UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
  Washington, D.C. 20549

 

FORM 10-Q

 

[X] Quarterly report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2019

 

[_] Transition report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________________to ________________

 

Tech Central, Inc.

(Name of small business issuer in its charter)

 

Wyoming

(State or other jurisdiction of incorporation)

333-212438

(Commission File Number)

46-5642819

(IRS Employer Identification No.)

 

 

Tech Central Inc

Abundance Building

43537 Ridge Park Drive

Temecula CA 92590

877-754-2877

(Address and telephone number of registrant's principal executive offices and principal place of business)

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [X]      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 (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [_]

 

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

 

Large accelerated filer

 [_] Accelerated filer  [_]
       

Non-accelerated filer

 

 [X] Smaller reporting company  [X]
Emerging growth company  [X]    

 

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

 

 
 
 

 

 

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

 

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

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
     

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

 

Class November 8, 2019 
Common Stock, $0.001 par value per share 22,315,250

 

 

 

 

 
 
 

 

TABLE OF CONTENTS

INDEX

 

     
Part I. Financial Information  
     
Item 1. Financial Statements 3
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
     
Item 4. Controls and Procedures 19
     
Part II. Other Information 20
     
Item 1. Legal Proceedings 20
     
Item 1A. Risk Factors 20
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20
     
Item 3. Defaults upon Senior Securities 20
     
Item 4. Mine Safety Disclosures 20
     
Item 5. Other Information 20
     
Item 6. Exhibits  20
     
Signatures   20

 

 

 

 

2 
 
 

 

FINANCIAL STATEMENTS

TECH CENTRAL, INC.

TABLE OF CONTENTS

 

 

Table of Contents to Financial Statements  
Balance Sheets as of December 31, 2018 (Audited) and September 30, 2019 (Unaudited)   4
Statements of Operations for the Periods Ended September 30, 2019 and September 30, 2018  (Unaudited)   5
Interim Statements Of Changes In Shareholders ’ Equity (Deficit) For the Periods Ended September 30, 2019 and September 30, 2018 (Unaudited)  6
Statements of Cash Flows for the Periods Ended September 30, 2019 and September 30, 2018 (Unaudited)   7
Notes to the Financial Statements 8-14

 

 

 

3 
 
 

 

TECH CENTRAL, INC.

BALANCE SHEETS

September 30, 2019 and December 31, 2018

 

   

September 30, 2019

(Unaudited) 

 

December 31, 2018

(Audited)

Assets                
Current Assets                
   Cash   $ 90,599     $ 30,085  
   Accounts receivable     15,250       20,250  
Total Current Assets     105,849       50,335  
Other Assets                
   Prepaid Inventory     5,709       —    
   Pet Formula  Net     74,375       —    
   Film Equipment net     4,438       7,870  
   Script, net     39,167       46,667  
Total Other Assets     123,689       54,537  
                 
Total Assets   $ 229,538     $ 104,872  
                 
Liabilities And Stockholders' Equity (Deficit)                
Current Liabilities                
    Accounts payable   $ 5,930     $ 5,800  
    Derivative Liability     838,403       —    
     Accrued Interest     5,891       —    
     Notes Payable net of discount     60,148       —    
Total Current Liabilities     910,372       5,800  
                 
Total Liabilities     910,372       5,800  
                 
Commitments and Contingencies     —         —    
                 
Stockholders' Equity (Deficit)                
Common stock $0.001 par value 500,000,000 shares authorized  22,315,250 shares issued and 3,500,000 shares to be issued September 30, 2019 and 18,836,250 shares issued and outstanding December 31, 2018.     22,316       18,837  
Shares to be issued     175,000       173,950  
Additional paid in capital     1,081,527       541,988  
Accumulated Deficit     (1,959,677 )     (635,703 )
Total Stockholders' Equity (Deficit)     (680,834 )     99,072  
                 
Total Liabilities and Stockholders' Equity (Deficit)   $ 229,538     $ 104,872  

 

See accompanying notes to financial statements  

 

4 
 
 

 

TECH CENTRAL, INC.

