10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the quarterly period ended June 30, 2019

o   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ____________ to ____________

Commission file number:  333-226801

TEO Foods Inc.

(Exact name of small business issuer as specified in its charter)

Nevada	47-1209532
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

Blvd. Insurgentes 19801 Int. 4A

Tijuana, B.C. 22216

(Address of principal executive offices)

(619) 758-1973

(Registrants telephone number, including area code)

_____________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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.     x Yes   o 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).  x Yes   o 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”, “non-accelerated filer”, “smaller reporting company” or “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to extend the transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Ticker symbol(s)	Name of each exchange on which registered
Common Stock	None	None

As of August 18, 2019, there were 21,622,245 shares of the registrant’s common stock outstanding.  

1

Contents

		Page
		Number
PART I	FINANCIAL INFORMATION	3
Item 1	Interim Consolidated Financial Statements June 30, 2019	3
	Consolidated Balance Sheets	3
	Consolidated Statement of Operations and Comprehensive Income	4
	Consolidated Statement of Stockholders’ Equity	5
	Consolidated Statement of Cash Flows	6
	Notes to the Interim Consolidated Financial Statements	7-16
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4	Controls and Procedures	20
PART II	OTHER INFORMATION	22
Item 1	Legal Proceedings	22
Item1A	Risk Factors	22
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3	Defaults Upon Senior Securities	22
Item 4	Mine Safety Disclosures	22
Item 5	Other Information	22
Item 6	Exhibits	23
SIGNATURES		24

2

PART I - FINANCIAL INFORMATION

Item 1 - Interim Financial Statements June 30, 2019

TEO Foods Inc.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30, 2019			December 31, 2018
Assets
Current Assets
Cash and Cash Equivalents	$	114,183		$	2,139
Accounts Receivables, Net		410,502			-
Inventory, Net		351,371			-
Related Party Receivables		272,319			-
Notes Receivable, Related Party		150,499			-
Tax Receivables		972,318			-
Prepaid and Other Assets		12,605			380,000
Total Current Assets		2,283,797			382,139
Fixed Assets, Net		132,048			-
TOTAL ASSETS		2,415,845		$	382,139
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payables and Accrued Liabilities	$	1,058,404		$	17,184
Related Party Payables		1,202			274
License Fee Payable - Related Party		767,000			875,000
Notes Payable		134,000			134,000
Convertible Notes Payable – Current Portion		220,000			220,000
Total Current Liabilities		2,180,606			1,246,458
Long Term Liabilities
Convertible Notes Payable – Long-Term		-			100,000
Deferred Tax Liability		26,230			-
TOTAL LIBILITIES		2,206,836			1,346,458
Stockholders' Equity
Preferred Stock $0.001 par value, 10,000,000 shares authorized, 9,022,900 shares issued and outstanding		9,023			9,023
Common Stock, $0.001 par value, 490,000,000 shares authorized, 21,622,245 and 10,334,745 shares issued and outstanding, respectively		21,623			10,335
Additional Paid In Capital		1,168,229			47,017
Accumulated Deficit		(1,044,546	)		(1,030,694	)
Other Comprehensive Income		54,680			-
TOTAL EQUITY (DEFICIT)		209,009			(964,319	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,415,845		$	382,139

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

3

TEO Foods Inc.

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

	Six Months Ended						Three Months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Revenues	$	2,167,409		$	-		$	1,132,995			-
Cost of Sales		1,766,485			-			967,083			-
GROSS PROFIT		400,924			-			165,912			-
Operating Expenses
Payroll		278,026			-			128,762			-
General and Administrative		224,512			274			82,734			-
Rent and Lease		55,797			-			36,329			-
Professional Fees		67,157			2,500			38,947			2,500
Advertising and Marketing		45,417			-			18,801			-
Depreciation		8,929			-			5,358			-
Total Operating Expenses		679,838			2,774			310,931			2,500
NET OPERATING LOSS		(278,914	)		(2,774	)		(145,019	)		(2,500	)
Other Income (Expense)
Interest Expenses		(47,323	)		(1,170	)		(33,130	)		(1,170	)
Other Income (Expenses)		116,398			-			65,624			-
Bargain Purchase gain		222,217			-			-			-
Total Other Income (Expenses)		291,292			(1,170	)		32,494			(1,170	)
Net Income/(Loss) Before Income Tax		12,378			(3,994	)		(112,525	)		(3,670	)
Income Tax Expense		(26,230	)		-			-			-
NET LOSS		(13,852	)		(3,994	)		(112,525	)		(3,670	)
Other Comprehensive Income/(Loss)
Foreign currency Translation Adjustments		54,680			-			25,350			-
COMPREHENSIVE INCOME/(LOSS)	$	40,828		$	(3,994	)	$	(87,175	)	$	(3,670	)
Earnings per common share –basic & diluted	$	(0.0007	)		(0.0000	)	$	(0.0104	)		(0.0004	)
Weighted average common – basic & diluted		19,744,120			4,966,475			10,811,123			9,771,000

See accompanying notes to unaudited pro forma financial statements

4

TEO Foods Inc.

CONSOLIDATED STATEMENT OF EQUITY

(Unaudited)

	Preferred Stocks					Common Stock
	Shares			Amount		Shares			Amount		Paid -in Capital		Accumulated Deficit			Other Comprehensive Income		Total
Six months ended June 30, 2018
Balance December 31, 2017	10,000,000		$	10,000		-	$			$	-	$	(1,010,000	)	$	-		$(1,000,000)
Conversion of preferred stock	(977,100	)		(977	)	9,771,000			977		-		-			-		-
Net loss	-			-		-			-		-		(274	)		-		(274)
Balance June 30,2018	9,022,900			9,023		9,771,000			977		-		(1,010,274	)		-		(1,000,274)
Net income	-			-		-			-		-		(3,670	)		-		(3,670)
Balance June 30, 2018	9,022,900		$	9,023		9,771,000		$	977	$	-	$	(1,013,944	)	$	-		$(1,003,944)
Six months ended June 30, 2019
Balance December 31, 2018	9,022,900		$	9,023		10,334,745		$	10,335	$	47,017	$	(1,030,694	)	$	-		$(964,319)
Stock issued for acquisition of Targa	-			-		11,250,000			11,250		1,113,750		-				-	1,125,000
Stock issued for cash	-			-		37,500			38		7,462		-				-	7,500
Foreign currency translation adjustments	-			-		-			-		-		-			29,330		29,330
Net income	-			-		-			-		-		98,673			-		98,673
Balance June 30, 2019	9,022,900			9,023		21,622,245			21,623		1,168,229		(932,021	)		29,330		296,184
Net loss	-			-		-			-		-		(112,525	)		-		(112,525)
Foreign currency translation adjustments	-			-		-			-		-		-			25,350		25,350
Balance June 30, 2019	9,022,900		$	9,023		21,622,245		$	21,623	$	1,168,229	$	(1,044,546	)	$	54,680		$209,009

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

5

TEO Foods Inc.

