UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to ________
Commission
file number:
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction | (I.R.S. Employer | |
of Incorporation or Organization) | Identification No.) |
(Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 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.
☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
Smaller
Reporting Company | |
Emerging
Growth Company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐
Yes ☒
Securities registered pursuant to Section 12(g) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
OTC Markets “PINK” |
As of December 1, 2023, there were shares of the registrant’s common stock outstanding.
CARBONMETA TECHNOLOGIES, INC.
TABLE OF CONTENTS
2 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q for the period ended September 30, 2023 (the “Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events including, without limitation, our ability to raise capital, our operational and strategic initiatives or our future financial performance. We have attempted to identify forward-looking statements by using terminology such as “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions; uncertainties and other factors may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Our expectations are as of the date this Quarterly Report is filed, and we do not intend to update any of the forward-looking statements after the date this Quarterly Report is filed to confirm these statements to actual results, unless required by law.
You should not place undue reliance on forward-looking statements. The cautionary statements set forth in this Quarterly Report identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:
● | Our ability to effectively execute our business plans including transitioning from being focused on end-to-end consumer product innovation, development, and commercialization to being focused on digital media, advertising and content technologies innovation, development, and commercialization; | |
● | Our ability to manage our expansion, growth and operating expenses; | |
● | Our ability to protect our brands, reputation and intellectual property rights; | |
● | Our ability to obtain adequate financing to support our development plans; | |
● | Our ability to repay our debts; | |
● | Our ability to rely on third-party suppliers, content contributors, developers, and other business partners; | |
● | Our ability to evaluate and measure our business, prospects and performance metrics; | |
● | Our ability to compete and succeed in a highly competitive and evolving industry; | |
● | Our ability to respond and adapt to changes in technology and consumer behavior; | |
● | Our dependence on information technology, and being subject to potential cyberattacks, security problems, network disruptions, and other incidents; | |
● | Our ability to comply with complex and evolving laws and regulations including those relating to privacy, data use and data protection, content, competition, safety and consumer protection, e-commerce, digital assets and other matters, many of which are subject to change and uncertain interpretation; | |
● | Our ability to enhance disclosure and financial reporting controls and procedures and remedy the existing weakness; | |
● | Risks in connection with completed or potential acquisitions, dispositions and other strategic growth opportunities and initiatives; | |
● | Taxes; | |
● | The stability of the governments and political and business conditions in certain foreign countries in which we or certain of our business partners may operate now or in the future; | |
● | Costs and results of potential litigation; | |
● | Changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies; | |
● | The use of social or digital media to disseminate false, misleading and/or unreliable or inaccurate information regarding our products, services or the industry in which we operate; | |
● | Other risk factors discussed in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 20, 2023. |
These and other factors discussed above could cause results to differ materially from those expressed in the estimates made by any independent parties and by us.
3 |
TRADEMARKS, SERVICE MARKS AND TRADE NAMES
Solely for convenience, we refer to trademarks in this Quarterly Report without the ® or the ™ or symbols, but such references are not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights to our own trademarks. Other service marks, trademarks and trade names referred to in this Quarterly Report, if any, are the property of their respective owners, although for presentational convenience we may not use the ® or the ™ symbols to identify such trademarks.
OTHER PERTINENT INFORMATION
Unless the context otherwise indicates, when used in this Annual Report, the terms “CarbonMeta,” “COWI,” “we,” “us,” “our,” the “Company” and similar terms refer to CarbonMeta Technologies, Inc., a Delaware corporation, and all of our consolidated subsidiaries and variable interest entities.
4 |
PART I - FINANCIAL INFORMATION
CARBONMETA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, | December 31, | |||||||
2023 | 2022 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash | $ | ( | ) | $ | ||||
Accounts receivable | ||||||||
Inventory | ||||||||
Total Current Assets | ||||||||
Property and equipment, net
of accumulated depreciation of $ | ||||||||
Licenses,
net of accumulated amortization of $ | ||||||||
Investment in Carbon Conversion Group, Inc. | ||||||||
TOTAL ASSETS | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable and accrued expenses | $ | $ | ||||||
Loan payable to Carbon Conversion Group, Inc. | ||||||||
Obligations collateralized by receivables | ||||||||
Convertible debt, net | ||||||||
Notes payable | ||||||||
Notes payable - related parties | ||||||||
Small Business Administration loan | ||||||||
Derivative liability | ||||||||
Total Current Liabilities | ||||||||
TOTAL LIABILITIES | $ | $ | ||||||
Commitments and contingencies | ||||||||
STOCKHOLDERS’ DEFICIT: | ||||||||
Redeemable convertible preferred stock, Series A, $par value, shares authorized, shares issued and outstanding | ||||||||
Redeemable convertible preferred stock, Series B, $par value, shares authorized, and shares issued and outstanding | ||||||||
Redeemable convertible preferred stock, Series C, $par value, shares authorized, and shares issued and outstanding | ||||||||
Redeemable convertible preferred stock, Series D, $par value, shares authorized, and shares issued and outstanding | ||||||||
Redeemable convertible preferred stock, Series E, $par value, shares authorized, and shares issued and outstanding, respectively | ||||||||
Redeemable convertible preferred stock, Series F, $par value, shares authorized, and shares issued and outstanding | ||||||||
Redeemable convertible preferred stock, Series G, $par value, shares authorized, and shares issued and outstanding | ||||||||
Common stock; and shares authorized at $ par value, and shares issued, respectively; and shares outstanding, respectively | ||||||||
Additional paid-in capital | ||||||||
Treasury stock – and shares of common stock | ( | ) | ( | ) | ||||
Accumulated other comprehensive income | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
TOTAL STOCKHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5 |
CARBONMETA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the three and nine months ended September 30, 2023 and 2022
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
REVENUES | ||||||||||||||||
Contract services revenues | $ | $ | $ | $ | ||||||||||||
Consulting fees from Salvum Corporation affiliate | ||||||||||||||||
Total | ||||||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Chief executive officer compensation | ||||||||||||||||
Legal and professional fees | ||||||||||||||||
Investor relations | ||||||||||||||||
Consulting fees | ||||||||||||||||
Sales and marketing | ||||||||||||||||
Research and development | ||||||||||||||||
Amortization of licenses | ||||||||||||||||
Depreciation of equipment | ||||||||||||||||
Other operating expenses | ||||||||||||||||
TOTAL OPERATING EXPENSES | ||||||||||||||||
LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
OTHER (EXPENSE) INCOME: | ||||||||||||||||
Gain from derivative liabilities | ||||||||||||||||
Interest expense (including amortization of debt discounts of $ | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Gain (loss) from debt settlements | ( | ) | ( | ) | ||||||||||||
Other income - net | ||||||||||||||||
Loss from deconsolidation of Carbon Conversion Group, Inc. | ( | ) | ( | ) | ||||||||||||
TOTAL OTHER INCOME - NET | ||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | ( | ) | ( | ) | ||||||||||||
Income taxes | ||||||||||||||||
Net income (loss) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
Loss attributable to non-controlling interest of Carbon Conversion Group, Inc. | ( | ) | ( | ) | ||||||||||||
Net income (loss) attributable to CarbonMeta Technologies, Inc. | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
Net income (loss) per common share: | ||||||||||||||||
Basic and diluted net income (loss) per common share | $ | $ | $ | ) | $ | ) | ||||||||||
Weighted average number of common shares outstanding – basic and diluted | ||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||
Net income (loss) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||||||
Comprehensive income (loss) | $ | $ | $ | ( | ) | $ | ( | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6 |
CARBONMETA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT)
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
Preferred Stock | Common Stock | Additional | Accumulated Other | |||||||||||||||||||||||||||||||||||||||||||||||||
Series B | Series D | Series E | Series F | Series G | Amount | Shares | Amount | Paid-In Capital | Treasury Stock | Accumulated Deficit | Comprehensive Income | Total | ||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||
Common stock issued for license | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for services | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock and warrants issued in connection with convertible notes financings, net of placement agent fee of $ | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for accrued executive compensation | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for accrued consulting fees | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Net loss for the three months ended March 31, 2022 | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
Balances, March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||
Preferred stock adjustments | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for services | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock and warrants issued in connection with convertible note financings | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Net loss for the three months ended June 30, 2022 | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||
Common stock and warrants issued in connection with convertible note financings | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
Net income for the three months ended September 30, 2022 | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Balances, September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||
Balances, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||
Common stock issued in connection with conversion of convertible notes | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for services | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Sale of Treasury stock | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
Net loss for three months ended March 31, 2023 | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
Balances, March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||
Common stock issued for services | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued in connection with conversion of convertible notes | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Sale of Treasury stock | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
Net loss for three months ended June 30, 2023 | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||
Common stock and warrants issued in connection with convertible note financings | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
Common Stock issued as capital contribution to Carbon Conversion Group, Inc. | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Deconsolidation of Carbon Conversion Group, Inc. | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Net income for three months ended September 30, 2023 | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Balances, September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7 |
CARBONMETA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2023 and 2022
For the Nine Months Ended September 30, | ||||||||
2023 | 2022 | |||||||
(Unaudited) | (Unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income (loss) | $ | ( | ) | $ | ( | ) | ||
Adjustment to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Depreciation of equipment | ||||||||
Amortization of licenses | ||||||||
Amortization of debt discounts | ||||||||
Stock based compensation | ||||||||
Gain from derivative liability | ( | ) | ( | ) | ||||
Loss (gain) from debt settlements | ||||||||
Loss from deconsolidation of Carbon Conversion Group, Inc. | ||||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | ( | ) | ||||||
Inventory | ( | ) | ||||||
Prepaid expenses | ||||||||
Accounts payable and accrued expenses | ||||||||
NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Acquisition of license | ( | ) | ||||||
NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from sales of treasury stock | ||||||||
Proceeds from convertible debt financings | ||||||||
Proceeds from notes payable | ||||||||
Proceeds from loan payable to Carbon Conversion Group, Inc. | ||||||||
Payments towards notes payable | ( | ) | ||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
Exchange Rate Effect on Cash | ( | ) | ||||||
Net increase (decrease) in cash | ( | ) | ( | ) | ||||
Cash at beginning of year | ||||||||
Cash at end of period | $ | ( | ) | $ | ||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
Cash paid for interest | $ | $ | ||||||
Cash paid for income taxes | $ | $ | ||||||
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES: | ||||||||
Common Stock issued in satisfaction of accrued executive compensation | $ | $ | ||||||
Common stock issued for accrued consulting fees | $ | $ | ||||||
Common Stock issued for prepaid marketing fees | $ | |||||||
Common Stock issued for license | $ | $ | ||||||
Common Stock and Warrants issued in connection with convertible note financings | $ | $ |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE A – ORGANIZATION
CarbonMeta Technologies, Inc. (f/k/a CoroWare, Inc.) (“CarbonMeta”, the “Company”, “we”, “us”, or “our”) is a publicly quoted environmental research and development company that is commercializing technologies for processing organic wastes into hydrogen and high-value carbon products economically and sustainably.
