SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d ) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM ___________ TO _____________.
Commission file number:
(Exact name of registrant as specified in its charter) |
| ||
(State or other Jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
( |
(Registrant’s telephone number, including area code) |
Securities registered pursuant to section 12(b) of the Act:
Title of Each Class | Trading Symbols | Name of Exchange on Which Registered |
Not applicable | Not applicable | Not applicable |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large 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 | ☐ |
☐ | Smaller reporting company | ||
Emerging growth company |
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes
The number of shares of the registrant’s common stock outstanding as of August 1, 2022, was
TAUTACHROME, INC.
FORM 10-Q
INDEX
3 | |
3 | |
Item 2 - Management’s Discussion And Analysis Of Financial Condition And Results Of Operations | 15 |
Item 3 - Quantitive And Qualitative Disclosures About Market Risk | 18 |
18 | |
19 | |
19 | |
19 | |
19 | |
19 | |
19 | |
20 | |
21 |
2 |
Table of Contents |
PART I – FINANCIAL INFORMATION
Item 1 – Consolidated Financial Statements
TAUTACHROME, INC.
CONSOLIDATED BALANCE SHEETS
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| 6/30/2022 |
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| 12/31/2021 |
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| (Unaudited) |
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ASSETS |
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Current assets: |
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Cash |
| $ |
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| $ |
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Total current assets |
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Non-current assets: |
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Property, plant and equipment, net |
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TOTAL ASSETS |
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| $ |
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LIABILITIES |
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Accounts payable and accrued expenses |
| $ |
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| $ |
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Accounts payable - related party |
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Loans from related parties |
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Convertible notes payable - related party, net |
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Short-term convertible notes payable, net |
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Convertible notes payable in default |
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Short-term notes payable, net |
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Derivative liability |
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Total current liabilities |
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Long-term convertible notes payable, net |
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Long-term convertible notes payable, related party, net |
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Total non-current liabilities |
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TOTAL LIABILITIES |
| $ |
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| $ |
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STOCKHOLDERS' DEFICIT |
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Series E Convertible Preferred Stock, par value $ |
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Series F Convertible Preferred Stock, par value $ |
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Common stock, $ |
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Additional paid in capital |
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Common stock payable |
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Accumulated deficit |
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Effect of foreign currency exchange |
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TOTAL STOCKHOLDERS' DEFICIT |
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ |
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| $ |
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The accompanying notes are an integral part of these consolidated financial statements.
3 |
Table of Contents |
TAUTACHROME, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
| Six Months Ended June 30, |
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| Three Months Ended June 30, |
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| 2022 |
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| 2021 |
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| 2022 |
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| 2021 |
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REVENUES |
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Online sales platform |
| $ |
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| $ |
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| $ |
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Products |
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Total revenues |
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Cost of sales |
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Gross profit |
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OPERATING EXPENSES |
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General and administrative |
| $ |
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| $ |
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| $ |
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| $ |
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Bad debt expense |
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Depreciation expense |
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Research and development |
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Total operating expenses |
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Operating loss |
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OTHER INCOME / (EXPENSE) |
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Loss on settlement of debt |
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Interest expense |
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Change in value of derivatives |
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Total other |
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Net income or (loss) |
| $ | ( | ) |
| $ | ( | ) |
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| $ | ( | ) | |
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OTHER COMPREHENSIVE INCOME (LOSS) |
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Effect of foreign currency exchange |
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Net comprehensive income or (loss) |
| $ | ( | ) |
| $ | ( | ) |
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| $ | ( | ) | |
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Net (loss) or income per common share |
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Basic |
| $ |
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| $ |
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| $ |
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Fully diluted |
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Weighted average shares outstanding |
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Basic |
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Fully diluted |
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The accompanying notes are an integral part of these consolidated financial statements.
4 |
Table of Contents |
TAUTACHROME, INC.
