Company Quick10K Filing
True Nature Holding
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 39 $4
10-Q 2019-11-14 Quarter: 2019-09-30
10-Q 2019-08-14 Quarter: 2019-06-30
10-Q 2019-05-20 Quarter: 2019-03-31
10-K 2019-04-01 Annual: 2018-12-31
10-Q 2018-11-14 Quarter: 2018-09-30
10-Q 2018-08-14 Quarter: 2018-06-30
10-Q 2018-06-04 Quarter: 2018-03-31
10-K 2018-04-17 Annual: 2017-12-31
10-Q 2017-12-05 Quarter: 2017-09-30
10-Q 2017-08-18 Quarter: 2017-06-30
10-Q 2017-05-15 Quarter: 2017-03-31
10-K 2017-04-17 Annual: 2016-12-31
10-Q 2016-12-14 Quarter: 2016-09-30
10-Q 2016-08-09 Quarter: 2016-06-30
10-Q 2016-05-20 Quarter: 2016-03-31
10-K 2016-05-02 Annual: 2015-12-31
10-Q 2015-12-08 Quarter: 2015-09-30
10-Q 2015-08-14 Quarter: 2015-06-30
10-Q 2015-05-20 Quarter: 2015-03-31
10-K 2015-04-15 Annual: 2014-12-31
10-Q 2014-11-25 Quarter: 2014-09-30
10-Q 2014-08-19 Quarter: 2014-06-30
10-Q 2014-05-20 Quarter: 2014-03-31
10-K 2014-04-15 Annual: 2013-12-31
10-Q 2013-11-18 Quarter: 2013-09-30
10-Q 2013-08-14 Quarter: 2013-06-30
10-Q 2013-05-20 Quarter: 2013-03-31
10-K 2013-04-16 Annual: 2012-12-31
10-Q 2012-11-19 Quarter: 2012-09-30
10-Q 2012-08-20 Quarter: 2012-06-30
10-Q 2012-05-21 Quarter: 2012-03-31
10-Q 2012-02-21 Quarter: 2011-12-31
10-Q 2011-11-14 Quarter: 2011-09-30
10-K 2011-10-13 Annual: 2011-06-30
10-Q 2011-05-16 Quarter: 2011-03-31
10-Q 2011-02-14 Quarter: 2010-12-31
10-Q 2010-11-15 Quarter: 2010-09-30
10-K 2010-09-28 Annual: 2010-06-30
10-Q 2010-05-17 Quarter: 2010-03-31
10-Q 2010-02-16 Quarter: 2009-12-31
8-K 2019-12-19 Enter Agreement, Leave Agreement, Sale of Shares, Control, Officers, Regulation FD, Exhibits
8-K 2019-11-11 Leave Agreement, Enter Agreement, Off-BS Arrangement, Sale of Shares, Exhibits
8-K 2019-09-11 Regulation FD, Exhibits
8-K 2019-08-20 Regulation FD, Exhibits
8-K 2019-08-15 Enter Agreement, Sale of Shares, Exhibits
8-K 2019-07-02 Enter Agreement, Off-BS Arrangement, Sale of Shares, Exhibits
8-K 2019-05-01 Enter Agreement, Off-BS Arrangement, Sale of Shares, Exhibits
8-K 2019-04-24 Enter Agreement, Off-BS Arrangement, Sale of Shares, Officers, Other Events, Exhibits
8-K 2019-03-18 Enter Agreement, Off-BS Arrangement, Sale of Shares, Exhibits
8-K 2019-03-18 Regulation FD, Exhibits
8-K 2019-02-11 Enter Agreement, Off-BS Arrangement, Sale of Shares, Officers, Exhibits
8-K 2018-11-26 Enter Agreement, Sale of Shares, Officers, Regulation FD, Exhibits
8-K 2018-11-26
8-K 2018-10-17 Officers, Sale of Shares, Regulation FD, Other Events, Exhibits
8-K 2018-09-28 Officers, Regulation FD, Sale of Shares, Other Events, Exhibits
8-K 2018-08-09 Enter Agreement, Off-BS Arrangement, Sale of Shares, Regulation FD, Other Events, Exhibits
8-K 2018-08-09 Sale of Shares, Regulation FD, Other Events, Exhibits
8-K 2018-08-09 Enter Agreement, Leave Agreement, Sale of Shares, Officers, Regulation FD, Other Events, Exhibits
8-K 2018-07-05 Enter Agreement, Off-BS Arrangement, Sale of Shares, Officers, Regulation FD, Exhibits
8-K 2018-06-27 Enter Agreement, Sale of Shares, Regulation FD, Exhibits
8-K 2018-04-05 Enter Agreement, Regulation FD, Exhibits
TNTY 2019-09-30
Part I - Financial Information
Item 1. Financial Statements.
Note 1 - Description of Business
Note 2 - Summary of Significant Accounting Policies
Note 3 - Financial Condition and Going Concern
Note 4 - Related Party Transactions
Note 5 - Debt
Note 6 - Derivative Liabilities
Note 7 - Stockholders' Deficit
Note 8 - Stock Options
Note 9 - Stock Warrants
Note 10 - Commitments and Contingencies
Note 11 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 ex_164768.htm
EX-31.2 ex_164769.htm
EX-32.1 ex_164770.htm

True Nature Holding Earnings 2019-09-30

TNTY 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
ATMS 4 0 0 0 0 -0 -0 4 -17.4 -661%
GBPT 4 21 16 6 0 -7 -6 4 4% -0.7 -33%
GKIT 4 3 5 1 0 -0 -0 4 50% -112.9 -2%
OWCP 4 2 2 0 0 1 1 2 0% 3.9 27%
FIFG 4 0 1 0 0 -2 -2 4 0% -2.1 -479%
WIZP 4 3 2 -0 0 -3 -3 3 -0% -0.8 -115%
TNTY 4 0 2 0 0 -2 -2 4 -2.7 -701,080%
APRI 4 10 5 0 0 -42 -42 -5 0.1 -409%
ICTV 4 12 10 30 21 -6 -5 5 69% -1.0 -52%
ITOX 4 0 2 0 0 -2 -2 5 46% -2.4 -505%

10-Q 1 truenat20190930_10q.htm FORM 10-Q truenat20190930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 10-Q

 


 

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

 

For the quarterly period ended September 30, 2019

 

OR

 

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

 

For the transition period from ________________ to ________________

 

Commission File Number 000-53601

 

TRUE NATURE HOLDING, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

87-0496850

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

 

1355 Peachtree Street, Suite 1150

Atlanta, Georgia

 

30309

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (844) 383-8689

 

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

 

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

 

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

 

 

 

 

 

Non-accelerated filer  

(Do not check if a smaller reporting company)

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

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

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

N/A

 

N/A

 

N/A

 

As of November 11, 2019, 72,789,330 shares of the registrant’s common stock, $0.01 par value, were outstanding. 

 

 

 

 

 

Table of Contents

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

ITEM 1.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

 

1

 

 

 

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

26

 

 

 

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

30

 

 

 

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES.

 

30

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

 

 

 

ITEM 1.

LEGAL PROCEEDINGS.

 

32

 

 

 

 

 

 

ITEM 1A.

RISK FACTORS.

 

32

 

 

 

 

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

32

 

 

 

 

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

 

32

 

 

 

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES.

 

33

 

 

 

 

 

 

ITEM 5.

OTHER INFORMATION.

 

33

 

 

 

 

 

 

ITEM 6.

EXHIBITS.

 

33

 

 

 

 

 

 

SIGNATURES

 

34

 

 

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. 

FINANCIAL STATEMENTS.

 

TRUE NATURE HOLDING, INC.

Condensed Consolidated Balance Sheets

(unaudited)

 

   

September 30,

   

December 31,

 
   

2019

   

2018

 

ASSETS

               

Current assets

               

Cash and cash equivalents

  $ 851     $ 1,304  

Prepaid expenses

    -       2,500  

Total current assets

    851       3,804  

Total Assets

    851       3,804  
                 

LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY

               

Current liabilities

               
                 

Accounts payable

    757,169       794,466  

Accrued liabilities

    283,414       117,085  

Due to related parties

    169,355       13,948  

Accrued interest

    86,626       60,381  

Derivative liabilities

    794,756       -  

Notes payable

    -       30,000  

Convertible notes payable, net of discount of $255,872 and $86,520

    207,246       247,590  

Convertible note payable, in default

    122,166       196,270  

Note payable, related party - current portion

    198,000       75,000  

Total current liabilities

    2,618,732       1,534,740  
                 

Notes payable, related party - non current portion

    -       123,000  
                 

Total Liabilities

    2,618,732       1,657,740  
                 

Commitments and contingencies

    -       -  
                 

Stockholders' equity (deficit)

               
                 

Preferred stock, $0.01 par value, 100,000,000 shares authorized, no shares issued or outstanding as of September 30, 2019 and December 31, 2018

    -       -  

Common stock, $0.01 par value, 500,000,000 shares authorized, 49,868,462 and 31,598,236 shares issued and outstanding as of September 30, 2019 and December 31, 2018

    498,684       315,982  

Additional paid-in capital

    6,783,329       5,684,208  

Stock payable

    37,186       37,186  

Accumulated deficit

    (9,937,080

)

    (7,691,312

)

Total (deficiency in) stockholders' equity

    (2,617,881

)

    (1,653,936

)

                 

Total liabilities and stockholders' equity

  $ 851     $ 3,804  

 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

 

 

TRUE NATURE HOLDING, INC.

Unaudited Condensed Consolidated Statements of Operations

 

 

 

For the Three

 

 

For the Three

 

 

For the Nine

 

 

For the Nine

 

 

 

Months Ended

 

 

Months Ended

 

 

Months Ended

 

 

Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

433,322

 

 

 

565,259

 

 

 

880,823

 

 

 

894,564

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

433,322

 

 

 

565,259

 

 

 

880,823

 

 

 

894,564

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Operating Loss

 

 

(433,322

)

 

 

(565,259

)

 

 

(880,823

)

 

 

(894,564

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(832,417

)

 

 

(22,739

)

 

 

(1,157,318

)

 

 

(39,405

)

Loss on conversion of accounts payable

 

 

-

 

 

 

3,240

 

 

 

-

 

 

 

(32,860

)

Loss on valuation of derivative liabilities

   

(69,611

)

   

-

     

(69,611

)

   

-

 

Gain on settlement of accounts payable

 

 

50,366

 

 

 

-

 

 

 

50,366

 

 

 

-

 

Loss on legal settlement

 

 

-

 

 

 

-

 

 

 

(26,924

)

 

 

-

 

Loss on conversion of notes

 

 

(2,799

)

 

 

-

 

 

 

(161,458

)

 

 

-

 

Total other expense

 

 

(854,461

)

 

 

(19,499

)

 

 

(1,364,945

)

 

 

(72,265

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before provision for income taxes

 

 

(1,287,783

)

 

 

(584,758

)

 

 

(2,245,768

)

 

 

(966,829

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,287,783

)

 

 

(584,758

)

 

 

(2,245,768

)

 

 

(966,829

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic

 

$

(0.03

)

 

$

(0.02

)

 

$

(0.06

)

 

$

(0.04

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - diluted

 

$

(0.03

)

 

$

(0.02

)

 

$

(0.06

)

 

$

(0.04

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

43,360,914

 

 

 

25,094,466

 

 

 

36,446,415

 

 

 

23,228,812

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

 

43,360,914

 

 

 

25,094,466

 

 

 

36,446,415

 

 

 

23,228,812

 

 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

 

 

TRUE NATURE HOLDING, INC.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit

 

   

FOR THE THREE MONTHS ENDED SEPTEMBER 30

 
                                                 
   

Common Stock

           

Stock

   

Accumulated

         
   

Shares

   

Amount

   

APIC

   

Payable

   

Deficit

   

Total

 

Balance, June 30, 2018

    24,210,997     $ 242,110     $ 5,068,865     $ 62,786     $ (6,658,230

)

  $ (1,284,469

)

Stock issued for services

    3,405,098       34,051       278,092       (25,600

)

    -       286,543  

Stock issued as compensation

    450,000       4,500       23,750       12,850       -       41,100  

Stock issued for accounts payable

    931,901       9,319       67,732       -       -       77,051  

Discount on notes payable due to conversion feature

    -       -       9,000       -       -       9,000  

Imputed interest

    -       -       2,250       -       -       2,250  

Net loss for the period

    -       -       -       -       (584,758

)

    (584,758

)

Balance, September 30, 2018

    28,997,996     $ 289,980     $ 5,449,689     $ 50,036     $ (7,242,988

)

  $ (1,453,283

)

                                                 

Balance, June 30, 2019

    39,077,529     $ 390,774     $ 6,370,513     $ 37,186     $ (8,649,297

)

  $ (1,850,824

)

Stock issued to employees subject to vesting

    1,975,000       19,750       (7,520

)

    -       -       12,230  

Vesting of shares

    -       -       104,465       -       -       104,465  

Stock issued for conversion of note payable

    9,115,933       91,160       111,601       -       -       202,761  

Settlement of derivative liabilities

    -       -       203,730       -       -       203,730  

Cancellation

    (300,000

)

    (3,000

)