CONSOLIDATED STATEMENT OF CASH FLOW

For the six months ended June 30,2019 and 2018

(Unaudited)

	June 30, 2019			June 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(13,852	)	$	(3,944	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation		8,929			-
Bargain Purchase Gain		(222,217	)		-
Change in Operating Assets and Liabilities:
Accounts Receivables		10,321			-
Receivables from Related Parties		(38,375	)		-
Inventory		142,186			-
Tax Receivable		(248,182	)		-
Prepaid and Other Assets		9,228			-
Accounts Payable and Accrued Expenses		420,650			3,670
Related Party Payables		928			374
Deferred Taxes		26,230			-
Net cash used in operating activities		95,846			100
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets		(14,486	)		-
Net Cash Received from Acquisition of Targa		6,504			-
Net cash provided by investing activities		(7,982	)		-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Issuance of Convertible Note Payable		120,000			100,000
Proceeds from Issuance of Notes Payable		-			25,000
Payments on Licensing Fee		(108,000	)		(43,000	)
Repayment of Convertible Note Payable		(50,000	)		-
Proceeds from Issuance of Common Stock		7,500			-
Net cash provided by financing activities		(30,500	)		82,000
Effect of Foreign Exchange Translation		54,680			-
Net Increase for the Period		112,044			82,100
Cash and Cash Equivalents, Beginning of the Period		2,139			-
Cash and Cash Equivalents, End of the Period	$	114,183		$	82,100
SUPPLEMENTAL INFORMATION
Cash Paid For:
Income Taxes	$	-		$	-
Interest	$	-		$	-
Disclosure of Non-Cash Investment and Finance Activities:
Elimination of convertible notes by offset against Notes Receivable, Related Party and Related Party Receivables	$	739,110		$	-
Elimination of Related Party Receivables and Payables offset	$	360,824		$	-

6

TEO Foods Inc.

NOTES TO THE FINANCIAL STATEMENTS

JUNE 30, 2019

(UNAUDITED)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Teo Foods Inc. (“TEO Foods” or the “Company”) was incorporated in the state of Nevada on December 27, 2012. On December 29, 2017, the Company filed an amendment to its articles of incorporation increasing its authorized capital to a total of 500,000,000 shares consisting of 490,000,000 shares designated as Common Stock, par value $0.001 per share, and 10,000,000 shares designated as Preferred Stock, par value $0.001 per share.

The Company’s principal activity is to produce and sell food packaged products for retail sale in the frozen, refrigerated and shelf stable categories. The Company has a license to use the TEO name and logo on food products it sells and to apply the TEO pasteurization/sterilization processes to its products for improved shelf life and safety.

On January 31, 2019, the Company executed the Stock Purchase Agreement with NERYS USA Inc. (“Nerys USA”). The Company issued the closing payments as described in Note 4. Pursuant to the terms of the purchase agreement, Commercial Targa S.A. de C.V. (“Targa”) became a wholly owned subsidiary of the Company.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to form 10-Q and Article 8 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2109 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. Notes to the unaudited financial statements that would substantially duplicate the disclosure contained in the audited financial statements for the fiscal year ending December 31, 2018 have been omitted. These interim financial statements are condensed and should be read in conjunction with audited financial statements and the footnotes thereto for the fiscal year ended December 31, 2018 included in the Company’s 10-K as filed with the Securities and Exchange commission on April 16, 2019

All amounts referred to in the notes to the financial statements are in United States Dollars ($) unless stated otherwise.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with a maturity date of three months or less, when purchased, to be cash equivalents.

Foreign Currency Translation

The Company subsidiary’s primary functional currency is the Mexican peso, but it’s reporting currency is the U.S. dollar. The balance sheet accounts are translated at exchange rates in effect at the end of the period and income statement accounts are translated at average exchange rates for the period. Translation gains and losses are included as a separate component of stockholders’ deficit.

7

Accounts Receivable

Accounts receivable are reported at the customers’ outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. The allowance for doubtful accounts at June 30, 2019 and December 31, 2018 was approximately, $44,000 and $43,000, respectively.

Inventory and Cost of Sales

Inventories are stated at the lower of cost or realizable value, using the average cost method. When an impairment indicator suggests that the carrying amounts of inventories might not be recoverable, the Company reviews such carrying amounts and estimates the net realizable value based on the most reliable evidence available at that time. An impairment loss is recorded if the net realizable value is less than the carrying value. Impairment indicators considered for these purposes are, among others, obsolescence, decrease in market prices, damage and a firm commitment to sell.

Property and Equipment

Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income.

Long-Lived Assets

The Company accounts for its long-lived assets in accordance with Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment. ASC 360 requires that long-lived assets be reviewed for impairment at least annually, or whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.

Beneficial Conversion Feature of Convertible Notes Payable

The Company considers whether a beneficial conversion feature ("BCF") exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note. The BCF of a convertible note is a reduction of the carrying amount of the convertible note, as a debt discount, and is credited to additional paid-in-capital. Such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense.

A contingent beneficial conversion feature in a convertible note payable with conversion terms that change upon the occurrence of a future event (ex: fair value of the underlying stock declines after the note issuance date) is recognized when the contingency is resolved.

8

Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the company expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount:

1. Identification of the promised goods in the contract;
2. Determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract;
3. Measurement of the transaction price, including the constraint of variable consideration;
4. Allocation of the transaction price of the performance obligations; and
5. Recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606, Revenue Recognition, at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligations when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time typically upon delivery.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received in the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has categorized all investments recorded at fair value based upon the level of judgment associated with the inputs used to measure their fair value.