The Company was incorporated on June 8, 2001 under the laws of the State of Nevada as SRM Networks, Inc. In connection with the acquisition of Hy-Tech Computer Systems, Inc. on January 31, 2003, the Company changed its name to Hy-Tech Technology Group, Inc. In connection with the Agreement and Plan of Merger of Robotics Workspace Technology, Inc., Innova Holdings, Inc. and the Company’s wholly owned subsidiary, RWT Acquisition, Inc., dated July 21, 2004, the Company’s name changed to Innova Holdings, Inc. Subsequently, the Company redomiciled in the State of Delaware and on November 20, 2006, the Company changed its name to Innova Robotics and Automation, Inc. and then on April 23, 2008, the Company changed its name to CoroWare, Inc. On or about July 28, 2021, the Company filed Articles of Amendment to its Amended and Restated Certificate of Incorporation with the State of Delaware to reflect a name change from CoroWare, Inc. to CarbonMeta Technologies, Inc.
The
Company has six wholly-owned subsidiaries: CoroWare Technologies, Inc. (“CTI”), CoroWare Robotics Solutions, Inc.
(“CRS”), Robotic Workspace Technologies, Inc. (“RWT”), Carbon Source, Inc. (“CS”), CoroWare
Treasury, Inc. (“CWT”), and CarbonMeta Research Ltd. (“CMR”), From August 30, 2022 to July 24, 2023, the
Company had a
CoroWare Technologies, Inc. (“CTI”) was incorporated in the State of Florida on May 16, 2006, was administratively dissolved on November 19, 2016, and its principal business was a software professional services company with a strong focus on information technology integration and robotics integration, business automation solutions, and unmanned systems solutions to its customers in North America and Europe.
CoroWare Robotics Solutions, Inc. (“CRS”) was incorporated in the State of Texas on February 27, 2015, and its principal business was as a technology incubation company whose focus was on the delivery of mobile robotics and IOT products, solutions and services for university, government and corporate researchers, and enterprise customers. CRS’s business operations were discontinued in October 2016 when the Company’s gross margins and financing costs became unsustainable.
Robotic Workspace Technologies, Inc. (“RWT”) was incorporated in the State of Florida on July 1, 1994, was administratively dissolved on September 25, 2009, and its principal business was developing and marketing open-architecture PC controls and related products that could improve the performance, applicability, and productivity of robots and other automated equipment. RWT’s business operations were discontinued in September 2007 when the Company’s losses became unsustainable.
Carbon Source, Inc. (“CS”) was incorporated in the State of Wyoming on June 14, 2021 and its principal business is waste reclamation technologies and processing.
CoroWare Treasury, Inc. (“CWT”) was incorporated in the State of Wyoming on July 8, 2021 and its principal business is acquisitions related to acquiring technologies and subsidiary businesses related to waste processing.
CarbonMeta Research Ltd. (‘CMR”) was incorporated in England and Wales on August 12, 2021 and its principal business is the development of technologies and solutions for processing organic wastes and generating economically sustainable hydrogen and high-value carbon products. Using proprietary and patented technologies, it plans to implement new industrial methods using inexpensive, environmentally friendly catalysts that process collected plastic waste material into high value products such as hydrogen gas, graphene and carbon nanotubes.
CarbonMeta Green Building Materials, LLC (“CMGBM”) was a joint venture with Salvum Corporation organized on August 30, 2022 to develop and market construction mix products that are carbon negative (see Production Agreement below).
In 2021, the Company began investigating emerging technologies, strategic intellectual property partnerships, and sustainable growth business opportunities related to the production of hydrogen and high value carbon products from organic waste streams. Working cooperatively with Oxford University Innovation, CarbonMeta plans to implement proven and patented technologies to add value to organic waste streams. By utilizing these proven proprietary technologies, collected and captured plastic waste material can be upcycled to high value products such as carbon nanotubes (“CNTs”) and hydrogen gas.
9 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE A – ORGANIZATION (continued)
CNTs can be used for improved electrical conduction and reinforcing materials that are used in a wide variety of industries including the automotive industry, aviation industry, medical industry, and construction. The number one growth driver is the increasing need for high performance batteries for the electric vehicle market.
Plastic waste is a cheap and abundant feedstock that will allow the Company to scale quickly and produce hydrogen gas for a competitive price.
License Agreements
Oxford University Innovation Limited
On
June 2, 2021, the Company (the “Licensee”) entered into a License Agreement (the “Agreement”) with Oxford University
Innovation Limited (the “Licensor”). Under the terms of the Agreement, the Licensee will license the licensed technology
(OUI Project- Hydrogen from plastics via microwave-initiated catalytic dehydrogenation). The Agreement is non-exclusive and includes
the United States and European Union. Signing fees for the Agreement were £
The process that the Company licensed from Licensor for producing hydrogen and carbon products from waste plastics has not been demonstrated on a larger scale. It is not yet known whether the process will be cost-effective or profitable to implement on a larger scale. The Company has conducted tests to prove the percentage of carbon nanotubes up to 10 grams. The Company is working with a microwave reactor company to help demonstrate this process at a scale of 100 kilograms and 1,000 kilograms per day.
The Company has met the following milestones of its development plan set forth in the license agreement with Oxford University Innovation:
● | September 2021: established subsidiary in Oxford, United Kingdom | |
● | March 2022: produced 0.025 kilograms per day of marketable carbon nanotubes |
Oxford University Innovation may terminate the license due to the company not using commercially reasonable efforts to develop, exploit and market the licensed technology in accordance with the development plan.
From July 2022 to present (see Service Award below), CarbonMeta Technologies has been working with University of Oxford on a project with a global multi-energy provider based in Europe to assess the feasibility of processing mixed plastic waste into clean hydrogen fuel and value-added carbon products using microwave catalysis on a large commercial scale.
Ecomena Limited
On
December 2, 2021, the Company (“Licensee”) entered into a License of Agreement (the “Agreement”) with Ecomena
Limited (an entity located in the United Kingdom) (“Licensor”). Under the terms of the Agreement, the Licensee will license
the Licensed Technology to recycle industrial byproduct into cement free pavers and mortars that are environmentally friendly and continuously
absorb carbon dioxide. The signing fees payable to the Licensor under the Agreement are £
10 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE A – ORGANIZATION (continued)
Production Agreement
On January 11, 2022, the Company entered into an Interim Joint Product Development and Sales Representation Agreement (the “Agreement”) with Salvum Corporation. Under the terms of the Agreement, the parties agree to work together to develop both CarbonMeta’s proprietary cementless paver products known as “Cementless Paver” and Salvum’s proprietary concrete alternative products known as “EarthCrete.” During the Term, Salvum agrees to manufacture CarbonMeta’s proprietary cementless paver products known as “Cementless Paver”. CarbonMeta reserves the right to appoint other manufacturers of the products and/or to engage other sales representatives for CarbonMeta’s proprietary cementless paver products known as “Cementless Paver” outside the United States of America. Although the Interim Joint Product Development and Sales Representation Agreement with Salvum Corporation had a term of 180 days and expired on July 11, 2022, the companies continued to work together, and the companies formed CarbonMeta Green Building Materials, LLC (“CMGBM”) and signed an Operating Agreement for Management of CMGBM on August 28, 2022 that superseded the Interim Joint Product Development and Sales Representation Agreement.
On July 24, 2023, the Company filed a Certificate of Conversion with the State of Wyoming for CMGBM, to convert CMGBM from a limited liability company to a corporation. In addition, the Company filed Articles of Incorporation changing the name of CMGBM to Carbon Conversion Group, Inc. (“CCGI”). CCGI has the authority to issue shares of preferred stock, par value $ per share, and shares of common stock, par value of $ per share. Please see NOTE F – INVESTMENT IN CARBON CONVERSION GROUP, INC. for further information.
On June 20, 2023, the Company announced plans to spin-off CCGI in the third quarter of 2023 on the basis of one share of CCGI common stock for every shares of the Company’s common stock owned as of June 23, 2023.
Service Award
On
June 10, 2022, our subsidiary, CarbonMeta Research Ltd. (“CMR”), was granted a Service Award (entitled “Waste Plastic
Catalysis Proof of Concept”) from a business company located in Spain. The award provided for CMR to provide the customer with
an initial prototype process for converting mixed waste plastic to hydrogen and solid carbon and for the customer to pay CMR a total
of
In
October 2022, CMR was granted a second Service Award for
North Bay Resources Joint Venture
On June 21, 2023, the Company and North Bay Resources, Inc. (“NBRI”) entered into a definitive Joint Venture Agreement (the “Joint Venture Agreement”). Under the terms of the Joint Venture Agreement:
CarbonMeta Green Resources Canada will be a Limited Liability Company in British Columbia, Canada with initial equity ownership as follows:
● | ||
● |
CarbonMeta Green Resources Canada will be a research and development center whose focus will be on:
● | Establish CarbonMeta Green Resources Canada as a mining and processing center for the production of carbon-negative cementless concrete using olivine | |
● | Build and operate a production facility and demonstration program for the production of carbon-negative cementless concrete that can be distributed in North America. | |
● | Establish an agreed upon transfer price from NBRI to CarbonMeta Green Resources Canada for purchasing olivine that shall be updated quarterly. | |
● | Develop and establish supply chain relationships with potential North American distributors of carbon-negative cementless concrete, including but not limited to Carbon Conversion Group, Inc. (f/k/a CarbonMeta Green Building Materials, LLC) in the United States | |
● | Establish technology licensing relationships, industry partnerships, and marketing sponsorships related to the production of carbon-negative cementless concrete using olivine |
11 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE A – ORGANIZATION (continued)
The contributions from each of the Joint Venturers, for the purpose of this Joint Venture, is the sum set after the name of each Joint Venturer as follows:
North Bay Resources, Inc. | Availability of olivine from the mining claims that North Bay Resources owns; geological and operational expertise for mining and extracting olivine. |
CarbonMeta Technologies, Inc. | Research and Development and Business Development expertise to process olivine into a cementitious raw material for the creation of carbon-negative concrete |
The transaction closed on June 21, 2023.
Fermion Electric Private Limited MOU
On April 8, 2023, CarbonMeta Technologies, Inc. (the “Company”) and Fermion Electric Private Limited (“Fermion”) signed a Memorandum of Understanding (MOU) to create a subsidiary corporation called CarbonMeta Research India as a Private Limited Company that shall be jointly owned and managed by the Company and Fermion, and whose initial objective shall be processing natural gas into hydrogen and high value carbon products.
Under the terms of the MOU:
CarbonMeta Research India will be a Private Limited Company in Kerala, India with initial equity ownership as follows:
● | ||
● |
CarbonMeta Research India will be a research and development center whose focus will be on:
● | Microwave catalysis of waste plastics, natural gas, and other organic waste materials; | |
● | Carbon dioxide (CO2) capture technologies using novel technologies and adsorbents; | |
● | Development of new catalysts for catalysis, pyrolysis, and electrolysis; and | |
● | Commercialize and patent technologies that were developed and licensed by CarbonMeta Technologies, Inc. or its subsidiaries. |
In order to further grow its business, the Company plans to:
● | Develop and patent new microwave catalysis processes and catalysts that can be scaled up to yield large volumes of high value hydrogen and carbon products; | |
● | Develop and patent new processes and formulas for producing carbon-negative building products that help alleviate climate change by capturing carbon dioxide (CO2) for renewable energy projects; | |
● | Acquire or develop patents that will help the Company generate royalty revenues with potential OEM customers and partners, and protect the Company’s competitive position against potential competitors; | |
● | seek out government programs in the United States, India, United Kingdom and European Union that encourage the development of high value production of hydrogen and high value carbon products from organic waste streams; and | |
● | Attract investment funds who will actively work with the Company to achieve these goals and help the Company grow rapidly during the next 3 years. |
12 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE A – ORGANIZATION (continued)
We have unrestricted discretion in seeking and participating in a business opportunity, subject to the availability of such opportunities, economic conditions, and other factors.
