UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2023
or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to ________
Commission file number: 000-33231
CARBONMETA TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 95-4868120 | |
| (State or Other Jurisdiction | (I.R.S. Employer | |
| of Incorporation or Organization) | Identification No.) |
| 13110 NE 177th Place, Suite 145 | ||
| Woodinville, WA | 98072 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(206) 900-9088
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 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 ☐ 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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒Yes ☐ 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 the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Non-accelerated filer ☒ | Smaller Reporting Company ☒ |
| Emerging Growth Company ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ☒ No
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, $0.001 par value per share | COWI | OTC Markets “PINK” |
As of August 21, 2023, there were shares of the registrant’s common stock outstanding.
CARBONMETA TECHNOLOGIES, INC.
TABLE OF CONTENTS
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q for the period ended June 30, 2023 (the “Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events including, without limitation, our ability to raise capital, our operational and strategic initiatives or our future financial performance. We have attempted to identify forward-looking statements by using terminology such as “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions; uncertainties and other factors may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Our expectations are as of the date this Quarterly Report is filed, and we do not intend to update any of the forward-looking statements after the date this Quarterly Report is filed to confirm these statements to actual results, unless required by law.
You should not place undue reliance on forward-looking statements. The cautionary statements set forth in this Quarterly Report identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:
| ● | Our ability to effectively execute our business plans including transitioning from being focused on end-to-end consumer product innovation, development, and commercialization to being focused on digital media, advertising and content technologies innovation, development, and commercialization; | |
| ● | Our ability to manage our expansion, growth and operating expenses; | |
| ● | Our ability to protect our brands, reputation and intellectual property rights; | |
| ● | Our ability to obtain adequate financing to support our development plans; | |
| ● | Our ability to repay our debts; | |
| ● | Our ability to rely on third-party suppliers, content contributors, developers, and other business partners; | |
| ● | Our ability to evaluate and measure our business, prospects and performance metrics; | |
| ● | Our ability to compete and succeed in a highly competitive and evolving industry; | |
| ● | Our ability to respond and adapt to changes in technology and consumer behavior; | |
| ● | Our dependence on information technology, and being subject to potential cyberattacks, security problems, network disruptions, and other incidents; | |
| ● | Our ability to comply with complex and evolving laws and regulations including those relating to privacy, data use and data protection, content, competition, safety and consumer protection, e-commerce, digital assets and other matters, many of which are subject to change and uncertain interpretation; | |
| ● | Our ability to enhance disclosure and financial reporting controls and procedures and remedy the existing weakness; | |
| ● | Risks in connection with completed or potential acquisitions, dispositions and other strategic growth opportunities and initiatives; | |
| ● | Taxes; | |
| ● | The stability of the governments and political and business conditions in certain foreign countries in which we or certain of our business partners may operate now or in the future; | |
| ● | Costs and results of potential litigation; | |
| ● | Changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies; | |
| ● | The use of social or digital media to disseminate false, misleading and/or unreliable or inaccurate information regarding our products, services or the industry in which we operate; | |
| ● | Other risk factors discussed in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 20, 2023. |
These and other factors discussed above could cause results to differ materially from those expressed in the estimates made by any independent parties and by us.
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TRADEMARKS, SERVICE MARKS AND TRADE NAMES
Solely for convenience, we refer to trademarks in this Quarterly Report without the ® or the ™ or symbols, but such references are not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights to our own trademarks. Other service marks, trademarks and trade names referred to in this Quarterly Report, if any, are the property of their respective owners, although for presentational convenience we may not use the ® or the ™ symbols to identify such trademarks.
OTHER PERTINENT INFORMATION
Unless the context otherwise indicates, when used in this Annual Report, the terms “CarbonMeta,” “COWI,” “we,” “us,” “our,” the “Company” and similar terms refer to CarbonMeta Technologies, Inc., a Delaware corporation, and all of our consolidated subsidiaries and variable interest entities.
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PART I - FINANCIAL INFORMATION
CARBONMETA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
CARBONMETA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the three and six months ended June 30, 2023 and 2022
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues:: | ||||||||||||||||
| Contract services revenues | $ | 10,970 | $ | 21,555 | $ | 21,346 | $ | 21,555 | ||||||||
| Consulting fees from Salvum Corporation affiliate | 15,000 | 15,000 | ||||||||||||||
| Total revenues | 25,970 | 21,555 | 36,346 | 21,555 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Executive Compensation | 37,500 | 37,500 | 75,000 | 75,000 | ||||||||||||
| Legal and Professional Fees | 66,684 | 123,953 | 89,845 | 168,009 | ||||||||||||
| Investor Relations | 3,630 | 15,118 | 7,720 | 35,782 | ||||||||||||
| Consulting Fees | 30,537 | 6,670 | 31,825 | 21,891 | ||||||||||||
| Sales and marketing | 3,108 | 21,244 | 23,108 | 35,427 | ||||||||||||
| Research and development | 60,810 | 4,545 | 70,140 | 8,644 | ||||||||||||
| Amortization of licenses | 6,526 | 6,526 | 12,980 | 14,430 | ||||||||||||
| Depreciation of equipment | 3,872 | 3,872 | 7,702 | 7,702 | ||||||||||||
| Other operating expenses | 43,842 | (29,850 | ) | 70,214 | 80,207 | |||||||||||
| Total operating expenses | 256,509 | 189,578 | 388,534 | 447,092 | ||||||||||||
| Operating income (loss) | (230,539 | ) | (168,023 | ) | (352,188 | ) | (425,537 | ) | ||||||||
| Other (expense) income: | ||||||||||||||||
| Gain (loss) from derivative liabilities | 6,120,022 | (5,284,532 | ) | (2,236,792 | ) | (5,855,627 | ) | |||||||||
| Interest expense, net | (333,794 | ) | (266,181 | ) | (663,237 | ) | (487,109 | ) | ||||||||
| Loss from debt settlements | (5,000 | ) | (5,000 | ) | ||||||||||||
| Total other income (expense) | 5,786,228 | (5,555,713 | ) | (2,900,029 | ) | (6,347,736 | ) | |||||||||
| Income (loss) before income taxes | 5,555,689 | (5,723,736 | ) | (3,252,217 | ) | (6,773,273 | ) | |||||||||
| Income tax expense | ||||||||||||||||
| Net income (loss) | $ | 5,555,689 | $ | (5,723,736 | ) | $ | (3,252,217 | ) | $ | (6,773,273 | ) | |||||
| Net income (loss) per common share: | ||||||||||||||||
| Basic and diluted net income (loss) per common share | $ | $ | ) | $ | ) | $ | ) | |||||||||
| Weighted average number of common shares outstanding – basic and diluted | ||||||||||||||||
| Comprehensive income (loss): | ||||||||||||||||
| Net income (loss) | $ | 5,555,689 | $ | (5,723,736 | ) | $ | (3,252,217 | ) | $ | (6,773,273 | ) | |||||
| Foreign currency translation adjustments | (2,408 | ) | 9,393 | (3,463 | ) | 9,393 | ||||||||||
| Comprehensive income (loss) | $ | 5,553,281 | $ | (5,714,343 | ) | $ | (3,255,680 | ) | $ | (6,763,880 | ) | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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CARBONMETA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT)
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
| Preferred Stock | Common Stock | Additional
| Accumulated Other
| |||||||||||||||||||||||||||||||||||||||||||||||||
| Series B | Series D | Series E | Series F | Series G | Amount | Shares | Amount | Paid-In
Capital | Treasury Stock |
Accumulated
Deficit | Comprehensive
Income | Total | ||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2021 | 159,666 | 100,000 | 791,567 | 180,000 | 25,000 | $ | 1,256 | 17,592,057,165 | $ | 1,759,206 | $ | 36,775,736 | $ | (18,997 | ) | $ | (64,404,388 | ) | $ | (25,887,187 | ) | |||||||||||||||||||||||||||||||
| Common stock issued for license | 160,000,000 | 16,000 | 48,000 | 64,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | - | - | - | - | 203,333,334 | 20,333 | 52,667 | 73,000 | |||||||||||||||||||||||||||||||||||||||||||
| Common stock and warrants issued in connection with convertible notes financings, net of placement agent fee of $1,350 | - | - | - | - | - | 60,500,000 | 6,050 | 102,600 | 108,650 | |||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for accrued executive compensation | - | - | - | - | - | 428,571,428 | 42,857 | 107,143 | 150,000 | |||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for accrued consulting fees | - | - | - | - | - | 206,896,552 | 20,690 | 279,310 | 300,000 | |||||||||||||||||||||||||||||||||||||||||||
| Net loss for three months ended March 31, 2022 | - | - | - | - | - | - | (1,049,537 | ) | (1,049,537 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Balances, March 31, 2022 | 159,666 | 100,000 | 741,567 | 180,000 | 25,000 | $ | 1,256 | 18,651,358,479 | $ | 1,865,136 | $ | 37,365,456 | $ | (18,997 | ) | $ | (65,453,925 | ) | $ | $ | (26,241,074 | ) | ||||||||||||||||||||||||||||||
| Preferred stock adjustments | - | - | 10,000 | - | 40 | - | (40 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | - | - | - | - | 2,000 | 5,000 | 7,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock and warrants issued in connection with convertible note financings, net of placement agent fee of $ | - | - | - | - | - | 1,653 | 29,153 | 30,806 | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | 9,393 | 9,393 | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended June 30, 2022 | - | - | - | - | - | - | (5,723,736 | ) | (5,723,736 | ) | ||||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2022 | $ | 1,296 | $ | 1,868,789 | $ | 37,399,569 | $ | (18,997 | ) | $ | (71,177,661 | ) | $ | 9,393 | $ | (31,917,611 | ) | |||||||||||||||||||||||||||||||||||
| Balances, December 31, 2022 | 159,666 | 100,000 | 821,377 | 190,000 | 25,000 | $ | 1,296 | $ | 1,883,139 | $ | 37,515,219 | $ | (18,997 | ) | $ | (64,003,956 | ) | $ | 3,725 | $ | (24,619,574 | ) | ||||||||||||||||||||||||||||||
| Common stock issued in connection with conversion of convertible notes | - | - | - | - | - | 329,333,562 | 32,933 | 32,933 | 65,866 | |||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | - | - | - | - | 200,000,000 | 20,000 | 20,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Sale of Treasury stock | - | - | - | - | - | - | 10,430 | 4,767 | 15,197 | |||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | (1,055 | ) | (1,055 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Net loss for three months ended March 31, 2023 | - | - | - | - | - | - | (8,807,906 | ) | (8,807,906 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Balances, March 31, 2023 | 159,666 | 100,000 | 821,377 | 190,000 | 25,000 | $ | 1,296 | 19,360,719,816 | $ | 1,936,072 | $ | 37,558,582 | $ | (14,230 | ) | $ | (72,811,862 | ) | $ | 2,670 | $ | (33,327,472 | ) | |||||||||||||||||||||||||||||
Common stock issued for services | - | - | - | - | - | 15,000 | 15,000 | 30,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued in connection with conversion of convertible notes | - | - | - | - | - | 127,087 | 107,886 | 234,973 | ||||||||||||||||||||||||||||||||||||||||||||
Sale of Treasury stock | - | - | - | - | - | - | 6,902 | 11,040 | 17,942 | |||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | (2,408 | ) | (2,408 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Net loss for three months ended June 30, 2023 | - | - | - | - | - | - | 5,555,689 | 5,555,689 | ||||||||||||||||||||||||||||||||||||||||||||
| Balances, June 30, 2023 | $ | 1,296 | $ | 2,078,159 | $ | 37,688,370 | $ | (3,190 | ) | $ | (67,256,173 | ) | $ | 262 | $ | (27,491,276 | ) | |||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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CARBONMETA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2023 and 2022
| June 30, 2023 | June 30, 2022 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income (loss) for the period | $ | (3,252,217 | ) | $ | (6,773,273 | ) | ||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation of equipment | 7,702 | 7,702 | ||||||
| Amortization of licenses | 12,980 | 14,430 | ||||||
| Amortization of debt discounts | 101,447 | 45,592 | ||||||
| Stock based compensation | 57,749 | 80,000 | ||||||
| Loss (gain) from derivative liability | 2,236,792 | 5,852,321 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 20,525 | (20,744 | ) | |||||
| Inventory | (3,157 | ) | ||||||
| Prepaid expenses | 28,611 | |||||||
| Accounts payable and accrued expenses | 789,112 | 647,282 | ||||||
| NET CASH (USED IN) OPERATING ACTIVITIES | (25,910 | ) | (121,236 | ) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Acquisition of license | (27,247 | ) | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | (27,247 | ) | ||||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from convertible debt financings | 139,456 | |||||||
| Proceeds from sales of treasury stock | 33,138 | |||||||
| Payments towards notes payable | (3,000 | ) | ||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 33,138 | 136,456 | ||||||
| EXCHANGE RATE EFFECT ON CASH | (3,463 | ) | 9,393 | |||||
| NET INCREASE (DECREASE) IN CASH | 3,765 | (2,634 | ) | |||||
| CASH, BEGINNING OF PERIOD | 379 | 10,573 | ||||||
| CASH, END OF PERIOD | $ | 4,144 | $ | 7,939 | ||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES: | ||||||||
| Common Stock issued in satisfaction of accrued executive compensation | $ | $ | 150,000 | |||||
| Common Stock issued for accrued consulting fees | $ | $ | 300,000 | |||||
| Common stock issued for prepaid marketing fees | $ | $ | 25,000 | |||||
| Common stock issued for advertising fees | $ | 20,000 | $ | |||||
| Common stock issued for license | $ | $ | 64,000 | |||||
| Common stock and warrants issued in connection with new convertible notes | $ | $ | 139,456 | |||||
| Common stock issued in satisfaction of convertible debt and accrued interest | $ | 300,839 | $ | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 8 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE A – ORGANIZATION
CarbonMeta Technologies, Inc. (f/k/a CoroWare, Inc.) (“CarbonMeta”, the “Company”, “we”, “us”, or “our”) is a publicly quoted environmental research and development company that is commercializing technologies for processing organic wastes into hydrogen and high-value carbon products economically and sustainably.
The Company was incorporated on June 8, 2001 under the laws of the State of Nevada as SRM Networks, Inc. In connection with the acquisition of Hy-Tech Computer Systems, Inc. on January 31, 2003, the Company changed its name to Hy-Tech Technology Group, Inc. In connection with the Agreement and Plan of Merger of Robotics Workspace Technology, Inc., Innova Holdings, Inc. and the Company’s wholly owned subsidiary, RWT Acquisition, Inc., dated July 21, 2004, the Company’s name changed to Innova Holdings, Inc. Subsequently, the Company redomiciled in the State of Delaware and on November 20, 2006, the Company changed its name to Innova Robotics and Automation, Inc. and then on April 23, 2008, the Company changed its name to CoroWare, Inc. On or about July 28, 2021, the Company filed Articles of Amendment to its Amended and Restated Certificate of Incorporation with the State of Delaware to reflect a name change from CoroWare, Inc. to CarbonMeta Technologies, Inc.
The Company has six wholly-owned subsidiaries: CoroWare Technologies, Inc. (“CTI”), CoroWare Robotics Solutions, Inc. (“CRS”), Robotic Workspace Technologies, Inc. (“RWT”), Carbon Source, Inc. (“CS”), CoroWare Treasury, Inc. (“CWT”), and CarbonMeta Research Ltd. (“CMR”). The Company has two majority owned subsidiaries: a 50.1% interest in CarbonMeta Green Building Materials, LLC (joint venture with Salvum Corporation)(“CMGBM”) and a 51% interest in AriCon, LLC (“AriCon”).
CoroWare Technologies, Inc. (“CTI”) was incorporated in the State of Florida on May 16, 2006, was administratively dissolved on November 19, 2016, and its principal business was a software professional services company with a strong focus on information technology integration and robotics integration, business automation solutions, and unmanned systems solutions to its customers in North America and Europe.
CoroWare Robotics Solutions, Inc. (“CRS”) was incorporated in the State of Texas on February 27, 2015, and its principal business was as a technology incubation company whose focus was on the delivery of mobile robotics and IOT products, solutions and services for university, government and corporate researchers, and enterprise customers. CRS’s business operations were discontinued in October 2016 when the Company’s gross margins and financing costs became unsustainable.
Robotic Workspace Technologies, Inc. (“RWT”) was incorporated in the State of Florida on July 1, 1994, was administratively dissolved on September 25, 2009, and its principal business was developing and marketing open-architecture PC controls and related products that could improve the performance, applicability, and productivity of robots and other automated equipment. RWT’s business operations were discontinued in September 2007 when the Company’s losses became unsustainable.
Carbon Source, Inc. (“CS”) was incorporated in the State of Wyoming on June 14, 2021 and its principal business is waste reclamation technologies and processing.
CoroWare Treasury, Inc. (“CWT”) was incorporated in the State of Wyoming on July 8, 2021 and its principal business is acquisitions related to acquiring technologies and subsidiary businesses related to waste processing.
CarbonMeta Research Ltd. (‘CMR”) was incorporated in England and Wales on August 12, 2021 and its principal business is the development of technologies and solutions for processing organic wastes and generating economically sustainable hydrogen and high-value carbon products. Using proprietary and patented technologies, it plans to implement new industrial methods using inexpensive, environmentally friendly catalysts that process collected plastic waste material into high value products such as hydrogen gas, graphene and carbon nanotubes.
CarbonMeta Green Building Materials, LLC (“CMGBM”) is a joint venture with Salvum Corporation organized on August 30, 2022 to develop and market construction mix products that are carbon negative (see Production Agreement below).
In 2021, the Company began investigating emerging technologies, strategic intellectual property partnerships, and sustainable growth business opportunities related to the production of hydrogen and high value carbon products from organic waste streams. Working cooperatively with Oxford University Innovation, CarbonMeta plans to implement proven and patented technologies to add value to organic waste streams. By utilizing these proven proprietary technologies, collected and captured plastic waste material can be upcycled to high value products such as carbon nanotubes (“CNTs”) and hydrogen gas.
| 9 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE A – ORGANIZATION (continued)
CNTs can be used for improved electrical conduction and reinforcing materials that are used in a wide variety of industries including the automotive industry, aviation industry, medical industry, and construction. The number one growth driver is the increasing need for high performance batteries for the electric vehicle market.
Plastic waste is a cheap and abundant feedstock that will allow the Company to scale quickly and produce hydrogen gas for a competitive price.
License Agreements
Oxford University Innovation Limited
On June 2, 2021, the Company (the “Licensee”) entered into a License Agreement (the “Agreement”) with Oxford University Innovation Limited (the “Licensor”). Under the terms of the Agreement, the Licensee will license the licensed technology (OUI Project- Hydrogen from plastics via microwave-initiated catalytic dehydrogenation). The Agreement is non-exclusive and includes the United States and European Union. Signing fees for the Agreement were £54,807 and have been paid in full by the Company. The Royalty Rate is 5% of net sales. The Agreement comprises milestone fees as: (i) £20,000 upon the first commercial sale of a licensed product; (ii) £50,000 upon generating $1,000,000 in sales; (iii) £10,000 upon the successful grant of the US patent; and (iv) £10,000 upon the successful grant of the EU patent. Whether the company realizes product sales or not, the Company is subject to a minimum payment to Oxford University Innovation of £10,000 for license year 3 and £20,000 for license year 4 and each license year thereafter.
The process that the Company licensed from Licensor for producing hydrogen and carbon products from waste plastics has not been demonstrated on a larger scale. It is not yet known whether the process will be cost-effective or profitable to implement on a larger scale. The Company has conducted tests to prove the percentage of carbon nanotubes up to 10 grams. The Company is working with a microwave reactor company to help demonstrate this process at a scale of 100 kilograms and 1,000 kilograms per day.
The Company has met the following milestones of its development plan set forth in the license agreement with Oxford University Innovation:
| ● | September 2021: established subsidiary in Oxford, United Kingdom | |
| ● | March 2022: produced 0.025 kilograms per day of marketable carbon nanotubes |
Oxford University Innovation may terminate the license due to the company not using commercially reasonable efforts to develop, exploit and market the licensed technology in accordance with the development plan.
From July 2022 to present (see Service Award below), CarbonMeta Technologies has been working with University of Oxford on a project with a global multi-energy provider based in Europe to assess the feasibility of processing mixed plastic waste into clean hydrogen fuel and value-added carbon products using microwave catalysis on a large commercial scale.
Ecomena Limited
On December 2, 2021, the Company (“Licensee”) entered into a License of Agreement (the “Agreement”) with Ecomena Limited (an entity located in the United Kingdom) (“Licensor”). Under the terms of the Agreement, the Licensee will license the Licensed Technology to recycle industrial byproduct into cement free pavers and mortars that are environmentally friendly and continuously absorb carbon dioxide. The signing fees payable to the Licensor under the Agreement are £20,000 cash (approximately $27,247 at February 17, 2022), of which £10,000 has been paid by the Licensee, and shares of the Company’s common stock, which was delivered to the Licensor on February 17, 2022. The royalty rate payable to the Licensor is 5% of net sales, subject to a minimum of £5,000 per year for license years 1 and 2, £3,000 for license year 3 and £1,000 for license year 4 and each license year thereafter. The term of the Agreement is five years from December 2, 2021 to December 2, 2026. The Licensee may terminate the Agreement for any reason at any time provided it gives Licensor six (6) months written notice to terminate expiring after December 2, 2024. If requested by the Licensee, the Licensor shall agree to the Agreement continuing in force after December 2, 2026. As of the date of this filing, the Agreement is still in effect.
| 10 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE A – ORGANIZATION (continued)
Production Agreement
On January 11, 2022, the Company entered into an Interim Joint Product Development and Sales Representation Agreement (the “Agreement”) with Salvum Corporation. Under the terms of the Agreement, the parties agree to work together to develop both CarbonMeta’s proprietary cementless paver products known as “Cementless Paver” and Salvum’s proprietary concrete alternative products known as “EarthCrete.” During the Term, Salvum agrees to manufacture CarbonMeta’s proprietary cementless paver products known as “Cementless Paver”. CarbonMeta reserves the right to appoint other manufacturers of the products and/or to engage other sales representatives for CarbonMeta’s proprietary cementless paver products known as “Cementless Paver” outside the United States of America. Although the Interim Joint Product Development and Sales Representation Agreement with Salvum Corporation had a term of 180 days and expired on July 11, 2022, the companies continued to work together, and the companies formed CarbonMeta Green Building Materials, LLC (“CMGBM”) and signed an Operating Agreement for Management of CMGBM on August 28, 2022 that supersedes the Interim Joint Product Development and Sales Representation Agreement.
