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Item 1. Financial Statements

2021-11-22 compared with 2021-08-23 · 590 added, 439 removed, 785 unchanged (57% of the section changed)

FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

Current assets:

MASSROOTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current assets:

AND STOCKHOLDERS’ DEFICIT

payable and accrued expenses

payroll and related expenses

Non-convertible

notes payable, current portion

notes payable

Prepaid expenses

Total current assets

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

Non-convertible

notes payable

and contingencies (See Note 8)

Stockholders’

Accounts payable and accrued expenses

Accrued payroll and related expenses

Deferred revenue

Non-convertible notes payable, current portion, net of debt discount of $ 15,862 and $ 0 , respectively

Derivative liabilities

Convertible notes payable

Total current liabilities

Non-convertible notes payable, net of debt discount of $ 1,636 and $ 0 , respectively

PPP note payable

Total liabilities

Commitments and contingencies (See Note 8)

Stockholders' deficit:

Preferred stock - 10,000,000 shares authorized:

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720.515674 and 626.995464 shares outstanding, and 0 and 27.78633 to be issued, respectively

Preferred stock - Series Z, $ 0.001 par value, $ 20,000 stated value, 500 shares authorized;

500 and 0 shares issued;

0 and 0 shares outstanding, and 500 and 0 to be issued, respectively

Preferred stock - Series C, $ 0.001 par value, 1,000 shares authorized;

7 unchanged sentences

Common stock to be issued, 906,373,564 and 907,379,814 shares, respectively

paid in capital

on preferred stock

Additional paid in capital

Discount on preferred stock

( 20,973,776 )

Accumulated deficit

( 318,717,287 )

( 301,185,712 )

stockholders’ deficit

Total stockholders' deficit

( 17,643,687 )

( 37,733,852 )

liabilities and stockholders’ deficit

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

CONSOLIDATED STATEMENTS OF OPERATIONS

and related expense

general and administrative expenses

Total liabilities and stockholders' deficit

The accompanying notes are an integral part of these unaudited condensed

consolidated financial statements.

MASSROOTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

September 30,

Nine Months Ended

September 30,

Operating Expenses:

From Operations

Income (Expense):

( 1,063,357 )

( 2,005,006 )

in derivative liability for authorized shares shortfall

( 132,821,830 )

( 78,849,723 )

( 162,275,278 )

Cost of revenues

Payroll and related expense

Other general and administrative expenses

Total Operating Expenses

Loss From Operations

( 1,196,292 )

in fair value of derivative liabilities

on settlement of convertible notes payable and accrued interest, warrants and accounts payable in exchange for Series Y preferred

on settlement of convertible notes payable and accrued interest and cancelation of common shares and warrants for cash

on forgiveness of debt

(loss) on conversion of convertible notes

Other Income (Expense):

Interest expense

( 1,602,204 )

( 1,667,413 )

Income (Loss) Before Income Taxes

( 3,607,210 )

Change in derivative liability for authorized shares shortfall

( 159,633,797 )

for Income Taxes (Benefit)

Income (Loss)

( 43,406,183 )

Change in fair value of derivative liabilities

Gain on settlement of convertible notes payable and accrued interest, warrants and accounts payable and cancelation of common shares in exchange for Series Y and Series Z preferred shares and cash

Gain on forgiveness of debt

Gain (loss) on conversion of convertible notes

Total Other Income (Expense)

( 46,708,918 )

dividend resulting from amortization of preferred stock discount

Net Income (Loss) Before Income Taxes

( 47,402,959 )

Provision for Income Taxes (Benefit)

Net Income (Loss)

( 47,402,959 )

dividend from warrant price protection

Deemed dividend resulting from amortization of preferred stock discount

( 34,798,923 )

Income (Loss) Available to Common Stockholders

Deemed dividend from warrant price protection

( 95,002,933 )

Net Income (Loss) Available to Common Stockholders

$ ( 17,531,575 )

$ ( 142,405,892 )

Income (Loss) Per Common Share:

Average Common Shares Outstanding:

Net Income (Loss) Per Common Share:

Weighted Average Common Shares Outstanding:

1,406,244,901

6 unchanged sentences

1,387,478,585

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

The accompanying notes are an integral part of these unaudited condensed

consolidated financial statements.

MASSROOTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

Balance at March 31, 2021 (unaudited)

$ 286,859,096

$ ( 3,244,472 )

$ ( 348,379,650 )

$ ( 63,359,469 )

Issuance of common shares previously

( 1,006,250 )

Issuance of common shares for

services rendered

Cancelation of common shares

and warrants in exchange for cash paid per cancelation agreement

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

Balance at June

30, 2021 (unaudited)

$ 298,648,071

Series Y preferred shares issued

in exchange for convertible notes, accrued interest and warrants

BCF recognized upon issuance

of Series Y preferred shares

$ ( 324,596,745 )

Deemed dividend resulting from

amortization of preferred stock discount

$ ( 24,542,427 )

at June 30, 2021 (unaudited)

Series Z preferred shares

issued as equity kicker for note payable

Series Z preferred shares

issued as part of settlement agmt

at September 30, 2021 (unaudited)

$ 299,667,352

1 unchanged sentence

$ ( 17,643,687 )

at December 31, 2020

Balance at December

$ 283,024,527

2 unchanged sentences

$ ( 37,733,852 )

of common shares previously to be issued

Issuance of common shares

previously to be issued

( 1,006,250 )

of common shares for services rendered

shares issued upon conversion of convertible notes

of common shares and warrants in exchange for cash paid per cancelation agreement

Issuance of common shares

for services rendered

Common shares issued upon

conversion of convertible notes

Cancelation of common shares

and warrants in exchange for cash paid per cancelation agreement

( 1,485,000 )

Sale of Series X preferred

BCF recognized upon issuance

of Series X preferred shares

recognized upon issuance of Series X preferred shares

( 2,852,500 )

Y preferred shares issued in exchange for convertible notes, accrued interest and warrants

recognized upon issuance of Series Y preferred shares

( 10,972,647 )

dividend resulting from amortization of preferred stock discount

( 34,798,923 )

at June 30, 2021 (unaudited)

$ 298,648,071

$ ( 324,596,745 )

$ ( 24,542,427 )

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

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

THE THREE AND SIX MONTHS ENDED JUNE 30, 2020

at March 31, 2020 (unaudited)

$ 246,633,884

Series Y preferred shares

issued in exchange for convertible notes, accrued interest and warrants

BCF recognized upon issuance

of Series Y preferred shares

( 10,972,647 )

Deemed dividend resulting

from amortization of preferred stock discount

( 34,798,923 )

shares issued upon conversion of convertible notes and accrued interest

Series Z preferred shares

issued as equity kicker for note payable

Series Z preferred shares

issued as part of settlement agmt

at September 30, 2021 (unaudited)

$ 299,667,352

$ ( 318,717,287 )

at June 30, 2020 (unaudited)

$ ( 17,643,687 )

The accompanying notes are an integral part of these unaudited condensed

consolidated financial statements.

MASSROOTS, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2020

Preferred Stock

Balance at June 30, 2020 (unaudited)

( 396,647,339 )

$ ( 148,580,352 )

at December 31, 2019

Balance at September 30, 2020 (unaudited)

( 331,968,117 )

$ ( 83,901,130 )

Preferred Stock

Balance at December 31, 2019

( 189,562,225 )

of common shares previously to be issued

$ ( 36,868,926 )

shares issued upon conversion of convertible notes and accrued interest

shares contributed back to the Company and promptly retired

dividend related to warrant price protection

Issuance of common shares previously to be issued

( 37,160,000 )

Common shares issued upon conversion of convertible notes and accrued interest

Common shares contributed back to the Company and promptly retired

Deemed dividend related to warrant price protection

( 95,002,933 )

( 47,402,959 )

at June 30, 2020 (unaudited)

( 47,402,959 )

Balance at September 30, 2020 (unaudited)

( 331,968,117 )

$ ( 83,901,130 )

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

CONSOLIDATED STATEMENTS OF CASHFLOWS

Six Months Ended

The accompanying notes are an integral part of these unaudited condensed

consolidated financial statements.

MASSROOTS, INC.