The selection of a business opportunity in which to participate is complex and risky. Additionally, we have only limited resources and may find it difficult to locate good opportunities. There can be no assurance that we will be able to identify and acquire any business opportunity which will ultimately prove to be beneficial to us and our shareholders. We will select any potential business opportunity based on our management’s best business judgment.
Our activities are subject to several significant risks, which arise primarily as a result of the fact that we have no specific business and may acquire or participate in a business opportunity based on the decision of management, which potentially could act without the consent, vote, or approval of our shareholders. The risks faced by us are further increased as a result of our lack of resources and our inability to provide a prospective business opportunity with significant capital.
Principal Products or Services and Markets
The Company is in the business of developing and marketing technologies and solutions that can process organic and construction wastes into economically high-value and ecologically sustainable products.
The principal technologies that the Company intends to commercialize and market to potential OEM customers comprise:
● | Microwave catalysis processes and affordable catalyst formulas for producing carbon black, graphite, nano-graphite, graphene, carbon nanotubes, and hydrogen; | |
● | Carbon sequestering concrete processes and formulas for producing carbon-negative building products that help alleviate climate change by capturing carbon dioxide (CO2) for renewable energy projects; and | |
● | Scalable and affordable technologies for extracting high-value metal oxides and rare earth metal oxides that can be further processed into high-value metals with strategic partners |
The Company is partnering with a microwave reactor manufacturer in the United States to “scale up” waste plastics microwave processes.
The Company is working with Saudi Investment Research Corporation (SIRC) to develop carbon-negative concrete made from construction and demolition waste and proprietary CarbonMeta Technologies’ concrete mixtures for the production of concrete products.
The Company shall be partnering with a university in the United States and a university in India to develop and patent an affordable and scalable catalyst that can be used for catalyzing mixed plastic wastes and bio-wastes into carbon black, graphite, nano-graphite, graphene, carbon nanotubes, and hydrogen.
The Company is in the planning stages of working with a university partner in the United States to separate, purify, and characterize graphite, nano-graphite, graphene, and carbon nanotubes.
13 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE B – SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The accompanying unaudited financial statements are presented in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary in order to make the financial statements not misleading, have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of results that may be expected for the year ending December 31, 2023. The balance sheet information as of December 31, 2022 was derived from the audited financial statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 20, 2023. These financial statements should be read in conjunction with that report.
Principles of Consolidation
The consolidated financial statements include the accounts of CarbonMeta Technologies, Inc. and its six wholly-owned subsidiaries, CoroWare Technologies, Inc., CoroWare Robotics Solutions, Inc., Robotic Workspace Technologies, Inc., Carbon Source, Inc., CoroWare Treasury, Inc., and CarbonMeta Research Ltd. and its one majority owned subsidiary, ARiCon, LLC (collectively, the “Company”). All significant inter-company balances and transactions have been eliminated in the consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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 period. The Company uses all available information and appropriate techniques to develop its estimates. However, actual results could differ from its estimates.
Foreign Currency Translation
The
accompanying consolidated financial statements are presented in United States dollars (“$”), which is the reporting currency
of the Company. The functional currency of CarbonMeta Research Ltd. (“CMR”) is the Great Britain pound (“GBP”);
the functional currency of the Company and its other subsidiaries is the United States dollar. The assets and liabilities of CMR are
translated at the GBR currency exchange rate at the end of the period ($
Cash and Cash Equivalents
The
Company considers highly liquid investments with original maturities of three months or less when purchased as cash equivalents. The
Company had
14 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE B – SIGNIFICANT ACCOUNTING POLICIES (continued)
Property and Equipment
Property and equipment are recorded at cost. Expenditures for major renewals and improvements are capitalized while expenditures for minor replacements, maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciation and the related gain or loss, if any, is reflected in loss on disposal of assets in the consolidated statement of income and comprehensive income.
At least annually, the Company evaluates, and adjusts when necessary, the estimated useful lives. There were no changes in estimated useful lives for the periods presented. The estimated useful lives are:
Computer equipment and software | ||||
Filament production equipment |
Licenses
The
licenses acquired from Oxford University Innovation Limited and Ecomena Limited (see Note A) are stated at cost less
accumulated amortization. Effective August 28, 2023, the Company assigned its interest in the Ecomena license to Carbon Conversion
Group, Inc. (see Notes E and F). For the Oxford license, amortization is calculated using the straight-line method over the
Impairment of Long-lived Assets
The Company evaluates the carrying value and recoverability of its long-lived assets when circumstances warrant such evaluation by applying the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-35, Property, Plant and Equipment, Subsequent Measurement (“ASC 360-35”). ASC 360-35 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. Additionally, taxes are calculated and expensed in accordance with applicable tax code.
Segment Reporting
FASB
ASC 280-10, Segment Reporting, defines operating segments as components of a company about which separate financial information
is available that is evaluated regularly by the chief decision maker in deciding how to allocate resources and in assessing performance.
The Company reports according to
Fair Value of Financial Instruments
The Company follows FASB ASC 820-10-35-37 (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB ASC for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
Level 3 | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts reported in the Company’s consolidated financial statements for cash, accounts receivable and accounts payable and accrued expenses approximate their fair value because of the immediate or short-term nature of these financial instruments. The carrying amounts reported in the balance sheet for its notes and loans payable approximate fair value as the contractual interest rate and features are consistent with similar instruments of similar risk in the marketplace.
15 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE B – SIGNIFICANT ACCOUNTING POLICIES (continued)
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
The following table presents assets and liabilities that are measured and recognized at fair value as of September 30, 2023 and December 31, 2022, on a recurring basis:
SUMMARY OF ASSETS AND LIABILITIES MEASURED AND RECOGNIZED AT FAIR VALUE:
Assets and liabilities measured at fair value on a recurring basis at September 30, 2023 | Level 1 | Level 2 | Level 3 | Total Carrying Value | ||||||||||||
Derivative liabilities | $ | $ | ( | ) | $ | $ | ( | ) |
Assets and liabilities measured at fair value on a recurring basis at December 31, 2022 | Level 1 | Level 2 | Level 3 | Total Carrying Value | ||||||||||||
Derivative liabilities | $ | $ | ( | ) | $ | $ | ( | ) |
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for FASB ASC 815, Derivatives and Hedging (“ASC 815”).
Professional standards generally provide three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”
The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards under “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the preferred stock transaction and the effective conversion price embedded in the preferred stock. ASC 815 provides that, among other things, generally, if an event is not within the entity’s control, could or require net cash settlement, then the contract shall be classified as an asset or a liability.
16 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE B – SIGNIFICANT ACCOUNTING POLICIES (continued)
Stock Based Compensation
The Company follows FASB ASC 718, Compensation – Stock Compensation, which prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the consolidated financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity–based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Through newly issued restricted common stock, the Company pays qualified contractors and advisors common shares in lieu of compensation for services provided including business development, management, technology development, consulting, legal services and accounting services.
Revenue Recognition
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is probable. Product sales will be recognized by us generally at the time product is shipped. Shipping and handling costs will be included in cost of goods sold.
Research and Development
Research
and development costs relate to the development of new products, including significant improvements and refinements to existing products,
and are expensed as incurred. Research and development expenses for the nine months ended September 30, 2023 and 2022 were $
The Company computes basic and diluted earnings per common share amounts in accordance with FASB ASC 260, Earnings per Share. Basic earnings per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share reflects the potential dilution that could occur if stock options, convertible securities and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.
The Company currently has convertible debt and preferred stock, which, if converted, as of September 30, 2023 and September 30, 2022, would have caused the Company to issue diluted shares totaling and , respectively.
Dividend Policy
The
Company has never declared or paid any cash dividends on its common stock. The Company anticipates that any earnings will be retained
for development and expansion of its business and does not anticipate paying any cash dividends in the foreseeable future. Additionally,
as of September 30, 2023 and December 31, 2022, the Company has issued, and has outstanding, shares of Series B Preferred Stock which
are entitled, prior to the declaration of any dividends on common stock, to earn a
Recent Accounting Pronouncements
Certain accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and therefore have not yet been adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards is not expected to be material.
17 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE C – GOING CONCERN
The
Company has a working capital deficit of $
There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support the Company’s working capital requirements. To the extent that funds generated from operations, any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE D – PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consists of the following at September 30, 2023 and December 31, 2022:
September 30, | December 31, | |||||||
2023 | 2022 | |||||||
Computer equipment and software | $ | $ | ||||||
Filament production equipment | ||||||||
Subtotal | ||||||||
Less: accumulated depreciation | ( | ) | ( | ) | ||||
Property and equipment, net | $ | $ |
Depreciation
of equipment expense for the nine months ended September 30, 2023 and 2022 was $
NOTE E – LICENSES, NET
The licenses, net, consist of the following at September 30, 2023 and December 31, 2022:
September 30, | December 31, | |||||||
2023 | 2022 | |||||||
License acquired from Oxford University Innovation Limited on June 2, 2021 (see Note A) | $ | $ | ||||||
License acquired from Ecomena Limited effective February 17, 2022 (see Note A) | ||||||||
Subtotal | ||||||||
Accumulated amortization | ( | ) | ( | ) | ||||
License, net | $ | $ |
Effective August 28, 2023, the Company assigned its interest in the Ecomena license to Carbon Conversion Group, Inc. (see Note F).
Amortization
of licenses expense for the nine months ended September 30, 2023 and 2022 was $
At September 30, 2023, the expected future amortization of licenses expense was:
Fiscal year ending December 31: | ||||
2023 (excluding the nine months ended September 30, 2023) | $ | |||
2024 | ||||
2025 | ||||
2026 | ||||
2027 | ||||
Thereafter | ||||
Total | $ |
18 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE F – INVESTMENT IN CARBON CONVERSION GROUP, INC.
