| **UNITED STATES**                      |
|----------------------------------------|
| **SECURITIES AND EXCHANGE COMMISSION** |
| **Washington, D.C.  20549**       |
| **   **                 |
|                                   |
| **FORM 10-K/A**

(Amendment No. 1)     |
|                              |

 

**[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the fiscal year ended:**December 31, 2018**

 

**[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**

**Commission File No. 333-150029**

 

**BERGIO INTERNATIONAL, INC.**

(Exact name of Registrant as specified in its charter)

 
| **Delaware**                             | **27-1338257**                       |
|------------------------------------------|--------------------------------------|
| (State of incorporation)****             | (IRS Employer Identification Number) |
|                                     |                                 |
| **12 Daniel Road E.**

**Fairfield, NJ** | **07007**                            |
| (Address of principal executive offices) | (Zip Code)                           |

 

Registrant's telephone number, including area code:**  ****(973) 227-3230**

 

Securities registered pursuant to Section 12(b) of the Act: **None**

 

Securities registered pursuant to Section 12(g) of the Act:**Common Stock, par value $0.00001**

 

Indicate by checkmark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes [  ] No [X]

 

Indicate by checkmark if registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes [  ] No [X]

 

Indicate by checkmark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [X]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ]    Accelerated filer [  ]    Non-accelerated filer [  ]    Smaller reporting company [X]

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Act).  Yes [  ] No [X]

 

The aggregate market value of the voting and non-voting common stock (par value $0.00001 per share) held by non-affiliates on June 30, 2018 (the last business day of our most recently completed second fiscal quarter) was $490,760 using the closing price on June 30, 2018.

 

As of August 20, 2019 the registrant had 5,391,410,729 shares of common stock, par value $0.00001 per share, outstanding.

 

Documents Incorporated By Reference:  **None**.

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**EXPLANATORY NOTE**

 

Bergio International, Inc. (referred to as “we,” “us,” “our,” or the “Company”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment No. 1”) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission (the “SEC”) on August 21, 2019 (the “Original Form 10-K”). This Amendment No. 1 amends the Original Form 10-K to provide audit opinions covering all periods of audited financial statements required to be presented in this form, and to provide the consent of our auditors related to the use of their report by reference into a previously filed registration statement.

 

Except as described above, no other changes have been made to the Original Form 10-K and continue to speak as of their respective dates. Other forward-looking statements made in the Original Form 10-K have not been revised to reflect events, results or developments that occurred or facts that became known to the Company after the date of the Original Form 10-K, and such forward-looking statements should be read in conjunction with the Original Form 10-K and the Company’s filings with the SEC subsequent to the Original Form 10-K, including Amendment No. 1. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Form 10-K.

 

In connection with the filing of this Amendment No. 1 and pursuant to the rules of the SEC, the Company is including with this Amendment No. 1 currently dated certifications, required by Rule 13a-14(a) under the Exchange Act, by its chief executive officer and principal financial officer.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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**BERGIO INTERNATIONAL, INC.**

 

**TABLE OF CONTENTS**

 
| **PART I**                                                                                                            | 4      |
|-----------------------------------------------------------------------------------------------------------------------|--------|
| Item 1. Business                                                                                                      | 4      |
| Item 1A. Risk Factors.                                                                                                | 9      |
| Item 1B. Unresolved Staff Comments.                                                                                   | 15     |
| Item 2. Properties.                                                                                                   | 15     |
| Item 3. Legal Proceedings.                                                                                            | 16     |
| Item 4. Mine Safety Disclosures.                                                                                      | 16     |
|                                                                                                                  |   |
| **PART II**                                                                                                           | 17     |
| Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. | 17     |
| Item 6. Selected Financial Data.                                                                                      | 18     |
| Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.                   | 18     |
| Item 7A. Quantitative and Qualitative Disclosures about Market Risk.                                                  | 25     |
| Item 8. Financial Statements and Supplementary Data.                                                                  | 25     |
| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                          | 26     |
| Item 9A. Controls and Procedures                                                                                      | 26     |
| Item 9B. Other Information.                                                                                           | 27     |
|                                                                                                                  |   |
| **PART III**                                                                                                          | 28     |
| Item 10. Directors and Executive Officers of the Registrant and Corporate Governance.                                 | 28     |
| Item 11. Executive Compensation.                                                                                      | 30     |
| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.              | 33     |
| Item 13. Certain Relationships and Related Transactions, and Director Independence                                    | 34     |
| Item 15. Exhibits and Financial Statement Schedules.                                                                  | 35     |
|                                                                                                                  |   |
| **Signatures**                                                                                                        | 38     |

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS**

 

Included in this Annual Report on Form 10-K are “forward-looking” statements, as well as historical information. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that the expectations reflected in these forward-looking statements will prove to be correct. Our actual results could differ materially from those anticipated in forward-looking statements as a result of certain factors, including matters described in the section titled “Risk Factors.” Forward-looking statements include those that use forward-looking terminology, such as the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “project,” “plan,” “will,” “shall,” “should,” and similar expressions, including when used in the negative. Although we believe that the expectations reflected in these forward-looking statements are reasonable and achievable, these statements involve risks and uncertainties and we cannot assure you that actual results will be consistent with these forward-looking statements. We undertake no obligation to update or revise these forward-looking statements, whether to reflect events or circumstances after the date initially filed or published, to reflect the occurrence of unanticipated events or otherwise.

 

We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements in this Report are based on assumptions management believes are reasonable. However, due to the uncertainties associated with forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly update any of them in light of new information, future events, or otherwise.

 

From time to time, forward-looking statements also are included in our other periodic reports on Forms 10-Q and 8-K, in our press releases, in our presentations, on our website and in other materials released to the public. Any or all of the forward-looking statements included in this Report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

 

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

 

For discussion of factors that we believe could cause our actual results to differ materially from expected and historical results see “Item 1A - Risk Factors” below.

 

In this Report, unless otherwise indicated or the context otherwise requires, “Bergio”, the “Company”, “we”, “us” or “our” refer to Bergio International, Inc., a Delaware corporation, and its subsidiaries.

 

 

 

 

 

 

 

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3

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**PART I**
 

**Item 1. Business**
 

**Company Overview**

 

We were incorporated as “Alba Mineral Exploration, Inc.” on July 24, 2007, in the State of Delaware for the purpose of engaging in the exploration of mineral properties. On October 21, 2009, we entered into an exchange agreement (the “Exchange Agreement”) with Diamond Information Institute, Inc. (“Diamond Information Institute”), whereby we acquired all of the issued and outstanding common stock of Diamond Information Institute and changed the name of the company to Bergio International, Inc.

 

The Bergio brand is our most important asset. The Bergio brand is associated with high-quality, handcrafted and individually designed pieces with European sensibility, Italian craftsmanship and a bold flair for the unexpected.  Bergio, is one of the most coveted brands of fine jewelry. Established in 1995, Bergio’s signature innovative design, coupled with extraordinary diamonds and precious stones, earned the company recognition as a highly sought-after purveyor of rare and exquisite treasures from around the globe. As President, CEO and Head Designer of Bergio, Berge Abajian performs a highly successful balancing act, accomplished with equal parts precision and passion. An informed and inspirational leader, Berge directs the company with the eye and soul of a designer and the mind of a businessman. The role that is perhaps closest to his heart, however, is that of designer. With family jewelry roots reaching back the 1930s, Berge is a third generation jeweler and a purist when it comes to design. Berge’s understanding of every aspect, in both design and manufacturing, creates collections that are nothing short of peerless in craftsmanship and style. Berge creates a collection, he looks well beyond the drawing board. Berge focuses on the woman who will ultimately wear his pieces, bringing to creation a magnificent piece of jewelry that reflects the beauty and vitality a woman possesses. Bergio creations are a seamless blend of classic elegance and subtle flair, adding to a woman’s charm while never overpowering her.

 

It is our intention to establish Bergio as a holding company for the purpose of establishing retails stores worldwide. Our branded product lines are products and/or collections designed by our designer and CEO Berge Abajian and will be the centerpiece of our retail stores. We also intend to complement our own quality-designed jewelry with other products and our own specially-designed handbags. This is in line with our strategy and belief that a brand name can create an association with innovation, design and quality which helps add value to the individual products as well as facilitate the introduction of new products.

 

It is our intention to open elegant stores in “high-end” areas and provide excellent service in our stores which will be staffed with knowledgeable professionals.

 

We also intend to sell our products on a wholesale basis to limited customers.

 

On March 5, 2014, the Company formed a wholly-owned subsidiary called Crown Luxe, Inc. in the State of Delaware (“Crown Luxe”). Crown Lux was established to operate the Company’s first retail store, which was opened in Bergen County, New Jersey in the fourth quarter of 2014.

 

During the fall of 2018, we opened our second retail store at the new Ocean Resort Casino in Atlantic City, New Jersey. We are also contemplating the opening of new stores in the future.

 

The Company has instituted various cost saving measures to conserve cash and has worked with its debtors in an attempt to negotiate the debt terms. The Company has been also investigating various strategies to increase sales and expand its business. The Company is in negotiations with some potential partners, but, at this time, there is nothing concrete, but the Company remains positive about its prospects. However, there is no assurance that the Company will be successful in its endeavors or that it will be able to increase its business.

 

Our future operations are contingent upon increasing revenues and raising capital for on-going operations and expansion of our product lines. Because we have a limited operating history, you may have difficulty evaluating our business and future prospects.

4

**Item 1. Business (continued)**

 

**Principal Products and Services**

 

Our products consist of a wide range of unique jewelry styles and designs made from precious metals such as gold, platinum and Karat gold, as well as other precious stones. We continuously innovate and change our designs based upon consumer trends. As a result of new designs being created we believe we are able to differentiate ourselves from our competition and strengthen our brands. We sell our products to our customers at price points that reflect the market price of the base material as well as design and processing fees.

 

We believe that we are a trendsetter in jewelry manufacturing. As a result, we come out with a variety of products throughout the year that we believe have commercial potential to meet what we feel are new trends within the industry. The “Bergio” designs consist of upscale jewelry that includes white diamonds, yellow diamonds, pearls, and colored stones, in 18K gold, platinum, and palladium. We currently design and produce approximately 100 to 150 product styles. Current retail prices for our products range from $400 to $200,000.

 

Our product range is divided into three fashion lines: (i) an 18K gold line, (ii) a bridal line, and (iii) a couture and/or one of kind pieces. Our Chief Executive Officer and director, Mr. Abajian, consults regularly with the design teams to design and create new products and product lines. Typically, new products come on line approximately every year and most recently, Bergio collections include Byzantine, Cestino, and Safari Collections, which consist of approximately 35 pieces made with pink gold and diamonds. Our offerings also include the Sistina and Rocca Collections. Depending on the timing and styling at any point in time, our products and collections would fall in one of the various categories shown below:

 

1.Whimsical. The whimsical line includes charms, crosses and other “add-on” pieces. 

 

2.Fine. The proposed middle line will consist of fashion jewelry utilizing colored stones, diamonds and pearls applied to a variety of applications such as necklaces, pendants, earrings, bracelets and rings. The metals that we intend to use for the Middle line include platinum, 18K white & yellow gold. 

 

3.Couture. The Couture line is our most luxurious line, and consists of one-of-a-kind pieces, new showcase products each year, and predominantly utilizes diamonds, platinum and other precious metals and stones of the highest grade and quality available. 

 

4.Bridal. The Bridal line is our core business. We attempt to stay on the forefront of trends and designs in the bridal market with the latest in wedding sets, engagement rings and wedding bands for both men and women. 

 

Each year, we attempt to expand and/or enhance these lines, while constantly seeking to identify trends that we believe exist in the market for new styles or types of merchandise. Design and innovation are the primary focus of our manufacturing and we are less concerned with the supply and capacity of raw materials. Mr. Abajian with his contacts, which are located mostly overseas, regularly meets to discuss, conceptualize and develop Bergio’s various products and collections. When necessary, additional suppliers and design teams can be brought in as needed. Management intends to maintain a diverse line of jewelry to mitigate concentration of sales and continuously expand our market reach.

 

 

 

 

 

 

 

5

**Item 1. Business (continued)**

 

**Competition and Market Overview**

 

The jewelry design and manufacture industry is extremely competitive and has low barriers to entry. We compete with other jewelry designers and manufacturers of upscale jewelry as well as retail jewelry stores. There are over 2,500 jewelry design and manufacture companies worldwide, several of which have greater experience, brand name recognition and financial resources than Bergio.

 

Our management believes that the jewelry industry competes in the global marketplace and therefore must be adaptable to remain competitive. Consumer spending for discretionary goods such as jewelry is sensitive to changes in consumer confidence and ultimately consumer confidence is affected by general business considerations in the U.S. economy. Consumer discretionary spending generally declines during times of falling consumer confidence, which may affect the retail sale of our products. U.S. consumer confidence reflected these slowing conditions throughout the last few years. The impact of the slowing U.S. economy is not usually known until the third quarter of any given year in our industry, thus it is hard to estimate the actual impact the slowing economy will have on our business.

 

We believe that a stronger economy, more spending by young professionals with an overall trend toward luxury products will lead to future growth. Therefore, we intend to make strong efforts to maintain our brand in the industry through our focus on the innovation and design of our products as well as being able to consolidate and increase cost efficiency when possible through acquisitions.

 

**Marketing and Distribution**

 

It is our intention to establish Bergio as a holding company for the purpose of establishing retails stores worldwide. Our branded product lines are products and/or collections designed by our designer and CEO Berge Abajian and will be the centerpiece of our retail stores. We also intend to complement our own quality-designed jewelry with other products and our own specially-designed handbags. This is in line with our strategy and belief that a brand name can create an association with innovation, design and quality which helps add value to the individual products as well as facilitate the introduction of new products.

 

It is our intention to open elegant stores in “high-end” areas and provide excellent service in our stores which will be staffed with knowledgeable professionals.

 

We also intend to sell our products on a wholesale basis to limited customers.

 

We have spent over $3 million in branding the Bergio name through tradeshows, trade advertising, national advertising and billboard advertising since launching the line in 1995. Our products consist of a wide range of unique styles and designs made from precious metals such as, gold, platinum, and Karat gold, as well as diamonds and other precious stones. We have manufacturing control over our line of products.

 

**Customers**

 

During the year ended December 31, 2018, the Company had one customer that accounted for 6% of total sales. No other no single customer accounted for over 5% or more of our annual sales. During the year ended December 31, 2017, the Company had one customer that accounted for 9% of total sales. No other no single customer accounted for over 5% or more of our annual sales.

 

As of December 31, 2018 accounts receivable, net amounted to only $39,354 and three customers represented 91% of this balance. As of December 31, 2017 accounts receivable, net amounted to only $61,511 and no one customer represented 93% significant amount of this balance. This amount was collected in the first quarter of 2018.

6

**Item 1. Business (continued)**

 

**Sources and Availability of Raw Materials and Principal Suppliers**

 

Most of the inventory and raw materials we purchase occurs through our manufacturers located in Europe. The inventory that we directly maintain is based on recent sales and revenues of our products but ultimately is at the discretion of Mr. Abajian, and his experience in the industry. Our inventories are commodities that can be incorporated into future products or can be sold on the open market. Additionally, we perform physical inventory inspections on a quarterly basis to assess upcoming styling needs and consider the current pricing in metals and stones needed for our products.

 

We acquire all raw gemstones, precious metals and other raw materials used for manufacturing our products on the open market. We are not constrained in our purchasing by any contracts with any suppliers and acquire raw material based upon, among other things, availability and price on the open wholesale market.

 

Product for U.S. consumption is now produced in the U.S, and our contracted manufacturer in Italy. Our manufacturing supplier in Italy, who procures the raw materials in accordance with the specifications and designs submitted by Bergio..  However, the general supply of precious metals and stones used by us can be reasonably forecast even though the prices will fluctuate. Any price differentials in the precious metals and stones will typically be passed on to the customer.

 

For the raw materials not procured by contracted manufacturers, we have approximately five suppliers that compete for our business, with our largest gold suppliers being ASD Casting Inc. Most of our precious stones are purchased from various diamond dealers. We do not have any formal agreements with any of our suppliers but have established an ongoing relationship with each of our suppliers.

 

**Intellectual Property**

 

Bergio is a federally registered trademarked name that we own. Since the first trademark of “Bergio” was filed, all advertising, marketing, trade shows and overall presentation of our product to the public has prominently displayed this trademark.  As additional lines are designed and added to our products, we may trademark new names to distinguish particular products and jewelry lines.

 

**Research and Development**

 

There were no expenses incurred for research and development in 2019 and 2018.

 

**Employees**

 

As of August 14, 2019, we had 3 full-time employees and 2 part-time employees. Our current employees are sales and marketing personnel.  No personnel are covered by a collective bargaining agreement. We use the services of independent consultants and contractors from time to time when needed.

 

**Environmental Regulation and Compliance**

 

The United States environmental laws do not materially impact our manufacturing as we are using state of the art equipment that complies with all relevant environmental laws.

