TPTW.OTC.PinkTpt Global Tech, INC
10-Q/A: TPT Global Tech Restates Financials to Correct Debt Conversion Error, Reports Net Income Amidst Going Concern Doubts
Sentiment:
Quarterly Report (Form 10-Q/A)
TPT Global Tech files an amended 10-Q report restating financials to correct a debt conversion error, while reporting net income for the period but facing substantial doubt about its ability to continue as a going concern.
Capital raiseThe company needs to obtain additional debt or equity financing to continue as a going concern.The company entered into a Standby Equity Commitment Agreement with MacRab LLC, providing an option to sell up to $3,000,000 worth of the company's common stock.
Worse than expectedRevenue decreased significantly for both the three and six months ended June 30, 2024, compared to the same periods in 2023.Gross profit decreased significantly for both the three and six months ended June 30, 2024, compared to the same periods in 2023.
Summary
- TPT Global Tech has filed an amended 10-Q report for the period ending June 30, 2024, to restate its financial statements.
- The restatement corrects an error related to an agreement to convert debt to preferred stock, which created a derivative liability.
- The derivative liability was valued at $821,555 at inception and $810,940 as of June 30, 2024.
- For the three months ended June 30, 2024, the company reported total revenues of $447,304, a decrease from $983,110 in the prior period.
- Gross profit for the three months ended June 30, 2024, was a loss of ($6,764) compared to a profit of $770,624 in the prior period.
- Operating expenses for the three months ended June 30, 2024, were $1,234,705, compared to $1,012,108 in the prior period.
- The company recognized a net income of $4,888,475 for the three months ended June 30, 2024, versus a loss of ($1,363,349) for the prior period.
- For the six months ended June 30, 2024, the company reported total revenues of $845,402, a decrease from $2,084,616 in the prior period.
- Gross profit for the six months ended June 30, 2024, was a loss of ($139,320) compared to a profit of $1,040,785 in the prior period.
- Operating expenses for the six months ended June 30, 2024, were $2,331,202, compared to $2,899,587 in the prior period.
- The company recognized a net income of $1,653,983 for the six months ended June 30, 2024, versus a loss of ($2,836,060) for the prior period.
- The company's auditor has expressed substantial doubt about its ability to continue as a going concern.
- As of June 30, 2024, the company had an accumulated deficit totaling $116,044,394.
- The company needs to obtain additional debt or equity financing and look for companies with cash flow positive operations that it can acquire to continue as a going concern.
Sentiment
Score: 4
Explanation: The document presents a mixed sentiment. While the company reports net income for the period, significant revenue declines and a going concern warning from the auditor raise serious concerns about the company's financial stability. The restatement of financials due to accounting errors further contributes to a negative outlook.
Positives
- The company reported a net income of $4,888,475 for the three months ended June 30, 2024, a significant improvement from the net loss in the same period last year.
- The company recognized a gain of $4,681,075 relating to trouble debt restructuring for the current period.
- The company recognized a gain on extinguishment of debt of $475,485 for the three months ended June 30, 2024.
- The company entered into a Settlement Agreement with EMA Financial, LLC, resulting in a gain on troubled debt restructuring of $3,938,347.
- The company entered into a Settlement Agreement with American Tower, resulting in a gain on troubled debt restructuring of $742,728.
Negatives
- Revenue decreased significantly for both the three and six months ended June 30, 2024, compared to the same periods in 2023.
- Gross profit decreased significantly for both the three and six months ended June 30, 2024, compared to the same periods in 2023.
- The company's auditor has expressed substantial doubt about its ability to continue as a going concern, citing an accumulated deficit of $116,044,394.
- The company is in default under many of its derivative financial instruments.
- The company has a history of defaults on debt obligations and has been involved in multiple lawsuits related to unpaid debts.
Risks
- The company's ability to continue as a going concern is uncertain and dependent on securing additional financing or acquiring cash flow positive operations.
- The company faces substantial debt obligations and is in default under many of its derivative financial instruments.
- The company is involved in multiple lawsuits related to unpaid debts, which could result in significant financial liabilities.
- The company's internal control over financial reporting is not effective, which could lead to errors in financial reporting.
- The company's success depends on technological advances and the ability to successfully develop business relationships, which are subject to various risks and uncertainties.
Future Outlook
The company needs to obtain additional debt or equity financing and look for companies with cash flow positive operations that it can acquire to continue as a going concern.
Management Comments
- Due to the lack of personnel and outside directors, management concluded that the Company's disclosure controls and procedures are not effective as of such date.
- The Company anticipates that with further resources, the Company will expand both management and the board of directors with additional officers and independent directors in order to provide sufficient disclosure controls and procedures.
Industry Context
The company operates in the technology sector, providing telecommunications, medical technology, media content, and technology solutions. The industry is competitive and subject to technological advances, requiring the company to continuously innovate and adapt to changing market conditions.
Comparison to Industry Standards
- It is difficult to compare TPT Global Tech's results to industry standards due to its diverse business segments and small size.
- Larger telecommunications companies like Verizon and AT&T have significantly higher revenues and established infrastructure.
