DATA CALL TECHNOLOGIES, INC. Results of Operations during the year ended
We had$553,846 of sales revenue for the year endedDecember 31, 2022 , compared to sales revenue of$580,226 for the year endedDecember 31, 2021 , a decrease in sales revenue of$26,380 or approximately a 4.55% decrease from the prior year. We generate revenues through subscription fees received in connection with our DL Manager and Info Services. Many of our customers discontinued our service because of the pandemic. Many of our customers provide services to the public. We had total costs of sales for the year endedDecember 31, 2022 of$188,651 compared to total costs of sales of$216,279 for the year endedDecember 31, 2021 , or a decrease of$27,628 or about 12.8% of which resulted in a gross margin of$365,195 for the year endedDecember 31, 2022 or 65.9%, compared to a gross margin of$363,947 or 62.7% for the year endedDecember 31, 2021 , an increase in gross margin of$1,248 from the prior year. Our decrease in gross margin was due a combination of our efforts to decreased costs. 14 Cost of sales as a percentage of sales was 34.1 % for the year endedDecember 31, 2022 , compared to 37.3 % for the year endedDecember 31, 2021 . As we gain more customers and enter into more service agreements, we anticipate our cost of sales will decrease as we expect to take advantage of applicable economies of scale. Our operating expenses decreased to$360,416 for the year endedDecember 31, 2022 , compared to operating expenses of$367,166 for the year endedDecember 31, 2021 , a decrease in expenses of$6,750 from the prior period. The decrease in expenses for the year of 2022 was due to the Company's ongoing efforts to expand its operations in the most cost effective and efficient means while reducing costs and the cost of stock issued. We had net income of$4,782 . The net income was the due to the Company's efforts to reduce its long-term debt which was accomplished in 2022. The effect of this effort allowed the Company to reclassify its accrued interest to the net income statement.
Liquidity and Capital Resources
We had current assets of$87,330 as ofDecember 31, 2022 , which consisted of$20,727 in cash, accounts receivable of$65,203 and prepaid expenses of$1,400 . In comparison toDecember 31, 2021 we had current assets of$81,093 which consisted of$13,817 in cash and$67 , 276 in accounts receivables. We had total assets of$92,120 as ofDecember 31, 2022 , compared to$86,864 as ofDecember 31, 2021 or an increase of$3,856 , which consisted of current assets of$87,330 , total property and equipment (net of accumulated depreciation) of$3,990 , which included high end flat screen televisions, computers and software equipment responsible for running our DL Manager Info Call Services and ourImage Library which are stored in ourFriendswood office and other off site locations; and other assets of$800 , which included our deposit on ourFriendswood office space. We had total liabilities of$18,845 as ofDecember 31, 2022 , compared to$26,367 as ofDecember 31, 2021 , a decrease of$7,522 primarily consisting of accounts payable of$16,710 , accounts payable related party of$1,774 , and accrued salaries of$361 . We had positive working capital of$68,485 and an accumulated deficit of$9,966,935 as ofDecember 31, 2022 . Operating activities provided$7,041 of cash for the year endedDecember 31, 2022 , which was mainly due to net income of$4,782 , common stock and options expense of$7,996 , decrease in depreciation expense of$981 , an increase in accounts receivables of$2,073 , a decrease in accounts payable of$7,403 and a decrease in prepaid expenses of$1,400 . We had investing activities for the year endedDecember 31, 2022 , of$0 .
We had financing activities of
Off-Balance Sheet Arrangements
As of
Contractual Obligations and Commitments
As of
Critical Accounting Policies
Our significant accounting policies are described in the notes to our financial
statements for the years ended
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK. Table of Contents
We have not entered, and do not expect to enter, financial instruments for trading or hedging purposes.