 

Approximately 5% of the Company’s manufacturing is contracted to quality suppliers in the vicinity of Valenza, Italy, with the remaining 95% of setting and finishing work being conducted in our Fairfield, New Jersey facility. The setting and finishing work done in our New Jersey facility involves the use of precision lasers, rather than using old soldering procedures which uses gas and oxygen to assemble different elements. Soap and water is used as a standard to clean the jewelry. Also, a standard polishing compound is used for the finishing work but it does not have a material impact on our cost and effect of compliance with environmental laws.

7

 

**Item 1. Business (continued)**

 

**Government Regulation**

 

Currently, we are subject to all of the government regulations that regulate businesses generally such as compliance with regulatory requirements of federal, state, and local agencies and authorities, including regulations concerning workplace safety, labor relations, and disadvantaged businesses. In addition, our operations are affected by federal and state laws relating to marketing practices in the retail jewelry industry. We are subject to the jurisdiction of federal, various state and other taxing authorities. From time to time, these taxing authorities review or audit our business.

 

**Where You Can Find More Information**

 

Our website address is www.bergio.com. We do not intend our website address to be an active link or to otherwise incorporate by reference the contents of the website into this Report. The public may read and copy any materials the Company files with the U.S. Securities and Exchange Commission (the “SEC”) at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0030. The SEC maintains an Internet website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

**Item 1A. Risk Factors**
 

**Risks Related To Our Business and Industry**

 

***WE HAVE HAD LIMITED OPERATIONS, HAVE INCURRED LOSSES SINCE INCEPTION, HAVE SUFFICIENT CASH TO SUSTAIN OUR OPERATIONS FOR A PERIOD OF APPROXIMATELY TWO MONTHS, AND WE NEED ADDITIONAL CAPITAL TO EXECUTE OUR BUSINESS PLAN AND RECEIVED A GOING CONCERN OPINION IN PRIOR PERIODS.***

 

The Company has suffered recurring losses. As of December 31, 2018, the Company had no cash on hand and $419,568 in convertible debentures due on December 31, 2018. At December 31, 2018, the Company also had a stockholders’ deficit of $640,487. These factors raise substantial doubt about the Company's ability to continue as a going concern. The recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheet is dependent upon continued operations of the Company, which in turn, is dependent upon the Company's ability to raise capital and/or generate positive cash flows from operations.

 

Management plans to achieve profitability by increasing its business through opening additional retail stores. There can be no assurance that the Company can raise the required capital to support operations or increase sales to achieve profitable operations. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

 

***A DECLINE IN DISCRETIONARY CONSUMER SPENDING MAY ADVERSELY AFFECT OUR INDUSTRY, OUR OPERATIONS, AND ULTIMATELY OUR PROFITABILITY.***

 

Luxury products, such as fine jewelry, are discretionary purchases for consumers. Any reduction in consumer discretionary spending or disposable income may affect the jewelry industry more significantly than other industries. Many economic factors outside of our control could affect consumer discretionary spending, including the financial markets, consumer credit availability, prevailing interest rates, energy costs, employment levels, salary levels, and tax rates. Any reduction in discretionary consumer spending could materially adversely affect our business and financial condition.

 

***OUR OPERATING RESULTS MAY BE ADVERSELY IMPACTED BY WORLDWIDE POLITICAL AND ECONOMIC UNCERTAINTIES AND SPECIFIC CONDITIONS IN THE MARKETS WE ADDRESS.***

 

In the recent past, general worldwide economic conditions have experienced a downturn due to slower economic activity, concerns about inflation, increased energy costs, decreased consumer confidence, and reduced corporate profits and capital spending, and adverse business conditions. Any continuation or worsening of the current global economic and financial conditions could materially adversely affect (i) our ability to raise, or the cost of, needed capital, (ii) demand for our current and future products and (iii) our ability to commercialize products. We cannot predict the timing, strength, or duration of any economic slowdown or subsequent economic recovery, worldwide, or in the display industry.

 

***THE LOSS OF THE SERVICERS OF OUR KEY EMPLOYEES, PARTICULARLY THE SERVICES RENDERED BY OUR CHIEF EXECUTIVE OFFICER AND DIRECTOR, MR. BERGE ABAJIAN, COULD HARM OUR BUSINESS.***

 

We believe our success will depend, to a significant extent, on the efforts and abilities of Berge Abajian, our Chief Executive Officer. If we lost Mr. Abajian, we would be forced to expend significant time and money in the pursuit of a replacement, which would result in both a delay in the implementation of our business plan and the diversion of limited working capital. We can give you no assurance that we could find a satisfactory replacement for Mr. Abajian at all, or on terms that are not unduly expensive or burdensome.

 

 

9

 

**Item 1A. Risk Factors (continued)**

 

**Risks Related To Our Business and Industry (continued)**

 

***OUR FUTURE SUCCESS DEPENDS UPON, IN LARGE PART, OUR CONTINUING ABILITY TO ATTRACT AND RETAIN QUALIFIED PERSONNEL.***

 

If we grow and implement our business plan, we will need to add managerial talent to support our business plan. There is no guarantee that we will be successful in adding such managerial talent. These professionals are regularly recruited by other companies and may choose to change companies. Given our relatively small size compared to some of our competitors, the performance of our business may be more adversely affected than our competitors would be if we lose well-performing employees and are unable to attract new ones.

 

***BECAUSE WE INTEND TO OPEN NEW RETAIL STORES AND SUCH ACTIVITY INVOLVES A NUMBER OF RISKS, OUR BUSINESS MAY SUFFER.***

 

We may consider acquisitions of assets or other business.  Any acquisition or opening of another retail store involves a number of risks that could fail to meet our expectations and adversely affect our profitability.  For example:

 

·The acquired assets or business may not achieve expected results; 

 

·We may incur substantial, unanticipated costs, delays or other operational or financial problems when integrating the acquired assets; 

 

·We may not be able to retain key personnel of an acquired business; 

 

·We may not be able to raise the required capital to expand; 

 

·Our management’s attention may be diverted; or 

 

·Our management may not be able to manage the acquired assets or combined entity effectively or to make acquisitions and grow our business internally at the same time. 

 

If these problems arise we may not realize the expected benefits of an acquisition.

 

***BECAUSE THE JEWELRY INDUSTRY IN GENERAL IS AFFECTED BY FLUCTUATIONS IN THE PRICES OF PRECIOUS METALS AND PRECIOUS AND SEMI-PRECIOUS STONES, WE COULD EXPERIENCE INCREASED OPERATING COSTS THAT WILL AFFECT OUR BOTTOM LINE.***

 

The availability and prices of gold, diamonds, and other precious metals and precious and semi-precious stones may be influenced by cartels, political instability in exporting countries and inflation.

 

Shortages of these materials or sharp changes in their prices could have a material adverse effect on our results of operations or financial condition. A significant change in prices of key commodities, including gold, could adversely affect our business or reduce operating margins and impact consumer demand if retail prices increased significantly, even though we historically incorporate any increases in the purchase of raw materials to our consumers. Additionally, a significant disruption in our supply of gold or other commodities could decrease the production and shipping levels of our products, which may materially increase our operating costs and ultimately affect our profit margins.

 

 

 

10

 

**Item 1A. Risk Factors (continued)**

 

**Risks Related To Our Business and Industry (continued)**

 

***BECAUSE WE DEPEND ON OUR ABILITY TO IDENTIFY AND RESPOND TO FASHION TRENDS, IF WE MISJUDGE THESE TRENDS, OUR ABILITY TO MAINTAIN AND GAIN MARKET SHARE WILL BE EFFECTED.***

 

The jewelry industry is subject to rapidly changing fashion trends and shifting consumer demands. Accordingly, our success may depend on the priority that our target customers place on fashion and our ability to anticipate, identify, and capitalize upon emerging fashion trends. If we misjudge fashion trends or are unable to adjust our products in a timely manner, our net sales may decline or fail to meet expectations and any excess inventory may be sold at lower prices.

 

***OUR ABILITY TO MAINTAIN OR INCREASE OUR REVENUES COULD BE HARMED IF WE ARE UNABLE TO STRENGTHEN AND MAINTAIN OUR BRAND IMAGE.***

 

We have spent significant amounts of time and money in branding our Bergio and Bergio Bridal lines. We believe that primary factors in determining customer buying decisions, especially in the jewelry industry, are determined by price, confidence in the merchandise and quality associated with a brand. The ability to differentiate products from competitors of the Company has been a factor in attracting consumers. However, if the Company’s ability to promote its brand fails to garner brand recognition, its ability to generate revenues may suffer. If the Company fails to differentiate its products, its ability to sell its products wholesale will be adversely affected. These factors could result in lower selling prices and sales volumes, which could adversely affect its financial condition and results of operations.

 

***IF WE WERE TO EXPERIENCE SUBSTANTIAL DEFAULTS BY OUR CUSTOMERS ON ACCOUNTS RECEIVABLE, THIS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR LIQUIDITY AND RESULTS OF OPERATIONS.***

 

If customers responsible for a large amount of accounts receivable were to become insolvent or otherwise unable to pay for our products, or to make payments in a timely manner, our liquidity and results of operations could be materially adversely affected. An economic or industry downturn could materially affect the ability to collect these accounts receivable, which could then result in longer payment cycles, increased collections costs and defaults in excess of management’s expectations. A significant deterioration in the ability to collect on accounts receivable could affect our cash flow and working capital position.

 

***WE MAY NOT BE ABLE TO INCREASE SALES OR OTHERWISE SUCCESSFULLY OPERATE OUR BUSINESS, WHICH COULD HAVE A SIGNIFICANT NEGATIVE IMPACT ON OUR FINANCIAL CONDITION.***

 

We believe that the key to our success is to increase our revenues and available cash. We may not have the resources required to promote our business and its potential benefits. If we are unable to gain market acceptance of our business, we will not be able to generate enough revenue to achieve and maintain profitability or to continue our operations.

 

We may not be able to increase our sales or effectively operate our business. To the extent we are unable to achieve sales growth, we may continue to incur losses. We may not be successful or make progress in the growth and operation of our business. Our current and future expense levels are based on operating plans and estimates of future sales and revenues and are subject to increase as strategies are implemented. Even if our sales grow, we may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall.

 

Further, if we substantially increase our operating expenses to increase sales and marketing, and such expenses are not subsequently followed by increased revenues, our operating performance and results would be adversely affected and, if sustained, could have a material adverse effect on our business. To the extent we implement cost reduction efforts to align our costs with revenue, our sales could be adversely affected.

11

 

**Item 1A. Risk Factors (continued)**

 

**Risks Related To Our Business and Industry (continued)**

 

***WE MAY BE UNABLE TO MANAGE GROWTH, WHICH MAY IMPACT OUR POTENTIAL PROFITABILITY.***

 

Successful implementation of our business strategy requires us to manage our growth. Growth could place an increasing strain on our management and financial resources. To manage growth effectively, we will need to:

 

·Establish definitive business strategies, goals and objectives; 

·Maintain a system of management controls; and 

·Attract and retain qualified personnel, as well as, develop, train and manage management-level and other employees. 

 

If we fail to manage our growth effectively, our business, financial condition or operating results could be materially harmed, and our stock price may decline.

 

**Risks Related to Our Common Stock**

 

***OUR COMMON STOCK IS CURRENTLY QUOTED ON THE OTC MARKETS (PINK SHEETS), WHICH MAY HAVE AN UNFAVORABLE IMPACT ON OUR STOCK PRICE AND LIQUIDITY.  ***

 

Our common stock is quoted on the Pink Sheets, an over-the-counter electronic quotation system maintained by the OTC Markets.  The quotation of our shares on the Pink Sheets may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future.

 

***THERE IS LIMITED LIQUIDITY ON THE PINK SHEETS, WHICH ENCHANCES THE VOLATILE NATURE OF OUR EQUITY.  ***

 

When fewer shares of a security are being traded on the Pink Sheets, volatility of prices may increase and price movement may outpace the ability to deliver accurate quote information.  Due to lower trading volumes in shares of our common stock, there may be a lower likelihood that orders for shares of our common stock will be executed, and current prices may differ significantly from the price that was quoted at the time of entry of the order.

**** 

***OUR COMMON STOCK IS CONSIDERED A “PENNY STOCK,” AND IS SUBJECT TO ADDITIONAL SALE AND TRADING REGULATIONS THAT MAY MAKE IT MORE DIFFICULT TO SELL.***

 

Our common stock is considered to be a “penny stock” since it does not qualify for one of the exemptions from the definition of “penny stock” under Section 3a51-1 of the Exchange Act. Our common stock is a “penny stock” because it meets one or more of the following conditions (i) the stock trades at a price less than $5.00 per share; (ii) it is not traded on a “recognized” national exchange; (iii) it is not quoted on the Nasdaq Stock Market, or even if so, has a price less than $5.00 per share; or (iv) is issued by a company that has been in business less than three years with net tangible assets less than $5 million.

 

The principal result or effect of being designated a “penny stock” is that securities broker-dealers participating in sales of our common stock will be subject to the “penny stock” regulations set forth in Rules 15-2 through 15g-9 promulgated under the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least two business days before effecting any transaction in a penny stock for the investor’s account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor.

12

 

**Item 1A. Risk Factors (continued)**

 

**Risks Related to Our Common Stock (continued)**

 

This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

 

***OUR CURRENT CHIEF EXECUTIVE OFFICER AND SOLE DIRECTOR, MR. BERGE ABAJIAN HAS SUFFICIENT VOTING POWER TO CONTROL THE VOTE ON SUBSTANTIALLY ALL CORPORATE MATTERS.***

 

Berge Abajian, our chief executive officer and sole director has sufficient voting power to control the vote on substantially all corporate matters.  Accordingly, Mr. Abajian will be able to determine the composition of our board of directors, will retain the effective voting power to approve all matters requiring shareholder approval, will prevail in matters requiring shareholder approval, including, in particular the election and removal of directors, and will continue to have significant influence over our business. As a result of his ownership and position in the Company, Mr. Abajian is able to influence all matters requiring shareholder action, including significant corporate transactions.  

 

***TRADING OF OUR STOCK MAY BE RESTRICTED BY THE U.S. SECURITIES & EXCHANGE COMMISSION’S PENNY STOCK REGULATIONS, WHICH MAY LIMIT A STOCKHOLDER’S ABILITY TO BUY AND SELL OUR STOCK.***

 

The U.S. Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”.  The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the U.S. Securities and Exchange Commission, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

 

 

 

13

 

**Item 1A. Risk Factors (continued)**

 

**Risks Related to Our Common Stock (continued)**

 

***WE CURRENTLY HAVE A LIMITED ACCOUNTING STAFF, AND IF WE FAIL TO DEVELOP OR MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY NOT BE ABLE TO REPORT OUR FINANCIAL RESULTS TIMELY AND ACCURATELY OR PREVENT FRAUD, WHICH WOULD LIKELY HAVE A NEGATIVE IMPACT ON THE MARKET PRICE OF OUR COMMON UNITS.***

 

We are subject to the public reporting requirements of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Effective internal controls are necessary for us to provide reliable and timely financial reports, prevent fraud and to operate successfully as a publicly traded partnership.

 

We prepare our consolidated financial statements in accordance with accounting and principles generally accepted in the United States, but our internal accounting controls may not meet all standards applicable to companies with publicly traded securities.  Our efforts to develop and maintain our internal controls may not be successful, and we may be unable to maintain effective controls over our financial processes and reporting in the future or to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002, which we refer to as Section 404. For example, Section 404 requires us, among other things, to annually review and report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal controls over financial reporting.  Based on management’s evaluation, as of December 31, 2018, our management concluded that we had several material weaknesses related to our internal controls over financial reporting (See Item 9A).

 

***THE MARKET PRICE FOR OUR COMMON SHARES IS PARTICULARLY VOLATILE GIVEN OUR STATUS AS A RELATIVELY UNKNOWN COMPANY WITH A SMALL AND THINLY TRADED PUBLIC FLOAT, LIMITED OPERATING HISTORY AND LACK OF PROFITS WHICH COULD LEAD TO WIDE FLUCTUATIONS IN OUR SHARE PRICE. YOU MAY BE UNABLE TO SELL YOUR COMMON SHARES AT OR ABOVE YOUR PURCHASE PRICE, WHICH MAY RESULT IN SUBSTANTIAL LOSSES TO YOU.***

 

The market for our common shares is characterized by significant price volatility when compared to the shares of larger, more established companies that trade on a national securities exchange and have large public floats, and we expect that our share price will continue to be more volatile than the shares of such larger, more established companies for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our common shares are, compared to the shares of such larger, more established companies, sporadically and thinly traded. As a consequence of this limited liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand. Secondly, we are a speculative or “risky” investment due to our limited operating history and lack of profits to date, and uncertainty of future market acceptance for our potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a larger, more established company that trades on a national securities exchange and has a large public float. Many of these factors are beyond our control and may decrease the market price of our common shares, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common shares will be at any time, including as to whether our common shares will sustain their current market prices, or as to what effect that the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price.