Hierarchical levels, directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

● Level 1: Quoted prices in active markets for identical assets or liabilities that the organization has the ability to access at the reporting date.

● Level 2: Inputs other than quoted prices included in Level 1, which are either observable or that can be derived from or corroborated by observable data as of the reporting date.

● Level 3: Inputs include those that are significant to the fair value of the asset or liability and are generally less observable from objective resources and reflect the reporting entity's assumptions about the assumptions market participants would use in pricing the asset or liability.

9

The Company's financial instruments consist of advances from related party, notes payable, convertible notes payable and license fee payable. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of the respective instruments.

Loss Per Share of Common Stock

Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period.  The calculation of diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.  Securities with anti-dilutive effects on net earnings (loss) per share are excluded. For the three and six months ended June 30, 2019 and 2018, preferred shares and convertible notes payable convertible into common shares were excluded from the calculation of loss per common share as they were anti-dilutive.

Accounting Pronouncements Recently Adopted and Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-2), which establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.  ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and did not have a significant impact on the Company’s financial statements or disclosures.

NOTE 3 – GOING CONCERN

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has suffered recurring losses from operations and has insufficient working capital as of June 30, 2019 to develop its business plan and meet its obligation of the next 12 months. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders, the Company's ability to obtain necessary equity or debt financing to continue operations, and ultimately the Company's ability to generate profit from sales of packaged food products. These financial statements do not include any adjustments to classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company plans to obtain funds for operations through continued financial support from its stockholders, debt and private offerings of its equity.

NOTE 4 – STOCK PURCHASE AGREEMENT

On July 30, 2018, the Company entered into a Stock Purchase Agreement with Nerys USA to purchase all of the issued and outstanding equity of Targa.

On January 31, 2019, TEO Foods Inc. acquired 100% of the equity interest of Targa, a private entity, in exchange for $160,000 in cash, $220,000 and $552,000 secured convertible notes payable and 11,250,000 common shares. The acquisition was effective as of January 1, 2019. In addition, an earn-out provision was added which, if certain conditions are met, would require an additional secured convertible promissory note of $310,000 and the issuance of an additional 3,750,000 common shares.

10

In May of 2019, the purchase agreement was amended resulting in the earn-out provision being eliminated, the $220,000 (which had a principal balance remaining of $170,000) and $552,000 secured convertible notes payable, plus accrued interest, issued as part of the purchase price being assigned to Targa in exchange for an equal reduction of amounts owed to Targa by Nerys USA. In addition, Nerys USA assumed and settled an account payable balance due from Targa against amounts Targa owed to Nerys USA.

The assignment of the Nerys notes to Targa resulted in a $722,000 reduction in the convertible notes payable and reduction in liabilities for the accrued interest due transferred of $17,110. This also resulted in an equal reduction of $739,110 of Related Party Receivable and Notes Receivable due to Targa from Nerys USA. In addition, $360,824 of Related Party Payables to Nerys USA were offset against Related Party Receivables from Nerys USA to Targa.

Due to the state of operations of Targa, along with the economic impact of U.S. tariffs, the Company acquired Targa for less than the estimated fair value of its net assets. In accordance with ASC 805, Business Combinations, the Company has initially measured Targa’s identifiable assets acquired at $3,405,052 and the identifiable liabilities at $1,125,835, resulting in a net value of $2,279,217. The expected purchase price is $2,057,000, which resulted in an initial estimated bargain purchase gain of $222,217. The Company has reviewed its procedures used to identify and measure the assets acquired, the liabilities assumed and the consideration transferred and concluded that the procedures followed and the resulting measurements, subject to the conditions below, were appropriate. The Company also performed a review and determined that the business combination did not include any transactions that should be accounted for separately from the business combination.

The following unaudited pro forma financial results reflects the historical operating results of the Company, including the unaudited pro forma results of Targa for the six months ended June 30, 2018, as if this business combination had occurred as of January 1, 2018. The pro forma financial information set forth below reflects adjustments to the historical data of the Company to give effect to the Targa acquisition and the related equity issuances as if each had occurred on January 1, 2018. The pro forma information presented below does not purport to represent what the actual results of operations would have been for the period indicated, nor does it purport to represent the Company’s future results of operations.

	2018
Net Revenue	$	3,859,231
Net Loss	$	(463,817	)
Net Loss per Common Share – Basic & Diluted	$	(.029	)
Weighted Average Number of Shares of Common Stock Outstanding – Basic & Diluted		16,216,475

The calculations of pro forma net revenue and pro forma net loss give effect to the Targa business combination for the six months ended June 30, 2018 based on the historical net revenue and net income (loss), as applicable, of Targa. The operations for the six months ended June 30, 2019 are included in the accompanying statement of operations and comprehensive income. It does not give account to all purchase accounting adjustments as the purchase accounting has not been finalized. The Company has begun to assess the fair value of the various net assets acquired but has not yet completed this assessment. The Company is also in the process of identifying other intangible assets, such as customer relationships and know-how that may need to be recognized. Once identified, these other intangible assets, if any, will be recorded at their fair values. The Company is working to finalize the allocations as quickly as possible and anticipates that the allocation will not be final for approximately six months. Any adjustments necessary may be material to the consolidated balance sheet, but should not have a material impact to the June 30, 2019 reported operating results or cash flows.

11

NOTE 5 – ROYALTY AND LICENSE AGREEMENT

On September 30, 2017, the Company entered into a Master Agreement with TEO Inc. ("TEO"). TEO is the founder and majority controlling shareholder of the Company. The Master Agreement provides the Company a license to use the TEO name and logo on food products it sells and to apply TEO's pasteurization/sterilization processes to its products for improved shelf life and safety. Additional provisions provide the Company production rights to TEO's pasteurizer/sterilizer and rights to lease its own system when certain sales/production increase. Pursuant to the master agreement, the Company agreed to pay an initial $1 million fee in installments with $100,000 due on June 30, 2018, $300,000 due on December 31, 2018 and the remaining $600,000 due in 12 equal monthly payments with the first payment due on January 31, 2019. TEO Inc. has agreed to maintain the license through December 31, 2019 and accrue and accept payments due as funds are available. As of June 30, 2019, the Company has paid $233,000 toward the license. Commencing January 1, 2020, a use/royalty and service fee of 5.5% of the Company's gross revenue for food sales processed using TEO's intellectual property is payable quarterly.  The ongoing licensing is maintained by meeting minimum annual use/royalty and service fees. The Company may pay for the difference between the actual use and the minimum to maintain the license. The annual minimum is listed as follows:

Year	Minimum Service Fee
2020	$   500,000
2021	750,000
2022	1,000,000
Thereafter	Increase 10% per year

As of June 30, 2019, and December 31, 2018, the outstanding balance of the license fee payable was $767,000 and $875,000, respectively

NOTE 6 – NOTES PAYABLES

Notes Payable

On July 31, 2018, the Company issued a note for $100,000 in principal bearing interest at 8% maturing on October 31, 2018. This note was subsequently amended to extend the maturity date to December 31, 2019. As of June 30, 2019 and December 31, 2018, the outstanding principal balance of the note was $100,000.

