporting

For purposes of segment disclosures, two or more operating segments should be grouped only if the segments meet all the requirements of paragraph 280-10-50-11, including the requirements for similar economic characteristics.

As a result, all operating units perform similar services, and approximately 99% of the Company’s revenue is generated from its Indian subsidiary. The Company believes that no segment reporting is required as all remaining operations outside of the Indian subsidiary is immaterial.

Recently Issued Accounting Standards

There were updates recently issued, most of which represent technical corrections to the accounting literature or application to specific industries or transactions that are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

Going Concern

The Company has an accumulated deficit of $4,196,717 and a working capital deficit of $6,846,179, as of March 31, 2021, and a working capital deficit of $2,851,721 as of December 31, 2020. As a result of these factors, management has determined that there is substantial doubt about the Company ability to continue as a going concern.

These consolidated financial statements of the Company have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable period. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of the uncertainties.

The Company plans to raise additional capital to carry out its business plan. The Company’s ability to raise additional capital through future equity and debt securities issuances is unknown. Obtaining additional financing and the successful development of the Company’s contemplated plan of operations, ultimately, to profitable operations, are necessary for the Company to continue operations.

NOTE 3: ACQUISITIONS

TRAQ PVT LTD

On May 16, 2019, the Company entered into a Share Exchange Agreement with Mann-India Technologies Private Ltd., an Indian Corporation. On January 2, 2020, the name of this company was changed to TRAQIQ Solutions Private Limited. Pursuant to the Share Exchange Agreement with TRAQ Pvt Ltd., the Company acquired 100% of the shares of TRAQ Pvt Ltd. and assumed certain net liabilities) in exchange for warrants exercisable over a five-years to purchase 1,329,272 shares of common stock of the Company valued at $268. The warrants will be exercisable as follows: (i) 100,771 warrants immediately upon closing; (ii) 859,951 warrants exercisable one-year after the date of closing, which was extended to March 31, 2021; and (iii) 368,550 warrants exercisable two-years after the date of closing.

The Company acquired the assets and liabilities noted below in exchange for the warrants noted herein and accounted for the acquisition in accordance with ASC 805. As a result, total consideration was equal to the value of the warrants of $268, as stated in the agreement, and the Company recognized a gain on bargain purchase in the amount of $417,148.

ROHUMA

The Company acquired the assets and liabilities noted below in exchange for the shares noted herein and accounted for the acquisition in accordance with ASC 805.

Cash	$	6,027
Accounts receivables, net		4,179
Prepaid expenses and other current assets		8,943
Fixed assets		4,512
Investment		1,440
Accounts payable and accrued expenses		(58,153	)
Accrued duties and taxes		(2,688	)
Cash overdraft		(2,980	)
Debt – related parties		(37,776	)
Debt		(10,000	)
	$	(86,496	)

The difference between the net liabilities acquired of $86,496, and the consideration paid (in the form of shares, inclusive of contingent consideration of $1,383,954) of $3,520,272 represents goodwill.

MIMO TECHNOLOGIES

The Company acquired the assets and liabilities noted below in exchange for the warrants noted herein and accounted for the acquisition in accordance with ASC 805.

Cash	$	43,851
Accounts receivables, net		58,692
Prepaid expenses and other current assets		272,872
Fixed and intangible assets		153,186
Accounts payable and accrued expenses		(708,833	)
Accrued payroll and related taxes		(104,750	)
Accrued duties and taxes		(28,213	)
Comprehensive income		(42,735	)
Debt – related parties		(343,118	)
Debt		(236,712	)
	$	(935,760	)

The difference between the net liabilities acquired of $935,760, and the consideration paid (in the form of warrants, net of adjustments for the note payable and accounts payable of Mimo with TRAQ Pvt Ltd) of $2,063,315 represents goodwill in the amount of $2,999,075.

The following table shows pro-forma results for the three months ended March 31, 2020 as if the acquisition had occurred on January 1, 2020. These unaudited pro forma results of operations are based on the historical financial statements and related notes of Rohuma, Mimo and the Company.

	For the three months ended March 31, 2021			For the three months ended March 31, 2020
Revenues	$	469,404		$	362,011
Net income (loss)	$	(1,408,446	)	$	(305,904	)
Net income (loss) per share	$	(0.05	)	$	(0.01	)

NOTE 4: CASH AND RESTRICTED CASH

Cash and restricted cash are as follows:

	March 31, 2021		December 31, 2020
Cash on hand	$	110	$	141
Bank balances		47,589		29,517
Restricted cash		28,570		28,746
Total	$	76,269	$	58,404

ASU 2016-18, “Statements of Cash Flows” (Topic 230) was adopted by the Company in 2017. In accordance with this standard, restricted cash and restricted cash equivalents is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Statements of Cash Flows. During the three months ended March 31, 2021 and the year ended December 31, 2020 there were no cash equivalents.

