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Dynamic quotes 
OFFON

MARIJUANA COMPANY OF AMERICA, INC.

(MCOA)
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MARIJUANA OF AMERICA : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

04/14/2021 | 12:02pm EDT

The statements contained in this report that are not statements of historical fact, including without limitation, statements containing the words "believes," "expects," "anticipates" and similar words, constitute forward-looking statements that are subject to a number of risks and uncertainties. From time to time we may make other forward-looking statements. Investors are cautioned that such forward-looking statements are subject to an inherent risk that actual results may materially differ as a result of many factors, including the risks discussed from time to time in this report, including the risks described under "Risk Factors" in any filings we have made with the SEC.

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, we evaluate these estimates, including those related to useful lives of real estate assets, cost reimbursement income, bad debts, impairment, net lease intangibles, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates.



Background


We were incorporated in the State of Utah on October 4, 1985, under the name of Mormon Mint, Inc. The corporation was originally a startup company organized to manufacture and market commemorative medallions related to the Church of Jesus Christ of Latter Day Saints. On January 5, 1999, Bekam Investments, Ltd. acquired one hundred percent of the common shares of the Company and spun the Company off changing its name Converge Global, Inc. From August 13, 1999 until November 20, 2002, the Company focused on the development and implementation of Internet web content and e-commerce applications. From 2009 to 2014 we operated primarily in the mining exploration business. In 2015, we left the mining business and began an internet-based marketing business focused on offerings from our "Majestic Menu" food service items offered to the hospitality and food service industry via an on-line internet site, where individuals could purchase retail direct from food distributors via credit cards and commercial accounts.

On September 4, 2015, Donald Steinberg and Charles Larsen purchased 400,000,000 shares of restricted common stock and 10,000,000 shares of the Preferred Class A stock from the Company's President, Cornelia Volino, in exchange for $105,000.00. On September 9, 2015, Donald Steinberg was appointed Chairman of the Board, Chief Executive Officer and Secretary of the Company. Mr. Larsen was appointed to the Board of Directors. The former officers and directors of the Company resigned concurrent with the new appointments. By virtue of Messrs. Steinberg and Larsen's stock purchase and appointment to the Company's Board of Directors, a purchase or sale of a significant amount of assets not in the ordinary course of business and a corresponding change of control occurred. The Company reported the change of control in its September 30, 2015 quarterly report filed with the OTC Markets. Thereafter, the Company's business plans and operations changed to focus on legalized cannabis and hemp more fully discussed in this filing. The Company changed its name and trading symbol on December 1, 2015.

We are a publicly listed company quoted on OTC Markets OTC Pink Market Tier under the symbol "MCOA". We are a Smaller Reporting Company based in Escondido, California. Our business includes the research and development of (1) varieties of various species of hemp; (2) beneficial uses of hemp and hemp derivatives; (3) indoor and outdoor cultivation methods for hemp; (4) technology used for cultivation and harvesting of different species of hemp, including but not limited to lighting, venting, irrigation, hydroponics, nutrients and soil; (5) different industrial hemp derived cannabinoids ("CBD") and the possible health benefits thereof; and, (6) new and improved methods of hemp cannabinoid extraction omitting or eliminating the delta-9 tetrahydrocannabinol "THC" molecule.



37









We also develop, manufacture and sell, through our wholly owned subsidiary H Smart, Inc., consumer products that include industrial hemp derived, non-psychoactive CBD as an ingredient, under the brand name "hempSMART™". Our industrial hemp-based products are specifically developed with an enriched CBD molecular composition with a THC concentration of three-tenths of a percent or less by dry weight. We market and sell our hempSMART™ products directly through our web site, and through our affiliate marketing program, where qualified sales affiliates use a secure multi-level-marketing sales software program that facilitates order placement over the internet via a web site, and accounts for affiliate orders and sales; calculates referral benefits apportionable to specific sales associates and calculates and accounts for loyalty and rewards benefits for returning customers.

We also provide financial accounting, bookkeeping, services, real property management, and reporting protocols in order to allow licensed cannabis and/or hemp operators, in those states where cannabis has been legalized for medicinal and/or recreational use, to report collect, verify and state effective financial records and disclosure. We provide a comprehensive accounting strategy based on best accounting practices. As of the date of this filing, we have not offered any financial accounting, bookkeeping or real property management consulting services that have generated reportable revenues as of 2020 and 2019.

Additionally, our business includes making selected investments and entered into joint ventures in start-up businesses in the legalized cannabis and hemp industries.

Readers are directed to review our detailed disclosures in Item 1, Business; Principal Products and their Markets; Joint Ventures and Investments above. A summary of our investment and joint venture activity follows:



Joint Ventures


Bougainville Ventures, Inc. Our joint venture with Bougainville Ventures, Inc. is currently in litigation (See Legal Proceedings, Item 3). We recorded an annual impairment in 2017 of $792,500, reflecting the Company's percentage of ownership of the net book value of the investment. During 2018, the Company recorded equity losses of $37,673 and $11,043 for the first and second quarters respectively, and recorded an annual impairment of $285,986 for the year ended December 31, 2018, at which time we determined the investment to be fully impaired due to Bougainville's breach of contract and resulting litigation.

GateC Research, Inc. Our joint venture agreement with GateC Research, Inc. ("GateC") was rescinded by mutual agreement of the parties on March 19, 2018. We incurred no termination penalties as the result of its entry into the Recession and mutual release agreement. In 2017, we recorded a debt obligation of $1,500,000 to the Joint Venture and a corresponding impairment charge of $1,500,000 during for year ended December 31, 2017. Upon termination of the material definitive agreement on March 19, 2018, we realized a gain on settlement of debt obligation of $1,500,000 during the six months ended June 30, 2018. As of December 31, 2018, we determined our joint venture with GateC to be fully impaired as having no intrinsic value due to our decision on March 19, 2018 to rescind the agreement. Our decision to fully impair our venture with GateC had an impact on our reported operations in fiscal year ended December 31, 2018, but had no impact on our reported operations for the fiscal year ended December 31, 2019 or 2020.