Consolidated Statement of Changes in Stockholders’ Deficit
December 31, 2020 to June 30, 2022
(Unaudited)
|
| Common Stock |
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| Preferred Stock Series D |
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| Preferred Stock Series E |
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| Preferred Stock Series F |
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| Additional Paid in |
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| Stock |
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| Other Comprehensive |
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| Accumulated |
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| Total Stockholders' Equity / |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Capital |
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| Payable |
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| Income (Loss) |
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| Deficit |
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| (Deficit) |
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Balance, December 31, 2020 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | |||||||||||
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Shares issued for conversion of debt |
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| - |
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| - |
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| - |
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| - |
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Derivative associated with early debt retirement |
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| - |
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| - |
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| - |
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| - |
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Shares issued for services |
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| - |
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| - |
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| - |
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Shares issued as enticement for loan |
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| - |
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| - |
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| - |
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Shares issued to convert Series D preferred to common |
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Shares retired by Chief Executive Officer |
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| - |
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| - |
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| - |
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Stock payable for services |
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| - |
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| - |
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| - |
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| - |
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Imputed interest |
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| - |
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| - |
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| - |
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| - |
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Effect of foreign currency exchange |
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| - |
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| - |
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| - |
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| - |
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Net loss |
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| - |
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| - |
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| - |
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| - |
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| ( | ) |
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Balance, December 31, 2021 |
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| $ |
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| - |
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| $ |
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| $ |
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| $ |
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Shares issued for conversion of debt |
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| - |
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| - |
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| - |
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Derivative associated with early debt retirement |
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| - |
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| - |
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| - |
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| - |
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Shares issued as enticement for loan |
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| - |
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| - |
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| - |
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Stock payable for services |
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| - |
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| - |
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| - |
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| - |
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Imputed interest |
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| - |
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| - |
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| - |
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| - |
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Effect of foreign currency exchange |
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| - |
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| - |
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| - |
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| - |
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Net loss |
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| - |
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| - |
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| - |
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| - |
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| ( | ) |
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Balance, June 30, 2022 |
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| $ |
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| - |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
The accompanying notes are an integral part of these consolidated financial statements.
5 |
Table of Contents |
TAUTACHROME, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| Six Months Ended June 30, |
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| 2022 |
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| 2021 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net Loss |
| $ | ( | ) |
| $ | ( | ) |
Stock-based compensation |
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Depreciation, depletion and amortization |
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Change in fair value of derivative |
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Amortization of discounts on notes payable |
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Imputed interest |
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Bad debt expense |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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| ( | ) | |
Accounts payable and accrued expenses |
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Accounts payable - related party |
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Net cash used in operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Investment in note receivable |
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Net cash used in investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from convertible notes payable |
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Proceeds from convertible notes payable, related party |
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Payment of expenses by related parties |
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Proceeds from notes payable |
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Principal payments on related-party loans |
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| ( | ) | |
Net cash provided by financing activities |
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Effect of exchange rate changes on cash and cash equivalents |
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Net increase/(decrease) in cash |
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Cash and equivalents - beginning of period |
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Cash and equivalents - end of period |
| $ |
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| $ |
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SUPPLEMENTARY INFORMATION |
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Cash paid for interest |
| $ |
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| $ |
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Cash paid for income taxes |
| $ |
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| $ |
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SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING TRANSACTIONS | ||||||||
Discounts on convertible notes |
| $ |
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| $ |
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Conversion of debt and interest to common stock |
| $ |
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| $ |
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Settlement of derivative liability |
| $ |
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| $ |
|
The accompanying notes are an integral part of these consolidated financial statements.
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TAUTACHROME, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
Note 1 – Organization and Nature of Business
History
Tautachrome, Inc. was formed in Delaware on June 5, 2006 as Caddystats, Inc., and subsequently renamed Roadships Holdings Inc. and on November 5, 2015 renamed to its current name Tautachrome Inc. (and hereinafter referred to as “Tautachrome”, the “Company”, “we’ or “us”).
The Company adopted the accounting acquirer’s year end, December 31.
Our Business
Tautachrome operates in the internet applications space, uniquely exploiting the technologies of the Augmented Reality sector, the blockchain/cryptocurrency sector and the smartphone picture and video technology sector. We have high-speed blockchain concepts under development aiming to couple with the Company’s revolutionary patents and licensing in augmented reality, smartphone-image authentication and imagery-based social networking interaction.
