Quarterly Report (10-q)

Date : 11/19/2019 @ 10:05PM
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

Quarterly Report (10-q)

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-Q
 
 (Mark One)
 
[X]
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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 November 15, 2019, there were 143,657,536 shares of the registrant’s common stock, $.001 par value, issued and outstanding.

 
 

TABLE OF CONTENTS
 
 
 
Page
 
PART 1 – FINANCIAL INFORMATION
 
 
 
 
3
 
 
 
 
3
 
 
 
 
5
 
 
 
 
6
 
 
 
 
8
 
 
 
 
10
 
 
 
26
 
 
 
28
 
 
 
28
 
 
 
 
PART II- OTHER INFORMATION
 
 
 
 
29
 
 
 
29
 
 
 
46
 
 
 
47
 
 
 
47
 
 
 
47
 
 
 
48
 
 
 
 
49
 
 
 
 
 
PART I – FINANCIAL INFORMATION
 
Item 1. Financial Statements
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
ASSETS
 
 
September 30,
 
 
December 31,
 
 
 
2019
 
 
2018
 
 
 
 (Unaudited)
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 $227,833 
 $31,786 
Accounts receivable, net
  193,173 
  48,922 
Prepaid expenses and other current assets
  20,550 
  36,111 
Total current assets
 $441,556 
 $116,819 
NON-CURRENT ASSETS
    
    
        Property and equipment, net
 $4,617,580 
 $3,046,942 
        Operating lease right of use assets
  4,240,823 
  --- 
        Intangible assets, net
  6,472,640 
  6,671,582 
        Goodwill
  1,121,361 
  924,361 
        Deposits and other assets
  96,485 
  62,013 
Total non-current assets
 $16,548,889 
 $10,704,898 
 
    
    
TOTAL ASSETS
 $16,990,445 
 $10,821,717 
 
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
 
 
 
 
 
 
Accounts payable and accrued expenses
 $6,392,022 
 $4,993,970 
    Deferred revenue
  160,906 
  6,450 
    Customer deposits
  338,725 
  338,725 
    Loans, advances and agreements
  1,534,229 
  716,936 
    Current portion of convertible notes payable, net of discounts
  1,704,029 
  10,000 
    Notes payable - related parties, net of discounts
  9,528,376 
  9,137,982 
    Current portion of convertible notes payable – related parties, net of discounts
  388,881 
  202,688 
Derivative liabilities
  5,255,932 
  --- 
Current portion of operating lease liabilities
  1,716,195 
  --- 
Financing lease liabilities
  138,250 
  138,774 
Financing lease liabilities – related party
  619,543 
  598,490 
       Total current liabilities
 $27,747,088 
 $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
  538,500 
  599,200 
     Long term portion of operating lease liabilities
  2,567,692 
  --- 
       Total non-current liabilities
  3,106,192 
  604,200 
 Total liabilities
 $30,853,280 
 $16,748,215 
 
    
    
Commitments and contingencies – See Note 8  
   
   
 
See accompanying notes to condensed consolidated financial statements.
 
 
3
 
 

 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 September 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 September 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 September 30, 2019 and December 31, 2018
   
   
Common stock, $.001 par value, 1,000,000,000 shares authorized, 139,027,625 and 136,953,904 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively
  139,028 
  136,954 
Subscriptions payable
  472,695 
  168,006 
Additional paid-in capital
  12,833,140 
  12,567,881 
Accumulated deficit
  (27,341,287)
  (18,802,928)
Total stockholders' deficit
  (13,892,835)
  (5,926,498)
 
    
    
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 $16,990,445 
 $10,821,717 
 
See accompanying notes to condensed consolidated financial statements.
 
