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Form 10-Q SinglePoint Inc. For: Jun 30

August 15, 2022 5:38 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

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

SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period ended June 30, 2022

 

Commission File No. 000-53425

 

Singlepoint Inc.

(Name of small business issuer in its charter)

 

Nevada

 

26-1240905

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

2999 North 44th Street Suite 530

Phoenix, AZ 85018

(Address of principal executive offices)

 

(888) 682-7464

(Issuer’s telephone number)

 

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

 

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

 

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

 

Large accelerated filer

Accelerated filer

Non-accelerated Filer

Smaller reporting company

 

Emerging growth company

 

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

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of August 10, 2022, the Company had 89,940,121 outstanding shares of its common stock, par value $0.0001.

 

 

 

 

Special Note Regarding Forward-Looking Statements

 

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

 

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

 

 

2

 

 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

Condensed Consolidated Balance Sheets (unaudited)

 

4

 

 

Condensed Consolidated Statements of Operations (unaudited)

 

5

 

 

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (unaudited)

 

6

 

 

Condensed Consolidated Statements of Cash Flows (unaudited)

 

7

 

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

8

 

 

 

 

 

 

Item 2.

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

 

25

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

27

 

Item 4.

Controls and Procedures

 

27

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

28

 

Item 1A.

Risk Factors

 

28

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

28

 

Item 3.

Defaults Upon Senior Securities

 

28

 

Item 4.

Mine Safety Disclosures

 

28

 

Item 5.

Other Information

 

28

 

Item 6.

Exhibits

 

29

 

Signatures

 

30

 

 

 
3

Table of Contents

 

SINGLEPOINT INC. AND SUBSIDIARIES

 CONDENSED CONSOLIDATED BALANCE SHEETS

 (Unaudited)

 

 

 

June 30,

2022

 

 

December 31,

2021

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash

 

$2,390,474

 

 

$191,485

 

Accounts receivable, net

 

 

2,048,464

 

 

 

90,763

 

Prepaid expenses

 

 

391,174

 

 

 

40,847

 

Inventory

 

 

1,746,242

 

 

 

70,250

 

Contract Assets

 

 

251,611

 

 

 

-

 

Note receivable from related party

 

 

63,456

 

 

 

63,456

 

Current portion of deferred compensation, net of discount

 

 

60,373

 

 

 

60,373

 

 

 

 

 

 

 

 

 

 

Total Current Assets

 

 

6,951,794

 

 

 

517,174

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS:

 

 

 

 

 

 

 

 

Property, net

 

 

258,426

 

 

 

54,105

 

Right of use asset

 

 

1,344,464

 

 

 

-

 

Intangible assets, net

 

 

3,520,691

 

 

 

34,485

 

Goodwill

 

 

8,487,536

 

 

 

1,702,119

 

Deferred compensation, net of current portion

 

 

30,187

 

 

 

60,374

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$20,593,098

 

 

$2,368,257

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$4,368,172

 

 

$231,816

 

Accrued expenses, including accrued officer salaries

 

 

1,830,245

 

 

 

512,214

 

Current portion of convertible notes payable, net of debt discount

 

 

5,720,165

 

 

 

10,500

 

Unearned Revenue

 

 

4,365,822

 

 

 

-

 

Lease liability, current portion

 

 

257,972

 

 

 

42,164

 

Advances from related party

 

 

467,124

 

 

 

415,068

 

Accrued preferred share dividends

 

 

 161,136

 

 

 

 -

 

Current Portion of notes payable, net of debt discount

 

 

1,684,615

 

 

 

1,020,350

 

 

 

 

 

 

 

 

 

 

Total Current Liabilities

 

 

18,855,251

 

 

 

2,232,112

 

 

 

 

 

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

 

 

Convertible notes payable, net of current portion

 

 

1,092,904

 

 

 

-

 

Lease liability, net of current portion

 

 

1,125,435

 

 

 

5,353

 

Advances from related party, net of current portion

 

 

498,934

 

 

 

602,363

 

Long-term notes payable, net of debt discount

 

 

720,365

 

 

 

767,160

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

22,292,889

 

 

 

3,606,988

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Undesignated preferred stock, par value $0.0001; 39,995,000 shares authorized as of June 30, 2022, and December 31, 2021, respectively;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A convertible preferred stock, par value $0.0001; 60,000,000 shares authorized; 56,108,617 and 56,353,015 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

 

5,611

 

 

 

5,635

 

 

 

 

 

 

 

 

 

 

Class B convertible preferred stock, par value $0.0001; 1,500 shares authorized; 0 and 48 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Class C convertible preferred stock, par value $0.0001; 1,500 shares authorized; 282 and 760 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Class D convertible preferred stock, par value $0.0001; 2,000 shares authorized; 2,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Class E convertible preferred stock, par value $0.0001; 1,550 shares authorized; 1,550 and no shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Common stock, par value $0.0001; 5,000,000,000 shares authorized; 89,940,121 and 58,785,924 shares issued and outstanding as of June 30, 2022, and December 31, 2021, respectively

 

 

8,994

 

 

 

5,879

 

 

 

 

 

 

 

 

 

 

Additional paid-in capital

 

 

88,993,884

 

 

 

85,853,388

 

Accumulated deficit

 

 

(91,069,111)

 

 

(86,158,902)

Total Singlepoint Inc. stockholders' equity (deficit)

 

 

(2,060,622)

 

 

(294,000)

Non-controlling interest

 

 

360,831

 

 

 

(944,731)

Total Stockholders' Equity (Deficit)

 

 

(1,699,791)

 

 

(1,238,731)

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity (Deficit)

 

$20,593,098

 

 

$2,368,257

 

 

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

  

 
4

Table of Contents

 

SINGLEPOINT INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

June 30,

2022

 

 

June 30,

2021

 

 

June 30,

2022

 

 

June 30,

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

$4,534,681

 

 

$454,822

 

 

$6,086,223

 

 

$693,835

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Revenue

 

 

3,204,841

 

 

 

302,332

 

 

 

4,574,357

 

 

 

607,071

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

1,329,840

 

 

 

152,490

 

 

 

1,511,866

 

 

 

86,764

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense ("SG&A")

 

 

4,522,284

 

 

 

1,284,232

 

 

 

6,141,746

 

 

 

2,330,925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

 

(3,192,444)

 

 

(1,131,742)

 

 

(4,629,880)

 

 

(2,244,161)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(64,790)

 

 

(12,404)

 

 

(118,968)

 

 

(67,769)

Amortization of debt discounts

 

 

(342,294)

 

 

-

 

 

 

(348,453)

 

 

-

 

Other Income

 

 

147,039

 

 

 

-

 

 

 

147,039

 

 

 

-

 

Gain (loss) on settlement of debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(151,727)

