Kisses From Italy Inc. 10-Q

10-Q 1 kisses_10q-063020.htm QUARTERLY REPORT Table of Contents U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission File Number: 000-52898 Kisses From Italy, Inc. (Exact name of registrant as specified in its charter) Florida 46-2388377 (State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.) 80 SW 8 th Street Suite 2000 Miami, Florida 33130 (Address of principal executive offices) (305) 423-7129 (Registrant’s telephone number, including area code) _______________________________________________________________ Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: None Title of each class Trading Symbol(s) Name of each exchange on which registered Not applicable Not applicable Not applicable Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☑ No ☐ Indicate by check mark whether the registrant has submitted electronically , every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No As of August 11, 2020, there were 151,902,335 shares of the registrant's common stock outstanding. TABLE OF CONTENTS Page No. PART I FINANCIAL INFORMATION Item 1. Financial Statements 4 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18 Item 3. Quantitative and Qualitative Disclosures About Market Risk 23 Item 4. Controls and Procedures 23 PART II OTHER INFORMATION Item 1. Legal Proceedings 25 Item 1A. Risk Factors 25 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25 Item 3. Defaults Upon Senior Securities 26 Item 4. Mine Safety Disclosures 26 Item 5. Other Information 26 Item 6. Exhibits 26 Signatures 27 2 CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon our current assumptions, expectations, and beliefs concerning future developments and their potential effect on our business. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although the absence of these words does not necessarily mean that a statement is not forward-looking. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements. Factors that may cause or contribute actual results to differ from these forward-looking statements include, but are not limited to, for example: · adverse economic conditions; · the Company’s ability to raise capital to fund a portion of its operations; · industry competition; · the inability to attract and retain qualified senior management; · other risks and uncertainties related to the restaurant industry and our business strategy; and the impact of the Covid-19 pandemic on our operations. · the impact of the Covid-19 pandemic on our operations. All forward-looking statements speak only as of the date of this Report. Except to the extent required by law, we undertake no obligation to update any forward-looking statements or other information contained herein. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in or suggested by the forward-looking statements in this Report are reasonable, we cannot assure you that these plans, intentions or expectations will be achieved. 3 PART I – FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Our unaudited consolidated financial statements included in this Form 10-Q are as follows: Unaudited Consolidated Balance Sheets as of June 30, 2020, and December 31, 2019 5 Unaudited Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2020, and 2019 6 Unaudited Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2020, and 2019 7 Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020, and 2019 9 Notes to Unaudited Consolidated Financial Statements 10 4 Kisses From Italy Inc. (Unaudited) Consolidated Balance Sheets June 30, December 31, 2020 2019 ASSETS Current assets: Cash and cash equivalents $ 281,993 $ 26,841 Prepaid expenses – – Other receivable 4,364 4,442 Inventory 1,951 1,987 Total current assets 288,308 33,270 Property and equipment, net 32,696 59,114 Other Assets 2,565 2,664 Total assets $ 323,569 $ 95,048 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 73,376 $ 65,486 Accrued liabilities 150,875 143,276 Loans payable – 6,000 Total current liabilities 224,251 214,762 Notes payable 47,171 Convertible Notes 10,000 10,000 Total liabilities 281,422 224,762 Commitments and contingencies – – Stockholders' Equity: Preferred stock, Series A $0.001 par value. 1,500,000 shares authorized; zero shares shares issued and outstanding – – Preferred stock, Series B $0.001 par value. 5,000,000 shares authorized; zero shares shares issued and outstanding – – Preferred stock, Series C, 1,000,000, $0.001 par value 1,000,000 shares authorized; 29,610 shares and 50,000 shares issued and outstanding as of June 30, 2020 and December 31 2019, respectively 30 50 Common stock, $0.001 par value, 200,000,000 shares authorized; 144,202,335 and 126,550,335 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively 144,202 126,550 Additional paid-in capital 7,503,088 4,945,109 Retained earnings deficit (7,611,538 ) (5,207,491 ) Total Kisses From Italy Stockholders' Equity (Deficit) 35,782 (135,782 ) Non-controlling interest 6,365 6,068 Total stockholders' equity 42,147 (129,714 ) Total liabilities and equity $ 323,569 $ 95,048 The accompanying notes are an integral part of the consolidated financial statements. 5 Kisses From Italy Inc. (Unaudited) Consolidated Statements of Operations Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 Food sales $ 9,336 $ 162,429 $ 119,082 $ 278,001 Franchise sales 291,585 – 291,585 Total Revenue 300,921 162,429 410,667 278,001 Cost of goods sold 7,511 78,790 51,485 126,934 Gross margin 293,410 83,639 359,182 151,067 Operating expenses: Depreciation and amortization 13,034 10,730 25,985 21,258 Executive compensation 2,687 – 12,681 – Stock based compensation 1,981,939 – 2,018,240 – Payroll and other expenses 11,532 68,420 58,550 138,806 Rent 28,914 33,418 58,603 64,874 Consulting and professional fees 39,914 10,241 69,744 31,613 General and administrative 13,448 77,112 56,705 105,277 Total operating expenses 2,091,467 199,921 2,300,508 361,828 Income (loss) from operations (1,798,058 ) (116,282 ) (1,941,326 ) (210,761 ) Other income (expense) Interest income (expense), net (107,791 ) (26,004 ) (462,424 ) (73,686 ) Total other income (expense) (107,791 ) (26,004 ) (462,424 ) (73,686 ) Income (loss) before income taxes (1,905,849 ) (142,286 ) (2,403,750 ) (284,446 ) Provision for income taxes (benefit) – – – – Net loss (1,905,849 ) (142,286 ) (2,403,750 ) (284,446 ) Less: net gain(loss) attributable to non-controlling interests (1,707 ) (3,377 ) 297 (9,574 ) Net loss attributable to Kisses From Italy, Inc. $ (1,904,140 ) $ (138,909 ) $ (2,404,047 ) $ (274,872 ) Basic and diluted earnings (loss) per common share $ (0.01 ) $ (0.00 ) $ (0.02 ) $ (0.00 ) Weighted-average number of common shares outstanding: Basic and diluted 129,957,170 81,780,170 128,524,753 81,780,170 The accompanying notes are an integral part of the consolidated financial statements. 