Tautachrome is currently pursuing three main avenues of business activity based on our patented activated imaging technology, our blockchain cryptocurrency products, and our licensing of the patent pending ARk technology (together banded “KlickZie” technology):
| 1. | KlickZie ARk technology business: The Company has licensed and is developing a new KlickZie augmented reality (“AR”) platform branded ARknet. ARknet enables goods and services providers to establish geolocated augmented reality interfaces, called ARks, allowing consumers to purchase the provider’s products and take advantage of is specials and discounts, using the ARk. A provider’s ARk may be located anywhere in the world, from a store location to anyplace else the provider may desire. The ARknet is a fintech platform connecting consumers to providers in the global $48 trillion household goods market, using augmented reality as the medium of interaction. |
| 2. | KlickZie’s blockchain cryptocurrency-based ecosystem: The Company has developed its own digital currency (“KLK”), smart contracts using KLKs, and high speed blockchain concepts aimed at supporting fast frictionless transactions within the ARknet as well as incentivizing user download and use of KlickZie products. |
| 3. | KlickZie Activated Digital Imagery business: The Company is developing downloadable apps based on our patented KlickZie trusted imaging technology and based on our patented trusted image-based social interactions using the pictures and videos that smartphone users create. Trusted imagery and user imagery-based interaction is expected to be widely used within the ARknet. |
Additional discussion of the business can be found in our Form 10-K filing as of December 31, 2021 and filed with the Securities and Exchange Commission.
Since its public announcement on September 25, 2017 (via SEC form 8-K) that it would be using its Twitter site (@Tautachrome_Inc) (https://twitter.com/tautachrome_inc) to post important Company information, and finding this method of publicizing important Company information both fast and effective, the Company has continued to use this means of public communication almost exclusively, supplemented occasionally with Current Reports via SEC Form 8-Ks. Shareholders are advised to follow us on Twitter to be current on the Company’s disclosures in conformity with Regulation FD.
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Note 2 – Basis of Presentation and Summary of Significant Accounting Policies
Consolidated Financial Statements
In the opinion of management, the accompanying financial statements includes all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the period ended June 30, 2022. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in our audited financial statements for the period ended December 31, 2021, as reported in Form 10-K filed with the SEC on March 24, 2022.
Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.
Principles of Consolidation
Our consolidated financial statements include the accounts of Tautachrome, Inc. and all majority-owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation.
Long-Lived Assets, Intangible Assets and Impairment
The Company’s long-lived assets and amortizable intangible assets are tested for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The Company assesses the recoverability of such assets by determining whether their carrying value can be recovered through undiscounted future operating cash flows, including its estimates of revenue driven by assumed market segment share and estimated costs. If impairment is indicated, the Company measures the amount of such impairment by comparing the fair value to the carrying value.
Revenue Recognition
The Company has two revenue streams: (1) sales of merchandise online on its own account for promotion of the Company and (2) the online sales platform which is an internet shopping place where businesses can create a store and place items for sale that other ARknet users can buy. Tautachrome takes a percentage fee of the sale.
The company recognizes revenues in accordance with ASC 606 – Revenue From Contracts with Customers which proscribes a five-step process in evaluating the revenue recognition process:
Step 1: Identify the contract with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
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Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Net Loss Per Share
Basic and diluted net loss per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the year. The per share amounts include the dilutive effect of common stock equivalents in years with net income.
Recent Accounting Pronouncements
We have reviewed the FASB issue Accounting Standards Update, (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the period reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
Note 3 – Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, we had negative cash flows from operations and have experienced recurring losses, and negative working capital at June 30, 2022. These conditions raise substantial doubt as to our ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through borrowings from financial institutions or related parties. Management believes that actions presently being taken to obtain additional funding may provide the opportunity for the Company to continue as a going concern. There is no guarantee the Company will be successful in achieving these objectives.
Note 4 – Related Party Transactions
Accounts payable – related party consists of $
Loans from Related Parties consists of $
Convertible Notes Payable, Related Party, Net consists of $
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Long-term Convertible Notes Payable, Related Party consists of $
Convertible note payable, related party
On May 5, 2013 (and on August 8, 2013 with an enlargement amendment) the Company entered into a no interest demand-loan agreement with our current Chairman, Jon N. Leonard under which the Company may borrow such money from Dr. Leonard as Dr. Leonard in his sole discretion is willing to loan.
