EDGAR 10-K Filing

Company CIK: 1389067
Filing Year: 2023
Filename: 1389067_10-K_2023_0001477932-23-003924.json

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ITEM 1. BUSINESS
Item 1. Business Factors
History
The Company was formed in Delaware on June 5, 2006 as Caddystats, Inc.
On March 3, 2009, the Company acquired all of the voting shares of Roadships Holdings, Inc., a Florida Corporation, and Roadships America, Inc., also a Florida Corporation in exchange for an aggregate of 16,025,000 shares of the Company’s common stock. On March 4, 2009, the Company changed its name to Roadships Holdings, Inc.
On May 26, 2015, the Company acquired all the voting shares of Click Evidence Inc., an Arizona corporation. Effective November 2, 2015, the Company changed its name to Tautachrome Inc.
Our Business
Tautachrome operates in the internet applications space, uniquely exploiting the technologies of the Augmented Reality sector, the blockchain/cryptocurrency sector and the smartphone picture and video technology sector. We have high-speed blockchain concepts under development aiming to couple with the Company’s patents and licensing in augmented reality, smartphone-image authentication and imagery-based social networking.
Tautachrome is currently pursuing four main avenues of business activity based on our patented activated imaging technology, our blockchain cryptocurrency products, and our licensing of the patent pending ARk technology (together banded “KlickZie” technology):
1.
KlickZie ARk technology business: The Company has licensed and is developing a new KlickZie augmented reality (“AR”) platform branded ARknet. ARknet enables goods and services providers to establish geolocated augmented reality interfaces, called ARks, allowing consumers to purchase the provider’s products and take advantage of is specials and discounts, using the ARk. A provider’s ARk may be located anywhere in the world, from a store location to anyplace else the provider may desire. The ARknet is a fintech platform connecting consumers to providers in the global $50+ trillion household goods market, using augmented reality as the medium of interaction.
2.
KlickZie’s blockchain cryptocurrency-based ecosystem: The Company has developed its own digital currency (“XAR”), smart contracts using XARs, and high speed blockchain concepts aimed at supporting fast frictionless transactions within the ARknet as well as incentivizing user activity in the development of ARknet infrastructure and the use of ARknet services.
3.
KlickZie Activated Digital Imagery business: The Company is developing downloadable apps based on our patented KlickZie trusted imaging and image-based social interactions using the pictures and videos that smartphone users create.
4.
New Platform Exploitation: The Company is looking to exploit its KlickZie technology to generate substantial revenues partnering with Fortune 50 corporations via novel platforms introduced to the Company by Mr. Timothy Holly (the “PXR Platforms”), our new director appointed to the Board on December 22, 2022.
In the long term, we envision a KlickZie ARknet with billions of users and ARks connecting humanity, commerce, information, crypto currency, and innovation in economically useful ways. In the mid-term, we aim to achieve significant cash flow by coupling the KlickZie and PXR Platforms together to develop unique partnerships with a number of Fortune 50 corporations.
Competition
With regard to the internet applications in general, competition is intense. According to Statista there are millions of smartphone applications available to users. In spaces that are this crowded the principal matter of competition is about capturing user mind space, which for a given product consists of elements such as degree of product exposure to users, degree of product apparent desirability, pleasure of product usage, and persisting necessity for the product in a user’s life. These elements of competition are well known to our competitors which include the internet giants Google, Apple, Facebook and Amazon, all of whom have financial resources and operating staffs substantially larger than those of the Company, and all of whom can focus on the optimization of their products towards the same consumer and business arenas upon which we intend to focus.
With regard to the ARknet augmented reality space, while there is no direct competition in the space at the moment, that could change in a heartbeat with an interest taken by any of the internet giants mentioned above.
With regard to KlickZie’s technology for marking, storing and tracking digital imagery, there are many firms who mark, store and track digital imagery. Among these have been Digimarc, BatchPhoto, and Thirdlight who have marketed such processes for purposes of protecting intellectual property. To our knowledge none of these has turned the smartphone into a generally trustable imager or an advanced image-based communicator as envisioned here. This requires substantially more talent and development activity than required for marking, storing and tracking digital imagery. However, there is nothing stopping any firm, particularly the internet giants, from entering into similar activity. Moreover Truepic, which entered the arena of smartphone trusted imagery, also has patents related to trusted imagery. We have reviewed Truepic’s patent claims and believe that our planned applications do not infringe their claims.
Intangible Properties: issued and pending patents
The proprietary nature of, and protection for, our technologies, processes, and know-how are important to our business. Our success could substantially depend upon our ability to protect the proprietary nature of our technologies and know-how, to protect our technology from infringement, misappropriation, discovery and duplication, and to operate without infringing the proprietary rights of others.
We seek patent protection for our technologies. Our policy is to patent the technology, inventions and improvements that we consider important to the development of our business. We cannot be sure that any of our pending patent applications will be granted, or that any patents or licenses which we own or obtain in the future will fully protect our position. Our patent rights and the patent rights of technology companies in general, are highly uncertain and include complex legal and factual issues. We believe that our existing technology licensing, and the patents which we hold and for which we have applied, do not infringe anyone else's patent rights. We believe our technology and patent rights will provide meaningful protection against others duplicating our proprietary technologies. We cannot be sure of this, however, because of the complexity of the legal and scientific issues that could arise in litigation over these issues.
Despite these measures, any of our intellectual property and proprietary rights could be challenged, invalidated, circumvented, infringed or misappropriated, or such intellectual property and proprietary rights may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages.
As of the date of this annual report, our patent portfolio includes the patents and applications issued by and filed with the USPTO and the purchase technology licensing as described in the following table:
Title
Status
Patent or Application Number
License date Patent Grant or Application Date
License to commercialize the patent: Exploitation Of Augmented Reality And Cryptotoken Economics In An Information-Centric Network Of Smartphone Users And Other Imaging Cyborgs
Patent pending owned by Arknet Inc & licensed to Tautachrome
62/755589
11/05/2018
Authentication And Validation Of Smartphone Imagery
Patent granted to & owned by Tautachrome
02/28/2017
Authentication And Validation Of Smartphone Imagery
Patent granted to & owned by Tautachrome
07/10/2018
Authentication And Validation Of Smartphone Imagery
Patent granted to & owned by Tautachrome
07/10/2018
System And Method For Creating, Processing, And Distributing Images That Serve As Portals Enabling Communication With Persons Who Have Interacted With The Images
Patent granted to & owned by Tautachrome
03/27/2018
System And Method For Creating, Processing, And Distributing Images That Serve As Portals Enabling Communication With Persons Who Have Interacted With The Images
Patent granted to & owned by Tautachrome
910,339,283 B2
07/02/2019
System And Method For Creating Geo-located Augmented Reality Communities
Patent granted and owned by Arknet Inc & licensed to Tautachrome
11,461,974
10/20/2022
Advanced Signal Processing and Fusion for AR, MR, and VR Applications with Attention Mechanisms, RNN Autoencoders, and Multi-Modal Integration.
Patent Pending Disclosure filed by Tautachrome
63/492,894
03/17/2023
Amenable Structures Approximate (ASA) Solution for Augmented Reality Object Placement. Invention enabling users to create AR objects permanently and correctly placed in any spot in the visible environment near shopping centers and housing complexes
Patent pending Disclosure filed by Tautachrome using . four advanced AI techniques
63/454,337
03/21/2023
Self-Destructing Digital Asset Protection System.
Invention provides a comprehensive licensing management and self-destructing digital asset protection system.
Patent Disclosure filed by Tautachrome using advanced security, monitoring, and protection
63/493,801
04/23/2023
Gramagery-Encoded Blockchain Improvement System with Gramage Stacks and Generational Tree Structures for Optimized Data Storage and Management
Patent Disclosure filed by Tautachrome using high peed block chain improvements
63/459/001
04/13/2023
We rely upon unpatented trade secrets, know-how, and continuing technological innovation to develop and maintain our competitive position. We seek to protect our ownership of know-how and trade secrets through an active program of legal mechanism including assignments, confidentiality agreements, material transfer agreements, research collaborations, and licenses.