On December 10, 2018, the Company issued a note for $34,000 in principal bearing interest at 8% maturing on June 10, 2019. This note was subsequently amended to extend the maturity date to December 31, 2019. As of June 30, 2019 and December 31, 2018, the outstanding principal balance of the note was $34,000.

12

Convertible Note Payable

On June 28, 2018, the Company issued a note for $100,000. The note is for a two-year term and bears an 8% interest rate, due at maturity. The note is convertible into common shares at a 20% discount to the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share.

On November 20, 2018 the Company issued a note for $220,000. The note was for a two-year term and bore an 8% interest rate, due at maturity. The note was convertible into common shares at a 20% discount to the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share. In February of 2019, the Company made a payment on the principal of $50,000 and in May of 2019, the note was settled (see Note 4).

On January 31, 2019 the Company issued a note for $552,000. The note was for a two-year term and bore an 8% interest rate, due at maturity. The note was convertible into common shares at a 20% discount to the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share. In May of 2019, the note was settled (see Note 4).

On February 4, 2019, the Company entered into a purchase agreement with one investor for the purchase of up to an aggregate of $350,000 in convertible notes payable in three payments commencing with the first in the amount of $120,000 on February 4, 2019, the second on April 1, 2019 in the amount of $110,000 and the third on June 1, 2019 in the amount of $120,000. The investor did not make the second purchase on April 1, 2019 or the third purchase on June 1, 2019. The purchase provisions of the agreement have expired with only the first purchase executed. The $120,000 note purchased in February can be converted to common stock at $0.20 per share or the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share and converts automatically upon certain conditions. The note bears no interest until June 30, 2019 and then bears 8% interest, if not converted to common stock.

As of June 30, 2019, there is not a quoted bid price available as the Company’s shares are not listed on any exchanges. As the minimum conversion rate at the time of issuance is greater than or equal to the current stock value based on other similar transactions, these notes are not deemed to have an embedded derivative associated with them.

NOTE 7 – EQUITY

Preferred Stock

Each share of Class A Preferred Stock may be converted by the holder upon request of the holder into 10 shares of common stock. Each holder is entitled to 100 votes for each share of Class A Preferred Stock held on the record date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company (and written actions of stockholders in lieu of meetings) with respect to any and all matters presented to the stockholders of the Company for their action or consideration. The holders are entitled to dividends, if any, as declared by the Company and participate pari passu with the common stock of the Company at the conversion rate.

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Common Stock Sales 

In January 2019, the Company sold a total of 37,500 common shares at $0.20 per share to three purchasers for a total of $7,500.

NOTE 8 - INCOME TAXES

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate is 21%.

The provision for Federal income tax consists of the following June 30, 2019 and December 31, 2018:

Federal income tax benefit attributable to:	June 30, 2019			December 31, 2018
Current Operations	$	4,196		$	4,346
Less: valuation allowance		(4,196	)		(4,346	)
Net provision for Federal income taxes	$	-		$	-

The cumulative tax effect at the expected rate of 21% of significant items comprising our net deferred tax amount is as follows:

Deferred tax asset attributable to:	June 30, 2019			December 31, 2018
Net operating loss carryover	$	9,450		$	5,254
Less: valuation allowance		(9,450	)		(5,254	)
Net deferred tax asset	$	-		$	-

As of June 30, 2019, the Company has recorded an estimated tax liability of $26,230 related to the bargain purchase gain; however, the Company is still evaluating the purchase accounting, so this estimate may change.

At June 30, 2019, the Company had net operating loss carry forwards of approximately $45,000 that may be offset against future taxable income. No tax benefit has been reported in the June 30, 2019 or December 31, 2018 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act (the “Tax Act”). The Tax Act establishes new tax laws that affects 2018 and future years, including a reduction in the U.S. federal corporate income tax rate to 21% effective January 1, 2018. For certain deferred tax assets and deferred tax liabilities.

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Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.

ASC 740, Income Taxes, provides guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. ASC 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than- not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of June 30, 2019, the Company had no accrued interest or penalties related to uncertain tax positions.

NOTE 9 - RELATED PARTY TRANSACTIONS

The Company has various related party receivables and payables derived from normal operating activities. These balances are non-interest bearing and are periodically settled as cash flow permits.

In addition, at June 30, 2019 and December 31, 2018, the Company had revolving receivables from related parties of $272,319 and $0, respectively.

As of June 30, 2019, and December 31, 2018, the Company had notes receivable from related parties of $150,499 and $0, respectively.

Preferred Share Issuance and Conversion

On March 31, 2018, the Company issued 9,771,000 common shares to TEO Inc. for the conversion of 977,100 Class A Preferred Stock. TEO Inc. directed that the common shares resulting from the conversion be issued to the shareholders of TEO Inc. The common shares were issued to 31 shareholders with 78% of the shares controlled by the Company’s sole officer and director.

Master License Agreement

On September 30, 2017, the Company entered into a Master Agreement with TEO, the founder and majority controlling shareholder of the Company. See Note 5.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Neither the Company nor its assets are subject to any legal action other than those that arise in the normal course of business.

NOTE 11 – CONCENTRATIONS

Cash Deposit

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At June 30, 2019 no cash balances exceeded the federally insured limit.

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Co-Pack Agreement

On April 20, 2018, the Company entered into a co-packing agreement with Targa. Targa is located in Tijuana, Mexico and produces and sells its own brands of products in Mexico which includes the NERYS line of imported California cheese products, frozen pizzas, various pasta meals and other products sold in major stores such as Wal-Mart, 7-Eleven, Soriana, OXXO and others.