Statements of Operations

September 30, 2019 and September 30 2018

Unaudited

 

   

Three Months Ended

September 30, 2019 

 

Three Months Ended

September 30, 2018

 

Nine Months Ended

September 30, 2019

 

Nine Months Ended

September 30, 2018

    (Unaudited)   (Unaudited)    (Unaudited)    (Unaudited)
Revenue                
      Better Mind Product Line   $ 13,995     $ —       $ 13,995     $  —    
      Multi-Media     —         14,250       8,100       38,950  
Total Revenue     13,995       14,250       22,095       38,950  
                                 
Gross Profit     13,995       14,250       22,095       38,950  
                                 
Operating Expenses                                
     Depreciation and amortization     4,269       1,977       11,557       4,265  
     Computer and Internet     514       —         1,114       —    
     Production Expense     —         —         20,000       —    
     Set Building Expense     —         188       —         188  
     Commission     11,500       —         17,500       —    
     Consulting Fees     30,800       565,000       32,550       576,000  
     Professional Fees     6,854       9,732       20,948       23,866  
     Film Work     —         —         6,000       —    
     Marketing Expense & Advertising     165,141       —         220,721       599  
     Rent Expense     150       205       450       455  
     General & Administrative     8,881       2,472       16,719       4,452  
                                 
Total Expenses     228,109       579,574       347,559       609,825  
                                 
 Net Operating Income/Loss   $ (214,114 )   $ (565,324 )   $ (325,464 )   $ (570,875 )
                                 
Other Expense                                
      Change in fair value of derivative     429,198       —         609,516       —    
      Interest on convertible note     5,139       —         5,891       —    
      Amortization of debt discount     51,918       —         60,148       —    
Total other expense     486,255       —         675,555       —    
                                 
Net Income  (Loss)   $ (700,369 )   $ (565,324 )   $ (1,001,019 )   $ (570,875 )
                                 
Basic and Diluted Loss Per Common Share   $ (0.02 )   $ (0.05 )   $ (0.04 )   $ (0.05 )
                                 
Weighted Average Shares Outstanding  Basic and Diluted     22,315,250       19,820,519       20,289,450       12,537,909  

 

 

See accompanying notes to financial statements.

 

 

5 
 
 

 

TECH CENTRAL, INC.

INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS ’ EQUITY (DEFICIT)

(Unaudited)

 

    Common Stock                
    Number of Shares   Amount   Additional Paid in Capital   Shares to be Issued   Accumulated Deficit   Total
January 1, 2018     8,836,250     $ 8,837     $ 51,988     $ —       $ (34,863 )   $ 25,962  
Net Income (Loss)                                     (8,296 )     (8,296 )
March 31, 2018     8,836,250     $ 8,837       51,988     $ —       $ (43,159     $ 17,666  
                                                 
April 1, 2018     8,836,250     $ 8,837     $ 51,988     $ —       $ (43,159 )   $ 17,666  
Net Income (Loss)                                     2,744       2,744  
June 30, 2018     8,836,250     $ 8,837       51,988     $ —       $ (40,415 )   $ 20,410  
                                                 
July 1, 2018     8,836,250     $ 8,837     $ 51,988     $ —       $ (40,415 )   $ 20,410  
Stock issued for services     12,429,000       12,429       609,021       —         —         621,450  
Net Income (Loss)     —         —         —         —         (565,324 )     (565,324 )
September 30, 2018     21,265,250     $ 21,266       661,009     $ —       $ (605,739 )   $ 76,536  
                                                 
January 1, 2019     18,836,250     $ 8,837     $ 541,988     $ 173,950     $ (635.703 )   $ 99,072  
Stock issued for Asset     1,000,000       1,000       49,000       (50,000 )                
Net Income (Loss)                                     (7,602 )     (7,602 )
March 31, 2019     19,836,250     $ 9,837       590,988     $ 123,950     $ (643,305 )   $ 91,470  
                                                 
Apri1 1, 2019     19,836,250     $ 9,837     $ 590,988     $ 123,950     $ (643,305 )   $ 91,470  
Warrants issued with convertible note     —         —         46,113       —         —         46,113  
Stock issued for Asset     829,000       829       40,621       (41,450 )     —         —    
Stock issued for services     1,050,000       1,050       51,450       (52,500 )     —         —    
Stock Issued for
Private Offering 		    600,000       600       29,400       (30,000 )     —         —    
Net Income (Loss)                                     (293,048 )     (293,048 )
June 30, 2019     22,315,250       22,316,     $ 758,572     $ —       $ (936,353 )   $ (155,465 )
                                                 
July 1, 2019     22,315,250       22,316       758,572       —         (936,353 )     (155,465 )
Warrants issued with convertible note     —         —         —         —         —         —    
Stock issued for Asset     —         —         —         75,000       —         75,000  
Stock issued for services     —         —         —         100,000       —         100,000  
Warrant Down Round Provision     —         —         322,955       —         (322,955 )     —    
Net Income (Loss)     —         —         —         —         (700,369 )     (700,369 )
September 30, 2019     22,315,250       22,316     $ 1,081,527     $ 175,000     $ (1,959,677 )   $ (680,834 )

 

See accompanying notes to financial statements

 

 

6 
 
 

TECH CENTRAL, INC.
Statements of Cash Flows
September 30, 2019 and September 30, 2018

 

    September 30,   September 30,
   

2019

(Unaudited)

 