NOTE 5: FIXED ASSETS

The Company’s property and equipment is as follows:

	March 31,2021			December 31, 2020			Estimated Life

Property and equipment – TRAQ Pvt Ltd.	$	634,668		$	638,587			3 - 10 years
Property and equipment – Rohuma US		1,100			-			3 - 10 years
Property and equipment – Rohuma India		3,399			-			3 – 10 years
Property and Equipment – Mimo Technologies		5,476			-			3 – 10 years
Less: accumulated depreciation		(606,857	)		(602,214	)

Net	$	37,786		$	36,373

Depreciation expense for the three months ended March 31, 2021 and 2020 was $4,046 and $4,420, respectively.

NOTE 6: INTANGIBLE ASSETS

The Company’s intangible assets are as follows:

	March 31, 2021			December 31, 2020

Customer relationships	$	448,800		$	448,800
Tradenames		49,799			49,799
Software		253,247			-
Less: accumulated amortization		(169,507	)		(54,015	)

Net	$	582,339		$	444,584

Amortization expense for the three months ended March 31, 2021 and 2020 was $12,672 and $8,310, respectively.

NOTE 7: GOODWILL

The Company’s goodwill consists of the following:

	March 31, 2021		December 31, 2020

Rohuma	$	3,520,272	$	-
Mimo Technologies		2,999,075		-

Net	$	6,519,347	$	-

For the period ended March 31, 2021, there were no indicators of impairment noted.

NOTE 8: LONG-TERM INVESTMENT

The Company’s long-term investment is as follows:

March 31,

2021

December 31,

2020

Equity Security – Compulsorily Convertible Debenture

40,603

The investment the Company had in a 1% Compulsorily Convertible Debenture for the period of seven years were neither to be redeemed by the issuing entity nor are redeemable at the option of the investor, therefore this has been considered an equity security. The Company had elected to measure the equity security at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The debenture was between TRAQ Pvt Ltd. and Mimo and was forgiven/written-off prior to the acquisition of Mimo on February 16, 2021.

In addition there was an investment acquired in the acquisition of Rohuma US for $1,440.

NOTE 9: NOTE RECEIVABLE

The Company’s notes receivable is as follows:

March 31,

2021

December 31,

2020

MIMO Technologies PVT Ltd

227,877

The Company entered into a note receivable with a related party in the amount of 15,037,263 INR (approximately $170,000 US$) dated April 1, 2020 with no stated maturity date. The note bears interest at 13% per annum. Further, the Company provided additional amounts on October 5, 2020, to bring the total outstanding to 16,647,264 INR ($227,877 US$) as of December 31, 2020. Upon the acquisition of Mimo by the Company, the balance of $258,736 in the note receivable was reduced to zero and applied towards the purchase of Mimo.

NOTE 10: CONVERTIBLE NOTES PAYABLE

As of March 31, 2021 and December 31, 2020, the Company had the following convertible notes outstanding:

		March 31, 2021			December 31, 2020
GS Capital	(a)	$	125,000		$	-
Platinum Point Capital	(b)		400,000			-
Total Convertible Notes Payable		$	525,000		$	-
Less: Debt Discount			(268,334	)		-
		$	256,666		$	-

(a)

On January 19, 2021, the Company entered into a 12% Convertible Promissory Note with GS Capital Partners, LLC (the “GS Note”) in the amount of $125,000. The GS Note has a maturity of one-year and is to be repaid commencing on the fifth month anniversary and every month thereafter in the amount of $20,000. The conversion price of the GS Note is 66% of the lowest closing stock price over the previous 20 trading days. There are certain price protections for GS Capital Partners, LLC under the terms of the GS Note, which make the conversion option a derivative liability. The Company recorded an original issue discount in the amount of $10,000 and $5,000 was paid out of the proceeds for legal fees. In accordance with the terms of the GS Note, the Company issued 26,000 shares of common stock as a commitment fee and issued 170,000 shares of common stock that are returnable upon achievement of the terms of the GS Note.

(b)

On February 12, 2021, the Company entered into a 10% Convertible Promissory Note with Platinum Point Capital, LLC (the “Platinum Note”). The Platinum Note has a maturity of one-year. The conversion price of the Platinum Note is the greater of (a) $0.01 or (b) 70% of the lowest closing stock price over the previous 15 trading days. There are certain price protections for Platinum Point Capital, LLC under the terms of the Platinum Note, which make the conversion option a derivative liability. The Company granted 200,000 warrants that have a term of three-years and an exercise price of $2.00 per share with the Platinum Note. The warrants granted with the Platinum Note also contain certain price protections, that make the value of the warrants a derivative liability. The Company and Platinum Point Capital, LLC entered into an amendment to exclude the Mimo warrants granted on February 17, 2021 from the price protections. In accordance with the terms of the Platinum Note, the Company issued 60,000 shares as a commitment fee.

Interest expense on these notes for the three months ended March 31, 2021 and 2020 are $8,068 and $0, respectively.