- Medical technology companies like Medtronic and Johnson & Johnson also have much larger scale and resources.
- TPT Global Tech's reliance on debt financing and history of defaults is not typical of well-established companies in these industries.
- The company's auditor's expression of doubt about its ability to continue as a going concern is a significant concern and not typical of financially stable companies.
Legal Proceedings
- The company is involved in multiple lawsuits related to unpaid debts, including lawsuits from EMA Financial, Pinnacle Towers, American Tower, Mr. Advance, CLOUDFUND, Fox Capital, and AHS Staffing.
- The company is also involved in a lawsuit from a former employee, Robert Serrett.
Related Party Transactions
- The company has amounts outstanding due to related parties of $1,448,822 as of June 30, 2024.
- The company entered into a Software Development agreement with Mr. and Mrs. Caudle for which a new note payable was created and employment agreements for Mrs. Caudle and her daughter were modified.
- The CEO of the Company, Stephen Thomas, signed an agreement with New Orbit Technologies, S.A.P.I. de C.V., a Mexican corporation, majority owned and controlled by Stephen Thomas, related to a license agreement for the distribution of TPT licensed products, software and services related to Lion Phone and VuMe within Mexico and Latin America.
Stakeholder Impact
- Shareholders face significant risk due to the company's financial instability and potential dilution from future equity offerings.
- Employees may be affected by potential layoffs or restructuring if the company is unable to secure additional financing.
- Customers may be impacted by potential service disruptions or changes in business operations.
- Creditors face increased risk of non-payment due to the company's debt obligations and financial difficulties.
Next Steps
- The company needs to secure additional debt or equity financing.
- The company needs to identify and acquire cash flow positive operations.
- The company needs to improve its internal control over financial reporting.
- The company needs to address the outstanding legal proceedings and debt obligations.
Key Dates
| Date | Description |
|---|---|
| 1988 | The Company was originally incorporated in the state of Florida. |
| 2014-06 | TPT Global, Inc., a Nevada corporation formed in June 2014, merged with Ally Pharma US, Inc., a Florida corporation. |
| 2015-02 | The Board of Directors authorized the issuance of 1,000,000 shares of Series A Preferred Stock to Stephen Thomas. |
| 2015-02 | The Company designated 3,000,000 shares of Preferred Stock as Series B Convertible Preferred Stock. |
| 2016-12 | Technology acquired in December 2016 from the owner of the Lion Phone. |
| 2017-12-31 | VuMe, formerly ViewMe Live technology acquired in 2017. |
| 2018-05-31 | The bank loan principal was for $360,000 dated May 28, 2019 which bore interest at Prime plus 6%, 14.5% as of December 31, 2023. |
| 2018-05 | The Company designated 3,000,000 shares of Preferred Stock as Series C Convertible Preferred Stock. |
| 2019-06-11 | The Company consummated a Securities Purchase Agreement with EMA Financial, LLC. (EMA) for the purchase of a $250,000 Convertible Promissory Note (EMA Convertible Promissory Note). |
| 2020-05-06 | Promissory note which was entered into on May 6, 2020 for the acquisition of Media Live One Platform from Steve and Yuanbing Caudle for the further development of software. |
| 2020-07-06 | The Company amended its Series D Designation from January 14, 2020. |
| 2020-10-01 | The Company entered an operating agreement to lease colocation space for 5 years. |
| 2021-04 | The Company entered into office space for Blue Collar which started April 2021 and runs for 3 years. |
| 2021-10-06 | TPT Global Tech, Inc. and FirstFire Global Opportunities Fund, LLC. entered into a convertible promissory note totaling $1,087,000 and a securities purchase agreement (FirstFire Note). |
| 2021-10-13 | TPT Global Tech, Inc. and Cavalry Investment Fund LP entered into a convertible promissory note totaling $271,250 and a securities purchase agreement (Cavalry Investment Note). |
| 2021-10-13 | TPT Global Tech, Inc. and Cavalry Fund I, LP entered into a convertible promissory note totaling $815,250 and a securities purchase agreement (Cavalry Fund I Note). |
| 2021-11-10 | The Company amended its Series E Designation from November 10, 2021. |
| 2022-01-31 | TPT Global Tech, Inc. and Blue Lake Partners, LLC entered into a convertible promissory note totaling $271,750 and a securities purchase agreement (Blue Lake Note). |
| 2022-03-20 | The Company amended its Series E Designation from November 10, 2021. |
| 2022-03-25 | Software Acquisition Agreement dated as of March 25, 2022 for shares of the Companys Series E Preferred Stock. |
| 2022-04-01 | The Company entered into a Future Receivable Sale and Purchase Agreement (Mr. Advance Agreement) with Mr. Advance LLC (Mr. Advance). |