6 Kisses from Italy (Unaudited) Consolidated Statements of Changes in Stockholders' Equity June 30, 2020 and June 30, 2019 Preferred Stock Preferred Stock Preferred Stock Series A Series B Series C Shares Value Shares Value Shares Value December 31, 2018 – $ – – $ – – $ – Net income (loss) – – – – – – Non-controlling interest, net income (loss) – – – – – – Beneficial conversion feature of convertible notes – – – – – – Balance, March 31, 2019 – $ – – $ – – $ – Net loss – – – – – – Beneficial conversion feature of convertible notes – – – – – – Balance, June 30, 2019 – $ – – $ – – $ – Balance, December 31, 2019 – $ – – $ – 50,000 $ 50 Net income (loss) – – – – – – Non-controlling interest, net income (loss) – – – – – – Issuance of Series C Preferred stock – – – – 66,000 66 Beneficial conversion feature of Series C Preferred stock – – – – – – Stock issued for services – – – – – – Balance, March 31, 2020 – $ – – $ – 116,000 $ 116 Net income (loss) – – – – – – Non-controlling interest, net income (loss) – – – – – – Beneficial conversion feature of Series C Preferred stock – – – – – – Issuance of Series C Preferred stock – – – – 32,600 33 Conversion of Series C Preferred stock to common stock – – – – (118,990 ) (119 ) Stock issued for services – – – – – – Balance, June 30, 2020 – $ – – $ – 29,610 $ 30 (Continued) 7 Kisses from Italy (Unaudited) Consolidated Statements of Changes in Stockholders' Equity June 30, 2020 and June 30, 2019 (Continued) Additional Non- Total Common Stock Paid-in controlling Retained Stockholders' Shares Value Capital Interest Earnings Equity December 31, 2018 81,780,170 $ 81,780 $ 1,638,253 $ 27,160 $ (2,124,631 ) $ (377,438 ) Net income (loss) – – – – (135,962 ) (135,962 ) Non-controlling interest, net income (loss) – – – (6,197 ) – (6,197 ) Beneficial conversion feature of convertible notes – – 33,633 – – 33,633 Balance, March 31, 2019 81,780,170 $ 81,780 $ 1,671,886 $ 20,963 $ (2,260,593 ) $ (485,964 ) Net loss – – – (3,377 ) (138,909 ) (142,286 ) Beneficial conversion feature of convertible notes – – 20,913 – – 20,913 Balance, June 30, 2019 81,780,170 $ 81,780 $ 1,692,799 $ 17,586 $ (2,399,502 ) $ (607,338 ) Balance, December 31, 2019 126,550,535 $ 126,550.00 $ 4,945,109 $ 6,068 $ (5,207,491 ) $ (129,714 ) Net income (loss) – – – – (499,905 ) (499,905 ) Non-controlling interest, net income (loss) – – – 2,004 – 2,004 Issuance of Series C Preferred stock – – 66,424 – – 66,490 Beneficial conversion feature of Series C Preferred stock – – 351,920 – – 351,920 Stock issued for services 541,800 542 35,759 – – 36,301 Balance, March 31, 2020 127,092,335 $ 127,092 $ 5,399,212 $ 8,072 $ (5,707,396 ) $ (172,905 ) Net income (loss) – – – – (1,904,142 ) (1,905,849 ) Non-controlling interest, net income (loss) – – – (1,707 ) – (1,707 ) Beneficial conversion feature of Series C Preferred stock – – 106,300 – – 106,300 Issuance of Series C Preferred stock – – 32,567 – – 32,600 Conversion of Series C Preferred stock to common stock 2,480,000 2,480 (2,361 ) – – – Stock issued for services 14,630,000 14,630 1,967,370 – – 1,982,000 Balance, June 30, 2020 144,202,335 $ 144,202 $ 7,503,088 $ 6,365 $ (7,611,538 ) $ 42,147 The accompanying notes are an integral part of the consolidated financial statements. 8 Kisses From Italy Inc. (Unaudited) Consolidated Statements of Cash Flows Six Months Six Months Ended Ended June 30, June 30, 2020 2019 Cash flows from operating activities of continuing operations: Net income (loss) $ (2,404,047 ) $ (274,872 ) Net income loss attributable to non-controlling interest 297 (9,574 ) Common stock issued for services Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 25,985 21,258 Amortization of debt discount 458,220 54,545 Stock-based compensation for services 2,018,240 – Changes in operating assets and liabilities: Other assets 99 – Other receivable 78 – Prepaid expenses – – Inventory 36 – Accounts payable 7,892 29,130 Accrued liabilities 7,597 3,899 Net cash provided by (used in) operating activities 114,397 (175,614 ) Cash flows from investing activities: Purchase of fixed assets – (4,299 ) Net cash provided by (used in) financing activities – (4,299 ) Cash flows from financing activities: Proceeds/payments from short term borrowings - net (6,000 ) 3,658 Proceeds from notes payable 47,171 – Proceeds for the sale of convertible notes – 163,800 Proceeds from the sale of preferred stock 99,090 – Net cash provided by (used in) financing activities 140,261 167,458 Impact of foreign exchange 494 – Net increase (decrease) in cash and cash equivalents 254,658 (12,455 ) Cash and cash equivalents at beginning of period 26,841 22,877 Cash and cash equivalents at end of period $ 281,993 $ 10,422 Supplemental disclosure of cash flow information: Cash paid for interest $ – $ – Cash paid for income taxes $ – $ – The accompanying notes are an integral part of the consolidated financial statements. 9 Kisses From Italy, Inc. Notes to Unaudited Consolidated Financial Statements For the Three and Six Months Ended June 30, 2020, and 2019 NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Kisses From Italy Inc. (the “Company”) was incorporated in Florida on March 7, 2013. The Company’s main focus is to develop a fast, casual food dining chain restaurant business of corporate-owned restaurants and expanding through a nationwide/international franchise and territory sales program. The Company commenced operations in May 2015 by opening its first location in Fort Lauderdale, Florida. Three additional restaurants, which are located in various Wyndham Hotel properties in the Pompano Beach, Florida area, were then opened within the following ten months. All locations, which are in leased facilities, were fully operational by April 2016. In December 2017, the Company vacated one of its restaurants due to a hurricane and did not re-open that location in 2019. The Company opened its inaugural European location in Ceglie del Campo, Bari, Italy, in October 2019. In September 2019, the Company's common stock was approved for trading by FINRA and in mid-October 2019 was approved for up-listing by the OTC Markets Group to the OTCQB under the symbol “KITL”. The Company’s accounting year-end is December 31. COVID-19 On March 11, 2020, the World Health Organization (“WHO”) declared the Covid-19 outbreak to be a global pandemic. In addition to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions and volatility in the global financial markets. Most US states and many countries have issued policies intended to stop or slow the further spread of the disease. Covid-19 and the U.S’s response to the pandemic are significantly affecting the