    3,000       -       -       -  

Imputed interest

    -       -       2,250       -       -       2,250  

Net loss for the period

    -       -       -       -       (1,287,783

)

    (1,287,783

)

Balance, September 30, 2019

    49,868,462     $ 498,684     $ 6,783,329     $ 37,186     $ (9,937,080

)

  $ (2,617,881

)

 

   

FOR THE NINE MONTHS ENDED SEPTEMBER 30

 
                                                 
   

Common Stock

           

Stock

   

Accumulated

         
   

Shares

   

Amount

   

APIC

   

Payable

   

Deficit

   

Total

 

Balance, December 31, 2017

    18,930,874     $ 189,309     $ 4,659,713     $ 39,886     $ (6,276,159

)

  $ (1,387,251

)

Stock issued for services

    6,510,726       65,107       483,161       (25,600

)

    -       522,668  

Stock issued as comp

    2,097,431       20,974       173,789       12,850       -       207,613  

Discount on notes payable

    -       -       9,000       -       -       9,000  

Stock issued for accounts payable

    1,458,965       14,590       117,276       -       -       131,866  

Stock to be issued

    -       -       -       22,900       -       22,900  

Imputed interest

    -       -       6,750       -       -       6,750  

Net loss for the period

    -       -       -       -       (966,829

)

    (966,829

)

Balance, September 30, 2018

    28,997,996     $ 289,980     $ 5,449,689     $ 50,036     $ (7,242,988

)

  $ (1,453,283

)

                                                 

Balance, December 31, 2018

    31,598,236     $ 315,982     $ 5,684,208     $ 37,186     $ (7,691,312

)

  $ (1,653,936

)

Stock issued for services

    200,000       2,000       15,480       -       -       17,480  

Stock issued for conversion of notes payable

    14,394,002       143,940       414,230       -       -       558,170  

Discount on notes payable due to conversion feature

    -       -       223,087       -       -       223,087  
Settlement of derivative liabilities     -       -       203,730       -       -       203,730  

Discount on notes payable due to warrants

    -       -       34,500       -       -       34,500  

Cancellation of shares

    (700,000

)

    (7,000

)

    7,000       -       -       -  

Stock to employees, subject to vesting

    2,975,000       29,750       (17,520

)

    -       -       12,230  

Stock in legal settlement

    1,401,224       14,012       87,016       -       -       101,028  

Vesting of shares

    -       -       124,848       -       -       124,848  

Imputed interest

    -       -       6,750       -       -       6,750  

Net loss for the period

    -       -       -       -       (2,245,768

)

    (2,245,768

)

Balance, September 30, 2019

    49,868,462     $ 498,684     $ 6,783,329     $ 37,186     $ (9,937,080

)

  $ (2,617,881

)

 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 

 

 

TRUE NATURE HOLDING, INC.

Unaudited Condensed Consolidated Statement of Cash Flows

 

   

For the

   

For the

 
   

Nine Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2019

   

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES

               

Net loss

  $ (2,245,768

)

  $ (966,829

)

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

               

Loss on conversion of notes payable to common stock

    161,458       -  

Loss on legal settlement

    26,924       -  

Gain on settlement of accounts payable

    (50,366

)

    -  

Loss on conversion of accrued expenses

    -       32,860  

Shares issued for extension of note payable

               

Imputed interest

    6,750       6,750  

Amortization of discount on notes payable

    603,861       1,529  

Derivative expense

    460,375       -  

Revaluation of derivative liabilities

    69,611       -  

Stock based compensation

    154,558       359,280  

Changes in assets and liabilities:

               

Prepaid expenses

    2,500       11,000  

Accounts payable

    18,069       361,917  

Accrued liabilities

    166,329       67,348  

Deferred revenue

    -       1,000  

Due to related parties

    150,407       (24,563

)

Accrued interest

    57,017       17,224  
                 

Net cash (used in) operating activities

    (418,275

)

    (132,484

)

                 

CASH FLOWS FROM FINANCING ACTIVITIES

               

Proceeds from notes payable, net of discount

    428,058       75,000  

Principal payments on notes payable

    (10,236

)

    -  

Advances from related parties

    -       66,594  
                 

Net cash provided by financing activities

    417,822       141,594  
                 

Net increase (decrease) in cash and cash equivalents

    (453

)

    9,110  
                 

Cash and cash equivalents at beginning of period

    1,304       -  
                 

Cash and cash equivalents at end of period

  $ 851     $ 9,110  
                 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

               

Interest paid

  $ 2,236     $ -  

Income taxes paid

  $ -     $ -  
                 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

               

Common stock issued for satisfaction of payables

  $ -     $ 501,907  

Consulting fees prepaid with note payable and stock

          $ 30,000  

Par value of shares returned for cancellation

  $ 7,000     $ -  

Stock issued for debt conversion

  $ 363,285     $ -  

Stock issued for legal settlement

  $ 74,104     $ -  

Discount due to warrants

  $ 34,500     $ -  

Beneficial conversion feature

  $ 223,087     $ -  

Debt issued to related party for settlement of accounts payable

  $ 5,000     $ -  

Settlement of derivative liabilities

  $ 203,730     $ -  

Discount on notes payable due to derivative liabilities

  $ 470,000     $ -  
Accrued interest converted to equity   $ 26,330       -  

Convertible debt issued for settlement of accounts payable

  $ -     $ 25,000  

 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

 

 

TRUE NATURE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 1 – Description of Business

 

Company Overview

 

True Nature Holding, Inc. (the “Company,” “we,” “us,” or “our”), previously known as Trunity Holdings, Inc., a Delaware corporation, became a publicly-traded company through a reverse triangular merger with Brain Tree International, Inc., a Utah corporation (“BTI”). Trunity Holdings, Inc. was the parent company of our educational business, named Trunity, Inc., which was formed on July 28, 2009 through the acquisition of certain intellectual property from its three founders. On December 9, 2015 the Company made a decision to restructure Trunity Holdings, Inc., having acquired Newco4pharmacy, LLC, a development stage business aimed at a roll-up of compounding pharmacy businesses. As a part of such restructuring, we competed a “spin out” transaction of our educational business line to our shareholders as of December 31, 2015.

 

Our business during 2018, which has continued into 2019 is focused in the area of software and solutions, predominantly in the healthcare sector, generally described as the healthcare information and technology (HCIT) market. We announced plans for a portfolio of health care technology companies focused on, but not limited to the following areas: population health management, POS/Data gathering solutions, electronic health records optimization, healthcare IT solutions, technology and artificial intelligence to improve outcomes, HIPAA security and augmentation using virtual care. We are developing, and seeking to acquire, integrate and deploy scalable technology solutions that reduce cost, improve care and increase efficiency. Our core product, a personal healthcare records application called SimpleHIPAA and SimpleHIPAA for Vets and Pets is in final testing with our initial client.

 

While this focus continues, we are also evaluating other applications, generally, but not exclusively in the healthcare area. We believe that new technologies such as voice recognition, virtual reality and robotics will all provide excellent vehicles to update traditional information management systems and will find quick acceptance in the healthcare field as well as other large and more traditional markets. We believe the need for compliance in other industries, similar to the need in healthcare for HIPAA and data security represents opportunity for growth over and above our healthcare efforts.

 

Within the healthcare arena one of the most active areas involves software that provides “interoperability”, the interfacing of systems and data so that information may be shared effectively. We believe there will be many opportunities in this application area, as older systems are integrated with newer, or more specialized systems, but we have not taken any actions in pursuit of these opportunities and no guarantee can be made if we enter this space, that we will be successful. These same needs exist in other market areas and we may consider applications for these markets as well as our healthcare efforts.

 

Note 2 – Summary of Significant Accounting Policies

 

Basis of Accounting – The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to interim financial reporting as prescribed by the Securities and Exchange Commission (the “SEC”). The results for the interim periods are not necessarily indicative of results for the entire year. These interim financial statements do not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”) and should be read in conjunction with the consolidated financial statements and notes thereto filed with the SEC in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. In the opinion of management, the unaudited Condensed Consolidated Financial Statements contained in this report include all known accruals and adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods reported herein. Any such adjustments are of a normal recurring nature.

 

Use of Estimates - The preparation of these financial statements requires our management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and related notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment.

 

Comprehensive Loss – Comprehensive income (loss) as defined includes all changes in equity during a period from non-owner sources. Items included in the Company’s comprehensive loss consist of unrealized gains (losses) on securities.

 

Cash -All highly liquid investments with a maturity date of three months or less at the date of purchase are cash equivalents.   

 

 

Revenue Recognition – On January 1, 2018, we adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition (Topic 605). Results for reporting periods beginning after January 1, 2018 are presented under Topic 606. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on January 1, 2018.

 

Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

 

We determine revenue recognition through the following steps:

 

identification of the contract, or contracts, with a customer;

identification of the performance obligations in the contract;

determination of the transaction price;

allocation of the transaction price to the performance obligations in the contract; and

recognition of revenue when, or as, we satisfy a performance obligation.

 

Stock-Based Compensation-We recognize the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation cost for stock options are estimated at the grant date based on each option’s fair-value as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model. Share-based compensation arrangements may include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.

 

Equity instruments issued to those other than employees are recorded on the basis of the fair value of the instruments. In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant.

 

Convertible Instruments-The Company reviews the terms of convertible debt and equity instruments to determine whether there are conversion features or embedded derivative instruments including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where the convertible instrument contains more than one embedded derivative instrument, including conversion options that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single compound instrument. Also, in connection with the sale of convertible debt and equity instruments, the Company may issue free standing warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. When convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for separately, the total proceeds allocated to the convertible host instruments are first allocated to the fair value of the bifurcated derivative instrument. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face amount. When the Company issues debt securities, which bear interest at rates that are lower than market rates, the Company recognizes a discount, which is offset against the carrying value of the debt. Such discount from the face value of the debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income. In addition, certain conversion features are recognized as beneficial conversion features to the extent the conversion price as defined in the convertible note is less than the closing stock price on the issuance of the convertible notes.

 

Derivative Financial Instruments- Derivatives are recorded on the condensed consolidated balance sheet at fair value. The conversion features of the convertible notes are embedded derivatives and are separately valued and accounted for on the consolidated balance sheet with changes in fair value recognized during the period of change as a separate component of other income/expense. Fair values for exchange-traded securities and derivatives are based on quoted market prices. The pricing model the Company uses for determining the fair value of its derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities.

 

 

The following assumptions were used for the valuation of the derivative liability related to the convertible notes that contain a derivative component during the three months ended September 30, 2019:

 

 

-

The stock prices of $0.0807 to $0.0290 in these periods would fluctuate with the Company projected volatility;

 

 

-

The projected volatility curve from an annualized analysis for each valuation period was based on the historical volatility of the Company and the term remaining for each note or warrant ranged from 129.7% through 318.2% at derivative treatment, issuance, conversion, exercise, and quarters ends. The Company continues to trade with high volatility;

 

 

-

The Holder would automatically convert the note at the maximum of 2 times the conversion price if the company was not in default.

 

 

-

The Holder would automatically convert the note before maturity if the registration was effective and the company was not in default. The Holder would automatically convert the note early based on ownership or trading volume limitations and the Company would redeem the unconverted balances at maturity.

 

 

-

A change of control and fundamental transaction would occur initially 0% of the time and increase monthly by 0% to a maximum of 0% – based on management being in control and no desire to sell the Company.

 

 

-

A reset event would adjust the Notes conversion price triggered by either a capital raise; stock issuance; settlement; or conversion/exercise. The reset events are projected to occur on 3 months following the date of valuation 12/31/19.

 

 

-

For the variable rate Notes (39% or 45% discount), the Holder would convert with effective discount rates of 43.49% to 48.55% (based on the lookback terms).

 

 

-

The Company would redeem the notes at maturity if the conversion value was less than the payment with penalties. During the period redemption is projected 0% of the time, increasing 0% per month to a maximum of 0%.

 

 

-

The cash flows are discounted to net present values using risk free rates. Discount rates were based on risk free rates in effect based on the remaining term.

 

 

-

An event of default would occur 10% of the time, increasing 0% per month to a maximum of 10%.

 

 

-

No Warrants expired nor were exercised in this period.

 

Common Stock Purchase Warrants-The Company accounts for common stock purchase warrants in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Accounting for Derivative Instruments and Hedging Activities. As is consistent with its handling of stock compensation and embedded derivative instruments, the Company’s cost for stock warrants is estimated at the grant date based on each warrant’s fair-value as calculated by the BSM option-pricing model value method for valuing the impact of the expense associated with these warrants.

 

Stockholders’ Equity-Shares of common stock issued for other than cash have been assigned amounts equivalent to the fair value of the service or assets received in exchange. Common stock share and per share amounts in these financial statements have been adjusted for the effects of a one for 101 reverse stock split that occurred in January 2016. 

 

Per Share Data-Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the year. Diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to warrants, options and convertible instruments.

 

The Company has excluded all common equivalent shares outstanding for warrants, options and convertible instruments to purchase common stock from the calculation of diluted net loss per share because all such securities are anti-dilutive for the periods presented. As of September 30, 2019, the Company had outstanding 1,425,000 warrants, 67,879 options, and 36,135,065 shares issuable pursuant to convertible debt which were excluded from the calculation of diluted net loss; as of December 31, 2018, the Company had outstanding 1,167,653 warrants and 67,879 options excluded from the calculation of diluted net loss.