CONDENSED CONSOLIDATED STATEMENTS

Nine Months Ended

September 30,

Cash flows from operating activities:

6 unchanged sentences

(Gain) loss on conversion of convertible notes payable

Gain on settlement of convertible notes payable and accrued interest, warrants and accounts payable in exchange for Series Y preferred shares

( 4,854,139 )

Gain on settlement of convertible notes payable and accrued interest and cancelation of common shares and warrants for cash

Gain on settlement of convertible notes payable and accrued interest, warrants and accounts payable and cancelation of common shares in exchange for Series Y and Series Z preferred shares and cash

( 179,272,324 )

16 unchanged sentences

Cash paid in settlement of debt and warrants

( 1,176,000 )

Net cash provided by financing activities

17 unchanged sentences

$ 169,815,037

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

to Condensed Consolidated Financial Statements

30, 2021 (Unaudited)

1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

(“MassRoots” or the “Company”) is a technology company focused on developing cloud-based solutions to deliver

informative content and improve operating efficiencies.

Series Z preferred shares issued as equity kicker for note payable

Series Z preferred shares issued as part of settlement agreement

The accompanying notes are an integral part of these unaudited condensed

consolidated financial statements.

MASSROOTS, INC.

Notes to Condensed

Consolidated Financial Statements

September 30, 2021

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

MassRoots, Inc.

(“MassRoots” or the

“Company”) is a technology company focused on developing cloud-based solutions to deliver informative content and improve

operating efficiencies.

The Company was incorporated in the State of Delaware on April 26, 2013.

unaudited condensed consolidated financial statements include the accounts of DDDigtal, Inc., Odava, Inc., MassRoots Supply Chain, Inc.,

and MassRoots Blockchain Technologies, Inc., our wholly-owned subsidiaries.

of Presentation

interim unaudited condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant

to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

In the opinion of the Company’s

management, all adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) necessary

to present fairly the Company’s results of operations for the three and six months ended June 30, 2021 and 2020, its cash flows

for the six months ended June 30, 2021 and 2020, and its financial position as of June 30, 2021 have been made.

The results of operations

for such interim periods are not necessarily indicative of the operating results to be expected for the full year.

information and disclosures normally included in the notes to the annual consolidated financial statements have been condensed or omitted

from these interim unaudited condensed consolidated financial statements.

Accordingly, these interim unaudited condensed consolidated

financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual

Report on Form 10-K for the fiscal year ended December 31, 2020 as filed with the SEC on April 16, 2021 (the “Annual Report”).

The December 31, 2020 balance sheet is derived from those statements.

2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

of June 30, 2021, the Company had cash of $ 1,261 and a working capital deficit (current liabilities in excess of current assets) of $ 24,482,427 .

During the six months ended June 30, 2021, the net loss available to common stockholders was $ 23,411,033

and net cash used in operating activities was $ 385,658 .

These conditions raise substantial doubt about the Company’s ability

to continue as a going concern for one year from the issuance of the unaudited condensed consolidated financial statements.

the six months ended June 30, 2021, the Company received proceeds of $ 200,000 and $ 357,053 from the issuance of preferred shares and

non-convertible notes, respectively.

Our unaudited condensed consolidated

financial statements include the accounts of DDDigtal, Inc., Odava, Inc., MassRoots Supply Chain, Inc., and MassRoots Blockchain Technologies,

Inc., our wholly-owned subsidiaries.

Basis of Presentation

The interim unaudited condensed

consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations

of the Securities and Exchange Commission (the “SEC”).

In the opinion of the Company’s management, all adjustments (consisting

of normal recurring adjustments and reclassifications and non-recurring adjustments) necessary to present fairly the Company’s results

of operations for the three and nine months ended September 30, 2021 and 2020, its cash flows for the nine months ended September 30,

2021 and 2020, and its financial position as of September 30, 2021 have been made.

The results of operations for such interim periods

are not necessarily indicative of the operating results to be expected for the full year.

Certain information and disclosures normally included

in the notes to the annual consolidated financial statements have been condensed or omitted from these interim unaudited condensed consolidated

financial statements.

Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with

the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December

31, 2020 as filed with the SEC on April 16, 2021 (the “Annual Report”).

The December 31, 2020 balance sheet is derived from

those statements.

NOTE 2 – GOING CONCERN AND MANAGEMENT’S

LIQUIDITY PLANS

As of September 30, 2021, the Company had cash

of $ 1,082 and a working capital deficit (current liabilities in excess of current assets) of $ 17,514,830 .

During the nine months ended

September 30, 2021, the net loss available to common stockholders was $ 17,531,575 and net

cash used in operating activities was $ 548,640 .

These conditions raise substantial doubt about the Company’s ability to continue

as a going concern for one year from the issuance of the unaudited condensed consolidated financial statements.

During the nine months ended September 30, 2021,

the Company received proceeds of $ 200,000 and $ 1,515,424 from the issuance of preferred shares and non-convertible notes, respectively.

The Company does not have sufficient cash to fund operations for the next fiscal year.

Company’s primary source of operating funds since inception has been cash proceeds from the public and private placements of the

Company’s securities, including debt and equity securities, and proceeds from the exercise of warrants and options.

has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable

T he Company’s ability to continue its operations is dependent upon its ability

to obtain additional capital through public or private equity offerings, debt financings or other sources;

however, financing

may not be available to the Company on acceptable terms, or at all.

The Company’s failure to raise capital as and when needed could

have a negative impact on its financial condition and its ability to pursue its business strategy, and the Company may be forced to curtail

The Company’s primary source of operating

funds since inception has been cash proceeds from the public and private placements of the Company’s securities, including debt

and equity securities, and proceeds from the exercise of warrants and options.

The Company has experienced net losses and negative cash

flows from operations since inception and expects these conditions to continue for the foreseeable future.

Company’s ability to continue its operations is dependent upon its ability to obtain additional capital through public or private

equity offerings, debt financings or other sources;

however, financing may not

be available to the Company on acceptable terms, or at all.

The Company’s failure to raise capital as and when needed could have

a negative impact on its financial condition and its ability to pursue its business strategy, and the Company may be forced to curtail

or cease operations.

plans regarding these matters encompass the following actions:

Management’s plans

regarding these matters encompass the following actions:

1) obtain funding from new and current investors to alleviate the Company’s

5 unchanged sentences

of certainty.

the accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates

the realization of assets and satisfaction of liabilities in the normal course of business for one year from the date the unaudited condensed

consolidated financial statements are issued.

The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated

financial statements do not necessarily purport to represent realizable or settlement values.

The unaudited condensed consolidated financial

statements do not include any adjustments that might result should the Company be unable to continue

as a going concern.

March 2020, the World Health Organization declared COVID-19 a global pandemic.

This contagious disease outbreak, which has continued

to spread, and any related adverse public health developments, has adversely affected workforces, customers, economies, and financial

markets globally, leading to an economic downturn.

Accordingly, the accompanying

unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization

of assets and satisfaction of liabilities in the normal course of business for one year from the date the unaudited condensed consolidated

financial statements are issued.

The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial

statements do not necessarily purport to represent realizable or settlement values.

The unaudited condensed consolidated financial statements

do not include any adjustments that might result should the Company be unable to continue as a going

In March 2020, the World

Health Organization declared COVID-19 a global pandemic.

This contagious disease outbreak, which has continued to spread, and any related

adverse public health developments, has adversely affected workforces, customers, economies, and financial markets globally, leading to

an economic downturn.

It has also disrupted the normal operations of many businesses, including ours.

is not possible for us to predict the duration or magnitude of the adverse results of the outbreak of COVID-19 and its effects on our

business including our financial condition, liquidity, or results of operations at this time.

Management is actively monitoring the global

situation and its impact on the Company’s financial condition, liquidity, operations, customers, industry, and workforce.

the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects

that the COVID-19 outbreak will have on its results of operations, financial condition, or liquidity for fiscal year 2021.

date of this Quarterly Report on Form 10-Q, the Company has experienced delays in securing new customers and related revenues and the

longer this pandemic continues there may be additional impacts.

Furthermore, the COVID-19 outbreak has and may continue to impact the

Company’s ability to raise capital.

the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it

may have a material adverse effect on the Company’s results of future operations, financial position, liquidity, and capital resources,

and those of the third parties on which the Company relies in fiscal year 2021.

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Consolidation

unaudited condensed consolidated financial statements include the accounts of MassRoots, Inc.

It is not possible for us to predict

the duration or magnitude of the adverse results of the outbreak of COVID-19 and its effects on our business including our financial condition,

liquidity, or results of operations at this time.

Management is actively monitoring the global situation and its impact on the Company’s

financial condition, liquidity, operations, customers, industry, and workforce.