| 2022-04-01 | The Company entered into a Future Receipts Sale and Purchase Agreement (CLOUDFUND Agreement) with CLOUDFUND LLC (CLOUDFUND). |
| 2022-04-27 | The Company entered into a Future Receivables Sale and Purchase Agreement (Fox Capital Agreement) with Fox Capital Group, Inc. (Fox Capital). |
| 2022-06-13 | TPT Global Tech, Inc. and 1800 Diagonal Lending LLC entered into a $200,760 promissory note agreement (1800 Diagonal Note). |
| 2022-06-29 | TPT Strategic entered into a definitive agreement for the acquisition of the assets and Information Security and Training LLC (IST LLC or IST). |
| 2023-02-08 | TPT Global Tech, Inc. and 1800 Diagonal Lending LLC entered into a $81,675 promissory note agreement (1800 Diagonal Note #2). |
| 2023-02-09 | TPT Global Tech, Inc. and FirstFire Global Opportunities Fund, LLC (First Fire) entered into a $330,000 promissory note agreement (Firstfire Note #2). |
| 2023-03-24 | An Agreement and Plan of Merger was made and entered into as of March 24, 2023 by and among TPT SpeedConnect LLC, a Colorado Limited Liability Company (wholly-owned subsidiary of TPT Global Tech, Inc.) and Asberry 22 Holdings, Inc., a Delaware Corporation. |
| 2023-07-31 | The Company and Michael Murphy, shareholder and debt holder, entered into a Conversion Shares Purchase Agreement. |
| 2023-09-11 | Everett Lanier and the Company agreed to a Settlement Agreement and Mutual Release (Settlement Agreement). |
| 2023-10-31 | The Company entered into an Acquisition and Purchase Agreement with Geokall UK Ltd. |
| 2023-11-08 | TPT Global Tech, Inc. and 1800 Diagonal Lending LLC entered into a 9% Convertible Promissory Note totaling $83,750 (the 1800 Diagonal Note #3). |
| 2024-01-17 | The Board of Directors of the Company amended the Articles of Incorporation to increase the authorized number of common shares by Ten Billion Five Hundred Million (10,500,000,000). |
| 2024-01-30 | TPT Global Tech, Inc. dba TPT Entertainment and Media LLC and Roy D. Foreman (Mr. Foreman) entered into a Business Development and Professional Services Consulting Agreement. |
| 2024-02-01 | The Board of Directors and Majority Shareholder of TPT Global Tech, Inc. approved and adopted an amendment and restatement of the 2024 TPT Global Tech, Inc. Stock Option, Compensation, and Award Incentive Plan. |
| 2024-02-07 | TPT Global Tech, Inc. and 1800 Diagonal Lending LLC entered into a Convertible Promissory Note (1800 Diagonal Note #4) totaling $92,000. |
| 2024-02-14 | The Company entered into a Standby Equity Commitment Agreement, dated February 14, 2024 (the SECA) with MacRab LLC. |
| 2024-03-25 | TPT Global Tech, Inc. and 1800 Diagonal Lending LLC entered into a Convertible Promissory Note (1800 Diagonal Note #5) totaling $66,000. |
| 2024-04-09 | The Company entered into an Acquisition and Purchase Agreement with Geokall UK Ltd. (Geokall), a UK Limited Company, and its owners (Sellers) (altogether, the Parties) for all of the assets, liabilities, intellectual property, and technology of Geokall. |
| 2024-04-15 | TPT Global Tech, Inc. dba TPT Entertainment and Media LLC and D. Sean Jones (Mr. Jones) entered into a Business Development and Professional Services Consulting Agreement. |
| 2024-05-14 | The Company and EMA entered into a Settlement Agreement and Release (EMA Settlement). |
| 2024-05-14 | TPT Global Tech, Inc. and FirstFire Global Opportunities Fund, LLC (First Fire) entered into a $83,333 promissory note agreement (Firstfire Note #3). |
| 2024-06-08 | The Company designated 3,000,000 shares of Preferred Stock as Series F Convertible Preferred Stock. |
| 2024-06-08 | The Company designated 8,000,000 shares of Preferred Stock as Series G Convertible Preferred Stock. |
| 2024-06-11 | American Tower received a summary judgment in the US District Court for the District of Colorado for these claims which amounted to $3,977,702, including $1,062,873 in accrued interest and legal fees. |
| 2024-06-19 | The Company and its subsidiary TPT Strategic, Inc. entered into an Acquisition and Purchase Agreement with Urban Icon Holdings LLC. |
| 2024-06-25 | The Company and American Tower entered into a Settlement Agreement to be paid of $1,000,000 for past due tower payments, $85,000 in attorney fees and $1,000,000 in costs to remove the Companys equipment from American Towers towers. |
| 2024-06-30 | End of reporting period. |
| 2024-09-06 | TPT Global Tech, Inc. and Cavalry Fund I, LP entered into a $83,333 promissory note agreement (Cavalry Fund I Note #2). |
| 2024-09-09 | The Company entered into an Acquisition and Purchase Agreement with Geokall UK Ltd. (Geokall), a UK Limited Company, and its owners (Sellers) (altogether, the Parties) for all of the assets, liabilities, intellectual property, and technology of Geokall. |
| 2025-02-07 | Report signed. |
Keywords
restatement, financials, derivative liability, going concern, debt conversion, TPT Global Tech, net income, revenue, lawsuits, defaults
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