 
4
 
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
 
 
For the three months ended
 September 30,
 
 
For the nine months ended
September 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
   Products
 $4,950 
 $26,650 
 $38,719 
 $105,080 
   Services
  3,612,550 
  174,825 
  6,168,712 
  535,624 
Total Revenues
 $3,617,500 
 $201,475 
 $6,207,431 
 $640,704 
 
    
    
    
    
COST OF SALES:
    
    
    
    
   Products
 $4,950 
 $27,609 
 $40,550 
 $110,004 
   Services
  2,169,747 
  286,956 
  3,884,463 
  725,020 
Total Cost of Sales
 $2,174,697 
 $314,565 
 $3,925,013 
 $835,024 
Gross profit (loss)
 $1,442,803 
 $(113,090)
 $2,282,418 
 $(194,320)
 EXPENSES:
    
    
    
    
Sales and marketing
 $1,746 
 $9,225 
 $46,063 
 $49,123 
Professional
  450,968 
  474,861 
  1,447,421 
  1,153,540 
Payroll and related
  480,524 
  193,824 
  1,045,083 
  564,580 
General and administrative
  521,824 
  175,570 
  1,138,091 
  495,306 
Depreciation
  168,655 
  53,151 
  368,362 
  140,897 
Amortization
  83,811 
  182,523 
  643,942 
  551,723 
                Total expenses
 $1,707,528 
 $1,089,155 
 $4,688,962 
 $2,955,170 
 
    
    
    
    
 Operating income (loss)
 $264,725 
 $(1,202,245 
 $(2,406,545)
 $(3,149,490)
 
    
    
    
    
OTHER INCOME (EXPENSE)
    
    
    
    
Derivative expense
  4,533,794 
   
  (3,572,107)
   
Gain on conversion of notes payable
  5,695 
  --- 
  5,695 
  --- 
Interest expense
  (1,287,966)
  (79,810)
  (2,565,404)
  (158,351)
                 Total other income (expenses)
 $3,251,523 
 $(79,810)
 $(6,131,816)
 $(158,351)
 
    
    
    
    
Net income (loss) before income taxes
  2,986,798 
  (1,282,055)
  (8,538,360)
  (3,307,841)
Income taxes
   
   
   
   
 
    
    
    
    
NET INCOME (LOSS)
 $2,986,798 
 $(1,282,055)
 $(8,538,360)
 $(3,307,841)
 
    
    
    
    
 
 Earnings (loss) per common share: Basic and diluted
 $0.02 
 $(0.01)
 $(0.06)
 $(0.02)
 
    
    
    
    
Weighted average number of common shares outstanding:
    
    
    
    
Basic and diluted
  137,084,846 
  136,953,904 
  136,998,031 
  136,953,904 
 
    
    
    
    
 
See accompanying notes to condensed consolidated financial statements
 
 
5
 
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For the three and nine months ended September 30, 2019 and 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 July 1, 2019
  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)
 
    
    
    
    
    
    
    
    
    
    
Issuance of stock and stock options for services
   
   
   
   
   
   
  101,563 
  27,182 
   
  128,745 
 
    
    
    
    
    
    
    
    
    
    
Conversion of debt
  --- 
  --- 
  --- 
  --- 
  2,073,721 
  2,074 
  --- 
  124,589 
  --- 
  126,663 
 
    
    
    
    
    
    
    
    
    
    
Net Loss
   
   
   
   
   
   
   
   
 $2,986,798 
 $2,986,798 
 
    
    
    
    
    
    
    
    
    
    
Balance as of September 30, 2019
  1,000,000 
 $1,000 
  2,588,693 
 $2,589 
  139,027,625 
 $139,028 
 $472,695 
 $12,833,140 
 $(27,341,287)
 $(13,892,835)
 
 
 
 
 
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
   
   
   
   
   
   
  304,689 
  140,670 
   
  445,359 
 
    
    
    
    
    
    
    
    
    
    
Conversion of debt
  --- 
  --- 
  --- 
  --- 
  2,073,721 
  2,074 
  --- 
  124,589 
  --- 
  126,663 
 
    
    
    
    
    
    
    
    
    
    
Net Loss
   
   
   
   
   
   
   
   
 $(8,538,360)
 $(8,538,360)
 
    
    
    
    
    
    
    
    
    
    
Balance as of September 30, 2019
  1,000,000 
 $1,000 
  2,588,693 
 $2,589 
  139,027,625 
 $139,028 
 $472,695 
 $12,833,140 
 $(27,341,287)
 $(13,892,835)
  
See accompanying notes to condensed consolidated financial statements.
 