 

 

Income Taxes- The Company accounts for income taxes under the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s condensed consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than possible enactments of changes in the tax laws or rates.

 

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has determined that a valuation allowance is needed due to recent taxable net operating losses, the sale of profitable divisions and the limited taxable income in the carry back periods. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain tax loss carryforwards, less any valuation allowance.  The following table reflects the deferred tax asset balance at September 30, 2019:

 

   

September 30, 2019

 

Deferred tax Asset

  $ 780,983  

Less: valuation allowance

    (780,983

)

Net deferred tax asset

  $ -  

 

The Company accounts for uncertain tax positions as required in that a position taken or expected to be taken in a tax return is recognized in the condensed consolidated financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. The Company does not have any material unrecognized tax benefits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as components of interest expense and other expense, respectively, in arriving at pretax income or loss. The Company does not have any interest and penalties accrued. The Company is generally no longer subject to U.S. federal, state, and local income tax examinations for the years before 2012.

 

Business Combinations- The Company accounts for business combinations by recognizing the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair values on the acquisition date. The purchase price allocation process requires management to make significant estimates and assumptions, especially with respect to intangible assets, estimated contingent consideration payments and pre-acquisition contingencies. Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to:

 

future expected cash flows from product sales, support agreements, consulting contracts, other customer contracts, and acquired developed technologies and patents; and

 

discount rates utilized in valuation estimates.

 

Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. Additionally, any change in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date, including changes from events after the acquisition date, such as changes in our estimates of relevant revenue or other targets, will be recognized in earnings in the period of the estimated fair value change. A change in fair value of the acquisition-related contingent consideration or the occurrence of events that cause results to differ from our estimates or assumptions could have a material effect on the condensed consolidated financial position, statements of operations or cash flows in the period of the change in the estimate.

 

Impairment of Long-Lived Assets-Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed would be separately presented in the condensed consolidated balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and are no longer depreciated. The assets and liabilities of a disposal group classified as held-for-sale would be presented separately in the appropriate asset and liability sections of the condensed consolidated balance sheet, if material. No impairment losses have been realized for the periods presented.

 

 

Financial Instruments and Fair Values-The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument. In determining fair value, we use various valuation methodologies and prioritize the use of observable inputs. We assess the inputs used to measure fair value using a three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market:

 

Level 1 – inputs include exchange quoted prices for identical instruments and are the most observable.

 

Level 2 – inputs include brokered and/or quoted prices for similar assets and observable inputs such as interest rates.

 

Level 3 – inputs include data not observable in the market and reflect management judgment about the assumptions market participants would use in pricing the asset or liability.

 

The use of observable and unobservable inputs and their significant in measuring fair value are reflected in our hierarchy assessment. The carrying amount of cash, prepaid assets, accounts payable and accrued liabilities approximates fair value due to the short-term maturities of these instruments. Because cash and cash equivalents are readily liquidated, management classifies these values as Level 1. The fair value of the debentures approximate their book value as the instruments are short-term in nature and contain market rates of interest. Because there is no ready market or observable transactions, management classifies the debentures as Level 3.

 

Recently Issued Accounting Standards-There are various other updates recently issued, most of which represent technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s condensed consolidated financial position, results of operations or cash flows.

 

Note 3 – Financial Condition and Going Concern

 

As of September 30, 2019, the Company had cash of $851, current liabilities of $2,618,732, and has incurred a loss from operations. True Nature Holding’s principal operation is the development and deployment of software and systems for the healthcare marketplace. The Company develops solutions in a) healthcare records, b) the sale of applications in the health and wellness area from 3rd parties in addition to its own developed products. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to execute its business plan.

 

As a result of these factors, there is substantial doubt about the ability of the Company to continue as a going concern. The Company’s continuance is dependent on raising capital and generating revenues sufficient to sustain operations. The Company believes that the necessary capital will be raised and has entered into discussions to do so with certain individuals and companies. However, as of the date of these condensed consolidated financial statements, no formal agreement exists.

 

The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts classified as liabilities that might be necessary should the Company be forced to take any such actions. 

 

Note 4 – Related Party Transactions

 

Nine months ended September 30, 2019:

 

On March 11, 2019, the Company issued 100,000 shares of common stock to its President as compensation and charged the fair value in the amount of $8,740 to operations.

 

On March 11, 2019, the Company issued 100,000 shares of common stock to a board member as compensation and charged the fair value in the amount of $8,740 to operations.

 

On July 29,2019, the Company cancelled 300,000 shares of common stock previously issued to its former President. The par value of these shares in the amount of $3,000 was charged to paid-in capital during the three months ended September 30, 2019.

 

On August 10, 2019, the Company issued 1,000,000 shares of common stock with a fair value of $60,000 to a board member pursuant to a director advisory agreement. The fair value of these shares will be recognized ratably over the vesting period; during the three months ended September 30, 2019, the amount of $37,054 was charged to operations in connection with these shares.

 

 

On August 10, 2019, the Company issued 775,000 shares of common stock with a fair value of $46,500 to a board member pursuant to a director advisory agreement. The fair value of these shares will be recognized ratably over the vesting period; during the three months ended September 30, 2019, the amount of $28,325 was charged to operations in connection with these shares.

 

On August 10, 2019, the Company issued 200,000 shares of common stock with a fair value of $12,000 to a board member pursuant to a director advisory agreement. The fair value of these shares will be recognized ratably over the vesting period; during the three months ended September 30, 2019, the amount of $12,000 was charged to operations in connection with these shares.

 

During the nine months ended September 30, 2019, the Company accrued the amount of $2,875 in connection with the vested portion of a common stock award granted to its President.

 

At September 30, 2019, the Company has the following amounts due to related parties:

 

 

Due to shareholders for consulting services, accounts payable paid on behalf of the Company, and accrued interest: $169,355

 

 

Note payable in the amount of $75,000 related to reclassification of accounts payable (see note 5, “July 2017 Note”)

 

 

Note payable in the amounts of $65,000 related to consulting services provided (see note 5, “Consulting Services Note”)

 

 

Note payable in the amounts of $58,000 related to accounts payable paid on behalf of the Company (see note 5, “Trade Payables Note”)

 

Nine months ended September 30, 2018:

 

On January 29, 2018, the Company converted outstanding accounts payable due to an investor in the amount of $54,815 for 527,064 restricted shares of the Company’s common stock.  The cost to the Company for this issuance is $54,815, based on the closing price on the date of issuance.  As the conversion amount equals the share value, no gain or loss was recorded.

 

On January 29, 2018, the Company converted accrued officer compensation in the amount of $93,333 into 897,432 restricted shares of the Company’s common stock.  The cost to the Company for this issuance is $93,333, based on the closing price on the date of issuance.  As the conversion amount equals the share value, no gain or loss was recorded.

 

On April 23, 2018, the Company issued 600,000 shares of common stock with a value of $48,000 to an investor, and an additional 600,000 shares of common stock with a value of $48,000 to a not for profit entity at the request of the investor due to conversion of $96,000 of accounts payable, no gain or loss was recognized due to stock price matching the amount converted.

 

On April 23, 2018, the Company issued 500,000 shares of common stock to its President, subject to certain vesting conditions:  (i) 100,000 shares vest when the President has been employed 90 days from the effective date of the employment agreement; (ii) 100,000 shares vest when the President has been employed one year from the effective date of the employment agreement; (iii) 100,000 shares vest when the President has been employed two years from the effective date of the employment agreement; (iv) 100,000 shares vest when the Company completes a capital raise of $2,000,000; (v) 100,000 shares vest when the Company reports $20,000,000 in gross revenue.  The Company valued the shares at the fair market value of $0.10 per share, or a total value of $50,000. During the three months ended September 30, 2018, the total amount of $13,740 was charged to operations pursuant to the various vesting conditions. On September 18, 2018, the Company accepted the resignation of its President, and 400,000 of these shares were forfeited. 

 

On June 13, 2018, the Company issued 100,000 shares of common stock with a fair value of $8,380 to its President as a bonus.  

 

On June 14, 2018, the Company issued 100,000 shares of common stock with a fair value of $9,000 to its chairman as a bonus.  Also, on June 14, 2018, the Company issued 100,000 shares of common stock with a fair value of $9,000 to a board member as a bonus.

 

 

On June 14, 2018, the Company issued to an investor 1,100,000 restricted shares of the Company’s common stock with a fair value of $95,700 for reimbursement of $60,000 of accrued expenses paid on behalf of the Company and for services provided.  The Company recognized a loss on conversion of $35,700 due to share price exceeding the value of the stock granted.

 

The Company accrued officer’s compensation during the nine months ended September 30, 2018 in the amount of $50,000 and imputed interest expense of $4,500 on a note payable to a related party in the amount of $75,000 (see note 5).

 

On July 24, 2018, the Company issued 312,499 shares of common stock with a fair value of $25,000 to its President for salary.

 

On July 24, 2018, the Company issued 369,500 shares of common stock with a fair value of $29,560 to its Chief Operating Officer for accrued salary.

 

On August 14, 2018, the Company issued to an investor 249,902 restricted shares of the Company’s common stock with a fair value of $22,491 for reimbursement of $22,491 of accrued expenses paid on behalf of the Company and for services provided. 

 

On August 14, 2018, the Company issued to an investor 2,250,098 restricted shares of the Company’s common stock with a fair value of $202,509 as compensation for consulting services provided.  The Company also accrued $58,000 for additional consulting services provided by the investor.  

 

On September 24, 2018, the Company issued 100,000 shares of common stock with a fair value of $13,000 to each of two board members for services provided (a total of 200,000 shares of common with an aggregate fair value of $26,000).

 

Note 5 – Debt

 

March 2016 Convertible Note A

 

On March 18, 2016, the Company issued a 12% Convertible Promissory Note (the “Convertible Note A”) in the principal amount of $60,000 to a lender. Upon issuance of the Convertible Note A, the lender was awarded 15,000 restricted common stock as an origination fee which includes piggy-back registration rights. On September 19, 2016, the Company issued the lender an additional 15,000 restricted common stock at a price of $0.30 per share to extend the term of the loan agreement indefinitely. The cost to the Company was $4,050 in interest expense.  On August 10, 2017, the Company issued 25,000 shares of common stock with a fair value of $3,750 for accrued interest through August 1, 2017 in the amount of $7,860.  In April 2018, the Company issued 75,000 shares of common stock with a value of $7,500 as consideration for an extension of the term of the loan to July 1, 2018, and on August 13, 2018, the Company issued an additional 75,000 shares of common stock with a value of $6,750 for an extension of the term of the loan to October 31, 2018. During the nine months ended September 30, 2019, the lender converted principal in the amount of $15,000 into 120,000 shares of common stock. The Company recorded a loss in the amount of $13,867 on this conversion. The Company accrued interest in the amount of $4,261 on this note during the nine months ended September 30, 2019. At September 30, 2019, the principal amount of the March 2016 Convertible Note A was $45,000 and accrued interest was $5,740. 

 

Pursuant to the terms of the Convertible Note A, the Company is obligated to pay monthly installments of not less than $1,000 the first of each month commencing the month following the execution of the Convertible Note A until its maturity on September 16, 2016 at which time the Company was obligated to repay the full principal amount of the Convertible Note A. The Convertible Note A is convertible by the holder at any time into shares of the Company’s common stock at price of $1.00 per share, and throughout the duration of the note, the holder has the right to participate in any financing the Company may engage in upon the same terms and conditions as all other investors. The Company allocated the face value of the Convertible Note A to the shares and the note based on relative fair values, and the amount allocated to the shares of $18,750 was recorded as a discount against the note.

 

The beneficial conversion feature of $9,375 was recorded as a debt discount with an offsetting entry to additional paid-in capital decreasing the note payable and increasing debt discount. The debt discount is being amortized to interest expense over the term of the debt. For the year ended December 31, 2016, debt discount amortization related to the Convertible Note A was $28,125.  There was no amortization of the discount during the nine months ended September 30, 2019.

 

 

August 2014 Convertible Debentures (Series C)

 

As part of the restructuring all debentures issued by Trunity Holdings, Inc., to fund the former, educational business were eligible to participate in a debt conversion; however, one debenture holder that was issued a Series C Convertible Debenture (the “Series C Debenture”) in August 2014 with an aggregate face value of $100,000 in exchange for the cancellation of Series B Convertible Debentures with a carrying value of $110,833 did not convert such debenture. The Series C Debenture accrues interest at an annual rate of 10%, matured November 2015, and is convertible into our common stock at a conversion rate of $20.20 per share. The holders of the Series C Debenture also received five-year warrants to acquire up to 4,950 shares post-split of common stock for an exercise price of $20.20 per share. The former educational business allocated the face value of the Series C Debenture to the warrants and the debentures based on its relative fair values, and allocated to the warrants, which was recorded as a discount against the Series C Debenture, with an offsetting entry to additional paid-in capital. The discount was fully expensed upon execution of the new debentures as debt extinguishment costs within discontinued operations. The Company accrued interest in the amount of $8,328 on this note during the nine months ended September 30, 2019. As of September 30, 2019, the carrying value of this Series C Debenture was $110,833 and accrued interest expense was $54,915. The Series C Debenture is currently in default.