Employees
Tautachrome Inc. has no employees. Services are currently provided through independent contractors. For SOX compliance, in the SOX Certifications section of our SEC 10-K and 10-Q financial filings, where one of our directors administers both CEO and CFO offices and is signing for both offices, this fact is indicated on the signature block thereof.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are not required to provide the information required under this item.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
Not applicable.

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ITEM 2. PROPERTIES
Item 2. Properties
Our principal business and corporate address is 1846 E Innovation Park Drive, Oro Valley, Arizona 85755 (Telephone: 520 318 5578).
We do not currently have any investments or interests in real estate, nor do we have investments or any interest in real estate mortgages or securities of entities engaged in real estate activities.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
None

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
Not applicable.
PART II - OTHER INFORMATION

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Common Equity and Related Stockholder Matters
Market Information
Our shares trade on the OTC PINK under the symbol “TTCM”. The following table sets forth the high and low closing bid prices of our common stock for the last two calendar years, as reported by OTC Markets Group Inc. and represents inter dealer quotations, without retail mark-up, mark-down or commission and may not be reflective of actual transactions:
Quarter Ended
High
Low
December 31, 2022
$ 0.00080
$ 0.00050
September 30, 2022
0.00130
0.00065
June 30, 2022
0.00320
0.00070
March 31, 2022
0.00460
0.00175
December 31, 2021
$ 0.00700
$ 0.00300
September 30, 2021
0.00950
0.00570
June 30, 2021
0.01400
0.00820
March 31, 2021
0.01950
0.00550
Holders
On December 31, 2022, the Company had approximately 590 stockholders of record, and approximately 6,956 beneficial owners of shares of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies, for a total of approximately 7,546 beneficial owners of shares of common stock.
Dividends
We have not declared or paid cash dividends on our common stock since inception and do not anticipate paying such dividends in the foreseeable future. The payment of dividends may be made at the discretion of the Board of Directors and will depend upon, among other factors, our operations, capital requirements, and overall financial condition.
Recent Sales of Equity Securities
·
We issued 227,485,212 shares in conversion of outstanding convertible promissory notes.
·
We issued 33,236,858 shares for conversion of accounts payable balances.
·
We issued 98,896,076 shares to settle stock payable balances.
·
We issued 3,000,000 shares to a Director
·
We issued 7,850,000 shares to a creditor as an enticement for a loan.
Securities Authorized for Issuance under Equity Compensation Plans
None.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Selected Financial Data
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis or Plan of Operation
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides information for the years ended December 31, 2022 and December 31, 2021. This MD&A should be read together with our audited consolidated financial statements and the accompanying notes for the fiscal years ended December 31, 2022 and December 31, 2021.
This discussion contains forward-looking statements that involve certain risks and uncertainties. See “Forward-Looking Statements” elsewhere in this report.
Overall Performance
We are an early stage internet applications company, engaged in advanced technology and business development in the internet applications space. We have incurred general and administrative costs, marketing expenses and research and development costs since we commenced our current operations in May 2015, against very little revenue.
The Company’s audited consolidated financial statements and the accompanying notes for the years ended December 31, 2022 and December 31, 2021, have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. We had negative cash flows from operations of $613,787 and $1,249,760 for the years ended December 31, 2022 and 2021, respectively, with recurring losses and negative working capital of $5,404,277 and $4,644,642 as at December 31, 2022 and 2021, respectively. These conditions raise substantial doubt as to our ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
The continuing operations of the Company are dependent upon our ability to raise adequate financing and to commence profitable operations in the future. The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through loans from related parties. We believe that actions presently being taken to obtain additional funding may provide the opportunity for the Company to continue as a going concern. There is no guarantee, however, that the Company will be successful in achieving these objectives.
Results of Operations for the Years ended December 31, 2022 and 2021
Net Comprehensive Loss
The Company realized a net comprehensive loss of 1,112,225 for the year ended December 31, 2022 compared to a net comprehensive loss of $5,026,747 for the year ended December 31, 2021.
Revenue and Cost of Sales
The Company recognized minimal revenues and cost of sales for both years as the company’s product has not been fully taken to market.
Operating Expenses
The Company’s total operating expenses for the year ended December 31, 2022 were $1,072,022 compared to $4,267,148 for the year ended December 31, 2021, a decrease of $3,195,126.
For the year ended December 31, 2022, the Company incurred general and administrative expenses of $591,907 compared to $2,862,773 for the year ended December 31, 2021, a decrease of $2,270,866.
The following table sets out the material components of the Company’s general and administrative for the years ended December 31, 2022 and 2021.
Year Ended December 31,
General and Administrative Expenses
Legal and accounting fees
$ 101,733
$ 132,486
Consulting
76,700
138,385
Other professional services
97,787
97,847
Office and occupancy costs
15,077
9,897
Arknet license fees
200,000
200,000
Advertising and promotion
100,315
2,276,445
Other
7,713
$ 591,907
$ 2,862,773
The vast majority of change from 2021 to 2022 was in advertising and promotion (a decrease of 2,161,648, or a 96% decrease). Most of this decrease resulted from our issuance of 198,000,000 shares in 2021 issued to a supplier to pay for media buys which resulted in a charge to Advertising and Promotion of $1,980,000. No such issuance occurred in 2022.
Research and development
Research and development costs were $1,239,133 in 2021 versus $465,633 in 2022 owing to decreased development activity.
Bad Debt Expense
On June 8, 2021, we loaned a board member $150,000 on a promissory note which was due upon demand. The company made demand for re-payment and the board member defaulted on the note. At the time of default, $760, in interest had accrued. We charged the entirety of principal and interest to Bad Debt Expense. We had no such item in 2022.
Depreciation Expense
We had depreciation expense of $14,482 for the year ended December 31, 2022 and 2021 as our assets are depreciated using the straight-line method and the asset base has not been changed.
Other Expenses
Other Expenses dropped significantly from the previous year due to decreased activities. 2021 saw a significant amount of discount amortization $1,092,397 versus only $593,261 in 2022.
Other Comprehensive Loss
At each balance sheet date, transactions and balances that are denominated in a currency other than U.S. dollars are adjusted to reflect the current exchange rate which may give rise to a foreign currency translation adjustment accounted for as a separate component of stockholders’ equity and included in other comprehensive income. The Company recorded a translation gain of $56,667 for the year ended December 31, 2022, compared to a gain of $53,444 for the year ended December 31, 2021. These amounts are included in the Company’s statement of operations as foreign currency gain (loss) for the respective years.
Liquidity and Capital Resources
As of the date of this report, the Company has generated only minimal revenues and is not profitable. The Company’s operations to date have been funded primarily by private placements of common stock and convertible notes, as well as by loans from its management and controlling stockholders.
As at December 31, 2022, the Company had $10,361 in cash and $5,414,638 in current liabilities resulting in a working capital deficit of $5,404,277. The Company is not currently able to maintain its operations through its existing cash balances and internally generated cash flows. Moreover, we have determined that the current capital structure of the Company is not adequate to fund its planned growth.
We intend to secure additional capital to fund the Company’s operations through the issuance of common stock, convertible debt instruments and loans from our management. There can be no assurance that we will be successful in obtaining the capital the Company requires to achieve its business objectives, or that such capital will be available on acceptable terms. Future cash flows are subject to a number of variables, including technology development costs, technology product rollout and support expense and the demand for the Company’s products and services.
Operating Activities
During the year ended December 31, 2022, the Company used net cash of $613,787 in operating activities compared to $1,249,760 for the year ended December 31, 2021.
The Company’s average monthly cash burn rate was $51,150 during the year ended December 31, 2022, compared to $104,000 for the year ended December 31, 2021. Subject to the success of the Company’s financing activities, we expect to increase operating activities in the coming year with a concomitant increase in the Company’s monthly burn rate. We will not be able to predict the increase to our burn rate until we have determined the outcomes of our financing activities.