The Company’s investment in Carbon Conversion Group, Inc. consisted of the following at September 30, 2023:
September 30, | ||||
2023 | ||||
$ | ||||
Issuance of Carbon Conversion Group, Inc. effective August 28, 2023 shares of CarbonMeta Technologies, Inc. common stock to | ||||
Assignment of Ecomena Limited license to Carbon Conversion Group, Inc. effective August 28, 2023 (Note A) | ||||
Total | $ |
After
the July 24, 2023 issuances, COWI’s common stock ownership percentage of CCGI (formerly CMGBM) decreased from
Net | ||||
Assets | ||||
Prepaid expenses | $ | |||
Due from COWI and Carbon Source, Inc. | ||||
Total assets | ||||
Negative cash balance | ||||
Accounts payable | ||||
Total liabilities | ||||
Net assets | ||||
Net assets attributable to non-controlling interest ( | ( | ) | ||
Net assets attributable to CarbonMeta Technologies, Inc. | $ |
For the period January 1, 2023 to July 23, 2023, CMGBM’s revenues and expenses were as follows:
Revenues and | ||||
Expenses | ||||
Consulting fees from Salvum Corporation affiliate | $ | |||
Total revenues | ||||
Legal and professional fees | ||||
Consulting fees | ||||
Sales and marketing | ||||
Research and development | ||||
Other operating expenses | ||||
Total expenses | ||||
Net loss | ( | ) | ||
Net loss attributable to non-controlling interest ( | ||||
Net loss attributable to CarbonMeta Technologies, Inc. | $ | ( | ) |
As
a result of COWI’s loss of its controlling interest of CCGI effective as of July 24, 2023, we deconsolidated CCGI from our consolidated
financial statements effective July 24, 2023 and recognized a loss from deconsolidation of CCGI of $
Deconsolidation | ||||
Fair value of | shares of Carbon Conversion Group, Inc. common stock acquired effective July 24, 2023$ | |||
Net assets of CMGBM attributable to COWI | ( | ) | ||
Loss from deconsolidation of CCGI | $ | ( | ) |
NOTE G – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consists of the following at September 30, 2023 and December 31, 2022:
September 30, | December 31, | |||||||
2023 | 2022 | |||||||
Accounts payable | $ | $ | ||||||
Accrued interest | ||||||||
Accrued CEO compensation | ||||||||
Accrued CarbonMeta Research, Ltd. Board of Directors fees | ||||||||
Accrued payroll | ||||||||
Deferred compensation to Chief Technology Officer of Company subsidiary, CoroWare Technologies, Inc. | ||||||||
Payroll taxes payable | ||||||||
Commissions payable | ||||||||
Accrued consulting fees relating to the Mutual Release and Settlement Agreement dated July 19, 2021 with Y.A. Global Investments, LP (Note H) | ||||||||
Accrued dividends on Series B Preferred Stock | ||||||||
License fee and minimum royalty payable to Ecomena Limited | ||||||||
Other | ||||||||
Total | $ | $ |
The
accounts payable of $1,
September 30, | ||||
2023 | ||||
CarbonMeta Technologies, Inc. | $ | |||
CoroWare Technologies, Inc. | ||||
CoroWare Robotics Solutions, Inc. | ||||
Carbon Source, Inc. | ||||
AriCon, LLC | ||||
Total | $ |
The
payroll taxes payable of $
NOTE H –OBLIGATIONS COLLATERALIZED BY RECEIVABLES, NET
Obligations collateralized by receivables consist of:
September 30, | December 31, | |||||||
2023 | 2022 | |||||||
Knight Capital July 16, 2015 arrangement | $ | $ | ||||||
Quick Fix Capital August 17, 2015 arrangement | ||||||||
Power Up January 8, 2016 arrangement | ||||||||
Power Up April 12, 2016 arrangement | ||||||||
Power Up April 28, 2016 arrangement | ||||||||
Power Up June 2, 2016 arrangement | ||||||||
Total | $ | $ |
The financing arrangements relating to the above liabilities were entered into between CoroWare Technologies, Inc. (“CTI”), a subsidiary of the Company, and lenders in 2015 and 2016. The agreements provided for financing plus debt discounts for CTI to repay to the lenders. The terms of repayment require CTI to remit to the lenders certain percentages of future receivables collections until such time as the balances are paid in full.
19 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE I – CONVERTIBLE DEBT, NET
Convertible debt, net, consists of:
Principal Balance at | Accrued Interest Balance at | |||||||||||||||||||||||||||
Lender | Interest Rate | Default Rate | Conversion Price | September 30, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||
Westmount Holdings International, Ltd – loan date January 12, 2010 due on demand | % | % | (1 | ) | $ | $ | $ | $ | ||||||||||||||||||||
Tangiers Investment Group, LLC – loan date March 9, 2013 and due date of March 9, 2014, in technical default | % | % | (2 | ) | ||||||||||||||||||||||||
Tangiers Investment Group, LLC – loan date March 27, 2014 and due date of March 27, 2015, in technical default | % | % | ||||||||||||||||||||||||||
Tangiers Investment Group, LLC – due on demand | % | % | $ | |||||||||||||||||||||||||
Tangiers Investment Group, LLC – loan date October 11, 2016 and due date of October 20, 2017, in technical default | % | % | $ | |||||||||||||||||||||||||
Tangiers Investment Group, LLC – loan date January 30, 2017 and due date of January 30, 2018, in technical default | % | % | $ | |||||||||||||||||||||||||
Tangiers Investment Group, LLC – loan date July 19, 2021 and due date of July 19, 2022, in technical default | % | % | $ | |||||||||||||||||||||||||
Tangiers Investment Group, LLC – loan date September 8, 2021 and due date of September 8, 2022, in technical default | % | % | $ | |||||||||||||||||||||||||
Tangiers Investment Group, LLC – loan date March 21, 2022 and due date of March 21, 2023, in technical default | % | % | $ | |||||||||||||||||||||||||
Lloyd T. Spencer (the Company’s sole officer and director) – loan date March 7, 2022 and due date of March 7, 2023, in technical default | % | % | $ | |||||||||||||||||||||||||
Dakota Capital Pty, Ltd – loan date April 8, 2014 and due date of December 31, 2014, in technical default | % | % | (3 | ) | ||||||||||||||||||||||||
Zoom Marketing – loan date August 23, 2013 and due date of January 23, 2014, in technical default | % | % | (8 | ) | ||||||||||||||||||||||||
Burrington Capital, LLC – loan date April 2, 2014 and due date of October 1, 2014, in technical default | % | % | (12 | ) | ||||||||||||||||||||||||
Patrick Ferro – loan date April 3, 2014 and due date of December 31, 2014, in technical default | % | % | (13 | ) | ||||||||||||||||||||||||
Barry Liben – loan date April 3, 2014 and due date of December 31, 2014, in technical default | % | % | (13 | ) | ||||||||||||||||||||||||
Jared Robert – loan date December 10, 2014 and due date of June 10, 2015, in technical default | % | % | (12 | ) | ||||||||||||||||||||||||
Raphael Cariou – loan date August 3, 2012 and due date of February 3, 2013, in technical default | % | % | (4 | ) | ||||||||||||||||||||||||
Raphael Cariou – loan date March 12, 2015 and due date of September 12, 2015, in technical default | % | % | (4 | ) | ||||||||||||||||||||||||
Raphael Cariou - loan date March 12, 2015 and due date of September 12, 2015, in technical default | % | % | (4 | ) | ||||||||||||||||||||||||
Redwood Management, LLC – loan date of March 21, 2011 and due date of March 18, 2013, in technical default | % | % | (1 | ) | ||||||||||||||||||||||||
AGS Capital Group, LLC – loan date of February 25, 2013 and due date of February 25, 2014, in technical default | % | % | (9 | ) | ||||||||||||||||||||||||
AGS Capital Group, LLC – loan date of February 25, 2013 and due date of February 25, 2014, in technical default | % | % | (9 | ) | ||||||||||||||||||||||||
Tim Burgess – loan date of July 8, 2003 and due date of January 8, 2004, in technical default | % | % | $ | |||||||||||||||||||||||||
Azriel Nagar – loan date of July 8, 2003 and due date of January 8, 2004, in technical default | % | % | $ | |||||||||||||||||||||||||
Kelburgh, Ltd – loan date of February 12, 2012 and due date of March 22, 2012, in technical default | % | % | (8 | ) | ||||||||||||||||||||||||
Premier IT Solutions – loan date of October 5, 2011 and due date of March 5, 2012, in technical default | % | % | (7 | ) | ||||||||||||||||||||||||
LG Capital Funding, LLC – loan date of March 11, 2014 and due date of March 11, 2015, in technical default | % | % | (11 | ) | ||||||||||||||||||||||||
LG Capital Funding, LLC – loan date of January 7, 2015 and due date of January 7, 2016, in technical default | % | % | (11 | ) | ||||||||||||||||||||||||
LG Capital Funding, LLC – loan date of March 11, 2014 and due date of March 11, 2015, in technical default | % | % | (11 | ) | ||||||||||||||||||||||||
Barclay Lyons – loan date of January 28, 2011 and due date of July 28, 2011, in technical default | % | % | (6 | ) | ||||||||||||||||||||||||
Blackridge Capital, LLC – loan date of April 2, 2011 and due date of July 28, 2011, in technical default | % | % | (7 | ) | ||||||||||||||||||||||||
Blackridge Capital, LLC – loan date of February 21, 2014 and due date of September 21, 2014, in technical default | % | % | (10 | ) | ||||||||||||||||||||||||
Julian Herskowitz – loan date of July 8, 2003 and due date of January 8, 2004, in technical default | % | % | (14 | ) | ||||||||||||||||||||||||
Patrick Tuohy – loan date of April 1, 2014 and due date of December 31, 2014, in technical default | % | % | (12 | ) | ||||||||||||||||||||||||
Richard Wynns – loan date July 22, 2005 and due date of December 31, 2006, in technical default | % | % | $ | |||||||||||||||||||||||||
Richard Wynns - loan date July 26, 2010 and due date of December 31, 2011, in technical default | % | % | (5 | ) | ||||||||||||||||||||||||
MacRab LLC – loan date May 10, 2022 and due date of May 10, 2023 | % | % | $ | |||||||||||||||||||||||||
BHP Capital NY Inc. - loan date July 14, 2022 and due date of July 14, 2023 | % | % | $ | |||||||||||||||||||||||||
Quick Capital LLC - loan date July 14, 2022 and due date of July 14, 2023 | % | % | $ | |||||||||||||||||||||||||
Quick Capital LLC - loan date November 1, 2022 and due date of November 1, 2023 | % | % | $ | |||||||||||||||||||||||||
Robert Papiri Defined Benefit Plan - loan date July 15, 2022 and due date of July 15, 2023 | % | % | $ | |||||||||||||||||||||||||
Robert Papiri Defined Benefit Plan - loan date November 16, 2022 and due date of November 16, 2023 | % | % | $ | |||||||||||||||||||||||||
Robert Papiri Defined Benefit Plan - loan date December 11, 2022 and due date of December 11, 2023 | % | % | ||||||||||||||||||||||||||
Robert Papiri Defined Contribution Plan - loan date July 15, 2022 and due date of July 15, 2023 | % | % | $ | |||||||||||||||||||||||||
RPG Capital Partners, Inc - loan date July 15, 2022 and due date of July 15, 2023 | % | % | $ | |||||||||||||||||||||||||
RPG Capital Partners, Inc - loan date August 4, 2022 and due date of August 4, 2023 | % | % | $ | |||||||||||||||||||||||||
RPG Capital Partners, Inc - loan date September 12, 2022 and due date of September 12, 2023 | % | % | $ | |||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||
Less debt discounts | ( | ) | ( | ) | ||||||||||||||||||||||||
Net | $ | $ | $ | $ |
(1) | |
(2) | |
(3) | |
(4) | |
(5) | |
(6) | |
(7) | |
(8) | |
(9) | |
(10) | |
(11) | |
(12) | |
(13) | |
(14) |
20 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE I – CONVERTIBLE DEBT, NET (continued)
On
June 16, 2023, the Company entered into a Waiver and Amendment Agreement (the “Waiver Agreement”) with Tangiers
Investment Group, LLC. Under the terms of the Waiver Agreement, the Convertible Promissory Note dated March 17, 2014 in the
principal amount of $
In
the Company’s evaluation of each convertible debt instrument in accordance with FASB ASC 815, Derivatives and Hedging,
based on the variable conversion price, it was determined that the conversion features were not afforded the exemption as a
conventional convertible instrument and did not otherwise meet the conditions for equity classification. As such, the conversion and
other features were compounded into one instrument, bifurcated from the debt instrument and carried as a derivative liability, at
fair value (Please see NOTE M – DERIVATIVE LIABILITY for further information). As of September 30, 2023 and
December 31, 2022, debt discounts related to convertible notes payable totaled $
NOTE J – NOTES PAYABLE
Notes payable consist of:
Principal Balance | Accrued Interest Balance | |||||||||||||||
Description (i) |
September 30, 2023 |
December 31, 2022 |
September 30, 2023 |
December 31, 2022 |
||||||||||||
Gary Sumner |
$ | $ | $ | $ | ||||||||||||
LTC International Corp |
||||||||||||||||
Richard Wynns |
||||||||||||||||
Barclay Lyons |
||||||||||||||||
John Kroon |
||||||||||||||||
Walter Jay Bell |
||||||||||||||||
Walter Jay Bell |
||||||||||||||||
George Ferch |
||||||||||||||||
Blackridge, LLC |
||||||||||||||||
Michael Sobeck |
||||||||||||||||
Total | $ | $ | $ | $ |
(i) |
21 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE K – NOTES PAYABLE, RELATED PARTIES
As
of September 30, 2023 and December 31, 2022, the Company had an aggregate total of $
NOTE L – SMALL BUSINESS ADMINISTRATION LOAN
On
April 17, 2002, the Company borrowed $
The
Company and the Small Business Administration reached an agreement in November 2010, whereby the Small Business Administration would
accept $
NOTE M – DERIVATIVE LIABILITY
Effective July 31, 2009, the Company adopted ASC 815, which defines determining whether an instrument (or embedded feature) is solely indexed to an entity’s own stock. The conversion price of certain convertible notes and convertible preferred stock are variable and subject to the fair value of the Company’s common stock on the date of conversion. As a result, the Company has determined that the conversion features are not considered to be solely indexed to the Company’s own stock and is therefore not afforded equity treatment. In accordance with ASC 815, the Company has bifurcated the conversion features of the instruments to be recorded as a derivative liability.