 
6
 
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT- CONTINUED
For the three and nine months ended September 30, 2019 and 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 July 1, 2018
  1,000,000 
 $1,000 
  2,588,693 
 $2,589 
  136,953,904 
 $136,954 
 $711,832 
 $10,454,996 
 $(15,451,225)
 $(4,143,854)
 
    
    
    
    
    
    
    
    
    
    
Issuance of stock and stock options for services
  --- 
  --- 
  --- 
  --- 
  --- 
  --- 
  (616,889)
  1,136,081 
   
  519,192 
 
    
    
    
    
    
    
    
    
    
    
Acquisition of Blue Collar
  --- 
  --- 
  --- 
  --- 
  --- 
  --- 
  6,500 
  838,500 
  --- 
  845,000 
 
    
    
    
    
    
    
    
    
    
    
Issuance of subscription shares
    
    
    
    
    
  --- 
  (35,000)
  35,000 
  --- 
  --- 
 
  --- 
  ---- 
  --- 
  --- 
    
    
    
    
    
    
 
    
    
    
    
    
    
    
    
    
    
Net loss
   
   
   
   
   
   
   
   
 $(1,282,055)
 $(1,282,055)
Balance as of September 30, 2018
  1,000,000 
 $1,000 
  2,588,693 
 $2,589 
  136,953,904 
 $136,954 
 $66,443 
 $12,464,511 
 $(16,733,280)
 $(4,061,717)
 
    
    
    
    
    
    
    
    
    
    
 
 
 
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 
 $25,235 
 $10,371,442 
 $(13,425,439)
 $(2,918,219)
 
    
    
    
    
    
    
    
    
    
    
Issuance of stock and stock options for services
  --- 
  --- 
  --- 
  --- 
  --- 
  --- 
  67,708 
  882,135 
   
  949,843 
 
    
    
    
    
    
    
    
    
    
    
Acquisition of Blue Collar
  --- 
  --- 
  --- 
  --- 
  --- 
  --- 
  6,500 
  838,500 
  --- 
  845,000 
 
    
    
    
    
    
    
    
    
    
    
Issuance of subscription shares
  --- 
  --- 
  --- 
  --- 
  --- 
  --- 
  (35,000)
  35,000 
  --- 
  --- 
 
    
    
    
    
    
    
    
    
    
    
Cash received for common stock to be contributed by officer
   
   
   
   
   
   
  --- 
  367,500- 
   
  367,500 
 
    
    
    
    
    
    
    
    
    
    
Conversion of debt
    
    
    
    
    
    
  2,000 
    
    
  2,000 
Net loss
   
   
   
   
   
   
   
   
 $(3,307,841)
 $(3,307,841)
Balance as of September 30, 2018
  1,000,000 
 $1,000 
  2,588,693 
 $2,589 
  136,953,904 
 $136,954 
 $66,443 
 $12,464,511 
 $(16,733,280)
 $(4,061,717)
 
See accompanying notes to condensed consolidated financial statements
 
 
7
 
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
For the nine months ended September 30,
 
 
2019
 
 
2018
 
 Cash flows from operating activities:
 
 
 
 
 
 
Net loss
 $(8,538,360)
 $(3,307,841)
Adjustments to reconcile net loss to net cash used in operating activities:
    
    
Depreciation
  368,362 
  140,897 
           Amortization
  643,942 
  551,723 
           Amortization of debt discount
  2,029,978 
   
Gain on conversion of notes payable
  (5,695)
   
           Derivative expense
  3,572,107 
   
           Share-based compensation: Common stock
  304,689 
  615,684 
                                                         Stock options
  140,670 
  152,879 
     Changes in operating assets and liabilities:
    
    
           Accounts receivable
  (144,251)
  25,098)
           Prepaid expenses and other assets
  92,715 
  (719)
           Accounts payable and accrued expenses
  578,398 
  1,006,076 
           Other liabilities
  (75,544)
  (20,025)
              Net cash used in operating activities
 $(1,032,989)
 $(836,228)
 
    
    
Cash flows from investing activities:
    