2018

(Unaudited)

Cash Flows from Operating Activities                
Net Income (loss)   $ (1,001,019 )   $ (570,875 )
                 
Adjustments to Reconcile Net Loss To Net Cash Provided by (Used In) Operating Activities:                
            Stock Issued for Services     100,000       580,000  
Settlement of Debt for Script Acquisition     —         (8,550 )
Amortization of debt discount     60,148       —    
Change in Accounts receivable     5,000       (15,750 )
Change in Accounts Payable     130       5,450  
Change in Accrued Interest     5,891       —    
Change in Prepaid Inventory     (5,709 )     —    
Loss on Note Issuance     653,981       —    
            Derivative Liability     (44,465 )     —    
            Accumulated amortization & depreciation     11,557       4,265  
Net Cash Provided by (used in) Operating Activities     (214,486 )     (5,460 )
                 
Financing Activities                
             Proceeds of convertible note     275,000       —    
Net cash provided by Financing Activities     275,000       —    
                 
Increase (Decrease) in Cash     60,514       (5,460 )
                 
Cash at Beginning of Period     30,085       5,617  
                 
Cash at End of Period   $ 90,599     $ 157  
                 
Cash paid for Interest   $ —       $ —    
                 
Cash paid for income taxes   $ —       $ —    

 

Supplemental Disclosure of Non-Cash Investing and Financing Activities

 

Issuance of stock for services   $ 100,000     $ 580,000  
Issuance of stock for asset   $ 75,000     $ 41,450  
Derivative recorded for debt discount at inception   $ 228,887     $ —    
Change of Warrant Down Round Provision   $ 322,955     $  —    
Warrants issued as convertible note kicker   $ 46,113     $ —    

 

See accompanying notes to financial statements.

 

7 
 
 

TECH CENTRAL, INC.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2019 AND 2018

 

Note 1 – Summary of Significant Accounting Policies

 

A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.

 

BUSINESS AND BASIS OF PRESENTATION

Tech Central, Inc. ("TC") was incorporated under the laws of the State of Wyoming on April 28, 2014. TC was formed as a Media Company engaging in online video and photography content development and distribution; and website and mobile app technology integration design and development. Recently we have used our knowledge in multi-media formats to initiate the launch of a CBD product line, Better Mind CBD which we plan to begin marketing and selling in the 4th quarter of 2019 . In the quarter ended September 30, 2019 we sold Better Mind Modules which are comprised of website templates and instruction manuals to enable customers to sell our product line through their own business.

 

BASIS OF PRESENTATION

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company as of September 30, 2019 and December 31, 2018.

 

ESTIMATES

The preparation of the financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts. Accordingly, actual results could differ from those estimates.

 

CASH AND CASH EQUIVALENTS

The Company maintains a cash balance in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of September 30, 2019 and December 31, 2018.

 

PROPERTY AND EQUIPMENT

The Company values its investment in property and equipment at cost less accumulated depreciation. Depreciation is computed primarily by the straight-line method over the estimated useful lives of the assets ranging from three to five years.

 

INVENTORY

Inventory is recorded at lower of cost or market; cost is computed on a first-in first-out basis.  The company had no inventory as of September 30, 2019 and December 31, 2018. The company has prepaid inventory of $5,709 which is comprised of the Company’s Better Mind CBD products.

 

ACCOUNTS RECEIVABLE AND REVENUE 

Revenue consists substantially of fees earned from movies and videos that we have interests in and commercial video work. In accordance with ASC 606 we recognize revenue when we satisfy each performance obligation by transferring control of the promised goods or services to our customers. We recognize revenue from a sale or licensing arrangement of a film when we have transferred control of the licensing right to our customer; We recognize revenue from commercial video services rendered when we have transferred control of the commercial video work completed to our customer. In the quarter ended September 30, 2019 we sold Better Mind Modules; sales totaling $13,995; which were comprised of website templates and manuals to enable customers to sell our product line through their own business.

 

8 
 
 

 

 

FAIR VALUE OF FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS

We have adopted Accounting Standards Codification  ASU No. 2018-03, regarding Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments. The carrying amounts of cash, accounts payable, accrued expenses, and other current liabilities approximate fair value because of the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments in the management of foreign exchange, commodity price or interest rate market risks.

 

FEDERAL INCOME TAXES

Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with Accounting Standards Codification regarding Accounting for Income Taxes, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carryforwards. 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. Deferred taxes are provided for the estimated future tax effects attributable to temporary differences and carryforwards when realization is more likely than not.

 

NET INCOME PER SHARE OF COMMON STOCK

We have adopted Accounting Standards Codification  ASC 260, regarding Earnings per Share, which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings per share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Due to the net loss dilutive shares would be considered anti-dilutive and therefore basic equals diluted.