economy. There are no comparable events that provide guidance as to the effect the Covid-19 pandemic may have, and, as a result, the ultimate effect of the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the effects on the economy, the markets we serve, our business, or our operations. If our restaurants are required to be closed or only allowed to operate at less than full capacity, we will continue to incur certain fixed expenses such as rent payments currently of approximately $10,000 per month. All of the Company’s four corporate-owned restaurants which are located in Fort Lauderdale, Florida, Bari, Italy, and within the Wyndham Palm Aire and the Wyndham Sea Gardens Hotels and Resorts in Pompano Beach, Florida, have all fully re-opened. The Company’s hotel locations were closed longer than other sites due to CDC recommendations. The Company’s flagship Fort Lauderdale restaurant re-opened on May 1, 2020, its Bari, Italy location re-opened on June 20, 2020, The Wyndham Palm Aire location re-opened on July 11, 2020 and the Wyndham Sea Gardens location re-opened on July 22, 2020. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Management’s Representation of Interim Financial Statements The accompanying unaudited consolidated financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements at December 31, 2019, and 2018, filed as part of the Company’s Annual Report on Form 10-K and Form 10-K/A filed with the SEC on May 18, 2020, and May 29, 2020, respectively. 10 Basis of Presentation and Principles of Consolidation The consolidated financial statements of the Company have been prepared in accordance with GAAP. This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses or recognized when incurred. The consolidated financials include the accounts of the Company and its wholly-owned subsidiaries; Kisses from Italy 9 th LLC, Kisses from Italy-Franchising LLC, and Kisses from Italy Bari, Italy and its 70% owned subsidiary, Kisses-Palm Sea Royal LLC. All intercompany accounts and transactions are eliminated in consolidation. Going Concern The accompanying unaudited consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve months following the date of these financial statements. On a consolidated basis, the Company has incurred significant operating losses since inception. Because the Company does not expect that existing operational cash flow will be sufficient to fund presently anticipated operations, this raises substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company will need to raise additional funds and is currently exploring alternative sources of financing. Historically, the Company has raised capital through private placements of equity and convertible debt as interim measures to finance working capital needs and may continue its efforts to raise additional capital through the sale of common stock or other securities and obtain short-term loans. The Company will be required to continue to do so until its consolidated operations become profitable. Also, the Company has, in the past, paid for consulting services with its common stock to maximize working capital, and intends to continue this practice where feasible. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of 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. The most significant estimates relate to impairment of long-lived assets, valuation of financial instruments, income taxes, and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates. Revenue Recognition Sales, as presented in the Company’s consolidated statement of earnings, represents food and beverage product sold and is presented net of discounts, coupons, employee meals, and complimentary meals. Revenue from restaurant sales is recognized when food and beverage products are sold. On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). For the six months ended June 30, 2020, and June 30, 2019, the consolidated financial statements were not materially impacted as a result of the application of Topic 606. Inventory The inventory is comprised of alcoholic beverages at the Company’s new Bari location in Italy which opened in 2019. Our US locations do not have liquor licenses. The balance of inventory at June 30, 2020 and 2018 was $1,951 and $1,987, respectively. 11 Value Added Tax The Value Added Tax (“VAT”) is a broadly-based consumption tax which is assessed to the value that is added to goods and services. VAT applies to nearly all goods and services that are bought and sold within the European Union. In Italy where the Company operates, the VAT ranges between 4 and 10% for food products and alcohol. As of June 30, 2020 and June 30, 2019, the Company had a VAT net receivable of $4.364 and $4,442, respectively, and was classified as “Other Receivables” on its balance sheet. Non-controlling interest Non-controlling interest represents third-party ownership in the net assets of one of the Company’s consolidated subsidiaries. For financial reporting purposes, the assets and liabilities of our majority-owned subsidiary is consolidated with those of the Company’s wholly-owned subsidiaries, with any third-party investor’s interest shown as non-controlling interest. Cash and Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. On June 30, 2020, and December 31, 2019, the Company’s cash equivalents totaled $281,993 and $26,841, respectively. Property and equipment Property and equipment are stated at cost or fair value. Depreciation is computed by the straight-line method and is charged to operations over the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred. The carrying amount and accumulated depreciation of assets sold or retired are removed from the accounts in the year of disposal and any resulting gain or loss is included in the results of operations. The estimated useful lives of property and equipment are as follows: Computers, software, and office equipment 1 – 6 years Machinery and equipment 3 – 5 years Leasehold improvements Lesser of the lease term or estimated useful life Income taxes The Company accounts for income taxes under FASB ASC 740, “Accounting for Income Taxes” . Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. FASB ASC 740-10-05, “Accounting for Uncertainty in Income Taxes” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions every quarter to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit. 12 Stock-based Compensation The Company accounts for stock-based compensation using the fair value method following the guidance outlined in Section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This Section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. During the six months ended June 30, 2020, and June 30, 2019, stock-based compensation was $2,018,240 and $-0-, respectively. Leases The Company follows the guidance in ASC 840 “ Leases ,” which requires the Company to evaluate the lease agreements the Company enters into to determine whether they represent operating or capital leases at the inception of the lease. Net Loss per Share Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, "Earnings per Share." Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In March 2019, the FASB issued ASU 2019-01, Codification Improvements , which clarifies certain aspects of the new lease standard. The FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases in July 2018. Also in 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard. In November 2019 the FASB issued ASU 2019-10 which superseded ASU 2019-02 and deferred the effective date for the implementation of lease standards per Topic 842. As an emerging growth company, the Company has until the fiscal year beginning after December 15, 2020, to adopt ASC 842. While the Company continues to evaluate the impact of the new standard, the Company expects the adoption of this guidance will have not have any impact on its financial statements. NOTE 3 – GOING CONCERN AND LIQUIDITY As of June 30, 2020, and December 31, 2019, the Company had $281,993 and $26,841 in cash on hand, respectively, and for the three-month periods ended June 30, 2020, and 2019, the Company generated revenues of $300,921 and $162,429 and had losses of $1,904,140 and $138,909 respectively. As of June 30, 2020, the Company had a working capital surplus of $64,056 and a stockholders surplus of $42,147. During the three months ended June 30, 2020, the Company entered into a multi-unit development agreement pursuant to which, among other things, the Company granted development rights to open and operate up to 100 Kisses From Italy Italian restaurants in Canada using the Company’s proprietary recipes, formulae, techniques, trade dress, trademarks and logos (each a “Restaurant”) at locations approved by the Company. Under the terms of the Agreement the Company received a non-refundable fee of $291,585 USD (400,000 CAD). Management believes that with the receipt of these funds, the Company can continue operations for the next 12 months. 13 This was the largest transaction in the Company’s history and significantly improved their liquidity, stockholders equity and working capital. There can be no assurances that this type of transaction can be replicated in the future, or that the Company can generate cash from future operations or maintain its current cash position. The reports of the Company’s independent registered public accounting firm in the Company’s financial statements for the years ended December 31, 2019, and 2018, include an explanatory paragraph that describes substantial doubt about the Company’s ability to continue as a going concern. These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. It is the Company’s current intention to raise debt and/or equity financing to fund ongoing operating expenses. There is no assurance that financing, whether debt or equity, will be available to the Company, satisfactorily completed or on terms favorable to the Company. Any issuance of equity securities, if accomplished, could cause substantial dilution to existing stockholders and any debt financing may contain covenants limiting certain corporate actions. Any failure by the Company to successfully raise additional financing would have a material adverse effect on its business, including the possible inability to continue operations. NOTE 4 – PROPERTY AND EQUIPMENT The following table sets forth the components of the Company’s property and equipment at June 30, 2020, and December 31, 2019: June 30, 2020 December 31, 2019 Cost Accumulated Depreciation Net Book Value Cost Accumulated Depreciation Net Book Value Capital assets subject to depreciation: Furniture and equipment $ 64,539 (51,703 ) 12,836 $ 64,781 $ (45,587 ) $ 19,194 Leasehold improvements 175,715 (155,855 ) 19,860 175,916 (135,996 ) 39,920 Total fixed assets $ 240,254 (207,558 ) 32,696 $ 240,697 $ (181,583 ) $ 59,114 For the six-month periods ended June 30, 2020, and 2019, respectively, the Company recorded depreciation and amortization of $25,985 and $21,258. NOTE 5 – ACCRUED AND OTHER LIABILITIES The following table sets forth the components of the Company’s accrued liabilities at June 30, 2020, and December 31, 2019. June 30, 2020 December 31, 2019 Sales tax payable $ 1,836 7,630 Accrued interest payable 597 2,940 Payroll tax liabilities 148,442 132,706 Total accrued liabilities $ 150,875 143,276 The Company is in arrears on its payroll tax payments as of June 30, 2020. Included in the “payroll tax liabilities” as of June 30, 2020, is approximately $41,376 in interest and penalties. 14 NOTE 6 – LOANS PAYABLE On an as-needed basis, the Company secures lines of credit of approximately $10,000 to $25,000. The amount of credit available to be accessed is dependent on the amount of documented credit card receipts received by the Company’s restaurants. The due dates on these credit advances are typically between 90 and 180 days and the interest rates on these facilities are typically, approximately 32%, plus additional processing fees of approximately 5%. As of June 30, 2020, and December 31, 2019, loan payable balances were $0 and $6,000, respectively. Currently, the Company has no lines of credit outstanding and there can be no assurances that previous lenders will extend new lines of credit to the Company. NOTE 7 – CONVERTIBLE NOTES As of June 30, 2020, and December 31, 2019, the outstanding principal balance of the Company’s 8% unsecured convertible notes was $10,000 and $10,000, respectively. These notes are convertible into the Company’s common stock at a conversion price of $.0667 per share. NOTE 8 – PROMISSORY NOTES During the three months ended June 30, 2020, the Company issued three unsecured promissory notes in the aggregate principal amount of $47,171. The notes mature in three years and have an 8% interest rate. As of June 30, 2020 and June 30, 2019, the outstanding principal balance of these notes were $47,171 and $-0-, respectively. NOTE 9 – STOCKHOLDERS EQUITY Common Stock On June 30, 2020, and December 31, 2019, there were 144,202,335 and 126,550,335 shares of common stock issued and outstanding, respectively, with a $0.001 par value per share. In May 2018, the Company’s Board of Directors and shareholders approved an amendment to the Company’s Articles of Incorporation, increasing the number of authorized common stock to 200,000,000, par value $0.001 per share. Common Stock Issued in Private Placements During the six months ended June 30, 2020, and 2019, the Company did not accept any subscription agreements to purchase its common stock. Common Stock Issued in Exchange for Services During the six months months ended June 30, 2020, the Company issued 15,171,800 shares of common stock for services that were valued at $2,018,301. During the six months ended June 30, 2019, the Company did not issue any shares of its common stock for services. 