Amended Quarterly Report (10-q/a)

Date : 11/19/2019 @ 9:23PM
Source : Edgar (US Regulatory)
Stock : TPT Global Tech Inc (QB) (TPTW)
Quote : 0.0027  0.0002 (8.00%) @ 9:33PM
TPT Global Tech (QB) share price Chart

Amended Quarterly Report (10-q/a)

 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
  
FORM 10-Q/A
  
 (Mark One)
 
[X]
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
 
[  ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
 
Commission file number: 333-222094
 
TPT Global Tech, Inc.
(Exact name of registrant as specified in its charter)
 
Florida
 
81-3903357
State or other jurisdiction of incorporation or organization
 
(I.R.S. Employer Identification No.)
 
 
 
501 West Broadway, Suite 800
San Diego, CA
 
92101
(Address of principal executive offices)
 
(Zip Code)
 
(619) 301-4200
Registrant’s telephone number, including area code
______________________________________
 
(Former Address and phone of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
---
---
---
 
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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the 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 for 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
[X]
 
No
[  ]
 
Indicate by check mark whether the registrant is a large accelerated file, 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 to Section 7(a)(2)(B) of the Securities 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]
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
As of August 19, 2019, there were 136,953,904 shares of the registrant’s common stock, $.001 par value, issued and outstanding. 
 

 
 
 
Explanatory Note
 
During the three months ended June 30, 2019, the Company failed to file a Form S-1 registering common shares underlying certain convertible debt instruments. This was considered a default under the applicable Securities Purchase Agreements resulting in different valuations of the convertible debt instruments for accounting purposes as of June 30, 2019. Thus, several numbers within these financial statements change significantly. Note 12 to the condensed financial statements explains in detail the numbers that change and to what extent. In addition to Note 12 and the discussion there in, there are changes to Notes 1, 2, 3, 5, 6 and 8 to the condensed consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TABLE OF CONTENTS
 
 
 
Page
 
PART 1 – FINANCIAL INFORMATION
 
 
 
 
Item 1.
Financial Statements (Unaudited)
3
 
 
 
 
Condensed Consolidated Balance Sheets – June 30, 2019 (Restated) and December 31, 2018
3
 
 
 
 
Condensed Consolidated Statements of Operations - Three months and six months ended June 30, 2019 (Restated) and 2018
5
 
 
 
 
Condensed Consolidated Statements of Stockholders’ Deficit – Three and six Months ended June 30, 2019 (Restated) and 2018
6
 
 
 
 
Condensed Consolidated Statements of Cash Flows – Six months ended June 30, 2019 (Restated) and 2018
8
 
 
 
 
Notes to the Condensed Consolidated Financial Statements
10
 
 
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
26
 
 
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk – Not Applicable
28
 
 
 
Item 4.
Controls and Procedures
28
 
 
 
 
PART II- OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings – Not Applicable
28
 
 
 
Item 1A.
Risk Factors
28
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
46
 
 
 
Item 3.
Defaults Upon Senior Securities
47
 
 
 
Item 4.
Mine Safety Disclosure – Not Applicable
47
 
 
 
Item 5.
Other Information – Not Applicable
47
 
 
 
Item 6.
Exhibits
48
 
 
 
 
Signatures
49
 
 
 
2
 
 
PART I – FINANCIAL INFORMATION
 
Item 1. Financial Statements
 
  TPT Global Tech, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
ASSETS
 
 
June 30,
 
 
December 31,
 
 
 
2019
 
 
2018
 
 
 
 (Unaudited and Restated)
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 $101,475 
 $31,786 
Accounts receivable, net
  238,751 
  48,922 
Prepaid expenses and other current assets
  232,481 
  36,111 
Total current assets
 572,707
 
 $116,819 
NON-CURRENT ASSETS
    
    
        Property and equipment, net
 $4,786,235 
 $3,046,942 
        Right of use assets
  5,240,311 
  
 
        Intangible assets, net
  6,652,320 
  6,671,582 
        Goodwill
  987,361 
  924,361 
        Deposits and other assets
  81,009 
  62,013 
Total non-current assets
 $17,747,236 
 $10,704,898 
 
    
    
TOTAL ASSETS
 18,319,943
 
 $10,821,717 
 
LIABILITIES AND STOCKHOLDERS' DEFICIT
 
CURRENT LIABILITIES
 
 
 
 
 
 
Accounts payable and accrued expenses
 5,908,516 
 4,993,970 
    Deferred revenue
  209,316 
  6,450 
    Customer deposits
  338,725 
  338,725 
    Business loans, advances and agreements
  1,675,566 
  716,936 
    Current portion of convertible notes payable, net of discount
  976,601 
  10,000 
    Notes payable - related parties, net of discount
  9,462,347 
  9,137,982 
    Current portion of convertible notes payable – related parties, net of discounts
  172,881 
  202,688 
Derivative liabilities
  9,836,901 
  --- 
Current portion of operating lease liabilities
  1,800,331 
  --- 
Financing lease liabilities
  139,925 
  138,774 
Financing lease liabilities – related party
  612,526 
  598,490 
       Total current liabilities
 31,133,635 
 $16,144,015 
 
    
    
 
    
    
NON-CURRENT LIABILITIES
    
    
     Convertible note payable, net of current portion and discounts
 $--- 
 $5,000 
     Convertible notes payable – related parties, net of current portion and discounts
  740,500 
  599,200 
     Long term portion of operating lease liabilities
  3,580,849 
  --- 
       Total non-current liabilities
  4,321,349 
  604,200 
 Total liabilities
 35,454,984 
 $16,748,215 
 
    
    
Commitments and contingencies – See Note 8  
   
   
 
 STOCKHOLDERS' DEFICIT   PREFERRED STOCK, $.001 PAR VALUE 100,000,000 SHARES AUTHORIZED:
 
 
 
 
 
 
 
 
 
 
 
 
 
Convertible Preferred Series A, 1,000,000 designated - 1,000,000 shares issued and outstanding as of June 30, 2019 and December 31, 2018
 $1,000 
 $1,000 
Convertible Preferred Series B, 3,000,000 designated - 2,588,693 shares issued and outstanding as of June 30, 2019 and December 31, 2018
  2,589 
  2,589 
Convertible Preferred Series C – 3,000,000 shares designated, zero shares issued and outstanding as of June 30, 2019 and December 31, 2018
   
   
Common stock, $.001 par value, 1,000,000,000 shares authorized, 136,953,904 shares issued and outstanding as of June 30, 2019 and December 31, 2018
  136,954 
  136,954 
Subscriptions payable
  371,132 
  168,006 
Additional paid-in capital
  12,681,369 
  12,567,881 
Accumulated deficit
  (30,328,085)
  (18,802,928)
Total stockholders' deficit
  (17,135,041)
  (5,926,498)
 
    
    
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 $18,319,943 
 $10,821,717 
See accompanying notes to condensed consolidated financial statements.
 
 
3
 
 
TPT Global Tech, Inc.
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
For the three months ended
 June 30,
 
 
For the six months ended
June 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
 
(Restated)
 
 
 
 
 
 (Restated)
 
 
 
 
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
  Products
 $15,086 
 $36,780 
 $33,769 
 $78,430 
   Services
  2,413,369 
  152,231 
  2,556,162 
  360,799 
Total Revenues
 $2,428,455 
 $189,011 
 $2,589,931 
 $439,229 
 
    
    
    
    
COST OF SALES:
    
    
    
    
   Products
 $15,100 
 $39,895 
 $35,600 
 $82,395 
   Services
  1,472,848 
  216,269 
  1,714,716 
  438,064 
Total Costs of Sales
 $1,487,948 
 $256,164 
 $1,750,316 
 $520,459 
Gross profit (loss)
 $940,507 
 $(67,153)
 $839,615 
 $(81,230)
 EXPENSES:
    
    
    
    
Sales and marketing
 $44,317 
 $21,012 
 $44,317 
 $39,898 
Professional
  483,913 
  333,271 
  996,453 
  678,679 
Payroll and related
  367,017 
  178,017 
  564,558 
  370,756 
General and administrative
  394,256 
  127,148 
  616,267 
  319,736 
Depreciation
  128,000 
  43,873 
  199,707 
  87,746 
Amortization
  354,129 
  169,600 
  560,131 
  369,200 
                Total expenses
 $1,771,632 
 $872,921 
 $2,981,433 
 $1,866,015 
 Income (loss) from operations
 831,125 
 (940,074)
 (2,141,818)
 (1,947,245)
 
    
    
    
    
OTHER INCOME (EXPENSE)
    
    
    
    
Derivative expense
  (6,565,485)
   
  (8,105,901)
   
Interest expense
    
  (48,131)
  (1,277,438)
  (78,541)
                 Total other income (expenses)
 (7,712,686)
 $(48,131)
 (9,383,339)
 $(78,541)
 