15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Table of Contents
Report of Independent Registered Public Accounting Firm PCAOB ID No.: 2738 17
Balance Sheets -December 31, 2022 and 2021 18 Statements of Operations -Years endedDecember 31, 2022 and 2021 19
Statement of Stockholders' Equity - Years ended
Statements of Cash Flows - Years endedDecember 31, 2022 and 2021 21 Notes to Financial Statements 22 16 [[Image Removed]] Report of Independent Registered Public Accounting Firm Table of Contents To the Board of Directors and
Shareholders of
Opinion on the Financial Statements
We have audited the accompanying balance sheets ofData Call Technologies, Inc. (the Company) as ofDecember 31, 2022 and 2021, and the related statements of operations, stockholders' equity, and cash flows for each of the years in the two-year period endedDecember 31, 2022 , and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2022 and 2021 and the results of its operations and its cash flows for each of the years in the two-year period endedDecember 31, 2022 , in conformity with accounting principles generally accepted inthe United States of America . Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with thePublic Company Accounting Oversight Board (United States ) (PCAOB) and are required to be independent with respect to the Company in accordance with theU.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. The risk of Going Concern was determined to be a critical audit matter due to the Company's past negative cash flows from operations. As such, the Company evaluated the need for a going concern.
To evaluate the appropriateness of the lack of going concern, we examined and evaluated the financial information that was the initial cause along with management's plans to mitigate the going concern and managements lack of disclosure on going concern.
/s/M&K CPAS, PLLC
We have served as the Company's auditor since 2013.
Houston, TX March 28, 2023 17 Data Call Technologies, Inc. Balance Sheets December 31, 2022 and 2021 Table of Contents 2022 2021 Assets Current assets: Cash$ 20,727 $ 13,817
Accounts receivable 65,203 67,276 Prepaid Rent 1,400 - Total current assets 87,330 81,093 Property and equipment 151,723
151,723
Less accumulated depreciation and amortization 147,733
146,752 Net property and equipment 3,990 4,971 Other assets 800 800 Total assets$ 92,120 $ 86,864
Liabilities and Stockholders' Equity
Current liabilities: Accounts payable$ 16,710 $
24,113
Accounts payable - related party 1,774
1,905
Accrued salaries - related party 361
349
Total current liabilities 18,845 26,367
Total liabilities 18,845 26,367
Stockholders' equity:
Preferred stock, $0.001 par value. Authorized
10,000,000 shares: Series A 12% Convertible -
800,000 shares issued and outstanding at December
31, 2022 and 2021 800 800
Preferred stock,$0.001 par value. Authorized 1,000,000 shares: Series B - 10,000 shares issued and outstanding atDecember 31, 2022 and 2021 10
10
Preferred stock value Common stock,$0.001 par value. Authorized 490,000,000 shares: 157,498,515 and 157,498,515 shares issued and outstanding atDecember 31, 2022 and 2021, respectively. 157,498 157,498 Additional paid-in capital 9,881,902 9,873,906 Accumulated deficit (9,966,935 ) (9,971,717 ) Total stockholders' equity 73,275 60,497
Total liabilities and stockholders' equity$ 92,120 $
86,864
The accompanying notes are an integral part of these financial statements.
18
Data Call Technologies, Inc.
Statements of Operations
Years ended December 31, 2022 and 2021
Table of Contents
2022 2021
Revenues:
Sales $ 553,846 $ 580,226
Cost of sales 188,651 216,279
Gross margin 365,195 363,947
Selling, general and administrative expenses 359,435
366,101
Depreciation and amortization expense 981
1,065
Total operating expenses 360,416 367,166
Other (income) expenses:
Interest income (3 ) (2 )Gain from the settlement of accrued interest - (19,003 ) Total expenses 360,413
348,161
Net Income (loss) before income taxes 4,782
15,786
Provision for income taxes - -
Net Income (loss) $ 4,782 $ 15,786 Net Income(loss) per common share - basic and diluted:
Net Income(loss) applicable to common shareholders
Weighted average common shares: Basic 157,498,515 157,164,268 Diluted 453,247,129 398,856,111
The accompanying notes are an integral part of these financial statements.