The Operating Agreement for Management of CMGBM (the “CMGBM Agreement”) provides for (1) the allocation of 501 Managing Membership units (50.1%) to CarbonMeta Technologies, Inc. (“COWI”) and 499 Managing Membership units (49.9%) to Salvum Corporation, (2) COWI capital contributions to CMGBM of (a) shares of COWI common stock and (b) the assignment of the Ecomena Limited license agreement, and (3) Salvum Corporation capital contributions to CMGBM of (a) existing EarthCrete customer list and sales pipeline, and (b) license to use EarthCrete trademark worldwide. The CMGBM Agreement also provides that profits and losses (and distributions) of CMGBM shall be allocated on the basis of each Managing Member’s relative capital accounts and that a Managing Member may withdraw from CMGBM upon not less than six months prior written notice to each non-withdrawing Managing Member. As of June 30, 2023, the above capital contributions provided for in the CMGBM Agreement had not occurred and no significant operations of CMGBM had commenced.
On June 16, 2023, the Company filed a Certificate of Conversion with the State of Wyoming for CMGBM, to convert CMGBM from a limited liability company to a corporation. In addition, the Company filed Articles of Incorporation changing the name of CMGBM to Carbon Conversion Group, Inc. (“CCGI”). CCGI has the authority to issue shares of preferred stock, par value $ per share, and shares of common stock, par value of $ per share.
On June 20, 2023, the Company announced plans to spin-off CCGI in the third quarter of 2023 on the basis of one share of CCGI common stock for every shares of the Company’s common stock owned as of June 23, 2023.
Service Award
On June 10, 2022, our subsidiary, CarbonMeta Research Ltd. (“CMR”), was granted a Service Award (entitled “Waste Plastic Catalysis Proof of Concept”) from a business company located in Spain. The award provided for CMR to provide the customer with an initial prototype process for converting mixed waste plastic to hydrogen and solid carbon and for the customer to pay CMR a total of 50,000 Euros in four installments as certain milestones are met. As of March 31, 2023, all of the milestones had been met by CMR and CMR had invoiced the customer the full 50,000 Euros ($49,542), of which $40,103 was collected in the third quarter 2022 and $9,439 was collected in the fourth quarter 2022.
In October 2022, CMR was granted a second Service Award for 50,000 Euros to provide the customer with further details on the composition of the carbon products resulting from the microwave catalysis of waste plastics. In December 2022, CMR invoiced the customer for 20,000 Euros, which was collected in January 2023. In January 2023, CMR invoiced the customer for 10,000 Euros, which was collected in the quarter ended March 31, 2023. In April 2023 and May 2023, CMR invoiced the customer for a total of 10,000 Euros, which was collected in the quarter ended June 30, 2023. The project is expected to reach completion in September 2023.
North Bay Resources Joint Venture
On June 21, 2023, the Company and NBRI entered into a definitive Joint Venture Agreement (the “Joint Venture Agreement”). Under the terms of the Joint Venture Agreement:
CarbonMeta Green Resources Canada will be a Limited Liability Company in British Columbia, Canada with initial equity ownership as follows:
| ● | 51% of the equity will be owned by CarbonMeta Technologies, Inc. | |
| ● | 49% of the equity will be owned by North Bay Resources, Inc. |
CarbonMeta Green Resources Canada will be a research and development center whose focus will be on:
| ● | Establish CarbonMeta Green Resources Canada as a mining and processing center for the production of carbon-negative cementless concrete using olivine | |
| ● | Build and operate a production facility and demonstration program for the production of carbon-negative cementless concrete that can be distributed in North America. | |
| ● | Establish an agreed upon transfer price from NBRI to CarbonMeta Green Resources Canada for purchasing olivine that shall be updated quarterly. | |
| ● | Develop and establish supply chain relationships with potential North American distributors of carbon-negative cementless concrete, including but not limited to Carbon Conversion Group, Inc. (f/k/a CarbonMeta Green Building Materials, LLC) in the United States | |
| ● | Establish technology licensing relationships, industry partnerships, and marketing sponsorships related to the production of carbon-negative cementless concrete using olivine |
| 11 |
The contributions from each of the Joint Venturers, for the purpose of this Joint Venture, is the sum set after the name of each Joint Venturer as follows:
The transaction closed on June 21, 2023.
Fermion Electric Private Limited MOU
On April 8, 2023, CarbonMeta Technologies, Inc. (the “Company”) and Fermion Electric Private Limited (“Fermion”) signed a Memorandum of Understanding (MOU) to create a subsidiary corporation called CarbonMeta Research India as a Private Limited Company that shall be jointly owned and managed by the Company and Fermion, and whose initial objective shall be processing natural gas into hydrogen and high value carbon products.
Under the terms of the MOU:
CarbonMeta Research India will be a Private Limited Company in Kerala, India with initial equity ownership as follows:
| ● | 80% of the equity will be owned by CarbonMeta Technologies, Inc.; and | |
| ● | 20% of the equity will be owned by Fermion Electric Private Limited. |
CarbonMeta Research India will be a research and development center whose focus will be on:
| ● | Microwave catalysis of waste plastics, natural gas, and other organic waste materials; | |
| ● | Carbon dioxide (CO2) capture technologies using novel technologies and adsorbents; | |
| ● | Development of new catalysts for catalysis, pyrolysis, and electrolysis; and | |
| ● | Commercialize and patent technologies that were developed and licensed by CarbonMeta Technologies, Inc. or its subsidiaries. |
In order to further grow its business, the Company plans to:
| ● | Develop and patent new microwave catalysis processes and catalysts that can be scaled up to yield large volumes of high value hydrogen and carbon products; | |
| ● | Develop and patent new processes and formulas for producing carbon-negative building products that help alleviate climate change by capturing carbon dioxide (CO2) for renewable energy projects; | |
| ● | Acquire or develop patents that will help the Company generate royalty revenues with potential OEM customers and partners, and protect the Company’s competitive position against potential competitors; | |
| ● | seek out government programs in the United States, India, United Kingdom and European Union that encourage the development of high value production of hydrogen and high value carbon products from organic waste streams; and | |
| ● | Attract investment funds who will actively work with the Company to achieve these goals and help the Company grow rapidly during the next 3 years. |
| 12 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE A – ORGANIZATION (continued)
Some potential joint venture candidates have been identified and discussions initiated. These candidates are within the Company’s core business model, serving commercial properties, accretive to cash flow, and geographically favorable. One of these joint ventures, CarbonMeta Green Building Materials LLC will be focused on the development at marketing of construction mix products that are carbon negative. Two other joint ventures under discussion are focused on processing waste plastics into hydrogen and high value carbon products. We plan to fund these joint ventures with customer purchase orders and invoice payments, federal loans, federal grants, and commercial loans.
We have unrestricted discretion in seeking and participating in a business opportunity, subject to the availability of such opportunities, economic conditions, and other factors.
The selection of a business opportunity in which to participate is complex and risky. Additionally, we have only limited resources and may find it difficult to locate good opportunities. There can be no assurance that we will be able to identify and acquire any business opportunity which will ultimately prove to be beneficial to us and our shareholders. We will select any potential business opportunity based on our management’s best business judgment.
Our activities are subject to several significant risks, which arise primarily as a result of the fact that we have no specific business and may acquire or participate in a business opportunity based on the decision of management, which potentially could act without the consent, vote, or approval of our shareholders. The risks faced by us are further increased as a result of our lack of resources and our inability to provide a prospective business opportunity with significant capital.
Principal Products or Services and Markets
The Company is in the business of developing and marketing technologies and solutions that can process organic and construction wastes into economically high-value and ecologically sustainable products.
The Company is partnering with a microwave reactor manufacturer in the United States to “scale up” the patented waste plastics microwave processes that the Company licensed from Oxford University Innovation, and with a university partner in the United States to separate, purify and characterize carbon nanotubes that the UK and US developers shall produce.
The Company is partnering with two universities in the United States and India to develop and patent an affordable and scalable catalyst that can be used for catalyzing mixed plastic wastes and bio-wastes into carbon black, graphite, nano-graphite, graphene, carbon nanotubes, and hydrogen.
The principal technologies that the Company intends to commercialize and market to potential OEM customers comprise:
| ● | Microwave catalysis processes and catalyst formulas for producing amorphous carbon black, graphite, nano-graphite, graphene, carbon nanotubes, and hydrogen; and | |
| ● | Carbon sequestering concrete processes and formulas for producing carbon-negative building products that help alleviate climate change by capturing carbon dioxide (CO2) for renewable energy projects. |
| 13 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE B – SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The accompanying unaudited financial statements are presented in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary in order to make the financial statements not misleading, have been included. Operating results for the six months ended June 30, 2023 are not necessarily indicative of results that may be expected for the year ending December 31, 2023. The balance sheet information as of December 31, 2022 was derived from the audited financial statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 20, 2023. These financial statements should be read in conjunction with that report.
Principles of Consolidation
The consolidated financial statements include the accounts of CarbonMeta Technologies, Inc. and its six wholly-owned subsidiaries, CoroWare Technologies, Inc., CoroWare Robotics Solutions, Inc., Robotic Workspace Technologies, Inc., Carbon Source, Inc., CoroWare Treasury, Inc., and CarbonMeta Research Ltd., and its two majority owned subsidiaries CarbonMeta Green Building Materials, LLC and ARiCon, LLC (collectively, the “Company”). All significant inter-company balances and transactions have been eliminated in the consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company uses all available information and appropriate techniques to develop its estimates. However, actual results could differ from its estimates.
Foreign Currency Translation
The accompanying consolidated financial statements are presented in United States dollars (“$”), which is the reporting currency of the Company. The functional currency of CarbonMeta Research Ltd. (“CMR”) is the Great Britain pound (“GBP”); the functional currency of the Company and its other subsidiaries is the United States dollar. The assets and liabilities of CMR are translated at the GBR currency exchange rate at the end of the period ($1.270841 and $1.210159 at June 30, 2023 and December 31, 2022, respectively), the revenues and expenses of CMR are translated at the GBP average exchange rates during the period ($1.240500 and $1.263580 for the six months ended June 30, 2023 and 2022, respectively), and stockholders’ equity (deficit) of CMR is translated at the historical exchange rates. The resulting translation adjustments are included in determining other comprehensive income (loss). Transaction gains and losses, which were not significant for the periods presented, are reflected in the consolidated statements of operations.
Cash and Cash Equivalents
The Company considers highly liquid investments with original maturities of three months or less when purchased as cash equivalents. The Company had no cash equivalents as of June 30, 2023 and December 31, 2022. At times throughout the year, the Company might maintain bank balances that may exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. Periodically, the Company evaluates the credit worthiness of the financial institutions and has not experienced any losses in such accounts. As of June 30, 2023 and December 31, 2022, the Company did not have bank balances that exceeded the FDIC insured limits.
Property and Equipment
Property and equipment are recorded at cost. Expenditures for major renewals and improvements are capitalized while expenditures for minor replacements, maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciation and the related gain or loss, if any, is reflected in loss on disposal of assets in the consolidated statement of income and comprehensive income.
At least annually, the Company evaluates, and adjusts when necessary, the estimated useful lives. There were no changes in estimated useful lives for the periods presented. The estimated useful lives are:
| Computer equipment and software | 5 years | |||
| Filament production equipment | 3 years |
Licenses
The licenses acquired from Oxford University Innovation Limited and Ecomena Limited (see Note A) are stated at cost less accumulated amortization. For the Oxford license, amortization is calculated using the straight-line method over the 10-year estimated life of the license. For the Ecomena license, amortization is calculated using the straight-line method over the 5-year term of the license.
| 14 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE B – SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment of Long-lived Assets
The Company evaluates the carrying value and recoverability of its long-lived assets when circumstances warrant such evaluation by applying the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-35, Property, Plant and Equipment, Subsequent Measurement (“ASC 360-35”). ASC 360-35 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. Additionally, taxes are calculated and expensed in accordance with applicable tax code.
Segment Reporting
FASB ASC 280-10, Segment Reporting, defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief decision maker in deciding how to allocate resources and in assessing performance. The Company reports according to one main segment.
Fair Value of Financial Instruments
The Company follows FASB ASC 820-10-35-37 (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB ASC for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
| Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| Level 3 | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts reported in the Company’s consolidated financial statements for cash, accounts receivable and accounts payable and accrued expenses approximate their fair value because of the immediate or short-term nature of these financial instruments. The carrying amounts reported in the balance sheet for its notes and loans payable approximates fair value as the contractual interest rate and features are consistent with similar instruments of similar risk in the marketplace.
| 15 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE B – SIGNIFICANT ACCOUNTING POLICIES (continued)
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
It is not, however, practical to determine the fair value of advances from stockholders, if any, due to their related party nature.
The following table presents assets and liabilities that are measured and recognized at fair value as of June 30, 2023 and December 31, 2022, on a recurring basis:
SUMMARY OF ASSETS AND LIABILITIES MEASURED AND RECOGNIZED AT FAIR VALUE:
| Assets and liabilities measured at fair value on a recurring basis at June 30, 2023 | Level 1 | Level 2 | Level 3 | Total Carrying Value | ||||||||||||
| Derivative liabilities | $ | $ | (11,889,638 | ) | $ | $ | (11,889,638 | ) | ||||||||
| Assets and liabilities measured at fair value on a recurring basis at December 31, 2022 | Level 1 | Level 2 | Level 3 | Total
Carrying Value | ||||||||||||
| Derivative liabilities | $ | $ | (9,652,846 | ) | $ | $ | (9,652,846 | ) | ||||||||
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for FASB ASC 815, Derivatives and Hedging (“ASC 815”).
Professional standards generally provide three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”
The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards under “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the preferred stock transaction and the effective conversion price embedded in the preferred stock. ASC 815 provides that, among other things, generally, if an event is not within the entity’s control, could or require net cash settlement, then the contract shall be classified as an asset or a liability.
| 16 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE B – SIGNIFICANT ACCOUNTING POLICIES (continued)
Stock Based Compensation
The Company follows FASB ASC 718, Compensation – Stock Compensation, which prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the consolidated financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity–based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Through newly issued restricted common stock, the Company pays qualified contractors and advisors common shares in lieu of compensation for services provided including business development, management, technology development, consulting, legal services and accounting services.
Revenue Recognition
The Company will recognize revenue for its sales of energy products pursuant to the License Agreements with Oxford University Innovation Limited and Ecomena Limited (see Note A) when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is probable. Product sales will be recognized by us generally at the time product is shipped. Shipping and handling costs will be included in cost of goods sold.
Research and Development
Research and development costs relate to the development of new products, including significant improvements and refinements to existing products, and are expensed as incurred. Research and development expenses for the six months ended June 30, 2023 and 2022 were $70,140 and $8,644, respectively.
The Company computes basic and diluted earnings per common share amounts in accordance with FASB ASC 260, Earnings per Share. Basic earnings per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share reflects the potential dilution that could occur if stock options, convertible securities and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.
The Company currently has convertible debt and preferred stock, which, if converted, as of June 30, 2023 and June 30, 2022, would have caused the Company to issue diluted shares totaling and , respectively.
Dividend Policy
The Company has never declared or paid any cash dividends on its common stock. The Company anticipates that any earnings will be retained for development and expansion of its business and does not anticipate paying any cash dividends in the foreseeable future. Additionally, as of June 30, 2023 and December 31, 2022, the Company has issued, and has outstanding, shares of Series B Preferred Stock which are entitled, prior to the declaration of any dividends on common stock, to earn a 5% dividend, payable in either cash or common stock of the Company. The Board of Directors has sole discretion to declare dividends based on the Company’s financial condition, results of operations, capital requirements, contractual obligations and other relevant factors. At June 30, 2023 and December 31, 2022, there were cumulative undeclared dividends to Preferred Series B shareholders of $135,712 and $127,728, respectively, the obligation for which is contingent on declaration by the board of directors. At June 30, 2023 and December 31, 2022 there were accrued unpaid declared dividends of $15,969 and $15,969, respectively (which are included in accounts payable and accrued expenses).
Recent Accounting Pronouncements
Certain accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and therefore have not yet been adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards is not expected to be material.
| 17 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE C – GOING CONCERN
The Company has a working capital deficit of $27,637,748 and $24,786,737 as of June 30, 2023 and December 31, 2022, respectively. The Company has accumulated deficits of $67,256,173 and $64,003,956 as of June 30, 2023 and December 31, 2022, respectively. Additionally, the Company is in default of substantially all of its debt and other obligations (see Notes F, H, I and K). Because of these and other factors, the Company will require additional working capital to develop its business operations. The Company intends to raise additional working capital through the use of private placements, public offerings and/or bank financing.
There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support the Company’s working capital requirements. To the extent that funds generated from operations, any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE D – PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consists of the following at June 30, 2023 and December 31, 2022:
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Computer equipment and software | $ | 1,325 | $ | 1,325 | ||||
| Filament production equipment | 45,799 | 45,799 | ||||||
| Subtotal | 47,124 | 47,124 | ||||||
| Less: accumulated depreciation | (25,937 | ) | (18,235 | ) | ||||
| Property and equipment, net | $ | 21,187 | $ | 28,889 | ||||
Depreciation of equipment expense for the six months ended June 30, 2023 and 2022 was $7,702 and $7,702, respectively.
NOTE E – LICENSES, NET
The licenses, net, consist of the following at June 30, 2023 and December 31, 2022:
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| License acquired from Oxford University Innovation Limited on June 2, 2021 (see Note A) | $ | 79,256 | $ | 79,256 | ||||
| License acquired from Ecomena Limited effective February 17, 2022 (see Note A) | 91,247 | 91,247 | ||||||
| Subtotal | 170,503 | 170,503 | ||||||
| Accumulated amortization | (45,209 | ) | (32,229 | ) | ||||
| License, net | $ | 125,294 | $ | 138,274 | ||||
Amortization of licenses expense for the six months ended June 30, 2023 and 2022 was $12,980 and $14,430, respectively.
At June 30, 2023, the expected future amortization of licenses expense was:
| Fiscal year ending December 31: | ||||
| 2023 (excluding the six months ended June 30, 2023) | $ | 13,195 | ||
| 2024 | 26,175 | |||
| 2025 | 26,175 | |||
| 2026 | 26,175 | |||
| 2027 | 10,327 | |||
| Thereafter | 23,247 | |||
| Total | $ | 125,294 | ||
| 18 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE F – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consists of the following at June 30, 2023 and December 31, 2022:
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Accounts payable | $ | 1,463,396 | $ | 1,434,142 | ||||
| Accrued interest | 6,813,257 | 6,362,570 | ||||||
| Accrued CEO compensation | 949,500 | 874,500 | ||||||
| Accrued CarbonMeta Research, Ltd. Board of Directors fees | 86,141 | 63,314 | ||||||
| Accrued payroll | 110,335 | 110,335 | ||||||
| Deferred compensation to Chief Technology Officer of Company subsidiary, CoroWare Technologies, Inc. | 232,818 | 230,993 | ||||||
| Payroll taxes payable | 1,998,735 | 1,998,735 | ||||||
| Commissions payable | 221,188 | 221,188 | ||||||
| Accrued consulting fees relating to the Mutual Release and Settlement Agreement dated July 19, 2021 with Y.A. Global Investments, LP (Note H) | 50,000 | 50,000 | ||||||
| Accrued dividends on Series B Preferred Stock | 15,969 | 15,969 | ||||||
| License fee and minimum royalty payable to Ecomena Limited | 23,693 | 13,624 | ||||||
| Cash received from investor for right to purchase shares of CMGBM common stock immediately after CMGBM’s conversion to a corporation | 100,000 | |||||||
| Other | 79,670 | 82,074 | ||||||
| Total | $ | 12,144,702 | $ | 11,457,444 | ||||
The accounts payable of $1,463,396 at June 30, 2023, which substantially all relate to year 2016 and prior, are liabilities of:
| June 30, | ||||
| 2023 | ||||
| CarbonMeta Technologies, Inc. | $ | 258,027 | ||
| CoroWare Technologies, Inc. | 1,157,662 | |||
| CoroWare Robotics Solutions, Inc. | 34,353 | |||
| Carbon Source, Inc. | 3,197 | |||
| CarbonMeta Green Buildings Materials, Inc. | 900 | |||
| AriCon, LLC | 9,257 | |||
| Total | $ | 1,463,396 | ||
The payroll taxes payable of $1,998,735 and commissions payable of $221,188 at June 30, 2023, which also substantially all relate to year 2016 and prior, are all liabilities of CoroWare Technologies, Inc. On October 28, 2021, the Company CEO submitted an Offer in Compromise with the Internal Revenue Service to satisfy the trust fund portion (approximately $1,400,000) of the liability for $534,457 and paid $106,891 to the Internal Revenue Service with the offer. To date, the Internal Revenue Service has not yet accepted or declined this Offer in Compromise.