 

 

 

 

**** 

14

 

**Item 1A. Risk Factors (continued)**

 

**Risks Related to Our Common Stock (continued)**

 

***WE WILL INCUR INCREASED COSTS AS A RESULT OF BEING A PUBLIC COMPANY, WHICH COULD AFFECT OUR PROFITABILITY AND OPERATING RESULTS.***

 

We voluntarily file annual, quarterly and current reports with the SEC. In addition, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the rules subsequently implemented by the SEC and the Public Company Accounting Oversight Board have imposed various requirements on public companies, including requiring changes in corporate governance practices. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities of ours more time-consuming and costly. We expect to spend between $50,000 and $100,000 in legal and accounting expenses annually to comply with our SEC reporting obligations and Sarbanes-Oxley. These costs could affect profitability and our results of operations.

 

***WE HAVE NOT PAID DIVIDENDS IN THE PAST AND DO NOT EXPECT TO PAY DIVIDENDS FOR THE FORESEEABLE FUTURE. ANY RETURN ON INVESTMENT MAY BE LIMITED TO THE VALUE OF OUR COMMON STOCK.***

 

No cash dividends have been paid on the Company’s common stock. We expect that any income received from operations will be devoted to our future operations and growth. The Company does not expect to pay cash dividends in the near future. Payment of dividends would depend upon our profitability at the time, cash available for those dividends, and other factors as the Company’s board of directors may consider relevant. If the Company does not pay dividends, the Company’s common stock may be less valuable because a return on an investor’s investment will only occur if the Company’s stock price appreciates.

 

**Item 1B. Unresolved Staff Comments.**
 

Not applicable.

 

**Item 2. Properties.**
 

Currently, we lease a 1,730 square feet in Fairfield, NJ for our offices. The lease expired in August 31, 2010, and is being renewed on a month-to-month basis. 

 

We also lease a 1,000 square foot retail store in Closter, NJ. The initial term of the lease is for five years commencing May 1, 2014. The Company has the option extend its lease for five additional years upon giving 90 days’ notice. The five-year option is available up to 20 years.  Rent payments are $1,200 a month for the first two years, $1,275 for the third and fourth year, and $1,350 for the fifth year. If the Company renews its option for the second five years, the rent will begin at $1,415 and escalate to $1,665 in the fifth year. If the option is exercised for the third five-year term, rent will begin at $1,800 per month and escalate to $2,280 in the fifth year. The rent for the last five years, if the Company exercises its option, will be at the fair market value. The Company is also responsible for its proportionate share of common charges.

 

In June 2018, the Company entered into lease agreement Ocean Resort Casino at 500 Boardwalk in Atlantic City, NJ for approximately 1,000 square feet of retail space to open a retail store. The initial term is for five (5) years beginning November 18, 2018. Subject to certain conditions, the lease is renewable for two additional 5-year periods. Percentage rent payments will be based on 10% of gross sales at this location and will be paid monthly. The Company is also responsible for additional rent or common area charges (“CAM”) of approximately $1,100 monthly.

 

Additionally, we anticipate opening additional retail stores as we continue to implement our business plan throughout the United States. At the current time, our expansion plans are in the preliminary stages with no formal negotiations being conducted. Most likely no expansions will take place until additional revenues can be achieved or additional capital can be raised to help offset the costs associated with any expansion.

15

 
**Item 3. Legal Proceedings.**
 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations.  There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

**Item 4. Mine Safety Disclosures.**
 

Not applicable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16

 
**PART II**
 

**Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.**
 

**a) Market Information**

 

The Company’s common stock is listed by the OTC Markets on the Pink Sheets and trades under the symbol BRGO.

 

The following table sets forth the range of the high and low bid quotations of the common stock for the past two years in the over-the-counter market, as reported by the OTC Markets.  The quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions.

 

**Years Ended December 31,**

 

 

 

 

 

**2018**

 

**High**

 

 

**Low**

First Quarter

 

$

0.0001

 

 

$

0.0000

Second Quarter

 

 

0.0002

 

 

 

0.0001

Third Quarter

 

 

0.0001

 

 

 

0.0000

Fourth Quarter

 

 

0.0002

 

 

 

0.0000

**2017**

 

 

 

 

 

 

 

First Quarter

 

$

0.0002

 

 

$

0.0001

Second Quarter

 

 

0.0001

 

 

 

0.0001

Third Quarter

 

 

0.0001

 

 

 

0.0001

Fourth Quarter

 

 

0.0002

 

 

 

0.0001

 

**b) Holders**

 

As of December 31, 2018, the Company has 39 shareholders of record of its issued and outstanding common stock. This figure does not take into account those shareholders whose certificates are held in the name of broker-dealers or other nominees.

 

**c) Dividends**

 

We have not declared or paid any dividends on our common stock and intend to retain any future earnings to fund development and growth of our business. Therefore, we do not anticipate paying dividends on our common stock for the foreseeable future. There are no restrictions on our present ability to pay dividends to stockholders of our common stock, other than those prescribed by law.

 

**d) Securities Authorized for Issuance under Equity Compensation Plans**

 

As of December 31, 2018, we had an incentive stock and award plan under which 200,000 shares had been reserved for issuance. The following table shows information with respect this plan as of the fiscal year ended December 31, 2018:

 

**Plan category**

 

**Number of**

**securities to be**

**issued upon**

**exercise of**

**outstanding**

**options,**

**warrants and rights**

 

 

**Weighted**

**average**

**exercise price**

**of outstanding**

**options, warrants**

 

 

**Number of**

**securities**

**remaining**

**available for**

**future issuance**

**under Equity**

**Compensation Plans**

Equity Compensation Plans approved by shareholders

 

 

--

 

 

$

-0-

 

 

 

176,750

Equity Compensation Plans not approved by shareholders

 

 

--

 

 

 

-0-

 

 

 

--

Total

 

 

--

 

 

$

-0-

 

 

 

176,750

Note: Only restricted shares of common stock were issued pursuant to this plan.

17

**2011 Incentive Stock and Award Plan**

 

In May 2011, the board of directors (the “Board”) of the Company adopted the 2011 Incentive Stock and Award Plan (the “Plan”) which reserved for issuance up to 5,000 shares of its common stock.   The Plan, which has a term of ten years from the date of adoption, is administered by the Board or by a committee appointed by the Board. The selection of participants, allotment of shares, and other conditions related to the grant of options, to the extent not set forth in the Plan, and are determined by the Board.  

 

**Recent Sales of Unregistered Securities**

 

During the year ended December 31, 2018, we have issued the following securities  which were not registered under the Securities Act and not previously disclosed in the Company’s Quarterly Reports on From 10-Q or Current Reports on Form 8-K.  Unless otherwise indicated, all of the share issuances described below were made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act for transactions not involving a public offering:

 

1)On February 8, 2018, we issued 230,000,000 shares of common stock valued at $15,640 to Illiad Capital for conversion of its convertible debt and accrued interest. 

2)On May 9, 2018, we issued 55,555,556 shares of common stock valued at $5,000 to KBM Financial for conversion of its convertible debt and accrued interest. 

3)On October 4, 2018, we issued 242,000,000 shares of common stock valued at $14,520 to KBM Financial for payment of accrued interest. 

4)On October 8, 2018, we issued 55,141,111 shares of common stock valued at $4,963 to KBM Financial for payment of accrued interest. 

5)On October 8, 2018, we issued 186,666,667 shares of common stock valued at $16,800 to VisVires for conversion of accrued interest. 

 

 

**Rule 10B-18 Transactions**

 

During the year ended December 31, 2018, there were no repurchases of the Company’s common stock by the Company.

 

**Item 6. Selected Financial Data.**
 

The Company is a smaller reporting company as defined in Item 10 (f) of Regulation S-K and therefore is not required to provide the information under this item.

 

**Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.**
 

**Forward Looking Statements**

 

This report and other reports filed by our Company from time to time with the SEC (collectively the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, our management as well as estimates and assumptions made by our management.  Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof.

 

When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to us or our management identify forward-looking statements. Such statements reflect our current view with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including those set forth in the Risk Factors on page 5.  Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

18

 

**Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued).**

 

**Forward Looking Statements (continued)**

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.  Except, as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented.  Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

 

**General**

 

Management’s discussion and analysis of results of operations and financial condition is intended to assist the reader in the understanding and assessment of significant changes and trends related to the results of operations and financial position of the Company together with its subsidiary.  This discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying financial notes, and with the Critical Accounting Policies noted below.

 

**Plan of Operation**

 

The Bergio brand is our most important asset. The Bergio brand is associated with high-quality, handcrafted and individually designed pieces with European sensibility, Italian craftsmanship and a bold flair for the unexpected.  Bergio, is one of the most coveted brands of fine jewelry. Established in 1995, Bergio’s signature innovative design, coupled with extraordinary diamonds and precious stones, earned the company recognition as a highly sought-after purveyor of rare and exquisite treasures from around the globe.

 

When designer and CEO, Berge Abajian, creates a collection, he looks well beyond the drawing board. Berge focuses on the woman who will ultimately wear his pieces, bringing to creation a magnificent piece of jewelry that reflects the beauty and vitality a woman possesses. Bergio creations are a seamless blend of classic elegance and subtle flair, adding to a woman’s charm while never overpowering her.

 

It is our intention to establish Bergio as a holding company for the purpose of establishing retails stores worldwide. Our branded product lines are products and/or collections designed by our designer and CEO Berge Abajian and will be the centerpiece of our retail stores. We also intend to complement our own quality-designed jewelry with other products and our own specially-designed handbags. This is in line with our strategy and belief that a brand name can create an association with innovation, design and quality which helps add value to the individual products as well as facilitate the introduction of new products.

 

It is our intention to open elegant stores in “high-end” areas and provide excellent service in our stores which will be staffed with knowledgeable professionals.

 

We also intend to sell our products on a wholesale basis to limited customers.

 

We have spent over $3 million in branding the Bergio name through tradeshows, trade advertising, national advertising and billboard advertising since launching the line in 1995.

19

 

**Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued).**

 

**Plan of Operation (continued)**

 

Our products consist of a wide range of unique styles and designs made from precious metals such as, gold, platinum, and Karat gold, as well as diamonds and other precious stones. We currently design and produce approximately 100 to 150 product styles. Current retail prices for our products range from $400 to $200,000. We have manufacturing control over our line as a result of having a manufacturing facility in New Jersey as well as subcontracts with facilities located in Italy.

 

On March 5, 2014, the Company formed a wholly-owned subsidiary called Crown Luxe, Inc. in the State of Delaware (“Crown Luxe”).  Crown Lux was established to operate the Company’s first retail store, which was opened in Bergen County, New Jersey in the fourth quarter of 2014.

 

During the fall of 2018, we opened our second retail store at the new Ocean Resort Casino in Atlantic City, New Jersey. We are also contemplating the opening of new stores in the future.

 

The Company has instituted various cost saving measures to conserve cash and has worked with its debtors in an attempt to negotiate the debt terms. The Company has been also investigating various strategies to increase sales and expand its business. The Company is in negotiations with some potential partners, but, at this time, there is nothing concrete, but the Company remains positive about its prospects. However, there is no assurance that the Company will be successful in its endeavors or that it will be able to increase its business.

 

Our future operations are contingent upon increasing revenues and raising capital for on-going operations and expansion of our product lines. Because we have a limited operating history, you may have difficulty evaluating our business and future prospects.

 

**Results of Operations - For the Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017**

 

**Overview**

 

The past few years have been difficult for the Company as we have worked hard at finding ways to take advantage of the Bergio brand. We believe that our plan to establish a chain of retail stores in strategic markets will be step in the right direction. The Company  exhibited andecrease in wholesale sales, but had a significant increase in its retail operations despite the fact that the new store in Atlantic City, NJ only opened in mid-November 2018. The Company’s gross profit has risen both in dollars and as a percent of sales as we grow our retail business which has much higher profit margins. As a result, the Company also provided a modest profit for the fourth quarter of 2018. We are encouraged by these results and are cautiously optimistic about the future.

 

**Sales**

 

Net sales for year ended December 31, 2018 decreased $27,158 (4.3%) to $608,790, as compared to $635,948 for the year ended December 31, 2017. This decrease is primarily attributed to lower wholesale sales offset by an increase in retail sales. The Company intends to concentrate on its domestic retail operations and explore additional opportunities to expand its business. 

 

**Gross Profit**

 

Gross profit for the year ended December 31, 2018 increased $58,696 (32.4%) to $239,732 as compared to $181,036 for the year ended December 31, 2017. This increase in gross profit is primarily due to the increase in retail sales and certain favorable inventory adjustments. Gross profit as a percentage of sales was 39.4% for the year ended December 31, 2018 as compared to $28.5% for the year ended December 31, 2017.

20

 

**Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued).**

 

**Selling, General and Administrative Expenses**

 

Total selling, general and administrative expenses increased $45,864 (9.8%) to $515,146 for the year ended December 31, 2018 as compared to $469,282 for the year ended December 31, 2017. This decrease is mostly a result of costs associated with the new store scheduled which opened at the Ocean Resort in Atlantic City, NJ in November 2018 as well as increase in professional fees and payroll expenses offset mostly by a favorable adjustments to operating expenses. Excluding these adjustments, operating expenses increased primarily as a result of an increase in marketing expenses and professional fees as well for costs associated with the new store scheduled to open at the Ocean Resort in Atlantic City, NJ in November 2019.
 

**Loss from Operations**

 

As a result of the above, the Company had a loss from operations in the amount of $275,414 for the year ended December 31, 2018 as compared to $288,246 for the year ended December 31, 2017.

 

**Other Expense**

 

For the year ended December 31, 2018, the Company had other expense of $141,900 as compared to other income of $73,774 for the year ended December 31, 2017. The year ended December 31, 2017 included a gain on the sale of an asset and a gain on the extinguishment of debt that did not incur in 2018

 

**Net Loss**

 

As a result of the above, the Company had a net loss of $417,314 or the year ended December 31, 2018 as compared to $214,472 for the year ended December 31, 2017.

 

**Liquidity and Capital Resources**

 

The following table summarizes total current assets, liabilities and working capital at December 31, 2018, compared to December 31, 2017.

 

 

**December 31, 2018**

**December 31, 2017**

**Increase/**

**(Decrease)**

 

 

 

 

Current Assets

$

1,255,335

$

1,261,878

$

(6,543)

 

 

 

 

 

 

 

Current Liabilities

$

1,074,707

$

1,791,222

$

716,515

 

 

 

 

 

 

 

Working Capital

$

180,628

$

(529,344)

$

709,972

 

Our working capital increased to $180,628 at December 31, 2018 as compared to a working capital deficiency 0f $529,344 at December 31, 2017. This improvement is primarily attributed to the reclassification of certain liabilities from current to long-term based on an agreement with the Principal Executive Officer who agreed to defer payments on $1,000,000 of amounts due him until January 31, 2020,

 

During the year ended December 31, 2018, the Company had a net decrease in cash of $21,721. The Company’s principal sources and uses of funds were as follows:

 

*Cash used in operating activities*. For the year ended December 31, 2018, the Company used $96,581 in cash for operations as compared to providing $91,880 in cash for the year ended December 31, 2017. This decrease in cash used in operations is primarily attributed to the change in accounts payable and accrued liabilities as well the increase in inventories.

21

 

**Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued).**

 

**Liquidity and Capital Resources (continued)**

 

*Cash used in investing activities.* For the year ended December 31, 2018, the Company used $31,345 in investing activities as compared to providing $20,527 for the year ended December 31, 2017. This decrease is due to the increase in capital assets and lower cash from the sale of asset.

 

*Cash provided by (used in) financing activities.* For the year ended December 31, 2018, the Company provided $106,205 in financing activities as compared to using $112,348 in cash for financing activities for the year ended December 31, 2017. This increase is primarily the result of proceeds from a loan.

 

Our indebtedness is comprised of various bank credit lines, convertible debt, advances from a stockholder/officer and credit cards intended to provide capital for the ongoing manufacturing of our jewelry line, in advance of receipt of the payment from our retail distributors.

 

**Convertible Debt**

 

The Company enters into certain financing agreements for convertible debt. For the most part, the Company settles these obligations with the Company’s common stock.  As of December 31, 2018, the Company had outstanding convertible debt in the amount of $419,568.

 

**Satisfaction of Our Cash Obligations for the Next 12 Months**

 

A critical component of our operating plan impacting our continued existence is to efficiently manage the production of our jewelry lines and successfully develop new lines through our Company or through possible acquisitions and/or mergers. Our ability to obtain capital through additional equity and/or debt financing, and joint venture partnerships will also be important to our expansion plans. In the event we experience any significant problems assimilating acquired assets into our operations or cannot obtain the necessary capital to pursue our strategic plan, we may have to reduce the growth of our operations. This may materially impact our ability to increase revenue and continue our growth.

 

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern.

 

The Company has suffered recurring losses, and at December 31, 2018, the Company had a stockholders’ deficit of $640,487. As of December 31, 2018, the Company had no cash on hand and $419,568 in convertible debentures due on December 31, 2018. These factors raise substantial doubt about the Company's ability to continue as a going concern. The recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheet is dependent upon continued operations of the Company, which in turn, is dependent upon the Company's ability to raise capital and/or generate positive cash flows from operations.