Warrant Expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Gain (loss) on change in fair value of derivative liability and equity securities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(41,627)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

(260,045)

 

 

(12,404)

 

 

(320,382)

 

 

(261,123)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

(3,452,489)

 

 

(1,144,146)

 

 

(4,950,262)

 

 

(2,505,284)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

 

(3,452,489)

 

 

(1,144,146)

 

 

(4,950,262)

 

 

(2,505,284)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss (income) attributable to non-controlling interests

 

 

125,879

 

 

 

145,657

 

 

 

201,189

 

 

 

365,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO SINGLEPOINT INC. STOCKHOLDERS

 

$(3,326,610)

 

$(998,489)

 

$(4,749,073)

 

$(2,140,219)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share - basic

 

$(0.04)

 

$(0.03)

 

$(0.06)

 

$(0.06)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

outstanding - basic

 

 

84,951,404

 

 

 

38,213,035

 

 

 

78,205,892

 

 

 

36,400,337

 

 

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

  

 
5

Table of Contents

 

SINGLEPOINT INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(Unaudited) 

 

 

 

Preferred Stock Class A Par Value $0.0001

 

 

Preferred Stock Class B Par Value $0.0001

 

 

Preferred Stock Class C Par Value $0.0001

 

 

Preferred Stock Class D Par Value $0.0001

 

 

Preferred Stock Class E Par Value $0.0001

 

 

Common Stock Par Value $0.0001

 

 

 

 

 

 

 

 

 

 

 

Number

of Shares

 

 

Amount

 

 

Number of Shares

 

 

Amount

 

 

Number of Shares

 

 

Amount

 

 

Number of Shares

 

 

Amount

 

 

Number of Shares

 

 

Amount

 

 

Number

of Shares

 

 

Amount

 

 

Additional paid-in Capital

 

 

Accumulated

Deficit

 

 

Non-controlling

Interest

 

 

Total Stockholders' Equity (Deficit)

 

Balance, December 31, 2021

 

 

56,353,015

 

 

$5,635

 

 

 

48

 

 

$-

 

 

 

760

 

 

 

-

 

 

 

2,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

58,785,924

 

 

$5,879

 

 

$85,853,388

 

 

$(86,158,902)

 

$(944,731)

 

$(1,238,731)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares for services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,500,000

 

 

 

150

 

 

 

239,850

 

 

 

 

 

 

 

 

 

 

 

240,000

 

Issuance of common shares for cash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,632,390

 

 

 

663

 

 

 

498,609

 

 

 

 

 

 

 

 

 

 

 

499,272

 

Conversion of preferred shares

 

 

(114,117)

 

 

(11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,852,925

 

 

 

285

 

 

 

(274)

 

 

 

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,422,463)

 

 

(75,310)

 

 

(1,497,773)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2022

 

 

56,238,898

 

 

$5,624

 

 

 

48

 

 

$-

 

 

 

760

 

 

 

-

 

 

 

2,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

69,771,239

 

 

$6,977

 

 

$86,591,573

 

 

$(87,581,365)

 

$(1,020,041)

 

$(1,997,232)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares for services and closing costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,626,000

 

 

 

963

 

 

 

870,075

 

 

 

 

 

 

 

 

 

 

 

871,038

 

Issuance of preferred shares for

cash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,550

 

 

 

-

 

 

 

 

 

 

 

-

 

 

 

1,488,000

 

 

 

 

 

 

 

 

 

 

 

1,488,000

 

Conversion of preferred shares

 

 

(130,281)

 

 

(13)

 

 

(48)

 

 

-

 

 

 

(478)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,870,052

 

 

 

987

 

 

 

(974)

 

 

 

 

 

 

 

 

 

 

-

 

Accrued preferred share dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (161,136

 

 

 

 

 

 

 (161,136

 )

Issuance of common shares for convertible note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

672,830

 

 

 

67

 

 

 

45,210

 

 

 

 

 

 

 

 

 

 

 

45,277

 

Effect of acquisition on non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,506,751

 

 

 

1,506,751

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,326,610)

 

 

(125,879)

 

 

(3,452,489)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2022

 

 

56,108,617

 

 

$5,611

 

 

 

-

 

 

$-

 

 

 

282

 

 

 

-

 

 

 

2,000

 

 

 

-

 

 

 

1,550

 

 

 

-

 

 

 

89,940,121

 

 

$8,994

 

 

$88,993,884

 

 

$(91,069,111)

 

$360,831

 

 

$(1,699,791)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

 

60,000,000

 

 

$6,000

 

 

 

408

 

 

$-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

33,075,711

 

 

$3,308

 

 

$78,132,202

 

 

$(80,785,887)

 

$(553,799)

 

$(3,198,176)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares for services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

66,667

 

 

 

7

 

 

 

17,993

 

 

 

 

 

 

 

 

 

 

 

18,000

 

Issuance of preferred shares for cash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

760

 

 

 

-

 

 

 

1,500

 

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

2,260,000

 

 

 

 

 

 

 

 

 

 

 

2,260,000

 

Issuance of common shares for acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

168,350

 

 

 

17

 

 

 

499,983

 

 

 

 

 

 

 

 

 

 

 

500,000

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,733,333

 

 

 

173

 

 

 

3,106,827

 

 

 

 

 

 

 

 

 

 

 

3,107,000

 

Conversion of preferred shares

 

 

(1,000,000)

 

 

(100)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

333,333

 

 

 

33

 

 

 

67

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,141,731)

 

 

(219,408)

 

 

(1,361,139)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2021

 

 

59,000,000

 

 

$5,900

 

 

 

408

 

 

$-

 

 

 

760

 

 

 

-

 

 

 

1,500

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

35,377,394

 

 

$3,538

 

 

$84,017,072

 

 

$(81,927,618)

 

$(773,207)

 

$1,325,685

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares for services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

66,667

 

 

 

5

 

 

 

35,860

 

 

 

 

 

 

 

 

 

 

 

35,865

 

Issuance of preferred shares for cash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

500

 

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

500,000

 

 

 

 

 

 

 

 

 

 

 

500,000

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

362,988

 

 

 

37

 

 

 

271,748

 

 

 

 

 

 

 

 

 

 

 

271,785

 

Conversion of preferred shares

 

 

(2,461,715)

 

 

(246)

 

 

(285)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,286,728

 

 

 

529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

283

 

Rounding adjustment in connection with reverse split

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,744,343

 

 

 

174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

174

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(998,487)

 

 

(145,657)

 

 

(1,144,146)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2021

 

 

56,538,285

 

 

$5,654

 

 

 

123

 

 

$-

 

 

 

760

 

 

 

-

 

 

 

2,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

42,838,120

 

 

$4,283

 

 

$84,824,680

 

 

$(82,926,105)

 