Given the daily evolution of the COVID-19 outbreak and

the global responses to curb its spread, the Company is not able to estimate the effects that the COVID-19 outbreak will have on its results

of operations, financial condition, or liquidity for fiscal year 2021.

As of the date of this Quarterly Report on Form 10-Q, the Company

has experienced delays in securing new customers and related revenues and the longer this pandemic continues there may be additional impacts.

Furthermore, the COVID-19 outbreak has and may continue to impact the Company’s ability to raise capital.

Although the Company cannot

estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material

adverse effect on the Company’s results of future operations, financial position, liquidity, and capital resources, and those of

the third parties on which the Company relies in fiscal year 2021.

NOTE 3 – SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The unaudited condensed consolidated financial

statements include the accounts of MassRoots, Inc.

and its wholly-owned subsidiaries.

intercompany balances and transactions have been eliminated in consolidation.

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure

of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during

the reporting period.

Significant estimates include stock-based compensation, fair values relating to derivative liabilities, fair value

of payroll tax liabilities, deemed dividends and the valuation allowance related to deferred tax assets.

Actual results may differ from

these estimates.

Value of Financial Instruments

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 825-10, “Financial

Instruments” (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments.

The estimated fair

value of certain financial instruments, including cash, accounts payable and accrued liabilities are carried at historical cost basis,

which approximates their fair value because of the short-term maturity of these instruments.

All other significant financial assets,

financial liabilities and equity instruments of the Company are either recognized or disclosed in the condensed consolidated financial

statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit

Company follows ASC 825-10, which permits entities to choose to measure many financial instruments and certain other items at fair value.

purposes of the unaudited condensed consolidated statements of cash flows, the Company considers highly liquid investments with an original

maturity of three months or less to be cash equivalents.

As of June 30, 2021 and December 31, 2020, the Company had no cash equivalents.

The Company maintains its cash in banks insured by the Federal Deposit Insurance Corporation in accounts that at times may be in excess

of the federally insured limit of $ 250,000 per bank.

The Company minimizes this risk by placing its cash deposits with major financial

institutions.

At June 30, 2021 and December 31, 2020, the uninsured balances amounted to $ 0 .

and Equipment

and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of three to five years.

Repair and maintenance costs are expensed as incurred.

When retired or otherwise disposed, the related carrying value and accumulated

depreciation are removed from the respective accounts and the net difference less any amount realized from disposition is reflected in

Receivable and Allowance for Doubtful Accounts

Company monitors outstanding receivables based on factors surrounding the credit risk of specific customers, historical trends, and other

The allowance for doubtful accounts is estimated based on an assessment of the Company’s ability to collect on customer

accounts receivable.

There is judgment involved with estimating the allowance for doubtful accounts, and if the financial condition of

the Company’s customers were to deteriorate, resulting in their inability to make the required payments, the Company may be required

to record additional allowances or charges against revenues.

The Company writes-off accounts receivable against the allowance when it

determines a balance is uncollectible and no longer actively pursues its collection.

Recognition and Deferred Revenue

are accounted for under ASC Topic 606, “Revenue From Contracts With Customers” (“ASC 606”).

ASC 606 is based

on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration

to which the entity expects to be entitled in exchange for those goods or services.

This ASC also requires additional disclosure about

the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer purchase orders, including significant judgments.

accordance with ASC 606, the Company recognizes revenue in accordance with that core principle by applying the following:

the contract(s) with a customer;

the performance obligation in the contract;

the transaction price;

the transaction price to the performance obligations in the contract;

revenue when (or as) the Company satisfies a performance obligation.

Company primarily generates revenue by charging businesses to advertise on the Company’s website and social media channels.

cases where clients enter advertising contracts for an extended period of time, the Company recognizes revenue pro rata over the contract

term and any unearned revenue is deferred to future periods.

on the nature of the Company’s revenue streams, revenues generally do not require significant estimates or judgments.

prices are generally fixed at the point of sale and all consideration from contracts is included in the transaction price.

The Company’s

contracts do not include multiple performance obligations or material variable consideration.

revenue represents the amount of prepaid advertising fees the Company has received from customers and it is included in current liabilities

in the accompanying condensed consolidated balance sheets.

Deferred revenue shall be recognized in the future as the advertising

services are provided.

Company charges the costs of advertising to expense as incurred.

Advertising costs were $ 22,703 and $ 0 for the six months ended June

30, 2021 and 2020, respectively.

compensation expense is measured at the grant date fair value of the award and is expensed over the requisite service period.

For stock-based

awards to employees, non-employees and directors, the Company calculates the fair value of the award on the date of grant using the Black-Scholes

All intercompany balances and transactions have

been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity

with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) requires management to make estimates

and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date

of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant estimates include

stock-based compensation, fair values relating to derivative liabilities, fair value of payroll tax liabilities, deemed dividends and

the valuation allowance related to deferred tax assets.

Actual results may differ from these estimates.

Fair Value of Financial

The Financial Accounting

Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 825-10, “Financial Instruments”

(“ASC 825-10”) requires disclosure of the fair value of certain financial instruments.

The estimated fair value of certain

financial instruments, including cash, accounts payable and accrued liabilities are carried at historical cost basis, which approximates

their fair value because of the short-term maturity of these instruments.

All other significant financial assets, financial liabilities

and equity instruments of the Company are either recognized or disclosed in the condensed consolidated financial statements together with

other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk.

The Company follows ASC 825-10, which permits

entities to choose to measure many financial instruments and certain other items at fair value.

For purposes of the unaudited

condensed consolidated statements of cash flows, the Company considers highly liquid investments with an original maturity of three months

or less to be cash equivalents.

As of September 30, 2021 and December 31, 2020, the Company had no cash equivalents.

The Company maintains

its cash in banks insured by the Federal Deposit Insurance Corporation in accounts that at times may be in excess of the federally insured

limit of $ 250,000 per bank.

The Company minimizes this risk by placing its cash deposits with major financial institutions.

30, 2021 and December 31, 2020, the uninsured balances amounted to $ 0 .

Property and Equipment

Property and equipment are stated at cost and

depreciated using the straight-line method over their estimated useful lives of three to five years.

Repair and maintenance costs are

expensed as incurred.

When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the

respective accounts and the net difference less any amount realized from disposition is reflected in earnings.

Accounts Receivable and

Allowance for Doubtful Accounts

The Company monitors outstanding

receivables based on factors surrounding the credit risk of specific customers, historical trends, and other information.

The allowance

for doubtful accounts is estimated based on an assessment of the Company’s ability to collect on customer accounts receivable.

is judgment involved with estimating the allowance for doubtful accounts, and if the financial condition of the Company’s customers

were to deteriorate, resulting in their inability to make the required payments, the Company may be required to record additional allowances

or charges against revenues.

The Company writes-off accounts receivable against the allowance when it determines a balance is uncollectible

and no longer actively pursues its collection.

Revenue Recognition and

Deferred Revenue

Revenues are accounted

for under ASC Topic 606, “Revenue From Contracts With Customers” (“ASC 606”).

ASC 606 is based on the principle

that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which

the entity expects to be entitled in exchange for those goods or services.

This ASC also requires additional disclosure about the nature,

amount, timing, and uncertainty of revenue and cash flows arising from customer purchase orders, including significant judgments.

In accordance with ASC 606, the Company recognizes

revenue in accordance with that core principle by applying the following:

Identify the contract(s) with a customer;

Identify the performance obligation in the contract;

Determine the transaction price;

Allocate the transaction price to the performance obligations in the contract;

Recognize revenue when (or as) the Company satisfies a performance obligation.

The Company primarily generates

revenue by charging businesses to advertise on the Company’s website and social media channels.

In cases where clients enter advertising

contracts for an extended period of time, the Company recognizes revenue pro rata over the contract term and any unearned revenue is deferred

to future periods.

Based on the nature of

the Company’s revenue streams, revenues generally do not require significant estimates or judgments.

The sales prices are generally

fixed at the point of sale and all consideration from contracts is included in the transaction price.

The Company’s contracts do

not include multiple performance obligations or material variable consideration.

Deferred revenue represents the amount of prepaid

advertising fees the Company has received from customers and it is included in current liabilities in the accompanying condensed consolidated

balance sheets.

Deferred revenue shall be recognized in the future as the advertising services are provided.

The Company charges the costs of advertising to

expense as incurred.

Advertising costs were $ 18,125 and $ 43,020 for the nine months ended September 30, 2021 and 2020, respectively.

Stock-Based Compensation

Stock-based compensation

expense is measured at the grant date fair value of the award and is expensed over the requisite service period.