NOTE 11: LONG-TERM DEBT RELATED PARTIES

The following is a summary of the current portion - long-term debt - related parties as of March 31, 2021 and December 31, 2020:

		March 31,2021			December 31, 2020
Unsecured advances - CEO	(a)	$	1,632,135		$	1,718,277
Notes payable - Satinder Thiara	(b)		32,000			57,000
Promissory note – Kunaal Sikka	(c)		15,000			15,000
Notes payable – Swarn Singh	(d)		45,000			45,000
Note payable - Chaudhary	(e)		8,314			8,122
Advances – former CEO of Rohuma			35,490			-
Advances – former CEO of Mimo Technologies	(f)		87,897			-

			1,855,836			1,843,399
Current portion of long-term debt related parties			(1,855,836	)		(1,843,399	)
Long-term debt – related parties		$	-		$	-

	(a)	This is an unsecured advance from the CEO originally entered into January 1, 2015. The note bears interest at 15% annually (1.25% monthly) and are due on demand.

	(b)	Notes payable to Satinder Thiara entered into May 25, 2016 ($22,000) which is due December 31, 2021, December 13, 2016 ($10,000) which is due December 31, 2021, and May 1, 2018 ($25,000) which matured December 31, 2019 at interest rate of 15% annually (1.25% monthly). These are unsecured loans. The May 1, 2018 note is in default as of December 31, 2019. As a result the interest rate was changed to 21% annually (1.75% monthly). The May 1, 2018 note that matured December 31, 2019 was converted along with $12,392 in accrued interest into 43,990 shares of common stock on March 5, 2021.

	(c)	Unsecured promissory note from Kunaal Sikka, the CEO’s son, dated September 13, 2018, in the amount of $15,000, maturing on December 31, 2019, and accruing interest at an annual rate of 12%. The note is in default as of December 31, 2019. As a result the interest rate was changed to 18% annually (1.50% monthly).

	(d)	Note payable to Swarn Singh, father-in-law of the CEO, entered into January 3, 2017 ($25,000) and February 1, 2017 ($20,000) at interest rate of 15% annually (1.25% monthly). These are unsecured notes. Both notes were due December 31, 2019. The notes are in default as of December 31, 2019. As a result the interest rate was changed to 21% annually (1.75% monthly).

	(e)	Note payable to Sushil Chaudhary dated April 27, 2020 in the amount of 1,100,000 INR (approximately $14,500 US$) due on demand at 13% per annum. This amount was offset by an amount due from the company that Sushil Chaudhary owns in the amount of $8,179.

	(f)	Note payable to Lathika Regunathan dated June 18, 2020 in the amount of 7,650,000 INR (approximately $100,000 US$) interest free and due on demand.

Interest expense on these notes for the three months ended March 31, 2021 and 2020 are $65,438 and $52,744, respectively.

NOTE 12: LONG-TERM DEBT

The following is a summary of the long-term debt as of March 31, 2021 and December 31, 2020:

		March 31, 2021			December 31, 2020
Other debt – in default	(a)	$	6,000		$	6,000
Yukti Securities Private Limited	(b)		4,518			4,547
Noor Qazi	(c)		-			-
Auto loan – ICICI Bank	(d)		16,699			18,539
Baxter Credit Union	(e)		99,881			99,911
UGECL	(f)		54,228			54,563
USA Bank PPP	(g)		-			10,057
Satin			142,673			-
SBA - Rohuma			10,000			-
Total		$	333,999		$	193,617
Current portion			(280,800	)		(133,761	)
Long-term debt, net of current portion		$	53,199		$	59,856

(a)	Note payable to an individual for $7,500, issued in May 2018 as consideration for services, due in June 2018, and bearing no interest. During the year ended December 31, 2018, the Company made a payment of $1,500 against the note and the Company has withheld payment of the remaining amount pending receipt of amounts due from the service provider.

(b)	Loan payable to Yukti Securities Private Limited is an unsecured loan which is due on demand.

(c)	Unsecured loan from Noor Qazi, individual, is due on demand. Was repaid in December 2020.

(d)	Loan payable with ICICI Bank, secured by the vehicle the loan was taken for. Payments are monthly at $752, through maturity in May 2023. Of the amount outstanding, the following represents the maturity: Current (2021) $7,183; (2022) $7,837; (2023) $3,519.

(e)	Revolving loan in the amount of $100,000 at 4% interest per annum due December 30, 2020. The loan was renegotiated for a balance of $99,911 with similar terms at 4% interest per annum and is guaranteed by the CEO of the Company.

(f)	COVID line of credit from UGECL up to 4,000,000 INR in India, term of 48 months, interest only at 7.5% annual rate for first 12 months, then 36 equal installments through maturity. Current (2021) $6,063; long-term (2022-2024) $48,500.

