0001352952 --12-31 false 2023 Q3 0001352952 2023-01-01 2023-09-30 0001352952 2023-09-30 0001352952 2023-11-14 0001352952 2022-12-31 0001352952 us-gaap:SeriesAPreferredStockMember 2023-09-30 0001352952 us-gaap:SeriesAPreferredStockMember 2022-12-31 0001352952 us-gaap:SeriesBPreferredStockMember 2023-09-30 0001352952 us-gaap:SeriesBPreferredStockMember 2022-12-31 0001352952 2023-07-01 2023-09-30 0001352952 2022-07-01 2022-09-30 0001352952 2022-01-01 2022-09-30 0001352952 2021-12-31 0001352952 us-gaap:SeriesAPreferredStockMember 2021-12-31 0001352952 us-gaap:SeriesBPreferredStockMember 2021-12-31 0001352952 us-gaap:CommonStockMember 2021-12-31 0001352952 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001352952 us-gaap:RetainedEarningsMember 2021-12-31 0001352952 us-gaap:NoncontrollingInterestMember 2021-12-31 0001352952 2022-01-01 2022-03-31 0001352952 us-gaap:SeriesAPreferredStockMember 2022-01-01 2022-03-31 0001352952 us-gaap:SeriesBPreferredStockMember 2022-01-01 2022-03-31 0001352952 us-gaap:CommonStockMember 2022-01-01 2022-03-31 0001352952 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-03-31 0001352952 us-gaap:RetainedEarningsMember 2022-01-01 2022-03-31 0001352952 us-gaap:NoncontrollingInterestMember 2022-01-01 2022-03-31 0001352952 2022-03-31 0001352952 us-gaap:SeriesAPreferredStockMember 2022-03-31 0001352952 us-gaap:SeriesBPreferredStockMember 2022-03-31 0001352952 us-gaap:CommonStockMember 2022-03-31 0001352952 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001352952 us-gaap:RetainedEarningsMember 2022-03-31 0001352952 us-gaap:NoncontrollingInterestMember 2022-03-31 0001352952 2022-04-01 2022-06-30 0001352952 us-gaap:SeriesAPreferredStockMember 2022-04-01 2022-06-30 0001352952 us-gaap:SeriesBPreferredStockMember 2022-04-01 2022-06-30 0001352952 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0001352952 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0001352952 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0001352952 us-gaap:NoncontrollingInterestMember 2022-04-01 2022-06-30 0001352952 2022-06-30 0001352952 us-gaap:SeriesAPreferredStockMember 2022-06-30 0001352952 us-gaap:SeriesBPreferredStockMember 2022-06-30 0001352952 us-gaap:CommonStockMember 2022-06-30 0001352952 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001352952 us-gaap:RetainedEarningsMember 2022-06-30 0001352952 us-gaap:NoncontrollingInterestMember 2022-06-30 0001352952 us-gaap:AdditionalPaidInCapitalMember 2022-07-01 2022-09-30 0001352952 us-gaap:RetainedEarningsMember 2022-07-01 2022-09-30 0001352952 us-gaap:NoncontrollingInterestMember 2022-07-01 2022-09-30 0001352952 2022-09-30 0001352952 us-gaap:SeriesAPreferredStockMember 2022-09-30 0001352952 us-gaap:SeriesBPreferredStockMember 2022-09-30 0001352952 us-gaap:CommonStockMember 2022-09-30 0001352952 us-gaap:AdditionalPaidInCapitalMember 2022-09-30 0001352952 us-gaap:RetainedEarningsMember 2022-09-30 0001352952 us-gaap:NoncontrollingInterestMember 2022-09-30 0001352952 us-gaap:CommonStockMember 2022-12-31 0001352952 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001352952 us-gaap:RetainedEarningsMember 2022-12-31 0001352952 us-gaap:NoncontrollingInterestMember 2022-12-31 0001352952 2023-01-01 2023-03-31 0001352952 us-gaap:SeriesAPreferredStockMember 2023-01-01 2023-03-31 0001352952 us-gaap:SeriesBPreferredStockMember 2023-01-01 2023-03-31 0001352952 us-gaap:CommonStockMember 2023-01-01 2023-03-31 0001352952 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-03-31 0001352952 us-gaap:RetainedEarningsMember 2023-01-01 2023-03-31 0001352952 us-gaap:NoncontrollingInterestMember 2023-01-01 2023-03-31 0001352952 2023-03-31 0001352952 us-gaap:SeriesAPreferredStockMember 2023-03-31 0001352952 us-gaap:SeriesBPreferredStockMember 2023-03-31 0001352952 us-gaap:CommonStockMember 2023-03-31 0001352952 us-gaap:AdditionalPaidInCapitalMember 2023-03-31 0001352952 us-gaap:RetainedEarningsMember 2023-03-31 0001352952 us-gaap:NoncontrollingInterestMember 2023-03-31 0001352952 2023-04-01 2023-06-30 0001352952 us-gaap:SeriesAPreferredStockMember 2023-04-01 2023-06-30 0001352952 us-gaap:SeriesBPreferredStockMember 2023-04-01 2023-06-30 0001352952 us-gaap:CommonStockMember 2023-04-01 2023-06-30 0001352952 us-gaap:AdditionalPaidInCapitalMember 2023-04-01 2023-06-30 0001352952 us-gaap:RetainedEarningsMember 2023-04-01 2023-06-30 0001352952 us-gaap:NoncontrollingInterestMember 2023-04-01 2023-06-30 0001352952 2023-06-30 0001352952 us-gaap:SeriesAPreferredStockMember 2023-06-30 0001352952 us-gaap:SeriesBPreferredStockMember 2023-06-30 0001352952 us-gaap:CommonStockMember 2023-06-30 0001352952 us-gaap:AdditionalPaidInCapitalMember 2023-06-30 0001352952 us-gaap:RetainedEarningsMember 2023-06-30 0001352952 us-gaap:NoncontrollingInterestMember 2023-06-30 0001352952 us-gaap:SeriesAPreferredStockMember 2023-07-01 2023-09-30 0001352952 us-gaap:SeriesBPreferredStockMember 2023-07-01 2023-09-30 0001352952 us-gaap:CommonStockMember 2023-07-01 2023-09-30 0001352952 us-gaap:AdditionalPaidInCapitalMember 2023-07-01 2023-09-30 0001352952 us-gaap:RetainedEarningsMember 2023-07-01 2023-09-30 0001352952 us-gaap:NoncontrollingInterestMember 2023-07-01 2023-09-30 0001352952 us-gaap:CommonStockMember 2023-09-30 0001352952 us-gaap:AdditionalPaidInCapitalMember 2023-09-30 0001352952 us-gaap:RetainedEarningsMember 2023-09-30 0001352952 us-gaap:NoncontrollingInterestMember 2023-09-30 0001352952 fil:AssetPurchasedAgreementWithEmergingGrowthLlcMember 2019-05-15 2019-05-15 0001352952 us-gaap:CommonStockMember 2019-05-15 2019-05-15 0001352952 us-gaap:SeriesBPreferredStockMember 2019-05-15 2019-05-15 0001352952 2019-05-15 2019-05-15 0001352952 us-gaap:ServiceMember 2023-01-01 2023-09-30 0001352952 us-gaap:ServiceMember 2023-07-01 2023-09-30 0001352952 us-gaap:ServiceMember 2022-07-01 2022-09-30 0001352952 us-gaap:ProductMember 2023-01-01 2023-09-30 0001352952 us-gaap:ProductMember 2023-07-01 2023-09-30 0001352952 us-gaap:ProductMember 2022-07-01 2022-09-30 0001352952 us-gaap:ShippingAndHandlingMember 2023-01-01 2023-09-30 0001352952 us-gaap:ShippingAndHandlingMember 2023-07-01 2023-09-30 0001352952 us-gaap:ShippingAndHandlingMember 2022-07-01 2022-09-30 0001352952 us-gaap:ServiceMember 2022-01-01 2022-09-30 0001352952 us-gaap:ProductMember 2022-01-01 2022-09-30 0001352952 us-gaap:ShippingAndHandlingMember 2022-01-01 2022-09-30 0001352952 us-gaap:EmployeeStockOptionMember 2023-09-30 2023-09-30 0001352952 fil:Warrant1Member 2023-09-30 2023-09-30 0001352952 fil:PreferredStock1Member 2023-09-30 2023-09-30 0001352952 us-gaap:EmployeeStockOptionMember 2022-12-31 2022-12-31 0001352952 fil:Warrant1Member 2022-12-31 2022-12-31 0001352952 2022-01-01 2022-12-31 0001352952 us-gaap:MachineryAndEquipmentMember 2023-09-30 0001352952 us-gaap:MachineryAndEquipmentMember 2022-12-31 0001352952 us-gaap:FurnitureAndFixturesMember 2023-09-30 0001352952 us-gaap:FurnitureAndFixturesMember 2022-12-31 0001352952 srt:RetailSiteMember 2023-09-30 0001352952 srt:RetailSiteMember 2022-12-31 0001352952 fil:PromissoryNotePayableMember 2019-09-10 2019-09-10 0001352952 fil:PromissoryNotePayableMember 2019-09-10 0001352952 fil:WarrantInConnectionWithPromissoryNoteMemberfil:PromissoryNotePayableMember 2019-09-10 0001352952 fil:PromissoryNotePayableMember 2023-09-30 0001352952 fil:CnpOperatingMember 2019-12-31 0001352952 fil:CnpOperatingMember 2023-09-30 0001352952 fil:CnpOperatingMember 2019-10-28 0001352952 fil:CnpOperatingMember 2019-09-30 0001352952 fil:CnpOperatingMember 2019-09-30 2019-09-30 0001352952 fil:SbaMember 2020-06-24 2020-06-24 0001352952 2021-05-12 0001352952 fil:CSBGMemberfil:EagleOneMember 2021-05-12 0001352952 fil:CSBGMemberfil:EaglTwoMember 2021-05-12 0001352952 fil:PromissoryNotePayable6Member 2020-11-19 0001352952 fil:PromissoryNotePayable6Member 2020-11-19 2020-11-19 0001352952 fil:PromissoryNotePayable6Member 2023-01-01 2023-09-30 0001352952 fil:PromissoryNotePayable6Member 2023-09-30 0001352952 2021-10-19 0001352952 fil:PromissoryNotePayable7Member 2022-04-08 2022-04-08 0001352952 us-gaap:CommonStockMember 2022-10-04 2022-10-04 0001352952 fil:PromissoryNotePayable8Member 2022-05-11 2022-05-11 0001352952 fil:PromissoryNotePayable9Member 2023-05-08 2023-05-08 0001352952 fil:PromissoryNotePayable10Member 2023-07-01 2023-07-01 0001352952 fil:RancoNotesMember 2023-01-01 2023-09-30 0001352952 2021-12-06 2021-12-06 0001352952 fil:StockIssuance2Member 2021-01-01 2021-01-31 0001352952 fil:Warrant1Member 2022-12-31 0001352952 fil:Warrant1Member 2022-01-01 2022-12-31 0001352952 fil:Warrant1Member 2023-01-01 2023-06-30 0001352952 fil:Warrant1Member 2023-06-30 0001352952 fil:Warrant1Member 2023-01-01 2026-06-30 0001352952 fil:Warrant1Member 2023-07-01 2023-09-30 0001352952 fil:Warrant1Member 2023-09-30 0001352952 fil:Warrant1Member 2023-01-01 2023-09-30 0001352952 fil:OfficeSpaceInWhitefishMontanaMember 2019-06-20 2019-06-20 0001352952 fil:OfficeSpaceInWhitefishMontanaMember 2020-09-01 2020-09-01 0001352952 fil:EmergingGrowthMember 2023-09-30 2023-09-30 0001352952 fil:OfficeSpaceInCentennialCoMember 2023-09-30 2023-09-30 0001352952 fil:OfficeSpaceInH2s2LlcMember 2023-09-30 2023-09-30 0001352952 fil:OfficeSpaceInWhitefishMontanaMember 2023-09-30 2023-09-30 0001352952 2023-04-12 2023-04-12 0001352952 2021-10-18 2021-10-18 xbrli:pure iso4217:USD xbrli:shares iso4217:USD xbrli:shares

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

☒

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

 

For the quarterly period ended September 30, 2023

 

☐

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

 

For the transition period from ________ to ________

 

Commission File Number: 000-52635

 

CFN ENTERPRISES INC.

(Exact name of registrant as specified in its charter)

 

Delaware

90-1559541

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

600 E. 8TH STREET

WHITEFISH, MT 59937

(Address of principal executive offices) (Zip code)

 

(833) 420-2636

(Registrant’s Telephone Number, including Area Code)

 

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

 

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 such files).   Yes ☒  No ☐

 

Indicate by check mark whether the registrant is 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 ☒

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 ☒

 

The number of shares outstanding of the registrant’s Common Stock, $0.001 par value per share, as of November 14, 2023 was 82,210,664.

 

When used in this quarterly report, the terms “CFN Enterprises,” “the Company,” “we,” “our,” and “us” refer to CFN Enterprises Inc., a Delaware corporation, and its consolidated subsidiaries, unless the context indicates otherwise.

 

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

 

This quarterly report on Form 10-Q contains certain forward-looking statements. Forward-looking statements may include our statements regarding our goals, beliefs, strategies, objectives, plans, including product and service developments, future financial conditions, results or projections or current expectations. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms, or other comparable terminology. For example, when we discuss our expectations for 2023, our expectations for revenue sources, costs of revenue and expenses going forward, and that we will continue to pursue strategic transactions and opportunities, we are using forward-looking statements. These statements are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those contemplated by the forward-looking statements. These factors include, but are not limited to, our ability to implement our strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. The business and operations of CFN Enterprises Inc. are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described under “Item 1A. Risk Factors” contained in our annual report on Form 10-K as filed with the Securities and Exchange Commission, or the SEC, on April 17, 2023. Readers are also urged to carefully review and consider the various disclosures we have made in this report and in our annual report on Form 10-K.

 

 

CFN ENTERPRISES INC.

 

INDEX

 

  

Page

 

 

PART I - FINANCIAL INFORMATION:

1

 

 

Item 1. Financial Statements and accompanying Notes to the Financial Statements (Unaudited)

1

 

 

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

19

  

  

Item 4. Controls and Procedures

25

 

 

PART II - OTHER INFORMATION:

26

 

 

Item 6. Exhibits

26

 

 

SIGNATURES

26

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

CFN ENTERPRISES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

2023

 

2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$1,741,005  

 

$12,474  

 

 

Restricted cash

 

20,366  

 

20,128  

 

 

Accounts receivable, net

 

712,881  

 

28,245  

 

 

Inventory

 

1,864,800  

 

-  

 

 

Prepaid expenses

 

74,250  

 

-  

 

 

 

 

Total current assets

 

4,413,302  

 

60,847  

Goodwill

 

8,676,430  

 

-  

Property and equipment, net

 

164,775  

 

53,570  

Right of use asset

 

2,382,627  

 

110,321  

Deposits

 

297,269  

 

-  

Other assets

 

55,676  

 

46,766  

Assets held for sale

 

-  

 

599,047  

 

 

 

 

Total assets

 

$15,990,079  

 

$870,551  

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$2,487,171  

 

$2,357,614  

 

 

Accrued liabilities

 

3,318,398  

 

2,343,654  

 

 

Payments made in advance of securities date

 

-  

 

217,500  

 

 

Due to related party

 

575,314  

 

503,259  

 

 

Deferred revenue

 

10,767  

 

10,978  

 

 

Current portion of notes payable

 

3,854,300  

 

3,088,250  

 

 

Due to seller

 

1,000,000  

 

-  

 

 

Contingent consideration

 

208,000  

 

-  

 

 

Current portion of right of use liability

 

912,215  

 

262,727  

 

 

Current liabilities of discontinued operations

 

79,823  

 

79,823  

 

 

 

 

Total current liabilities

 

12,445,987  

 

8,863,805  

Right of use liability

 

1,724,267  

 

200,758  

Long-term note payable, net of current portion and discounts

 

4,071,631  

 

978,337  

 

 

 

 

Total liabilities

 

18,241,885  

 

10,042,900  

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

Stockholders' deficit:

 

 

 

 

 

Series A preferred stock, $0.001 par value, 500 shares authorized, 500 shares issued and outstanding as of September 30, 2023 and December 31, 2022

 

1  

 

1  

 

Series B preferred stock, $0.001 par value, 3,000 shares authorized, 3,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022

 

3  

 

3  

 

Common stock, $0.001 par value, 500,000,000 shares authorized, 82,210,664 and 37,609,664 shares issued and outstanding as of September 30, 2023 and December 31,2022, respectively

82,210  

 

37,690  

 

Additional paid-in capital

 

60,759,497  

 

49,786,056  

 

Accumulated deficit

 

(63,093,517) 

 

(58,996,099) 

 

 

 

 

Total stockholders' deficit

 

(2,251,806) 

 

(9,172,349) 

 

 

 

 

Total liabilities and stockholders' deficit

 

$15,990,079  

 

$870,551  

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

1

 

 

CFN ENTERPRISES INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

 

 

 

 

 

September 30,

 

September 30,

 

2023

 

2022

 

2023

 

2022

Net revenues 

 

 

$1,678,571  

 

$840,970  

 

$1,943,830  

 

$3,828,634  

Cost of revenue

 

 

 

 

 

 

1,225,536  

 

1,309,853  

 

1,449,211  

 

5,710,701  

 

 

Gross profit (loss)

 

 

453,035  

 

(468,883) 

 

494,619  

 

(1,882,067) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

1,597,681  

 

513,200  

 

3,722,829  

 

1,788,872  

 

 

Total operating expenses

 

 

1,597,681  

 

513,200  

 

3,722,829  

 

1,788,872  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(1,144,646) 

 

(982,083) 

 

(3,228,210) 

 

(3,670,939) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(765,919) 

 

(115,257) 

 

(869,420) 

 

(267,644) 

 

Gain on property and equipment

 

 

-  

 

-  

 

9,253  

 

87,933  

 

Unrealized loss on marketable securities

 

 

-  

 

(24,750) 

 

-  

 

(44,244) 

 

Gain on extinguishment of debt

 

 

-  

 

-  

 

13,219  

 

-  

 

Other income

 

 

-  

 

-  

 

157,502  

 

3,772  

 

Interest income

 

 

82  

 

43  

 

238  

 

52  

 

 

Total other income (expense), net

 

 

(765,837) 

 

(139,963) 

 

(689,207) 

 

(220,130) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-  

 

-  

 

-  

 

-  

Net loss

 

 

 

 

 

$(1,910,483) 

 

$(1,122,046) 

 

$(3,917,417) 

 

$(3,891,069) 

Preferred stock interest

 

 

60,000  

 

60,000  

 

180,000  

 

180,000  

Net loss available to common shareholders

 

 

$(1,970,483) 

 

$(1,182,046) 

 

$(4,097,417) 

 

$(4,071,069) 

Net loss attributable to non-controlling interest

 

 

-  

 

422  

 

-  

 

467  

Net loss available to CFN Enterprises common shareholders

 

 

$(1,970,483) 

 

$(1,182,468) 

 

$(4,097,417) 

 

$(4,071,536) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share - basic and diluted  

 

 

$(0.02) 

 

$(0.03) 

 

$(0.08) 

 

$(0.12) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding -

 

 

 

 

 

 

 

 

 

 

basic and diluted

 

 

 

81,990,884  

 

33,822,379  

 

54,346,145  

 

32,951,092  

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

2

CFN ENTERPRISES INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

Series A

 

Series B

 

 

 

Additional

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

Preferred Stock

 

Preferred Stock

 

Common Stock

 

Paid-in

 

Accumulated

 

Non-controlling

 

Stockholders'

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Deficit

 

Interest

 

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2021

 

500 

 

$1 

 

3,000 

 

$3 

 

31,679,481

 

$31,679 

 

$46,399,451 

 

$(48,833,880) 

 

$7,003  

 

$(2,395,743) 

Payment of CSIS debt by shareholder

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

415,875 

 

 

 

-  

 

415,875  

Preferred stock interest

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

- 

 

(60,000) 

 

-  

 

(60,000) 

Net loss

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

- 

 

(1,302,182) 

 

(23) 

 

(1,302,204) 

Balances at March 31, 2022

 

500 

 

$1 

 

3,000 

 

$3 

 

31,679,481

 

$31,679 

 

$46,815,326 

 

$(50,196,062) 

 

$6,980  

 

$(3,342,072) 

Issuance of common stock for proceeds

 

- 

 

- 

 

- 

 

- 

 

1,142,898

 

1,143 

 

798,877 

 

-  

 

-  

 

800,020  

Purchase of property and equipment with common stock

 

- 

 

- 

 

- 

 

- 

 

1,000,000

 

1,000 

 

699,000 

 

-  

 

-  

 

700,000  

Warrants issued with promissory notes

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

302,537 

 

-  

 

-  

 

302,537  

Payment of CSIS debt by shareholder

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

477,723 

 

-  

 

-  

 

477,723  

Preferred stock interest

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

- 

 

(60,000) 

 

-  

 

(60,000) 

Net loss

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

- 

 

(1,466,841) 

 

(22) 

 

(1,466,863) 

Balances at June 30, 2022

 

500 

 

$1 

 

3,000 

 

$3 

 

33,822,379

 

$33,822 

 

$49,093,462 

 

$(51,722,903) 

 

$6,958  

 

$(2,588,657) 

Payment of CSIS debt by shareholder

 

 

 

 

 

 

 

 

 

 

 

 

 

318,482 

 

 

 

 

 

318,482  

Preferred stock interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(60,000) 

 

 

 

(60,000) 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,122,046) 

 

(422) 

 

(1,122,468) 

Balances at September 30, 2022

 

500 

 

$1 

 

3,000 

 

$3 

 

33,822,379

 

$33,822 

 

$49,411,944 

 

$(52,904,949) 

 

$6,536  

 

$(3,452,643) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31,2022

 

500 

 

$1 

 

3,000 

 

$3 

 

37,690,664

 

$37,690 

 

$49,786,056 

 

$(58,996,099) 

 

$-  

 

$(9,172,349) 

Issuance of common stock for cash

 

- 

 

- 

 

- 

 

- 

 

2,400,000

 

2,400 

 

597,600 

 

-  

 

-  

 

600,000  

Preferred stock interest

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

- 

 

(60,000) 

 

-  

 

(60,000) 

Net loss

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

- 

 

(551,222) 

 

-  

 

(551,222) 

Balances at March 31, 2023

 

500 

 

1 

 

3,000 

 

3 

 

40,090,664

 

40,090 

 

50,383,656 

 

(59,607,321) 

 

-  

 

(9,183,571) 

Conversion of accrued preferred stock interest into shares

 

- 

 

- 

 

- 

 

- 

 

1,620,000

 

1,620 

 

403,380 

 

-  

 

-  

 

405,000  

Stock compensation expense

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

1,156,100 

 

-  

 

-  

 

1,156,100  

Warrants issued with promissory notes

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

185,788 

 

-  

 

-  

 

185,788  

Preferred stock interest

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

- 

 

(60,000) 

 

-  

 

(60,000) 

Net loss

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

- 

 