For stock-based awards

to employees, non-employees and directors, the Company calculates the fair value of the award on the date of grant using the Black-Scholes

option pricing model.

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of management’s judgment.

Company follows ASC Subtopic 740-10, “Income Taxes” (“ASC 740-10”) for recording the provision for income taxes.

Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets

and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled.

Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period.

available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized,

a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized.

changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

Deferred income

taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes

in different periods.

GAAP requires companies to bifurcate conversion options from their host instruments and account for them as freestanding derivative financial

instruments according to certain criteria.

The criteria include circumstances in which (a) the economic characteristics and risks of

the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract,

(b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value

under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and

(c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

to this rule is when the host instrument is deemed to be conventional, as that term is described under ASC 480, “Distinguishing

Liabilities From Equity.”

the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records,

when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon

the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective

conversion price embedded in the note.

Debt discounts under these arrangements are amortized over the term of the related debt to their

stated date of redemption using the effective interest method.

The Company follows ASC Subtopic

740-10, “Income Taxes” (“ASC 740-10”) for recording the provision for income taxes.

Deferred tax assets and liabilities

are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted

marginal tax rate applicable when the related asset or liability is expected to be realized or settled.

Deferred income tax expenses or

benefits are based on the changes in the asset or liability during each period.

If available evidence suggests

that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required

to reduce the deferred tax assets to the amount that is more likely than not to be realized.

Future changes in such valuation allowance

are included in the provision for deferred income taxes in the period of change.

Deferred income taxes may arise from temporary differences

resulting from income and expense items reported for financial accounting and tax purposes in different periods.

Convertible Instruments

GAAP requires companies

to bifurcate conversion options from their host instruments and account for them as freestanding derivative financial instruments according

to certain criteria.

The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative

instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument

that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable

generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument

with the same terms as the embedded derivative instrument would be considered a derivative instrument.

An exception to this rule is when

the host instrument is deemed to be conventional, as that term is described under ASC 480, “Distinguishing Liabilities From Equity.”

When the Company has determined

that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, discounts

to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the

fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in

Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption using

the effective interest method.

Beneficial Conversion Features and Deemed

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The Company evaluated these derivatives to assess their

proper classification in the balance sheet as of June 30, 2021 and December 31, 2020 using the applicable classification criteria enumerated

under ASC 815, “Derivatives and Hedging.” The Company determined that certain embedded conversion and/or exercise features

did not contain fixed settlement provisions.

The convertible notes contained a conversion feature such that the Company could not ensure

it would have adequate authorized shares to meet all possible conversion demands.

As such, the Company is required to record the derivatives

which do not have fixed settlement provisions as liabilities and mark to market all such derivatives to fair value at the end of each

reporting period.

The Company also records derivative liabilities for instruments, including convertible notes, preferred stock, and warrants,

in which the Company does not have sufficient authorized shares to cover the conversion of these instruments into shares of common stock.

proper classification in the balance sheet as of September 30, 2021 and December 31, 2020 using the applicable classification criteria

enumerated under ASC 815, “Derivatives and Hedging.” The Company determined that certain embedded conversion and/or exercise

features did not contain fixed settlement provisions.

The convertible notes contained a conversion feature such that the Company could

not ensure it would have adequate authorized shares to meet all possible conversion demands.

As such, the Company is required to record

the derivatives which do not have fixed settlement provisions as liabilities and mark to market all such derivatives to fair value at

the end of each reporting period.

The Company also records derivative liabilities for instruments, including convertible notes, preferred

stock, and warrants, in which the Company does not have sufficient authorized shares to cover the conversion of these instruments into

shares of common stock.

Long-Lived Assets

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excluded from the computation of basic and diluted net loss per share are as follows:

September 30,

Shares of common stock issuable upon conversion of convertible notes

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7,817,778,624

18,017,191,930

Total potentially dilutive shares

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unaudited condensed consolidated financial statements and related disclosures.

There are other various updates

recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and

are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

There are other various

updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries

and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment as of June 30, 2021 and

December 31, 2020 is summarized as follows:

Property and equipment as of September 30, 2021

and December 31, 2020 is summarized as follows:

September 30,

Office equipment

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Property and equipment, net

Depreciation expense for the six months ended June 30, 2021 and 2020

Depreciation expense for the nine months ended September 30, 2021 and

2020 was $ 0 .

NOTE 5 – ADVANCES, NON-CONVERTIBLE NOTES PAYABLE AND PPP NOTE

During the six months

ended June 30, 2021 and 2020, the Company received aggregate proceeds from non-interest bearing advances of $ 14,311 and $ 0 and repaid

During the nine months

ended September 30, 2021 and 2020, the Company received aggregate proceeds from non-interest bearing advances of $ 53,991 and $ 0 and repaid

an aggregate of $ 20,178 and $ 0 , respectively, of advances.

Included in the six months ended June 30, 2021 were $ 1,210 of advances from

and $ 4,330 of repayments to the Company’s Chief Executive Officer (See Note 14).

The remaining advances are primarily for Simple

Agreements for Future Tokens, entered into with accredited investors issued pursuant to an exemption from the registration requirements

of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2) thereof and/or Regulation D thereunder in 2018.

June 30, 2021 and December 31, 2020, the Company owed $ 92,568 and $ 88,187 in principal and $ 1,000 and $ 0 in accrued interest, respectively,

Included in the nine months ended September 30, 2021 were $ 2,091 of advances

from and $ 5,278 of repayments to the Company’s Chief Information Officer and $ 25,000 of advances from Empire Services, Inc.

The remaining advances are primarily for Simple Agreements for Future Tokens, entered into with accredited investors issued

pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2)

thereof and/or Regulation D thereunder in 2018.

As of September 30, 2021 and December 31, 2020, the Company owed $ 122,000 and $ 88,187

in principal and $ 4,000 and $ 0 in accrued interest, respectively, on advances.

Non-Convertible Notes

During the six months ended

June 30, 2021 and 2020, the Company received proceeds from the issuance of non-convertible notes of $ 357,053 and $ 110,000 and repaid an

aggregate of $ 0 and $ 37,250 , respectively, of non-convertible notes.

Included in the six months ended June 30, 2021 were $ 357,053 of advances

from and $ 0 of repayments to the Company’s Chairman of the Board and Empires Services, Inc., (See Note 14).

The non-convertible

notes have maturity dates ranging from March 31, 2019 to June 24, 2023 and accrue interest at rates ranging from 0 % to 35 % (default

interest rate) per annum.

During the nine months ended

September 30, 2021 and 2020, the Company received proceeds from the issuance of non-convertible notes of $ 1,515,424 and $ 132,911 and repaid

an aggregate of $ 25,000 and $ 39,641 , respectively, of non-convertible notes.

Included in the nine months ended September 30, 2021 and

2020 were $ 1,515,424 and $ 20,520 , respectively, of advances from and $ 0 of repayments to the Company’s Chief Executive Officer and

Empires Services, Inc., (See Note 14).

The non-convertible notes have maturity dates ranging from March 31, 2019 to June 24, 2023 and

accrue interest at rates ranging from 0 % to 35 % (default interest rate) per annum.

On June 2, 2021, one of the

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holders of a non-convertible note payable for $ 60,000 extended the due date of the note from June 26, 2022 to June 24, 2023.

As of June 30, 2021 and December

31, 2020, the Company owed $ 497,573 and $ 219,520 in principal (of which $ 60,000 and $ 60,000 is long-term) and $ 317,203 and $ 251,612 in

accrued interest, respectively, on non-convertible notes (See Note 15).

On June 25, 2021, a law firm

the Company formerly used received an arbitration award of $ 459,251 for unpaid legal bills.

On September 23, 2021, the Company entered

into a Resolution Agreement to settle the arbitration award for an aggregate of $ 275,000 to be paid as follows:

(i) $ 25,000 by September

(ii) $ 15,000 per month by the last day of each month from October 2021 through January 2023;

and (iii) $ 10,000 by February 28,

The Company imputed an interest rate of 10 % and discounted the note accordingly.

The imputed debt discount of $ 17,991 is being amortized

to interest expense over the term of the note.

The Company recognized a $ 202,242 gain on settlement.

As of September 30, 2021, the remaining

carrying value of the note was $ 232,502 , net of debt discount of $ 17,498 .