    
Net cash from acquisition of assets of Blue Collar
 $--- 
 $41,927 
         Net cash paid for acquisition of assets of SpeedConnect
  (798,386)
  --- 
              Net cash provided (used in) by investing activities
 $(798,386)
 $41,927 
 
    
    
 
    
    
Cash flows from financing activities:
    
    
           Proceeds from stock subscriptions
   
  367,500 
           Proceeds from convertible notes and notes payable – related parties
  512,419 
  439,300 
           Proceeds from convertible notes, loans and advances
  2,689,675 
  21,064 
           Payment on loans, advances and agreements
  (1,148,976)
   
           Payments on convertible notes – related parties
  (15,807)
  (48,836)
           Payments on financing lease liabilities
  (9,889)
  (4,313)
                Net cash provided by financing activities
 $2,027,422 
 $774,715 
 
    
    
 
    
    
Net change in cash
 $196,047 
 $(19,586)
Cash and cash equivalents - beginning of period
 $31,786 
 $36,380 
 
    
    
Cash and cash equivalents - end of period
 $227,833 
 $16,794 
 
    
    
 
See accompanying notes to condensed consolidated financial statements
 
 
8
 
 
TPT Global Tech, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 
(Unaudited)
Supplemental Cash Flow Information:
 
Cash paid for:
 
 
 
2019
 
 
2018
 
Interest
 $9,857 
 $--- 
Taxes
 $--- 
 $--- 
 
Non-Cash Investing and Financing Activities:
 
 
 
2019
 
 
2018
 
Discount on derivative financial instruments
 $2,011,600 
 $ 
Common stock issued for prepaid expenses
 $--- 
  479,250 
Common stock issued for acquisition of Blue Collar
 $--- 
  845,000 
Note payable issued for acquisition of Blue Collar, net of discount
 $--- 
  1,533,217 
Stock subscription payable issued for conversion of debt
 $ 
 $2,000 
Liabilities assumed in SpeedConnect asset acquisition
 $1,894,964 
 $ 
Operating lease liabilities and right of use assets
 $5,003,178 
 $--- 
 
See accompanying notes to condensed consolidated financial statements
 
 
9
 
 
TPT Global Tech, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 nine months ended September 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 September 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, Copperhead Digital, SDM, Blue Collar and TPT SpeedConnect. All intercompany accounts and transactions have been eliminated in consolidation.

 
10
 
 
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 nine months ended
September 30,
2019
 
 
For the nine months ended
September 30,
2018
 
 
TPT SpeedConnect
 
 $5,082,260 
 $--- 
 
Copperhead Digital
 
  176,640 
  322,550 
 
K Telecom
 
  38,719 
  105,080 
 
San Diego Media
 
  21,621 
  141,426 
 
Blue Collar
 
  888,191 
  46,218 
 P2P
   
  25,430 
 
Total Revenue
 
 $6,207,431 
 $640,704 
 
TPT SpeedConnect: ISP and Telecom Revenue
 
TPT SpeedConnect is a rural Internet 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.
 
 
11
 
 
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.
 
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 for options and warrants and using the if-converted method for preferred stock and convertible notes. 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 September 30, 2019, the Company had shares that were potentially common stock equivalents as follows:
 
 
 
2019
 
Series A Preferred Stock
  141,835,420 
Series B Preferred Stock
  2,588,693 
Stock Options and Warrants
  6,426,453 
Convertible Debt
  125,654,896 
 
  276,495,462 
 
 
12
 
 
Financial Instruments and Fair Value of Financial Instruments
 
Our primary financial instruments at September 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.
 
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 September 30, 2019 are the following:
  
Derivative Instrument
 
Fair Value
 
Fair value of Geneva Roth Convertible Promissory Notes
 $288,852 
Fair value of Auctus Convertible Promissory Note
 $3,051,995 
Fair value of Odyssey Capital Convertible Promissory Note
 $744,394 
Fair value of EMA Financial Convertible Promissory Note
 $912,138 
Fair value of JSJ Investment Convertible Promissory Note
 $188,068 
Fair value of Warrants issued with the derivative instruments
 $70,486 
 
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 September 30, 2019 and is reflected in the condensed consolidated financial statements as of September 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.
 