Targa is currently the Company's only vendor contracted to produce its products. The Company acquired Targa in January of 2019. See Note 4.

NOTE 12 – TAX RECEIVABLES

Tax Receivables which are credits from the Mexican taxing authority. The Company has accumulated IVA tax payments that exceeded its IVA tax liabilities over the past several years. The Company has begun to apply for refunds of these accumulated overpayments and expect to obtain these refunds during 2019.

NOTE 13 – INVENTORY

At June 30, 2019, inventory consisted of approximately $351,000 of raw materials and finished goods in a warehouse in Tijuana, Mexico. The Company has an allowance of approximately $8,000 for shrinkage as of June 30, 2019.

NOTE 14 – FIXED ASSETS

At June 30, 2019, fixed assets consisted of approximately $10,000 of furniture and equipment, $169,000 of machinery, $4,000 of computers and $15,000 of vehicles. Accumulated depreciation was approximately $130,000 as of June 30, 2019 and net fixed assets were approximately $68,000. Depreciation expense for the six months ended June 30, 2019 and 2018 was $8,929 and $0, respectively. The estimated useful lives range from 3 to 10 years.

NOTE 15 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events for recognition and disclosure through August 19, 2019 which is the date the financial statements were available to be issued. No other matters were identified affecting the accompanying financial statements and related disclosures.

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Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations

The following Management's Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto. The Management's Discussion and Analysis may contain “forward-looking statements.” Any statements that are not statements of historical fact are forward-looking statements.

These statements are based on the current expectations, forecasts, and assumptions of our management and are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements are sometimes identified by language such as “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “projects,” “future” and similar expressions and may also include references to plans, strategies, objectives, and anticipated future performance as well as other statements that are not strictly historical in nature.

The risks, uncertainties, and other factors that could cause our actual results to differ materially from those expressed or implied in this Quarterly Report on Form 10-Q include:

● our ability to successfully develop and sell our products;

● our ability to obtain additional financing at favorable rates to maintain and develop our operations; and

● competitive conditions in our industry.

● the ability to attract and retain key personnel;

There may be other factors that may cause our actual results to differ materially from the forward-looking statements. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition. Readers should carefully consider this information as well as the risks and other uncertainties described in our other filings made with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements. They reflect opinions, assumptions, and estimates only as of the date they were made, and we undertake no obligation to publicly update or revise any forward-looking statements in this Quarterly Report on Form 10-Q, whether as a result of new information, future events or circumstances, or otherwise.

Critical Accounting Policies and Estimates

The 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 reported amounts of assets, liabilities, revenues and expenses. We have identified the following accounting policies that we believe are key to an understanding of our financial statements. These are important accounting policies that require management’s most difficult, subjective judgments.

Beneficial Conversion Feature of Convertible Notes Payable

A beneficial conversion feature ("BCF") exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note. BCF of a convertible note is a reduction of the carrying amount of the convertible note, as a debt discount, and is credited to additional paid-in-capital. Such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense.

A contingent beneficial conversion feature in a convertible note payable with conversion terms that change upon the occurrence of a future event (ex: fair value of the underlying stock declines after the note issuance date) is recognized when the contingency is resolved.

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Recent Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update (“ASM”) No. 2016-02, Leases, (ASU 2016-2), which establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.  ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and did not have a significant impact on our financial statements or disclosures.

Overview

The Company was incorporated in the state of Nevada on December 27, 2012, but did not commence operations until September of 2017.

The Company intends to produce and sell packaged food products for retail in the frozen, refrigerated and shelf stable categories. The Company has a license to use the TEO name and logo on food products it sells and to apply the TEO pasteurization/sterilization processes to its products for improved shelf life and safety.

The Company will initially sell a line of TEO branded packaged food products in the refrigerated meal and meal component categories. The initial markets are domestically and in Mexico.

On January 31, 2019, we completed an acquisition of Commercial Targa S.A. De C.V. ("Targa"). Targa is located in Tijuana Mexico and produces and sells its own brands of products in Mexico which includes the NERYS line of imported California cheese products, frozen pizzas, various pasta meals and other products sold in the major stores such as Wal-Mart, 7-Eleven, Soriana, OXXO and others.

We recently moved our business offices to our subsidiary, Targa where we are continuing to develop our packaged products for initial retail placements in Mexico. We have met with the buyers of our current customers and they have expressed a willingness to place the new products.

We have remodeled the cheese processing area, revised production processes, removed and replaced some obsolete equipment at the facility in Mexico. The pizza and meal processing area has been shut down and is being prepared for remodeling and revision of production processes. We have begun to replace some of the pizza and meal production equipment as part of the remodeling.

The rework of the existing production facility is more extensive than originally anticipated and therefore we expect the production planning, formulation, equipment and supply lead times, testing, validation, branding and sales of the new trayed meal products will extend into 2020 for a limited regional new product offering. This assumes that we are able to secure additional capital to purchase the necessary equipment, supplies (trays, film, carton/print materials…), retain consultants/staff and provide for other costs of production.

We have received equity and debt investments both from insiders and from private investors. As we expand operational activities, we may continue to experience operating losses and/or negative cash flows from operations and may be required to obtain additional financing to fund operations. There can be no assurance that we will be able obtain additional financing, if at all or upon terms that will be acceptable to us.

Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in our stage of development. Such risks include, but are not limited to, an evolving business model and the management of growth.

To address these risks we must, among other things, implement and successfully execute our business and marketing strategy and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

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Results of Operations

Results of Operations for the Six Months Ended June 30, 2019 and 2018

During the six-month periods ended June 30, 2019 and 2018, the Company had $2,167,409 and $0 in revenue, respectively. The change in revenue was a result of the completion of the acquisition of Targa. The revenue from the operations of Targa are primarily sales of food products which include packaged cheese under the retail brand Nery’s, frozen pizzas, frozen pasta meals and food service sales of cheese, pizza sauce, flour and pizza toppings.

The Company began operations with the entry into a Master Agreement with TEO Inc. ("TEO") in September 2017. TEO is the founder and majority controlling shareholder of the Company. The Master Agreement provides the Company a license to use the TEO name and logo on food products it sells and to apply TEO's pasteurization/sterilization processes to its products for improved shelf life and safety. Additional provisions provide the Company production rights to TEO's pasteurizer/sterilizer and rights to lease its own system when certain sales/production increase.