As of September 30, 2021

and December 31, 2020, the Company owed principal of $ 1,888,446 and $ 219,520 (of which $ 128,857 and $ 60,000 is long-term), net of debt

discount of $ 17,498 and $ 0 , and accrued interest of $ 372,480 and $ 251,612 , respectively, on non-convertible notes.

PPP Note Payable

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and accrued interest of $466, resulting in gain on forgiveness of debt of $50,466.

As of June 30, 2021 and December 31, 2020, the Company

owed $0 and $50,000 in principal and $0 and $330 in accrued interest, respectively, on this note.

As of September 30, 2021 and December 31, 2020, the

Company owed $0 and $50,000 in principal and $0 and $330 in accrued interest, respectively, on this note.

NOTE 6 – ACCOUNTS

PAYABLE AND ACCRUED EXPENSES

As of June 30, 2021 and December 31, 2020, the

Company owed accounts payable and accrued expenses of $ 4,242,543 and $ 4,948,890 , respectively.

As of September 30, 2021 and December 31, 2020,

the Company owed accounts payable and accrued expenses of $ 4,218,421 and $ 4,948,890 , respectively.

These are primarily comprised of payments

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taxes, primarily related to stock compensation awards in 2016 and 2017, but also including payroll for 2018 through 2021.

As of June 30,

As of September

30, 2021 and December 31, 2020, the Company owed payroll tax liabilities, including penalties, of $ 4,037,298 and $ 3,864,055 , respectively,

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In accordance with the terms of the Settlement, PowerUp, the judgment creditor of a judgment against the Company and Isaac Dietrich, the

Company’s Chief Executive Officer and director, in the total amount of $ 350,551.10 entered in the Office of the Clerk of the County

Company’s Chief Information Officer and director, in the total amount of $ 350,551.10 entered in the Office of the Clerk of the County

of Nassau on February 23, 2021 (the “Judgement”), agreed to a settlement and filing of a satisfaction of judgment in consideration

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On December 1, 2020, Sheppard, Mullin, Richter&

& Hampton LLP (“Sheppard Mullin”), the Company’s former securities counsel, filed a demand for arbitration at JAMS

in New York, New York against the Company, alleging the Company’s breach of an engagement agreement dated January 4, 2018, and a

failure of the Company to pay $ 487,390.73 of outstanding legal fees to Sheppard Mullin.

Sheppard Mullin seeks to collect the entirety

of the amount owed by the Company in accordance with said engagement agreement.

Sheppard Mullin was awarded $ 459,251 in unpaid legal fees, disbursements and interest on June 25, 2021.

Hampton LLP (“Sheppard Mullin”), the Company’s former securities counsel, filed a demand for arbitration at JAMS in

New York, New York against the Company, alleging the Company’s breach of an engagement agreement dated January 4, 2018, and a failure

of the Company to pay $ 487,390.73 of outstanding legal fees to Sheppard Mullin.

Sheppard Mullin was awarded $ 459,251 in unpaid legal fees,

disbursements and interest on June 25, 2021.

A judgement confirming the arbitration award was entered on September 8, 2021 in the Federal

District Court located in Denver, Colorado.

On September 23, 2021, the Company entered into a Resolution Agreement

with Sheppard, Mullin, Richter & Hampton concerning the $ 459,250.88 judgement entered against the Company.

Under the terms of the

Resolution Agreement, the Company was required to make a $25,000 initial payment by September 30, 2021 and is required to make $15,000

monthly payments from October 2021 to January 2023 with a final $10,000 payment due in February 2023.

The Company has made both the September

and October 2021 payments.

Rother Investments’ Petition

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(“Trawick”) filed a complaint (“Trawick’s Lawsuit”) against the Company and Isaac Dietrich, the Company’s

Chief Executive Officer and director, in the Circuit Court for the City of Virginia Beach, Virginia (the “Court”), asserting

Chief Information Officer and director, in the Circuit Court for the City of Virginia Beach, Virginia (the “Court”), asserting

the Company’s failure to remit payments under the certain promissory note, as subsequently amended and modified, and ancillary documents

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On May 4, 2021, Trawick requested that the Clerk

of the Court files for entry an order to dismiss Trawick’s Lawsuit with prejudice.

of the Court filed for entry an order to dismiss Trawick’s Lawsuit with prejudice.

Iroquois Master Fund

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The Demand alleges breach of contract and various related state law claims

against the defendants, and seeks, inter alia , specific performance of the subject warrant, damages in an amount not less than

against the defendants, and sought, inter alia , specific performance of the subject warrant, damages in an amount not less than

$12 million, equitable relief, and attorney’s fees for the Company’s alleged failure to reserve more than 150 million shares

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Danny Meeks, and Empire (See – “ Litigation ” below), Iroquois informed the American Arbitration Association (the

arbitral body overseeing the Arbitration) that it will (i) dismiss the Counterclaim Defendants from the Arbitration without prejudice,

arbitral body overseeing the Arbitration) that it would (i) dismiss the Counterclaim Defendants from the Arbitration without prejudice,

(ii) assert its claims against Isaac Dietrich, Danny Meeks, and Empire the in the action commended by them, and (iii) proceed with the

Arbitration with respect to the Company only.

The Company has recorded a derivative liability for $ 8,765,731 at June 30, 2021 for the warrants owned by Iroquois.

On July 21, 2021, in response to the Demand, Isaac

Dietrich, Danny Meeks, and Empire, filed a complaint (the “Complaint”) against Iroquois in the United States District Court

of the Southern District of New York alleging that the aforementioned plaintiffs are not parties to the warrant the Demand based on, and

as such, the Demand could not have brought against them.

of the Southern District of New York alleging that the aforementioned plaintiffs were not parties to the warrant the Demand based on,

and as such, the Demand could not have brought against them.

Declaratory relief and injunctive relief were sought in the Complaint.

20, 2021, Iroquois submitted an answer with counterclaims stating that Iroquois informed the American Arbitration Association (the arbitral

body overseeing the Arbitration) that it will (i) dismiss the Counterclaim Defendants from the Arbitration without prejudice, (ii) assert

its claims against Isaac Dietrich, Danny Meeks, and Empire the in the action commended by them, and (iii) proceed with the Arbitration

with respect to the Company only.

In its answer, Iroquois made allegations substantially similar to the claims made in the Arbitration,

asserted defenses, and requested an award in not less than $ 12 million against Demand, Isaac Dietrich, Danny Meeks, and Empire, an entry

of an award of a constructive trust against them, and costs and expenses, including its reasonable attorneys’ fees, incurred in

prosecuting said action and the Arbitration.

August 20, 2021, Iroquois submitted an answer with counterclaims stating that Iroquois informed the American Arbitration Association (the

arbitral body overseeing the Arbitration) that it would (i) dismiss the Counterclaim Defendants from the Arbitration without prejudice,

(ii) assert its claims against Isaac Dietrich, Danny Meeks, and Empire the in the action commended by them, and (iii) proceed with the

Arbitration with respect to the Company only.

In its answer, Iroquois made allegations substantially similar to the claims made in the

Arbitration, asserted defenses, and requested an award in not less than $ 12 million against Demand, Isaac Dietrich, Danny Meeks, and Empire,

an entry of an award of a constructive trust against them, and costs and expenses, including its reasonable attorneys’ fees, incurred

in prosecuting said action and the Arbitration.

On September 30, 2021,

the Company entered into a Settlement Agreement (the “Settlement Agreement”) with Iroquois ;

Pursuant to the Settlement Agreement, in exchange for terminating any duties owed by the Company to Iroquois

under the Warrant, the Company agreed to pay, on its own behalf and on behalf of Dietrich, Meeks, and Empire, one million dollars ($ 1,000,000 )

and issue shares of the Series Z Convertible Preferred Stock, par value $ 0.001 per share (the “Series Z”), sufficient in number

such that if they are converted into the Company’s common stock, par value $ 0.001 per share (“Common Stock”) by Iroquois,

such shares of Common Stock will be equal in number to 9.99 % of the issued and outstanding shares of Common Stock at the time of such

NOTE 9 – CONVERTIBLE

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a fair value of $ 133,002 , resulting in a reduction of the derivative liability by $ 118,778 and a loss on conversion of $ 880 .

of June 30, 2021 and December 31, 2020, the remaining carrying value of the note was $ 2,878,985 and $ 2,892,330 , respectively.