22 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE M – DERIVATIVE LIABILITY (continued)
ASC 815 requires Company management to assess the fair market value of certain derivatives at each reporting period and recognize any change in the fair market value as items of other income or expense. The Company’s only asset or liability measured at fair value on a recurring basis is its derivative liability associated with convertible notes payable and preferred stock.
At origination and subsequent revaluations, the Company valued the derivative liabilities using the Black-Scholes options pricing model under the following assumptions as of September 30, 2023 and December 31, 2022:
September 30, 2023 | December 31, 2022 | |||||||
Risk-free interest rate | % | % | ||||||
Expected options life | ||||||||
Expected dividend yield | ||||||||
Expected price volatility | % | % |
For
the nine months ended September 30, 2023, the Company’s derivative liability decreased from $
NOTE N – PREFERRED STOCK
a) Series A Preferred Stock
The
Company has authorized
There were no issuances, conversions or redemptions of Series A Preferred Stock during the nine months ended September 30, 2023 and year ended December 31, 2022. At September 30, 2023 and December 31, 2022, the Company had and shares of Series A Preferred Stock issued and outstanding, respectively.
b) Series B Preferred Stock
The
Company has authorized
23 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE N – PREFERRED STOCK (continued)
There were no issuances, conversions or redemptions of Series B Preferred Stock during the nine months ended September 30, 2023 and year ended December 31, 2022. At September 30, 2023 and December 31, 2022, the Company had and shares of Series B Preferred Stock issued and outstanding, respectively.
Based upon the Company’s evaluation of the terms and conditions of the Series B Preferred Stock, the embedded conversion feature related to the Series B Preferred Stock was afforded the exemption as a conventional convertible instrument due to certain variabilities in the conversion price and met the conditions for equity classification. However, the Company is required to bifurcate the embedded conversion feature and carry it as a derivative liability.
The
Company estimated the fair value of the compound derivative using a common stock equivalent and the current share price of the
Company’s common stock. As a result of this estimate, the Company’s valuation model resulted in a compound derivative
balance associated with the Series B Preferred Stock of $
c) Series C Preferred Stock
The
Company has authorized
There were no issuances, conversions or redemptions of Series C Preferred Stock during the nine months ended September 30, 2023 and year ended December 31, 2022. At September 30, 2023 and December 31, 2022, the Company had and shares of Series C Preferred Stock issued and outstanding, respectively.
d) Series D Preferred Stock
On
November 10, 2011, the Board approved by unanimous written consent an amendment to the Company’s Certificate of Incorporation to
designate the rights and preferences of Series D Preferred Stock. There are
There were no issuances, conversions or redemptions of Series D Preferred Stock during the nine months ended September 30, 2023 and year ended December 31, 2022. At September 30, 2023 and December 31, 2022, the Company had and shares of Series D Preferred Stock issued and outstanding, respectively.
24 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE N – PREFERRED STOCK (continued)
Based upon the Company’s evaluation of the terms and conditions of the Series D Preferred Stock, the embedded conversion feature related to the Series D Preferred Stock was afforded the exemption as a conventional convertible instrument due to certain variabilities in the conversion price and met the conditions for equity classification. However, the Company is required to bifurcate the embedded conversion feature and carry it as a derivative liability.
The
Company estimated the fair value of the compound derivative using a common stock equivalent and the current share price of the Company’s
common stock. As a result of this estimate, the Company’s valuation model resulted in a compound derivative balance associated
with the Series D Preferred Stock of $
e) Series E Preferred Stock
On
March 9, 2012, the Company filed the Certificate of Designation of the Rights and Preferences of Series E Preferred Stock of the Company
with the Delaware Secretary of the State pursuant to which the Company set forth the designation, powers, rights, privileges, preferences
and restrictions of
There were no issuances, conversions or redemptions of Series E Preferred Stock during the nine months ended September 30, 2023 and year ended December 31, 2022. At September 30, 2023 and December 31, 2022, the Company had and shares of Series E Preferred Stock issued and outstanding, respectively.
Based upon the Company’s evaluation of the terms and conditions of the Series E Preferred Stock, the embedded conversion feature related to the Series E Preferred Stock was afforded the exemption as a conventional convertible instrument due to certain variabilities in the conversion price and met the conditions for equity classification. However, the Company is required to bifurcate the embedded conversion feature and carry it as a derivative liability.
The
Company estimated the fair value of the compound derivative using a common stock equivalent and the current share price of the Company’s
common stock. As a result of this estimate, the Company’s valuation model resulted in a compound derivative balance associated
with the Series E Preferred Stock of $
f) Series F Preferred Stock
On October 4, 2013, the Company filed the certificate of designation pursuant to which the Company set forth the designation, powers, rights, privileges, preferences and restrictions of authorized shares of Series F Preferred Stock, par value $ per share.
25 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE N – PREFERRED STOCK (continued)
The
shares of Series F Preferred Stock have a stated value of $
There were no issuances, conversions or redemptions of Series F Preferred Stock during the nine months ended September 30, 2023 and year ended December 31, 2022. At September 30, 2023 and December 31, 2022, the Company had and shares of Series F Preferred Stock issued and outstanding, respectively.
Based upon the Company’s evaluation of the terms and conditions of the Series F Preferred Stock, the embedded conversion feature related to the Series F Preferred Stock was afforded the exemption as a conventional convertible instrument due to certain variabilities in the conversion price and met the conditions for equity classification. However, the Company is required to bifurcate the embedded conversion feature and carry it as a derivative liability.
The
Company estimated the fair value of the compound derivative using a common stock equivalent and the current share price of the Company’s
common stock. As a result of this estimate, the Company’s valuation model resulted in a compound derivative balance associated
with the Series F Preferred Stock of $
g) Series G Preferred Stock
On April 17, 2014, the Company filed the certificate of designation pursuant to which the Company set forth the designation, powers, rights, privileges, preferences and restrictions of authorized shares of Series G Preferred Stock, par value $ per share.
The
shares of Series G Preferred Stock have a stated value of $
There were no issuances, conversions or redemptions of Series G Preferred Stock during the nine months ended September 30, 2023 and year ended December 31, 2022. At September 30, 2023 and December 31, 2022, the Company had and shares of Series G Preferred Stock issued and outstanding, respectively.
Based upon the Company’s evaluation of the terms and conditions of the Series G Preferred Stock, the embedded conversion feature related to the Series G Preferred Stock was afforded the exemption as a conventional convertible instrument due to certain variabilities in the conversion price and met the conditions for equity classification. However, the Company is required to bifurcate the embedded conversion feature and carry it as a derivative liability.
The
Company estimated the fair value of the compound derivative using a common stock equivalent and the current share price of the Company’s
common stock. As a result of this estimate, the Company’s valuation model resulted in a compound derivative balance associated
with the Series G Preferred Stock of $
26 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE O – COMMON STOCK AND TREASURY STOCK
Common Stock
The Company is authorized to issue up to shares of $ par value common stock, of which and shares were outstanding as of September 30, 2023 and December 31, 2022, respectively.
Issuances during the nine months ended September 30, 2023:
On
January 25, 2023, the Company issued
On
February 15, 2023, the Company issued
On March 3, 2023, the Company issued shares of its common stock to New to The Street Group, LLC as per the terms of the Production & Broadcasting Agreement dated February 24, 2022.
On
June 1, 2023, the Company issued
On
June 21, 2023, the Company issued
On
June 22, 2023, the Company issued
On
June 22, 2023, the Company issued
On
June 23, 2023, the Company issued
On June 23, 2023, the Company issued shares of its common stock to William David Elder in full settlement of the Master Subcontractor Agreement entered by the parties dated January 24, 2022.
On
June 26, 2023, the Company issued
On August 1, 2023, the Company issued
shares of its common stock to the Robert Papiri Defined Benefit Plan as commitment shares for two convertible notes.
On August 28, 2023, the Company issued
shares of its common stock to Carbon Conversion Group, Inc. as per the terms of the joint venture with the Salvum Corporation.
Issuances during the year ended December 31, 2022:
On January 21, 2022, the Company issued shares of common stock to a consultant for accrued consulting fees in connection with negotiating and arranging for the entry by the Company into a Mutual Release and Settlement Agreement with Y.A. Global Investments, LP dated July 19, 2021.
27 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE O – COMMON STOCK AND TREASURY STOCK (continued)
On January 21, 2022, the Company issued its sole officer and director, Lloyd Spencer, shares of common stock for past due compensation in the amount of $ .
On February 14, 2022, the Company issued shares of common stock to Salvum Corporation as per the terms of the Memorandum of Understanding to an Interim Joint Product Development and Sales Representation Agreement dated January 11, 2022 (see Note A, Production Agreement).
On February 14, 2022, the Company issued its sole officer and director, Lloyd Spencer, shares of common stock as compensation for serving on the Board of Directors of CarbonMeta Research Ltd.
On February 14, 2022, the Company issued a total of shares ( shares each) of common stock to three other individuals as compensation for serving on the Board of Directors of CarbonMeta Research Ltd.
On February 17, 2022, the Company issued shares of its common stock to Ecomena Limited (an entity located in the United Kingdom) pursuant to a License of Agreement dated December 2, 2021 between Ecomena Limited and CarbonMeta Technologies, Inc. (see Note A, License Agreements).
On
March 7, 2022, the Company issued
On
March 21, 2022, the Company issued
On April 4, 2022, the Company issued shares of its common stock to Bill Elder, a third-party contractor, as compensation for his business development services.