$(918,864)

 

$989,648

 

 

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

 

 
6

Table of Contents

 

SINGLEPOINT INC. AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

  (Unaudited)

 

 

For the Six Months Ended

 

 

 

June 30,

2022

 

 

June 30,

2021

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss attributable to Singlepoint Inc. stockholders

 

$(4,749,073)

 

$(2,140,219)

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Loss attributable to non-controlling interests

 

 

(201,189)

 

 

(365,065)

Common stock issued for services and closing costs

 

 

1,111,038

 

 

 

53,867

 

Bad Debt Expense

 

 

105,040

 

 

 

-

 

Depreciation

 

 

85,503

 

 

 

28,883

 

Amortization of intangibles

 

 

83,094

 

 

 

7,260

 

Amortization of debt discounts

 

 

348,453

 

 

 

-

 

Amortization of deferred compensation

 

 

30,187

 

 

 

-

 

(Gain) loss on change in fair value of equity securities

 

 

-

 

 

 

41,627

 

Goodwill impairment charge

 

 

28,005

 

 

 

-

 

(Gain) loss on debt settlement

 

 

-

 

 

 

151,727

 

Changes in operating assets and liabilities (net of acquisitions):

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(222,944)

 

 

(297,539)

Prepaid expenses

 

 

(139,364)

 

 

(100,952)

Inventory

 

 

(109,071)

 

 

(68,180)

Contract Asset

 

 

(7,311)

 

 

-

 

Accounts payable

 

 

935,068

 

 

 

395,045

 

Accrued expenses

 

 

297,527

 

 

 

110,305

 

Unearned Revenue

 

 

560,595

 

 

 

-

 

 

 

 

 

 

 

 

 

 

NET CASH USED IN OPERATING ACTIVITIES

 

 

(1,844,442)

 

 

(2,183,241)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Acquisitions, net of cash acquired

 

 

(1,283,613)

 

 

-

 

Cash paid for acquisition related expenses

 

 

-

 

 

 

(25,000)

Cash paid for property, plant and equipment

 

 

(71,966)

 

 

(16,120)

 

 

 

 

 

 

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

(1,355,579)

 

 

(41,120)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from sale of common stock

 

 

499,271

 

 

 

-

 

Proceeds from advances from related party

 

 

93,627

 

 

 

211,397

 

Proceeds from notes payable

 

 

-

 

 

 

311,070

 

Proceeds from issuance of convertible notes

 

 

3,777,500

 

 

 

-

 

Payments on advances to related party

 

 

(145,000)

 

 

(8,295)

Payments on convertible notes payable

 

 

-

 

 

 

(75,000)

Payments on capital lease obligations

 

 

(64,388)

 

 

(32,177)

Payments on notes payable

 

 

(250,000)

 

 

(286,518)

Proceeds from sale of preferred stock - Class C

 

 

-

 

 

 

760,000

 

Proceeds from sale of preferred stock - Class D

 

 

-

 

 

 

2,000,000

 

Proceeds from sale of preferred stock - Class E

 

 

1,488,000

 

 

 

-

 

 

 

 

 

 

 

 

 

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

5,399,010

 

 

 

2,880,477

 

 

 

 

 

 

 

 

 

 

NET CHANGE IN CASH

 

 

2,198,989

 

 

 

656,116

 

 

 

 

 

 

 

 

 

 

Cash at beginning of period

 

 

191,485

 

 

 

198,473

 

 

 

 

 

 

 

 

 

 

Cash at end of period

 

$2,390,474

 

 

$854,589

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

 

 

 

 

 

 

 

 

Interest paid

 

$32,669

 

 

$-

 

Income tax paid

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Non-cash consideration given for acquisitions through issuance of common stock and notes payable

 

$2,422,836

 

 

$550,000

 

Original issue discount from issuance of notes payable

 

$1,523,198

 

 

$-

 

Common stock issued for conversion of debt and accrued interest

 

$45,277

 

 

$-

 

Conversion of preferred stock to common stock

 

$24

 

 

$100

 

Inventory transferred to Related Party for Note Receivable

 

$-

 

 

$63,456

 

Investment in Jacksam transferred for reduction in Related Party debt

 

$-

 

 

$547,010

 

Non-cash portion of termination agreement removing accrued compensation and Related Party debt in exchange for stock and new Related Party note

 

$-

 

 

$1,120,852

 

Deferred stock compensation recognized for acquisitions

 

$-

 

 

$450,000

 

Discount recognized on deferred stock compensation for acquisitions

 

$-

 

 

$110,402

 

 

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

 

 
7

Table of Contents

 

SINGLEPOINT INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

 

Corporate History

 

On May 14, 2019, SinglePoint Inc. (“SinglePoint” or “the Company”) established a subsidiary, SinglePoint Direct Solar LLC (“Direct Solar America”), completing the acquisition of certain assets of Direct Solar LLC and AI Live Transfers LLC. The Company owns Fifty One Percent (51%) of the membership interests of Direct Solar America. On January 26, 2021, the Company acquired 100% ownership of EnergyWyze, LLC, a limited liability company (“EnergyWyze”). On February 26, 2021, the Company purchased 51% ownership of Box Pure Air, LLC, (“Box Pure Air”). On April 21, 2022 the Company purchased 80.1% membership interests in The Boston Solar Company, LLC (“Boston Solar”).

 

Business

 

We are a company focused on providing renewable energy solutions and energy-efficient applications to drive better health and living. We currently have core subsidiaries specialized in solar energy and air purification. We built our portfolio through synergistic acquisitions, and partnerships. The Company’s initial focus is on solar energy. Through technology solutions we believe we will increase efficiencies across various markets. We strive to create long-term value for our shareholders by helping our partner companies to increase their market penetration, grow revenue and improve cash flow. As of June 30, 2022, we have six subsidiaries, Boston Solar, 80.1% interest, EnergyWyze LLC, 100% interest, Box Pure Air, 51% interest, Direct Solar America, 51% interest, Discount Indoor Garden Supply, Inc. (“DIGS”), 90% interest, and ShieldSaver, LLC (“ShieldSaver”), 51% interest. Our principal offices are located at 2999 North 44th Street Suite 530, Phoenix, AZ 85018, telephone: (888) 682-7464. In April 2021, we formalized and completed the spin-off of 1606 Corp. We intend to spin-off additional assets or non-core subsidiaries in the future, although there are no definitive arrangements in place.

 

Going Concern

 

The financial statements have been prepared assuming that the Company will continue as a going concern. As of June 30, 2022, the Company has yet to achieve profitable operations and is dependent on its ability to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. These factors raise substantial doubt about the Company’s ability to continue as a going concern. As of June 30, 2022, the Company had $2,390,474 in cash. The Company’s net losses incurred for the six months ended June 30, 2022, were $4,749,073 and working capital deficit was $11,903,457 at June 30, 2022.