 

November 2014 Convertible Debentures (Series D)

 

As part of the restructuring all debentures issued by Trunity Holdings, Inc., to fund the former, educational business were eligible to participate in a debt conversion; however, one debenture holder that was issued a Series D Convertible Debenture (the “Series D Debenture”) in November 2014 with an aggregate face value of $10,000 in exchange for the cancellation of Series B Convertible Debenture with a carrying value of $11,333 did not participate in the debt conversion restructuring. The Series D Debenture accrues interest at an annual rate of 12%, matured November 2015, and is convertible into our common stock at a conversion rate of $16.67 per share. The holders of the Series D Debenture also received five-year warrants to acquire up to 495 shares of common stock for an exercise price of $20.20 per share on a post-split basis. The former educational business allocated the face value of the Series D Debenture to the warrants and the debentures based on their relative fair values, and allocated to the warrants, which was recorded as a discount against the Series D Debenture, with an offsetting entry to additional paid-in capital. The discount was fully expensed upon execution of the new debentures as debt extinguishment costs within discontinued operations. The Company accrued interest in the amount of $1,022 on this note during the nine months ended September 30, 2019. As of September 30, 2019, the carrying value of the Series D Debenture was $11,333 and accrued interest was $6,683.   The Series D Debenture is currently in default.

 

Short Term Loan

 

As a result of the acquisition of P3 Compounding of Georgia, LLC (“P3”) the Company had a short-term convertible note with a loan agency in the principal amount of $52,000 for the purchase of future sales and credit card receivables of P3. Under the terms of the receivable purchase agreement, the Company purchased an advance of $50,000 plus $2,000 for origination costs with a 10.5% daily interest rate to be repaid over 160 days at a repayment amount of $451.75 per day. The origination fee and interest were recorded as debt discount on the date of issuance in the amount of $22,280 and $22,280 was amortized during the year ending December 31, 2016. During the nine months ended September 30, 2019, principal in the amount of $74,104 was converted into 1,401,224 shares of common stock; a loss in the amount of $16,955 was recorded on this transaction. The principal balance due under this note was $0 at September 30, 2019.

 

July 2017 Note

 

On July 10, 2017, the Company negotiated the reclassification of $75,000 in accounts payable to a loan payable (the “July 2017 Note”).  The July 2017 Note is due no later than 90 days after the receipt of a minimum of $1,000,000 of funding. The July 2017 Note bears no interest; however, if it is not paid by the due date, interest will accrue at the rate of 12% per year. During the nine months ended September 30, 2019, the Company imputed interest in the amount of $6,750 on the July 2017 Note.

 

July 2018 RU Promissory Note

 

On July 26, 2018, the Company entered into an agreement with Resources Unlimited NW LLC (“RU”) pursuant to which RU provides business development services to the Company for a period of six months. As compensation for these services, the Company issued RU 250,000 shares of common stock with a fair value of $20,000 and a six month note payable in the amount of $30,000 (the “RU Note”). The RU Note bears interest at the rate of 12% per year; principal and interest are due on January 26, 2019. During the nine months ended September 30, 2019, the Company accrued interest in the amount of $1,776 on the July 2018 RU Promissory Note. During the nine months ended September 30, 2019, the Company converted principal and accrued in the amounts of $30,000 and $3,344, respectively, into an aggregate of 400,000 shares of common stock; a loss in the amount of $2,637 was recorded on this transaction. The principal balance due under this note was $0 at September 30, 2019.

 

 

Power Up Note 1

 

On July 5, 2018, the Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd. (“Power Up”) pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 1”) in the aggregate principal amount of $38,000. The Power Up Note entitles the holder to 12% interest per annum and matures on April 15, 2019.  Under the Power Up Note 1, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 1 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 1, at a price equal to 61% of the average of the lowest two trading prices during the 15 trading day period ending on the last complete trading date prior to the date of conversion, but no lower than $0.00006 (fixed price floor), provided, however, that Power Up may not convert the Power Up Note 1 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. On January 1, 2019, the Power Up Note 1 became convertible, and the Company recorded a discount in connection with the beneficial conversion feature in the amount of $9,032; $9,032 of this amount was charged to interest expense during the nine months ended September 30, 2019. If the Company prepays the Power Up Note 1 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note 1, then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Power Up Note 1, there shall be no further right of prepayment. The Company recorded an original issue discount in the amount of $3,000 in connection with the Power Up Note 1; $2,077 of this amount was charged to interest during the year ended nine months ended September 30, 2019. During the year ended December 31, 2018, the Company paid principal and accrued interest in the amount of $27,764 and $2,236, respectively, on the Power Up Note 1. The Company accrued interest in the amount of $58 on this note during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company paid the remaining principal and accrued interest in the amount of $10,236 and $58, respectively, along with a prepayment penalty in the amount of $16,072 on the Power Up Note 1; The principal balance due under this note was $0 at September 30, 2019 as this note has been fully satisfied.

 

Power Up Note 2 

 

On August 10, 2018, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 2”) in the aggregate principal amount of $33,000. The Power Up Note 2 entitles the holder to 12% interest per annum and matures on May 14, 2019. Under the Power Up Note 2, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 2 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 2, at a price equal to 61% of the average of the lowest two trading prices during the 15 trading day period ending on the last complete trading date prior to the date of conversion, but no lower than $0.00006 (fixed price floor), provided, however, that Power Up may not convert the Power Up Note 2 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. On February 5, 2019, the Power Up Note 2 became convertible; there was no discount associated with the conversion feature of Power Up Note 2. If the Company prepays the Power Up Note 2 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note 2, then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Power Up Note, there shall be no further right of prepayment. The Company recorded an original issue discount in the amount of $3,000 in connection with the Power Up Note 2; $3,000 was amortized to interest expense during the nine months ended September 30, 2019. During the nine months ended September 30, 2019 the Company also recorded a discount to the Power Up Note 2 in the amount of $32,500 related to a beneficial conversion feature; this amount was charged to operations during the nine months ended September 30, 2019.  During the nine months ended September 30 2019, principal and accrued interest in the amount of $33,000 and $1,980, respectively, were converted into a total of 624,993 shares of the Company’s common stock. The Company recognized a loss in the amount of $34,101 on these conversions which was charged to operations during the nine months ended September 30, 2019. The Company accrued interest in the amount of $418 on the Power Up Note 2 during the nine months ended September 30, 2019. The principal balance due under this note was $0 at September 30, 2019 as this note has been fully satisfied.

 

 

Power Up Note 3

 

On September 18, 2018, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 3”) in the aggregate principal amount of $38,000. The Power Up Note 3 entitles the holder to 12% interest per annum and matured on June 30, 2019.  Under the Power Up Note 3, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 3 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 3, at a price equal to 61% of the average of the lowest two trading prices during the 20 trading day period ending on the last complete trading date prior to the date of conversion, but no lower than $0.00006 (fixed price floor), provided, however, that Power Up may not convert the Power Up Note 3 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. On March 17, 2019, the Power Up Note 3 became convertible, and the Company recorded a discount in connection with the beneficial conversion feature in the amount of $38,000; $38,000 of this amount was charged to interest expense during the nine months ended September 30, 2019. If the Company prepays the Power Up Note 3 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note 3, then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Power Up Note 3, there shall be no further right of prepayment. The Company recorded an original issue discount in the amount of $3,000 in connection with the Power Up Note 3; $3,000 was amortized to interest expense during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, principal and accrued interest in the amount of $38,000 and $2,280, respectively, were converted into a total of 1,173,632 shares of the Company’s common stock. The Company recognized a loss in the amount of $45,724 on these conversions which was charged to operations during the nine months ended September 30, 2019. The Company accrued interest in the amount of $1,592 on Power Up Note 3 during the nine months ended September 30, 2019. The principal balance under this note was $0 at September 30, 2019 as this note has been fully satisfied.

 

Power Up Note 4

 

On November 9, 2018, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 4”) in the aggregate principal amount of $33,000. The Power Up Note 4 entitles the holder to 12% interest per annum and matures on August 31, 2019.  Under the Power Up Note 4, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 4 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 4, at a price equal to the higher of the variable conversion price or $0.00006 per share.  The variable conversion price  shall mean 61% of the average of the lowest two trading prices during the 20 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Power Up may not convert the Power Up Note 4 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. On May 8, 2019, the Power Up Note 4 became convertible, and the Company recorded a discount in connection with the beneficial conversion feature in the amount of $33,000; $33,000 of this amount was charged to interest expense during the nine months ended September 30, 2019. If the Company prepays the Power Up Note 3 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note 3, then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Power Up Note 4, there shall be no further right of prepayment. The Company recorded an original issue discount in the amount of $3,000 in connection with the Power Up Note 4; $3,000 was amortized to interest expense during the nine months ended September 30, 2019. The Company accrued interest in the amount of $976 on Power Up Note 4 during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, principal and accrued interest in the amount of $33,000 and $1,980, respectively, were converted into a total of 1,619,444 shares of the Company’s common stock. The Company recognized a loss in the amount of $63,443 on these conversions which was charged to operations during the nine months ended September 30, 2019. The principal balance under this note was $0 at September 30, 2019 as this note has been fully satisfied.

 

 

Auctus Note

 

On November 26, 2018, the Company entered into a Securities Purchase Agreement with Auctus Fund, LLC (“Auctus”) pursuant to which Auctus agreed to purchase a convertible promissory note (the “Auctus Note”) in the principal amount of $125,000. The Auctus Note entitles the holder to 12% interest per annum and matures on August 26, 2019.  Pursuant to the terms of the note, the interest rate was raised to 24% effective August 27, 2019, on the portion of principal that had not been paid by the due date of the note. Under the Auctus Note, Auctus may convert all or a portion of the outstanding principal of the Auctus Note into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Auctus Note, at a price equal to the higher of the variable conversion price or $0.00003 per share.  The variable conversion price shall mean 55% of the lowest trading price during the 25 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Auctus may not convert the Auctus Note to the extent that such conversion would result in beneficial ownership by Auctus and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Auctus Note within 90 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 135%; if such prepayment is made between the 91st day and the 180th day after the issuance of the Auctus Note, then such redemption premium is 150%. After the 180th day following the issuance of the Auctus Note there shall be no further right of prepayment. In connection with the Auctus Note, the Company issued five-year warrants to purchase 625,000 shares of the Company’s common stock at a price of $0.10 per share. The Company valued these warrants at $39,595, and recorded this amount as a discount to the Auctus Note; $39,595 of this amount was amortized to interest expense during the nine months ended September 30, 2019. On May 25, 2019, the Auctus Note became convertible, and the Company recorded a discount in connection with the beneficial conversion feature in the amount of $93,291; $93,291 of this amount was charged to interest expense during the nine months ended September 30, 2019. The Company also recorded an original issue discount in the amount of $13,500 in connection with the Auctus Note; $13,500 was amortized to interest expense during the nine months ended September 30, 2019. The Company accrued interest in the amount of $10,685 on the Auctus Note during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company determined that a derivative liability existed in connection with the variable rate conversion feature of the Auctus Note. The derivative liability related to the conversion feature was valued at $153,405, and the derivative liability related to the warrants was valued at $39,595; these amounts were charged to operations during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, principal and accrued interest in the amount of $56,587 and $11,048, respectively, along with fees in the amount of $1,000, were converted into a total of 2,600,000 shares of the Company’s common stock. The Company recognized a loss in the amount of $29,670 on these conversions which was charged to operations during the nine months ended September 30, 2019. The remaining principal balance under this note was $68,413 at September 30, 2019.

 

Crown Bridge Note 1

 

On December 19, 2018, the Company entered into a Securities Purchase Agreement with Crown Bridge Partners, LLC (“Crown Bridge”) pursuant to which Crown Bridge agreed to purchase a convertible promissory note (the “Crown Bridge Note 1”) in the principal amount of $40,000. The Crown Bridge Note 1 entitles the holder to 12% interest per annum and matures on September 19, 2019. Pursuant to the terms of the note, the interest rate was raised to 24% effective September 20, 2019, on the portion of principal that was not paid by the due date of the note. Under the Crown Bridge Note 1, Crown Bridge may convert all or a portion of the outstanding principal of the Crown Bridge Note 1 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Crown Bridge Note 1, at a price equal to the higher of the variable conversion price or $0.00006 per share.  The variable conversion price  shall mean 55% of the lowest trading price during the 25 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Crown Bridge may not convert the Crown Bridge Note 1 to the extent that such conversion would result in beneficial ownership by Crown Bridge and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Crown Bridge Note 1 within 90 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 135%; if such prepayment is made between the 91st day and the 180th day after the issuance of the Crown Bridge Note 1, then such redemption premium is 140%. After the 180th day following the issuance of the Crown Bridge Note 1, there shall be no further right of prepayment. In connection with the Crown Bridge Note 1, the Company issued five-year warrants to purchase 400,000 shares of the Company’s common stock at a price of $0.10 per share. The Company valued these warrants at $34,500 and recorded this amount as a discount to the Crown Bridge Note 1; $34,500 of this amount was amortized to interest expense during the nine months ended September 30, 2019. On June 17, 2019, the Crown Bridge Note 1 became convertible, and the Company recorded a discount in connection with the beneficial conversion feature in the amount of $22,039; $22,039 of this amount was charged to interest expense during the nine months ended September 30, 2019. The Company also recorded an original issue discount in the amount of $5,500 in connection with the Crown Bridge Note 1; $5,500 was amortized to interest expense during the nine months ended September 30, 2019. The Company accrued interest in the amount of $3,127 on the Crown Bridge Note 1 during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, principal in the amount of $19,295 and fees in the amount of $500 were converted into a total of 700,000 shares of the Company’s common stock. The Company recognized a loss in the amount of $7,694 on this conversion which was charged to operations during the nine months ended September 30, 2019. On July 1, 2019, the Company determined that a derivative liability with a fair value of $44,325 existed in connection with the beneficial conversion feature of the Crown Bridge Note 1 and charged this amount to interest expense during the nine months ended September 30, 2019. The remaining principal balance under this note was $20,705 at September 30, 2019.

