10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended June 30, 2019

or

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from __________ to __________

Commission File Number: 333-206260

FIRST FOODS GROUP, INC.

(Exact name of registrant as specified in its charter)

NEVADA	47-4145514
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

First Foods Group, Inc. c/o Incorp Services, Inc.,

3773 Howard Hughes Parkway, Suite 500S,

Las Vegas, NV 89169-6014

(Address of principal executive offices) (Zip Code)

(201) 471-0988

Registrant’s telephone number, including area code

___________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes xNo ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes xNo ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One).

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
		Emerging growth company	¨

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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x 

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

Securities registered pursuant to section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
		None

As of August 8, 2019, the number of shares outstanding of the registrant’s class of common stock was 18,305,502, par value of $0.001 per share.

TABLE OF CONTENTS

		Pages
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets at June 30, 2019 and December 31, 2018	3
	Condensed Consolidated Statements of Operations for the Three and Six Months ended June 30, 2019 and 2018	4
	Condensed Consolidated Statement of Changes in Deficit for the Periods ended June 30, 2019 and 2018	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	24
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
SIGNATURES		27

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

First Foods Group, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
(Unaudited)
	June 30, 2019			December 31, 2018
ASSETS
CURRENT ASSETS:
Cash	$	32,513		$	30,426
Accounts receivable, net		31,545			-
Merchant cash advances, net of allowance $45,096 and $82,354, respectively		280,435			562,488
Prepaid expenses and other current assets		57,939			36,506
Deferred merchant advance commissions		29,646			50,759
TOTAL ASSETS	$	432,078		$	680,179
LIABILITIES AND DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	574,106		$	317,356
Deferred revenue		94,130			176,115
Loans, net		352,545			-
Related party loans, net		376,475			372,835
TOTAL CURRENT LIABILITIES		1,397,256			866,306
Loans, net - long term		66,523			342,119
TOTAL LIABILITIES		1,463,779			1,208,425
DEFICIT
FIRST FOODS GROUP, INC. DEFICIT:
Preferred stock, 20,000,000 shares authorized:
Series A convertible preferred stock: $0.001 par value, 1 share authorized, 1 issued and outstanding ($577,005 liquidation preference)		-			-
Series B convertible preferred stock: $0.001 par value, 4,999,999 shares authorized, 473,332 issued and outstanding ($160,000 liquidation preference)		473			473
Series C convertible preferred stock: $0.001 par value, 3,000,000 shares authorized, 660,000 shares issued and outstanding ($174,900 liquidation preference)		660			660
Common stock: $0.001 par value,100,000,000 shares authorized, 18,055,502 and 17,709,087 shares issued and outstanding, respectively		18,056			17,709
Additional paid-in capital		7,330,640			7,081,559
Accumulated deficit		(8,372,285	)		(7,637,029	)
Total First Foods Group, Inc. Deficit		(1,022,456	)		(536,628	)
Noncontrolling interests		(9,245	)		8,382
Total deficit		(1,031,701	)		(528,246	)
TOTAL LIABILITIES AND DEFICIT	$	432,078		$	680,179

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

First Foods Group, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
(Unaudited)
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
REVENUES
Product sales	$	31,545		$	-		$	31,545		$	-
Merchant cash advance income, net		41,916			85,510			156,753			145,805
Total Revenues		73,461			85,510			188,298			145,805
OPERATING EXPENSES
Cost of product sales		20,983			-			20,983			-
Professional fees		25,615			1,620			54,847			23,689
General and administrative		391,340			277,540			790,248			717,283
Provision for merchant cash advances		(6,099	)		13,656			22,239			36,440
Total Operating Expenses		431,839			292,816			888,317			777,412
LOSS FROM OPERATIONS		(358,378	)		(207,306	)		(700,019	)		(631,607	)
OTHER INCOME (EXPENSE)
Gain on forgiveness of debt		-			3,000			-			3,000
Interest expense		(27,914	)		(11,943	)		(52,864	)		(28,181	)
Loss before income taxes		(386,292	)		(216,249	)		(752,883	)		(656,788	)
Provision for income taxes		-			-			-			-
NET LOSS		(386,292	)		(216,249	)		(752,883	)		(656,788	)
Non-controlling interest share of loss		10,580			-			17,627			-
Dividends on preferred stock		(4,950	)		-			(9,900	)		-
Net loss attributed to shareholders of First Foods Group, Inc.	$	(380,662	)	$	(216,249	)	$	(745,156	)	$	(656,788	)
BASIC AND DILUTED LOSS PER COMMON SHARE ATTRIBUTABLE TO FIRST FOODS GROUP, INC. STOCKHOLDERS	$	(0.02	)	$	(0.01	)	$	(0.04	)	$	(0.04	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING ATTRIBUTABLE TO FIRST FOODS GROUP, INC. STOCKHOLDERS		17,952,371			16,999,061			17,887,548			16,963,453

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

First Foods Group, Inc. and Subsidiary
Condensed Consolidated Statements of Changes in Deficit
(Unaudited)
															Total First
									Additional						Foods			Non-
	Preferred Stock				Common Stock				paid-in			Accumulated			Group,  Inc.			controlling			Total
	Shares		Amount		Shares		Amount		capital			deficit			deficit			interests			deficit
Balance at December 31, 2018		1,133,333	$	1,133		17,709,087	$	17,709	$	7,081,559		$	(7,637,029	)	$	(536,628	)	$	8,382		$	(528,246	)
Common stock issued to consultants for services		-		-		7,500		8		1,492			-			1,500			-			1,500
Warrants issued for director services		-		-		-		-		71,553			-			71,553			-			71,553
Warrants issued for consultant services		-		-		-		-		25,385			-			25,385			-			25,385
Common stock issued for services		-		-		100,000		100		29,900			-			30,000			-			30,000
Common stock issued with loans payable		-		-		50,000		50		7,075			-			7,125			-			7,125
Dividend on preferred stock		-		-		-		-		(4,950	)		-			(4,950	)		-			(4,950	)
Net loss		-		-		-		-		-			(359,544	)		(359,544	)		(7,047	)		(366,591	)
Balance at March 31, 2019		1,133,333	$	1,133		17,866,587	$	17,867	$	7,212,014		$	(7,996,573	)	$	(765,559	)	$	1,335		$	(764,224	)
Common stock issued to consultants for services		-		-		176,415		176		40,074			-			40,250			-			40,250
Warrants issued for director services		-		-		-		-		72,348			-			72,348			-			72,348
Warrants issued for consultant services		-		-		-		-		7,479			-			7,479			-			7,479
Common stock issued with loans payable		-		-		12,500		13		3,675			-			3,688			-			3,688
Dividend on preferred stock		-		-		-		-		(4,950	)		-			(4,950	)		-			(4,950	)
Net loss		-		-		-		-		-			(375,712	)		(375,712	)		(10,580	)		(386,292	)
Balance at June 30, 2019		1,133,333	$	1,133		18,055,502	$	18,056	$	7,330,640		$	(8,372,285	)	$	(1,022,456	)	$	(9,245	)	$	(1,031,701	)
Balance at December 31, 2017		1	$	-		16,919,524	$	16,920	$	5,255,402		$	(5,675,169	)	$	(402,847	)	$	20,000		$	(382,847	)
Preferred stock issued for cash		660,000		660		-		-		164,340			-			165,000			-			165,000
Common stock issued to consultants for services		-		-		13,262		13		5,987			-			6,000			-			6,000
Common stock issued for CFO services		-		-		-		-		140,625			-			140,625			-			140,625
Warrants issued for director services		-		-		-		-		72,009			-			72,009			-			72,009
Net loss		-		-		-		-		-			(440,539	)		(440,539	)		-			(440,539	)
Balance at March 31, 2018		660,001	$	660		16,932,786	$	16,933	$	5,638,363		$	(6,115,708	)	$	(459,752	)	$	20,000		$	(439,752	)
Common stock issued to consultants for services		-		-		10,101		10		1,990			-			2,000			-			2,000
Common stock issued to consultants for services - related party		-		-		75,000		75		8,925			-			9,000			-			9,000
Common stock issued with related party loans		-		-		100,000		100		10,900			-			11,000			-			11,000
Warrants issued for director services		-		-		-		-		72,010			-			72,010			-			72,010
Net loss		-		-		-		-		-			(216,249	)		(216,249	)		-			(216,249	)
Balance at June 30, 2018		660,001	$	660		17,117,887	$	17,118	$	5,732,188		$	(6,331,957	)	$	(581,991	)	$	20,000		$	(561,991	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

First Foods Group, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(Unaudited)
	For the Six Months Ended June 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(752,883	)	$	(656,788	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-employee stock based compensation		104,615			17,000
Employee stock based compensation		143,901			284,645
Gain on forgiveness of debt		-			3,000
Amortization of debt discount		16,401			11,667
Provision for merchant cash advances		22,239			46,003
Changes in operating assets and liabilities:
Accounts receivable		(31,545	)		-
Merchant cash advances		259,814			(309,262	)
Deferred merchant advance commissions		21,113			(15,227	)
Prepaid expenses and other current assets		(21,433	)		(13,539	)
Accounts payable and accrued liabilities		265,000			107,725
Deferred revenue		(81,985	)		71,175
Deferred compensation		-			84,971
Net cash used in operating activities		(54,763	)		(368,630	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of Series C convertible preferred stock		-			165,000
Dividend payment		(18,150	)		-
Proceeds from shareholder loans		-			280,134
Repayment of shareholder loans		-			(179,814	)
Proceeds from loans		75,000			-
Net cash provided by financing activities		56,850			265,320
NET INCREASE (DECREASE) IN CASH		2,087			(103,310	)
CASH AT BEGINNING OF PERIOD		30,426			136,188
CASH AT END OF PERIOD	$	32,513		$	32,878
SUPPLEMENTAL CASH FLOW INFORMATION:
NON-CASH FINANCING ACTIVITIES:
Common stock issued with long term loans	$	10,813		$	11,000
CASH PAID FOR:
Interest	$	40,848		$	3,750
Income taxes	$	-		$	-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

NOTE 1 – BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY

Nature of Business

First Foods Group, Inc. (the “Company” or “First Foods”) is a smaller reporting company focused on developing its specialty chocolate line and participating in merchant cash advances through its 1^st Foods Funding Division (the “Division”). First Foods continues to pursue new foodservice brands and menu concepts.

On August 31, 2017, the Company formed Holy Cacao, Inc., a Nevada corporation (“Holy Cacao”). Holy Cacao has 100 shares of no par value common stock authorized, issued and outstanding with 85 shares owned by the Company and 15 shares owned by non-controlling interests. Holy Cacao is dedicated to producing, packaging, distributing and selling specialty chocolate, including specialty chocolate infused with a hemp-based ingredient in those United States jurisdictions where hemp-based products are legal. The Company has not been, is not, and has no current plans to be involved in producing, packaging, distributing or selling any product that is infused with a marijuana-based ingredient, although it intends to revisit the matter as laws change in jurisdictions in which it operates. The Company is also dedicated to licensing its intellectual property (“IP”), including its name, brand, and packaging, to third parties. The Company may license its IP to third parties that may produce, package, distribute or sell hemp-based or marijuana-based products, but only in those states where such activities are legal. On February 27, 2019, the United States Patent and Trademark Office (the “USPTO”) approved Holy Cacao’s trademark brand, “The Edibles’ Cult.” The Company has submitted multiple applications to the USPTO for additional brand names, including “Mystere” and “Purely Irresistible” among others. On February 5, 2019, the Company signed a Consulting Agreement with a consultant to assist in the manufacturing, packaging and distribution of the Company’s chocolate product line. On March 26, 2019, the Company signed a Facility Access and Wholesale Production Purchase and Sale Agreement that allows it to use a fully staffed and fully equipped state of the art manufacturing facility to begin producing its specialty chocolate product and selling it to manufacturing and wholesaling companies. On May 7, 2019, the Company sold three of its products comprised of 1,500 kilograms of specialty chocolate. This was the only purchase order received by the company to date. The Company expects to have additional orders in the future, but is not assured of receiving additional purchase orders. However, on July 1, 2019, hemp-based ingredients became legal in the state of Florida, where the Company produces its specialty chocolate products. Accordingly, on August 9, 2019, the Company signed a letter of intent to enter into a master distribution agreement with a master distributor to distribute the Company’s hemp-based chocolate edibles products (see Note 6). Also, on August 9, 2019, the Company purchased the intellectual property of Southeast Edibles, which consists of a pending logo, in-process package designs, social media tags and handles, and a pending trademark (see Note 6).

On October 25, 2017, the Company entered into a contract with TIER Merchant Advances LLC (“TIER”) to participate in the purchase of future receivables from qualified TIER merchants for the purpose of generating near-term and long-term revenue for the Company. The Company may also provide cash advances directly to merchants.

7

Liquidity and Going Concern

The Company’s unaudited condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States of America (“GAAP”) applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. As of June 30, 2019, the Company had approximately $350,000 of third-party short-term debt that is due within the next twelve months. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its operating expenses and seeking equity and/or debt financing. However, neither any members of management nor any significant shareholders are currently committed to invest funds and; therefore, the Company cannot provide any assurances that it will be successful in accomplishing any of its plans.

The Company does not have sufficient cash flow for the next twelve months from the issuance of this report. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States of America 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 unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these unaudited condensed consolidated financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read in conjunction with the Company’s annual consolidated financial statements included within the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on March 29, 2019.

In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the six months ended June 30, 2019 may not be indicative of results for the full year. 

The noncontrolling interest represents the proportionate share of the proceeds received and also the income and loss pickup from the fifteen-percent equity interest in our otherwise wholly owned subsidiary; Holy Cacao.

Principles of Consolidation

The unaudited condensed consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiary in conformity with GAAP. All intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of twelve months or less to be cash equivalents. At June 30, 2019 and December 31, 2018, the Company had no cash equivalents.

The Company’s cash is held with financial institutions, and the account balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limit at times. Accounts are insured by the FDIC up to $250,000 per financial institution. The Company has not experienced any losses in such accounts with these financial institutions.

8

Merchant Cash Advances

Starting in October 2017, the Company entered into a contract with TIER to participate in TIER’s purchase of merchant cash advances, which are short-term cash advances made to businesses in return for an agreed-upon amount of future sales, paid by the business in small, regular daily payments. During the six months ended June 30, 2019, the Division participated in 259 merchant cash advances from TIER and 3 merchant cash advances directly with 1 merchant.

The Company participates in the merchant cash advance industry by directly advancing sums to a merchant or a merchant advance provider, TIER, who in turn advances sums to merchants or other merchant cash advance providers. Each reporting period, the Company reviews the carrying value of these advances and determines whether an impairment reserve is necessary. At June 30, 2019, the Company reserved an amount equal to 12% of the outstanding merchant cash advance balance at period end determined by the risk of default as disclosed by TIER along with management’s assessment, as well as an additional reserve for discounts to merchants who settle their advance balance prior to the scheduled due date. In addition, the Company wrote off eighteen (18) merchant advances for a total of $59,497 for the six months ended June 30, 2019. These expenses, unless they were included in previous reserves, are included in provision for merchant cash advances expenses on the accompanying unaudited condensed consolidated statements of operations.

Concentration Risks

As of and during the three and six months ended June 30, 2019, the Company’s merchant cash advance income (“MCA income”) and advances from merchant cash advances were mainly derived from one merchant cash advance provider. The Company recognizes the concentration of its merchant cash advances, which could inherently create a potential risk to future working capital in the event that the Company is not able to collect all, or a majority, of the outstanding merchant cash advances. The Company actively mitigates its portfolio concentration risk by monitoring its merchant cash advance provider’s ability to participate in merchant cash advances from alternative providers and spreading merchant cash advance participation across various merchants.

As of June 30, 2019, the Company’s receivables from merchant cash advances included $164,172 from two merchants ($102,719 and $61,453), representing 58.5% of the Company’s merchant cash advances. The Company earned $13,350 of MCA income from one merchant, representing 32% of the Company’s MCA income for the three months ended June 30, 2019. The Company earned $46,839 of MCA income from two merchants ($25,852 and $20,987), representing 30% of the Company’s MCA income for the six months ended June 30, 2019.

For the three months ended June 30, 2018, the Company earned MCA income from seven merchants for $46,106 ($12,542, $8,862, $8,401, $5,063, $4,213, $3,927, and $3,099), representing 54% of total MCA income. The Company earned MCA income from nine merchants for $87,486 ($18,375, $15,965, $15,147, $10,800, $8,401, $5,967, $4,699, $4,432 and $3,700), representing 60% of total MCA income for the six months ended June 30, 2018.

As of June 30, 2019, the Company’s accounts receivable had a concentration of 100% from one customer. The concentration of the Company’s accounts receivable creates a potential risk to future working capital in the event that the Company is not able to collect all, or a majority, of outstanding accounts receivable balances.

As of June 30, 2019, the Company had a purchase concentration of 100% from one vendor.

As of December 31, 2018, the Company’s receivables from merchant cash advances included $232,484 from two merchants ($141,539 and $90,945), representing 41% of the Company’s merchant cash advances.

9

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” which creates Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers,” and supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition” and most industry-specific guidance throughout the ASC. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. We completed our assessment of the impact of the ASC 606 and determined that we recognize our merchant cash advances in accordance with ASC 860, Transfers and Servicing, which is explicitly excluded from the scope of ASC 606. We participate in the servicing of merchant cash advances that have been provided to third parties, which in accordance with ASC 860, causes us to recognize MCA income. Commencing in Q2 2019, we also have product sales from our Holy Cacao division that follow ASC 606.

The amendments may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company completed its assessment of the guidance and determined its merchant cash advances are excluded from the scope of ASU 2014-09. As a result of this scope exception, the adoption of this ASU did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

During the three and six months ended June 30, 2019, the Company recognized its product sales as follows:

Product sales are measured based on consideration specified in a contract with a customer that we expect to receive in exchange for goods, net of any variable considerations (e.g. rights to return product, sales incentives, etc.). The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer. These criteria are assumed to have been met upon delivery of the products requested by the customer to the customer’s carrier. The Company applied the practical expedient available under ASC 606 to disregard determining significant financing components, if the good is transferred and payment is received within one year.

During the three and six months ended June 30, 2019, the Company recognized its MCA income as follows:

When a merchant cash advance is purchased, the Company records a merchant cash advance participation receivable for the purchase price. The purchase price consists of the merchant cash advance principal plus an up-front commission that is amortized over the term of the merchant cash advance. The amount of the commission is negotiated between the Company and TIER for each contract. The standard commission is 15% of the merchant cash advance principal but can be reduced depending upon the credit worthiness of the merchant. If a merchant cash advance contract is signed in one period, but not paid until a subsequent period, a corresponding liability is established in the current period.

At the time the merchant cash advance is purchased, the Company records a deferred revenue liability, which is the total future receivable due to the Company less the principal amount of the merchant cash advance. Revenue is recognized and the deferred liability is reduced over the term of the merchant cash advance.

TIER maintains a bank account on behalf of the Company. Each day, TIER receives payment, reflected in the bank account, for each merchant cash advance TIER has purchased on behalf of the Company from various merchant cash advance providers. The Company reduces its merchant cash advance balance by the cash received, which is net of platform fees. Platform fees are a daily charge associated with the ACH service and the financial and reporting management software platform provided by TIER. The platform fees are also negotiated between the Company and TIER for each contract but are typically 4% of the daily merchant cash advance principal amount.

The Company records a reserve liability equal to 2% of the merchant cash advance amount released, which is a residual commission owed to TIER. This reserve is recognized over the term of the merchant cash advance and eliminated when the merchant cash advance is completely satisfied and payment is remitted by the Company to TIER.

10

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions and sets up an allowance for doubtful accounts when collection is uncertain. Customers’ accounts are written off when all attempts to collect have been exhausted. The Company considers an invoice past due once the terms of the invoice has passed and payment has not been received. No interest is charged on past due invoices. Recoveries of accounts receivable previously written off are recorded as income when received. As of June 30, 2019, the Company had no allowance for doubtful accounts.

Inventory

Inventory, consisting of raw materials, work in process and products available for sale, are primarily accounted for using the first-in, first-out method (“FIFO”), and are valued at the lower of cost or net realizable value. This valuation requires management to make judgements based on currently available information, about the likely method of disposition, such as through sales to individual customers and returns to product vendors. As of June 30, 2019, the Company had no inventory and no allowance for inventory reserves.

Research and Development

The Company’s policy is to engage market and branding consultants to research and develop specialty chocolate products and packaging targeted to particular states within the US. The research and development costs for the three months ended June 30, 2019 and 2018, were approximately $18,510 and $15,000, respectively. The research and development costs for the six months ended June 30, 2019 and 2018, were approximately $33,510 and $30,000, respectively. These expenses are included in general and administrative expenses on the accompanying unaudited condensed consolidated statements of operations.

Deferred Financing Costs

The Company records origination and other expenses related to its debt obligations as deferred financing costs. These expenses are deferred and amortized over the life of the related debt instrument. In accordance with ASU No. 2015-03, deferred finance costs, net of accumulated amortization have been included as a contra to the corresponding loans in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2019 and December 31, 2018, respectively.