 

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

 

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

 

Basis of Presentation

 

The accompanying condensed consolidated contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly our consolidated financial position as of June 30, 2022, and December 31, 2021, and the results of our consolidated operations for the interim periods presented. We follow the same accounting policies when preparing quarterly financial data as we use for preparing annual data. These statements should be read in conjunction with the consolidated financial statements and the notes included in our latest annual report on Form 10-K for the year ended December 31, 2021, and our other reports on file with the Securities and Exchange Commission (“SEC”).

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of Singlepoint, Direct Solar America, Box Pure Air, EnergyWyze, DIGS, and ShieldSaver as of June 30, 2022, and December 31, 2021, and for the three and six months ended June 30, 2022 and 2021, and the accounts of Boston Solar as of June 30, 2022, and the period from April 21, 2022 (acquisition date) through June 30, 2022. All significant intercompany transactions have been eliminated in consolidation.

 

 
8

Table of Contents

 

Use of Estimates in the Preparation of Financial Statements

 

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

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with the original maturities of ninety days or less at the time of purchase to be cash equivalents. The Company maintains deposits in financial institutions which are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company had $1,640,474 deposits in excess of amounts insured by the FDIC as of June 30, 2022.

 

Reverse Stock-Split

 

On March 26, 2021, we affected a 1 for 75 reverse stock split of our common stock. At the effective time of the reverse stock split, every 75 shares of issued and outstanding common stock were converted into one (1) share of issued and outstanding common stock. The number of authorized shares and the par value per share of the common stock and the number of authorized or issued and outstanding shares of the Company’s preferred stock remained unchanged. The reverse stock split did not cause an adjustment to the par value or the authorized shares of the common stock. As a result of the reverse stock split, the Company further adjusted the share amounts under its employee incentive plan which had no outstanding options and common stock warrant agreements with third parties. All disclosures of common shares and per common share data in the accompanying financial statements and related notes reflect this reverse stock split for all periods presented.

 

Revenues

 

The Company records revenue under the adoption of ASC 606 by analyzing exchanges with its customers using a five-step analysis:

 

 

(1)

identifies the contract(s) with a customer;

 

 

 

 

(2)

identifies the performance obligations in the contract(s);

 

 

 

 

(3)

determines the transaction price;

 

 

 

 

(4)

allocates the transaction price to the performance obligations in the contract(s); and

 

 

 

 

(5)

recognizes revenue when (or as) the entity satisfies a performance obligation.

 

The Company incurs costs associated with product distribution, such as freight and handling costs. The Company has elected to treat these costs as fulfillment activities and recognizes these costs at the same time that it recognizes the underlying product revenue. In accordance with ASC 606, the Company recognizes revenue at an amount that reflects the consideration that the Company expects to be entitled to receive in exchange for transferring goods or services to its customers. The Company’s policy is to record revenue when control of the goods transfers to the customer.

 

The Company uses three categories for disaggregated revenue classification:

 

 

(1)

Retail Sales (Box Pure Air, DIGS),

 

 

 

 

(2)

Distribution (1606 and related products through the date of spin-off, DIGS) and,

 

 

 

 

(3)

Services Revenue (Boston Solar, Direct Solar, EnergyWyze).

 

Additionally, the Company also disaggregates revenue by subsidiary:

 

 

(1)

Singlepoint (parent company)

 

 

 

 

(2)

Direct Solar America

 

 

 

 

(4)

EnergyWyze

 

 

 

 

(5)

Box Pure Air

 

 

 

 

(6)

Boston Solar

 

 
9

Table of Contents

 

 

Retail Sales. Our retail sales include our products sold directly to consumers, with sales recognized upon delivery of the product to the customer, with the customer taking risk of ownership and assuming risk of loss. Payment is due upon delivery. Box Pure Air provides advanced air purification devices to businesses and consumers. DIGS operates an online store and sells nutrients, lights, HVAC systems and other products to consumers.

 

Distribution Revenue. Our distribution revenue includes Singlepoint’s 1606 (through the date of the spin-off), DIGS, and related product sales to third-party resellers with revenue recognized upon delivery of the product to the reseller, with the reseller taking risk of ownership and assuming risk of loss. Payment is due upon delivery or within 30 days of invoicing, except for when sold direct to consumer upon which payment is due immediately.

 

Services Revenue. Our services revenue includes services provided by Boston Solar which provides installation of solar panels for residential and commercial properties. Direct Solar America, which earns commission revenue for solar services placed with third-party contractors and recognizes revenue upon date of completion of installation. Cash received in advance of contract completion is recognized as deferred revenue until contracts are complete. Singlepoint’s merchant services provides payment services to businesses with revenue recognized upon the close and remittance of commissions each month. EnergyWyze generates and sells marketing leads to the solar industry. Service revenue is recognized as the performance obligations are fulfilled, with the customer taking risk of ownership and assuming risk of loss. Payment for service revenue is generally due upon completion.

 

Construction Contract Performance Obligations, Revenues and Costs. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. The Company evaluates whether two or more contracts should be combined and accounted for as one performance obligation and whether the combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment, and the decision to combine a group of contracts or separate a single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. The Company's installation contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contract and integrated and, therefore, not distinct. Less commonly, the Company may promise to provide distinct goods or services within a contract, in which case the contract is separated into more than one performance obligation. If a contract is separated into more than one performance obligation, the total transaction price is allocated to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation.

 

The primary method used to estimate standalone selling price of each performance obligation is the expected cost plus a margin approach, under which the Company estimates the costs of satisfying the performance obligations and then adds appropriate margins.

 

 
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The Company recognizes revenue over time on its contracts when it satisfies a performance obligation by continuously transferring control to a customer. The customer typically controls the contract and related service, as evidenced by contractual termination clauses or by contract terms specifying the Company's rights to payment for work performed to date, plus a reasonable profit to deliver products or services that do not have an alternative use to the Company.

 

Management has determined that using contract costs as an input method depicts the continuous transfer of control to customers as the Company incurs these costs from fixed-price or lump-sum contracts.

 

Under this method, actual direct contract costs incurred are compared to total estimated contract costs for each contract to determine a percentage depicting progress toward contract completion or satisfaction of performance obligations. This percentage is applied to the contract price or allocated transaction price to determine the amount of cumulative revenue to recognize.

 

Contract costs include all installed materials, direct labor and subcontract costs. Operating costs are charged to expense as incurred.

 

Contract costs incurred that do not contribute to satisfying performance obligations and are not reflective of transferring control to the customer, such as uninstalled materials and rework labor, are excluded from the percent complete calculation.