15 Common Stock Issued Upon the Conversion of Series C Preferred to Common Stock During the six months ended June 30, 2020, holders of an aggregate of 118,990 shares of Series C Preferred stock converted their shares into an aggregate of 2,480,000 shares of common stock. There were no conversions during the six month period ended June 30, 2019. Preferred Stock On December 19, 2019, the Company filed a Certificate of Designation with the State of Florida designating 1,500,000 shares of the Company’s preferred stock as Series A Preferred Stock (“Series A Stock”), 5,000,000 shares as Series B Preferred Stock (“Series B Stock”) and 1,000,000 shares as Series C Preferred Stock (“Series C Stock”). Series A Stock The Series A Stock is not convertible. Each share of Series A Stock shall entitle the holder to three hundred (300) votes for each share of Series A Stock. Any amendment to the Certificate of Designation requires the consent of the holders of at least two-thirds of the shares of Series A Stock then outstanding. The holders of Series A Stock are not entitled to dividends until and unless determined by the Board of Directors. There were no shares of Series A Stock outstanding as of June 30, 2020, and December 31, 2019. No distribution shall be made to holders of shares of capital stock ranking junior to the Series A Preferred Stock upon liquidation, dissolution or winding-up of the Company. The Series A Stock ranks pari passu with the Series C Stock. Series B Stock The Series B Stock is convertible at any time by the holder into the number of shares of common stock of the Company based on two times the purchase price of the shares. The Board may establish a minimum conversion price (so that if the market price of the common stock of the Company drops below the issuance price, the conversion rate will then be based on the minimum price established by the Board and not the price paid for the shares). The holders of the Series B Stock shall not be entitled to voting rights except as otherwise required by law. The holders of Series B Stock are not entitled to dividends until and unless determined by the Board. There were no shares of Series B Stock outstanding as of June 30, 2020, and December 31, 2019. Series C Stock The Series C Stock is convertible at any time by the holder into the number of shares of common stock of the Company based on three times the purchase price of the shares. The Board has established a minimum price for the price paid of $0.10 per share. The holders of the Series C Stock shall not be entitled to voting rights except as otherwise required by law. The holders of Series C Stock are not entitled to dividends until and unless determined by the Board. There were 29,610 shares and 50,000 shares of Series C Stock, par value $0.001, which were purchased at $1.00 per share, outstanding as of June 30, 2020, and December 31, 2019, respectively. 16 NOTE 10 – COMMITMENTS AND CONTINGENCIES As of June 30, 2020, and December 31, 2019, the Company had four operating restaurants. The Company leases these spaces based upon the following schedules: · Kisses From Italy 9 th LLC based in Fort Lauderdale, Florida leases approximately 990 square feet of space at a cost of $2,650 per month through the period ended July 31, 2018. Beginning on August 1, 2018, the rent increased to $5,773 per month for eight months, and then was reduced to $3,274 per month. The lease ends on December 9, 2020. The lease has an optional automatic renewal provision. · Kisses From Italy-Palm Aire based in Pompano Beach, Florida leases approximately 2,300 square feet of space at a cost of $3,600 per month. The Company has a one-year automatic renewal provision for this lease on May 1st of each year under the same terms. · Kisses From Italy – Sea Gardens based in Pompano Beach, Florida leases approximately 600 square feet of space at a cost of $546 per month. The lease ended on August 1, 2018, and was renewed on the same terms. The Company has a one-year optional automatic renewal provision for this lease. · Kisses From Italy – based in Bari, Italy, leases approximately 2,200 square feet of space for 1,400 euros per month under the terms of a six year lease which ends on May 5, 2024 and has an optional automatic renewal provision for six years. The Company also rents furnished office space on a month to month basis in Miami, Florida at a cost of $223 per month which serves as its principal place of business. The Company will remain responsible for rent payments even if its restaurants are required to close or are permitted to open at limited occupancy, due to the continuing Covid-19 outbreak. NOTE 11 – SUBSEQUENT EVENTS On July 13, 2020, the Company issued its two executive officers, 3,600,000 shares each for services provided to the Company. On July 22, 2020, the Company issued 500,000 shares pursuant to the terms of a consulting agreement. On August 7, 2020, the Company used $35,000 to pay down $35,000 of its notes payable balance with incurring any prepayment penalty or having to pay any accrued interest on such note. 17 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward-looking statements in the following discussion and elsewhere in this report and any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on our behalf. We disclaim any obligation to update forward-looking statements. Overview We are a Florida corporation incorporated on March 7, 2013, focused on developing a fast, casual food dining chain restaurant business. We commenced operations by opening our initial corporately owned location in Fort Lauderdale, Florida, in May 2015. We opened three additional locations by April 2016, all in Southern Florida, through a working relationship with Wyndham Hotels. In September 2017, Hurricane Irma caused significant damage to the area. As a result of the damage from the Hurricane, our hotel locations closed due to the fact that the Wyndham hotel group had to halt operations at the respective hotel properties in order to begin the necessary repairs and renovations following the storm. All but one of our restaurants are located in timeshare developments. The storm impacted travel to Florida during this time. While our Fort Lauderdale location was reopened in early November 2017, we were only able to reopen two of the hotel locations in Pompano Beach in late January 2018. We also elected not to reopen our fourth location, as