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Global Hemp Group New Brunswick Joint Venture. On September 5, 2017, we announced our agreement to participate in a joint venture with Global Hemp Group Inc., a Canadian corporation, in a multi-phase industrial hemp research and development project on the Acadian peninsula of New Brunswick, Canada. Our participation included providing one-half, or $10,775 of the funding for the phase one work. On January 10, 2018, phase-one was completed by successfully cultivating industrial hemp during the 2017 growing season for research purposes. We incurred costs of $10,775 and $0 for the years ended December 31, 2017 and 2018, recorded as other income/expense in the Company's Statement of Operations in the appropriate periods. As of December 31, 2019, the balance of the New Brunswick joint venture reported on the balance sheet was $0.00 and as of September 30, 2019, we determined that the joint venture was fully impaired and had no intrinsic value due to the research projects failure to finalize the phase two research studies due to Canadian regulations requiring those cultivating hemp for CBD extraction to obtain individual cannabis licenses, as cannabis was deemed to have more valuable CBD content than hemp. Canada's resulting emphasis on cannabis cultivation and the requirement for individual producers to obtain individual cannabis licenses led to termination of phase two of the research project. The Company determined the New Brunswick joint venture fully impaired as it did not render any tangible revenue generating benefits to us.

Global Hemp Group Scio Oregon Joint Venture. On May 8, 2018, we entered into a joint venture with Global Hemp Group, Inc., develop a project to commercialize the cultivation of industrial hemp on a 109 acre parcel of real property owned by the Company and Global Hemp Group in Scio, Oregon, and operating under the Oregon corporation Covered Bridges, Ltd. The joint venture agreement commits the Company to a cash contribution of $600,000 payable on the following funding schedule: $200,000 upon execution of the joint venture agreement; $238,780 by July 31, 2018; $126,445 by October 31, 2018; and, $34,775 by January 31, 2019. The Company has complied with its payments. The 2018 crop of hemp grown on the joint venture's real property consisted of 33 acres of high yielding CBD hemp grown in an orchard style cultivation on the property. The 2018 harvest consisted of approximately 37,000 high yielding CBD hemp plants producing 24 tons of biomass that produced 48,000 pounds of dried biomass. However, there were delays with Global Hemp Group's management and maintenance of the business and the biomass that caused degradation to the harvested crop affecting marketability. Additional issues and disputes arose between the Company and Global Hemp Group. These disputes led to the parties entering into a settlement agreement on September 28, 2020, whereby Global Hemp Group agreed to pay the Company $200,000 and issue common stock to the Company equal in value to $185,000 as of September 28, 2020, subject to a non-dilutive protection provision. Additionally, Global Hemp Group agreed to pay the Company $10,000 to cover the Company's legal fees relating to the Agreement. In exchange for the settlement consideration, the Company agreed to relinquish its ownership interest in the joint venture.

Natural Plant Extract of California & Subsidiaries Joint Venture; On April 15, 2019, the Company entered into a joint venture agreement with Natural Plant Extracts of California, Inc. and subsidiaries ("NPE"). The purpose of the joint venture was to utilize NPE's California and City cannabis licenses to jointly operate a business named "Viva Buds" to operate a licensed cannabis distribution service in California. In exchange for acquiring 20% of NPE's common stock, the Company agree to pay two million dollars and issue NPE one million dollars' worth of the Company's restricted common stock. As of February 3, 2020, the Company was in arrears in its payment obligations under the joint venture agreement, and the parties entered into a settlement and release of all claims terminating the joint venture. The parties agreed to reduce the Company's equity ownership in NPE from 20% to 5%. The Company also agreed to pay NPE $85,000 and the balance of $56,085.15 paid in a convertible promissory note issued with terms allowing NPE to convert the note into common stock at a 50% discount to the closing price of MCOA's common stock as of the maturity date. As of the date of this filing, the Company satisfied its payment obligations under the settlement agreement. Our continuing 5% equity ownership in NPE involves related parties, since Edward Manolos, our director, is also a director and beneficial owner of 18.8% of the common stock in NPE.

Joint Ventures in Brazil and Uruguay; On October 1, 2020, we entered into two Joint Venture Agreements with Marco Guerrero, a director of the Company, dated September 30, 2020, to form joint venture operations in Brazil and in Uruguay to produce, manufacture, market and sell the Company's hempSMART™ products in Latin America, and will also work to develop and sell hempSMART™ products globally. The Joint Venture Agreements contain equal terms for the formation of joint venture entities in Uruguay and Brazil. The Brazilian joint venture will be headquartered in São Paulo, Brazil, and will be named HempSmart Produtos Naturais Ltda. ("HempSmart Brazil"). The Uruguayan joint venture will be headquartered in Montevideo, Uruguay and will be named Hempsmart Uruguay S.A.S. ("HempSmart Uruguay"). Both are in the development stage.

Investments

MoneyTrac Technologies, Inc. On March 13, 2017, we entered into a stock purchase agreement with MoneyTrac Technologies, Inc. ("MoneyTrac") on to purchase a 15% equity position in MoneyTrac. On July 27, 2017 we completed tender of the purchase price of $250,000. On June 12th, 2018 Global Payout, Inc. ("Global") entered into a Reverse Triangular Merger (the "Merger") with MoneyTrac Technology, Inc. ("MoneyTrac") a California Corporation and MTrac Tech Corporation ("Merger Sub") a Nevada corporation and wholly-owned subsidiary of Global Payout, Inc. whereby MoneyTrac was successfully merged into Merger Sub, the surviving corporation of the merger, and thereafter the separate existence of MoneyTrac ceased, and all rights, of MoneyTrac, were assumed by Merger Sub. Pursuant to the terms of the Merger, Global issued 1,100,000,000 (one billion, one hundred million) shares of its common stock to MoneyTrac as consideration for the purchase of MoneyTrac. Pursuant to the terms of the Merger, a conversion of issued MoneyTrac stock was completed whereby each one (1) share of MoneyTrac stock, issued and outstanding immediately prior to the effective date of the Merger, was canceled and extinguished and converted automatically into ten (10) shares of Global common stock. As of the effective date of the Merger, all shares of Global Preferred Stock issued prior to the effective date of the Merger were canceled and extinguished without any conversion thereof. We acquired 150,000,000 Global common shares for our original $250,000 representing approximately 15% ownership. Global's name changed in April, 2020 to Global Trac Solutions, Inc. Global's common stock is traded on the OTC Markets under the symbol "PYSC." We realized $51,748.17 from sales of our Global securities.