 
13
 
 
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 treated the asset acquisition as a business combination and has allocated the fair market value to assets received in excess of goodwill.
 
Purchase Price Allocation:
 
Effective
 
May 7, 2019
 
 
 
 
 
Purchaser
 
TPT Global Tech
 
 
 
 
 
Consideration Given:
 
 
 
Cash paid
 $1,000,000 
Liabilities:
    
 
    
   Promissory Note
 $750,000 
   Deferred revenue
  230,000 
   Unfavorable leases
  323,000 
   Accounts and other payables
  591,964 
      Total liabilities
 $1,894,964 
Total Consideration Value
 $2,894,964 
 
    
Assets Acquired:
    
   Customer base
 $350,000 
   Current assets:
    
Cash
  201,614 
        Prepaid and other receivables
  99,160 
        Deposits
  13,190 
Favorable leases
  95,000 
   Property and equipment
  1,939,000 
Total Assets Acquired
 $2,697,964 
Goodwill
 $197,000 
 
 
14
 
 
Had the acquisition occurred on January 1, 2018, condensed proforma results of operations for the nine months ended September 30, 2019 and 2018 would be as follows:
 
 
 
2019
 
 
2018
 
Revenue
 $10,970,258 
 $13,634,120 
Cost of Sales
  6,928,862 
  7,812,095 
Gross Profit
 $4,041,396 
 $5,822,025 
Expenses
  (5,521,661)
  (6,791,761)
Derivative Expense
  (3,572,107 
  --- 
Interest Expense and Impairment
  (2,559,709)
  (158,351)
Income Taxes
   
   
Net Loss
 $(7,612,081)
 $(1,128,087)
Loss per share
 $(0.06)
 $(0.01)
 
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, 2018 or to project potential operating results as of any future date or for any future periods. The revenue and net loss of TPT SpeedConnect since May 7, 2019 acquisition date through September 30, 2019 included in the consolidated income statement amounted to $5,082,259 and $641,299, 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 nine months ended September 30, 2019 and 2018. Financing activities described below have helped with working capital and other capital requirements. We incurred $8,538,360 and $3,307,841, respectively, in losses, and we used $1,032,989 and $836,228, respectively, in cash for operations for the nine months September 30, 2019 and 2018. Cash flows from financing activities were $2,027,422 and $774,715 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.
 
 
15
 
 
NOTE 4 – PROPERTY AND EQUIPMENT
 
Property and equipment and related accumulated depreciation as of September 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
  (1,066,061)
  (697,699)
Property and equipment, net
 $4,617,580 
 $3,046,942 
 
Depreciation expense was $368,362 and $140,897 for the nine months ended September 30, 2019 and 2018, respectively.
 
NOTE 5 – DEBT FINANCING ARRANGEMENTS
 
Financing arrangements as of September 30, 2019 and December 31, 2018 are as follows:
 
 
 
 2019
 
 
 2018
 
Business loans and advances, net of discounts (1)
 $1,122,118 
 $615,692 
Convertible notes payable, net of discounts (2)
  1,704,029 
  15,000 
Factoring agreement (3)
  412,111 
  101,244 
Debt – third party
 $3,238,258 
 $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)
  927,381 
  801,888 
Shareholder debt (6)
  534,986 
  181,694 
Debt – related party
 $10,455,757 
 $9,939,870 
 
    
    
Total financing arrangements
 $13,694,015 
  10,671,806 
 
    
    
Less current liabilities:
    
    
   Business loans, advances and agreements
 $(1,534,229)
 $(716,936)
Convertible notes payable, net of discount
  (1,704,029)
  (10,000)
  Notes payable – related parties, net of discount
  (9,528,376)
  (9,137,982)
  Convertible notes payable – related party
  (388,881)
  (202,688)
 
 $(13,155,515)
 $(10,067,606)
Total non-current liabilities
 $538,500 
 $604,200 
 
 
16
 
 
(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%, 3.8% as of September 30, 2019, and is secured by assets of the Company, is due February 28, 2020, as amended, and included 8,000 stock options as part of the terms (see Note 7).
 