NOTE G –OBLIGATIONS COLLATERALIZED BY RECEIVABLES, NET
Obligations collateralized by receivables consist of:
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Knight Capital July 16, 2015 arrangement | $ | $ | ||||||
| Quick Fix Capital August 17, 2015 arrangement | 48,907 | 48,907 | ||||||
| Power Up January 8, 2016 arrangement | 14,232 | 14,232 | ||||||
| Power Up April 12, 2016 arrangement | 67,645 | 67,645 | ||||||
| Power Up April 28, 2016 arrangement | 29,696 | 29,696 | ||||||
| Power Up June 2, 2016 arrangement | 45,756 | 45,756 | ||||||
| Total | $ | 206,236 | $ | 206,236 | ||||
The financing arrangements relating to the above liabilities were entered into between CoroWare Technologies, Inc. (“CTI”), a subsidiary of the Company, and lenders in 2015 and 2016. The agreements provided for financing plus debt discounts for CTI to repay to the lenders. The terms of repayment require CTI to remit to the lenders certain percentages of future receivables collections until such time as the balances are paid in full.
| 19 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE H – CONVERTIBLE DEBT, NET
Convertible debt, net, consists of:
| Principal Balance at | Accrued
Interest Balance at | |||||||||||||||||||||||||||
| Lender | Interest Rate | Default Rate | Conversion Price | June 30, 2023 | December 31, 2022 | June 30, 2023 | December 31, 2022 | |||||||||||||||||||||
| Westmount Holdings International, Ltd – loan date January 12, 2010 due on demand | 14.00 | % | 14.00 | % | (1 | ) | $ | 537,317 | $ | 537,317 | $ | 1,005,787 | $ | 968,268 | ||||||||||||||
| Tangiers Investment Group, LLC – loan date March 9, 2013 and due date of March 9, 2014, in technical default | 10.00 | % | 20.00 | % | (2 | ) | 891 | 891 | ||||||||||||||||||||
| Tangiers Investment Group, LLC – loan date March 27, 2014 and due date of March 27, 2015, in technical default | 10.00 | % | 20.00 | % | 0.0002 | 75,000 | 75,000 | 130,253 | 122,219 | |||||||||||||||||||
| Tangiers Investment Group, LLC – due on demand | 0.00 | % | 15.00 | % | $ | 0.0006 | 47,000 | 62,892 | ||||||||||||||||||||
| Tangiers Investment Group, LLC – loan date October 11, 2016 and due date of October 20, 2017, in technical default | 0.00 | % | 20.00 | % | $ | 0.0002 | 10,000 | 6,663 | ||||||||||||||||||||
| Tangiers Investment Group, LLC – loan date January 30, 2017 and due date of January 30, 2018, in technical default | 10.00 | % | 20.00 | % | $ | 0.0002 | 30,910 | 18,445 | ||||||||||||||||||||
| Tangiers Investment Group, LLC – loan date July 19, 2021 and due date of July 19, 2022, in technical default | 10.00 | % | 20.00 | % | $ | 0.0002 | 105,000 | 105,000 | 30,090 | 15,275 | ||||||||||||||||||
| Tangiers Investment Group, LLC – loan date September 8, 2021 and due date of September 8, 2022, in technical default | 10.00 | % | 20.00 | % | $ | 0.0002 | 105,000 | 105,000 | 26,840 | 13,779 | ||||||||||||||||||
| Tangiers Investment Group, LLC – loan date March 21, 2022 and due date of March 21, 2023, in technical default | 12.00 | % | 16.00 | % | $ | 0.0002 | 55,000 | 55,000 | 8,975 | 5,153 | ||||||||||||||||||
| Lloyd T. Spencer (the Company’s sole officer and director) – loan date March 7, 2022 and due date of March 7, 2023, in technical default | 12.00 | % | 16.00 | % | $ | 0.0002 | -66,000 | 6,488 | ||||||||||||||||||||
| Dakota Capital Pty, Ltd – loan date April 8, 2014 and due date of December 31, 2014, in technical default | 14.00 | % | 14.00 | % | (3 | ) | 200,000 | 200,000 | 258,367 | 244,482 | ||||||||||||||||||
| Zoom Marketing – loan date August 23, 2013 and due date of January 23, 2014, in technical default | 5.00 | % | 10.00 | % | (8 | ) | 65,000 | 65,000 | 65,542 | 62,319 | ||||||||||||||||||
Burrington Capital, LLC – loan date April 2, 2014 and due date of October 1, 2014, in technical default | 10.00 | % | 15.00 | % | (12 | ) | 25,000 | 25,000 | 71,794 | 64,897 | ||||||||||||||||||
| Patrick Ferro – loan date April 3, 2014 and due date of December 31, 2014, in technical default | 14.00 | % | 14.00 | % | (13 | ) | 26,825 | 26,825 | 40,566 | 38,704 | ||||||||||||||||||
| Barry Liben – loan date April 3, 2014 and due date of December 31, 2014, in technical default | 0.00 | % | 0.00 | % | (13 | ) | 52,800 | 52,800 | ||||||||||||||||||||
| Jared Robert – loan date December 10, 2014 and due date of June 10, 2015, in technical default | 10.00 | % | 15.00 | % | (12 | ) | 20,000 | 20,000 | 49,844 | 44,867 | ||||||||||||||||||
| Raphael Cariou – loan date August 3, 2012 and due date of February 3, 2013, in technical default | 10.00 | % | 15.00 | % | (4 | ) | 7,000 | 7,000 | 27,699 | 25,227 | ||||||||||||||||||
| Raphael Cariou – loan date March 12, 2015 and due date of September 12, 2015, in technical default | 24.00 | % | 29.00 | % | (4 | ) | 82,178 | 82,178 | 801,089 | 684,080 | ||||||||||||||||||
| Raphael Cariou - loan date March 12, 2015 and due date of September 12, 2015, in technical default | 24.00 | % | 29.00 | % | (4 | ) | 94,178 | 94,178 | 898,203 | 766,739 | ||||||||||||||||||
| Redwood Management, LLC – loan date of March 21, 2011 and due date of March 18, 2013, in technical default | 14.00 | % | 14.00 | % | (1 | ) | 123,936 | 123,936 | 179,284 | 170,680 | ||||||||||||||||||
| AGS Capital Group, LLC – loan date of February 25, 2013 and due date of February 25, 2014, in technical default | 14.00 | % | 14.00 | % | (9 | ) | 8,640 | 8,640 | 126,976 | 117,931 | ||||||||||||||||||
| AGS Capital Group, LLC – loan date of February 25, 2013 and due date of February 25, 2014, in technical default | 14.00 | % | 14.00 | % | (9 | ) | 42,000 | 42,000 | 135,260 | 123,437 | ||||||||||||||||||
| Tim Burgess – loan date of July 8, 2003 and due date of January 8, 2004, in technical default | 8.00 | % | 15.00 | % | $ | 1.00 | 50,000 | 50,000 | 148,133 | 144,414 | ||||||||||||||||||
| Azriel Nagar – loan date of July 8, 2003 and due date of January 8, 2004, in technical default | 8.00 | % | 15.00 | % | $ | 1.00 | 50,000 | 50,000 | 148,133 | 144,414 | ||||||||||||||||||
| Kelburgh, Ltd – loan date of February 12, 2012 and due date of March 22, 2012, in technical default | 10.00 | % | 15.00 | % | (8 | ) | 13,000 | 13,000 | 57,378 | 52,363 | ||||||||||||||||||
| Premier IT Solutions – loan date of October 5, 2011 and due date of March 5, 2012, in technical default | 10.00 | % | 15.00 | % | (7 | ) | 21,962 | 21,962 | 101,814 | 92,994 | ||||||||||||||||||
| LG Capital Funding, LLC – loan date of March 11, 2014 and due date of March 11, 2015, in technical default | 12.00 | % | 24.00 | % | (11 | ) | 32,000 | 32,000 | 67,626 | 63,817 | ||||||||||||||||||
| LG Capital Funding, LLC – loan date of January 7, 2015 and due date of January 7, 2016, in technical default | 12.00 | % | 24.00 | % | (11 | ) | 20,625 | 20,625 | 39,498 | 37,044 | ||||||||||||||||||
| LG Capital Funding, LLC – loan date of March 11, 2014 and due date of March 11, 2015, in technical default | 12.00 | % | 24.00 | % | (11 | ) | 24,000 | 24,000 | 50,720 | 47,863 | ||||||||||||||||||
| Barclay Lyons – loan date of January 28, 2011 and due date of July 28, 2011, in technical default | 21.00 | % | 36.00 | % | (6 | ) | 10,750 | 10,750 | 47,273 | 45,354 | ||||||||||||||||||
| Blackridge Capital, LLC – loan date of April 2, 2011 and due date of July 28, 2011, in technical default | 10.00 | % | 15.00 | % | (7 | ) | 6,985 | 6,985 | 135,376 | 125,231 | ||||||||||||||||||
| Blackridge Capital, LLC – loan date of February 21, 2014 and due date of September 21, 2014, in technical default | 8.00 | % | 8.00 | % | (10 | ) | 5,000 | 5,000 | 5,312 | 4,912 | ||||||||||||||||||
| Julian Herskowitz – loan date of July 8, 2003 and due date of January 8, 2004, in technical default | 8.00 | % | 15.00 | % | (14 | ) | 16,287 | 16,287 | ||||||||||||||||||||
| Patrick Tuohy – loan date of April 1, 2014 and due date of December 31, 2014, in technical default | 14.00 | % | 14.00 | % | (12 | ) | 153 | 153 | ||||||||||||||||||||
| Richard Wynns – loan date July 22, 2005 and due date of December 31, 2006, in technical default | 5.00 | % | 5.00 | % | $ | 0.15 | 7,500 | 7,500 | 7,688 | 7,502 | ||||||||||||||||||
| Richard Wynns - loan date July 26, 2010 and due date of December 31, 2011, in technical default | 10.00 | % | 10.00 | % | (5 | ) | 93,997 | 93,997 | 122,171 | 117,472 | ||||||||||||||||||
| MacRab LLC – loan date May 10, 2022 and due date of May 10, 2023 | 12.00 | % | 16.00 | % | $ | 0.0002 | 33,056 | 33,056 | 4,630 | 2,554 | ||||||||||||||||||
| BHP Capital NY Inc. - loan date July 14, 2022 and due date of July 14, 2023 | 12.00 | % | 12.00 | % | $ | 0.0002 | 25,000 | 1,397 | ||||||||||||||||||||
| Quick Capital LLC - loan date July 14, 2022 and due date of July 14, 2023 | 12.00 | % | 12.00 | % | $ | 0.0002 | 16,864 | 25,000 | 1,397 | |||||||||||||||||||
| Quick Capital LLC - loan date November 1, 2022 and due date of November 1, 2023 | 12.00 | % | 16.00 | % | $ | 0.0002 | 5,809 | 10,000 | 201 | |||||||||||||||||||
| Robert Papiri Defined Benefit Plan - loan date July 15, 2022 and due date of July 15, 2023 | 12.00 | % | 12.00 | % | $ | 0.0002 | 10,000 | 10,000 | 1,151 | 556 | ||||||||||||||||||
| Robert Papiri Defined Benefit Plan - loan date November 16, 2022 and due date of November 16, 2023 | 12.00 | % | 16.00 | % | $ | 0.0002 | 10,000 | 10,000 | 743 | 148 | ||||||||||||||||||
| Robert Papiri Defined Benefit Plan - loan date December 11, 2022 and due date of December 11, 2023 | 12.00 | % | 16.00 | % | 0.0002 | 5,000 | 5,000 | 330 | 33 | |||||||||||||||||||
| Robert Papiri Defined Contribution Plan - loan date July 15, 2022 and due date of July 15, 2023 | 12.00 | % | 16.00 | % | $ | 0.0002 | 2,500 | 2,500 | 288 | 139 | ||||||||||||||||||
| RPG Capital Partners, Inc - loan date July 15, 2022 and due date of July 15, 2023 | 12.00 | % | 16.00 | % | $ | 0.0002 | 2,500 | 2,500 | 288 | 139 | ||||||||||||||||||
| RPG Capital Partners, Inc - loan date August 4, 2022 and due date of August 4, 2023 | 12.00 | % | 16.00 | % | $ | 0.0002 | 25,000 | 25,000 | 2,712 | 1,225 | ||||||||||||||||||
| RPG Capital Partners, Inc - loan date September 12, 2022 and due date of September 12, 2023 | 12.00 | % | 16.00 | % | $ | 0.0002 | 15,000 | 15,000 | 1,435 | 542 | ||||||||||||||||||
| Total | 2,086,422 | 2,277,659 | 4,816,599 | 4,471,583 | ||||||||||||||||||||||||
| Less debt discounts | (16,178 | ) | (117,625 | ) | ||||||||||||||||||||||||
| Net | $ | 2,070,244 | $ | 2,160,034 | $ | 4,816,599 | $ | 4,471,583 | ||||||||||||||||||||
| (1) | Lesser of (a) $0.02 or (b) 85% of the lowest closing price during the 30-day trading period prior to conversion. |
| (2) | 50% of the lowest closing price during the 20-day trading period prior to conversion. |
| (3) | Lesser of (a) $0.02 or (b) 50% of the lowest volume weighted average price during the 30-day trading period prior to conversion. |
| (4) | 86.9565% of the average prices of the five trading days prior to the conversion date. |
| (5) | 75% of the average of the three lowest closing prices during the 10-day trading period prior to conversion. |
| (6) | 50% of the lesser of (i) the closing price on the day prior to conversion, or (ii) the volume-weighted-average closing price of the five-day trading period prior to conversion, though in no instance shall the conversion price be less than $0.0001. |
| (7) | Average of the five trading days prior to the applicable conversion date, with the number of conversion shares multiplied by 115%. |
| (8) | 85% of the average of the five trading days prior to the applicable conversion date. |
| (9) | 35% of the lowest closing price during the 20-day trading period prior to conversion. |
| (10) | 60% of the lowest closing price during the 30-day trading period prior to conversion |
| (11) | 50% of the lowest closing price during the 10-day trading period prior to, and including the date of, conversion |
| (12) | 60% of the lowest closing price during the 20-day trading period prior to conversion, or $0.01, whichever is lower. |
| (13) | 50% of the average of the three lowest closing prices during the 30-day trading period prior to conversion, or $0.02, whichever is lower, with the conversion rate being rounded to $0.0001 or whole share. |
| (14) | 65% of the lowest closing price during the 7-day trading period prior to conversion |
On June 16, 2023, the Company entered into a Waiver and Amendment Agreement (the “Waiver Agreement”) with Tangiers Investment Group, LLC. Under the terms of the Waiver Agreement, the Convertible Promissory Note dated March 17, 2014 in the principal amount of $75,000 shall no longer accrue interest after the effective date of the Waiver Agreement. In addition, the conversion price for the Convertible Promissory Note dated March 17, 2014 in the principal amount of $75,000, the Convertible Promissory Note dated March 17, 2014 in the principal amount of $600,000, the Convertible Promissory Note dated October 11, 2016 in the principal amount of $85,000, the Convertible Promissory Note dated January 30, 2017 in the principal amount of $55,000, the Convertible Promissory Note dated July 19, 2021 in the principal amount of $105,000 and the Convertible Promissory Note dated September 8, 2021 in the principal amount of $105,000 shall be changed to $0.0002.
| 20 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE H – CONVERTIBLE DEBT, NET (continued)
In the Company’s evaluation of each convertible debt instrument in accordance with FASB ASC 815, Derivatives and Hedging, based on the variable conversion price, it was determined that the conversion features were not afforded the exemption as a conventional convertible instrument and did not otherwise meet the conditions for equity classification. As such, the conversion and other features were compounded into one instrument, bifurcated from the debt instrument and carried as a derivative liability, at fair value (Please see NOTE L – DERIVATIVE LIABILITY for further information). As of June 30, 2023 and December 31, 2022, debt discounts related to convertible notes payable totaled $16,178 and $117,625, respectively.
NOTE I – NOTES PAYABLE
Notes payable consist of:
| Principal Balance | Accrued Interest Balance | |||||||||||||||
| Description (i) | June 30, 2023 | December 31, 2022 | June 30, 2023 | December 31, 2022 | ||||||||||||
| Gary Sumner June 29, 2017 note, interest at 5% compounded (default simple interest at 18%), due March 31, 2018 | $ | 45,000 | $ | 45,000 | $ | 118,272 | $ | 114,255 | ||||||||
| LTC International Corp July 3, 2018 note, interest at 20.8% (default interest at 41.6%), due December 17, 2018 | 4,732 | 4,732 | 31,683 | 30,707 | ||||||||||||
| Richard Wynns July 27, 2010 note, interest at 18% compounded (default compounded interest at 21%), due January 23, 2011 | 25,000 | 25,000 | 336,207 | 300,313 | ||||||||||||
| Barclay Lyons March 15, 2011 note, interest at 18.99% (default interest at 28.99%), due March 25, 2011 | 15,000 | 15,000 | 53,427 | 51,271 | ||||||||||||
| John Kroon March 17, 2010 note, interest at 18% compounded (default compounded interest at 21%), due September 13, 2010 | 10,000 | 10,000 | 145,830 | 130,345 | ||||||||||||
| Walter Jay Bell October 18, 2013 note, interest at 10%, due November 29, 2013 | 10,000 | 10,000 | 9,753 | 9,257 | ||||||||||||
| Walter Jay Bell April 24, 2016 note, interest at 10%, due September 30, 2016 | 8,641 | 8,641 | 3,129 | 2,915 | ||||||||||||
| George Ferch March 29, 2011 note, interest at 0% (default compounded interest at 21%), due June 27, 2011 | 5,000 | 5,000 | 55,553 | 49,536 | ||||||||||||
| Blackridge, LLC April 11, 2012 note, interest at 5% (default interest at 5%), due May 25, 2012 | 1,500 | 1,500 | 1,064 | 1,027 | ||||||||||||
| Michael Sobeck August 16, 2022 note, interest at 12%, due August 16, 2023 | 30,000 | 30,000 | 2,100 | 300 | ||||||||||||
| Total | $ | 154,873 | $ | 154,873 | $ | 757,018 | $ | 689,927 | ||||||||
| (i) | Unless otherwise noted, interest is simple interest. |
| 21 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE J – NOTES PAYABLE, RELATED PARTIES
As of June 30, 2023 and December 31, 2022, the Company had an aggregate total of $199,415 and $199,415, respectively, in related party notes payable. These notes bear simple interest at rates ranging from 10% to 18% per annum, with default simple interest at rates ranging from 10% to 24% per annum. Accrued interest on related party notes payable totaled $489,202 and $468,562 at June 30, 2023 and December 31, 2022, respectively.
NOTE K – SMALL BUSINESS ADMINISTRATION LOAN
On April 17, 2002, the Company borrowed $989,100 under a note agreement with the Small Business Administration. The note bears interest at 4% and is secured by the equipment and machinery assets of the Company. The balance outstanding at June 30, 2023 and December 31, 2022 was $979,950 and $979,950, respectively. The note calls for monthly installments of principal and interest of $4,813 beginning September 17, 2002 and continuing until April 17, 2032.
The Company and the Small Business Administration reached an agreement in November 2010, whereby the Small Business Administration would accept $500 per month for 12 months with payment reverting back to $4,813 in November 2011. The Company only made four payments under the modification agreement. The Company continues to carry the loan as a current term liability because current payments are not being made, resulting in a default. Accrued interest payable on the note totaled $752,279 and $732,497 as of June 30, 2023 and December 31, 2022, respectively.
NOTE L – DERIVATIVE LIABILITY
Effective July 31, 2009, the Company adopted ASC 815, which defines determining whether an instrument (or embedded feature) is solely indexed to an entity’s own stock. The conversion price of certain convertible notes and convertible preferred stock are variable and subject to the fair value of the Company’s common stock on the date of conversion. As a result, the Company has determined that the conversion features are not considered to be solely indexed to the Company’s own stock and is therefore not afforded equity treatment. In accordance with ASC 815, the Company has bifurcated the conversion features of the instruments to be recorded as a derivative liability.
| 22 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE L – DERIVATIVE LIABILITY (continued)
ASC 815 requires Company management to assess the fair market value of certain derivatives at each reporting period and recognize any change in the fair market value as items of other income or expense. The Company’s only asset or liability measured at fair value on a recurring basis is its derivative liability associated with convertible notes payable and preferred stock.
At origination and subsequent revaluations, the Company valued the derivative liabilities using the Black-Scholes options pricing model under the following assumptions as of June 30, 2023 and December 31, 2022:
June 30, 2023 | December 31, 2022 | |||||||
| Risk-free interest rate | 5.14 | % | 4.41 | % | ||||
| Expected options life | 1 - 2 yrs | 1-2 yrs | ||||||
| Expected dividend yield | ||||||||
| Expected price volatility | 338 | % | 341 | % | ||||
For the six months ended June 30, 2023, the Company’s derivative liability increased from $9,652,846 at December 31, 2022 to $11,889,638 at June 30, 2023, and the Company recognized a loss from derivative liability of $2,236,792. For the six months ended June 30, 2022, the Company’s derivative liability increased from $11,904,070 at December 31, 2021 to $17,756,391 at June 30, 2022, and the Company recognized a loss from derivative liability of $5,855,627.