    
    
    
    
Net loss before income taxes
  (8,543,811)
  (988,205)
  (11,525,157)
  (2,025,786)
Income taxes
   
   
   
   
 
    
    
    
    
NET LOSS
 (8,543,811)
 $(988,205)
 (11,525,157)
 $(2,025,786)
 
    
    
    
    
 
Loss per common share: Basic and diluted
 $(0.06)
 $(0.01)
 $(0.08)
 $(0.01)
 
    
    
    
    
Weighted average number of common shares outstanding:
    
    
    
    
Basic and diluted
  136,953,904 
  136,953,904 
  136,953,904 
  136,953,904 
 
See accompanying notes to condensed consolidated financial statements
 
 
4
 

TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For the three and six months ended June 30, 2019 Restated
(Unaudited)
 
 
 Series A Preferred Stock 
 Series B Preferred Stock 
 
    
Common Stock    
 
 
    Subscriptions  
 
 
    Additional Paid-in
 
 
Accumulated
 
 
 

     
 
 
 
Shares
 
 
Amount 
 
 
Shares
 
 
Amount
 
 
Shares
 
 Amount 
 Payable (Receivable) 
 Capital 
 Deficit 
 
Total
 
Balance as of April 1, 2019
  1,000,000 
 1,000
 
  2,588,693 
 2,589
 
 136,953,904
 
 136,954
 
  269,569 
  12,640,597 
  (21,784,274)
 (8,733,565)
 
    
    
    
    
    
    
    
    
    
    
Issuance of stock and stock options for services
   
   
   
   
   
   
  101,563 
  
40,772
 
  
 
  142,335 
 
    
    
    
    
    
    
    
    
    
    
 
    
    
    
    
    
    
    
    
    
    
Net Loss (Restated)
   
   
   
   
   
   
   
   
 (8,543,811)
 (8,543,811)
 
    
    
    
    
    
    
    
    
    
    
Balance as of
June 30, 2019 (Restated)
  1,000,000 
 1,000 
  2,588,693 
 2,589 
  136,953,904 
 136,954 
 371,132 
 12,681,369 
 (30,328,085)
 (17,135,041)
 
 
 Series A Preferred Stock
 Series B Preferred Stock
  
           
Common Stock
 
 
    Subscriptions
 
 
    Additional Paid-in

 
Accumulated

 
 

     
 
 
 
Shares

 
Amount 

 
 Shares

 
Amount

 
Shares
 
 Amount
 Payable (Receivable)
 Capital
 Deficit
 
  Total
Balance as of December 31, 2018
  1,000,000 
 $1,000
 
  2,588,693 
 $2,589
 
 $136,953,904
 
 $136,954
 
  168,006 
  12,567,881 
  (18,802,928)
 $(5,926,498)
 
    
    
    
    
    
    
    
    
    
    
Issuance of stock and stock options for services
   
   
   
   
   
   
  203,126 
  113,488 
   
  316,614 
 
    
    
    
    
    
    
    
    
    
    
 
    
    
    
    
    
    
    
    
    
    
Net Loss (Restated)
   
   
   
   
   
   
   
   
 $(11,525,157)
 $(11,525,157)
 
    
    
    
    
    
    
    
    
    
    
Balance as of
June 30, 2019 (Restated)
  1,000,000 
 $1,000 
  2,588,693 
 $2,589 
  136,953,904 
 $136,954 
 $371,132 
 $12,681,369 
 $(30,328,085)
 $(17,135,041)
 
See accompanying notes to condensed consolidated financial statements.
 
 
 
 
 TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For the three and six months ended June 30, 2018
(Unaudited)
 
 
 Series A Preferred Stock 
 Series B Preferred Stock 
 
    
Common Stock    
 
 
    Subscriptions  
 
 
    Additional Paid-in
 
 
Accumulated
 
 
 

     
 
 
 
Shares
 
 
Amount 
 
 
Shares
 
 
Amount
 
 
Shares
 
 Amount 
 Payable (Receivable) 
 Capital 
 Deficit 
 
Total
 
Balance as of April 1, 2018
  1,000,000 
 1,000
 
  2,588,693 
 2,589
 
 136,953,904
 
 136,954
 
  401,541 
  14,463,020
 
  (21,784,274)
 (3,565,270)
 
    
    
    
    
    
    
    
    
    
    
Issuance of stock and stock options for services
   
   
   
   
   
   
  92,790
 
  
69,330
 
  
 
  162,121
 
 
    
    
    
    
    
    
    
    
    
    
Cash received for common stock to be contributed by officer
  
 
  
 
  
 
  
 
  
 
   
  245,500
 
  
 
  
 
  
 
 
    
    
    
    
    
    
    
    
    
    
Conversion of debt
    
    
    
    
    
    
  2,000
 
    
    
  2,000
 
Net loss
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  (988,205)
  (998,205)
Balance as of June 30, 2018
  1,000,000 
 1,000 
  2,588,693 
 2,589 
  136,953,904 
 136,954 
 741,832
 
 10,424,996
 
 (15,451,225)
 (4,143,854)
 
 
 Series A Preferred Stock 
 Series B Preferred Stock 
 
    
Common Stock    
 
 
    Subscriptions  
 
 
    Additional Paid-in
 
 
Accumulated
 
 
 

     
 
 
 
Shares
 
 
Amount 
 
 
Shares
 
 
Amount
 
 
Shares
 
 Amount 
 Payable (Receivable) 
 Capital 
 Deficit 
 
Total
 
Balance as of December 31, 2017
  1,000,000 
 1,000
 
  2,588,693 
 2,589
 
 136,953,904
 
 136,954
 
  (4,765)
  10,371,442
 
  (13,425,439)
 (2,918,219)
 
    
    
    
    
    
    
    
    
    
    
Issuance of stock and stock options for services
   
   
   
   
   
   
  347,097
 
  
83,554
 
  
 
  430,651
 
 
    
    
    
    
    
    
    
    
    
    
Cash received for common stock to be contributed by officer
  
 
  
 
  
 
  
 
  
 
   
  367,500
 
  
 
  
 
  367,500
 
 
    
    
    
    
    
    
    
    
    
    
Conversion of debt
    
    
    
    
    
    
  2,000
 
    
    
  2,000
 
Net loss
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  (2,025,786)
  (2,025,786)
Balance as of June 30, 2018
  1,000,000 
 1,000 
  2,588,693 
 2,589 
  136,953,904 
 136,954 
 741,832
 
 10,424,996
 
 (15,451,225)
 (4,143,854)
 
See accompanying notes to condensed consolidated financial statements

 
6
 
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
 
 
 
For the six months ended June 30,
 
 
 
2019
 
 
2018
 
Cash flows from operating activities:
 
(Restated)
 
 
 
 
Net loss
 (11,383,038)
 $(2,025,786)
Adjustments to reconcile net loss to net cash used in operating activities:
    
    
Depreciation
  199,707 
  87,746 
           Amortization
  560,131 
  369,200 
           Amortization of debt discount
  539,796 
  
 
           Derivative expense
  8,105,901
 
  
 
Interest expense - default penalty
  635,507
 
  
 
           Share-based compensation: Common stock
  203,126 
  347,097 
                                                        Stock options
  113,488 
  83,554 
     Changes in operating assets and liabilities:
    
    
           Accounts receivable
  (189,829)
  (1,278)
           Prepaid expenses and other assets
  44,646 
  (30,658)
           Accounts payable and accrued expenses
  285,798
 
  542,873 
           Other liabilities
  (55,322)
  (7,924)
              Net cash used in operating activities
 $(1,082,208)
 $(635,176)
 
    
    
Cash flows from investing activities:
    
    
              Cash paid for acquisition of assets of SpeedConnect
 $(1,000,000)
 $ 
              Net cash provided (used in) by investing activities
 $(1,000,000)
 $ 
 
    
    
 
    
    
Cash flows from financing activities:
    
    
           Proceeds from stock subscriptions
  
 
  367,500 
           Proceeds from convertible notes and notes payable – related parties
  456,390 
  300,000 
           Proceeds from convertible notes and business advance
  2,659,181 
  10,000 
           Payment on business loans
  (913,978)
  
 
           Payments on convertible notes – related parties
  (39,807)
  (44,894)
           Payments on financing lease liabilities
  (9,889)
    
              Net cash provided by financing activities
 $2,151,897
 
 $632,916 
 
    
    
 
    
    
Net change in cash
 $69,689 
 $(2,260)
Cash and cash equivalents - beginning of period
 $31,786 
 $36,380 
 
    
    
Cash and cash equivalents - end of period
 $101,475 
 $34,120 
 
See accompanying notes to condensed consolidated financial statements
 
 
7
 
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS - CONTINUED 
 
Supplemental Cash Flow Information:
 