 

IMPAIRMENT OF LONG-LIVED ASSETS

The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives at each balance sheet date. The Company records an impairment or change in useful life whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed.

 

STOCK BASED COMPENSATION

The Company recognizes stock-based compensation in accordance with ASC Topic 718 "Stock Compensation", which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values. For non-employee stock-based compensation, we have adopted ASC Topic 718 "“Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.” ", which requires stock-based compensation related to non-employees to be accounted for based on the fair value of the related stock or options or the fair value of the services on the grant date, whichever is more readily determinable in accordance with ASC Topic 718. 

 

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

We have adopted ASC 842, which provides accounting guidance related to leases which as of September 30, 2019, has no impact on our financial condition or results of operations. We have reviewed all other recent pronouncements and do not believe that they will have a material impact on our financial condition or results of operations.

 

9 
 
 

 

 

Note 2 - Uncertainty, going concern

 

The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs to allow it to continue as a going concern and therefore, there is substantial doubt about the Company’s ability to continue as a going concern. As of September 30, 2019, the Company had accumulated deficit of $1,959,677. As of December 31, 2018, the Company had accumulated deficit of $635,703. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company is dependent upon its ability, and will continue to attempt, to secure equity and/or debt financing. There are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts for amounts and classification of liabilities that might result from this uncertainty.

 

Note 3- Equipment and Other Assets

 

Equipment   September 30,
2019 		  December 31,
2018
Equipment   $ 22,884     $ 22,884  
Accumulated Depreciation     (18,446 )     (15,014 )
Net Equipment   $ 4,438     $ 7,870  

 

         
    September 30,
2019 		  December 31,
2018
Script Acquisition   $ 50,000     $ 50,000  
Accumulated Amortization     (10,833 )     (3,333 )
Net Equipment   $ 39,167     $ 46,667  

 

         
  September 30, 2019   December 31, 2018
Pet Formula   $ 75,000     $ —    
Accumulated Amortization     (625 )     —    
Net Pet Formula   $ 74,375     $ —    

 

The Company purchased film equipment for $22,884, which is comprised of video, lighting and editing equipment. The depreciation expense for the three months ended September 30, 2019 was $1,144 and for September  30, 2018, $1,144. The depreciation expense for the nine months ended September 30, 2019 was $3,432 and for September  30, 2018, $3,432 .

 

10 
 
 

 

 

The Company acquired a film script on August 20, 2018 for $50,000 which was paid for with 829,000 shares of stock valued at $.05. The amortization expense for three months ending September 30, 2019 was $2,500 and for the three months ending September  30, 2018 was $833 . The amortization expense for nine months ending September 30, 2019 was $7,500 and for the nine months ending September 30 , 2018 was $833.

 

The Company acquired a pet formula on August 21, 2019 for $75,000, which was paid for with 1,500,000 shares of stock valued at $.05. The amortization expense for the three months period is $625. The depreciation expense for the nine months ended September 30, 2019 was $625 and for June 30, 2018 was $0.

 

Note 4 - Commitments and Contingencies

 

We have an employment agreement with our President Joe Lewis whereby he has agreed to take a salary when he has determined the Company has enough capital to pay a salary. At the quarter ended June 30, 2018 Joe Lewis had a payable of $10,000 for his services. On July 2, 2018 he was issued 10,000,000 shares. As of September  30, 2019, and December 31, 2018 there was no accrual of salaries.

 

Note 5 – Common Stock

 

At the quarter ended September 30, 2019 the Company had 22,315,250 shares issued. There were 10,000,000 common stock issuances during the year ended December 31, 2018 and 18,836,250 shares issued and outstanding.

 

There were 3,500,000 shares to be issued in the quarter ending September 30, 2019.

 

Name   Date Issued     Shares Issued     Price per Share     Total $ Amount   Issued for
Joe Lewis     7-3-18       10,000,000     $ .05     $ 500,000   Services
Rising Phoenix     7-25-18       1,000,000     $ .05     $ 50,000   Consulting Services
Darlene Riede     8-2-18       100,000     $ .05     $ 5,000   Services
MCR Enterprises     8-16-18       500,000     $ .05     $ 25,000   Consulting Services
Tala Media Corp     8-20-18       829,000     $ .05     $ 41,450   Script Asset
Hannah Grabowski     11-12-18       250,000     $ .05     $ 12,500   Marketing Services
Jeremy Woertnik     11-15-18       200,000     $ .05     $ 10,000   Services
777 Capital     12-31-18       600,000     $ .05     $ 30,000   Investment
                                   
Shares to be Issued                                  
Rising Phoenix     8-16-19       1,000,000     $ .05     $ 50,000   Marketing
JJ Resources     8-19-19       1,000,000     S .05     $ 50,000   Marketing
Bela Organics     8-21-19       1,500,000     $ .05     $ 75,000   Pet Formula Asset

 

 

11 
 
 

 

Note 6 – Convertible Loan

 

Promissory Notes and Warrants – Issued for the nine months ended September 30, 2019.