 

In addition to obtaining new customers and increasing sales to existing customers, management plans to achieve profitability by also establishing Bergio as a holding company for the purpose of establishing retails stores worldwide. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

 

**Research and Development**

 

We are not anticipating significant research and development expenditures in the near future.

 

**Expected Purchase or Sale of Plant and Significant Equipment**

 

We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.

22

 

**Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued).**

 

**Critical Accounting Policies**

 

The Company prepares its financial statements in accordance with GAAP. In preparing the financial statements and accounting for the underlying transactions and balances, the Company applies its accounting policies as disclosed in Note 2 of our Notes to Financial Statements.  The Company’s accounting policies that require a higher degree of judgment and complexity used in the preparation of financial statements include:

 

*Revenue Recognition* - the Company’s management recognizes revenue when realized or realizable and earned.  In connection with revenue, the Company established a sales return and allowance reserve for anticipated merchandise to be returned based on historical operations.  The Company’s sole revenue producing activity as a manufacturer and distributor of upscale jewelry is affected by movement in fashion trends and customer desire for new designs, varying economic conditions affecting consumer spending and changing product demand by retailers affecting their desired inventory levels. Realizing that this may, and in some periods has, resulted in a significant amount of sales returns, management revised the Company policy of accepting merchandise returns. Whereas under prior policy customers had up to 360 days to return merchandise and were allowed credits as offsets to their outstanding accounts receivable, under the current return policy merchandise, with limited exceptions, cannot be returned.

 

*Accounts receivable*- the Company performs ongoing credit evaluations of its customers and adjusts credit limits based on customer payment and current credit worthiness, as determined by review of their current credit information.  The Company continuously monitors credits and payments from its customers and maintains provision for estimated credit losses based on its historical experience and any specific customer issues that have been identified. While such credit losses have historically been within our expectation and the provision established, the Company cannot guarantee that it will continue to receive positive results. Management has provided an allowance for doubtful accounts of $-0- at December 31, 2018 and $76,227 at December 31, 2017.

 

*Fair Value of Financial Instruments* - The Company follows guidance issued by the Financial Accounting Standards Board (“FASB”) on “Fair Value Measurements” for assets and liabilities measured at fair value on a recurring basis.  This guidance establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.

 

The FASB defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Additionally, the FASB requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

 

These inputs are prioritized below:

 

·Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities. 

·Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. 

·Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. 

 

The Company discloses the estimated fair value for all financial instruments for which it is practicable to estimate fair value. As of December 31, 2018, the fair value of short-term financial instruments including accounts receivable, accounts payable and accrued expenses, approximates book value due to their short-term maturity.  The fair value of property and equipment is estimated to approximate its net book value.  The fair value of debt obligations, other than convertible debt obligations, approximates their face values due to their short-term maturities and/or the variable rates of interest associated with the underlying obligations.

 

*Income taxes* - deferred tax assets arise from a variety of sources, the most significant being: a) tax losses that can be carried forward to be utilized against profits in future years; b) expenses recognized in the books but disallowed in the tax return until the associated cash flow occurs; and c) valuation changes of assets which need to be tax effected for book purposes but are deductible only when the valuation change is realized.

23

 

**Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued).**

 

**Critical Accounting Policies (continued)**

 

Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when such differences are expected to reverse. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefit which is not more likely than not to be realized. In assessing the need for a valuation allowance, future taxable income is estimated, considering the realization of tax loss carryforwards. Valuation allowances related to deferred tax assets can also be affected by changes to tax laws, changes to statutory tax rates and future taxable income levels. In the event it was determined that the Company would not be able to realize all or a portion of its deferred tax assets in the future, the Company would reduce such amounts through a charge to income in the period in which that determination is made. Conversely, if it were determined that it would be able to realize the deferred tax assets in the future in excess of the net carrying amounts, the Company would decrease the recorded valuation  allowance through an increase to income in the period in which that determination is made. In its evaluation of a valuation allowance, the Company takes into account existing contracts and backlog, and the probability that options under these contract awards will be exercised as well as sales of existing products. The Company prepares profit projections based on the revenue and expenses forecast to determine that such revenues will produce sufficient taxable income to realize the deferred tax assets.

 

**Off Balance Sheet Arrangements**

 

The Company is not party to any off-balance sheet arrangements that may affect its financial position or its results of operations.

 

**Recently Adopted Authoritative Pronouncements**

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606 which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The ASU defines a five-step process to achieve the core principal and, in doing so, it is possible more judgement and estimates may be required within the revenue recognition process than are currently in use. The ASU was effective for the Company in the first quarter of 2018 using either of two methods: (1) retrospective application to each prior reporting period presented with the option to elect certain practical expedients or (2) retrospective application with the cumulative effect of initially applying the ASU recognized at the date of the initial application and providing certain disclosures. The Company adopted Topic 606 pursuant to the method (2) and it determined that any cumulative effect for the initial application did not require an adjustment to retained earnings at January 1, 2018.

 

**Recent Authoritative Pronouncements**

 

In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard is effective on January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company adopted the new standard on January 1, 2019 and use the effective date as the date of initial application.

24

 

**Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued).**

 

 

Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company elects the ‘package of practical expedients’, which permits the Company not to reassess under the new standard prior conclusions about lease identification, lease classification and initial direct costs. The Company continues to evaluate the impact that that this standard will have on the Company’s financial statements. While the Company continues to assess all of the effects of adoption, the Company currently believes the most significant effects relate to the recognition of new ROU assets and lease liabilities on the Company’s balance sheet for the Company’s real estate operating leases. 

 

In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.” This ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments should be applied prospectively to an award modified on or after the adoption date. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted. We are evaluating whether this ASU will have a material impact on our consolidated financial statements.

 

No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s condensed consolidated financial statements.

 

No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s condensed consolidated financial statements.

 

**Item 7A. Quantitative and Qualitative Disclosures about Market Risk.**
 

We do not hold any derivative instruments and do not engage in any hedging activities.

 

**Item 8. Financial Statements and Supplementary Data.**
 

 

**Pages**

**Financial Statements:**

 

 

 

Report of  Independent Registered Public Accounting Firms

F-1

 

 

Consolidated Balance Sheets - December 31, 2018 and 2017

F-3

 

 

Consolidated Statements of Operations - Years Ended December 31, 2018 and 2017

F-4

 

 

Consolidated Statement of Changes in Stockholders'  Equity - As of  December  31, 2018

F-5

 

 

Consolidated Statements of Cash Flows - Years Ended December 31, 2018 and 2017

F-6

 

 

Notes to Consolidated Financial Statements

F-7

 

 

 

 

 

 

25

 

 

 

Report of Independent Registered Public Accounting Firm
 

To the Board of Directors and Stockholders

 of Bergio, International, Inc.

 

**Opinion on the Financial Statements**

 

We have audited the accompanying balance sheets of Bergio International, Inc. ("the Company") as of December 31, 2018 and 2017, and the related statements of income, comprehensive income, stockholders' equity, and cash flows for the year then ended 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 of December 31, 2018 and 2017 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the 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 the Public Company Accounting Oversight Board (United States) ('PCAOB') and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities 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 audit 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.

 

**Going Concern**

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses, has a stockholders’ deficit, has no cash on hand and has convertible debt that is overdue. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans with regard to these matters are described in Note 1. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

We have served as the Company's accountants since 2017.

 

*/s/ Tama, Budaj and Raab, LLP*

Farmington Hills, Michigan

August 20, 2019

F-1

 

**BERGIO INTERNATIONAL, INC.**
Consolidated Balance Sheets
 

 

**December 31,**

**2018**

 

**December 31,**

**2017**

 

 

 

 

ASSETS:

 

 

 

Current assets:

 

 

 

 

 

Cash

$

-

 

$

21,721

 

 

Accounts receivable, net of allowance for doubtful accounts of

$-0- at December 31, 2018 and $76,227 at December 31, 2017

 

39,354

 

 

61,511

 

 

Inventories

 

1,215,981

 

 

1,178,646

 

 

Total current assets

 

1,255,335

 

 

1,261,878

 

 

 

 

 

 

 

Property and equipment, net

 

173,057

 

 

243,420

 

Investment in unconsolidated affiliate

 

5,828

 

 

5,828

 

 

 

 

 

 

 

Total assets

$

1,434,220

 

$

1,511,126

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT:

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

$

279,027

 

$

250,796

 

 

Bank lines of credit, net

 

-

 

 

14,700

 

 

Loan payable

 

125,000

 

 

-

 

 

Convertible debt

 

419,568

 

 

437,781

 

 

Advances from Principal Executive Officer and accrued interest

 

251,112

 

 

459,636

 

 

Deferred compensation - CEO

 

-

 

 

628,309

 

 

Total current liabilities

 

1,074,707

 

 

1,791,222

 

 

 

 

 

 

Long-term Liabilities:

 

 

 

 

 

 

 

Deferred compensation - CEO- long-term portion

 

795,571

 

 

-

 

 

Advances from Principal Executive Officer and accrued interest

 

204,429

 

 

-

 

 

Total long-term liabilities

 

1,000,000

 

 

-

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

2,074,707

 

 

1,791,222

 

 

 

 

 

 

 

Commitments and contingencies

 

-

 

 

-

 

 

 

 

 

 

 

Stockholders' deficit

 

 

 

 

 

 

 

Series A preferred stock - $0.0001 par value, 51 Shares

Authorized, 51 and 51 shares issued and outstanding

 

-

 

 

-

 

 

Common stock,  $0.0001 par value; 6,000,000,000 shares

authorized, 5,391,410,725 and 4,622,047,391 issued and

outstanding, respectively

 

53,912

 

 

46,218

 

 

Additional paid-in capital

 

7,931,013

 

 

7,881,784

 

 

Accumulated deficit

 

(8,625,412)

 

 

(8,208,098)

 

 

Total stockholders' deficit

 

(640,487)

 

 

(280,096)

 

 

 

 

 

 

 

Total liabilities and stockholders' deficit

$

1,434,220

 

$

1,511,126

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

F-2

 

**BERGIO INTERNATIONAL, INC.**

Consolidated Statements of Operations
 

 

 

**For the years ended**

**December 31,**

 

 

**2018**

 

 

**2017**

 

 

 

 

 

 

Net sales

 

$

608,790

 

 

$

635,948

 

 

 

 

 

 

 

 

Cost of sales

 

 

369,058

 

 

 

454,912

 

 

 

 

 

 

 

 

 Gross margin

 

 

239,732

 

 

 

181,036

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 Impairment loss on assets

 

 

-

 

 

 

-

 Selling, general and administrative

 

 

515,146

 

 

 

469,282

 

 

 

 

 

 

 

 

   Total operating expenses

 

 

515,146

 

 

 

469,282

 

 

 

 

 

 

 

 

(Loss) income from operations

 

 

(275,414)

 

 

 

(288,246)

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 Interest expense

 

 

(141,900)

 

 

 

(104,349)

 Amortization of debt discount

 

 

-

 

 

 

-

 Amortization of deferred financing costs

 

 

-

 

 

 

-

 Change in fair value of derivatives

 

 

-

 

 

 

13,406

 Derivative expense

 

 

-

 

 

 

-

 Gain on extinguishment of debt

 

 

-

 

 

 

116,237

 Gain on sale of asset

 

 

-

 

 

 

48,480

 Other income

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

   Total other expense

 

 

(141,900)

 

 

 

73,774

 

 

 

 

 

 

 

 

Loss before provision for income taxes

 

 

(417,314)

 

 

 

(214,472)

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

Net loss 

 

$

(417,314)

 

 

$

(214,472)

 

 

 

 

 

 

 

 

Basic loss per common share

 

$

(0.00)

 

 

$

(0.00)

Diluted loss per common share

 

$

(0.00)

 

 

$

(0.00)

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding 

 Basic and diluted

 

 

4,967,522,622

 

 

 

2,836,986,113

 

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

F-3

 

**BERGIO INTERNATIONAL, INC.**

Consolidated Statement of Changes in Stockholder’s Equity (Deficit)
As of December 31, 2018

 

 

**Common Stock**

**Additional**

**Paid in**

**Accumulated**

**Non-**

**controlling**

**interest in R.S.**

**Total**

**Stockholders’**

 

**Shares**

**Amount**

**Capital**

**Deficit**

**Fisher**

**Deficit**

 

 

 

 

 

 

 

Balance at

January 1, 2017

1,836,846,489

$

18,366

$

7,531,256

$

(7,801,231)

$

(21,242)

$

(272,851)

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of stock for debt

conversion

2,390,200,902

 

23,902

 

143,825

 

-

 

-

 

167,727

Issuance of stock for

accounts payable

185,000,000

 

1,850

 

16,650

 

 

 

 

 

18,500

Issuance of common stock

for services

210,000,000

 

2,100

 

18,900

 

 

 

 

 

21,000

Non-controlling interest

-

 

-

 

171,153

 

(192,395)

 

21,242

 

-

Net loss

-

 

-

 

-

 

(214,472)

 

 

 

(214,472)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

December 31, 2017

4,622,047,391

 

46,218

 

7,881,784

 

(8,208,098)

 

-

 

(280,096)

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of stock for debt

conversion

769,363,334

 

7,694

 

49,229

 

-

 

-

 

56,923

Net loss

-

 

-

 

-

 

(417,314)

 

-

 

(417,314)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

December 31, 2018

5,391,410,725

$

53,912

$

7,931,013

$

(8,625,412)

$

-

$

(640,487)

 

 

 

Preferred Stock

 

Shares

Amount

 

 

 

Balance at January 1, 2017

51

$        -

 

 

 

Balance at December 31, 2017

51

$        -

 

 

 

Balance at December 31, 2018

51

$        -

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

F-4

 

**BERGIO INTERNATIONAL, INC.**

Consolidated Statements of Cash Flows
 

 

 

**For the years ended**

**December 31,**

 

 

**2018**

 

 

**2017**

Cash flows from operating activities:

 

 

 

 

 

 Net loss

 

$

(417,314)

 

 

$

(214,472)

 Adjustments to reconcile net loss to net cash

   used in operating activities:

 

 

 

 

 

 

 

   Non-controlling interest

 

 

-

 

 

 

-

   Depreciation, amortization and loss on impairment

 

 

101,708

 

 

 

103,438

   Provision for bad debts

 

 

(76,227)

 

 

 

(11,860)

   Change in fair value of derivatives

 

 

-

 

 

 

(13,406)

   Stock for services

 

 

-

 

 

 

21,000

   Gain on sale of asset

 

 

-

 

 

 

(48,480)

   Gain on extinguishment of debt

 

 

-

 

 

 

(116,237)

 Changes in assets and liabilities:

 

 

 

 

 

 

 

   Accounts receivable

 

 

98,384

 

 

 

(46,099)

   Inventories

 

 

(37,335)

 

 

 

85,434

   Deferred compensation

 

 

167,262

 

 

 

175,000

   Accounts payable and accrued liabilities

 

 

66,941

 

 

 

157,562

 Net cash used in operating activities

 

 

(96,581)

 

 

 

91,880

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 Sale of RS Fisher

 

 

-

 

 

 

20,527

 Acquisition of property and equipment

 

 

(31,345)

 

 

 

-

Net cash used in investing activities

 

 

(31,345)

 

 

 

20,527

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

  Proceeds from loan

 

 

125,000

 

 

 

-

 Advances (repayments) of bank lines of credit, net

 

 

(14,700)

 

 

 

(329,854)

 (Payments) advances from stockholder and accrued interest, net

 

 

(4,095)

 

 

 

217,506

Net cash provided by financing activities

 

 

106,205

 

 

 

(112,348)

 

 

 

 

 

 

 

 

Net increase (decrease) increase in cash

 

 

(21,721)

 

 

 

59

 Cash,  beginning of year

 

 

21,721

 

 

 

2,893

 Cash,  end of year

 

$

-0-

 

 

 

21,721

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 Cash paid for taxes

 

$

-

 

 

 

-

 Cash paid for interest

 

$

58,038

 

 

 

48,738

 

 

 

 

 

 

 

 

Supplemental non-cash information

 

 

 

 

 

 

 

 Issuance of common stock for vendor payables

 

$

-

 

 

 

18,500

 Issuance of common stock for convertible debt and accrued interest

 

$

56,923

 

 

 

136,494

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

F-5

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements**
 

**Note 1. Business, Organization, and Liquidity**

 

**Business and Organization**

 

Bergio International, Inc. (the “Company”) was incorporated in the State of Delaware on July 24, 2007 under the name Alba Mineral Exploration, Inc.  On October 21, 2009, as a result of a Share Exchange Agreement, the corporation’s name was changed to Bergio International, Inc. Effective July 15, 2013, the Company amended its Certificate of Incorporation to change the Company’s authorized capital from 1,500,000,000 common shares to 3,000,000,000 common shares of stock. On April 3, 2014, the Company filed a Certificate of Amendment of Certificate of Incorporation with the Secretary of State of the State of Delaware to reduce the par value of all shares of common stock and preferred stock from $0.001 to $0.00001 per share.  On February 26, 2014, the Company filed a certificate of amendment to its Certificate of Amendment to the Incorporation with the Secretary of State of the State of Delaware to increase the number of authorized shares of capital stock of the Company to 6,000,000,000 shares. Effective on October 14, 2014, the Company filed a Certificate of Amendment to the Certificate of Incorporation to effectuate a 1-for-1,000 reverse stock split of the Company’s common stock. All share and per share data has been adjusted to reflect such stock splits and change in par value. The Company is engaged in the product design, manufacturing, distribution of fine jewelry primarily in the United States and is headquartered in Fairfield, New Jersey. The Company also two retail stores located in Closter, NJ and Atlantic City, NJ.