NOTE M – PREFERRED STOCK
a) Series A Preferred Stock
The Company has authorized shares of Series A Preferred Stock. Each share of Series A Preferred Stock (i) pays a dividend of 5%, payable at the discretion of the Company in cash or common stock, (ii) is convertible immediately after issuance into the Company’s common stock at the lesser of $ per share (as adjusted for the November 20, 2006 1 for 10, the April 8, 2009 1 for 300 and the July 12, 2012 1 for 200 reverse stock splits) or 75% of the average closing bid prices over the 20 trading days immediately preceding the date of conversion, (iii) has a liquidation preference of $1.00 per share, (iv) may be redeemed by the Company at any time up to five years after the issuance date for $ per share plus accrued and unpaid dividends, and (v) has no voting rights except as provided by Delaware law.
There were no issuances, conversions or redemptions of Series A Preferred Stock during the six months ended June 30, 2023 and year ended December 31, 2022. At June 30, 2023 and December 31, 2022, the Company had and shares of Series A Preferred Stock issued and outstanding, respectively.
b) Series B Preferred Stock
The Company has authorized shares of Series B Preferred Stock. Each share of Series B Preferred Stock (i) pays a dividend of 5%, payable at the discretion of the Company in cash or common stock, (ii) is convertible immediately after issuance into the Company’s common stock at the lesser of $ per share (as adjusted for the November 20, 2006 1 for 10, the April 8, 2009 1 for 300 and the July 12, 2012 1 for 200 reverse stock splits) or 75% of the average closing bid prices over the 20 trading days immediately preceding the date of conversion, (iii) has a liquidation preference of $1.00 per share, (iv) may be redeemed by the Company at any time up to five years after the issuance date for $ per share plus accrued and unpaid dividends, and (v) has no voting rights except as provided by Delaware law.
| 23 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE M – PREFERRED STOCK (continued)
There were no issuances, conversions or redemptions of Series B Preferred Stock during the six months ended June 30, 2023 and year ended December 31, 2022. At June 30, 2023 and December 31, 2022, the Company had and shares of Series B Preferred Stock issued and outstanding, respectively.
Based upon the Company’s evaluation of the terms and conditions of the Series B Preferred Stock, the embedded conversion feature related to the Series B Preferred Stock was afforded the exemption as a conventional convertible instrument due to certain variabilities in the conversion price and met the conditions for equity classification. However, the Company is required to bifurcate the embedded conversion feature and carry it as a derivative liability.
The Company estimated the fair value of the compound derivative using a common stock equivalent and the current share price of the Company’s common stock. As a result of this estimate, the Company’s valuation model resulted in a compound derivative balance associated with the Series B Preferred Stock of $176,862 and $145,763 as of June 30, 2023 and December 31, 2022, respectively. These amounts are included as a derivative liability on the Company’s consolidated balance sheet. Fair value adjustments of $88,605, ($57,500), ($31,099) and ($76,934) were credited (charged) to derivative income (expense) for the three and six months ended June 30, 2023 and 2022, respectively.
c) Series C Preferred Stock
The Company has authorized shares of Series C Preferred Stock. During 2007, the Company initiated a private offering under Regulation D of the Securities Act of 1933 (the “Private Offering”), of an aggregate units (collectively referred to as the “Units”) at a price of $1.00 per Unit, with each Unit consisting of one share of Series C Preferred Stock convertible at the lesser of 85% of the average closing bid price of the common stock over the 20 trading days immediately preceding the date of conversion, or $0.04 per share and stock purchase warrants equal to the number of shares of common stock converted from the Series C Preferred Stock, exercisable at $0.06 per share and which expire five years from the conversion date.
There were no issuances, conversions or redemptions of Series C Preferred Stock during the six months ended June 30, 2023 and year ended December 31, 2022. At June 30, 2023 and December 31, 2022, the Company had and shares of Series C Preferred Stock issued and outstanding, respectively.
d) Series D Preferred Stock
On November 10, 2011, the Board approved by unanimous written consent an amendment to the Company’s Certificate of Incorporation to designate the rights and preferences of Series D Preferred Stock. There are shares of Series D Preferred Stock authorized with a par value of . Each share of Series D Preferred Stock has a stated value equal to $. These preferred shares rank higher than all other securities. Each outstanding share of Series D Preferred Stock shall be convertible into the number of shares of the Company’s common stock determined by dividing the stated value by the conversion price which is defined as 85% of the average closing bid price of the common stock over the twenty trading days immediately preceding the date of conversion, but no less than par value of the common stock. Mandatory conversion can be demanded by the Company prior to October 1, 2013. Each share of the Series D Preferred Stock shall have voting rights equal to 100,000 votes of common stock.
There were no issuances, conversions or redemptions of Series D Preferred Stock during the six months ended June 30, 2023 and year ended December 31, 2022. At June 30, 2023 and December 31, 2022, the Company had and shares of Series D Preferred Stock issued and outstanding, respectively.
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CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE M – PREFERRED STOCK (continued)
Based upon the Company’s evaluation of the terms and conditions of the Series D Preferred Stock, the embedded conversion feature related to the Series D Preferred Stock was afforded the exemption as a conventional convertible instrument due to certain variabilities in the conversion price and met the conditions for equity classification. However, the Company is required to bifurcate the embedded conversion feature and carry it as a derivative liability.
The Company estimated the fair value of the compound derivative using a common stock equivalent and the current share price of the Company’s common stock. As a result of this estimate, the Company’s valuation model resulted in a compound derivative balance associated with the Series D Preferred Stock of $194,879 and $197,877 as of June 30, 2023 and December 31, 2022, respectively. These amounts are included as a derivative liability on the Company’s consolidated balance sheet. Fair value adjustments of $46,957, ($47,844), $2,998 and $2,017 were credited (charged) to derivative income (expense) for the three and six months ended June 30, 2023 and 2022, respectively.
e) Series E Preferred Stock
On March 9, 2012, the Company filed the Certificate of Designation of the Rights and Preferences of Series E Preferred Stock of the Company with the Delaware Secretary of the State pursuant to which the Company set forth the designation, powers, rights, privileges, preferences and restrictions of authorized shares of Series E Preferred Stock, par value $ per share. The Series E Preferred Stock is convertible into common stock at 50% of the lowest closing bid price of the common stock over the 20 days immediately prior to the date of conversion, but no less than the par value of the common stock.
There were no issuances, conversions or redemptions of Series E Preferred Stock during the six months ended June 30, 2023 and year ended December 31, 2022. At June 30, 2023 and December 31, 2022, the Company had and shares of Series E Preferred Stock issued and outstanding, respectively.
Based upon the Company’s evaluation of the terms and conditions of the Series E Preferred Stock, the embedded conversion feature related to the Series E Preferred Stock was afforded the exemption as a conventional convertible instrument due to certain variabilities in the conversion price and met the conditions for equity classification. However, the Company is required to bifurcate the embedded conversion feature and carry it as a derivative liability.
The Company estimated the fair value of the compound derivative using a common stock equivalent and the current share price of the Company’s common stock. As a result of this estimate, the Company’s valuation model resulted in a compound derivative balance associated with the Series E Preferred Stock of $1,600,689 and $1,625,314 as of June 30, 2023 and December 31, 2022, respectively. These amounts are included as a derivative liability on the Company’s consolidated balance sheet. Fair value adjustments of $385,700, ($275,240), $24,625 and ($656,854) were credited (charged) to derivative income (expense) for the three and six months ended June 30, 2023 and 2022, respectively.
f) Series F Preferred Stock
On October 4, 2013, the Company filed the certificate of designation pursuant to which the Company set forth the designation, powers, rights, privileges, preferences and restrictions of authorized shares of Series F Preferred Stock, par value per share.
| 25 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE M – PREFERRED STOCK (continued)
The shares of Series F Preferred Stock have a stated value of $, have no voting rights, are entitled to no dividends due or payable and are convertible into the number of shares of the Company’s common stock determined by dividing the stated value by the conversion price, which is defined as 85% of the average closing bid price of the common stock over the five trading days immediately preceding the date of conversion, but no less than the par value of the common stock. At any time after the issuance date through the fifth anniversary of the issuance of the Series F Preferred Stock, the Company shall have the option to redeem any unconverted shares at an amount equal to 130% of the stated value of the Series F Preferred Stock plus accrued and unpaid dividends, if any. Redemption shall be established by the Company in its sole and absolute discretion and no holder of Series F Preferred Stock may demand that the Series F Preferred Stock be redeemed.
There were no issuances, conversions or redemptions of Series F Preferred Stock during the six months ended June 30, 2023 and year ended December 31, 2022. At June 30, 2023 and December 31, 2022, the Company had and shares of Series F Preferred Stock issued and outstanding, respectively.
Based upon the Company’s evaluation of the terms and conditions of the Series F Preferred Stock, the embedded conversion feature related to the Series F Preferred Stock was afforded the exemption as a conventional convertible instrument due to certain variabilities in the conversion price and met the conditions for equity classification. However, the Company is required to bifurcate the embedded conversion feature and carry it as a derivative liability.
The Company estimated the fair value of the compound derivative using a common stock equivalent and the current share price of the Company’s common stock. As a result of this estimate, the Company’s valuation model resulted in a compound derivative balance associated with the Series F Preferred Stock of $370,270 and $375,966 as of June 30, 2023 and December 31, 2022, respectively. These amounts are included as a derivative liability on the Company’s consolidated balance sheet. Fair value adjustments of $89,219, ($51,408), $5,696 and $43,328 were credited (charged) to derivative income (expense) for the three and six months ended June 30, 2023 and 2022, respectively.
g) Series G Preferred Stock
On April 17, 2014, the Company filed the certificate of designation pursuant to which the Company set forth the designation, powers, rights, privileges, preferences and restrictions of authorized shares of Series G Preferred Stock, par value $ per share.
The shares of Series G Preferred Stock have a stated value of $, have voting rights equal to 5,000,000 votes of common stock, are entitled to no dividends due or payable, are non-redeemable, and are convertible into the number of shares of the Company’s common stock determined by dividing the stated value by the conversion price, which is defined as 85% of the average closing bid price of the common stock over the twenty trading days immediately preceding the date of conversion, but no less than par value of the common stock.
There were no issuances, conversions or redemptions of Series G Preferred Stock during the six months ended June 30, 2023 and year ended December 31, 2022. At June 30, 2023 and December 31, 2022, the Company had and shares of Series G Preferred Stock issued and outstanding, respectively.
Based upon the Company’s evaluation of the terms and conditions of the Series G Preferred Stock, the embedded conversion feature related to the Series G Preferred Stock was afforded the exemption as a conventional convertible instrument due to certain variabilities in the conversion price and met the conditions for equity classification. However, the Company is required to bifurcate the embedded conversion feature and carry it as a derivative liability.
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CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE M – PREFERRED STOCK (continued)
The Company estimated the fair value of the compound derivative using a common stock equivalent and the current share price of the Company’s common stock. As a result of this estimate, the Company’s valuation model resulted in a compound derivative balance associated with the Series G Preferred Stock of $48,720 and $49,469 as of June 30, 2023 and December 31, 2022, respectively. These amounts are included as a derivative liability on the Company’s consolidated balance sheet. Fair value adjustments of $11,739, ($11,961), $749 and $504 were credited (charged) to derivative income (expense) for the three and six months ended June 30, 2023 and 2022, respectively.
NOTE N – COMMON STOCK AND TREASURY STOCK
Common Stock
The Company is authorized to issue up to shares of $ par value common stock, of which and shares were outstanding as of June 30, 2023 and December 31, 2022, respectively.
Issuances during the six months ended June 30, 2023:
On January 25, 2023, the Company issued shares of its common stock to Lloyd Spencer in satisfaction of $34,700 principal against the convertible note dated May 7, 2022.
On February 15, 2023, the Company issued shares of its common stock to BHP Capital NY, Inc. in satisfaction of $25,000 principal, $2,500 accrued fees, $1,750 deposit fees and $1,917 interest against the convertible note dated October 15, 2021.
On March 3, 2023, the Company issued shares of its common stock to New to The Street Group, LLC as per the terms of the Production & Broadcasting Agreement dated February 24, 2022.
On June 1, 2023, the Company issued shares of its common stock to Quick Capital, LLC in satisfaction of $8,136 principal, $1,750 deposit fees and $2,614 interest against the convertible note dated July 14, 2022.
On June 21, 2023, the Company issued shares of its common stock to Tangiers Investment Group, LLC in satisfaction of $47,000 principal and $62,892 interest against the convertible note dated March 27, 2014.
On June 22, 2023, the Company issued shares of its common stock to Tangiers Investment Group, LLC in satisfaction of $10,000 principal and $6,663 interest against the convertible note dated October 11, 2016.
On June 22, 2023, the Company issued shares of its common stock to Tangiers Investment Group, LLC in satisfaction of $30,910 principal and $18,445 interest against the convertible note dated January 30, 2017.
On June 23, 2023, the Company issued shares of its common stock to Lloyd Spencer in satisfaction of $31,300 principal and $8,564 interest against the convertible note dated May 7, 2022.
On June 23, 2023, the Company issued shares of its common stock to William David Elder in full settlement of the Master Subcontractor Agreement entered by the parties dated January 24, 2022.
On June 26, 2023, the Company issued shares of its common stock to Quick Capital, LLC in satisfaction of $4,191 principal, $1,750 deposit fees and $759 interest against the convertible note dated November 3, 2022.
Issuances during the year ended December 31, 2022:
On January 21, 2022, the Company issued shares of common stock to a consultant for accrued consulting fees in connection with negotiating and arranging for the entry by the Company into a Mutual Release and Settlement Agreement with Y.A. Global Investments, LP dated July 19, 2021.
On January 21, 2022, the Company issued its sole officer and director, Lloyd Spencer, shares of common stock for past due compensation in the amount of $.
On February 14, 2022, the Company issued shares of common stock to Salvum Corporation as per the terms of the Memorandum of Understanding to an Interim Joint Product Development and Sales Representation Agreement dated January 11, 2022 (see Note A, Production Agreement).
On February 14, 2022, the Company issued its sole officer and director, Lloyd Spencer, shares of common stock as compensation for serving on the Board of Directors of CarbonMeta Research Ltd.
On February 14, 2022, the Company issued a total of shares ( shares each) of common stock to three other individuals as compensation for serving on the Board of Directors of CarbonMeta Research Ltd.
On February 17, 2022, the Company issued shares of its common stock to Ecomena Limited (an entity located in the United Kingdom) pursuant to a License of Agreement dated December 2, 2021 between Ecomena Limited and CarbonMeta Technologies, Inc. (see Note A, License Agreements).
On March 7, 2022, the Company issued shares of its common stock to Lloyd Spencer in connection with a $66,000 convertible note financing.
On March 21, 2022, the Company issued shares of its common stock to Tangiers Investment Group, LLC in connection with a $55,000 convertible note financing.
On April 4, 2022, the Company issued shares of its common stock to Bill Elder, a third-party contractor, as compensation for his business development services.
On May 10, 2022, the Company issued shares of its common stock to MacRab, LLC in connection with a $33,056 convertible note financing.
On July 14, 2022, the Company issued shares of its common stock to BHP Capital NY, Inc. in connection with a $25,000 convertible note financing.
On July 14, 2022, the Company issued shares of its common stock to Quick Capital, LLC in connection with a $25,000 convertible note financing.
On August 4, 2022, the Company issued shares of its common stock to RPG Capital Partners, Inc. in connection with a $25,000 convertible note financing.
On September 12, 2022, the Company issued shares of its common stock to RPG Capital Partners, Inc. in connection with a $15,000 convertible note financing.
On November 7, 2022, the Company issued shares of its common stock to RPG Capital Partners, Inc. in connection with a $2,500 convertible note financing.
On November 16, 2022, the Company issued shares of its common stock to the Robert Papiri Defined Benefit Plan in connection with a $10,000 convertible note financing.
| 27 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE N – COMMON STOCK AND TREASURY STOCK (continued)
Treasury Stock
As of June 30, 2023 and December 31, 2022, the Company held and , respectively, shares of common stock in treasury.