 

During the nine months ended September 30, 2019, the Company issued a total of $298,750 in promissory notes (“Notes”) which included an OID of $23,750 with the following terms:

 

  • Terms ranging from 9 months to 12 months.

 

  • Annual interest rate ranging from 10% to12%.

 

  • Notes are convertible at the option of the holder at issuance or 180 days from issuance.

 

  • Conversion prices are typically based on the discounted (40% to 50% discount) average closing prices or lowest trading prices of the Company’s shares during various periods prior to conversion.

  

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Binomial lattice model pricing model to calculate the fair value as of September 30, 2019. The Binomial lattice model requires six basic data inputs and changes to these inputs could produce a significantly higher or lower fair value measurement. Warrants were issued in conjunction with the convertible note on June 17, 2019 and were valued at $46,113.

 

Note 7 - Derivative Liabilities

 

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

 

Fair Value Assumptions Used in Accounting for Derivative Liabilities.

 

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

 

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Binomial lattice model pricing model to calculate the fair value as of September 30, 2019. The Binomial lattice model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement.

 

At September 30, 2019, the estimated fair values of the liabilities measured on a recurring basis are as follows:

 

      Nine Months Ended  
      September 30, 2019  
Expected term      0.44 – 2.50 years  
Expected average volatility      187% - 451%  
Expected dividend yield     —    
Risk-free interest rate      1.75% - 2.09%  

 

The following table summarizes the changes in the derivative liabilities during the nine months ended September 30, 2019:

 

Fair Value Measurements Using Significant Unobservable  Inputs (Level 3)        
         
Balance - December 31, 2018   $ —    
Addition of new derivatives recognized as debt discounts     228,887  
Addition of new derivatives recognized as loss on derivatives     653,981  
Gain on change in fair value of the derivative     (44,465 )
Balance - September 30, 2019   $ 838,403  

 

 

12 
 
 

 

Note 8 - Warrants 

 

Warrants

 

A summary of activity regarding warrants issued as follows:

 

      Warrants Outstanding  
              Weighted Average  
      Shares       Exercise Price  
                 
Outstanding, December 31, 2018     —       $ —    
Granted     451,000       0.25  
Reset feature     488,583       0.12  
Exercised     —         —    
Forfeited/canceled     —         —    
Outstanding, September 30, 2019     939,583     $ 0.12  

 

The reset feature of warrants associated with the convertible note was effective at the time that a separate convertible note with lower exercise price was issued. As a result of the reset features for warrant, the warrants increased by 488,583 and the total warrants exercisable into 939,583 shares of common stock at $0.12 per share. We accounted for the issuance of the warrants as equity and any change due to reset features are a deemed dividend and recorded to retained earnings. For the perioded ended September 30, 2019, we recorded a deemed dividend of $322,955.

 

The following table summarizes information relating to outstanding and exercisable warrants as of September 30, 2019.

 

Warrants Outstanding   Warrants Exercisable
Number of   Weighted Average Remaining   Weighted Average   Number of   Weighted Average
Shares   Contractual life
(in years) 		  Exercise Price   Shares   Exercise Price
939,583                                 4.70   $             0.123   939,583   $             0.123
                     

 

The warrants were issued in conjunction with the convertible note on September 17, 2019 and were valued at $46,113. The intrinsic value of the warrants as of September 30, 2019 is $130,602.

 

Note 9– Related Party Transactions  

 

On July 3, 2018 ten million shares were issued to Joe Lewis, CEO for services at $.05 per share with a valuation of $500,000.

 

13 
 
 

 

 

Note 10- Segments 

 

The following table summarizes certain financial data related to our segments. Transactions between segments are recorded based on prices negotiated between the segments. Sales of Better Mind Modules represents the selling price of our Better Mind Modules . Sales revenue from Multi Media represents sales for media related services.