19
Data Call Technologies, Inc.
Statement of Stockholders' Equity
Years ended December 31, 2022 and 2021
Table of Contents
Shares amount shares amount shares amount capital
deficit (deficit)
Additional Stockholders'
Preferred Stock A Preferred Stock B Common Stock paid-in Accumulated equity
Shares amount shares amount shares amount capital deficit (deficit)
Balance year ended
$ (9,987,503 ) $ 39,353 Shares issued for services - -
- - 500,000 500 4,858 - 5,358 Net Income - - - - - - - 15,786 15,786 Balance year ended December 31, 2021 800,000$ 800 10,000$ 10 $ 157,498,515 $ 157,498 $ 9,873,906 $ (9,971,717 ) $ 60,497 Balance 800,000$ 800 10,000$ 10 $ 157,498,515 $ 157,498 $ 9,873,906 $ (9,971,717 ) $ 60,497
Shares issued for services - -
- - - 7,996 - 7,996 Net Income - - - - - - - 4,782 4,782 Balance year ended December 31, 2022 800,000$ 800 10,000$ 10 $ 157,458,515 $ 157,498 $ 9,881,902 $ (9,966,935 ) $ 73,275 Balance 800,000$ 800 10,000$ 10 $ 157,458,515 $ 157,498 $ 9,881,902 $ (9,966,935 ) $ 73,275
The accompanying notes are an integral part of these financial statements.
20
Data Call Technologies, Inc.
Statements of Cash Flows
Years ended December 31, 2022 and 2021
Table of Contents
2022 2021
Cash flows from operating activities:
Net income (loss) $ 4,782 $ 15,786
Adjustments to reconcile net income(loss) to net cash provided by operating activities: Shares issued for services 7,996
5,358
Depreciation and amortization of property and equipment 981
1,065
(Increase) decrease in operating assets: Accounts receivable 2,073 (1,972 ) Prepaid expenses (1,400 )
-
Increase (decrease) in operating liabilities: Accounts payable (7,403 )
2,895
Accounts payable - related party - (6,443 ) Accrued expenses - related party 12
12
Accrued interest-related party - (4,788 ) Gain from settlement of accrued interest - (19,003 ) Net cash provided by operating activities 7,041
(7,090 )
Cash flows from investing activities Capital expenditure for equipment - - ) Net cash (used in) investing activities -
- )
Cash flows from financing activities: Principal payment on debt - related party (131 ) (7,200 ) Net cash (used in) financing activities (131 )
(7,200 )
Net increase (decrease) in cash 6,910
(14,290 ) Cash at beginning of year 13,817 28,107 Cash at end of year$ 20,727 $ 13,817 Supplemental Cash Flow Information: Cash paid for interest $ -$ 4,800 Cash paid for taxes $ - $ -
The accompanying notes are an integral part of these financial statements.
21
Data Call Technologies, Inc.
Notes to Financial Statements
December 31, 2022
Table of Contents
Note 1. Summary of Significant Accounting Policies.
Organization, Ownership and Business
Data Call Technologies, Inc. (the "Company") was incorporated under the laws of theState of Nevada in 2002. The Company's mission is to integrate cutting-edge information delivery solutions that are currently deployed by the media and put them within the control of retail and commercial enterprises. The Company's software and services put its clients in control of real-time advertising, news, and other content, including emergency alerts, within one building or 10,000, local or thousands of miles away. The Company's financial statements are presented in accordance with accounting principles generally accepted (GAAP) inthe United States . In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and result of operations for the periods presented have been reflected herein. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly liquid investment instruments purchased with original maturities of three months or less to be cash equivalents. There were no cash equivalents as ofDecember 31, 2022 , or 2021 Revenue Recognition OnJanuary 1 2018 , we adopted Accounting Standards Update No. 2014-09, (Revenue from Contracts with Customers) (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC), Revenue Recognition. Results for reporting periods beginning afterJanuary 1, 2018 are presented under Topic 606. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings onJanuary 1, 2018 .
Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
We determine revenue recognition through the following steps:
? identification of the contract, or contracts, with a customer; ? identification of the performance obligations in the contract; ? determination of the transaction price; ? allocation of the transaction price to the performance obligations in the
contract; and ? recognition of revenue when, or as, we satisfy a performance obligation.
Company recognizes revenues based on monthly fees for services provided to customers. Some customers prepay for annual services and the Company defers such amounts and amortizes them into revenues as the service is provide.
Accounts Receivable Accounts receivable consist primarily of trade receivables. The Company provides an allowance for doubtful trade receivables equal to the estimated uncollectible amounts. That estimate is based on historical collection experience, current economic and market conditions and a review of the current status of each customer's trade accounts receivable. The allowance for doubtful trade receivables was$0 as ofDecember 31, 2022 and 2021 as we believe all of our receivables are fully collectable. 22
Property, Equipment and Depreciation
Property and equipment are recorded at cost less accumulated depreciation. Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are removed from the accounts, with any resultant gain or loss being recognized as a component of other income or expense. Depreciation is computed over the estimated useful lives of the assets (3-7 years) using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. Maintenance and repairs are charged to operations
as incurred. Advertising Costs
The cost of advertising is expensed as incurred.
Research and Development
Research and development costs are expensed as incurred.
Product Development Costs
Product development costs consist of cost incurred to develop the Company's website and software for internal and external use. All product development costs are expensed as incurred.
Income Taxes The Company is a taxable entity and recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change. A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized. Use of Estimates The preparation of financial statements in conformity with U. S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could vary from those estimates.
Beneficial Conversion Feature
Convertible debt includes conversion terms that are considered in the money compared to the market price of the stock on the date of the related agreement. The Company calculates the beneficial conversion feature and records a debt discount with the amount being amortized to interest expense over the term
of the note.
Management's Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses. Actual results could differ from these estimates. 23 Earnings (Loss) Per Share
The basic net income per common share is computed by dividing the net loss by the weighted average number of shares outstanding during a period. Diluted net loss per common share is computed by dividing the net loss, adjusted on an as if converted basis, by the weighted average number of common shares outstanding plus potential dilutive securities using the treasury stock method. For the years endedDecember 31, 2022 , and 2021, potential securities include "Convertible preferred A shares". Under the treasury stock method, an increase in the fair market value of the Company's common stock results in a greater dilutive effect from outstanding options, restricted stock awards and common stock warrants. In years with a net loss, potentially dilutive securities are not included because their effect is anti-dilutive.
Schedule of Earnings Per Share, Basic and Diluted
2022 2021
Years Ended December 31,
2022 2021
Net Income (loss) $ 4,782 $ 15,786
Net (loss) per common share:
Basic $ 0.00 $ 0.00
Diluted $ 0.00 $ 0.00
Weighted average number of common shares outstanding:
Basic 157,498,515 157,164,268
Diluted 453,247,129 398,856,111
Stock-based Compensation
We account for stock-based compensation in accordance with "FASB ASC 718-10."
Stock-based compensation expense recognized during the period is based on the
value of the portion of share-based awards that are ultimately expected to vest
during the period. The fair value of each stock option grant is estimated on the
date of grant using the Black-Scholes option pricing model. The fair value of
restricted stock is determined based on the number of shares granted and the
closing price of the Company's common stock on the date of grant. Compensation
expense for all share-based payment awards is recognized using the straight-line
amortization method over the vesting period.