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Conveniant Hemp Mart, LLC. On July 19, 2017, we loaned fifty thousand dollars ($50,000) to Conveniant Hemp Mart, LLC ("Conveniant") based on a promissory note. Conveniant's business involved developing CBD products for sale in gas stations and convenience stores. The note provided that in lieu of receiving repayment, we could elect to exercise a right to convert the loaned amount into a payment towards the purchase of a 25% interest in Conveniant, subject to our payment of an additional fifty thousand dollars [$50,000] equaling a total purchase price of $100,000. The Company exercised this option on November 20, 2017 and made payment to Conveniant on November 21, 2017. On May 1, 2019, the Company and Conveniant agreed to cancel the Company's 25% interest in Conveniant. Conveniant issued to the Company a credit memo equal to the Company's $100,000 investment. The Company determined that as of December 31, 2018, the total investment was impaired.

Share Exchange with Cannabis Global, Inc. On September 30, 2020, the Company entered into a securities exchange agreement with Cannabis Global, Inc., a Nevada corporation. By virtue of the agreement, the Company issued 650,000,000 shares of its unregistered common stock to Cannabis Global in exchange for 7,222,222 shares of Cannabis Global unregistered common stock. The Company and Cannabis Global also entered into a lock up leak out agreement which prevents either party from sales of the exchanged shares for a period of 12 months. Thereafter the parties may sell not more than the quantity of shares equaling an aggregate maximum sale value of $20,000 per week, or $80,000 per month until all Shares and Exchange Shares are sold. Our transaction with Cannabis Global, Inc. is material and involves related parties, since Edward Manolos, our director, is also a director of Cannabis Global, Inc.



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Results of Operations


Year ended December 31, 2020 compared to year ended December 31, 2019

The following table presents our operating results for the year ended December 31, 2020 compared to December 31, 2019:




                       MARIJUANA COMPANY OF AMERICA, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                    AUDITED



                                                          For the Year ended Dec 31,
                                                           2020               2019
REVENUES:
Sales                                                 $     267,584     $      673,919
Related party Sales                                          13,069             21,157
Total Revenues                                              280,653            695,076

Cost of sales                                               159,304            248,556

Gross Profit                                                121,349            446,520

OPERATING EXPENSES:
Depreciation                                                  5,933              7,299
Selling and marketing                                       420,511          1,743,427
Payroll and related                                         411,954            385,246
Stock-based compensation                                  3,014,888          1,417,850
General and administrative                                1,122,954          3,363,516
 Total operating expenses                                 4,976,240          6,917,338

Net loss from operations                                 (4,854,891 )       (6,470,818 )

OTHER INCOME (EXPENSES):
Interest expense, net                                    (2,999,291 )       (4,682,247 )
Legal Contingency expense                                        -          (1,497,674 )
Impairment gain (Loss) on Joint Ventures                    (22,658 )         (478,400 )
Income (loss) on equity investment                          106,305            (13,842 )
Loss on change in fair value of derivative
liabilities                                              (4,698,072 )       (2,123,570 )
Unrealized Gain (loss) on trading securities                248,204           (677,584 )
Realized loss on sale of trading securities                  (2,603 )          (75,545 )
Loss on disposition of investment                                 0           (389,664 )
(Loss) Gain on settlement of debt                            77,624         (3,770,974 )
Total other income (expense)                             (7,290,491 )      (13,709,500 )

Net loss before income taxes                            (12,145,382 )      (20,180,318 )

Income taxes (benefit)                                            0                  0

NET INCOME (LOSS)                                     $ (12,145,382 )   ($  20,180,318 )

Loss per common share, basic and diluted              $       (0.01 )   $        (0.41 )

Weighted average number of common shares
outstanding, basic and diluted (after stock-split)      962,029,388         48,669,683










  See the accompanying notes to these audited condensed consolidated financial
                                   statements





41
Revenues



Total revenues for the year end December 31, 2020 and December 31, 2019, were $280,653 and $695,076, respectively, a decrease of $414,423. This decrease is attributable to the global pandemic Covid-19 which affected the level of sales of our hempSMART products.

During 2020 the Company released a new industrial hemp based powderized premium CBD Drink made with Organic CBD Infused with Honey to be mixed with any beverage of preference. The Company also offered online subscription for memberships and other marketing tools for our associates.

The following table identifies our new product offerings in 2020, and the revenues produces from sales of our products in 2020 and 2019 respectively:



                       2020          2019
Body                    3,901        10,503
Brain Capsules         29,135        68,182
Drink Mix               2,966            -        New Product for 2020
Drops                 152,121       341,555
Face Moisturizers      13,951        36,979
Pain Capsules           8,308        53,969
Pain Cream             55,938       126,099
Pet Drops              14,332        57,789
TOTAL                 280,653       695,076




Related Party Sales

Related party sales contributed $13,069 and $21,157 to our revenue for 2020 and 2019, respectively. Related party sales are comprised of sales of our hempSMART products to our directors, officers, and sales team members. No related party sales were for services. All sales were made at listed retail prices and were for cash consideration.




Costs of Sales

Costs of sales primarily consist of inventory cost and overhead, manufacturing, packaging, warehousing, shipping and direct labor costs directly attributable to our hempSMART products. For the year ended December 31, 2020 and December 31, 2019, our total costs of sales were $159,304 and $248,556, respectively. The decrease was primarily due to decreased in sales volume due from the pandemic Covid-19.




Gross Profit

For the year ended December 31, 2020 and December 31, 2019, gross profit was $121,349 and $446,520, respectively. This decrease was primarily due to the pandemic affecting the opportunity for our associates to sell higher volumes of hempSMART products, as our sales developed through direct sales efforts and through the implementation and development of our affiliate sales program. Gross margins were 43.2% and 64.2% for the year ended December 31, 2020 and December 31, 2019, respectively. The Company has incurred net losses from operations of $4,854,891 and $6,470,818 for the years ended December 31, 2020 and 2019, respectively.



