UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
For the transition period from _______________ to _______________
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices, including Zip Code)
(Issuer’s telephone number, including area code)
N/A
(Former name or former address if changed since last report)
Check
whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☐
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 the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
| ☒ | Smaller reporting company | ||||
| Emerging growth company |
If an emerging growth company, indicate by checkmark 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 ☐
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: shares of common stock as of October 20, 2022.
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 | N/A | N/A |
Table of Contents
| 2 |
Advantego Corporation
Consolidated Balance Sheets
As of March 31, 2020 and December 31, 2019
(Unaudited)
| March 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable - related parties | $ | $ | ||||||
| Accounts payable | ||||||||
| Accrued interest, convertible notes payable | ||||||||
| Convertible notes payable (net of unamortized debt discounts
of $ | ||||||||
| Total current liabilities | ||||||||
| Total Liabilities | $ | $ | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, par value $ per share; shares authorized | ||||||||
| Series A convertible preferred stock; designated; and shares issued and outstanding, respectively | ||||||||
| Series B convertible preferred stock: shares designated; shares issued and outstanding | ||||||||
| Common stock, par value $ per share; shares authorized; and issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited condensed financial statements.
| 3 |
Advantego Corporation
Consolidated Statements of Operations
For the Three Months Ended March 31, 2020 and 2019
(Unaudited)
| March 31, | March 31, | |||||||
| 2020 | 2019 | |||||||
| REVENUES | ||||||||
| Sales | $ | $ | ||||||
| Cost of sales | ( | ) | ||||||
| Gross margin | ( | ) | ||||||
| OPERATING EXPENSES | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| OPERATING (LOSS) | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other income (expense) | ( | ) | ( | ) | ||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income taxes | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted loss per share | $ | ( | ) | ( | ) | |||
| Basic and diluted weighted average shares outstanding | ||||||||
The accompanying footnotes are an integral part of these unaudited condensed financial statements.
| 4 |
Advantego Corporation
Consolidated Statement of Changes in Stockholders’ Equity (Deficit)
For the Three Months Ended March 31, 2020 and 2019 (Unaudited)
| Three Months Ended March 31, 2020 | ||||||||||||||||||||||||||||||||||||
| Series A | Series B | |||||||||||||||||||||||||||||||||||
| Convertible Preferred | Convertible Preferred | Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||
| Balance at December 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Common stock issued for conversion of notes payable | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Common stock issued for accrued interest | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Amortization of debt premium | - | - | - | |||||||||||||||||||||||||||||||||
| Series A Convertible Preferred Stock issued for services | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at March 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Three Months Ended March 31, 2019 | ||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Total Stockholders | ||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||||
| Balance at December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Debt premium on convertible notes | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Amortization of debt premium | - | - | - | - | ||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at March 31, 2019 | - | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
The accompanying footnotes are an integral part of these unaudited condensed financial statements.
| 5 |
Advantego Corporation
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2020 and 2019
(Unaudited)
| March 31, | March 31, | |||||||
| 2020 | 2019 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash provided (used) by operating activities | ||||||||
| Amortization of debt discount | ||||||||
| Preferred stock issued for services | ||||||||
| Changes in operating assets and liabilities | ||||||||
| (Increase) decrease in accounts receivable | ( | ) | ||||||
| (Increase) decrease in prepaid expenses | ( | ) | ||||||
| Decrease in inventory | ||||||||
| Increase (decrease) in accounts payable | ( | ) | ||||||
| Increase in deferred revenue | ||||||||
| (Decrease) in accounts payable - related parties | ( | ) | ||||||
| Increase in accrued interest, convertible notes payable | ||||||||
| Net cash flows provided (used) by operating activities | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | - | - | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from convertible notes payable | ||||||||
| Principal payments on convertible notes payable | ( | ) | ||||||
| Net cash flows provided by financing activities | ||||||||
| NET CHANGE IN CASH | ||||||||
| CASH - BEGINNING OF PERIOD | ||||||||
| CASH - END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
| Schedule of Non-cash Investing and Financing Activities: | ||||||||
| Conversion of convertible notes payable into common stock | $ | $ | ||||||
| Conversion of accrued interest, convertible notes payable into common stock | $ | $ | ||||||
| Recording of premium on convertible debt at stock redemption value | $ | $ | ||||||
| Amortization to additional paid in capital of premium on convertible notes payable | $ | $ | ||||||
| Debt discounts on issuance of convertible notes payable | $ | $ | ||||||
| Cash paid for | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited condensed financial statements.