(1,455,712) 

 

-  

 

(1,455,712) 

Balances at June 30, 2023

 

500 

 

$1 

 

3,000 

 

$3 

 

41,710,664

 

41,710 

 

52,128,924 

 

(61,123,034) 

 

-  

 

(8,952,396) 

Conversion of accrued preferred stock interest into shares

 

- 

 

- 

 

- 

 

- 

 

500,000

 

500 

 

44,500 

 

-  

 

-  

 

45,000  

Issuance of common stock pursuant to business combination

- 

 

- 

 

- 

 

- 

 

40,000,000

 

40,000 

 

7,960,000 

 

-  

 

-  

 

8,000,000  

Warrants issued with promissory notes

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

626,073 

 

-  

 

-  

 

626,073  

Preferred stock interest

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

- 

 

(60,000) 

 

-  

 

(60,000) 

Net loss

 

- 

 

- 

 

- 

 

- 

 

-

 

- 

 

- 

 

(1,910,483) 

 

-  

 

(1,910,483) 

Balances at September 30, 2023

 

500 

 

$1 

 

3,000 

 

$3 

 

82,210,664

 

$82,210 

 

$60,759,497 

 

$(63,093,518) 

 

$-  

 

$(2,251,807) 

 

See accompanying notes to the unaudited condensed consolidated financial statements

3

 

CFN ENTERPRISES INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

 

 

 

September  30,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

 

 

 

$(3,917,417) 

 

$(3,891,069) 

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

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

50,995  

 

1,209,788  

 

 

Amortization of right of use asset

 

187,616  

 

148,300  

 

 

Amortization of debt discount

 

178,721  

 

-  

 

 

Stock compensation expense

 

1,156,100  

 

-  

 

 

Gain on property and equipment

 

 

 

 

(9,253) 

 

(87,933) 

 

 

Gain on extinguishment of debt

 

 

 

 

(13,219) 

 

-  

 

 

Unrealized loss (gain) on marketable securities

 

 

 

 

-  

 

44,244  

 

 

Amortization of deferred financing cost

 

-  

 

72,855  

 

 

Non-controlling interest

 

 

 

 

-  

 

(467) 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

(509,296) 

 

87,424  

 

 

 

Inventory

 

(1,864,800) 

 

140,481  

 

 

 

Prepaid expenses and other assets

 

(83,160) 

 

11,540  

 

 

 

Accounts payable and accrued expenses

 

1,339,090  

 

805,325  

 

 

 

Deferred revenue

 

(211) 

 

(6,524) 

 

 

 

Payments made in advance of securities date

 

32,500  

 

250,000  

 

 

 

Right of use liability, net

 

(313,595) 

 

(171,547) 

 

 

Net cash used in operating activities

 

 

 

 

(3,765,929) 

 

(1,387,583) 

Cash flows from investing activities:

 

 

 

 

Cash acquired pursuant to business combination  

 

 

 

 

134,060  

 

-  

Sale of assets held for sale

 

 

 

 

608,300  

 

-  

Purchase of property and equipment, net

 

 

 

 

(162,200) 

 

(127,588) 

 

 

Net cash provided/(used) in investing activities

 

580,160  

 

(127,588) 

Cash flows from financing activities:

 

 

 

 

Net advances from related parties

 

72,055  

 

45,443  

Proceeds from promissory notes

 

 

 

 

5,000,000  

 

1,233,000  

Repayments of notes

 

 

 

 

(507,517) 

 

(34,493) 

Proceeds from sale of common stock

 

 

 

 

350,000  

 

210,000  

 

Net cash provided by financing activities 

 

 

 

 

4,914,537  

 

1,453,950  

Net change in cash and cash equivalents

 

1,728,769  

 

(61,221) 

Cash and restricted cash at beginning of period

 

32,602  

 

190,029  

Cash and restricted cash at end of period

 

$1,761,371  

 

$128,808  

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of cash and restricted cash:

 

 

 

 

 

Cash at beginning of period

 

$12,474  

 

$170,015  

 

Restricted cash at beginning of period

 

20,128  

 

20,014  

 

Cash and restricted cash at beginning of period

 

$32,602  

 

$190,029  

 

 

 

 

 

 

 

 

 

 

 

 

Cash at end of period

 

$1,741,005  

 

$108,741  

 

Restricted cash at end of period

 

20,366  

 

20,067  

 

Cash and restricted cash at end of period

 

$1,761,371  

 

$128,808  

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

Cash paid for income taxes

 

$-  

 

$-  

Cash paid for interest

 

$-  

 

$-  

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

Issuance of common stock pursuant to business combination

 

 

 

 

$8,000,000  

 

$-  

Due to seller and contingent consideration pursuant to business combination

 

$1,208,000  

 

$-  

Conversion of accrued preferred stock interest into shares

 

 

 

 

$450,000  

 

$-  

Right of use asset and liability

 

 

 

 

$187,863  

 

$-  

Payment of CSIS debt by shareholder

 

 

 

 

$-  

 

$1,212,080  

Warrants issued with promissory notes

 

 

 

 

$811,861  

 

$302,537  

Accrual of preferred stock interest

 

 

 

 

$120,000  

 

$180,000  

Purchase of property and equipment with common stock

 

 

 

 

$-  

 

$700,000  

Purchase of equipment with notes payable

 

 

 

 

$-  

 

$55,016  

Settlement of accounts payable with sale of equipment

 

 

 

 

$-  

 

$212,067  

 

See accompanying notes to the unaudited condensed consolidated financial statements

4

 

CFN ENTERPRISES INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

 

Organization

 

CFN Enterprises Inc., formerly known as Accelerize Inc., or the Company, is a Delaware corporation incorporated on November 22, 2005. Effective October 22, 2019, the Company filed a certificate of amendment to its certificate of incorporation with the Secretary of State of the State of Delaware to change its corporate name to CFN Enterprises Inc.

 

On May 15, 2019, the Company entered into an asset purchase agreement or the Emerging Growth Agreement with Emerging Growth, LLC, or Emerging Growth, pursuant to which the Company acquired certain assets from Emerging Growth related to its sponsored content and marketing business for a purchase price consideration consisting of $420,000 in cash, 30,000,000 shares of the Company’s common stock, and 3,000 shares of Series B preferred stock with a total stated value of $3,000,000 which bears interest at 6% per annum and is convertible into the Company’s common stock at a conversion price to be mutually agreed in the future, without voting rights or a liquidation preference except with respect to default interest. The securities were issued pursuant to an exemption under Section 4(a)(2) of the Securities Act of 1933, as amended. The closing of the purchase of the assets pursuant to the Emerging Growth Agreement occurred on June 20, 2019.

 

On January 22, 2021, the Company invested $35,000 in a new joint venture focused on sponsored content and marketing called East West Asset Management or East West. East West was formed as a Limited Liability Company in the State of Nevada on November 13, 2020. CFN owns 50% of the entity and one of its officers holds the title of Member Manager in East West. The Company has concluded that East West is a variable interest entity in accordance with applicable accounting standards and guidance. As such, the accounts and results of East West have been included in the Company’s condensed consolidated financial statements.

 

On August 23, 2021, the Company entered into securities purchase agreements with CNP Operating, LLC, a Colorado limited liability company, or CNP Operating, and the owners of all of the equity interests of CNP Operating, or the Owners, whereby the Company acquired 100% of CNP Operating from the Owners in exchange for an aggregate of 23.6 million shares of the Company’s common stock. The securities were issued pursuant to an exemption under Section 4(a)(2) of the Securities Act of 1933, as amended. On August 25, 2021 the transaction was closed and CNP Operating became a wholly owned subsidiary of the Company. CNP Operating is a cannabidiol manufacturer. In the fourth quarter of 2022 and the first quarter of 2023, the Company took steps to wind down the operations of CNP Operating and focus on the CFN Business.

 

On July 1, 2023, the Company and its wholly owned subsidiary, RANCO, LLC, a Delaware limited liability company, or Ranco, entered into an asset purchase agreement, or the Asset Purchase Agreement with RAN CoPacking Solutions LLC, a California limited liability company, or the Seller and the members of the Seller (collectively, the Founders). The assets of the Seller acquired by Ranco consist of assets for co-packing and white label manufacturing services, including comprehensive solutions for third party logistics (3PL) related areas such as storage, order fulfillment, solutions for custom packaging and hardware needs for many different industries, and media and design services, along with strategic marketing support, to help clients establish and enhance their brand presence in the market, or the Purchased Assets. Ranco acquired the Purchased Assets and assumed certain liabilities of the Seller or the Acquisition, in exchange for an aggregate of 40 million shares of Company common stock, or the Acquisition Shares, and $1 million in cash consideration, payable in quarterly installments in an amount equal to the lesser of (i) Ranco’s gross revenues attributable to the Purchased Assets from and after the closing, net of all accrued debts, liabilities, and obligations of the Ranco and all amounts necessary or advisable to reserve, designate, or set aside for actual or anticipated costs, payments, liabilities, obligations, and claims with respect to the Purchased Assets, all as determined in good faith by Ranco, and (ii) $250,000, until paid in full, or the Cash Consideration. The Acquisition Shares were issued pursuant to an exemption under Section 4(a)(2) of the Securities Act of 1933, as amended. The Asset Purchase Agreement also contains an earn out provision providing for the issuance of (i) 8 million shares of Company common stock to be issued upon Ranco achieving $19 million in gross revenue attributable to the Purchased Assets and a net profit of $3.9 million within the twelve month period beginning three months from the closing of the Acquisition, or the First Earnout Period, and (ii) 8 million shares of Company common stock to be issued upon Ranco achieving $29 million in gross revenue attributable to the Purchased Assets and a net profit of $5.9 million within the twelve month period beginning on the day immediately following the end of the First Earnout Period.

 

Also on July 1, 2023, Ranco entered into the Packwoods Private Label Services and Intellectual Property Licensing Agreement, or the Licensing Agreement, with PW Industries LLC, a Wyoming limited liability company, or PW, RS Distributions LLC, a Delaware limited liability company, or RS, and Packaging Innovations LLC, a Wyoming limited liability company, or PI, and together with PW and RS, the Licensors, for the exclusive manufacturing, packaging and distribution of, and wholesale and retail sales of a variety hemp-based inhalable (pre-roll and vaporizer), edible products, and disposable nicotine-based inhalable vaporizer products, and the purchase of packaging materials to be used with Packwoods-branded cannabis products (containing more than 0.3% delta-9 THC by weight) and the distribution of those packaging materials to licensed cannabis manufacturers designated by PW, using the Licensor’s licensed property for a 5 year exclusive term, subject to certain exclusions.

 

5

The Company’s current operations consist of the sponsored content and marketing business, or the CFN Business, from the assets acquired pursuant to the Emerging Growth Agreement, and the business of Ranco, or the Ranco Business, consisting of co-packing and white label manufacturing services, including comprehensive solutions for third party logistics (3PL) related areas such as storage, order fulfillment, solutions for custom packaging and hardware needs for many different industries, and media and design services, along with strategic marketing support, to help clients establish and enhance their brand presence in the market, and the manufacturing, packaging and distribution of, and wholesale and retail sales of a variety hemp-based inhalable (pre-roll and vaporizer), edible products, and disposable nicotine-based inhalable vaporizer products, and the purchase of packaging materials to be used with Packwoods-branded cannabis products (containing more than 0.3% delta-9 THC by weight) and the distribution of those packaging materials to licensed cannabis manufacturers designated by PW, using the Licensor’s licensed property for a 5 year exclusive term, subject to certain exclusions.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis which implies the Company will continue to meet its obligations for the next 12 months as of the date these financial statements are issued.

 

The Company had a working capital deficit of $8,032,685 and an accumulated deficit of $63,093,517 as of September 30, 2023. The Company also had a net loss of $3,917,417 for the nine months ended September 30, 2023.

 

Management’s plan to continue as a going concern includes raising capital in the form of debt or equity, growing the CFN Business, growing the newly acquired Ranco Business managing and reducing operating and overhead costs and continuing to pursue strategic transactions and opportunities including launching an e-commerce network focused on the sale of general wellness cannabidiol, or CBD, products.

 

These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

 

Basis of Presentation and Consolidation

 

The accompanying consolidated financial statements include the results of operations of the Company and its subsidiaries CNP Operating, CFN Real Estate, LLC, a Delaware limited liability company, CFN Real Estate II, LLC, a Delaware limited liability company, CNP of Wyoming, LLC, a Colorado limited liability company, and Ranco, LLC, a Delaware limited liability company. All intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation.

 

During the period ended June 30, 2022 the Company concluded that East West was a variable interest entity in accordance with applicable accounting standards and guidance. As such, the accounts and results of East West have been included in the Company’s consolidated financial statements.  As of December 31, 2022, East West was fully impaired and valued at $0.

 

These unaudited condensed financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 2022 and 2021, which are included in the Company’s December 31, 2022 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission on April 17, 2023. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation of these may be determined in that context. The results of operations for the period ended September 30, 2023 are not necessarily indicative of results for the entire year ending December 31, 2023.

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reported period. Actual results will differ from those estimates. Included in these estimates are assumptions about collection of accounts receivable, useful life of fixed assets and intangible assets, borrowing rate considered for operating lease right-of-use asset and related operating lease liability, and assumptions used in Black-Scholes valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.

6

 

Financial Statement Reclassification

 

Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less when purchased, to be cash equivalents. The Company has restricted cash as a result of its corporate card program through its bank, which requires collateral placed in a money market account. At September 30, 2023, the Company had a restricted cash balance of $20,366 included as a component of total cash and restricted cash as presented on the accompanying unaudited condensed consolidated statement of cash flows.

 

Accounts Receivable

 

The Company’s account receivables for the CFN Business are due from customers relating to contracts to provide investor relation services for the CFN Business. For the Ranco Business, accounts receivables are due from customers for products sold and manufacturing, packing and labeling services provided.  Collateral is currently not required. The Company also maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments. The Company periodically reviews these estimated allowances, including an analysis of the customers’ payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’s ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserves for those accounts deemed uncollectible or likely to become uncollectible. When receivables are determined to be uncollectible, principal amounts of such receivables outstanding are deducted from the allowance. The allowance for doubtful accounts as of September 30, 2023 and December 31, 2022 amounted to $454,012 and $470,532 respectively.

 

Inventory

 

The Company’s inventory consists of finished goods acquired for its Ranco business.  As of September 30, 2023, all inventory consisted of disposable nicotine-based inhalable vaporizer products purchased from overseas.  The inventory is valued at the lower of cost (specific identification) or estimated net realizable value. As of September 30, 2023, the Company valued the inventory at $1,864,800.

 

Concentration of Credit Risks

 

The Company is subject to concentrations of credit risk primarily from cash and cash equivalents and accounts receivable.

 

The Company’s cash and restricted cash accounts are held at a financial institution and are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to $250,000. From time-to-time, the Company’s bank balances exceed the FDIC insurance limit. To reduce its risk associated with the failure of such financial institutions, the Company periodically evaluates the credit quality of the financial institution in which it holds deposits. As of September 30, 2023, the Company had $1,491,005 in excess of federally insured limits.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with Accounting Standards Codification, or ASC, 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.

 

The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered.

 

CFN Business

 

Subsequent to the closing of the Emerging Growth Agreement on June 20, 2019, the Company’s revenue is generated from the sale of promotional service packages to its customers ranging from 3 to 6 months. The Company offers different packages tailored to the type and stage of the potential customer, such as public companies looking to increase their shareholder base, as well as private companies potentially looking to go public and attract capital and publicity. The services provided by the Company include advertising, publishing of interviews and articles across its network and featuring of client content on its newsletters and social media. The packages all have fixed prices that are billed monthly over the terms of the agreement in even amounts. The Company recognizes revenue for its

7

performance obligation associated with its contracts with customers over time as work is performed, which is deemed to occur evenly throughout the duration of the contract. This also reflects the pattern in which costs are incurred on performing the contracts. To the extent revenue recognized on contracts at each period end exceeds collections, the amounts are reflected as accounts receivable. To the extent collections on contracts at each period end exceeds revenue recognized, the amounts are reflected as deferred revenue.

 

Ranco Business

 

The Company performs services including white label manufacturing and co-packing for customers.  Customers will drop off their product and the Company will perform the services via their employees and contractors.  When the services are complete, the Company has satisfied its performance obligations.  Revenue is recognized at this point in time.

 

The Company will order products that are manufactured overseas, such as custom boxes, packaging and hardware.  These products are generally shipped from overseas to the customer.  When these products are shipped out from the manufacturer, the Company has satisfied its performance obligations.  Revenue is recognized at this point in time.

 

Lastly, the Company provides certain shipping and third party logistics services for customers.  When the services are complete, the Company has satisfied its performance obligations.  Revenue is recognized at this point in time.

 

Disaggregation of Revenue

 

The following is a disaggregation of revenue for the three months ended September 30, 2023 and 2022 respectively:

 

 

 

 

 

Three Months Ended

 

 

 

 

September 30,

 

2023

 

2022

Services

 

$399,603 

 

$119,028 

Products  

 

384,380 

 

721,942 

Shipping and logistics

 

894,588 

 

- 

 

$1,678,571 

 

$840,970 

 

The following is a disaggregation of revenue for the nine months ended September 30, 2023 and 2022 respectively:

 

 

 

 

 

Nine Months Ended

 

 

 

 

September 30,

 

2023

 

2022

Services

 

$622,378 

 

$343,997 

Products  

 

426,863 

 

3,484,637 

Shipping and logistics

 

894,588 

 

- 

 

$1,943,830 

 

$3,828,634 

 

Cost of Revenue

 

Cost of revenue includes direct labor and materials.  Cost of revenues also includes inbound and outbound shipping, freight and delivery costs.

Shipping and Handling Fees and Costs

 

Amounts billed to customers for shipping and handling fees are presented in revenue. Costs incurred for shipping and handling are included in cost of revenue.

 

Fair Value of Financial Instruments

 

The Company accounts for assets and liabilities measured at fair value on a recurring basis in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.

 

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

 

8

Level 1:

Observable inputs such as quoted market prices in active markets for identical assets or liabilities.

 

 

Level 2:

Observable market-based inputs or unobservable inputs that are corroborated by market data.

 

 

Level 3:

Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

 

The carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, deferred revenue and due to related party approximate their fair value due to the short-term maturity of these items. The Company’s notes payable approximate their fair value due to the market rate of interest on the notes.

 

The Company’s contingent consideration recorded in connection with the Ranco acquisition (see Note 3) is a Level 3 liability.  The liability is valued using a probability weighted analysis of the respective earn out provisions.

 

Business Combinations

The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase.

Goodwill represents the excess of the purchase price of an acquired entity over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination.

Impairment

 

Long-Lived Assets

 

In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made.

 

Goodwill

 

Goodwill and identifiable intangible assets that have indefinite useful lives are not amortized, but instead are tested annually for impairment and upon the occurrence of certain events or substantive changes in circumstances. The annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity may choose to perform the qualitative assessment on none, some or all of its reporting units or an entity may bypass the qualitative assessment for any reporting unit and proceed directly to step one of the quantitative impairment test. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required.

 

The quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. It is the Company’s practice, at a minimum, to perform a qualitative or quantitative goodwill impairment test in the fourth quarter every year.

 

Contingent Consideration

 

The Company records a contingent consideration liability relating to earn the Company’s shares included in its acquisition agreements. The estimated fair value of the contingent consideration is recorded using significant unobservable measures and other fair value inputs and is therefore classified as a Level 3 financial instrument.

 

The Company estimates and records the acquisition date fair value of contingent consideration as part of purchase price consideration for acquisitions. Additionally, each reporting period, the Company estimates changes in the fair value of contingent consideration and recognizes any change in fair in the consolidated statement of operations. The estimate of the fair value of contingent consideration requires very subjective assumptions to be made of future operating results, discount rates and probabilities assigned to various potential

9

operating result scenarios. Future revisions to these assumptions could materially change the estimate of the fair value of contingent consideration and, therefore, materially affect the Company’s future financial results. The contingent consideration liability is to be settled with the issuance of shares of common stock once contingent provisions set forth in respective acquisition agreements have been achieved. Upon achievement of contingent provisions, respective liabilities are relieved and offset by increases to common stock and additional paid-in capital in the stockholders’ equity section of the Company’s consolidated balance sheets.

 

Advertising

 

The Company expenses advertising costs as incurred. Advertising expenses for the three months ended September 30, 2023 and 2022 amounted to $24,487 and $4,761, respectively. Advertising expenses for the nine months ended September 30, 2023 and 2022 amounted to $52,773 and $23,172, respectively.

 

Income Taxes

 

Income taxes are accounted for in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized, but no less than quarterly.

 

For interim periods, the Company uses the effective income tax rate method resulting in zero income tax for the nine months ended September 30, 2023 and 2022.

 

Property and Equipment

 

Property and equipment are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives of five years. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized.

 

Basic and Diluted Earnings Per Share

 

Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method). As of September 30, 2023, the Company had no outstanding stock options, 11,988,500 outstanding warrants and 3,500 shares of preferred stock which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As of September 30, 2022, the Company had 0 outstanding stock options and 988,500 outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As a result, the basic and diluted earnings per share are the same for each of the periods presented.

 

Share-Based Payments

 

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. Under the fair value recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period.

 

The Company has elected to use the Black-Scholes option-pricing model to estimate the fair value of its options, which incorporates various subjective assumptions including volatility, risk-free interest rate, expected life, and dividend yield to calculate the fair value of stock option awards. Compensation expense recognized in the statements of operations is based on awards ultimately expected to vest and reflects estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

 

Common Stock Awards

 

The Company has granted common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these awards using the fair value of the services provided or the fair value of the awards granted. The fair value of the awards is recognized on a straight-line basis as services are rendered. The share-based payments related to common stock awards for the settlement of services provided by non-employees is recorded on the consolidated statement of comprehensive loss in the same manner and charged to the same account as if such settlements had been made in cash.

 

10

Warrants

 

In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants are recorded at fair value as expense over the requisite service period or at the date of issuance, if there is not a service period. Warrants granted in connection with ongoing arrangements are more fully described in Note 6, Stockholders’ Deficit.

 

Leases

 

The Company adopted Accounting Standards Update No. 2016-02, Leases (“Topic 842”) using the modified retrospective method. This accounting standard requires a lessee to recognize an asset and liability for most leases on its balance sheet.

 

The Company elected the practical expedient method permitted under the transition guidance, which allows a carryforward of historical lease classification, the assessment on whether a contract was or contains a lease, and the initial direct costs for any leases that existed prior to July 1, 2019. The Company also elected to recognize the associated lease payments in the consolidated statements of operations on a straight-line basis over the lease term.

 

Under Topic 842, the Company determines if an arrangement is a lease at inception. ROU assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement and leases with an initial term of 12 months or less are not included in lease liabilities or ROU asset. As most leases do not provide an implicit rate, a rate which approximates the Company’s incremental borrowing rate is used, based on the information available at commencement date, in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes or other costs. Variable lease costs are expensed as incurred. Lease agreements generally do not contain residual value guarantees or restrictive covenants. Over the lease term, the Company uses the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized in a manner that results in straight-line expense recognition.