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The following is a tabular breakdown of expenses related to Selling and
Marketing, Payroll and Related expenses, Stock-based Compensation and General
and Administrative Expenses:



Expense                            2020            2019           Variance
Stock based Compensation         3,014,888       1,417,850        1,597,038
Consulting Fees                    236,343       1,793,260       (1,556,917 )
Officer's Compensation             223,356         380,371         (157,015 )
Legal expense                      171,680         207,453          (35,773 )
Marketing compensation             154,430          40,754          113,676
Marketing /Media                   125,490         698,247         (572,757 )
Investor Relation                  123,399         121,490            1,909
Accounting                         111,810          94,318           17,492
Board of Director Fees              91,010         627,166         (536,156 )
Audit Fee                           74,475          55,032           19,443
Website Development Costs           56,260         141,275          (85,015 )
Rent expense                        51,526          31,284           20,242
Independent contractor              47,800           4,500           43,300
Web Sales Commission                30,632         117,081          (86,449 )
UK Contract Compensation            26,704         320,829         (294,125 )
SEC Filing fees                     16,668          29,182          (12,514 )
Office Supplies                      6,741          12,898           (6,157 )
Advertising and Promotion            4,012             209            3,803
Bank Service Charges                 2,120         122,815         (120,695 )
Fees/Licensing                       1,252          27,427          (26,175 )
Wholesale Commissions                  994          12,512          (11,518 )
Admin Compensation                      -          405,533         (405,533 )
Software                                -           13,307          (13,307 )
Special Events                          -           22,876          (22,876 )
All other expenses, net *          404,650         219,669          184,981
Total Payroll & G&A Expenses     4,976,240       6,917,338       (1,941,098 )



*This represents other individually immaterial General and Administrative expenses in the ordinary course of business that were not compensation to any third-party vendors.

Stock-based Compensation increased by $1,597,038 primarily due to Stock-based compensation in the form of Series B Preferred stock issued to the Chief Executive Officer during the year ended December 31, 2020 as Stock-Based Compensation was $1,417,850 for the year ended December 31, 2019 as compared to $3,014,888 for the year ended December 31, 2020. Administrative compensation costs decreased from $405,533 in 2019 to $0 in 2019 respectively, this $405,533 decrease was due to elimination of unnecessary positions from the administration of the Company complemented with the hiring of new Marketing staff which is reflected in the increase of $113,676 in Marketing Compensation as this expense increased to $154,430 in 2020 from $40,754 in 2019. Marketing/Media costs decreased $572,757 from $698,247 in 2019 to $125,490 in 2020, respectively due to the effects of the COVID-19 Pandemic. We had a decrease in Board of Directors fees of $536,156 from $627,166 in 2019 to $91,010 in 2020, respectively. These decreases were due to equity compensation issued to the former Chief Executive officer and former Executive Vice President. UK Contract Compensation decreased $294,125 due to the termination of the Company's agreement with the former Global Sales Director as the expense was $26,704 in 2020 as compared to $320,829. Bank Service Charges decreased $120,695 due to less wire transfers made to our Global Sales Director in the UK as the expense were $2,120 in 2020 as compared to $122,815 in 2019. In addition, Web Sales Commissions and Wholesale Commissions also saw significant decreases as a direct relation to a decrease in our sales related to the COVID-19 Pandemic.

Overall, our total operating expenses decreased 28% from 2019 to 2020 as the decrease was $1,941,098 from $6,917,338 in 2019 to $4,976,240 in 2020, respectively.



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The Following Is a Tabular Breakdown of Our 2020 Stock Based Bonus Compensation for Officers and Directors, as compared to 2019.



 Officer and Director        2020            2019
Donald Steinberg         $        -      $ 1,367,204
Charles Larsen           $        -      $    40,000
Robert Coale             $        -      $   266,333
Edward Manolos           $    15,600     $   356,833
Gloria Albarran-Lynch    $    70,350     $        -
Themistocles Psomiadis   $    19,010     $        -
Jesus Quintero           $ 2,502,140     $   262,333



The 2020 stock compensation bonuses were issued by the Board of Directors pursuant to our Equity Incentive Plan and executive contracts with our directors and officers. Pursuant to our Equity Incentive Plan, the Company has discretion to make stock awards to its affiliates for past services, in lieu of bonuses or other cash compensation, for directors' compensation or for any other valid purpose. At December 31, 2020, we reviewed the performance of our staff and affiliates, and in making the 2020 awards, determined the awards justified because our staff and affiliates accomplished the following:

Our Equity Plan issuances to affiliates as of December 31, 2020 increased by $10,780. This was due to the Company's performance during a difficult year 2020 due to the COVID-19 Pandemic. The balance was in stock based compensation in 2020 as it was for 2019. This was primarily for shares issued for consulting services as follows:

The balance of our stock-based compensation in 2020, as compared to 2019 was for consulting services as follows:



                  2020 Stock-Based     2019 Stock-Based
                    Compensation         Compensation                            Nature of
  Consultant                                                   Variance          Consultant
                                                                                  Services
                                                                                  Provided
Paula Vetter               19,065                9,905              9,160        Consulting
                                                                                 Services -
                                                                              Medical Advisory
                                                                               Specialist for
                                                                              hempSMART during
                                                                               2020 and 2019
Gloria Lynch               70,350                    0             70,350     Bonus as part of
                                                                              Equity Incentive
                                                                              Plan during 2020
                                                                                and 2019 for
                                                                                services in
                                                                               restructuring
                                                                                  company
Lauren Regier              41,975               10,000             31,975        Consulting
                                                                               Services - Web
                                                                                and graphic
                                                                               design during
                                                                               2020 and 2019
Tad Mailander              43,950                                  43,950        Consulting
                                                                              Services - Legal
                                                                              services during
                                                                                    2020
Otto Creative              31,140                    0             31,140        Consulting
Studio                                                                         Services - IT
                                                                              services during
                                                                                    2020
Ian Harvey                      0                  500               (500 )     Consulting -
                                                                                 Marketing
                                                                              services during
                                                                                    2019
Trevor                          0               25,833            (25,833 )      Consulting
Muehlfelder                                                                   Services during
                                                                                    2019
Robert L.                 356,730              568,333           (211,603 )    Settlement of
Hymers III                                                                       delinquent
                                                                              Consulting fees
                                                                              owed during 2020
                                                                                  and 2019






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The objective outcomes resulting from the consulting services are summarized as follows:

· The Company lowered its expense rate by becoming more efficient, reducing head

count, and making efficient and effective cashflow decisions.