Cash paid for:
 
 
 
2019
 
 
2018
 
 
  (Restated)
   
 
Interest
 $9,857 
 $
 
Taxes
 $
 
 $
 
 
Non-Cash Investing and Financing Activities:

 
 
2019  
 
 
2018  
 
Discount on derivative financial instruments
 $2,011,600 
 $
 
Stock subscription payable issued for conversion of debt
 $ 
 $2,000 
Acquisition of the assets of SpeedConnect - liabilities assumed
 1,662,013 
 $
 
Right of use assets
 $5,381,180
 
 
 
Operating lease liabilities
 $5,381,180
 
 
 
 
See accompanying notes to condensed consolidated financial statements
 
 
8
 
 
TPT Global Tech, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
JUNE 30, 2019
 
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Nature of Operations
 
The Company was originally incorporated in 1988 in the state of Florida. TPT Global, Inc., a Nevada corporation formed in June 2014, merged with Ally Pharma US, Inc., a Florida corporation, (“Ally Pharma”, formerly known as Gold Royalty Corporation) in a “reverse merger” wherein Ally Pharma issued 110,000,000 shares of Common Stock, or 80% ownership, to the owners of TPT Global, Inc. in exchange for all outstanding common stock of TPT Global Inc. and Ally Pharma agreed to change its name to TPT Global Tech, Inc. (jointly referred to as “the Company” or “TPTG”).
 
The following acquisitions have resulted in entities which have been consolidated into TPTG. In 2014 the Company acquired all the assets of K Telecom and Wireless LLC (“K Telecom”) and Global Telecom International LLC (“Global Telecom”). Effective January 31, 2015, TPTG completed its acquisition of 100% of the outstanding stock of Copperhead Digital Holdings, Inc. (“Copperhead Digital”) and Subsidiaries, TruCom, LLC (“TruCom”), Nevada Utilities, Inc. (“Nevada Utilities”) and CityNet Arizona, LLC (“CityNet”). Effective September 30, 2016, the company acquired 100% ownership in San Diego Media Inc. (“SDM”). In October 2017, we entered into agreements to acquire Blue Collar, Inc. (“Blue Collar”) which closed as of September 1, 2018. On May 7, 2019 we completed the acquisition of a majority of the assets of SpeedConnect, LLC, which assets were conveyed into our wholly owned subsidiary TPT SpeedConnect, LLC (“TPT SC” or “TPT SpeedConnect”) which was formed on April 16, 2019.
 
We are based in San Diego, California, and operate as a Media Content Hub for Domestic and International syndication Technology/Telecommunications company operating on our own proprietary Global Digital Media TV and Telecommunications infrastructure platform and also provide technology solutions to businesses domestically and worldwide. We are a rural Broadband Wireless Access (BWA) provider, Software as a Service (SaaS), Technology Platform as a Service (PAAS), Cloud-based Unified Communication as a Service (UCaaS) and carrier-grade performance and support for businesses over our private IP MPLS fiber and wireless network in the United States. Our cloud-based UCaaS services allow businesses of any size to enjoy all the latest voice, data, media and collaboration features in today's global technology markets. We also operate as a Master Distributor for Nationwide Mobile Virtual network Operators (MVNO) and Independent Sales Organization (ISO) as a Master Distributor for Pre-Paid Cellphone services, Mobile phones, Cellphone Accessories and Global Roaming Cellphones. In addition, we create media marketing materials and content.
 
Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements have been prepared according to the instructions to Form 10-Q and Section 210.8-03(b) of Regulation S-X of the Securities and Exchange Commission (“SEC”) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted.
 
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.
 
These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2018. The condensed consolidated balance sheet at June 30, 2019, has been derived from the consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP.
 
Our condensed consolidated financial statements include the accounts of K Telecom and Global Telecom, Copperhead Digital, SDM, Port 2 Port, Blue Collar and TPT SpeedConnect. All intercompany accounts and transactions have been eliminated in consolidation.
 
 
9
 
 
CRITICAL ACCOUNTING POLICIES
 
Revenue Recognition
 
On January 1, 2018, we adopted the new accounting standard ASC 606, Revenue from Contracts with Customers, and all of the related amendments (“new revenue standard”). We recorded the change, which was immaterial, related to adopting the new revenue standard using the modified retrospective method. Under this method, we recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. This results in no restatement of prior periods, which continue to be reported under the accounting standards in effect for those periods. We expect the impact of the adoption of the new revenue standard to continue to be immaterial on an ongoing basis. We have applied the new revenue standard to all contracts as of the date of initial application.
 
The Company’s revenue generation for the last two years came from the following sources, which sources are explained in detail below.
 
 
 
For the six months ended June 30, 2019  
 
 
For the six months ended June 30, 2018
 
TPT SpeedConnect
 $1,946,820
 
  
Copperhead Digital
  128,130 
  224,454 
K Telecom
  33,769 
  78,430 
San Diego Media
  17,165 
  114,257 
Blue Collar
  464,047 
   
P2P
  
 
  22,088 
Total Revenue
 $2,589,931 
 $439,229 
 
TPT SpeedConnect: ISP and Telecom Revenue
 
TPT SpeedConnect is a rural BWA provider operating in 10 Midwestern States under the trade name SpeedConnect. TPT SC’s primary business model is subscription based, pre-paid monthly reoccurring revenues, from wireless delivered, high-speed internet connections. In addition, the company resells third-party satellite and DSL internet and IP telephony services. Revenue generated from sales of telecommunications services is recognized as the transaction with the customer is considered closed and the customer receives and accepts the services that were the result of the transaction. Due date is detailed on monthly invoices distributed to customer. Services billed monthly in advance are deferred to the proper period as needed. Certain of our products require specialized installation and equipment. For telecom products that include installation, if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, and installation revenue is recognized when the installation is complete. The Installation Technician collects the signed quote containing terms and conditions when installing the site equipment at customer premises.
 
Revenue for installation services and equipment is billed separately from recurring ISP and telecom services, and is recognized when equipment is delivered and installation is completed. Revenue from ISP and telecom services is recognized monthly over the contractual period, or as services are rendered and accepted by the customer.
 
The overwhelming majority of our revenue continues to be recognized when transactions occur. Since installation fees are generally small relative to the size of the overall contract and because most contracts are for two years or less, the impact of not recognizing installation fees over the contract is immaterial.
 
Copperhead Digital: ISP and Telecom Revenue
 
Copperhead Digital is a regional internet and telecom services provider operating in Arizona under the trade name Trucom. Copperhead Digital operates as a wireless telecommunications Internet Service Provider (“ISP”) facilitating both residential and commercial accounts. Copperhead Digital’s primary business model is subscription based, pre-paid monthly reoccurring revenues, from wireless delivered, high-speed internet connections. In addition, the company resells third-party satellite and DSL internet and IP telephony services. Revenue generated from sales of telecommunications services is recognized as the transaction with the customer is considered closed and the customer receives and accepts the services that were the result of the transaction. Due date is detailed on monthly invoices distributed to customer. Services billed monthly in advance are deferred to the proper period as needed. Certain of our products require specialized installation and equipment. For telecom products that include installation, if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, and installation revenue is recognized when the installation is complete. The Installation Technician collects the signed quote containing terms and conditions when installing the site equipment at customer premises.
 
Revenue for installation services and equipment is billed separately from recurring ISP and telecom services, and is recognized when equipment is delivered and installation is completed. Revenue from ISP and telecom services is recognized monthly over the contractual period, or as services are rendered and accepted by the customer.
 
The overwhelming majority of our revenue continues to be recognized when transactions occur. Since installation fees are generally small relative to the size of the overall contract and because most contracts are for a year or less, the impact of not recognizing installation fees over the contract is immaterial.
 
 
10
 
 
K Telecom: Prepaid Phones and SIM Cards Revenue
 
K Telecom generates revenue from reselling prepaid phones, SIM cards, and rechargeable minute traffic for prepaid phones to its customers (primarily retail outlets). Product sales occur at the customer’s locations, at which time delivery occurs and cash or check payment is received. The Company recognizes the revenue when they receive payment at the time of delivery. 
 
SDM: Ecommerce, Email Marketing and Web Design Services
 
SDM generates revenue by providing ecommerce, email marketing and web design solutions to small and large commercial businesses, complete with monthly software support, updates and maintenance. Services are billed monthly. Platform infrastructure support is a prepaid service billed in monthly recurring increments. The services are billed a month in advance and due prior to services being rendered. The revenue is deferred when invoiced and booked in the month the service is provided. Software support services (including software upgrades) are billed in real time, on the first of the month. Web design service revenues are recognized upon completion of specific projects. Revenue is booked in the month the services are rendered and payments are due on the final day of the month.
 