Financing Activities
The Company received net cash of $323,400 from financing activities during the year ended December 31, 2022, consisting primarily from the issuance of convertible notes. During the year ended December 31, 2021, we received a net of $1,439,902 from financing activities which, again, we primarily from the issue of convertible notes. We expect to continue our financing activities to fund our operations until such time as the Company’s technologies are commercialized and we generate revenue on a profitable basis.
Investing Activities
In 2021, we loaned a board member $150,000 on a promissory note which was due upon demand. The company made demand for re-payment and the board member defaulted on the note. We had no such item in 2022.
Off Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies
The discussion and analysis of the Company’s financial condition and results of operations is based upon its financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of the Company’s financial statements is critical to an understanding of its financial statements.
Use of Estimates
The preparation of these financial statements in conformity with generally accepted accounting principles in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We regularly evaluate estimates and assumptions related to the recoverability of long-lived assets, valuation of convertible debentures, assumptions used to determine the fair value of stock-based compensation and derivative liabilities, and deferred income tax asset valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Fair Value of Financial Instruments
We adopted the Financial Accounting Standards Board’s (FASB) Accounting Codification Standard No. 820 (“ASC 820), Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. ASC 820 applies under other accounting pronouncements that require or permit fair value measurements and accordingly, does not require any new fair value measurements. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1 - Observable inputs such as quoted prices in active markets;
Level 2 - Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3 - Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The Company’s financial instruments consist principally of cash, amounts receivable, accounts payable, and accrued liabilities, due to related parties and convertible notes. Pursuant to ASC 820, the fair value of the Company’s cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of the Company’s other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
Recent Accounting Pronouncements
We have reviewed the FASB issue Accounting Standards Update, (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the period reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
A smaller reporting company is not required to provide the information required by this item.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplemental Data
Reference is made to the following in the Financial Section of this report:
·
Consolidated financial statements, together with the report thereon of M&K CPAS, PLLC dated March 24, 2022 (PCAOB ID 2738), beginning with the section entitled “Report of Independent Registered Public Accounting Firm” and continuing through “Note 7 - Subsequent Events”;
·
Financial Statement Schedules have been omitted because they are not applicable or the required information is shown in the consolidation financial statements or notes thereto.
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Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets - December 31, 2022 and 2021
Consolidated Statements of Operations for the years Ended December 31, 2022 and 2021
Consolidated Statement of Changes in Stockholders’ Deficit from December 31, 2020 to December 31, 2022
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021
Notes to Consolidated Financial Statements
To the Board of Directors and Stockholders of Tautachrome, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Tautachrome, Inc. (the Company) as of December 31, 2022 and 2021, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the two-year period then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its consolidated operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered net losses from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are discussed in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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 audits to obtain reasonable assurance about whether the consolidated 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 consolidated 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 consolidated financial statements. Our audits also included evaluating the accounting principles used and the significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.
Convertible Notes Payable and Derivative Liabilities
As discussed in Note 5, the Company borrows funds through the use of convertible notes payable that contain a conversion price that may be fixed or fluctuates with the stock price. Due to the fluctuation of the conversion price, the embedded conversion feature requires bifurcation from the host contract and is recorded as a liability subject to market adjustments as of each reporting period. Significant judgment is exercised by the Company in determining derivative liability values for these convertible note agreements, including the use of a specialist engaged by management.
We evaluated management’s conclusions regarding their derivative liability and reviewed support for the significant inputs used in the valuation model, as well as assessing the model and disclosures for reasonableness.
/s/ M&K CPAS, PLLC
M&K CPAS, PLLC
We have served as the Company’s auditor since 2008
Houston, TX
May 20, 2023
TAUTACHROME, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets
12/31/2022
12/31/2021
ASSETS
Current assets:
Cash
$ 10,361
$ 119,466
Total current assets
10,361
119,466
Non-current assets:
Property, plant and equipment, net
10,862
25,344
TOTAL ASSETS
$ 21,223
$ 144,810
LIABILITIES
Accounts payable and accrued expenses
$ 1,143,766
$ 813,024
Accounts payable - related party
930,000
706,476
Loans from related parties
116,088
103,640
Convertible notes payable - related party, net
108,792
70,392
Short-term convertible notes payable, net
1,671,805
1,637,812
Convertible notes payable in default
499,426
32,000
Short-term notes payable, net
67,227
15,989
Derivative liability
877,534
1,384,775
Total current liabilities
5,414,638
4,764,108
Long-term convertible notes payable, related party, net
-
14,996
Total non-current liabilities
-
14,996
TOTAL LIABILITIES
5,414,638
4,779,104
STOCKHOLDERS' DEFICIT
Series E Convertible Preferred Stock, par value $0.0001. 40,000 shares authorized, 40,000 shares outstanding at December 31, 2022 and December 31, 2021, respectively
Series F Convertible Preferred Stock, par value $0.00001. 290,397 shares authorized, 290,397 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively
Common stock, $0.00001 par value. 6.5 billion shares authorized. 6,237,077,061 and 5,866,608,915 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively
62,371
58,666
Additional paid in capital
16,162,774
15,337,300
Common stock payable
164,509
640,584
Accumulated deficit
(21,911,052 )
(20,742,160 )
Effect of foreign currency exchange
127,949
71,282
TOTAL STOCKHOLDERS' DEFICIT
(5,393,415 )
(4,634,294 )
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
$ 21,223
$ 144,810
The accompanying notes are an integral part of these financial statements.
TAUTACHROME, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Operations
Year Ended December 31,
REVENUES
Online sales platform
$ 3
$ 22
Products
Total revenues
Cost of sales
Gross profit
OPERATING EXPENSES
General and administrative
$ 591,907
$ 2,862,773
Bad debt expense
-
150,760
Depreciation expense
14,482
14,482
Research and development
465,633
1,239,133
Total operating expenses
1,072,022
4,267,148
Operating loss
(1,071,991 )
(4,266,965 )
OTHER INCOME / (EXPENSE)
Gain (loss) on settlement of debt
108,087
(225 )
Interest expense
(806,482 )
(1,238,843 )
Change in value of derivatives
601,494
425,842
Total other
(96,901 )
(813,226 )
Net loss
$ (1,168,892 )
$ (5,080,191 )
OTHER COMPREHENSIVE INCOME (LOSS)
Effect of foreign currency exchange
56,667
53,444
Net comprehensive income or (loss)
$ (1,112,225 )
$ (5,026,747 )
Net (loss) or income per common share
Basic and fully diluted
$ (0.00 )
$ (0.00 )
Weighted average shares outstanding
Basic and fully diluted
6,007,163,665
4,721,741,017
The accompanying notes are an integral part of these financial statements.