Stock Based Compensation

The Company measures and recognizes compensation expense for all stock-based payments at fair value over the requisite service period. The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options and warrants. For restricted stock grants, fair value is determined as the closing price of the Company’s common stock on the date of grant. Equity-based compensation expense is recorded in administrative expenses based on the classification of the employee or vendor. The determination of fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price, as well as by assumptions regarding a number of subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

Income Taxes

The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2019 and December 31, 2018, the Company had a full valuation allowance against deferred tax assets. With the historical change in ownership, the Company is subject to certain NOL limitations under Section 382 of the Internal Revenue Code.

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The Tax Cuts and Jobs Act (the “Tax Act”), enacted on December 22, 2017, among other things, permanently lowered the statutory federal corporate tax rate from 35% to 21%, effective for tax years including or beginning January 1, 2018. Under the guidance of ASC 740, “Income Taxes”, the Company revalued its net deferred tax assets on the date of enactment based on the reduction in the overall future tax benefit expected to be realized at the lower tax rate implemented by the new legislation. Although in the normal course of business the Company is required to make estimates and assumptions for certain tax items which cannot be fully determined at period end, the Company did not identify items for which the income tax effects of the Tax Act have not been completed as of June 30, 2019, and therefore, considers its accounting for the tax effects of the Tax Act on its deferred tax assets and liabilities to be complete as of June 30, 2019.

Per Share Data

In accordance with “ASC-260 - Earnings per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. No dilutive shares were outstanding as of June 30, 2019 and December 31, 2018 because their effect would be antidilutive.

The Company had 403,750 and 100,000 warrants to purchase common stock outstanding at June 30, 2019 and 2018, respectively. The Company had 3,370,000 and 1,970,000 warrants to purchase Series B preferred stock outstanding at June 30, 2019 and 2018, respectively. Additionally, the Company has 1,133,333 and 660,001 preferred shares outstanding that are convertible into 3,026,665 and 660,005 shares of common stock at June 30, 2019 and 2018, respectively. The warrants and preferred stock were not included in the Company’s weighted average number of common shares outstanding because they would be anti-dilutive.

Fair Value of Financial Instruments

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value. The carrying value of cash, merchant cash advances, prepaid expenses, accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments. Management is of the opinion that the Company is not exposed to significant market or credit risks arising from these financial instruments.

Advertising and Promotion

Advertising and promotion costs are expensed as incurred. Advertising and promotion costs recognized in the unaudited condensed consolidated statements of operations for the three months ended June 30, 2019 and 2018, were $34,150 and $11,504, respectively and $44,889 and $32,243, respectively, for the six months ended June 30, 2019 and 2018.

Non-Controlling Interests in Consolidated Financial Statements

In June 2011, the FASB issued ASC 810-10-65-1, to clarify that a non-controlling (minority) interest in a subsidiary is an ownership interest in the entity that should be reported as equity in the consolidated financial statements. It also requires consolidated net income to include the amounts attributable to both the parent and non-controlling interest, with disclosure on the face of the consolidated income statement of the amounts attributed to the parent and to the non-controlling interest. In accordance with ASC 810-10-45-21, those losses attributable to the parent and the non-controlling interest in subsidiaries may exceed their interests in the subsidiary’s equity. The excess and any further losses attributable to the parent and the non-controlling interest shall be attributed to those interests even if that attribution results in a deficit non-controlling interest balance. During the year ended December 31, 2017, the Company entered into two subscription agreements for the sale of 800,000 shares of its common stock and a ten-percent equity interest in its wholly owned subsidiary, Holy Cacao, for $200,000 in cash proceeds, in the aggregate. The Company recorded ten-percent of the cash proceeds or $20,000 as noncontrolling interests for the year ended December 31, 2017. On July 16, 2018, the Company entered into a consulting agreement with a service provider that contained the following term: 5% equity ownership in the Company’s Holy Cacao subsidiary will be awarded immediately upon the successful launch of the Holy Cacao product line and the sale of the first production run of Holy Cacao product. As of June 30, 2019, this part of the agreement was completed and 5% equity was issued. The Company’s periodic reporting now includes the results of operations of Holy Cacao, with the fifteen-percent ownership reported as noncontrolling interests. The cost of goods sold and operating expense for Holy Cacao for the six months ended June 30, 2019 were $20,983 and $165,565, respectively. There was $31,545 of revenue for Holy Cacao for the six months ended June 30, 2019.

The Company conducts business as two operating segments, First Foods and Holy Cacao. The Company does not distinguish between the two segments and has only one reportable segment based on quantitative thresholds. The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker.

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Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which affects any entity that enters into a lease (as that term is defined in ASU 2016-02), with some specified scope exceptions. The main difference between the guidance in ASU 2016-02 and prior GAAP is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under current GAAP. Under ASU 2016-02, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients. The Company adopted this provision on January 1, 2019 which did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which supersedes the revenue recognition requirements in ASC 605-Revenue Recognition and most industry-specific guidance throughout the ASC. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers in an amount that reflects the expected consideration received in exchange for those goods or services. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early adoption is permitted to the original effective date for annual reporting periods beginning after December 15, 2016 (including interim reporting periods within those periods). The Company completed its assessment of the guidance and determined its merchant cash advances are excluded from the scope of ASU 2014-09. As a result of this scope exception, the adoption of this ASU did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

NOTE 2 – RELATED PARTY TRANSACTIONS

As of June 30, 2019, the Company owes a Director approximately $8,000 for expenses the Director incurred on behalf of the Company.

Employment Agreement

On March 1, 2017, Mark J. Keeley assumed the role of Chief Financial Officer (“CFO”). Pursuant to his Employment Agreement, the CFO shall receive (i) 750,000 shares of common stock of the Company, and (ii) $20,833 per month, which shall be deferred until the Company raises at least $1,500,000 in financing. The 750,000 shares of common stock are fully vested and valued at $1,687,500, representing a fair market value of $2.25 per share based on the closing price on the day of entry into the agreement. On December 26, 2017, the CFO amended his employment agreement and agreed to reduce the annual salary from $250,000 to $150,000 for the period from February 1, 2017 through January 31, 2019, and then revert back to the original amount of $250,000 annually starting February 1, 2019 through the remainder of his employment. The CFO’s salary was deferred until the Company raised at least $1,000,000 in financing. This raise has been achieved. This agreement has since been amended, where Mr. Keeley earns an additional $40,000 per year for his role as a Director of the Board. Mr. Keeley was awarded 85,000 and 33,333 shares of Series B Preferred Stock on October 25, 2018 and December 17, 2018, respectively, for a total of 118,333 shares in lieu of $40,000 Director compensation accrued for the period January 1, 2018 through December 31, 2018 (see Note 4). As of June 30, 2019 and December 31, 2018, the Company has accrued $204,167 and $87,500, respectively, in relation to the employment agreement and $15,141 and $13,449, respectively, in relation to the payroll tax liability.

On January 30, 2019, the Company entered into a consulting agreement with R and W Financial, an entity owned by a Company director, to assist with the growth of the Company. R and W Financial will receive $5,000 per month for an indefinite period of time, subject to cancellation by the Company or R and W Financial with 30 days written notice to the other.

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Consulting Agreement

On February 27, 2017, Harold Kestenbaum assumed the role of Chairman of the Board of Directors and Interim Chief Executive Officer (“Interim CEO”). Pursuant to his consulting agreement, the Interim CEO shall receive (i) 750,000 shares of common stock of the Company for his appointment as Chairman of the Board, (ii) $10,000 per month for his role as Interim CEO, which shall be deferred until the Company raises at least $1,500,000 in financing, (iii) $10,000 for every new franchising client he obtains, and (iv) $2,000 per month for legal services upon acquisition of a franchising client. The shares were valued at $1,500,000, representing a market value of $2.00 per share based on the closing price on the day of entry into the agreement. On December 26, 2017, Mr. Kestenbaum agreed to a reduction in his 2017 annual salary from $120,000 to $40,000. This agreement has since been amended, where Mr. Kestenbaum now earns $40,000 per year for his role as Chairman of the Board and earns no salary as Interim CEO. Mr. Kestenbaum was awarded 85,000 and 33,333 shares of Series B Preferred Stock on October 24, 2018 and December 17, 2018, respectively, for a total of 118,333 shares in lieu of $40,000 compensation accrued for the period January 1, 2018 through December 31, 2018 (see Note 4). As of June 30, 2019 and December 31, 2018, the Company has accrued a total of $40,000 in relation to the consulting agreement.

Related Party Loans

On October 17, 2017, Obvia LLC, of which the Company’s Chief Financial Officer, who is also a director and a shareholder of the Company, is a 50% owner, provided a loan to the Company’s Funding Division in the amount of $100,000 bearing an interest rate of the US Prime Federal Funds Rate +1% or 6.50% at June 30, 2019, to be compounded monthly. The note is secured by the full value of the borrower and matures on October 31, 2019. During the three months ended June 30, 2019 and 2018, the Company recorded $1,772 and $1,214, respectively, as interest expense related to this loan. During the six months ended June 30, 2019 and 2018, the Company recorded $3,496 and $2,401, respectively, as interest expense related to this loan. As of June 30, 2019 and December 31, 2018, the principal balance of this loan was $100,000 and the accrued interest was $10,507 and $7,011, respectively. 

On November 2, 2017, Kennedy Business Center LLC, an entity owned by an immediate family member of a Company director, provided a loan in the amount of $90,000 bearing an interest rate of 10% which matured on November 30, 2018, but was paid back early on October 25, 2018. As part of the agreement, the Company issued 50,000 shares of common stock on November 3, 2017. The Company recorded a debt discount of $17,500 for the fair market value of the shares issued. During the three months ended June 30, 2018, the Company recorded $2,917 of interest expense related to the amortization of debt discount related to this loan and $2,250 of regular interest. During the six months ended June 30, 2018, the Company recorded $11,667 of interest expense related to the amortization of debt discount related to this loan and $4,500 of regular interest. As of June 30, 2019 and December 31, 2018, the principal balance of this loan was $0 and the accrued interest was $0 and $4,366, respectively.

On April 26, 2018, R and W Financial, an entity owned by a Company director, provided an unsecured, non-interest bearing loan in the amount of $179,813 which matures on April 25, 2020 and which was used to pay the balance of the non-interest bearing short-term loans due to the Company Secretary, who is also a Director and shareholder of the Company. As of June 30, 2019 and December 31, 2018, the principal balance of this loan was $179,813.

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On June 14, 2018, the Company issued a promissory note of $100,000 to Mayer Weiss, an immediate family member of a Company director. The note carries a 12% interest rate per annum, and non-compounding interest is to be paid every six months. Additionally, 100,000 shares of common stock were issued with the note and are being amortized over the life of the loan which is due December 13, 2019. The Company recorded a debt discount of $11,000 for the fair market value of the shares issued. During the three months ended June 30, 2019 and 2018, the Company recorded $1,830 and $322 of interest expense related to the amortization of debt discount related to this loan and $2,992 and $526 of regular interest, respectively. During the six months ended June 30, 2019 and 2018, the Company recorded $3,640 and $322 of interest expense related to the amortization of debt discount related to this loan, respectively and $5,951 and $$526 of regular interest, respectively. As of June 30, 2019 and December 31, 2018, the principal balance of this loan was $100,000 and the accrued interest was $5,954 and $6,575, respectively.

All of the above transactions were approved by disinterested directors.

	June 30, 2019			December 31, 2018
Obvia LLC	$	100,000		$	100,000
R & W Financial		179,813			179,813
Mayer Weiss		100,000			100,000
Unamortized debt discount		(3,338	)		(6,978	)
Total	$	376,475		$	372,835

Director Agreements

On December 26, 2017, the Company entered into binding term sheets with each of the Directors of the Company. Pursuant to the Agreements, each Director may be compensated with share-based and/or cash-based compensation. Each Director’s cash-based compensation for the period January 1, 2018 through December 31, 2018, will be $10,000 per quarter paid on a date determined by the majority vote of the Board of Directors. The Directors’ share-based compensation for the period January 1, 2018 through December 31, 2018 will be a one-time award of the ability to purchase a particular amount of warrants, ranging from 40,000 to 200,000 (collectively the “Warrants”) with the following terms:

· Number and Type – Each Director is entitled to a one-time award of Warrants for the number of shares of Series B Preferred Stock (the “Preferred Stock B”) of the Corporation, which shall have voting rights equal to five (5) votes per share. Each share of Preferred stock B is convertible into five (5) shares of the Corporation’s common stock, including liquidation preference over common stock.

· Duration – The Warrants entitle each Director to purchase the Preferred Stock B from the Corporation, after January 1, 2018 and before December 31, 2024.

· Purchase Price - The purchase price is $0.51 per share of Preferred Stock B.

· Cashless Exercise - If on the date the Director surrenders all or a portion of the Warrants for the purchase of Series B Preferred Stock or the equivalent number of shares of Common Stock, the per share market value of one share of Common Stock is greater than the exercise price of the equivalent Warrant, in lieu of exercising the Warrant by payment of cash, the Director may exercise the Warrant by a cashless exercise and shall receive a ratably lower number of shares of Series B Preferred Stock or the equivalent number of shares of Common Stock.

· Vesting – 125,000 Warrants awarded to the CFO were fully vested at the time of issuance. The remaining 565,000 Warrants are subject to a 12-month period whereby the Warrants vest in equal monthly increments from January 1, 2018 through December 31, 2018.

The Company issued warrants with respect to 565,000 Series B Preferred Stock, in the aggregate, in relation to the binding term sheets. The Company expensed the fair value of these warrants in the amount of $144,000 ratably during the six months ended June 30, 2018.

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On May 10, 2018, the directors of the Company were awarded share-based compensation for the service period of May 10, 2018 through December 31, 2020, as a one-time award of the ability to purchase a particular amount of warrants, ranging from 80,000 to 400,000 (collectively the “Warrants”) with the following terms:

· Number and Type – Each Director is entitled to a one-time award of Warrants for the number of shares of Series B Preferred Stock of the Company. Each share of Series B Preferred Stock shall have voting rights equal to five (5) votes per share. Each share of Series B Preferred Stock is convertible into five (5) shares of the Company’s Common Stock (the “Common Stock”), including liquidation preference over Common Stock.

· Duration – The Warrants entitle each Director to purchase the Series B Preferred Stock from the Company, after January 1, 2019 and before December 31, 2027.

· Purchase Price - The purchase price is $0.60 per share of Series B Preferred Stock.

· Cashless Exercise - If on the date the Director surrenders all or a portion of the Warrants for the purchase of Series B Preferred Stock or the equivalent number of shares of Common Stock, the per share market value of one share of Common Stock is greater than the exercise price of the equivalent Warrant, in lieu of exercising the Warrant by payment of cash, the Director may exercise the Warrant by a cashless exercise and shall receive a ratably lower number of shares of Series B Preferred Stock or the equivalent number of shares of Common Stock.

· Vesting - The Warrants are subject to a 32-month period whereby the Warrants vest in equal monthly increments from May 10, 2018 through December 31, 2020. Any unvested warrants are forfeited, if the Director ceases to be a Director.

The Company issued warrants with respect to 1,280,000 Series B Preferred Stock, in the aggregate. The Company will expense the fair value of these warrants in the amount of $768,000 ratably during the years ended December 31, 2018, 2019 and 2020. For the three months ended June 30, 2019 and 2018, the Company recorded $72,348 and $40,547, respectively, as compensation expense related to the warrants. For the six months ended June 30, 2019 and 2018, the Company recorded $143,901 and $40,547, respectively, as compensation expense related to the warrants. 

On February 26, 2019, the Company entered into director agreements with each of the Directors of the Company. Pursuant to the agreements, each Director may be compensated with share-based and/or cash-based compensation. The Directors’ compensation for the period January 1, 2019 through December 31, 2019 will be $10,000 per quarter per Director to be paid on a date determined by the Board of Directors. In addition, the Director’s may receive a one-time award of the ability to purchase a particular amount of warrants, as determined by the Board of Directors. The Company issued no warrants in relation to the agreements for the six months ended June 30, 2019. 

NOTE 3 – LOANS AND LONG-TERM LOANS

On July 23, 2018, the Company issued promissory notes of $100,000 and $18,000, respectively. The notes carry a 12% interest rate per annum, and non-compounding interest is to be paid every six months. Additionally, 100,000 and 18,000 shares of common stock were issued with the respective notes and will be amortized over the life of the loans which are due January 22, 2020 with a balloon payment. The Company recorded a debt discount of $5,500 and $990 for the fair market value of the shares issued, respectively. During the three months ended June 30, 2019, the Company recorded $913 and $164 of interest expense related to the amortization of debt discount related to these notes and $2,992 and $539 of regular interest, respectively. During the six months ended June 30, 2019, the Company recorded $1,827 and $327 of interest expense related to the amortization of debt discount related to these notes and $5,951 and $1,071 of regular interest, respectively. As of June 30, 2019, the principal balance of these notes was $100,000 and $18,000 with unamortized debt discount of $2,057 and $372, respectively, and the accrued interest was $244 and $224, respectively. As of December 31, 2018, the principal balance of these notes was $100,000 and $18,000 and the accrued interest was $293 and $233, respectively.

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On October 11, 2018, the Company issued a promissory note of $250,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 250,000 shares of common stock were issued with the note valued at $0.10 per share, which is the market value on the date of the agreement and will be amortized over the life of the loan which is due April 10, 2020 with a balloon payment. The Company recorded a debt discount of $25,000 for the fair market value of the shares issued. During the three months ended June 30, 2019, the Company recorded $4,159 of interest expense related to the amortization of debt discount related to the note and $7,480 of regular interest. During the six months ended June 30, 2019, the Company recorded $8,272 of interest expense related to the amortization of debt discount related to the note and $14,877 of regular interest. As of June 30, 2019 and December 31, 2018, the principal balance of the note was $250,000 with unamortized debt discount of $13,026 at June 30, 2019 and the accrued interest was $1,534 and $6,658, respectively.

On January 9, 2019, the Company issued a promissory note of $50,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 50,000 shares of common stock were issued with the note valued at $0.1425 per share, which is the market value on the date of the agreement and will be amortized over the life of the note which is due July 8, 2020 with a balloon payment. The Company recorded a debt discount of $7,125 for the fair market value of the shares issued. During the three months ended June 30, 2019, the Company recorded $1,188 of interest expense related to the amortization of debt discount related to the note and $1,495 of regular interest. During the six months ended June 30, 2019, the Company recorded $2,245 of interest expense related to the amortization of debt discount related to the note and $2,827 of regular interest. As of June 30, 2019, the principal balance of the note was $50,000, the unamortized debt discount was $4,880 and the accrued interest was $327.

On June 12, 2019, the Company issued a promissory note of $25,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 12,500 shares of common stock were issued with the note valued at $0.295 per share, which is the market value on the date of the agreement and will be amortized over the life of the note which is due June 11, 2021 with a balloon payment. The Company recorded a debt discount of $3,688 for the fair market value of the shares issued. During the three and six months ended June 30, 2019, the Company recorded $91 of interest expense related to the amortization of debt discount related to the note and $148 of regular interest. As of June 30, 2019, the principal balance of the note was $25,000, the unamortized debt discount was $3,597 and the accrued interest was $148.

	June 30, 2019			December 31, 2018
Loan issued July 23, 2018	$	18,000		$	18,000
Loan issued July 23, 2018		100,000			100,000
Loan issued October 11, 2018		250,000			250,000
Loan issued January 09, 2019		50,000			-
Loan issued June12, 2019		25,000			-
Unamortized debt discount		(23,932	)		(25,881	)
Total		419,068			342,119
Less: short term loans, net		352,545			-
Total long-term loans, net	$	66,523		$	342,119

NOTE 4 – DEFICIT

On May 11, 2017, the Company entered into a consulting agreement to place up to $1.5 million worth of common stock within six months to provide funds to complete an acquisition. The Company may incur fees up to $135,000 in relation to this agreement with a $10,000 retainer payable immediately in common stock valued on the date of signing. The remaining $125,000 is to be placed into escrow and released on the date of closing valued at the closing asking price. Of the $10,000 retainer, $5,000 is non-refundable. As of June 30, 2019 and through the date of these financial statements, the Company has recorded $5,000 as prepaid expense and accrued liabilities, no shares have been issued related to this agreement, and the original agreement is in the process of being renegotiated among and between the Company and the consultant.

On January 11, 2018, the Company entered into a consulting agreement for matters involving business development, public relations, marketing services and media placement. The agreement may be terminated upon 30 days prior written notice by either party. The Company paid the consultant $25,000 for the first 30 days of services, and $2,500 for any services requested by the Company on a bi-weekly basis thereafter. The fee will cover all cash cost for production, editing and airing up to three Fox Business production shots. If the Company pursued an interview with Fox News, which the Company is currently not contemplating, it would have to issue 200,000 shares of its common stock to the consultant.

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On February 2, 2018, the Company entered into a subscription agreement for the sale of 660,000 shares of the Company’s Series C Preferred Stock for $0.25 per share or $165,000. The terms of the agreement require a monthly dividend payment equal to 1% of the amount invested for 18 months from the date of issuance. For the three months ended June 30, 2019 and 2018, the Company recorded $4,950 and $4,950 of dividend expense related to the subscription agreement, respectively. For the six months ended June 30, 2019 and 2018, the Company recorded $9,900 and $8,250 of dividend expense related to the subscription agreement, respectively.

On January 9, 2019, the Company issued a promissory note of $50,000 to an unrelated party that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 50,000 shares of common stock were issued with the note valued at $0.1425 per share, which is the market value on the date of the agreement and will be amortized over the life of the note which is due July 8, 2020 with a balloon payment.

On March 26, 2019, the Company signed a Facility Access and Wholesale Production Purchase and Sale Agreement for a term of twelve (12) months with an unrelated party to use the party’s leased commercial chocolate manufacturing facility in exchange for paying the following:

(a)	the full amount of the party’s lease obligations of $6,433 per month plus taxes and common area maintenance fees through May 31, 2019 and $6,626 per month plus taxes and common area maintenance fees for 12 months through March 31, 2020;
(b)	66.6% of the party’s expenses related to payroll for employees that make the Company’s product; and
(c)	66.6% of the party’s operating expenses specifically related to the Company’s product including utilities, equipment, maintenance and insurance expenses.

The Company also issued 100,000 shares of the Company’s common stock at the closing market price of $0.30 on February 5, 2019 as a charitable contribution to a non-profit entity in support of the entity’s environmental regeneration efforts.

On May 8, 2019, the Company entered into an agreement with a strategic advisory consultant (the “Consultant”). The Consultant was awarded 100,000 shares of the Company’s common stock at a fair market value of $0.20 per share, for $20,000. Also, in accordance with the agreement, the Company shall at its sole discretion grant a bonus to the Consultant of up to 1,000,000 shares. As of the filing date, management does not have intention to grant these shares.

On February 11, 2019, the Company entered into an agreement with a strategic advisory consultant (the “Consultant”). On May 31, 2019, in accordance with the agreement, the Consultant was awarded 26,415 shares of the Company’s common stock at a fair market value of $0.265 per share.

On May 31, 2019, the Company entered into an agreement with a strategic advisory consultant (the “Consultant”). The Consultant was awarded 50,000 shares of the Company’s common stock at a fair market value of $0.265 per share, for $13,250. In addition, the company may extend this agreement for an additional twelve months at the sole discretion of management. Fees for the additional twelve months shall be 200,000 shares of common stock issued in increments of 50,000 shares per quarter.

On June 12, 2019, the Company issued a promissory note of $25,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 12,500 shares of common stock were issued with the note valued at $0.295 per share.

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Warrant Activity

Common Stock Warrants

On July 16, 2018, the Company entered into a consulting agreement with a service provider that contains the following terms:

· 375,000 warrants were awarded as of the date of the agreement and will vest ratably over the next 12 months from the date of the agreement. The Company valued these warrants using the Black-Scholes option pricing model with the following inputs: exercise price of $0.078; fair market value of underlying stock of $0.08; expected term of 3 years; risk free rate of 2.67%; volatility of 417.39%; and dividend yield of 0%. The total fair value of these warrants is $30,000 and will be expensed ratably over a period of 12 months. For the three and six months ended June 30, 2019, the Company recorded an expense of $7,479 and $14,877, respectively in relation to these warrants. As of June 30, 2019, a total of 359,375 warrants had vested and 31,250 were exercised.

· 5% equity ownership in the Company’s Holy Cacao subsidiary will be awarded immediately upon the successful launch of the Holy Cacao product line and the sale of the first production run of Holy Cacao product. As of June 30, 2019, this part of the agreement was completed, and 5% equity was issued.

· A $6,000 per month advance of Holy Cacao equity distribution will be awarded every month Holy Cacao earns a net profit over a period of twenty-four (24) consecutive months following the initial product launch and production sale.

· 300,000 warrants for shares of the Company’s common stock will be awarded after each of two consecutive twelve (12) month periods in which Holy Cacao earns a net profit from gross annual product sales of at least $1M. Each of the two 300,000 warrant awards will vest equally over a twelve (12) month period.

On February 5, 2019, the Company signed a Consulting Agreement for a six (6) month term with a consultant to assist in the manufacturing, packaging and distribution of the Company’s chocolate product line. The Consulting Agreement has a $7,000 monthly fee. In addition, the Company issued a warrant to the Consultant to purchase 60,000 shares of the Company’s common stock at the closing market price of $0.30 on the February 5, 2019 with a term of three (3) years. The Company valued these warrants using the Black-Scholes option pricing model with the following inputs: exercise price of $0.30; fair market value of underlying stock of $0.30; expected term of 3 years; risk free rate of 2.50%; volatility of 388.56%; and dividend yield of 0%. The total fair value of these warrants is $17,988 and was expensed at issuance.

On February 5, 2019, the Company signed an Employment Agreement for a term of three years beginning when the prospective employee obtains his permanent United States visa. The employee will assist with the manufacturing, packaging and distribution of the Company’s chocolate product line. The Employment Agreement has a $7,000 monthly salary. In addition, the Company will issue a warrant to the prospective employee to purchase 300,000 shares of the Company’s common stock with a term of three (3) years. In addition, the employee will receive a warrant to purchase 300,000 of the Company’s common stock for each of the two remaining years under the Employment Agreement with an exercise price equal to the closing market price of the Company’s common stock on the first day of each of such two annual employment periods. The warrants will be subject to a 12-month period whereby the warrants will vest in equal monthly increments for each year of the employment period. Each of the warrants will be exercisable within a three-year period from the date of issue. If the employee fails to obtain his visa, all granted warrants must be given back to the Company. Once per quarter, the employee may waive the right to receive 25,000 warrants and receive in exchange for $5,000 worth of shares of the Company’s common stock. As of June 30, 2019, no warrants have been expensed because the employment period has not commenced.

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A summary of the Company’s warrants to purchase common stock activity is as follows:

	Number of			Weighted
	Warrants			Average
	(in common			Exercise
	shares)			Price
Outstanding, December 31, 2017		100,000		$	1.45
Granted		375,000			0.08
Exercised		(31,250	)		0.08
Forfeited or cancelled		(100,000	)		-
Outstanding, December 31, 2018		343,750			0.08
Granted		60,000			0.30
Exercised		-			-
Forfeited or cancelled		-			-
Outstanding, June 30, 2019		403,750		$	0.11

As of June 30, 2019, 388,125 warrants for common stock were exercisable and the intrinsic value of these warrants was $66,281. As of June 30, 2019, the weighted average remaining contractual life was 2.13 years for warrants outstanding and the remaining expense is approximately $1,315 over the remaining amortization period which is 1 month.

As of June 30, 2018, 100,000 warrants for common stock were exercisable and the intrinsic value of these warrants was $0. As of June 30, 2018, the weighted average remaining contractual life was 6months for warrants outstanding and the remaining expense is approximately $0.

Preferred Stock Warrants

On December 26, 2017, the Company amended its employment agreement with the CFO and Director (see Note 2) and issued warrants to purchase 125,000 shares of Series B Preferred Stock as compensation expense for each of the years ended December 31, 2017 and 2018. The warrants have an exercise price of $0.51 per share. The warrants associated with compensation in 2017 were fully vested as of December 31, 2017. The warrants associated with compensation in 2018 vested monthly from January 1, 2018 through December 31, 2018. The warrants are exercisable from January 1, 2018 through December 31, 2024. The Company expensed the fair value of these warrants in the amount of $15,931 and $31,863 during the three and six months ended June 30, 2018, respectively.

On December 26, 2017, the Company issued warrants to purchase 440,000 shares of Series B Preferred Stock, in the aggregate, to its Board of Directors as compensation expense for the year ended December 31, 2018. The warrants have an exercise price of $0.51 per share, vests monthly from January 1, 2018 through December 31, 2018, and are exercisable from January 1, 2018 through December 31, 2024. The Company expensed the fair value of these warrants in the amount of $56,078 and $112,156 during the three and six months ended June 30, 2018, respectively. These warrants were fully expensed as of December 31, 2018.

On May 10, 2018, the Company issued warrants to purchase 1,280,000 shares of Series B Preferred Stock, in the aggregate, to its Board of Directors as compensation expense for services to be performed for the period May 10, 2018 through December 31, 2020. The warrants have an exercise price of $0.60, vest over a 32-month period starting May 10, 2018 through December 31, 2020, and are exercisable from January 1, 2019 through December 31, 2027. As of December 31, 2018, there were 320,000 Series B Preferred Stock warrants exercisable. The Company will expense the fair value of these warrants in the amount of $768,000 ratably during the years ended December 31, 2018, 2019 and 2020. For the three and six months ended June 30, 2019, the Company recorded $72,348 and $143,901, respectively, as compensation expense related to the warrants.

A summary of the Company’s warrants to purchase Series B Preferred Stock activity is as follows:

	Number of Warrants (in Series B Preferred Stock)		Weighted Average Exercise Price
Outstanding, December 31, 2017		690,000	$	0.51
Granted		2,680,000		0.58
Outstanding, December 31, 2018		3,370,000		0.57
Granted		-		-
Exercised		-		-
Forfeited or cancelled		-		-
Outstanding, June 30, 2019		3,370,000	$	0.57

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As of June 30, 2019, 2,650,000 warrants for Series B preferred stock were exercisable and the intrinsic value of these warrants was $2,212,100. As of June 30, 2019, the weighted average remaining contractual life was 8.25 years for warrants outstanding and the remaining expense is $437,267 over the remaining amortization period which is 1.50 years.

As of June 30, 2018, the weighted average remaining contractual life was 8.5 years for warrants outstanding. As of June 30, 2018, 0 warrants were exercisable and the intrinsic value of warrants exercisable was $0. As of June 30, 2018, the remaining expense is approximately $297,618 over the remaining amortization period which is 2.5 years.

NOTE 5 - COMMITMENTS

On February 26, 2019, the Company entered into director agreements with each of the Directors of the Company. Pursuant to the agreements, each Director may be compensated with share-based and/or cash-based compensation. The Directors’ compensation for the period January 1, 2019 through December 31, 2019 will be $10,000 per quarter per Director to be paid on a date determined by the Board of Directors. In addition, the Director’s may receive a one-time award of the ability to purchase a particular amount of warrants, as determined by the Board of Directors.

On June 5, 2019, the Company entered into a consulting agreement for social media and public relation services whereby the Company is required to pay $1,800 in cash per month and $7,000 in shares of the Company’s common stock upon completion of the agreement, which is on September 4, 2019.

NOTE 6 – SUBSEQUENT EVENTS

On July 22, 2019 (the “Effective Date”), the Company issued a promissory note of $250,000. The interest rate for the note is 12% per annum with non-compounding interest to be paid every month. $100,000 of the note will be used by the Company exclusively for the purpose of investing in merchant cash advances. The remaining $150,000 of the note will be used by the Company for its operational activities. Additionally, 250,000 shares of common stock were issued with a fair value of $100,000, recorded as a debt discount, and will be amortized over the life of the note, which is due in monthly payments between eighteen (18) months and twenty-three (23) months from the Effective Date based upon the sum of funds available in the Company’s First Foods Funding Division. The balance will be paid twenty-four (24) months from the Effective Date. In addition, the Company issued a warrant to purchase 250,000 shares of the Company’s common stock with an exercise price of $0.25 per share. The warrant was valued at $99,925 based on the Black Scholes Model and included in the debt discount. The warrant is fully vested as of the Effective Date with an exercise term of three (3) years. At the sole discretion of the lender, an additional $250,000 note may be issued to the Company anytime within nine months after the Effective Date. The additional note will be subject to the same terms and conditions as the initial note, with 250,000 shares of common stock issued at a 30% discount from the last market closing price per share as of the effective date of the additional note. If an additional $250,000 note is issued, the Company will issue a warrant to purchase an additional 250,000 shares of the Company’s common stock that will be fully vested as of the effective date of the additional note and have an exercise price that is the lesser of $0.25 per share or the market closing price per share on the effective date of the additional note. The exercise term will be three (3) years.

On August 9, 2019, the Company forgave a June 18, 2019 promissory note with Genesis Laboratories International, LLC for outstanding principle and accrued unpaid interest of $8,140 in exchange for Southeast Edibles’ intellectual property, consisting of a pending logo, in-process package designs, social media tags and handles, and an ungranted trademark.

On August 9, 2019, the Company signed a letter of intent to enter into a master distribution agreement with a master distributor to distribute the Company’s hemp-based chocolate edibles products.

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

Cautionary Statements

This Form 10-Q contains “forward-looking statements,” as that term is used in federal securities laws, about First Foods Group, Inc.’s financial condition, results of operations and business.

These statements include, among others:

· statements concerning the potential benefits that First Foods Group, Inc. (“First Foods”, “we”, “our”, “us”, the “Company”, or “management”) may experience from its business activities and certain transactions it contemplates or has completed; and

· statements of First Foods’ expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. These statements may be made expressly in this Form 10-Q. You can find many of these statements by looking for words such as “believes,” “expects,” “anticipates,” “estimates,” “opines,” or similar expressions used in this Form 10-Q. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause First Foods’ actual results to be materially different from any future results expressed or implied by First Foods in those statements. The most important facts that could prevent First Foods from achieving its stated goals include, but are not limited to, the following:

(a)	volatility or decline of First Foods’ stock price;
(b)	potential fluctuation of quarterly results;
(c)	failure of First Foods to earn significant revenues or profits;
(d)	inadequate capital to continue or expand its business, and inability to raise additional capital or financing to implement its business plans;
(f)	rapid adverse changes in markets;
(g)	litigation with or legal claims and allegations by outside parties against First Foods, including but not limited to challenges to First Foods’ intellectual property rights; and
(h)	reliance on proprietary merchant advance credit models, which involve the use of qualitative factors that are inherently judgmental and which could result in merchant defaults.

There is no assurance that First Foods will be profitable, First Foods may not be able to successfully develop, manage or market its products and services, First Foods may not be able to attract or retain qualified executives and personnel, First Foods may not be able to obtain customers for its products or services, additional dilution in outstanding stock ownership may be incurred due to the issuance of more shares, warrants and stock options, or the exercise of outstanding warrants and stock options, and other risks inherent in First Foods’ business.

Because the forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. First Foods cautions you not to place undue reliance on the statements, which speak only of management’s plans and expectations as of the date of this Form 10-Q. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that First Foods or persons acting on its behalf may issue. First Foods does not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Form 10-Q, or to reflect the occurrence of unanticipated events.

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General

First Foods is currently a “smaller reporting company” under the JOBS Act. A company loses its “smaller reporting company” status on (i) the day its public float becomes greater than or equal to $250,000,000 or (ii) had annual revenues of less than $100,000,000 and either: (A) had no public float or (B) had a public float of less than $700,000,000. As a “smaller reporting company,” First Foods is exempt from certain obligations of the Exchange Act, including those found in Section 14A(a) and (b) related to shareholder approval of executive compensation and golden parachute compensation and Section 404(b) of the Sarbanes-Oxley Act of 2002 related to the requirement that management assess the effectiveness of the Company’s internal control for financial reporting. Furthermore, Section 103 of the JOBS Act provides that as a “smaller reporting company”, First Foods is not required to comply with the requirement to provide an auditor’s attestation of ICFR under Section 404(b) of the Sarbanes-Oxley Act for as long as First Foods qualifies as a “smaller reporting company.” However, a “smaller reporting company” is not exempt from the requirement to perform management’s assessment of internal control over financial reporting.

First Foods is focused on developing its specialty chocolate line and participating in merchant cash advances through its 1^st Foods Funding Division. First Foods continues to pursue new foodservice brands and menu concepts.

On August 31, 2017, the Company formed Holy Cacao, Inc., a Nevada corporation (“Holy Cacao”). Holy Cacao has 100 shares of no-par value common stock authorized, issued and outstanding with 85 shares owned by the Company and 15 shares owned by non-controlling interests. Holy Cacao is dedicated to producing, packaging, distributing and selling specialty chocolate, including specialty chocolate infused with a hemp-based ingredient in those United States jurisdictions where hemp-based products are legal. The Company has not been, is not, and has no current plans to be involved in producing, packaging, distributing or selling any product that is infused with a marijuana-based ingredient, although it intends to revisit the matter as laws change in jurisdictions in which it operates. The Company is also dedicated to licensing its intellectual property (“IP”), including its name, brand, and packaging, to third parties. The Company may license its IP to third parties that may produce, package, distribute or sell hemp-based or marijuana-based products, but only in those states where such activities are legal. On February 27, 2019, the United States Patent and Trademark Office (the “USPTO”) approved Holy Cacao’s trademark brand, “The Edibles’ Cult.” The Company has submitted multiple applications to the USPTO for additional brand names, including “Mystere” and “Purely Irresistible” among others. On February 5, 2019, the Company signed a Consulting Agreement with a consultant to assist in the manufacturing, packaging and distribution of the Company’s chocolate product line. On March 26, 2019, the Company signed a Facility Access and Wholesale Production Purchase and Sale Agreement that allows it to use a fully staffed and fully equipped state of the art manufacturing facility to begin producing its specialty chocolate product and selling it to manufacturing and wholesaling companies. On May 7, 2019, the Company sold three of its products comprised of 1,500 kilograms of specialty chocolate. This was the only purchase order received by the company to date. The Company expects to have additional orders in the future, but is not assured of receiving additional purchase orders. However, on July 1, 2019, hemp-based ingredients became legal in the state of Florida, where the Company produces its specialty chocolate products. Accordingly, on August 9, 2019, the Company signed a letter of intent to enter into a master distribution agreement with a master distributor to distribute the Company’s hemp-based chocolate edibles products. Also, on August 9, 2019, the Company purchased the intellectual property of Southeast Edibles, which consists of a pending logo, in-process package designs, social media tags and handles, and a pending trademark. The Company forgave a June 18, 2019 promissory note with Genesis Laboratories International, LLC ("GLI") for outstanding principle and accrued unpaid interest of $8,140 in exchange for GLI's Southeast Edibles’ intellectual property.

On October 25, 2017, the Company entered into a contract with TIER Merchant Advances LLC (“TIER”) to participate in the purchase of future receivables from qualified TIER merchants for the purpose of generating near-term and long-term revenue for the Company. The Company may also provide cash advances directly to merchants.

The Company is quoted on the OTCQB under “FIFG.”

The Company’s principal executive offices are located at First Foods Group, Inc. c/o Incorp Services, Inc., 3773 Howard Hughes Parkway, Suite 500S, Las Vegas, NV 89169-6014. Our telephone number is (201) 471-0988.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We monitor our estimates on an on-going basis for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates, if past experience or other assumptions do not turn out to be substantially accurate.

Certain of our accounting policies are particularly important to the portrayal and understanding of our financial position and results of operations and require us to apply significant judgment in their application. As a result, these policies are subject to an inherent degree of uncertainty. In applying these policies, we use our judgment in making certain assumptions and estimates. Our critical accounting policies are outlined in Note 1 in the Notes to the Unaudited Condensed Consolidated Financial Statements.

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Results of Operations for the Three Months Ended June 30, 2019 compared to the Three Months ended June 30, 2018

We had $73,461 of revenue for the three months ended June 30, 2019 compared to $85,510 in revenue for the three months ended June 30, 2018. Our decrease in revenue was the result of a decrease in participation in merchant cash advances offset by our first product sale in the second quarter of 2019 of approximately $31,000.For the three months ended June 30, 2019,our operating expenses were $431,839 which consisted of cost of product sales of $20,983 vs zero for the prior period as there were no product sales, professional fees of $25,615, general and administrative expenses of $391,340 and a gain of $6,099 of provision for merchant cash advances. Our net loss was $386,292. For the three months ended June 30, 2018, our operating expenses were $292,816 which consisted of professional fees of $1,620, general and administrative expenses of $277,540 and $13,656 of provision for merchant cash advances. As a result, our net loss was $216,249. This increase in our net loss was primarily due to increased costs associated with expanding the business, producing products, consulting and accounting fees, advertising and promotion, and cost of product sales. 

Results of Operations for the Six Months Ended June 30, 2019 compared to the Six Months ended June 30, 2018

We had $188,298 of revenue for the six months ended June 30, 2019 compared to $145,805 in revenue for the six months ended June 30, 2018. Our increase in revenue was the result of an increase in participation in merchant cash advances and our first product sales. For the six months ended June 30, 2019, operating expenses were $888,317 which consisted of cost of product sales of $20,983 vs zero for the prior period as there were no product sales, professional fees of $54,847, general and administrative expenses of $790,248 and $22,239 of provision for merchant cash advances. Our net loss was $752,883. For the six months ended June 30, 2018, our operating expenses were $631,607 which consisted of professional fees of $23,689, general and administrative expenses of $717,283 and $36,440 of provision for merchant cash advances. As a result, our net loss was $656,788. This increase in our net loss was primarily due to increased costs associated with expanding the business, producing products, consulting and accounting fees, advertising and promotion, and cost of product sales. 

Liquidity and Capital Resources

Net cash used in operating activities amounted to $54,763 for the six months ended June 30, 2019 and $368,630 for the six months ended June 30, 2018. This was primary due to collections of cash advances and an increase of accounts payables and accrued expenses. This resulted in a working capital deficiency of $(965,178) at June 30, 2019 and $(186,127) at December 31, 2018. This decrease in working capital was due primarily to loans coming due within the year.

Net cash provided by financing activities amounted to $56,850 for the six months ended June 30, 2019 and $265,320 for the six months ended June 30, 2018. This was due to a lower amount of proceeds from loans in 2019 vs funding through preferred stock in 2018.

Going Concern

The Company’s unaudited condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. As of June 30, 2019, the Company had approximately $350,000 of third party short term debt that is due within the next twelve months. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The Company does not have sufficient cash flow for the next twelve months from the issuance of these unaudited condensed consolidated financial statements. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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Concentration Risks

As of and during the three and six months ended June 30, 2019, the Company’s merchant cash advance income (“MCA income”) and advances from merchant cash advances were mainly derived from one merchant cash advance provider. The Company recognizes the concentration of its merchant cash advances, which could inherently create a potential risk to future working capital in the event that the Company is not able to collect all, or a majority, of the outstanding merchant cash advances. The Company actively mitigates its portfolio concentration risk by monitoring its merchant cash advance provider’s ability to participate in merchant cash advances from alternative providers and spreading merchant cash advance participation across various merchants.

As of June 30, 2019, the Company’s receivables from merchant cash advances included $164,172 from two merchants ($102,719 and $61,453), representing 58.5% of the Company’s merchant cash advances. The Company earned $13,350 of MCA income from one merchant, representing 32% of the Company’s MCA income for the three months ended June 30, 2019. The Company earned $46,839 of MCA income from two merchants ($25,852 and $20,987), representing 30% of the Company’s MCA income for the six months ended June 30, 2019.

For the three months ended June 30, 2018, the Company earned MCA income from seven merchants for $46,106 ($12,542, $8,862, $8,401, $5,063, $4,213, $3,927, and $3,099), representing 54% of total MCA income. The Company earned MCA income from nine merchants for $87,486 ($18,375, $15,965, $15,147, $10,800, $8,401, $5,967, $4,699, $4,432 and $3,700), representing 60% of total MCA income for the six months ended June 30, 2018.

As of June 30, 2019, the Company’s accounts receivable had a concentration of 100% from one customer. The concentration of the Company’s accounts receivable creates a potential risk to future working capital in the event that the Company is not able to collect all, or a majority, of outstanding accounts receivable balances.

As of June 30, 2019, the Company had a purchase concentration of 100% from one vendor.

As of December 31, 2018, the Company’s receivables from merchant cash advances included $232,484 from two merchants ($141,539 and $90,945), representing 41% of the Company’s merchant cash advances.

Off-Balance Sheet Arrangements

No off-balance sheet arrangements exist.

Contractual Obligations

None.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management has carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of June 30, 2019. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were ineffective due to a lack of sufficient resources to hire a support staff in order to separate duties between different individuals. The Company lacks the appropriate personnel to handle all the varying recording and reporting tasks on a timely basis. The Company plans to address these material weaknesses as resources become available by hiring additional professional staff, as funding becomes available, outsourcing certain aspects of the recording and reporting functions, and separating responsibilities.

In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2019 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

As of June 30, 2019, we were not a party to any legal proceedings that could have a material adverse effect on the Company’s business, financial condition or operating results. Further, to the Company’s knowledge, no such proceedings have been threatened against the Company.

Item 1A. Risk Factors

We are not obligated to disclose our risk factors in this report; however, information regarding our risk factors appears in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018. There have been no material changes from the risk factors previously disclosed in such Annual Report on Form 10-K.

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

No sales of unregistered equity securities occurred during the quarter ended June 30, 2019.

Item 3. Defaults Upon Senior Securities

.

There have been no defaults upon senior securities.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not Applicable

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Item 6. Exhibits

(a) Exhibits

Item 6. Exhibits, Financial Statement Schedules

EXHIBIT NO.	DESCRIPTION
3.1	Amendment to Articles of Incorporation of the Registrant (1) for Preferred Stock Designations
3.2	By-laws of the Registrant (1)
3.3	Form of Compensatory Arrangements of Directors (2)
10.1	Facility Access and Wholesale Production Purchase and Sale Agreement (3)
31.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certifications of Chief Executive Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002
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

___________ 

(1)	Filed as an Exhibit to the Form S-1, filed by First Foods Group, Inc. on August 10, 2015, and incorporated herein by reference.
(2)	Filed as an Exhibit to Form 10-Q, filed by First Foods Group, Inc. on May 13, 2019, and incorporated herein by reference.
(3)	Filed as an Exhibit to Form 10-K, filed by First Foods Group, Inc. on March 29, 2019, and incorporated herein by reference.

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SIGNATURES

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

By:	/s/ Harold Kestenbaum	Dated: August 13, 2019
	Harold Kestenbaum,
	Chairman of the Board and
	Chief Executive Officer
By:	/s/ Mark J. Keeley	Dated: August 13, 2019
	Mark J. Keeley,
	Chief Financial Officer

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Harold Kestenbaum, certify that:

1. I have reviewed this report on Form 10-Q of First Foods Group, Inc.;

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

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

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

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

b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

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

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

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

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Dated: August 13, 2019

/s/ Harold Kestenbaum

Harold Kestenbaum,

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Mark J. Keeley, certify that:

1. I have reviewed this report on Form 10-Q of First Foods Group, Inc.;

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

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

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

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

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

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

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

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

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

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Dated: August 13, 2019

/s/ Mark J. Keeley

Mark J. Keeley,

Chief Financial Officer

(Principal Financial/Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

418 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Foods Group, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2019 (the “Report”) I, Harold Kestenbaum, Chief Executive Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

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

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

/s/ Harold Kestenbaum	Dated: August 13, 2019
Harold Kestenbaum, Chief Executive Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

418 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Foods Group, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2019 (the “Report”) I, Mark J. Keeley, Chief Financial Officer (Principal Financial/Accounting Officer) of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

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

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

/s/ Mark J. Keeley	Dated: August 13, 2019
Mark J. Keeley, Chief Financial Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 08, 2019
Document And Entity Information
Entity Registrant Name	First Foods Group, Inc.
Entity Central Index Key	0001648903
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Jun. 30, 2019
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2019
Entity Common Stock Shares Outstanding		18,305,502

XML

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2019	Dec. 31, 2018
CURRENT ASSETS:
Cash	$ 32,513	$ 30,426
Accounts receivable, net	31,545
Merchant cash advances, net of allowance $45,096 and $82,354, respectively	280,435	562,488
Prepaid expenses and other current assets	57,939	36,506
Deferred merchant advance commissions	29,646	50,759
TOTAL ASSETS	432,078	680,179
CURRENT LIABILITIES
Accounts payable and accrued liabilities	574,106	317,356
Deferred revenue	94,130	176,115
loans, net	376,475
Related party loans, net	376,475	372,835
TOTAL CURRENT LIABILITIES	1,397,256	866,306
Loans, net - long term	66,523	342,119
TOTAL LIABILITIES	1,463,779	1,208,425
DEFICIT
FIRST FOODS GROUP, INC. DEFICIT:
Common stock: $0.001 par value,100,000,000 shares authorized, 18,055,502 and 17,709,087 shares issued and outstanding, respectively	18,056	17,709
Additional paid-in capital	7,330,640	7,081,559
Accumulated deficit	(8,372,285)	(7,637,029)
Total First Foods Group, Inc. Deficit	(1,022,456)	(536,628)
Noncontrolling interests	(9,245)	8,382
Total deficit	(1,031,701)	(528,246)
TOTAL LIABILITIES AND DEFICIT	432,078	680,179
Series A Convertible Preferred Stock [Member]
FIRST FOODS GROUP, INC. DEFICIT:
Preferred stock
Series B Convertible Preferred Stock [Member]
FIRST FOODS GROUP, INC. DEFICIT:
Preferred stock	473	473
Series C Convertible Preferred Stock [Member]
FIRST FOODS GROUP, INC. DEFICIT:
Preferred stock	$ 660	$ 660

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Net of allowance cash advances	$ 45,096	$ 82,354
STOCKHOLDERS' DEFICIT
Preferred stock, authorized shares	20,000,000	20,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized shares	100,000,000	100,000,000
Common stock, issued shares	18,055,502	18,055,502
Common stock, outstanding shares	17,709,087	17,709,087
Series A Convertible Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock, authorized shares	1	1
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, issued shares	1	1
Preferred stock, outstanding shares	1	1
Preferred stock, liquidation preference value	$ 577,005	$ 577,005
Series B Convertible Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock, authorized shares	4,999,999	4,999,999
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, issued shares	473,332	473,332
Preferred stock, outstanding shares	473,332	473,332
Preferred stock, liquidation preference value	$ 160,000	$ 160,000
Series C Convertible Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock, authorized shares	3,000,000	3,000,000
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, issued shares	660,000	660,000
Preferred stock, outstanding shares	660,000	660,000
Preferred stock, liquidation preference value	$ 174,900	$ 174,900

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
REVENUES
Product sales	$ 31,545		$ 31,545
Merchant cash advance income, net	41,916	85,510	156,753	145,805
TOTAL REVENUE	73,461	85,510	188,298	145,805
OPERATING EXPENSES
Cost of product sales	20,983		20,983
Professional fees	25,615	1,620	54,847	23,689
General and administrative	391,340	277,540	790,248	717,283
Provision for merchant cash advances	(6,099)	13,656	22,239	36,440
Total Operating Expenses	431,839	292,816	888,317	777,412
LOSS FROM OPERATIONS	(358,378)	(207,306)	(700,019)	(631,607)
OTHER INCOME (EXPENSE)
Gain for forgiveness of debt		3,000		3,000
Interest expense	(27,914)	(11,943)	(52,864)	(28,181)
Loss before income taxes	(386,292)	(216,249)	(752,883)	(656,788)
Provision for income taxes
NET LOSS	(386,292)	(216,249)	(752,883)	(656,788)
Non-controlling interest share of loss	10,580		17,627
Dividends on preferred stock	(4,950)		(9,900)
Net loss attributed to shareholders of First Foods Group, Inc.	$ (380,662)	$ (216,249)	$ (745,156)	$ (656,788)
BASIC AND DILUTED LOSS PER COMMON SHARE ATTRIBUTABLE TO FIRST FOODS GROUP, INC. STOCKHOLDERS	$ (0.02)	$ (0.01)	$ (0.04)	$ (0.04)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING ATTRIBUTABLE TO FIRST FOODS GROUP, INC. STOCKHOLDERS	17,952,371	16,999,061	17,887,548	16,963,453

XML

Condensed Consolidated Statements of Changes in Deficit (Unaudited) - USD ($)	Total	Preferred Stock Shares	Common Stock Shares	Additional paid-in capital	Accumulated deficit	Total First Foods Group Inc deficit	Non- controlling interests
Beginning Balance, Shares at Dec. 31, 2017		1	16,919,524
Beginning Balance, Amount at Dec. 31, 2017	$ (382,847)		$ 16,920	$ 5,255,402	$ (5,675,169)	$ (402,847)	$ 20,000
Common stock issued to consultants for services, Shares			13,262
Common stock issued to consultants for services, Amount	6,000		$ 13	5,987		6,000
Warrants issued for director services	72,009			72,009		72,009
Preferred stock issued for cash, Shares		660,000
Preferred stock issued for cash, Amount	165,000	$ 660		164,340		165,000
Common stock issued for CFO services	140,625			140,625		140,625
Net loss	(440,539)				(440,539)	(440,539)
Ending Balance, Shares at Mar. 31, 2018		660,001	16,932,786
Ending Balance, Amount at Mar. 31, 2018	(439,752)	$ 660	$ 16,933	5,638,363	(6,115,708)	(459,752)	20,000
Beginning Balance, Shares at Dec. 31, 2017		1	16,919,524
Beginning Balance, Amount at Dec. 31, 2017	(382,847)		$ 16,920	5,255,402	(5,675,169)	(402,847)	20,000
Net loss	(656,788)
Ending Balance, Shares at Jun. 30, 2018		660,001	17,117,887
Ending Balance, Amount at Jun. 30, 2018	(561,991)	$ 660	$ 17,118	5,732,188	(6,331,957)	(581,991)	20,000
Beginning Balance, Shares at Mar. 31, 2018		660,001	16,932,786
Beginning Balance, Amount at Mar. 31, 2018	(439,752)	$ 660	$ 16,933	5,638,363	(6,115,708)	(459,752)	20,000
Common stock issued to consultants for services, Shares			10,101
Common stock issued to consultants for services, Amount	2,000		$ 10	1,990		2,000
Warrants issued for director services	72,010			72,010		72,010
Common stock issued to consultants for services - related party, Shares			75,000
Common stock issued to consultants for services - related party, Amount	9,000		$ 75	8,925		9,000
Common stock issued with related party loans, Shares			100,000
Net loss	(216,249)				(216,249)	(216,249)
Common stock issued with related party loans, Amount	11,000		$ 100	10,900		11,000
Ending Balance, Shares at Jun. 30, 2018		660,001	17,117,887
Ending Balance, Amount at Jun. 30, 2018	(561,991)	$ 660	$ 17,118	5,732,188	(6,331,957)	(581,991)	20,000
Beginning Balance, Shares at Dec. 31, 2018		1,133,333	17,709,087
Beginning Balance, Amount at Dec. 31, 2018	(528,246)	$ 1,133	$ 17,709	7,081,559	(7,637,029)	(536,628)	8,382
Common stock issued to consultants for services, Shares			7,500
Common stock issued to consultants for services, Amount	1,500		$ 8	1,492		1,500
Warrants issued for director services	71,553			71,553		71,553
Warrants issued for consultant services	25,385			25,385		25,385
Common stock issued for services, Shares			100,000
Common stock issued for services, Amount	30,000		$ 100	29,900		30,000
Common stock issued with loans payable, Shares			50,000
Common stock issued with loans payable, Amount	7,125		$ 50	7,075		7,125
Dividend on preferred stock	(4,950)			(4,950)		(4,950)
Net loss	(366,591)				(359,544)	(359,544)	(7,047)
Ending Balance, Shares at Mar. 31, 2019		1,133,333	17,866,587
Ending Balance, Amount at Mar. 31, 2019	(764,224)	$ 1,133	$ 17,867	7,212,014	(7,996,573)	(765,559)	1,335
Beginning Balance, Shares at Dec. 31, 2018		1,133,333	17,709,087
Beginning Balance, Amount at Dec. 31, 2018	(528,246)	$ 1,133	$ 17,709	7,081,559	(7,637,029)	(536,628)	8,382
Net loss	(752,883)
Ending Balance, Shares at Jun. 30, 2019		1,133,333	18,055,502
Ending Balance, Amount at Jun. 30, 2019	(1,031,701)	$ 1,133	$ 18,056	7,330,640	(8,372,285)	(1,022,456)	(9,245)
Beginning Balance, Shares at Mar. 31, 2019		1,133,333	17,866,587
Beginning Balance, Amount at Mar. 31, 2019	(764,224)	$ 1,133	$ 17,867	7,212,014	(7,996,573)	(765,559)	1,335
Common stock issued to consultants for services, Shares			176,415
Common stock issued to consultants for services, Amount	40,250		$ 176	40,074		40,250
Warrants issued for director services	72,348			72,348		72,348
Warrants issued for consultant services	7,479			7,479		7,479
Common stock issued with loans payable, Shares			12,500
Common stock issued with loans payable, Amount	3,688		$ 13	3,675		3,688
Dividend on preferred stock	(4,950)			(4,950)		(4,950)
Net loss	(386,292)				(375,712)	(375,712)	(10,580)
Ending Balance, Shares at Jun. 30, 2019		1,133,333	18,055,502
Ending Balance, Amount at Jun. 30, 2019	$ (1,031,701)	$ 1,133	$ 18,056	$ 7,330,640	$ (8,372,285)	$ (1,022,456)	$ (9,245)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$ (752,883)	$ (656,788)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-employee stock based compensation	104,615	17,000
Employee stock based compensation	143,901	284,645
Gain on forgiveness of debt		3,000
Amortization of debt discount	16,401	11,667
Provision for merchant cash advances	22,239	46,003
Changes in operating assets and liabilities:
Accounts receivable	(31,545)
Merchant cash advances	259,814	(309,262)
Deferred merchant advance commissions	21,113	(15,227)
Prepaid expenses and other current assets	(21,433)	(13,539)
Accounts payable and accrued liabilities	265,000	107,725
Deferred revenue	(81,985)	71,175
Deferred compensation		84,971
Net cash used in operating activities	(54,763)	(368,630)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of Series C convertible preferred stock		165,000
Divident payment	(18,150)
Proceeds from shareholder loans		280,134
Repayment of shareholder loans		(179,814)
Proceeds from loans	75,000
Net cash provided by financing activities	56,850	265,320
NET INCREASE (DECREASE) IN CASH	2,087	(103,310)
CASH AT BEGINNING OF PERIOD	30,426	136,188
CASH AT END OF PERIOD	32,513	32,878
NON-CASH FINANCING ACTIVITIES:
Common stock issued for long term loans	10,813	11,000
CASH PAID FOR:
Interest	40,848	3,750
Income taxes

XML

BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY

6 Months Ended

Jun. 30, 2019

BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY

NOTE 1 - BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY

Nature of Business

First Foods Group, Inc. (the Company or First Foods) is a smaller reporting company focused on developing its specialty chocolate line and participating in merchant cash advances through its 1^st Foods Funding Division (the Division). First Foods continues to pursue new foodservice brands and menu concepts.

On August 31, 2017, the Company formed Holy Cacao, Inc., a Nevada corporation (Holy Cacao). Holy Cacao has 100 shares of no par value common stock authorized, issued and outstanding with 85 shares owned by the Company and 15 shares owned by non-controlling interests. Holy Cacao is dedicated to producing, packaging, distributing and selling specialty chocolate, including specialty chocolate infused with a hemp-based ingredient in those United States jurisdictions where hemp-based products are legal. The Company has not been, is not, and has no current plans to be involved in producing, packaging, distributing or selling any product that is infused with a marijuana-based ingredient, although it intends to revisit the matter as laws change in jurisdictions in which it operates. The Company is also dedicated to licensing its intellectual property (IP), including its name, brand, and packaging, to third parties. The Company may license its IP to third parties that may produce, package, distribute or sell hemp-based or marijuana-based products, but only in those states where such activities are legal. On February 27, 2019, the United States Patent and Trademark Office (the USPTO) approved Holy Cacaos trademark brand, The Edibles Cult. The Company has submitted multiple applications to the USPTO for additional brand names, including Mystere and Purely Irresistible among others. On February 5, 2019, the Company signed a Consulting Agreement with a consultant to assist in the manufacturing, packaging and distribution of the Companys chocolate product line. On March 26, 2019, the Company signed a Facility Access and Wholesale Production Purchase and Sale Agreement that allows it to use a fully staffed and fully equipped state of the art manufacturing facility to begin producing its specialty chocolate product and selling it to manufacturing and wholesaling companies. On May 7, 2019, the Company sold three of its products comprised of 1,500 kilograms of specialty chocolate. This was the only purchase order received by the company to date. The Company expects to have additional orders in the future, but is not assured of receiving additional purchase orders. However, on July 1, 2019, hemp-based ingredients became legal in the state of Florida, where the Company produces its specialty chocolate products. Accordingly, on August 9, 2019, the Company signed a letter of intent to enter into a master distribution agreement with a master distributor to distribute the Companys hemp-based chocolate edibles products (see Note 6). Also, on August 9, 2019, the Company purchased the intellectual property of Southeast Edibles, which consists of a pending logo, in-process package designs, social media tags and handles, and a pending trademark (see Note 6).

On October 25, 2017, the Company entered into a contract with TIER Merchant Advances LLC (TIER) to participate in the purchase of future receivables from qualified TIER merchants for the purpose of generating near-term and long-term revenue for the Company. The Company may also provide cash advances directly to merchants.

Liquidity and Going Concern

The Companys unaudited condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States of America (GAAP) applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. As of June 30, 2019, the Company had approximately $350,000 of third-party short-term debt that is due within the next twelve months. Managements plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its operating expenses and seeking equity and/or debt financing. However, neither any members of management nor any significant shareholders are currently committed to invest funds and; therefore, the Company cannot provide any assurances that it will be successful in accomplishing any of its plans.

The Company does not have sufficient cash flow for the next twelve months from the issuance of this report. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States of America 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 unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these unaudited condensed consolidated financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read in conjunction with the Companys annual consolidated financial statements included within the Companys Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on March 29, 2019.

In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Companys financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the six months ended June 30, 2019 may not be indicative of results for the full year. 

The noncontrolling interest represents the proportionate share of the proceeds received and also the income and loss pickup from the fifteen-percent equity interest in our otherwise wholly owned subsidiary; Holy Cacao.

Principles of Consolidation

The unaudited condensed consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiary in conformity with GAAP. All intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of twelve months or less to be cash equivalents. At June 30, 2019 and December 31, 2018, the Company had no cash equivalents.