Blue Collar: Media Production Services
 
Blue Collar creates original live action and animated content productions, and has produced hundreds of hours of material for the television, theatrical, home entertainment and new media markets. Blue Collar designs branding and marketing campaigns and has had agreements with some of the world’s largest companies including PepsiCo, Intel, HP, WalMart and many other Fortune 500 companies. Additionally, they create motion picture, television and home entertainment marketing campaigns for studios including Sony, DreamWorks, Twentieth Century Fox, Universal Studios, Paramount Studios, and Warner Brothers. With regard to revenue recognition, Blue Collar receives an agreement from each client to perform defined work. Some agreements are written, some are verbal. Work may include creation of marketing materials and/or content creation. Some work may be short term and take weeks to create and some work may be longer and take months to create. There are instances where customer agreements segregate identifiable obligations (like filming on site vs. film editing and final production) with separate transaction pricing. The performance obligation is generally satisfied upon delivery of such film or production products, at which time revenue is recognized.
 
P2P Asset Activity: Telecom Revenue
 
Port 2 Port Communications (P2P) is a U.S. domestic minutes provider that sells wholesale long distance domestic telecom minutes to other domestic U.S. carriers. A service is defined as wholesale telecom minute based on a per-minute and per-destination rate basis. A series of services for P2P would be substantially the same and would include a pattern of transfers of services to a customer on a per-minute flat rate basis for all destinations in a specified geographic. Revenue generated from sales of minute services are recognized when weekly invoices are generated and distributed.
   
Basic and Diluted Net Loss Per Share
 
The Company computes net income (loss) per share in accordance with ASC 260, “Earning per Share””. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of thee income statement. Basic EPS is computed by dividing net income (loss) available to common shareholder (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of June 30, 2019, the Company had shares that were potentially common stock equivalents as follows:
 
 
 
2019
 
Series A Preferred Stock
  128,056,506 
Series B Preferred Stock
  2,588,693 
Stock Options and Warrants
  6,426,453 
Convertible Debt
  95,575,070
 
 
  232,646,721
 
 
Financial Instruments and Fair Value of Financial Instruments
 
Our primary financial instruments at June 30, 2019 and December 31, 2018 consisted of cash equivalents, accounts receivable, accounts payable, notes payable and derivative liabilities. We apply fair value measurement accounting to either record or disclose the value of our financial assets and liabilities in our financial statements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.
 
 
11
 
 
Described below are the three levels of inputs that may be used to measure fair value:
 
Level 1 Quoted prices in active markets for identical assets or liabilities.
 
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
 
We consider our derivative financial instruments as Level 3. The balances for our derivative financial instruments as of June 30, 2019 are the following:
 
Derivative Instrument
 
Fair Value
 
Fair value of Geneva Roth Convertible Promissory Notes
 $302,523 
Fair value of Auctus Convertible Promissory Note
 7,767,966
 
Fair value of Odyssey Capital Convertible Promissory Note
 788,984
 
Fair value of EMA Financial Convertible Promissory Note
 $651,837 
Fair value of JSJ Investment Convertible Promissory Note
 $215,611 
Fair value of Warrants issued with the derivative instruments
 $109,980 
 
Use of Estimates
 
The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. The Company’s consolidated financial statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition and results of operations for the periods presented.
 
Recently Adopted Accounting Pronouncements
  
In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which amends ASC 718, Compensation – Stock Compensation. This ASU requires that most of the guidance related to stock compensation granted to employees be followed for non-employees, including the measurement date, valuation approach, and performance conditions. The expense is recognized in the same period as though cash were paid for the good or service. The effective date is the first quarter of fiscal year 2019, with early adoption permitted, including in interim periods. The ASU has been adopted using a modified-retrospective transition approach. The adoption is not considered to have a material effect on the consolidated financial statements.
 
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively, Topic 842). Topic 842 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. We adopted Topic 842 using the effective date, January 2019, as the date of our initial application of the standard. Consequently, financial information for the comparative periods has not been updated. Our finance and operating lease commitments are subject to the new standard and we recognize as finance and operating lease liabilities and right-of-use assets. The effect on our condensed consolidated financial statements has not been material until we acquired the assets of SpeedConnect, which effect has been recorded during the period ended June 30, 2019 and is reflected in the condensed consolidated financial statements as of June 30, 2019.
 
Management has reviewed other recently issued accounting pronouncements and have determined there are not any that would have a material impact on the condensed consolidated financial statements.
 
 
12
 
 
NOTE 2 – ACQUISITIONS
 
TPT SpeedConnect, LLC Asset Acquisition
 
SpeedConnect Asset Acquisition
 
Effective April 2, 2019, the Company entered into an Asset Purchase Agreement with SpeedConnect, LLC (“SpeedConnect”) to acquire substantially all of the assets of SpeedConnect. On May 7, 2019, the Company closed the transaction underlying the Asset Purchase Agreement with SpeedConnect to acquire substantially all of the assets of SpeedConnect for $2 million and the assumption of certain liabilities. The Asset Purchase Agreement required a deposit of $500,000 made in April and an additional $500,000 payment to close. The additional $500,000 was paid and all other conditions were met to effectuate the sale of substantially all of the assets of SpeedConnect to the Company. As part of the closing, the Company entered into a Promissory Note to pay SpeedConnect $1,000,000 in two equal installments of $500,000 plus applicable interest at 10% per annum with the first installment payable within 30 days of closing and the second installment payable within 60 days of closing (but no later than July 6, 2019). The Company paid off the Promissory Note by June 11, 2019 and by amendment dated May 7, 2019, SpeedConnect forgave $250,000 of the Promissory Note. The Company is required to have SpeedConnect’s financial information audited for the last two years.
 
The Company applied the acquisition method of accounting to the business combination and has valued each of the assets acquired and liabilities on a provisional basis primarily because the valuation of the assets acquired has not yet been finalized, there could be a material adjustment. Accordingly, the assets and liabilities were deemed to be recorded at fair value on a provisional basis as of the acquisition date of May 7, 2019.
 
Provisional Purchase Price Allocation:
 
 
 
TPT Global Tech
 
Effective
 
  May 7, 2019
 


Purchaser
  TPT Global Tech
 
 
    
Provisional Consideration Given:
    
Liabilities:
    
   Cash paid
 1,000,000 
   Promissory Note
  750,000 
   Deferred revenue
  258,188 
   Accounts and other payables
  653,824 
Total Consideration Value
 $2,662,013 
 
    
Provisional Assets Acquired:
    
 
    
Assets
    
   Customer base
 $400,000 
   Current assets:
    
        Prepaid and other receivables
  246,823 
        Deposits
  13,190 
   Property and equipment
  1,939,000 
Total Assets Acquired
 $2,599,013 
Goodwill – provisional  
 $63,000 
 
 
13
 
 
Had the acquisition occurred on January 1, 2018, the condensed proforma statement of operations for the six months ended June 30, 2019 and 2018 would be as follows:
 
 
 
2019
 
 
2018
 
Revenue
 7,352.758 
 9,101,507 
Cost of Sales
  4,754,166 
  5,171,840 
Gross Profit
 2,598,592 
 3,929,667 
Expenses
  4.514,097
 
  (4,423,743)
Interest Expense and Impairment
  9,383,339 
  (78,541)
Income Taxes
   
   
Net Loss
 11,298,844
 
 (572,617)
Earnings (loss) per share 
 (0.08)
 (0.00)
 
The unaudited proforma results of operations are presented for information purposes only. The unaudited proforma results of operations are not intended to present actual results that would have been attained had the asset acquisition been completed as of January 1, 2019 or to project potential operating results as of any future date or for any future periods. The revenue and net income before non-controlling interest of SpeedConnect since May 7, 2019 acquisition date through June 30, 2019 included in the consolidated income statement amounted to $1,946,820 and $186,725, respectively.

NOTE 3 – GOING CONCERN
 
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
 
Cash flows generated from operating activities were not enough to support all working capital requirements for the six months ended June 30, 2019 and 2018. Financing activities described below have helped with working capital and other capital requirements. We incurred $11,525,157 and $2,025,786, respectively, in losses, and we used $1,082,208 and $635,176, respectively, in cash for operations for the six months ended June 30, 2019 and 2018. Cash flows from financing activities were $2,151,897 and $632,916 for the same periods. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a period of one year from the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
We acquired the assets of SpeedConnect on May 7, 2019 for $1,000,000 and a note payable for $750,000. These assets were conveyed into a wholly owned subsidiary, TPT SpeedConnect. Although TPT SpeedConnect is currently generating cash flows, there is expected to be significant capital required in the near term to upgrade the current network to 5G standards.
 