 

**Basis of Presentation**

 

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary consisting of normal recurring adjustments to present fairly the financial position of the Company as of December 31, 2018, the results of operations for the years ended December 31, 2018 and 2017, and statements of cash flows for the years ended December 31, 2018 and 2017. The financial statements have been prepared in accordance with the requirements of Form 10-K.
 

**Going Concern**

 

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern.

 

The Company has suffered recurring losses, and at December 31, 2018, the Company had a stockholders’ deficit of $640,487. As of December 31, 2018, the Company had no cash on hand and $419,568 in convertible debentures due on December 31, 2018. These factors raise substantial doubt about the Company's ability to continue as a going concern. The recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheet is dependent upon continued operations of the Company, which in turn, is dependent upon the Company's ability to raise capital and/or generate positive cash flows from operations.

 

In addition to obtaining new customers and increasing sales to existing customers, management plans to achieve profitability by also establishing Bergio as a holding company for the purpose of establishing retails stores worldwide. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

F-6

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 2. Summary of Significant Accounting Policies**

 

**Principles of Consolidation:**

 

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, and include the Company and its wholly-owned subsidiary. All significant inter-company accounts and transactions have been eliminated.

 

**Use of Estimates:**

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires that management 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

**Risks and Uncertainties:**

 

The Company’s operations are subject to a number of risks, including but not limited to changes in the general economy, demand for the Company’s products, and the success of its customers.

 

**Revenue Recognition:**

 

Revenues are recognized at the time of shipment to with the price to the buyer being fixed and determinable and collectability assured, provided title and risk of loss is transferred to the customer.  Provisions, when appropriate, are made where the right to return exists.

 

Shipping and handling costs charged to customers are classified as sales, and the shipping and handling costs incurred are included in cost of sales.

 

**Non-controlling Interest:**

 

Non-controlling interest represents third party ownership in the net assets of our consolidated subsidiaries. For financial reporting purposes, the assets and liabilities of our majority owned subsidiaries are consolidated with those of our own, with any third party investor’s interest shown as non-controlling interest.

 

On June 1, 2015, the Company acquired a 51% interest in R.S. Fisher, Inc., a Delaware corporation, in exchange for funding the Company’s operations. The minority holder contributed jewelry molds and inventory valued at $349,292.

 

As of December 31, 2017, the Company sold its 51% interest in R.S. Fisher.

 

**Fair Value of Financial Instruments:**

 

The Company estimates that the fair value of all financial instruments at December 31, 2018 and, 2017, as defined in FASB ASC 825 “Financial Instruments”, does not differ materially, except for the items discussed below, from the aggregate carrying values of its financial instruments recorded in the accompanying consolidated balance sheets. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value.

F-7

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 2. Summary of Significant Accounting Policies (continued)**

 

**Fair Value of Financial Instruments (continued):**

 

The carrying amounts reported in the balance sheets as of December 31, 2018 and 2017 for cash, accounts receivable, inventories and accounts payable and loans payable approximate the fair value because of the immediate or short-term maturity of these financial instruments.  Each reporting period we evaluate market conditions including available interest rates, credit spreads relative to our credit rating and liquidity in estimating the fair value of our debt. After considering such market conditions, we estimate that the fair value of debt approximates its carrying value.

 

**Accounting for Income Taxes:**

 

The Company accounts for income taxes using the asset and liability method described in FASB ASC 740, “Income Taxes”. Deferred tax assets arise from a variety of sources, the most significant being: a) tax losses that can be carried forward to be utilized against profits in future years; b) expenses recognized for financial reporting purposes but disallowed in the tax return until the associated cash flow occurs; and c) valuation changes of assets which need to be tax effected for book purposes but are deductible only when the valuation change is realized.

 

Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when such differences are expected to reverse.  The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefit which is not more likely than not to be realized. In assessing the need for a valuation allowance, future taxable income is estimated, considering the realization of tax loss carryforwards. Valuation allowances related to deferred tax assets can also be affected by changes to tax laws, changes to statutory tax rates and future taxable income levels. In the event it was determined that the Company would not be able to realize all or a portion of our deferred tax assets in the future, we would reduce such amounts through a charge to income in the period in which that determination is made. Conversely, if we were to determine that we would be able to realize our deferred tax assets in the future in excess of the net carrying amounts, we would decrease the recorded valuation allowance through an increase to income in the period in which that determination is made.

 

**Income Tax Uncertainties:**

 

The Company accounts for uncertainties in income taxes under ASC 740-10-50 which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740-10 requires that the Company determine whether the benefits of its tax positions are more-likely-than-not of being sustained upon audit based on the technical merits of the tax position. The Company recognizes the impact of an uncertain income tax position taken on its income tax return at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. The implementation of ASC 740-10 had no impact on the Company’s results of operations or financial position.

 

Despite the Company’s belief that its tax return positions are consistent with applicable tax laws, one or more positions may be challenged by taxing authorities. Settlement of any challenge can result in no change, a complete disallowance, or some partial adjustment reached through negotiations or litigation.

 

Interest and penalties related to income tax matters, if applicable, will be recognized as income tax expense. During the years ended December 31, 2018 and 2017, the Company did not incur any expense related to interest or penalties for income tax matters, and no such amounts were accrued as of December 31, 2018 and 2017.

 

**Cash and Cash Equivalents:**

 

Cash equivalents are comprised of certain highly liquid instruments with a maturity of three months or less when purchased. The Company did not have any cash equivalents on hand at December 31, 2018 and December 31, 2017.

F-8

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 2. Summary of Significant Accounting Policies (continued)**

 

**Accounts Receivable:**

 

Accounts receivable are generated from sales of fine jewelry to retail outlets throughout the United States. At December 31, 2018 and December 31, 2017, accounts receivable were substantially comprised of balances due from retailers.

 

The Company performs ongoing credit evaluations of its customers and adjusts credit limits based on customer payment and current credit worthiness, as determined by review of their current credit information.  The Company continuously monitors credit limits for and payments from its customers and maintains provision for estimated credit losses based on its historical experience and any specific customer issues that have been identified.  While such credit losses have historically been within the Company’s expectation and the provision established, the Company cannot guarantee that this will continue.

 

An allowance for doubtful accounts is provided against accounts receivable for amounts management believes may be uncollectible. The Company determines the adequacy of this allowance by regularly reviewing the composition of its accounts receivable aging and evaluating individual customer receivables, considering the customer’s financial condition, credit history and current economic circumstance. The Company historically has been able to collect the accounts receivable balance during a period of nine months to a year. While credit losses have historically been within the Company’s expectation and the provision established, the Company cannot guarantee that this will continue. As of December 31, 2018 and 2017, the allowance for doubtful accounts was $-0- and $76,227, respectively.

 

**Concentrations of Credit Risk:**

 

Cash Held in Banks: The Company maintains cash balances at a financial institution that is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to federally insured limits. At times balances may exceed FDIC insured limits. The Company has not experienced any losses in such accounts.

 

Accounts Receivable: The Company’s customer base is primarily comprised of balances due from retailers. Concentrations of credit risk with respect to accounts receivable is limited due to the wide variety of customers and markets into which the Company’s services are provided, as well as their dispersion across many different geographical areas. The Company has been expanding its brand into retail stores. These sales come with a lower degree of credit risk as these sales are made by cash or credit card. As is characteristic of the Company’s business and of the jewelry industry generally, the Company extends its customers seasonal credit terms.  The carrying amount of receivables approximates fair value. The Company routinely assesses the financial strength of its customers and believes its credit risk exposure on accounts receivable is limited. Based on management’s review of accounts receivable, an allowance for doubtful accounts is recorded, if appropriate. The Company does not require collateral to support these financial instruments.

 

**Inventories:**

 

Inventories consist primarily of finished goods, and are stated at the lower of cost or market.  Cost is determined using the weighted average method, and average cost is recomputed after each inventory purchase or sale.  Inventories are written down if the estimated net realizable value is less than the recorded value, if appropriate. The Company reviews the carrying cost of inventories by product to determine the adequacy of reserves for obsolescence. In accounting for inventories, the Company must make estimates regarding the estimated realizable value of inventory. The estimate is based, in part, on the Company’s forecasts of future sales and age of inventory.

F-9

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 2. Summary of Significant Accounting Policies (continued)**

 

**Property and Equipment:**

 

Equipment is stated at cost, net of accumulated depreciation.  Depreciation and amortization are provided on a straight-line basis over periods ranging from 5 to 10 years.

 

Leasehold improvements are amortized over the term of the lease or the useful life of the asset, whichever is shorter.

 

Maintenance, repairs, and renewals that do not materially add to the value of the equipment nor appreciably prolong its life are charged to expense as incurred.

 

When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in the Statement of Operations.

 

**Long-Lived Assets:**

 

The Company assesses the recoverability of the carrying value of its long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future, undiscounted cash flows expected to be generated by an asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. No impairment losses were recognized for the years ended December 31, 2018 and 2017.

 

**Investment in Unconsolidated Affiliates:**

 

The Company owns less than 20% or otherwise does not exercise significant influence, are stated at cost. At December 31, 2018 and December 31, 2017, the Company had an investment in which the Company owned less than 1% interest in an unconsolidated affiliate and therefore the investment is carried at cost.

 

**Equity-Based Compensation:**

 

The Company accounts for equity based compensation transactions with employees under the provisions of ASC Topic No. 718, “Compensation: Stock Compensation” (“Topic No. 718”). Topic No. 718 requires the recognition of the fair value of equity-based compensation in net income. The fair value of common stock issued for compensation is measured at the market price on the date of grant.  The fair value of the Company’s equity instruments, other than common stocks, is estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections including expected stock price volatility and the estimated life of each award. In addition, the calculation of equity-based compensation costs requires that the Company estimate the number of awards that will be forfeited during the vesting period. The fair value of equity-based awards granted to employees is amortized over the vesting period of the award and the Company elected to use the straight-line method for awards granted after the adoption of Topic No. 718.

 

The Company accounts for equity based transactions with non-employees under the provisions of ASC Topic No. 505-50, “Equity-Based Payments to Non-Employees” (“Topic No. 505-50”). Topic No. 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to non-employees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, the Company recognizes an asset or expense in the same manner as if it was to pay cash for the goods or services instead of paying with or using the equity instrument.

F-10

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 2. Summary of Significant Accounting Policies (continued)**

 

**Net (Loss) Income per Common Share:**

 

Basic net (loss) income per share attributable to common stockholders is computed by dividing net (loss) income by the weighted-average number of common shares outstanding during the period.  Diluted income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period, including common stock equivalents, such as stock options and warrants using the treasury stock method.  Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period and excludes the anti-dilutive effects of common stock equivalents.

 

**Recently Adopted Authoritative Pronouncements**

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606 which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The ASU defines a five-step process to achieve the core principal and, in doing so, it is possible more judgement and estimates may be required within the revenue recognition process than are currently in use. The ASU was effective for the Company in the first quarter of 2018 using either of two methods: (1) retrospective application to each prior reporting period presented with the option to elect certain practical expedients or (2) retrospective application with the cumulative effect of initially applying the ASU recognized at the date of the initial application and providing certain disclosures. The Company adopted Topic 606 pursuant to the method (2) and it determined that any cumulative effect for the initial application did not require an adjustment to retained earnings at January 1, 2018.

 

**Recent Authoritative Pronouncements**

 

In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard is effective on January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company adopted the new standard on January 1, 2019 and use the effective date as the date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company elects the ‘package of practical expedients’, which permits the Company not to reassess under the new standard prior conclusions about lease identification, lease classification and initial direct costs. The Company continues to evaluate the impact that that this standard will have on the Company’s financial statements. While the Company continues to assess all of the effects of adoption, the Company currently believes the most significant effects relate to the recognition of new ROU assets and lease liabilities on the Company’s balance sheet for the Company’s real estate operating leases. 

F-11

 

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 2. Summary of Significant Accounting Policies (continued)**

 

**Recent Authoritative Pronouncements (continued)**

 

In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.” This ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments should be applied prospectively to an award modified on or after the adoption date. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted. We are evaluating whether this ASU will have a material impact on our consolidated financial statements.

 

No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s condensed consolidated financial statements.

 

**Subsequent Events:**

 

The Company evaluated subsequent events, which are events or transactions that occurred after December 31, 2018 through the issuance of the accompanying financial statements.

 

**Note 3. Basic and Diluted Income (Loss) Per Share**

 

Net loss per share has been computed according to FASB ASC 260, “Earnings per Share,” which requires a dual presentation of basic and diluted earnings (loss) per share (“EPS”). Basic EPS represents net loss divided by the weighted average number of common shares outstanding during a reporting period. Diluted EPS reflects the potential dilution that could occur if securities, including warrants and options, were converted into common stock. The dilutive effect of outstanding warrants, options, and/or conversions is reflected in earnings per share by use of the treasury stock method. In applying the treasury stock method for stock-based compensation arrangements, the assumed proceeds are computed as the sum of the amount the employee must pay upon exercise. For the years ended December 31. 2018 and 2017, basic net loss per share equaled the diluted loss per share, since the effect of shares potentially issuable upon exercise or conversion was anti-dilutive.  For the years ended December 31, 2018 and 2017, 5,882,876,190 and 6,431,347,619 shares, respectively, issuable upon the conversion of convertible debt were not included in the computation of diluted net loss because their inclusion would be anti-dilutive.

 

 

 

**December 31,**

**2018**

 

**December 31,**

**2017**

**Basic net loss per share computation:**

 

 

 

 

 Net loss

 

$

(417,314)

 

$

(214,472)

 Weighted-average common shares outstanding

 

 

4,967,522,262

 

 

2,836,986,113

 Basic net loss per share

 

$

(0.00)

 

$

(0.00)

**Diluted net loss per share computation:**

 

 

 

 

 

 

 Net loss

 

$

(417,314)

 

$

(214,472)

 Weighted-average common shares outstanding:

 

 

4,967,522,262

 

 

2,836,986,113

 Incremental shares attributable to the assumed exercise of 

outstanding stock options and warrants

 

 

--

 

 

--

 Total adjusted weighted-average shares

 

 

4,967,522,262

 

 

2,836,986,113

 **Diluted net loss per share**

 

$

(0.00)

 

$

(0.00)

F-12

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 4. Property and Equipment**

 

Property and equipment consists of the following:

 

 

 

**December 31,**

 

 

**2018**

 

 

**2017**

 

 

 

 

 

 

Leasehold improvements

 

$

349,121

 

 

$

317,776

Office and equipment

 

 

566,308

 

 

 

566,308

Selling equipment

 

 

8,354

 

 

 

8,354

Furniture and fixtures

 

 

18,487

 

 

 

18,487

 

 

 

 

 

 

 

 

Total at cost

 

 

942,270

 

 

 

910,925

Less: Accumulated depreciation & amortization

 

 

(769,213)

 

 

 

(667,505)

 

 

 

 

 

 

 

 

 

 

$

173,057

 

 

$

243,420

 

Depreciation and amortization expense related to the assets above for the years ended December 31, 2018 and 2017 was $101,708 and $103,438, respectively.

 

**Note 5. Accounts Payable and Accrued Liabilities**

 

Accounts payable and accrued liabilities consist of the following:

 

 

 

**December 31,**

 

 

**2018**

 

 

**2017**

 

 

 

 

 

 

Accounts payable

 

$

121,493

 

 

$

153,831

Accrued interest

 

 

143,024

 

 

 

96,965

Accrued liabilities - other

 

 

14,510

 

 

 

-

 

 

 

 

 

 

 

 

 

 

$

279,027

 

 

$

250,796

 

 

 

 

 

 

 

 

 

 

 

 

F-13

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 6. Related Party**

 

**Advances from Principal Executive Officer and Accrued Interest**

 

The Company receives periodic advances from its principal executive officer based upon the Company’s cash flow needs. At December 31, 2018 and December 31, 2017, $455,541 and $459,636, respectively, was due to such officer, including accrued interest. On September 30, 2018, the Principal Executive Office signed an agreement with the Company extending payments in the amount of $1,000,000 due him until January 31, 2020 as a result of the financial situation of the Company. As such, all deferred compensation in the amount of $795,571 and $204,429 of the advances was classified as a long-term liability. At December 31, 2017, an amount of $323,855 was reclassified from Bank lines of credit and $2,000 from accounts payable and accrued liabilities to Advances from principal executive officer and accrued interest to reflect the guaranty of these loans by the principal executive officer. Interest expense is accrued at an average annual market rate of interest which was 5.25% and 4.5% at December 31, 2018 and December 31, 2017, respectively. Interest expense due to such officer was $45,392 and $24,431 for the years ended December 31, 2018 and 2017, respectively. Accrued interest was $149,993 and $104,601 at December 31, 2018 and 2017, respectively. No terms for repayment have been established. 