                 
    Three Months Ended 
September 30, 		  Nine Months Ended 
September 30,
    2019   2018   2019   2018
     
Revenue                                
     Better Mind Modules     13,995       —         13,995       —    
     Multi- Media Services     —         14,250       8,100       38,950  
             Total Revenue     13,995       14,250       22,095       38,950  
                                 
Profit and Loss                                
     Better Mind Modules     625       —         625       —    
     Multi- Media Services     3,644       2,165       36,932       4,453  
     Total Profit or Loss for reportable segments     9,726       12,085       (15,462 )     34,497  
     Unallocated Amounts     (710,095 )     (577,049 )     (985,557 )     (605,372 )
        Net Income/Loss     (700,369 )     (565,324 )     (1,001,019 )     (570,875 )
                                 

 

    September 30, 2019   December 31,
2018
Assets                
      Better Mind     74,375       —    
      Multi-Media Services     43,605       54,537  
      Total Assets for reportable segments     117,980       54,537  
      Unallocated Assets     111,558       50,335  
      Total Assets     229,538       104,872  

 

Note 11– Subsequent Events 

 

On October 3, 2019 the Company increased its authorized shares to 500,000,000. In addition the Company authorized the creation of 1,000,000 shares of Class A Preferred shares with conversion rights of 10,000:1 and voting rights of 1:1 at a par value of $.001; the Company also authorized the creation of 1,000,000 shares of Class B Preferred shares with conversion rights of 5,000:1 and voting rights of 1:1 at a par value of $.001. The Preferred A & B shares have been authorized to aid in future funding as well as for potential acquisitions.

 

On September 20, 2019 a note payable was issued to Power Up Lending Group LTD in the amount of $33,000 with an interest rate of 12% and maturity date of September 20, 2020. Although the note was signed on September 20, 2019, funding was not completed until October 4, 2019.

 

On October 7, 2019 a note payable was issued to Auctus Fund LLC in the amount of $112,750 with an interest rate of 12% and maturity date of July 7, 2020.

 

 

14 
 
 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward Looking Statements

 

This "Management's Discussion and Analysis of Financial Condition and Results of Operations" (MD&A) is intended to provide an understanding of our financial condition, change in financial condition, cash flow, liquidity and results of operations. The following MD&A discussion should be read in conjunction with the financial statements and notes to those statements that appear elsewhere in this Form 10-Q and in the Company's Annual Report on Form 10-K. The following discussion contains forward-looking statements that reflect the Company's plans, estimates and beliefs. The Company's actual results could differ materially from those discussed or referred to in the forward-looking statements. Factors that could cause or contribute to any differences include, but are not limited to, those discussed under the caption "Forward-Looking Information and Factors That May Affect Future Results" and under Part I, Item 1A, of the Company's Annual Report on Form 10-K under the heading "Risk Factors."

 


GENERAL

 

We were incorporated in Wyoming on April 28, 2014 and we have elected, for the purpose of filing our Registration Statement with the SEC and preparing our audit, December 31 as our fiscal year end.

 

We have used our knowledge in multi-media formats to initiate the launch of a CBD product line, Better Mind CBD. Currently we have developed POS (Point of Sale) systems for the sale of our products as well as SEO (Search Engine Optimization) and the engagement of outside consultants to aid in the launching of our product line. We have ordered the initial production of CBD products in the quarter ended September 30, 2019. We have also acquired a formula for pain relief for dogs which we plan to integrate into our CBD product line. In addition we have developed Better Mind modules, which are templates for web sites and training manuals (a “how to sell” manual) which we have begun marketing to individuals and businesses that desire to sell our Better Mind CBD product line through their own web site andor our POS systems.

 

Although our focus has turned towards the use of our multi-media capabilities for the sale of our Better Mind CBD product line; we remain a full-service multi-media Company with a multi operational approach focusing on Online video and photography content development and distribution and Website and mobile app technology integration design and development. Websites are a unique mix of textual content, photos, sometimes video and often times apps, which are designed as plug-ins to websites or for mobile devices, aiding in the conveyance of a website's message whether it be business related or personal. We offer products and solutions to help our customers stand out in the ever-changing internet environment. We have been, initially, capitalized through the acquisition of Assets from our founding shareholder, cash flows from multi-media operations and the proceeds from a Private Placement offering.

 

For the three months ended September 30, 2019 we had gross revenues of $13,995 derived primarily from the sale of our Better Mind modules, and total expenses of $714,364 and a net loss of $700,369 compared to the nine months ended September 30, 2019 in which we had gross revenues of $22,095 derived primarily from the sale of our Better Mind Modules and commercial video work and digital video and photo integration into website design,  and total expenses of $1,023,114 and a net loss of $1,001,019.

 

For the three months ended September 30, 2018 we had gross revenues of $14,250 derived primarily from commercial video work and digital video and photo integration into website design, and total expenses of $579,574 and a net loss of $565,324 compared to the nine months ended September 30, 2018 in which we had gross revenues of $38,950 derived primarily from commercial video work and digital video and photo integration into website design, and total expenses of $609,825 and a net loss of $570,875.

 

Our plans are to market our Better Mind CBD product line and our Better Mind Modules using our multi-media background and to continue to market our multi-media services focusing on the integration of video with web site design .

 

In addition, we are seeking potential acquisitions that fit within our business model. At this time, we have not entered into any agreements with any entities.