In order for us to continue as a going concern for a period of one year from the issuance of these financial statements, we will need to obtain additional debt or equity financing and look for companies with cash flow positive operations that we can acquire. There can be no assurance that we will be able to secure additional debt or equity financing, that we will be able to acquire cash flow positive operations, or that, if we are successful in any of those actions, those actions will produce adequate cash flow to enable us to meet all our future obligations. Most of our existing financing arrangements are short-term. If we are unable to obtain additional debt or equity financing, we may be required to significantly reduce or cease operations.
  
 
14
 
 
NOTE 4 – PROPERTY AND EQUIPMENT
 
Property and equipment and related accumulated depreciation as of June 30, 2019 and December 31, 2018 are as follows:
 
 
 
2019
 
 
2018
 
Property and equipment:
 
 
 
 
 
 
     Telecommunications fiber and equipment
 $5,213,045 
 $3,274,045 
Film production equipment
  369,903 
  369,903 
Office furniture and equipment
  82,014 
  82,104 
Leasehold improvements
  18,679 
  18,679 
 
  5,683,641 
  3,744,641 
Accumulated depreciation
  (897,406)
  (697,699)
Property and equipment, net
 $4,786,235 
 $3,046,942 
 
Depreciation expense was $199,707 and $87,746 for the six months ended June 30, 2019 and 2018, respectively.
 
NOTE 5 – DEBT FINANCING ARRANGEMENTS
 
Financing arrangements as of June 30, 2019 and December 31, 2018 are as follows:
 
 
 
 2019
 
 
 2018
 
 
  Restated  
    
Business loans and advances, net of discounts (1)
 $1,574,322 
 $615,692 
Convertible notes payable, net of discounts (2)
 976,601
  15,000 
Factoring agreement (3)
  101,244 
  101,244 
Debt – third party
 $2,652,167
 $731,936 
 
    
    
Line of credit, related party secured by assets (4)
 $3,043,390 
 $3,043,390 
Debt– other related party, net of discounts (5)
  5,950,000 
  5,912,898 
Convertible debt – related party (2)
  913,381 
  801,888 
Shareholder debt (6)
  468,957 
  181,694 
Debt – related party
 $10,375,728 
 $9,939,870 
 
    
    
Total financing arrangements
 $13,027,895
 $10,671,806 
 
    
    
Less current liabilities:
    
    
   Business loans, advances and agreements
 $(1,675,566)
 $(716,936)
Convertible notes payable, net of discount
  (976,601)
  (10,000)
  Notes payable – related parties, net of discount
  (9,462,347)
  (9,137,982)
  Convertible notes payable – related party
  (172,881)
  (202,688)
 
  (12,287,395)
  (10,067,606)
Total non-current liabilities
 $740,500 
 $604,200 
 
(1) The terms of $40,000 of this balance are similar to that of the Line of Credit which bears interest at adjustable rates, 1 month Libor plus 2%, 4.4% as of June 30, 2019, and is secured by assets of the Company, is due August 31, 2019, as amended, and included 8,000 stock options as part of the terms (see Note 7).
 
 
15
 
 
$500,500 is a line of credit that Blue Collar has with a bank, bears interest at Prime plus 1.125%, 6.755% as of June 30, 2019, and is due March 25, 2021.
 
$500,000 is a bank loan dated May 28, 2019 which bears interest at Prime plus 6%, 11.5% as of June 30, 2019, is interest only for the first year, thereafter payable monthly of principal and interest until the due date of May 1, 2022. The bank loan is collateralized by assets of the Company.
 
$10,000 is an amount the bears interest at 6%, subsequently increased to 11%, as it was due and not repaid on October 10, 2018. The remaining balances generally bear interest at approximately 10%, have maturity dates that are due on demand or are past due, are unsecured and are classified as current in the balance sheets.
 
 (2) During 2017, the Company issued convertible promissory notes in the amount of $67,000 (comprised of $62,000 from two related parties and $5,000 from a former officer of CDH), all which are due May 1, 2020 and bear 6% annual interest (12% default interest rate). The convertible promissory notes are convertible, as amended, at $0.25 per share.
 
During 2016, the Company acquired SDM which consideration included a convertible promissory note for $250,000 due August 31, 2018, as amended, does not bear interest, unless delinquent in which the interest is 12% per annum, and is convertible into common stock at $1.00 per share. The SDM balance is $172,881 as of June 30, 2019.
 
During 2018, the Company issued convertible promissory notes in the amount of $537,200 to related parties and $10,000 to a non-related party which bear interest at 6% (11% default interest rate), are due 30 months from issuance and are convertible into Series C Preferred Stock at $1.00 per share. During 2019, the Company issued these same securities with the same terms in the amount of $141,300 to related parties. Because the Series C Preferred Stock has a conversion price of $0.15 per share, the issuance of Series C Preferred Stock promissory notes will cause a beneficial conversion feature of approximately $38,479 upon exercise of the convertible promissory notes.
 
During 2019, the Company consummated Securities Purchase Agreements dated March 15, 2019, April 12, 2019, May 15, 2019 and June 6, 2019 with Geneva Roth Remark Holdings, Inc. (“Geneva Roth”) for the purchase of convertible promissory notes in the amounts of $68,000, $65,000, $58,000 and $53,000 (“Geneva Roth Convertible Promissory Notes”). The Geneva Roth Convertible Promissory Notes are due one year from issuance, pays interest at the rate of 12% per annum and gives the holder the right from time to time, and at any time during the period beginning 180 days from the origination date to the maturity date or date of default to convert all or any part of the outstanding balance into common stock of the Company limited to 4.99% of the outstanding common stock of the Company. The conversion price is 61% multiplied by the average of the two lowest trading prices for the common stock during the previous 20 trading days prior to the applicable conversion date.   The Geneva Roth Convertible Promissory Notes may be prepaid in whole or in part of the outstanding balance at 125% to 140% up to 180 days from origination. Subsequent to June 30, 2019, all of the $68,000 Convertible Promissory Note was converted to 4,203,632 common shares in accordance with the Geneva Roth Securities Purchase Agreement.
 
On March 25, 2019, the Company consummated a Securities Purchase Agreement dated March 18, 2019 with Auctus Fund, LLC. (“Auctus”) for the purchase of a $600,000 ($1,235,507 under default calculations) Convertible Promissory Note (“Auctus Convertible Promissory Note”). The Auctus Convertible Promissory Note is due December 18, 2019, pays interest at the rate of 12% (24% default) per annum and gives the holder the right from time to time, and at any time during the period beginning 180 days from the origination date or at the effective date of the registration of the underlying shares of common stock, which the holder has registration rights for, to convert all of the outstanding balance into common stock of the Company limited to 4.99% of the outstanding common stock of the Company. The conversion price is the lessor of the lowest trading price during the previous 25 trading days prior the date of the Auctus Convertible Promissory Note or 50% multiplied by the average of the two lowest trading prices for the common stock during the previous 25 trading days prior to the applicable conversion date. The Auctus Convertible Promissory Note may be prepaid in full at 135% to 150% up to 180 days from origination. 2,000,000 warrants were issued in conjunction with the issuance of this debt. See Note 7. Subsequent to June 30, 2019, Auctus converted $24,280 of accrued interest into 2,500,000 common shares in accordance with the Auctus Securities Purchase Agreement.
 
On June 4, 2019, the Company consummated a Securities Purchase Agreement with Odyssey Capital Funding, LLC. (“Odyssey”) for the purchase of a $525,000 Convertible Promissory Note (“Odyssey Convertible Promissory Note”). The Odyssey Convertible Promissory Note is due June 3, 2020, pays interest at the rate of 12% (18% default) per annum and gives the holder the right from time to time, and at any time during the period beginning six months from the issuance date to convert all of the outstanding balance into common stock of the Company limited to 4.99% of the outstanding common stock of the Company. The conversion price is 55% multiplied by the average of the two lowest trading prices for the common stock during the previous 20 trading days prior to the applicable conversion date. The Odyssey Convertible Promissory Note may be prepaid in full at 125% to 145% up to 180 days from origination.
 
On June 6, 2019, the Company consummated a Securities Purchase Agreement with JSJ Investments Inc. (“JSJ”) for the purchase of a $112,000 Convertible Promissory Note (“JSJ Convertible Promissory Note”). The JSJ Convertible Promissory Note is due June 6, 2020, pays interest at the rate of 12% per annum and gives the holder the right from time to time, and at any time during the period beginning 180 days from the origination date to convert all of the outstanding balance into common stock of the Company limited to 4.99% of the outstanding common stock of the Company. The conversion price is the lower of the market price, as defined, or 55% multiplied by the average of the two lowest trading prices for the common stock during the previous 20 trading days prior to the applicable conversion date. The JSJ Convertible Promissory Note may be prepaid in full at 135% to 150% up to 180 days from origination. 333,333 warrants were issued in conjunction with the issuance of this debt. See Note 7.