 

At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the net book value of CNP’s ROU assets may not be recoverable. As such, the Company recorded an impairment charge of $339,768.

 

NOTE 3: BUSINESS COMBINATIONS

 

RAN CoPacking Solutions LLC

 

The Company evaluated the Asset Purchase Agreement pursuant to ASC 805 and ASU 2017-01, Topic 805, Business Combinations.  The Company first determined that the Seller met the definition of a business as it includes inputs and a substantive process that together significantly contribute to the ability to create outputs.  The Seller’s  results of operations are included in the Company’s consolidated financial statements from the date of acquisition.The acquisition method of accounting requires, among other things, that the assets acquired and liabilities assumed in a business combination be measured at their estimated respective fair values as of the closing date of the acquisition. Goodwill recognized in connection with this transaction represents primarily the potential economic benefits that the Company believes may arise from the acquisition The purchase price allocation is preliminary and could be significantly revised as a result of additional information obtained regarding assets acquired and liabilities assumed and revisions of estimates of fair values of tangible assets and related deferred tax assets and liabilities. The Company will finalize its valuation and the allocation of the purchase price, along with required retrospective adjustments, if any, within a year following the acquisition date.

Total fair value of the preliminary purchase price consideration as of July 1, 2023 was determined as follows:

 

Cash (due to seller) 

 

$1,000,000 

Common stock 

 

8,000,000 

Contingent consideration 

 

208,000 

Purchase price consideration 

 

$9,208,000 

 

On July 1, 2023, the Company issued 40,000,000 shares of common stock pursuant to the Asset Purchase Agreement for a fair value of $8,000,000, or $0.20 per share.

11

 

Pursuant to the Asset Purchase Agreement, the Company owes the Seller $1,000,000 in cash consideration.  The amount was recorded as a due to seller liability on the consolidated balance sheet.  As of September 30, 2023, no payments were made.

 

In accordance with the Earn Out provisions per the Asset Purchase Agreement, the Company determined an initial fair value of $208,000 based on the fair value of the shares at the acquisition date and probabilities of the respective Earn Out terms.  There was no change in fair value of the contingent consideration at September 30, 2023.

 

Preliminary Purchase Price Allocation

 

The Company has made a preliminary allocation of the purchase price in regard to the acquisition related to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the preliminary purchase price allocation:

 

Cash

 

$134,060  

Accounts receivable

 

175,340  

Deposits

 

297,269  

Goodwill

 

8,676,430  

Right of use asset

 

2,272,059  

Accounts payable

 

(48,430) 

Current portion of right of use liability

 

(538,243) 

Right of use of liability

 

(1,760,485) 

Purchase price consideration

 

$9,208,000  

 

Goodwill is primarily attributable to the go-to-market synergies that are expected to arise as a result of the acquisition and other intangible assets that do not qualify for separate recognition. The goodwill is not deductible for tax purposes.

 

The results of RAN CoPacking Solutions LLC have been included in the consolidated financial statements since the date of acquisition. RAN CoPacking Solutions LLC’s net revenue and net income included in the consolidated financial statements since the acquisition date were approximately $1,588,561 and $300,433, respectively.

 

Unaudited Pro Forma Financial Information

 

The following unaudited pro forma financial information presents the Company’s financial results as if the RAN CoPacking Solutions LLC acquisition had occurred as of January 1, 2022. The unaudited pro forma financial information is not necessarily indicative of what the financial results actually would have been had the acquisitions been completed on this date. In addition, the unaudited pro forma financial information is not indicative of, nor does it purport to project, the Company’s future financial results. The unaudited pro forma information does not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisition:

 

 

Nine Months Ended
September 30,

 

2023

 

2022

Net revenues

$4,137,571  

 

$6,982,954  

Net loss

$(4,192,796) 

 

$(3,815,533) 

Net loss per common share

$(0.08) 

 

$(0.12) 

12

 

NOTE 4: PROPERTY AND EQUIPMENT

 

The Company’s property and equipment relating to continuing operations consisted of the following:

 

 

September 30,

 

December 31,

2023

 

2022

Machinery & equipment

$-  

 

$50,000  

Furniture and equipment and leasehold improvements

14,772  

 

14,772  

Tradeshow booth

162,200  

 

-  

176,972  

 

64,772  

Less: Accumulated depreciation

(12,197) 

 

(11,202) 

$164,775  

 

$53,570  

 

At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the net book value of CNP’s long-lived assets may not be recoverable. As such, the Company recorded an impairment charge of $3,276,193 to record the estimated residual value of the property and equipment, which was determined to be $50,000.  This remaining residual value was fully depreciated in the third quarter of 2023.

 

Depreciation expense for the three months ended September 30, 2023 and 2022 amounted to $45,332 and $421,336, respectively.

 

Depreciation expense for the nine months ended September 30, 2023 and 2022 amounted to $50,996 and $1,209,788, respectively.

 

NOTE 5: NOTES PAYABLE

 

On September 10, 2019, the Company entered into a promissory note payable whereby the Company borrowed $500,000 bearing interest at 8% per annum. Interest on the note is payable quarterly on the first business day of December, March, June and September commencing December 1, 2019. In May 2021, the Company and the holder of the promissory note reached an agreement to extend the maturity date of the note from September 30, 2022 to September 30, 2024. In connection with the extension, the Company issued 160,000 shares of its common stock to the noteholder in lieu of $40,000 of interest accrued and accruing on the promissory note through December 31, 2022. In 2022, the maturity date was extended to 2024.

 

In connection with the promissory note on September 10, 2019, the Company issued warrants to purchase 33,333 shares of the Company’s common stock at an exercise price of $1.50 per share. The warrants were exercised on June 30, 2021 and the Company received $50,000. The note was discounted by $17,624 allocated from the valuation of the warrants issued. The discount recorded on the note is being amortized as interest expense through the maturity date. As of September 30, 2023, the net book value of the promissory note amounted to $500,000, including the principal amount of $50,000 which was fully amortized.

 

On October 28, 2019, the Company’s subsidiary CNP Operating entered into a promissory note payable with Complete Business Solutions Group, Inc (“CBSG”) whereby the Company borrowed $3,050,000. The outstanding balance of the note was $2,218,000 at December 31, 2022.  At December 31, 2022, the Company reversed $1,312,080 previously recorded to additional paid-in capital in 2022 to reflect the outstanding principal of $2,218,000. The note is currently in default and personally guaranteed by Anthony Zingarelli.

 

On September 30, 2019, the Company’s subsidiary CNP Operating entered into a promissory note payable with Eagle Six Consultants, Inc. (“Eagle”) whereby the Company borrowed $550,000 bearing interest at 16% per annum. The outstanding balance of the note was $302,489 at September 30, 2023. The note is currently in default.

 

On June 24, 2020, the Company entered into a Loan Authorization and Agreement with the SBA under which the Company borrowed $150,000 and issued to the SBA a note and security agreement for the amount borrowed. Outstanding borrowings accrue interest at a rate of 3.75% per annum, and installment payments, including principal and interest, of $731 are due monthly and begin 12 months from the date of the loan agreement. The balance of any remaining principal and interest is due 30 years from the date of the loan agreement. As collateral for the borrowing, the Company granted the SBA a security interest in substantially all assets of the Company.

 

On May 12, 2021, the Company’s subsidiary CNP Operating restructured the CSBG note payable of $2,957,000, the Eagle #1 note payable of $550,000 and the Eagle #2 note payable of $300,000 by entering into a payment and indemnification agreement with the receivers/trustee of CBSG and Eagle. The receiver has agreed that the balance of the outstanding amounts will be paid over the course of 24 months in equal payments of $158,625. Further, the Company shall pay $20,000 per month toward the balance and Anthony Zingarelli (“Zingarelli”) and Colorado Sky Industrial Supply LLC (“CSIS”), agree to personally pay the sum of $138,625 per month. Zingarelli is the only member of CNP Operating that signed a personal guarantee on the loans and Zingarelli is the sole member of CSIS. Zingarelli and CSIS has agreed to indemnify and hold the Company harmless from any and all losses, liabilities and claims. If a loss is incurred by the Company with respect to any claims, Zingarelli shall reimburse the Company for the amount of any such loss. The Company has recorded the Zingarelli payments during the period as contributions to additional paid in capital through December 31, 2021.  This note is currently in default.

13

 

On November 19, 2020, the Company’s subsidiary CNP Operating purchased equipment for $58,095 which was financed at zero interest rate. The monthly payments of $968 will be made for the next 60 months and mature on November 19, 2025. Imputed interest was not material. The outstanding balance of the note was $34,892 at December 31, 2022. In 2022, CNP purchased equipment for $55,016 which was financed at zero interest rate with the same lender with similar terms.  The outstanding balance of the note was $48,513 at December 31, 2022, and was fully repaid in 2023.

 

On October 19, 2021, the Company borrowed $250,000 from a lender and issued a promissory note for the repayment of the amount borrowed. The promissory note is unsecured, has a maturity date of December 31, 2024 and all principal is due upon maturity. The amount borrowed accrues interest at 12% per annum and accrued interest is payable monthly commencing on December 1, 2021. The promissory note contains customary events of default permitting acceleration of repayment for nonpayment of amounts due, a bankruptcy related proceeding, breach of representations or covenants, sale of substantially all assets, and change of control.

 

On April 8, 2022, the Company entered into two promissory notes for aggregate proceeds of $676,000. The promissory note is unsecured, has a maturity date of April 30, 2024 and all principal is due upon maturity. The notes bear interest at 18% per annum and accrued interest is payable monthly commencing on August 1, 2022. In connection with the notes, the Company granted 676,000 warrants to the lenders with an exercise price of $1.00 per share.

 

On October 4, 2022, the Company converted the entire $676,000 in principal and $50,700 in accrued interest on its convertible notes into an aggregate of 2,906,800 shares of common stock.  

 

On May 11, 2022, the Company’s subsidiary, CFN Real Estate II, LLC, entered into a promissory note with a lender for the repayment of $500,000 in connection with the $500,000 refinancing of the Company’s property located in Wray, Colorado. The company received the proceeds from the refinancing on May 16, 2022. Accrued interest at the rate of 12% is payable monthly commencing on June 15, 2022, and the principal of the promissory note is payable upon maturity on June 15, 2024. Upon the Company’s sale of the property in April 2023 (see Note 7), the note was fully repaid.

 

On May 8, 2023, the Company entered into a promissory note with two lenders for aggregate proceeds of $1,150,000.  The notes are unsecured and have a maturity date 15 months following their issuance.  Beginning on the fourth month after issuance, the Company will make monthly repayments totaling $143,750, including principal and interest.  Total principal and interest to be repaid is $1,725,000, and any remaining outstanding balance is due at maturity. In connection with the notes, the Company granted an aggregate of 1,150,000 warrants to the lenders with an exercise price of $0.25 per share. The fair value of the warrants was $185,788, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $53,507. As of September 30, 2023, note payable, net of unamortized discount of $132,281, was $1,017,719 for these two notes.

 

On July 1, 2023, the Company entered into a promissory note with two lenders for aggregate proceeds of $3,850,000.  The notes are unsecured and have a maturity date 15 months following their issuance. In connection with the notes, the Company granted an aggregate of 3,850,000 warrants to the lenders with an exercise price of $0.25 per share. The fair value of the warrants was $626,073, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $125,215. As of September 30, 2023, note payable, net of unamortized discount of $500,858, was $3,349,141 for these two notes.

 

On July 1, 2023, the May and July notes were rolled over to Ranco, LLC for an aggregate of $5,000,000 (the “Ranco Notes”).  The Ranco Notes have a 15 month term and are subject to mandatory equal repayments commencing on the fourth month following issuance, for an aggregate repayment of $7,500,000. The Ranco Notes are secured by the assets of Ranco and guaranteed by the Company.

 

Future scheduled maturities of long-term debt are as follows:

 

 

 

 

 

 

September 30,
2023

2024

 

 

 

 

3,854,300 

2025

 

 

 

 

3,892,727 

2026

 

 

 

 

50,882 

2027

 

 

 

 

23,702 

Thereafter

 

 

 

104,320 

 

 

 

 

 

7,925,930 

 

The aggregate current portion of long-term debt as of June 30, 2023 amounted is $3,854,300, which represents the contractual principal payments due in the next 12 months period as well as any notes in default.

14

 

NOTE 6: STOCKHOLDERS’ DEFICIT

 

Common Stock

 

On December 6, 2021, the Company effected a reverse split of its outstanding common stock in the ratio of 1-for-15.

  

In January 2023, the Company issued 2,400,000 shares of common stock at a purchase price of $0.25 per share for $600,000 in gross proceeds.

 

In May 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 1,620,000 shares of its common stock as payment for $405,000 in outstanding accrued interest on the Series B Preferred Stock through June 30, 2023.

 

In July 2023, the Company issued 40,000,000 shares of common stock at a price of $0.20 per share, or total fair value of $8,000,000, pursuant to the Ranco business combination.

 

In August 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 500,000 shares of its common stock as payment for $45,000 in outstanding accrued interest on the Series B Preferred Stock through September 30, 2023.

 

As of September 30, 2023 and December 31, 2022, there was $0 and $217,500, respectively, in payments made in advance of securities date.

 

Preferred Stock

 

The Company is authorized to issue 2,000,000 shares of preferred stock with a par value of $0.001 per share, of which 500 have been authorized as Series A Preferred Stock and 3,000 have been authorized as Series B Preferred Stock.

 

For the nine months ending September 30, 2023 and 2022, the Company incurred $180,000 and $180,000, respectively, of interest from the outstanding preferred stock. In May, 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 1,620,000 shares of its common stock as payment for $405,000 in outstanding accrued interest on the Series B Preferred Stock through June 30, 2023. In August, 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 500,000 shares of its common stock as payment for $45,000 in outstanding accrued interest on the Series B Preferred Stock through September 30, 2023.

 

Warrants

 

The following summarizes the Company’s warrant activity for the six months ended September 30, 2023:

 

 

Warrants

 

Weighted-Average Exercise Price

 

Weighted-Average Remaining Contractual Life
(Years)

Outstanding at December 31, 2022

988,500

 

$2.25 

 

2.39 

Granted

7,150,000

 

0.25 

 

4.89 

Forfeited

-

 

 

 

Outstanding at June 30, 2023

8,138,500

 

$0.49 

 

4.53 

Granted

3,850,000

 

0.25 

 

4.75 

Forfeited

-

 

 

 

Outstanding at September 30, 2023

11,988,500

 

$0.41 

 

4.43 

 

 

 

 

 

 

Vested and expected to vest at September 30, 2023

11,988,500

 

$0.41 

 

4.43 

Exercisable at September 30, 2023

11,988,500

 

$0.41 

 

4.43 

 

On May 19, 2023, the Company entered into an advisory agreement with the Isaac Shehebar 2008 AIJJ Grantor Retained Annuity Trust and Ezra A. Chehebar (the “Advisors”), existing shareholders of the Company, for consulting services and to advise the Company’s executive team on strategic, branding, marketing, distribution, networking and other general business matters. As consideration under the advisory agreement, on May 22, 2023, the Company issued an aggregate of 6,000,000 five-year warrants to purchase common stock at a price of $0.25 per share to the Advisors.  The warrants are immediately exercisable.  During the nine months ending September 30, 2023, the Company recorded stock-based compensation expense of $1,156,100 pertaining to these warrants, which was included in additional paid-in capital.

15

 

In connection with the May 2023 notes (see Note 5), the Company issued 1,150,000 warrants to purchase common stock. The warrants have an exercise price of $0.25 per share, are immediately exercisable and have a term of 5 years. The fair value of the warrants was $185,788, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $53,507.

 

In connection with the July 2023 notes (see Note 5), the Company issued 3,850,000 warrants to purchase common stock. The warrants have an exercise price of $0.25 per share, are immediately exercisable and have a term of 5 years. The fair value of the warrants was $626,073, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $125,215.

 

As of September 30, 2023, all outstanding warrants were fully vested and there was no remaining unrecorded compensation expense.

 

Options

The Company had a Stock Option Plan, or the Plan, under which the total number of shares of capital stock of the Company that may be subject to options under the Plan was 1,500,000 shares of Common Stock from either authorized but unissued shares or treasury shares. The Plan expired on December 14, 2016.

 

As of September 30, 2023, there were no outstanding options.

 

NOTE 7: LEASES

 

On June 20, 2019, the Company entered into a Lease Agreement with Emerging Growth for the lease of office space in Whitefish, Montana, for a period of one year at a rate of $1,500 per month. On August 5, 2020, the Company entered into a lease agreement with Emerging Growth for additional office space in Whitefish, Montana, replacing its previous lease from June 20, 2019. The term of the lease commenced on September 1, 2020 for a period of one year at a rate of $4,500 per month. The lease contains an option for the Company to renew the lease for a period of one additional year at a monthly rent subject to a 3% increase. Management has elected a policy to exclude leases with an initial term of 12 months or less from the balance sheet presentation required under ASC 842. As a result, the office lease has been excluded from balance sheet presentation as it has an original term of 12 months or less.

 

On March 30, 2021, the Company entered into a new lease with Emerging Growth, which took the place of the old lease effective April 1, 2021. The lease provides for payments of $4,500 per month and has a term of three years and contains an option for the Company to renew the lease for a period of one additional year at a monthly rent subject to a 3% increase.

 

On June 4, 2019, the Company’s subsidiary CNP Operating entered into a Lease Agreement with Blair Investments, LLC for the lease of office space in Centennial Colorado, for a period of 3 year at a rate of $10,521 per month. On September 26, 2019, this agreement was terminated and replaced with a new agreement starting October 1, 2019 and expiring on June 30, 2023. The agreement is personally guaranteed by Anthony Zingarelli.

 

On December 9, 2021, CFN Real Estate LLC, a Delaware limited liability company, and wholly-owned subsidiary of the Company, entered into a Lease Agreement (with Option to Purchase), or the Lease, with H2S2 LLC, a Colorado limited liability company, for property in Eaton, Colorado, consisting of 9.53 acres of agricultural land zoned with use for special review for hemp processing and storage, an 8,500 square foot C1D1 rated steel building, triple tunnel green houses with a total of 8,712 square feet, a shop building consisting of 3,825 square feet and a 2,280 square foot residence. The Lease has an eleven month term and contains an option to purchase the premises, each terminating on November 30, 2022. The total monthly rent under the lease during the term is an aggregate of $354,000, consisting of a $14,000 monthly lease payment, and an aggregate of $200,000 in non-refundable payments towards the option. The total purchase price for the premises under the option is $1.2 million, inclusive of the $200,000 in payments made during the term of the lease. If the option is exercised, the lease contains a 30-day automatic extension of the term at $14,000.

 

At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the net book value of CNP’s ROU assets may not be recoverable. As such, the Company recorded an impairment charge of $339,768.

 

On April 1, 2023, Emerging Growth LLC entered into a new lease agreement for its premises in Whitefish, Montana commencing April 1, 2023, for a period of five years at a rate of $3,750 per month, which lease contains an option for the Company to renew the lease for a period of one additional year at a monthly rent subject to a 3% increase.  In connection with this lease, the Company recorded a ROU asset and liability of $187,863.

 

In connection with the Ranco acquisition, the Company agreed to assume the Seller’s lease for property related to the Purchased Assets in Los Angeles, California, consisting of approximately 46,000 square feet of space.  The Ranco operating lease agreement commenced on July 1, 2022 and expires on July 31, 2027.    The lease requires monthly base rent payments of $49,782 and required a security deposit of $297,269.  Upon the Ranco acquisition, the Company recognized a right of use asset of $2,270,059 and right of use liability of

16

$1,760,485.  Furthermore, the Company acquired the existing security deposit of $297,269. As of September 30, 2023, the Company recognized a right of use asset of $2,132,953 and right of use liability of $ 2,165,615.

 

NOTE 8: ASSETS HELD FOR SALE

 

As of December 31, 2022, the Company determined that its property and equipment in Wray, Colorado (via CFN Real Estate II) were to be listed for sale. Accordingly, the Company reported the disposal group of the long-lived assets at its lower of the carrying value or the fair value less cost to sell.  Through March 31, 2023, the Company had $599,047 in assets held for sale on its consolidated balance sheet.

 

On April 12, 2023, the Company sold its property, including the machinery and equipment, at Wray, Colorado for $699,000 and received net proceeds of $608,300 after selling expenses.  Accordingly, the Company recorded a gain on disposal of $9,253.

 

In connection with the sale, the Company repaid $525,000, including $500,000 in principal and $25,000 in accrued interest, on CFN Real Estate II’s related note payable with Physician Strategic, resulting in a gain on extinguishment of debt of $13,219.

 

As of September 30, 2023 and December 31, 2022, the assets held for sale balance was $0 and $599,047, respectively.

 

NOTE 9: RELATED PARTY TRANSACTIONS

 

As of September 30, 2023 and December 31, 2022, there was $575,314 and $503,259 in amounts due to related parties, respectively, including $428,700 due to CSIS. The advances are unsecured, non-interest bearing and due on demand.

In connection with the Ranco acquisition, the Company entered into acquisition agreements with the founders of RAN CoPacking Solutions LLC.

NOTE 10: COMMITMENTS AND CONTINGENCIES

 

Legal Proceedings

 

From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. Except as set forth below, the Company is not presently a party to any legal proceedings that it currently believes, if determined adversely to the Company, would individually or taken together have a material adverse effect on the Company’s business, operating results, financial condition or cash flows.

 

In October 2022, CAKE Software Inc., or CAKE, filed a lawsuit against the Company in the Supreme Court of the State of New York, County of New York, captioned CAKE Software, Inc. v. Accelerize Inc. n/k/a CFN Enterprises Inc., Index No. 653838/2022. On December 6, 2022, CAKE filed an amended complaint, which is the operative complaint in this matter. CAKE's lawsuit stems from an Asset Purchase Agreement, or the APA, executed by the parties in May 2019, in which CAKE was the buyer of certain assets from the Company. CAKE alleges that the Company breached the APA by not paying a purported outstanding amount due which was to be calculated post-closing, and for breaching certain representations and warranties in the APA. CAKE further seeks indemnification under the APA for what it alleges are liabilities the Company retained after the closing of the sale. Based on its claims, CAKE is seeking compensatory damages of at least $1,045,441.86, attorney's fees, interests and costs, and such other relief as the court may deem just and appropriate.

 

In January 2023, the Company filed its initial Answer and Counterclaims, denying the material allegations and asserting its own claims against CAKE and Perseus Operating Group, or Perseus, a division of Constellation Software Inc. (TSX:CSU, OTCPK: CNSWF; www.csisoftware.com), or Constellation Software.  On July 19, 2023, the parties held a mediation but were unsuccessful in reaching an agreement.  

 

On September 25, 2023, after prevailing on a motion for leave to amend its initial Answer with Counterclaims, the Company filed its Amended Answer with Counterclaims against CAKE and Constellation Software itself, instead of its operating group, Perseus. The Amended Answer with Counterclaims is the Company’s operative pleading in this matter, and through it, the Company asserts that CAKE breached the APA by failing to pay the Company an earn-out, calculated in accordance with the APA, over a three-year period and totaling no less than $12,375,000, and that CAKE failed to pay the Company a $500,000 holdback amount. The Company further alleges that Constellation Software is the alter ego of CAKE, and therefore, is also liable under the APA. Through its amended counterclaims, the Company seeks compensatory damages of no less than $12,875,000, encompassing the earn-out amounts owed and the holdback amount, plus attorneys' fees, interests and costs, and other such relief as the court may deem just and proper.