the damages were too excessive. If we can raise additional capital, of which there is no assurance, we intend to own and operate up to 10 of our restaurants and utilize them as a showcase in the marketing of our proposed franchise operations. In May 2017, we completed our National Franchise License which permits us to sell franchises in all of the United States, except New York, Virginia, and Maryland which licenses we hope to obtain if sufficient demand exists in the future. In September 2017, we completed the purchase of two franchise locations in Florida. We currently anticipate the commencement of the building and development of these locations by mid-2021. On October 24, 2019, we opened our first restaurant in Italy, at Strada Provinciale 70 #100, Via Vittorio Veneto 100 Ceglie del Campo, Bari, Italia which we intend to also use as a training facility for franchises in Europe. Management recently began scouting various locations in regions of Italy and believes that the regions of Rome and Puglia may offer opportunities for additional corporate-owned and franchise expansion. However, there are no agreements in place as of the date of this Report to open any new facilities, either Company-owned or franchises, and no assurances can be provided that we will expand our operations accordingly. In September 2019, the Company's common stock was approved for trading by FINRA and in mid-October 2019 was approved for up-listing by the OTC Markets Group to the OTCQB under the symbol “KITL”. The Company opened its inaugural European location in Ceglie del Campo, Bari, Italy, in October 2019. In January of 2020, the Company completed its first franchise agreement for a restaurant in the State of California. As a result of the COVID-19 pandemic, the opening of this restaurant has been delayed and is currently expected to begin operating in August, 2020 18 Recent Developments On June 18, 2020, Kisses From Italy Franchising LLC entered into a multi-unit development agreement (the “Development Agreement”) pursuant to which it granted development rights to Demasar Management Inc., a Canadian corporation (“Developer”) to open and operate up to 100 Kisses From Italy Italian restaurants in Canada. Under the Agreement, Developer is obligated to open a minimum of 20 restaurants by June 17, 2025. In consideration of the development rights, the Development Agreement provides for a franchise fee of $4,000 Canadian dollars (“CAD”) for each restaurant. Upon execution of the Development Agreement, the Developer paid $400,000 CAD to the Company, and the Company issued Denis Senecal, a director of the Developer, 9,500,000 shares of common stock of the Company. The Developer will have a right of first refusal to obtain the development rights to additional restaurants in Canada if it is in compliance with the Development Agreement and has opened the minimum 20 restaurants. If the Developer receives a bona fide offer from an unaffiliated third party to purchase the Developer’s rights under the Development Agreement, Kisses From Italy-Franchising LLC will have the option, exercisable for 30 days to purchase such business, If Kisses From Italy Franchising LLC does not exercise such option, the Developer may sell its rights to said third party for a $5,000 transfer fee. The Agreement contains certain non-competition and non-solicitation provisions. The Company and Developer will share profits for all locations developed and agreed to an allocation of franchise royalties. On June 17, 2020, the Company entered into a five-year distribution-financing-lead generation agreement (“Advisory Agreement”) with Denis Senecal pursuant to which he will provide business development, financial advisory and franchise lead generation services to the Company in consideration for the issuance of 9,500,000 shares of the Company’s common stock. Such common stock has “piggyback” registration rights for one year from the date of issuance for one registration statement. The Advisory Agreement will automatically be renewed for an additional five-year term unless either party notifies the other within 180 days prior to the expiration of the initial term that it desires not to renew the Agreement. During the three months ended June 30, 2020, the Company entered into one year investor relations agreements with two investor relations firms and issued an aggregate of 4,800,000 shares of common stock valued at $480,000. The $480,000 was expensed during the three months ended June 30, 2020 in the Company’s Statements of Operations. Covid-19 Pandemic On March 11, 2020, the World Health Organization declared the Covid-19 outbreak to be a global pandemic. In addition to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions and volatility in the global financial markets. Many states and countries have issued policies intended to stop or slow the further spread of the disease. There are no comparable events that provide guidance as to the effect the Covid-19 pandemic may have, and, as a result, the full impact of the pandemic continues to evolve, is highly uncertain, and is subject to change. Management is actively monitoring the situation but given the daily evolution of the Covid-19 outbreak, the Company is not currently able to estimate the full effects on the economy, the markets we serve, our business, or on our operations and financial condition. 19 As a result of Covid-19, our two restaurants located in Florida in the Wyndham hotels closed on March 17, 2020 and re-opened on July 11, 2020 and July 22, 2020 for the Wyndham Palm Aire and the Wyndham Sea Gardens, respectively. Our Fort Lauderdale location closed on April 1, 2020 and re-opened on May 1, 2020. The only restrictions currently imposed on our business are recommended social distancing guidelines along with the requirements that our employees wear masks. Our restaurant in Bari, Italy closed on March 1, 2020, and re-opened on July 1, 2020 and. may be subject to future closure due to Covid-19. As a result of these closures, revenue from our restaurants were severely impacted during the three months ended June 30, 2020. Going forward there can be no assurance that we will be allowed to remain open or that we can achieve historic sales levels in the near future. Results of Operations Comparison of Results of Operations for the three months ended June 30, 2020, and 2019 Revenue and Cost of Sales During the three months ended June 30, 2020, our revenues from food sales at our restaurants were $9,336 compared to $162,429 for the three months ended June 30, 2019, representing a decrease of $153,093. The decrease in revenue is attributable to the Covid-19 mandated shutdown of all of our locations. As discussed above in Recent Developments, we