 

Effective February 28, 2010, the Company entered into an employment agreement with its CEO. The agreement, which is for a five year term, provides for an initial base salary of $175,000 per year with a 3% annual increase thereafter (the “Base Salary”). The CEO is also entitled to certain bonuses based on net profits before taxes and other customary benefits, as defined in the agreement. In addition, since it is understood that the Company is employing the CEO during a time of economic decline throughout the U.S. and at times and from time to time, the Company may not be in a position to pay the full amount of Base Salary owed the CEO it is understood and agreed to by the Board, that as long as the Company is unable to pay the CEO the full amount of his Base Salary that the Board shall issue to him, from time to time, an amount of shares that will allow him to remain in possession of fifty-one percent (51%) of the Company’s then outstanding shares of common stock.  Such issuances shall be made to the CEO at any time when his total share holdings are reduced to an amount less than fifty-one percent (51%) as a result of issuance of shares of common stock made on behalf of the Company.

 

Effective September 1, 2011, the Company and CEO entered into an Amended and Restated Employment Agreement (the “Amended Agreement”) which primarily retains the term and compensation of the original agreement. The Amended Agreement, however, removes the section which previously provided for the issuance of Company common stock to the CEO, from time to time, when the Company is unable to pay the CEO the full amount of his Base Salary (as defined in the Amended Agreement) which would allow the CEO to maintain a fifty-one percent (51%) share of the Company’s outstanding common stock.  However, the CEO does have the right to request all or a portion of his unpaid Base Salary be paid with the Company’s restricted common stock. In addition, the Amended Agreement provides for the issuance of 51 shares of newly authorized Series A Preferred Stock to be issued to the CEO. As defined in the Certificate of Designations, Preferences and Rights of the Series A Preferred Stock, each share of Series A Preferred Stock has voting rights such that the holder of 51 shares of Series A Preferred Stock will effectively maintain majority voting control of the Company. Effective November 3, 2011, the CEO notified the Company that for the one year period, retroactive from April 1, 2011, through December 31, 2012, he would reduce his Base Salary to $100,000. The reduction in base compensation was subsequently extended to December 31, 2013. The CEO is currently deferring his salary to conserve cash. Deferred wages due to the CEO amounted to $795,571 and $628,309 for the periods ended December 31, 2018 and December 31, 2017, respectively. On September 30, 2018, the Principal Executive Office signed an agreement with the Company extending payments in the amount of $1,000,000 due him until January 31, 2020 as a result of the financial situation of the Company. As such, all deferred compensation in the amount of $795,571 and $204,429 of the advances was classified as a long-term liability.

 

On January 1, 2019, the CEO amended his employment agreement with the Company for a term of one year expiring December 31, 2019. The agreement primarily retains the terms of the Amended Agreement, but lowers the compensation to $100,000 for the year.

F-14

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued**)

 

**Note 7. Bank Lines of Credit**

 

A summary of the Company’s credit facilities is as follows:

 

 

**December 31,**

 

**2018**

 

 

**2017**

 

 

 

 

 

Various unsecured Credit Cards, minimum payment of principal and interest are due monthly at the credit card’s annual interest rate. At December 31, 2018 and 2017, the interest rates ranged from 3.99% to 15.9%.

$

-

 

 

$

14,700

 

 

 

 

 

 

 

 Current maturities included in current liabilities

$

-

 

 

$

14,700

 

The Company’s CEO also serves as a guarantor of the Company’s debt.

 

**Note 8. Convertible Debt**

 

Fife, Typenex and Iliad

 

In December 2012, the Company entered into a $325,000 convertible note with Fife consisting of three tranches to be drawn down with the first tranche totaling $125,000, including $25,000 in loan costs and additional two tranches totaling $200,000. The note bears a 5% annual interest rate and matures eighteen months from the date of issuance. The note is convertible into shares of the Company’s common stock based on 70% of the average of the three lowest closing prices of the common stock for the proceeding 15 consecutive trading days immediately prior to the conversion. During 2013, the conversion price was fixed at $0.005 per share. As of December 31, 2012, the Company only drew down the first tranche totaling $125,000. On February 11, 2013, April 5, 2013, April 23, 2013, and July 1, 2013, the Company drew down an additional $250,000.

 

On June 5, 2014, the Company, Fife, Typenex and Iliad Research and Trading, LLP (“Iliad”) entered into an Assignment and Assumption Agreement and Note Purchase Agreement (the “Note Purchase Agreement”) whereby Iliad acquired all of Fife’s and Typenex’s right, title, obligations and interest in, to and arising under the Company Notes (as defined in the Note Purchase Agreement) and the Note Purchase Documents (as defined in the Note Purchase Agreement). 

 

On October 17, 2014, the Company entered into a financing arrangement with Iliad to provide additional financing in the amount of up to $450,000 through the issuance of a Secured Convertible Promissory Note (the “Note”). The Company agreed to cover Iliad’s legal, accounting and other related fees in the amount of $5,000, which is included in the principal balance of the Note. The Note will accrue interest at the rate of 8% per annum until the Note is paid in full. Monies are to be drawn in eight tranches with the initial tranche in the amount of $105,000, and the remaining balance of $350,000 in seven tranches of $50,000 each. The Company drew down the initial tranche on October 17, 2014. The Note has a maturity date of July 17, 2016.

 

Beginning six months after October 17, 2014 and on the same day each month thereafter, the Company shall make an installment payment, based upon the unpaid balance. At the option of the Company, payments may be made in cash or by converting the installment amount into shares of the Company’s common stock. The conversion price is equal to the lesser of (i) $0.0005 per share and (ii) 67.5% of the average of the three lowest closing bid prices in the 15 trading days immediately preceding the conversion. The Company has the right to prepay the Note at 135% of the outstanding balance at the time of prepayment. During the year ended December 31, 2018, principal of $14,733 and accrued interest of $907 was converted into 230,000,000 shares of common stock. During the year ended December 31, 2017, principal of $63,483 and accrued interest of $5,911 was converted into 1,020,392,460 shares of common stock. The outstanding balances at December 31, 2018 and December 31, 2017 were $19,393 and $34,126, respectively with accrued interest of $1,457 and $604 at December 31, 2018 and December 31, 2017, respectively.

F-15

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 8. Convertible Debt (continued)**

 

Fife, Typenex and Iliad (continued)

 

During the year ended December 31, 2014, the Company drew down an additional $314,703. During the years ended December 31, 2018 and 2017, there were no conversions. The outstanding balances at December 31, 2018 and December 31, 2017 were $329,175 and $329,175 respectively, with accrued interest of $104,823 and $71,015 at December 31, 2018 and December 31, 2017, respectively.

 

Third Party Note

 

In November 2014, the Company converted a portion of its outstanding accounts payable for legal services to a third party into two convertible promissory notes in the aggregate amount of $63,275. These are demand notes and accrue interest at the rate of 10% on the outstanding balance.  The notes are convertible into shares of the Company’s common stock based on 65% of the average ten trading days closing bid price during the preceding ten consecutive trading days immediately prior to the conversion. During the year ended December 31, 2017, principal of $22,672 was converted into 398,205,370 shares of common stock. The outstanding balances at December 31, 2018 and December 31, 2017 were $-0- and $-0-, respectively, with accrued interest of $-0-and $-0- at December 31, 2018 and December 31, 2017, respectively.

 

KBM Worldwide

 

On February 4 2015, the Company entered into an 8% convertible note in the amount of $54,000 with KBM Worldwide, Inc. (“KBM Worldwide”). The principal and accrued interest is payable on or before November 6, 2015. At the option of the Company, but not before six months from the date of issuance, the holder may elect to convert all or part of such note into the Company’s common stock. The note is convertible into shares of the Company’s common stock at a price of 60% of the average of the three lowest trading prices during the 10 days prior to the date of conversion or $0.00009, whichever is greater. During the year ended December 31, 2018, principal of $3,480 and accrued interest of $1,520 was converted into 55,555,556 shares of common stock. During the year ended December 31, 2017, principal of $37,110 and accrued interest of $20,295 was converted into 637,833,332 shares of common stock. The outstanding balances at December 31, 2018 and December 31, 2017 were $-0- and $3,480, respectively, with accrued interest of $-0- and $9,721 at December 31, 2018 and December 31, 2017, respectively.

 

Vis Vires Group, Inc.

 

On March 11, 2015, the Company entered into an 8% convertible note in the amount of $38,000 with Vis Vires Group, Inc.  (“Vis Vires”). The principal and accrued interest is payable on or before November 6, 2015. At the option of the Company, but not before six months from the date of issuance, the holder may elect to convert all or part of the convertible into the Company’s common stock. The note is convertible into shares of the Company’s common stock at a price equal to 60% of the average of the three lowest trading prices during the 10 days prior to the date of conversion or $0.00009, whichever is greater. During the year ended December 31, 2018, accrued interest of $16,800 was converted into 186,666,667 shares of common stock. There were no conversions during the years ended December 31, 2017. The Company is currently in default, and interest accrues at the default interest rate of 22%.  The outstanding balances at December 31, 2018 and 2017 were $38,000 and $38,000, respectively, with accrued interest of $9,520 and $8,622 at December 31, 2018 and December 31, 2017, respectively. The Company is currently negotiating an extension to this note.

F-16

 

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 8. Convertible Debt (continued)**

 

Vis Vires Group, Inc. (continued)

 

On April 30, 2015, the Company entered into an 8% convertible note in the amount of $33,000 with Vis Vires. The principal and accrued interest is payable on or before November 6, 2015. At the option of the Company, but not before six months from the date of issuance, the holder may elect to convert all or part of the convertible into the Company’s common stock. The note is convertible into shares of the Company’s common stock at a price equal to 60% of the average of the three lowest trading prices during the 10 days prior to the date of conversion or $0.00009, whichever is greater. There were no conversions during the years ended December 31, 2018 and 2017. The Company is currently in default, and interest accrues at the default interest rate of 22%.  The outstanding balance at December 31, 2018 and 2017 was $33,000 with accrued interest of $9,644 and $7,004 at December 31, 2018 and 2017, respectively. The Company is currently negotiating an extension to this note.

 

JMJ Financial

 

On April 15 2015, the Company entered into a $250,000 convertible note with JMJ Financial. The consideration was $225,000 and $25,000 original issue discount.  The principal and accrued interest is payable on or before May 4, 2016. On April 15, 2015, the Company borrowed $25,000 of this amount. The holder, at its option, may elect to convert all or part of the convertible into the Company’s common stock. The note is convertible into shares of the Company’s common stock at a price equal to the lesser of $0.018 per share or 60% of the lowest trading price during the 25 days prior to the date of conversion. During the year ended December 31, 2017, principal of $16,713 and accrued interest of $3,484 was converted into 276,000,000 shares of common stock. The outstanding balances at December 31, 2018 and 2017 were $-0- and $-0-, respectively, with accrued interest of $-0- and $-0- at December 31, 2018 and 2017, respectively.

 

As of December 31, 2018 and December 31, 2017, total convertible debt was $419,568 and $437,781, respectively, net of debt discount of $-0- and $-0-, respectively.

 

**Note 9. Derivative Liability**

 

The Company accounts for the fair value of the conversion features of its convertible debt in accordance with ASC Topic No. 815-15 “Derivatives and Hedging; Embedded Derivatives” (“Topic No. 815-15”). Topic No. 815-15 requires the Company to bifurcate and separately account for the conversion features as an embedded derivative contained in the Company’s convertible debt. The Company is required to carry the embedded derivative on its balance sheet at fair value and account for any unrealized change in fair value as a component of results of operations. The Company values the embedded derivatives using the Black-Scholes pricing model. There was no amortization of debt discount for the years ended December 31, 2018 and 2017. There was no derivative liability as of December 31, 2018 and 2017 as the outstanding convertible debt does not meet the criteria of ASC Topic 815-15. 

 

**Note 10. Stockholders’ Equity**

 

The Company is authorized to issue 6,000,000,000 shares of common stock, par value $0.00001 per share and 51 shares of preferred stock, par value $0.00001 per share. At December 31, 2018 and December 31, 2017, there were 5,391,410,725 and 4,622,047,391 common shares issued and outstanding, respectively. On April 3, 2014, the Company filed a Certificate of Amendment of Certificate of Incorporation with the Secretary of State of the State of Delaware to reduce the par value of all shares of common stock and preferred stock from $0.001 to $0.00001 per share.  On February 26, 2014, the Company filed a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware to increase the number of authorized shares of capital stock of the Company to 6,000,000,000 shares. Effective on October 14, 2014, the Company filed a Certificate of Amendment to the Certificate of Incorporation to effectuate a 1-for-1,000 reverse stock split of the Company’s common stock.

F-17

 

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 10. Stockholders’ Equity (continued)**

 

All share and per share data has been adjusted to reflect such stock splits and change in par value. Effective September 1, 2011, the Company authorized and issued 51 shares of Series A Preferred Stock, par value $0.001 to its CEO. In April 2014, the Company changed its par value on its preferred stock from $0.001 to $0.00001. The Series A Preferred Stock pays no dividends and has no conversion rights. Each share of Series A Preferred Stock has voting rights such that the holder of 51 shares of Series A Preferred Stock will effectively maintain majority voting control of the Company.

 

For the year ended December 31, 2018, the Company issued the following shares of common stock:

 

1)On February 8, 2018, we issued 230,000,000 shares of common stock valued at $15,640 to Illiad Capital for conversion of its convertible debt and accrued interest. 

2)On May 9, 2018, we issued 55,555,556 shares of common stock valued at $5,000 to KBM Financial for conversion of its convertible debt and accrued interest. 

3)On October 4, 2018, we issued 242,000,000 shares of common stock valued at $14,520 to KBM Financial for payment of accrued interest. 

4)On October 8, 2018, we issued 55,141,111 shares of common stock valued at $4,963 to KBM Financial for payment of accrued interest. 

5)On October 8, 2018, we issued 186,666,667 shares of common stock valued at $16,800 to VisVires for payment of accrued interest. 

 

For the year ended December 31, 2017, the Company issued the following shares of common stock:

 

1)On March 22, 2017, we issued 90,005,478 shares of common stock valued at $4,951 to Carebourn Capital for conversion of its convertible debt. 

2)On March 22, 2017, we issued 183,000,000 shares of common stock valued at $12,244 to Illiad for conversion of its convertible debt and accrued interest. 

3)On March 22, 2017, we issued 91,600,000 shares of common stock valued at $4,580 to JMJ Financial for conversion of its convertible debt. 

4)On May 12, 2017, we issued 60,000,000 shares of common stock valued at $6,000 to a firm for payment of accounts payable. 

5)On May 12, 2017, we issued 219,000,000 shares of common stock valued at $14,892 to Illiad for conversion of its convertible debt and accrued interest. 

6)On June 30, 2017, we issued 107,871,146 shares of common stock valued at $5,394 to Carebourn Capital for conversion of its convertible debt. 

7)On October 1, 2017, we issued 210,000,000 shares of common stock valued at $21,000 to View Point Health Investments in exchange for consulting services. 

8)On October 4, 2017, we issued 107,871,146 shares of common stock valued at $6,935 to Carebourn Capital for conversion of its convertible debt. 

9)On October 10, 2017, we issued 92,457,600 shares of common stock valued at $6,935 to Carebourn Capital for conversion of its convertible debt. 

10)On October 3, 2017, we issued 258,500,000 shares of common stock valued at $17,568 to Illiad for conversion of its convertible debt and accrued interest. 

11)On October 13, 2017, we issued 360,000,000 shares of common stock valued at $24,480 to Illiad for conversion of its convertible debt and accrued interest. 

12)On October 3, 2017, we issued 129,000,000 shares of common stock valued at $6,450 to JMJ Financial for conversion of its convertible debt. 

13)On October 10, 2017, we issued 113,062,200 shares of common stock valued at $5,653 to JMJ Financial for conversion of its convertible debt. 

14)On October 11, 2017, we issued 159,444,444 shares of common stock valued at $14,350 to KBM Financial for conversion of its convertible debt and accrued interest. 

F-18

 

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 10. Stockholders’ Equity (continued)**

 

15)On October 12, 2017, we issued 159,500,000 shares of common stock valued at $14,355 to KBM Financial for conversion of its convertible debt. 

16)On October 13, 2017, we issued 159,444,444 shares of common stock valued at $14,350 to KBM Financial for conversion of its convertible debt. 

17)On October 24, 2017, we issued 159,444,444 shares of common stock valued at $14,350 to KBM Financial for conversion of its convertible debt. 

18)On October 26, 2017, we issued 125,000,000 shares of common stock valued at $12,500 to a firm for payment of accounts payable. 