TAUTACHROME, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statement of Changes in Stockholders’ Deficit
From December 31, 2020 to December 31, 2022
Common Stock
Preferred Stock Series D
Preferred Stock Series E
Preferred Stock Series F
Additional Paid in
Stock
Other Comprehensive Income
Accumulated
Total Stockholders' Equity /
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Payable
(Loss)
Deficit
(Deficit)
Balance, December 31, 2020
4,120,475,247
$ 41,205
13,795,104
$ 1,380
40,000
$ 4
290,397
$ 30
$ 11,427,087
$ 336,584
$ 17,838
$ (15,661,969 )
$ (3,837,841 )
Shares issued for conversion of debt
295,898,288
2,959
-
-
-
-
-
-
1,087,086
-
-
-
1,090,045
Derivative associated with early debt retirement
-
-
-
-
-
-
-
-
650,208
-
-
-
650,208
Shares issued for services
214,125,000
2,141
-
-
-
-
-
-
2,116,384
(2,111,400 )
-
-
7,125
Shares issued as enticement for loan
6,600,000
-
-
-
-
-
-
56,749
-
-
-
56,815
Shares issued to convert Series D preferred to common
1,379,510,380
13,795
(13,795,104 )
(1,380 )
-
-
-
-
(12,415 )
-
-
-
-
Shares retired by Chief Executive Officer
(150,000,000 )
(1,500 )
-
-
-
-
-
-
1,500
-
-
-
-
Stock payable for services
-
-
-
-
-
-
-
-
-
2,415,400
-
-
2,415,400
Imputed interest
-
-
-
-
-
-
-
-
10,701
-
-
-
10,701
Effect of foreign currency exchange
-
-
-
-
-
-
-
-
-
-
53,444
-
53,444
Net loss
-
-
-
-
-
-
-
-
-
-
-
(5,080,191 )
(5,080,191 )
Balance, December 31, 2021
5,866,608,915
$ 58,666
-
$ -
40,000
290,397
$ 15,337,300
$ 640,584
$ 71,282
$ (20,742,160 )
$ (4,634,294 )
Shares issued for conversion of debt
227,485,212
2,275
-
-
-
-
-
-
140,420
-
-
-
142,695
Shares issued for conversion of accounts payable
33,236,858
-
-
-
-
-
-
28,581
-
-
-
28,913
Shares issued for stock payable
98,896,076
-
-
-
-
-
-
562,261
(563,250 )
-
-
-
Derivative associated with early debt retirement
-
-
-
-
-
-
-
-
74,042
-
-
-
74,042
Shares issued to Director
3,000,000
-
-
-
-
-
-
2,670
-
-
-
2,700
Shares issued as enticement for loan
7,850,000
-
-
-
-
-
-
8,121
-
-
-
8,200
Stock payable for services
-
-
-
-
-
-
-
-
-
87,175
-
-
87,175
Imputed interest
-
-
-
-
-
-
-
-
9,379
-
-
-
9,379
Effect of foreign currency exchange
-
-
-
-
-
-
-
-
-
-
56,667
-
56,667
Net loss
-
-
-
-
-
-
-
-
-
-
-
(1,168,892 )
(1,168,892 )
Balance, December 31, 2022
6,237,077,061
$ 62,371
-
$ -
40,000
$ 4
290,397
$ 30
$ 16,162,774
$ 164,509
$ 127,949
$ (21,911,052 )
$ (5,393,415 )
The accompanying notes are an integral part of these financial statements.
TAUTACHROME, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows
Year Ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss
$ (1,168,892 )
$ (5,080,191 )
Stock-based compensation
89,875
2,422,525
Depreciation, depletion and amortization
14,482
14,482
Change in fair value of derivative
(601,494 )
(425,842 )
Gain/(loss) on debt settlements
(108,087 )
Amortization of discounts on notes payable
593,261
1,092,397
Imputed interest
9,379
10,701
Bad debt expense
-
150,760
Changes in operating assets and liabilities:
Accounts receivable
-
(760 )
Accounts payable and accrued expenses
319,689
368,943
Accounts payable - related party
238,000
197,000
Net cash used in operating activities
(613,787 )
(1,249,760 )
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Accumen
-
(150,000 )
Net cash used in investing activities
-
(150,000 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible notes payable
275,000
1,416,000
Proceeds from convertible notes payable, related party
-
40,000
Principal payments on convertible notes payable
(1,600 )
-
Payment of expenses by related parties
-
6,000
Proceeds from notes payable
50,000
-
Principal payments on related-party loans
-
(22,098 )
Net cash provided by financing activities
323,400
1,439,902
Effect of exchange rate changes on cash and cash equivalents
181,282
(35,203 )
Net increase/(decrease) in cash
(109,105 )
4,939
Cash and equivalents - beginning of period
119,466
114,527
Cash and equivalents - end of period
$ 10,361
$ 119,466
SUPPLEMENTARY INFORMATION
Cash paid for interest
$ -
$ -
Cash paid for income taxes
$ -
$ -
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING TRANSACTIONS
Discounts on convertible notes
$ 202,495
$ 1,102,110
Conversion of debt and interest to common stock
$ 142,695
$ 1,090,045
Settlement of derivative liability
$ 74,042
$ 650,208
Shares issued for trade debts
$ 28,913
-
Shares issued for stock payable
$ 563,250
$ 2,111,400
Shares for debt enticement
$ -
$ 56,815
Preferred for common shares
$ -
$ 13,795
Shares retired
$ -
$ 1,500
Accounts payable settled with convertible note
$ -
$ 247,426
Initial derivative
$ 168,295
$ 981,295
The accompanying notes are an integral part of these financial statements.
TAUTACHROME, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies
Organization and Nature of Business
History
Tautachrome, Inc. was formed in Delaware on June 5, 2006 as Caddystats, Inc. and hereinafter collectively referred to as “Tautachrome”, the “Company”, “we’ or “us”).
The Company adopted the accounting acquirer’s year end, December 31.
Our Business
Tautachrome operates in the internet applications space, uniquely exploiting the technologies of the Augmented Reality sector, the blockchain/cryptocurrency sector and the smartphone picture and video technology sector. We have high-speed blockchain concepts under development aiming to couple with the Company’s patents and licensing in augmented reality, smartphone-image authentication and imagery-based social networking.
Tautachrome is currently pursuing four main avenues of business activity based on our patented activated imaging technology, our blockchain cryptocurrency products, and our licensing of the patent pending ARk technology (together banded “KlickZie” technology):
1.
KlickZie ARk technology business: The Company has licensed and is developing a new KlickZie augmented reality (“AR”) platform branded ARknet. ARknet enables goods and services providers to establish geolocated augmented reality interfaces, called ARks, allowing consumers to purchase the provider’s products and take advantage of is specials and discounts, using the ARk. A provider’s ARk may be located anywhere in the world, from a store location to anyplace else the provider may desire. The ARknet is a fintech platform connecting consumers to providers in the global $50+ trillion household goods market, using augmented reality as the medium of interaction.
2.
KlickZie’s blockchain cryptocurrency-based ecosystem: The Company has developed its own digital currency (“XAR”), smart contracts using XARs, and high speed blockchain concepts aimed at supporting fast frictionless transactions within the ARknet as well as incentivizing user activity in the development of ARknet infrastructure and the use of ARknet services.
3.
KlickZie Activated Digital Imagery business: The Company is developing downloadable apps based on our patented KlickZie trusted imaging and image-based social interactions using the pictures and videos that smartphone users create.
4.
New Platform Exploitation: The Company is looking to exploit its KlickZie technology to generate substantial revenues partnering with Fortune 50 corporations via novel platforms introduced to the Company by Mr. Timothy Holly (the “PXR Platforms”), our new director appointed to the Board on December 22, 2022.
In the long term, we envision a KlickZie ARknet with billions of users and ARks connecting humanity, commerce, information, crypto currency, and innovation in economically useful ways. In the mid-term, we aim to achieve significant cash flow by coupling the KlickZie and PXR Platforms together to develop unique partnerships with a number of Fortune 50 corporations.
Basis of Presentation
The Company’s financial statements are presented in accordance with accounting principles generally accepted (GAAP) in the United States. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein.
Principles of Consolidation
Our consolidated financial statements include Tautachrome, Inc. and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of these financial statements in conformity with generally accepted accounting principles in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We regularly evaluate estimates and assumptions related to the recoverability of long-lived assets, valuation of convertible debentures, assumptions used to determine the fair value of stock-based compensation and derivative liabilities, and deferred income tax asset valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an initial maturity of 3 months or less to be cash equivalents. The Company maintains its deposits with high quality financial institutions and, accordingly, believes its credit risk exposure associated with cash is remote.
Earnings Per Share
Basic earnings per common share is computed by dividing net earnings or loss (the numerator) by the weighted average number of common shares outstanding during each period (the denominator). Diluted earnings per common share is similar to the computation for basic earnings per share, except that the denominator is increased by the dilutive effect of stock options outstanding and unvested restricted shares and share units, computed using the treasury stock method. There are currently no common stock equivalents.
Fair Value of Financial Instruments
We adopted the Financial Accounting Standards Board’s (FASB) Accounting Codification Standard No. 820 (“ASC 820), Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. ASC 820 applies under other accounting pronouncements that require or permit fair value measurements and accordingly, does not require any new fair value measurements. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1 - Observable inputs such as quoted prices in active markets;
Level 2 - Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3 - Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
At December 31, 2022 and 2021, we had total liabilities of $5,414,638 and $4,779,104, respectively. Of this amount, only the derivative liabilities of $877,534 and 1,384,775, respectively ,were calculated using level 3 inputs. All other liabilities were calculated using level 1 inputs.