At June 30, 2023, the Company has outstanding a total of 1,146,000,000 warrants/options to the persons and upon the terms below:
| Name | Date of Issuance | Shares upon Exercise of warrants or options | Exercise Price | Expiration Date | ||||||||
| Lloyd Spencer (i) | 165,000,000 | $ | 0.0004 | |||||||||
| Tangiers Investment Group, LLC (ii) | 125,000,000 | $ | 0.0004 | |||||||||
| J.H. Darbie & Co., Inc. (iii) | 19,125,000 | $ | 0.0004 | |||||||||
| MacRab LLC (iv) | 500,000,000 | $ | 0.0004 | |||||||||
| MacRab LLC (v) | 74,375,000 | $ | 0.0004 | |||||||||
| BHP Capital NY Inc. (vi) | 62,500,000 | $ | 0.0004 | |||||||||
| Quick Capital LLC (vii) | 62,500,000 | $ | 0.0004 | |||||||||
| Robert Papiri Defined Benefit Plan (viii) | 25,000,000 | $ | 0.0004 | |||||||||
| Robert Papiri Defined Contribution Plan(ix) | 6,250,000 | $ | 0.0004 | |||||||||
| RPG Capital Partners Inc. (x) | 6,250,000 | $ | 0.0004 | |||||||||
| RPG Capital Partners Inc. (xi) | 62,500,000 | $ | 0.0004 | |||||||||
| RPG Capital Partners Inc. (xii) | 37,500,000 | $ | 0.0004 | |||||||||
| Total | 1,146,000,000 | |||||||||||
| (i) | On March 7, 2022, the Company issued Lloyd Spencer (the “Holder”) a Fixed Convertible Promissory Note (the “Note”) in the amount of $66,000. The Note has a term of one (1) year (Maturity date of March 7, 2023) and bears interest at 12% annually. The Note is convertible, in whole or in part, at any time and from time to time before maturity at the option of the Holder at the Fixed Conversion Price of $0.0002 per share. Upon the event of default, the Note shall accrue interest at the rate equal to the lower of 16% per annum or the highest rate permitted by law. The transaction closed on March 7, 2022. In connection with this note, the Holder was issued warrants to purchase 165,000,000 shares of the Company’s Common Stock at $0.0004 per share. |
| (ii) | On March 21, 2022, the Company issued Tangiers Investment Group, LLC (the “Holder”) a Fixed Convertible Promissory Note (the “Note”) in the amount of $55,000. The Note has a term of one (1) year (Maturity date of March 21, 2023) and bears interest at 12% annually. The Note is convertible, in whole or in part, at any time and from time to time before maturity at the option of the Holder at the Fixed Conversion Price of $0.0002 per share. Upon the event of default, the Note shall accrue interest at the rate equal to the lower of 16% per annum or the highest rate permitted by law. The transaction closed on March 21, 2022. In connection with this note, the Holder was issued warrants to purchase 125,000,000 shares of the Company’s Common Stock at $0.0004 per share. |
| (iii) | On February 23, 2022, the Company and J.H. Darbie & Co., Inc. (“Darbie”) entered into a Placement Agent Agreement (the “Agreement”). Under the terms of the Agreement, Darbie was issued warrants to purchase 19,125,000 shares of the Company’s common stock at $0.0004 per share. |
| (iv) | On April 14, 2022, the Company and MacRab, LLC (the “Investor”) entered into a Standby Equity Commitment Agreement (the “Agreement”) whereby the Company shall issue and sell to the Investor, from time to time, up to $5,000,000 of the Company’s common stock. Under the terms of the Agreement, the Purchase Price of the Company’s common stock shall be 88% of the Market Price on the date the Purchase Price is calculated. The Market Price shall mean the average of the two lowest volume weighted average prices of the Company’s common stock during the Valuation Period. The transaction closed on April 14, 2022. In connection with this note, the Holder was issued warrants to purchase 500,000,000 shares of the Company’s Common Stock at $0.0004 per share. |
| 28 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE O – STOCK OPTIONS AND WARRANTS (continued)
| (v) | On May 10, 2022, the Company issued MacRab, LLC (the “Holder”) a Fixed Convertible Promissory Note (the “Note”) in the amount of $33,056. The Note has a term of one (1) year (Maturity date of May 10, 2023) and bears interest at 12% annually. The Note is convertible, in whole or in part, at any time and from time to time before maturity at the option of the Holder at the Fixed Conversion Price of $0.0002 per share. Upon the event of default, the Note shall accrue interest at the rate equal to the lower of 16% per annum or the highest rate permitted by law. The transaction closed on May 10, 2022. In connection with this Note, the Holder was issued warrants to purchase 74,375,000 shares of common stock at an exercise price of $0.0004 per share and shares of common stock as commitment shares. |
| (vi) | On July 14, 2022, the Company issued BHP Capital NY Inc. (the “Holder”) a Fixed Convertible Promissory Note (the “Note”) in the principal amount of $25,000. The Note has a term of one (1) year (Maturity date of July 14, 2023) and bears interest at 12% annually. The Note is convertible, in whole or in part, at any time and from time to time before maturity at the option of the Holder at the Fixed Conversion Price of $0.0002 per share. Upon the event of default, the Note shall accrue interest at the rate equal to the lower of 16% per annum or the highest rate permitted by law. In connection with this note, the Holder was issued -year warrants to purchase 62,500,000 shares of the Company’s common stock at an exercise price of $0.0004 per share. In addition, the Holder and the Company entered into a Registration Rights Agreement (“RRA”) whereby the Company agreed to register shares of its common stock within 30 days of entry into the RRA for the benefit of the Holder. |
| (vii) | On July 14, 2022, the Company issued Quick Capital, LLC (the “Holder”) a Fixed Convertible Promissory Note (the “Note”) in the principal amount of $25,000. The Note has a term of one (1) year (Maturity date of July 14, 2023) and bears interest at 12% annually. The Note is convertible, in whole or in part, at any time and from time to time before maturity at the option of the Holder at the Fixed Conversion Price of $0.0002 per share. Upon the event of default, the Note shall accrue interest at the rate equal to the lower of 16% per annum or the highest rate permitted by law. In connection with this note, the Holder was issued warrants to purchase 62,500,000 shares of the Company’s common stock at an exercise price of $0.0004 per share. In addition, the Holder and the Company entered into a Registration Rights Agreement (“RRA”) whereby the Company agreed to register shares of its common stock within 30 days of entry into the RRA for the benefit of the Holder. |
| (viii) | On July 15, 2022, the Company issued the Robert Papiri Defined Benefit Plan (the “Holder”) a Fixed Convertible Promissory Note (the “Note”) in the principal amount of $10,000. The Note has a term of one (1) year (Maturity date of July 15, 2023) and bears interest at 12% annually. The Note is convertible, in whole or in part, at any time and from time to time before maturity at the option of the Holder at the Fixed Conversion Price of $0.0002 per share. Upon the event of default, the Note shall accrue interest at the rate equal to the lower of 16% per annum or the highest rate permitted by law. In connection with this note, the Holder was issued -year warrants to purchase 25,000,000 shares of the Company’s common stock at an exercise price of $0.0004 per share. In addition, the Holder and the Company entered into a Registration Rights Agreement (“RRA”) whereby the Company agreed to register shares of its common stock within 30 days of entry into the RRA for the benefit of the Holder. |
| (ix) | On July 15, 2022, the Company issued the Robert Papiri Defined Contribution Plan (the “Holder”) a Fixed Convertible Promissory Note (the “Note”) in the principal amount of $2,500. The Note has a term of one (1) year (Maturity date of July 15, 2023) and bears interest at 12% annually. The Note is convertible, in whole or in part, at any time and from time to time before maturity at the option of the Holder at the Fixed Conversion Price of $0.0002 per share. Upon the event of default, the Note shall accrue interest at the rate equal to the lower of 16% per annum or the highest rate permitted by law. In connection with this note, the Holder was issued warrants to purchase 6,250,000 shares of the Company’s common stock at an exercise price of $0.0004 per share. In addition, the Holder and the Company entered into a Registration Rights Agreement (“RRA”) whereby the Company agreed to register shares of its common stock within 30 days of entry into the RRA for the benefit of the Holder. |
| (x) | On July 15, 2022, the Company issued RGP Capital Partners, Inc. (the “Holder”) a Fixed Convertible Promissory Note (the “Note”) in the principal amount of $2,500. The Note has a term of one (1) year (Maturity date of July 15, 2023) and bears interest at 12% annually. The Note is convertible, in whole or in part, at any time and from time to time before maturity at the option of the Holder at the Fixed Conversion Price of $0.0002 per share. Upon the event of default, the Note shall accrue interest at the rate equal to the lower of 16% per annum or the highest rate permitted by law. In connection with this note, the Holder was issued warrants to purchase 6,250,000 shares of the Company’s stock at an exercise price of $0.0004 per share. In addition, the Holder and the Company entered into a Registration Rights Agreement (“RRA”) whereby the Company agreed to register shares of its common stock within 30 days of entry into the RRA for the benefit of the Holder. |
| 29 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
NOTE O – STOCK OPTIONS AND WARRANTS (continued)
| (xi) | On August 4, 2022, the Company issued RGP Capital Partners, Inc. (the “Holder”) a Fixed Convertible Promissory Note (the “Note”) in the principal amount of $25,000. The Note has a term of one (1) year (Maturity date of July 27, 2023) and bears interest at 12% annually. The Note is convertible, in whole or in part, at any time and from time to time before maturity at the option of the Holder at the Fixed Conversion Price of $0.0002 per share. Upon the event of default, the Note shall accrue interest at the rate equal to the lower of 16% per annum or the highest rate permitted by law. In connection with this note, the Holder was issued warrants to purchase 62,500,000 shares of the Company’s common stock at an exercise price of $0.0004 per share. In addition, the Holder and the Company entered into a Registration Rights Agreement (“RRA”) whereby the Company agreed to register shares of its common stock within 30 days of entry into the RRA for the benefit of the Holder. |
| (xii) | On September 12, 2022, the Company issued RGP Capital Partners, Inc. (the “Holder”) a Fixed Convertible Promissory Note (the “Note”) in the principal amount of $15,000. The Note has a term of one (1) year (Maturity date of September 12, 2023) and bears interest at 12% annually. The Note is convertible, in whole or in part, at any time and from time to time before maturity at the option of the Holder at the Fixed Conversion Price of $0.0002 per share. Upon the event of default, the Note shall accrue interest at the rate equal to the lower of 16% per annum or the highest rate permitted by law. In connection with this note, the Holder was issued -year warrants to purchase 37,500,000 shares of the Company’s common stock at an exercise price of $0.0004 per share. In addition, the Holder and the Company entered into a Registration Rights Agreement (“RRA”) whereby the Company agreed to register shares of its common stock within 30 days of entry into the RRA for the benefit of the Holder. |
NOTE P – COMMITMENTS AND CONTINGENCIES
Employment Agreement with Chief Executive Officer
On May 13, 2006, the Company executed an Employment Agreement (the “Agreement”) with Lloyd Spencer for Spencer to serve as the Company’s Chief Executive Officer. The Agreement provides for a 5-year term of employment to May 15, 2011 and the automatic renewal of successive one year periods unless terminated and provides for compensation to Spencer of $12,500 per month. Either party may terminate the Agreement provided more than 60 days prior written notice is given the other party. If the Company terminates Spencer without Just Cause or Spencer terminates employment with Good Reason, Spencer will be entitled to accrued but unpaid salary and benefits through the date of termination and shall receive a severance payment equal to one month’s current salary for each full year of employment, with a minimum severance payment of three months and a maximum of six months’ pay. If Spencer is terminated for Just Cause or resigns without Good Reason, Spencer will be entitled only to salary and benefits accrued but unpaid through the date of termination and shall receive no amount for severance.
For the six months ended June 30, 2023 and 2022, chief executive officer compensation expense was $75,000 and $75,000, respectively. As of June 30, 2023 and December 31, 2022, the accrued chief executive officer compensation liability was $949,500 and $874,500, respectively.
Major Customers
For the six months ended June 30, 2023, one customer (located in Spain) accounted for 100% of contract service revenues.
For the six months ended June 30, 2023, one customer (Silt Energy Development, LLC) accounted for 100% of consulting fees revenues.
| 30 |
CARBONMETA TECHNOLOGIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
| 31 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
As explained above, unless otherwise indicated, the terms “we,” “us,” “our,” “our Company,” “COWI” and “the Company” refer to CarbonMeta Technologies, Inc., together with its consolidated subsidiaries. The following discussion and analysis of the Company’s financial condition and results of operations should be read together with the Company’s financial statements and related notes appearing elsewhere in this Quarterly Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to the Company’s plans and strategy for the Company’s business and related financing, includes forward-looking statements involving risks and uncertainties and should be read together with the “Cautionary Note Regarding Forwarding- Looking Statements” section of this Quarterly Report. Such risks and uncertainties could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
CarbonMeta Technologies, Inc. (f/k/a CoroWare, Inc.) (“CarbonMeta”, the “Company”, “we”, “us”, or “our”) is a publicly quoted environmental research and development company that is commercializing technologies for processing organic wastes into hydrogen and high-value carbon products economically and sustainably.
The Company was incorporated on July 8, 2001, under the laws of the State of Delaware, as SRM Networks, Inc. In connection with the acquisition of Hy-Tech Computer Systems, Inc. on January 31, 2003, the Company changed its name to Hy-Tech Technology Group, Inc. In connection with the Agreement and Plan of Merger Robotics Workspace Technology, Inc., Innova Holdings, Inc. and the Company’s wholly owned subsidiary, RWT Acquisition, Inc., dated July 21, 2004, the Company’s name changed to Innova Holdings, Inc. Subsequently, on November 20, 2006, the Company changed its name to Innova Robotics and Automation, Inc. and then on April 23, 2008, the Company changed its name to CoroWare, Inc. On or about July 28, 2021, the Company filed Articles of Amendment to its Amended and Restated Certificate of Incorporation with the State of Delaware to reflect a name change from CoroWare, Inc. to CarbonMeta Technologies, Inc.
The Company was a reporting company with the Securities and Exchange Commission until October 2016, when the Company’s gross margins and financing costs became unsustainable. In 2020, the Company began investigating emerging technologies and sustainable growth business opportunities related to the production of hydrogen and high value carbon products from organic waste streams. After careful consideration of the potential market opportunities and the partnership with Oxford University, the Company took the decision to raise capital in the public market and therefore become an SEC reporting company again.
The Company has six wholly-owned subsidiaries: CoroWare Technologies, Inc. (“CTI”), CoroWare Robotics Solutions, Inc. (“CRS”), Robotic Workspace Technologies, Inc. (“RWT”), Carbon Source, Inc. (“CS”), CoroWare Treasury, Inc. (“CWT”), and CarbonMeta Research Ltd. (“CMR”). The Company has one majority owned subsidiaries: a 50.1% interest in Carbon Conversion Group, Inc. (f/k/a CarbonMeta Green Building Materials, LLC) (joint venture with Salvum Corporation)(“CCG”).
CoroWare Technologies (“CTI”) was incorporated in the State of Florida on May 16, 2006 and its principal business was a software professional services company with a strong focus on information technology integration and robotics integration, business automation solutions, and unmanned systems solutions to its customers in North America and Europe.
CoroWare Robotics Solutions, Inc. (“CRS”) was incorporated in the State of Texas on February 27, 2015, and its principal business was as a technology incubation company whose focus was on the delivery of mobile robotics and IOT products, solutions and services for university, government and corporate researchers, and enterprise customers. CRS’s business operations were discontinued in October 2016 when the Company’s gross margins and financing costs became unsustainable.
Robotic Workspace Technologies, Inc. (“RWT”) was incorporated in the State of Florida on July 1, 1994, and its principal business was developing and marketing open-architecture PC controls and related products that could improve the performance, applicability, and productivity of robots and other automated equipment. RWT’s business operations were discontinued in September 2007 when the Company’s losses became unsustainable.
Carbon Source, Inc. (“CS”) was incorporated in the State of Wyoming on June 14, 2021 and its principal business is waste reclamation technologies and processing.
CoroWare Treasury, Inc. (“CWT”) was incorporated in the State of Wyoming on July 6, 2021 and its principal business is acquisitions related to acquiring technologies and subsidiary businesses related to waste processing.
CarbonMeta Research Ltd. (‘CMR”) was incorporated in England and Wales on August 12, 2021 and its principal business will focus on the development of technologies and solutions for processing organic wastes and generating economically sustainable hydrogen and high-value carbon products. Using proprietary and patented technologies, it plans to implement new industrial methods using inexpensive, environmentally friendly catalysts that process collected plastic waste material into high value products such as hydrogen gas, graphene and carbon nanotubes.
Carbon Conversion Group, Inc. (f/k/a CarbonMeta Green Building Materials, LLC) (“CCG”) is a joint venture with Salvum Corporation organized on August 30, 2022 to develop and market construction mix products that are carbon negative (see Production Agreement below). On June 13, 2023, the Company filed a Certificate of Conversion with the State of Wyoming to convert CarbonMeta Green Building Materials, LLC to a corporation and change the name to Carbon Conversion Group, Inc. Articles of Incorporation were filed for CCG on this same date.
On June 12, 2023, the Company’s Board of Directors elected to spin-off CCG in a stock dividend to its shareholders. CarbonMeta Technologies’ shareholders will receive one (1) share of CCG common stock for every 3,000 shares of CarbonMeta Technologies common stock owned as of the Record Date (June 23, 2023). The Company filed its Issuer Company-related Action Notification Form with the Financial Industry Regulatory Authority (“FINRA”) for the proposed stock dividend.
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In 2021, the Company began investigating emerging technologies, strategic intellectual property partnerships, and sustainable growth business opportunities related to the production of hydrogen and high value carbon products from organic waste streams. Working cooperatively with Oxford University Innovation, CarbonMeta plans to implement proven and patented technologies to add value to organic waste streams. By utilizing these proven proprietary technologies, collected and captured plastic waste material can be upcycled to high value products such as carbon nanotubes (“CNTs”) and hydrogen gas.
CNTs can be used for improved electrical conduction and reinforcing materials that are used in a wide variety of industries including the automotive industry, aviation industry, medical industry, and construction. The number one growth driver is the increasing need for high performance batteries for the electric vehicle market.
Plastic waste is a cheap and abundant feedstock that will allow the Company to scale quickly and produce hydrogen gas for a competitive price.
License Agreements
Oxford University Innovation Limited
On June 2, 2021, the Company (the “Licensee”) entered into a License Agreement (the “Agreement”) with Oxford University Innovation Limited (the “Licensor”). Under the terms of the Agreement, the Licensee will license the licensed technology (OUI Project- Hydrogen from plastics via microwave-initiated catalytic dehydrogenation). The Agreement is non-exclusive and includes the United States and European Union. Signing fees for the Agreement were £54,807 and have been paid in full by the Company. The Royalty Rate is 5% of net sales. The Agreement comprises milestone fees as: (i) £20,000 upon the first commercial sale of a licensed product; (ii) £50,000 upon generating $1,000,000 in sales; (iii) £10,000 upon the successful grant of the US patent; and (iv) £10,000 upon the successful grant of the EU patent. Whether the company realizes product sales or not, the Company is subject to a minimum payment to Oxford University Innovation of £10,000 for license year 3 and £20,000 for license year 4 and each license year thereafter.
The process that the Company licensed from Licensor for producing hydrogen and carbon products from waste plastics has not been demonstrated on a larger scale. It is not yet known whether the process will be cost-effective or profitable to implement on a larger scale. The Company has conducted tests to prove the percentage of carbon nanotubes up to 10 grams. The Company is working with a microwave reactor company to help demonstrate this process at a scale of 100 kilograms and 1,000 kilograms per day.
The Company has met the following milestones of its development plan set forth in the license agreement with Oxford University Innovation:
| ● | September 2021: established subsidiary in Oxford, United Kingdom | |
| ● | March 2022: produced 0.025 kilograms per day of marketable carbon nanotubes |
Oxford University Innovation may terminate the license due to the company not using commercially reasonable efforts to develop, exploit and market the licensed technology in accordance with the development plan.
From July 2022 to present (see Service Award below), CarbonMeta Technologies has been working with University of Oxford on a project with a global multi-energy provider based in Europe to assess the feasibility of processing mixed plastic waste into clean hydrogen fuel and value-added carbon products using microwave catalysis on a large commercial scale.
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Ecomena Limited
On December 2, 2021, the Company (“Licensee”) entered into a License of Agreement (the “Agreement”) with Ecomena Limited (an entity located in the United Kingdom) (“Licensor”). Under the terms of the Agreement, the Licensee will license the Licensed Technology to recycle industrial byproduct into cement free pavers and mortars that are environmentally friendly and continuously absorb carbon dioxide. The signing fees payable to the Licensor under the Agreement are £20,000 cash (approximately $27,247 at February 17, 2022) of which £10,000 has been paid by the Licensee, and 160,000,000 shares of the Company’s common stock, which was delivered to the Licensor on February 17, 2022. The royalty rate payable to the Licensor is 5% of net sales, subject to a minimum of £5,000 per year for license years 1 and 2, £3,000 for license year 3 and £1,000 for license year 4 and each license year thereafter. The term of the Agreement is five years from December 2, 2021 to December 2, 2026. The Licensee may terminate the Agreement for any reason at any time provided it gives Licensor six (6) months written notice to terminate expiring after December 2, 2024. If requested by the Licensee, the Licensor shall agree to the Agreement continuing in force after December 2, 2026. As of the date of this filing, the Agreement is still in effect.
Production Agreement
On January 11, 2022, the Company entered into an Interim Joint Product Development and Sales Representation Agreement (the “Agreement”) with Salvum Corporation. Under the terms of the Agreement, the parties agree to work together to develop both CarbonMeta’s proprietary cementless paver products known as “Cementless Paver” and Salvum’s proprietary concrete alternative products known as “EarthCrete.” During the Term, Salvum agrees to manufacture CarbonMeta’s proprietary cementless paver products known as “Cementless Paver”. CarbonMeta reserves the right to appoint other manufacturers of the products and/or to engage other sales representatives for CarbonMeta’s proprietary cementless paver products known as “Cementless Paver” outside the United States of America. Although the Interim Joint Product Development and Sales Representation Agreement with Salvum Corporation had a term of 180 days and expired on July 11, 2022, the companies continued to work together, and the companies formed CarbonMeta Green Building Materials, LLC (“CMGBM”) and signed an Operating Agreement for Management of CMGBM on August 28, 2022 that supersedes the Interim Joint Product Development and Sales Representation Agreement.
The Operating Agreement for Management of CMGBM (the “CMGBM Agreement”) provides for (1) the allocation of 501 Managing Membership units (50.1%) to CarbonMeta Technologies, Inc. (“COWI”) and 499 Managing Membership units (49.9%) to Salvum Corporation, (2) COWI capital contributions to CMGBM of (a) 250,000,000 shares of COWI common stock and (b) the assignment of the Ecomena Limited license agreement, and (3) Salvum Corporation capital contributions to CMGBM of (a) existing EarthCrete customer list and sales pipeline, and (b) license to use EarthCrete trademark worldwide. The CMGBM Agreement also provides that profits and losses (and distributions) of CMGBM shall be allocated on the basis of each Managing Member’s relative capital accounts and that a Managing Member may withdraw from CMGBM upon not less than six months prior written notice to each non-withdrawing Managing Member. As of December 31, 2022, the above capital contributions provided for in the CMGBM Agreement had not occurred and no significant operations of CMGBM had commenced.
On June 16, 2023, the Company filed a Certificate of Conversion with the State of Wyoming for CGBM, to convert CGBM from a limited liability company to a corporation. In addition, the Company filed Articles of Incorporation changing the name of CGBM to Carbon Conversion Group, Inc. (“CCGI”). CCGI has the authority to issue 100,000,000 shares of preferred stock, par value $0.0001 per share, and 500,000,000 shares of common stock, par value of $0.0001 per share.
On June 20, 2023, the Company announced plans to spin-off CCGI in the third quarter of 2023 on the basis of one share of CCGI common stock for every 3,000 shares of the Company’s common stock owned as of June 23, 2023.
Service Award
On June 10, 2022, our subsidiary, CarbonMeta Research Ltd. (“CMR”), was granted a Service Award (entitled “Waste Plastic Catalysis Proof of Concept”) from a European global energy supplier. The award provides for CMR to provide the customer with an initial prototype process for converting mixed waste plastic to hydrogen and solid carbon and for the customer to pay CMR a total of 50,000 Euros in four installments as certain milestones are met. As of September 30, 2022, all of the milestones had been met by CMR and CMR had invoiced the customer the full 50,000 Euros ($49,542), of which $40,103 was collected in the third quarter 2022 and $9,439 has been collected in the fourth quarter 2022.
In October 2022, CMR was granted a second Service Award for 50,000 Euros to provide the customer with further details on the composition of the carbon products resulting from the microwave catalysis of waste plastics. In December 2022, CMR invoiced the customer for 20,000 Euros, which was collected in January 2023. In January 2023, CMR invoiced the customer for 10,000 Euros, which was collected in the quarter ended March 31, 2023. In April 2023 and May 2023, CMR invoiced the customer for a total of 10,000 Euros, which was collected in the quarter ended June 30, 2023. The project is expected to reach completion in September 2023.
North Bay Resources Joint Venture
On June 21, 2023, the Company and NBRI entered into a definitive Joint Venture Agreement (the “Joint Venture Agreement”). Under the terms of the Joint Venture Agreement:
CarbonMeta Green Resources Canada will be a Limited Liability Company in British Columbia, Canada with initial equity ownership as follows:
| ● | 51% of the equity will be owned by CarbonMeta Technologies, Inc. | |
| ● | 49% of the equity will be owned by North Bay Resources, Inc. |
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CarbonMeta Green Resources Canada will be a research and development center whose focus will be on:
| ● | Establish CarbonMeta Green Resources Canada as a mining and processing center for the production of carbon-negative cementless concrete using olivine | |
| ● | Build and operate a production facility and demonstration program for the production of carbon-negative cementless concrete that can be distributed in North America. | |
| ● | Establish an agreed upon transfer price from NBRI to CarbonMeta Green Resources Canada for purchasing olivine that shall be updated quarterly. | |
| ● | Develop and establish supply chain relationships with potential North American distributors of carbon-negative cementless concrete, including but not limited to Carbon Conversion Group, Inc. (f/k/a CarbonMeta Green Building Materials, LLC) in the United States | |
| ● | Establish technology licensing relationships, industry partnerships, and marketing sponsorships related to the production of carbon-negative cementless concrete using olivine |
The contributions from each of the Joint Venturers, for the purpose of this Joint Venture, is the sum set after the name of each Joint Venturer as follows:
The transaction closed on June 21, 2023.
Fermion Electric Private Limited MOU
On April 8, 2023, CarbonMeta Technologies, Inc. (the “Company”) and Fermion Electric Private Limited (“Fermion”) signed a Memorandum of Understanding (MOU) to create a subsidiary corporation called CarbonMeta Research India as a Private Limited Company that shall be jointly owned and managed by the Company and Fermion, and whose initial objective shall be processing natural gas into hydrogen and high value carbon products.