30, 2021 and December 31, 2020, accrued interest payable of $ 1,406,155 and $ 1,073,809 , respectively, was outstanding on the note.

of September 30, 2021 and December 31, 2020, the remaining carrying value of the note was $ 2,878,985 and $ 2,892,330 , respectively.

of September 30, 2021 and December 31, 2020, accrued interest payable of $ 1,575,001 and $ 1,073,809 , respectively, was outstanding on the

25, 2019, the Company issued a convertible promissory note in the principal amount of $ 55,000 (including original issuance discount of

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On July 20, 2021, the court granted the Company’s motion finding and ordered a new trial of the matter.

of June 30, 2021 and December 31, 2020, the remaining carrying value of the note was $148,685 and $55,000, respectively.

As of June 30,

of September 30, 2021 and December 31, 2020, the remaining carrying value of the note was $148,685 and $55,000, respectively.

As of September

30, 2021 and December 31, 2020, accrued interest payable of $0 and $92,600, respectively, was outstanding on the note (See Note 8 –

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$ 936,405 and a gain on settlement of $ 936,405 .

As of June 30, 2021 and December 31, 2020, the remaining carrying value of the notes was

$ 0 and $ 164,174 , respectively.

As of June 30, 2021 and December 31, 2020, accrued interest payable of $ 0 and $ 1,191,998 , respectively,

As of September 30, 2021 and December 31, 2020, the remaining carrying value of the notes

was $ 0 and $ 164,174 , respectively.

As of September 30, 2021 and December 31, 2020, accrued interest payable of $ 0 and $ 1,191,998 , respectively,

was outstanding on the notes.

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liability by $301,257 and a gain on settlement of $301,257.

As of June 30, 2021 and December 31, 2020, the carrying value of the remaining

note was $36,300.

As of June 30, 2021 and December 31, 2020, accrued interest payable of $77,491 and $57,231, respectively, was outstanding

on the remaining note.

As of September 30, 2021 and December 31, 2020, the carrying value of the

remaining note was $36,300.

As of September 30, 2021 and December 31, 2020, accrued interest payable of $87,789 and $57,231, respectively,

was outstanding on the remaining note.

December 6, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $110,000, having an aggregate original

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liability by $379,600 and a gain on settlement of $379,600.

As of June 30, 2021 and December 31, 2020, the remaining carrying value of

the notes was $0.

As of June 30, 2021 and December 31, 2020, accrued interest payable of $0 was outstanding on the notes.

As of September 30, 2021 and December 31, 2020, the remaining carrying value

of the notes was $0.

As of September 30, 2021 and December 31, 2020, accrued interest payable of $0 was outstanding on the notes.

December 2019, the Company and the holders of all of the outstanding Series A and Series B Preferred Shares (the “Preferred Shares”)

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of $74,533, resulting in a reduction of the derivative liability by $3,880,958 and a gain on settlement of $3,900,186.

As of June 30,

As of September

30, 2021 and December 31, 2020, the remaining carrying value of the notes was $0 and $38,500, respectively.

As of June 30, 2021 and December

31, 2020, accrued interest payable of $0 and $54,473, respectively, was outstanding on the notes.

As of September 30, 2021 and

December 31, 2020, accrued interest payable of $0 and $54,473, respectively, was outstanding on the notes.

January to September 2020, the Company issued convertible promissory notes in the aggregate principal amount of $ 700,700 , having an aggregate

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a stated value of $21,945, resulting in a reduction of the derivative liability by $17,548 and a gain on settlement of $17,548.

June 30, 2021 and December 31, 2020, the remaining carrying value of the notes was $0.

As of June 30, 2021 and December 31, 2020, accrued

interest payable of $0 and $13,844 was outstanding on the notes.

September 30, 2021 and December 31, 2020, the remaining carrying value of the notes was $0.

As of September 30, 2021 and December 31,

2020, accrued interest payable of $0 and $13,844 was outstanding on the notes.

December 15, 2020, $ 79,143 of accrued compensation owed to the Company’s former Chief Financial Officer was settled by the issuance

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by $60,971 and a loss on settlement of $60,971.

As of June 30, 2021 and December 31, 2020, the remaining carrying value of the note was

As of June 30, 2021 and December 31, 2020, accrued interest payable of $0 was outstanding on the note.

As of June 30, 2021 and

December 31, 2020, the remaining carrying value of the convertible notes was $ 3,063,970 and $ 3,186,303 , respectively.

As of June 30, 2021

As of September 30, 2021 and December 31, 2020, the remaining carrying value of the note

As of September 30, 2021 and December 31, 2020, accrued interest payable of $0 was outstanding on the note.

As of September 30, 2021

and December 31, 2020, the remaining carrying value of the convertible notes was $ 3,063,970 and $ 3,186,303 , respectively.

As of September

30, 2021 and December 31, 2020, accrued interest payable of $ 1,661,704 and $ 2,483,955 , respectively, was outstanding on the notes.

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a sufficient number of shares would be available to settle all potential future conversion transactions.

During the six months

ended June 30, 2021, upon issuance of the instruments underlying the derivative liabilities and

upon revaluation (immediately prior to conversion of the underlying instrument) , the Company estimated the fair value of the embedded

derivatives using the Black-Scholes Pricing Model based on the following assumptions:

(1) dividend yield of 0 %, (2) expected volatility

of 133.69 % to 138.77 %, (3) risk-free interest rate of 0.01 % to 0.14 %, and (4) expected life of 0.06 to 1.85 years.

On June 30, 2021, the

Company estimated the fair value of the embedded derivatives of $ 12,681,183 using the Black-Scholes Pricing Model based on the following

During the nine months

ended September 30, 2021, upon issuance of the instruments underlying the derivative liabilities

and upon revaluation (immediately prior to conversion of the underlying instrument) , the Company estimated the fair value of the

embedded derivatives using the Black-Scholes Pricing Model based on the following assumptions:

(1) dividend yield of 0 %, (2) expected

volatility of 133.69 % to 138.77 %, (3) risk-free interest rate of 0.01 % to 0.14 %, and (4) expected life of 0.06 to 1.85 years.

On September 30, 2021,

the Company estimated the fair value of the embedded derivatives of $ 4,289,634 using the Black-Scholes Pricing Model based on the following

(1) dividend yield of 0 %, (2) expected volatility of 137.90 %, (3) risk-free interest rate of 0.07 % to 0.09 %, and (4) expected

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ASC 825-10 establishes three levels of inputs that may be used to measure fair value:

● Level 1 – Quoted prices in active markets for identical

assets or liabilities.

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities;

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of volatility and market price of the underlying common stock of the Company.

of June 30, 2021 and December 31, 2020, the Company did not have any derivative instruments that were designated as hedges.

recorded or measured at fair value on a recurring basis consisted of the following items as of June 30, 2021 and December 31, 2020:

of September 30, 2021 and December 31, 2020, the Company did not have any derivative instruments that were designated as hedges.

recorded or measured at fair value on a recurring basis consisted of the following items as of September 30, 2021 and December 31, 2020:

September 30,

Quoted Prices

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The following table provides a summary of changes

in fair value of the Company’s Level 3 financial liabilities for the six months ended June 30, 2021:

in fair value of the Company’s Level 3 financial liabilities for the nine months ended September 30, 2021:

Balance, December 31, 2020

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Change in derivative liability due to authorized shares shortfall

Mark to market to June 30, 2021

Balance, June 30, 2021

Gain on change in derivative liabilities for the six months ended June 30, 2021

Mark to market to September 30, 2021

Balance, September 30, 2021

Gain on change in derivative liabilities for the nine months ended September 30, 2021

Fluctuations in the Company’s stock price

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Company authorized the issuance of 6,000 Series A preferred stock, par value $ 0.001 per share.

The Series A preferred stock have a $ 1,250

stated value and are convertible into shares of common stock at $ 0.05 per share, subject to certain adjustments.

The Certificate of Designation

for the Series A preferred stock was filed on July 9, 2019.

The Series A preferred stock has a $ 1,250

stated value per share and is convertible into shares of common stock at $ 0.05 per share, subject to certain adjustments.

The Certificate

of Designation for the Series A preferred stock was filed on July 9, 2019.

During the periods presented, there were 0

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June 24, 2019, the Company authorized the issuance of 2,000 shares of Series B Preferred Stock, par value $ 0.001 per share.

B Preferred Stock have a $ 1,250 stated value and are convertible into shares of common stock at $ 0.05 per share, subjected to certain

B Preferred Stock has a $ 1,250 stated value per share and is convertible into shares of common stock at $ 0.05 per share, subjected to

certain adjustments.

The Certificate of Designation for the Series B Preferred Stock was filed on July 9, 2019.