The Companys cash is held with financial institutions, and the account balances may exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit at times. Accounts are insured by the FDIC up to $250,000 per financial institution. The Company has not experienced any losses in such accounts with these financial institutions.

Merchant Cash Advances

Starting in October 2017, the Company entered into a contract with TIER to participate in TIERs purchase of merchant cash advances, which are short-term cash advances made to businesses in return for an agreed-upon amount of future sales, paid by the business in small, regular daily payments. During the six months ended June 30, 2019, the Division participated in 259 merchant cash advances from TIER and 3 merchant cash advances directly with 1 merchant.

The Company participates in the merchant cash advance industry by directly advancing sums to a merchant or a merchant advance provider, TIER, who in turn advances sums to merchants or other merchant cash advance providers. Each reporting period, the Company reviews the carrying value of these advances and determines whether an impairment reserve is necessary. At June 30, 2019, the Company reserved an amount equal to 12% of the outstanding merchant cash advance balance at period end determined by the risk of default as disclosed by TIER along with managements assessment, as well as an additional reserve for discounts to merchants who settle their advance balance prior to the scheduled due date. In addition, the Company wrote off eighteen (18) merchant advances for a total of $59,497 for the six months ended June 30, 2019. These expenses, unless they were included in previous reserves, are included in provision for merchant cash advances expenses on the accompanying unaudited condensed consolidated statements of operations.

Concentration Risks

As of and during the three and six months ended June 30, 2019, the Companys merchant cash advance income (MCA income) and advances from merchant cash advances were mainly derived from one merchant cash advance provider. The Company recognizes the concentration of its merchant cash advances, which could inherently create a potential risk to future working capital in the event that the Company is not able to collect all, or a majority, of the outstanding merchant cash advances. The Company actively mitigates its portfolio concentration risk by monitoring its merchant cash advance providers ability to participate in merchant cash advances from alternative providers and spreading merchant cash advance participation across various merchants.

As of June 30, 2019, the Companys receivables from merchant cash advances included $164,172 from two merchants ($102,719 and $61,453), representing 58.5% of the Companys merchant cash advances. The Company earned $13,350 of MCA income from one merchant, representing 32% of the Companys MCA income for the three months ended June 30, 2019. The Company earned $46,839 of MCA income from two merchants ($25,852 and $20,987), representing 30% of the Companys MCA income for the six months ended June 30, 2019.

For the three months ended June 30, 2018, the Company earned MCA income from seven merchants for $46,106 ($12,542, $8,862, $8,401, $5,063, $4,213, $3,927, and $3,099), representing 54% of total MCA income. The Company earned MCA income from nine merchants for $87,486 ($18,375, $15,965, $15,147, $10,800, $8,401, $5,967, $4,699, $4,432 and $3,700), representing 60% of total MCA income for the six months ended June 30, 2018.

As of June 30, 2019, the Companys accounts receivable had a concentration of 100% from one customer. The concentration of the Companys accounts receivable creates a potential risk to future working capital in the event that the Company is not able to collect all, or a majority, of outstanding accounts receivable balances.

As of June 30, 2019, the Company had a purchase concentration of 100% from one vendor.

As of December 31, 2018, the Companys receivables from merchant cash advances included $232,484 from two merchants ($141,539 and $90,945), representing 41% of the Companys merchant cash advances.

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which creates Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, and supersedes the revenue recognition requirements in ASC 605, Revenue Recognition and most industry-specific guidance throughout the ASC. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. We completed our assessment of the impact of the ASC 606 and determined that we recognize our merchant cash advances in accordance with ASC 860, Transfers and Servicing, which is explicitly excluded from the scope of ASC 606. We participate in the servicing of merchant cash advances that have been provided to third parties, which in accordance with ASC 860, causes us to recognize MCA income. Commencing in Q2 2019, we also have product sales from our Holy Cacao division that follow ASC 606.

The amendments may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company completed its assessment of the guidance and determined its merchant cash advances are excluded from the scope of ASU 2014-09. As a result of this scope exception, the adoption of this ASU did not have a material impact on the Companys unaudited condensed consolidated financial statements.

During the three and six months ended June 30, 2019, the Company recognized its product sales as follows:

Product sales are measured based on consideration specified in a contract with a customer that we expect to receive in exchange for goods, net of any variable considerations (e.g. rights to return product, sales incentives, etc.). The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer. These criteria are assumed to have been met upon delivery of the products requested by the customer to the customers carrier. The Company applied the practical expedient available under ASC 606 to disregard determining significant financing components, if the good is transferred and payment is received within one year.

During the three and six months ended June 30, 2019, the Company recognized its MCA income as follows:

When a merchant cash advance is purchased, the Company records a merchant cash advance participation receivable for the purchase price. The purchase price consists of the merchant cash advance principal plus an up-front commission that is amortized over the term of the merchant cash advance. The amount of the commission is negotiated between the Company and TIER for each contract. The standard commission is 15% of the merchant cash advance principal but can be reduced depending upon the credit worthiness of the merchant. If a merchant cash advance contract is signed in one period, but not paid until a subsequent period, a corresponding liability is established in the current period.

At the time the merchant cash advance is purchased, the Company records a deferred revenue liability, which is the total future receivable due to the Company less the principal amount of the merchant cash advance. Revenue is recognized and the deferred liability is reduced over the term of the merchant cash advance.

TIER maintains a bank account on behalf of the Company. Each day, TIER receives payment, reflected in the bank account, for each merchant cash advance TIER has purchased on behalf of the Company from various merchant cash advance providers. The Company reduces its merchant cash advance balance by the cash received, which is net of platform fees. Platform fees are a daily charge associated with the ACH service and the financial and reporting management software platform provided by TIER. The platform fees are also negotiated between the Company and TIER for each contract but are typically 4% of the daily merchant cash advance principal amount.

The Company records a reserve liability equal to 2% of the merchant cash advance amount released, which is a residual commission owed to TIER. This reserve is recognized over the term of the merchant cash advance and eliminated when the merchant cash advance is completely satisfied and payment is remitted by the Company to TIER.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customers financial condition, credit history and current economic conditions and sets up an allowance for doubtful accounts when collection is uncertain. Customers accounts are written off when all attempts to collect have been exhausted. The Company considers an invoice past due once the terms of the invoice has passed and payment has not been received. No interest is charged on past due invoices. Recoveries of accounts receivable previously written off are recorded as income when received. As of June 30, 2019, the Company had no allowance for doubtful accounts.

Inventory

Inventory, consisting of raw materials, work in process and products available for sale, are primarily accounted for using the first-in, first-out method (FIFO), and are valued at the lower of cost or net realizable value. This valuation requires management to make judgements based on currently available information, about the likely method of disposition, such as through sales to individual customers and returns to product vendors. As of June 30, 2019, the Company had no inventory and no allowance for inventory reserves.

Research and Development

The Companys policy is to engage market and branding consultants to research and develop specialty chocolate products and packaging targeted to particular states within the US. The research and development costs for the three months ended June 30, 2019 and 2018, were approximately $18,510 and $15,000, respectively. The research and development costs for the six months ended June 30, 2019 and 2018, were approximately $33,510 and $30,000, respectively. These expenses are included in general and administrative expenses on the accompanying unaudited condensed consolidated statements of operations.

Deferred Financing Costs

The Company records origination and other expenses related to its debt obligations as deferred financing costs. These expenses are deferred and amortized over the life of the related debt instrument. In accordance with ASU No. 2015-03, deferred finance costs, net of accumulated amortization have been included as a contra to the corresponding loans in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2019 and December 31, 2018, respectively.

Stock Based Compensation

The Company measures and recognizes compensation expense for all stock-based payments at fair value over the requisite service period. The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options and warrants. For restricted stock grants, fair value is determined as the closing price of the Companys common stock on the date of grant. Equity-based compensation expense is recorded in administrative expenses based on the classification of the employee or vendor. The determination of fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price, as well as by assumptions regarding a number of subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

Income Taxes

The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2019 and December 31, 2018, the Company had a full valuation allowance against deferred tax assets. With the historical change in ownership, the Company is subject to certain NOL limitations under Section 382 of the Internal Revenue Code.

The Tax Cuts and Jobs Act (the Tax Act), enacted on December 22, 2017, among other things, permanently lowered the statutory federal corporate tax rate from 35% to 21%, effective for tax years including or beginning January 1, 2018. Under the guidance of ASC 740, Income Taxes, the Company revalued its net deferred tax assets on the date of enactment based on the reduction in the overall future tax benefit expected to be realized at the lower tax rate implemented by the new legislation. Although in the normal course of business the Company is required to make estimates and assumptions for certain tax items which cannot be fully determined at period end, the Company did not identify items for which the income tax effects of the Tax Act have not been completed as of June 30, 2019, and therefore, considers its accounting for the tax effects of the Tax Act on its deferred tax assets and liabilities to be complete as of June 30, 2019.

Per Share Data

In accordance with ASC-260 - Earnings per Share, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. No dilutive shares were outstanding as of June 30, 2019 and December 31, 2018 because their effect would be antidilutive.

The Company had 403,750 and 100,000 warrants to purchase common stock outstanding at June 30, 2019 and 2018, respectively. The Company had 3,370,000 and 1,970,000 warrants to purchase Series B preferred stock outstanding at June 30, 2019 and 2018, respectively. Additionally, the Company has 1,133,333 and 660,001 preferred shares outstanding that are convertible into 3,026,665 and 660,005 shares of common stock at June 30, 2019 and 2018, respectively. The warrants and preferred stock were not included in the Companys weighted average number of common shares outstanding because they would be anti-dilutive.

Fair Value of Financial Instruments

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value. The carrying value of cash, merchant cash advances, prepaid expenses, accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments. Management is of the opinion that the Company is not exposed to significant market or credit risks arising from these financial instruments.

Advertising and Promotion

Advertising and promotion costs are expensed as incurred. Advertising and promotion costs recognized in the unaudited condensed consolidated statements of operations for the three months ended June 30, 2019 and 2018, were $34,150 and $11,504, respectively and $44,889 and $32,243, respectively, for the six months ended June 30, 2019 and 2018.

Non-Controlling Interests in Consolidated Financial Statements

In June 2011, the FASB issued ASC 810-10-65-1, to clarify that a non-controlling (minority) interest in a subsidiary is an ownership interest in the entity that should be reported as equity in the consolidated financial statements. It also requires consolidated net income to include the amounts attributable to both the parent and non-controlling interest, with disclosure on the face of the consolidated income statement of the amounts attributed to the parent and to the non-controlling interest. In accordance with ASC 810-10-45-21, those losses attributable to the parent and the non-controlling interest in subsidiaries may exceed their interests in the subsidiarys equity. The excess and any further losses attributable to the parent and the non-controlling interest shall be attributed to those interests even if that attribution results in a deficit non-controlling interest balance. During the year ended December 31, 2017, the Company entered into two subscription agreements for the sale of 800,000 shares of its common stock and a ten-percent equity interest in its wholly owned subsidiary, Holy Cacao, for $200,000 in cash proceeds, in the aggregate. The Company recorded ten-percent of the cash proceeds or $20,000 as noncontrolling interests for the year ended December 31, 2017. On July 16, 2018, the Company entered into a consulting agreement with a service provider that contained the following term: 5% equity ownership in the Companys Holy Cacao subsidiary will be awarded immediately upon the successful launch of the Holy Cacao product line and the sale of the first production run of Holy Cacao product. As of June 30, 2019, this part of the agreement was completed and 5% equity was issued. The Companys periodic reporting now includes the results of operations of Holy Cacao, with the fifteen-percent ownership reported as noncontrolling interests. The cost of goods sold and operating expense for Holy Cacao for the six months ended June 30, 2019 were $20,983 and $165,565, respectively. There was $31,545 of revenue for Holy Cacao for the six months ended June 30, 2019.

The Company conducts business as two operating segments, First Foods and Holy Cacao. The Company does not distinguish between the two segments and has only one reportable segment based on quantitative thresholds. The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The operating results of these business segments are regularly reviewed by the Companys chief operating decision maker.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02), which affects any entity that enters into a lease (as that term is defined in ASU 2016-02), with some specified scope exceptions. The main difference between the guidance in ASU 2016-02 and prior GAAP is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under current GAAP. Under ASU 2016-02, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients. The Company adopted this provision on January 1, 2019 which did not have a material impact on the Companys unaudited condensed consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in ASC 605-Revenue Recognition and most industry-specific guidance throughout the ASC. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers in an amount that reflects the expected consideration received in exchange for those goods or services. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early adoption is permitted to the original effective date for annual reporting periods beginning after December 15, 2016 (including interim reporting periods within those periods). The Company completed its assessment of the guidance and determined its merchant cash advances are excluded from the scope of ASU 2014-09. As a result of this scope exception, the adoption of this ASU did not have a material impact on the Companys unaudited condensed consolidated financial statements.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2019

RELATED PARTY TRANSACTIONS

NOTE 2 - RELATED PARTY TRANSACTIONS

As of June 30, 2019, the Company owes a Director approximately $8,000 for expenses the Director incurred on behalf of the Company.

Employment Agreement

On March 1, 2017, Mark J. Keeley assumed the role of Chief Financial Officer (CFO). Pursuant to his Employment Agreement, the CFO shall receive (i) 750,000 shares of common stock of the Company, and (ii) $20,833 per month, which shall be deferred until the Company raises at least $1,500,000 in financing. The 750,000 shares of common stock are fully vested and valued at $1,687,500, representing a fair market value of $2.25 per share based on the closing price on the day of entry into the agreement. On December 26, 2017, the CFO amended his employment agreement and agreed to reduce the annual salary from $250,000 to $150,000 for the period from February 1, 2017 through January 31, 2019, and then revert back to the original amount of $250,000 annually starting February 1, 2019 through the remainder of his employment. The CFOs salary was deferred until the Company raised at least $1,000,000 in financing. This raise has been achieved. This agreement has since been amended, where Mr. Keeley earns an additional $40,000 per year for his role as a Director of the Board. Mr. Keeley was awarded 85,000 and 33,333 shares of Series B Preferred Stock on October 25, 2018 and December 17, 2018, respectively, for a total of 118,333 shares in lieu of $40,000 Director compensation accrued for the period January 1, 2018 through December 31, 2018 (see Note 4). As of June 30, 2019 and December 31, 2018, the Company has accrued $204,167 and $87,500, respectively, in relation to the employment agreement and $15,141 and $13,449, respectively, in relation to the payroll tax liability.

On January 30, 2019, the Company entered into a consulting agreement with R and W Financial, an entity owned by a Company director, to assist with the growth of the Company. R and W Financial will receive $5,000 per month for an indefinite period of time, subject to cancellation by the Company or R and W Financial with 30 days written notice to the other.

Consulting Agreement

On February 27, 2017, Harold Kestenbaum assumed the role of Chairman of the Board of Directors and Interim Chief Executive Officer (Interim CEO). Pursuant to his consulting agreement, the Interim CEO shall receive (i) 750,000 shares of common stock of the Company for his appointment as Chairman of the Board, (ii) $10,000 per month for his role as Interim CEO, which shall be deferred until the Company raises at least $1,500,000 in financing, (iii) $10,000 for every new franchising client he obtains, and (iv) $2,000 per month for legal services upon acquisition of a franchising client. The shares were valued at $1,500,000, representing a market value of $2.00 per share based on the closing price on the day of entry into the agreement. On December 26, 2017, Mr. Kestenbaum agreed to a reduction in his 2017 annual salary from $120,000 to $40,000. This agreement has since been amended, where Mr. Kestenbaum now earns $40,000 per year for his role as Chairman of the Board and earns no salary as Interim CEO. Mr. Kestenbaum was awarded 85,000 and 33,333 shares of Series B Preferred Stock on October 24, 2018 and December 17, 2018, respectively, for a total of 118,333 shares in lieu of $40,000 compensation accrued for the period January 1, 2018 through December 31, 2018 (see Note 4). As of June 30, 2019 and December 31, 2018, the Company has accrued a total of $40,000 in relation to the consulting agreement.

Related Party Loans

On October 17, 2017, Obvia LLC, of which the Companys Chief Financial Officer, who is also a director and a shareholder of the Company, is a 50% owner, provided a loan to the Companys Funding Division in the amount of $100,000 bearing an interest rate of the US Prime Federal Funds Rate +1% or 6.50% at June 30, 2019, to be compounded monthly. The note is secured by the full value of the borrower and matures on October 31, 2019. During the three months ended June 30, 2019 and 2018, the Company recorded $1,772 and $1,214, respectively, as interest expense related to this loan. During the six months ended June 30, 2019 and 2018, the Company recorded $3,496 and $2,401, respectively, as interest expense related to this loan. As of June 30, 2019 and December 31, 2018, the principal balance of this loan was $100,000 and the accrued interest was $10,507 and $7,011, respectively. 

On November 2, 2017, Kennedy Business Center LLC, an entity owned by an immediate family member of a Company director, provided a loan in the amount of $90,000 bearing an interest rate of 10% which matured on November 30, 2018, but was paid back early on October 25, 2018. As part of the agreement, the Company issued 50,000 shares of common stock on November 3, 2017. The Company recorded a debt discount of $17,500 for the fair market value of the shares issued. During the three months ended June 30, 2018, the Company recorded $2,917 of interest expense related to the amortization of debt discount related to this loan and $2,250 of regular interest. During the six months ended June 30, 2018, the Company recorded $11,667 of interest expense related to the amortization of debt discount related to this loan and $4,500 of regular interest. As of June 30, 2019 and December 31, 2018, the principal balance of this loan was $0 and the accrued interest was $0 and $4,366, respectively.

On April 26, 2018, R and W Financial, an entity owned by a Company director, provided an unsecured, non-interest bearing loan in the amount of $179,813 which matures on April 25, 2020 and which was used to pay the balance of the non-interest bearing short-term loans due to the Company Secretary, who is also a Director and shareholder of the Company. As of June 30, 2019 and December 31, 2018, the principal balance of this loan was $179,813.

On June 14, 2018, the Company issued a promissory note of $100,000 to Mayer Weiss, an immediate family member of a Company director. The note carries a 12% interest rate per annum, and non-compounding interest is to be paid every six months. Additionally, 100,000 shares of common stock were issued with the note and are being amortized over the life of the loan which is due December 13, 2019. The Company recorded a debt discount of $11,000 for the fair market value of the shares issued. During the three months ended June 30, 2019 and 2018, the Company recorded $1,830 and $322 of interest expense related to the amortization of debt discount related to this loan and $2,992 and $526 of regular interest, respectively. During the six months ended June 30, 2019 and 2018, the Company recorded $3,640 and $322 of interest expense related to the amortization of debt discount related to this loan, respectively and $5,951 and $$526 of regular interest, respectively. As of June 30, 2019 and December 31, 2018, the principal balance of this loan was $100,000 and the accrued interest was $5,954 and $6,575, respectively.

All of the above transactions were approved by disinterested directors.

	June 30, 2019			December 31, 2018
Obvia LLC	$	100,000		$	100,000
R & W Financial		179,813			179,813
Mayer Weiss		100,000			100,000
Unamortized debt discount		(3,338	)		(6,978	)
Total	$	376,475		$	372,835

Director Agreements

On December 26, 2017, the Company entered into binding term sheets with each of the Directors of the Company. Pursuant to the Agreements, each Director may be compensated with share-based and/or cash-based compensation. Each Directors cash-based compensation for the period January 1, 2018 through December 31, 2018, will be $10,000 per quarter paid on a date determined by the majority vote of the Board of Directors. The Directors share-based compensation for the period January 1, 2018 through December 31, 2018 will be a one-time award of the ability to purchase a particular amount of warrants, ranging from 40,000 to 200,000 (collectively the Warrants) with the following terms:

· Number and Type Each Director is entitled to a one-time award of Warrants for the number of shares of Series B Preferred Stock (the Preferred Stock B) of the Corporation, which shall have voting rights equal to five (5) votes per share. Each share of Preferred stock B is convertible into five (5) shares of the Corporations common stock, including liquidation preference over common stock.

· Duration The Warrants entitle each Director to purchase the Preferred Stock B from the Corporation, after January 1, 2018 and before December 31, 2024.

· Purchase Price - The purchase price is $0.51 per share of Preferred Stock B.

· Cashless Exercise - If on the date the Director surrenders all or a portion of the Warrants for the purchase of Series B Preferred Stock or the equivalent number of shares of Common Stock, the per share market value of one share of Common Stock is greater than the exercise price of the equivalent Warrant, in lieu of exercising the Warrant by payment of cash, the Director may exercise the Warrant by a cashless exercise and shall receive a ratably lower number of shares of Series B Preferred Stock or the equivalent number of shares of Common Stock.

· Vesting 125,000 Warrants awarded to the CFO were fully vested at the time of issuance. The remaining 565,000 Warrants are subject to a 12-month period whereby the Warrants vest in equal monthly increments from January 1, 2018 through December 31, 2018.

The Company issued warrants with respect to 565,000 Series B Preferred Stock, in the aggregate, in relation to the binding term sheets. The Company expensed the fair value of these warrants in the amount of $144,000 ratably during the six months ended June 30, 2018.

On May 10, 2018, the directors of the Company were awarded share-based compensation for the service period of May 10, 2018 through December 31, 2020, as a one-time award of the ability to purchase a particular amount of warrants, ranging from 80,000 to 400,000 (collectively the Warrants) with the following terms:

· Number and Type Each Director is entitled to a one-time award of Warrants for the number of shares of Series B Preferred Stock of the Company. Each share of Series B Preferred Stock shall have voting rights equal to five (5) votes per share. Each share of Series B Preferred Stock is convertible into five (5) shares of the Companys Common Stock (the Common Stock), including liquidation preference over Common Stock.

· Duration The Warrants entitle each Director to purchase the Series B Preferred Stock from the Company, after January 1, 2019 and before December 31, 2027.

· Purchase Price - The purchase price is $0.60 per share of Series B Preferred Stock.

· Cashless Exercise - If on the date the Director surrenders all or a portion of the Warrants for the purchase of Series B Preferred Stock or the equivalent number of shares of Common Stock, the per share market value of one share of Common Stock is greater than the exercise price of the equivalent Warrant, in lieu of exercising the Warrant by payment of cash, the Director may exercise the Warrant by a cashless exercise and shall receive a ratably lower number of shares of Series B Preferred Stock or the equivalent number of shares of Common Stock.

· Vesting - The Warrants are subject to a 32-month period whereby the Warrants vest in equal monthly increments from May 10, 2018 through December 31, 2020. Any unvested warrants are forfeited, if the Director ceases to be a Director.

The Company issued warrants with respect to 1,280,000 Series B Preferred Stock, in the aggregate. The Company will expense the fair value of these warrants in the amount of $768,000 ratably during the years ended December 31, 2018, 2019 and 2020. For the three months ended June 30, 2019 and 2018, the Company recorded $72,348 and $40,547, respectively, as compensation expense related to the warrants. For the six months ended June 30, 2019 and 2018, the Company recorded $143,901 and $40,547, respectively, as compensation expense related to the warrants. 

On February 26, 2019, the Company entered into director agreements with each of the Directors of the Company. Pursuant to the agreements, each Director may be compensated with share-based and/or cash-based compensation. The Directors compensation for the period January 1, 2019 through December 31, 2019 will be $10,000 per quarter per Director to be paid on a date determined by the Board of Directors. In addition, the Directors may receive a one-time award of the ability to purchase a particular amount of warrants, as determined by the Board of Directors. The Company issued no warrants in relation to the agreements for the six months ended June 30, 2019. 

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LOANS AND LONG-TERM LOANS

6 Months Ended

Jun. 30, 2019

LOANS AND LONG-TERM LOANS

NOTE 3 - LOANS AND LONG-TERM LOANS

On July 23, 2018, the Company issued promissory notes of $100,000 and $18,000, respectively. The notes carry a 12% interest rate per annum, and non-compounding interest is to be paid every six months. Additionally, 100,000 and 18,000 shares of common stock were issued with the respective notes and will be amortized over the life of the loans which are due January 22, 2020 with a balloon payment. The Company recorded a debt discount of $5,500 and $990 for the fair market value of the shares issued, respectively. During the three months ended June 30, 2019, the Company recorded $913 and $164 of interest expense related to the amortization of debt discount related to these notes and $2,992 and $539 of regular interest, respectively. During the six months ended June 30, 2019, the Company recorded $1,827 and $327 of interest expense related to the amortization of debt discount related to these notes and $5,951 and $1,071 of regular interest, respectively. As of June 30, 2019, the principal balance of these notes was $100,000 and $18,000 with unamortized debt discount of $2,057 and $372, respectively, and the accrued interest was $244 and $224, respectively. As of December 31, 2018, the principal balance of these notes was $100,000 and $18,000 and the accrued interest was $293 and $233, respectively

On October 11, 2018, the Company issued a promissory note of $250,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 250,000 shares of common stock were issued with the note valued at $0.10 per share, which is the market value on the date of the agreement and will be amortized over the life of the loan which is due April 10, 2020 with a balloon payment. The Company recorded a debt discount of $25,000 for the fair market value of the shares issued. During the three months ended June 30, 2019, the Company recorded $4,159 of interest expense related to the amortization of debt discount related to the note and $7,480 of regular interest. During the six months ended June 30, 2019, the Company recorded $8,272 of interest expense related to the amortization of debt discount related to the note and $14,877 of regular interest. As of June 30, 2019 and December 31, 2018, the principal balance of the note was $250,000 with unamortized debt discount of $13,026 at June 30, 2019 and the accrued interest was $1,534 and $6,658, respectively.

On January 9, 2019, the Company issued a promissory note of $50,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 50,000 shares of common stock were issued with the note valued at $0.1425 per share, which is the market value on the date of the agreement and will be amortized over the life of the note which is due July 8, 2020 with a balloon payment. The Company recorded a debt discount of $7,125 for the fair market value of the shares issued. During the three months ended June 30, 2019, the Company recorded $1,188 of interest expense related to the amortization of debt discount related to the note and $1,495 of regular interest. During the six months ended June 30, 2019, the Company recorded $2,245 of interest expense related to the amortization of debt discount related to the note and $2,827 of regular interest. As of June 30, 2019, the principal balance of the note was $50,000, the unamortized debt discount was $4,880 and the accrued interest was $327.

On June 12, 2019, the Company issued a promissory note of $25,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 12,500 shares of common stock were issued with the note valued at $0.295 per share, which is the market value on the date of the agreement and will be amortized over the life of the note which is due June 11, 2021 with a balloon payment. The Company recorded a debt discount of $3,688 for the fair market value of the shares issued. During the three and six months ended June 30, 2019, the Company recorded $91 of interest expense related to the amortization of debt discount related to the note and $148 of regular interest. As of June 30, 2019, the principal balance of the note was $25,000, the unamortized debt discount was $3,597 and the accrued interest was $148.

	June 30, 2019			December 31, 2018
Loan issued July 23, 2018	$	18,000		$	18,000
Loan issued July 23, 2018		100,000			100,000
Loan issued October 11, 2018		250,000			250,000
Loan issued January 09, 2019		50,000			-
Loan issued June12, 2019		25,000			-
Unamortized debt discount		(23,932	)		(25,881	)
Total		419,068			342,119
Less: short term loans, net		352,545			-
Total long-term loans, net	$	66,523		$	342,119

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DEFICIT

6 Months Ended

Jun. 30, 2019

Defined Benefit Plan [Abstract]

NOTE 4 - DEFICIT

On May 11, 2017, the Company entered into a consulting agreement to place up to $1.5 million worth of common stock within six months to provide funds to complete an acquisition. The Company may incur fees up to $135,000 in relation to this agreement with a $10,000 retainer payable immediately in common stock valued on the date of signing. The remaining $125,000 is to be placed into escrow and released on the date of closing valued at the closing asking price. Of the $10,000 retainer, $5,000 is non-refundable. As of June 30, 2019 and through the date of these financial statements, the Company has recorded $5,000 as prepaid expense and accrued liabilities, no shares have been issued related to this agreement, and the original agreement is in the process of being renegotiated among and between the Company and the consultant

On January 11, 2018, the Company entered into a consulting agreement for matters involving business development, public relations, marketing services and media placement. The agreement may be terminated upon 30 days prior written notice by either party. The Company paid the consultant $25,000 for the first 30 days of services, and $2,500 for any services requested by the Company on a bi-weekly basis thereafter. The fee will cover all cash cost for production, editing and airing up to three Fox Business production shots. If the Company pursued an interview with Fox News, which the Company is currently not contemplating, it would have to issue 200,000 shares of its common stock to the consultant.

On February 2, 2018, the Company entered into a subscription agreement for the sale of 660,000 shares of the Companys Series C Preferred Stock for $0.25 per share or $165,000. The terms of the agreement require a monthly dividend payment equal to 1% of the amount invested for 18 months from the date of issuance. For the three months ended June 30, 2019 and 2018, the Company recorded $4,950 and $4,950 of dividend expense related to the subscription agreement, respectively. For the six months ended June 30, 2019 and 2018, the Company recorded $9,900 and $8,250 of dividend expense related to the subscription agreement, respectively.

On January 9, 2019, the Company issued a promissory note of $50,000 to an unrelated party that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 50,000 shares of common stock were issued with the note valued at $0.1425 per share, which is the market value on the date of the agreement and will be amortized over the life of the note which is due July 8, 2020 with a balloon payment.

On March 26, 2019, the Company signed a Facility Access and Wholesale Production Purchase and Sale Agreement for a term of twelve (12) months with an unrelated party to use the partys leased commercial chocolate manufacturing facility in exchange for paying the following:

(a)	the full amount of the partys lease obligations of $6,433 per month plus taxes and common area maintenance fees through May 31, 2019 and $6,626 per month plus taxes and common area maintenance fees for 12 months through March 31, 2020;
(b)	66.6% of the partys expenses related to payroll for employees that make the Companys product; and
(c)	66.6% of the partys operating expenses specifically related to the Companys product including utilities, equipment, maintenance and insurance expenses.

The Company also issued 100,000 shares of the Companys common stock at the closing market price of $0.30 on February 5, 2019 as a charitable contribution to a non-profit entity in support of the entitys environmental regeneration efforts.

On May 8, 2019, the Company entered into an agreement with a strategic advisory consultant (the Consultant). The Consultant was awarded 100,000 shares of the Companys common stock at a fair market value of $0.20 per share, for $20,000. Also, in accordance with the agreement, the Company shall at its sole discretion grant a bonus to the Consultant of up to 1,000,000 shares. As of the filing date, management does not have intention to grant these shares.

On February 11, 2019, the Company entered into an agreement with a strategic advisory consultant (the Consultant). On May 31, 2019, in accordance with the agreement, the Consultant was awarded 26,415 shares of the Companys common stock at a fair market value of $0.265 per share.

On May 31, 2019, the Company entered into an agreement with a strategic advisory consultant (the Consultant). The Consultant was awarded 50,000 shares of the Companys common stock at a fair market value of $0.265 per share, for $13,250. In addition, the company may extend this agreement for an additional twelve months at the sole discretion of management. Fees for the additional twelve months shall be 200,000 shares of common stock issued in increments of 50,000 shares per quarter.

On June 12, 2019, the Company issued a promissory note of $25,000 that carries a 12% interest rate per annum, and non-compounding interest is to be paid every month. Additionally, 12,500 shares of common stock were issued with the note valued at $0.295 per share.

Warrant Activity

Common Stock Warrants

On July 16, 2018, the Company entered into a consulting agreement with a service provider that contains the following terms:

· 375,000 warrants were awarded as of the date of the agreement and will vest ratably over the next 12 months from the date of the agreement. The Company valued these warrants using the Black-Scholes option pricing model with the following inputs: exercise price of $0.078; fair market value of underlying stock of $0.08; expected term of 3 years; risk free rate of 2.67%; volatility of 417.39%; and dividend yield of 0%. The total fair value of these warrants is $30,000 and will be expensed ratably over a period of 12 months. For the three and six months ended June 30, 2019, the Company recorded an expense of $7,479 and $14,877, respectively in relation to these warrants. As of June 30, 2019, a total of 359,375 warrants had vested and 31,250 were exercised.

· 5% equity ownership in the Companys Holy Cacao subsidiary will be awarded immediately upon the successful launch of the Holy Cacao product line and the sale of the first production run of Holy Cacao product. As of June 30, 2019, this part of the agreement was completed, and 5% equity was issued.

· A $6,000 per month advance of Holy Cacao equity distribution will be awarded every month Holy Cacao earns a net profit over a period of twenty-four (24) consecutive months following the initial product launch and production sale.

· 300,000 warrants for shares of the Companys common stock will be awarded after each of two consecutive twelve (12) month periods in which Holy Cacao earns a net profit from gross annual product sales of at least $1M. Each of the two 300,000 warrant awards will vest equally over a twelve (12) month period.

On February 5, 2019, the Company signed a Consulting Agreement for a six (6) month term with a consultant to assist in the manufacturing, packaging and distribution of the Companys chocolate product line. The Consulting Agreement has a $7,000 monthly fee. In addition, the Company issued a warrant to the Consultant to purchase 60,000 shares of the Companys common stock at the closing market price of $0.30 on the February 5, 2019 with a term of three (3) years. The Company valued these warrants using the Black-Scholes option pricing model with the following inputs: exercise price of $0.30; fair market value of underlying stock of $0.30; expected term of 3 years; risk free rate of 2.50%; volatility of 388.56%; and dividend yield of 0%. The total fair value of these warrants is $17,988 and was expensed at issuance.

On February 5, 2019, the Company signed an Employment Agreement for a term of three years beginning when the prospective employee obtains his permanent United States visa. The employee will assist with the manufacturing, packaging and distribution of the Companys chocolate product line. The Employment Agreement has a $7,000 monthly salary. In addition, the Company will issue a warrant to the prospective employee to purchase 300,000 shares of the Companys common stock with a term of three (3) years. In addition, the employee will receive a warrant to purchase 300,000 of the Companys common stock for each of the two remaining years under the Employment Agreement with an exercise price equal to the closing market price of the Companys common stock on the first day of each of such two annual employment periods. The warrants will be subject to a 12-month period whereby the warrants will vest in equal monthly increments for each year of the employment period. Each of the warrants will be exercisable within a three-year period from the date of issue. If the employee fails to obtain his visa, all granted warrants must be given back to the Company. Once per quarter, the employee may waive the right to receive 25,000 warrants and receive in exchange for $5,000 worth of shares of the Companys common stock. As of June 30, 2019, no warrants have been expensed because the employment period has not commenced.

A summary of the Companys warrants to purchase common stock activity is as follows:

	Number of			Weighted
	Warrants			Average
	(in common			Exercise
	shares)			Price
Outstanding, December 31, 2017		100,000		$	1.45
Granted		375,000			0.08
Exercised		(31,250	)		0.08
Forfeited or cancelled		(100,000	)		-
Outstanding, December 31, 2018		343,750			0.08
Granted		60,000			0.30
Exercised		-			-
Forfeited or cancelled		-			-
Outstanding, June 30, 2019		403,750		$	0.11

As of June 30, 2019, 388,125 warrants for common stock were exercisable and the intrinsic value of these warrants was $66,281. As of June 30, 2019, the weighted average remaining contractual life was 2.13 years for warrants outstanding and the remaining expense is approximately $1,315 over the remaining amortization period which is 1 month.

As of June 30, 2018, 100,000 warrants for common stock were exercisable and the intrinsic value of these warrants was $0. As of June 30, 2018, the weighted average remaining contractual life was 6months for warrants outstanding and the remaining expense is approximately $0.

Preferred Stock Warrants

On December 26, 2017, the Company amended its employment agreement with the CFO and Director (see Note 2) and issued warrants to purchase 125,000 shares of Series B Preferred Stock as compensation expense for each of the years ended December 31, 2017 and 2018. The warrants have an exercise price of $0.51 per share. The warrants associated with compensation in 2017 were fully vested as of December 31, 2017. The warrants associated with compensation in 2018 vested monthly from January 1, 2018 through December 31, 2018. The warrants are exercisable from January 1, 2018 through December 31, 2024. The Company expensed the fair value of these warrants in the amount of $15,931 and $31,863 during the three and six months ended June 30, 2018, respectively.

On December 26, 2017, the Company issued warrants to purchase 440,000 shares of Series B Preferred Stock, in the aggregate, to its Board of Directors as compensation expense for the year ended December 31, 2018. The warrants have an exercise price of $0.51 per share, vests monthly from January 1, 2018 through December 31, 2018, and are exercisable from January 1, 2018 through December 31, 2024. The Company expensed the fair value of these warrants in the amount of $56,078 and $112,156 during the three and six months ended June 30, 2018, respectively. These warrants were fully expensed as of December 31, 2018.

On May 10, 2018, the Company issued warrants to purchase 1,280,000 shares of Series B Preferred Stock, in the aggregate, to its Board of Directors as compensation expense for services to be performed for the period May 10, 2018 through December 31, 2020. The warrants have an exercise price of $0.60, vest over a 32-month period starting May 10, 2018 through December 31, 2020, and are exercisable from January 1, 2019 through December 31, 2027. As of December 31, 2018, there were 320,000 Series B Preferred Stock warrants exercisable. The Company will expense the fair value of these warrants in the amount of $768,000 ratably during the years ended December 31, 2018, 2019 and 2020. For the three and six months ended June 30, 2019, the Company recorded $72,348 and $143,901, respectively, as compensation expense related to the warrants.

A summary of the Companys warrants to purchase Series B Preferred Stock activity is as follows:

	Number of Warrants (in Series B Preferred Stock)		Weighted Average Exercise Price
Outstanding, December 31, 2017		690,000	$	0.51
Granted		2,680,000		0.58
Outstanding, December 31, 2018		3,370,000		0.57
Granted		-		-
Exercised		-		-
Forfeited or cancelled		-		-
Outstanding, June 30, 2019		3,370,000	$	0.57

As of June 30, 2019, 2,650,000 warrants for Series B preferred stock were exercisable and the intrinsic value of these warrants was $2,212,100. As of June 30, 2019, the weighted average remaining contractual life was 8.25 years for warrants outstanding and the remaining expense is $437,267 over the remaining amortization period which is 1.50 years.

As of June 30, 2018, the weighted average remaining contractual life was 8.5 years for warrants outstanding. As of June 30, 2018, 0 warrants were exercisable and the intrinsic value of warrants exercisable was $0. As of June 30, 2018, the remaining expense is approximately $297,618 over the remaining amortization period which is 2.5 years.

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COMMITMENTS

6 Months Ended

Jun. 30, 2019

COMMITMENTS

NOTE 5 - COMMITMENTS

On February 26, 2019, the Company entered into director agreements with each of the Directors of the Company. Pursuant to the agreements, each Director may be compensated with share-based and/or cash-based compensation. The Directors compensation for the period January 1, 2019 through December 31, 2019 will be $10,000 per quarter per Director to be paid on a date determined by the Board of Directors. In addition, the Directors may receive a one-time award of the ability to purchase a particular amount of warrants, as determined by the Board of Directors.

On June 5, 2019, the Company entered into a consulting agreement for social media and public relation services whereby the Company is required to pay $1,800 in cash per month and $7,000 in shares of the Companys common stock upon completion of the agreement, which is on September 4, 2019.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2019

SUBSEQUENT EVENTS

NOTE 6 - SUBSEQUENT EVENTS

On July 22, 2019 (the Effective Date), the Company issued a promissory note of $250,000. The interest rate for the note is 12% per annum with non-compounding interest to be paid every month. $100,000 of the note will be used by the Company exclusively for the purpose of investing in merchant cash advances. The remaining $150,000 of the note will be used by the Company for its operational activities. Additionally, 250,000 shares of common stock were issued with a fair value of $100,000, recorded as a debt discount, and will be amortized over the life of the note, which is due in monthly payments between eighteen (18) months and twenty-three (23) months from the Effective Date based upon the sum of funds available in the Companys First Foods Funding Division. The balance will be paid twenty-four (24) months from the Effective Date. In addition, the Company issued a warrant to purchase 250,000 shares of the Companys common stock with an exercise price of $0.25 per share. The warrant was valued at $99,925 based on the Black Scholes Model and included in the debt discount. The warrant is fully vested as of the Effective Date with an exercise term of three (3) years. At the sole discretion of the lender, an additional $250,000 note may be issued to the Company anytime within nine months after the Effective Date. The additional note will be subject to the same terms and conditions as the initial note, with 250,000 shares of common stock issued at a 30% discount from the last market closing price per share as of the effective date of the additional note. If an additional $250,000 note is issued, the Company will issue a warrant to purchase an additional 250,000 shares of the Companys common stock that will be fully vested as of the effective date of the additional note and have an exercise price that is the lesser of $0.25 per share or the market closing price per share on the effective date of the additional note. The exercise term will be three (3) years.

On August 9, 2019, the Company forgave a June 18, 2019 promissory note with Genesis Laboratories International, LLC for outstanding principle and accrued unpaid interest of $8,140 in exchange for Southeast Edibles intellectual property, consisting of a pending logo, in-process package designs, social media tags and handles, and an ungranted trademark.

On August 9, 2019, the Company signed a letter of intent to enter into a master distribution agreement with a master distributor to distribute the Companys hemp-based chocolate edibles products.

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BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY (Policies)

6 Months Ended

Jun. 30, 2019

BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY (Policies)

Nature of Business

First Foods Group, Inc. (the Company or First Foods) is a smaller reporting company focused on developing its specialty chocolate line and participating in merchant cash advances through its 1^st Foods Funding Division (the Division). First Foods continues to pursue new foodservice brands and menu concepts.