On
May 10, 2022, the Company issued
On
July 14, 2022, the Company issued
On
July 14, 2022, the Company issued
On
August 4, 2022, the Company issued
On
September 12, 2022, the Company issued
On
November 7, 2022, the Company issued
On
November 16, 2022, the Company issued
28 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE O – COMMON STOCK AND TREASURY STOCK (continued)
Treasury Stock
As of September 30, 2023 and December 31, 2022, the Company held and , respectively, shares of common stock in treasury.
At
September 30, 2023, the Company has outstanding a total of
Name | Date of Issuance | Shares upon Exercise of warrants or options | Exercise Price | Expiration Date | ||||||||
Lloyd Spencer (i) | $ | |||||||||||
Tangiers Investment Group, LLC (ii) | $ | |||||||||||
J.H. Darbie & Co., Inc. (iii) | $ | |||||||||||
MacRab LLC (iv) | $ | |||||||||||
MacRab LLC (v) | $ | |||||||||||
BHP Capital NY Inc. (vi) | $ | |||||||||||
Quick Capital LLC (vii) | $ | |||||||||||
Robert Papiri Defined Benefit Plan (viii) | $ | |||||||||||
Robert Papiri Defined Contribution Plan(ix) | $ | |||||||||||
RPG Capital Partners Inc. (x) | $ | |||||||||||
RPG Capital Partners Inc. (xi) | $ | |||||||||||
RPG Capital Partners Inc. (xii) | $ | |||||||||||
Total |
(i) | |
(ii) | |
(iii) | |
(iv) |
29 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE P – STOCK OPTIONS AND WARRANTS (continued)
(v) | |
(vi) | |
(vii) | |
(viii) | |
(ix) | |
(x) |
30 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2023 and 2022
(Unaudited)
NOTE P – STOCK OPTIONS AND WARRANTS (continued)
(xi) | |
(xii) |
NOTE Q – COMMITMENTS AND CONTINGENCIES
Employment Agreement with Chief Executive Officer
On
May 13, 2006, the Company executed an Employment Agreement (the “Agreement”) with Lloyd Spencer for Spencer to serve as the
Company’s Chief Executive Officer.
For
the nine months ended September 30, 2023 and 2022, chief executive officer compensation expense was $
Major Customers
For
the nine months ended September 30, 2023, one customer (located in Spain) accounted for
For
the nine months ended September 30, 2023, one customer (Silt Energy Development, LLC) accounted for
NOTE R – SUBSEQUENT EVENTS
On November 11, 2023, the Company and Saudi Investment Research Corporation entered into a Research and Development Agreement (the “Agreement”) whereby the Company was awarded an $ Saudi Arabia Riyal (approximately $ ) sole source contract to develop carbon-negative concrete made from construction and demolition waste and proprietary CarbonMeta Technologies’ concrete mixtures for the production of concrete street furniture that meets local specifications and standards.
31 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
As explained above, unless otherwise indicated, the terms “we,” “us,” “our,” “our Company,” “COWI” and “the Company” refer to CarbonMeta Technologies, Inc., together with its consolidated subsidiaries. The following discussion and analysis of the Company’s financial condition and results of operations should be read together with the Company’s financial statements and related notes appearing elsewhere in this Quarterly Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to the Company’s plans and strategy for the Company’s business and related financing, includes forward-looking statements involving risks and uncertainties and should be read together with the “Cautionary Note Regarding Forwarding- Looking Statements” section of this Quarterly Report. Such risks and uncertainties could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
CarbonMeta Technologies, Inc. (f/k/a CoroWare, Inc.) (“CarbonMeta”, the “Company”, “we”, “us”, or “our”) is a publicly quoted environmental research and development company that is commercializing technologies for processing organic wastes into hydrogen and high-value carbon products economically and sustainably.
The Company was incorporated on July 8, 2001, under the laws of the State of Delaware, as SRM Networks, Inc. In connection with the acquisition of Hy-Tech Computer Systems, Inc. on January 31, 2003, the Company changed its name to Hy-Tech Technology Group, Inc. In connection with the Agreement and Plan of Merger Robotics Workspace Technology, Inc., Innova Holdings, Inc. and the Company’s wholly owned subsidiary, RWT Acquisition, Inc., dated July 21, 2004, the Company’s name changed to Innova Holdings, Inc. Subsequently, on November 20, 2006, the Company changed its name to Innova Robotics and Automation, Inc. and then on April 23, 2008, the Company changed its name to CoroWare, Inc. On or about July 28, 2021, the Company filed Articles of Amendment to its Amended and Restated Certificate of Incorporation with the State of Delaware to reflect a name change from CoroWare, Inc. to CarbonMeta Technologies, Inc.
The Company was a reporting company with the Securities and Exchange Commission until October 2016, when the Company’s gross margins and financing costs became unsustainable. In 2020, the Company began investigating emerging technologies and sustainable growth business opportunities related to the production of hydrogen and high value carbon products from organic waste streams. After careful consideration of the potential market opportunities and the partnership with Oxford University, the Company took the decision to raise capital in the public market and therefore become an SEC reporting company again.
The Company has six wholly-owned subsidiaries: CoroWare Technologies, Inc. (“CTI”), CoroWare Robotics Solutions, Inc. (“CRS”), Robotic Workspace Technologies, Inc. (“RWT”), Carbon Source, Inc. (“CS”), CoroWare Treasury, Inc. (“CWT”), and CarbonMeta Research Ltd. (“CMR”), From August 30, 2022 to July 24, 2023, the Company had a 50.1% interest in CarbonMeta Green Building Materials, LLC (joint venture with Salvum Corporation)(“CMGBM”). Also, the Company has a 51% interest in AriCon, LLC (“AriCon”).
CoroWare Technologies (“CTI”) was incorporated in the State of Florida on May 16, 2006 and its principal business was a software professional services company with a strong focus on information technology integration and robotics integration, business automation solutions, and unmanned systems solutions to its customers in North America and Europe.
CoroWare Robotics Solutions, Inc. (“CRS”) was incorporated in the State of Texas on February 27, 2015, and its principal business was as a technology incubation company whose focus was on the delivery of mobile robotics and IOT products, solutions and services for university, government and corporate researchers, and enterprise customers. CRS’s business operations were discontinued in October 2016 when the Company’s gross margins and financing costs became unsustainable.
Robotic Workspace Technologies, Inc. (“RWT”) was incorporated in the State of Florida on July 1, 1994, and its principal business was developing and marketing open-architecture PC controls and related products that could improve the performance, applicability, and productivity of robots and other automated equipment. RWT’s business operations were discontinued in September 2007 when the Company’s losses became unsustainable.
Carbon Source, Inc. (“CS”) was incorporated in the State of Wyoming on June 14, 2021 and its principal business is waste reclamation technologies and processing.
CoroWare Treasury, Inc. (“CWT”) was incorporated in the State of Wyoming on July 6, 2021 and its principal business is acquisitions related to acquiring technologies and subsidiary businesses related to waste processing.
CarbonMeta Research Ltd. (‘CMR”) was incorporated in England and Wales on August 12, 2021 and its principal business will focus on the development of technologies and solutions for processing organic wastes and generating economically sustainable hydrogen and high-value carbon products. Using proprietary and patented technologies, it plans to implement new industrial methods using inexpensive, environmentally friendly catalysts that process collected plastic waste material into high value products such as hydrogen gas, graphene and carbon nanotubes.
Carbon Conversion Group, Inc. (f/k/a CarbonMeta Green Building Materials, LLC) (“CCG”) was a joint venture with Salvum Corporation organized on August 30, 2022 to develop and market construction mix products that are carbon negative (see Production Agreement below). Please see NOTE F – INVESTMENT IN CARBON CONVERSION GROUP, INC. for further information.
On June 12, 2023, the Company’s Board of Directors elected to spin-off CCG in a stock dividend to its shareholders. CarbonMeta Technologies’ shareholders will receive one (1) share of CCG common stock for every 3,000 shares of CarbonMeta Technologies common stock owned as of the Record Date (June 23, 2023). The Company has filed its Issuer Company-related Action Notification Form with the Financial Industry Regulatory Authority (“FINRA”) for the proposed stock dividend.
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In 2021, the Company began investigating emerging technologies, strategic intellectual property partnerships, and sustainable growth business opportunities related to the production of hydrogen and high value carbon products from organic waste streams. Working cooperatively with Oxford University Innovation, CarbonMeta plans to implement proven and patented technologies to add value to organic waste streams. By utilizing these proven proprietary technologies, collected and captured plastic waste material can be upcycled to high value products such as carbon nanotubes (“CNTs”) and hydrogen gas.
CNTs can be used for improved electrical conduction and reinforcing materials that are used in a wide variety of industries including the automotive industry, aviation industry, medical industry, and construction. The number one growth driver is the increasing need for high performance batteries for the electric vehicle market.
Plastic waste is a cheap and abundant feedstock that will allow the Company to scale quickly and produce hydrogen gas for a competitive price.
License Agreements
Oxford University Innovation Limited
On June 2, 2021, the Company (the “Licensee”) entered into a License Agreement (the “Agreement”) with Oxford University Innovation Limited (the “Licensor”). Under the terms of the Agreement, the Licensee will license the licensed technology (OUI Project- Hydrogen from plastics via microwave-initiated catalytic dehydrogenation). The Agreement is non-exclusive and includes the United States and European Union. Signing fees for the Agreement were £54,807 and have been paid in full by the Company. The Royalty Rate is 5% of net sales. The Agreement comprises milestone fees as: (i) £20,000 upon the first commercial sale of a licensed product; (ii) £50,000 upon generating $1,000,000 in sales; (iii) £10,000 upon the successful grant of the US patent; and (iv) £10,000 upon the successful grant of the EU patent. Whether the company realizes product sales or not, the Company is subject to a minimum payment to Oxford University Innovation of £10,000 for license year 3 and £20,000 for license year 4 and each license year thereafter.
The process that the Company licensed from Licensor for producing hydrogen and carbon products from waste plastics has not been demonstrated on a larger scale. It is not yet known whether the process will be cost-effective or profitable to implement on a larger scale. The Company has conducted tests to prove the percentage of carbon nanotubes up to 10 grams. The Company is working with a microwave reactor company to help demonstrate this process at a scale of 100 kilograms and 1,000 kilograms per day.
The Company has met the following milestones of its development plan set forth in the license agreement with Oxford University Innovation:
● | September 2021: established subsidiary in Oxford, United Kingdom | |
● | March 2022: produced 0.025 kilograms per day of marketable carbon nanotubes |
Oxford University Innovation may terminate the license due to the company not using commercially reasonable efforts to develop, exploit and market the licensed technology in accordance with the development plan.
From July 2022 to present (see Service Award below), CarbonMeta Technologies has been working with University of Oxford on a project with a global multi-energy provider based in Europe to assess the feasibility of processing mixed plastic waste into clean hydrogen fuel and value-added carbon products using microwave catalysis on a large commercial scale.
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Ecomena Limited
On December 2, 2021, the Company (“Licensee”) entered into a License of Agreement (the “Agreement”) with Ecomena Limited (an entity located in the United Kingdom) (“Licensor”). Under the terms of the Agreement, the Licensee will license the Licensed Technology to recycle industrial byproduct into cement free pavers and mortars that are environmentally friendly and continuously absorb carbon dioxide. The signing fees payable to the Licensor under the Agreement are £20,000 cash (approximately $27,247 at February 17, 2022), of which £10,000 has been paid by the Licensee, and 160,000,000 shares of the Company’s common stock, which was delivered to the Licensor on February 17, 2022. The royalty rate payable to the Licensor is 5% of net sales, subject to a minimum of £5,000 per year for license years 1 and 2, £3,000 for license year 3 and £1,000 for license year 4 and each license year thereafter. The term of the Agreement is five years from December 2, 2021 to December 2, 2026. The Licensee may terminate the Agreement for any reason at any time provided it gives Licensor six (6) months written notice to terminate expiring after December 2, 2024. If requested by the Licensee, the Licensor shall agree to the Agreement continuing in force after December 2, 2026. Effective August 28, 2023, the Company assigned its interest in the Ecomena license to Carbon Conversion Group, Inc. (see Notes E and F). As of the date of this filing, the Agreement is still in effect.