Income Taxes
We recognize deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates that are expected to be in effect when the differences are expected to be recovered. We provide a valuation allowance for deferred tax assets for which we do not consider realization of such assets to be more likely than not.
See Note 6 for our reconciliation of income tax expense and deferred income taxes as of and for the years ended December 31, 2022 and 2021.
Note 2 - Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, we had negative cash flows from operations of $613,787 and $1,249,760 for the years ended December 31, 2022 and 2021, respectively, and have experienced recurring losses, and negative working capital at December 31, 2022 and 2021. These conditions raise substantial doubt as to our ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through borrowings from financial institutions or related parties. Management believes that actions presently being taken to obtain additional funding may provide the opportunity for the Company to continue as a going concern. There is no guarantee the Company will be successful in achieving these objectives.
Note 3 - Related Party Transactions
Accounts payable - related party consists of $130,000 accrued to our former CEO and Director, Dr. Jon Leonard for unpaid salary and $800,000 owed in accrued license fees to Arknet.
Loans from Related Parties consists of $97,480 owed to Michael Nugent, $5,000 owed to David LaMountain, our CEO, and $13,608 owed to various members of the Nugent family. At December 31, 2021, we owed $103,640 to Michael Nugent and members of the Nugent family.
Convertible Notes Payable, Related Party, Net consists of $70,392 that are owed to officers and directors of the company and $38,400 due to Arknet. The discount on this note has been fully amortized to interest expense. At December 31, 2021, we owed $70,392 to officers and directors of the Company.
According to our agreement with Mr. Nugent, we accrue interest on all unpaid amounts at 5%. Principal and interest are callable at any time. If principal and interest are called and not repaid, the loan is considered in default after which interest is accrued at 10%.
Certain of our promissory notes bear no nominal interest. We therefore imputed interest expense and increased Additional Paid in Capital. For the year ended December 31, 2022, we imputed $9,379 of such interest.
We issued 3,000,000 shares to a Director pursuant to our agreement with him. We valued the shares at the grant date fair value and charged general and administrative expenses with $2,700.
Convertible note payable, related party
On May 5, 2013 (and on August 8, 2013 with an enlargement amendment) the Company entered into a no interest demand-loan agreement with our current Chairman, Jon N. Leonard under which the Company may borrow such money from Dr. Leonard as Dr. Leonard in his sole discretion is willing to loan.
The terms of the note provide that at the Company’s option, the Company may make repayments in stock, at a fixed share price of $1.00 per share. Also, because this loan is a no-interest loan, an imputed interest expense of $17 was recorded as additional paid-in capital for the year ended December 31, 2022. The Company evaluated Dr. Leonard’s note for the existence of a beneficial conversion feature and determined that none existed.
At December 31, 2022, the balanced owed Dr. Leonard is $419.
Common Stock
On December 29, 2021, Dr. Jon Leonard, our Chief Executive Officer, retired 150,000,000 shares of common stock.
Note 4 - Capital
Common Stock
During the year ended December 31, 2021, we issued
·
295,898,288 shares in conversion of $1,045,000 of principal and $45,045 of interest. We realized no gain or loss on the conversions.
·
214,125,000 shares to pay contractors for marketing campaigns. As a result, we charged general and administrative expenses with $2,118,525. We valued the issuances at the fair-value grant date. Of the $2,118,525 charged to general and administrative expenses, $2,111,400 we charged to expense in previous periods.
·
6,600,000 to a creditor as an enticement to enter into three convertible promissory notes whose principal amounts were $1,125,000 in the aggregate. The grant-date fair value of these enticements were $56,815 and are accounted for as debt discounts.
·
1,379,510,380 shares to convert all of the issued and outstanding Preferred D series shares into common stock according to the terms of the agreement. We recognized no gain or loss on the conversion.
·
A negative 150,000,000 shares which were retired from our Chief Executive Officer, Jon Leonard.
During the year ended December 31, 2022, we issued the following common shares:
·
227,485,212 shares converting $129,371 of principal and $13,324 in interest for convertible debt into equity. We recognized no gain or loss on the transactions.
·
7,850,000 shares an enticement for a convertible promissory note. We valued the shares at the grant date fair value and included $8,200 into equity. We accounted for the cost of these shares as a debt discount to be amortized over the life of the loan.
·
3,000,000 shares to a Director pursuant to our agreement with him. We valued the shares at the grant date fair value and charged general and administrative expenses with $2,700.
·
33,236,858 shares to our software development company to extinguish $137,000 of invoices due to them. We valued the shares at the grant data fair value and recorded a gain in the amount of $108,087.
Stock Payable
For the year ended December 31, 2022 we recorded stock payable to consultants of $87,175 pursuant to our contracts with them.
·
One consultant’s stock payable was valued per contract at $25,000 per quarter for a total of $50,000 for the year ended December 31, 2022. The actual number of shares to be issued will be calculated upon issuance.
·
Another consultant’s stock payable was valued at the total amount of work performed less $10,000 per month payable in cash. This consultant’s stock payable was therefore valued at $37,175 for work performed during the year ended December 31, 2022. The actual number of shares to be issued will be calculated upon issuance.
During the year ended December 31, 2022, we issued 98,896,076 shares to a consultant to extinguish a stock payable in the amount of $563,250.
Imputed Interest
Several of our loans were made without any nominal interest. As such, we imputed interest at 8% to these loans, crediting Additional Paid in Capital and charging Interest Expense. For the year ended December 31, 2022 and 2021, these amounted to $9,379 and $10,701, respectively.
Preferred Stock
In October, 2016 we issued 13,795,104 shares of Series D preferred stock to our (then) directors in exchange for 1,379,510,380 shares of common stock. This series of preferred stock was subject to two separate rights to convert to common stock. The first could be elected by the shareholder if the stock sold for greater than $3 per share. The second was automatic and would not be trigger until October 5, 2021. On that date, the original 1,379,510,380 common shares were issued retiring the Series D preferred stock. There was no gain or loss on the conversion because the value of the common shares issued equaled the value of the Series D Preferred shares.
During the year ended December 31, 2018, we accrued $1,837,000 in costs related to the 40,000 Series E Preferred shares issued in accordance with our ARknet contract containing a par value of $0.0001. This series of preferred shares have the following rights, limitations, restrictions and privileges:
·
They are not entitled to dividends,
·
They are entitled to no liquidation rights,
·
Each share has the voting rights of all other voting shares combined, multiplied by 0.00001, and
·
They have no conversion or redemption rights.
In September, 2020 we issued 290,397 Series F Preferred shares in retirement of twelve convertible promissory notes to Arknet. In so doing, we reduced our liability to them in the amount of $610,500 of principal and $14,735 in interest. Each share of Series F preferred is convertible into 1,000 shares of common stock. This series of preferred shares have the following rights, limitations, restrictions and privileges:
·
They are not entitled to dividends unless all other classes of dividends have been paid,
·
They are entitled to no liquidation rights.
In October, 2016 we issued 13,795,104 shares of Series D preferred stock to our (then) directors in exchange for 1,379,510,380 shares of common stock. This series of preferred stock was subject to two separate rights to convert to common stock. The first could be elected by the shareholder if the stock sold for greater than $3 per share. The second was automatic and would not be trigger until October 5, 2021. On that date, the original 1,379,510,380 common shares were issued retiring the Series D preferred stock. There was no gain or loss on the conversion because the value of the common shares issued equaled the value of the Series D Preferred shares.
Note 5 - Debt
Our debt in certain categories went from $3,259,604 at December 31, 2021 to $3,340,872 at December 31, 2022 as follows:
12/31/22
12/31/21
Loans from related parties
$ 116,088
$ 103,640
Convertible notes payable, related party
108,792
70,392
Short-term convertible notes payable, net
1,671,805
1,637,812
Convertible notes payable in default
499,426
32,000
Short-term notes payable
67,227
15,989
Derivative liability
877,534
1,384,775
Long-term convertible notes payable, related party
-
14,996
Totals
$ 3,340,872
$ 3,259,604
Loans from related parties
Loans from Related Parties consists of $97,480 owed to Michael Nugent, $5,000 owed to David LaMountain, our CEO, and $13,608 owed to various members of the Nugent family. At December 31, 2021, we owed $103,640 to Michael Nugent and various members of the Nugent family.