 
16
 
 
On June 11, 2019, the Company consummated a Securities Purchase Agreement with EMA Financial, LLC. (“EMA”) for the purchase of a $250,000 Convertible Promissory Note (“EMA Convertible Promissory Note”). The EMA Convertible Promissory Note is due June 11, 2020, pays interest at the rate of 12% per annum and gives the holder the right from time to time to convert all of the outstanding balance into common stock of the Company limited to 4.99% of the outstanding common stock of the Company. The conversion price is 55% multiplied by the lowest traded price for the common stock during the previous 25 trading days prior to the applicable conversion date. The EMA Convertible Promissory Note may be prepaid in full at 135% to 150% up to 180 days from origination. 1,000,000 warrants were issued in conjunction with the issuance of this debt. See Note 7. 
 
The Company may be in default under several of its new derivative financial instruments for not having filed a Form S-1 with the Securities and Exchange Commission by now. It is the intent of the Company to payback all derivative securities prior to December 31, 2019 and is in negotiation for a term loan to do so. In addition, the Company is in negotiation to not have to file a Form 10Q for certain underlying shares of common stock for warrants that were issued with the derivative securities. Otherwise, the Company may have to file a Form S-1 to register these underlying common shares and has accounted for both the Auctus and Odyssey derivative financial instruments as if they were in default at June 30, 2019. Do this included an adjustment of $635,507 to the derivative debt principal balances and $10,033 to the related accrued interest balances as of June 30, 2019 included as a part of the restatement. See Note 12.
 
(3) One Factoring Agreement with full recourse, due August 31, 2019, as amended, was established in June 2016 with a company that is controlled by a shareholder and is personally guaranteed by an officer of the Company. The Factoring Agreement is such that the Company pays a discount of 2% per each 30-day period for each advance received against accounts receivable or future billings. The Company was advanced funds from the Factoring Agreement for which $101,244 in principal remained unpaid as of June 30, 2019 and December 31, 2018.
 
Another factoring agreement was entered into dated May 8, 2019 with Advantage Capital Funding. $500,000 was actually funded to the Company with a promise to pay $18,840 per week for 40 weeks until a total of $753,610 is paid. $656,712 remains outstanding under this factoring agreement as of June 30, 2019.
 
(4) The Line of Credit originated with a bank and was secured by the personal assets of certain shareholders of Copperhead Digital. During 2016, the Line of Credit was assigned to the Copperhead Digital shareholders, who subsequent to the Copperhead Digital acquisition by TPTG became shareholders of TPTG, and the secured personal assets were used to pay off the bank. The Line of Credit bears a variable interest rate based on the 1 Month LIBOR plus 2.0%, 4.4% as of June 30, 2019, is payable monthly, and is secured by the assets of the Company. 1,000,000 shares of Common Stock of the Company have been reserved to accomplish raising the funds to pay off the Line of Credit. Since assignment of the Line of Credit to certain shareholders, which balance on the date of assignment was $2,597,790, those shareholders have loaned the Company $445,600 under the similar terms and conditions as the line of credit but most of which were also given stock options totaling 85,120 (see Note 7) and is due, as amended, August 31, 2019.
 
During the year ended December 31, 2018, these same shareholders and one other loaned the Company money in the form of convertible loans of $537,200 described in (2) above.
 
(5) $350,000 represents cash due to the prior owners of the technology acquired in December 2016 from the owner of the Lion Phone which is due to be paid as agreed by TPTG and the former owners of the Lion Phone technology and has not been determined.
 
$4,000,000 represents a promissory note included as part of the consideration of ViewMe Live technology acquired in 2017, later agreed to as being due and payable in full, with no interest with $2,000,000 from debt proceeds and the remainder from proceeds from the second Company public offering intended to be in 2019.
 
On September 1, 2018, the Company closed on its acquisition of Blue Collar. Part of the acquisition included a promissory note of $1,600,000 (fair value of $1,533,217, net of a discount to fair value of $66,783 which is being amortized through expense through the due date of May 1, 2019) and interest at 3% from the date of closure. $37,102 was amortized as interest expense in the six months ended June 30, 2019. The promissory note is secured by the assets of Blue Collar.
 
(6) The shareholder debt represents funds given to TPTG or subsidiaries by officers and managers of the Company as working capital. There are no written terms of repayment or interest that is being accrued to these amounts and they will only be paid back, according to management, if cash flows support it. They are classified as current in the balance sheets.
 
During the six months ended June 30, 2019, the Company borrowed $50,000 from a related party for working capital with no written terms. This was paid back prior to June 30, 2019 with $7,000 representing interest on the funds.
 
Note 6 - Derivative Financial Instruments
 
The Company previously adopted the provisions of ASC subtopic 825-10, Financial Instruments (“ASC 825-10”). ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
 
 
17
 
 
The derivative liability as of June 30, 2019, in the amount of $9,836,901 has a level 3 classification under ASC 825-10.
 
The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of June 30, 2019. There were no derivative financial instruments as of December 31, 2018.
 
 
 
Debt Derivative Liabilities
 
Balance, December 31, 2018
 $
 
Debt discount from initial derivative
  1,731,000 
Initial fair value of derivative liabilities
  2,592,736 
Change in fair value of derivative liabilities at end of period
 5,513,565
Balance, June 30, 2019
 $9,836,901
Derivative expense for the six months ended June 30, 2019
 $8,105,901
 
Convertible notes payable and warrant derivatives – The Company issued convertible promissory notes which are convertible into common stock, at holders’ option, at a discount to the market price of the Company’s common stock. The Company has identified the embedded derivatives related to these notes relating to certain anti-dilutive (reset) provisions. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date.
 
As of June 30, 2019, the Company marked to market the fair value of the debt derivatives and determined a fair value of $9,726,921 ($9,726,921 from the convertible notes and $109,980 from the warrants) in Note 5 (2) above. The Company recorded a loss from change in fair value of debt derivatives of $5,513,565 for the six months ended June 30, 2019. The fair value of the embedded derivatives was determined using Monte Carlo simulation method based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 188.2% to 212.8%, (3) weighted average risk-free interest rate of 2.23% to 2.52% (4) expected life of 0.72 to 5.0 years, and (5) the quoted market price of $0.0531 to $0.0726 for the Company’s common stock.
 
See Financing lease arrangements in Note 8.
  
NOTE 7 - STOCKHOLDERS' DEFICIT
 
Preferred Stock
 
As of June 30, 2019, we had authorized 100,000,000 shares of Preferred Stock, of which certain shares had been designated as Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock.
 
Series A Convertible Preferred Stock
 
In February 2015, the Company designated 1,000,000 shares of Preferred Stock as Series A Preferred Stock.
 
The Series A Preferred Stock was designated in February 2016, has a par value of $.001, is redeemable at the Company’s option at $100 per share, is senior to any other class or series of outstanding Preferred Stock or Common Stock and does not bear dividends. The Series A Preferred Stock has a liquidation preference immediately after any Senior Securities, as defined, and amended, of an amount equal to amounts payable owing, including contingency amounts where Holders of the Series A have personally guaranteed obligations of the Company. Holders of the Series A Preferred Stock shall, collectively have the right to convert all of their Series A Preferred Stock when conversion is elected into that number of shares of Common Stock of the Company, determined by the following formula: 60% of the issued and outstanding Common Shares as computed immediately after the transaction for conversion. For further clarification, the 60% of the issued and outstanding common shares includes what the holders of the Series A Preferred Stock may already hold in common shares at the time of conversion. The Series A Preferred Stock, collectively, shall have the right to vote as if converted prior to the vote to an amount of shares equal to 60% of the outstanding Common Stock of the Company.
 
In February 2015, the Board of Directors authorized the issuance of 1,000,000 shares of Series A Preferred Stock to Stephen Thomas, Chairman, CEO and President of the Company, valued at $3,117,000 for compensation expense.
 
 
 
18
 
 
Series B Convertible Preferred Stock
 
In February 2015, the Company designated 3,000,000 shares of Preferred Stock as Series B Convertible Preferred Stock. There are 2,588,693 shares of Series B Convertible Preferred Stock outstanding as of June 30, 2019.
 
The Series B Preferred Stock was designated in February 2015, has a par value of $.001, is not redeemable, is senior to any other class or series of outstanding Preferred Stock, except the Series A Preferred Stock, or Common Stock and does not bear dividends. The Series B Preferred Stock has a liquidation preference immediately after any Senior Securities, as defined and currently the Series A Preferred Stock, and of an amount equal to $2.00 per share. Holders of the Series B Preferred Stock have a right to convert all or any part of the Series B Preferred Shares and will receive and equal amount of common shares at the conversion price of $2.00 per share. The Series B Preferred Stockholders have a right to vote on any matter with holders of Common Stock and shall have a number of votes equal to that number of Common Shares on a one to one basis.
 