· The Company paid off most variable priced convertible notes prior to conversion

over the last quarter with funds raised from its Form S-1 registration

statement.

· The Company successfully negotiated a full settlement of its largest senior

convertible note holder at a fixed price, preserving shareholder value and

minimizing the impact of the dilutive nature of the notes.

· The management team has helped pivot from the legacy affiliate marketing (MLM)

   model for hempSMART to the new direct to consumer e-commerce marketing model.
   This required significant changes to the culture, business plan and branding of
   the products.

· The Company successful fully drew down on its Form S-1 registration equity line

with White Lion and was able to get a second Form S-1 primary offering

registration statement effective to obtain funds for operations and expansion.

· The Company managed to not only survive during the COVID pandemic, but actually

   grew and thrived due to key management decisions along the way and the personal
   sacrifice of our CEO Jesus Quintero, who paid for business expenses for several
   months on his personal business card to help float the Company during periods
   where funds were depleted.

· The executive management team has overseen significant efforts to expand into

South America and move key parts of its supply chain to Uruguay to reduce the

cost of goods sold and increase gross margins and overall profitability.

· The Company has successfully negotiated acquisitions and deals that resulted in

the Company's market capitalization increasing substantially during the year to

enhance shareholder value.

· The Company successfully removed over three billion shares that were on

reservation with the Transfer Agent over the last few weeks due to successful

settlement of convertible debt, resulting in less dilution and more shares

available for financing and acquisitions.

We anticipate continuing to reduce our dependence on stock-based compensation in the future. However, given our present cash position, and because of possible increased operational costs including overhead, product manufacturing and development, and related costs, we may, to the extent necessary, utilize stock-based compensation in the future to compensate key product development, operations and sales and marketing personnel.

Operating Losses

For the year ended December 31, 2020, operating expenses were $4,976,240 or 1,773% of total revenues, as compared to $6,917,338 or 995.2% of total revenues for the year ended December 31, 2019. This decrease of $1,941,098 was due to an overall restructuring of the Company's operations. Such operating losses reflect the effectiveness of the Company's new management team in 2020. We expect to reduce our losses as we continue to implement new sales strategies and cost-cutting measures in the near future until profitability is achieved, which is not certain. Our operations are subject to numerous risks associated with establishing any new business, including unforeseen expenses, delays and complications. There can be no assurance that we will achieve or sustain profitable operations. This increase was primarily related to the Company issuing less stock-based compensation for consulting services.

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Other Income (Expense)

Other income (expense) for the years ended December 31, 2020 and December 31, 2019 included expense of $7,290,491 and $13,709,500, respectively. This decrease of $6,419,009, which was primarily due to a decrease of $1,682,956 in Interest expense from $4,682,247 for the year ended December 31, 2019 to $2,999,291 for the year ended December 31, 2020; a $1,497,674 reduction in Legal Contingency expense from $1,497,674 for the year ended December 31, 2019 as compared to $0 for the year ended December 31, 2020; an increase in loss on change in fair value of derivative liabilities of $2,574,502 as the expense for the period ended December 31, 2020 was $4,698,072 as compared to $2,123,570 for the period ended December 31, 2019. an unrealized gain on trading securities of $248,204 for the year ended December 31, 2020 as compared to a of unrealized loss on trading securities of $677,584 for the year ended December 31, 2019; $77,624 gain on settlement of debt for the year ended December 31, 2020 as compared to Loss on settlement of $3,770,974 for the year ended December 31, 2019.

Income Tax Expense (Benefit)

We did not have any income tax expense or benefit for the years ended December 31, 2020 and December 31, 2019, respectively.

Net Income (Loss)

As a result of the factors discussed above, net losses for the year ended December 31, 2020 and December 31, 2019 were $12,145,382 and $20,180,318, respectively. For December 31, 2020 and December 31, 2019, these net losses represented a 4,328% and 2,903% of total revenues for the respective periods.



hempSMART



Segment Information

Accounting Standards Codification subtopic Segment Reporting 280-10 ("ASC 280-10") establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. ASC 280-10 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The information disclosed herein materially represents all of the financial information related to the Company's only material principal operating segment. The following table represents the Company's hempSMART business, which is its sole operating segment as of December 31, 2020 and 2019:




hempSMART
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

                                          For Years ended December 31,
                                             2020               2019
Revenues                               $     280,653       $    695,076
Cost of Sales                                159,304            248,556
Gross profit                                 121,349            446,520

Operating Expenses
 Depreciation expense                          5,933              7,299
 Selling and Marketing expenses              393,799          1,090,981
 Payroll and related expenses                165,491                 -
 Stock-based compensation                    207,965                 -
 General and administrative expenses         217,288            761,128
Total Expenses                               990,477          1,859,408

Net Loss from Operations               $    (869,128 )     $ (1,412,888 )





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Legal Settlement Expense

Natural Plant Extract of California & Subsidiaries Joint Venture

On April 15, 2019, the Company entered into a joint venture agreement with Natural Plant Extracts of California, Inc. and subsidiaries ("NPE"). The purpose of the joint venture was to utilize NPE's California and City cannabis licenses to jointly operate a business named "Viva Buds" to operate a licensed cannabis distribution service in California. In exchange for acquiring 20% of NPE's common stock, the Company agree to pay two million dollars and issue NPE one million dollars' worth of the Company's restricted common stock. As of February 3, 2020, the Company was in arrears in its payment obligations under the joint venture agreement, and the parties entered into a settlement and release of all claims terminating the joint venture. The parties agreed to reduce the Company's equity ownership in NPE from 20% to 5%. The Company also agreed to pay NPE $85,000 and the balance of $56,085.15 paid in a convertible promissory note issued with terms allowing NPE to convert the note into common stock at a 50% discount to the closing price of MCOA's common stock as of the maturity date. As of the date of this filing, the Company satisfied its payment obligations under the settlement agreement. The respective transactions are related party transactions as our director, Edward Manolos, is also a director and beneficial owner of 18.8% of the common stock of NPE.

Caren Glasser

On March 2, 2020, Caren Glasser filed a request for arbitration against the Company alleging non-payment for past due compensation. The case was filed in the in the American Arbitration Association under Case no. 01-20-0000-6290. The Company and Ms. Glasser agreed to settle her dispute on May 7, 2020. The settlement agreement obligates the Company to pay Ms. Glasser $24,000 thirty days of Ms. Glasser's review and execution, consistent with the Older Workers Benefit Protection Act (29 U.S.C. § 626(f). The Company made this payment.