Convertible notes payable - related party, net
At December 31, 2022, we owed $108,792 of related-party notes which are convertible into common stock, of which $69,973 is owed to David LaMountain, Our Chief Operating Officer and $419 to Dr. Jon Leonard, our former Chief Executive Officer.
At December 31, 2021, we owed $70,392 of related-party notes which are convertible into common stock, of which $69,973 is owed to David LaMountain, Our Chief Operating Officer and $419 to Dr. Jon Leonard, our Chief Executive Officer. As of December 31, 2021, all discounts on this items had been fully amortized. During the year ended December 31, 2021, we amortized $26,316 of discounts to interest expense from this category.
As of December 31, 2022, all discounts on these items had been fully amortized.
Additionally at December 31, 2022, we owed $38,400 to ArKnet.
Short-term convertible notes payable - third-party, net
Unpaid principal on short-term convertible notes payable at December 31, 2021 was $2,137,349, net of discounts of $499,537 (or $1,637,812).
We have three convertible promissory notes which are in default at December 31, 2021 totaling $32,000. There are no discount balances on these notes.
During the year ended December 31, 2021 we issued 220,978,521 shares to convert five outstanding convertible notes in their entirety and 220,978,521 shares to convert a portion of another. We reduced unpaid principal by $1,045,000 and unpaid interest by $45,045. There was no gain or loss related to the conversions.
During the year ended December 31, 2021, we issued the following promissory notes:
·
we issued a promissory note in the amount of $220,000, receiving proceeds of $208,000. The note matures February 17, 2022 and bears interest at 8% (24% default rate). They are convertible at 63% of the lowest closing bid price during the twenty days preceding the conversion.
·
we issued a promissory note in the amount of $520,000, receiving proceeds of $500,000 with a discount of $136,844. The note matures September 3, 2022 and bears interest at 8%. They are convertible at 63% of the lowest closing bid price during the twenty days preceding the conversion. We recorded a discount of $344,816 upon issuance consisting of 28,875 for the fair value of the 2,750,000 shares issued to entice the lender, an original issue discount of $20,000 and the initial derivative of $295,941. We amortized $283,590 of this discount to interest expense during the year ended December 31, 2021.
·
we issued a convertible note to a software developer to convert $247,426 of outstanding accounts payable into a convertible note. The initial derivative associated with this instrument was $109,247 of which we have amortized $55,248 as of December 31, 2021. The note is convertible at $0.008265 and is due September 3, 2022.
·
we issued a promissory note in the amount of $520,000, receiving proceeds of $500,000. The note matures August 17, 2022 and bears interest at 8%. They are convertible at 63% of the lowest closing bid price during the twenty days preceding the conversion. We recorded a discount of $338,842 upon issuance consisting of 23,650 for the fair value of the 2,750,000 shares issued to entice the lender, an original issue discount of $20,000 and the initial derivative of $295,192. We amortized $87,035 of this discount to interest expense during the year ended December 31, 2021.
·
we issued a promissory note in the amount of $220,000, receiving proceeds of $208,000. The note matures December 28, 2022 and bears interest at 8%. They are convertible at 63% of the lowest closing bid price during the twenty days preceding the conversion. We recorded a discount of $139,695 upon issuance consisting of $4,290 for the fair value of the 1,100,000 shares issued to entice the lender, an original issue discount of $7,000, $5,000 of associated legal fees and the initial derivative of $123,405. We amortized $7,189 of this discount to interest expense during the year ended December 31, 2021.
During the year ended December 31, 2022:
·
we issued a promissory note in the amount of $108,000, receiving proceeds of $100,000. The note matures April 28, 2023 and bears interest at 8%. They are convertible at 63% of the lowest closing bid price during the twenty days preceding the conversion. We recorded a discount of $69,523 upon issuance consisting of $8,000 of an original issue discount and the initial derivative of $61,523. At December 31, 2022, we had unamortized discounts of $29,855 for a net balance of $78,145.
·
we issued a promissory note in the amount of $81,000, receiving proceeds of $75,000. The note matures July 5, 2023 and bears interest at 8%. They are convertible at 63% of the lowest closing bid price during the twenty days preceding the conversion. We recorded a discount of $56,921 upon issuance consisting of $6,000 of an original issue discount, the initial derivative of $45,921 and $5,000 resulting from the fair value of 6,250,000 shares issued as an inticement for the loan. At December 31, 2022, we had unamortized discounts of $40,052 for a net balance of $40,948.
·
we issued a promissory note in the amount of $108,000, receiving proceeds of $100,000. The note matures November 1, 2023 and bears interest at 8%. They are convertible at 63% of the lowest closing bid price during the twenty days preceding the conversion. We recorded a discount of $68,851 upon issuance consisting of $8,000 of an original issue discount and the initial derivative of $60,851. At December 31, 2022, we had unamortized discounts of $62,105 for a net balance of $45,895.
Short-term notes payable
At December 31,2022, we owed AU$22,000 (US$14,989) to three Australian investors on promissory notes which contain no conversion privileges.
In addition, during the year ended December 31, 2022 we issued a promissory note in the amount of $54,000, receiving proceeds of $50,000 and incurring an original issue discount of $4,000. On this note, we also issued 1,600,000 common shares as an enticement for this loan which we valued at $3,200, also recorded as a debt discount (for a total initial discount of $7,200). At December 31, 2022, we had unamortized discounts of $1,762 for a net balance ofr $52,238.
Imputed Interest
Certain of our promissory notes bear no nominal interest. We therefore imputed interest expense and increased Additional Paid in Capital. For the year ended December 31, 2022, we imputed $9,379 of such interest.
Derivative liabilities
The above-referenced convertible promissory notes issued during the year ended December 31, 2022 were analyzed in accordance with EITF 07-05 and ASC 815. EITF 07-5, which is effective for fiscal years beginning after December 15, 2009, and interim periods within those fiscal years. The objective of EITF 07-5 is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception under Paragraph 11(a) of ASC 815 which would enable a derivative instrument to be accounted for under the accrual method. The classification of a non-derivative instrument that falls within the scope of EITF 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock. A non-derivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted for as a liability. The EITF reached a consensus that would establish a two-step approach in determining whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument's contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument's settlement provisions.
Derivative financial instruments should be recorded as liabilities in the consolidated balance sheet and measured at fair value. For purposes of this engagement and report, we utilized fair value as the basis for formulating our opinion which has been defined by the Financial Accounting Standards Board (“FASB”) as “the amount for which an asset (or liability) could be exchanged in a current transaction between knowledgeable, unrelated willing parties when neither party is acting under compulsion”. The FASB has provided guidance that its definition of fair value is consistent with the definition of fair market value in IRS Rev. Rule 59-60.
The Company issued certain fixed-rate convertible Subscription Notes from 2015 through December 31, 2022 in the United States and Australia These convertible notes have become tainted (“The Tainted Notes”) as a result of the issuance of convertible promissory notes issued in the United States since there is a possibility (however remote) that the Company would not have enough shares in the Treasury to satisfy all possible conversions.
The Convertible Note derivatives were valued as of issuance; conversion; redemption/settlement; and each quarterly period from March 31, 2018 through December 31, 2022. The following assumptions were used for the valuation of the derivative liability related to the Notes:
·
The stock price in this period would fluctuate with the Company projected volatility.
·
The notes convert with variable conversion prices based on the percentages of the low or average trades or bids over 20 to 25 trading days.
·
The effective discounts rates estimated throughout the periods are 37%.
·
The Holder would automatically convert the note before maturity if the registration was effective and the company was not in default.
·
The projected annual volatility for each valuation period was based on the historic volatility of the company are 169.0% - 210.0% (annualized over the term remaining for each valuation).
·
An event of default would occur 0% of the time, increasing 1.00% per month to a maximum of 20%.