 

 

Consulting Services Note

 

On December 31, 2018, the Company entered into a note payable agreement with an investor for consulting services performed on behalf of the Company in the amount of $65,000 (the “Consulting Services Note”). The Consulting Services Note matures on March 21, 2020, and bears interest at the rate of 12% per annum. The Company recorded $5,834 in interest on the Consulting Services Note during the nine months ended September 30, 2019. The principal balance under this note was $65,000 at September 30, 2019.

 

Trade Payables Note

  

On December 31, 2018, the Company entered into a note payable agreement with an investor for payments of trade accounts payable made by the investor on behalf of the Company in the amount of $58,000 (the “Trade Payables Note”). The Trade Payables Note matures on March 21, 2020, and bears interest at the rate of 12% per annum. The Company recorded $5,205 in interest on the Trade Payable Note during the nine months ended September 30, 2019. The principal balance under this note was $58,000 at September 30, 2019.

 

Power Up Note 5

 

On January 2, 2019, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 5”) in the aggregate principal amount of $53,000. The Power Up Note 5 entitles the holder to 12% interest per annum and matures on October 31, 2019.  Under the Power Up Note 5, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 5 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 5, at a price equal to the higher of the variable conversion price or $0.00006 per share. The variable conversion price  shall mean 61% of the average of the lowest two trading prices during the 20 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Power Up may not convert the Power Up Note 5 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Power Up Note 5 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note 6, then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Power Up Note 5, there shall be no further right of prepayment. The Company recorded an original issue discount in the amount of $3,000 in connection with the Power Up Note 5; $3,000 was amortized to interest expense during the nine months ended September 30, 2019. On July 1, 2019, the Power Up Note 5 became convertible, and the Company recorded a discount in connection with the beneficial conversion feature in the amount of $50,000; $50,000 of this amount was charged to interest expense during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, principal and accrued interest in the amount of $53,000 and $3,180, respectively, were converted into a total of 1,488,098 shares of the Company’s common stock. The Company recognized no gain or loss in connection with these conversions as they were made pursuant to the terms of the original agreement. The Company accrued interest in the amount of $3,289 on the Power Up Note 5 during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company determined that a derivative liability in the amount of $53,681 existed in connection with the variable rate conversion feature of the Power Up Note 5. $53,000 of this amount was charged to discount on the Power Up Note 5, and $681 was charged to interest expense. $53,000 of the discount was charged to operations during the nine months ended September 30, 2019. The principal balance under this note was $0 at September 30, 2019 as this note has been fully satisfied.

 

 

Power Up Note 6

 

On February 11, 2019, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 6”) in the aggregate principal amount of $48,000. The Power Up Note 6 entitles the holder to 12% interest per annum and matures on November 30, 2019.  Under the Power Up Note 6, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 6 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 6, at a price equal to the higher of the variable conversion price or $0.00006 per share.  The variable conversion price shall mean 61% of the average of the lowest two trading prices during the 20 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Power Up may not convert the Power Up Note 6 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Power Up Note 6 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note 6, then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Power Up Note 6, there shall be no further right of prepayment. The Company recorded an original issue discount in the amount of $3,000 in connection with the Power Up Note 6; $3,000 was amortized to interest expense during the nine months ended September 30, 2019. On August 10, 2019, the Power Up Note 6 became convertible, and the Company recorded a discount in connection with the beneficial conversion feature in the amount of $45,000; $45,000 of this amount was charged to interest expense during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, principal and accrued interest in the amount of $48,000 and $2,880, respectively, were converted into a total of 2,106,210 shares of the Company’s common stock. The Company recognized no gain or loss in connection with these conversions as they were made pursuant to the terms of the original agreement. The Company accrued interest on the Power Up Note 6 in the amount of $2,998 during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company determined that a derivative liability in the amount of $48,844 existed in connection with the variable rate conversion feature of the Power Up Note 6. $48,000 of this amount was charged to discount on the Power Up Note 6, and $844 was charged to interest expense. $48,000 of the discount was charged to operations during the nine months ended September 30, 2019. The principal balance under this note was $0 at September 30, 2019 as this note has been fully satisfied.

 

Crown Bridge Note 2

 

On March 4, 2019, the Company entered into a Securities Purchase Agreement with Crown Bridge Partners, LLC (“Crown Bridge”) pursuant to which Crown Bridge agreed to purchase a convertible promissory note (the “Crown Bridge Note 2”) in the principal amount of $40,000. The Crown Bridge Note 2 entitles the holder to 12% interest per annum and matures on December 4, 2019.  Under the Crown Bridge Note 2, Crown Bridge may convert all or a portion of the outstanding principal of the Crown Bridge Note 2 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Crown Bridge Note 2, at a price equal to the higher of the variable conversion price or $0.00004 per share.  The variable conversion price  shall mean 55% of the lowest trading price during the 25 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Crown Bridge may not convert the Crown Bridge Note 2 to the extent that such conversion would result in beneficial ownership by Crown Bridge and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Crown Bridge Note 2 within 90 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 135%; if such prepayment is made between the 91st day and the 180th day after the issuance of the Crown Bridge Note 2, then such redemption premium is 150%. After the 180th day following the issuance of the Crown Bridge Note 2, there shall be no further right of prepayment. In connection with the Crown Bridge Note 2, the Company issued five-year warrants to purchase 400,000 shares of the Company’s common stock at a price of $0.10 per share. The Company valued these warrants at $34,500 and recorded this amount as a discount to the Crown Bridge Note 2; $26,346 of this amount was amortized to interest expense during the nine months ended September 30, 2019. On August 31, 2019, the Crown Bridge Note 2 became convertible, and the Company recorded a discount in connection with the beneficial conversion feature in the amount of $3,053; $960 of this amount was charged to interest expense during the nine months ended September 30, 2019. The Company also recorded an original issue discount in the amount of $5,500 in connection with the Crown Bridge Note 2; $5,500 of this amount was amortized to interest expense during the nine months ended September 30, 2019. The Company accrued interest expense in the amount of $3,971 on the Crown Bridge Note 2 during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company determined that a derivative liability in the amount of $53,681 existed in connection with the variable rate conversion feature of the Crown Bridge Note 2. $53,000 of this amount was charged to discount on the Crown Bridge Note 2, and $15,863 was charged to interest expense. $17,069 of the discount was charged to operations during the nine months ended September 30, 2019. The remaining principal balance under this note was $40,000 at September 30, 2019.

 

 

Power Up Note 7

 

On March 18, 2019, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 7”) in the aggregate principal amount of $43,000. The Power Up Note 7 entitles the holder to 12% interest per annum and matures on January 30, 2020.  Under the Power Up Note 7, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 7 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 7, at a price equal to the higher of the variable conversion price or $0.00006 per share.  The variable conversion price  shall mean 61% of the average of the lowest two trading prices during the 20 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Power Up may not convert the Power Up Note 7 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Power Up Note 7 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note , then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Power Up Note 7, there shall be no further right of prepayment. The Company recorded an original issue discount in the amount of $3,000 in connection with the Power Up Note 7; $3,000 was amortized to interest expense during the nine months needed September 30, 2019. On September 14, 2019, the Power Up Note 7 became convertible, and the Company recorded a discount in connection with the beneficial conversion feature in the amount of $40,000; $40,000 of this amount was charged to interest expense during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, principal and accrued interest in the amount of $43,000 and $2,580, respectively, were converted into a total of 3,561,625 shares of the Company’s common stock. The Company recognized a loss in the amount of $20 in connection with these conversions. The Company accrued interest in the amount of $2,675 on the Power Up Note 7 during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company determined that a derivative liability in the amount of $44,139 existed in connection with the variable rate conversion feature of the Power Up Note 7. $43,000 of this amount was charged to discount on the Power Up Note 7, and $1,139 was charged to interest expense. $43,000 of the discount was charged to operations during the nine months ended September 30, 2019. The principal balance under this note was $0 at September 30, 2019 as this note has been fully satisfied.

 

Power Up Note 8

 

On April 1, 2019, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 8”) in the aggregate principal amount of $53,000. The Power Up Note 8 entitles the holder to 12% interest per annum and matures on January 30, 2020.  Under the Power Up Note 8, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 8 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 8, at a price equal to the higher of the variable conversion price or $0.00006 per share.  The variable conversion price  shall mean 61% of the average of the lowest two trading prices during the 20 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Power Up may not convert the Power Up Note 8 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Power Up Note 8 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note 8, then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 1405. After the 180th day following the issuance of the Power Up Note 8, there shall be no further right of prepayment. The Company recorded an original issue discount in the amount of $3,000 in connection with the Power Up Note 8; $1,815 was amortized to interest expense during the nine months needed September 30, 2019. On September 23, 2019, the Power Up Note 8 became convertible, and the Company recorded a discount in connection with the beneficial conversion feature in the amount of $50,000; $2,716 of this amount was charged to interest expense during the nine months ended September 30, 2019. The Company accrued interest in the amount of $3,089 on the Power Up Note 8 during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company determined that a derivative liability in the amount of $54,404 existed in connection with the variable rate conversion feature of the Power Up Note 8. $53,000 of this amount was charged to discount on the Power Up Note 8, and $1,404 was charged to interest expense. $14,324 of the discount was charged to operations during the nine months ended September 30, 2019. The principal balance under this note was $53,000 at September 30, 2019.

 

 

Power Up Note 9

 

On May 2, 2019, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 9”) in the aggregate principal amount of $33,000. The Power Up Note 9 entitles the holder to 12% interest per annum and matures on February 28, 2020.  Under the Power Up Note 9, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 9 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 9, at a price equal to the higher of the variable conversion price or $0.00006 per share.  The variable conversion price  shall mean 61% of the average of the lowest two trading prices during the 20 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Power Up may not convert the Power Up Note 9 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Power Up Note 9 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note 9, then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Power Up Note 9, there shall be no further right of prepayment. The Company recorded an original issue discount in the amount of $3,000 in connection with the Power Up Note 9; $911 was amortized to interest expense during the nine months needed September 30, 2019. The Company accrued interest in the amount of $1,660 on the Power Up Note 9 during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company determined that a derivative liability in the amount of $34,196 existed in connection with the variable rate conversion feature of the Power Up Note 9. $33,000 of this amount was charged to discount on the Power Up Note 9, and $1,196 was charged to interest expense. $7,445 of the discount was charged to operations during the nine months ended September 30, 2019. The principal balance under this note was $33,000 at September 2019.

 

BHP Note

 

On June 4, 2019, the Company entered into a securities purchase agreement with BHP Capital NY, Inc., a New York corporation (“BHP”), pursuant to which BHP agreed to purchase a Convertible Promissory Note (the “BHP Note”) in the principal amount of $38,500.   The BHP Note the holder to 10% interest per annum and matures on March 4, 2020.  In the event the Company prepays the BHP Note beginning on the issuance date through the 180th day following the issuance date, the Company must pay BHP all of the outstanding principal and interest due plus a cash redemption premium ranging from 135% to 150%. After the 180th day following the issuance date, there is no further right of prepayment by the Company. BHP has no right of conversion under the BHP Note for a period of 180 days commencing on the issuance date. In the event the Company has not paid the BHP Note in full prior to 180 days from the issuance date, BHP may convert all or a portion of the outstanding principal of the BHP Note into shares of the Company’s common stock at a price per share at a price equal to the higher of the variable conversion price or $0.00006 per share.  The variable conversion price shall mean 55% of the lowest traded price of the Common Stock during the 25 trading-day period ending on the last complete trading day prior to the date of conversion. BHP may not convert the BHP Note to the extent that such conversion would result in beneficial ownership by BHP and its affiliates of more than 4.99% of the issued and outstanding Common Stock. The BHP Note contains certain representations, warranties, covenants and events of default including if the Common Stock is suspended or delisted for trading on the OTC Marketplace or if the Company is delinquent in its periodic report filings with the SEC. In the event of default, as described in the BHP Note, at the option of BHP, it may consider the BHP Note immediately due and payable. The Company recorded an original issue discount in the amount of $5,500 in connection with the BHP Note; $2,358 was amortized to interest expense during the nine months needed September 30, 2019. The Company accrued interest in the amount of $1,493 on the BHP Note during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company determined that a derivative liability in the amount of $73,886 existed in connection with the variable rate conversion feature of the BHP Note. $38,500 of this amount was charged to discount on the BHP Note, and $35,386 was charged to interest expense. $8,440 of the discount was charged to operations during the nine months ended September 30, 2019. The principal balance under this note was $38,500 at September 30, 2019.