 

Contract Estimates

 

The estimation of total revenue and cost at completion requires significant judgment and involves the use of various estimation techniques. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, and the performance of subcontractors. Changes in job performance, job conditions and estimated profitability, including those changes arising from contract penalty provisions and final contract settlements, may result in revisions to costs and revenue. Such changes are recognized in the period in which the revisions are determined. If, at any time, the estimate of contract profitability indicates an anticipated loss on the contract, a provision for the entire loss is recognized in the period in which it is identified.

 

Contract Modifications

 

Contract modifications are routine in the performance of the Company's contracts. Contracts are often modified to account for changes in the contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct and are accounted for as part of the existing contract.

 

Contract Assets and Liabilities

 

Billing practices are governed by the contract terms of each project based primarily on costs incurred, achievement of milestones or predetermined schedules. Billings do not necessarily correlate with revenue recognized over time. Contract assets represent revenues recognized in excess of amounts billed. Contract liabilities represents billings in excess of revenues recognized.

 

Accrued revenue includes amounts which have met the criteria for revenue recognition and have not yet been billed to the client.

 

The Company's residential contracts include payments terms that call for payment upon receipt of the invoice, and their commercial contracts call for payment between 15 and 60 days from the invoice date, primarily within 30 days.

 

 
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Accounts Receivable

 

The Company carries its accounts receivable at the amount management expects to collect from outstanding receivables. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, when deemed necessary, based on historic write offs and collections and current credit conditions.

 

Accounts receivable is net of an allowance for doubtful accounts of $44,805 and $0 as of June 30, 2022, and December 31, 2021, respectively. During the three and six months ended June 30, 2022, the Company did not write off any receivables.

 

Inventory

 

Inventory consists primarily of photovoltaic modules, inverters, racking and associated finished parts required for the assembly of photovoltaic systems. Inventories are valued at the lower of cost or net realizable value determined by the first-in, first-out method. The Company writes down its inventory for estimated obsolescence equal to the difference between the carrying value of the inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. If actual future demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

 

Inventory is net of a reserve for obsolescence of $96,394 and $0 as of June 30, 2022, and December 31, 2021, respectively.

 

Accrued Warranty and Production Guarantee Liabilities

 

As a standard practice, the Company warranties its labor for ten years from the completion date of their installation projects and passes through manufacturer warranties on products installed. These warranties are not separately priced, therefore, costs related to the warranties are accrued when management determines they are able to estimate them. Management has not separately accounted for the actual warranty costs each year, and has accrued based on their best estimates as of each year end.

 

As a standard practice, the Company provides a two-year production guarantee on installed solar systems. These production guarantees are not separately priced, therefore, costs related to production guarantees are accrued based on management's best estimates as of each year end. Separately, the Company offers customers an optional ten-year production guarantee that can be purchased for $1,000.

 

Returns and other adjustments

 

The Company records an estimate for provisions of discounts, returns, allowances, customer rebates and other adjustments for each shipment, and are netted with gross sales. The Company’s discounts and customer rebates are known at the time of sale and the Company appropriately debits net product revenues for these transactions based on the known discount and customer rebates. The Company estimates for customer returns and allowances based on estimates of historical transactions and accounts for such provisions during the same period in which the related revenues are earned. Customer discounts, returns and rebates on product revenues during the quarter ended June 30, 2022, are not material.

 

Convertible Instruments

 

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

 

Leases

 

ASC 842 requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. A number of the lease agreements may contain options to renew and options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised. The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, and unamortized lease incentives provided by lessors. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. The Company has elected not to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities.

 

 
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Income Taxes

 

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

 

Earnings (loss) Per Common Share

 

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

 

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

 

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Class A Preferred Stock

 

 

1,402,715,425

 

 

 

1,413,457,125

 

Class B Preferred Stock

 

 

-

 

 

 

806,557

 

Class C Preferred Stock, including accrued dividends

 

 

4,903,394

 

 

 

747,540

 

Class D Preferred Stock, including accrued dividends

 

 

32,569,191

 

 

 

1,395,349

 

Class E Preferred Stock, including accrued dividends

 

 

24,657,963

 

 

 

-

 

Convertible notes

 

 

12,703,579

 

 

 

20,000

 

Warrants

 

 

4,129,091

 

 

 

10,000,000

 

Potentially dilutive securities

 

 

1,481,678,643

 

 

 

1,428,295,424

 

 

 
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Fair Value Measurements

 

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

 

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

 

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

 

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

 

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

 

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

 

Recently Issued Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. ASU 2016-13 is effective for the Company’s fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on the Company’s consolidated financial statements.

 

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the manner in which an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Under the amendments in ASU 2017- 04, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, ASU 2017-04 requires any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test. We adopted ASU 2017-04 effective March 1, 2020 (the first quarter of our 2021 fiscal year).

 

Subsequent Events

 

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

 

 
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NOTE 3 – UNCOMPLETED CONTRACTS

 

Deferred costs and estimated earnings and billings on uncompleted contracts consist of the following as of June 30, 2022 and December 31, 2021:

 

 

 

2022

 

 

2021

 

Deferred costs

 

$244,300

 

 

$-

 

Estimated earnings

 

 

 

 

 

 

 

 

 

 

 

244,300

 

 

 

-

 

Add: billings to date

 

 

7,311

 

 

 

-

 

Deferred costs and costs and estimated earnings in excess of related billings on uncompleted contracts

 

$251,611

 

 

$-

 

 

Deferred costs include permitting costs to fulfill contracts on installations in progress

 

NOTE 4 – ACQUISITIONS, GOODWILL, AND INTANGIBLE ASSETS

 

Boston Solar Acquisition

 

On April 21, 2022, the Company completed the acquisition of 80.1% of the membership interests in Boston Solar, a leading residential, small commercial solar energy, procurement, and construction (“EPC”) company focused on customers in the greater Boston area. This acquisition solidifies the Company’s EPC acquisition strategy. The total consideration paid for the purchased interests was $6,064,858 consisting of: $2,287,168 of cash paid at closing; issuance of a note payable in 14,781,938 shares of Company common stock with a fair value of $1,252,273; issuance of a promissory note with a fair value of $897,306; issuance of a convertible promissory note with a fair value of $1,378,111 payable in cash or shares of Company common stock at the holder’s option; and a $250,000 holdback of additional cash. The Company incurred acquisition related expenses of approximately $615,000 during the six months ended June 30, 2022, which were recognized in SG&A within the Company’s consolidated statement of income.