| 6 |
ADVANTEGO CORPORATION
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2020 and 2019 (Unaudited)
Note A – Organization and Business
Organization and Nature of Business
Advantego Corporation (“Advantego,” “we,” or the “Company”) was originally incorporated in Colorado on July 21, 1988, as Beneficial Capital Financial Services Corp. On February 2, 1995, the Company changed its name to Golden Eagle International, Inc. (“GEII”). From late 2008 through June 2009, GEII engaged in contract gold milling operations in the state of Nevada in the United States. GEII had not had any business operations since it disposed of its wholly owned subsidiary, Golden Eagle International, Inc. (Bolivia), in the first quarter of fiscal 2010. Prior to that time, GEII had been involved in the business of minerals exploration and (prior to 2005) mining and milling operations in Bolivia through that subsidiary. More recently, GEII had been a non-operating corporation seeking to sell its remaining milling plant and equipment and/or merge with an operating company. Advantego Technologies, Inc. (“ATI”) is a Colorado corporation formed on July 29, 2016. On October 27, 2016, GEII completed a reverse merger with ATI, which resulted in a change of control and the perpetuation of ATI’s management and business operations.
Effective
February 1, 2018 and pursuant to Board authorization and majority shareholder approval, the Company changed its name to Advantego Corporation
(amending GEII’s Articles of Incorporation accordingly),
The Company empowers business innovation as a technical solutions provider developing stand-alone digital and enterprise software products to capitalize on niche opportunities within a specific market. The Company leverages a proprietary Intelligent Solution Platform combining leading third-party technologies with existing data and systems to deliver a turnkey specialized Business Process as a Services (BPaaS) that is both scalable and cost effective.
We also provide a subscription-based online directory listing services and were a reseller of software that allows potential customers to better locate an auto collision center, or any business, on the internet.
Basis of Presentation
The accompanying consolidated financial statements represent the operations of Advantego Corporation and its wholly owned subsidiary, Advantego Technologies, Inc., with all intercompany transactions eliminated.
Going Concern
The
consolidated financial statements for the three months ended March 31, 2020 and 2019 have been prepared on the going concern basis which
assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled
in the ordinary course of business. Accordingly, the financial statements do not include any adjustments related to the recoverability
of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern. The
Company has not yet achieved profitable operations, has negative working capital, has accumulated losses of $(
| 7 |
In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the world. While the disruption is currently expected to be temporary, there is uncertainty around its duration. As a result of COVID-19 mobility restrictions globally, there have been changes in consumer behavior. We expect these changes in behavior to continue to evolve as the pandemic progresses. The impacts seen to date may continue to create a wider range of outcomes as consumer behaviors and mobility restrictions continue to evolve. The Covid 19 pandemic has impacted our business resulting in the cancellation of certain business contracts and hindered our ability to raise additional capital.
Note B – Summary of Significant Accounting Policies
Fair Value of Financial Instruments
The Company accounts for fair value measurements in accordance with accounting standard ASC 820-10-50, “Fair Value Measurements.” This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.
The carrying amount of the Company’s current assets and liabilities approximates fair value because of the short-term nature of these items. The carrying amount of convertible notes payable approximates fair value as the individual borrowings bear interest at market interest rates and are also short-term in nature.
Use of Estimates
Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the financial statements.
Concentration of Credit Risk
From
time to time our cash balances, held at major financial institutions, exceed the federally insured limits of $
Cash and Cash Equivalents
For
the statement of cash flows, any liquid investments with a maturity of three months or less at the time of acquisition are considered
to be cash equivalents. The Company had
Revenue Recognition
The Company recognizes revenue from the sale of products and services in accordance with ASC 606, “Revenue from Contracts with Customers” following the five steps procedure:
Step 1: Identify the contract(s) with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to performance obligations
Step 5: Recognize revenue when the entity satisfies a performance obligation
| 8 |
The
Company generates revenue from online directory and digital signage components of its ongoing licensing services it provides to third
parties. Revenue from online directory services is recognized over the life of the agreement ranging from one to twelve months. Revenue
from digital signage control boxes is recognized at the time of sale and renewal fees are amortized over the term of the renewal, ranging
from one to twelve months. The Company recognized $
We measure stock-based compensation cost at the estimated fair value of the awards on the grant date. We recognize the cost over the requisite service period, which is typically the vesting period.
The computation of basic earnings (loss) per common share is based on the net income (loss) divided by the weighted average number of shares outstanding during each period.
The computation of diluted earnings (loss) per common share is based on the weighted average number of shares outstanding during the period plus the common stock equivalents as detailed in the following chart. During the three months ended March 31, 2020 and December 31, 2019, the inclusion of these common stock equivalents on the consolidated statements of operations would have resulted in a diluted weighted average shares number that was anti-dilutive, and as such they are excluded.
March 31, 2020 | March 31, 2019 | |||||||
| Basic weighted average shares outstanding | ||||||||
| Convertible debt | ||||||||
| Warrants | ||||||||
| Series A convertible preferred stock | ||||||||
| Series B convertible preferred stock | 10,909- | |||||||
| Fully diluted weighted average shares outstanding | ||||||||
Income Taxes
Income taxes are accounted for under the liability method. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statements and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized, or the liability settled.
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax law and rates on the date of enactment.
| 9 |
Effect of New Accounting Pronouncements
There are no recent accounting pronouncements that are expected to have a material impact on our financial position, results of operations or cash flows.
Note C – Convertible Notes Payable
Convertible Notes Payable
We have uncollateralized convertible debt obligations with unaffiliated investors outstanding at March 31, 2020 and December 31, 2019 as follows:
| March 31, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||
| Note | Principal | Less Debt Discount | Plus Premium | Net Note Balance | Accrued Interest | Principal | Less Debt Discount | Plus Premium | Net Note Balance | Accrued Interest | |||||||||||||||||||||||||||||||
| (a) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| (c) | |||||||||||||||||||||||||||||||||||||||||
| (i) | |||||||||||||||||||||||||||||||||||||||||
| (k) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| (n) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| (o) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| (p) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| (q) | ( | ) | |||||||||||||||||||||||||||||||||||||||
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| (s) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| (t) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| (u) | |||||||||||||||||||||||||||||||||||||||||
| (v) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| (w) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| (x) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| (y) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| (z) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| (aa) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| (bb) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| (cc) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| (dd) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| (ee) | |||||||||||||||||||||||||||||||||||||||||
| Totals | $ | $ | ( | ) | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||
| 10 |
From January 17, 2019, through August 7, 2019, the Company issued nineteen (19) Convertible Promissory Notes to third parties ranging
in face values from a low of $
During
the three months ended March 31, 2020 and 2019, the Company received $and
$
Note D – Stockholders’ Equity
Common Stock
On March 11, 2020, the board of directors amended the Articles of Incorporation to increase the number of authorized common shares to with a par value of $ per share. On March 31, 2020 and December 31, 2019 there were and shares issued and outstanding respectively.
During
the three months ended March 31, 2020, unaffiliated holders of our convertible notes payable elected to convert $
There were issuances of common stock during the three months ended March 31, 2019.
Preferred Stock
Our Articles of Incorporation provide that we may issue up to shares of various series of preferred stock. Subject to the requirements of the Colorado Business Corporation Act, the Board of Directors may issue the preferred stock in series with rights and preferences as the Board of Directors may determine appropriate, without shareholder approval.
The Company has designated Series B Convertible Preferred shares, of which shares were issued and outstanding at March 31, 2020 and December 31, 2019. These Series B shares are convertible into common shares. There were issuances of Series B convertible preferred stock during the three months ended March 31, 2020 or 2019.
The
Company has also designated shares of Series A Convertible Preferred Shares. These shares entitle the holder to $
| 11 |
On
January 15, 2020, Robert W. Ferguson, our CEO, and Fred J. Popke, our COO, were each issued shares of Series A convertible preferred
stock in exchange for $
Note E – Related Party Transactions
We
incur various consulting, management, and software licensing expenses with our officers, directors, and companies owned by our officers
and directors. During the three months ended March 31, 2020 and 2019, we incurred $
Note F – Prepaid Expenses
| March 31, 2020 | December 31, 2019 | |||||||
| Prepaid insurance | $ | $ | ||||||
| Deposits for office leases | ||||||||
| Total | $ | $ | ||||||
Note G – Subsequent Events
The Company has analyzed events occurring subsequent to March 31, 2020, through the date these financial statements were issued, and noted the following material items requiring disclosure herein:
(1)
During the subsequent period from April 1, 2020, through the date of this filing, unaffiliated holders of our convertible notes payable
elected to convert $
(2)
The Company’s Nevada office was closed on April 30, 2020, and the other leases have since been converted to month-to-month obligations
of under $
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Throughout this Annual Report on Form 10-K Advantego Corporation is referred to as “we,” “our,” “us,” the “Company,” or “Advantego.”
Advantego Corporation (“Advantego,” formerly Golden Eagle International, Inc., or “GEII”) was incorporated in Colorado on July 21, 1988. GEII had previously engaged in contract gold milling operations primarily in the state of Nevada in the United States. Advantego Technologies, Inc. is a California corporation formed on July 29, 2016. On October 27, 2016, the Company acquired 100% stock ownership of Advantego Technologies, Inc. in exchange for 11,628,636 (post-split) shares of the Company’s common stock. The stock exchange was deemed a reverse merger, as the management and operations of Advantego continued; and Advantego’s management received in the aggregate a majority ownership in GEII as a result of the stock exchange.
On February 1, 2018, we changed our name from GEII to Advantego Corporation and our trading symbol from MYNG to ADGO. On January 31, 2018, our shareholders approved a 1-for-11 reverse stock split, which was effective February 22, 2018. Unless otherwise indicated, all per-share information in this report has been adjusted to reflect this reverse stock split. All references to “the Company,” “we,” “us,” or “our,” include the operations of Advantego Technologies, Inc. consolidated with Advantego.
| 12 |
The Company empowers business innovation as a technical solutions provider developing stand-alone digital and enterprise software products to capitalize on niche opportunities within a specific market. The Company leverages a proprietary Intelligent Solution Platform combining leading third-party technologies with existing data and systems to deliver a turnkey specialized Business Process as a Services (BPaaS) that is both scalable and cost effective.
The Company offers a variety of stand-alone products tailored specifically to targeted industries as well as combining these with multiple software applications for large enterprises, affiliate networks and franchise operators delivering comprehensive, all-inclusive, managed bundled solutions.
Additional services include Product Design, Engineering and Manufacturing services; Custom Enterprise Software development, and Licensing of Intellectual Property from its vast library of strategic partners. This provides a “one-stop-shop” for our customers.
We maintain a small core group of employees and outsource most of our Product Development, Product Maintenance, Sales and Marketing, Accounting, Investor Relations, Legal, and Project Management services. We feel this approach is more cost-effective, provides greater flexibility, and resources can be applied quickly to specific projects and tasks as needed.
We launched our field testing of various products and services in May 2017 and commenced fulfillment of a revenue generating contract of our digital signage product to a network of certified auto care collision centers in March of 2018 throughout the United States during the year ended December 31, 2018. The digital signage allows the auto care collision centers to display, on a large television screen or counter displays, information concerning the center, their certifications and other informational and promotional content associated with the automotive industry.
We also provide subscription-based online directory listing services; and we are a reseller of software that allows potential customers to better locate an auto collision center or any business on the internet. As of March 31, 2020, 25 auto care collision centers were using this software.
Beginning in March of 2018 and continuing through the end of 2019, management began a campaign to attract and associate with certain companies that had proprietary and patented technology in the hopes that if the opportunity arose, the Company could utilize these technologies in the development of new products internally or help facilitate the development of new products that these new strategic partners might like to develop and distribute.
This approach continued throughout 2019 until it became apparent that the Company’s strategic technical partners had limited capital capabilities and fell short of the potential of what management thought could be achieved with them. We learned that a catastrophe, such as Covid 19, would devastate many small private and public companies because of their limited surplus capital. Since that time, no further strategic partnership agreements have been sought by the Company because of the lack of financial capability in most of the potential associates. Any and all commitments that Advantego had agreed to with its strategic partners have since been terminated or run their course. The Company, therefore, has no obligations or contingent liabilities from its relationship with these strategic partners moving forward.
The Company did use proprietary technology owned by Badu Networks to develop a revenue producing service (“eLobby”). eLobby was a digital signage solution that was delivered to a network of 1,250 auto care collision centers around the US. The client, however, decided not to renew the recurring licenses or to purchase any additional ones thus eliminating any recurring revenue the Company had expected to realize.
| 13 |
As of March 31, 2020, the Company does not expect anything of substance to develop in the future from the relationships it has established with its strategic partners. The Company will not be expending any further resources to enhance any existing service or try to adapt the present technologies of its strategic partners to new opportunities.
In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the world. While the disruption is currently expected to be temporary, there is uncertainty around its duration. As a result of COVID-19 mobility restrictions globally, there have been changes in consumer behavior. We expect these changes in behavior to continue to evolve as the pandemic progresses. The impacts seen to date may continue to create a wider range of outcomes as consumer behaviors and mobility restrictions continue to evolve.
The Covid 19 pandemic has impacted our business resulting in the cancellation of certain business contracts and hindered our ability to raise additional capital.
Results of Operations
During the three months ended March 31, 2020 and 2019, we had revenues of $5,773 and $8,325, respectively. The related cost of sales for the three months ended March 31, 2020 and 2019 was $0 and $10,838, respectively. The decrease in revenue was the result of the wind down of renewal fees for our digital signage service and service for our digital signage product to a network of certified auto care collision centers in the United States during the later parts of 2019. Similarly, our cost of sales decreased as we had no renewal costs. As a result, gross margin for the three months ended March 31, 2019 increased to $5,773 from ($2,513) during the same period during 2019. Our general and administrative expenses totaled $10,885 and $347,749 for the three months ended March 31, 2020 and 2019, respectively. The decrease in general and administrative expenses was primarily the result of the winding down of operations as a result of the lack of cash and the onset of the Covid pandemic. Interest expense was $146,920 and $250,152 during the three months ended March 31, 2020 and 2019, respectively. The decrease during 2020 was due to the conversion of a portion of our convertible notes payable into common stock, resulting in a lower principal balance on which to accrue interest.
Liquidity and Capital Resources
Our primary sources and (uses) of cash for the three months ended March 31, 2020 and 2019 were as follows:
| 2020 | 2019 | |||||||
| Cash provided (used) by operating activities | $ | 554 | $ | (557,454 | ) | |||
| Cash from investing activities | $ | - | $ | - | ||||
| Cash provided by financing activities | $ | - | $ | 889,250 | ||||
During the three months ended March 31, 2020, operating activities provided $554, which consisted of a net loss of $152,032, offset by non-cash expenses of $42,325 in debt discount amortization and preferred stock issued for $50 in services, as well as a net change in operating assets and liabilities of $110,211.
During the three months ended March 31, 2019, we used $557,454 in operating activities, which consisted of a net loss of $600,414, offset by $70,465 in debt discount amortization and net change in operating assets and liabilities of $27,505. Also during the three months ended March 31, 2019, we received $889,250 from financing activities, consisting of $1,142,250 in proceeds from convertible notes, offset by repayments of convertible notes of $253,000. We did not have any investing activities during the three months ended March 31, 2019.
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See Note B to the March 31, 2020 financial statements included as part of this report, for a description of our significant accounting policies.
See Note C to the March 31, 2020 financial statements, which are a part of this report, for a discussion of our convertible notes payable.
Off-Balance Sheet Arrangements
None.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not Applicable. The Company is a “smaller reporting company.”
Item 4. Controls and Procedures.
An evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive and Financial Officers of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-Q, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Principal Executive and Financial Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of March 31, 2020, our disclosure controls and procedures were not effective for the following reasons:
| ● | the lack of formal written documentation relating to the design of our controls. | |
| ● | we did not maintain adequate segregation of duties related to job responsibilities for initiating, authorizing, and recording of certain transactions due to the small size of our company. |
Notwithstanding the above, a controls system cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting during the quarter ended March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II.
Item 1. Legal Proceedings.
The Company is not a party to any material pending legal proceedings and, to the best of its knowledge; its properties are not the subject of any such proceedings.
Item 1A. Risk Factors.
See the Going Concern statement listed in Footnote A.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended March 31, 2020 the Company:
| ● | issued 900,000 restricted shares of Series A Convertible Preferred Stock to two officers of the Company for services rendered, | |
| ● | issued 96,984,801 shares of common stock upon the conversion of notes, and | |
| ● | issued 198,685,559 shares of common stock in payment of accrued interest. |
The Company relied upon the exemption provided by Section 4(a)(2) of the Securities Act of 1933 with respect to the issuance of these shares. The individuals who acquired these shares were sophisticated investors and were provided full information regarding the Company’s business and operations. There was no general solicitation in connection with the offer or issuance of these shares. The individuals who acquired these shares acquired them for their own accounts. The certificates representing these shares will bear a restricted legend which provides they cannot be sold except pursuant to an effective registration statement or an exemption from registration. No commission or other form of remuneration was given to any person in connection with the issuance of these shares.
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Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ADVANTEGO CORPORATION | ||
| October 20, 2022 | By: | /s/ Robert W. Ferguson |
| Robert W. Ferguson, Principal Executive Officer | ||
| October 20, 2022 | By: | /s/ Tracy A. Madsen |
| Tracy A. Madsen Principal Financial Officer | ||
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