17

 

On November 3, 2023, CAKE and Constellation Software filed replies to the Company’s amended counterclaims.  Currently, the parties are engaged in the discovery process and a Status Conference with the Court regarding discovery is scheduled for December 8, 2023. The Company expects to vigorously defend against CAKE and Constellation Software’s claims, and to pursue its own counterclaims against CAKE, Constellation Software, and any other persons that it may identify through discovery to have harmed the Company or to have taken any action to interfere with the Company’s ability to receive its earn-out and/or the holdback amount.

 

The Company has determined that potential losses in this matter are neither probable or reasonably possible at this time.

 

On October 18, 2021, the Company settled a vendor dispute in the amount of $100,000 of which the initial payment of $40,000 was paid on the execution of the settlement and balance to paid in 48 equal monthly payments of $1,250. The balance as of September 30, 2023 and December 31, 2022, is $32,500 and $41,250, respectively.

 

NOTE 11: SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through November 14, 2023, the date the consolidated financial statements were available to be issued. Based on this evaluation, no additional material events were identified which require adjustment or disclosure in these financial statements.

18

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2022. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements. See “Cautionary Statement Regarding Forward Looking Information’’ elsewhere in this report. Because this discussion involves risk and uncertainties, our actual results may differ materially from those anticipated in these forward-looking statements.

 

Overview

 

We own and operate a cannabis industry focused sponsored content and marketing business, or the CFN Business, and a white label manufacturing and co-packing business, or the Ranco Business. Our ongoing operations currently consist primarily of the CFN Business and the Ranco Business and we will continue to pursue strategic transactions and opportunities. We are currently in the process of launching an e-commerce network focused on the sale of general wellness CBD products. We also own CNP Operating which is a cannabidiol manufacturer. In the fourth quarter of 2022 and the first quarter of 2023, the Company took steps to wind down the operations of CNP Operating and focus on the CFN Business.

 

On July 1, 2023, the Company, through its wholly owned subsidiary, RANCO, LLC, a Delaware limited liability company, or  Ranco, acquired assets from RAN CoPacking Solutions LLC, a California limited liability company, or  the Acquisition which consists of assets for co-packing and white label manufacturing services, including comprehensive solutions for third party logistics (3PL) related areas such as storage, order fulfillment, solutions for custom packaging and hardware needs for many different industries, and media and design services, along with strategic marketing support, to help clients establish and enhance their brand presence in the market. Also on July 1, 2023, Ranco entered into the Packwoods Private Label Services and Intellectual Property Licensing Agreement, or the Licensing Agreement, with PW Industries LLC, a Wyoming limited liability company, or PW, RS Distributions LLC, a Delaware limited liability company, or RS, and Packaging Innovations LLC, a Wyoming limited liability company, or PI, and together with PW and RS, the Licensors, for the exclusive manufacturing, packaging and distribution of, and wholesale and retail sales of a variety hemp-based inhalable (pre-roll and vaporizer), edible products, and disposable nicotine-based inhalable vaporizer products, and the purchase of packaging materials to be used with Packwoods-branded cannabis products (containing more than 0.3% delta-9 THC by weight) and the distribution of those packaging materials to licensed cannabis manufacturers designated by PW, using the Licensor’s licensed property for a 5 year exclusive term, subject to certain exclusions.

 

The CFN Business generates revenue through sponsored content, including articles, press releases, videos, podcasts, advertisements and other media, email advertisements and other marketing campaigns run on behalf of public and private companies in the cannabis industry, helping them reach accredited, retail and institutional investors. Most revenue is generated through contracts involving a monthly cash payment.

 

The CFN Business’ primary expenses come from advertising on platforms like Twitter and Facebook and from employee salaries and contractor fees. The CFN Business’ content is primarily produced by a team of freelance writers and video content is produced through various vendors. The CFN Business also incurs hosting and development costs associated with maintaining and improving its website, web applications, and mobile applications. The CFN Business operates several media platforms, including CannabisFN.com, the CannabisFN iOS app, the CFN Media YouTube channel, the CFN Media podcast, and other venues. These properties are designed to educate and inform investors interested in the cannabis industry, as well as provide a platform for the clients of the CFN Business to reach investors. The CFN Business distributes content across numerous online platforms, including the CannabisFN.com website, press releases, financial news syndicates, search engines, YouTube, iTunes, Twitter, Instagram, Facebook, LinkedIn, and others.

 

The CFN Business targets the legal cannabis industry. According to Grand View Research, the global cannabis industry is expected to reach $146.4 billion by 2025, driven by the legalization of medical and adult-use cannabis across a growing number of jurisdictions. According to the Marijuana Index, there are approximately 400 public companies involved in the cannabis industry, which represents the primary target market of the CFN Business. The CFN Business’ services are designed to help private companies prepare to go public and public companies grow their shareholder base through sponsored content and marketing outreach. The success of the CFN Business depends on the legal status of cannabis, investor demand for cannabis investments, and numerous other external factors.

 

The CFN Business competes with other public relations firms for clients, as well as online publishers for investors. Public relations competition includes investor awareness firms like Stockhouse Publishing, Catalyst Xchange, Stonebridge Partners and Midan Ventures. Online publisher competition includes firms like New Cannabis Ventures, Leafly and High Times. The CFN Business is regulated by rules established by the SEC, FINRA, and certain federal and state cannabis regulations.

 

Our corporate website is: www.cfnenterprisesinc.com, the contents of which are not part of this quarterly report.

 

Our Common Stock is quoted on the OTCQB Marketplace under the symbol "CNFN."

19

 

Results of Operations for the Three Months Ended September 30, 2023 and 2022

 

The following are the results of our operations for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022:

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

 

 

 

2023

 

2022

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

 

$1,678,571  

 

$840,970  

 

$837,601  

Cost of revenue

 

1,225,536  

 

1,309,853  

 

(84,317) 

 

 

Gross profit (loss)

 

453,035  

 

(468,883) 

 

921,918  

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

1,597,681  

 

513,200  

 

1,084,481  

 

 

Total operating expenses

 

1,597,681  

 

513,200  

 

1,084,481  

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(1,144,646) 

 

(982,083) 

 

(162,563) 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense 

 

(765,919) 

 

(115,257) 

 

(650,662) 

 

Gain on property and equipment

 

-  

 

-  

 

-  

 

Unrealized loss on marketable securities

 

-  

 

(24,750) 

 

24,750  

 

Interest income

 

82  

 

43  

 

39  

 

 

Total other income (expense), net

 

(765,837) 

 

(139,964) 

 

(625,873) 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

-  

 

-  

 

-  

Net loss

 

 

 

 

$(1,910,483) 

 

$(1,122,047) 

 

$(788,436) 

 

Net Revenues

 

The Company’s revenues from the CFN Business are generated from the sale of promotional service packages to customers ranging from 3 to 6 months. The Company offers different packages tailored to the type and stage of the potential customer, such as public companies looking to increase their shareholder base, as well as private companies potentially looking to go public and attract capital and publicity.  Ranco performs services including white label manufacturing and co-packing for customers.  Customers will drop off their product and the Company will perform the services via their employees and contractors.  When the services are complete, the Company has satisfied its performance obligations.  Revenue is recognized at this point in time.  Ranco will order products that are manufactured overseas, such as custom boxes, packaging and hardware.  These products are generally shipped from overseas to the customer.  When these products are shipped out from the manufacturer, the Company has satisfied its performance obligations.  Revenue is recognized at this point in time. Lastly, Ranco provides certain shipping and third party logistics services for customers.  When the services are complete, the Company has satisfied its performance obligations.  Revenue is recognized at this point in time.

 

Revenues increased by $837,601 to $1,678,571 for the three months ended September 30, 2023, compared to $840,970 in the corresponding fiscal period in 2022. The increase was primarily due to the acquisition of Ranco in July 2023.

 

During the three months ended September 30, 2023, the Company realized $91,793 of campaign revenue compared to $109,698 in 2022. The decrease was primarily due to a shift in efforts during the period to the Ranco Business.

 

During the three months ended September 30, 2023, the Company’s subsidiary CNP Operating generated nominal revenue compared to $0.7 million in 2022 as the CNP Operating subsidiary was ceasing most operations at the end of 2022.

 

During the three months ended September 30, 2023, the Company’s Ranco subsidiary generated revenue of $1.6 million.

 

Cost of Revenue

 

The costs of revenue consist primarily of labor, fees paid for production of content for clients and the costs of placement of the content on various platforms. CNP Operating cost of revenue included the cost of hemp material, manufacturing material such as solvent, fuel and equipment depreciation.  Cost of revenue also includes products sold in the Ranco business.

 

Cost of revenue for the CFN Business decreased by $84,317 to $1,225,936 for the three months ended September 30, 2023, compared to $1,309,853 in the corresponding fiscal period in 2022. The decrease was primarily due to the CNP Operating business ceasing operation, partially offset by the Ranco  acquisition in July 2023.

20

 

Operating Expenses

 

The Company’s operating expenses for the three months ended September 30, 2023 were higher than those in the corresponding period in 2022 due to the acquisition of RAN CoPacking Solutions LLC in July 2023 and increased professional fees and travel.

 

Other Income/Expense

 

Other income/expenses during the three months ended September 30, 2023 were due to interest expense related to notes payable, which incudes amortization of debt discount.  

 

Results of Operations for the Nine Months Ended September 30, 2023 and 2022

 

The following are the results of our operations for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022:

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

 

 

 

2023

 

2022

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

 

$1,943,830  

 

$3,828,634  

 

$(1,884,804) 

Cost of revenue

 

1,449,211  

 

5,710,701  

 

(4,261,490) 

 

 

Gross profit (loss)

 

494,619  

 

(1,882,067) 

 

2,376,686  

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

3,722,829  

 

1,788,872  

 

1,933,957  

 

 

Total operating expenses

 

3,722,829  

 

1,788,872  

 

1,933,957  

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(3,228,210) 

 

(3,670,939) 

 

442,729  

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense

 

(869,420) 

 

(267,644) 

 

(601,776) 

 

Gain on property and equipment

 

9,253  

 

87,933  

 

(78,680) 

 

Unrealized loss on marketable securities

 

-  

 

(44,244) 

 

44,244  

 

Gain on extinguishment of debt

 

13,219  

 

-  

 

13,219  

 

Other income

 

157,502  

 

3,772  

 

153,730  

 

Interest income

 

238  

 

52  

 

186  

 

 

Total other income (expense), net

 

(689,207) 

 

(220,131) 

 

(469,076) 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

-  

 

-  

 

-  

Net loss

 

 

 

 

$(3,917,417) 

 

$(3,891,070) 

 

$(26,347) 

 

Net Revenues

 

Revenues decreased by $1,884,804 to $1,943,830 for the nine months ended September 30, 2023, compared to $3,828,634 in the corresponding fiscal period in 2022. The decrease was primarily due to the ceasing of the CNP Operating business, partially offset by the Ranco acquisition in July 2023.

 

During the nine months ended September 30, 2023, the Company realized $308,544 of campaign revenue compared to $289,244 in 2022. The increase was primarily due to a shift in efforts in 2023 back to the CFN Business.

 

The Company’s revenue during the nine months ended September 30, 2023 and 2022 also included $40,700 and $8,542, respectively, relating to sales of product from its e-commerce network focused on the sale of general wellness CBD products.

 

During the nine months ended September 30, 2023, the Company’s subsidiary CNP Operating generated nominal revenue compared to $3.5 million in 2022 as the CNP Operating subsidiary was ceasing most operations at the end of 2022.

 

During the nine months ended September 30, 2023, the Company’s Ranco subsidiary generated revenue of $1.6 million.

21

 

Cost of Revenue

 

The costs of revenue for the CFN Business consist primarily of labor, fees paid for production of content for clients and the costs of placement of the content on various platforms. CNP Operating cost of revenue included the cost of hemp material, manufacturing material such as solvent, fuel and equipment depreciation.  Cost of revenue includes products sold in the Ranco Business.

 

The Company’s cost of revenue for the nine months ended September 30, 2023 were significantly lower than those in the corresponding year in 2022 due to the CNP Operating subsidiary ceasing operations, including their inventory purchasing and revenue generating activities, in late 2022.

 

Operating Expenses

 

The Company’s operating expenses for the nine months ended September 30, 2023 were higher than those in the corresponding period in 2022 due to $1,156,100 and 626,073 in stock compensation expense pertaining to the issuance of warrants in May 2023 and August 2023 respectively, as well as the Ranco acquisition in July 2023.

 

Other Income/Expense

 

Other income/expenses during the nine months ended September 30, 2023 were due to interest expense related to notes payable, gain on property and equipment, gain on extinguishment of debt, interest income and other income which was due to employee retention credits received. In 2023, the Company recorded a $9,253 gain on the sale of property and equipment. The Company also recorded a $13,219 gain on extinguishment of debt. In 2022, the Company recorded a $87,933 gain on the sale of property and equipment. The Company also recorded a $44,244 unrealized loss on marketable securities in 2022.

 

Liquidity, Capital Resources and Going Concern

As of September 30, 2023, we had $1,741,005 in unrestricted cash and $7,925,930 in notes payable.

 

The Company had a working capital deficit of $7,946,953 and an accumulated deficit of $63,047,861 as of September 30, 2023. The Company also had a net loss of $3,871,760 for the nine months ended September 30, 2023.

  

Management’s plan to continue as a going concern includes raising capital in the form of debt or equity, growing its CFN Business, growing the Ranco Business, managing and reducing operating and overhead costs and continuing to pursue strategic transactions and opportunities including launching an e-commerce network focused on the sale of general wellness CBD, products.

 

At the present time, we do not have arrangements to raise additional capital, and we may need to identify potential investors and negotiate appropriate arrangements with them. We may not be able to arrange enough investment within the time the investment is required or that if it is arranged, that it will be on favorable terms. If we cannot obtain the needed capital, we may not be able to become profitable and may have to curtail or cease our operations. Additional equity financing, if available, may be dilutive to the holders of our capital stock. Debt financing may involve significant cash payment obligations, covenants and financial ratios that may restrict our ability to operate and grow our business.

 

These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

 

The following is a summary of our cash flows from operating, investing and financing activities for the nine months ended September 30, 2023:

 

 

 

 

 

 

 

 

 

Period Ended

 

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

 

2023

 

2022

Net cash used in operating activities

 

$(3,765,928) 

 

$(1,387,583) 

Net cash provided/(used) in investing activities

 

$580,160  

 

$(127,588) 

Net cash provided by (used in) financing activities

 

$4,914,537  

 

$1,453,950  

 

Net cash used in operating activities was $(3,765,928) during the nine months ended September 30, 2023, compared to cash used in operating activities of $(1,387,583) during the same period in 2022. The decrease in cash used in operating activities was primarily driven by the Company’s cash used in operating assets and liabilities.

22

Net cash provided/(used) in investing activities during the nine months ended September 30, 2023 and 2022 primarily consisted of the sale and purchase of property and equipment.  In 2023, the Company acquired $134,060

 

Net cash provided by financing activities during the nine months ended September 30, 2023 was $4,914,537 including proceeds from common stock for $350,000 and proceeds from promissory notes for $5,000,000 and proceeds from related party of $72,055 and note repayments of $507,517. Net cash provided by financing activities during the nine months ended September 30, 2022 was $1.4 million, including $1.2 million in proceeds from promissory notes, proceeds from common stock of $210,000, partially offset by note repayments of $34,493.

 

Description of Indebtedness

 

On September 10, 2019, the Company entered into a promissory note payable whereby the Company borrowed $500,000 bearing interest at 8% per annum. Interest on the note is payable quarterly on the first business day of December, March, June and September commencing December 1, 2019. In May 2021, the Company and the holder of the promissory note reached an agreement to extend the maturity date of the note from September 30, 2022 to September 30, 2024. In connection with the extension, the Company issued 160,000 shares of its common stock to the noteholder in lieu of $40,000 of interest accrued and accruing on the promissory note through December 31, 2022. In 2022, the maturity date was extended to 2024.

 

In connection with the promissory note on September 10, 2019, the Company issued warrants to purchase 33,333 shares of the Company’s common stock at an exercise price of $1.50 per share. The warrants were exercised on June 30, 2021 and the Company received $50,000. The note was discounted by $17,624 allocated from the valuation of the warrants issued. The discount recorded on the note is being amortized as interest expense through the maturity date. As of June 30, 2023, the net book value of the promissory note amounted to $500,000, including the principal amount of $50,000 which was fully amortized.

 

On October 28, 2019, the Company’s subsidiary CNP Operating entered into a promissory note payable with Complete Business Solutions Group, Inc (“CBSG”) whereby the Company borrowed $3,050,000. The outstanding balance of the note was $2,218,000 at December 31, 2022. At December 31, 2022, the Company reversed $1,312,080 previously recorded to additional paid-in capital in 2022 to reflect the outstanding principal of $2,218,000. The note is currently in default and personally guaranteed by Anthony Zingarelli.

 

On September 30, 2019, the Company’s subsidiary CNP Operating entered into a promissory note payable with Eagle Six Consultants, Inc. (“Eagle”) whereby the Company borrowed $550,000 bearing interest at 16% per annum. The outstanding balance of the note was $302,489 at June 30, 2023. The note is currently in default.

 

On June 24, 2020, the Company entered into a Loan Authorization and Agreement with the SBA under which the Company borrowed $150,000 and issued to the SBA a note and security agreement for the amount borrowed. Outstanding borrowings accrue interest at a rate of 3.75% per annum, and installment payments, including principal and interest, of $731 are due monthly and begin 12 months from the date of the loan agreement. The balance of any remaining principal and interest is due 30 years from the date of the loan agreement. As collateral for the borrowing, the Company granted the SBA a security interest in substantially all assets of the Company.

 

On May 12, 2021, the Company’s subsidiary CNP Operating restructured the CSBG note payable of $2,957,000, the Eagle #1 note payable of $550,000 and the Eagle #2 note payable of $300,000 by entering into a payment and indemnification agreement with the receivers/trustee of CBSG and Eagle. The receiver has agreed that the balance of the outstanding amounts will be paid over the course of 24 months in equal payments of $158,625. Further, the Company shall pay $20,000 per month toward the balance and Anthony Zingarelli (“Zingarelli”) and Colorado Sky Industrial Supply LLC (“CSIS”), agree to personally pay the sum of $138,625 per month. Zingarelli is the only member of CNP Operating that signed a personal guarantee on the loans and Zingarelli is the sole member of CSIS. Zingarelli and CSIS has agreed to indemnify and hold the Company harmless from any and all losses, liabilities and claims. If a loss is incurred by the Company with respect to any claims, Zingarelli shall reimburse the Company for the amount of any such loss. The Company has recorded the Zingarelli payments during the period as contributions to additional paid in capital through December 31, 2021.  This note is currently in default.

 

On November 19, 2020, the Company’s subsidiary CNP Operating purchased equipment for $58,095 which was financed at zero interest rate. The monthly payments of $968 will be made for the next 60 months and mature on November 19, 2025. Imputed interest was not material. The outstanding balance of the note was $34,892 at December 31, 2022. In 2022, CNP purchased equipment for $55,016 which was financed at zero interest rate with the same lender with similar terms. The outstanding balance of the note was $48,513 at December 31, 2022, and was fully repaid in 2023.

 

On October 19, 2021, the Company borrowed $250,000 from a lender and issued a promissory note for the repayment of the amount borrowed. The promissory note is unsecured, has a maturity date of December 31, 2024 and all principal is due upon maturity. The amount borrowed accrues interest at 12% per annum and accrued interest is payable monthly commencing on December 1, 2021. The promissory note contains customary events of default permitting acceleration of repayment for nonpayment of amounts due, a bankruptcy related proceeding, breach of representations or covenants, sale of substantially all assets, and change of control.

23

On April 8, 2022, the Company entered into two promissory notes for aggregate proceeds of $676,000. The promissory note is unsecured, has a maturity date of April 30, 2024 and all principal is due upon maturity. The notes bear interest at 18% per annum and accrued interest is payable monthly commencing on August 1, 2022. In connection with the notes, the Company granted 676,000 warrants to the lenders with an exercise price of $1.00 per share.

 

On October 4, 2022, the Company converted the entire $676,000 in principal and $50,700 in accrued interest on its convertible notes into an aggregate of 2,906,800 shares of common stock.  

 

On May 11, 2022, the Company’s subsidiary, CFN Real Estate II, LLC, entered into a promissory note with a lender for the repayment of $500,000 in connection with the $500,000 refinancing of the Company’s property located in Wray, Colorado. The company received the proceeds from the refinancing on May 16, 2022. Accrued interest at the rate of 12% is payable monthly commencing on June 15, 2022, and the principal of the promissory note is payable upon maturity on June 15, 2024. Upon the Company’s sale of the property in April 2023 (see Note 7), the note was fully repaid.

 

On May 8, 2023, the Company entered into a promissory note with two lenders for aggregate proceeds of $1,150,000.  The notes are unsecured and have a maturity date 15 months following their issuance.  Beginning on the fourth month after issuance, the Company will make monthly repayments totaling $143,750, including principal and interest.  Total principal and interest to be repaid is $1,725,000, and any remaining outstanding balance is due at maturity. In connection with the notes, the Company granted an aggregate of 1,150,000 warrants to the lenders with an exercise price of $0.25 per share. The fair value of the warrants was $185,788, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $53,507. As of September 30, 2023, note payable, net of unamortized discount of $132,281, was $1,017,719 for these two notes.

 

On July 1, 2023, the Company entered into a promissory note with two lenders for aggregate proceeds of $3,850,000.  The notes are unsecured and have a maturity date 15 months following their issuance. In connection with the notes, the Company granted an aggregate of 3,850,000 warrants to the lenders with an exercise price of $0.25 per share. The fair value of the warrants was $626,073, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $125,215. As of September 30, 2023, note payable, net of unamortized discount of $500,858, was $3,349,141 for these two notes.

 

On July 1, 2023, the May and July notes were rolled over to Ranco, LLC for an aggregate of $5,000,000 (the “Ranco Notes”).  The Ranco Notes have a 15 month term and are subject to mandatory equal repayments commencing on the fourth month following issuance, for an aggregate repayment of $7,500,000. The Ranco Notes are secured by the assets of Ranco and guaranteed by the Company.

 

Future scheduled maturities of long-term debt are as follows:

 

 

 

 

 

 

September 30,
2023

2024

 

 

 

 

3,854,300 

2025

 

 

 

 

3,892,727 

2026

 

 

 

 

50,882 

2027

 

 

 

 

23,702 

Thereafter

 

 

 

104,320 

 

 

 

 

 

7,925,930 

 

The aggregate current portion of long-term debt as of September 30, 2023 amounted to $3,854,300 which represents the contractual principal payments due in the next 12 months period as well as any notes in default.