(g)	PPP loan from USA Bank, with interest accruing at 1% per annum. Original amount of $34,697 had $24,640 forgiven in December 2020, with the remaining $10,057 due in five years In February 2021, the Company was notified that the entire balance of the PPP loan has been forgiven.

Interest expense on these notes for the three months ended March 31, 2021 and 2020 are $1,000 and $4,186, respectively.

NOTE 13: CURRENT PORTION - CONVERTIBLE DEBT – RELATED AND UNRELATED PARTIES

The following is a summary of current portion - convertible debt - related and unrelated parties as of March 31, 2021 and December 31, 2020:

		March 31, 2021		December 31, 2020
Face value of notes – related party	(a)	$	-	$	95,000

Face value of notes – unrelated parties	(a)		68,077		98,077

Excess of the fair value of shares issuable over the face value of the convertible notes	(a)		17,007		48,257

		$	85,084	$	241,334

	(a)	In connection with the reverse merger in July 2017, the Company and two stockholders, who had provided related party advances to the Company, agreed to exchange their related party advances for 6% Convertible Promissory Notes that were originally due on January 15, 2018 (the “Notes”) in the amount of $68,077. From August 2017 through November 2017, the Company issued additional notes to four different parties (two of which were related parties) in the principal amount of $100,000 ($70,000 to related parties). In January 2018, the holders of the Notes agreed to extend the maturity to April 30, 2018, and in April 2018, agreed to further extend the maturity of certain notes to June or July 2018. During the year ended December 31, 2018, the maturity of the notes were further extended to March 31, 2019 and then again to periods ranging from June 30, 2019 to December 31, 2019. The Notes bear simple interest at 6% unless the Company defaults, which increases the interest rate to 10%. The Holders, at their option, can elect to convert the principal plus any accrued interest, into shares of the Company’s common stock at a conversion rate equal to eighty percent (80%) of the average closing share price as quoted on the OTC Markets for the five (5) trading days prior to the date of conversion. There are two notes that had a maturity date of June 30, 2019, with the remaining notes having a maturity date of December 31, 2019. These notes have not been extended and are currently in default. The Company has classified these notes as current liabilities. The Company has accrued the default interest on the two notes from July 1, 2019 through March 4, 2021. On March 5, 2021, the Company converted $156,250 in convertible notes which includes the excess of the fair value of shares issuable over the face value of the convertible notes along with $31,046 in accrued interest into 187,296 shares of common stock.

		During the year ended December 31, 2018, the Company received additional proceeds from a related party of $25,000 (from Dharam V. Sikka, father of CEO) pursuant to a convertible note payable issued in May 2018, with the same interest rate and conversion terms as the Notes described above, initially maturing on December 31, 2018, which has been extended to March 31, 2019 and then again to December 31, 2019. Because the Notes are convertible into a variable number of shares of common stock based on a fixed dollar amount, in accordance with ASC Topic 480-10-50-2, the notes are recorded at the fair value of the shares issuable upon conversion. The excess of the fair value of shares issuable over the face value of the Notes is recorded as a discount to the note to be amortized into interest expense over the term of the note.

Interest expense on these notes for the three months ended March 31, 2021 and 2020 are $3,802 and $4,689, respectively.

The Company has calculated the stock-settled liability in accordance with ASC 835-30 which establishes the monetary value at settlement of these instruments at fair value.

NOTE 14: STOCKHOLDERS’ EQUITY (DEFICIT)

Series A Convertible Preferred Stock

On July 19, 2017, the Company approved the issuance of 50,000 shares of its Series A Convertible Preferred Stock to its CEO and, on August 1, 2017, the Company sold and issued the 50,000 shares of its Series A Convertible Preferred Stock to its CEO at a price of $0.20 per share for $10,000.

Each outstanding share of Series A Convertible Preferred Stock is convertible into the number of shares of the Company’s common stock (the “Common Stock”) determined by dividing the Stated Value by the Conversion Price as defined below, at the option of any Series A Convertible Preferred Stock shareholder in whole or in part, at any time commencing no earlier than six (6) months after the issuance date; provided that any conversion under this section must be made during the ten (10) day period immediately following the date on which the corporation files with the Securities and Exchange Commission any periodic report on form 10-Q, 10-K or the equivalent form; provided further that, any conversion under this Section IV: (a) shall be for a minimum Stated Value of $500 of Series A Convertible Preferred Stock.

The Conversion Price for each share of Series A Convertible Preferred Stock in effect on any Conversion Date shall be (i) eighty five percent (85%) of the average closing bid price of the Common Stock over the twenty (20) trading days immediately preceding the date of conversion, (ii) but no less than par value of the Common Stock. For purposes of determining the closing bid price on any day, reference shall be to the closing bid price for a share of Common Stock on such date on the OTC Markets, as reported on Bloomberg, L.P. (or similar organization or agency succeeding to its functions of reporting prices) (the “Per Share Market Value”).

Common Stock

As of March 31, 2021, the Company has 31,094,575 shares issued and outstanding.