Fair Value of Financial Instruments
The Company estimates the fair value of its financial instruments using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the Company estimates of fair value are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumption and/or estimation methodologies may have a material effect on the estimated fair value amounts. The interest rates payable by the Company on its notes payable approximate market rates. The Company believes that the fair value of its financial instruments comprising accounts receivable, notes receivable, accounts payable, and notes payable approximate their carrying amounts. OnJanuary 1, 2009 , the Company adopted an accounting standard for applying fair value measurements to certain assets, liabilities and transactions that are periodically measured at fair value. The adoption did not have a material effect on the Company's financial position, results of operations or cash flows. InAugust 2009 , the FASB issued an amendment to the accounting standards related to the measurement of liabilities that are routinely recognized or disclosed at fair value. This standard clarifies how a company should measure the fair value of liabilities, and those restrictions preventing the transfer of a liability should not be considered as a factor in the measurement of liabilities within the scope of this standard. This standard became effective for the Company onOctober 1, 2009 . The adoption of this standard did not have a material impact on the Company's financial statements. The fair value accounting standard creates a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below with Level 1 having the highest priority and Level 3 having the lowest. The Company is authorized to issue up to 10,000,000 shares of Series A Preferred Stock,$0.001 par value per share, of which 800,000 are outstanding as ofDecember 31, 2022 and 2021. The Preferred Stock may be issued in one or more series, the terms of which may be determined at the time of issuance by the Board of Directors, without further action by stockholders, and may include voting rights (including the right to vote as a series on particular matters), preferences as to dividends and liquidation, conversion, redemption rights
and sinking fund provisions. Each share of Series A Preferred Stock shall bear a preferential dividend of twelve percent (12%) per year and is convertible into a number shares of the Company's common stock, par value$0.001 per share ("Common Stock") based upon Fifty (50%) percent of the average closing bid price of the Common Stock During the ten (10) day period prior to the conversion. The Company has not declared or accrued any dividends as ofDecember 31, 2022 , or 2021. Unaccrued and undeclared dividends were$4,800 as ofDecember 31, 2022 , and 2021, respectively. 24
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable.
The following table presents the Company's assets and liabilities within the fair value hierarchy utilized to measure fair value on a recurring basis as ofDecember 31, 2022 , and 2021: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
(Level 1) (Level 1) (Level 3)
2022 $ 0 $ 0 $ 0
2021 $ 0 $ 0 $ 0
Recent Accounting Pronouncements
The Company has reviewed all other recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations. The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on results of operations, financial condition, or cash flows, based on current information.
Note 2. Related Party Transactions.
During the second quarter of 2018, the Company issued unregistered shares as follows: (i) 3,500,000 restricted shares toTim Vance , the Company's CEO, in connection with the execution of a new 5-year employment agreement; and 2,000,000 restricted shares toGary Woerz , the Company's CFO, in connection with the execution of a new 5-year employment agreement. The restricted shares were valued at$0.0034 per share using the closing price of the stock on the date of grant. Total expense associated with the issuances is calculated at$18,700 to be recognized over the 5-year term of the agreements. The expense recognized in the year endedDecember 31, 2022 , was$7,996 (2021:$3,548 ). TheApril 30, 2018 , employment agreements call for a 5-year term endingApril 30, 2023 , annual compensation of$98,000 per year for services as CEO, annual compensation of$57,200 per year for services as CFO.
As of
As of
Note 3. Prepaid Expenses.
As of
25
Note 4. Property and Equipment.
Major classes of property and equipment together with their estimated useful lives, consisted of the following:
Schedule of Property, Plant and Equipment
Years 2022 2021
December 31
Years 2022 2021
Equipment 3-5 $ 119,386 $ 119,386
Office furniture 7 21,681 21,681
Leasehold improvements 3 10,656 10,656Property and equipment, gross 151,723
151,723
Less accumulated depreciation and amortization (147,733 ) (146,752 ) Net property and equipment$ 3,990 $ 4,971 Note 5. Income Taxes.
Schedule of Income Tax Expenses (Benefit)
2022 2021
December 31
2022 2021
Tax expense/(benefit) computed at statutory rate
for continuing operations $ 2,683 $ 3,550
Tax effect (benefit) of operating loss carryforwards (2,683 ) (3,550 ) Tax expense/(benefit) for continuing operations $ - $
-
The Company has current net operating loss carryforwards more than $3,069,087 as
of December 31, 2022 , to offset future taxable income, which expire beginning
2029.