Series C Convertible Preferred Stock
 
In May 2018, the Company designated 3,000,000 shares of Preferred Stock as Series C Convertible Preferred Stock. There are no shares of Series C Convertible Preferred Stock outstanding as of June 30, 2019.
 
The Series C Preferred Stock was designated in May 2018, has a par value of $.001, is not redeemable, is senior to any other class or series of outstanding Preferred Stock, except the Series A and Series B Preferred Stock, or Common Stock and does not bear dividends. The Series C Preferred Stock has a liquidation preference immediately after any Senior Securities, as defined and currently the Series A and B Preferred Stock, and of an amount equal to $2.00 per share. Holders of the Series C Preferred Stock have a right to convert all or any part of the Series C Preferred Shares and will receive an equal amount of common shares at the conversion price of $0.15 per share. The Series C Preferred Stockholders have a right to vote on any matter with holders of Common Stock and shall have a number of votes equal to that number of Common Shares on a one to one basis.
 
Common Stock and Capital Contributions
 
As of June 30, 2019, we had authorized 1,000,000,000 shares of Common Stock, of which 136,953,904 common shares are issued and outstanding.
 
Common Stock Contributions Related to Acquisitions
 
Effective November 1 and 3, 2017, an officer of the Company contributed 9,765,000 shares of restricted Common Stock to the Company for the acquisition of Blue Collar and HRS. These shares were subsequently issued as consideration for these acquisitions in November 2017. In March 2018, the HRS acquisition was rescinded and 3,625,000 shares of common stock are being returned by the recipients. The other transaction involved 6,500,000 shares for the acquisition of Blue Collar which closed in 2018. As such, as of June 30, 2019 the 3,265,000 shares for the HRS transaction are reflected as subscriptions receivable based on their par value.
 
Common Stock Issued for Expenses and Liabilities
 
During the year ended December 31, 2018, the Company entered into a two-year agreement for legal services. The agreement provided for 4,000,000 shares of restricted common stock to be issued. 2,000,000 to be issued for previous legal services upon execution of the agreement in March 2018 and the remaining 2,000,000 in the form of stock options to purchase common stock at $0.10 per share, of which the stock options would vest equally over 18 months. The value of the Company’s common stock upon execution of the agreement was $0.125 per share, or $250,000 which was recorded as professional expenses during 2018. See stock options and warrants discussion below for the value of the 2,000,000 stock options.
 
During the year ended December 31, 2018, the Company also entered into a twelve-month general consulting agreement with a third party to provide general business advisory services to be rendered through June 30, 2019 for 1,000,000 restricted shares of common stock and 1,000,000 options to purchase restricted common shares at $0.10 per share for 36 months from the time of grant. The fair value of the common shares granted was based on the Company’s stock price of $0.155 per share, or $155,000 of which $34,444 was expensed during the six months ended June 30, 2019 for the portion of service term completed during this period.
 
For these two agreements, the underlying stock for the stock options are intended to come from the contribution of stock by an officer of the Company. During the six months ended June 30, 2019, the Company recorded $203,126 as stock-based compensation related to these agreements.
 
Common Stock Payable Issued for Expenses and Liabilities
 
As of June 30, 2019, 16,667 of common shares were subscribed to in 2018 for a note payable of $2,000.
 
19
 
 
In 2018, a majority of the outstanding voting shares of the Company voted through a consent resolution to support a consent resolution of the Board of Directors of the Company to add two new directors to the Board. As such, Arkady Shkolnik and Reginald Thomas (family member of CEO) were added as members of the Board of Directors. The total members of the Board of Directors after this addition is four. In accordance with agreements with the Company for his services as a director, Mr. Shkolnik is to receive $25,000 per quarter and 5,000,000 shares of restricted common stock valued at approximately $692,500 vesting quarterly over twenty-four months. The quarterly cash payments of $25,000 will be paid in unrestricted common shares if the Company has not been funded adequately to make such payments. Mr. Thomas is to receive $10,000 per quarter and 1,000,000 shares of restricted common stock valued at approximately $120,000 vesting quarterly over twenty-four months. The quarterly payment of $10,000 may be suspended by the Company if the Company has not been adequately funded. As of June 30, 2019, $72,500 and $20,000 has been accrued in the balance sheet for Mr. Shkolnik and Mr. Thomas, respectively. 
 
Stock Options
 
 
 
Options Outstanding
 
 
Vested
 
 
Vesting Period
 
 
Exercise Price Outstanding and Exercisable
 
 
Expiration Date
 
December 31, 2017
  93,120 
  93,120 
100% at issue
 $0.05 to $0.22 
  12-31-19 
Granted
  3,000,000 
  
 
12 to 18 months
 $0.10 
 
2-28-20 to 3-20-21
 
December 31, 2018
  3,093,120 
  1,954,230 
 
 $0.05 to $0.22 
 
12-31-19 to 3-20-21
 
Granted
  
 
    
 
    
    
June 30, 2018
  3,093,120 
  2,176,453 
 
 $0.05 to $0.22 
 
12-31-19 to 3-20-21
 
 
Stock options to purchase approximately 3,093,120 shares of common stock of the Company are outstanding as of June 30, 2019 related to debt issuances (see Note 5) at prices ranging from $0.05 to $0.22 per share.
 
In addition, the company granted through consulting arrangements primarily for legal work and general business support that included the issuance of stock options to purchase 3,000,000 options to purchase common shares at $0.10 per share, 1,000,000 of which is fully vested and 2,000,000 which will vest over 18 months from date of grant. All these stock options have an exercise period of 24 to 36 months. The Black-Scholes options pricing model was used to value the stock options. The inputs included the following:
 
(1)
 Dividend yield of 0%
(2)
 expected annual volatility of 307% - 311%
(3)
 discount rate of 2.2% to 2.3%
(4)
 expected life of 2 years, and
(5)
 estimated fair value of the Company’s common $0.125 to $0.155 per share.
 
During the six months ended June 30, 2019, the Company recorded $113,488 as stock-based compensation related to the stock options and the related service period for which services have been rendered. For future periods, the remaining value of the stock options totaling approximately $27,181 will be amortized into the statement of operations consistent with the period for which the services will be rendered, which is two years for the legal agreement and one year for the general consulting agreement.
 
Common Stock Reservations
 
The Company has reserved 1,000,000 shares of Common Stock of the Company for the purpose of raising funds to be used to pay off debt described in Note 5.
 
We have reserved 20,000,000 shares of Common Stock of the Company to grant to certain employee and consultants as consideration for services rendered and that will be rendered to the Company.
 
Warrants
 
As part of the Convertible Promissory Notes issuance in Note 5, the Company issued 3,333,333 warrants to purchase 3,333,333 common shares of the Company at 70% of the current market price. Current market price means the average of the three lowest trading prices for our common stock during the ten-trading day period ending on the latest complete trading day prior to the date of the respective exercise notice. However, if a required registration statement, registering the underlying shares of the Convertible Promissory Notes, is declared effective on or before June 11, 2019 to September 11, 2019, then, while such Registration Statement is effective, the current market price shall mean the lowest volume weighted average price for our common stock during the ten-trading day period ending on the last complete trading day prior to the conversion date.
 
The warrants issued were considered derivative liabilities valued at $109,980 of the total $5,450,963 derivative liabilities as of June 30, 2019. See Note 5.
 
 
20
 
 
NOTE 8 - COMMITMENTS AND CONTINGENCIES
 
Accounts Payable and Accrued Expenses as of June 30, 2019 and December 31, 2018:
 
 
 
2019
 
 
2018
 
Accounts payable:
 
 
 
 
 
 
   Related parties (1)
 $954,284 
 $741,577 
   General operating
  3,096,771 
  3,036,601 
   Credit card balances
  257,109 
  246,949 
   Accrued interest on debt
 472,731
  306,319 
   Accrued expenses
  495,765 
  33,062 
   Taxes and fees payable
  631,857 
  629,462 
Total
 $5,908,516
 $4,993,970 
 
 
(1)
Relates to amounts due to management and members of the Board of Directors according to verbal and written agreements that have not been paid as of period end.
 
Lease Arrangements
 
We have various non-cancelable lease agreements for certain of our tower locations with original lease periods expiring between 2019 and 2044. Our lease terms may include options to extend or terminate the lease when it is reasonably certain we will exercise that option. Certain of the arrangements contain escalating rent payment provisions. Our Michigan main office lease and our two other equipment leases that are in default and leases with an initial term of twelve months have not been recorded on the condensed consolidated balance sheets. We recognize rent expense on a straight-line basis over the lease term.