During the three months ended March 31, 2021, the Company issued 570,000 shares of common stock for $456,000; 264,338 shares of common stock for the conversion for $181,250 in convertible notes and $43,438 in accrued interest; 400,000 shares of common stock for services rendered in the amount of $436,385; and 2,562,277 shares (of a total of 4,292,220 to be issued) for the purchase of Rohuma.

There were no shares issued in the three months ended March 31, 2020.

On April 12, 2018, the Company amended its Articles of Incorporation to forward split all outstanding shares of common stock such that all issued and outstanding shares of Common Stock shall be automatically combined and reclassified such that each share of Pre-Forward Split Stock shall be combined and reclassified into four shares of Common Stock. The number of shares for all periods presented has been retroactively restated to reflect the forward split.

Common Stock Warrants

The following schedule summarizes the changes in the Company’s common stock warrants:

					Weighted				Weighted
	Warrants Outstanding				Average				Average
	Number		Exercise		Remaining		Aggregate		Exercise
	Of		Price		Contractual		Intrinsic		Price
	Shares		Per Share		Life		Value		Per Share

Balance at December 31, 2019		1,329,272	$	0.001		4.87 years	$	-	$	0.001

Warrants granted		-	$	-		-				$
Warrants exercised		-	$	-		-				$
Warrants expired/cancelled		-	$	-		-				$

Balance at December 31, 2020		1,329,272	$	0.001		3.87 years	$	2,125,506	$	0.001

Warrants granted		1,962,539	$	0.001-2.00		-				$
Warrants exercised/exchanged		-	$	-		-				$
Warrants expired/cancelled		-	$	-		-				$

Balance at March 31, 2021		3,281,811	$	0.001-2.00		2.99 years	$	3,152,572	$	0.36

Exercisable at March 31, 2021		2,366,264	$	0.001-2.00		2.99 years	$	2,082,274	$	0.50

Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each option/warrant is estimated using the Black-Scholes valuation model. The following assumptions were used for the three months ended March 31, 2021 and year ended December 31, 2020:

	Three Months Ended March 31, 2021			Year Ended December 31, 2020
Expected term		3 years			-
Expected volatility		100-170	%		-
Expected dividend yield		-			-
Risk-free interest rate		0.15-0.58	%		-

On May 16, 2019, the Company entered into a Share Exchange Agreement with Mann-India Technologies Private Ltd., an Indian Corporation. Pursuant to the Share Exchange Agreement, the Company acquired 100% of the shares of TRAQ Pvt Ltd. and assumed certain net liabilities in exchange for warrants exercisable over a five-years to purchase 1,329,272 shares of common stock of the Company valued at $268. The warrants will be exercisable as follows: (i) 100,771 warrants immediately upon closing; (ii) 859,951 warrants exercisable one-year after the date of closing, which was extended to March 31, 2021; and (iii) 368,550 warrants exercisable two-years after the date of closing. The value of the transaction totaled $268 and is reflected as an increase to additional paid in capital.

On February 16, 2021, the Company entered into several stock purchase agreements for the issuance of 570,000 shares for cash in the amount of $456,000 (value of $0.80 per share). The individuals also received 285,000 warrants that have a term of three years at an exercise price of $2.00 per share.

On March 8, 2021, the Company entered into a consulting agreement to provide advisory services regarding strategic planning. The agreement is for a term of one-year. The agreement calls for payments to be paid monthly in the amount of $3,000 and the issuance of stock at the commencement of the agreement for 25,000 shares, and a three-year warrant for 100,000 warrants with a strike price of $2.00 per share that vest March 7, 2022.

Options

On November 23, 2020, the Board of Directors of the Company approved the 2020 Equity Incentive Plan.

On October 19, 2020, the Company granted 3,930,000 stock options to board members, advisory board members, employees and consultants. The options have a 10-year term, and are both service based grants, as well as performance-based grants. Stock-based compensation for the year ended December 31, 2020 was $104,638, and the unrecognized stock-based compensation for these grants as of December 31, 2020 is $660,372. Of the 3,930,000 options granted, only 312,500 have been vested through December 31, 2020.

The following represents a summary of options:

	Three Months Ended March 31, 2021				Year Ended December 31, 2020
	Number		Weighted Average Exercise Price		Number		Weighted Average Exercise Price
Beginning balance		3,930,000	$	0.0052		-	$	-

Granted		-		-		3,930,000		0.0052
Exercised		-		-		-		-
Forfeited		-		-		-		-
Expired		-		-		-		-
Ending balance		3,930,000	$	0.0052		3,930,000	$	0.0052
Intrinsic value of options	$	4,577,575			$	6,267,475