$500,500 is a line of credit that Blue Collar has with a bank, bears interest at Prime plus 1.125%, 6.125% as of September 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%, 11.0% as of September 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 February 28, 2020, 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 $186,881 as of September 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, June 6, 2019 and August 22, 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, $53,000 and $43,000 (“Geneva Roth Convertible Promissory Notes”). The Geneva Roth Convertible Promissory Notes are due one year from issuance, pays interest at the rate of 12% (principal amount increases 150%-200% and interest rate increases to 24% under 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 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. During September 2019, Geneva Roth converted a total of $40,000 of principal of the March 15, 2019 Securities Purchase Agreement into 1,073,721 shares of common stock of the Company leaving an outstanding principal balance on the March 15, 2019 Securities Purchase Agreement of $28,000. Subsequent to September 30, 2019, Geneva Roth converted another $28,000 of principal into 3,129,911 shares of common stock of the Company leaving a principal balance of zero for the March 15, 2019 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 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. Auctus converted $21,100 of accrued interest into 1,000,000 shares of common stock of the Company during September 2019. Subsequent to September 30, 2019, Auctus converted another $3,930 of accrued interest into 1,500,000 shares of common stock of the Company. 2,000,000 warrants were issued in conjunction with the issuance of this debt. See Note 7.
 
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% ( 24% 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.
 
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% (principal amount increases 200% and interest rate increases to 24% under default) 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.
 
 
17
 
 
The Company may be in default under several of its new derivative financial instruments for not having filed a Form S-1 Registration Statement with the Securities and Exchange Commission by now. It is the intent of the Company to pay back 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 S-1registrations statement to register 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.
 
(3) One Factoring Agreement with full recourse, due February 28, 2020, 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 September 30, 2019 and December 31, 2018.
 
Another factoring agreement was entered into dated May 8, 2019 with Advantage Capital Funding. $527,000 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. $310,867 remains outstanding under this factoring agreement as of September 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%, 3.8% as of September 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, February 28, 2020.
 
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. $19,275 was amortized as interest expense in the nine months ended September 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 nine months ended September 30, 2019, the Company borrowed $50,000 from a related party for working capital with no written terms. This was paid back prior to September 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.
 
The derivative liability as of September 30, 2019, in the amount of $5,255,932 has a level 3 classification under ASC 825-10.
 
 
18
 
 
The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of September 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
  1,774,000 
Initial fair value of derivative liabilities
  2,601,631 
Change in derivative liability from conversion of notes payable
  (90,175)
Change in fair value of derivative liabilities at end of period
  970,476 
Balance, September 30, 2019
 $5,255,932 
Derivative expense for the nine months ended September 30, 2019
 $3,572,107 
 
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 September 30, 2019, the Company marked to market the fair value of the debt derivatives and determined a fair value of $5,255,932 ($5,185,446 from the convertible notes and $70,486 from the warrants) in Note 5 (2) above. The Company recorded a loss from change in fair value of debt derivatives of $3,572,107 for the nine months ended September 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 178.2% to 278.9%, (3) weighted average risk-free interest rate of 1.55% to 1.88% (4) expected life of 0.72 to 5.0 years, and (5) the quoted market price of $0.045 to $0.098 for the Company’s common stock.
 
See Financing lease arrangements in Note 8.
  
NOTE 7 - STOCKHOLDERS' DEFICIT
 
Preferred Stock
 
As of September 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 number 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.

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 September 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 number 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.
 
 
19
 
 
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 September 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 number 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 September 30, 2019, we had authorized 1,000,000,000 shares of Common Stock, of which 139,027,625 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 September 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 September 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 nine months ended September 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 nine months ended September 30, 2019, the Company recorded $140,670 as stock-based compensation related to these agreements.
 
Common Stock Payable Issued for Expenses and Liabilities
 
As of September 30, 2019, 16,667 of common shares were subscribed to in 2018 for a note payable of $2,000.
 
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 September 30, 2019, $97,500 and $30,000 has been accrued in the balance sheet for Mr. Shkolnik and Mr. Thomas, respectively. For the nine months ended September 31, 2019 and 2018, $409,688 and $91,042, respectively, have been expensed under these agreements.
 