 

**Note 11. Income Taxes**

 

The components of the Company’s deferred taxes at December 31, 2018 and 2017 are as follows:

 

 

 

**December 31,**

 

**December 31,**

 

 

**2018**

 

**2017**

Deferred tax assets:

 

 

 

 

  Net operating loss carryforwards

 

$

1,372,854

 

$

1,304,872

  Startup costs

 

 

2,359

 

 

2,892

  Accounts receivable reserves

 

 

-

 

 

22,868

  Deferred compensation

 

 

238,671

 

 

186,993

  Depreciation

 

 

(16,406)

 

 

(16,406)

  Deferred tax asset

 

 

1,597,479

 

 

1,501,209

  Less valuation allowance

 

 

(1,597,459)

 

 

(1,501,209)

 

 

 

 

 

 

 

  Deferred tax asset, net

 

$

--

 

$

--

 

The recognized deferred tax asset is based upon the expected utilization of its benefit from future taxable income. At December 31, 2018, the Company had approximately $4,877,000 of federal net operating tax loss carryforwards expiring at various dates through 2035. The Tax Reform Act of 1986 enacted a complex set of rules which limits a company's ability to utilize net operating loss carryforwards and tax credit carryforwards in periods following an ownership change. These rules define an ownership change as a greater than 50 percent point change in stock ownership within a defined testing period which is generally a three-year period. As a result of stock which may be issued by us from time to time and the conversion of warrants, options or the result of other changes in ownership of our outstanding stock, the Company may experience an ownership change and consequently our utilization of net operating loss carryforwards could be significantly limited.

 

Based upon the net losses historically incurred and, the prospective global economic conditions, management believes that it is not more likely than not that the deferred tax asset will be realized and has provided a valuation allowance of 100% of the deferred tax asset.

 

A reconciliation of the income tax (benefit) provision at the statutory Federal tax rate of 21% and 34%, respectively, for the years ended December 31, 2018 and 2017 to the income tax (benefit) provision recognized in the financial statements is as follows:

 

 

 

**December 31,**

 

 

**December 31,**

 

 

**2018**

 

 

**2017**

U.S. statutory rate

 

 

(21%)

 

 

 

(34%)

Income tax expenses - state and local, net of federal benefit

 

 

6%

 

 

 

6%

Change in valuation allowance

 

 

15%

 

 

 

28%

 

 

 

 

 

 

 

 

Effective tax rate

 

 

--

 

 

 

--

F-19

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 12. Commitments**

 

The Company leases certain office and manufacturing facilities and equipment.

 

Currently, we lease a 1,730 square feet in Fairfield, NJ for our offices. The lease expired in August 31, 2010, and is being renewed on a month-to-month basis.

 

We also lease a 1,000 square foot retail store in Closter, NJ. The initial term of the lease is for five years commencing May 1, 2014. The Company has the option extend its lease for five additional years upon giving 90 days’ notice.  The five-year option is available up to 20 years.  Rent payments are $1,200 a month for the first two years, $1,275 for the third and fourth year, and $1,350 for the fifth year. If the Company renews its option for the second five years, the rent will begin at $1,415 and escalate to $1,665 in the fifth year. If the option is exercised for the third five-year term, rent will begin at $1,800 per month and escalate to $2,280 in the fifth year. The rent for the last five years, if the Company exercises its option, will be at the fair market value. The Company is also responsible for its proportionate share of common charges.

 

In June 2018, the Company entered into lease agreement with Ocean Resort Casino at 500 Boardwalk in Atlantic City, NJ for approximately 1,000 square feet of retail space to open a retail store. The initial term is for five (5) years beginning November 18, 2018. Subject to certain conditions, the lease is renewable for two additional 5-year periods. Percentage rent payments will be based on 10% of gross sales at this location and will be paid monthly. The Company is also responsible for additional rent or common area charges (“CAM”) of approximately $1,100 monthly.

 

In addition, the Company has agreements to lease equipment for use in the operations of the business under operating leases.

 

The following is a schedule of approximate future minimum rental payments for operating leases subsequent to the year ended December 31, 2018.

 

 

 

**Years Ended December 31,**

**2019**

 

 

5,400( 1)

 

(1)The above amount does not include contingent rentals which may be paid under lease agreement with Ocean Resort Casino. This rental is based upon 10% of gross sales at this location. 

 

Rent expense for the Company's operating leases for year ended December 31, 2018 and 2017 amounted to approximately $30,218 and $30,408, respectively.

 

**Note 13. Litigation**

 

The Company is currently not involved in any litigation that it believes could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

**Note 14. Significant Customer Concentrations**

 

During the year ended December 31, 2018, the Company had one customer that accounted for 6% of total sales. No other no single customer accounted for over 5% or more of our annual sales. During the year ended December 31, 2017, the Company had one customer that accounted for 9% of total sales. No other no single customer accounted for over 5% or more of our annual sales.

F-20

 

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 14. Significant Customer Concentrations (continued)**

 

As of December 31, 2018 accounts receivable, net amounted to only $39,354 and three customers represented 91% of this balance. As of December 31, 2017 accounts receivable, net amounted to only $61,511 and no one customer represented 93% significant amount of this balance. This amount was collected in the first quarter of 2018.

 

**Note 15. Fair Value Measurements**

 

FASB ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and prescribes disclosures about fair value measurements.

 

As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

 

The three levels of the fair value hierarchy defined by ASC 820 are as follows:

 

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

 

Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

 

Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

 

The valuation techniques that may be used to measure fair value are as follows:

 

Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities

 

Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method

 

Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost)

 

The carrying value of the Company’s borrowings is a reasonable estimate of its fair value as borrowings under the Company’s credit facility have variable rates that reflect currently available terms and conditions for similar debt.

F-21

 

**BERGIO INTERNATIONAL, INC.**

**Notes to Consolidated Financial Statements (continued)**

 

**Note 15. Fair Value Measurements (continued)**

 

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. As required by FASB ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company has no assets or liabilities that are required to be classified.

 

In addition, the FASB issued, “The Fair Value Option for Financial Assets and Financial Liabilities. This guidance expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value.  The Company did not elect the fair value option for any of its qualifying financial instruments.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-22

**Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**
 

There are no reportable events under this item for the year ended December 31, 2018.

 

**Item 9A. Controls and Procedures**
 

**a) Evaluation of disclosure controls and procedures**

 

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports we file pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”), to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide a reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Management designed the disclosure controls and procedures to provide reasonable assurance of achieving the desired control objectives.

 

We carried out an evaluation, under the supervision and with the participation of our management, including our PEO and PFO, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report. Based upon that evaluation, the PEO and PFO concluded that the Company’s disclosure controls and procedures were not effective.

 

**b) Management’s Annual Report on Internal Control over Financial Reporting**

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act Rules 13a-15(f).  A system of internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

 

Under the supervision and with the participation of management, including the principal executive officer and the principal financial officer, the Company’s management has evaluated the effectiveness of its internal control over financial reporting as of December 31, 2018, based on the criteria established in a report entitled “Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission” and the interpretive guidance issued by the Commission in Release No. 34-55929. Based on this evaluation, the Company’s management has evaluated and concluded that the Company’s internal control over financial reporting was ineffective as of December 31, 2018, and identified the following material weaknesses:

 

·there is a lack of accounting personnel with the requisite knowledge of GAAP and the financial reporting requirements of the SEC. 

 

·there are insufficient written policies and procedures to insure the correct application of accounting and financial reporting with respect to the current requirements of GAAP and SEC disclosure requirements. 

 

·there is a lack of segregation of duties, in that we only had one person performing all accounting-related duties. 

 

Notwithstanding the existence of these material weaknesses in our internal control over financial reporting, our management believes that the financial statements included in its reports fairly present in all material respects the Company’s financial condition, results of operations and cash flows for the periods presented.

 

The Company will continue its assessment on a quarterly basis.  We plan to hire personnel and resources to address these material weaknesses. We believe these issues can be solved with hiring accounting support and plan to do so as soon as we have funds available for this.  

26

 

**Item 9A. Controls and Procedures (continued)**

 

**b) Management’s Annual Report on Internal Control over Financial Reporting (continued)**

 

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.  The Company’s registered public accounting firm was not required to issue an attestation on its internal controls over financial reporting pursuant to temporary rules of the Securities and Exchange Commission.  The Company will continue to evaluate the effectiveness of internal controls and procedures on an on-going basis.

 

**c) Changes in Internal Control over Financial Reporting  **

 

There have been no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act) during the year ended December 31, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

**Item 9B. Other Information.**
 

Not applicable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27

 
**PART III**
 

**Item 10. Directors and Executive Officers of the Registrant and Corporate Governance**
 

**Directors and Executive Officers**

 

The following table and text sets forth the names and ages of all our directors and executive officers and our key management personnel as of March 25, 2019. All of our directors serve until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. Executive officers serve at the discretion of the Board, and are elected or appointed to serve until the next meeting of the Board following the annual meeting of stockholders. Also provided is a brief description of the business experience of each director and executive officer and the key management personnel during the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities laws.

 

**Name (age)**

 

**Position**

 

**Year First**

**Elected a Director**

Berge Abajian (56)

 

Chief Executive Officer and Chairman

 

2007

 

**Background of Directors and Officers**

 

***Berge Abajian*** became the Chief Executive Officer of Bergio International in October 2009. Prior to that, Mr. Abajian served as CEO of the Diamond Information Institute, the predecessor company to Bergio, from 1988 to October 2009. Mr. Abajian has a BS in Business Administration from Fairleigh Dickinson University and is well known and respected in the jewelry industry. Since 2005, Mr. Abajian has served as the President of the East Coast branch of the Armenian Jewelry Association and has also served as a Board Member on MJSA (Manufacturing Jewelers and Suppliers of America), New York Jewelry Association, and the 2001-2002 Luxury Show.

 

**Term of Office**

 

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board, except to the extent governed by an employment agreement.

 

**Involvement in Certain Legal Proceedings**

 

To the best of our knowledge, during the past ten years, none of the following occurred with respect to our present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

 

**Meetings of Our Board of Directors**

 

Our Board did not hold any meetings during the most recently completed fiscal year end. Various matters were approved by written consent, which in each case was executed by the Board.

 

**Committees of the Board**

 

We do not currently have a compensation committee, nominating committee, or stock plan committee.

28

 

**Item 10. Directors and Executive Officers of the Registrant and Corporate Governance (continued)**

 

**Audit Committee**

 

We do not have a separately-designated standing audit committee. The entire Board performs the functions of an audit committee, but no written charter governs the actions of the Board when performing the functions of what would generally be performed by an audit committee. The Board approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the Board reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor.

 

**Nominating Committee**

 

Our Board does not maintain a nominating committee. As a result, no written charter governs the director nomination process. Our size and the size of our Board, at this time, do not require a separate nominating committee.

 

When evaluating director nominees, our directors consider the following factors:

 

·the appropriate size of our board of directors; 

·our needs with respect to the particular talents and experience of our directors; 

·the knowledge, skills and experience of nominees, including experience in finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board; 

·experience in political affairs; 

·experience with accounting rules and practices; and 

·the desire to balance the benefit of continuity with the periodic injection of the fresh perspective provided by new Board members. 

 

Our goal is to assemble a Board that brings together a variety of perspectives and skills derived from high quality business and professional experience.

 

Other than the foregoing, there are no stated minimum criteria for director nominees, although the Board may also consider such other factors as it may deem are in our best interests as well as our stockholders. In addition, the Board identifies nominees by first evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination. If any member of the Board does not wish to continue in service or if the Board decides not to re-nominate a member for re-election, the Board then identifies the desired skills and experience of a new nominee in light of the criteria above. Current members of the Board are polled for suggestions as to individuals meeting the criteria described above. The Board may also engage in research to identify qualified individuals. To date, we have not engaged third parties to identify or evaluate or assist in identifying potential nominees, although we reserve the right in the future to retain a third party search firm, if necessary.

 

**Section 16(a) Beneficial Ownership Reporting Compliance**

 

Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and regulations of the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a).

 

Based solely on our review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the reports required to be filed with respect to transactions in our common stock during the fiscal year ended December 31, 2018, were timely

29

 

**Item 10. Directors and Executive Officers of the Registrant and Corporate Governance (continued)**

 

**Code of Ethics**

 

We do not currently have a code of ethics that applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer or Controller, or persons performing similar functions.  Because we have only limited business operations and four officers and directors, we believe a code of ethics would have limited utility. We intend to adopt such a code of ethics as our business operations expand and we have more directors, officers and employees.

 

**Item 11. Executive Compensation.**
 

**Overview**

 

The following is a discussion of our program for compensating our named executive officers and directors. Currently, we do not have a compensation committee, and as such, our board of directors is responsible for determining the compensation of our named executive officers.

 

**Compensation Program Objectives and Philosophy**

 

The primary goals of our policy of executive compensation are to attract and retain the most talented and dedicated executives possible, to assure that our executives are compensated effectively in a manner consistent with our strategy and competitive practice and to align executive compensation with the achievement of our short- and long-term business objectives.

 

The Board considers a variety of factors in determining compensation of executives, including their particular background and circumstances, such as their training and prior relevant work experience, their success in attracting and retaining savvy and technically proficient managers and employees, increasing our revenues, broadening our product line offerings, managing our costs and otherwise helping to lead our Company through a period of rapid growth.

 

In the near future, we expect that our Board will form a compensation committee charged with the oversight of executive compensation plans, policies and programs of our Company and with the full authority to determine and approve the compensation of our chief executive officer and make recommendations with respect to the compensation of our other executive officers. We expect that our compensation committee will continue to follow the general approach to executive compensation that we have followed to date, rewarding superior individual and company performance with commensurate compensation.

 

**Employment Agreements**

 

Effective February 28, 2010, the Company entered into an employment agreement with its CEO.  The agreement, which is for a five year term, provides for an initial base salary of $175,000 per year with a 3% annual increase thereafter (the “Base Salary”). The CEO is also entitled to certain bonuses based on net profits before taxes and other customary benefits, as defined in the agreement. In addition, since it is understood that the Company is employing the CEO during a time of economic decline throughout the U.S. and at times and from time to time, the Company may not be in a position to pay the full amount of Base Salary owed the CEO it is understood and agreed to by the Board, that as long as the Company is unable to pay the CEO the full amount of his Base Salary that the Board shall issue to him, from time to time, an amount of shares that will allow him to remain in possession of fifty-one percent (51%) of the Company’s then outstanding shares of common stock.  Such issuances shall be made to the CEO at any time when his total share holdings are reduced to an amount less than fifty-one percent (51%) as a result of issuance of shares of common stock made on behalf of the Company.

 

Effective September 1, 2011, the Company and CEO entered into an Amended and Restated Employment Agreement (the “Amended Agreement”) which primarily retains the term and compensation of the original agreement. The Amended Agreement, however, removes the section which previously provided for the issuance of Company common stock to the CEO, from time to time, when the Company is unable to pay the CEO the full amount of his Base Salary (as defined in the Amended Agreement) which would allow the CEO to maintain a fifty-one percent (51%) share of the Company’s outstanding common stock.

30

 

**Item 11. Executive Compensation (continued)**

 

**Employment Agreements (continued)**

 

However, the CEO does have the right to request all or a portion of his unpaid Base Salary be paid with the Company’s restricted common stock. In addition, the Amended Agreement provides for the issuance of 51 shares of newly authorized Series A Preferred Stock to be issued to the CEO. As defined in the Certificate of Designations, Preferences and Rights of the Series A Preferred Stock, each share of Series A Preferred Stock has voting rights such that the holder of 51 shares of Series A Preferred Stock will effectively

 

maintain majority voting control of the Company. Effective November 3, 2011, the CEO notified the Company that for the one year period, retroactive from April 1, 2011, through December 31, 2012, he would reduce his Base Salary to $100,000. The reduction in base compensation was subsequently extended to December 31, 2013. The CEO is currently deferring his salary to conserve cash. Deferred wages due to the CEO amounted to $795,571 and $628,309 for the periods ended December 31, 2018 and December 31, 2017, respectively. On September 30, 2018, the Principal Executive Office signed an agreement with the Company extending payments in the amount of $1,000,000 due him until January 31, 2020 as a result of the financial situation of the Company. As such, all deferred compensation in the amount of $795,571 and $204,429 of the advances was classified as a long-term liability.

 

On January 1, 2019, the CEO amended his employment agreement with the Company for a term of one year expiring December 31, 2019. The agreement primarily retains the terms of the Amended Agreement, but lowers the compensation to $100,000 for the year.

 

**Retirement Benefits**

 

Currently, we do not provide any Company sponsored retirement benefits to any employee, including the named executive officers.

 

**Perquisites**

 

We have historically provided only modest perquisites to our named executive officers. We do not view perquisites as a significant element of our compensation structure, but do believe that perquisites can be useful in attracting, motivating and retaining the executive talent for which we compete. It is expected that our historical practices regarding perquisites will continue and will be subject to periodic review by our by our board of directors.

 

**Summary Compensation Table**

 

The following table presents information regarding compensation of our principal executive officer, and the two most highly compensated executive officers other than the principal executive officer for services rendered during years ended 2018 and 2017, respectively.