Weighted Average Remaining Contractual Life (Years)		9.56				9.81

NOTE 15: OPERATING LEASE

The Company has adopted ASU No. 2016-02, Leases (Topic 842), as of January 1, 2019 and will account for their lease in terms of the right of use assets and offsetting lease liability obligations for this new lease under this pronouncement. In accordance with ASC 842 - Leases, effective January 1, 2019, the Company up until May 16, 2019 did not have any long-term lease commitments. On May 17, 2019 with the Company’s acquisition of TRAQ Pvt Ltd., recorded a lease right of use asset and a lease liability at present value of $576,566 and $585,207, respectively. The Company is recording this amount at present value, in accordance with the standard, using an incremental borrowing rate by adjusting the benchmark reference rates with appropriate financing spreads and lease specific adjustments for the effects of collateral. The right of use asset will be composed of the sum of all lease payments plus any initial direct cost and will be straight line amortized over the life of the expected lease term. For the expected term of the lease the Company will use the term of the nine-year lease. This lease will be treated as an operating lease under the new standard.

The Company has chosen to implement this standard using the modified retrospective model approach with a cumulative-effect adjustment, which does not require the Company to adjust the comparative periods presented when transitioning to the new guidance on January 1, 2019. The Company has also elected to utilize the transition related practical expedients permitted by the new standard. The modified retrospective approach provides a method for recording existing leases at adoption and in comparative periods that approximates the results of a modified retrospective approach.

The lease right of use asset of in the original amount of $592,909 was to be amortized on a straight-line basis over the term of the lease.

During the year ended December 31, 2020, the Company renegotiated their leases with the landlord for TRAQ Pvt Ltd. As a result of this renegotiation, the Company vacated one of their two leases, and as a result, impaired $333,571 in right-of-use asset and $349,428 in lease liability.

As of March 31, 2021, the value of the unamortized lease right of use asset is $122,483. As of March 31, 2021, the Company’s lease liability was $131,293.

Remaining Lease Obligation by calendar year (undiscounted cash flows)
2022	$	19,642
2023		28,912
2024		28,912
2025		29,816
2026		33,249
2027		59,572
Total lease payments		200,103
Less: Imputed interest		68,810
Present value of lease liabilities	$	131,293

For the three months ended March 31, 2021 and 2020 the Company recorded rent expense of $6,285 and $33,009.

NOTE 16: DERIVATIVE LIABILITIES

Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each warrant is estimated using the Black-Scholes valuation model. The following assumptions were used in March 31, 2021 and December 31, 2020:

	Three Months Ended			Year Ended
	March 31, 2021			December 31, 2020

Expected term		1 year			-
Expected volatility		164 - 170	%		-
Expected dividend yield		-			-
Risk-free interest rate		0.15	%		-

The Company’s derivative liabilities are as follows:

	March 31, 2021		December 31, 2020
Fair value of the GS Capital conversion option	$	246,875	$	-
Fair value of the Platinum Point conversion option		448,000		-
Fair value of the Platinum Point warrants (200,000 warrants)		124,000		-
	$	818,875	$	-

Activity related to the derivative liabilities for the period ended March 31, 2021 is as follows:

Beginning balance as of December 31, 2020	$	-
Issuances of warrants/conversion option – derivative liabilities		313,868
Warrants exchanged for common stock		-
Change in fair value of warrants/conversion option - derivative liabilities		505,008
Ending balance as of March 31, 2021	$	818,875

There were no derivative liabilities prior to January 2021.

nOTE 17: CONCENTRATIONS

During the three months ended March 31, 2021 and 2020, the Company had two major customers comprising 89% of revenues and two major customers comprising 88% of revenues, respectively. A major customer is defined as a customer that represents 10% or greater of total revenues. There was 89% and 85% of accounts receivable representing two and two customers as of March 31, 2021 and December 31, 2020, respectively.

The Company does not believe that the risk associated with these customers or vendors will have an adverse effect on the business.

nOTE 18: CONTINGENCY

During the year ended December 31, 2018, the Company charged an independent truck driver approximately $190,000 pursuant to its agreement with the driver, which entitled the Company to fees equal to $800 per day for the driver’s failure to return a trailer owned by the Company with the period prescribed by the agreement. The Company has not recognized this as income due to uncertainty of payment and will record as other income during the period in which amounts are collected.

nOTE 19: COMMITMENTS AND CONTINGENCIES

Commitments and contingencies in respect of TRAQ Pvt Ltd;

	(i)	TRAQ Pvt Ltd had applied for compounding of the TDS liability for the assessment year 2014-2015 and 2015-2016 in accordance with Indian Income Tax Laws. However, no amount payable for tax and penalty was confirmed by the Income Tax Department. Further, TRAQ Pvt Ltd has also defaulted for TDS deducted but not paid in time during assessment years 2016-2017 to 2020-2021. Accordingly, there may be a contingent liability in respect of TDS regarding compounding charges, interest, and penalty which is not quantifiable at present, hence not provided in the Consolidated Financial Statements.

	(ii)	TRAQ Pvt Ltd has outstanding Gratuity for $23,971 as of December 31, 2020, towards ex-employees of TRAQ Pvt Ltd; therefore, TRAQ Pvt Ltd is liable for penalty under The Gratuity Act under the Indian Laws and other relevant laws. Since the amount of penalty for default in payment of gratuity is not ascertainable, therefore it is not provided for in the Consolidated Financial Statements. Gratuity of $13,816 has been paid in the month of January 2021.

	(iii)	There are numerous interpretative issues relating to the Indian Supreme Court (SC) judgment dated February 28, 2019, on Provident Fund (PF) on the inclusion of allowances for the purpose of PF contribution as well as its applicability. Due to a pending decision on the subject review petition and directions from EPFO, the impact for the past period, if any, was not ascertainable and consequently no effect was given in the Consolidated Financial Statements.

	(iv)	TRAQ Pvt Ltd has delayed in complying with provisions related to Foreign Direct Investment and Transfer of Shares to Non-resident as per the Master Circulars and notification issued by Reserve Bank of India, therefore, is liable for imposition of penalty. Since the amount of the penalty for the same is not ascertainable, no effect was given in the Consolidated Financial Statements.

	(v)	Prior to its acquisition in May 2019, TRAQ Pvt Ltd, had provided a guarantee in favor of State Bank of India for $165,813 on March 22, 2014, for Mira Green Tech Private Limited. The State Bank of India is in process of satisfying whether there is any obligation due by TRAQ Pvt Ltd at this time.

nOTE 20: SUBSEQUENT EVENTS

In April 2020, the Company issued 1,000 shares of common stock for services rendered.

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

The discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

As used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” except where the context otherwise requires, the term “we,” “us,” “our,” or “the Company,” refers to the business of TraqIQ Inc.

The following presentation of management’s discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements, the accompanying notes thereto and other financial information appearing elsewhere in this quarterly report on Form 10-Q. This section and other parts of this quarterly report on Form 10-Q contain forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements.”

Overview

TraQiQ Solutions, Inc.

Ci2i’s cloud solutions and analytics services comprise software development, program management, project management, and business analytics services.

TraQiQ Solutions, Private Limited

Mann-India Private limited was renamed to TraQiQ Solutions Private Limited shortly after acquisition by TraQiQ Inc.

TRAQ Pvt Ltd. has its own experienced team of software developers dedicated towards developing various kinds of customized software.

Targeting

Transactions

Last mile

Integration

TraQSuite also includes software designed to integrate the TraQSuite tools with existing business software.

Learning

TraQLearn is an eLearning software platform that includes modules and dashboards for students, teachers and administrators and tools to help with targeted learning.

Rohuma, LLC

Mimo Technologies Private Limited

Going Concern

These consolidated financial statements of the Company have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable period of time. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of the uncertainties.

The Company raised $525,000 in the three months ended March 31, 2021 from the issuance of convertible notes, and raised $456,000 through sales of common stock and warrants. In addition, the Company acquired two businesses that enhance the Company’s services in both India and the United States.

Results of Operations

Results of Operations and Financial Condition for the Three Months Ended March 31, 2021 as Compared to the Three Months Ended March 31, 2020

Revenues

For the three months ended March 31, 2021 compared to March 31, 2020, the Company’s revenues increased by $91,325, or 31%, from $291,061 in 2020 to $382,386 in 2021. The increase is the result of the acquisitions of Rohuma and Mimo as well as improvement is revenues as TRAQ Pvt Ltd. Has started to emerge from the effects of COVID which contributed higher revenue and higher profitability.

Cost of Revenues

For the three months ended March 31, 2021 compared to March 31, 2020, the Company’s cost of revenues increased by $84,694, or 61%, from $139,138 in 2020 to $223,832 in 2021. The increase is the result of the acquisitions of Rohuma and Mimo as well as added direct labor for TRAQ Pvt Ltd. which contributed higher costs and slightly higher profitability (4% increase).

Operating Expenses

For the three months ended March 31, 2021 compared to March 31, 2020, the Company’s salary and salary related costs increased by $102,006, or 220%, from $46,425 in 2020 to $148,431 in 2021 due to the acquisitions of Rohuma and Mimo as well as increases to management salaries.

During the three months ended March 31, 2021 compared to March 31, 2020, the Company’s professional fees increased by $91,543, or 153%, from $59,882 in 2020 to $151,425 in 2021. Our professional fees increased in 2021 compared to 2020 due to the acquisitions of Rohuma and Mimo as well as fees related to the acquisitions of those companies and the preparation of the annual report.

For the three months ended March 31, 2021 compared to March 31, 2020, the Company’s rent expense decreased by $25,223, or 76%, from $33,009 in 2020 to $7,786 in 2021 due to TRAQ Pvt Ltd, renegotiating their leases in December 2020 reducing their space due to COVID.

For the three months ended March 31, 2021 compared to March 31, 2020, the Company’s depreciation and amortization expense increased $3,988, or 31%, from $12,730 in 2020 to $16,718 in 2021. The increase was the result of the depreciation and amortization expense on the fixed and intangible assets acquired in the Rohuma and Mimo acquisitions.