 

The Company accounted for the acquisition as a purchase of a business and recorded the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed as goodwill. The total purchase price was provisionally allocated as follows:

 

Goodwill

 

$6,785,416

 

Tangible assets

 

 

4,787,928

 

Intangible asset – tradename/trademarks (10-year life)

 

 

3,008,100

 

Intangible asset – IP/technology (7-year life)

 

 

438,000

 

Intangible asset – non-competes (3-year life)

 

 

123,200

 

Total liabilities

 

 

(7,571,036 )

Non-controlling interest

 

 

(1,506,750 )

Total consideration paid for 80.1% interest

 

$6,064,858

 

 

Revenue of $3,839,773 and a net loss of $721,964 related to Boston Solar for the period from the April 21, 2022 acquisition date through the end June 30, 2022 are included in the Company’s accompanying consolidated statement of operations. These results are prior to consideration for non-controlling interest. 

 

The following supplemental unaudited pro forma information presents the consolidated results of the Company’s operations as if the acquisition of Boston Solar on April 21, 2022 had been consummated on April 1, 2021. This supplemental unaudited pro forma information is based solely on the historical unaudited financial results for the Boston Solar acquisition and does not include operational or other changes which might have been affected by the Company. The supplemental unaudited pro forma information presented below is for illustrative purposes only and is not necessarily indicative of the results which would have been achieved or results which may be achieved in the future:

 

 

 

Three Months Ended June 30,

 

 

 

2022

 

 

2021

 

Revenue, net

 

$5,333,803

 

 

$4,501,773

 

Net loss

 

(3,348,902)

 

(667,789)

 

 
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Goodwill

 

The following table presents details of the Company’s goodwill as of June 30, 2022, and December 31, 2021:

 

 

 

Boston

Solar

 

 

Direct Solar America

 

 

Box Pure Air

 

 

EnergyWyze

 

 

Total

 

Balances at December 31, 2021:

 

$-

 

 

$1,212,968

 

 

$414,151

 

 

$75,000

 

 

$1,702,119

 

Aggregate goodwill acquired

 

 

6,785,416

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,785,416

 

Impairment losses

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Balances at June 30, 2022:

 

$6,785,416

 

 

$1,212,968

 

 

$414,151

 

 

$75,000

 

 

$8,487,536

 

 

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

 

Intangible Assets

 

The following table presents details of the Company’s intangible assets (excluding goodwill) as of June 30, 2022:

 

 

 

IP /

Technology

 

 

Tradename Trademarks

 

 

Non - Competes

 

 

Other

 

 

Total

 

Balances at December 31, 2021:

 

$-

 

 

$-

 

 

$-

 

 

$34,485

 

 

$34,485

 

Intangibles acquired

 

 

438,000

 

 

 

3,008,100

 

 

 

123,200

 

 

 

-

 

 

 

3,569,300

 

Less: Amortization

 

 

11,732

 

 

 

56,402

 

 

 

7,700

 

 

 

7,260

 

 

 

83,094

 

Balances at June 30, 2022:

 

$426,268

 

 

$2,951,698

 

 

$115,500

 

 

$27,225

 

 

$3,520,691

 

 

 Estimated amortization expense:

 

 

Year Ending December 31,

 

 

 

2022 (remainder) 

 

$209,484

 

2023 

 

 

418,968

 

2024 

 

 

409,893

 

2025 

 

 

376,215

 

2026

 

 

363,381

 

Thereafter

 

 

 1,742,750

 

Total

 

$3,520,691

 

 

 
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NOTE 5 - NOTES PAYABLE

 

Notes Payable

 

Seller Note Payable. On April 21, 2022 the Company entered into an unsecured note payable with a former owner of Boston Solar as part of the Boston Solar acquisition. The face value of the note is $1,000,000 with no stated interest. Principal payments are due as follows: $250,000 due October 31, 2022, $250,000 due April 30, 2023, and $500,000 due October 31, 2023. The fair value of the note was determined to be $897,306 at the date of acquisition with the difference between the stated value and the fair value being amortized to interest expense over the 18 month period. At June 30, 2022, $475,075 is included in Current portion of notes payable and $475,075 is included Long-term notes payable.

 

Note Purchase Agreement. In July 2021the Company entered into a Note Purchase Agreement with Bucktown Capital LLC (“BCL”) whereby the Company agreed to issue and sell to BCL a promissory note in the principal amount of $1,580,000 (the “Note”). The Note bears interest at the rate of Eight Percent (8%) per annum, and provides that for the calendar quarter beginning on January 1, 2022 and continuing for each calendar quarter thereafter until the Note is paid in full, the Company will make quarterly cash payments to BCL equal to $250,000. The Company may choose the frequency and amount of each payment (subject to a minimum payment of $50,000) during each applicable quarter so long as the aggregate amount paid during each quarter is equal to $250,000. The Note matures in July 2024. The Note contains the following covenants: (i) Company will timely file on the applicable deadline all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the 1934 Act, and will take all reasonable action under its control to ensure that adequate current public information with respect to Company, as required in accordance with Rule 144 of the 1933 Act, is publicly available, and will not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination; (ii) the Common Stock shall be listed or quoted for trading on any of (a) NYSE, (b) NASDAQ, (c) OTCQX, (d) OTCQB, or (e) OTC Pink; (iii) trading in Company’s Common Stock will not be suspended, halted, chilled, frozen, reach zero bid or otherwise cease trading on Company’s principal trading market for more than two (2) consecutive Trading Days; and (iv) Company will not enter into any financing transaction with John Kirkland or any of his affiliated entities. The Company was in compliance with these covenants at December 31, 2021. The Note is not convertible into any securities of the Company. At June 30, 2022, $1,209,776 is included Current Portion of notes payable and $69,380 is included in Long-term notes payable.

 

SBA Loan. In May 2020, the Company received loan proceeds of $150,000 under the SBA’s Economic Injury Disaster Loan program (“EIDL”). The EIDL dated May 22, 2020, bears interest at 3.75%, has a 30-year term, is secured by substantially all assets of the Company, and is due in monthly installments of $731 beginning May 1, 2021. At June 30, 2022, $10,234 is included Current Portion of notes payable and $139,766 is included in Long-term notes payable.