Production Agreement
On January 11, 2022, the Company entered into an Interim Joint Product Development and Sales Representation Agreement (the “Agreement”) with Salvum Corporation. Under the terms of the Agreement, the parties agree to work together to develop both CarbonMeta’s proprietary cementless paver products known as “Cementless Paver” and Salvum’s proprietary concrete alternative products known as “EarthCrete.” During the Term, Salvum agrees to manufacture CarbonMeta’s proprietary cementless paver products known as “Cementless Paver”. CarbonMeta reserves the right to appoint other manufacturers of the products and/or to engage other sales representatives for CarbonMeta’s proprietary cementless paver products known as “Cementless Paver” outside the United States of America. Although the Interim Joint Product Development and Sales Representation Agreement with Salvum Corporation had a term of 180 days and expired on July 11, 2022, the companies continued to work together, and the companies formed CarbonMeta Green Building Materials, LLC (“CMGBM”) and signed an Operating Agreement for Management of CMGBM on August 28, 2022 that supersedes the Interim Joint Product Development and Sales Representation Agreement.
The Operating Agreement for Management of CMGBM (the “CMGBM Agreement”) provides for (1) the allocation of 501 Managing Membership units (50.1%) to CarbonMeta Technologies, Inc. (“COWI”) and 499 Managing Membership units (49.9%) to Salvum Corporation, (2) COWI capital contributions to CMGBM of (a) 250,000,000 shares of COWI common stock and (b) the assignment of the Ecomena Limited license agreement, and (3) Salvum Corporation capital contributions to CMGBM of (a) existing EarthCrete customer list and sales pipeline, and (b) license to use EarthCrete trademark worldwide. The CMGBM Agreement also provides that profits and losses (and distributions) of CMGBM shall be allocated on the basis of each Managing Member’s relative capital accounts and that a Managing Member may withdraw from CMGBM upon not less than six months prior written notice to each non-withdrawing Managing Member. As of December 31, 2022, the above capital contributions provided for in the CMGBM Agreement had not occurred and no significant operations of CMGBM had commenced.
On July 24, 2023, the Company filed a Certificate of Conversion with the State of Wyoming for CGBM, to convert CGBM from a limited liability company to a corporation. In addition, the Company filed Articles of Incorporation changing the name of CGBM to Carbon Conversion Group, Inc. (“CCGI”). CCGI has the authority to issue 100,000,000 shares of preferred stock, par value $0.0001 per share, and 500,000,000 shares of common stock, par value of $0.0001 per share. Please see NOTE F – INVESTMENT IN CARBON CONVERSION GROUP, INC. for further information.
Service Award
On June 10, 2022, our subsidiary, CarbonMeta Research Ltd. (“CMR”), was granted a Service Award (entitled “Waste Plastic Catalysis Proof of Concept”) from a European global energy supplier. The award provides for CMR to provide the customer with an initial prototype process for converting mixed waste plastic to hydrogen and solid carbon and for the customer to pay CMR a total of 50,000 Euros in four installments as certain milestones are met. As of September 30, 2022, all of the milestones had been met by CMR and CMR had invoiced the customer the full 50,000 Euros ($49,542), of which $40,103 was collected in the third quarter 2022 and $9,439 has been collected in the fourth quarter 2022.
In October 2022, CMR was granted a second Service Award for 50,000 Euros to provide the customer with further details on the composition of the carbon products resulting from the microwave catalysis of waste plastics. In December 2022, CMR invoiced the customer for 20,000 Euros, which was collected in January 2023. In January 2023, CMR invoiced the customer for 10,000 Euros, which was collected in the quarter ended March 31, 2023. In April 2023 and May 2023, CMR invoiced the customer for a total of 10,000 Euros, which was collected in the quarter ended June 30, 2023. The project is expected to reach completion in September 2023.
North Bay Resources Joint Venture
On June 21, 2023, the Company and North Bay Resources, Inc. (“NBRI”) entered into a definitive Joint Venture Agreement (the “Joint Venture Agreement”). Under the terms of the Joint Venture Agreement:
CarbonMeta Green Resources Canada will be a Limited Liability Company in British Columbia, Canada with initial equity ownership as follows:
● | 51% of the equity will be owned by CarbonMeta Technologies, Inc. | |
● | 49% of the equity will be owned by North Bay Resources, Inc. |
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CarbonMeta Green Resources Canada will be a research and development center whose focus will be on:
● | Establish CarbonMeta Green Resources Canada as a mining and processing center for the production of carbon-negative cementless concrete using olivine | |
● | Build and operate a production facility and demonstration program for the production of carbon-negative cementless concrete that can be distributed in North America. | |
● | Establish an agreed upon transfer price from NBRI to CarbonMeta Green Resources Canada for purchasing olivine that shall be updated quarterly. | |
● | Develop and establish supply chain relationships with potential North American distributors of carbon-negative cementless concrete, including but not limited to Carbon Conversion Group, Inc. (f/k/a CarbonMeta Green Building Materials, LLC) in the United States | |
● | Establish technology licensing relationships, industry partnerships, and marketing sponsorships related to the production of carbon-negative cementless concrete using olivine |
The contributions from each of the Joint Venturers, for the purpose of this Joint Venture, is the sum set after the name of each Joint Venturer as follows:
North Bay Resources, Inc. | Availability of olivine from the mining claims that North Bay Resources owns; geological and operational expertise for mining and extracting olivine. |
CarbonMeta Technologies, Inc. | Research and Development and Business Development expertise to process olivine into a cementitious raw material for the creation of carbon-negative concrete |
The transaction closed on June 21, 2023.
Fermion Electric Private Limited MOU
On April 8, 2023, CarbonMeta Technologies, Inc. (the “Company”) and Fermion Electric Private Limited (“Fermion”) signed a Memorandum of Understanding (MOU) to create a subsidiary corporation called CarbonMeta Research India as a Private Limited Company that shall be jointly owned and managed by the Company and Fermion, and whose initial objective shall be processing natural gas into hydrogen and high value carbon products.
Under the terms of the MOU:
CarbonMeta Research India will be a Private Limited Company in Kerala, India with initial equity ownership as follows:
● | 80% of the equity will be owned by CarbonMeta Technologies, Inc.; and | |
● | 20% of the equity will be owned by Fermion Electric Private Limited. |
CarbonMeta Research India will be a research and development center whose focus will be on:
● | Microwave catalysis of waste plastics, natural gas, and other organic waste materials; | |
● | Carbon dioxide (CO2) capture technologies using novel technologies and adsorbents; | |
● | Development of new catalysts for catalysis, pyrolysis, and electrolysis; and | |
● | Commercialize and patent technologies that were developed and licensed by CarbonMeta Technologies, Inc. or its subsidiaries. |
The below discussions are as of the date stated (unless specifically noted otherwise) and should be read in conjunction with financial statements and notes thereto for the applicable period referenced.
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Results of Operations:
For the three months ended September 30, 2023 versus September 30, 2022:
September 30, 2023 | September 30, 2022 | $ Change | ||||||||||
Gross revenue | $ | 17,000 | $ | 27,987 | $ | (10,987 | ) | |||||
Operating expenses | 169,765 | 211,315 | (41,550 | ) | ||||||||
Loss from operations | (152,765 | ) | (183,328 | ) | (30,563 | ) | ||||||
Other income | 2,912,391 | 6,533,654 | (3,621,263 | ) | ||||||||
Net income | 2,759,626 | 6,350,326 | (3,590,700 | ) | ||||||||
Net income per share - basic and diluted | $ | 0.0001 | $ | 0.0003 | $ | (0.0002 | ) |
Revenues
During the three months ended September 30, 2023, revenues were $17,000 compared to revenues of $27,987 during the three months ended September 30, 2022. For the three months ended September 30, 2022, the Company accrued revenues from one customer, Carbon Conversion Group, Inc. (CCGI), which was formally “spun out” in the third quarter of 2023 on the basis of 1 (one) share of CCGI common stock for every 3,000 shares of the Company’s common stock owned as of June 23, 2023.
Carbon Conversion Group, Inc. realized revenues and accrued prepaid revenues resulting from the sale of solar panels and accompanying materials during the three months ended September 30, 2023.
Through service contract and technology licensing agreements, CarbonMeta Technologies will provide research and development support to CCGI and other commercial customers for scaling up the unique technologies and solutions that have been developed by CarbonMeta Technologies, including microwave catalysis for transforming waste plastics into valuable resources, and producing carbon negative EarthCrete.
Operating Expenses
Operating expenses were $169,765 for the three months ended September 30, 2023 compared to $211,315 for the three months ended September 30, 2022.
We incurred $28,591 and $6,176 in research and development expenses during the three months ended September 30, 2023 and 2022, respectively.
We incurred $37,500 and $37,500 in chief executive officer compensation expenses during the three months ended September 30, 2023 and 2022, respectively. The Company anticipates that it will need to expand its management team with future acquisitions or joint ventures.
Loss from Operations
Loss from operations was $152,765 for the three months ended September 30, 2023 compared to $183,328 for the three months ended September 30, 2022.
Other Income
Other income was $2,912,391 during the three months ended September 30, 2023 compared to other income (expenses) of $6,533,654 in the three months ended September 30, 2022, a decrease of $3,621,263. Other expenses is comprised primarily of gain/loss on derivative liabilities and interest expense. The gain from derivative liabilities for the three months ended September 30, 2023 was $3,245,793 compared to $6,837,508 for the three months ended September 30, 2022, a decrease of $3,591,715. The embedded conversion features associated with our convertible debentures are valued based on the number of shares that are indexed to that liability. Keeping the number of shares constant, the liability associated with the embedded conversion features increases as our share price increases and, likewise, decreases when our share price decreases. Derivative income (expense) displays the inverse relationship.
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Net Income
Net income for the three months ended September 30, 2023 was $2,759,626 compared to $6,350,326 for the three months ended September 30, 2022, a decrease of $3,590,700. The decrease in net income is primarily a result of the change in derivative liabilities.
For the nine months ended September 30, 2023 versus September 30, 2022:
September 30, 2023 | September 30, 2022 | $ Change | ||||||||||
Gross revenue | $ | 53,346 | $ | 49,542 | $ | 3,804 | ||||||
Operating expenses | 558,299 | 658,407 | (100,108 | ) | ||||||||
Loss from operations | (504,953 | ) | (608,865 | ) | (103,912 | ) | ||||||
Other income | 12,362 | 185,918 | (173,556 | ) | ||||||||
Net (loss) | (492,591 | ) | (422,947 | ) | 69,644 | |||||||
Net (loss) per share - basic and diluted | $ | (0.0000 | ) | $ | (0.0000 | ) | $ | (0.0000 | ) |
Revenues
During the nine months ended September 30, 2023, revenues were $53,346 compared to revenues of $49,542 during the nine months ended September 30, 2022. For the nine months ended September 30, 2022, the Company had two customers. The first is a European global energy industry for whom we are in a technology assessment project to evaluate our microwave catalysis process for mixed waste plastics. The second customer is Carbon Conversion Group, Inc., which was formally “spun out” in the third quarter of 2023 on the basis of 1 (one) share of CCGI common stock for every 3,000 shares of the Company’s common stock owned as of June 23, 2023.