 

Obligations Under Preferred Stock

 

On June 20, 2019, existing debtholders were issued an aggregate of 500 shares of Series A Preferred Stock, each with a stated value per share of $1,000, as conversion of $500,000 worth of outstanding promissory notes. The Series A Preferred Stock bears interest at 12% per annum, and is convertible into our common stock at the election of the holder at a conversion price per share to be mutually agreed between us and the holder in the future, and be redeemable at our option following the third year after issuance, without voting rights or a liquidation preference.

 

On June 20, 2019, we issued 3,000 shares of Series B Preferred Stock, each with a stated value of $1,000 per share, to Emerging Growth, LLC as part of the Emerging Growth Agreement. The aggregate fair value of $687,000 was recorded as part of the acquisition price of the net assets acquired from Emerging Growth, LLC. The Series B Preferred Stock bears interest at 6% per annum and is convertible into our common stock at the election of Emerging Growth, LLC at a conversion price per share to be mutually agreed between us and Emerging Growth, LLC in the future, without voting rights or a liquidation preference, except with respect to accrued penalty interest.

24

On May 15, 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 1,620,000 shares of its common stock as payment for $405,000 in outstanding accrued interest on the Series B Preferred Stock through June 30, 2023,

 

On August 15, 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 500,000 shares of its common stock as payment for $45,000 in outstanding accrued interest on the Series B Preferred Stock through September 30, 2023.

 

Other Outstanding Obligations at September 30, 2023

 

Warrants

 

As of September 30, 2023, 11,988,500 shares of our common stock are issuable pursuant to the exercise of warrants.

 

Options

 

As of September 30, 2023, 0 shares of our common stock are issuable pursuant to the exercise of options.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our Chief Executive Officer, who is our principal executive officer and our principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our principal executive officer and principal financial officer concluded that as of September 30, 2023, our disclosure controls and procedures were not effective.

 

Changes in Internal Control Over Financial Reporting

 

During the quarter ended September 30, 2023, in order to remediate the segregation of duties and other deficiencies initially created by the departure of our accounting department in June 2019, we hired accounting consultants to perform our account reconciliations and other day-to-day accounting requirements. The internal control structure was also documented and assessed in the areas of financial reporting and disclosure controls as it relates to our continuing operations. In addition, we revised and improved the use of our systems for getting appropriate approvals for purchases and other activities that require authorization. However, our ability to file timely reports is heavily dependent on having the necessary financial resources to pay consultants and other outside service providers involved with performing key elements of our disclosure and financial reporting controls. Our current financial condition, has temporarily hindered our ability to file timely reports for this reason. As a result, we have assessed our disclosure controls and controls over financial reporting as not effective.

25

 

PART II - OTHER INFORMATION

Item 6.  Exhibits

 

31.1

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14(a) and15d-14(a).*

  

  

32.1

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. 1350.**

 

 

101.

The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in XBRL (eXtensible Business Reporting Language): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Comprehensive Loss, (iv) the Statements of Changes in Stockholders’ Deficit, (v) the Statements of Cash Flows, and (vi) related notes to these financial statements.*

 

*Filed herewith.

 

**Furnished herewith.

 

SIGNATURES

 

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

 

  

CFN ENTERPRISES INC. 

  

  

  

Dated: November 14, 2023

 

 

By:

 

/s/ Brian Ross

  

  

Brian Ross

 

 

President and Chief Executive Officer

 

 

(Principal Executive Officer and
Principal Financial Officer)

26

 

Exhibit 31.1

CERTIFICATION

Pursuant to Rule 13a-14(a) and 15d-14(a)

Under the Securities Exchange Act of 1934, as Amended

 

I, Brian Ross, certify that:

 

1.I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2023 of CFN Enterprises Inc.;  

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;  

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this report;  

 

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:  

 

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;  

 

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;  

 

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and  

 

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.  

 

5.The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):  

 

a)All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and  

 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.  

 

 

Date: November 14, 2023

 

 

 

/s/ Brian Ross

 

Brian Ross

 

President and Chief Executive Officer

 

(Principal Executive Officer and

 

Principal Financial Officer)

 

 

 

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report (the “Report”) of CFN Enterprises Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof, I, Brian Ross, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and  

 

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.  

 

Date: November 14, 2023

 

 

 

/s/ Brian Ross

 

Brian Ross

 

President and Chief Executive Officer

 

(Principal Executive Officer and
Principal Financial Officer)

 

 

 

v3.23.3
Document and Entity Information - shares
 9 Months Ended
Sep. 30, 2023
Nov. 14, 2023
Details    
Registrant CIK 0001352952  
Fiscal Year End --12-31  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2023  
Document Transition Report false  
Entity File Number 000-52635  
Entity Registrant Name CFN ENTERPRISES INC.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 90-1559541  
Entity Address, Address Line One 600 E. 8TH STREET  
Entity Address, City or Town WHITEFISH  
Entity Address, Country MT  
Entity Address, Postal Zip Code 59937  
Country Region 833  
City Area Code 420  
Local Phone Number 2636  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   82,210,664
Amendment Flag false  
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q3  
v3.23.3
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Current assets    
Cash $ 1,741,005 $ 12,474
Restricted cash 20,366 20,128
Accounts receivable, net 712,881 28,245
Inventory 1,864,800 0
Prepaid expenses 74,250 0
Total current assets 4,413,302 60,847
Goodwill 8,676,430 0
Property and equipment, net 164,775 53,570
Right of use asset 2,382,627 110,321
Deposits 297,269 0
Other assets 55,676 46,766
Assets held for sale 0 599,047
Total assets 15,990,079 870,551
Current liabilities    
Accounts payable 2,487,171 2,357,614
Accrued liabilities 3,318,398 2,343,654
Payments made in advance of securities date 0 217,500
Due to related party 575,314 503,259
Deferred revenue 10,767 10,978
Current portion of notes payable 3,854,300 3,088,250
Due to seller 1,000,000 0
Contingent consideration 208,000 0
Current portion of right of use liability 912,215 262,727
Current liabilities of discontinued operations 79,823 79,823
Total current liabilities 12,445,987 8,863,805
Right of use liability 1,724,267 200,758
Long-term note payable, net of current portion and discounts 4,071,631 978,337
Total liabilities 18,241,885 10,042,900
Stockholders' deficit    
Common shares 82,210 37,690
Additional paid-in capital 60,759,497 49,786,056
Accumulated deficit (63,093,517) (58,996,099)
Total stockholders' deficit (2,251,806) (9,172,349)
Total liabilities and stockholders' deficit 15,990,079 870,551
Series A Preferred Stock    
Stockholders' deficit    
Preferred shares 1 1
Series B Preferred Stock    
Stockholders' deficit    
Preferred shares $ 3 $ 3
v3.23.3
CONDENSED CONSOLIDATED BALANCE SHEETS - Parenthetical - $ / shares
Sep. 30, 2023
Dec. 31, 2022
Preferred Stock, Par or Stated Value Per Share $ 0.001  
Preferred Stock, Shares Authorized 2,000,000  
Common Stock, Par or Stated Value Per Share $ 0.001 $ 0.001
Common Stock, Shares Authorized 500,000,000 500,000,000
Common Stock, Shares, Issued 82,210,664 37,609,664
Common Stock, Shares, Outstanding 82,210,664 37,609,664
Series A Preferred Stock    
Preferred Stock, Par or Stated Value Per Share $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 500 500
Preferred Stock, Shares Issued 500 500
Preferred Stock, Shares Outstanding 500 500
Series B Preferred Stock    
Preferred Stock, Par or Stated Value Per Share $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 3,000 3,000
Preferred Stock, Shares Issued 3,000 3,000
Preferred Stock, Shares Outstanding 3,000 3,000
v3.23.3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS        
Net revenues $ 1,678,571 $ 840,970 $ 1,943,830 $ 3,828,634
Cost of revenue 1,225,536 1,309,853 1,449,211 5,710,701
Gross profit (loss) 453,035 (468,883) 494,619 (1,882,067)
Operating expenses        
Selling, general and administrative 1,597,681 513,200 3,722,829 1,788,872
Total operating expenses 1,597,681 513,200 3,722,829 1,788,872
Loss from operations (1,144,646) (982,083) (3,228,210) (3,670,939)
Other income (expense)        
Interest expense (765,919) (115,257) (869,420) (267,644)
Gain on property and equipment 0 0 9,253 87,933
Unrealized loss on marketable securities 0 (24,750) 0 (44,244)
Gain on extinguishment of debt 0 0 13,219 0
Other income 0 0 157,502 3,772
Interest income 82 43 238 52
Total other income (expense), net (765,837) (139,963) (689,207) (220,130)
Provision for income taxes 0 0 0 0
Net loss (1,910,483) (1,122,046) (3,917,417) (3,891,069)
Preferred stock interest 60,000 60,000 180,000 180,000
Net loss available to common shareholders (1,970,483) (1,182,046) (4,097,417) (4,071,069)
Net loss attributable to non-controlling interest 0 422 0 467
Net loss available to CFN Enterprises common shareholders $ (1,970,483) $ (1,182,468) $ (4,097,417) $ (4,071,536)
Net loss per common share - basic and diluted $ (0.02) $ (0.03) $ (0.08) $ (0.12)
Basic and diluted 81,990,884 33,822,379 54,346,145 32,951,092
v3.23.3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($)
Common Stock
Additional Paid-in Capital
Retained Earnings
Noncontrolling Interest
Total
Series A Preferred Stock
Series B Preferred Stock
Equity, Attributable to Parent, Beginning Balance at Dec. 31, 2021 $ 31,679 $ 46,399,451 $ (48,833,880) $ 7,003 $ (2,395,743) $ 1 $ 3
Shares, Outstanding, Beginning Balance at Dec. 31, 2021 31,679,481         500 3,000
Preferred stock interest $ 0 0 60,000 0 60,000 $ 0 $ 0
Payment of CSIS debt by shareholder 0 415,875   0 415,875 0 0
Net Income (Loss) Attributable to Parent 0 0 (1,302,182) (23) (1,302,204) 0 0
Equity, Attributable to Parent, Ending Balance at Mar. 31, 2022 $ 31,679 46,815,326 (50,196,062) 6,980 (3,342,072) $ 1 $ 3
Shares, Outstanding, Ending Balance at Mar. 31, 2022 31,679,481         500 3,000
Preferred stock interest $ 0 0 (60,000) 0 (60,000) $ 0 $ 0
Equity, Attributable to Parent, Beginning Balance at Dec. 31, 2021 $ 31,679 46,399,451 (48,833,880) 7,003 (2,395,743) $ 1 $ 3
Shares, Outstanding, Beginning Balance at Dec. 31, 2021 31,679,481         500 3,000
Purchase of property and equipment with common stock         700,000    
Warrants issued with promissory notes         302,537    
Stock compensation expense         0    
Preferred stock interest         180,000    
Payment of CSIS debt by shareholder         1,212,080    
Non-controlling interest         (467)    
Shares, Outstanding, Ending Balance at Sep. 30, 2022 33,822,379         500 3,000
Preferred stock interest         (180,000)    
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Sep. 30, 2022 $ 33,822 49,411,944 (52,904,949) 6,536 (3,452,643) $ 1 $ 3
Conversion of accrued preferred stock interest into shares         0    
Issuance of common stock pursuant to business combination         0    
Equity, Attributable to Parent, Beginning Balance at Mar. 31, 2022 $ 31,679 46,815,326 (50,196,062) 6,980 (3,342,072) $ 1 $ 3
Shares, Outstanding, Beginning Balance at Mar. 31, 2022 31,679,481         500 3,000
Issuance of common stock for proceeds $ 1,143 798,877 0 0 800,020 $ 0 $ 0
Issuance of common stock for proceeds, Shares 1,142,898            
Purchase of property and equipment with common stock $ 1,000 699,000 0 0 700,000 0 0
Purchase of property and equipment with common stock, Shares 1,000,000            
Warrants issued with promissory notes $ 0 302,537 0 0 302,537 0 0
Preferred stock interest 0 0 60,000 0 60,000 0 0
Payment of CSIS debt by shareholder 0 477,723 0 0 477,723 0 0
Net Income (Loss) Attributable to Parent $ 0 0 (1,466,841) (22) (1,466,863) $ 0 $ 0
Shares, Outstanding, Ending Balance at Jun. 30, 2022 33,822,379         500 3,000
Preferred stock interest $ 0 0 (60,000) 0 (60,000) $ 0 $ 0
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Jun. 30, 2022 $ 33,822 49,093,462 (51,722,903) 6,958 (2,588,657) $ 1 $ 3
Preferred stock interest     60,000   60,000    
Payment of CSIS debt by shareholder   318,482     318,482    
Net Income (Loss) Attributable to Parent     (1,122,046) (422) (1,122,468)    
Shares, Outstanding, Ending Balance at Sep. 30, 2022 33,822,379         500 3,000
Preferred stock interest     (60,000)   (60,000)    
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Sep. 30, 2022 $ 33,822 49,411,944 (52,904,949) 6,536 (3,452,643) $ 1 $ 3
Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Jun. 30, 2022 $ 33,822 49,093,462 (51,722,903) 6,958 (2,588,657) $ 1 $ 3
Equity, Attributable to Parent, Beginning Balance at Dec. 31, 2022         (9,172,349)    
Shares, Outstanding, Beginning Balance at Dec. 31, 2022 37,690,664         500 3,000
Preferred stock interest $ 0 0 60,000 0 60,000 $ 0 $ 0
Stock Issued During Period, Value, New Issues $ 2,400 597,600 0 0 600,000 0 0
Stock Issued During Period, Shares, New Issues 2,400,000            
Net Income (Loss) Attributable to Parent $ 0 0 (551,222) 0 (551,222) $ 0 $ 0
Shares, Outstanding, Ending Balance at Mar. 31, 2023 40,090,664         500 3,000
Preferred stock interest $ 0 0 (60,000) 0 (60,000) $ 0 $ 0
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Mar. 31, 2023 40,090 50,383,656 (59,607,321) 0 (9,183,571) 1 3
Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Dec. 31, 2022 $ 37,690 49,786,056 (58,996,099) 0 (9,172,349) $ 1 $ 3
Equity, Attributable to Parent, Beginning Balance at Dec. 31, 2022         (9,172,349)    
Shares, Outstanding, Beginning Balance at Dec. 31, 2022 37,690,664         500 3,000
Purchase of property and equipment with common stock         0    
Warrants issued with promissory notes         811,861    
Stock compensation expense         1,156,100    
Preferred stock interest         180,000    
Payment of CSIS debt by shareholder         0    
Non-controlling interest         0    
Equity, Attributable to Parent, Ending Balance at Sep. 30, 2023         (2,251,806)    
Shares, Outstanding, Ending Balance at Sep. 30, 2023 82,210,664         500 3,000
Preferred stock interest         (180,000)    
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Sep. 30, 2023 $ 82,210 60,759,497 (63,093,518) 0 (2,251,807) $ 1 $ 3
Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Dec. 31, 2022 $ 37,690 49,786,056 (58,996,099) 0 (9,172,349) $ 1 $ 3
Conversion of accrued preferred stock interest into shares         450,000    
Issuance of common stock pursuant to business combination         8,000,000    
Shares, Outstanding, Beginning Balance at Mar. 31, 2023 40,090,664         500 3,000
Warrants issued with promissory notes $ 0 185,788 0 0 185,788 $ 0 $ 0
Stock compensation expense 0 1,156,100 0 0 1,156,100 0 0
Preferred stock interest 0 0 60,000 0 60,000 0 0
Net Income (Loss) Attributable to Parent $ 0 0 (1,455,712) 0 (1,455,712) $ 0 $ 0
Shares, Outstanding, Ending Balance at Jun. 30, 2023 41,710,664         500 3,000
Preferred stock interest $ 0 0 (60,000) 0 (60,000) $ 0 $ 0
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Jun. 30, 2023 41,710 52,128,924 (61,123,034) 0 (8,952,396) 1 3
Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Mar. 31, 2023 40,090 50,383,656 (59,607,321) 0 (9,183,571) 1 3
Conversion of accrued preferred stock interest into shares $ 1,620 403,380 0 0 405,000 0 0
Conversion of accrued preferred stock interest into shares Shares 1,620,000            
Warrants issued in connection with note payable $ 0 626,073 0 0 626,073 0 0
Preferred stock interest $ 0 0 60,000 0 60,000 0 0
Shares Issued As Payment For Accrued Interest, Value         405,000    
Shares Issued As Payment For Accrued Interest, Shares 1,620,000            
Net Income (Loss) Attributable to Parent $ 0 0 (1,910,483) 0 (1,910,483) $ 0 $ 0
Equity, Attributable to Parent, Ending Balance at Sep. 30, 2023         (2,251,806)    
Shares, Outstanding, Ending Balance at Sep. 30, 2023 82,210,664         500 3,000
Preferred stock interest $ 0 0 (60,000) 0 (60,000) $ 0 $ 0
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Sep. 30, 2023 82,210 60,759,497 (63,093,518) 0 (2,251,807) 1 3
Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Jun. 30, 2023 41,710 52,128,924 (61,123,034) 0 (8,952,396) 1 3
Conversion of accrued preferred stock interest into shares $ 500 44,500 0 0 45,000 0 0
Conversion of accrued preferred stock interest into shares Shares 500,000            
Issuance of common stock pursuant to business combination $ 40,000 $ 7,960,000 $ 0 $ 0 $ 8,000,000 $ 0 $ 0
Issuance of common stock pursuant to business combination Shares 40,000,000            
v3.23.3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Cash flows from operating activities    
Net loss $ (3,917,417) $ (3,891,069)
Adjustments to reconcile net loss to net cash used in operating activities    
Depreciation and amortization 50,995 1,209,788
Amortization of right of use asset 187,616 148,300
Amortization of debt discount 178,721 0
Stock compensation expense 1,156,100 0
Gain on property and equipment (9,253) (87,933)
Gain on extinguishment of debt (13,219) 0
Unrealized loss (gain) on marketable securities 0 44,244
Amortization of deferred financing cost 0 72,855
Non-controlling interest 0 (467)
Changes in operating assets and liabilities    
Accounts receivable, net (509,296) 87,424
Inventory (1,864,800) 140,481
Prepaid expenses and other assets (83,160) 11,540
Accounts payable and accrued expenses 1,339,090 805,325
Deferred revenue (211) (6,524)
Payments made in advance of securities date 32,500 250,000
Right of use liability, net (313,595) (171,547)
Net cash used in operating activities (3,765,929) (1,387,583)
Cash flows from investing activities    
Cash acquired pursuant to business combination 134,060 0
Sale of assets held for sale 608,300 0
Purchase of property and equipment, net (162,200) (127,588)
Net cash provided/(used) in investing activities 580,160 (127,588)
Cash flows from financing activities    
Proceeds from (Repayments of) Related Party Debt 72,055 45,443
Proceeds from Notes Payable 5,000,000 1,233,000
Repayments of Notes Payable (507,517) (34,493)
Proceeds from sale of common stock 350,000 210,000
Net cash provided by financing activities 4,914,537 1,453,950
Net change in cash and cash equivalents 1,728,769 (61,221)
Cash and restricted cash at beginning of period 32,602 190,029
Cash and restricted cash at end of period 1,761,371 128,808
Cash at beginning of period 12,474 170,015
Restricted cash at beginning of period 20,128 20,014
Cash and restricted cash at beginning of period 32,602 190,029
Cash at end of period 1,741,005 108,741
Restricted cash at end of period 20,366 20,067
Cash and restricted cash at end of period 1,761,371 128,808
Cash paid for income taxes 0 0
Cash paid for interest 0 0
Supplemental disclosure of non-cash investing and financing activities    
Issuance of common stock pursuant to business combination 8,000,000 0
Due to seller and contingent consideration pursuant to business combination 1,208,000 0
Conversion of accrued preferred stock interest into shares 450,000 0
Right of use asset and liability 187,863 0
Payment of CSIS debt by shareholder 0 1,212,080
Warrants issued with promissory notes 811,861 302,537
Accrual of preferred stock interest 120,000 180,000
Purchase of property and equipment with common stock 0 700,000
Purchase of equipment with notes payable 0 55,016
Settlement of accounts payable with sale of equipment $ 0 $ 212,067
v3.23.3
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
 9 Months Ended
Sep. 30, 2023
Notes  
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

 

Organization

 

CFN Enterprises Inc., formerly known as Accelerize Inc., or the Company, is a Delaware corporation incorporated on November 22, 2005. Effective October 22, 2019, the Company filed a certificate of amendment to its certificate of incorporation with the Secretary of State of the State of Delaware to change its corporate name to CFN Enterprises Inc.

 

On May 15, 2019, the Company entered into an asset purchase agreement or the Emerging Growth Agreement with Emerging Growth, LLC, or Emerging Growth, pursuant to which the Company acquired certain assets from Emerging Growth related to its sponsored content and marketing business for a purchase price consideration consisting of $420,000 in cash, 30,000,000 shares of the Company’s common stock, and 3,000 shares of Series B preferred stock with a total stated value of $3,000,000 which bears interest at 6% per annum and is convertible into the Company’s common stock at a conversion price to be mutually agreed in the future, without voting rights or a liquidation preference except with respect to default interest. The securities were issued pursuant to an exemption under Section 4(a)(2) of the Securities Act of 1933, as amended. The closing of the purchase of the assets pursuant to the Emerging Growth Agreement occurred on June 20, 2019.

 

On January 22, 2021, the Company invested $35,000 in a new joint venture focused on sponsored content and marketing called East West Asset Management or East West. East West was formed as a Limited Liability Company in the State of Nevada on November 13, 2020. CFN owns 50% of the entity and one of its officers holds the title of Member Manager in East West. The Company has concluded that East West is a variable interest entity in accordance with applicable accounting standards and guidance. As such, the accounts and results of East West have been included in the Company’s condensed consolidated financial statements.

 

On August 23, 2021, the Company entered into securities purchase agreements with CNP Operating, LLC, a Colorado limited liability company, or CNP Operating, and the owners of all of the equity interests of CNP Operating, or the Owners, whereby the Company acquired 100% of CNP Operating from the Owners in exchange for an aggregate of 23.6 million shares of the Company’s common stock. The securities were issued pursuant to an exemption under Section 4(a)(2) of the Securities Act of 1933, as amended. On August 25, 2021 the transaction was closed and CNP Operating became a wholly owned subsidiary of the Company. CNP Operating is a cannabidiol manufacturer. In the fourth quarter of 2022 and the first quarter of 2023, the Company took steps to wind down the operations of CNP Operating and focus on the CFN Business.