The terms of the note provide that at the Company’s option, the Company may make repayments in stock, at a fixed share price of $
At June 30, 2022, the balanced owed Dr. Leonard is $
Note 5 – Capital
During the year ended December 31, 2021 we issued a net of
During the six months ended June 30, 2022, we issued the following common shares:
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Stock Payable
For the six months ended June 30, 2022 we recorded stock payable to consultants of $
Other than the above, there was no change in stock payable from December 31, 2021 to June 30, 2022. The explanation of the changes and balances for the year ended December 31, 2021 can be found in Note 4 of the financial statements included in our Form 10-K filed with the Securities and Exchange Commission as of December 31, 2021 and filed on March 24, 2021 and herewith included by reference.
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Preferred Stock
In October, 2016 we issued
Imputed Interest
Certain of our promissory notes bear no nominal interest. We therefore imputed interest expense and increased Additional Paid in Capital. For the six months ended June 30, 2022, we imputed $
Note 6 – Debt
Our debt in certain categories went from $
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| 06/30/22 |
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| 12/31/21 |
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Loans from related parties |
| $ |
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| $ |
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Convertible notes payable, related party |
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Short-term convertible notes payable, net |
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Convertible notes payable in default |
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Short-term notes payable, net |
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Derivative liability |
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Long-term convertible notes payable, net |
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Long-term convertible notes payable, related party |
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Totals |
| $ |
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| $ |
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Loans from related parties
At June 30, 2022 we owed $
Short-Term Convertible Notes Payable – Related Party
At June 30, 2022, we owed $
Short-Term Convertible Notes Payable – Third-Party, Net
Unpaid principal on short-term convertible notes payable at June 30, 2022 was $
We have three convertible promissory notes which are in default at June 30, 2022 totaling $
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Short-term notes payable
At June 30,2022, we owed AU$22,000 (US$
In addition, during the six months ended June 30, 2022 we issued a promissory note in the amount of $
Derivative liabilities
The above-referenced convertible promissory notes were analyzed in accordance with EITF 07–05 and ASC 815. EITF 07–5, which is effective for fiscal years beginning after December 15, 2009, and interim periods within those fiscal years. The objective of EITF 07–5 is to provide guidance for determining whether an equity–linked financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception under Paragraph 11(a) of ASC 815 which would enable a derivative instrument to be accounted for under the accrual method. The classification of a non–derivative instrument that falls within the scope of EITF 00–19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock. A non–derivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted for as a liability. The EITF reached a consensus that would establish a two–step approach in determining whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument's contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument's settlement provisions.
Derivative financial instruments should be recorded as liabilities in the consolidated balance sheet and measured at fair value. For purposes of this engagement and report, we utilized fair value as the basis for formulating our opinion which has been defined by the Financial Accounting Standards Board (“FASB”) as “the amount for which an asset (or liability) could be exchanged in a current transaction between knowledgeable, unrelated willing parties when neither party is acting under compulsion”. The FASB has provided guidance that its definition of fair value is consistent with the definition of fair market value in IRS Rev. Rule 59–60.
The Company issued certain fixed-rate convertible Subscription Notes from 2015 through June 30, 2022 in the United States and Australia These convertible notes have become tainted (“The Tainted Notes”) as a result of the issuance of convertible promissory notes issued in the United States since there is a possibility (however remote) that the Company would not have enough shares in the Treasury to satisfy all possible conversions.
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The Convertible Note derivatives were valued as of issuance; conversion; redemption/settlement; and each quarterly period from March 31, 2018 through June 30, 2022. The following assumptions were used for the valuation of the derivative liability related to the Notes:
| · | The stock price of $ |
| · | |
| · | The effective discounts rates estimated throughout the periods range are |
| · | The Holder would automatically convert the note before maturity if the registration was effective and the company was not in default. |
| · | The projected annual volatility for each valuation period was based on the historic volatility of the company are |
| · | |
| · | |
| · | The Holder would automatically convert the note at the maximum of 2 times the conversion price or the stock price on the date of valuation. |
| · | The Holder would automatically convert the note based on ownership or trading volume limitations. |
We recorded the initial derivative as both a derivative liability and a debt discount (or initial reduction in carrying value of the debt). We then amortized the debt discounts using the Effective Interest Method which recognizes the cost of borrowing at a constant interest rate throughout the contractual term of the obligation. The effective interest rate on the only convertible instrument issued during the six months ended June 30, 2022 range was
At each reporting date, we determine the fair market value for each derivative associated with each of the above instruments.