entered into a Development Agreement in which we received a fee of 400,000 CAD, or $291,585. This fee falls under the guidelines of ASC 606 which states that the entire amount of revenue can be recognized because we have no future performance obligations associated with the Agreement, and the fee is non-refundable. As a result we recorded the entire amount as revenue during the three months ended June 30, 2020. Cost of goods sold during the three months ended June 30, 2020, was $7,511 compared to $78,900 during the three months ended June 30, 2019. This decrease is attributable to lower sales volumes due to the impact of Covid-19. Operating expenses Operating expense increased to $2,091,467 during the three months ended June 30, 2020, compared to $199,921 during the three months ended June 30, 2019. The increase is primarily attributable to 1,981,939 in stock-based compensation expense in the three months ended June 30, 2020, compared to no stock-based compensation in the three months ended June 30, 2019. The stock-based compensation during the three months ended June 30, 2020 was comprised primarily of $480,000 related to compensation under investor relations agreements and $1,425,000 related to the Advisory Agreement. Excluding the stock-based compensation, operating expenses were $109,259 for the three months ended June 30, 2020 compared to $199,921 for the three months ended June 30, 2019, representing a decrease of 90,392. This decrease is attributable to expense reductions in all expense categories due to the impact of Covid-19. Other income and expense Other expense was $107,091during the three months ended June 30, 2020, compared to $26,004 during the three months ended June 30, 2019. The significant increase in other expenses is attributable to increased interest expense due to the issuance of Series C preferred stock with a beneficial conversion feature of $106,300 that was charged to interest expense during the three months ended June 30, 2020. 20 Net Loss During the three months ended June 30, 2020, we incurred a net loss of $1,905,849 and a net loss of $1,707 attributable to non-controlling interests compared to a net loss of $142,286 and a $3,377 net loss attributable to non-controlling interests for the three months ended June 30, 2019. The significant increase in the net loss during the three months ended June 30, 2020 is primarily attributable to an increase in operating expenses of $1,763,563, partially offset by an increase in revenues due to $291,585 in franchise revenue. Comparison of Results of Operations for the six months ended June 30, 2020, and 2019 Revenue and Cost of Sales During the six months ended June 30, 2020, our revenues from food sales at our restaurants were $119,082 compared to $278,001 for the six months ended June 30, 2019, representing a decrease of $158,010. The decrease in revenue is attributable to the Covid-19 mandated shutdown of all of our locations. As discussed above in Recent Developments, we entered into a Development Agreement in which we received a fee of 400,000 CAD, or $291,585. This fee falls under the guidelines of ASC 606 which states that the entire amount of revenue can be recognized because we have no future performance obligations associated with the Agreement, and the fee is non-refundable. As a result, we recorded the entire amount as revenue during the six months ended June 30, 2020. Cost of goods sold during the six months ended June 30, 2020, was $51,485 compared to $126,934 during the six months ended June 30, 2019. This decrease is attributable to lower sales volumes due to the impact of Covid-19. Operating expenses Operating expense increased to $2,300,508 during the six months ended June 30, 2020, compared to $361,828 during the six months ended June 30, 2019. The increase is primarily attributable to 2,018,240 in stock-based compensation expense in the six months ended June 30, 2020, compared to no stock-based compensation in the six months ended June 30, 2019. The stock-based compensation during the six months ended June 30, 2020 was comprised primarily of $480,000 related to compensation under investor relations agreements and $1,425,000 related to the Advisory Agreement. Excluding the stock-based compensation, operating expenses were $282,629 for the six months ended June 30, 2020 compared to $361,828 for the six months ended June 30, 2019, representing a decrease of 79,559. This decrease is attributable to expense reductions in all expense categories due to the impact of Covid-19. Other income and expense Other expense was $462,424 during the six months ended June 30, 2020, compared to $73,686 during the six months ended June 30, 2019. The significant increase in other expenses is attributable to increased interest expense due to the issuance of Series C preferred stock with a beneficial conversion feature of $458,220 that was charged to interest expense during the six months ended June 30, 2020. Net Loss During the six months ended June 30, 2020, we incurred a net loss of $2,404,047 and a net profit of $297 attributable to non-controlling interests compared to a net loss of $274,872 and a $9,574 net loss attributable to non-controlling interests for the six months ended June 30, 2019. The significant increase in the net loss during the six months ended June 30, 2020 is primarily attributable to an increase in operating expenses of $1,938,680 partially offset by an increase in revenues due to $291,585 in franchise revenue. 21 Liquidity and Capital Resources On June 30, 2020, we had $8,643 in cash and cash equivalents. Net cash provided in operating activities was $114,458 during the six months ended June 30, 2020, compared to net cash used of $(175,614) during the six months ended June 30, 2019. This increase is primarily attributable to our receipt of $291,585 in franchise fees during the six months ended June 30, 2020. There was no cash used in investing activities during the six months ended June 30, 2020, compared to net cash of $4,299 used in investing activities during the six months ended June 30, 2019, in which we purchased $2,000 worth of equipment. Net cash provided by financing activities was $140,261 for the six months ended June 30, 2020, compared to $167,458 during the six months ended June 30, 2019. The decrease in net cash provided from financing activities is primarily attributable to proceeds of $163,800 in 2019 from the sale of convertible notes, compared to the sale of Series C preferred stock of $99,090 and the issuance of $47,171 in promissory notes in the six months ended June 30, 2020. We currently believe that due to the $400,000 CAD or approximately $291,000 USD we received in connection with the Development Agreement described above, we