 

On July 1, 2023, the Company and its wholly owned subsidiary, RANCO, LLC, a Delaware limited liability company, or Ranco, entered into an asset purchase agreement, or the Asset Purchase Agreement with RAN CoPacking Solutions LLC, a California limited liability company, or the Seller and the members of the Seller (collectively, the Founders). The assets of the Seller acquired by Ranco consist of assets for co-packing and white label manufacturing services, including comprehensive solutions for third party logistics (3PL) related areas such as storage, order fulfillment, solutions for custom packaging and hardware needs for many different industries, and media and design services, along with strategic marketing support, to help clients establish and enhance their brand presence in the market, or the Purchased Assets. Ranco acquired the Purchased Assets and assumed certain liabilities of the Seller or the Acquisition, in exchange for an aggregate of 40 million shares of Company common stock, or the Acquisition Shares, and $1 million in cash consideration, payable in quarterly installments in an amount equal to the lesser of (i) Ranco’s gross revenues attributable to the Purchased Assets from and after the closing, net of all accrued debts, liabilities, and obligations of the Ranco and all amounts necessary or advisable to reserve, designate, or set aside for actual or anticipated costs, payments, liabilities, obligations, and claims with respect to the Purchased Assets, all as determined in good faith by Ranco, and (ii) $250,000, until paid in full, or the Cash Consideration. The Acquisition Shares were issued pursuant to an exemption under Section 4(a)(2) of the Securities Act of 1933, as amended. The Asset Purchase Agreement also contains an earn out provision providing for the issuance of (i) 8 million shares of Company common stock to be issued upon Ranco achieving $19 million in gross revenue attributable to the Purchased Assets and a net profit of $3.9 million within the twelve month period beginning three months from the closing of the Acquisition, or the First Earnout Period, and (ii) 8 million shares of Company common stock to be issued upon Ranco achieving $29 million in gross revenue attributable to the Purchased Assets and a net profit of $5.9 million within the twelve month period beginning on the day immediately following the end of the First Earnout Period.

 

Also on July 1, 2023, Ranco entered into the Packwoods Private Label Services and Intellectual Property Licensing Agreement, or the Licensing Agreement, with PW Industries LLC, a Wyoming limited liability company, or PW, RS Distributions LLC, a Delaware limited liability company, or RS, and Packaging Innovations LLC, a Wyoming limited liability company, or PI, and together with PW and RS, the Licensors, for the exclusive manufacturing, packaging and distribution of, and wholesale and retail sales of a variety hemp-based inhalable (pre-roll and vaporizer), edible products, and disposable nicotine-based inhalable vaporizer products, and the purchase of packaging materials to be used with Packwoods-branded cannabis products (containing more than 0.3% delta-9 THC by weight) and the distribution of those packaging materials to licensed cannabis manufacturers designated by PW, using the Licensor’s licensed property for a 5 year exclusive term, subject to certain exclusions.

 

The Company’s current operations consist of the sponsored content and marketing business, or the CFN Business, from the assets acquired pursuant to the Emerging Growth Agreement, and the business of Ranco, or the Ranco Business, consisting of co-packing and white label manufacturing services, including comprehensive solutions for third party logistics (3PL) related areas such as storage, order fulfillment, solutions for custom packaging and hardware needs for many different industries, and media and design services, along with strategic marketing support, to help clients establish and enhance their brand presence in the market, and the manufacturing, packaging and distribution of, and wholesale and retail sales of a variety hemp-based inhalable (pre-roll and vaporizer), edible products, and disposable nicotine-based inhalable vaporizer products, and the purchase of packaging materials to be used with Packwoods-branded cannabis products (containing more than 0.3% delta-9 THC by weight) and the distribution of those packaging materials to licensed cannabis manufacturers designated by PW, using the Licensor’s licensed property for a 5 year exclusive term, subject to certain exclusions.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis which implies the Company will continue to meet its obligations for the next 12 months as of the date these financial statements are issued.

 

The Company had a working capital deficit of $8,032,685 and an accumulated deficit of $63,093,517 as of September 30, 2023. The Company also had a net loss of $3,917,417 for the nine months ended September 30, 2023.

 

Management’s plan to continue as a going concern includes raising capital in the form of debt or equity, growing the CFN Business, growing the newly acquired Ranco Business managing and reducing operating and overhead costs and continuing to pursue strategic transactions and opportunities including launching an e-commerce network focused on the sale of general wellness cannabidiol, or CBD, products.

 

These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

 

Basis of Presentation and Consolidation

 

The accompanying consolidated financial statements include the results of operations of the Company and its subsidiaries CNP Operating, CFN Real Estate, LLC, a Delaware limited liability company, CFN Real Estate II, LLC, a Delaware limited liability company, CNP of Wyoming, LLC, a Colorado limited liability company, and Ranco, LLC, a Delaware limited liability company. All intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation.

 

During the period ended June 30, 2022 the Company concluded that East West was a variable interest entity in accordance with applicable accounting standards and guidance. As such, the accounts and results of East West have been included in the Company’s consolidated financial statements.  As of December 31, 2022, East West was fully impaired and valued at $0.

 

These unaudited condensed financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 2022 and 2021, which are included in the Company’s December 31, 2022 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission on April 17, 2023. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation of these may be determined in that context. The results of operations for the period ended September 30, 2023 are not necessarily indicative of results for the entire year ending December 31, 2023.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 9 Months Ended
Sep. 30, 2023
Notes  
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reported period. Actual results will differ from those estimates. Included in these estimates are assumptions about collection of accounts receivable, useful life of fixed assets and intangible assets, borrowing rate considered for operating lease right-of-use asset and related operating lease liability, and assumptions used in Black-Scholes valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.

 

Financial Statement Reclassification

 

Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less when purchased, to be cash equivalents. The Company has restricted cash as a result of its corporate card program through its bank, which requires collateral placed in a money market account. At September 30, 2023, the Company had a restricted cash balance of $20,366 included as a component of total cash and restricted cash as presented on the accompanying unaudited condensed consolidated statement of cash flows.

 

Accounts Receivable

 

The Company’s account receivables for the CFN Business are due from customers relating to contracts to provide investor relation services for the CFN Business. For the Ranco Business, accounts receivables are due from customers for products sold and manufacturing, packing and labeling services provided.  Collateral is currently not required. The Company also maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments. The Company periodically reviews these estimated allowances, including an analysis of the customers’ payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’s ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserves for those accounts deemed uncollectible or likely to become uncollectible. When receivables are determined to be uncollectible, principal amounts of such receivables outstanding are deducted from the allowance. The allowance for doubtful accounts as of September 30, 2023 and December 31, 2022 amounted to $454,012 and $470,532 respectively.

 

Inventory

 

The Company’s inventory consists of finished goods acquired for its Ranco business.  As of September 30, 2023, all inventory consisted of disposable nicotine-based inhalable vaporizer products purchased from overseas.  The inventory is valued at the lower of cost (specific identification) or estimated net realizable value. As of September 30, 2023, the Company valued the inventory at $1,864,800.

 

Concentration of Credit Risks

 

The Company is subject to concentrations of credit risk primarily from cash and cash equivalents and accounts receivable.

 

The Company’s cash and restricted cash accounts are held at a financial institution and are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to $250,000. From time-to-time, the Company’s bank balances exceed the FDIC insurance limit. To reduce its risk associated with the failure of such financial institutions, the Company periodically evaluates the credit quality of the financial institution in which it holds deposits. As of September 30, 2023, the Company had $1,491,005 in excess of federally insured limits.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with Accounting Standards Codification, or ASC, 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.

 

The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered.

 

CFN Business

 

Subsequent to the closing of the Emerging Growth Agreement on June 20, 2019, the Company’s revenue is generated from the sale of promotional service packages to its customers ranging from 3 to 6 months. The Company offers different packages tailored to the type and stage of the potential customer, such as public companies looking to increase their shareholder base, as well as private companies potentially looking to go public and attract capital and publicity. The services provided by the Company include advertising, publishing of interviews and articles across its network and featuring of client content on its newsletters and social media. The packages all have fixed prices that are billed monthly over the terms of the agreement in even amounts. The Company recognizes revenue for its

performance obligation associated with its contracts with customers over time as work is performed, which is deemed to occur evenly throughout the duration of the contract. This also reflects the pattern in which costs are incurred on performing the contracts. To the extent revenue recognized on contracts at each period end exceeds collections, the amounts are reflected as accounts receivable. To the extent collections on contracts at each period end exceeds revenue recognized, the amounts are reflected as deferred revenue.

 

Ranco Business

 

The Company performs services including white label manufacturing and co-packing for customers.  Customers will drop off their product and the Company will perform the services via their employees and contractors.  When the services are complete, the Company has satisfied its performance obligations.  Revenue is recognized at this point in time.

 

The Company will order products that are manufactured overseas, such as custom boxes, packaging and hardware.  These products are generally shipped from overseas to the customer.  When these products are shipped out from the manufacturer, the Company has satisfied its performance obligations.  Revenue is recognized at this point in time.

 

Lastly, the Company provides certain shipping and third party logistics services for customers.  When the services are complete, the Company has satisfied its performance obligations.  Revenue is recognized at this point in time.

 

Disaggregation of Revenue

 

The following is a disaggregation of revenue for the three months ended September 30, 2023 and 2022 respectively:

 

 

 

 

 

Three Months Ended

 

 

 

 

September 30,

 

2023

 

2022

Services

 

$399,603 

 

$119,028 

Products  

 

384,380 

 

721,942 

Shipping and logistics

 

894,588 

 

- 

 

$1,678,571 

 

$840,970 

 

The following is a disaggregation of revenue for the nine months ended September 30, 2023 and 2022 respectively:

 

 

 

 

 

Nine Months Ended

 

 

 

 

September 30,

 

2023

 

2022

Services

 

$622,378 

 

$343,997 

Products  

 

426,863 

 

3,484,637 

Shipping and logistics

 

894,588 

 

- 

 

$1,943,830 

 

$3,828,634 

 

Cost of Revenue

 

Cost of revenue includes direct labor and materials.  Cost of revenues also includes inbound and outbound shipping, freight and delivery costs.

Shipping and Handling Fees and Costs

 

Amounts billed to customers for shipping and handling fees are presented in revenue. Costs incurred for shipping and handling are included in cost of revenue.

 

Fair Value of Financial Instruments

 

The Company accounts for assets and liabilities measured at fair value on a recurring basis in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.

 

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

 

Level 1:

Observable inputs such as quoted market prices in active markets for identical assets or liabilities.

 

 

Level 2:

Observable market-based inputs or unobservable inputs that are corroborated by market data.

 

 

Level 3:

Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

 

The carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, deferred revenue and due to related party approximate their fair value due to the short-term maturity of these items. The Company’s notes payable approximate their fair value due to the market rate of interest on the notes.

 

The Company’s contingent consideration recorded in connection with the Ranco acquisition (see Note 3) is a Level 3 liability.  The liability is valued using a probability weighted analysis of the respective earn out provisions.

 

Business Combinations

The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase.

Goodwill represents the excess of the purchase price of an acquired entity over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination.

Impairment

 

Long-Lived Assets

 

In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made.

 

Goodwill

 

Goodwill and identifiable intangible assets that have indefinite useful lives are not amortized, but instead are tested annually for impairment and upon the occurrence of certain events or substantive changes in circumstances. The annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity may choose to perform the qualitative assessment on none, some or all of its reporting units or an entity may bypass the qualitative assessment for any reporting unit and proceed directly to step one of the quantitative impairment test. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required.

 

The quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. It is the Company’s practice, at a minimum, to perform a qualitative or quantitative goodwill impairment test in the fourth quarter every year.

 

Contingent Consideration

 

The Company records a contingent consideration liability relating to earn the Company’s shares included in its acquisition agreements. The estimated fair value of the contingent consideration is recorded using significant unobservable measures and other fair value inputs and is therefore classified as a Level 3 financial instrument.

 

The Company estimates and records the acquisition date fair value of contingent consideration as part of purchase price consideration for acquisitions. Additionally, each reporting period, the Company estimates changes in the fair value of contingent consideration and recognizes any change in fair in the consolidated statement of operations. The estimate of the fair value of contingent consideration requires very subjective assumptions to be made of future operating results, discount rates and probabilities assigned to various potential

operating result scenarios. Future revisions to these assumptions could materially change the estimate of the fair value of contingent consideration and, therefore, materially affect the Company’s future financial results. The contingent consideration liability is to be settled with the issuance of shares of common stock once contingent provisions set forth in respective acquisition agreements have been achieved. Upon achievement of contingent provisions, respective liabilities are relieved and offset by increases to common stock and additional paid-in capital in the stockholders’ equity section of the Company’s consolidated balance sheets.

 

Advertising

 

The Company expenses advertising costs as incurred. Advertising expenses for the three months ended September 30, 2023 and 2022 amounted to $24,487 and $4,761, respectively. Advertising expenses for the nine months ended September 30, 2023 and 2022 amounted to $52,773 and $23,172, respectively.

 

Income Taxes

 

Income taxes are accounted for in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized, but no less than quarterly.

 

For interim periods, the Company uses the effective income tax rate method resulting in zero income tax for the nine months ended September 30, 2023 and 2022.

 

Property and Equipment

 

Property and equipment are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives of five years. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized.

 

Basic and Diluted Earnings Per Share

 

Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method). As of September 30, 2023, the Company had no outstanding stock options, 11,988,500 outstanding warrants and 3,500 shares of preferred stock which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As of September 30, 2022, the Company had 0 outstanding stock options and 988,500 outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As a result, the basic and diluted earnings per share are the same for each of the periods presented.

 

Share-Based Payments

 

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. Under the fair value recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period.

 

The Company has elected to use the Black-Scholes option-pricing model to estimate the fair value of its options, which incorporates various subjective assumptions including volatility, risk-free interest rate, expected life, and dividend yield to calculate the fair value of stock option awards. Compensation expense recognized in the statements of operations is based on awards ultimately expected to vest and reflects estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

 

Common Stock Awards

 

The Company has granted common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these awards using the fair value of the services provided or the fair value of the awards granted. The fair value of the awards is recognized on a straight-line basis as services are rendered. The share-based payments related to common stock awards for the settlement of services provided by non-employees is recorded on the consolidated statement of comprehensive loss in the same manner and charged to the same account as if such settlements had been made in cash.

 

Warrants

 

In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants are recorded at fair value as expense over the requisite service period or at the date of issuance, if there is not a service period. Warrants granted in connection with ongoing arrangements are more fully described in Note 6, Stockholders’ Deficit.

 

Leases

 

The Company adopted Accounting Standards Update No. 2016-02, Leases (“Topic 842”) using the modified retrospective method. This accounting standard requires a lessee to recognize an asset and liability for most leases on its balance sheet.

 

The Company elected the practical expedient method permitted under the transition guidance, which allows a carryforward of historical lease classification, the assessment on whether a contract was or contains a lease, and the initial direct costs for any leases that existed prior to July 1, 2019. The Company also elected to recognize the associated lease payments in the consolidated statements of operations on a straight-line basis over the lease term.

 

Under Topic 842, the Company determines if an arrangement is a lease at inception. ROU assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement and leases with an initial term of 12 months or less are not included in lease liabilities or ROU asset. As most leases do not provide an implicit rate, a rate which approximates the Company’s incremental borrowing rate is used, based on the information available at commencement date, in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes or other costs. Variable lease costs are expensed as incurred. Lease agreements generally do not contain residual value guarantees or restrictive covenants. Over the lease term, the Company uses the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized in a manner that results in straight-line expense recognition.

 

At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the net book value of CNP’s ROU assets may not be recoverable. As such, the Company recorded an impairment charge of $339,768.
v3.23.3
NOTE 3: BUSINESS COMBINATIONS
 9 Months Ended
Sep. 30, 2023
Notes  
NOTE 3: BUSINESS COMBINATIONS

NOTE 3: BUSINESS COMBINATIONS

 

RAN CoPacking Solutions LLC

 

The Company evaluated the Asset Purchase Agreement pursuant to ASC 805 and ASU 2017-01, Topic 805, Business Combinations.  The Company first determined that the Seller met the definition of a business as it includes inputs and a substantive process that together significantly contribute to the ability to create outputs.  The Seller’s  results of operations are included in the Company’s consolidated financial statements from the date of acquisition.The acquisition method of accounting requires, among other things, that the assets acquired and liabilities assumed in a business combination be measured at their estimated respective fair values as of the closing date of the acquisition. Goodwill recognized in connection with this transaction represents primarily the potential economic benefits that the Company believes may arise from the acquisition The purchase price allocation is preliminary and could be significantly revised as a result of additional information obtained regarding assets acquired and liabilities assumed and revisions of estimates of fair values of tangible assets and related deferred tax assets and liabilities. The Company will finalize its valuation and the allocation of the purchase price, along with required retrospective adjustments, if any, within a year following the acquisition date.

Total fair value of the preliminary purchase price consideration as of July 1, 2023 was determined as follows:

 

Cash (due to seller) 

 

$1,000,000 

Common stock 

 

8,000,000 

Contingent consideration 

 

208,000 

Purchase price consideration 

 

$9,208,000 

 

On July 1, 2023, the Company issued 40,000,000 shares of common stock pursuant to the Asset Purchase Agreement for a fair value of $8,000,000, or $0.20 per share.

 

Pursuant to the Asset Purchase Agreement, the Company owes the Seller $1,000,000 in cash consideration.  The amount was recorded as a due to seller liability on the consolidated balance sheet.  As of September 30, 2023, no payments were made.

 

In accordance with the Earn Out provisions per the Asset Purchase Agreement, the Company determined an initial fair value of $208,000 based on the fair value of the shares at the acquisition date and probabilities of the respective Earn Out terms.  There was no change in fair value of the contingent consideration at September 30, 2023.

 

Preliminary Purchase Price Allocation

 

The Company has made a preliminary allocation of the purchase price in regard to the acquisition related to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the preliminary purchase price allocation:

 

Cash

 

$134,060  

Accounts receivable

 

175,340  

Deposits

 

297,269  

Goodwill

 

8,676,430  

Right of use asset

 

2,272,059  

Accounts payable

 

(48,430) 

Current portion of right of use liability

 

(538,243) 

Right of use of liability

 

(1,760,485) 

Purchase price consideration

 

$9,208,000  

 

Goodwill is primarily attributable to the go-to-market synergies that are expected to arise as a result of the acquisition and other intangible assets that do not qualify for separate recognition. The goodwill is not deductible for tax purposes.

 

The results of RAN CoPacking Solutions LLC have been included in the consolidated financial statements since the date of acquisition. RAN CoPacking Solutions LLC’s net revenue and net income included in the consolidated financial statements since the acquisition date were approximately $1,588,561 and $300,433, respectively.

 

Unaudited Pro Forma Financial Information

 

The following unaudited pro forma financial information presents the Company’s financial results as if the RAN CoPacking Solutions LLC acquisition had occurred as of January 1, 2022. The unaudited pro forma financial information is not necessarily indicative of what the financial results actually would have been had the acquisitions been completed on this date. In addition, the unaudited pro forma financial information is not indicative of, nor does it purport to project, the Company’s future financial results. The unaudited pro forma information does not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisition:

 

 

Nine Months Ended
September 30,

 

2023

 

2022

Net revenues

$4,137,571  

 

$6,982,954  

Net loss

$(4,192,796) 

 

$(3,815,533) 

Net loss per common share

$(0.08) 

 

$(0.12) 
v3.23.3
NOTE 4: PROPERTY AND EQUIPMENT
 9 Months Ended
Sep. 30, 2023
Notes  
NOTE 4: PROPERTY AND EQUIPMENT

NOTE 4: PROPERTY AND EQUIPMENT

 

The Company’s property and equipment relating to continuing operations consisted of the following:

 

 

September 30,

 

December 31,

2023

 

2022

Machinery & equipment

$-  

 

$50,000  

Furniture and equipment and leasehold improvements

14,772  

 

14,772  

Tradeshow booth

162,200  

 

-  

176,972  

 

64,772  

Less: Accumulated depreciation

(12,197) 

 

(11,202) 

$164,775  

 

$53,570  

 

At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the net book value of CNP’s long-lived assets may not be recoverable. As such, the Company recorded an impairment charge of $3,276,193 to record the estimated residual value of the property and equipment, which was determined to be $50,000.  This remaining residual value was fully depreciated in the third quarter of 2023.

 

Depreciation expense for the three months ended September 30, 2023 and 2022 amounted to $45,332 and $421,336, respectively.

 

Depreciation expense for the nine months ended September 30, 2023 and 2022 amounted to $50,996 and $1,209,788, respectively.
v3.23.3
NOTE 5: NOTES PAYABLE
 9 Months Ended
Sep. 30, 2023
Notes  
NOTE 5: NOTES PAYABLE

NOTE 5: NOTES PAYABLE

 

On September 10, 2019, the Company entered into a promissory note payable whereby the Company borrowed $500,000 bearing interest at 8% per annum. Interest on the note is payable quarterly on the first business day of December, March, June and September commencing December 1, 2019. In May 2021, the Company and the holder of the promissory note reached an agreement to extend the maturity date of the note from September 30, 2022 to September 30, 2024. In connection with the extension, the Company issued 160,000 shares of its common stock to the noteholder in lieu of $40,000 of interest accrued and accruing on the promissory note through December 31, 2022. In 2022, the maturity date was extended to 2024.

 

In connection with the promissory note on September 10, 2019, the Company issued warrants to purchase 33,333 shares of the Company’s common stock at an exercise price of $1.50 per share. The warrants were exercised on June 30, 2021 and the Company received $50,000. The note was discounted by $17,624 allocated from the valuation of the warrants issued. The discount recorded on the note is being amortized as interest expense through the maturity date. As of September 30, 2023, the net book value of the promissory note amounted to $500,000, including the principal amount of $50,000 which was fully amortized.

 

On October 28, 2019, the Company’s subsidiary CNP Operating entered into a promissory note payable with Complete Business Solutions Group, Inc (“CBSG”) whereby the Company borrowed $3,050,000. The outstanding balance of the note was $2,218,000 at December 31, 2022.  At December 31, 2022, the Company reversed $1,312,080 previously recorded to additional paid-in capital in 2022 to reflect the outstanding principal of $2,218,000. The note is currently in default and personally guaranteed by Anthony Zingarelli.

 

On September 30, 2019, the Company’s subsidiary CNP Operating entered into a promissory note payable with Eagle Six Consultants, Inc. (“Eagle”) whereby the Company borrowed $550,000 bearing interest at 16% per annum. The outstanding balance of the note was $302,489 at September 30, 2023. The note is currently in default.

 

On June 24, 2020, the Company entered into a Loan Authorization and Agreement with the SBA under which the Company borrowed $150,000 and issued to the SBA a note and security agreement for the amount borrowed. Outstanding borrowings accrue interest at a rate of 3.75% per annum, and installment payments, including principal and interest, of $731 are due monthly and begin 12 months from the date of the loan agreement. The balance of any remaining principal and interest is due 30 years from the date of the loan agreement. As collateral for the borrowing, the Company granted the SBA a security interest in substantially all assets of the Company.

 

On May 12, 2021, the Company’s subsidiary CNP Operating restructured the CSBG note payable of $2,957,000, the Eagle #1 note payable of $550,000 and the Eagle #2 note payable of $300,000 by entering into a payment and indemnification agreement with the receivers/trustee of CBSG and Eagle. The receiver has agreed that the balance of the outstanding amounts will be paid over the course of 24 months in equal payments of $158,625. Further, the Company shall pay $20,000 per month toward the balance and Anthony Zingarelli (“Zingarelli”) and Colorado Sky Industrial Supply LLC (“CSIS”), agree to personally pay the sum of $138,625 per month. Zingarelli is the only member of CNP Operating that signed a personal guarantee on the loans and Zingarelli is the sole member of CSIS. Zingarelli and CSIS has agreed to indemnify and hold the Company harmless from any and all losses, liabilities and claims. If a loss is incurred by the Company with respect to any claims, Zingarelli shall reimburse the Company for the amount of any such loss. The Company has recorded the Zingarelli payments during the period as contributions to additional paid in capital through December 31, 2021.  This note is currently in default.