 

 

Armada Note

 

On June 10, 2019, the Company entered into a securities purchase agreement with Armada Investment Fund, LLC (“Armada”) pursuant to which Armada agreed to purchase a convertible promissory note (the “Armada Note”) in the aggregate principal amount of $38,500. The Armada Note the holder to 10% interest per annum and matures on March 10, 2020.  In the event the Company prepays the Armada Note beginning on the issuance date through the 180th day following the Armada Issuance Date, the Company must pay Armada all of the outstanding principal and interest due plus a cash redemption premium ranging from 135% to 150%. After the 180th day following the Armada Issuance Date, there is no further right of prepayment by the Company. Armada has no right of conversion under the Armada Note for a period of 180 days commencing on the Armada Issuance Date. In the event the Company has not paid the Armada Note in full prior to 180 days from the Armada Issuance Date, Armada may convert all or a portion of the outstanding principal of the Armada Note into shares of the Company’s common stock at a price per share equal to the higher of the variable conversion price or $0.00006 per share. The variable conversion price shall mean 55% of the lowest traded price of the Common Stock during the 25 trading-day period ending on the last complete trading day prior to the date of conversion. Armada may not convert the Armada Note to the extent that such conversion would result in beneficial ownership by Armada and its affiliates of more than 4.99% of the issued and outstanding Common Stock. The Armada Note contains certain representations, warranties, covenants and events of default including if the Common Stock is suspended or delisted for trading on the OTC Marketplace or if the Company is delinquent in its periodic report filings with the SEC. In the event of default, as described in the Armada Note, at the option of Armada, it may consider the Armada Note immediately due and payable. The Company recorded an original issue discount in the amount of $3,000 in connection with the Armada Note; $1,007 was amortized to interest expense during the nine months needed September 30, 2019. The Company accrued interest in the amount of $1,417 on the Armada Note during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company determined that a derivative liability in the amount of $73,256 existed in connection with the variable rate conversion feature of the Armada Note. $38,500 of this amount was charged to discount on the Armada Note, and $34,756 was charged to interest expense. $8,161 of the discount was charged to operations during the nine months ended September 30, 2019. The principal balance under this note was $38,500 at September 30, 2019.

 

Crown Bridge Note 3

 

On July 2, 2019, the Company entered into a Securities Purchase Agreement with Crown Bridge Partners, LLC (“Crown Bridge”) pursuant to which Crown Bridge agreed to purchase a convertible promissory note (the “Crown Bridge Note 3”) in the principal amount of $40,000. The Crown Bridge Note 3 entitles the holder to 12% interest per annum and matures on December 29, 2019.  Under the Crown Bridge Note 3, Crown Bridge may convert all or a portion of the outstanding principal of the Crown Bridge Note 3 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Crown Bridge Note 3, at a price equal to the 55% of the lowest trading price during the 25 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Crown Bridge may not convert the Crown Bridge Note 3 to the extent that such conversion would result in beneficial ownership by Crown Bridge and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Crown Bridge Note 2 within 90 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 135%; if such prepayment is made between the 91st day and the 180th day after the issuance of the Crown Bridge Note 2, then such redemption premium is 150%. After the 180th day following the issuance of the Crown Bridge Note 3, there shall be no further right of prepayment. In connection with the Crown Bridge Note 3. The Company recorded an original issue discount in the amount of $5,500 in connection with the Crown Bridge Note 3; $1,800 of this amount was amortized to interest expense during the nine months ended September 30, 2019. The Company accrued interest expense in the amount of $1,184 on the Crown Bridge Note 3 during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company determined that a derivative liability in the amount of $57,346 existed in connection with the variable rate conversion feature of the Crown Bridge Note 3. $40,000 of this amount was charged to discount on the Crown Bridge Note 3, and $17,346 was charged to interest expense. $7,367 of the discount was charged to operations during the nine months ended September 30, 2019. The principal balance under this note was $40,000 at September 30, 2019.

 

 

Power Up Note 10

 

On July 11, 2019, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 10”) in the aggregate principal amount of $38,000. The Power Up Note 10 entitles the holder to 12% interest per annum and matures on April 30, 2020.  Under the Power Up Note 10, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 10 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 10, at a price equal to the higher of the variable conversion price or $0.00006 per share.  The variable conversion price  shall mean 55% of the lowest trading price during the 25 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Power Up may not convert the Power Up Note 10 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Power Up Note 10 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note 10, then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Power Up Note 10, there shall be no further right of prepayment. The Company recorded an original issue discount in the amount of $3,000 in connection with the Power Up Note 10; $827 was amortized to interest expense during the nine months needed September 30, 2019. The Company accrued interest in the amount of $1,012 on the Power Up Note 10 during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company determined that a derivative liability in the amount of $40,033 existed in connection with the variable rate conversion feature of the Power Up Note 10. $38,000 of this amount was charged to discount on the Power Up Note 10, and $2,033 was charged to interest expense. $4,684 of the discount was charged to operations during the nine months ended September 30, 2019. The principal balance under this note was $38,000 at September 30, 2019

 

Power Up Note 11

 

On September 12, 2019, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 11”) in the aggregate principal amount of $45,000. The Power Up Note 11 entitles the holder to 12% interest per annum and matures on July 15, 2020.  Under the Power Up Note 11, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 11 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 11, at a price equal to the higher of the variable conversion price or $0.00006 per share.  The variable conversion price  shall mean 55% of lowest trading price during the 25 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Power Up may not convert the Power Up Note 11 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Power Up Note 11 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note 11, then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Power Up Note 11, there shall be no further right of prepayment. The Company recorded an original issue discount in the amount of $3,000 in connection with the Power Up Note 11; $176 was amortized to interest expense during the nine months needed September 30, 2019. The Company accrued interest in the amount of $444 on the Power Up Note 11 during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company determined that a derivative liability in the amount of $47,187 existed in connection with the variable rate conversion feature of the Power Up Note 11. $45,000 of this amount was charged to discount on the Power Up Note 11, and $2,187 was charged to interest expense. $2,638 of the discount was charged to operations during the nine months ended September 30, 2019. The principal balance under this note was $45,000 at September 30, 2019.

 

 

Note 6 – Derivative Liabilities

 

Certain of the Company’s convertible notes contain conversion features that create derivative liabilities. The pricing model the Company uses for determining fair value of its derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management’s judgment and may impact net income.  The derivative components of these notes are valued at issuance, at conversion, at restructure, and at each period end. 

 

Derivative liability activity for the nine months ended September 30, 2019 is summarized in the table below:

 

December 31, 2019

  $ -  

Conversion features issued

    780,565  

Warrants issued

    148,310  

Debt converted

    (203,730

)

Loss on revaluation

    69,611  

September 30, 2019

  $ 794,756  

 

Note 7 – Stockholders’ Deficit

 

Shares for Stock Based Compensation

 

During the nine months ending September 30, 2019, the Company issued 200,000 restricted shares of the Company’s common stock at valued $17,480 in exchange for services conducted on behalf of the Company. The value of these shares was based on the closing market price on the respective date of grant.  Also, during the nine months ended September 30, 2019, the Company issued 2,975,000 shares of common stock to employees, subject to vesting provisions, pursuant to employment agreements. The par value of these shares in the amount of $29,750 was credited to paid-in capital. During the nine months ended September 30, 2019, the Company charged the amount of $154,558 to paid-in capital representing the vesting of shares issued to employees. 

 

During the nine months ending September 30, 2018, the Company issued 4,100,000 restricted shares of the Company’s common stock at valued $345,430 in exchange for services provided. The value of these shares was based on the closing market price on the respective date of grant.

 

Stock-based compensation expenses are included in general and administrative expenses on the condensed consolidated statements of operations.

 

Shares issued for notes payable

 

During the nine months ended September 30, 2019, the Company issued, in 24 transactions, a total of 14,394,002 shares in connection with the conversion of notes payable principal, accrued interest, and fees in the aggregate amounts of $368,882 and $26,330, and $1,500, respectively; a loss in the aggregate amount of $161,458 was recognized on these transactions (see note 5).

 

During the nine months ending September 30, 2018, the Company issued 150,000 restricted shares of common stock valued at $13,850 for an extension of the term of a note payable.  

  

Shares issued for conversion of accounts payable

 

During the nine months ended September 30, 2019, the Company did not issue any shares to settle accounts payable.

 

During the nine months ending September 30, 2018, the Company issued 5,817,122 shares valued at $534,767 to settle outstanding accounts payable. There was a loss on the transaction of $32,860 because the fair value of the issuance exceeded the fair value of the accounts payable settled. 

 

Stock returned for cancellation

 

During the nine months ended September 30, 2019, the Company cancelled an aggregate 700,000 shares of common stock issued to former executive officers.

 

 

During the nine months ended September 30, 2018. there were no cancellations of common stock.

 

Shares issued for legal settlement

 

During the nine months ended September 30, 2019, the Company issued 1,401,224 shares of common stock in connection with the settlement of a note payable in the amount of $74,104. The Company recorded a loss in the amount of $26,924 in connection with this transaction.

 

During the nine months ended September 30, 2018. there were no shares issued in connection with a legal settlement.

 

Note 8 – Stock Options

 

A summary of options issued, exercised and cancelled are as follows:

 

   

Shares

   

Weighted- Average

Exercise Price ($)

   

Weighted- Average

Remaining

Contractual Term

   

Aggregate Intrinsic

Value ($)

 

Outstanding at December 31, 2017

    67,879     $ 21.40       5.17     $ -  

Granted

    -       -       -       -  

Cancelled

    -       -       -       -  
                                 

Outstanding at December 31, 2018

    67,879     $ 21.40       4.17       -  
                                 

Granted

    -       -       -       -  

Cancelled

    -       -       -       -  

Outstanding at September 30, 2019

    67,879     $ 21.40       3.42     $ -  
                                 

Exercisable at September 30, 2019

    67,879     $ 21.40       3.42     $ -  

 

Note 9 – Stock Warrants

 

A summary of warrants issued, exercised and expired are as follows:

 

   

Shares

   

Weighted- Average

Exercise Price ($)

   

Weighted- Average

Remaining

Contractual Term

 

Outstanding at December 31, 2017

    142,653     $ 17.42       1.00  

Granted

    1,025,000       0.10       4.93  

Expired

    -       -       -  
                         

Outstanding at December 31, 2018

    1,167,653     $ 2.18       4.36  
                         

Granted

    400,000       0.10       4.50  

Expired

    (142,653

)

    17.42       -  

Outstanding at September 30, 2019

    1,425,000     $ 0.10       4.50  
                         

Exercisable at September 30, 2019

    1,425,000     $ 0.10       4.25  

 

 

Note 10 – Commitments and Contingencies

 

Legal

 

Stress Free Capital, Inc. vs. True Nature Holdings, Inc. Case No. CACE-18-0108656

 

Pursuant to a judgment rendered in the Seventeenth Judicial District I and for Broward County, Florida, the Company in June 2019 issued 1,401,224 shares of common stock in complete settlement of a note payable to the plaintiff in the aggregate amount of $84,073.48.

 

National Council for Science and the Environment, Inc. v. Trunity Holdings, Inc., Case No. 2015 CA 009726 B, Superior Court for the District of Columbia, Civil Division.

 

This action was filed on December 16, 2015 by the National Council for Science and the Environment, Inc. (“NCSE”) in the state court in the District of Columbia against Trunity Holdings, Inc. (“Trunity”) and alleges claims for breach of contract. Acknowledgement of indebtedness and settlement agreement and quantum meruit arising out of an agreement entered into between NCSE and Trunity in 2014. The complaint seeks damages in the amount of $177,270, inclusive of attorney’s fees, costs and accrued interest, continuing interest in the amount of 12% per annum and attorney’s fees and costs of collection relating to the case. The Company, in its answer dated January 27, 2016, denied the material allegations made by NCSE, asserted a number of affirmative defenses and filed a counterclaim alleging claims for fraud, negligent misrepresentation, breach of fiduciary duty, breach of contract and unjust enrichment. In its counterclaim, the Company sought actual and compensatory damages against NCSE that it believes exceed the amount sought by NCSE on its claims, pre-judgment interest, punitive damages and all costs and expenses, including attorney’s fees, incurred by the Company in bringing its claims against NCSE.

 

On September 23, 2016, the Company settled this obligation with an agreement to pay $48,500 to NCSE if paid by November 4, 2016, and $75,000 if paid later. The Company has not paid the amounts as of the date of this filing and has recorded the obligation at $75,000.

 

Carlton Fields Jorden Burt, P.A.

 

This action was filed on May 18, 2017 by a law firm that represented the Company prior to the spin-out of the educational software business in 2016 with the intent of collection past due invoices in the aggregate amount of $241,828.  The Company believes it has strong defenses against any such action and anticipates a settlement upon completion of certain funding activities. The Company has recorded a liability in the amount of $241,828 on its balance sheet at December 31, 2018.

 

Trunity, Inc.

 

The spin-out that now owns the former educational software business has been informed that they owe the Company from the obligations of the NCSE settlement, and the costs of the legal action. We intend to take all actions available to us to collect on these amounts.