·
The Holders would redeem the notes (with penalties up to 50% depending on the date and full-partial redemption) based on availability of alternative financing of 0% of the time, increasing 1.00% per month to a maximum of 5%.
·
The Holder would automatically convert the note at the maximum of 2 times the conversion price or the stock price on the date of valuation.
·
The Holder would automatically convert the note based on ownership or trading volume limitations.
We recorded the initial derivative as both a derivative liability and a debt discount (or initial reduction in carrying value of the debt). We then amortized the debt discounts using the Effective Interest Method which recognizes the cost of borrowing at a constant interest rate throughout the contractual term of the obligation. The effective interest rates on the four instruments issued during the year ended December 31, 2022 range from 112% to 132%.
At each reporting date, we determine the fair market value for each derivative associated with each of the above instruments. At December 31, 2022, we determined the fair value of these derivatives were $877,534.
Changes in outstanding derivative liabilities are as follows:
Balance, December 31, 2021
$ 1,384,775
Changes due to new issuances
168,295
Changes due to extinguishments
(74,042 )
Changes due to adjustment to fair value
(601,494 )
Balance, December 31, 2022
$ 877,534
Note 6 - Income Taxes
Deferred income taxes reflect the tax consequences on future years of differences between the tax bases:
12/31/22
12/31/21
Net operating loss carry-forward
$ 9,175,662
$ 8,095,091
Deferred tax asset
$ 1,926,889
$ 1,699,969
Valuation allowance
(1,926,889 )
(1,699,969 )
Net future income taxes
$ -
$ -
Deferred taxes for 2022 and 2021 are calculated using a marginal tax rate of 21%.
In assessing the realizability of future tax assets, management considers whether it is more likely than not that some portion or all of the future tax assets will not be realized. The ultimate realization of future tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of future tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Management has provided for a valuation allowance on all of its losses as there is no assurance that future tax benefits will be realized.
Note 7 - Subsequent Events
On January 19, 2023 the Board of Directors of the corporation voted unanimously to change the name of the issuer from Tautachrome Inc to ARtelligence Group Inc. The name change is pending approval of FINRA.
On March 31, 2023, Timothy A. Holly, d/b/a Timothy A. Holly and Associates ("Holly"), who is also a director of the Company, exchanged an Exclusive Capital Lease of Trade Secrets of the PXR Tactical Platform and the PXR Strategic Platform trade secrets for five (5) shares of Series I Perpetual Preferred Stock from the Company.
We issued 366,115,787 shares in conversion of debt.
Note 8 - Contingencies
None

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Management’s Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act, as amended. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, our management used the 2013 criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“2013 Framework”) in Internal Control-Integrated Framework. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. We have identified the following material weaknesses.
As of December 31, 2022, we did not maintain effective controls over the control environment. Specifically we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.
As of December 31, 2022, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.
As of December 31, 2022, the Company did not establish a formal written policy for the approval, identification and authorization of related party transactions.
Because of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2022, based on the criteria established in "Internal Control-Integrated Framework" issued by the COSO.
Change in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during quarterly period ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Attestation Report of the Registered Public Accounting Firm
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
None
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers, Promoters and Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act
The following sets forth our directors, executive officers, promoters and control persons, their ages, and all offices and positions held. Directors are elected for a period of one year and thereafter serve until the stockholders duly elect their successor. Officers serve at the will of the Board.
Name
Position(s)
Age
Held Position(s) Since
Dr. Jon N. Leonard
President
May 21, 2015
Chief Executive Officer Director
Chief Financial Officer
Director
David LaMountain
Director
October 10, 2019
Chief Operations Operator
Timothy Holly
Director
December 22, 2022
Dr. Jon N. Leonard, Ph.D., M.S., B.S.
Dr. Jon N. Leonard has been the President, CEO, CFO and a director of the Company since May 21, 2015.
From June 2012 until November 2015, he was the President, Chief Executive Officer and a director of Click Evidence Inc., an Arizona corporation that he co-founded, which developed our KlickZie smartphone trustable imaging technology. Prior to that he directed counterterrorism technology development for the Raytheon Missile Company in Tucson, Arizona and before that was the Chief Scientist of the Strategic Systems Division of the Hughes Aircraft Company in El Segundo, California. Dr. Leonard holds a Ph.D. in mathematics from the University of Arizona, an M.S. in engineering from U.C.L.A. and a B.S. in physics from the University of Arizona
David LaMountain
Mr. LaMountain has been a Tautachrome director and the Corporation’s Chief Operating Officer (COO) since his appointment in October 10, 2019, and was appointed to the position of CEO on October 26, 2022. With great people skills he has directed the Company’s social network activities since November 2016, providing strategic Investor Relations functions integrating communication, marketing and securities compliance enabling effective two-way communication between Tautachrome and its constituencies, contributing to achieving fair valuation of Tautachrome’s shares. Mr. LaMountain has been a successful business owner and investor/trader in public and private entities since 1999 and is a uniquely talented and driven individual with outstanding work ethics. He is also an inventor on KlickZie’s pending ARk patent, as well as several other newer inventions.
Timothy Holly
Timothy Holly is a businessman with forty years of innovative business experience. Mr. Holly is an expert in international business, with business activities in 114 countries, advising on $3.2 billion of assets under management, and acquiring assets appraised at over $2.1 billion. He has a Juris Doctor Degree from John Marshall Law School and was a Fellow at the Fletcher School of Law and Diplomacy. He also has a BA from Indiana University, and is currently completing a Master of Strategic Leadership Development from Clayton State University. He has well-honed skills in mergers and acquisitions, asset management, commercial intelligence, trade and investment law, technology transfers, and international licensing. Mr. Holly is the Chairman and CEO of Red Alert Group, Inc., whose entities hold intellectual properties synergistic with Tautachrome, including one of the world’s most valuable collections of newspaper and magazine images.
Family Relationships
There are no family relationships between any of our executive officers and director
Involvement in Certain Legal Proceedings
Except as noted herein or below, during the last ten years none of our directors or officers have:
1.
had 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.
been convicted in a criminal proceeding or subject to a pending criminal proceeding;
3.
been 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 involvement in any type of business, securities or banking activities;
4.
been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in securities or banking activities, or to be associated with persons engaged in any such activity;
5.
been found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6.
been found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7.
been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) Any Federal or State securities or commodities law or regulation; or (ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; o
8.
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Board of Directors and Committees
At December 31, 2022, our Board of Directors presently consisted of three members: Dr. Jon Leonard, David LaMountain and Timoth Holly. Our Bylaws generally provide for majority approval of directors in order to adopt resolutions, and provide that the Board of Directors may be expanded by Board action. All executive officer compensation, including payroll expenditures, salaries, stock options, stock incentives, and bonuses, must be approved by the unanimous consent of the Board of Directors. The entire Board of Directors acts as the Audit Committee and the Compensation Committee.
On future compensation matters, the Board will consider and recommend payroll expenditures, salaries, stock options, stock incentive and bonus proposals for our employees (if any). Acting in its audit committee function, the Board reviews, with our independent accountants, our annual financial statements prior to publication, and reviews the work of, and approves non-audit services performed by, such independent accountants. The Board appoints the independent public accountants for the ensuing year. The Board also reviews the effectiveness of the financial and accounting functions and the organization, operation and management of our Company.
Delinquent Section 16(a) Reports
The following table identifies each person who, at any time during the fiscal year ended December 31, 2020, was a director, executive officer, or beneficial owner of more than 10% of our common stock that failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the most recent fiscal year:
Name
Number of
Late Reports
Number of
Transactions
Not Reported
on a Timely
Basis
Reports Not
Filed
Dr. Jon Leonard
David LaMountain
Timothy Holly
Code of Ethics
We do not currently have a Code of Ethics, because we have only limited business operations, have a limited number of officers and directors, and believe a Code of Ethics would, at the present time, 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.
Procedure for Nominating Directors
We have not made any material changes to the procedures by which security holders may recommend nominees to our board of directors.
The board does not have a written policy or charter regarding how director candidates are evaluated or nominated for the board. Additionally, the board has not created particular qualifications or minimum standards that candidates for the board must meet. Instead, the board considers how a candidate could contribute to the Company's business and meet the needs of the Company and the board.