 

Convertible Notes Payable

 

Purchase Agreement. On April 21, 2022, the Company entered a Securities Purchase Agreement (the “Purchase Agreement”) with Cameron Bridge LLC, Target Capital LLC, and Walleye Opportunities Master Fund Ltd. (collectively the “Investors”), whereby the Investors purchased from the Company, and the Company issued, an aggregate principal amount of $4,885,353 of 15% original issue discount convertible promissory notes (each, a “Note” and collectively, the “Notes”), and (ii) warrants to purchase shares of Common Stock of the Company (each, a “Warrant” and collectively, the “Warrants”). Pursuant to the terms of the Purchase Agreement the Company (and or The Boston Solar Company LLC (“Boston Solar”) also entered into the following agreements (also collectively referred to as the “Transaction Documents”): Registration Rights Agreement, Assignment of Boston Solar Membership Interest, Guarantor Security Agreement, Guaranty, and Pledge and Escrow Agreement. In order to secure the full and timely payment and performance of all of the Company’s Obligations to the Investors under the Transaction Documents, the Company agreed to transfer, pledge, assign, and grant to the Investors a continuing lien and security interest in all right, title and interest of the Company’s 80.1% of the issued and outstanding Membership Interests of Boston Solar. Boston Solar guaranteed the obligations of the Company under the Notes and granted the Investors a security interest in and pledged its assets as collateral for the Notes, in the event of a default on the terms of the Notes. The Company agreed that it will prepare and, as soon as practicable, but in no event later than the Filing Deadline (as defined below), file with the Commission a registration statement; registering for resale (a) at least the number of shares of Common Stock equal to 125% of the sum of the maximum number of shares of Common Stock issuable upon conversion of the Notes at the initial conversion price thereof, and (b) 100% of the Warrant Shares (the “Initial Required Registration Amount”). The Registration Statement filed hereunder shall be on Form S-1 in connection with the Liquidity Event. “Liquidity Event” means a public offering of Common Stock (or units consisting of Common Stock and warrants to purchase Common Stock), resulting in the listing for trading of the Common Stock on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing). ”Filing Deadline” means: (i) with respect to the Initial Registration Statement, the earlier of (a) the date that a Registration Statement is filed in connection with the Liquidity Event and (b) 180 days. Each Note was designated as a 15% Convertible Promissory Note due the earlier of January 21, 2023 or upon the occurrence of the Liquidity Event. Upon an Event of Default, interest on the Notes immediately accrues thereafter at a rate equal to 18% per annum which shall be paid in cash monthly until the Default is cured. The Company shall have the option to prepay the Notes at any time after the Original Issue Date prior to or on the Maturity Date at an amount equal to 120% of the Prepayment Amount. Upon or following the occurrence of a Liquidity Event or an Event of Default, at the option of the holder, the Notes are convertible into Conversion Shares. The number of Conversion Shares to be issued upon each conversion is determined by dividing the Conversion Amount by the applicable Conversion Price then in effect, if the holder does not exercise its option to convert this Note upon or following the occurrence of a Liquidity Event, the Company shall be required to pay the amounts owing thereunder on the Liquidity Date in cash, as required therein. The Company shall not affect any conversion of the Notes, and a holder shall not have the right to convert any portion of the Notes, to the extent that after giving effect to the conversion, the holder (together with the holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the holder’s Affiliates would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion thereof. The holder, upon notice to the Company, may increase or decrease such percentage, but in no event shall it exceed 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of the Note held by the holder. At June 30, 2022 all of the note, $4,053,714, net of the original issue discount and debt issuance costs, is included in Current portion of convertible notes payable. Additionally, at June 30, 2022, there has been no Liquidity Event or event of default, and as such, the note is not convertible and no warrants have been issued.

 

 
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Seller Note Payable in Shares. On April 21, 2022, the Company issued an unsecured 36-month seller note to the chief executive officer of Boston Solar in the amount of $1,940,423 payable in shares of the Company’s common stock based on the volume weighted average closing share price of the Company’s common stock over the 60 trading days prior to April 21, 2022. The payments begin six months after April 21, 2022 and are paid quarterly over 30 months. The fair value of the note was determined to be $1,252,272. The difference between the stated value and the fair value is being amortized to interest expense over the 36-month period. At June 30, 2022, $232,743 is included in Current portion of convertible notes payable, and $1,062,538 is included in Long-term portion of convertible notes payable.

 

Seller Convertible Note. On April 21, 2022, the Company issued an unsecured convertible note of $976,016 to the chief executive office of Boston Solar, payable in cash or in shares of the Company’s common stock at the holder’s option at a 20% discount to the market based on a predetermined formula. The stated interest rate on the note is 12.5 percent. The fair value of the note on April 21, 2022, was determined to be $1,378,111, a premium of $409,095. The note is due March 31, 2023. At June 30, 2022, all of the note, $1,378,111 is included in Current portion of convertible notes payable.

 

EnergyWyze. Related to the acquisition of EnergyWyze, the Company incurred an initial purchase consideration obligation of $450,000 with a fair value of $339,599. The remaining fair value amount of the purchase obligation at June 30, 2022, is $75,464, of which $45,099 is included in Current Portion of notes payable and $30,365 is included in Long-term notes payable

 

Other. In October 2016 the Company issued a convertible note payable in the amount of $10,500 to an accredited investor with interest at 0%, due October 2017, convertible at $0.525 per share. This note is currently in default and included in Current Portion of convertible notes payable.

 

As of June 30, 2022, the Company was in compliance with all covenants of its debt agreements, except for the $10,500 convertible note that is currently in default and included in Current Portion of convertible notes payable.

 

NOTE 6 – LEASES

 

Boston Solar was acquired on April 21, 2022, and has fixed rate non-cancelable operating lease agreements for office, warehouse, and parking real estate; vehicles; and tools. The monthly operating lease payments for real estate are from $4,372 to $18,466 and end September 2027. Vehicle leases range from $644 to $821 per month, and their end dates from December 2023 to September 2026. Tools lease payments are $1,312 per month and end March 2027. Total lease expense for the three months ended June 30, 2022 is $81,420. At April 21, 2022, as part of the acquisition, the Company recognized initial ROU Assets and Lease Liabilities related to Boston Solar of $1,400,278 and $(1,400,278), respectively.

 

Future minimum operating lease payments are as follows:

 

Year Ending December 31,

 

 

 

2022 (remainder)

 

$162,840

 

2023

 

 

325,681

 

2024

 

 

313,044

 

2025

 

 

309,058

 

2026

 

 

304,241

 

Thereafter

 

 

209,474

 

Total

 

 

1,624,338

 

Less: interest

 

 

(240,930)

Present value of lease liabilities

 

$1,383,408

 

Less: Current portion

 

 

(257,972)

Lease liability, net of current portion

 

$1,125,436

 

 

 
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NOTE 7 - STOCKHOLDERS’ EQUITY

 

Class A Convertible Preferred Shares

 

As of June 30, 2022, and December 31, 2021, the Company had authorized 100,000,000 shares of preferred stock, $0.0001 par value per share, of which 60,000,000 shares are designated as Class A Convertible Preferred Stock (“Class A Stock”) with $0.0001 par value per share, of which 56,108,617 and 56,353,015 shares were issued and outstanding as of June 30, 2022, and December 31, 2021, respectively.

 

Each share of Class A Stock is convertible at any time into 25 shares of common stock, totaling 1,402,715,425 shares of common stock assuming full conversion of all outstanding shares as of June 30, 2022. No dividends are payable unless declared by the Board of Directors. Each share of Class A Stock votes with the shares of Common Stock and is entitled to 50 votes per share and ranks senior to all other classes of stock in liquidation in the amount of $1 per share.