On August 31, 2017, the Company formed Holy Cacao, Inc., a Nevada corporation (Holy Cacao). Holy Cacao has 100 shares of no par value common stock authorized, issued and outstanding with 85 shares owned by the Company and 15 shares owned by non-controlling interests. Holy Cacao is dedicated to producing, packaging, distributing and selling specialty chocolate, including specialty chocolate infused with a hemp-based ingredient in those United States jurisdictions where hemp-based products are legal. The Company has not been, is not, and has no current plans to be involved in producing, packaging, distributing or selling any product that is infused with a marijuana-based ingredient, although it intends to revisit the matter as laws change in jurisdictions in which it operates. The Company is also dedicated to licensing its intellectual property (IP), including its name, brand, and packaging, to third parties. The Company may license its IP to third parties that may produce, package, distribute or sell hemp-based or marijuana-based products, but only in those states where such activities are legal. On February 27, 2019, the United States Patent and Trademark Office (the USPTO) approved Holy Cacaos trademark brand, The Edibles Cult. The Company has submitted multiple applications to the USPTO for additional brand names, including Mystere and Purely Irresistible among others. On February 5, 2019, the Company signed a Consulting Agreement with a consultant to assist in the manufacturing, packaging and distribution of the Companys chocolate product line. On March 26, 2019, the Company signed a Facility Access and Wholesale Production Purchase and Sale Agreement that allows it to use a fully staffed and fully equipped state of the art manufacturing facility to begin producing its specialty chocolate product and selling it to manufacturing and wholesaling companies. On May 7, 2019, the Company sold three of its products comprised of 1,500 kilograms of specialty chocolate. This was the only purchase order received by the company to date. The Company expects to have additional orders in the future, but is not assured of receiving additional purchase orders. However, on July 1, 2019, hemp-based ingredients became legal in the state of Florida, where the Company produces its specialty chocolate products. Accordingly, on August 9, 2019, the Company signed a letter of intent to enter into a master distribution agreement with a master distributor to distribute the Companys hemp-based chocolate edibles products (see Note 6). Also, on August 9, 2019, the Company purchased the intellectual property of Southeast Edibles, which consists of a pending logo, in-process package designs, social media tags and handles, and a pending trademark (see Note 6).

On October 25, 2017, the Company entered into a contract with TIER Merchant Advances LLC (TIER) to participate in the purchase of future receivables from qualified TIER merchants for the purpose of generating near-term and long-term revenue for the Company. The Company may also provide cash advances directly to merchants.

Liquidity and Going Concern

The Company’s unaudited condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States of America (“GAAP”) applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. As of June 30, 2019, the Company had approximately $350,000 of third-party short-term debt that is due within the next twelve months. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its operating expenses and seeking equity and/or debt financing. However, neither any members of management nor any significant shareholders are currently committed to invest funds and; therefore, the Company cannot provide any assurances that it will be successful in accomplishing any of its plans.

The Company does not have sufficient cash flow for the next twelve months from the issuance of this report. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States of America 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 unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these unaudited condensed consolidated financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read in conjunction with the Companys annual consolidated financial statements included within the Companys Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on March 29, 2019.

In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Companys financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the six months ended June 30, 2019 may not be indicative of results for the full year. 

The noncontrolling interest represents the proportionate share of the proceeds received and also the income and loss pickup from the fifteen-percent equity interest in our otherwise wholly owned subsidiary; Holy Cacao.

Principles of Consolidation

The unaudited condensed consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiary in conformity with GAAP. All intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of twelve months or less to be cash equivalents. At June 30, 2019 and December 31, 2018, the Company had no cash equivalents.

The Companys cash is held with financial institutions, and the account balances may exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit at times. Accounts are insured by the FDIC up to $250,000 per financial institution. The Company has not experienced any losses in such accounts with these financial institutions.

Merchant Cash Advances

Starting in October 2017, the Company entered into a contract with TIER to participate in TIERs purchase of merchant cash advances, which are short-term cash advances made to businesses in return for an agreed-upon amount of future sales, paid by the business in small, regular daily payments. During the six months ended June 30, 2019, the Division participated in 259 merchant cash advances from TIER and 3 merchant cash advances directly with 1 merchant.

The Company participates in the merchant cash advance industry by directly advancing sums to a merchant or a merchant advance provider, TIER, who in turn advances sums to merchants or other merchant cash advance providers. Each reporting period, the Company reviews the carrying value of these advances and determines whether an impairment reserve is necessary. At June 30, 2019, the Company reserved an amount equal to 12% of the outstanding merchant cash advance balance at period end determined by the risk of default as disclosed by TIER along with managements assessment, as well as an additional reserve for discounts to merchants who settle their advance balance prior to the scheduled due date. In addition, the Company wrote off eighteen (18) merchant advances for a total of $59,497 for the six months ended June 30, 2019. These expenses, unless they were included in previous reserves, are included in provision for merchant cash advances expenses on the accompanying unaudited condensed consolidated statements of operations.

Concentration Risks

As of and during the three and six months ended June 30, 2019, the Company’s merchant cash advance income (“MCA income”) and advances from merchant cash advances were mainly derived from one merchant cash advance provider. The Company recognizes the concentration of its merchant cash advances, which could inherently create a potential risk to future working capital in the event that the Company is not able to collect all, or a majority, of the outstanding merchant cash advances. The Company actively mitigates its portfolio concentration risk by monitoring its merchant cash advance provider’s ability to participate in merchant cash advances from alternative providers and spreading merchant cash advance participation across various merchants.

As of June 30, 2019, the Company’s receivables from merchant cash advances included $164,172 from two merchants ($102,719 and $61,453), representing 58.5% of the Company’s merchant cash advances. The Company earned $13,350 of MCA income from one merchant, representing 32% of the Company’s MCA income for the three months ended June 30, 2019. The Company earned $46,839 of MCA income from two merchants ($25,852 and $20,987), representing 30% of the Company’s MCA income for the six months ended June 30, 2019.

For the three months ended June 30, 2018, the Company earned MCA income from seven merchants for $46,106 ($12,542, $8,862, $8,401, $5,063, $4,213, $3,927, and $3,099), representing 54% of total MCA income. The Company earned MCA income from nine merchants for $87,486 ($18,375, $15,965, $15,147, $10,800, $8,401, $5,967, $4,699, $4,432 and $3,700), representing 60% of total MCA income for the six months ended June 30, 2018.

As of June 30, 2019, the Company’s accounts receivable had a concentration of 100% from one customer. The concentration of the Company’s accounts receivable creates a potential risk to future working capital in the event that the Company is not able to collect all, or a majority, of outstanding accounts receivable balances.

As of June 30, 2019, the Company had a purchase concentration of 100% from one vendor.

As of December 31, 2018, the Company’s receivables from merchant cash advances included $232,484 from two merchants ($141,539 and $90,945), representing 41% of the Company’s merchant cash advances.

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” which creates Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers,” and supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition” and most industry-specific guidance throughout the ASC. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. We completed our assessment of the impact of the ASC 606 and determined that we recognize our merchant cash advances in accordance with ASC 860, Transfers and Servicing, which is explicitly excluded from the scope of ASC 606. We participate in the servicing of merchant cash advances that have been provided to third parties, which in accordance with ASC 860, causes us to recognize MCA income. Commencing in Q2 2019, we also have product sales from our Holy Cacao division that follow ASC 606.

The amendments may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company completed its assessment of the guidance and determined its merchant cash advances are excluded from the scope of ASU 2014-09. As a result of this scope exception, the adoption of this ASU did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

During the three and six months ended June 30, 2019, the Company recognized its product sales as follows:

Product sales are measured based on consideration specified in a contract with a customer that we expect to receive in exchange for goods, net of any variable considerations (e.g. rights to return product, sales incentives, etc.). The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer. These criteria are assumed to have been met upon delivery of the products requested by the customer to the customer’s carrier. The Company applied the practical expedient available under ASC 606 to disregard determining significant financing components, if the good is transferred and payment is received within one year.

During the three and six months ended June 30, 2019, the Company recognized its MCA income as follows:

When a merchant cash advance is purchased, the Company records a merchant cash advance participation receivable for the purchase price. The purchase price consists of the merchant cash advance principal plus an up-front commission that is amortized over the term of the merchant cash advance. The amount of the commission is negotiated between the Company and TIER for each contract. The standard commission is 15% of the merchant cash advance principal but can be reduced depending upon the credit worthiness of the merchant. If a merchant cash advance contract is signed in one period, but not paid until a subsequent period, a corresponding liability is established in the current period.

At the time the merchant cash advance is purchased, the Company records a deferred revenue liability, which is the total future receivable due to the Company less the principal amount of the merchant cash advance. Revenue is recognized and the deferred liability is reduced over the term of the merchant cash advance.

TIER maintains a bank account on behalf of the Company. Each day, TIER receives payment, reflected in the bank account, for each merchant cash advance TIER has purchased on behalf of the Company from various merchant cash advance providers. The Company reduces its merchant cash advance balance by the cash received, which is net of platform fees. Platform fees are a daily charge associated with the ACH service and the financial and reporting management software platform provided by TIER. The platform fees are also negotiated between the Company and TIER for each contract but are typically 4% of the daily merchant cash advance principal amount.

The Company records a reserve liability equal to 2% of the merchant cash advance amount released, which is a residual commission owed to TIER. This reserve is recognized over the term of the merchant cash advance and eliminated when the merchant cash advance is completely satisfied and payment is remitted by the Company to TIER.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customers financial condition, credit history and current economic conditions and sets up an allowance for doubtful accounts when collection is uncertain. Customers accounts are written off when all attempts to collect have been exhausted. The Company considers an invoice past due once the terms of the invoice has passed and payment has not been received. No interest is charged on past due invoices. Recoveries of accounts receivable previously written off are recorded as income when received. As of June 30, 2019, the Company had no allowance for doubtful accounts.

Inventory

Inventory, consisting of raw materials, work in process and products available for sale, are primarily accounted for using the first-in, first-out method (FIFO), and are valued at the lower of cost or net realizable value. This valuation requires management to make judgements based on currently available information, about the likely method of disposition, such as through sales to individual customers and returns to product vendors. As of June 30, 2019, the Company had no inventory and no allowance for inventory reserves.

Research and Development

The Companys policy is to engage market and branding consultants to research and develop specialty chocolate products and packaging targeted to particular states within the US. The research and development costs for the three months ended June 30, 2019 and 2018, were approximately $18,510 and $15,000, respectively. The research and development costs for the six months ended June 30, 2019 and 2018, were approximately $33,510 and $30,000, respectively. These expenses are included in general and administrative expenses on the accompanying unaudited condensed consolidated statements of operations.

Deferred Financing Costs

The Company records origination and other expenses related to its debt obligations as deferred financing costs. These expenses are deferred and amortized over the life of the related debt instrument. In accordance with ASU No. 2015-03, deferred finance costs, net of accumulated amortization have been included as a contra to the corresponding loans in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2019 and December 31, 2018, respectively.

Stock Based Compensation

The Company measures and recognizes compensation expense for all stock-based payments at fair value over the requisite service period. The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options and warrants. For restricted stock grants, fair value is determined as the closing price of the Company’s common stock on the date of grant. Equity-based compensation expense is recorded in administrative expenses based on the classification of the employee or vendor. The determination of fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price, as well as by assumptions regarding a number of subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

Income Taxes

The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2019 and December 31, 2018, the Company had a full valuation allowance against deferred tax assets. With the historical change in ownership, the Company is subject to certain NOL limitations under Section 382 of the Internal Revenue Code.

The Tax Cuts and Jobs Act (the Tax Act), enacted on December 22, 2017, among other things, permanently lowered the statutory federal corporate tax rate from 35% to 21%, effective for tax years including or beginning January 1, 2018. Under the guidance of ASC 740, Income Taxes, the Company revalued its net deferred tax assets on the date of enactment based on the reduction in the overall future tax benefit expected to be realized at the lower tax rate implemented by the new legislation. Although in the normal course of business the Company is required to make estimates and assumptions for certain tax items which cannot be fully determined at period end, the Company did not identify items for which the income tax effects of the Tax Act have not been completed as of June 30, 2019, and therefore, considers its accounting for the tax effects of the Tax Act on its deferred tax assets and liabilities to be complete as of June 30, 2019.

Per Share Data

In accordance with “ASC-260 - Earnings per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. No dilutive shares were outstanding as of June 30, 2019 and December 31, 2018 because their effect would be antidilutive.

The Company had 403,750 and 100,000 warrants to purchase common stock outstanding at June 30, 2019 and 2018, respectively. The Company had 3,370,000 and 1,970,000 warrants to purchase Series B preferred stock outstanding at June 30, 2019 and 2018, respectively. Additionally, the Company has 1,133,333 and 660,001 preferred shares outstanding that are convertible into 3,026,665 and 660,005 shares of common stock at June 30, 2019 and 2018, respectively. The warrants and preferred stock were not included in the Company’s weighted average number of common shares outstanding because they would be anti-dilutive.

Fair Value of Financial Instruments

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value. The carrying value of cash, merchant cash advances, prepaid expenses, accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments. Management is of the opinion that the Company is not exposed to significant market or credit risks arising from these financial instruments.

Advertising and Promotion

Advertising and promotion costs are expensed as incurred. Advertising and promotion costs recognized in the unaudited condensed consolidated statements of operations for the three months ended June 30, 2019 and 2018, were $34,150 and $11,504, respectively and $44,889 and $32,243, respectively, for the six months ended June 30, 2019 and 2018.

Non-Controlling Interests in Consolidated Financial Statements

In June 2011, the FASB issued ASC 810-10-65-1, to clarify that a non-controlling (minority) interest in a subsidiary is an ownership interest in the entity that should be reported as equity in the consolidated financial statements. It also requires consolidated net income to include the amounts attributable to both the parent and non-controlling interest, with disclosure on the face of the consolidated income statement of the amounts attributed to the parent and to the non-controlling interest. In accordance with ASC 810-10-45-21, those losses attributable to the parent and the non-controlling interest in subsidiaries may exceed their interests in the subsidiary’s equity. The excess and any further losses attributable to the parent and the non-controlling interest shall be attributed to those interests even if that attribution results in a deficit non-controlling interest balance. During the year ended December 31, 2017, the Company entered into two subscription agreements for the sale of 800,000 shares of its common stock and a ten-percent equity interest in its wholly owned subsidiary, Holy Cacao, for $200,000 in cash proceeds, in the aggregate. The Company recorded ten-percent of the cash proceeds or $20,000 as noncontrolling interests for the year ended December 31, 2017. On July 16, 2018, the Company entered into a consulting agreement with a service provider that contained the following term: 5% equity ownership in the Company’s Holy Cacao subsidiary will be awarded immediately upon the successful launch of the Holy Cacao product line and the sale of the first production run of Holy Cacao product. As of June 30, 2019, this part of the agreement was completed and 5% equity was issued. The Company’s periodic reporting now includes the results of operations of Holy Cacao, with the fifteen-percent ownership reported as noncontrolling interests. The cost of goods sold and operating expense for Holy Cacao for the six months ended June 30, 2019 were $20,983 and $165,565, respectively. There was $31,545 of revenue for Holy Cacao for the six months ended June 30, 2019.

The Company conducts business as two operating segments, First Foods and Holy Cacao. The Company does not distinguish between the two segments and has only one reportable segment based on quantitative thresholds. The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02), which affects any entity that enters into a lease (as that term is defined in ASU 2016-02), with some specified scope exceptions. The main difference between the guidance in ASU 2016-02 and prior GAAP is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under current GAAP. Under ASU 2016-02, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients. The Company adopted this provision on January 1, 2019 which did not have a material impact on the Companys unaudited condensed consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in ASC 605-Revenue Recognition and most industry-specific guidance throughout the ASC. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers in an amount that reflects the expected consideration received in exchange for those goods or services. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early adoption is permitted to the original effective date for annual reporting periods beginning after December 15, 2016 (including interim reporting periods within those periods). The Company completed its assessment of the guidance and determined its merchant cash advances are excluded from the scope of ASU 2014-09. As a result of this scope exception, the adoption of this ASU did not have a material impact on the Companys unaudited condensed consolidated financial statements.

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RELATED PARTY TRANSACTIONS (Tables)

6 Months Ended

Jun. 30, 2019

RELATED PARTY TRANSACTIONS (Tables)

Schedule of related party transactions

	June 30, 2019			December 31, 2018
Obvia LLC	$	100,000		$	100,000
R & W Financial		179,813			179,813
Mayer Weiss		100,000			100,000
Unamortized debt discount		(3,338	)		(6,978	)
Total	$	376,475		$	372,835

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LOANS AND LONG-TERM LOANS (Tables)

6 Months Ended

Jun. 30, 2019

LOANS AND LONG-TERM LOANS (Tables)

Schedule of maturities of long term debt

	June 30, 2019			December 31, 2018
Loan issued July 23, 2018	$	18,000		$	18,000
Loan issued July 23, 2018		100,000			100,000
Loan issued October 11, 2018		250,000			250,000
Loan issued January 09, 2019		50,000			-
Loan issued June12, 2019		25,000			-
Unamortized debt discount		(23,932	)		(25,881	)
Total		419,068			342,119
Less: short term loans, net		352,545			-
Total long-term loans, net	$	66,523		$	342,119

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DEFICIT (Tables)

6 Months Ended

Jun. 30, 2019

DEFICIT (Tables)

Schedule of common stock activity

	Number of			Weighted
	Warrants			Average
	(in common			Exercise
	shares)			Price
Outstanding, December 31, 2017		100,000		$	1.45
Granted		375,000			0.08
Exercised		(31,250	)		0.08
Forfeited or cancelled		(100,000	)		-
Outstanding, December 31, 2018		343,750			0.08
Granted		60,000			0.30
Exercised		-			-
Forfeited or cancelled		-			-
Outstanding, June 30, 2019		403,750		$	0.11

Schedule of Series B Preferred Stock activity

	Number of Warrants (in Series B Preferred Stock)		Weighted Average Exercise Price
Outstanding, December 31, 2017		690,000	$	0.51
Granted		2,680,000		0.58
Outstanding, December 31, 2018		3,370,000		0.57
Granted		-		-
Exercised		-		-
Forfeited or cancelled		-		-
Outstanding, June 30, 2019		3,370,000	$	0.57

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BUSINESS SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND LIQUIDITY (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 16, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2017	Aug. 31, 2017
Cash, FDIC insured amount		$ 250,000		$ 250,000
Description for the sale of speciality chocolate				Company sold three of its products comprised of 1,500 kilograms of specialty chocolate
Short term debt third party		$ 350,000		$ 350,000
Advance cash receivable				164,172		$ 232,484
Merchant cash advances income		$ 46,839	$ 46,106	$ 13,350	$ 87,486
Preferred stock, outstanding		1,133,333	660,001	1,133,333	660,001
Common stock shares issuable upon conversion of convertible preferred stock		3,026,665	660,005	3,026,665	660,005
Purchase concentration risk percentage				100.00%
Concentration risk percentage			54.00%	58.50%	60.00%	41.00%
Research and development costs		$ 18,510	$ 15,000	$ 33,510	$ 30,000
Advertising and promotion costs		$ 34,150	11,504	44,889	32,243
Amount of merchant advances written off				$ 59,497
Common stock shares authorized		100,000,000		100,000,000		100,000,000
Merchant cash advances reserved, description				the Company reserved an amount equal to 12% of the outstanding merchant cash advance balance at period end determined by the risk of default as disclosed by TIER along with management’s assessment, as well as an additional reserve for discounts to merchants who settle their advance balance prior to the scheduled due date. In addition, the Company wrote off eighteen (18) merchant advances for a total of $59,497 for the six months ended June 30, 2019. These expenses, unless they were included in previous reserves, are included in provision for merchant cash advances expenses on the accompanying unaudited condensed consolidated statements of operations
Revenue		$ 73,461	$ 85,510	$ 188,298	$ 145,805
Warrant [Member]
Class of warrants or rights outstanding		403,750	100,000	403,750	100,000
Warrant [Member] | Series B Convertible Preferred Stock [Member]
Warrants outstanding to purchase common shares		3,370,000	1,970,000	3,370,000	1,970,000
Holy Cacao [Member] | Non-controlling Interest
Common stock shares authorized								100
Description for the sale of common stock and interest in subsidiary under subscription agreement							the Company entered into two subscription agreements for the sale of 800,000 shares of its common stock and a ten-percent equity interest in its wholly owned subsidiary, Holy Cacao, for $200,000 in cash proceeds, in the aggregate. The Company recorded ten-percent of the cash proceeds or $20,000 as noncontrolling interests for the year ended December 31, 2017
Terms of consulting agreement	the Company entered into a consulting agreement with a service provider that contained the following term: 5% equity ownership in the Company’s Holy Cacao subsidiary will be awarded immediately upon the successful launch of the Holy Cacao product line and the sale of the first production run of Holy Cacao product. As of June 30, 2019, this part of the agreement was completed, and 5% equity was issued
Proceeds from sale of common stock							$ 20,000
Common stock shares owned by company								85
Common stock shares owned by noncontrolling interest								15
Ownership interest		15.00%		15.00%
Cost of goods sold and operating expenses		$ 20,983		$ 165,565
Revenue				$ 31,545
Accounts Receivable [Member]
Concentration risk percentage				100.00%
Merchant Six [Member]
Merchant cash advances income			$ 3,927		5,967
Merchant Seven [Member]
Merchant cash advances income			3,099		4,699
Merchant Eight [Member]
Merchant cash advances income					4,432
Merchant Nine [Member]
Merchant cash advances income					3,700
Merchant One [member]
Advance cash receivable				102,719		$ 141,539
Merchant cash advances income		25,852	12,542		18,375
Merchant Two [Member]
Advance cash receivable				$ 61,453		$ 90,945
Merchant cash advances income		$ 20,987	8,862		15,965
MCA [Member]
Concentration risk percentage		30.00%		32.00%
Merchant Four [Member]
Merchant cash advances income			5,063		10,800
Merchant Three [Member]
Merchant cash advances income			8,401		15,147
Merchant Five [Member]
Merchant cash advances income			$ 5,063		$ 10,800