During the six-month periods ended June 30, 2019 and 2018, we had general and administrative expenses of $224,512 and $274, respectively. Payroll expenses were $278,026 and $0 during the six-month periods ended June 30, 2019 and 2018, respectively. The increase is due to the acquisition of Targa operations.

Interest expense was $47,323 and $1,170 for the six-month periods ended June 30, 2019 and 2018, respectively. This interest is related to notes payable.

The Company's net loss for the six-month period ended June 30, 2019 and 2018 was $13,852 and $3,994, respectively. Although the six-month period ended June 30, 2019 had a net operating loss of $278,914 this was offset by the Bargain Purchase Gain of $222,217 related to the acquisition.

Results of Operations for the Three Months Ended June 30, 2019 and 2018

During the three-month periods ended June 30, 2019 and 2018, the Company had $1,132,995 and $0 in revenue, respectively. The change in revenue was a result of the completion of the acquisition of Targa.

During the three-month periods ended June 30, 2019 and 2018, we had general and administrative expenses of $82,734 and $0, respectively. Payroll expenses were $128,762 and $0 during the three-month periods ended June 30, 2019 and 2018, respectively. The increase is due to the acquisition of Targa operations.

Interest expense was $33,130 and $1,170 for the three-month periods ended June 30, 2019 and 2018, respectively. This interest is related to notes payable.

The Company's net loss for the three-month period ended June 30, 2019 and 2018 was $112,525 and $3,670, respectively. Although the three-month period ended June 30, 2019 had a net operating loss of $145,019 this was offset by the Bargain Purchase Gain of $222,217 related to the acquisition.

Targa has experienced a significant loss in sales primarily resulting from the retaliatory tariffs Mexico has placed on imports of cheese produced in the USA. In June of 2018, the USA placed a tariff on steel imported from Mexico to the USA. Mexico retaliated with tariffs on imports of cheese produced in the USA. The tariffs ranged from 20% to 25%. Targa lost customers as a result. The tariffs were lifted on May 20, 2019. There can be no assurance that new tariffs won’t be imposed without warning.

We have been working to recover the loss of sales. We have sought to offset lost revenue by increasing revenue from converting services. Targa received the necessary approvals in late March 2019 to operate as a maquiladora enabling it to import cheese from the USA, process it and export it back to the USA without incurring tariffs in Mexico. Although this will not provide relief from any future tariffs on cheese sales in Mexico, it may insulate us from future tariffs on sales back to the USA.

We expect to generate revenue for cutting, shredding and packaging of products to be exported back to the USA. Targa has received orders for processing in Mexico and the USA and is continuing to work to develop our converting services.

Expenses are expected to increase as our operations develop and we begin to introduce new products into the market.

Liquidity and Capital Resources

At June 30, 2019, we had total assets of $2,415,845 and total liabilities of $2,206,836. As of December 31, 2018, we had total assets of $382,139 and total liabilities of $1,346,458. The Company recorded a deemed dividend of $1 million for the initial license fee payable to TEO. During the six-month period ended June 30, 2019, the Company paid $108,000 toward the current portion of the license fee payable.

Net cash provided by investing activities for the six-month period ended June 30, 2019 amounted to $7,982.

Cash provided from financing activities for the six-month period ended June 30, 2019 amounted to ($30,500) which consisted of $120,000 received through the issuance of a convertible note, $50,000 repayment of a convertible note, $7,500 in proceeds from the sale of common stock and deemed dividend payment for license of $108,000 to TEO pursuant to a license agreement.

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Over the next twelve months, we believe that we will require additional capital and anticipated funds from operations to further develop and sustain our operations. The Company will need to seek additional financing to expand operations and create revenue with the introduction of its products to the market. The TEO license requires future payments and royalty payments on related revenue. The capital requirements for development of our business based on the TEO license has not yet been determined and the implementation plan for this segment is currently under revision due to the recent acquisition of Targa.

We believe that the acquisition of Targa with its production facilities and retail placements will help support the introduction of our products into the market. We believe the acquisition further enhances the prospects of increasing sales of the Nery's brands by developing domestic sales of those product in addition to the introduction of new TEO products.

We believe that we will need to raise an additional $1,000,000 over the next 12 months and intent to seek additional investment through a private or a public equity offering. We will use the proceeds to cover our product development, auditing and accounting costs, licensing, necessary equipment, supplies (trays, film, carton/print materials…), retain consultants/staff, provide for other costs of production and other working capital needs.

There can be no assurance that we will be able obtain additional financing, if at all or upon terms that will be acceptable to us. There can, moreover, be no assurance of when, if ever, we will complete the acquisition of Targa or our operations become profitable.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements or financing activities with special purpose entities. 

Going Concern

The Company financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has suffered recurring losses from operations and has insufficient working capital as of June 30, 2019. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders, the Company's ability to obtain necessary equity or debt financing to continue operations, and ultimately the Company's ability to generate profit from sales of packaged food products. These financial statements do not include any adjustments to classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company plans to obtain fund for operations through continued financial support from its stockholders, debt and private offerings of its equity.

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

Not required for Smaller Reporting Companies.

Item 4 - Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Principal Executive Officer and Principal Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”).  Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that information required to be disclosed in the reports that we file or submit under the Exchange Act reports is (1) recorded, processed, summarized and reported within the periods specified in the Commission’s rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

20

Internal control systems, no matter how well designed and operated, have inherent limitations.  Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented.  Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.

Management will continue to review and make any changes it deems necessary to the overall design of the Company’s internal control over financial reporting, including implementing improvements in policies and procedures. We are committed to a proper internal control environment and will continue to implement measures to improve the Company’s internal control over financial reporting in response to our continued operational development.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended June 30, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

No disclosure required.

Item 1A - Risk Factors

Not required for Smaller Reporting Companies.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

No disclosure required.

Item 3 - Defaults Upon Senior Securities

No disclosure required.

Item 4 – Mine Safety Disclosures

No disclosure required.

Item 5 - Other Information

No disclosure required.

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Item 6 - Exhibits

Index to Exhibits

Exhibit No.	Description
10.1*	Stock Purchase Agreement Amendment 3.
31.1*	Certification of Principal Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
31.2*	Certification of Principal Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
32.1*	Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document.
101.SCH**	XBRL Taxonomy Extension Schema Document.
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document.