Carbon Conversion Group, Inc. realized revenues and accrued prepaid revenues resulting from the sale of solar panels and accompanying materials during the three months ended September 30, 2023.
Through service contract and technology licensing agreements, CarbonMeta Technologies will provide research and development support to CCGI and other commercial customers for scaling up the unique technologies and solutions that have been developed by CarbonMeta Technologies, including microwave catalysis for transforming waste plastics into valuable resources, and producing carbon negative EarthCrete.
Operating Expenses
Operating expenses were $558,299 for the nine months ended September 30, 2023 compared to $658,407 for the nine months ended September 30, 2022.
We anticipate that our cost of revenues will increase in 2023 and 2024 and for the foreseeable future as we continue to identify potential acquisitions, joint ventures and licensing opportunities.
We incurred $98,731 and $14,820 in research and development expenses during the nine months ended September 30, 2023 and 2022, respectively.
We incurred $112,500 and $112,500 in executive compensation expenses during the nine months ended September 30, 2023 and 2022, respectively. The Company anticipates that it will need to expand its management team with future acquisitions or joint ventures.
Loss from Operations
Loss from operations was $504,953 for the nine months ended September 30, 2023 compared to $608,865 for the nine months ended September 30, 2022.
Other Income
Other income was $12,362 during the nine months ended September 30, 2023 compared to $185,918 in the nine months ended September 30, 2022, a decrease of $173,556. Other expenses are comprised primarily of gain/loss on derivative liabilities and interest expense. The gain from derivative liabilities for the nine months ended September 30, 2023 was $1,009,001 compared to $981,881 for the nine months ended September 30, 2022, an increase of $27,120. The embedded conversion features associated with our convertible debentures are valued based on the number of shares that are indexed to that liability. Keeping the number of shares constant, the liability associated with the embedded conversion features increases as our share price increases and, likewise, decreases when our share price decreases. Derivative income (expense) displays the inverse relationship.
Net (Loss)
Net (loss) for the nine months ended September 30, 2023 was ($492,591) compared to ($422,947) for the nine months ended September 30, 2022, an increase of $69,644.
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Liquidity and Capital Resources
For the Nine Months Ended September 30, | ||||||||
2023 | 2022 | |||||||
Cash (used in) provided by: | ||||||||
Operating Activities | $ | (131,003 | ) | $ | (242,643 | ) | ||
Investing Activities | - | (27,247 | ) | |||||
Financing Activities | 130,218 | 268,400 | ||||||
Net increase in cash and restricted cash | $ | (505 | ) | $ | (3,519 | ) |
For the nine months ended September 30, 2023 and 2022, net cash (used in) operating activities was ($131,003) and ($242,643), respectively. The decrease in net cash (used in) operating activities for the nine months ended September 30, 2023 was largely attributable to a loss from deconsolidation of Carbon Conversion Group, Inc. of $29,775 and accounts receivable of $20,525 during the nine months ended September 30, 2023.
For the nine months ended September 30, 2023 and 2022, net cash (used in) investing activities was $- and ($27,247), respectively.
For the nine months ended September 30, 2023 and 2022, cash provided by financing activities was $130,218 and $268,400, respectively. The decrease in net cash provided from financing activities for the nine months ended September 30, 2023 was largely attributable to a decrease in proceeds from convertible debt financing.
At September 30, 2023, we had current assets of $3,031, current liabilities of $24,799,896, a working capital deficit of $24,796,865 and an accumulated deficit of $64,427,436.
At December 31, 2022, we had current assets of $24,061, current liabilities of $24,810,798, a working capital deficit of $24,786,737 and an accumulated deficit of $64,003,956.
Financing Needs
In order to fund our operations, we rely upon direct investments with accredited investors, joint ventures, and customer revenues. Once the Company becomes profitable, we intend to fund our operations from free cash flow.
At present, the Company only has sufficient funds to conduct its operations for three to six months. There can be no assurance that additional financing will be available in amounts or on terms acceptable to the Company, if at all.
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If we are not successful in generating sufficient liquidity from Company operations or in raising sufficient capital resources, on terms acceptable to us, this could have a material adverse effect on the Company’s business, results of operations liquidity and financial condition.
The Company presently does not have any available credit, bank financing or other external sources of liquidity. Due to its brief history and historical operating losses, the Company’s operations have not been a source of liquidity. The Company will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, the Company may need to sell additional shares of its common stock or borrow funds from private lenders. There can be no assurance that the Company will be successful in obtaining additional funding.
The Company will need additional investments in order to continue operations. Additional investments are being sought, but the Company cannot guarantee that it will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. In the event there is a downturn in the U.S. stock and debt markets, this could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if the Company is able to raise the funds required, it is possible that it could incur unexpected costs and expenses, fail to collect significant amounts owed to it, or experience unexpected cash requirements that would force it to seek alternative financing. Further, if the Company issues additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders.
Satisfaction of Outstanding Liabilities
There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources to satisfy these outstanding liabilities. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business.
We currently have no external sources of liquidity such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.
We are dependent on the sale of our securities to fund our operations and will remain so until we generate sufficient revenues to pay for our operating costs. Our officers and directors have made no written commitments with respect to providing a source of liquidity in the form of cash advances, loans and/or financial guarantees.
If we are unable to raise the funds, we will seek alternative financing through means such as borrowings from institutions or private individuals. There can be no assurance that we will be able to raise the capital we need for our operations from the sale of our securities. We have not located any sources for these funds and may not be able to do so in the future. We expect that we will seek additional financing in the future. However, we may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to cease operations. If we fail to raise funds, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws.
Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern and believes that our ability is dependent on our ability to implement our business plan, raise capital and generate revenues. Please see NOTE C - GOING CONCERN for further information.
Convertible Notes
At September 30, 2023 and December 31, 2022, the Company had $2,083,340 and $2,160,034 in outstanding convertible debt, net, respectively. At September 30, 2023 and December 31, 2022, the Company had $1,495,586 and $1,781,104 of outstanding default principal, respectively. If all Convertible Notes were converted, shareholders would undergo significant dilution to their holdings.
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The Company’s legacy financing contains unfavorable terms that contributed to dilution and negatively impacted the Company’s market price, and therefore posed a challenge to attracting investment under more favorable. During the year ended December 31, 2021, the Company began the process of extinguishing or renegotiating the terms of this unfavorable legacy debt. During the year ended December 31, 2022, the Company began realizing revenues, and intends to grow its business with key customers directly and through joint venture companies. As a result, the Company has been able to attract investments with third parties that are more favorable to the company, thereby reducing potential dilution.
Please see NOTE I – CONVERTIBLE DEBT, NET for further information.
Debt
At September 30, 2023 and December 31, 2022, the Company had $16,156,051 and $15,157,952 in total debt, exclusive of derivative liabilities, respectively. Please see NOTES G, H, I, J, K and L for further information.
Required Capital Over the Next Twelve Months
We expect to incur losses from operations for the near future. We believe we will have to raise an additional $2,500,000 to fund our operations over the next twelve months, including roughly $50,000 to remain current in our filings with the SEC. The additional funds will be utilized for hiring ancillary staff and key personnel, corporate website and SEO development, acquisition(s) in the waste and recycling management sector and day-to-day operations.
Future financing may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, existing holders of our securities may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our securities.
If additional financing is not available or is not available on acceptable terms, we may be required to delay or alter our business plan based on available financing.
Contractual Obligations and Commitments
The Company has no debt covenants that require certain financial information to be met.
Off-Balance Sheet Arrangements
The Company did not have any off-balance sheet arrangements as of September 30, 2023.
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s combined financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. In accordance with U.S. GAAP, the Company bases its estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
For information on the Company’s significant accounting policies please refer to NOTE B – SIGNIFICANT ACCOUNTING POLICIES to the Company’s Financial Statements included in this Quarterly Report.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Due to being a Smaller Reporting Company, the Company is not required to provide information under this Item 3.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Principal Executive Officer and Principal Financial and Accounting Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on such evaluation, the Company’s Principal Executive Officer and Principal Financial and Accounting Officer have concluded that, as of the end of such period covered by this Quarterly Report, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that information that it is required to disclose in reports that the Company files with the SEC is recorded, processed, summarized and reported within the time periods specified by the Exchange Act rules and regulations due to the reasons set forth below.
As of December 31, 2022, management identified the following material weakness in our internal control over financial reporting: the Company was unable to provide a timely financial reporting package in connection with the year end audit. This was primarily the result of the Company’s limited accounting personnel. This also limits the extent to which the Company can segregate incompatible duties and has a lack of controls in place to ensure that all material transactions and developments impacting the financial statements are reflected. There is a risk under the current circumstances that intentional or unintentional errors could occur and not be detected.
Management has concluded that the material weakness described above currently exists as of September 30, 2023. The Company plans to engage with outside consultants to strengthen its capabilities and help the Company in the design and assessment of its internal controls over financial reporting to further reduce and remediate existing control deficiencies during 2023.
Changes in Internal Control over Financial Reporting
During the three months ended September 30, 2023, there were no changes in our internal control over financial reporting that materially affected our internal control over financial reporting as of September 30, 2023.
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PART II
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is party to legal actions that are routine and incidental to its business. However, based upon available information and in consultation with legal counsel, management does not expect the ultimate disposition of any or a combination of these actions to have a material adverse effect on the Company’s assets, business, cash flow, condition (financial or otherwise), liquidity, prospects and\or results of operations.
ITEM 1A. RISK FACTORS
Our business and common stock are subject to a number of risks and uncertainties The discussion of such risks and uncertainties may be found under “Risk Factors” in the Company’s Annual report on Form 10-K filed with the Securities and Exchange Commission on April 20, 2023, which is supplemented by the risk factor set forth below.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
Recent Sales of Unregistered Securities; Uses of Proceeds from Registered Securities
On March 3, 2023, the Company issued 200,000,000 shares of its common stock to New to The Street Group, LLC as per the terms of the Production & Broadcasting Agreement dated February 24, 2022.
On June 23, 2023, the Company issued 150,000,000 shares of its common stock to William David Elder in full settlement of the Master Subcontractor Agreement entered by the parties dated January 24, 2022.
On August 1, 2023, the Company issued 12,500,000 shares of its common stock to the Robert Papiri Defined Benefit Plan as commitment shares for two convertible notes.
On August 28, 2023, the Company issued 250,000,000 shares of its common stock to Carbon Conversion Group, Inc. as per the terms of the joint venture with the Salvum Corporation.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
(b) Exhibits
The following documents are filed as exhibits hereto:
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+ | Management contract or compensatory plan or arrangement. |
* | Filed herewith. |
** | The certifications attached as Exhibit 32.1 are not deemed “filed” with the SEC and are not to be incorporated by reference into any filing of CarbonMeta Technologies, Inc. under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: December 1, 2023
CARBONMETA TECHNOLOGIES, INC. | ||
By: | /s/ Lloyd Spencer | |
Name: | Lloyd Spencer | |
Title: | Chief Executive Officer |
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