Deferred taxes are determined based on the temporary differences between the
financial statement and income tax bases of assets and liabilities as measured
by the enacted tax rates, which will be in effect when these differences
reverse. The components of deferred income tax assets are as follows:
Schedule of Deferred Tax Assets and Liabilities
2022 2021
December 31
2022 2021
Deferred tax assets: $ $
Net operating loss 642,829 649,953 Valuation allowance (642,829 ) (649,953 ) Net deferred asset $ - $ -
AtDecember 31, 2022 , the Company provided a 100% valuation allowance for the deferred tax asset because it could not be determined whether it was more likely than not that the deferred tax asset/(liability) would be realized.
Note 6. Capital Stock, Options and Warrants.
During the second quarter of 2018, the Company issued unregistered shares as follows: (i) 3,500,000 restricted shares toTim Vance , the Company's CEO, in connection with the execution of a new 5-year employment agreement; and 2,000,000 restricted shares toGary Woerz , the Company's CFO, in connection with the execution of a new 5-year employment agreement. The restricted shares were valued at$0.0034 per share using the closing price of the stock on the date of grant. Total expense associated with the issuances is calculated at$18,700 to be recognized over the 5-year term of the agreements. The expense recognized in the year endedDecember 31, 2022 , was$7,996 (2021:$3,548 ). TheApril 30, 2018 , employment agreements call for a 5-year term endingApril 30, 2023 , annual compensation of$98,000 per year for services as CEO, annual compensation of$57,200 per year for services as CFO. The Company is authorized to issue up to 10,000,000 shares of Series A Preferred Stock,$0.001 par value per share, of which 800,000 are outstanding as ofDecember 31, 2022 and 2021. The Preferred Stock may be issued in one or more series, the terms of which may be determined at the time of issuance by the Board of Directors, without further action by stockholders, and may include voting rights (including the right to vote as a series on particular matters), preferences as to dividends and liquidation, conversion, redemption rights
and sinking fund provisions. 26 Each share of Series A Preferred Stock shall bear a preferential dividend of twelve percent (12%) per year and is convertible into a number shares of the Company's common stock, par value$0.001 per share ("Common Stock") based upon Fifty (50%) percent of the average closing bid price of the Common Stock During the ten (10) day period prior to the conversion. The Company has not declared or accrued any dividends as ofDecember 31, 2022 , or 2021. Unaccrued and undeclared dividends were$4,800 as ofDecember 31, 2022 , and 2021, respectively. During the year endedDecember 31, 2021 , the Company granted 500,000 shares of common stock to a consultant for services provided. The stock was value using the grant date closing price for the Company's stock for a total compensation expense of$5,358 of which$4 ,900was expensed during the year endedDecember 31, 2022 (2021:$458 ).
Note 7. Commitments and Contingencies.
The Company conducted its operations from a facility located in
Rent expense in 2022 and 2021 under the terms of the
From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect our financial condition, results of operations and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome, whether favorable or unfavorable, may materially and adversely affect us due to legal costs and expenses, diversion of management attention and other factors. We expense legal costs in the period incurred. We cannot assure you that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against us in the future, and these matters could relate to prior, current or future transactions or events. As ofDecember 31, 2022 , there were no pending or threatened litigation against the Company. Note 8. Concentrations.
Concentration of Major Customers
As of
For the year endedDecember 31, 2021 , the Company received approximately 73% of its revenue from two customers. The specific concentrations were Customer A, 59%, and Customer B, 14%. For the year endedDecember 31, 2021 the Company received approximately 76% of its revenue from two customers.
Concentration of Supplier Risk
The Company had 4 vendors that accounted for approximately 58% of purchases
during the year ended
Note 9. Subsequent Events. The Company has evaluated subsequent events from the date on the balance sheet through the date these financial statements are being filed with theSecurities and Exchange Commission . 27
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