* Filed herewith

** Furnished herewith

+ Each of these Exhibits constitutes a management contract, compensatory plan, or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TEO Foods Inc.
Date:  August 19, 2019	By:	/s/ Jeffrey H. Mackay
		Jeffrey H. Mackay, CEO and President
		Principal Executive Officer

Date:  August 19, 2019	By:	/s/ John O’Keefe
		John O’Keefe, Chief Financial Officer
		Principal Financial Officer

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EX-10

Exhibit 10.1

STOCK PURCHASE AGREEMENT

Amendment 3

Amendment 3 to the STOCK PURCHASE AGREEMENT by and among TEO FOODS, INC., a Nevada corporation (“Buyer”), NERYS USA INC., a Nevada corporation, each of the Persons set forth on Schedule A thereto (“Sellers”), and COMERCIAL TARGA, S.A. de C.V., a Mexican corporation (the “Company”).

RECITALS

WHEREAS, Sellers, Buyer and Company desire to amend certain terms of that certain Stock Purchase Agreement between the parties that was effective on July 30, 2018, as amended November 9, 2018 and January 31, 2019.; and

                NOW, THEREFORE, in consideration of the premises and mutual covenants contained in this Agreement and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound hereby, agree to amend the Agreement as follows:

1. Section 2.2 (d) shall be terminated and fail as of the date of this amendment. No additional consideration shall be payable related to the future performance of the Company.

2. Sellers shall assume a $360,824 debt due to Comercializadora Nery's LLC from the Company and the Company shall apply a credit of the same amount to the debt due to the Company from the Sellers.

3. Sellers shall assign all notes outstanding from Purchaser to the Company and the Company shall credit same amount to the debt due to the Company from the Sellers.

FURTHER, the buyer agrees to waive any claims against Sellers for representations or omissions to the Purchaser regarding the business prospects and financial status of the Company.

IN WITNESS WHEREOF, the Parties hereto have executed this amendment to the Agreement on May 6, 2019.

BUYER:
TEO FOODS, INC., a Nevada corporation
By:	/s/Jeffrey Mackay                                      5/21/19
	Jeffrey H. Mackay
	President
SELLERS:
NERYS USA Inc., a Nevada Corporation
By:	/s/ John Cathcart
	John Cathcart
	President
Sandro Piancone, an individual
By:	/s/ Sandro Piancone
	Sandro Piancone
THE COMPANY:
COMERCIAL TARGA, S.A. de C.V., a Mexican corporation
By:	/s/ Sandro Piancone
	Sandro Piancone
	Authorized Signatory

EX-31

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a) OR RULE 15d-14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

I, Jeffrey H. Mackay, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TEO Foods Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within that entity, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated August 19, 2019

/s/ Jeffrey H. Mackay

Jeffrey H. Mackay

Chief Executive Officer and President

Principal Executive Officer

EX-31

Exhibit 31.2

RULE 13a-14(a) OR RULE 15d-14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

I, John O’Keefe, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TEO Foods Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a): Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others

b): within that entity, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the

effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most

recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably

likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 19, 2019

/s/ John O’Keefe

John O’Keefe

Chief Financial Officer and Principal Financial Officer

EX-32

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of Title 18, United States Code), the undersigned officer of TEO Foods Inc., (the “Company”) hereby certifies with respect to the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2019 as filed with the Securities and Exchange Commission (the “Report”) that to his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated August 19, 2019

/s/ Jeffrey H. Mackay

Jeffrey H. Mackay

Chief Executive Officer and President

Principal Executive Officer

EX-32

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of Title 18, United States Code), the undersigned officer of TEO Foods Inc., (the “Company”) hereby certifies with respect to the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2019 as filed with the Securities and Exchange Commission (the “Report”) that to his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 19 , 2019

/s/ John O’Keefe

John O’Keefe

Chief Financial Officer and Principal Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 18, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	TEO Foods Inc.
Entity Central Index Key	0001612188
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity an Emerging Growth Company?	true
Is Entity a Small Business?	true
Entity Ex Transition Period	false
Is Entity's Reporting Status Current?	Yes
Entity Shell Company	false
Entity File Number	333-226801
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	NV
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		21,622,245
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2019

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Current assets:
Cash and Cash Equivalents	$ 114,183	$ 2,139
Accounts Receivables, Net	410,502	0
Inventory, Net	351,371	0
Related Party Receivables	272,319	0
Notes Receivable, Related Party	150,499	0
Tax Receivables	972,318	0
Prepaid and Other Assets	12,605	380,000
Total Current Assets	2,283,797	382,139
Fixed Assets, Net	132,048	0
Total Assets	2,415,845	382,139
Current liabilities
Accounts Payables and Accrued Liabilities	1,058,404	17,184
Related Party Payables	1,202	274
License Fee Payable	767,000	875,000
Notes Payable	134,000	134,000
Convertible Notes Payable - Current Portion	220,000	220,000
Total Current Liabilities	2,180,606	1,246,458
Long Term Liabilities
Convertible Notes Payable - Long-Term	0	100,000
Deferred Tax Liability	26,230	0
TOTAL LIBILITIES	2,206,836	1,346,458
Stockholders' Equity
Preferred Stock $0.001 par value, 10,000,000 shares authorized, 9,022,900 shares issued and outstanding	9,023	9,023
Common Stock, $0.001 par value, 490,000,000 shares authorized, 21,622,245 and 10,334,745 shares issued and outstanding, respectively	21,623	10,335
Additional Paid In Capital	1,168,229	47,017
Accumulated Deficit	(1,044,546)	(1,030,694)
Other Comprehensive Income	54,680	0
TOTAL EQUITY (DEFICIT)	209,009	(964,319)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 2,415,845	$ 382,139

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Stockholders' equity (deficit):
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock shares, authorized	10,000,000	10,000,000
Preferred stock shares, issued	9,022,900	9,022,900
Preferred stock shares, outstanding	9,022,900	9,022,900
Common stock, par value	$ 0.001	$ 0.001
Common stock shares, authorized	490,000,000	490,000,000
Common stock shares, issued	21,622,245	10,334,745
Common stock shares, outstanding	21,622,245	10,334,745