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RELATED PARTY TRANSACTIONS (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Unamortized debt discount	$ (3,338)	$ (6,978)
Related party loans, net	376,475
Obvia LLC [Member]
Related party loans, gross	100,000	100,000
R & W Financial [Member]
Related party loans, gross	179,813	179,813
Mayer Weiss [Member]
Related party loans, gross	$ 100,000	$ 100,000

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)			1 Months Ended								3 Months Ended			6 Months Ended
	Jun. 12, 2019	May 10, 2018	Feb. 26, 2019	Jan. 30, 2019	Dec. 17, 2018	Oct. 25, 2018	Oct. 24, 2018	Dec. 26, 2017	Feb. 28, 2017	Feb. 27, 2017	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	May 31, 2019	May 08, 2019	Feb. 05, 2019	Dec. 31, 2018	Dec. 26, 2018	Jun. 14, 2018	Apr. 26, 2018	Nov. 03, 2017	Nov. 02, 2017	Oct. 17, 2017	Mar. 01, 2017
Consulting fees, monthly														$ 29,232	$ 22,069
Common stock, issued shares											17,866,587			17,866,587				100,000	17,709,087
Interest expense														$ 24,950	16,238
Debt discount											(5,168)			(5,168)					$ (6,978)
Fair value warrants
Compensation expense related to warrants											$ 72,348		$ 40,547		40,547
Common stock, issued shares											18,055,502			18,055,502					18,055,502
Interest expense											$ (27,914)		(11,943)	$ (52,864)	(28,181)
Unamortized debt discount											(3,338)			(3,338)					$ (6,978)
Professional fees											25,615		1,620	54,847	23,689
R and W Financial [Member]
Professional fees				$ 5,000
Mr. Kestenbaum [Member]
Annual salary, Description								On December 26, 2017, Mr. Kestenbaum agreed to a reduction in his 2017 annual salary from $120,000 to $40,000.
Warrant [Member]
Fair value of warrants to be amortized in 2018, 2019, 2020											768,000			768,000
Warrant [Member] | Maximum [Member]
Purchase ability of warrants		$ 400,000
Warrant [Member] | Minimum [Member]
Purchase ability of warrants		80,000
Series B Convertible Preferred Stock [Member] | Warrant [Member]
Warrant issued		$ 1,280,000
Promissory Note [Member
Principal balance for loan											100,000			100,000					100,000
Accrued interest											5,954			5,954					6,575
Interest rate																					12.00%
Common stock, issued shares																					100,000
Interest expense											1,830			3,640	322
Loan and regular interest											2,992			5,951	526
Unamortized debt discount											11,000			11,000
Note issued to related party																					$ 100,000
Director [Member]
Due to related party											8,000			8,000
Officer's compensation, description			Each Director may be compensated with share-based and/or cash-based compensation. The Directors’ compensation for the period January 1, 2019 through December 31, 2019 will be $10,000 per quarter per Director to be paid on a date determined by the Board of Directors.
Chief Financial Officer [Member] | Employment agreement [Member]
Officer's compensation									$ 20,833
Frequency of officers compensation									Monthly
Common stock, issued shares																										750,000
Officer's compensation, description									Pursuant to his Employment Agreement, the CFO shall receive (i) 750,000 shares of common stock of the Company, and (ii) $20,833 per month, which shall be deferred until the Company raises at least $1,500,000 in financing. The 750,000 shares of common stock are fully vested and valued at $1,687,500, representing a fair market value of $2.25 per share based on the closing price on the day of entry into the agreement.
Description for salary being deferred									The CFO’s salarywas deferred until the Company raised at least $1,000,000 in financing.
Annual salary, Description								On December 26, 2017, the CFO amended his employment agreement and agreed to reduce the annual salary from $250,000 to $150,000 for the period from February 1, 2017 through January 31, 2019, and then revert back to the original amount of $250,000 annually starting February 1, 2019 through the remainder of his employment.
Share based compensation, shares issuable									750,000
Share based compensation, shares issuable value									$ 1,687,500
Minimum financing to release monthly compensation									$ 1,500,000
Share price																										$ 2.25
Chief Financial Officer [Member] | Amended employment agreement [Member] | Till January 31, 2017 [Member]
Officer's compensation								$ 250,000
Chief Financial Officer [Member] | Amended employment agreement [Member] | From February 1, 2017 till January 31, 2019 [Member]
Officer's compensation								150,000
Chief Financial Officer [Member] | Amended employment agreement [Member] | From February 1, 2019 [Member]
Officer's compensation								250,000
Chairman of the Board [Member] | Employment agreement [Member] | Mr. Kestenbaum [Member]
Employment agreement accrued								40,000
Accrued compensation											40,000			40,000					40,000
Chairman of the Board and Interim CEO [Member] | Series B Convertible Preferred Stock [Member]
Shares issued for accrued compensation					33,333		85,000
Interim CEO [Member] | Employment agreement [Member]
Officer's compensation										$ 10,000
Frequency of officers compensation										Monthly
Officer's compensation, description										Pursuant to his consulting agreement, the Interim CEO shall receive (i) 750,000 shares of common stock of the Company for his appointment as Chairman of the Board, (ii) $10,000 per month for his role as Interim CEO, which shall be deferred until the Company raises at least $1,500,000 in financing, (iii) $10,000 for every new franchising client he obtains, and (iv) $2,000 per month for legal services upon acquisition of a franchising client. The shares were valued at $1,500,000, representing a market value of $2.00 per share based on the closing price on the day of entry into the agreement.
Share based compensation, shares issuable										750,000
Share based compensation, shares issuable value										$ 1,500,000
Minimum financing to release monthly compensation										$ 1,500,000
Share price										$ 2.00
Franchisee allocation incentive										$ 10,000
Legal fees, monthly										$ 2,000
CFO and Director [Member]
Accrued compensation											204,167			204,167					87,500
Payroll tax liability											15,141			15,141					13,449
CFO and Director [Member] | Series B Convertible Preferred Stock [Member]
Shares issued for accrued compensation					33,333	85,000
Related Party Two [Member]
Principal balance for loan											0			0					0
Accrued interest											0			0					4,366
Kennedy Business Center LLC [Member]
Loan																								$ 90,000
Interest rate																								10.00%
Common stock, issued shares																							50,000
Interest expense													2,917		11,667
Loan and regular interest											2,250				4,500
Unamortized debt discount																							$ 17,500
Related Party [Member]
Accrued interest											10,507			10,507					$ 7,011
Mr. Keeley [Member] | Director [Member] | Employment agreement [Member]
Additional earnings																				$ 40,000
R&W Financial [Member] | Hershel Weiss [Member] | Non-Interest Bearing Loan [Member]
Principal balance for loan																						$ 179,813
Obvia LLC [Member] | Chief Financial Officer [Member]
Loan																									$ 100,000
Interest expense											$ 1,772		$ 1,214	3,496	$ 2,401
Federal Funds Rate																									1.00%
Owner percentage																									50.00%
Director Agreements [Member]
Fair value warrants								$ 288,037						$ 144,000
Director Agreements, description								Pursuant to the Agreements, each Director may be compensated with share-based and/or cash-based compensation. Each Director’s cash-based compensation for the period January 1, 2018 through December 31, 2018, will be $10,000 per quarter paid on a date determined by the majority vote of the Board of Directors. The Directors’ share-based compensation for the period January 1, 2018 through December 31, 2018 will be a one-time award of the ability to purchase a particular amount of warrants, ranging from 40,000 to 200,000 (collectively the “Warrants”) with the following terms
Officer's compensation								$ 10,000
Frequency of officers compensation								Quarterly
Warrants vested								125,000
Warrants outstanding								565,000
Director Agreements [Member] | Preferred Stock [Member]
Purchase price per share								$ 0.51
Director Agreements [Member] | Series B Convertible Preferred Stock [Member]
Warrant issued								$ 565,000

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LOANS AND LONG-TERM LOANS (Details) - USD ($)	Jun. 30, 2019	Jun. 12, 2019	Dec. 31, 2018
Unamortized debt discount	$ (23,932)		$ (25,881)
Total	419,068		342,119
Less: short term loans, net	352,545
Total long-term loans, net	66,523		342,119
Promissory Notes [Member]
Long term loans, gross	18,000	$ 25,000	18,000
Promissory Notes One [Member]
Long term loans, gross	100,000		100,000
Promissory Note Two [Member]
Long term loans, gross	250,000		250,000
Promissory Note Three [Member]
Long term loans, gross	50,000
Promissory Note Four [Member]
Long term loans, gross	$ 25,000

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LOANS AND LONG-TERM LOANS (Details Narrative) - USD ($)				1 Months Ended	3 Months Ended		6 Months Ended
	Jun. 12, 2019	Jan. 09, 2019	Oct. 11, 2018	Jul. 23, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	May 31, 2019	May 08, 2019	Feb. 05, 2019	Dec. 31, 2018
Common stock shares issued					17,866,587		17,866,587				100,000	17,709,087
Interest expense							$ 24,950	$ 16,238
Debt discount					$ (5,168)		$ (5,168)					$ (6,978)
Common stock shares issued					18,055,502		18,055,502					18,055,502
Interest expense					$ (27,914)	$ (11,943)	$ (52,864)	$ (28,181)
Unamortized debt discount					(3,338)		(3,338)					$ (6,978)
Promissory Notes [Member]
Debt interest rate	12.00%			12.00%
Common stock shares issued	12,500	50,000		100,000
Interest expense					913		1,827
Regular interest					2,992		5,951
Principal balance					100,000		100,000					100,000
Accrued interest					244		244
Unamortized debt discount					2,057		2,057
Debt due date				Jan. 22, 2020
Promissory Notes One [Member]
Debt interest rate				12.00%
Common stock shares issued				18,000
Interest expense					164		327
Regular interest					539		1,071
Principal balance					18,000		18,000					18,000
Accrued interest					224		224
Unamortized debt discount					372		372
Debt due date				Jan. 22, 2020
Promissory Note Two [Member]
Debt due date			Apr. 10, 2020
Promissory Note Three [Member]
Issuance of Debt			$ 250,000
Debt interest rate			12.00%
Common stock shares issued			250,000
Price per share			$ 0.10
Interest expense					4,159		8,272
Regular interest					7,480		14,877
Principal balance					250,000		250,000					250,000
Accrued interest					1,534		1,534					6,658
Unamortized debt discount			$ 25,000		13,026		13,026					$ 13,026
Promissory Note Four [Member]
Debt interest rate		12.00%
Common stock shares issued		50,000
Price per share		$ 0.1425
Interest expense					1,188		2,245
Regular interest					1,495		2,827
Principal balance					50,000		50,000
Accrued interest					327		327
Unamortized debt discount		$ 7,125			4,880		4,880
Debt due date		Jul. 08, 2020
Promissory Note Five [Member]
Debt interest rate	12.00%
Common stock shares issued	12,500
Price per share	$ 0.295
Interest expense					91		91
Regular interest					148		148
Principal balance	$ 25,000				25,000		25,000
Accrued interest					148		148
Unamortized debt discount	$ 3,688				$ 3,597		$ 3,597
Debt due date	Jun. 11, 2021

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DEFICIT (Details) - $ / shares	3 Months Ended		6 Months Ended	12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Dec. 31, 2018
Exercised			31,250
Warrant [Member]
Outstanding, beginning			343,750	100,000
Granted			60,000	375,000
Exercised				(31,250)
Forfeited or cancelled				(100,000)
Outstanding, ending	403,750		403,750	343,750
Weighted Average Exercise Price [Member]
Granted			0.30	0.08
Exercised				0.08
Outstanding, beginning			$ 0.08	$ 1.45
Outstanding, ending	$ 0.11		$ 0.11	$ 0.08

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DEFICIT (Details 1) - $ / shares	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Warratns
Exercised			31,250
Series B Convertible Preferred Stock [Member]
Warratns
Exercised			2,650,000	0
Warrant [Member]
Warratns
Outstanding, beginning			343,750	100,000	100,000
Granted			60,000		375,000
Exercised					(31,250)
Outstanding, ending	403,750		403,750		343,750
Warrant [Member] | Series B Convertible Preferred Stock [Member]
Warratns
Outstanding, beginning			3,370,000	690,000	690,000
Granted					2,680,000
Exercised
Forfeited or cancelled
Outstanding, ending	3,370,000		3,370,000		3,370,000
Weighted Average Exercise Price
Outstanding, beginning			$ 0.57	$ 0.51	$ 0.51
Granted					0.58
Exercised
Forfeited or cancelled
Outstanding, ending	$ 0.57		$ 0.57		$ 0.57

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DEFICIT (Details Narrative) - USD ($)					1 Months Ended		3 Months Ended			6 Months Ended		12 Months Ended
	Feb. 05, 2019	Jul. 16, 2018	May 10, 2018	Feb. 02, 2018	Mar. 26, 2019	Dec. 26, 2017	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Jun. 12, 2019	May 31, 2019	May 08, 2019	Jan. 09, 2019	Jul. 23, 2018
Dividends on preferred stock							$ (4,950)			$ (9,900)
Common stock shares issued	100,000						17,866,587			17,866,587		17,709,087
Common stock, per share	$ 0.30						$ 0.001			$ 0.001		$ 0.001
Warrants issued		375,000
General and administrative expense									439,743	$ 398,908
Fair market value of underlying stock		$ 0.08
Warrants exercise price		$ 0.078
Risk free rate		2.67%
Volatility		417.39%
Dividend yield		0.00%
Expected term		3 years
Debt discount to be amortized									8,749	$ 8,046
Warrants vested										359,375
Fair value of warrants		$ 30,000
Exercised										31,250
Common stock shares issued							18,055,502			18,055,502		18,055,502
Compensation expense related to warrants							$ 72,348		$ 40,547		$ 40,547
Series B Convertible Preferred Stock [Member]
Exercised										2,650,000	0
Warrants expenses										$ 437,267	$ 297,618
Intrinsic value warrants							$ 2,212,100		$ 0	$ 2,212,100	$ 0
Weighted average remaining contractual life										8 years 3 months	8 years 6 months
Remaining amortization period										1 year 6 months	2 years 6 months
Consulting Agreement [Member]
Fair market value of underlying stock	$ 0.30
Risk free rate	2.50%
Volatility	388.56%
Dividend yield	0.00%
Expected term	3 years
Fair value of warrants	$ 17,988
Warrants expenses							$ 7,479			$ 14,877
Consulting fee periodic payment	$ 7,000
Frequency of periodic payment	Monthly
Term of agreement	6 months
Common stock shares reserved for future issuance	60,000
Exercise price per share	$ 0.30
Board of Directors [Member] | Series B Convertible Preferred Stock [Member]
Warrants exercise price			$ 0.60			$ 0.51
Fair value of warrants									$ 56,078		$ 112,156
Shares issuable upon exercise of warrants			1,280,000			565,000
Description for vesting of warrants			Vest over a 32-month period starting May 10, 2018 through December 31, 2020			Vests monthly from January 1, 2018 through December 31, 2018
Description for maturity period			Exercisable from January 1, 2019 through December 31, 2027			Exercisable from January 1, 2018 through December 31, 2024
Number of warrants outstanding							320,000			320,000
Fair value of warrants to be amortized in 2019							$ 768,000			$ 768,000
Compensation expense related to warrants							72,348			143,901
Employment agreement [Member]
Warrants issued	300,000
Consulting fee periodic payment	$ 7,000
Frequency of periodic payment	Monthly
Value of common stock issuable upon waiver of warrants	$ 5,000
Warrants waiver description	Once per quarter, the employee may waive the right to receive 25,000 warrants and receive in exchange for $5,000 worth of shares of the Company’s common stock.
Employment agreement [Member] | CFO and Director [Member] | Series B Convertible Preferred Stock [Member] | For both 2017 and 2018 [Member]
Warrants exercise price						$ 0.51
Fair value of warrants									15,931		31,863
Shares issuable upon exercise of warrants						125,000
Description for vesting of warrants						The warrants associated with compensation in 2017 were fully vested as of December 31, 2017. The warrants associated with compensation in 2018 vested monthly from January 1, 2018 through December 31, 2018
Description for maturity period						The warrants are exercisable from January 1, 2018 through December 31, 2024
Wholesale Production Purchase and Sale Agreement [Member]
Lease obligations per month					$ 6,433
Maintenance fees per month					$ 6,626
Payroll expenses percentage					66.60%
Operating expenses percentage					66.60%
Subscription agreement [Member] | Series C convertible preferred stock [Member]
Dividends on preferred stock				$ 18,150			4,950		$ 4,950	$ 9,900	$ 8,250
Share price				$ 0.25
Preferred stock shares sold				660,000
Preferred stock shares sold value				$ 165,000
Preferred stock, dividend rate, percentage				1.00%
Warrant [Member]
Exercised												(31,250)
Warrants expenses									$ 0	$ 1,315
Warrants exercisable										388,125	100,000
Intrinsic value warrants							$ 66,281		$ 0	$ 66,281	$ 0
Weighted average remaining contractual life										2 years 1 month 15 days	6 months
Number of warrants outstanding							403,750		0	403,750	0
Number of warrants outstanding							403,750		100,000	403,750	100,000
Warrant [Member] | Series B Convertible Preferred Stock [Member]
Exercised
Holy Cacao [Member]
Warrants issued		300,000
Monthly advance		$ 6,000
Promissory Notes [Member]
Common stock, per share													$ 0.295			$ 0.1425
Issuance of debt							$ 18,000			$ 18,000		$ 18,000	$ 25,000
Interest rate													12.00%				12.00%
Common stock shares issued													12,500			50,000	100,000
Strategic advisory consultant one [Member]
Common stock shares awarded under agreement, shares														50,000
Fair market value, per share														$ 0.265
Common stock shares awarded under agreement, amount														$ 13,250
Conditional bonus shares shall be granted under agreement														200,000
Conditional bonus shares shall be granted quarterly														50,000
Strategic advisory consultant [Member]
Common stock shares awarded under agreement, shares														26,415	100,000
Fair market value, per share														$ 0.265	$ 0.20
Common stock shares awarded under agreement, amount															$ 20,000
Conditional bonus shares shall be granted under agreement															1,000,000

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COMMITMENTS (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended		6 Months Ended
	Jun. 05, 2019	Feb. 26, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Consulting fee paid in cash			$ 25,615	$ 1,620	$ 54,847	$ 23,689
Director [Member]
Compensation description		The Directors’ compensation for the period January 1, 2019 through December 31, 2019 will be $10,000 per quarter per Director to be paid on a date determined by the Board of Directors. In addition, the Director’s may receive a one-time award of the ability to purchase a particular amount of warrants, as determined by the Board of Directors.
Consulting Agreement [Member]
Consulting fee paid in cash	$ 1,800
Consulting fee paid in shares	7,000

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SUBSEQUENT EVENTS (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended		6 Months Ended
	Aug. 09, 2019	Jul. 22, 2019	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018
Fair value of shares issued in connection of promissory note			$ 3,688	$ 7,125
Forgiveness of debt amount					$ 3,000
Subsequent Event [Member] | Promissory Note [Member]
Promissory note		$ 250,000
Interest rate		12.00%
Amount to be used for investing in MCA		$ 100,000
Amount to be used for operational activities		$ 150,000
Common stock shares issued in connection of promissoy note		250,000
Fair value of shares issued in connection of promissory note		$ 100,000
Description for the payment terms		due in monthly payments between eighteen (18) months and twenty-three (23) months from the Effective Date based upon the sum of funds available in the Company’s First Foods Funding Division. The balance will be paid twenty-four (24) months from the Effective Date
Common stock shares issuable upon exercise of warrant issued		250,000
Exercise price of warrants		$ 0.25
Fair value of warrant		$ 99,925
Exercise period of warrant		3 years
Description for additional note lender may issue		At the sole discretion of the lender, an additional $250,000 note may be issued to the Company anytime within nine months after the Effective Date. The additional note will be subject to the same terms and conditions as the initial note, with 250,000 shares of common stock issued at a 30% discount from the last market closing price per share as of the effective date of the additional note. If an additional $250,000 note is issued, the Company will issue a warrant to purchase an additional 250,000 shares of the Company’s common stock that will be fully vested as of the effective date of the additional note and have an exercise price that is the lesser of $0.25 per share or the market closing price per share on the effective date of the additional note. The exercise term will be three (3) years
Forgiveness of debt amount	$ 8,140