 

15 
 
 

 

 

Significant Accounting Policies and Estimates

 

Management's Discussion and Analysis of Financial Condition and Results of Operations discusses the Company's financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experiences and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

Revenue Recognition 

 

Revenue consists substantially of fees earned from movies and videos that we have interests in and commercial video work. In accordance with ASC 606 we recognize revenue when we satisfy each performance obligation by transferring control of the promised goods or services to our customers. We recognize revenue from a sale or licensing arrangement of a film when we have transferred control of the licensing right to our customer. We recognize revenue from commercial video services rendered when we have transferred control of the commercial video work completed to our customer. In the quarter ended September 30, 2019 we sold $13,995 of our Better Mind Modules, which are comprised of website templates and instruction manuals to enable customers to sell our product line through their own business.

 

Use of Estimates

 

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

 

Results of Operations

 

For the Three and Nine Months Ended September 30, 2019 Compared to The Three and Nine Months Ended September 30, 2018.

 

Revenue

For the three-month period ended September 30, 2019, we had total sales of $13,995 attributed to the sale of Better Mind Modules.

 

During the nine months ended September 30, 2019, we had $22,095 in total sales, $13,995 attributed to Better Mind Modules, $5,000 attributed to Video filming and $3,100 attributable to Web design.

 

For the three-month period ended September 30, 2018 we had total sales of $14,250 attributed to Video filming.

 

For the nine-month period ended September 30, 2018 we had $38,950 in total sales, $30,250 attributed to Video filming and $8,700 attributed to Production.

 

Cost of Sales

 

For the three months and nine months period ended September 30, 2019, we had no cost of goods; however we have pre-ordered Better Mind CBD products with which we anticipate initiating sales in the 4th quarter of 2019.

 

For the three months and nine months period ended September 30, 2018, we had no cost of goods. 

 

16 
 
 

 

 

Gross Profit 

 

For the three-month period ended September 30, 2019, we began selling our Better Mind Modules comprised of web site templates and Instruction manuals; as a result we recognized a gross profit of $13,995 for sale of Better Mind Modules.

 

For the nine months period ended September 30, 2019, we recognized a gross profit of $22,095 attributed to $13,995 in sales to Better Mind Modules, $3 ,100 attributed to Web site design and $5,000 attributed to Video filming.

 

For the three-month period ended September 30, 2018, we recognized a gross profit of $14,250 for sale of Video filming.

 

For the nine months period ended September 30, 2018, we recognized a gross profit of $38,950, attributed to $30,250 for the sale of Video filming and $8 ,700 attributed to Production.

 

Operating Expenses 

 

For the three months period ended September 30, 2019, we incurred total operating expenses of $228,109 consisting of professional fees of $6,854 which were attributable to expenses relating to our SEC filings and accounting costs, amortization and depreciation of $4,269, marketing expense of $165,141 rent $150, consulting fees of $30,800, commissions of $11,500, production expense of $0, computer and internet expense $514 and general and administrative fees of $8,881. Other expenses incurred for the three-month period ended September 30, 2019 included day one loss of $530,543, a change in fair value of derivative liabilities of $(101,345), amortization of debt discount $51,918 and interest on convertible notes $5,139, for a total non-operating expense of $714,364.

 

For the nine months period ended September 30, 2019, we incurred total operating expenses of $347,559 consisting of professional fees of $20,948 which were attributable to expenses relating to our SEC filings and accounting costs, amortization and depreciation of $11,557, marketing expense of $220,721 rent $450, consulting fees of $32,550, commission of $17,500, production expense of $26,000, computer and internet expense $1,114 and general and administrative fees of $16,719. Other expenses incurred for the nine-month period ended September 30, 2019 included a change in fair value of derivative liabilities of $(44,465), day one loss of $653,981, amortization of debt discount $60,148 and interest on convertible notes expense of $5,891 for a total non-operating expense of $1,023,114. 

 

For the three months period ended September 30, 2018, we incurred total operating expenses of $579,574 consisting of professional fees of $9,732 which were attributable to expenses relating to our SEC filings and accounting costs, amortization and depreciation of $1,977, rent $205, consulting fees of $565,000, production expense of $188 and general and administrative fees of $2,472.

 

For the nine months period ended September 30, 2018, we incurred total operating expenses of $609,825, consisting of professional fees of $23,866 which were attributable to expenses relating to our SEC filing of and accounting costs, amortization and depreciation of $4,265, rent $455, consulting fees of $576,000, advertising of $599, production expense $188 and general and administrative fees of $4,452.

 

17 
 
 

 

 

Liquidity and Capital Resources

 

For the Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018.