 

Class B Convertible Preferred Stock

 

As of June 30, 2022, and December 31, 2021, the Company had authorized 1,500 shares of Class B Preferred Stock, $0.0001 par value per share, of which 0 and 48 shares were issued and outstanding as of June 30, 2022, and December 31, 2021, respectively.

 

Class C Convertible Preferred Stock

 

On January 28, 2021, the Company amended its Articles of Incorporation to designate 1,500 shares of undesignated preferred stock as Class C Preferred Stock, of which 282 and 760 shares were issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.

 

The Company has the right to redeem the Class C Preferred Stock, in accordance with the terms stated by the Certificate of Designation.

 

The Company shall pay a dividend of three percent (3%) per annum on the Class C Preferred Stock. Dividends shall be paid quarterly, and at the Company’s discretion, in cash or Class C Preferred Stock calculated at the purchase price. The Stated Value of the Class C Preferred Stock is $1,200 per share.

 

On June 8, 2022, the Company amended the conversion rights so that each share of the Class C Preferred Stock is convertible, at any time and from time to time from and after the issuance at the option of the Holder thereof, into that number of shares of Common Stock (subject to Beneficial Ownership Limitations) determined by dividing the Stated Value of such share by the lesser of (a) $0.1055 ; and (b) where applicable, a fixed price equaling one hundred percent (100%) of the lowest traded VWAP for the fifteen (15) trading days preceding a conversion.

 

Class D Convertible Preferred Shares

 

On March 11, 2021, the Company amended its Articles of Incorporation to designate 2,000 shares of undesignated preferred stock as Class D Preferred Stock, of which 2,000 shares were issued and outstanding as of June 30, 2022, and December 31, 2021.

 

The Company has the right to redeem the Class D Preferred Stock, in accordance with the terms stated by the Certificate of Designation.

 

The Company shall pay a dividend of three percent (3%) per annum on the Class D Preferred Stock. Dividends shall be paid quarterly, and at the Company’s discretion, in cash or Class D Preferred Stock calculated at the purchase price. The Stated Value of the Class D Preferred Stock is $1,200 per share.

 

On June 8, 2022, the Company amended the conversion rights so that each share of the Class D Preferred Stock is convertible, at any time and from time to time from and after the issuance at the option of the Holder thereof, into that number of shares of Common Stock (subject to Beneficial Ownership Limitations) determined by dividing the Stated Value of such share by (a) $0.1055; and (b) where applicable, a fixed price equaling one hundred percent (100%) of the lowest traded VWAP for the fifteen (15) trading days preceding a conversion.

 

 
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Class E Convertible Preferred Shares

 

On April 7, 2022, Singlepoint Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with GHS Investments, LLC (“GHS”), whereby GHS agreed to purchase, in tranches, up to One Million Five Hundred Thousand Dollars ($1,500,000) of the Company’s Class E Preferred Stock in exchange for One Thousand Five Hundred (1,500) shares of Class E Preferred Stock in three separate tranches. The first tranche (the “Initial Closing Date”), occurred upon execution of the Purchase Agreement with the purchase of Seven Hundred Seven (707) shares of Class E Preferred Stock for Seven Hundred Seven Thousand Dollars ($707,000). The Company completed the second and third tranche of the transactions set forth in the Securities Purchase Agreement and issued 500 shares of Class E Preferred Stock on May 23, 2022 in exchange for Five Hundred Thousand ($500,000) Dollars, and 293 shares of Class E Preferred Stock on June 27, 2022 in exchange for Two Hundred Ninety Three Thousand ($293,000) Dollars. In addition the Company issued GHS fifty shares of Class E Preferred Stock upon the Initial Closing Date as an equity incentive, and warrants to purchase 4,129,091 shares of its common stock at a purchase price of $.114 per share for a period of five years.

 

The Company has the right to redeem the Class E Preferred Stock, in accordance with the following schedule:

 

 

i.

If all of the Class E Preferred Stock are redeemed within ninety (90) calendar days from the issuance date thereof, the Company shall have the right to redeem the Class E Preferred Stock upon three (3) business days’ of written notice at a price equal to one hundred and fifteen percent (115%) of the Stated Value, together with any accrued but unpaid dividends;

 

 

 

 

ii.

If all of the Class E Preferred Stock are redeemed after ninety (90) calendar days and within one hundred twenty (120) calendar days from the issuance date thereof, the Company shall have the right to redeem the Class E Preferred Stock upon three (3) business days of written notice at a price equal to one hundred and twenty percent (120%) of the Stated Value together with any accrued but unpaid dividends; and

 

The Company shall pay a dividend of eight percent (8%) per annum on the Class E Preferred Stock. Dividends shall be paid quarterly, and at the Company’s discretion, in cash or Class E Preferred Stock calculated at the purchase price. The Stated Value of the Class E Preferred Stock is $1,200 per share.The Class E Preferred Stock will vote together with the common stock on an as-converted basis subject to the Beneficial Ownership Limitations (as set forth in the Certificate of Designation).The conversion price (the “Conversion Price”) for the Class E Preferred Stock is the amount equal to the lower of (1) a fixed price equaling the closing price of the Common Stock on the trading day immediately preceding the date of the Purchase Agreement, and (2) 100% of the lowest VWAP of the Company’s Common Stock during the fifteen (15) trading days immediately preceding, but not including, the Conversion Date.

 

From the date of issuance until the date when the original holder no longer holds any shares of Class E Preferred Stock, upon any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration, Indebtedness or a combination of units thereof (a “Subsequent Financing”), such holder may elect, in its sole discretion, to exchange (in lieu of conversion), if applicable, all or some of the shares of Class E Preferred Stock then held for any securities or units issued in a Subsequent Financing on a $1.00 for $1.00 basis. Upon a Subsequent Financing, such holder of at least one hundred (100) shares of Class E Preferred Stock shall have the right to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing on the same terms, conditions and price provided for in the Subsequent Financing.

 

As of June 30, 2022, and December 31, 2021, a total of 39,995,000 shares of preferred stock remains undesignated and unissued.

 

Common Stock

 

As of June 30, 2022, and December 31, 2021, the Company’s authorized common stock was 5,000,000,000 shares, at $0.0001 par value per share, with 89,940,121 and 58,785,924 shares issued and outstanding, respectively.

 

 
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Equity Financing Agreement

 

On September 16, 2021, the Company entered into an equity financing agreement (the “Equity Financing Agreement”) and a registration rights agreement (the “Registration Rights Agreement”) with GHS Investments LLC (“GHS”), pursuant to which GHS shall purchase from the Company, up to that number of shares of common stock of the Company (the “Shares”) having an aggregate Purchase Price of Ten Million Dollars ($10,000,000), subject to certain limitations and conditions set forth in the Equity Financing Agreement from time to time over the course of