Lease Cost – Actual lease cost for the six months ended June 30, 2019 was $450,626.
 
Summary of future payments
 $6,436,103 
Discount
  (1,054,923)
Net Present Value
 $5,381,180 
 
Lease Term and Discount Rate - The weighted-average remaining lease term (in years) and discount rate related to the operating leases were as follows:
 
Weighted average lease term
6 years
Discount Rate
  12%
 
Maturity of Lease Liabilities - The present value of our tower operating lease liabilities as of June 30, 2019 were as follows:
 
 
 
2019
 
 
2020
 
 
2021
 
 
2022
 
 
2023
 
 
Thereafter
 
Tower Leases
 $1,913,493 
 $1,466,659 
 $975,744 
 $630,800 
 $252,960 
 $141,525 
 
 
21
 
 
 
Lease obligations not included in the above calculations are as follows as of June 30, 2019:
 
Obligation
 
2019
 
 
In Default
 
 
Accrued
Interest
 
 
 Total
 
Telecom Equipment Finance (1)
 $449,103 
   
  156,405 
 $605,508 
Telecommunications Equipment (2)
   
  101,347 
  33,624 
  134,971 
Production Equipment Lease (3)
  2,919 
   
  
 
  2,919 
Total
 $452,022 
  101,347 
  190,029 
 $743,398 
 
(1) The Telecom Equipment Lease is with an entity owned and controlled by shareholders of the Company and is due August 31, 2019, as amended.
 
(2) The Telecommunications Equipment Lease requires payments of $3,702 per month and is in default. See discussion below in Other Commitments and Contingencies. In December 2017, the Company learned that the telecommunications equipment lease identified herein for $101,348 was included in a default judgement in a non-jurisdictional state of Pennsylvania for $169,474 from a lawsuit by the lessor. Management is working with the lessor to settle this matter including a proposal for the equipment to be returned to the lessor and then a negotiated amount for any deficiency between the value given for the retired equipment and the $101,348. When concluded, management does not believe the results will be significantly different than the liability of $101,348 and accrued fees and interest of $38,110 recorded.
 
(3) The Production Equipment Lease, maturing on April 15, 2019, required payments of $2,535 per month and includes imputed interest at 8.5%. The lease was entered into in 2015 for the purchase of equipment in the amount of approximately $120,000.
 
Other Commitments and Contingencies
 
The Company has employment agreements with certain employees of SDM and K Telecom. The agreements are such that SDM and K Telecom, on a standalone basis in each case, must provide sufficient cash flow to financially support the financial obligations within the employment agreements.
 
In December 2016, a subsidiary’s landlord agreed to terminate a facilities lease for 150,000 restricted shares of Common Stock valued at $43,350 from a capital contribution of an officer of the Company. Subsequent to the agreement, the landlord requested more shares against the Company’s agreement. As such, $63,053 remains in liabilities payable to the landlord and the $43,350 was expensed as rent previously. The matter is still unresolved. Management does not believe any negative resolution will have a material impact on the Company’s consolidated financial statements. 
 
 
 
22
 
The Company has been named in a lawsuit by a former employee who was terminated by management in 2016. The employee was working under an employment agreement but was terminated for breach of the agreement. The former employee is suing for breach of contract and is seeking around $75,000 in back pay and benefits. Management believes it has good and meritorious defenses and does not believe the outcome of the lawsuit will have any material effect on the financial position of the Company.
 
As of June 30, 2019, the Company has collected $338,725 from one customer in excess of amounts due from that customer in accordance with the customer’s understanding of the appropriate billings activity. The customer has filed a written demand for repayment by the Company of amounts owed. Management believes that the customer agreement allows them to keep the amounts under dispute. Given the dispute, the Company has reflected the amounts in dispute as a customer liability on the consolidated balance sheet as of June 30, 2019 and does not believe the outcome of the dispute will have a material effect on the financial position of the Company.
 
NOTE 9 – RELATED PARTY ACTIVITY
 
The Company entered into a lease for living space which is occupied by Stephen Thomas, Chairman, CEO and President of the Company. Mr. Thomas lives in the space and uses it as his corporate office. The Company has paid $15,500 and $13,642 in rent and utility payments for this space for the six months ended June 30, 2019 and 2018, respectively.
 
There are shares issuances and capital contributions from an officer of the Company. See Note 7. Also, there are debt and lease balances outstanding due to shareholders and other related parties of the Company of $954,693 and $741,577, respectively, as of June 30, 2019 and December 31, 2018 related to amounts due to management and members of the Board of Directors according to verbal and written agreements that have not been paid as of period end which are included in accounts payable and accrued expenses on the balance sheet. See Notes 7 and 8.
  
As is mentioned in Note 7, Reginald Thomas was appointed to the Board of Directors of the Company in August 2018. Mr. Thomas is the brother to the CEO Stephen J. Thomas III. According to an agreement with Mr. Reginald Thomas, he is to receive $10,000 per quarter and 1,000,000 shares of restricted common stock valued at approximately $120,000 vesting quarterly over twenty-four months. The quarterly payment of $10,000 may be suspended by the Company if the Company has not been adequately funded.
 
 
 
23
 
 
NOTE 10 – GOODWILL AND INTANGIBLE ASSETS
 
Goodwill and intangible assets are comprised of the following:
 
June 30, 2019
 
 
 
Gross Carrying Amount
 
 
Accumulated Amortization
 
 
Net Book Value
 
 
Useful Life
 
Customer Base
 $2,347,200 
  (1,413,089)
  934,111 
  3-10 
Developed Technology
 $6,105,600 
  (1,398,272)
  4,707,328 
  9 
Film Library
 $957,000 
  (68,800)
  888,200 
  11 
Trademarks and Tradenames
 $132,000 
  (9,319)
  122,681 
  12 
 
 $9,541,800 
  (2,889,480)
  6,652,320 
    
 
    
    
    
    
Goodwill
 $987,361 
   
  987,361 
   
 
Amortization expense was $419,262 and $369,200 for the six months ended June 30, 2019 and 2018, respectively.
 
December 31, 2018
 
 
 
Gross Carrying Amount
 
 
Accumulated Amortization
 
 
Net Book Value
 
 
Useful Life
 
Customer Base
 $1,947,200 
  (1,374,933)
  572,267 
  3-10 
Developed Technology
 $6,105,600 
  (1,059,070)
  5,046,530 
  9 
Film Library
 $957,000 
  (32,700)
  924,300 
  11 
Trademarks and Tradenames
 $132,000 
  (3,515)
  128,485 
  12 
 
 $9,141,800 
  (2,470,218)
  6,671,582 
    
 
    
    
    
    
Goodwill
 $924,361 
   
  924,361 
   
  
Remaining amortization of the intangible assets as of June 30, 2019 is as follows:
 
 
 
2019
 
 
2020
 
 
2021
 
 
2022
 
 
2023
 
 
Beyond
 
Customer Base
 $47,557 
 $103,455 
 $103,455 
 $103,455 
 $103,455 
 $472,734 
Developed Technology
  339,202 
  678,404 
  678,404 
  678,404 
  678,404 
  1,654,510 
Film Library
  50,900 
  87,000 
  87,000 
  87,000 
  87,000 
  489,300 
Trademarks and Tradenames
  5,196 
  11,000 
  11,000 
  11,000 
  11,000 
  73,485 
Total
 $442,855 
 $879,859 
 $879,859 
 $879,859 
 $879,859 
 $2,652,320 
 
NOTE 11 – SUBSEQUENT EVENTS
 
There were no significant subsequent eventsthat have not been disclosed in Notes 5, 6, 7 and 12.
 
 
24
 
 
NOTE 12 – RESTATEMENT OF INTERIM CONDENSED UNAUDITED FINANCIAL STATEMENTS
 
During the three months ended June 30, 2019, the Company failed to file a Form S-1 registering common shares underlying certain convertible debt instruments. This was considered a default under the applicable Securities Purchase Agreements resulting in default interest which in turn affected the related valuations of the convertible debt instruments for accounting purposes as of June 30, 2019. Thus, liabilities as of June 30, 2019 were understated by $5,142,119 and corresponding derivative expense and interest expense were understated by $4,496,579 and $645,540, respectively.
 
The effects of the corrections on the interim consolidated financial statements were as follows:
 
Consolidated Balance Sheets (Unaudited)
 

 
June 30, 2019
As Reported
 
 
  Corrections 
 
 
June 30, 2019
As Restated
 
Accounts payable and accrued expenses
 5,898,483 
 10,033
 
 5,908,516 
Current portion of convertible notes payable
 341,094 
 635,507 
 976,601 
Derivative liabilities
 5,340,322 
 4,496,579 
 9,836,901 
Total current liabilities
 25,991,516 
 5,142,119