can continue operations for the next 12 months. We estimate that we will need approximately $1,000,000 to fully effectuate our business development plans, including opening additional company-owned restaurants and continuing to develop and enhance the marketing of our franchise concept. Subject to the continued impact of Covid-19, we currently believe that we can open at least two additional restaurants for approximately $300,000. We may use some of the cash we received from the Development Agreement to open additional locations or for franchise marketing. We believe that continuing to open company-owned restaurants will assist us to market other locations. We cannot assure that additional funding will be available on a timely basis, on terms acceptable to us, or at all. While we have had discussions with potential investors and investment bankers, we have no agreement with any third party to provide us this additional financing and there can be no assurances that we will obtain this financing, either debt or equity or both, on favorable terms, or at all. Our inability to receive additional financing may have a significant negative impact on our continued development and results of our operations. Covid-19 has also caused significant disruptions to the global financial markets, which impacts our ability to raise additional capital. If the Company is unable to obtain adequate capital due to the continued spread of Covid-19, the Company may be required to reduce the scope, delay, or eliminate some or all of its planned operations. Going Concern Our consolidated financial statements were prepared assuming that we will continue as a going concern, which does not adjustments for the recoverability and the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve months following the date of these financial statements that may be necessary should we be unable to continue in operation. Our report from our independent registered public accounting firm for the fiscal year ended December 31, 2019, includes an explanatory paragraph stating there was substantial doubt about the Company's ability to continue as a going concern. Also, if the Company is unable to obtain adequate capital due to the continued spread of Covid-19, the Company may be required to further reduce the scope, delay, or eliminate some or all of its planned operations. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. 22 Off-Balance Sheet Arrangements We have no off-balance sheet arrangements Critical Accounting Estimates Management’s discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Our critical accounting policies are defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. See notes to our financial statements, Note 2 – Summary Of Significant Accounting Policies. Recent Accounting Pronouncements There were various accounting standards and interpretations issued recently, none of which are expected to have a material effect on the Company's operations, financial position, or cash flows. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K. ITEM 4. CONTROLS AND PROCEDURES. Disclosure Controls and Procedures – Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Report. These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2020. We believe that our financial statements presented in this quarterly report on Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein. 23 Inherent Limitations – Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all errors and all 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. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. 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. Because of 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, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data. Changes in Internal Control over Financial Reporting –. During the period covered by this report, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 24 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company's property is not the subject of any pending legal proceedings. ITEM 1A. RISK FACTORS We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Except as set forth below, there were no sales of equity securities sold that were not registered under the Securities Act and were not previously reported in a Current Report on Form 8-K filed by the Company. On January 13, 2020 we sold 19,900 shares of our Series C Preferred Stock and received $19,900 in proceeds. On January 21, 2020 we sold 4,000 shares of our Series C Preferred Stock and received $4,000 in proceeds. On February 4, 2020 we sold 10,000 shares of our Series C Preferred Stock and received $10,000 in proceeds. On March 2, 2020 we sold 15,000 shares of our Series C Preferred Stock and received $15,000 in proceeds. On March 25, 2020 we sold 5,000 shares of our Series C Preferred Stock and received $5,000 in proceeds. On March 31, 2020 we sold 2,500 shares of our Series C Preferred Stock and received $2,500 in proceeds. On April 9, 2020 we sold 1,600 shares of our Series C Preferred Stock and received $1,600 in proceeds. On June 4, 2020 we sold 1,000 shares of our Series C Preferred Stock and received $1,000 in proceeds. On June 5, 2020 we sold 5,000 shares of our Series C Preferred Stock and received $5,000 in proceeds. On June 15, 2020 we sold 5,000 shares of our Series C Preferred Stock and received $25,000 in proceeds. On May 20, 2020, the Company issued 2,200,000 shares to an investor relations firm pursuant to a one-year service agreement. On June 10, 2020, the Company issued 2,400,000 shares to an investor relations firm pursuant to a one-year service agreement. The above issuances did not involve any underwriters, underwriting discounts or commissions, or any public offering and we believe is exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof and/or Regulation D promulgated thereunder. 25 ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS Exhibit No. Description 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS XBRL Instance Document* 101.SCH XBRL Schema Document* 101.CAL XBRL Calculation Linkbase Document* 101.DEF XBRL Definition Linkbase Document* 101.LAB XBRL Label Linkbase Document* 101.PRE XBRL Presentation Linkbase Document* ______________________ * Pursuant to Rule 406T of Regulation S-T, these interactive data files are not deemed filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act or Section 18 of the Securities Exchange Act and otherwise not subject to liability. 26 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on August 12 , 2020. KISSES FROM ITALY, INC. By: /s/ Michele Di Turi Michele Di Turi, Principal Executive Officer By: /s/ Claudio Ferri Claudio Ferri Principal Financial Officer and Principal Accounting Officer 27