 
20
 
 
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
   
    
 
    
    
September 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 September 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 nine months ended September 30, 2019, the Company recorded $140,670 as stock-based compensation related to the stock options and the related service period for which services have been rendered.
 
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.
 
There are Transfer Agent common stock reservations that have been approved by the Company relative to the outstanding derivative financial instruments, the outstanding Form S-1 Registration Statement and general treasury of 411,244,492 as of September 30, 2019. Subsequent to September 30, 2019 this was increased to 856,342,464.
 
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 $70,046 of the total $5,255,932, derivative liabilities as of September 30, 2019. See Note 5.
 
 
21
 
 
NOTE 8 - COMMITMENTS AND CONTINGENCIES
 
Accounts Payable and Accrued Expenses as of September 30, 2019 and December 31, 2018:
 
 
 
2019
 
 
2018
 
Accounts payable:
 
 
 
 
 
 
   Related parties (1)
 $1,022,036 
 $741,577 
   General operating
  3,269,735 
  3,036,601 
   Credit card balances
  258,647 
  246,949 
   Accrued interest on debt
  642,258 
  306,319 
   Accrued expenses
  565,990 
  33,062 
   Taxes and fees payable
  633,357 
  629,462 
Total
 $6,392,023 
 $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.
 
Lease Cost – As of September 30, 2019, operating lease right-of-use assets and liabilities arising from operating leases were $4,240,823 and $4,283,887, respectively. During the nine months ended September 30, 2019, cash paid for amounts included for the measurement of lease liabilities was $1,074,604 and the Company recorded operating lease expense of $1,074,604.
  
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%
 
 
22
 
 
Maturity of Lease Liabilities - The following represents future minimum lease payments by year and the present value of the minimum payments as of  September 30, 2019 as follows:
 
 
 
For the years ended
 
2019- remaining
 $623,978 
2020
  1,994,924 
2021
  1,331,810 
2022
  832,664 
2023
  316,946 
Thereafter
  193,175 
Total lease payments
 $5,293,497 
Less imputed interest
  (1,009,610)
Present value of minimum lease payments
 $4,283,887 
 
Financing lease obligations not included in the above calculations are as follows as of September 30, 2019:
 
Obligation
 
2019
 
 
In Default
 
 
Accrued Interest
 
 
Total
 
Telecom Equipment Finance (1)
 $449,103 
   
  170,440 
 $619,543 
Telecommunications Equipment (2)
   
  101,347 
  36,903 
  138,250 
Production Equipment Lease (3)
  --- 
   
   
  --- 
Total
 $449,103 
  101,347 
  207,343 
 $757,793 
 
(1) The Telecom Equipment Lease is with an entity owned and controlled by shareholders of the Company and is due February 28, 2020, 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 $101,347 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 $101,347. When concluded, management does not believe the results will be significantly different than the liability of $101,347 and accrued fees and interest of $36,903 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.
 
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 September 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 September 30, 2019 and does not believe the outcome of the dispute will have a material effect on the financial position of the Company.
 
 
23
 
 
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 $23,641 and $21,267 in rent and utility payments for this space for the nine months ended September 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 balances outstanding due to shareholders and other related parties of the Company of $1,022,036 and $741,577, respectively, as of September 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.
 
NOTE 10 – GOODWILL AND INTANGIBLE ASSETS
 
Goodwill and intangible assets are comprised of the following:
September 30, 2019
 
 
 
Gross Carrying Amount
 
 
Accumulated Amortization
 
 
Net Book Value
 
 
Useful Life
 
Customer Base
 $2,297,200 
  (1,438,736)
  858,464 
  3-10 
Developed Technology
 $6,105,600 
  (1,567,873)
  4,537,727 
  9 
Film Library
 $957,000 
  (86,850)
  870,150 
  11 
Trademarks and Tradenames
 $132,000 
  (12,221)
  119,779 
  12 
Favorable Leases
 $95,000 
  (8,480)
  86,520 
  3 
 
 $9,586,800 
  (3,114,160)
  6,472,640