Liquidity and Capital Resources

As of December 31, 2020, and December 31, 2019, our operating activities produced negative cash and cash equivalents of $1,723,950 and $2,816,282, respectively. Our primary internal sources of liquidity were provided by an increase in proceeds from the issuance of note payables of $1,017,664 for December 31, 2020 as compared to $2,802,500 for December 31, 2019, and a decrease in proceeds from the sale of note payables to a related party of $75,000 as compared to $42,861 in repayments to a related party for December 31, 2019. An increase in proceeds from sales of our common stock of $478,685 for December 31, 2020 as compared to $90,000 for December 31, 2019. During the period ended December 31, 2019, relied upon external financing arrangements to fund our operations. During the year ended December 31, 2018, we entered into several separate financing arrangements with St. George Investments, LLC, a Utah limited liability company, in which we borrowed an aggregate of $2,541,470, the principal of which is convertible into shares of our common stock (see Note 4, Convertible Note Payable). Our ability to rely upon external financing arrangements to fund operations is not certain, and this may limit our ability to secure future funding from external sources without changes in terms requested by counterparties, changes in the valuation of collateral, and associated risk, each of which is reasonably likely to result in our liquidity decreasing in a material way. We intend to utilize cash on hand, loans and other forms of financing such as the sale of additional equity and debt securities and other credit facilities to conduct our ongoing business, and to also conduct strategic business development and implementation of our business plans generally.

Operating Activities

For the year ended December 31, 2020 and 2019, the Company used cash for operating activities of $1,723,950 and $2,816,282, respectively. Operating activities consist of corporate overhead and product development of our hempSMART™ products. Increases are due primarily to increases in executive compensation, professional fees, and product development costs.



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Investing Activities

For the years ended December 31, 2020 and December 31, 2019, net cash provided by and used in investing activities were $118,984 and $226,169, respectively. For the year ended December 31, 2020 the Company used $6,016 for the purchase of equipment, while receiving $125,000 in proceeds from the disposition of an investment. For the year ended December 31, 2019, the cash used in investing continued to be attributed to our acquisition of an interest Natural Plant Extract and an interest in the Global Hemp Group Joint Venture.

Financing Activities

For the years ended December 31, 2020 and 2019, financing activities were a source of cash of $1,467,704 and $2,894,639, respectively. For the years ended December 31, 2020 and 2019, respectively, this was primarily from proceeds of $1,017,664 and $2,802,500 from the issuance of notes payable; repayment to related parties of $75,000 and $42,861 for the year ended December 31, 2020 and 2019, respectively, The Company received sale of common stock of $478,685 and $90,000 for the years ended December 31, 2020 and 2019, respectively. For the year ended December 31, 2020, the Company received proceeds of $35,500 from an Payroll Payment Protection loan from the Small Business Administration and also received proceeds of $10,855 from the sale of trading securities

We currently do not have sufficient cash and liquidity to meet our anticipated working capital for the next twelve months. Historically, we have financed our operations primarily through private sales of our common stock. If our sales goals for our hempSMART™ products do not materialize as planned, and we are not able to achieve profitable operations at some point in the future, we may have insufficient working capital to maintain our operations as we presently intend to conduct them or to fund our expansion, marketing, and product development plans. There can be no assurance that we will be able to obtain such financing on acceptable terms, or at all.

Off Balance Sheet Arrangements

As of December 31, 2020 and December 31, 2019, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect amounts reported in those statements. We have made our best estimates of certain amounts contained in our consolidated financial statements. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. However, application of our accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties, and, as a result, actual results could differ materially from these estimates. Management believes that the estimates, assumptions, and judgments involved in the accounting policies described below have the most significant impact on our consolidated financial statements.

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.




Cash and Cash Equivalents

We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are held in operating accounts at a major financial institution.

Inventory

Inventory is primarily comprised of products and equipment to be sold to end-customers. Inventory is valued at cost, based on the specific identification method, unless and until the market value for the inventory is lower than cost, in which case an allowance is established to reduce the valuation to market value. As of December 31, 2020, and December 31, 2019, market values of all of our inventory were greater than cost, and accordingly, no such valuation allowance was recognized.



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Deposits

Deposits is comprised of advance payments made to third parties, primarily for inventory for which we have not yet taken title. When we take title to inventory for which deposits are made, the related amount is classified as inventory, then recognized as a cost of revenues upon sale (see "Costs of Revenues" below).

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets is primarily comprised of advance payments made to third parties for independent contractors' services or other general expenses. Prepaid services and general expenses are amortized over the applicable periods which approximate the life of the contract or service period.

Accounts Receivable

Accounts receivable are recorded at the net value of face amount less any allowance for doubtful accounts. On a periodic basis, we evaluate our accounts receivable and, based on a method of specific identification of any accounts receivable for which we deem the net realizable value to be less than the gross amounts of accounts receivable recorded, we establish an allowance for doubtful accounts for those balances. In determining our need for an allowance for doubtful accounts, we consider historical experience, analysis of past due amounts, client creditworthiness and any other relevant available information. However, our actual experience may vary from our estimates. If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay our fees, we may need to record additional allowances or write-offs in future periods. This risk is mitigated to the extent that we collect retainers from our clients prior to performing significant services.

The allowance for doubtful accounts, if any, is recorded as a reduction in revenue to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. To the extent the provision relates to a client's inability to make required payments on accounts receivables, the provision is recorded in operating expenses. As of December 31, 2020, and December 31, 2019 we had $0 and $0 allowance for doubtful accounts, respectively. For December 31, 2020 and December 31, 2019, we recorded bad debt expense of $0 and $9,249, respectively.

Property and Equipment, net

Property and Equipment is stated at net book value, cost less depreciation. Maintenance and repairs are expensed as incurred. Depreciation of owned equipment is provided using the straight-line method over the estimated useful lives of the assets, ranging from two to seven years. Depreciation of capitalized construction in progress costs, a component of property and equipment, net, begins once the underlying asset is placed into service and is recognized over the estimated useful life. Property and equipment is reviewed for impairment as discussed below under "Accounting for the Impairment of Long-Lived Assets." We did not capitalize any interest as of December 31, 2020 and as of December 31, 2019.