Changes in outstanding derivative liabilities are as follows:
Balance, December 31, 2021 |
| $ |
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Changes due to new issuances |
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Changes due to extinguishments |
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Changes due to adjustment to fair value |
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Balance, June 30, 2022 |
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Note 7 – Income Taxes
Deferred income taxes reflect the tax consequences on future years of differences between the tax bases:
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| 12/31/21 |
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Net operating loss carry-forward |
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Deferred tax asset |
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Valuation allowance |
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Net future income taxes |
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In assessing the realizability of future tax assets, management considers whether it is more likely than not that some portion or all of the future tax assets will not be realized. The ultimate realization of future tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of future tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Management has provided for a valuation allowance on all of its losses as there is no assurance that future tax benefits will be realized.
Our tax loss carry-forwards will
Note 8 – Subsequent Events
On July 5, 2022, we issues a convertible promissory note in the amount of $
Subsequent events have been evaluated through the date of this report.
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Item 2- Management’s Discussion And Analysis Of Financial Condition And Results Of Operations
This report contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including: any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. “Forward-looking statements” may include the words “may,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan” or “anticipate” and other similar words.
Although we believe that the expectations reflected in our “forward-looking statements” are reasonable, actual results could differ materially from those projected or assumed. Our future financial condition and results of operations, as well as any “forward-looking statements”, are subject to change and to inherent risks and uncertainties, such as those disclosed in this report. In light of the significant uncertainties inherent in the “forward-looking statements” included in this report, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. Except for its ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any “forward-looking statement”. Accordingly, the reader should not rely on “forward-looking statements”, because they are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by the “forward-looking statements”.
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited financial statements, including the notes to those financial statements, included elsewhere in this report.
Overview
We are an early stage internet applications company, engaged in advanced technology and business development in the internet applications space. We have incurred general and administrative costs, marketing expenses and research and development costs since we commenced our current operations in May 2015, against minimal revenue.
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The continuing operations of the Company are dependent upon our ability to raise adequate financing and to commence profitable operations in the future. The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through loans from related parties. We believe that actions presently being taken to obtain additional funding may provide the opportunity for the Company to continue as a going concern. There is no guarantee, however, that the Company will be successful in achieving these objectives.
Results of Operations – Six months ended June 30, 2022 versus 2021
Revenues were de minimis in both periods in 2022 and 2021.
General and administrative expenses went from $2,456,469 in 2021 to $393,851 in the current year for a decrease of $2,062,618. The vast majority of the change was 198,000,000 shares of stock issued in June, 2021 for advertisements. This did not occur in the current year.
Depreciation expense did not change from last year to this since we depreciate our only asset using the straight line method which causes depreciation expense to be the same from period to period.
Research and development expenses fell from $430,109 last year to $178,377 in the current year due to a decrease in development activities.
Interest expense fell from $659,052 in 2021 to $437,094 in 2022 ( decrease of $221,958), mostly because there were several large early payoffs of debt (in the form of conversion to common stock) occurring in the previous year requiring the full amortization of existing discount balances. Fewer such early payoffs occurred in the current year.
The change in value of our derivative liability resulted in a loss of $2,262,282 in 2021 versus a gain of $597,073 in 2022. See Note 6 to the financial statements for a calculation of these values.
During the current year we had foreign exchange gain of $44,999 versus a gain of $28,320 in the previous year, all of which are caused by fluctuations in the exchange rate differences between the U.S. and Australian dollars.
Our net comprehensive losses of $374,461 in the current year versus $5,937,638 in the previous year are a result of the above items.
Results of Operations - Three months ended June 30, 2022 versus 2021
Revenues were de minimis in both periods in 2022 and 2021.
General and administrative expenses went from $2,302,093 in 2021 to $185,471 in the current year for a decrease of $2,116,622. The vast majority of the change was 198,000,000 shares of stock issued in June, 2021 for advertisements. This did not occur in the current year.
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We had bad debt expense of $150,760 in 2021 related to a loan we made which was ultimately not repaid. We had no such occurrence in the current year.
Depreciation expense did not change from last year to this since we depreciate our only asset using the straight line method which causes depreciation expense to be the same from period to period.
Research and development expenses fell from $229,334 last year to $91,495 in the current year due to a decrease in development activities.
Interest expense fell from $235,282 in 2021 to $211,734 in 2022 ( decrease of $23,548), mostly because there were several large early payoffs of debt (in the form of conversion to common stock) occurring in the previous year requiring the full amortization of existing discount balances. Fewer such early payoffs occurred in the current year.
The value of our derivative liability resulted in a loss of $358,835 in 2021 versus a gain of $564,639 in 2022. See Note 6 to the financial statements for a calculation of these values.
During the current year we had foreign exchange gain of $73,165 versus a gain of $16,941 in the previous year, all of which are caused by fluctuations in the exchange rate differences between the U.S. and Australian dollars.
Our net comprehensive gain and losses of a $145,485 in the current year versus $3,263,123 in the previous year are a result of the above items.
Liquidity and Capital Resources
Our financial statements have been prepared on a going concern basis that contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
At June 30, 2022, the Company had $123 in current assets and current liabilities totaling $4,765,801. We are currently seeking financing to attain our business goals, but there is no guarantee that we will obtain such financing or, upon obtaining it, that we will be able to invest in productive assets that will result in positive cash flows from operations.
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Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, we had negative cash flows from operations, recurring losses, and negative working capital at June 30, 2022. These conditions raise substantial doubt as to our ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Management intends to finance these deficits by making additional shareholder notes and seeking additional outside financing through either debt or sales of its common stock.
Plan of Operation
Our immediate term plans for operations is discussed extensively in Item 7 – Management’s Discussion and Analysis or Plan of Operation included in our Form 10-K as of December 31, 2021, filed with the Securities and Exchange Commission on March 24, 2021 and is herein incorporated by reference.
Item 3 - Quantitive And Qualitative Disclosures About Market Risk
A smaller reporting company is not required to provide the information required by this item.
Item 4 – Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
We maintain "disclosure controls and procedures" as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based upon the evaluation of our officers and directors of our disclosure controls and procedures as of June 30, 2022, the end of the period covered by this Quarterly Report on Form 10-Q (the "Evaluation Date"), our Chief Executive Officer has concluded that as of the Evaluation Date that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure. Our management concluded that our disclosure controls and procedures were not effective as a result of material weaknesses in our internal control over financial reporting. We are a small organization with only a few employees. Under these circumstances it is impossible to completely segregate duties. We do not expect our internal controls to be effective until such time as we are able to begin full operations and even then, there are no assurances that our disclosure controls will be adequate in future periods.
Change In Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1 – Legal Proceedings
We may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect on our operations or finances. We are not aware of any pending or threatened litigation against us or our officers and directors in their capacity as such that could have a material impact on our operations or finances.
Item 2 – Unregistered Sale of Equity Securities
A portion of the securities were issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), by reason of the exemption from registration afforded by the provisions of Section 4(a)(2) thereof, and Rule 506(b) of Regulation D promulgated thereunder, as a transaction by an issuer not involving any public offering. The investors did not enter into any of the transactions with the Company as a result of or subsequent to any advertisement, article, notice, or other communication published in any newspaper, magazine, or similar media or broadcast on television or radio, or presented at any seminar or meeting. Each investor was also afforded the opportunity to ask questions of management and to receive answers concerning the terms and conditions of the transaction. No selling commissions were paid in connection with these transactions.
A portion of the securities were issued without registration under the Securities Act, by reason of the exemption from registration afforded by Rule 903 of Regulation S promulgated thereunder. In determining that the issuance of certain of such securities qualified for exemption in reliance on Regulation S, the Company relied on the following facts: each recipient represented that it is not a “U.S. Person” within the meaning of Regulation S under the Securities Act and that he, she or it would not sell the shares in the U.S. for a period of at least one year after purchase.
Item 3 – Defaults Upon Senior Securities
None
Item 4 – Mine Safety Disclosures
Not applicable.
Item 5 – Other Information
Not applicable.
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Item 6 - Exhibits
Exhibit No. |
| Description of Exhibit |
| ||
| ||
101.INS* |
| XBRL Instance Document |
101.SCH* |
| XBRL Taxonomy Extension Schema Document |
101.CAL* |
| XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* |
| XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* |
| XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* |
| XBRL Taxonomy Extension Presentation Linkbase Document |
* Filed herewith.
** Furnished herewith
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Tautachrome, Inc |
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Date: August 1, 2022 | By: | /s/ Dr. Jon Leonard |
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| Dr. Jon Leonard Chief Executive Officer |
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