 

On November 19, 2020, the Company’s subsidiary CNP Operating purchased equipment for $58,095 which was financed at zero interest rate. The monthly payments of $968 will be made for the next 60 months and mature on November 19, 2025. Imputed interest was not material. The outstanding balance of the note was $34,892 at December 31, 2022. In 2022, CNP purchased equipment for $55,016 which was financed at zero interest rate with the same lender with similar terms.  The outstanding balance of the note was $48,513 at December 31, 2022, and was fully repaid in 2023.

 

On October 19, 2021, the Company borrowed $250,000 from a lender and issued a promissory note for the repayment of the amount borrowed. The promissory note is unsecured, has a maturity date of December 31, 2024 and all principal is due upon maturity. The amount borrowed accrues interest at 12% per annum and accrued interest is payable monthly commencing on December 1, 2021. The promissory note contains customary events of default permitting acceleration of repayment for nonpayment of amounts due, a bankruptcy related proceeding, breach of representations or covenants, sale of substantially all assets, and change of control.

 

On April 8, 2022, the Company entered into two promissory notes for aggregate proceeds of $676,000. The promissory note is unsecured, has a maturity date of April 30, 2024 and all principal is due upon maturity. The notes bear interest at 18% per annum and accrued interest is payable monthly commencing on August 1, 2022. In connection with the notes, the Company granted 676,000 warrants to the lenders with an exercise price of $1.00 per share.

 

On October 4, 2022, the Company converted the entire $676,000 in principal and $50,700 in accrued interest on its convertible notes into an aggregate of 2,906,800 shares of common stock.  

 

On May 11, 2022, the Company’s subsidiary, CFN Real Estate II, LLC, entered into a promissory note with a lender for the repayment of $500,000 in connection with the $500,000 refinancing of the Company’s property located in Wray, Colorado. The company received the proceeds from the refinancing on May 16, 2022. Accrued interest at the rate of 12% is payable monthly commencing on June 15, 2022, and the principal of the promissory note is payable upon maturity on June 15, 2024. Upon the Company’s sale of the property in April 2023 (see Note 7), the note was fully repaid.

 

On May 8, 2023, the Company entered into a promissory note with two lenders for aggregate proceeds of $1,150,000.  The notes are unsecured and have a maturity date 15 months following their issuance.  Beginning on the fourth month after issuance, the Company will make monthly repayments totaling $143,750, including principal and interest.  Total principal and interest to be repaid is $1,725,000, and any remaining outstanding balance is due at maturity. In connection with the notes, the Company granted an aggregate of 1,150,000 warrants to the lenders with an exercise price of $0.25 per share. The fair value of the warrants was $185,788, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $53,507. As of September 30, 2023, note payable, net of unamortized discount of $132,281, was $1,017,719 for these two notes.

 

On July 1, 2023, the Company entered into a promissory note with two lenders for aggregate proceeds of $3,850,000.  The notes are unsecured and have a maturity date 15 months following their issuance. In connection with the notes, the Company granted an aggregate of 3,850,000 warrants to the lenders with an exercise price of $0.25 per share. The fair value of the warrants was $626,073, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $125,215. As of September 30, 2023, note payable, net of unamortized discount of $500,858, was $3,349,141 for these two notes.

 

On July 1, 2023, the May and July notes were rolled over to Ranco, LLC for an aggregate of $5,000,000 (the “Ranco Notes”).  The Ranco Notes have a 15 month term and are subject to mandatory equal repayments commencing on the fourth month following issuance, for an aggregate repayment of $7,500,000. The Ranco Notes are secured by the assets of Ranco and guaranteed by the Company.

 

Future scheduled maturities of long-term debt are as follows:

 

 

 

 

 

 

September 30,
2023

2024

 

 

 

 

3,854,300 

2025

 

 

 

 

3,892,727 

2026

 

 

 

 

50,882 

2027

 

 

 

 

23,702 

Thereafter

 

 

 

104,320 

 

 

 

 

 

7,925,930 

 

The aggregate current portion of long-term debt as of June 30, 2023 amounted is $3,854,300, which represents the contractual principal payments due in the next 12 months period as well as any notes in default.
v3.23.3
NOTE 6: STOCKHOLDERS' DEFICIT
 9 Months Ended
Sep. 30, 2023
Notes  
NOTE 6: STOCKHOLDERS' DEFICIT

NOTE 6: STOCKHOLDERS’ DEFICIT

 

Common Stock

 

On December 6, 2021, the Company effected a reverse split of its outstanding common stock in the ratio of 1-for-15.

  

In January 2023, the Company issued 2,400,000 shares of common stock at a purchase price of $0.25 per share for $600,000 in gross proceeds.

 

In May 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 1,620,000 shares of its common stock as payment for $405,000 in outstanding accrued interest on the Series B Preferred Stock through June 30, 2023.

 

In July 2023, the Company issued 40,000,000 shares of common stock at a price of $0.20 per share, or total fair value of $8,000,000, pursuant to the Ranco business combination.

 

In August 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 500,000 shares of its common stock as payment for $45,000 in outstanding accrued interest on the Series B Preferred Stock through September 30, 2023.

 

As of September 30, 2023 and December 31, 2022, there was $0 and $217,500, respectively, in payments made in advance of securities date.

 

Preferred Stock

 

The Company is authorized to issue 2,000,000 shares of preferred stock with a par value of $0.001 per share, of which 500 have been authorized as Series A Preferred Stock and 3,000 have been authorized as Series B Preferred Stock.

 

For the nine months ending September 30, 2023 and 2022, the Company incurred $180,000 and $180,000, respectively, of interest from the outstanding preferred stock. In May, 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 1,620,000 shares of its common stock as payment for $405,000 in outstanding accrued interest on the Series B Preferred Stock through June 30, 2023. In August, 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 500,000 shares of its common stock as payment for $45,000 in outstanding accrued interest on the Series B Preferred Stock through September 30, 2023.

 

Warrants

 

The following summarizes the Company’s warrant activity for the six months ended September 30, 2023:

 

 

Warrants

 

Weighted-Average Exercise Price

 

Weighted-Average Remaining Contractual Life
(Years)

Outstanding at December 31, 2022

988,500

 

$2.25 

 

2.39 

Granted

7,150,000

 

0.25 

 

4.89 

Forfeited

-

 

 

 

Outstanding at June 30, 2023

8,138,500

 

$0.49 

 

4.53 

Granted

3,850,000

 

0.25 

 

4.75 

Forfeited

-

 

 

 

Outstanding at September 30, 2023

11,988,500

 

$0.41 

 

4.43 

 

 

 

 

 

 

Vested and expected to vest at September 30, 2023

11,988,500

 

$0.41 

 

4.43 

Exercisable at September 30, 2023

11,988,500

 

$0.41 

 

4.43 

 

On May 19, 2023, the Company entered into an advisory agreement with the Isaac Shehebar 2008 AIJJ Grantor Retained Annuity Trust and Ezra A. Chehebar (the “Advisors”), existing shareholders of the Company, for consulting services and to advise the Company’s executive team on strategic, branding, marketing, distribution, networking and other general business matters. As consideration under the advisory agreement, on May 22, 2023, the Company issued an aggregate of 6,000,000 five-year warrants to purchase common stock at a price of $0.25 per share to the Advisors.  The warrants are immediately exercisable.  During the nine months ending September 30, 2023, the Company recorded stock-based compensation expense of $1,156,100 pertaining to these warrants, which was included in additional paid-in capital.

 

In connection with the May 2023 notes (see Note 5), the Company issued 1,150,000 warrants to purchase common stock. The warrants have an exercise price of $0.25 per share, are immediately exercisable and have a term of 5 years. The fair value of the warrants was $185,788, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $53,507.

 

In connection with the July 2023 notes (see Note 5), the Company issued 3,850,000 warrants to purchase common stock. The warrants have an exercise price of $0.25 per share, are immediately exercisable and have a term of 5 years. The fair value of the warrants was $626,073, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $125,215.

 

As of September 30, 2023, all outstanding warrants were fully vested and there was no remaining unrecorded compensation expense.

 

Options

The Company had a Stock Option Plan, or the Plan, under which the total number of shares of capital stock of the Company that may be subject to options under the Plan was 1,500,000 shares of Common Stock from either authorized but unissued shares or treasury shares. The Plan expired on December 14, 2016.

 

As of September 30, 2023, there were no outstanding options.
v3.23.3
NOTE 7: LEASES
 9 Months Ended
Sep. 30, 2023
Notes  
NOTE 7: LEASES

NOTE 7: LEASES

 

On June 20, 2019, the Company entered into a Lease Agreement with Emerging Growth for the lease of office space in Whitefish, Montana, for a period of one year at a rate of $1,500 per month. On August 5, 2020, the Company entered into a lease agreement with Emerging Growth for additional office space in Whitefish, Montana, replacing its previous lease from June 20, 2019. The term of the lease commenced on September 1, 2020 for a period of one year at a rate of $4,500 per month. The lease contains an option for the Company to renew the lease for a period of one additional year at a monthly rent subject to a 3% increase. Management has elected a policy to exclude leases with an initial term of 12 months or less from the balance sheet presentation required under ASC 842. As a result, the office lease has been excluded from balance sheet presentation as it has an original term of 12 months or less.

 

On March 30, 2021, the Company entered into a new lease with Emerging Growth, which took the place of the old lease effective April 1, 2021. The lease provides for payments of $4,500 per month and has a term of three years and contains an option for the Company to renew the lease for a period of one additional year at a monthly rent subject to a 3% increase.

 

On June 4, 2019, the Company’s subsidiary CNP Operating entered into a Lease Agreement with Blair Investments, LLC for the lease of office space in Centennial Colorado, for a period of 3 year at a rate of $10,521 per month. On September 26, 2019, this agreement was terminated and replaced with a new agreement starting October 1, 2019 and expiring on June 30, 2023. The agreement is personally guaranteed by Anthony Zingarelli.

 

On December 9, 2021, CFN Real Estate LLC, a Delaware limited liability company, and wholly-owned subsidiary of the Company, entered into a Lease Agreement (with Option to Purchase), or the Lease, with H2S2 LLC, a Colorado limited liability company, for property in Eaton, Colorado, consisting of 9.53 acres of agricultural land zoned with use for special review for hemp processing and storage, an 8,500 square foot C1D1 rated steel building, triple tunnel green houses with a total of 8,712 square feet, a shop building consisting of 3,825 square feet and a 2,280 square foot residence. The Lease has an eleven month term and contains an option to purchase the premises, each terminating on November 30, 2022. The total monthly rent under the lease during the term is an aggregate of $354,000, consisting of a $14,000 monthly lease payment, and an aggregate of $200,000 in non-refundable payments towards the option. The total purchase price for the premises under the option is $1.2 million, inclusive of the $200,000 in payments made during the term of the lease. If the option is exercised, the lease contains a 30-day automatic extension of the term at $14,000.

 

At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the net book value of CNP’s ROU assets may not be recoverable. As such, the Company recorded an impairment charge of $339,768.

 

On April 1, 2023, Emerging Growth LLC entered into a new lease agreement for its premises in Whitefish, Montana commencing April 1, 2023, for a period of five years at a rate of $3,750 per month, which lease contains an option for the Company to renew the lease for a period of one additional year at a monthly rent subject to a 3% increase.  In connection with this lease, the Company recorded a ROU asset and liability of $187,863.

 

In connection with the Ranco acquisition, the Company agreed to assume the Seller’s lease for property related to the Purchased Assets in Los Angeles, California, consisting of approximately 46,000 square feet of space.  The Ranco operating lease agreement commenced on July 1, 2022 and expires on July 31, 2027.    The lease requires monthly base rent payments of $49,782 and required a security deposit of $297,269.  Upon the Ranco acquisition, the Company recognized a right of use asset of $2,270,059 and right of use liability of

$1,760,485.  Furthermore, the Company acquired the existing security deposit of $297,269. As of September 30, 2023, the Company recognized a right of use asset of $2,132,953 and right of use liability of $ 2,165,615.

v3.23.3
NOTE 8: ASSETS HELD FOR SALE
 9 Months Ended
Sep. 30, 2023
Notes  
NOTE 8: ASSETS HELD FOR SALE

NOTE 8: ASSETS HELD FOR SALE

 

As of December 31, 2022, the Company determined that its property and equipment in Wray, Colorado (via CFN Real Estate II) were to be listed for sale. Accordingly, the Company reported the disposal group of the long-lived assets at its lower of the carrying value or the fair value less cost to sell.  Through March 31, 2023, the Company had $599,047 in assets held for sale on its consolidated balance sheet.

 

On April 12, 2023, the Company sold its property, including the machinery and equipment, at Wray, Colorado for $699,000 and received net proceeds of $608,300 after selling expenses.  Accordingly, the Company recorded a gain on disposal of $9,253.

 

In connection with the sale, the Company repaid $525,000, including $500,000 in principal and $25,000 in accrued interest, on CFN Real Estate II’s related note payable with Physician Strategic, resulting in a gain on extinguishment of debt of $13,219.

 

As of September 30, 2023 and December 31, 2022, the assets held for sale balance was $0 and $599,047, respectively.
v3.23.3
NOTE 9: RELATED PARTY TRANSACATIONS
 9 Months Ended
Sep. 30, 2023
Notes  
NOTE 9: RELATED PARTY TRANSACATIONS

NOTE 9: RELATED PARTY TRANSACTIONS

 

As of September 30, 2023 and December 31, 2022, there was $575,314 and $503,259 in amounts due to related parties, respectively, including $428,700 due to CSIS. The advances are unsecured, non-interest bearing and due on demand.

In connection with the Ranco acquisition, the Company entered into acquisition agreements with the founders of RAN CoPacking Solutions LLC.
v3.23.3
NOTE 10: COMMITMENTS AND CONTINGENCIES
 9 Months Ended
Sep. 30, 2023
Notes  
NOTE 10: COMMITMENTS AND CONTINGENCIES

NOTE 10: COMMITMENTS AND CONTINGENCIES

 

Legal Proceedings

 

From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. Except as set forth below, the Company is not presently a party to any legal proceedings that it currently believes, if determined adversely to the Company, would individually or taken together have a material adverse effect on the Company’s business, operating results, financial condition or cash flows.

 

In October 2022, CAKE Software Inc., or CAKE, filed a lawsuit against the Company in the Supreme Court of the State of New York, County of New York, captioned CAKE Software, Inc. v. Accelerize Inc. n/k/a CFN Enterprises Inc., Index No. 653838/2022. On December 6, 2022, CAKE filed an amended complaint, which is the operative complaint in this matter. CAKE's lawsuit stems from an Asset Purchase Agreement, or the APA, executed by the parties in May 2019, in which CAKE was the buyer of certain assets from the Company. CAKE alleges that the Company breached the APA by not paying a purported outstanding amount due which was to be calculated post-closing, and for breaching certain representations and warranties in the APA. CAKE further seeks indemnification under the APA for what it alleges are liabilities the Company retained after the closing of the sale. Based on its claims, CAKE is seeking compensatory damages of at least $1,045,441.86, attorney's fees, interests and costs, and such other relief as the court may deem just and appropriate.

 

In January 2023, the Company filed its initial Answer and Counterclaims, denying the material allegations and asserting its own claims against CAKE and Perseus Operating Group, or Perseus, a division of Constellation Software Inc. (TSX:CSU, OTCPK: CNSWF; www.csisoftware.com), or Constellation Software.  On July 19, 2023, the parties held a mediation but were unsuccessful in reaching an agreement.  

 

On September 25, 2023, after prevailing on a motion for leave to amend its initial Answer with Counterclaims, the Company filed its Amended Answer with Counterclaims against CAKE and Constellation Software itself, instead of its operating group, Perseus. The Amended Answer with Counterclaims is the Company’s operative pleading in this matter, and through it, the Company asserts that CAKE breached the APA by failing to pay the Company an earn-out, calculated in accordance with the APA, over a three-year period and totaling no less than $12,375,000, and that CAKE failed to pay the Company a $500,000 holdback amount. The Company further alleges that Constellation Software is the alter ego of CAKE, and therefore, is also liable under the APA. Through its amended counterclaims, the Company seeks compensatory damages of no less than $12,875,000, encompassing the earn-out amounts owed and the holdback amount, plus attorneys' fees, interests and costs, and other such relief as the court may deem just and proper.

 

On November 3, 2023, CAKE and Constellation Software filed replies to the Company’s amended counterclaims.  Currently, the parties are engaged in the discovery process and a Status Conference with the Court regarding discovery is scheduled for December 8, 2023. The Company expects to vigorously defend against CAKE and Constellation Software’s claims, and to pursue its own counterclaims against CAKE, Constellation Software, and any other persons that it may identify through discovery to have harmed the Company or to have taken any action to interfere with the Company’s ability to receive its earn-out and/or the holdback amount.

 

The Company has determined that potential losses in this matter are neither probable or reasonably possible at this time.

 

On October 18, 2021, the Company settled a vendor dispute in the amount of $100,000 of which the initial payment of $40,000 was paid on the execution of the settlement and balance to paid in 48 equal monthly payments of $1,250. The balance as of September 30, 2023 and December 31, 2022, is $32,500 and $41,250, respectively.
v3.23.3
NOTE 11: SUBSEQUENT EVENTS
 9 Months Ended
Sep. 30, 2023
Notes  
NOTE 11: SUBSEQUENT EVENTS

NOTE 11: SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through November 14, 2023, the date the consolidated financial statements were available to be issued. Based on this evaluation, no additional material events were identified which require adjustment or disclosure in these financial statements.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Use of Estimates (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Use of Estimates

Use of Estimates

 

The preparation of consolidated financial statements in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reported period. Actual results will differ from those estimates. Included in these estimates are assumptions about collection of accounts receivable, useful life of fixed assets and intangible assets, borrowing rate considered for operating lease right-of-use asset and related operating lease liability, and assumptions used in Black-Scholes valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Financial Statement Reclassification (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Financial Statement Reclassification

Financial Statement Reclassification

 

Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Cash and Cash Equivalents (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Cash and Cash Equivalents

Cash and Cash Equivalents

 

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less when purchased, to be cash equivalents. The Company has restricted cash as a result of its corporate card program through its bank, which requires collateral placed in a money market account. At September 30, 2023, the Company had a restricted cash balance of $20,366 included as a component of total cash and restricted cash as presented on the accompanying unaudited condensed consolidated statement of cash flows.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Accounts Receivable (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Accounts Receivable

Accounts Receivable

 

The Company’s account receivables for the CFN Business are due from customers relating to contracts to provide investor relation services for the CFN Business. For the Ranco Business, accounts receivables are due from customers for products sold and manufacturing, packing and labeling services provided.  Collateral is currently not required. The Company also maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments. The Company periodically reviews these estimated allowances, including an analysis of the customers’ payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’s ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserves for those accounts deemed uncollectible or likely to become uncollectible. When receivables are determined to be uncollectible, principal amounts of such receivables outstanding are deducted from the allowance. The allowance for doubtful accounts as of September 30, 2023 and December 31, 2022 amounted to $454,012 and $470,532 respectively.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventory (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Inventory

Inventory

 

The Company’s inventory consists of finished goods acquired for its Ranco business.  As of September 30, 2023, all inventory consisted of disposable nicotine-based inhalable vaporizer products purchased from overseas.  The inventory is valued at the lower of cost (specific identification) or estimated net realizable value. As of September 30, 2023, the Company valued the inventory at $1,864,800.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Concentration of Credit Risks (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Concentration of Credit Risks

Concentration of Credit Risks

 

The Company is subject to concentrations of credit risk primarily from cash and cash equivalents and accounts receivable.

 

The Company’s cash and restricted cash accounts are held at a financial institution and are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to $250,000. From time-to-time, the Company’s bank balances exceed the FDIC insurance limit. To reduce its risk associated with the failure of such financial institutions, the Company periodically evaluates the credit quality of the financial institution in which it holds deposits. As of September 30, 2023, the Company had $1,491,005 in excess of federally insured limits.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Revenue Recognition

Revenue Recognition

 

The Company recognizes revenue in accordance with Accounting Standards Codification, or ASC, 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.

 

The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered.

 

CFN Business

 

Subsequent to the closing of the Emerging Growth Agreement on June 20, 2019, the Company’s revenue is generated from the sale of promotional service packages to its customers ranging from 3 to 6 months. The Company offers different packages tailored to the type and stage of the potential customer, such as public companies looking to increase their shareholder base, as well as private companies potentially looking to go public and attract capital and publicity. The services provided by the Company include advertising, publishing of interviews and articles across its network and featuring of client content on its newsletters and social media. The packages all have fixed prices that are billed monthly over the terms of the agreement in even amounts. The Company recognizes revenue for its

performance obligation associated with its contracts with customers over time as work is performed, which is deemed to occur evenly throughout the duration of the contract. This also reflects the pattern in which costs are incurred on performing the contracts. To the extent revenue recognized on contracts at each period end exceeds collections, the amounts are reflected as accounts receivable. To the extent collections on contracts at each period end exceeds revenue recognized, the amounts are reflected as deferred revenue.

 

Ranco Business

 

The Company performs services including white label manufacturing and co-packing for customers.  Customers will drop off their product and the Company will perform the services via their employees and contractors.  When the services are complete, the Company has satisfied its performance obligations.  Revenue is recognized at this point in time.

 

The Company will order products that are manufactured overseas, such as custom boxes, packaging and hardware.  These products are generally shipped from overseas to the customer.  When these products are shipped out from the manufacturer, the Company has satisfied its performance obligations.  Revenue is recognized at this point in time.

 

Lastly, the Company provides certain shipping and third party logistics services for customers.  When the services are complete, the Company has satisfied its performance obligations.  Revenue is recognized at this point in time.

 

Disaggregation of Revenue

 

The following is a disaggregation of revenue for the three months ended September 30, 2023 and 2022 respectively:

 

 

 

 

 

Three Months Ended

 

 

 

 

September 30,

 

2023

 

2022

Services

 

$399,603 

 

$119,028 

Products  

 

384,380 

 

721,942 

Shipping and logistics

 

894,588 

 

- 

 

$1,678,571 

 

$840,970 

 

The following is a disaggregation of revenue for the nine months ended September 30, 2023 and 2022 respectively:

 

 

 

 

 

Nine Months Ended

 

 

 

 

September 30,

 

2023

 

2022

Services

 

$622,378 

 

$343,997 

Products  

 

426,863 

 

3,484,637 

Shipping and logistics

 

894,588 

 

- 

 

$1,943,830 

 

$3,828,634 
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Cost of Revenue (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Cost of Revenue

Cost of Revenue

 

Cost of revenue includes direct labor and materials.  Cost of revenues also includes inbound and outbound shipping, freight and delivery costs.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Shipping and Handling Fees and Costs (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Shipping and Handling Fees and Costs

Shipping and Handling Fees and Costs

 

Amounts billed to customers for shipping and handling fees are presented in revenue. Costs incurred for shipping and handling are included in cost of revenue.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Fair Value of Financial Instruments (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

The Company accounts for assets and liabilities measured at fair value on a recurring basis in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.