Accounting for the Impairment of Long-Lived Assets

We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair value is determined based on discounted cash flows, appraised values or management's estimates, depending upon the nature of the assets. We have recorded $22,658 and $478,400 in impairment charges related to our JV investments during the years ended December 31, 2020 and 2019, respectively.

Beneficial Conversion Feature

If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value at issuance, this feature is characterized as a beneficial conversion feature ("BCF"). We record a BCF as a debt discount pursuant to Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ACF") Topic 470-20 Debt with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the BCF, and we amortize the discount to interest expense over the life of the debt using the effective interest method.



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Revenue Recognition

For annual reporting periods after December 15, 2017, the Financial Accounting Standards Board ("FASB") made effective ASU 2014-09 "Revenue from Contracts with Customers," to supersede previous revenue recognition guidance under current U.S. GAAP. Revenue is now recognized in accordance with FASB ASC Topic 606, Revenue Recognition. The objective of the guidance is to establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. The core principal is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Two options were made available for implementation of the standard: the full retrospective approach or modified retrospective approach. The guidance became effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. We adopted FASB ASC Topic 606 for our reporting period as of the year ended December 31, 2017, which made our implementation of FASB ASC Topic 606 effective in the first quarter of 2018. We decided to implement the modified retrospective transition method to implement FASB ASC Topic 606, with no restatement of the comparative periods presented. Using this transition method, we applied the new standards to all new contracts initiated on/after the effective date. We also decided to apply this method to any incomplete contracts we determine are subject to FASB ASC Topic 606 prospectively. For the years ended December 31, 2020 and 2019, there were no incomplete contracts. As is more fully discussed below, we are of the opinion that none of our contracts for services or products contain significant financing components that require revenue adjustment under FASB ASC Topic 606.

Identification of Our Contracts with Our Customers.

Contracts included in our application of FASB ASC Topic 606, consist completely of sales contracts between us and our customers that create enforceable rights and obligations. For the years ended December 31, 2020, and 2019, our sales contracts included the following parties: us, our sales associates and our customers. Our sales contracts were offered by us and our sales associates to our customers directly through our web site. Our sales contracts, and those formalized by our sales associates, are represented by an electronic order form, which contains the contractual elements of offer for sale, acceptance and the provision of consideration consisting of the buyer's payment, which is concurrent with our delivery of hempSMART™ product. Since our hempSMART™ product sales contracts are consummated upon receipt of the customer's acceptance of our offer; our concurrent receipt of our customers payment; and, our delivery of the agreed to hempSMART™ product, all parties are equally committed to fulfilling their respective obligations under the sales contracts. Further, the sales contracts specifically identify (1) parties; (2) quantity of hempSMART™ product ordered; (3) price; and, (4) subject, and so each respective party's rights are identifiable and the payment terms are defined. Since the sales contracts are consummated concurrent with offer, acceptance, payment and delivery of the hempSMART™ product ordered, we recognize revenue and cash flows as the principal from the respective sales contract transactions as they complete. Further, because our sales contracts are offered, accepted and consummated concurrently, our ability to collect revenue is immediate. We receive no payments for agreements that do not qualify as a contract. If customers agree to multiple sales contracts when they are entered into at or near the same time, our policy is to combine those contracts if: (1) the sales contracts are negotiated as a single package; (2) the payment amount of one sales contract is dependent upon another sales contract; (3) our performance obligations of delivering multiple hempSMART™ products can be determined to be part of a single transaction. Since the nature of the entry into and consummation of our sales contracts occur concurrently, there are no changes or modifications to the terms of the sales contracts that would modify the enforceable rights and performance obligations of the parties and that would materially alter the timing of our receipt of revenue from our sales contracts.

Identifying the Performance Obligations in Our Sales Contracts.

In analyzing our sales contracts, our policy is to identify the distinct performance obligations in a sales contract arrangement. In determining our performance obligations under our sales contracts, we consider that the terms and conditions of sales are explicitly outlined in our sales contracts and are so distinct and identifiable within the context of each sales contract, and so are not integrated with other goods, or constitute a modification or customization of other goods in our contracts, or are highly dependent or highly integrated with other goods in our sales contracts. Thus, our performance obligations are singularly related to our promise to provide the hempSMART™ products upon receipt of payment. We offer an assurance warranty on our hempSMART™ products that allows a customer to return any hempSMART™ products within thirty days if not satisfied for any reason. Assurance warranties are not identifiable performance obligations, since they are electable at the whim of the customer for any reason. However, we do account for returns of purchase prices if made.

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Determination of the Price in Our Sales Contracts.

The transaction prices in our sales contract is the amount of consideration we expect to be entitled to for transferring promised hempSMART™ products. The consideration amount is fixed and not variable. The transaction price is allocated to the identified performance obligations in the contract. These allocated amounts are recognized as revenue when or as the performance obligations are fulfilled, which is concurrently upon receipt of payment. There are no future options for a contract when considering and determining the transaction price. We exclude amounts third parties will eventually collect, such as sales tax, when determining the transaction price. Since the timing between receiving consideration and transferring goods or services is immediate, our sales contract do not have a significant financing component, i.e., recognizing revenue at the amount that reflects the cash payment that the customer would have made at the time the goods or services were transferred to them (cash selling price), rather than significantly before or after the goods or services are provided.

Allocation of the Transaction Price of Our Sales Contracts.

Our sales contracts are not considered multi-element arrangements which require the fulfillment of multiple performance obligations. Rather, our sales contracts include one performance obligation in each contract. As such, from the outset, we allocate the total consideration to each performance obligation based on the fixed and determinable standalone selling price, which we believe is an accurate representation of what the price is in each transaction.

Recognition of Revenue when the Performance Obligation is Satisfied.

A performance obligation is satisfied when or as control of the good or service is transferred to the customer. The standard defines control as "the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset." (ASC 606-10-20). For performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation. As noted above, our single performance obligation sales contracts are singularly related to our promise to provide the hempSMART™ products to the customer upon receipt of payment, which occurs concurrently and when, upon completion, allows us under our revenue recognition policy to realize revenue.