Indemnification
Under our Articles of Incorporation and Bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Delaware.
Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Delaware law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
Summary Compensation
Except for the employment agreement for CEO Dr. Jon N Leonard described below, during the years ended December 31, 2022 and 2021, no salary, bonus or other compensation was awarded or earned. However, Jon Leonard was partially paid his accrued salary. Payments to him during 2022 amounted to $22,000.
We intend to adopt a compensation plan for executive officers when we have positive and stable cash flows for the purpose of: (a) attracting and retaining talented executive officers who can assist with our business strategy; (b) aligning the interests of those executive officers with those of the Company; and (c) linking individual compensation to the performance of the Company. Any such plan that we may adopt will be designed to provide compensation that is both in line with our fiscal resources and competitive with companies at a similar stage of development.
The elements of compensation to be awarded to, earned by, paid to, or payable to our executive officers are currently expected to be composed of: (i) base salary (or consulting fees); (ii) option-based awards; and (iii) cash bonuses or share-based awards for exceptional performance that results in a significant increase in stockholder value.
Base salary will be a fixed element of compensation payable to executive officers for performing the specific duties of their respective positions. The amount of base salary for each executive officer will be reviewed and set annually by the Board of Directors. While base salary is intended to fit into our overall compensation objectives by serving to attract and retain talented executive officers, the size of the Company and the nature and stage of its business will also impact the level of base salary.
We intend to use option-based awards as a variable element of compensation to attract and reward talented executives and professionals. Option-based awards are intended fit into our overall compensation objectives by aligning the interests of executive officers with those of the Company and linking individual compensation to its performance. The Board of Directors will be responsible for setting and amending any equity incentive plan under which an option based award would be granted. Previous grants of stock options will be taken into account when considering new grants.
We intend to award bonuses at our sole discretion and do not have any pre-existing performance criteria or objectives.
At this time we do not provide medical, dental, pension or other benefits to our executive officers.
Employment Agreements
The Company has an employment agreement with Dr. Jon Leonard, the Company’s Chief Executive Officer at a compensation rate of $60,000 and six weeks per year of paid vacation. Payment and vacation benefits began to accrue in June, 2019.
Other than the agreement in the previous paragraph, there are no employment agreements or arrangements, whether written or unwritten, between the Company and any of its executive officers. We do not contemplate entering into any other employment agreements with our executive officers until the Company has positive and stable cash flows.
Incentive Plans
The Company does not have any plan or arrangement providing compensation to executive officers or directors intended to serve as an incentive for performance to occur over any period.
Equity Compensation Plans
The Company does not have any stock option plans, stock appreciation rights or any other plan, contract, authorization or arrangement pursuant to which the executive officers or directors of the Company may receive equity-based compensation for their services to the Company.
Outstanding Equity Awards
No executive officer or director of the Company had any unexercised option, stock that had not vested or equity incentive plan award as at the end of the Company’s last completed fiscal year.
Pension and Retirement Plans
The Company does not have any plan or arrangement by which to provide pension, retirement or similar benefits to its executive officers or directors, and we do not currently intend to offer such any such plan or arrangement until we have positive and stable cash flows
Termination, Resignation or Change of Control
The Company is not a party to any contract or agreement, and has not entered into any plan or arrangement that may provide for payment to an executive officer or a director at, following, or in connection with the resignation, retirement or other termination of an executive officer or director, or a change of control of the Company or a change in the responsibilities of an executive officer following a change of control.
Compensation of Directors
The members of the Board of Directors do not receive compensation for their services as directors, but they are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. We may pay cash compensation to an executive officer who is also a director, but only in his or her capacity as an executive officer. We do not currently have an established policy to provide compensation to directors for their services in that capacity.
Director Independence
Our Board of Directors has determined that none of our directors is “independent” as defined under the standards set forth in Section 303A.02 of the NYSE Listed Company Manual. In making this determination, the Board of Directors considered all transactions set forth in the section titled “Certain Relationships and Related Transactions,” elsewhere in this prospectus.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of May 22, 2023, information concerning ownership of our voting shares by (i) each director, (ii) each executive officer, (iii) all directors and executive officers as a group, and (iv) each person known to us to be the beneficial owner of more than five percent of each class. The number and percentage of shares beneficially owned includes any shares as to which the named person has sole or shared voting power or investment power and any shares that the named person has the right to acquire within 60 days.
Common
Preferred E3
Preferred
% Total Voting, All
Shares
%1
Shares
%
Shares
%4
Classes
Name of Beneficial Owner
5% Owners
Michael Nugent
392,613,893
6.3 %
6.3 %
Arknet, Inc. (AZ Corp.)
40,000
100.0 %
290,397
100.0 %
40.0 %
Officers and Directors
Dr. Jon Leonard
1,237,829,545
19.8 %
19.8 %
David LaMountain
43,177,151
0.7 %
0.7 %
Directors and Officers as a Group
1,281,006,696
20.5 %
-
0.0 %
-
0.0 %
20.5 %
(1)
Based on an aggregate of 6,237,077,061 shares of common stock outstanding at December 31, 2022.
(2)
Common stock holdings includes 126,166,322 shares of common stock held by California Molecular Electronics Corp., of which Dr. Leonard is the sole officer and director.
(3)
Each Preferred E share has the voting rights of all other voting shares combined, multiplied by 0.00001.
(4)
Based on an aggregate of 40,000 shares of preferred E stock outstanding at December 31, 2023.
(5)
Based on an aggregate of 290,397 shares of preferred F outstanding at December 31, 2023.
The mailing address for all directors, executive officers and beneficial owners of more than five percent of our common stock is 1846 E. Innovation Park Drive, Oro Valley, Arizona 85755.
Unless otherwise stated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of our common and preferred stock beneficially owned by them. For purposes hereof, a person is considered to be the beneficial owner of securities that can be acquired by such person within 60 days from the date hereof, upon the exercise of warrants or options or the conversion of convertible securities. Each beneficial owner's percentage ownership is determined by assuming that any such warrants, options or convertible securities that are held by such person (but not those held by any other person) and which can be exercised within 60 days from the date hereof, have been exercised.
Changes in Control
Except for the change of control giving El Dorado Family Group, Ltd. a 55% voting control in all voting matters, which change of control was publicly announced in out SEC 8-K filings on March 10th and March 13th 2023, we are not aware of any arrangement, the operation of which may at a subsequent date result in a change of control of the Company.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence
For the years ended December 31, 2022 and 2021, certain related parties made cash payments to the Company and the Company made cash payments to the related parties (see Note 3 to the financial statements).
Director Independence
As our common stock is currently traded on the OTC Bulletin Board, we are not subject to the rules of any national securities exchange which require that a majority of a listed company’s directors and specified committees of the board of directors meet independence standards prescribed by such rules.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accountant Fees and Services
Audit and Review Fees. We paid M&K, CPAS, PLLC for audit and review fees of $29,000 for 2022 and $28,500 for 2021.
Tax Fees. We have not paid any money for tax related services.
All Other Fees. We have not paid any money for other fees.
Audit Committee pre-approval policies and procedures. The entire Board of Directors, which acts as our audit committee, approved the engagement of M&K, CPAS, PLLC.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits, Financial Statement Schedules, Signatures
Exhibit No.
Description of Exhibit
3.1
Articles of Incorporation of Roadships Holdings, Inc. filed as exhibit 3.1 with our Form 8-K/A filed April 20, 2009 and incorporated herein by reference
3.2
Bylaws of Roadships Holdings, Inc. filed as exhibit 3.2 with our Form 8-K/A filed April 20, 2009 and incorporated herein by reference
3.3
Amended and Restated Certificate of Incorporation filed with our Form 8-K filed November 5, 2015 and incorporated herein by reference.
21.1*
Subsidiaries of the Registrant
31.1*
Certification pursuant to Section 302 of the Sarbanes-Oxley act of 2002
32.1*
Certification of Officers pursuant to Section 906 of the Sarbanes-Oxley act of 2002 (18 U.S.C. section 1350)
101.INS
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
*Filed herewith