Under the terms of the MOU:
CarbonMeta Research India will be a Private Limited Company in Kerala, India with initial equity ownership as follows:
| ● | 80% of the equity will be owned by CarbonMeta Technologies, Inc.; and | |
| ● | 20% of the equity will be owned by Fermion Electric Private Limited. |
CarbonMeta Research India will be a research and development center whose focus will be on:
| ● | Microwave catalysis of waste plastics, natural gas, and other organic waste materials; | |
| ● | Carbon dioxide (CO2) capture technologies using novel technologies and adsorbents; | |
| ● | Development of new catalysts for catalysis, pyrolysis, and electrolysis; and | |
| ● | Commercialize and patent technologies that were developed and licensed by CarbonMeta Technologies, Inc. or its subsidiaries. |
The below discussions are as of the date stated (unless specifically noted otherwise) and should be read in conjunction with financial statements and notes thereto for the applicable period referenced.
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Results of Operations:
For the three months ended June 30, 2023 versus June 30, 2022:
| June 30, 2023 | June 30, 2022 | $ Change | ||||||||||
| Gross revenue | $ | 25,970 | $ | 21,555 | $ | 4,415 | ||||||
| Operating expenses | 265,509 | 189,578 | 74,835 | |||||||||
| Loss from operations | (230,539 | ) | (168,023 | ) | (70,420 | ) | ||||||
| Other income (expense) | 5,786,228 | (5,555,713 | ) | 11,339,941 | ||||||||
| Net income (loss) | 5,555,689 | (5,723,736 | ) | 38,209,112 | ||||||||
| Net income (loss) per share - basic and diluted | $ | (0.0003 | ) | $ | (0.0003 | ) | $ | 0.00 | ||||
Revenues
During the three months ended June 30, 2023, revenues were $25,970 compared to revenues of $21,555 during the three months ended June 30, 2023. For the three months ended June 30, 2023 and 2022, the Company had two customers. The first is a European global energy industry for whom we are in a technology assessment project to evaluate our microwave catalysis process for mixed waste plastics. The Company has a contractual agreement with this customer for the technology assessment project. The second is a construction contractor with expertise in the deployment of solar farm systems. The Company has a Interim Joint Product Development and Sales Representation Agreement with this customer, and the companies subsequently signed a Joint Venture Agreement on August 28, 2022 that supersedes the Interim Joint Product Development and Sales Representation Agreement.
Operating Expenses
Operating expenses were $265,509 for the three months ended June 30, 2023 compared to $189,578 for the three months ended June 30, 2022.
We anticipate that our cost of revenues will increase in 2023 and for the foreseeable future as we continue to identify potential acquisitions, joint ventures and licensing opportunities.
We incurred $60,810 and $4,545 in research and development expenses during the three months ended June 30, 2022 and 2021, respectively.
We incurred $37,500 and $37,500 in compensation expenses during the three months ended June 30, 2023 and 2022, respectively. The Company anticipates that it will need to expand its management team with future acquisitions or joint ventures.
Loss from Operations
Loss from operations was $230,539 for the three months ended June 30, 2022 compared to $168,023 for the three months ended June 30, 2021.
Other Income (Expenses)
Other income (expenses) was $5,786,228 during the three months ended June 30, 2023 compared to other income (expenses) of ($5,55,713) in the three months ended June 30, 2022, a decrease of $38,339,635. Other income (expenses) is comprised primarily of gain/loss on derivative liabilities and interest expense. The gain from derivative liabilities for the three months ended June 30, 2023 was $6,120,022 compared to ($5,284,532) for the three months ended June 30, 2022, an increase of $11,404,554. The embedded conversion features associated with our convertible debentures are valued based on the number of shares that are indexed to that liability. Keeping the number of shares constant, the liability associated with the embedded conversion features increases as our share price increases and, likewise, decreases when our share price decreases. Derivative income (expense) displays the inverse relationship.
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Net Income (Loss)
Net income (loss) for the three months ended June 30, 2023 was $5,555,689 compared to ($5,723,736) for the three months ended June 30, 2022, an increase of $11271,521. The increase in net income is primarily a result of the change in derivative liabilities.
For the six months ended June 30, 2023 versus June 30, 2022:
| June 30, 2023 | June 30, 2022 | $ Change | ||||||||||
| Gross revenue | $ | 36,346 | $ | 21,555 | $ | 14,791 | ||||||
| Operating expenses | 388,534 | 447,092 | (58,558 | ) | ||||||||
| Loss from operations | (352,188 | ) | (425,537 | ) | 73,349 | |||||||
| Other Income (expense) | (2,900,029 | ) | (6,347,736 | ) | 3,447,707 | |||||||
| Net Income (loss) | (3,252,217 | ) | (6,773,273 | ) | 3,521,056 | |||||||
| Net income (loss) per share - basic and diluted | $ | (0.0002 | ) | $ | (0.0004 | ) | $ | 0.0002 | ||||
Revenues
During the six months ended June 30, 2023, revenues were $36,346 compared to revenues of $21,555 during the six months ended June 30, 2022. For the six months ended June 30, 2023 and 2022, the Company had two customers. The first is a European global energy industry for whom we are in a technology assessment project to evaluate our microwave catalysis process for mixed waste plastics. The Company has a contractual agreement with this customer for the technology assessment project. The second is a construction contractor with expertise in the deployment of solar farm systems. The Company has an Interim Joint Product Development and Sales Representation Agreement with this customer, and the companies subsequently signed a Joint Venture Agreement on August 28, 2022 that supersedes the Interim Joint Product Development and Sales Representation Agreement.
Operating Expenses
Operating expenses were $388,534 for the six months ended June 30, 2023 compared to $447,092 for the six months ended June 30, 2022.
We anticipate that our cost of revenues will increase in 2023 and for the foreseeable future as we continue to identify potential acquisitions, joint ventures and licensing opportunities.
We incurred $70,140 and $8,644 in research and development expenses during the six months ended June 30, 2023 and 2022, respectively.
We incurred $75,000 and $75,000 in compensation expenses during the six months ended June 30, 2023 and 2022, respectively. The Company anticipates that it will need to expand its management team with future acquisitions or joint ventures.
Loss from Operations
Loss from operations was $352,188 for the six months ended June 30, 2023 compared to $425,537 for the six months ended June 30, 2022.
Other Income (Expenses)
Other income (expenses) was ($2,900,029) during the six months ended June 30, 2023 compared to ($6,347,736) in the six months ended June 30, 2022, an increase of $3,447,707. Other expenses are comprised primarily of gain/loss on derivative liabilities and interest expense. The loss from derivative liabilities for the six months ended June 30, 2023 was ($2,236,792) compared to ($5,855,627) for the six months ended June 30, 2022, a decrease of $3,618,835. The embedded conversion features associated with our convertible debentures are valued based on the number of shares that are indexed to that liability. Keeping the number of shares constant, the liability associated with the embedded conversion features increases as our share price increases and, likewise, decreases when our share price decreases. Derivative income (expense) displays the inverse relationship.
Net Income (Loss)
Net income (loss) for the six months ended June 30, 2023 was ($3,252,217) compared to ($6,773,273) for the six months ended June 30, 2022, a decrease of $3,521,056. The decrease in net loss is primarily a result of the change in derivative liabilities.
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Liquidity and Capital Resources
For the Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash (used in) provided by: | ||||||||
| Operating Activities | $ | (25,910 | ) | $ | (121,236 | ) | ||
| Investing Activities | - | (27,247 | ) | |||||
| Financing Activities | 33,138 | 136,456 | ||||||
| Net increase in cash and restricted cash | $ | 3,765 | $ | (2,634 | ) | |||
For the six months ended June 30, 2023 and 2022, net cash (used in) operating activities was ($25,910) and ($121,236), respectively. The decrease in net cash (used in) operating activities for the six months ended June 30, 2023 was largely attributable to a decrease in net loss and loss from derivative liability during the six months ended June 30, 2023.
For the six months ended June 30, 2023 and 2022, net cash (used in) investing activities was $- and ($27,247), respectively.
For the six months ended June 30, 2023 and 2022, cash provided by financing activities was $33,138 and $136,456, respectively. The decrease in net cash provided from financing activities for the six months ended June 30, 2023 was largely attributable to a decrease in proceeds from convertible debt financings.
At June 30, 2023, we had current assets of $7,301, current liabilities of $27,645,058, a working capital deficit of $27,637,757 and an accumulated deficit of $67,256,173.
At December 31, 2022, we had current assets of $24,061, current liabilities of $24,810,798, a working capital deficit of $24,786,737 and an accumulated deficit of $64,003,956.
Financing Needs
In order to fund our operations, we rely upon direct investments with accredited investors, joint ventures, and customer revenues. Once the Company becomes profitable, we intend to fund our operations from free cash flow.
At present, the Company only has sufficient funds to conduct its operations for three to six months. There can be no assurance that additional financing will be available in amounts or on terms acceptable to the Company, if at all.
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If we are not successful in generating sufficient liquidity from Company operations or in raising sufficient capital resources, on terms acceptable to us, this could have a material adverse effect on the Company’s business, results of operations liquidity and financial condition.
The Company presently does not have any available credit, bank financing or other external sources of liquidity. Due to its brief history and historical operating losses, the Company’s operations have not been a source of liquidity. The Company will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, the Company may need to sell additional shares of its common stock or borrow funds from private lenders. There can be no assurance that the Company will be successful in obtaining additional funding.
The Company will need additional investments in order to continue operations. Additional investments are being sought, but the Company cannot guarantee that it will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. In the event there is a downturn in the U.S. stock and debt markets, this could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if the Company is able to raise the funds required, it is possible that it could incur unexpected costs and expenses, fail to collect significant amounts owed to it, or experience unexpected cash requirements that would force it to seek alternative financing. Further, if the Company issues additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders.
Satisfaction of Outstanding Liabilities
There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources to satisfy these outstanding liabilities. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business.
We currently have no external sources of liquidity such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.
We are dependent on the sale of our securities to fund our operations and will remain so until we generate sufficient revenues to pay for our operating costs. Our officers and directors have made no written commitments with respect to providing a source of liquidity in the form of cash advances, loans and/or financial guarantees.
If we are unable to raise the funds, we will seek alternative financing through means such as borrowings from institutions or private individuals. There can be no assurance that we will be able to raise the capital we need for our operations from the sale of our securities. We have not located any sources for these funds and may not be able to do so in the future. We expect that we will seek additional financing in the future. However, we may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to cease operations. If we fail to raise funds, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws.
Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern and believes that our ability is dependent on our ability to implement our business plan, raise capital and generate revenues. Please see NOTE C - GOING CONCERN for further information.
Convertible Notes
At June 30, 2023 and December 31, 2022, the Company had $2,070,244 and $2,160,034 in outstanding convertible debt, net, respectively. At June 30, 2023 and December 31, 2022, the Company had $1,495,586 and $1,781,104 of outstanding default principal, respectively. If all Convertible Notes were converted, shareholders would undergo significant dilution to their holdings.
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The Company’s legacy financing contains unfavorable terms that contributed to dilution and negatively impacted the Company’s market price, and therefore posed a challenge to attracting investment under more favorable. During the year ended December 31, 2021, the Company began the process of extinguishing or renegotiating the terms of this unfavorable legacy debt. During the year ended December 31, 2022, the Company began realizing revenues, and intends to grow its business with key customers directly and through joint venture companies. As a result, the Company has been able to attract investments with third parties that are more favorable to the company, thereby reducing potential dilution.
Please see NOTE H – CONVERTIBLE DEBT, NET for further information.
Debt
At June 30, 2023 and December 31, 2022, the Company had $15,755,420 and $15,157,952 in total debt, exclusive of derivative liabilities, respectively. Please see NOTES F, G, H, I, J and K for further information.
Required Capital Over the Next Twelve Months
We expect to incur losses from operations for the near future. We believe we will have to raise an additional $2,500,000 to fund our operations over the next twelve months, including roughly $50,000 to remain current in our filings with the SEC. The additional funds will be utilized for hiring ancillary staff and key personnel, corporate website and SEO development, acquisition(s) in the waste and recycling management sector and day-to-day operations.
Future financing may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, existing holders of our securities may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our securities.
If additional financing is not available or is not available on acceptable terms, we may be required to delay or alter our business plan based on available financing.
Contractual Obligations and Commitments
The Company has no debt covenants that require certain financial information to be met.
Off-Balance Sheet Arrangements
The Company did not have any off-balance sheet arrangements as of June 30, 2023.
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s combined financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. In accordance with U.S. GAAP, the Company bases its estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
For information on the Company’s significant accounting policies please refer to NOTE B – SIGNIFICANT ACCOUNTING POLICIES to the Company’s Financial Statements included in this Quarterly Report.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Due to being a Smaller Reporting Company, the Company is not required to provide information under this Item 3.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Principal Executive Officer and Principal Financial and Accounting Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on such evaluation, the Company’s Principal Executive Officer and Principal Financial and Accounting Officer have concluded that, as of the end of such period covered by this Quarterly Report, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that information that it is required to disclose in reports that the Company files with the SEC is recorded, processed, summarized and reported within the time periods specified by the Exchange Act rules and regulations due to the reasons set forth below.
As of December 31, 2022, management identified the following material weakness in our internal control over financial reporting: the Company was unable to provide a timely financial reporting package in connection with the year end audit. This was primarily the result of the Company’s limited accounting personnel. This also limits the extent to which the Company can segregate incompatible duties and has a lack of controls in place to ensure that all material transactions and developments impacting the financial statements are reflected. There is a risk under the current circumstances that intentional or unintentional errors could occur and not be detected.
Management has concluded that the material weakness described above currently exists as of June 30, 2023. The Company plans to engage with outside consultants to strengthen its capabilities and help the Company in the design and assessment of its internal controls over financial reporting to further reduce and remediate existing control deficiencies during 2023.
Changes in Internal Control over Financial Reporting
During the three months ended June 30, 2023, there were no changes in our internal control over financial reporting that materially affected our internal control over financial reporting as of June 30, 2023.
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PART II
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is party to legal actions that are routine and incidental to its business. However, based upon available information and in consultation with legal counsel, management does not expect the ultimate disposition of any or a combination of these actions to have a material adverse effect on the Company’s assets, business, cash flow, condition (financial or otherwise), liquidity, prospects and\or results of operations.
ITEM 1A. RISK FACTORS
Our business and common stock are subject to a number of risks and uncertainties The discussion of such risks and uncertainties may be found under “Risk Factors” in the Company’s Annual report on Form 10-K filed with the Securities and Exchange Commission on April 20, 2023, which is supplemented by the risk factor set forth below.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities; Uses of Proceeds from Registered Securities
On January 25, 2023, the Company issued 173,500,000 shares of its common stock to Lloyd Spencer in satisfaction of $34,700 principal against the convertible note dated May 7, 2022.
On March 3, 2023, the Company issued 200,000,000 shares of its common stock to New to The Street Group, LLC as per the terms of the Production & Broadcasting Agreement dated February 24, 2022.
On June 21, 2023, the Company issued 549,457,550 shares of its common stock to Tangiers Investment Group, LLC in satisfaction of $47,000 principal and $62,892 interest against the convertible note dated March 27, 2014.
On June 22, 2023, the Company issued 83,315,050 shares of its common stock to Tangiers Investment Group, LLC in satisfaction of $10,000 principal and $6,663 interest against the convertible note dated October 11, 2016.
On June 22, 2023, the Company issued 246,773,250 shares of its common stock to Tangiers Investment Group, LLC in satisfaction of $30,910 principal and $18,445 interest against the convertible note dated January 30, 2017.
On June 23, 2023, the Company issued 150,000,000 shares of its common stock to William David Elder in full settlement of the Master Subcontractor Agreement entered by the parties dated January 24, 2022.
On June 26, 2023, the Company issued 67,000,000 shares of its common stock to Quick Capital, LLC in satisfaction of $4,191 principal, $1,750 deposit fees and $759 interest against the convertible note dated November 3, 2022.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
| 42 |
ITEM 6. EXHIBITS
(b) Exhibits
The following documents are filed as exhibits hereto:
| 43 |
| 44 |
| 45 |
| + | Management contract or compensatory plan or arrangement. |
| * | Filed herewith. |
| ** | The certifications attached as Exhibit 32.1 are not deemed “filed” with the SEC and are not to be incorporated by reference into any filing of CarbonMeta Technologies, Inc. under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing. |
| 46 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 22, 2023
| CARBONMETA TECHNOLOGIES, INC. | ||
| By: | /s/ Lloyd Spencer | |
| Name: | Lloyd Spencer | |
| Title: | Chief Executive Officer | |
| 47 |
Exhibit 3.21
CERTIFICATE OF CONVERSION
Limited Liability Company to Corporation
Pursuant to W.S. 17-29-1009 and W.S.17-26-101
1. The name of the limited liability company immediately prior to the filing of this Certificate of Conversion is CarbonMeta Green Building Materials, LLC.
2. The limited liability company was originally formed on the 30th day of August, 2022, under the laws of the State of Wyoming. The limited liability company’s jurisdiction of organization immediately prior to the filing of this Certificate of Conversion is Wyoming.
3. The name of the corporation into which the limited liability company shall be converted, as set forth in its Articles of Incorporation, is Carbon Conversion Group, Inc.
4. The Conversion has been approved in accordance with the applicable provisions of the Wyoming Limited Liability Company Act.
5. This Certificate of Conversion from Limited Liability Company to Corporation shall be effective at 12:01 a.m. on June 14, 2023.
IN WITNESS WHEREOF, the Limited Liability Company has caused this Certificate of Conversion to be executed this 13th day of June 2023.
| CARBONMETA GREEN BUILDING MATERIALS, LLC | |||
| By: | CARBONMETA TECHNOLOGIES, INC., | ||
| 51% Member | |||
| By: | |||
| Name: | |||
| Title: | |||
| By: | SALVUM CORPORATION, | ||
| 49% Member | |||
| By: | |||
| Name: | |||
| Title: | |||
Exhibit 3.22
PROFIT CORPORATION
ARTICLES OF INCORPORATION
OF
CARBON CONVERSION GROUP, INC.
Preliminary Statement
These Articles of Incorporation are filed in connection with the conversion of a limited liability company, CarbonMeta Green Building Materials, LLC, a Wyoming limited liability company, to a corporation, pursuant to W.S 17-29-1009 and W.S. 17-26-101. CarbonMeta Green Building Materials, LLC was formed on August 30, 2022, in the State of Wyoming. The conversion of CarbonMeta Green Building Materials, LLC to a corporation was adopted and approved by a unanimous vote of its members.
ARTICLE I – NAME OF THE CORPORATION
The name of the corporation shall be: Carbon Conversion Group, Inc. (the “Corporation”).
ARTICLE II – NAME AND ADDRESS OF REGISTERED AGENT
The address of the registered office of the Corporation in the State of Wyoming is 30 N Gould, STE 100, Sheridan, Wyoming 82801. The name of the Corporation’s registered agent at the address is Registered Agents Inc. Either the registered office or the registered agent may be changed in the manner provided by law.
ARTICLE III – PRINCIPAL OFFICE AND MAILING ADDRESS OF CORPORATION
The principal office address and mailing address of Corporation is 970 W. Broadway, Suite E #457, Jackson, Wyoming 83001.
ARTICLE IV – PERPETUAL DURATION OF THE CORPORATION
The period of this Corporation’s duration is perpetual.
ARTICLE V – PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the Wyoming Business Corporation Act other than the banking business, the trust Corporation business or the practice of a profession permitted to be incorporated by the Wyoming Business Corporation Act
ARTICLE VI – AUTHORIZED CAPITAL
A. Authorized Capital. The aggregate number of shares of all classes of capital stock which this Corporation shall have authority to issue is 600,000,000 shares, of which 100,000,000 shares shall be shares of preferred stock, par value of $.0001 per share as described herein (“Preferred Stock”), and 500,000,000 shares shall be shares of common stock, par value of $.0001 per share (“Common Stock”).
(1) Preferred Stock. Notwithstanding the designation of the class of Series A Preferred Stock designated in Article XV and Series B Preferred Stock designated in Article XVI, the designations, preferences, limitations, restrictions, and relative rights of any additional classes of Preferred Stock, and variations in the relative rights and preferences as between different series, shall be established in accordance with the Wyoming Business Corporation Act by the board of directors of the Corporation (“Board of Directors”). Except for such voting powers with respect to the election of directors or other matters as may be stated in the resolutions of the Board of Directors creating any series of Preferred Stock, the holders of any such series shall have no voting power.
(2) Common Stock. The holders of Common Stock shall have and possess all rights as shareholders of the Corporation, including such rights as may be granted elsewhere by these Articles of Incorporation, except as such rights may be limited by the preferences, privileges and voting powers, and the restrictions and limitations of the Preferred Stock.
The Common Stock shall have voting rights such that each share of Common Stock duly authorized, issued and outstanding shall entitle its holder to one vote.
B. Dividends. Subject to preferential dividend rights, if any, of the holders of Preferred Stock, dividends on the Common Stock may be declared by the Board of Directors and paid out of any funds legally available therefor at such times and in such amounts as the Board of Directors shall determine.
C. No Assessment. The capital stock, after the amount of the subscription price has been paid in, shall not be subject to assessment to pay the debts of the Corporation.
D. Value. Any stock of the Corporation may be issued for money, property, services rendered, labor done, cash advances for the Corporation, or for any other assets of value in accordance with the action of the Board of Directors, whose judgment as to value received in return therefor shall be conclusive and said stock when issued shall be fully paid and non-assessable.