Regarding our offered financial accounting, bookkeeping and/or real property management consulting services, to date no contracts have been entered into, and thus no reportable revenues have resulted for the fiscal years ended 2020 and 2019.

Product Sales

Revenue from product sales, including delivery fees, FOB shipping point, is recognized when (1) an order is placed by the customer; (2) the price is fixed and determinable when the order is placed; (3) the customer is required to and concurrently pays for the product upon order; and, (4) the product is shipped. The evaluation of our recognition of revenue after the adoption of FASB ASC 606 did not include any judgments or changes to judgments that affected our reporting of revenues, since our product sales, both pre and post adoption of FASB ASC 606, were evaluated using the same standards as noted above, reflecting revenue recognition upon order, payment and shipment, which all occurs concurrently when the order is placed and paid for by the customer, and the product is shipped. Further, given the facts that (1) our customers exercise discretion in determining the timing of when they place their product order; and, (2) the price negotiated in our product sales is fixed and determinable at the time the customer places the order, and there is no delay in shipment, we are of the opinion that our product sales do not indicate or involve any significant customer financing that would materially change the amount of revenue recognized under the sales transaction, or would otherwise contain a significant financing component for us or the customer under FASB ASC Topic 606.

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Consulting Services

We also offer professional services for financial accounting, bookkeeping or real property management consulting services based on consulting agreements. As of the date of this filing, we have not entered into any contracts for any financial accounting, bookkeeping and/or real property management consulting services that have generated reportable revenues as of the fiscal years ended 2020 and 2019. We intend and expect these arrangements to be entered into on an hourly fixed fee basis.

For hourly based fixed fee service contracts, we intend to utilize and rely upon the proportional performance method, which recognizes revenue as services are performed. Under this method, in order to determine the amount of revenue to be recognized, we will calculate the amount of completed work in comparison to the total services to be provided under the arrangement or deliverable. We only recognize revenues as we incur and charge billable hours. Because our hourly fees for services are fixed and determinable and are only earned and recognized as revenue upon actual performance, we are of the opinion that such arrangements are not an indicator of a vendor or customer based significant financing, that would materially change the amount of revenue we recognize under the contract or would otherwise contain a significant financing component under FASB ASC Topic 606.

The Company determined that upon adoption of ASC 606 there were no quantitative adjustments converting from ASC 605 to ASC 606 respecting the timing of our revenue recognition because product sales revenue is recognized upon customer order, payment and shipment, which occurs concurrently, and our consulting services offered are fixed and determinable and are only earned and recognized as revenue upon actual performance.

Costs of Revenues

Our policy is to recognize costs of revenue in the same manner in conjunction with revenue recognition. Cost of revenues include the costs directly attributable to revenue recognition and includes compensation and fees for services, travel and other expenses for services and costs of products and equipment. Selling, general and administrative expenses are charged to expense as incurred.

Advertising and Promotion Costs

Advertising and promotion costs are included as a component of selling and marketing expense and are expensed as incurred. During the year ended December 31, 2020 and December 31, 2019, these costs were $129,504 and $540,474, respectively.




Shipping and Handling Costs

For product and equipment sales, shipping and handling costs are included as a component of cost of revenues.

Stock-Based Compensation

Restricted shares are awarded to employees and entitle the grantee to receive shares of restricted common stock at the end of the established vesting period. The fair value of the grant is based on the stock price on the date of grant. We recognize related compensation costs on a straight-line basis over the requisite vesting period of the award, which to date has been one year from the grant date. During the years ended December 31, 2020 and December 31, 2019, stock-based compensation expense for restricted shares was $3,014,888 and $1,417,850, respectively. Compensation expense for warrants and options is based on the fair value of the instruments on the grant date, which is determined using the Black-Scholes valuation model and are expensed over the expected term of the awards.




Income Taxes

We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns in accordance with applicable accounting guidance for accounting for income taxes, using currently enacted tax rates in effect for the year in which the differences are expected to reverse. We record a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. For the year ended December 31, 2020 and December 31, 2019, due to cumulative losses, we recorded a valuation allowance against our deferred tax asset that reduced our income tax benefit for the period to zero. As of December 31, 2020, and December 31, 2019, we had no liabilities related to federal or state income taxes and the carrying value of our deferred tax asset was zero.



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Loss Contingencies

From time to time the Company is subject to various legal proceedings and claims that arise in the ordinary course of business. On at least a quarterly basis, consistent with ASC 450-20-50-1C, if the Company determines that there is a reasonable possibility that a material loss may have been incurred, or is reasonably estimable, regardless of whether the Company accrued for such a loss (or any portion of that loss), the Company will confer with its legal counsel, consistent with ASC 450. If the material loss is determinable or reasonably estimable, the Company will record it in its accounts and as a liability on the balance sheet. If the Company determines that such an estimate cannot be made, the Company's policy is to disclose a demonstration of its attempt to estimate the loss or range of losses before concluding that an estimate cannot be made, and to disclose it in the notes to the financial statements under Contingent Liabilities.

Net Income (Loss) Per Common Share

We report net income (loss) per common share in accordance with FASB ASC 260, "Earnings per Share." This statement requires dual presentation of basic and diluted earnings with a reconciliation of the numerator and denominator of the earnings per share computations. Basic net income (loss) per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period and excludes the effects of any potentially dilutive securities. Diluted net income (loss) per share gives effect to any dilutive potential common stock outstanding during the period. The computation does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings.




Related Party Transactions

We follow FASB ASC subtopic 850-10, "Related Party Transactions", for the identification of related parties and disclosure of related party transactions.

Pursuant to ASC 850-10-20, related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

Material related party transactions are required to be disclosed in the consolidated financial statements, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

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Financials (USD)
Sales 2020 0,28 M - -
Net income 2020 -12,1 M - -
Net Debt 2020 1,20 M - -
P/E ratio 2020 -0,33x
Yield 2020 -
Capitalization 28,7 M 28,7 M -
EV / Sales 2019 12,3x
EV / Sales 2020 50,5x
Nbr of Employees 4
Free-Float 39,9%
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Managers and Directors
NameTitle
Jesus M. Quintero Chairman, Chief Executive Officer, CFO & Treasurer
Edward F. Manolos Independent Director
Tad Mailander Independent Director
Marco Guerrero Director
Glen Bonilla Manager-Sales & Brand
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