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Certificate of Designation for the Series C Preferred Stock was filed on July 19, 2019.

of June 30, 2021 and December 31, 2020, there were 1,000 shares of Series C Preferred Stock outstanding.

of September 30, 2021 and December 31, 2020, there were 1,000 shares of Series C Preferred Stock outstanding.

November 23, 2020, the Company authorized the issuance of 100 shares of Series X Preferred Stock, par value $ 0.0001 per share.

X Preferred Stock has a $ 20,000 stated value and is convertible into shares of common stock at $ 0.002 per share, subjected to certain

In the event the Company issues or sells any securities with an effective price or exercise or conversion price less than

the Conversion Price, the Conversion Price shall be reduced to the sale price or exercise or conversion price of the securities issued

X Preferred Stock has a $ 20,000 stated value per share and is convertible into shares of common stock at $ 0.002 per share, subjected to

certain adjustments.

In the event the Company issues or sells any securities with an effective price or exercise or conversion price less

than the Conversion Price, the Conversion Price shall be reduced to the sale price or exercise or conversion price of the securities issued

The Certificate of Designation for the Series X Preferred Stock was filed on November 23, 2020.

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X preferred shares with a $454,200 increase in Discount on preferred stock and a corresponding increase in additional paid-in capital.

The preferred stock discount is being amortized over 120 days commencing November 25, 2020 (the date of the initial issuance of the Series

X preferred shares), which is the maximum amount of time the Company has to conduct a stockholder vote to increase the Company’s

The preferred stock discount was amortized over 120 days commencing November 25, 2020 (the date of the initial issuance of the Series

X preferred shares), which is the maximum amount of time the Company had to conduct a stockholder vote to increase the Company’s

authorized shares.

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Upon each issuance of Series X shares, the conversion price was less than the Company’s stock price.

Accordingly, during the six

months ended June 30, 2021, the Company recognized an aggregate beneficial conversion feature of $ 2,852,500 upon issuance of the Series

X preferred shares with a $ 2,852,500 increase in Discount on preferred stock and a corresponding increase in Additional paid in capital.

The preferred stock discount is being amortized over 120 days commencing November 25, 2020 (the date of the initial issuance of the Series

X preferred shares), which is the maximum amount of time the Company has to conduct a stockholder vote to increase the Company’s

Accordingly, during the nine

months ended September 30, 2021, the Company recognized an aggregate beneficial conversion feature of $ 2,852,500 upon issuance of the

Series X preferred shares with a $ 2,852,500 increase in Discount on preferred stock and a corresponding increase in additional paid-in

The preferred stock discount was amortized over 120 days commencing November 25, 2020 (the date of the initial issuance of the

Series X preferred shares), which is the maximum amount of time the Company had to conduct a stockholder vote to increase the Company’s

authorized shares.

Amortization of the preferred stock discount of $ 3,260,252 was recognized as a deemed dividend for the six months ended

June 30, 2021.

As of June 30, 2021, unamortized debt discount on Series X Preferred Stock was $ 0 .

of June 30, 2021 and December 31, 2020, there were 26.05 and 16.05 shares, respectively, of Series X Preferred Stock outstanding.

Amortization of the preferred stock discount of $ 3,260,252 was recognized as a deemed dividend for the nine months

ended September 30, 2021.

As of September 30, 2021, unamortized debt discount on Series X Preferred Stock was $ 0 .

of September 30, 2021 and December 31, 2020, there were 26.05 and 16.05 shares, respectively, of Series X Preferred Stock outstanding.

December 30, 2020, the Company authorized the issuance of 1,000 shares of Series Y Preferred Stock, par value $ 0.001 per share.

Y Preferred Stock has a $ 20,000 stated value and is convertible into shares of common stock at $ 0.002 per share, subjected to certain

In the event the Company issues or sells any securities with an effective price or exercise or conversion price less than

the Conversion Price, the Conversion Price shall be reduced to the sale price or exercise or conversion price of the securities issued

Y Preferred Stock has a $ 20,000 stated value per share and is convertible into shares of common stock at $ 0.002 per share, subjected to

certain adjustments.

In the event the Company issues or sells any securities with an effective price or exercise or conversion price less

than the Conversion Price, the Conversion Price shall be reduced to the sale price or exercise or conversion price of the securities issued

The Certificate of Designation for the Series Y Preferred Stock was filed on December 30, 2020.

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Series Y preferred shares with a $ 21,594,115 increase in Discount on preferred stock and a corresponding increase in additional paid-in

The preferred stock discount is being amortized over 120 days commencing December 23, 2020 (the date of the initial issuance

of the Series Y preferred shares), which is the maximum amount of time the Company has to conduct a stockholder vote to increase the Company’s

The preferred stock discount was amortized over 120 days commencing December 23, 2020 (the date of the initial issuance of the

Series Y preferred shares), which is the maximum amount of time the Company had to conduct a stockholder vote to increase the Company’s

authorized shares.

11 unchanged sentences

Upon each issuance of Series Y shares, the conversion price was less than the Company’s stock

Accordingly, during the six months ended June 30, 2021, the Company recognized an aggregate beneficial conversion feature of $ 10,972,647

upon issuance of the Series Y preferred shares with a $ 10,972,647 increase in Discount on preferred stock and a corresponding increase

in Additional paid in capital.

The preferred stock discount is being amortized over 120 days commencing December 23, 2020 (the date of

the initial issuance of the Series Y preferred shares), which is the maximum amount of time the Company has to conduct a stockholder vote

to increase the Company’s authorized shares.

Amortization of the preferred stock discount of $ 31,538,671 was recognized as a deemed

dividend for the six months ended June 30, 2021.

As of June 30, 2021, unamortized debt discount on Series Y Preferred Stock was $ 0 .

Accordingly, during the nine months ended September 30, 2021, the Company recognized an aggregate beneficial conversion feature

of $ 10,972,647 upon issuance of the Series Y preferred shares with a $ 10,972,647 increase in Discount on preferred stock and a corresponding

increase in additional paid-in capital.

The preferred stock discount was amortized over 120 days commencing December 23, 2020 (the date

of the initial issuance of the Series Y preferred shares), which is the maximum amount of time the Company had to conduct a stockholder

vote to increase the Company’s authorized shares.

Amortization of the preferred stock discount of $ 31,538,671 was recognized as

a deemed dividend for the nine months ended September 30, 2021.

As of September 30, 2021, unamortized debt discount on Series Y Preferred

Stock was $ 0 .

March 17, 2021, the Company issued 27.78633 shares of Series Y Preferred Stock that were recorded as to be issued as of December 31, 2020.

of June 30, 2021 and December 31, 2020, there were 720.515674 and 626.995464 shares of Series Y Preferred Stock outstanding and 0 and

27.78633 shares to be issued, respectively.

The Company is authorized

to issue 500,000,000 shares of common stock, par value $ 0.001 per share.

of September 30, 2021 and December 31, 2020, there were 720.515674 and 626.995464 shares of Series Y Preferred Stock outstanding and 0

and 27.78633 shares to be issued, respectively.

On September 30, 2021,

the Company authorized the issuance of 500 shares of Series Z Preferred Stock, par value $ 0.001 per share.

The Series Z Preferred Stock

has a $ 20,000 stated value per share and all 500 Series Z preferred shares, in aggregate, are convertible into 19.98 % of the issued and

outstanding common shares of the Company (post conversion).

The conversion rate is applicable on a pro rata basis to each share of Series

Z Preferred Stock upon conversion.

This anti-dilutive conversion feature is in effect until such time an S-1 Registration Statement is

declared effective by the SEC in conjunction with a NASDAQ listing.

September 30, 2021, the Company entered into a Series Z Preferred Stock Issuance Agreement with the Company’s Chief Executive Officer

whereby the Company received $ 1,000,000 in exchange for the issuance of:

(i) a $1,000,000 note payable;

and (ii) 250 Series Z Preferred

Shares having a fair value of $632,019 (See Note 14).

The note bears interest of 8 % per annum and is due within three days of the Company’s

next closing of equity financing of $ 3,000,000 or more.

The proceeds received were allocated to the debt and equity on a relative fair

Accordingly, debt discount of $ 387,262 was recognized with a corresponding increase in additional paid-in capital.

the due date is contingent upon a future event, the entire debt discount was amortized to interest expense immediately.