E. Restrictions. The Board of Directors shall have the authority to impose restrictions upon the transfer of the capital stock of the Corporation as it deems necessary in the best interests of the corporation or as required by law.
ARTICLE VII - CUMULATIVE VOTING
Cumulative voting for the election of directors shall not be permitted.
ARTICLE VIII - PREEMPTIVE RIGHTS
No holder of any stock of the Corporation shall be entitled, as a matter of right, to purchase, subscribe for or otherwise acquire any new or additional shares of stock of the Corporation of any class, or any options or warrants to purchase, subscribe for or otherwise acquire any such new or additional shares, or any shares, bonds, notes, debentures or other securities convertible into or carrying options or warrants to purchase, subscribe for or otherwise acquire any such new or additional shares unless specifically authorized by the governing board of the Corporation.
ARTICLE IX - GOVERNING BOARD
The governing board of this Corporation shall be known as directors, and the number of the directors may from time to time be increased or decreased in such manner as shall be permitted by the bylaws of this Corporation. There shall not be fewer than one member of the Board of Directors.
ARTICLE X – SHAREHOLDER VOTING ON CORPORATE ACTIONS
Notwithstanding the requirements of Wyoming law, the affirmative vote or concurrence of the holders of a majority of the outstanding shares of the Corporation entitled to vote thereon are required to make effective all transactions that require shareholder approval under applicable law.
ARTICLE XI – INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES, FIDUCIARIES AND AGENTS
A. Liability for Monetary Damages. The liability of the directors of the Corporation for monetary damages shall be eliminated to the fullest extent permissible under Wyoming law provided, however, that (1) the liability of directors is not limited or eliminated (a) for acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, (b) for acts or omissions that a director believes to be contrary to the best interests of the corporation or its shareholders or that involve the absence of good faith on the part of the director, (c) for any transaction from which a director derived an improper personal benefit, (d) for acts or omissions that show a reckless disregard for the director’s duty to the corporation or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director’s duties, of a risk of serious injury to the corporation or its shareholders, (e) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director’s duty to the corporation or its shareholders, (2) the liability of directors is not limited or eliminated for any act or omission occurring prior to the date when these Articles of Incorporation becomes effective, or (f) any of the acts set forth in Section 17-16-202 of the Wyoming Business Corporations Act and (3) the liability of officers is not limited or eliminated for any act or omission as an officer, notwithstanding that the officer is also a director or that his or her actions, if negligent or improper, have been ratified by the directors.
The Corporation shall indemnify, to the fullest extent permitted by applicable law, any person, and the estate and personal representative of any such person, against all liability and expense (including attorneys’ fees) incurred by reason of the fact that he is or was a director or officer of the Corporation or, while serving at the request of the Corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of, or in any similar managerial or fiduciary position of, another domestic or foreign corporation or other individual or entity or of an employee benefit plan. The Corporation also shall indemnify any person who is serving or has served the Corporation as director, officer, employee, fiduciary, or agent, and that person’s estate and personal representative, to the extent and in the manner provided in any bylaw, resolution of the shareholders or directors, contract, or otherwise, so long as such provision is legally permissible.
B. Expenses. The Corporation shall advance expenses in advance of the final disposition of the case to or for the benefit of a director, officer, employee, fiduciary, or agent, who is party to a proceeding such as described in the preceding paragraph A to the maximum extent permitted by applicable law.
C. Repeal or Modification. Any repeal or modification of the foregoing paragraph by the shareholders of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation or other person entitled to indemnification existing at the time of such repeal or modification.
ARTICLE XII - LIMITATIONS OF LIABILITY
A. Limitation of Liability. Notwithstanding Wyoming law, specifically Section 17-16-202 of the Wyoming Business Corporations Act, or the provisions of these Articles of Incorporation, a director of the Corporation shall not be personally liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or to its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (iii) for any transaction from which the director derived an improper personal benefit. If the Wyoming Business Corporations Act is amended after this Article is adopted to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Wyoming Business Corporations Act, as so amended.
B. Repeal or Modification. Any repeal or modification of the foregoing paragraph by the shareholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.
ARTICLE XIII – ACTIONS OF SHAREHOLDERS
A. Meetings. Meetings of shareholders shall be held at such time and place as provided in the bylaws of the Corporation or by resolution of the board of directors.
B. Quorum. At all meetings of the shareholders, the presence of 50% of all votes entitled to be cast at the beginning of a meeting shall constitute a quorum.
C. Required Approval. Notwithstanding the provisions of these Articles, any action for which the Wyoming Business Corporations Act requires the approval of two-thirds of the shares or any class or series or voting group entitled to vote with respect thereto, unless otherwise provided in the Articles of Incorporation, shall require for approval, the affirmative vote of 50% of the shares or any class or series or voting group outstanding and entitled to vote thereon.
D. Vote Procedure. Any vote of the shareholders of the Corporation may be taken either:
(1) at a meeting called for such purpose or,
(2) by the written consent of the shareholders in lieu of a meeting provided that shareholders holding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted consent to such action in writing.
ARTICLE XIV – DESIGNATION OF SERIES A CONVERTIBLE PREFERRED STOCK
A. Designation. The designation of said series of preferred stock shall be “Series A Convertible Preferred Stock,” $0.0001 par value per share (the “Series A Preferred Stock”).
B. Number of Shares. The number of shares of Series A Preferred Stock authorized shall be one million (1,000,000) shares. Each share of Series A Preferred Stock shall have a stated value equal to $0.05 (as may be adjusted for any stock dividends, combinations or splits with respect to such shares) (the “Series A Stated Value”).
C. Dividends. Initially, there will be no dividends due or payable on the Series A Preferred Stock. Any future terms with respect to dividends shall be determined by the Board consistent with the Corporation’s Certificate of Incorporation. Any and all such future terms concerning dividends shall be reflected in an amendment to this Certificate, which the Board shall promptly file or cause to be filed.
D. Liquidation Preference. If the Corporation shall commence a voluntary case under the U.S. Federal bankruptcy laws or any other applicable bankruptcy, insolvency or similar law, or consent to the entry of an order for relief in an involuntary case under any law or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or make an assignment for the benefit of its creditors, or admit in writing its inability to pay its debts generally as they become due, or if a decree or order for relief in respect of the Corporation shall be entered by a court having jurisdiction in the premises in an involuntary case under the U.S. Federal bankruptcy laws or any other applicable bankruptcy, insolvency or similar law resulting in the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and any such decree or order shall be unstayed and in effect for a period of sixty (60) consecutive days and, on account of any such event, the Corporation shall liquidate, dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve or wind up, including, but not limited to, the sale or transfer of all or substantially all of the Corporation’s assets in one transaction or in a series of related transactions (a “Liquidation Event”), no distribution shall be made to the holders of any shares of capital stock of the Corporation (other than Senior Securities and Pari Passu Securities) upon liquidation, dissolution or winding up unless prior thereto the Holders of shares of Series A Preferred Stock shall have received the Liquidation Preference (as defined below) with respect to each share. If, upon the occurrence of a Liquidation Event, the assets and funds available for distribution among the Holders of the Series A Preferred Stock and Holders of Pari Passu Securities shall be insufficient to permit the payment to such holders of the preferential amounts payable thereon, then the entire assets and funds of the Corporation legally available for distribution to the Series A Preferred Stock and the Pari Passu Securities shall be distributed ratably among such shares in proportion to the ratio that the Liquidation Preference payable on each such share bears to the aggregate Liquidation Preference payable on all such shares. The purchase or redemption by the Corporation of stock of any class, in any manner permitted by law, shall not, for the purposes hereof, be regarded as a liquidation, dissolution or winding up of the Corporation. Neither the consolidation or merger of the Corporation with or into any other entity nor the sale or transfer by the Corporation of substantially all of its assets shall, for the purposes hereof, be deemed to be a liquidation, dissolution or winding up of the Corporation. The “Liquidation Preference” with respect to a share of Series A Preferred Stock means an amount equal to the Stated Value thereof. The Liquidation Preference with respect to any Pari Passu Securities shall be as set forth in the Certificate of Designation filed in respect thereof.
E. Conversion.
(1) Each outstanding share of Series A Preferred Stock shall be convertible into the number of shares of the Corporation’s common stock (“Common Stock”) determined by dividing the Stated Value by the Conversion Price as defined below, at the option of the Holder in whole or in part, at any time commencing no earlier than six (6) months after the Issuance Date; provided that any conversion under this section must be made during the ten (10) day period immediately following the date on which the Corporation files with the Securities and Exchange Commission any periodic report on form 10-Q, 10-K or the equivalent form; provided further that, any conversion under this section shall be for a minimum Stated Value of $500.00 of Series A Preferred Stock. The Holder shall effect conversions by sending a conversion notice (the “Notice of Conversion”) in the manner set forth herein. Each Notice of Conversion shall specify the Stated Value of Series A Preferred Stock to be converted. The date on which such conversion is to be effected (the “Conversion Date”) shall be on the date the Notice of Conversion is delivered pursuant to this section. Except as provided herein, each Notice of Conversion, once given, shall be irrevocable. Upon the entire conversion of the Series A Preferred Stock, the certificates for such Series A Preferred Stock shall be returned to the Corporation for cancellation.
(2) Not later than ten (10) Business Days after the Conversion Date, the Corporation will deliver to the Holder (a) a certificate or certificates representing the number of shares of Common Stock being acquired upon the conversion of the Series A Preferred Stock and (b) once received from the Corporation, the Series A Preferred Stock in principal amount equal to the principal amount of the Series A Preferred Stock not converted; provided, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon conversion of any Series A Preferred Stock until the Series A Preferred Stock are either delivered for conversion to the Corporation or any transfer agent for the Series A Preferred Stock or Common Stock, or the Holder notifies the Corporation that such Series A Preferred Stock certificates have been lost, stolen or destroyed and provides an agreement reasonably acceptable to the Corporation to indemnify the Corporation from any loss incurred by it in connection therewith. In the case of a conversion pursuant to a Notice of Conversion, if such certificate or certificates are not delivered by the date required under this section, the Holder shall be entitled, by providing written notice to the Corporation at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Corporation shall immediately return the Series A Preferred Stock tendered for conversion.
(3) The Conversion Price for each share of Series A Preferred Stock in effect on any Conversion Date shall be (a) eighty five percent (85%) of the average closing bid price of the Common Stock over the twenty (20) trading days immediately preceding the date of conversion, (b) but no less than Par Value of the Common Stock. For purposes of determining the closing bid price on any day, reference shall be to the closing bid price for a share of Common Stock on such date on the NASD OTC Bulletin Board, as reported on Bloomberg, L.P. (or similar organization or agency succeeding to its functions of reporting prices).
(4) (a) If the Corporation, at any time while any Series A Preferred Stock are outstanding, (i) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Junior Securities (as defined below) payable in shares of its capital stock (whether payable in shares of its Common Stock or of capital stock of any class), (ii) subdivide outstanding shares of Common Stock into a larger number of shares, (iii) combine outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of shares of Common Stock any shares of capital stock of the Corporation, the Conversion Price designated herein shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock of the Company outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.
(b) If the Corporation, at any time while Series A Preferred Stock are outstanding, shall distribute to all holders of Common Stock (and not to Holders of Series A Preferred Stock) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security, then in each such case the Conversion Price at which each Series A Preferred Stock shall thereafter be convertible shall be determined by multiplying the Conversion Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the Per Share Market Value of Common Stock determined as of the record date mentioned above, and of which the numerator shall be such Per Share Market Value of the Common Stock on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of Common Stock as determined by the Board of Directors in good faith; provided, however that in the event of a distribution exceeding ten percent (10%) of the net assets of the Corporation, such fair market value shall be determined by a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Corporation) (an “Appraiser”) selected in good faith by the Holders of a majority of the principal amount of the Series A Preferred Stock then outstanding; and provided, further, that the Corporation, after receipt of the determination by such Appraiser shall have the right to select an additional Appraiser, in which case the fair market value shall be equal to the average of the determinations by each such Appraiser. In either case the adjustments shall be described in a statement provided to the Holder and all other Holders of Series A Preferred Stock of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.
(c) All calculations under this Article IV shall be made to the nearest 1/1,000th of a cent or the nearest 1/1,000th of a share, as the case may be. Any calculation resulting in a fraction shall be rounded up to the next cent or share.
(d) Whenever the Conversion Price is adjusted pursuant to this section, the Corporation shall within ten (10) days after the determination of the new Fixed Conversion Price mail and fax to the Holder and to each other Holder of Series A Preferred Stock, a notice setting forth the Fixed Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
(e) In case of any reclassification of the Common Stock, any consolidation or merger of the Corporation with or into another person, the sale or transfer of all or substantially all of the assets of the Corporation or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, then each holder of Series A Preferred Stock then outstanding shall have the right thereafter to convert such Series A Preferred Stock only into the shares of stock and other securities and property receivable upon or deemed to be held by holders of Common Stock following such reclassification, consolidation, merger, sale, transfer or share exchange (except in the event the property is cash, then the Holder shall have the right to convert the Series A Preferred Stock and receive cash in the same manner as other stockholders), and the Holder shall be entitled upon such event to receive such amount of securities or property as the shares of the Common Stock into which such Series A Preferred Stock could have been converted immediately prior to such reclassification, consolidation, merger, sale, transfer or share exchange would have been entitled. The terms of any such consolidation, merger, sale, transfer or share exchange shall include such terms so as to continue to give to the holder the right to receive the securities or property set forth in this section upon any conversion following such consolidation, merger, sale, transfer or share exchange. This provision shall similarly apply to successive reclassifications, consolidations, mergers, sales, transfers or share exchanges.
(f) If:
(i) the Corporation shall declare a dividend (or any other distribution) on its Common Stock; or
(ii) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock; or
(iii) the Corporation shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; or
(iv) the approval of any stockholders of the Corporation shall be required in connection with any reclassification of the Common Stock of the Corporation (other than a subdivision or combination of the outstanding shares of Common Stock), any consolidation or merger to which the Corporation is a party, any sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; or
(v) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation;
then the Corporation shall cause to be filed at each office or agency maintained for the purpose of conversion of Series A Preferred Stock, and shall cause to be mailed and faxed to the Holders of Series A Preferred Stock at their last addresses as it shall appear upon the Series A Preferred stock register, at least thirty (30) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding-up; provided, however, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.
(5) Intentionally omitted.
(6) The Corporation covenants that all shares of Common Stock that shall be issuable hereunder shall, upon issue, be duly and validly authorized, issued and fully paid and nonassessable.
(7) No fractional shares of Common Stock shall be issuable upon a conversion hereunder and the number of shares to be issued shall be rounded up to the nearest whole share. If a fractional share interest arises upon any conversion hereunder, the Corporation shall eliminate such fractional share interest by issuing the Holder an additional full share of Common Stock.
(8) The issuance of certificates for shares of Common Stock on conversion of Series A Preferred Stock shall be made without charge to the Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder and the Corporation shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.
(9) Series A Preferred Stock converted into Common Stock shall be canceled upon conversion.
(10) Each Notice of Conversion shall be given by facsimile to the Corporation no later than 4:00 pm EST. Any such notice shall be deemed given and effective upon the transmission of such facsimile at the current facsimile telephone number of the Company. In the event that the Corporation receives the Notice of Conversion after 4:00 p.m. EST, the Conversion Date shall be deemed to be the next Business Day. In the event that the Corporation receives the Notice of Conversion after the end of the Business Day, notice will be deemed to have been given the next Business Day.
F. Rank. The Series A Preferred Stock shall, as to distribution of assets upon liquidation, dissolution or winding up of the Corporation, rank (i) prior to the Corporation’s Common Stock (ii) prior to any class or series of capital stock of the Corporation hereafter created that, by its terms, ranks junior to the Series A Preferred Stock (“Junior Securities”); (iii) junior to the Series B Preferred Stock and any class or series of capital stock of the Corporation hereafter created which by its terms ranks senior to the Series A Preferred Stock (“Senior Securities”); (iv) pari passu with any other series of preferred stock of the Corporation hereafter created which by its terms ranks on a parity (“Pari Passu Securities”) with the Series A Preferred Stock.
G. Voting Rights. Each one share of the Series A Preferred Stock shall have voting rights equal to five million (5,000,000) votes of Common Stock. With respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series A Preferred Stock shall vote together with the holders of Common Stock without regard to class, except as to those matters on which separate class voting is required by applicable law or the Corporation’s Certificate of Incorporation or by-laws.
H. Protection Provisions. So long as any shares of Series A Preferred Stock are outstanding, the Corporation shall not, without first obtaining the unanimous written consent of the holders of Series A Preferred Stock, alter or change the rights, preferences or privileges of the Series A Preferred so as to affect adversely the holders of Series A Preferred Stock.
I. Miscellaneous.
(1) Status of Converted or Redeemed Stock. In case any shares of Series A Preferred Stock shall be redeemed or otherwise repurchased or reacquired, the shares so redeemed, repurchased, or reacquired shall resume the status of authorized but unissued shares of preferred stock, and shall no longer be designated as Series A Preferred Stock.
(2) Lost or Stolen Certificates. Upon receipt by the Corporation of (a) evidence of the loss, theft, destruction or mutilation of any Preferred Stock Certificate(s) and (b) in the case of loss, theft or destruction, indemnity (with a bond or other security) reasonably satisfactory to the Corporation, or in the case of mutilation, the Preferred Stock Certificate(s) (surrendered for cancellation), the Corporation shall execute and deliver new Preferred Stock Certificates. However, the Corporation shall not be obligated to reissue such lost, stolen, destroyed or mutilated Preferred Stock Certificates if the holder of Series A Preferred Stock contemporaneously requests the Corporation to convert such holder’s Series A Preferred.
(3) Waiver. Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the holders of Series A Preferred granted hereunder may be waived as to all shares of Series A Preferred Stock (and the holders thereof) upon the unanimous written consent of the holders of the Series A Preferred Stock.
(4) Notices. Any notices required or permitted to be given under the terms hereof shall be sent by certified or registered mail (return receipt requested) or delivered personally, by nationally recognized overnight carrier or by confirmed facsimile transmission, and shall be effective five (5) days after being placed in the mail, if mailed, or upon receipt or refusal of receipt, if delivered personally or by nationally recognized overnight carrier or confirmed facsimile transmission, in each case addressed to a party as set forth below, or such other address and telephone and fax number as may be designated in writing hereafter in the same manner as set forth in this section.
ARTICLE XV – DESIGNATION OF SERIES B CONVERTIBLE PREFERRED STOCK
A. Designation. The designation of said series of preferred stock shall be “Series B Convertible Preferred Stock,” $0.0001 par value per share (the “Series B Preferred Stock”).
B. Number of Shares. The number of shares of Series B Preferred Stock authorized shall be one million (1,000,000) shares. Each share of Series B Preferred Stock shall have a stated value equal to $100.00 (as may be adjusted for any stock dividends, combinations or splits with respect to such shares) (the “Series B Stated Value”).
C. Dividends. Initially, there will be no dividends due or payable on the Series B Preferred Stock. Any future terms with respect to dividends shall be determined by the Board consistent with the Corporation’s Certificate of Incorporation. Any and all such future terms concerning dividends shall be reflected in an amendment to this Certificate, which the Board shall promptly file or cause to be filed.
D. Liquidation Preference. If the Corporation shall commence a voluntary case under the U.S. Federal bankruptcy laws or any other applicable bankruptcy, insolvency or similar law, or consent to the entry of an order for relief in an involuntary case under any law or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or make an assignment for the benefit of its creditors, or admit in writing its inability to pay its debts generally as they become due, or if a decree or order for relief in respect of the Corporation shall be entered by a court having jurisdiction in the premises in an involuntary case under the U.S. Federal bankruptcy laws or any other applicable bankruptcy, insolvency or similar law resulting in the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and any such decree or order shall be unstayed and in effect for a period of sixty (60) consecutive days and, on account of any such event, the Corporation shall liquidate, dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve or wind up, including, but not limited to, the sale or transfer of all or substantially all of the Corporation’s assets in one transaction or in a series of related transactions (a “Liquidation Event”), no distribution shall be made to the holders of any shares of capital stock of the Corporation (other than Senior Securities and Pari Passu Securities) upon liquidation, dissolution or winding up unless prior thereto the Holders of shares of Series B Preferred Stock shall have received the Liquidation Preference (as defined below) with respect to each share. If, upon the occurrence of a Liquidation Event, the assets and funds available for distribution among the Holders of the Series B Preferred Stock and Holders of Pari Passu Securities shall be insufficient to permit the payment to such holders of the preferential amounts payable thereon, then the entire assets and funds of the Corporation legally available for distribution to the Series B Preferred Stock and the Pari Passu Securities shall be distributed ratably among such shares in proportion to the ratio that the Liquidation Preference payable on each such share bears to the aggregate Liquidation Preference payable on all such shares. The purchase or redemption by the Corporation of stock of any class, in any manner permitted by law, shall not, for the purposes hereof, be regarded as a liquidation, dissolution or winding up of the Corporation. Neither the consolidation or merger of the Corporation with or into any other entity nor the sale or transfer by the Corporation of substantially all of its assets shall, for the purposes hereof, be deemed to be a liquidation, dissolution or winding up of the Corporation. The “Liquidation Preference” with respect to a share of Series B Preferred Stock means an amount equal to the Stated Value thereof. The Liquidation Preference with respect to any Pari Passu Securities shall be as set forth in the Certificate of Designation filed in respect thereof.
E. Conversion.
(1) Each outstanding share of Series B Preferred Stock shall be convertible into the number of shares of the Corporation’s common stock (“Common Stock”) determined by dividing the Stated Value by the Conversion Price as defined below, at the option of the Holder in whole or in part, at any time commencing no earlier than six (6) months after the Issuance Date; provided that any conversion under this section must be made during the ten (10) day period immediately following the date on which the Corporation files with the Securities and Exchange Commission any periodic report on form 10-Q, 10-K or the equivalent form; provided further that, any conversion under this section shall be for a minimum Stated Value of $500.00 of Series B Preferred Stock. The Holder shall effect conversions by sending a conversion notice (the “Notice of Conversion”) in the manner set forth herein. Each Notice of Conversion shall specify the Stated Value of Series B Preferred Stock to be converted. The date on which such conversion is to be effected (the “Conversion Date”) shall be on the date the Notice of Conversion is delivered pursuant to this section. Except as provided herein, each Notice of Conversion, once given, shall be irrevocable. Upon the entire conversion of the Series B Preferred Stock, the certificates for such Series B Preferred Stock shall be returned to the Corporation for cancellation.
(2) Not later than ten (10) Business Days after the Conversion Date, the Corporation will deliver to the Holder (i) a certificate or certificates representing the number of shares of Common Stock being acquired upon the conversion of the Series B Preferred Stock and (ii) once received from the Corporation, the Series B Preferred Stock in principal amount equal to the principal amount of the Series B Preferred Stock not converted; provided, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon conversion of any Series B Preferred Stock until the Series B Preferred Stock are either delivered for conversion to the Corporation or any transfer agent for the Series B Preferred Stock or Common Stock, or the Holder notifies the Corporation that such Series B Preferred Stock certificates have been lost, stolen or destroyed and provides an agreement reasonably acceptable to the Corporation to indemnify the Corporation from any loss incurred by it in connection therewith. In the case of a conversion pursuant to a Notice of Conversion, if such certificate or certificates are not delivered by the date required under this section, the Holder shall be entitled, by providing written notice to the Corporation at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Corporation shall immediately return the Series B Preferred Stock tendered for conversion.
(3) The Conversion Price for each share of Series B Preferred Stock in effect on any Conversion Date shall be (a) eighty five percent (85%) of the average closing bid price of the Common Stock over the twenty (20) trading days immediately preceding the date of conversion, (b) but no less than Par Value of the Common Stock. For purposes of determining the closing bid price on any day, reference shall be to the closing bid price for a share of Common Stock on such date on the NASD OTC Bulletin Board, as reported on Bloomberg, L.P. (or similar organization or agency succeeding to its functions of reporting prices).
(4) (a) If the Corporation, at any time while any Series B Preferred Stock are outstanding, (i) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Junior Securities (as defined below) payable in shares of its capital stock (whether payable in shares of its Common Stock or of capital stock of any class), (ii) subdivide outstanding shares of Common Stock into a larger number of shares, (iii) combine outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of shares of Common Stock any shares of capital stock of the Corporation, the Conversion Price designated in this section shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock of the Company outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.
(b) If the Corporation, at any time while Series B Preferred Stock are outstanding, shall distribute to all holders of Common Stock (and not to Holders of Series B Preferred Stock) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security, then in each such case the Conversion Price at which each Series B Preferred Stock shall thereafter be convertible shall be determined by multiplying the Conversion Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the Per Share Market Value of Common Stock determined as of the record date mentioned above, and of which the numerator shall be such Per Share Market Value of the Common Stock on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of Common Stock as determined by the Board of Directors in good faith; provided, however that in the event of a distribution exceeding ten percent (10%) of the net assets of the Corporation, such fair market value shall be determined by a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Corporation) (an “Appraiser”) selected in good faith by the Holders of a majority of the principal amount of the Series B Preferred Stock then outstanding; and provided, further, that the Corporation, after receipt of the determination by such Appraiser shall have the right to select an additional Appraiser, in which case the fair market value shall be equal to the average of the determinations by each such Appraiser. In either case the adjustments shall be described in a statement provided to the Holder and all other Holders of Series B Preferred Stock of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.
(c) All calculations under this Article IV shall be made to the nearest 1/1,000th of a cent or the nearest 1/1,000th of a share, as the case may be. Any calculation resulting in a fraction shall be rounded up to the next cent or share.
(d) Whenever the Conversion Price is adjusted pursuant to this section, the Corporation shall within ten (10) days after the determination of the new Fixed Conversion Price mail and fax to the Holder and to each other Holder of Series B Preferred Stock, a notice setting forth the Fixed Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
(e) In case of any reclassification of the Common Stock, any consolidation or merger of the Corporation with or into another person, the sale or transfer of all or substantially all of the assets of the Corporation or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, then each holder of Series B Preferred Stock then outstanding shall have the right thereafter to convert such Series B Preferred Stock only into the shares of stock and other securities and property receivable upon or deemed to be held by holders of Common Stock following such reclassification, consolidation, merger, sale, transfer or share exchange (except in the event the property is cash, then the Holder shall have the right to convert the Series B Preferred Stock and receive cash in the same manner as other stockholders), and the Holder shall be entitled upon such event to receive such amount of securities or property as the shares of the Common Stock into which such Series B Preferred Stock could have been converted immediately prior to such reclassification, consolidation, merger, sale, transfer or share exchange would have been entitled. The terms of any such consolidation, merger, sale, transfer or share exchange shall include such terms so as to continue to give to the holder the right to receive the securities or property set forth in this Section IV(d)(v) upon any conversion following such consolidation, merger, sale, transfer or share exchange. This provision shall similarly apply to successive reclassifications, consolidations, mergers, sales, transfers or share exchanges.
(f) If:
(i) the Corporation shall declare a dividend (or any other distribution) on its Common Stock; or
(ii) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock; or
(iii) the Corporation shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; or
(iv) the approval of any stockholders of the Corporation shall be required in connection with any reclassification of the Common Stock of the Corporation (other than a subdivision or combination of the outstanding shares of Common Stock), any consolidation or merger to which the Corporation is a party, any sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; or
(v) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation;
then the Corporation shall cause to be filed at each office or agency maintained for the purpose of conversion of Series B Preferred Stock, and shall cause to be mailed and faxed to the Holders of Series B Preferred Stock at their last addresses as it shall appear upon the Series B Preferred stock register, at least thirty (30) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding-up; provided, however, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.
(5) Intentionally omitted.
(6) The Corporation covenants that all shares of Common Stock that shall be issuable hereunder shall, upon issue, be duly and validly authorized, issued and fully paid and nonassessable.
(7) No fractional shares of Common Stock shall be issuable upon a conversion hereunder and the number of shares to be issued shall be rounded up to the nearest whole share. If a fractional share interest arises upon any conversion hereunder, the Corporation shall eliminate such fractional share interest by issuing the Holder an additional full share of Common Stock.
(8) The issuance of certificates for shares of Common Stock on conversion of Series B Preferred Stock shall be made without charge to the Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder and the Corporation shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.
(9) Series B Preferred Stock converted into Common Stock shall be canceled upon conversion.
(10) Each Notice of Conversion shall be given by facsimile to the Corporation no later than 4:00 pm EST. Any such notice shall be deemed given and effective upon the transmission of such facsimile at the current facsimile telephone number of the Company. In the event that the Corporation receives the Notice of Conversion after 4:00 p.m. EST, the Conversion Date shall be deemed to be the next Business Day. In the event that the Corporation receives the Notice of Conversion after the end of the Business Day, notice will be deemed to have been given the next Business Day.
F. Rank. The Series B Preferred Stock shall, as to distribution of assets upon liquidation, dissolution or winding up of the Corporation, rank (i) prior to the Corporation’s Common Stock (ii) prior to any class or series of capital stock of the Corporation hereafter created that, by its terms, ranks junior to the Series B Preferred Stock (“Junior Securities”); (iii) junior to the Series B Preferred Stock and any class or series of capital stock of the Corporation hereafter created which by its terms ranks senior to the Series B Preferred Stock (“Senior Securities”); (iv) pari passu with any other series of preferred stock of the Corporation hereafter created which by its terms ranks on a parity (“Pari Passu Securities”) with the Series B Preferred Stock.
G. Voting Rights. The Holders of the Series B Preferred Stock have no voting power whatsoever, except as provided by the Wyoming Business Corporation Act. To the extent that under the Wyoming Business Corporation Act the vote of the Holders of the Series B Preferred Stock, voting separately as a class or series, as applicable, is required to authorize a given action of the Company, the affirmative vote or consent of the Holders of at least a majority of the then outstanding shares of the Series B Preferred Stock represented at a duly held meeting at which a quorum is present or by written consent of the Holders of at least a majority of the then outstanding shares of Series B Preferred Stock (except as otherwise may be required under the Wyoming Business Corporation Act) shall constitute the approval of such action by the class. To the extent that under the Wyoming Business Corporation Act Holders of the Series B Preferred Stock are entitled to vote on a matter with holders of Common Stock, voting together as one class, each share of Series B Preferred Stock shall be entitled to a number of votes equal to the number of shares of Common Stock into which it is then convertible (subject to the limitations contained elsewhere herein) using the record date for the taking of such vote of shareholders as the date as of which the Conversion Price is calculated.
H. Protection Provisions. So long as any shares of Series B Preferred Stock are outstanding, the Corporation shall not, without first obtaining the unanimous written consent of the holders of Series B Preferred Stock, alter or change the rights, preferences or privileges of the Series B Preferred so as to affect adversely the holders of Series B Preferred Stock.
I. Miscellaneous.
(1) Status of Converted or Redeemed Stock. In case any shares of Series B Preferred Stock shall be redeemed or otherwise repurchased or reacquired, the shares so redeemed, repurchased, or reacquired shall resume the status of authorized but unissued shares of preferred stock, and shall no longer be designated as Series B Preferred Stock.
(2) Lost or Stolen Certificates. Upon receipt by the Corporation of (a) evidence of the loss, theft, destruction or mutilation of any Preferred Stock Certificate(s) and (b) in the case of loss, theft or destruction, indemnity (with a bond or other security) reasonably satisfactory to the Corporation, or in the case of mutilation, the Preferred Stock Certificate(s) (surrendered for cancellation), the Corporation shall execute and deliver new Preferred Stock Certificates. However, the Corporation shall not be obligated to reissue such lost, stolen, destroyed or mutilated Preferred Stock Certificates if the holder of Series B Preferred Stock contemporaneously requests the Corporation to convert such holder’s Series B Preferred.
(3) Waiver. Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the holders of Series B Preferred granted hereunder may be waived as to all shares of Series B Preferred Stock (and the holders thereof) upon the unanimous written consent of the holders of the Series B Preferred Stock.
(4) Notices. Any notices required or permitted to be given under the terms hereof shall be sent by certified or registered mail (return receipt requested) or delivered personally, by nationally recognized overnight carrier or by confirmed facsimile transmission, and shall be effective five (5) days after being placed in the mail, if mailed, or upon receipt or refusal of receipt, if delivered personally or by nationally recognized overnight carrier or confirmed facsimile transmission, in each case addressed to a party as set forth below, or such other address and telephone and fax number as may be designated in writing hereafter in the same manner as set forth in this section.
ARTICLE XVI – CONFLICTING INTEREST TRANSACTIONS
No contract or other transaction between the Corporation and one (1) or more of its directors or any other Corporation, firm, association, or entity in which one (1) or more of its directors are directors or officers or are financially interested shall be either void or voided solely because of such relationship or interest, or solely because such directors are present at the meeting of the board of directors or a committee thereof which authorizes, approves, or ratifies such contract or transaction, or solely because their votes are counted for such purpose if:
A. The fact of such a relationship or interest is disclosed or known to the Board of Directors or committee that authorizes, approves. or ratifies the contract or transaction by 8 vote or consent sufficient for the purpose without counting the votes or consents of such interested directors;
B. The fact of such relationship or interest is disclosed or known to the shareholders entitled to vote and they authorize, approve, or ratify such contract or transaction by vote or written consent; or
C. The contract or transaction is fair and reasonable to the Corporation. Common or interested directors may be counted in determining the presence of a quorum, as herein previously defined, at a meeting of the Board of Directors or a committee thereof that authorizes, approves, or ratifies such contract or transaction.
ARTICLE XVII – INCORPORATOR
The name and address of the incorporator is as follows:
Registered Agents Inc.
30 N Gould Street
STE 100
Sheridan, Wyoming 82801
support@registeredagentsinc.com
http://www.registeredagentsinc.com
| Signature: | Date: June 15, 2023 | ||
| Print Name: | |||
| Title: | |||
| Email: | reports@registeredagentsinc.com | ||
| Daytime Phone #: | (307) 200-2803 |
Exhibit 10.101
WAIVER AND AMENDMENT AGREEMENT #2
This AMENDMENT AGREEMENT (this “Agreement”) is entered into as of June 16, 2023 (the “Effective Date”) by and between Tangiers Investment Group, LLC (“Holder”), and CarbonMeta Technologies, Inc., a Delaware corporation (“Company”). The Company and the Holder are each a “Party” to this Agreement and are sometimes collectively referred to as the “Parties”. Capitalized terms used in this Agreement without definition shall have the meanings given to them in the Note (defined below).
WHEREAS, Company previously sold and issued to Holder that certain 0% Convertible Promissory Note dated March 27, 2014 in the original principal amount of $600,000 (“Note 1”);
WHEREAS, Company previously sold and issued to Holder that certain 10% Convertible Promissory Note dated March 27, 2014 in the original principal amount of $75,000 (“Note 2”);
WHEREAS, Company previously sold and issued to Holder that certain 0% Convertible Promissory Note dated October 11, 2016 in the original principal amount of $85,000 (“Note 3”)
WHEREAS, Company previously sold and issued to Holder that certain 10% Convertible Promissory Note dated January 30, 2017 in the original principal amount of $55,000 (“Note 4”)
WHEREAS, Company previously sold and issued to Holder that certain 10% Convertible Promissory Note dated July 19, 2021 in the original principal amount of $105,000 (“Note 5”)
WHEREAS, Company previously sold and issued to Holder that certain 10% Convertible Promissory Note dated September 8, 2021 in the original principal amount of $105,000 (“Note 6”); and, together with Note 1, Note 2, Note 3, Note 4, and Note 5, the “Notes”);
WHEREAS, No new or additional cash or property consideration of any kind is being provided in connection with this Agreement; and
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Recitals and Definitions. Each of the Parties hereto acknowledges and agrees that the recitals set forth above in this Agreement are true and accurate, are contractual in nature, and are hereby incorporated into and made a part of this Agreement.
2. Acknowledgement of Default.
| (a) | Company acknowledges that Company is currently in default under Note 2 due to Company’s failure to repay the Note, in accordance with the provisions set forth therein. |
| (b) | Company further acknowledges and confirms that as of the Effective Date, and immediately prior to any of the payments specified in Note 2, the Company is indebted to Holder, without any deduction, defense, setoff, claim or counterclaim, of any nature, in the aggregate principal amount of $205,253.42, comprised of principal of $75,000 due on account of Note 2, together with $130,253.42 accrued but unpaid interest thereon (Note 2 Obligation). The Company and Holder understand, acknowledge, and agree, Note 2 shall no longer accrue interest as of the date of this Agreement. |
3. Waiver of Events of Default Under Note 2. The Holder agrees that any and all Events of Default under Note 2 occurring prior to the Effective Date or continuing after the Effective Date shall be deemed waived, without any recourse or remedy, by Holder or any successor or assign.
4. Amendment of Conversion Price. To induce the Holder to enter into this Agreement, and as consideration contained herein, the Parties agree the provisions pertaining to “Conversion Price” in the Notes are hereby amended and restated in their entirety as follows:
“Conversion Price” shall be equal to $0.0002.
5. Ratification of the Notes. The Notes shall be and remain in full force and effect in accordance with its terms, and are hereby ratified and confirmed in all respects. Company acknowledges that it is unconditionally obligated to pay the remaining balance of each Note and represents that such obligation is not subject to any defenses, rights of offset or counterclaims. No forbearance or waiver other than as expressly set forth herein may be implied by this Agreement. Except as expressly set forth herein, the execution, delivery, and performance of this Agreement shall not operate as a waiver of, or as an amendment to, any right, power or remedy of Holder under any Note, as in effect prior to the date hereof.
6. Repayment. The Company shall have the right to repay the outstanding Principal Amounts and Interest that are due on the Notes in cash without penalty.
7. Representations, Warranties and Agreements. In order to induce Holder to enter into this Agreement, Company, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows:
(a) Company has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action. No consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Company hereunder.
(b) All understandings, representations, warranties and recitals contained or expressed in this Agreement are true, accurate, complete, and correct in all respects. Company acknowledges and agrees that Holder has been induced in part to enter into this Agreement based upon Holder’s justifiable reliance on the truth, accuracy, and completeness of all understandings, representations, warranties, and recitals contained in this Agreement.
(c) Except as expressly set forth in this Agreement, Company acknowledges and agrees that neither the execution and delivery of this Agreement nor any of the terms, provisions, covenants, or agreements contained in this Agreement shall in any manner release, impair, lessen, modify, waive, or otherwise affect the liability and obligations of Company under the terms of the Notes.
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(d) Company hereby acknowledges that it has freely and voluntarily entered into this Agreement after an adequate opportunity and sufficient period of time to review, analyze, and discuss (i) all terms and conditions of this Agreement, (ii) any and all other documents executed and delivered in connection with the transactions contemplated by this Agreement, and (iii) all factual and legal matters relevant to this Agreement and/or any and all such other documents, with counsel freely and independently selected by Company (or had the opportunity to be represented by counsel). Company further acknowledges and agrees that it has actively and with full understanding participated in the negotiation of this Agreement and all other documents executed and delivered in connection with this Agreement after consultation and review with its counsel (or had the opportunity to be represented by counsel), that all of the terms and conditions of this Agreement and the other documents executed and delivered in connection with this Agreement have been negotiated at arm’s-length, and that this Agreement and all such other documents have been negotiated, prepared, and executed without fraud, duress, undue influence, or coercion of any kind or nature whatsoever having been exerted by or imposed upon any party by any other party. No provision of this Agreement or such other documents shall be construed against or interpreted to the disadvantage of any party by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured, dictated, or drafted such provision.
8. Headings. The headings contained in this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement.
9. Governing Law; Venue. This Agreement shall be governed by and interpreted in accordance with the laws of the State of California without regard to the principles of conflict of laws. Each party agrees that the proper venue for any dispute arising out of or relating to this Agreement shall be the courts of the State of California. COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
10. Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or other electronic transmission (including email) shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile transmission or other electronic transmission (including email) shall be deemed to be their original signatures for all purposes.
11. Severability. If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.
12. Entire Agreement. This Agreement, and all other documents referred to herein, supersedes all other prior oral or written agreements between Company, Holder, its affiliates and persons acting on its behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Holder nor Company makes any representation, warranty, covenant or undertaking with respect to such matters.
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13. No Reliance. Company acknowledges and agrees that neither Holder nor any of its officers, directors, shareholders, managers, representatives or agents has made any representations or warranties to Company or any of its agents, representatives, officers, directors, or employees except as expressly set forth in this Agreement and, in making its decision to enter into the transactions contemplated by this Agreement, Company is not relying on any representation, warranty, covenant or promise of Holder or its officers, directors, members, managers, agents or representatives other than as set forth in this Agreement.
14. Amendments. This Agreement may be amended, modified, or supplemented only by written agreement of the parties. No provision of this Agreement may be waived except in writing signed by the party against whom such waiver is sought to be enforced.
15. Continuing Enforceability; Conflict Between Documents. Except as otherwise modified by this Agreement, the Notes shall remain in full force and effect, enforceable in accordance with all of their original terms and provisions. This Agreement shall not be effective or binding unless and until it is fully executed and delivered by Holder and Company. If there is any conflict between the terms of this Agreement, on the one hand, and the Notes or any other transaction document, on the other hand, the terms of this Agreement shall prevail.
16. Time of Essence. Time is of the essence with respect to each and every provision of this Agreement.
17. Notices. Unless otherwise specifically provided for herein, all notices, demands or requests required or permitted under this Agreement to be given to Company or Holder shall be given as set forth in the “Notices” section of the Notes.
18. Further Assurances. Each party shall do and perform or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
[Signature Page to Follow.]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.
| COMPANY: | ||
| CARBONMETA TECHNOLOGIES, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
| HOLDER: | ||
| TANGIERS INVESTMENT GROUP, LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Waiver and Amendment Agreement #2]
EXHIBIT 31.1
CARBONMETA TECHNOLOGIES, INC. CERTIFICATION PURSUANT TO RULE 13a-14 OR 15d-14 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Lloyd Spencer, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of CarbonMeta Technologies, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: August 22, 2023 | /s/ Lloyd Spencer |
| Lloyd Spencer | |
| Chief Executive Officer | |
| (Principal Executive Officer) |
EXHIBIT 31.2
CARBONMETA TECHNOLOGIES, INC. CERTIFICATION PURSUANT TO RULE 13a-14 OR 15d-14 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Lloyd Spencer, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of CarbonMeta Technologies, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: August 22, 2023 | /s/ Lloyd Spencer |
| Lloyd Spencer | |
| Chief Financial Officer | |
| (Principal Financial Officer) |
EXHIBIT 32.1
CARBONMETA TECHNOLOGIES, INC. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report on Form 10-Q for the quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), of CarbonMeta Technologies, Inc. (the “Company”), each of the undersigned officers of the Company hereby certify, in their capacity as an executive officer of the Company, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: August 22, 2023 | /s/ Lloyd Spencer |
| Lloyd Spencer | |
| Chief Executive Officer | |
| (Principal Executive Officer) |