 

Randstad General Partner (US) LLC D/B/A Tatum

 

A former service provider of the Company has filed an action in Georgia to collect the amount of $44,365 for services provided to the Company. On October 18, 2018, the Superior Court of Fulton County, State of George issued an Order & Final Judgment against the Company in the amount of $44,365 plus an additional $11,001 of accrued interest. On July 3, 2019 the Company settled this matter with a $5,000 payment made by a shareholder for the benefit of the Company, and the Company recorded a gain on settlement in the amount of $50,366.

 

Note 11 – Subsequent Events

 

Issuance of Common Stock

 

In October and November 2019, the Company issued a total of 18,820,868 shares of common stock in eleven transactions in connection with the conversion of convertible notes payable. The conversions were made pursuant to the terms of the original agreements.

 

 

In October 2019, the Company issued 100,000 shares of common stock with a fair value of $2,000 to a service provider.

 

In October 2019, the Company issued 2,000,000 shares of common stock, subject to vesting conditions, to its Chief Executive Officer. This grant consisted of 1,000,000 shares for services as a member of the Board of Directors, and an additional 1,000,000 shares for services as an officer of the Company. The fair value of these shares was $60,000.

 

In October 2019, the Company issued 2,000,000 shares of common stock, subject to vesting conditions, to its President and Chief Operating Officer. This grant consisted of 1,000,000 shares for services as a member of the Board of Directors, and an additional 1,000,000 shares for services as an officer of the Company. The fair value of these shares was $60,000.

 

Appointment of Officers

 

On October 3, 2019 the Company announces the appointment of Ms. Julie R. Smith as a member of its Board of Directors and President & COO. Ms. Smith, age 54, is an experienced Senior Executive and Board Member who has held multiple leadership positions for both public and private entities.  Most recently she was President and CEO at HOMEWATCH CARE GIVERS, LLC (www.homewatchcaregivers.com), a $150 million per year franchise network operating in 7 countries which provides services within the healthcare continuum. Prior to that she held senior positions in the educational arena with stints at Lincoln Education Services (www.lincolnedu.com) and The Princeton Review (www.princetonreview.com). Julie attained her MBA in International Management from the Thunderbird School of Global Management and a BA in Business from the University of Denver, Daniels College of Business.  She resides in Denver, Colorado and will operate from the Company’s new Denver office and will be focused on the acquisition and integration of new operations. Ms. Smith will receive a salary of $250,000 per annum for services as President, and $5,000 per month for services as a board member. Ms. Smith will also receive, subject to vesting provisions, an initial grant of 1,000,000 shares of the Company’s restricted stock for services as a member of the Board of Directors, and an additional 1,000,000 shares for services as an officer of the Company. NOTE: Since Ms. Smith has moved into her officer role, the Board stipend has been discontinued in favor of her compensation as an officer.

 

On October 7, 2019 the Company announces the appointment of Mr. Lawrence Diamond to its Board of Directors, and as CEO to its senior management team. Mr. Diamond, age 56, was most recently CEO of Intelligere Inc., a supplier of interpretation and translation for 73 languages to health care providers. Prior to that role he was COO of PointRight, Inc., a leading healthcare analytics firm specializing in long-term and post-acute care using predictive analytics for skilled nursing, home health, Medicare & Medicaid payers, hospitals, and ACOs. While VP of Insignia Health he grew their business internationally and domestically providing population health engagement via their validated program (Patient Activation Measure, PAM) and SaaS-based population health-coaching. He led strategic planning and sales at American Telecare, an innovator of telemedicine enabled clinical services and medical devices that improve cost and quality. He was VP at Ubiquio Corporation, Inc., an innovator in mobile technology and services which was acquired by Mobile Planet, after an eight-year stint at UnitedHealth Group, where he was Vice President driving their Medicare Advantage, pharmacy products, health plan operations, and M&A. He began his career at Merrill Lynch in private client banking.  He earned his M.B.A. at the University of Minnesota, and his B.S., Business Administration, at the University of Richmond. Mr. Diamond will receive a salary of $250,000 per annum for services as Chief Executive Officer, and $5,000 per month for services as a board member. Mr. Diamond will also receive, subject to vesting provisions, an initial grant of 1,000,000 shares of the Company’s restricted stock for services as a member of the Board of Directors, and an additional 1,000,000 shares for services as an officer of the Company. NOTE: Since Mr. Diamond has moved into his officer role, the Board stipend has been discontinued in favor of his compensation as an officer.

 

Resignation of Officer

 

Effective October 8, 2019 Mr. Jim Crone has resigned all positions with the Company in order to pursue other opportunities. There were no disagreements with Mr. Crone.

 

In October 2019, the Company received funds of approximately $53,000 pursuant to Power Up Note 12. Power Up Note 12 is a convertible promissory note in the amount of $53,000. Power Up Note 12 bears interest at the rate of 12% per year and becomes convertible at any time following the 180th calendar day after the issue date at a price per share equal to 55% of the lowest trading price for the Company’s common stock for the twenty-five days prior to the conversion date.  The Power Up Note 12 is due August 15, 2020.

 

 

ITEM 2. 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes thereto contained in Part I, Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”). Our condensed consolidated financial statements have been prepared and, unless otherwise stated, the information derived therefrom as presented in this discussion and analysis is presented, in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

 

The information contained in this Quarterly Report is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and subsequent reports on Form 8-K, which discuss our business in greater detail. Unless the context indicates otherwise, the “Company”, “we”, “us”, and “our” in this Item 2 and elsewhere in this Quarterly Report refer to True Nature Holdings, Inc., a Delaware corporation, and its consolidated subsidiaries.

 

In addition to historical information, the following discussion contains forward-looking statements regarding future events and our future performance. In some cases, you can identify forward-looking statements by terminology such as “will”, “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “forecasts”, “potential” or “continue” or the negative of these terms or other comparable terminology. All statements made in this Quarterly Report other than statements of historical fact are forward-looking statements. These forward-looking statements involve risks and uncertainties and reflect only our current views, expectations and assumptions with respect to future events and our future performance. If risks or uncertainties materialize or assumptions prove incorrect, actual results or events could differ materially from those expressed or implied by such forward-looking statements. Risks that could cause actual results to differ from those expressed or implied by the forward-looking statements we make include, among others, risks related to: our ability to successfully implement our business plan, develop and commercialize our software in a timely manner or at all, identify and acquire additional software products, manage our operations, service our debt, obtain financing necessary to operate our business, recruit and retain qualified personnel, manage any growth we may experience and successfully realize the benefits of our acquisitions and collaborative arrangements we may pursue; outsourcing facilities and pharmacies; general economic and business conditions; regulatory and legal risks and uncertainties related to our operations and the business in general; our limited operating history; and the other risks and uncertainties described under the heading “Risk Factors” in Item 1A of our Annual Report on Form 10-K and any other reports we file with the SEC. You should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made and, except as required by law, we undertake no obligation to revise or publicly update any forward-looking statement for any reason.

 

Company Overview

 

Our business during 2018, which has continued into 2019 is focused in the area of software and solutions, predominantly in the healthcare sector, generally described as the healthcare information and technology (HCIT) market. We announced plans for a portfolio of health care technology companies focused on, but not limited to the following areas: population health management, POS/Data gathering solutions, electronic health records optimization, healthcare IT solutions, technology and artificial intelligence to improve outcomes, HIPAA security and augmentation using virtual care. We are developing, and seeking to acquire, integrate and deploy scalable technology solutions that reduce cost, improve care and increase efficiency. Our core product, a personal healthcare records application called SimpleHIPAA and SimpleHIPAA for Vets and Pets is in final testing with our initial client.

 

While this focus continues, we are also evaluating other applications, generally, but not exclusively in the healthcare area. We believe that new technologies such as voice recognition, virtual reality and robotics will all provide excellent vehicles to update traditional information management systems and will find quick acceptance in the healthcare field as well as other large and more traditional markets. We believe the need for compliance in other industries, similar to the need in healthcare for HIPAA and data security represents opportunity for growth over and above our healthcare efforts.

 

Within the healthcare arena one of the most active areas involves software that provides “interoperability”, the interfacing of systems and data so that information may be shared effectively. We believe there will be many opportunities in this application area, as older systems are integrated with newer, or more specialized systems, but we have not taken any actions in pursuit of these opportunities and no guarantee can be made if we enter this space, that we will be successful. These same needs exist in other market areas and we may consider applications for these markets as well as our healthcare efforts.

  

 

Off-Balance Sheet Arrangements

 

Since our inception, except for standard operating leases, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities. We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

 

Critical Accounting Policies

 

For the nine months ended September 30, 2019, there were no significant changes to our critical accounting policies and estimates from those disclosed in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

 

Recently Issued and Adopted Accounting Pronouncements

 

See Note 2 to our consolidated financial statements included in this Quarterly Report.

 

Results of Operations

 

The following period-to-period comparisons of our financial results are not necessarily indicative of results for the current period or any future period. Our software, systems and consulting operations activities have become our primary focus, along with engagement with our new and potential user base. This change our operations will have and is expected to continue to have a significant impact on our financial results.

 

For the Three Months ended September 30, 2019 and 2018

 

Our total operating expenses for the three months period ended September 30, 2019 were $433,322.  For the comparable period in 2018, the operating expense was $565,259.  Operating expenses were comprised primarily of $234,741 in compensation (including $111,985 in non-cash compensation), and $138,250 in consulting fees.

 

There was $832,417 of interest expense for the three months ended September 30, 2019, compared to $22,739 for the comparable period of 2018. Interest expense consisted of $460,375 of derivatives in excess of the discount on convertible debt, $344,326 in amortization of the discount on convertible debt; $21,746 of accrued interest; $3,720 of accrued interest to related parties, and $2,250 of interest imputed on related party debt.

 

The Company had a gain on conversion of accounts payable to common stock in the amount of $3,240 during the three months ended September 30, 2018; there was no comparable transaction during the current period; there was also a loss on conversion of notes payable to common stock in the amount of $2,799 during the three months ended September 30, 2019; there was no such comparable transaction during the prior period.

 

The Company had a gain on settlement of accounts payable of $50,366 during the three months ended September 30, 2019; there was no comparable transaction during the three months ended September 30, 2018.

 

The Company recognized a loss on the revaluation of derivative liabilities in the amount of $69,611 during the three months ended September 30, 2019; there was no comparable transaction during the prior period.

 

For the reasons above, the Company had a loss in the amount of $1,287,783 during the three months ended September 30, 2019, compared to a loss in the amount of $584,758 during the three months ended September 30, 2018.

 

For the Nine Months ended September 30, 2019 and 2018

 

Our total operating expenses for the nine months period ended September 30, 2019 were $880,823.  For the comparable period in 2018, the operating expenses were $894,564.  Operating expenses were comprised primarily of compensation expense of $351,952 (including non-cash compensation of $154,558, $219,108 in consulting fees, financial services, legal, and audit fees of $141,492, travel of $42,623, and insurance of $28,545.

 

 

There was $1,157,318 of interest expense for the nine months ended September 30, 2019, compared to $39,405 for the comparable period of 2018. Interest expense consisted of $460,375 of derivatives in excess of the discount on convertible debt, $603,861 in amortization of the discount on convertible debt; $59,221 of accrued interest; $16,072 of prepayment penalties associated with convertible notes payable; $11,039 of accrued interest to related parties, and $6,750 of interest imputed on related party debt.

 

The Company had a loss on conversion of accounts payable of $0 during the nine months ended September 30, 2019, compared to a loss on conversion of accounts payable of $32,860 during the comparable period of 2018. 

 

The Company had a gain on settlement of accounts payable of $50,366 during the nine months ended September 30, 2019; there was no comparable transaction during the three months ended September 30, 2018.

 

The Company recognized a loss on the revaluation of derivative liabilities in the amount of $69,611 during the nine months ended September 30, 2019; there was no comparable transaction during the prior period.

 

The Company had a loss on legal settlement in the amount of $26,924 during the nine months ended September 30, 2019; there was on such transaction during the comparable period of 2018.

 

The Company had a loss on conversion of notes payable $161,458 during the nine months ended September 30, 2019, compared to a loss on conversion of notes payable of $0 during the comparable period of 2018. 

 

For the reasons above, the Company had a loss in the amount of $2,245,768 during the nine months ended September 30, 2019, compared to a loss in the amount of $966,829 during the nine months ended September 30, 2018.

 

Liquidity and Capital Resources

 

We have financed our operations through the sale of equity securities. As of September 30, 2019, we had a working capital deficit of $2,617,881.  Our working capital deficit is attributable to the fact that we have been implementing the Company’s business plan of development of software, and acquisition of various software and systems businesses.

 

During the nine months ending September 30, 2019, the Company had net cash used in operating activities of $418,275.  This consisted of Company’s net loss of $2,245,768 plus the non-cash gain on settlement of accounts payable in the amount of $50,366, offset by a loss on conversion of notes payable of $161,458, loss on legal settlement of $26,924, imputed interest expense of $6,750, amortization of the discount on notes payable of $603,861, derivative expense of $460,375, stock-based compensation in the amount of $154,558, and the net change in the components of working capital in the net amount of $394,322.  The Company had cash provided by financing activities in the amount of $417,822 which consisted of the proceeds of notes payable in the amount of $428,058, less principal payments in the amount of $10,236. There was no cash provided by investing activities during the nine months ended September 30, 2019. The following securities are currently in default: the Company’s Series C Debenture, in the principal and accrued interest amounts of $110,833 and $54,915, respectively; and the November 2014 Convertible Debenture (Series D), in the principal and accrued interest amounts of $11,333 and $6,683, respectively.