On September 30, 2021,

an investor owning warrants to purchase 156,250,079 common shares at $ 0.0004 per share entered into an agreement to cancel the aforementioned

warrants in exchange for:

(i) a cash payment of $1,000,000 by the Company;

and (ii) 250 Series Z Preferred Shares having a fair value

The settlement resulted in a reduction in the derivative liability of $ 5,750,067 , offset by a reduction in cash of $ 1,000,000 ,

an increase in additional paid-in capital of $ 632,019 and a gain on settlement of debt of $ 4,118,048 .

September 30, 2021, the Company amended its Articles of Incorporation to change the number of authorized common shares to 1,200,000,000

shares of common stock, par value $ 0.001 per share, which has been reflected retroactively in the accompanying consolidated financial

January 8, 2020, the Company issued 37,160,000 shares of the Company’s common stock previously recorded as to be issued as of December

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June 6, 2021, the Company awarded an aggregate of 2,175,431 fully-vested shares of common stock, having a fair value of $ 166,855 , to the

Chairman of the Board for services rendered.

As of June 30, 2021 and

December 31, 2020, there were 499,871,337 and 493,726,405 shares, respectively, of common stock issued and outstanding.

Chief Executive Officer for services rendered.

As of September 30, 2021

and December 31, 2020, there were 499,871,337 and 493,726,405 shares, respectively, of common stock issued and outstanding.

NOTE 12 – WARRANTS

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in the derivative liability of $ 95,380,286 and a gain on settlement of $ 95,365,286 .

On September 30, 2021,

an investor owning warrants to purchase 156,250,079 common shares at $ 0.0004 per share entered into an agreement to cancel the aforementioned

warrants in exchange for:

(i) a cash payment of $ 1,000,000 by the Company;

and (ii) 250 Series Z Preferred Shares having a fair value

of $ 632,019 .

The settlement resulted in a reduction in the derivative liability of $ 5,750,067 , offset by a reduction in cash of $ 1,000,000 ,

an increase in additional paid-in capital of $ 632,019 and a gain on settlement of debt of $ 4,118,048 .

A summary of the Company’s warrant activity

during the six months ended June 30, 2021, is presented below:

during the nine months ended September 30, 2021, is presented below:

Outstanding at December 31, 2020

2 unchanged sentences

( 2,509,502,555 )

Outstanding at June 30, 2021

Exercisable at June 30, 2021

Outstanding at September 30, 2021

Exercisable at September 30, 2021

Exercise Price

3 unchanged sentences

of outstanding stock warrants was $ 9,200 , based on warrants with an exercise price less than the Company’s stock price of $ 0.0372

as of June 30, 2021, which would have been received by the warrant holders had those holders exercised the warrants as of that date.

as of September 30, 2021, which would have been received by the warrant holders had those holders exercised the warrants as of that date.

NOTE 13 – STOCK OPTIONS

2 unchanged sentences

Plan”), our 2016 Equity Incentive Plan in October 2016 (“2016 Plan”), our 2017 Equity Incentive Plan in December 2016

(“2017 Plan” and together with the 2014 Plan, 2015 Plan, 2016 Plan, the “Prior Plans”) and our 2018 Equity Incentive

Plan in June 2018 (the “2018 Plan”, and together with the Prior Plans, the “Plans”).

The Prior Plans are identical,

except for the number of shares reserved for issuance under each.

As of September 30, 2020, the Company had granted an

aggregate of 64,310,000 securities under the Plans, with 190,000 shares available for future issuances.

(“2017 Plan” and together with the 2014 Plan, 2015 Plan, 2016 Plan, the “Prior Plans”), our 2018 Equity Incentive

Plan in June 2018 (the “2018 Plan”), and our 2021 Equity Incentive Plan in September 2021 (“2021 Plan” , and together

with the Prior Plans, the “Plans”).

The Prior Plans are identical, except for the number of shares reserved for

issuance under each.

As of September 30, 2021, the Company had granted an aggregate of 64,310,000 securities under the Plans, with

50,190,000 shares available for future issuances.

The Plans provide for the

10 unchanged sentences

A summary of the Company’s stock option

activity during the six months ended June 30, 2021, is presented below:

activity during the nine months ended September 30, 2021, is presented below:

Outstanding at December 31, 2020

Expired/Canceled

Outstanding at June 30, 2021

Exercisable at June 30, 2021

Outstanding at September 30, 2021

Exercisable at September 30, 2021

Exercise Price

4 unchanged sentences

of outstanding stock options was $ 0 , based on options with an exercise price less than the Company’s stock price of $ 0.0372 as of

June 30, 2021, which would have been received by the option holders had those option holders exercised their options as of that date.

NOTE 14 – RELATED

PARTY TRANSACTIONS

During the six months ended

June 30, 2021 and 2020, the Company received aggregate advances of $ 1,210 and $ 0 and repaid an aggregate of $ 4,330 and $ 0 , respectively,

to the Company’s Chief Executive Officer.

The advances are non-interest bearing and due on demand.

As of June 30, 2021 and December

31, 2020, the Company owed $ 68 and $ 3,187 , respectively, in advances to the Company’s Chief Executive Officer (See Note 5).

During the six months ended

June 30, 2021 and 2020, the Company received aggregate proceeds of $ 357,053 and $ 0 , respectively, and repaid $ 0 from the issuance of non-convertible

notes to the Company’s Chairman of the Board and Empires Services, Inc.

The non-convertible notes bear interest from 15 % to 20 %

and have maturity dates ranging from January 31, 2021 through September 30, 2021 .

For those notes in default, the interest rate increases

to 35 % per annum from the date of default.

As of June 30, 2021 and December 31, 2020, the Company owed $ 357,053 and $ 0 , respectively,

in non-convertible notes payable to the Company’s Chief Executive Officer and Empire Services, Inc.

September 30, 2021, which would have been received by the option holders had those option holders exercised their options as of that date.

NOTE 14 – RELATED PARTY TRANSACTIONS

During the nine months ended

September 30, 2021 and 2020, the Company received aggregate advances of $ 2,091 and $ 0 and repaid an aggregate of $ 5,278 and $ 0 , respectively,

to the Company’s Chief Information Officer and $ 25,000 of advances from Empire Services, Inc.

The advances are non-interest bearing

and due on demand.

As of September 30, 2021 and December 31, 2020, the Company owed $ 0 and $ 3,187 , respectively, in advances to the Company’s

Chief Information Officer and $ 25,000 and $ 0 , respectively, in advances to Empire Services, Inc.

(See Note 5).

During the nine months ended

September 30, 2021 and 2020, the Company received aggregate proceeds of $ 1,515,424 and $ 20,520 , respectively, and repaid $ 0 from the issuance

of non-convertible notes to the Company’s Chief Executive Officer and Empires Services, Inc.

The non-convertible notes bear interest

from 15 % to 20 % and have maturity dates ranging from December 31, 2020 through October 15, 2021.

For those notes in default, the interest

rate increases to 35 % per annum from the date of default.

As of September 30, 2021 and December 31, 2020, the Company owed $ 1,535,944

and $ 0 , respectively, in non-convertible notes payable to the Company’s Chief Executive Officer and Empire Services, Inc.

On September 30, 2021,

the Company entered into a Series Z Preferred Stock Issuance Agreement with the Company’s Chief Executive Officer whereby the Company

received $ 1,000,000 in exchange for the issuance of:

(i) a $ 1,000,000 note payable;

and (ii) 250 Series Z Preferred Shares having a fair

value of $ 632,019 .

The note bears interest of 8 % per annum and is due within three days of the Company’s next closing of equity

financing of $ 3,000,000 or more.

The proceeds received were allocated to the debt and equity on a relative fair value basis.

debt discount of $ 387,262 was recognized with a corresponding increase in Additional paid-in capital.

Since the due date is contingent

upon a future event, the entire debt discount was amortized to interest expense immediately (See Note 11).

NOTE 15 – SUBSEQUENT EVENTS

1 unchanged sentence

after the balance sheet date but before the unaudited condensed consolidated financial statements are issued.

From July 1 to August 20, 2021 the Company received aggregate proceeds

of $ 114,996 from the issuance of a non-convertible note to the Company’s Chairman of the Board and Empires Services, Inc.

On September 30, 2021, MassRoots, Inc.

into definitive agreements to acquire the Company for consideration of (i) 495,000,000 shares of

Common Stock, (ii) within 3 business days of the closing of the Company’s next capital raise, repayment of a $ 1 million advance

made to purchase Empire’s Virginia Beach location and (iii) a promissory note in the principal amount of $ 3.7 million with a maturity

date of September 30, 2023.

The acquisition was effective October 1, 2021 upon the effectiveness of a Certificate of Merger in Virginia.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements