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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 11/13/19 First Foods Group, Inc. 10-Q 9/30/19 43:3.8M Discount Edgar/FA |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 491K
2: EX-31.1 Certification -- §302 - SOA'02 HTML 20K
3: EX-31.2 Certification -- §302 - SOA'02 HTML 20K
4: EX-32.1 Certification -- §906 - SOA'02 HTML 15K
5: EX-32.2 Certification -- §906 - SOA'02 HTML 15K
32: R1 Document and Entity Information HTML 41K
16: R2 Condensed Consolidated Balance Sheets HTML 84K
23: R3 Condensed Consolidated Balance Sheets HTML 46K
(Parenthetical)
39: R4 Condensed Consolidated Statements of Operations HTML 70K
(Unaudited)
31: R5 Statement Of Stockholder's Equity (Unaudited) HTML 99K
15: R6 Condensed Consolidated Statements of Cash Flows HTML 89K
(Unaudited)
22: R7 Business Summary of Significant Accounting HTML 69K
Principles and Liquidity
42: R8 Related Party Transactions HTML 53K
28: R9 Accounts Payable and Accrued Liabilities HTML 22K
12: R10 Loans and Long-Term Loans HTML 36K
25: R11 Deficit HTML 67K
37: R12 Commitments HTML 22K
34: R13 Subsequent Events HTML 26K
13: R14 Business Summary of Significant Accounting HTML 123K
Principles and Liquidity (Policies)
26: R15 Related Party Transactions (Tables) HTML 23K
38: R16 Loans and Long-Term Loans (Tables) HTML 27K
35: R17 Deficit (Tables) HTML 42K
14: R18 Accounts Payable and Accrued Liabilities (Tables) HTML 21K
24: R19 Business Summary of Significant Accounting HTML 92K
Principles and Liquidity (Details Narrative)
41: R20 Related Party Transactions (Details) HTML 30K
27: R21 Related Party Transactions (Details Narrative) HTML 250K
17: R22 Accounts Payable and Accrued Liabilities (Details) HTML 25K
20: R23 Loans and Longterm Loans (Details) HTML 35K
43: R24 Loans and Longterm Loans (Details Narrative) HTML 106K
30: R25 Deficit (Details) HTML 41K
18: R26 Deficit (Details 1) HTML 32K
21: R27 Deficit (Details Narrative) HTML 273K
40: R28 Commitments (Details Narrative) HTML 41K
33: R29 Subsequent Events (Details Narrative) HTML 72K
36: XML IDEA XML File -- Filing Summary XML 69K
29: EXCEL IDEA Workbook of Financial Reports XLSX 66K
6: EX-101.INS XBRL Instance -- fifg-20190930 XML 1.28M
9: EX-101.CAL XBRL Calculations -- fifg-20190930_cal XML 44K
11: EX-101.DEF XBRL Definitions -- fifg-20190930_def XML 576K
8: EX-101.LAB XBRL Labels -- fifg-20190930_lab XML 833K
10: EX-101.PRE XBRL Presentations -- fifg-20190930_pre XML 724K
7: EX-101.SCH XBRL Schema -- fifg-20190930 XSD 171K
19: ZIP XBRL Zipped Folder -- 0001477932-19-006414-xbrl Zip 139K
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 September 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,
(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 x No ¨
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 x No ¨
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 | x | 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 November 11, 2019, the number of shares outstanding of the registrant’s class of common stock was 20,232,105, par value of $0.001 per share.
| Pages | ||||
| |||||
| |||||
| 3 | ||||
| Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018 |
| 3 | ||
|
| 4 | |||
|
| 5 | |||
|
| 6 | |||
|
| 7 | |||
| |||||
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| 24 | |||
| |||||
| 28 | ||||
| |||||
| 29 | ||||
| |||||
| 30 | ||||
| |||||
| 30 | ||||
| |||||
| 30 | ||||
| |||||
| 30 | ||||
| |||||
| 30 | ||||
| |||||
| 30 | ||||
| |||||
| 31 | ||||
| |||||
| 32 | ||||
| 2 |
First Foods Group, Inc. and Subsidiary |
| |||||||
Condensed Consolidated Balance Sheets |
| |||||||
(Unaudited) |
| |||||||
|
|
|
|
| ||||
|
|
|
|
| ||||
ASSETS |
| |||||||
CURRENT ASSETS: |
|
|
|
|
|
| ||
Cash |
| $ | 8,933 |
|
| $ | 30,426 |
|
Accounts receivable, net |
|
| 13,063 |
|
|
| - |
|
Inventory, net |
|
| 18,394 |
|
|
| - |
|
Merchant cash advances, net of allowance $63,765 and $82,354, respectively |
|
| 420,096 |
|
|
| 562,488 |
|
Prepaid expenses and other current assets |
|
| 56,734 |
|
|
| 36,506 |
|
Deferred merchant advance commissions |
|
| 11,416 |
|
|
| 50,759 |
|
| TOTAL ASSETS |
| $ | 528,636 |
|
| $ | 680,179 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND DEFICIT | ||||||||
| CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| $ | 685,450 |
|
| $ | 317,356 |
|
Deferred revenue |
|
| 147,045 |
|
|
| 176,115 |
|
Loans, net |
|
| 162,980 |
|
|
| - |
|
Related party loans, net |
|
| 619,504 |
|
|
| 372,835 |
|
| TOTAL CURRENT LIABILITIES |
|
| 1,614,979 |
|
|
| 866,306 |
|
|
|
|
|
|
|
|
|
|
Loans, net - long term |
|
| 91,114 |
|
|
| 342,119 |
|
| TOTAL LIABILITIES |
|
| 1,706,093 |
|
|
| 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 ($176,550 and $183,150 liquidation preference as of September 30, 2019 and December 31, 2018, respectively) |
|
| 660 |
|
|
| 660 |
|
Common stock: $0.001 par value,100,000,000 shares |
|
|
|
|
|
|
|
|
authorized, 18,424,669 and 17,709,087 shares |
|
|
|
|
|
|
|
|
issued and outstanding, respectively |
|
| 18,425 |
|
|
| 17,709 |
|
Additional paid-in capital |
|
| 7,635,154 |
|
|
| 7,081,559 |
|
Accumulated deficit |
|
| (8,804,695 | ) |
|
| (7,637,029 | ) |
Total First Foods Group, Inc. Deficit |
|
| (1,149,983 | ) |
|
| (536,628 | ) |
|
|
|
|
|
|
|
|
|
Noncontrolling interests |
|
| (27,474 | ) |
|
| 8,382 |
|
Total deficit |
|
| (1,177,457 | ) |
|
| (528,246 | ) |
| TOTAL LIABILITIES AND DEFICIT |
| $ | 528,636 |
|
| $ | 680,179 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
| Table of Contents |
First Foods Group, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
(Unaudited)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
| Table of Contents |
First Foods Group, Inc. and Subsidiary
Condensed Consolidated Statements of Changes in Deficit
(Unaudited)
|
| Preferred Stock |
|
| Common Stock |
|
| Additional |
|
| Accumulated |
|
| Total First Foods Group, Inc. |
|
| Noncontrolling |
|
| 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 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued to consultants for services |
|
| - |
|
|
| - |
|
|
| 119,167 |
|
|
| 119 |
|
|
| 32,031 |
|
|
| - |
|
|
| 32,150 |
|
|
| - |
|
|
| 32,150 |
|
Warrants issued for director services |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 73,143 |
|
|
| - |
|
|
| 73,143 |
|
|
| - |
|
|
| 73,143 |
|
Warrants issued for consultant services |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,315 |
|
|
| - |
|
|
| 1,315 |
|
|
| - |
|
|
| 1,315 |
|
Common stock issued with loans payable |
|
| - |
|
|
| - |
|
|
| 250,000 |
|
|
| 250 |
|
|
| 99,750 |
|
|
| - |
|
|
| 100,000 |
|
|
| - |
|
|
| 100,000 |
|
Warrants issued with loan payable |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 99,925 |
|
|
| - |
|
|
| 99,925 |
|
|
| - |
|
|
| 99,925 |
|
Dividend on preferred stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,650 | ) |
|
| - |
|
|
| (1,650 | ) |
|
| - |
|
|
| (1,650 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (432,410 | ) |
|
| (432,410 | ) |
|
| (18,229 | ) |
|
| (450,639 | ) |
Balance at September 30, 2019 |
|
| 1,133,333 |
|
| $ | 1,133 |
|
|
| 18,424,669 |
|
| $ | 18,425 |
|
| $ | 7,635,154 |
|
| $ | (8,804,695 | ) |
| $ | (1,149,983 | ) |
| $ | (27,474 | ) |
| $ | (1,177,457 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued to consultants for services |
|
| - |
|
|
| - |
|
|
| 17,500 |
|
|
| 18 |
|
|
| 2,982 |
|
|
| - |
|
|
| 3,001 |
|
|
| - |
|
|
| 3,001 |
|
Common stock issued with loans payable |
|
| - |
|
|
| - |
|
|
| 118,000 |
|
|
| 118 |
|
|
| 6,373 |
|
|
| - |
|
|
| 6,491 |
|
|
| - |
|
|
| 6,491 |
|
Common stock issued for exercise of warrants |
|
| - |
|
|
| - |
|
|
| 31,250 |
|
|
| 31 |
|
|
| 2,406 |
|
|
| - |
|
|
| 2,437 |
|
|
| - |
|
|
| 2,437 |
|
Warrants issued for director services |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 185,698 |
|
|
| - |
|
|
| 185,698 |
|
|
| - |
|
|
| 185,698 |
|
Warrants issued for consultant services |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 6,207 |
|
|
| - |
|
|
| 6,207 |
|
|
| - |
|
|
| 6,207 |
|
Dividend on preferred stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (13,200 | ) |
|
| - |
|
|
| (13,200 | ) |
|
| - |
|
|
| (13,200 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (388,045 | ) |
|
| (388,045 | ) |
|
| (2,571 | ) |
|
| (390,616 | ) |
Balance at September 30, 2018 |
|
| 660,001 |
|
| $ | 660 |
|
|
| 17,284,637 |
|
| $ | 17,285 |
|
| $ | 5,922,654 |
|
| $ | (6,720,002 | ) |
| $ | (779,402 | ) |
| $ | 17,429 |
|
| $ | (761,973 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
| Table of Contents |
First Foods Group, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(Unaudited)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
| Table of Contents |
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 1st 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 products, including specialty chocolate products infused with a hemp-based ingredient in accordance with the Company’s understanding of the Agricultural Act of 2014 (the “2014 Farm Bill”) and/or the Agriculture Improvement Act of 2018 (the “2018 Farm Bill,” and together with the 2014 Farm Bill, collectively, the “Farm Bill”), which renders the production of hemp federally lawful. 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 regulations 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, and distribute hemp-based products pursuant with the Company’s understanding of the Farm Bill. The Company may license its IP to third parties that may produce, package, and distribute marijuana-based products, but only as such licensing is 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 produce its specialty chocolate product and sell it to manufacturing and wholesaling companies. On October 10, 2019, the Company signed a master distribution agreement with CBD Unlimited, Inc, which is a public company and a master distributor, to distribute the Company’s hemp-based chocolate products.
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 |
| Table of Contents |
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 September 30, 2019, the Company had approximately $163,000 in 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 nine months ended September 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.
| 8 |
| Table of Contents |
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 September 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.
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.
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 September 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 thirty-six (36) merchant advances for a total of $79,019 for the nine months ended September 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
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 September 30, 2019, the Company’s receivables from merchant cash advances included $345,078 from two merchants ($291,908 and $53,170), representing 71.3% of the Company’s merchant cash advances. The Company earned $44,073 of MCA income from one merchant, representing 55.6% of the Company’s MCA income for the three months ended September 30, 2019. The Company earned $102,987 of MCA income from one merchant, representing 43.7% of the Company’s MCA income for the nine months ended September 30, 2019.
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.
The Company did not earn revenues from any one merchant that were greater than or equal to 10% of the total revenues for the three and nine months ended September 30, 2018.
As of September 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.
For the three and nine months ended September 30, 2019, the Company had a purchase concentration of 100% from one vendor.
| 9 |
| Table of Contents |
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 nine months ended September 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 nine months ended September 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.
For each merchant cash advance entered into by the Company prior to January 1, 2019, the Company recorded 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. For each merchant cash advance entered into by the Company on January 1, 2019 or later, TIER receives a daily payment as payments are made on the advance, 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 TIER’s 2% residual commission.
| 10 |
| Table of Contents |
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 term 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 September 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 September 30, 2019, the Company had inventory of approximately $18,000, which consisted of $12,816 of raw materials, $4,266 of work in process, and $1,332 of finished goods. The Company has 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 September 30, 2019 and 2018, were approximately $29,000 and $15,000, respectively. The research and development costs for the nine months ended September 30, 2019 and 2018, were approximately $63,000 and $45,000, 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 September 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 our 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 September 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.
| 11 |
| Table of Contents |
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 September 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 September 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. There were no dilutive shares outstanding as of September 30, 2019 and December 31, 2018 because their effect would be antidilutive.
The Company had 653,750 and 443,750 warrants to purchase common stock outstanding at September 30, 2019 and 2018, respectively. The Company had 3,370,000 and 1,970,000 warrants to purchase Series B preferred stock outstanding at September 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 September 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 September 30, 2019 and 2018, were $44,473 and $7,085, respectively and $89,362 and $39,328, respectively, for the nine months ended September 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 September 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 nine months ended September 30, 2019 was $21,003 and $287,130, respectively. There was $31,605 of revenue for Holy Cacao for the nine months ended September 30, 2019.
| 12 |
| Table of Contents |
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 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 September 30, 2019, the Company owes a Director approximately $15,000 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 5). As of September 30, 2019 and December 31, 2018, the Company has accrued $266,667 and $87,500, respectively, in relation to the employment agreement and $16,047 and $13,449, respectively, in relation to the payroll tax liability.
| 13 |
| Table of Contents |
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. The outstanding balance as of September 30, 2019, was $16,800.
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 5). As of September 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 6.00% at September 30, 2019, to be compounded monthly. The note is secured by the full value of the borrower and matures on October 31, 2019. This loan has been amended and matures on April 30, 2020. During the three months ended September 30, 2019 and 2018, the Company recorded $1,820 and $1,931, respectively, as interest expense related to this loan. During the nine months ended September 30, 2019 and 2018, the Company recorded $5,316 and $4,332, respectively, as interest expense related to this loan. As of September 30, 2019 and December 31, 2018, the principal balance of this loan was $100,000 and the accrued interest was $12,327 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 September 30, 2018, the Company recorded $0 of interest expense related to the amortization of debt discount related to this loan and $2,250 of regular interest. During the nine months ended September 30, 2018, the Company recorded $11,667 of interest expense related to the amortization of debt discount related to this loan and $6,750 of regular interest. As of September 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 September 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 September 30, 2019 and 2018, the Company recorded $1,850 of interest expense related to the amortization of debt discount related to this loan and $3,025 of regular interest, respectively. During the nine months ended September 30, 2019 and 2018, the Company recorded $5,490 and $2,172 of interest expense related to the amortization of debt discount related to this loan, respectively and $8,975 and $3,551 of regular interest, respectively. As of September 30, 2019 and December 31, 2018, the principal balance of this loan was $100,000 with unamortized debt discount of $1,488 at September 30, 2019 and the accrued interest was $8,979 and $6,575, respectively.
On October 11, 2018, the Company issued a promissory note of $250,000 to a shareholder, 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 September 30, 2019, the Company recorded $4,205 of interest expense related to the amortization of debt discount related to the note and $7,562 of regular interest. During the nine months ended September 30, 2019, the Company recorded $12,477 of interest expense related to the amortization of debt discount related to the note and $22,438 of regular interest. As of September 30, 2019 and December 31, 2018, the principal balance of the note was $250,000 with unamortized debt discount of $8,821 at September 30, 2019 and the accrued interest was $1,596 and $6,658, respectively.
All of the above transactions were approved by disinterested directors.
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. |
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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 $216,028 ratably during the nine months ended September 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 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 September 30, 2019 and 2018, the Company recorded $73,143, respectively, as compensation expense related to the warrants. For the nine months ended September 30, 2019 and 2018, the Company recorded $217,043 and $113,689, 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 nine months ended September 30, 2019.
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NOTE 3 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following as of September 30, 2019 and December 31, 2018:
|
| 2019 |
|
| 2018 |
| ||
Accounts payable |
| $ | 306,800 |
|
| $ | 128,405 |
|
Interest |
|
| 36,208 |
|
|
| 43,371 |
|
Salaries |
|
| 322,714 |
|
|
| 140,950 |
|
Other |
|
| 19,728 |
|
|
| 4,630 |
|
Total |
| $ | 685,450 |
|
| $ | 317,356 |
|
NOTE 4 – 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 September 30, 2019, the Company recorded $923 and $166 of interest expense related to the amortization of debt discount related to these notes and $3,025 and $544 of regular interest, respectively. During the nine months ended September 30, 2019, the Company recorded $2,750 and $493 of interest expense related to the amortization of debt discount related to these notes and $8,975 and $1,616 of regular interest, respectively. As of September 30, 2019, the principal balance of these notes was $100,000 and $18,000 with unamortized debt discount of $1,134 and $206, respectively, and the accrued interest was $268 and $228, 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 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 September 30, 2019, the Company recorded $1,201 of interest expense related to the amortization of debt discount related to the note and $1,512 of regular interest. During the nine months ended September 30, 2019, the Company recorded $3,445 of interest expense related to the amortization of debt discount related to the note and $4,340 of regular interest. As of September 30, 2019, the principal balance of the note was $50,000, the unamortized debt discount was $3,680 and the accrued interest was $340.
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 months ended September 30, 2019, the Company recorded $465 of interest expense related to the amortization of debt discount related to the note and $756 of regular interest. During the nine months ended September 30, 2019, the Company recorded $556 of interest expense related to the amortization of debt discount related to the note and $904 of regular interest. As of September 30, 2019, the principal balance of the note was $25,000, the unamortized debt discount was $3,132 and the accrued interest was $154.
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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 a 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. During the three and nine months ended September 30, 2019, the Company recorded $19,171 of interest expense related to the amortization of debt discount related to the note and $5,753 of regular interest. As of September 30, 2019, the principal balance of the note was $250,000, the unamortized debt discount was $180,754 and the accrued interest was $753.
|
| 2019 |
|
| 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 |
|
Loan issued January 09, 2019 |
|
| 50,000 |
|
|
| - |
|
Loan issued June 12, 2019 |
|
| 25,000 |
|
|
| - |
|
Loan issued July 22, 2019 |
|
| 250,000 |
|
|
| - |
|
Unamortized debt discount |
|
| (188,906 | ) |
|
| (25,881 | ) |
Total |
|
| 254,094 |
|
|
| 342,119 |
|
Less: short term loans, net |
|
| 162,980 |
|
|
| - |
|
Total long-term loans, net |
| $ | 91,114 |
|
| $ | 342,119 |
|
NOTE 5 – 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 September 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 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. The Company stopped accruing the dividend payments during the quarter ending September 30, 2019 per the terms of the agreement. For the three months ended September 30, 2019 and 2018, the Company recorded $1,650 and $4,950 of dividend expense related to the subscription agreement, respectively. For the nine months ended September 30, 2019 and 2018, the Company recorded $11,550 and $13,200 of dividend expense related to the subscription agreement, respectively.
|
|
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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.
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.
On July 22, 2019, 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. 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 date of issuance based upon the sum of funds available in the Company’s First Foods Funding Division, with the balance due 24 months from the date of issuance.
On February 11, 2019, the Company entered into an agreement with a strategic advisory consultant (the “Consultant”). On September 4, 2019, in accordance with the agreement, the Consultant was awarded 17,500 shares of the Company’s common stock at a fair market value of $0.40 per share.
On September 9, 2019, the Company entered into an agreement with a strategic advisory consultant (the “Consultant”). On September 17, 2019, in accordance with the agreement, the Consultant was awarded 26,667 shares of the Company’s common stock at a fair market value of $0.24 per share. The contract term is for ninety days. As full compensation for the Services, the Consultant shall be paid a weekly fee of $1,500 payable by the Company to the Consultant at the end of each full week of service. In addition, the Consultant shall receive $6,400 worth of restricted shares of the Company’s common stock (the “Shares”) issued by the Company to the Consultant on the first day of each month of service, starting on the Effective Date, at a 20% discount from the last closing market price of the Shares.
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| Table of Contents |
On September 19, 2019, the Company entered into an agreement with a related party strategic advisory consultant (the “Consultant”). On September 26, 2019, in accordance with the agreement, the Consultant was awarded 75,000 shares of the Company’s common stock at a fair market value of $0.25 per share.
Warrant Activity
Common Stock Warrants
On July 16, 2018, the Company entered into a consulting agreement with a related party service provider that contains the following terms:
| · | 375,000 warrants were awarded as of the date of the agreement to 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 was expensed ratably over a period of 12 months. For the three and nine months ended September 30, 2019, the Company recorded an expense of $1,315 and $16,192, respectively in relation to these warrants. As of September 30, 2019, a total of 343,750 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 September 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 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 September 30, 2019, no warrants have been expensed because the employment period has not commenced.
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| Table of Contents |
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. 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 and was fully expensed as of the Effective Date with an exercise term of three (3) years.
A summary of the Company’s warrants to purchase common stock activity is as follows:
|
| Number of Warrants (in common shares) |
|
| Weighted Average Exercise 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 |
|
| 310,000 |
|
|
| 0.26 |
|
Exercised |
|
| - |
|
|
| - |
|
Forfeited or cancelled |
|
| - |
|
|
| - |
|
Outstanding, September 30, 2019 |
|
| 653,750 |
|
| $ | 0.16 |
|
As of September 30, 2019, 653,750 warrants for common stock were exercisable and the intrinsic value of these warrants was $95,350. As of September 30, 2019, the weighted average remaining contractual life was 2.23 years for warrants outstanding.
As of September 30, 2018, 146,875 warrants for common stock were exercisable and the intrinsic value of these warrants was $23,960. As of September 30, 2018, the weighted average remaining contractual life was 2.16 years for warrants outstanding and the remaining expense is approximately $23,753.
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 $47,794 during the three and nine months ended September 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 $168,234 during the three and nine months ended September 30, 2018, respectively. These warrants were fully expensed as of December 31, 2018.
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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 nine months ended September 30, 2019, the Company recorded $73,143 and $217,043, 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, September 30, 2019 |
|
| 3,370,000 |
|
| $ | 0.57 |
|
As of September 30, 2019, 2,770,000 warrants for Series B preferred stock were exercisable and the intrinsic value of these warrants was $2,723,600. As of September 30, 2019, the weighted average remaining contractual life was 8.06 years for warrants outstanding and the remaining expense is $364,124 over the remaining amortization period which is 1.25 years.
As of September 30, 2018, the weighted average remaining contractual life was 7.10 years for warrants outstanding. As of September 30, 2018, 748,750 warrants were exercisable and the intrinsic value of warrants exercisable was $0. As of September 30, 2018, the remaining expense is approximately $726,319 over the remaining amortization period which is 2.25 years.
NOTE 6 - 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 August 14, 2019, the Company entered into an agreement with a CFN Media. In consideration for the services and deliverables provided by CFN Media, the Company will make three (3) cash payments to CFN Media totaling $30,000. Payments will be made in accordance with the following staged schedule:
“Stage 1” - $10,000 due upon the signing of the agreement for the Stage 1 services and deliverables: the interview, lead generation system and two (2) articles, including syndication, distribution and placement.
“Stage 2” - $10,000 due upon the Company’s receipt of CFN Media’s invoice issued after CFN Media’s completion of Stage 1 and the Company’s confirmation they are ready to continue with Stage 2, which will include CFN Media’s delivery of two (2) Articles with the embedded interview and lead generation, as well as syndication, distribution and placement of services and deliverables.
“Stage 3” - $10,000 due upon the Company’s receipt of CFN Media’s invoice issued after CFN Media’s completion of Stage 2 and the Company’s confirmation they are ready to continue with Stage 3, which will include CFN Media’s delivery of two (2) Articles with the embedded interview and lead generation, as well as syndication, distribution and placement of services and deliverables.
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On September 9, 2019, the Company entered into an agreement with a strategic advisory consultant (the “Consultant”). On September 17, 2019, in accordance with the agreement, the Consultant was awarded 26,667 shares of the Company’s common stock at a fair market value of $0.24 per share. The contract term is for 3 months. As full compensation for the Services, the Consultant shall be paid a weekly fee of $1,500 payable by the Company to the Consultant at the end of each full week of service. In addition, the Consultant shall receive $6,400 worth of restricted shares of the Company’s common stock (the “Shares”) issued by the Company to the Consultant on the first day of each month of service, starting on the effective date, at a 20% discount from the last closing market price of the Shares.
On September 11, 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 December 11, 2019, to be valued at the closing price on that day.
NOTE 7 – SUBSEQUENT EVENTS
On October 2, 2019, the Company entered into an agreement with a strategic advisory consultant (the “Consultant”) with a ninety day term. The Consultant was awarded 500,000 shares of the Company’s common stock at a fair market value of $0.26 per share, for $130,000. Also, in accordance with the agreement, the Company shall at its sole discretion grant a bonus to the Consultant of up to 500,000 shares. On October 31, 2019 250,000 of the 500,000 discretionary bonus shares were issued to the Consultant at a fair market value of $0.29.
On October 2, 2019, the Company issued a promissory note for $410,000. The interest rate for the note is 12% per annum with non-compounding interest to be paid every month. The Company received $389,500 and the lender retained $20,500 as an original issue discount. $155,800 of the note will be used by the Company exclusively for the purpose of investing in merchant cash advances. The remaining $233,700 of the note will be used by the Company for its operational activities. Additionally, 410,000 shares of the Company’s common stock were issued with a fair value of $106,600, recorded as a debt discount, and will be amortized over the life of the notes, which are due in monthly payments between eighteen (18) months and twenty-three (23) months from the date of the note 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 date of the note. In addition, the Company issued warrants to purchase 205,000 shares of the Company’s common stock with an exercise price of $0.30 per share. The warrants are valued at $52,501 based on the Black Scholes Model and included in the debt discount. The warrants are fully vested as of the date on the note with an exercise term of three (3) years.
On October 10, 2019, the Company signed a master distribution agreement with CBD Unlimited, Inc., which is a public company and a master distributor, to distribute the Company’s hemp-based chocolate products. The term of this agreement is four years. The agreement includes the issuance of 250,000 shares of the Company’s common stock at the closing market price of $0.26 per share as of the date of the agreement. In the event that this agreement is terminated by FIFG within twelve months of signing of this agreement, a claw back provision shall be invoked by FIFG whereby the Shares shall be returned to FIFG. Additionally, FIFG shall pay the distributor a commission for its services hereunder amounting to applicable percentage of the sales price of any sales or sales contract with a customer.
On October 16, 2019, the Company issued a promissory note for $140,000. The interest rate for the note is 12% per annum with non-compounding interest to be paid every month. The Company received $133,000 and the lender retained $7,000 as an original issue discount. $53,200 of the note will be used by the Company exclusively for the purpose of investing in merchant cash advances. The remaining $79,800 of the note will be used by the Company for its operational activities. Additionally, 140,000 shares of the Company’s common stock were issued with a fair value of $34,300, recorded as a debt discount, and will be amortized over the life of the notes, which are due in monthly payments between eighteen (18) months and twenty-three (23) months from the issue 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 issue date. In addition, the Company issued warrants to purchase 205,000 and 140,000 shares of the Company’s common stock with an exercise price of $0.30 and $0.50 per share, respectively. The warrants are valued at $83,060 based on the Black Scholes Model and included in the debt discount. The warrants are fully vested as of the issue date with an exercise term of three (3) years.
On October 31, 2019, the Company issued a promissory note of $200,000. The interest rate for the note is 12% per annum with non-compounding interest to be paid every month. The Company received $190,000 and the lender retained $10,000 as an original debt discount. $76,000 of the note will be used by the Company exclusively for the purpose of investing in merchant cash advances. The remaining $114,000 of the note will be used by the Company for its operational activities. Additionally, 200,000 shares of the Company’s common stock were issued with a fair value of $58,000, 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 issue 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 issue date. In addition, the Company issued warrants to purchase 200,000 shares of the Company’s common stock with an exercise price of $0.30 per share, respectively. The warrants are valued at $57,180 based on the Black Scholes Model and included in the debt discount. The warrants are fully vested as of the issue dates with an exercise term of three (3) years.
On September 9, 2019, the Company entered into an agreement with a strategic advisory consultant (the “Consultant”). On October 9, 2019, in accordance with the agreement, the Consultant was awarded 30,769 shares of the Company’s common stock at a fair market value of $0.208 per share.
On November 9, 2019, in accordance with the agreement, the Consultant was awarded 26,667 shares of the Company’s common stock at a fair market value of $0.24 per share.
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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. |
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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.
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 1st 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 products, including specialty chocolate products infused with a hemp-based ingredient in accordance with the Company’s understanding of the Agricultural Act of 2014 (the “2014 Farm Bill”) and/or the Agriculture Improvement Act of 2018 (the “2018 Farm Bill,” and together with the 2014 Farm Bill, collectively, the “Farm Bill”), which renders the production of hemp federally lawful. 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 regulations 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, and distribute hemp-based products pursuant with the Company’s understanding of the Farm Bill. The Company may license its IP to third parties that may produce, package, and distribute marijuana-based products, but only as such licensing is 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 produce its specialty chocolate product and sell it to manufacturing and wholesaling companies. On October 10, 2019, the Company signed a master distribution agreement with CBD Unlimited, Inc, which is a public company and a master distributor, to distribute the Company’s hemp-based chocolate products.
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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.
Results of Operations for the Three Months Ended September 30, 2019 compared to the Three Months ended September 30, 2018
We had $79,480 of revenue for the three months ended September 30, 2019 compared to $38,601 in revenue for the three months ended September 30, 2018. Our increase in revenue was the result of an increase in participation in merchant cash advances. For the three months ended September 30, 2019, our operating expenses were $477,799 which consisted of cost of product sales of $20 vs $0 for the prior period, professional fees of $11,576, general and administrative expenses of $429,012 and $37,191 of provision for merchant cash advances. Our net loss was $450,639. For the three months ended September 30, 2018, our operating expenses were $424,101 which consisted of professional fees of $22,174, general and administrative expenses of $325,948, and $75,979 of provision for merchant cash advances. As a result, our net loss was $390,616. This increase in our net loss was primarily due to an increase in interest expense.
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Results of Operations for the Nine Months Ended September 30, 2019 compared to the Nine Months ended September 30, 2018
We had $267,778 of revenue for the nine months ended September 30, 2019 compared to $184,406 in revenue for the nine months ended September 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 nine months ended September 30, 2019, operating expenses were $1,366,116 which consisted of cost of product sales of $21,003 vs $0 for the prior period as there were no product sales, professional fees of $66,423, general and administrative expenses of $1,219,260 and $59,430 of provision for merchant cash advances. Our net loss was $1,203,522. For the nine months ended September 30, 2018, our operating expenses were $1,201,512 which consisted of professional fees of $45,863, general and administrative expenses of $1,043,230 and $112,419 of provision for merchant cash advances. As a result, our net loss was $1,047,403. 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, cost of product sales and interest expense.
Liquidity and Capital Resources
Net cash used in operating activities amounted to $328,343 for the nine months ended September 30, 2019 and $421,227 for the nine months ended September 30, 2018. This decrease in cash used was primarily due to collections of cash advances and an increase of accounts payables and accrued expenses. Working capital deficiency was $(1,086,343) at September 30, 2019 compared to $(186,127) at December 31, 2018. This decrease in working capital was due primarily to loans coming due within the year, an increase in accounts payable and accrued expenses and an increase in financing.
Net cash provided by financing activities amounted to $306,850 for the nine months ended September 30, 2019 and $385,438 for the nine months ended September 30, 2018. This was due to a lower amount of proceeds from loans in 2019 as well as 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 September 30, 2019, the Company had approximately $162,980 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
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 September 30, 2019, the Company’s receivables from merchant cash advances included $345,078 from two merchants ($291,908 and $53,170), representing 71.3% of the Company’s merchant cash advances. The Company earned $44,073 of MCA income from one merchant, representing 55.6% of the Company’s MCA income for the three months ended September 30, 2019. The Company earned $102,987 of MCA income from one merchant, representing 43.7% of the Company’s MCA income for the nine months ended September 30, 2019.
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.
The Company did not earn revenues from any one merchant that were greater than or equal to 10% of the total revenues for the three and nine months ended September 30, 2018.
As of September 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.
For the three and nine months ended September 30, 2019, the Company had a purchase concentration of 100% from one vendor.
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 September 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 September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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As of September 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.
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 September 30, 2019.
Item 3. Defaults Upon Senior Securities
.
There have been no defaults upon senior securities.
Item 4. Mine Safety Disclosures
Not applicable.
Not Applicable
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(a) Exhibits
Item 6. Exhibits, Financial Statement Schedules
EXHIBIT NO. |
| DESCRIPTION |
| Amendment to Articles of Incorporation of the Registrant (1) for Preferred Stock Designations | |
| ||
| ||
| Facility Access and Wholesale Production Purchase and Sale Agreement (3) | |
| ||
| ||
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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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: |
| Dated: November 13, 2019 | |
| |||
| Chairman of the Board and | ||
| Chief Executive Officer | ||
| |||
By: | /s/ Mark J. Keeley |
| Dated: November 13, 2019 |
| |||
| Chief Financial Officer |
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| 1/30/19 | ||||
| 1/9/19 | ||||
| 1/1/19 | ||||
| 12/31/18 | 10-K | |||
| 12/17/18 | ||||
| 11/30/18 | ||||
| 10/25/18 | ||||
| 10/24/18 | ||||
| 10/11/18 | ||||
| 9/30/18 | 10-Q | |||
| 7/23/18 | ||||
| 7/16/18 | ||||
| 6/30/18 | 10-Q | |||
| 6/14/18 | ||||
| 5/10/18 | ||||
| 4/26/18 | ||||
| 3/31/18 | 10-Q | |||
| 2/2/18 | 8-K | |||
| 1/11/18 | ||||
| 1/1/18 | ||||
| 12/31/17 | 10-K | |||
| 12/26/17 | 8-K | |||
| 12/22/17 | ||||
| 12/15/17 | ||||
| 11/3/17 | ||||
| 11/2/17 | ||||
| 10/25/17 | 8-K | |||
| 10/17/17 | ||||
| 8/31/17 | ||||
| 5/11/17 | ||||
| 3/1/17 | 8-K | |||
| 2/27/17 | 8-K | |||
| 2/1/17 | ||||
| 12/15/16 | ||||
| 8/10/15 | S-1 | |||
| List all Filings | ||||