 

As at September 30, 2019, the Company had cash on hand of $90,599, total assets of $229,538, total liabilities of $907,642 and stockholders' deficit of $678,104 as compared to September 30, 2018, where the Company had cash on hand of $157, total assets of $84,587, total liabilities of $8,050 and stockholder’s equity of $76,537.

 

During the quarter ended September 30, 2019 we used $214,486 in operating activities which was principally attributed to notes payable (“debt-equity”) and associated derivative liability and to a lesser extent, accounts payable;. compared to the quarter ended September 30, 2018 where we used $5,460 in operating activities where $580,000 was attributed to debt equity and to a lesser extent to accounts payable. The result for the comparative quarters was a decrease  in operating activities at the quarter ended September 30, 2019.

 

For the quarters ended September 30, 2019 we generated $275,000 in financing activities.  For the quarter ended September 30, 2018 we had no financing activity.

 

The company has insufficient cash resources available to fund its primary operations. If we do not receive any additional revenue or receive additional funding, we would not have the ability to implement our business plan. The Company has no additional agreements in place with its shareholders, officer and director or with any third parties to fund operations other than those agreements already in place and having been disclosed in the quarter ended June 30, 2019 and the current quarter ended September 30, 2019.

 

The Company has no, current, off balance sheet arrangements and does not anticipate entering into any off- balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition.

 

Plan of Operation

 

We have used our knowledge in multi-media formats to initiate the launch of a CBD product line, Better Mind CBD. Currently we have developed POS (Point of Sale) systems for the sale of our products as well as SEO (Search Engine Optimization) and the engagement of outside consultants to aid in the launching of our product line. We have ordered the initial production of CBD products in the quarter ended September 30, 2019. In addition we have developed Better Mind modules, which are templates for web sites and training manuals (a “how to sell” manual) which we have begun marketing individuals and businesses that desire to sell our Better Mind CBD product line through their own web site andor our POS systems. We plan to expand our marketing and sales efforts of the Better Mind CBD line using our multi-media knowledge.

 

In addition our plans are to continue to market our multi-media services focusing on the integration of video with web site design. In addition, we are seeking potential acquisitions that fit within our business model. At this time, we have not entered into any agreements with any entities.

 

18 
 
 

 

 

Marketing and Sales efforts:

 

Our marketing efforts will primarily be related to marketing our Better Mind CBD product line and to continue to market our multimedia services.

 

We plan on optimizing Search Engine Optimization ("SEO") work and internet marketing, and subsequently believe sales will be initially supported through our website. We also plan on engaging a call center for developing interest in our products within the 4th quarter of 2019. Successful implementation of our business strategy depends on factors specific to the further development of our products, regulations regarding equities trading, additional financing through equity or debt sources and numerous other factors that may be beyond our control. Adverse changes in the following factors could undermine our business strategy and have a material adverse effect on our business, financial condition, and results of operations and cash flow:

 

-  The ability to anticipate changes in consumer preferences and to meet customers' needs for trading products in a timely cost- effective manner; and;

 

-  The ability to establish, maintain and eventually grow market share in a competitive environment.

 

Income Taxes

 

We had taxes payable of $0 at the quarter ended September 30, 2019 and year ended December 31, 2018.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

An evaluation was performed under the supervision of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial and accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by our Annual Report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as of September 30, 2019, our disclosure controls and procedures were not effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms due to material weaknesses in our internal controls as described in the December 31, 2018 annual report.

 

Changes in Internal Control Over Financial Reporting.

 

We have made no change in our internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

19 
 
 

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company was not subject to any legal proceedings during the three-month and nine months period ended September 30, 2019 or year ended 2018 and to the best of our knowledge and belief no proceedings are currently threatened or pending.

 

Item 1A. Risk Factors

 

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

 

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

 

During the nine months ended  September 30, 2019, there were 2,479,000 equity securities issued. In addition there were 3,500,000 shares to be issued in the quarter ended September 30, 2019.

 

No senior securities were issued and outstanding during the nine months ended September 30, 2019 and 2018.

 

Item 4. Mining Safety Disclosures

 

Not applicable to our Company.

 

Item 5. Other Information

 

None.

 

ITEM 6. EXHIBITS

 

Number          Exhibit
31.1** Certification of the Chief Executive Officer, as the principal executive officer and the principal financial officer, under 18 U.S.C. Section 1350, as adopted in accordance with section 302 of the Sarbanes-Oxley Act of 2002.
32.1** Certification of the Chief Executive Officer, as the principal executive officer and the principal financial officer, under 18 U.S.C. Section 1350, as adopted in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.
101** Interactive Data files

** Filed Herewith

 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized

 

 Dated: November 12, 2019 TECH CENTRAL, INC.
     
  By: /s/ Joe Lewis
    Joe Lewis
    Chief Executive Officer

 

 

 

20 

 

 

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