 

**Name and**

**Principal Position**

 

**Fiscal Year**

 

**Salary ($)**

**(1)(2)**

 

**Incentive ($)**

**(3)**

 

**Option**

**Awards ($)**

**(4)**

 

**All Other**

**Compensation**

**$ (5)**

**Total**

**($)**

Berge Abajian

 

2018

 

 

(2) 175,000

 

 

-

 

 

-

 

 

$19,795

 

$194,795

CEO & Chairman

 

2017

 

 

(2) 175,000

 

 

-

 

 

-

 

 

$12,266

 

$187,266

 

(1)The amounts shown in this column represent the dollar value of base cash salary earned by each named executive officer (“NEO”). 

(2)Mr. Abajian voluntarily deferred $167,262 and $175,000 of his salary for the years 2018 and 2017, respectively, until such time as the Company is in a better financial position. 

(3)No incentive compensation was made to the NEO’s in 2018 and 2017 and therefore no amounts are shown. 

(4)Amounts in this column represent the fair value required by ASC Topic 718 to be included in our financial statements for all options granted during that year. 

(5)Other compensation was made up of Mr. Abajian’s car expense and health insurance expenses. 

31

 

**Item 11. Executive Compensation (continued)**

 

**Incentive Stock and Award Plan**

 

On May 9, 2011, the Company’s Board approved, authorized and adopted the 2011 Incentive Stock and Award Plan (the “Plan”).  The Plan was amended on October 11, 2012.  Subject to adjustment for mergers, reorganizations, consolidation, recapitalization, stock dividend or other change in corporate structure, a total of 35,000,000****shares of common stock, par value $0.00001 per share is subject to the Plan. Under the Plan, the Company may grant non-qualified options (the “Non-qualified Options”), incentive options (the “Incentive Options” and together with the Non-qualified Options, the “Options”) and restricted stock (the “Restricted Stock”) to directors, officers, consultants, attorneys, advisors and employees. Subject to a tax exception, if any Option or Restricted Stock expires or is canceled prior to its exercise or vesting in full, the shares of common stock issuable under the Option or Restricted Stock may be issuable pursuant to future Options or Restricted Stock under the Plan.

 

The Plan shall be administered by a committee consisting of one (1) director (the “Committee”).  In the absence of such a Committee, the Company’s Board shall administer the Plan.

 

Each Option shall contain the following material terms:

 

(i) the exercise price, which shall be determined by the Committee at the time of grant, shall not be less than 100% of the Fair Market Value (defined as the closing price on the final trading day immediately prior to the grant on the principal exchange or quotation system on which the Common Stock is listed or quoted, as applicable) of the Common Stock of the Company on the date the Option is granted, *provided* that if the recipient of the Option owns more than ten percent (10%) of the total combined voting power of the Company, the exercise price shall be at least 110% of the Fair Market Value;

 

(ii) the term of each Option shall be fixed by the Committee, *provided* that such Option shall not be exercisable more than ten (10) years after the date such Option is granted, and*provided further* that with respect to an Incentive Option, if the recipient owns more than ten percent (10%) of the total combined voting power of the Company, the Incentive Stock Option shall not be exercisable more than five (5) years after the date such Incentive Option is granted;

 

(iii) subject to acceleration in the event of a Change of Control of the Company (as further described in the Plan), the period during which the Options vest shall be designated by the Committee or, in the absence of any Option vesting periods designated by the Committee at the time of grant, shall vest and become exercisable in equal amounts on each fiscal year of the Company through the five (5) year anniversary of the date on which the Option was granted;

 

(iv) no Option is transferable and each is exercisable only by the recipient of such Option except in the event of the death of the recipient; and

 

(v) with respect to Incentive Stock Options, the aggregate Fair Market Value of Common Stock that may be issued for the first time during any calendar year shall not exceed $100,000.

 

Each award of Restricted Stock is subject to the following material terms:

 

(i) no rights to an award of Restricted Stock is granted to the intended recipient of Restricted Stock unless and until the grant of Restricted Stock is accepted within the period prescribed by the Committee;

 

(ii) Restricted Stock shall not be delivered until they are free of any restrictions specified by the Committee at the time of grant;

 

(iii) shares of Restricted Stock are forfeitable until the terms of the Restricted Stock grant have been satisfied; and

 

(iv) the Restricted Stock are not transferable until the date on which the Committee has specified such restrictions have lapsed.

32

 

**Item 11. Executive Compensation (continued)**

 

**Stock Option Grants**

 

We have not granted any stock options to the executive officers or directors since the adoption of the Plan.

 

**Director Compensation**

 

We do not currently pay any cash fees or expenses to our sole director for serving on the Board.

 

**Compensation Policy**

 

The Company does not believe that its compensation policies are reasonably likely to increase corporate risk or have a material adverse effect on the Company.

 

**Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.**
 

The following table sets forth certain information known to the Company with respect to the beneficial ownership as of March 25, 2019, by (i) all persons who are beneficial owners of five percent (5%) or more of the Company’s common stock, (ii) each director and nominee, (iii) the executive officers, and (iv) all current directors and executive officers as a group.

 

**Name and Address(1)**

 

**Number of Shares**

**Beneficially Owned**

 

**Percentage**

**of Class 2)**

 

 

 

 

 

**Named Directors and Officers**

 

 

 

 

Berge Abajian, Chairman and CEO (3)

 

7,446

 

 

*%

 

 

 

 

 

 

All Officers and Directors as a Group (1 person)

 

7,446

 

 

*%

 

·Less than 0.1%. 

 

(1)Unless otherwise indicated, the address of each beneficial owner listed above is c/o Bergio International, Inc., 12 Daniel Road East, Fairfield, NJ 07007. 

(2)Based on a total of 5,391,410,725 shares of common stock outstanding on December 31, 2018. 

(3)Mr. Abajian also owns 51 shares of the Company’s Series A Preferred Stock. 

 

**Issuances under the Compensation Plan**

 

The following table provides information as of December 31, 2018 regarding compensation plans under which equity securities of the Company are authorized for issuance.

 

**Plan category**

 

**Number of**

**securities**

**to be**

**issued upon**

**exercise of**

**outstanding**

**options**

 

**Weighted**

**average**

**exercise**

**price of**

**outstanding**

**options**

 

**Number of**

**options**

**remaining**

**available for**

**future issuance**

**under Equity**

**Compensation Plans**

Equity Compensation Plans approved by shareholders

 

 

--

 

$

-0-

 

 

**176,750**

Equity Compensation Plans not approved by shareholders

 

 

--

 

 

-0-

 

 

**--**

Total

 

 

--

 

$

-0-

 

 

**176,750**

 

Note: Only restricted shares of common stock were issued pursuant to this plan.

33

 

**Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters (continued)**

 

**Changes in Control**

 

We are not aware of any arrangements that may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K.

 

**Item 13. Certain Relationships and Related Transactions, and Director Independence**
 

The Company receives periodic advances from its principal executive officer based upon the Company’s cash flow needs. At December 31, 2018 and December 31, 2017, $455,541 and $459,636, respectively, was due to such officer, including accrued interest. On September 30, 2018, the Principal Executive Office signed an agreement with the Company extending payments in the amount of $1,000,000 due him until January 31, 2020 as a result of the financial situation of the Company. As such, all deferred compensation in the amount of $795,571 and $204,429 of the advances was classified as a long-term liability. At December 31, 2017, an amount of $323,855 was reclassified from Bank lines of credit and $2,000 from accounts payable and accrued liabilities to Advances from principal executive officer and accrued interest to reflect the guaranty of these loans by the principal executive officer. Interest expense is accrued at an average annual market rate of interest which was 5.25% and 4.5% at December 31, 2018 and December 31, 2017, respectively. Interest expense due to such officer was $45,392 and $24,431 for the years ended December 31, 2018 and 2017, respectively. Accrued interest was $149,993 and $104,601 at December 31, 2018 and 2017, respectively. No terms for repayment have been established. 

 

**Director Independence**

 

The common stock of the Company is currently quoted on the OTC Markets, a quotation system which currently does not have director independence requirements.  On an annual basis, each director and executive officer will be obligated to disclose any transactions with the Company in which a director or executive officer, or any member of his or her immediate family, have a direct or indirect material interest in accordance with Item 407(a) of Regulation S-K. Following completion of these disclosures, the Board will make an annual determination as to the independence of each director using the current standards for “independence” that satisfy the criteria for the NASDAQ.

 

At this time, the Company does not have any independent directors.

 

**Item 14. Principal Accountant Fees and Services**

 

The following table presents the aggregate fees for professional audit services and other services rendered Tama, Budaj & Raab, P.C. (“TBR”), our independent registered public accountants in 2018 and 2017, Fees for the years ended December 31, 2018 and 2017 were as follows:

 

 

 

**2018**

 

**2017**

Audit Fees

 

$

25,550

 

$

26,300

Audit-Related Fees

 

 

-

 

 

-

Total Audit and Audit-Related Fees

 

 

25,550

 

 

26,300

Tax Fees

 

 

-

 

 

-

All Other Fees

 

 

-

 

 

-

 

 

 

 

 

 

 

Total

 

$

25,550

 

$

26,300

 

**Audit Fees**.  This category includes the audit of the Company’s consolidated financial statements, and reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q. It also includes advice on accounting matters that arose during, or as a result of, the audit or the review of interim financial statements, and services which are normally provided in connection with regulatory filings, or in an auditing engagement.

 

**Audit Related Fees, tax and other fees**.  No other fees under these categories were paid in 2018 and 2017. 

34

**Item 15. Exhibits and Financial Statement Schedules.**
 

a.) The following documents are filed as a part of this report:

 

**Exhibit No.**

 

**Description**

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000125529409000728/ex2_1.htm style=TEXT-DECORATION:none>2.1

 

Share Exchange Agreement, dated October 19, 2009, by and between Alba Mineral Exploration, Inc. and Diamond Information Institute, Inc. (as filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the SEC on October 21, 2009)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000125529409000728/ex2_2.htm style=TEXT-DECORATION:none>2.2

 

Stock Purchase Agreement, dated October 20, 2009, by and among Alba Mineral Exploration, Inc., Owen Gibson, individually, Joan Gibson, individually, Darcy Brann, individually, Duane Schaffer, individually, Lindsay Devine, individually, and Dennis Rodowitz, individually (as filed as Exhibit 2.2 to the Company’s Current Report on Form 8-K, filed with the SEC on October 21, 2009)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000125529408000398/ex3_1.htm style=TEXT-DECORATION:none>3.1

 

Articles of Incorporation, as amended (as filed as Exhibit 3.1 to the Company’s Registration Statement on Form S-1/A, filed with the SEC on April 23, 2008)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000125529409000734/ex3_1.htm style=TEXT-DECORATION:none>3.2

 

Certificate of Amendment to the Articles of Incorporation (as filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on October 22, 2009)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000125529408000398/ex3_2.htm style=TEXT-DECORATION:none>3.3

 

Bylaws, as amended (as filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-1/A, filed with the SEC on April 23, 2008)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390511000616/brgo_ex3-1.htm style=TEXT-DECORATION:none>3.4

 

Certificate of Designation of Preferences, Rights and Limitations of the Bergio International Inc. Series A Preferred Stock, as filed with the Delaware Secretary of State on September 2, 2011 (as filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on September 8, 2011)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390512000705/brgo_ex3.htm style=TEXT-DECORATION:none>3.5

 

Certificate of Amendment of Certificate of Incorporation, dated November 29, 2012 (as filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 12, 2012)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390514000037/brgo_ex3.htm style=TEXT-DECORATION:none>3.6

 

Certificate of Amendment of Certificate of Incorporation, dated January 14, 2014 (as filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on January 30, 2014)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390514000075/brgo_ex3.htm style=TEXT-DECORATION:none>3.7

 

Certificate of Amendment of Certificate of Incorporation, dated February 26, 2014 (as filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 3, 2014)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390514000176/brgo_ex3.htm style=TEXT-DECORATION:none>3.8

 

Certificate of Amendment of Certificate of Incorporation, dated April 3, 2014 (as filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 8, 2014)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390514000561/brgo_ex3.htm style=TEXT-DECORATION:none>3.9

 

Certificate of Amendment of Certificate of Incorporation, dated October 14, 2014 (as filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on October 16, 2014)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000125529410000087/ex10_1.htm style=TEXT-DECORATION:none>10.1

 

Order Approving Stipulation for Settlement of Claim, dated February 4, 2010 (as filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on February 5, 2010)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390511000616/brgo_ex10-1.htm style=TEXT-DECORATION:none>10.2

 

Amended and Restated Employment Agreement, dated September 1, 2011, by and between Bergio International Inc. and Berge Abajian, individually (as filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on September 8, 2011)

35

 

**Exhibit No.**

 

**Description**

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390511000274/bergio_ex10-1.htm style=TEXT-DECORATION:none>10.3

 

Bergio International, Inc. 2011 Stock Incentive and Reward Plan (as filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-8, filed with the SEC on May 10, 2011).

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390512000038/brgo_ex104.htm style=TEXT-DECORATION:none>10.4

 

Committed Equity Facility Agreement, dated December 23, 2011, by and between Bergio International Inc. and TCA Global Credit Master Fund, LP (as filed as Exhibit 10.4 to the Company’s Registration Statement on Form S-1, filed with the SEC on February 1, 2012)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390512000038/brgo_ex105.htm style=TEXT-DECORATION:none>10.5

 

Registration Rights Agreement, dated December 23, 2011, by and between Bergio International Inc. and TCA Global Credit Master Fund, LP (as filed as Exhibit 10.5 to the Company’s Registration Statement on Form S-1, filed with the SEC on February 1, 2012)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390512000591/brgo_ex101.htm style=TEXT-DECORATION:none>10.6

 

First Amendment to Committed Equity Facility Agreement, dated October 18, 2012, by and between Bergio International Inc. and TCA Global Credit Master Fund, LP (as filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on October 24, 2012)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390515000244/brgo_ex101.htm style=TEXT-DECORATION:none>10.7

 

8% Convertible Note with KBM Worldwide, Inc, dated February 4, 2015 (as filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2015, filed with the SEC on May 13, 2015)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390515000244/brgo_ex102.htm style=TEXT-DECORATION:none>10.8

 

8% Convertible Note with Vis Vires Group, Inc., dated March 11, 2015 (as filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2015, filed with the SEC on May 13, 2015)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390515000244/brgo_ex103.htm style=TEXT-DECORATION:none>10.9

 

8% Convertible Note with Vis Vires Group, Inc., dated April 30, 2015 (as filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2015, filed with the SEC on May 13, 2015)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390515000244/brgo_ex104.htm style=TEXT-DECORATION:none>10.10

 

8% Convertible Note with LG Capital Funding, LLC, dated May 4, 2015 (as filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2015, filed with the SEC on May 13, 2015)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390515000244/brgo_ex105.htm style=TEXT-DECORATION:none>10.11

 

Securities Purchase Agreement with KBM Worldwide, Inc., dated February 4, 2015 (as filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2015, filed with the SEC on May 13, 2015)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390515000244/brgo_ex106.htm style=TEXT-DECORATION:none>10.12

 

Securities Purchase Agreement with Vis Vires Group, Inc., dated March 11, 2015 (as filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2015, filed with the SEC on May 13, 2015)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390515000244/brgo_ex107.htm style=TEXT-DECORATION:none>10.13

 

Securities Purchase Agreement with Vis Vires Group, Inc., dated April 30, 2015 (as filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2015, filed with the SEC on May 13, 2015)

 

 

 

/www.sec.gov/Archives/edgar/data/1431074/000139390515000244/brgo_ex108.htm style=TEXT-DECORATION:none>10.14

 

Securities Purchase Agreement with LG Capital Funding, LLC, dated May 4, 2015 (as filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2015, filed with the SEC on May 13, 2015)

 

 

 

23.1

 

Consent of Independent Registered Public Accounting Firm

 

 

 

31.1

 

Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).

36

 

**Exhibit No.**

 

**Description**

 

 

 

31.2

 

Certification by the Principal Accounting Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).

 

 

 

32.1

 

Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.2

 

Certification by the Principal Accounting Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

101.INS

 

XBRL Instance Document *

 

 

 

101.SCH

 

XBRL Taxonomy Extension Schema *

 

 

 

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase *

 

 

 

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase *

 

 

 

101.LAB

 

XBRL Taxonomy Extension Label Linkbase *

 

 

 

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase *

 

* Filed herewith

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

37

 

**Signatures**
 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

**BERGIO INTERNATIONAL, INC.**

 

 

(Registrant)

 

 

 

 

 

Dated: October 11, 2019

By:

*/s/ Berge Abajian*

 

 

 

Berge Abajian

 

 

 

CEO and Chairman

 

 

 

(Principal Executive Officer)

 

 

 

(Principal Accounting Officer)

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated and by signature hereto.

 

**Signature**

 

**Title**

 

**Date**

 

 

 

 

 

*/s/ Berge Abajian*

 

Chief Executive Officer and Chairman

 

October 11, 2019

Berge Abajian

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38