 

Plan of Operations

 

Our business during 2018, which has continued into 2019 is focused in the area of software and solutions, predominantly in the healthcare sector, generally described as the healthcare information and technology (HCIT) market. We announced plans for a portfolio of health care technology companies focused on, but not limited to the following areas: population health management, POS/Data gathering solutions, electronic health records optimization, healthcare IT solutions, technology and artificial intelligence to improve outcomes, HIPAA security and augmentation using virtual care. We are developing, and seeking to acquire, integrate and deploy scalable technology solutions that reduce cost, improve care and increase efficiency. Our core product, a personal healthcare records application called SimpleHIPAA and SimpleHIPAA for Vets and Pets, is in final testing with our initial client.

 

While this focus continues, we are also evaluating other applications, generally, but not exclusively in the healthcare area. We believe that new technologies such as voice recognition, virtual reality and robotics will all provide excellent vehicles to update traditional information management systems and will find quick acceptance in the healthcare field as well as other large and more traditional markets. We believe the need for compliance in other industries, similar to the need in healthcare for HIPAA and data security represents opportunity for growth over and above our healthcare efforts.

 

 

Within the healthcare arena one of the most active areas involves software that provides “interoperability”, the interfacing of systems and data so that information may be shared effectively. We believe there will be many opportunities in this application area, as older systems are integrated with newer, or more specialized systems, but we have not taken any actions in pursuit of these opportunities and no guarantee can be made if we enter this space, that we will be successful. These same needs exist in other market areas and we may consider applications for these markets as well as our healthcare efforts.

 

Recent Developments 

 

Appointments to the Board

 

On May 22, 2019, the Company’s Board of Directors appointed Mr. Douglas Cole as a member of the Board, effective immediately. Mr. Cole (Doug), age 63, has served as the Chairman and CEO of American Battery Metals Corporation since August 2017. Doug has been a Partner with Objective Equity LLC since 2005, a boutique investment bank focused on the high technology, data analytics and the mining sector. Doug serves on the Board of Directors of eWellness Healthcare Corporation (OTC: EWLL). Since 1977 Mr. Cole has held various executive roles, including Chairman, Executive Vice Chairman, Chief Executive Officer and President of multiple public corporations. Currently, Doug sits on the Board of "People in Motion," a global data analytics company. He also sits on the Board of "Voise," an AI company specializing in linguistics. From 2000 to September 2005, he was the Director of Lair of the Bear, The University of California Alumni Family Camp located in Pinecrest, California. During the period between 1991 and 1996 he was the CEO of HealthSoft and he founded and operated Great Bear Technology, a global media company, which acquired Sony Image Soft and Starpress, then went public and eventually sold to Graphix Zone. In 1995, Doug was honored by NEA, a leading venture capital firm, as CEO of the year. In 1997 Doug became CEO of NetAmerica until merging in 1999. Since 1982 he has been very active with the University of California, Berkeley, mentoring early-stage technology companies.

 

On October 3, 2019 the Company announces the appointment of Ms. Julie R. Smith as a member of its Board of Directors and President & COO. Ms. Smith, age 54, is an experienced Senior Executive and Board Member who has held multiple leadership positions for both public and private entities.  Most recently she was President and CEO at HOMEWATCH CARE GIVERS, LLC (www.homewatchcaregivers.com), a $150 million per year franchise network operating in 7 countries which provides services within the healthcare continuum. Prior to that she held senior positions in the educational arena with stints at Lincoln Education Services (www.lincolnedu.com) and The Princeton Review (www.princetonreview.com). Julie attained her MBA in International Management from the Thunderbird School of Global Management and a BA in Business from the University of Denver, Daniels College of Business.  She resides in Denver, Colorado and will operate from the Company’s new Denver office and will be focused on the acquisition and integration of new operations. Ms. Smith will receive a salary of $250,000 per annum for services as President, and $5,000 per month for services as a board member. Ms. Smith . will also receive, subject to vesting provisions, an initial grant of 1,000,000 shares of the Company’s restricted common stock for services as a member of the Board of Directors, and an additional 1,000,000 shares for services as an officer of the Company. NOTE: Since Ms. Smith has moved into her officer role, the Board stipend has been discontinued in favor of her compensation as an officer.

 

On October 7, 2019 the Company announces the appointment of Mr. Lawrence Diamond to its Board of Directors, and as CEO to its senior management team. Mr. Diamond, age 56, was most recently CEO of Intelligere Inc., a supplier of interpretation and translation for 73 languages to health care providers. Prior to that role he was COO of PointRight, Inc., a leading healthcare analytics firm specializing in long-term and post-acute care using predictive analytics for skilled nursing, home health, Medicare & Medicaid payers, hospitals, and ACOs. While VP of Insignia Health he grew their business internationally and domestically providing population health engagement via their validated program (Patient Activation Measure, PAM) and SaaS-based population health-coaching. He led strategic planning and sales at American Telecare, an innovator of telemedicine enabled clinical services and medical devices that improve cost and quality. He was VP at Ubiquio Corporation, Inc., an innovator in mobile technology and services which was acquired by Mobile Planet, after an eight year stint at UnitedHealth Group, where he was Vice President driving their Medicare Advantage, pharmacy products, health plan operations, and M&A. He began his career at Merrill Lynch in private client banking.  He earned his M.B.A. at the University of Minnesota, and his B.S., Business Administration, at the University of Richmond. Mr. Diamond will receive a salary of $250,000 per annum for services as Chief Executive Officer, and $5,000 per month for services as a board member. Mr. Diamond will also receive, subject to vesting provisions, an initial grant of 1,000,000 shares of the Company’s restricted stock for services as a member of the Board of Directors, and an additional 1,000,000 shares for services as an officer of the Company. NOTE: Since Mr. Diamond has moved into his officer role, the Board stipend has been discontinued in favor of his compensation as an officer.

 

Effective October 8, 2019 Mr. Jim Crone has resigned all positions with the Company in order to pursue other opportunities. There were no disagreements with Mr. Crone.

 

 

Acquisition of Businesses and Financing

 

The Company has since 2017 developed plans for software, systems and consulting aimed at business development in the healthcare field. It has also invested significant time and effort in evaluating the use of telemedicine and kiosks for the delivery of health services into rural and other underserved markets. Lastly, it has individuals working full time on the design of telemedicine applications, with initial introduction into the veterinary markets, and into the human markets using the same software currently scheduled for Q4 of 2019. During the first quarter of 2019 we expanded our potential markets to include anywhere the ability to provide regulatory compliance is a valuable feature of the software solution, not unlike the needs in healthcare for HIPAA compliance and data security.

 

While it is busy on internal operations, it still reviews various acquisition opportunities and intends to target businesses who have a) strong regulatory compliance history, b) a record of profitable operations, c) potential developers of technology or consulting, or d) where the combination of technology and operations, facilitates cross selling of a growing line of products or expedited implementation.

 

On June 13, 2019, the Company executed a Non-Binding Letter of Intent (“EPOS LOI”) for the potential acquisition of Power EPOS Limited, a U.K. based provider of certain software and systems to the hospitality industry (doing business as PowerEPOS) (“EPOS”). Under the terms of the EPOS LOI, the Company shall, at its option, purchase all of the issued and outstanding shareholder interests of EPOS, or its assets, in exchange for a combination of (i) shares of a newly issued non-convertible Series A Preferred (the “Series A”), which will be redeemable in 36 months and pay interest at a rate of ten percent (10%) per annum; and (ii) Common Stock equal to twenty percent (20%) of the outstanding shares of Common Stock of the Company, subsequent to closing (the “EPOS Acquisition”). The Company has begun a review of accounting and is preparing for an audit as a part of its due diligence process. There is no assurance that the EPOS Acquisition will be effectuated.

 

ITEM 3. 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not required for a Smaller Reporting Company.
 

ITEM 4. 

CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this report (the "Evaluation Date"), we carried out an evaluation regarding the nine months ended September 30, 2019, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer who is also serving as our Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based upon this evaluation, our management concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by the SEC's rules and forms and that our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  Management believes the Company's disclosure controls and procedures are not effective because of the small size of the Company's accounting staff which may prevent adequate controls, such as segregation of duties, which is due to the cost/benefit associated with such remediation. To address the material weaknesses, the Company performed additional analysis and other procedures in an effort to ensure our condensed consolidated financial statements included in this Quarterly Report have been prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects our financial condition, results of operations and cash flows for the periods presented.

 

Limitations on Internal Controls

 

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that the Company’s disclosure controls and procedures will detect or uncover every situation involving the failure of persons within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports. 

 

 

Changes in Internal Control Over Financial Reporting

 

The Company’s management is also responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. As of the Evaluation Date, no changes in the Company’s internal control over financial reporting occurred that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

During the nine months ended September 30, 2019, there were no changes that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

 

PART II – OTHER INFORMATION

 

ITEM 1. 

LEGAL PROCEEDINGS.

 

National Council for Science and the Environment, Inc. v. Trunity Holdings, Inc., Case No. 2015 CA 009726 B, Superior Court for the District of Columbia, Civil Division.

 

This action was filed on December 16, 2015 by the National Council for Science and the Environment, Inc. (“NCSE”) in the state court in the District of Columbia against Trunity Holdings, Inc. (“Trunity”) and alleges claims for breach of contract. Acknowledgement of indebtedness and settlement agreement and quantum meruit arising out of an agreement entered into between NCSE and Trunity in 2014. The complaint seeks damages in the amount of $177,270, inclusive of attorney’s fees, costs and accrued interest, continuing interest in the amount of 12% per annum and attorney’s fees and costs of collection relating to the case. The Company, in its answer dated January 27, 2016, denied the material allegations made by NCSE, asserted a number of affirmative defenses and filed a counterclaim alleging claims for fraud, negligent misrepresentation, breach of fiduciary duty, breach of contract and unjust enrichment. In its counterclaim, the Company sought actual and compensatory damages against NCSE that it believes exceed the amount sought by NCSE on its claims, pre-judgment interest, punitive damages and all costs and expenses, including attorney’s fees, incurred by the Company in bringing its claims against NCSE.

 

On September 23, 2016, the Company settled this obligation with an agreement to pay $48,500 to NCSE if paid by November 4, 2016, and $75,000 if paid later. The Company has not paid the amounts as of the date of this filing and has recorded the obligation at $75,000.

 

On April 5, 2017, NCSE filed a petition to domesticate a foreign judgment in the Superior Court of Fulton County, Georgia, Civil Action File No. 2017CV288416.  NCSE is now pursuing post-judgment discovery.

 

Carlton Fields Jorden Burt, P.A.

 

This action was filed on May 18, 2017 by a law firm that represented the Company prior to the spin-out of the educational software business in 2016 with the intent of collection past due invoices in the aggregate amount of $241,828.  The Company believes it has strong defenses against any such action and anticipates a settlement upon completion of certain funding activities. The Company has recorded a liability in the amount of $241,828 on its balance sheet at December 31, 2018. The Company has negotiated a settlement to this claim subject to funding.

 

Randstad General Partner (US) LLC D/B/A Tatum

 

A former service provider of the Company has filed an action in Georgia to collect the amount of $44,365 for services provided to the Company. On October 18, 2018, the Superior Court of Fulton County, State of George issued an Order & Final Judgment against the Company in the amount of $44,365 plus an additional $11,001 of accrued interest. The Company has accrued the amount of $55,366 in connection with this claim. This claim was settled for a one-time payment of $5,000 made by a shareholder for the benefit of the Company on July 2, 2019, and the Company recorded a gain on settlement in the amount of $50,366.

 

ITEM 1A.

RISK FACTORS.

 

We believe there are no changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.

 

ITEM 2. 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

None.

 

ITEM 3. 

DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

 

ITEM 4. 

MINE SAFETY DISCLOSURES.

 

Not applicable to the Company’s operations.

 

ITEM 5. 

OTHER INFORMATION.

 

None.

 

ITEM 6. 

EXHIBITS.

 

Exhibit

Number

 

Description

 

 

  

31.1*

 

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

 

 

  

31.2*

 

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

 

 

  

32.1*

 

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

  

101.INS **

 

XBRL INSTANCE DOCUMENT

 

 

  

101.SCH **

 

XBRL TAXONOMY EXTENSION SCHEMA

 

 

  

101.CAL **

 

XBRL TAXONOMY EXTENSION CALCULATION LINKBASE

 

 

  

101.DEF **

 

XBRL TAXONOMY EXTENSION DEFINITION LINKBASE

 

 

  

101.LAB **

 

XBRL TAXONOMY EXTENSION LABEL LINKBASE

 

 

  

101.PRE **

 

XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

 

* Filed herewith.

** Furnished herewith.

 

 

 

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.

 

 

TRUE NATURE HOLDING, INC.

 

 

 

 

 

Dated: November 14, 2019

By:

/s/ Julie R. Smith 

 

 

 

 

 

President and Chief Operating Officer

 

 

 

 

 

 

 

 

 

 

 

 

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