 

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

 

Level 1:

Observable inputs such as quoted market prices in active markets for identical assets or liabilities.

 

 

Level 2:

Observable market-based inputs or unobservable inputs that are corroborated by market data.

 

 

Level 3:

Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

 

The carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, deferred revenue and due to related party approximate their fair value due to the short-term maturity of these items. The Company’s notes payable approximate their fair value due to the market rate of interest on the notes.

 

The Company’s contingent consideration recorded in connection with the Ranco acquisition (see Note 3) is a Level 3 liability.  The liability is valued using a probability weighted analysis of the respective earn out provisions.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Business Combinations (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Business Combinations

Business Combinations

The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase.

Goodwill represents the excess of the purchase price of an acquired entity over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Impairment (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Impairment

Impairment

 

Long-Lived Assets

 

In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made.

 

Goodwill

 

Goodwill and identifiable intangible assets that have indefinite useful lives are not amortized, but instead are tested annually for impairment and upon the occurrence of certain events or substantive changes in circumstances. The annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity may choose to perform the qualitative assessment on none, some or all of its reporting units or an entity may bypass the qualitative assessment for any reporting unit and proceed directly to step one of the quantitative impairment test. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required.

 

The quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. It is the Company’s practice, at a minimum, to perform a qualitative or quantitative goodwill impairment test in the fourth quarter every year.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Contingent Consideration (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Contingent Consideration

Contingent Consideration

 

The Company records a contingent consideration liability relating to earn the Company’s shares included in its acquisition agreements. The estimated fair value of the contingent consideration is recorded using significant unobservable measures and other fair value inputs and is therefore classified as a Level 3 financial instrument.

 

The Company estimates and records the acquisition date fair value of contingent consideration as part of purchase price consideration for acquisitions. Additionally, each reporting period, the Company estimates changes in the fair value of contingent consideration and recognizes any change in fair in the consolidated statement of operations. The estimate of the fair value of contingent consideration requires very subjective assumptions to be made of future operating results, discount rates and probabilities assigned to various potential

operating result scenarios. Future revisions to these assumptions could materially change the estimate of the fair value of contingent consideration and, therefore, materially affect the Company’s future financial results. The contingent consideration liability is to be settled with the issuance of shares of common stock once contingent provisions set forth in respective acquisition agreements have been achieved. Upon achievement of contingent provisions, respective liabilities are relieved and offset by increases to common stock and additional paid-in capital in the stockholders’ equity section of the Company’s consolidated balance sheets.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Advertising (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Advertising

Advertising

 

The Company expenses advertising costs as incurred. Advertising expenses for the three months ended September 30, 2023 and 2022 amounted to $24,487 and $4,761, respectively. Advertising expenses for the nine months ended September 30, 2023 and 2022 amounted to $52,773 and $23,172, respectively.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Income Taxes (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Income Taxes

Income Taxes

 

Income taxes are accounted for in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized, but no less than quarterly.

 

For interim periods, the Company uses the effective income tax rate method resulting in zero income tax for the nine months ended September 30, 2023 and 2022.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Property and Equipment (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Property and Equipment

Property and Equipment

 

Property and equipment are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives of five years. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basic and Diluted Earnings Per Share (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Basic and Diluted Earnings Per Share

Basic and Diluted Earnings Per Share

 

Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method). As of September 30, 2023, the Company had no outstanding stock options, 11,988,500 outstanding warrants and 3,500 shares of preferred stock which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As of September 30, 2022, the Company had 0 outstanding stock options and 988,500 outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As a result, the basic and diluted earnings per share are the same for each of the periods presented.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Share-Based Payment (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Share-Based Payment

Share-Based Payments

 

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. Under the fair value recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period.

 

The Company has elected to use the Black-Scholes option-pricing model to estimate the fair value of its options, which incorporates various subjective assumptions including volatility, risk-free interest rate, expected life, and dividend yield to calculate the fair value of stock option awards. Compensation expense recognized in the statements of operations is based on awards ultimately expected to vest and reflects estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Common Stock Awards (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Common Stock Awards

Common Stock Awards

 

The Company has granted common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these awards using the fair value of the services provided or the fair value of the awards granted. The fair value of the awards is recognized on a straight-line basis as services are rendered. The share-based payments related to common stock awards for the settlement of services provided by non-employees is recorded on the consolidated statement of comprehensive loss in the same manner and charged to the same account as if such settlements had been made in cash.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Warrants (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Warrants

Warrants

 

In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants are recorded at fair value as expense over the requisite service period or at the date of issuance, if there is not a service period. Warrants granted in connection with ongoing arrangements are more fully described in Note 6, Stockholders’ Deficit.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Leases (Policies)
 9 Months Ended
Sep. 30, 2023
Policies  
Leases

Leases

 

The Company adopted Accounting Standards Update No. 2016-02, Leases (“Topic 842”) using the modified retrospective method. This accounting standard requires a lessee to recognize an asset and liability for most leases on its balance sheet.

 

The Company elected the practical expedient method permitted under the transition guidance, which allows a carryforward of historical lease classification, the assessment on whether a contract was or contains a lease, and the initial direct costs for any leases that existed prior to July 1, 2019. The Company also elected to recognize the associated lease payments in the consolidated statements of operations on a straight-line basis over the lease term.

 

Under Topic 842, the Company determines if an arrangement is a lease at inception. ROU assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement and leases with an initial term of 12 months or less are not included in lease liabilities or ROU asset. As most leases do not provide an implicit rate, a rate which approximates the Company’s incremental borrowing rate is used, based on the information available at commencement date, in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes or other costs. Variable lease costs are expensed as incurred. Lease agreements generally do not contain residual value guarantees or restrictive covenants. Over the lease term, the Company uses the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized in a manner that results in straight-line expense recognition.

 

At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the net book value of CNP’s ROU assets may not be recoverable. As such, the Company recorded an impairment charge of $339,768.
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition: Disaggregation of Revenue (Tables)
 9 Months Ended
Sep. 30, 2023
Tables/Schedules  
Disaggregation of Revenue

The following is a disaggregation of revenue for the three months ended September 30, 2023 and 2022 respectively:

 

 

 

 

 

Three Months Ended

 

 

 

 

September 30,

 

2023

 

2022

Services

 

$399,603 

 

$119,028 

Products  

 

384,380 

 

721,942 

Shipping and logistics

 

894,588 

 

- 

 

$1,678,571 

 

$840,970 

 

The following is a disaggregation of revenue for the nine months ended September 30, 2023 and 2022 respectively:

 

 

 

 

 

Nine Months Ended

 

 

 

 

September 30,

 

2023

 

2022

Services

 

$622,378 

 

$343,997 

Products  

 

426,863 

 

3,484,637 

Shipping and logistics

 

894,588 

 

- 

 

$1,943,830 

 

$3,828,634 
v3.23.3
NOTE 3: BUSINESS COMBINATIONS: Schedule of Business Acquisitions by Acquisition, Contingent Consideration (Tables)
 9 Months Ended
Sep. 30, 2023
Tables/Schedules  
Schedule of Business Acquisitions by Acquisition, Contingent Consideration

 

Cash (due to seller) 

 

$1,000,000 

Common stock 

 

8,000,000 

Contingent consideration 

 

208,000 

Purchase price consideration 

 

$9,208,000 

 
v3.23.3
NOTE 3: BUSINESS COMBINATIONS: Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Tables)
 9 Months Ended
Sep. 30, 2023
Tables/Schedules  
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

 

Cash

 

$134,060  

Accounts receivable

 

175,340  

Deposits

 

297,269  

Goodwill

 

8,676,430  

Right of use asset

 

2,272,059  

Accounts payable

 

(48,430) 

Current portion of right of use liability

 

(538,243) 

Right of use of liability

 

(1,760,485) 

Purchase price consideration

 

$9,208,000  

 
v3.23.3
NOTE 4: PROPERTY AND EQUIPMENT: Property, Plant and Equipment (Tables)
 9 Months Ended
Sep. 30, 2023
Tables/Schedules  
Property, Plant and Equipment

 

 

September 30,

 

December 31,

2023

 

2022

Machinery & equipment

$-  

 

$50,000  

Furniture and equipment and leasehold improvements

14,772  

 

14,772  

Tradeshow booth

162,200  

 

-  

176,972  

 

64,772  

Less: Accumulated depreciation

(12,197) 

 

(11,202) 

$164,775  

 

$53,570  
v3.23.3
NOTE 5: NOTES PAYABLE: Schedule of Maturities of Long-Term Debt (Tables)
 9 Months Ended
Sep. 30, 2023
Tables/Schedules  
Schedule of Maturities of Long-Term Debt

Future scheduled maturities of long-term debt are as follows:

 

 

 

 

 

 

September 30,
2023

2024

 

 

 

 

3,854,300 

2025

 

 

 

 

3,892,727 

2026

 

 

 

 

50,882 

2027

 

 

 

 

23,702 

Thereafter

 

 

 

104,320 

 

 

 

 

 

7,925,930 
v3.23.3
NOTE 6: STOCKHOLDERS' DEFICIT: Schedule of Stockholders' Equity Note, Warrants or Rights (Tables)
 9 Months Ended
Sep. 30, 2023
Tables/Schedules  
Schedule of Stockholders' Equity Note, Warrants or Rights

The following summarizes the Company’s warrant activity for the six months ended September 30, 2023:

 

 

Warrants

 

Weighted-Average Exercise Price

 

Weighted-Average Remaining Contractual Life
(Years)

Outstanding at December 31, 2022

988,500

 

$2.25 

 

2.39 

Granted

7,150,000

 

0.25 

 

4.89 

Forfeited

-

 

 

 

Outstanding at June 30, 2023

8,138,500

 

$0.49 

 

4.53 

Granted

3,850,000

 

0.25 

 

4.75 

Forfeited

-

 

 

 

Outstanding at September 30, 2023

11,988,500

 

$0.41 

 

4.43 

 

 

 

 

 

 

Vested and expected to vest at September 30, 2023

11,988,500

 

$0.41 

 

4.43 

Exercisable at September 30, 2023

11,988,500

 

$0.41 

 

4.43 
v3.23.3
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION (Details) - USD ($)
 9 Months Ended
May 15, 2019
Sep. 30, 2023
Dec. 31, 2022
Stock Issued During Period, Value, Acquisitions $ 3,000,000    
Working Capital Deficit   $ 8,032,685  
Accumulated deficit   63,093,517 $ 58,996,099
Net Income (Loss) Available to Common Stockholders, Basic   $ 3,917,417  
Series B Preferred Stock      
Stock Issued During Period, Shares, Acquisitions 3,000    
Common Stock      
Stock Issued During Period, Shares, Acquisitions 30,000,000    
Asset Purchased Agreement With Emerging Growth Llc      
Payments to Acquire Businesses, Gross $ 420,000    
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Accounts Receivable (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Details    
Accounts Receivable, Allowance for Credit Loss $ 454,012 $ 470,532
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventory (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Details    
Inventory $ 1,864,800 $ 0
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Concentration of Credit Risks (Details)
Sep. 30, 2023
USD ($)
Details  
Cash, FDIC Insured Amount $ 250,000
Funds in excess of Federal Insured Limits $ 1,491,005
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition: Disaggregation of Revenue (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Service        
Net revenues $ 399,603 $ 119,028 $ 622,378 $ 343,997
Product        
Net revenues 384,380 721,942 426,863 3,484,637
Shipping and Handling        
Net revenues 894,588 0 894,588 0
Net revenues $ 1,678,571 $ 840,970 $ 1,943,830 $ 3,828,634
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Advertising (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Details        
Advertising Expense $ 24,487 $ 4,761 $ 52,773 $ 23,172
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basic and Diluted Earnings Per Share (Details) - shares
Sep. 30, 2023
Dec. 31, 2022
Warrant    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 11,988,500 988,500
Share-Based Payment Arrangement, Option    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 0 0
Preferred Stock    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 3,500  
v3.23.3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Leases (Details)
 12 Months Ended
Dec. 31, 2022
USD ($)
Details  
Impairment Charge on ROU assets $ 339,768
v3.23.3
NOTE 3: BUSINESS COMBINATIONS: Schedule of Business Acquisitions by Acquisition, Contingent Consideration (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Details        
Due to seller $ 1,000,000 $ 1,000,000   $ 0
Issuance of common stock pursuant to business combination 8,000,000 8,000,000 $ 0  
Contingent consideration 208,000 208,000   $ 0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net $ 9,208,000 $ 9,208,000    
v3.23.3
NOTE 3: BUSINESS COMBINATIONS (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2023
Sep. 30, 2022
Issuance of common stock pursuant to business combination $ 8,000,000 $ 8,000,000 $ 0
Common Stock      
Issuance of common stock pursuant to business combination Shares 40,000,000    
Issuance of common stock pursuant to business combination $ 40,000    
v3.23.3
NOTE 3: BUSINESS COMBINATIONS: Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details)
Sep. 30, 2023
USD ($)
Details  
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents $ 134,060
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables 175,340
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other 297,269
Business Combination, Recognized Identifiable Assets Acquired AndLiabilities Assumed, Goodwill 8,676,430
Business Combination, Recognized Identifiable Assets Acquired AndLiabilities Assumed, Right of Use Asset 2,272,059
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable (48,430)
Business Combination, Recognized Identifiable Assets Acquired AndLiabilities Assumed, Right of Use Liability, Current (538,243)
Business Combination, Recognized Identifiable Assets Acquired AndLiabilities Assumed, Right of Use Liability, Noncurrent (1,760,485)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net $ 9,208,000
v3.23.3
NOTE 4: PROPERTY AND EQUIPMENT: Property, Plant and Equipment (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Property, Plant and Equipment, Gross $ 176,972 $ 64,772
Less: Accumulated depreciation (12,197) (11,202)
Property and equipment, net 164,775 53,570
Machinery and Equipment    
Property, Plant and Equipment, Gross 0 50,000
Furniture and Fixtures    
Property, Plant and Equipment, Gross 14,772 14,772
Retail Site    
Property, Plant and Equipment, Gross $ 162,200 $ 0
v3.23.3
NOTE 4: PROPERTY AND EQUIPMENT (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Details        
Impairment charge to record the residual value of property and equipment     $ 3,276,193  
Depreciation $ 45,332 $ 421,336 $ 50,996 $ 1,209,788
v3.23.3
NOTE 5: NOTES PAYABLE (Details) - USD ($)
 9 Months Ended
Jul. 01, 2023
May 08, 2023
Oct. 04, 2022
May 11, 2022
Apr. 08, 2022
Nov. 19, 2020
Jun. 24, 2020
Sep. 30, 2019
Sep. 10, 2019
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Oct. 19, 2021
May 12, 2021
Dec. 31, 2019
Oct. 28, 2019
Long-Term Debt                   $ 7,925,930            
Long-Term Debt, Gross                         $ 250,000      
Notes Payable                           $ 2,957,000    
Outstanding Amount                           158,625    
Balance Paid Per Month                           20,000    
Total Paid Per Month                           138,625    
Property and equipment, net                   164,775   $ 53,570        
Purchase of equipment with notes payable                   0 $ 55,016          
Accrued Interest Rate                         12.00%      
Proceeds from Notes Payable                   5,000,000 $ 1,233,000          
Current portion of notes payable                   3,854,300   $ 3,088,250        
Common Stock                                
Shares issued pursuant to conversion of debt, Shares     2,906,800                          
C S B G | Eagle One                                
Notes Payable                           550,000    
C S B G | Eagl Two                                
Notes Payable                           $ 300,000    
CNP Operating                                
Long-Term Debt, Gross               $ 550,000             $ 3,050,000  
Outstanding Balance               $ 302,489   2,218,000           $ 2,218,000
Debt Instrument, Interest Rate During Period               16.00%                
Promissory Note Payable                                
Proceeds from Long-Term Lines of Credit                 $ 500,000              
Debt Instrument, Interest Rate, Stated Percentage                 8.00%              
Debt Instrument, Unamortized Discount                 $ 17,624              
Long-Term Debt                   500,000            
Long-Term Debt, Gross                   50,000            
Promissory Note Payable | Warrant in Connection with Promissory Note                                
Class of Warrant or Right, Number of Securities Called by Warrants or Rights                 33,333              
Class of Warrant or Right, Exercise Price of Warrants or Rights                 $ 1.50              
SBA                                
Debt Instrument, Interest Rate During Period             3.75%                  
Proceeds from Loans             $ 150,000                  
Debt Instrument, Periodic Payment             $ 731                  
Promissory Note Payable 6                                
Long-Term Debt                   48,513            
Debt Instrument, Periodic Payment           $ 968                    
Property and equipment, net           $ 58,095                    
Purchase of equipment with notes payable                   55,016            
Promissory Note Payable 7                                
Debt Instrument, Interest Rate During Period         18.00%                      
Proceeds from Loans         $ 676,000                      
Promissory Note Payable 8                                
Debt Instrument, Interest Rate During Period       12.00%                        
Proceeds from Loans       $ 500,000                        
Promissory Note Payable 9                                
Proceeds from Loans   $ 1,150,000                            
Promissory Note Payable 10                                
Proceeds from Loans $ 3,850,000                              
Ranco Notes                                
Proceeds from Notes Payable                   $ 5,000,000            
v3.23.3
NOTE 5: NOTES PAYABLE: Schedule of Maturities of Long-Term Debt (Details)
Sep. 30, 2023
USD ($)
Details  
Long-Term Debt, Maturity, Year Two $ 3,854,300
Long-Term Debt, Maturity, Year Three 3,892,727
Long-Term Debt, Maturity, Year Four 50,882
Long-Term Debt, Maturity, Year Five 23,702
Long-Term Debt, Maturity, after Year Five 104,320
Long-Term Debt $ 7,925,930
v3.23.3
NOTE 6: STOCKHOLDERS' DEFICIT (Details) - USD ($)
 1 Months Ended 3 Months Ended 9 Months Ended
Dec. 06, 2021
Jan. 31, 2021
Sep. 30, 2023
Jun. 30, 2023
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Stockholders' Equity, Reverse Stock Split the Company effected a reverse split of its outstanding common stock in the ratio of 1-for-15            
Proceeds from sale of common stock         $ 350,000 $ 210,000  
Shares Issued As Payment For Accrued Interest, Value     $ 405,000        
Issuance of common stock pursuant to business combination     8,000,000   8,000,000 0  
Conversion of accrued preferred stock interest into shares     45,000 $ 405,000 450,000 0  
Payments made in advance of securities date     $ 0   $ 0   $ 217,500
Preferred Stock, Shares Authorized     2,000,000   2,000,000    
Preferred Stock, Par or Stated Value Per Share     $ 0.001   $ 0.001    
Dividends, Paid-in-kind         $ 180,000 $ 180,000  
Series A Preferred Stock              
Issuance of common stock pursuant to business combination     $ 0        
Conversion of accrued preferred stock interest into shares     $ 0 0      
Preferred Stock, Shares Authorized     500   500   500
Preferred Stock, Par or Stated Value Per Share     $ 0.001   $ 0.001   $ 0.001
Series B Preferred Stock              
Issuance of common stock pursuant to business combination     $ 0        
Conversion of accrued preferred stock interest into shares     $ 0 $ 0      
Preferred Stock, Shares Authorized     3,000   3,000   3,000
Preferred Stock, Par or Stated Value Per Share     $ 0.001   $ 0.001   $ 0.001
Common Stock              
Shares Issued As Payment For Accrued Interest, Shares     1,620,000        
Issuance of common stock pursuant to business combination Shares     40,000,000        
Issuance of common stock pursuant to business combination     $ 40,000        
Conversion of accrued preferred stock interest into shares Shares     500,000 1,620,000      
Conversion of accrued preferred stock interest into shares     $ 500 $ 1,620      
Stock Issuance 2              
Shares issued as for exercise of warrant   2,400,000          
Proceeds from sale of common stock   $ 600,000          
v3.23.3
NOTE 6: STOCKHOLDERS' DEFICIT: Schedule of Stockholders' Equity Note, Warrants or Rights (Details) - Warrant
 3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended 42 Months Ended
Sep. 30, 2023
$ / shares
shares
Jun. 30, 2023
$ / shares
shares
Sep. 30, 2023
$ / shares
shares
Dec. 31, 2022
$ / shares
shares
Jun. 30, 2026
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Outstanding, Number 11,988,500 8,138,500 11,988,500 988,500  
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ / shares $ 0.41 $ 0.49 $ 0.41 $ 2.25  
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms 4 years 5 months 4 days     2 years 4 months 20 days 4 years 6 months 10 days
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Net of Forfeitures 3,850,000 7,150,000      
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares $ 0.25 $ 0.25      
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Remaining Contractual Term 4.75 4.89      
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures in Period 0 0      
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number 11,988,500   11,988,500    
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price | $ / shares $ 0.41   $ 0.41    
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term     4 years 5 months 4 days    
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Number 11,988,500   11,988,500    
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ / shares $ 0.41   $ 0.41    
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term     4 years 5 months 4 days    
v3.23.3
NOTE 7: LEASES (Details) - USD ($)
 9 Months Ended 12 Months Ended
Sep. 30, 2023
Sep. 01, 2020
Jun. 20, 2019
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Impairment Charge on ROU assets           $ 339,768
Right of use asset and liability       $ 187,863 $ 0  
Office Space In Whitefish Montana            
Operating Lease Monthly Rent $ 3,750 $ 4,500 $ 1,500      
Emerging Growth            
Operating Lease Monthly Rent 4,500          
Office Space in Centennial, CO            
Operating Lease Monthly Rent 10,521          
Office space In H2S2 LLC            
Operating Lease Monthly Rent $ 14,000          
v3.23.3
NOTE 8: ASSETS HELD FOR SALE (Details) - USD ($)
 3 Months Ended 9 Months Ended
Apr. 12, 2023
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Mar. 31, 2023
Dec. 31, 2022
Details              
Assets held for sale   $ 0   $ 0   $ 599,047 $ 599,047
Proceeds from Sale of Real Estate $ 699,000            
Sale of assets held for sale       608,300 $ 0    
Gain on property and equipment   0 $ 0 9,253 87,933    
Gain on extinguishment of debt   $ 0 $ 0 $ 13,219 $ 0    
v3.23.3
NOTE 9: RELATED PARTY TRANSACATIONS (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Details    
Due to related party $ 575,314 $ 503,259
v3.23.3
NOTE 10: COMMITMENTS AND CONTINGENCIES (Details) - USD ($)
Oct. 18, 2021
Sep. 30, 2023
Dec. 31, 2022
Details      
Proceeds from Legal Settlements $ 100,000    
Payments for Legal Settlements 40,000    
Monthly Installment $ 1,250    
Balance, Legal Amount Paid During The Period   $ 41,250 $ 32,500
CFN Enterprises (QB) (USOTC:CNFN)
Historical Stock Chart
Von Apr 2024 bis Apr 2025 Click Here for more CFN Enterprises (QB) Charts.