For the three months ended March 31, 2021 compared to March 31, 2020, the Company’s general and administrative expenses increased by $800,966, or 2304%, from $34,758 in 2020 to $835,724 in 2021 primarily due to the acquisitions of Rohuma and Mimo as well as expenses related to stock-based compensation.

Interest Expense

For the three months ended March 31, 2021 compared to March 31, 2020, the Company’s interest expense increased by $62,449, or 75%, from $83,184 in 2020 to $145,633 in 2021 due to higher levels of debt in 2021 prior to the conversion of certain convertible notes.

Changes in Fair Value of Derivative Liabilities

For the three months ended March 31, 2021 compared to March 31, 2020, the Company’s change in the fair value of the derivative liability increased by $505,007, from $0 in 2020 to $505,007 in 2021 due to the classification of the convertible promissory notes and related warrants being classified as derivative liabilities and the changes in the share price over the period March 31, 2021.

Net Loss

For the three months ended March 31, 2021 compared to March 31, 2020, the Company’s net loss increased by $1,571,497, from $(118,874) in 2020 to $(1,690,371) in 2021 due to the changes noted herein.

Liquidity and Capital Resources

As of March 31, 2021, current assets were $1,096,838 and current liabilities outstanding amounted to $7,943,017 which resulted in a working capital deficit of $6,46,179. As of December 31, 2020, current assets were $1,101,439 and current liabilities outstanding amounted to $3,953,160 which resulted in a working capital deficit of $2,851,721.

Net cash used in operating activities was $111,058 for the three months ended March 31, 2020 compared to $629,035 in 2021. Cash used in operations for 2021 and 2020 was the primarily related to the income (loss) in operations offset by increases in accounts payable and accrued expenses and the changes in accounts receivable due to the lack of adequate cash flow of the Company as well as non-cash charges related to stock based compensation.

The only investing activities for the three months ended March 31, 2021 and 2020, related to the acquisitions of fixed assets related to TRAQ Pvt Ltd. And the amount of cash received in the acquisitions of Rohuma and Mimo Technologies.

Net cash provided by financing activities for the three months ended March 31, 2021 consisted of proceeds from the issuance of common stock of $456,000 and convertible notes of $515,000, along with proceeds received from related party notes of $24,101. The Company repaid $366,943 in related party notes and $93,244 in long-term debt during the three months ended March 31, 2021. During the three months ended March 31, 2020 the financing activities consisted of proceeds from related party and unrelated party notes of $76,978 as well as repayments of long-term debt to both related and unrelated parties of $23,192.

Off-Balance Sheet Arrangements

We have no off-balance sheet financing arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

None.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation as of the date of the end of the period covered by this report, the Company’s Certifying Officers conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Based on that evaluation, the Company’s Certifying Officers concluded that, because of the disclosed material weaknesses in the Company’s internal control over financial reporting, the Company’s disclosure controls and procedures were ineffective as of the end of the period covered by this report to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Certifying Officers, to allow timely decisions regarding required disclosure. Based upon the evaluation of the disclosure controls and procedures at the end of the period covered by this report, our Certifying Officers concluded that our disclosure controls and procedures were not effective as a result of continuing weaknesses in our internal control over financial reporting principally due to the following:

	-	We have not established adequate financial reporting processes or monitoring activities to ensure adequate financial reporting and to mitigate the risk of management override, specifically because there are few employees and only two officers with management functions and therefore there is lack of segregation of duties.

	-	An outside consultant assists in the preparation of the annual and quarterly financial statements and partners with us to ensure compliance with US GAAP and SEC disclosure requirements.

	-	Outside counsel assists us to review and editing of the annual and quarterly filings and to ensure compliance with SEC disclosure requirements.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the period ended March 31, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the registrant’s principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

(a)	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;

(b)	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and

(c)	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant’s assets that could have a material effect on the financial statements.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any material litigation, nor, to the knowledge of management, is any litigation threatened against us that may materially affect us.

Item 1A. Risk Factors

None.

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

None.

Item 3. Defaults Upon Senior Securities

The Company has two convertible notes that were due June 30, 2019. These have not been extended and are in default.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

(a) Not applicable.

(b) During the quarter ended March 31, 2021, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

Item 6. Exhibits

Exhibit Number		Description of Exhibit

31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation

101.DEF		XBRL Taxonomy Extension Definition

101.LAB		XBRL Taxonomy Extension Labels

101.PRE		XBRL Taxonomy Extension Presentation

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TraQiQ, Inc.

Date: May 7, 2021	By:	/s/ Ajay Sikka
		Ajay Sikka
		Chief Executive Officer and Chief Financial Officer (principal executive officer, principal accounting officer and principal financial officer)

TRAQIQ, INC. - FORM 10-Q - May 7, 2021

Attached files

TRAQIQ, INC. Reports