XML

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Unaudited Statements Of Operations
Revenues	$ 1,132,995	$ 0	$ 2,167,409	$ 0
Cost of Sales	967,083	0	1,766,485	0
GROSS PROFIT	165,912	0	400,924	0
Operating expenses
Payroll	128,762	0	278,026	0
General and administrative expenses	82,734	0	224,512	274
Rent and Lease	36,329	0	55,797	0
Professional Fees	38,947	2,500	67,157	2,500
Advertising and Marketing	18,801	0	45,417	0
Depreciation	5,358	0	8,929	0
Total Operating Expenses	310,931	2,500	679,838	2,774
NET OPERATING LOSS	(145,019)	(2,500)	(278,914)	(2,774)
Other Income (Expense)
Interest expense	(33,130)	(1,170)	(47,323)	(1,170)
Other Income (Expenses)	65,624	0	116,398	0
Bargain Purchase Gain	0	0	222,217	0
Total Other Income (Expenses)	32,494	(1,170)	291,292	(1,170)
Net Income/(Loss) Before Income Tax	(112,525)	(3,670)	12,378	(3,994)
Income Tax Expense	0	0	(26,230)	0
NET LOSS	(112,525)	(3,670)	(13,852)	(3,994)
Other Comprehensive Income/(Loss)
Foreign Currency Translation Adjustments	25,350	0	54,680	0
COMPREHENSIVE INCOME/(LOSS)	$ (87,175)	$ (3,670)	$ 40,828	$ (3,994)
Earnings per common share - basic & diluted	$ (0.0104)	$ (0.0004)	$ (0.0007)	$ 0.0000
Weighted average common - basic & diluted	10,811,123	9,771,000	19,744,120	4,966,475

XML

CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED) - USD ($)	Preferred Stock	Common Stock	Paid-In Capital	Accumulated Deficit	Other Comprehensive Income	Total
Beginning Balance, Shares at Dec. 31, 2017	10,000,000
Beginning Balance, Value at Dec. 31, 2017	$ 10,000			$ (1,010,000)		$ (1,000,000)
Conversion of Preferred Stock, Shares	(977,100)	9,771,000
Conversion of Preferred Stock, Value	$ (977)	$ 977
Net income (loss)				(274)		(274)
Ending Balance, Shares at Mar. 31, 2018	9,022,900	9,771,000
Ending Balance, Value at Mar. 31, 2018	$ 9,023	$ 977		(1,010,274)		(1,000,274)
Beginning Balance, Shares at Dec. 31, 2017	10,000,000
Beginning Balance, Value at Dec. 31, 2017	$ 10,000			(1,010,000)		(1,000,000)
Net income (loss)						(3,994)
Ending Balance, Shares at Jun. 30, 2018	9,022,900	9,771,000
Ending Balance, Value at Jun. 30, 2018	$ 9,023	$ 977		(1,013,944)		(1,003,944)
Beginning Balance, Shares at Mar. 31, 2018	9,022,900	9,771,000
Beginning Balance, Value at Mar. 31, 2018	$ 9,023	$ 977		(1,010,274)		(1,000,274)
Net income (loss)				(3,670)		(3,670)
Ending Balance, Shares at Jun. 30, 2018	9,022,900	9,771,000
Ending Balance, Value at Jun. 30, 2018	$ 9,023	$ 977		(1,013,944)		(1,003,944)
Beginning Balance, Value at Dec. 31, 2018	$ 9,023	$ 10,335	47,017	(1,030,694)		(964,319)
Conversion of Preferred Stock, Shares	9,022,900	10,334,745
Stock Issued for Acqusition of Targa, Shares		11,250,000
Stock Issued for Acqusition of Targa, Value		$ 11,250	1,113,750			1,125,000
Stock Issued for Cash, Shares		37,500
Stock Issued for Cash, Value		$ 38	7,462			7,500
Foreign Currency Translation Adjustments					29,330	29,330
Net income (loss)				98,673		98,673
Ending Balance, Shares at Mar. 31, 2019	9,022,900	21,622,245
Ending Balance, Value at Mar. 31, 2019	$ 9,023	$ 21,623	1,168,229	(932,021)	29,330	296,184
Beginning Balance, Value at Dec. 31, 2018	$ 9,023	$ 10,335	47,017	(1,030,694)		(964,319)
Net income (loss)						(13,852)
Ending Balance, Shares at Jun. 30, 2019	9,022,900	21,622,245
Ending Balance, Value at Jun. 30, 2019	$ 9,023	$ 21,623	1,168,229	(1,044,546)	54,680	209,009
Beginning Balance, Shares at Mar. 31, 2019	9,022,900	21,622,245
Beginning Balance, Value at Mar. 31, 2019	$ 9,023	$ 21,623	1,168,229	(932,021)	29,330	296,184
Foreign Currency Translation Adjustments					25,350	25,350
Net income (loss)				(112,525)		(112,525)
Ending Balance, Shares at Jun. 30, 2019	9,022,900	21,622,245
Ending Balance, Value at Jun. 30, 2019	$ 9,023	$ 21,623	$ 1,168,229	$ (1,044,546)	$ 54,680	$ 209,009

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$ (13,852)	$ (3,944)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation	8,929	0
Bargain Purchase Gain	(222,217)	0
Change in Operating Assets and Liabilities:
Accounts Receivables	10,321	0
Receivables from Related Parties	(38,375)	0
Inventory	142,186	0
Tax Receivable	(248,182)	0
Prepaid and Other Assets	9,228	0
Accounts payable and accrued expenses	420,650	3,670
Related Party Payables	928	374
Deferred Taxes	26,230	0
Net cash used in operating activities	95,846	100
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets	(14,486)	0
Net Cash Received from Acquisition of Targa	6,504	0
Net cash provided by investing activities	(7,982)	0
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Issuance of Convertible Note Payable	120,000	100,000
Proceeds from Issuance of Notes Payable	0	25,000
Payments on Licensing Fee	(108,000)	(43,000)
Repayment of Convertible Note Payable	(50,000)	0
Proceeds from Issuance of Common Stock	7,500	0
Net cash provided by financing activities	(30,500)	82,000
Effect of Foreign Exchange Translation	54,680	0
Net increase for the period	112,044	82,100
Cash and Cash Equivalents, Beginning of the Period	2,139	0
Cash and Cash Equivalents, End of the Period	114,183	82,100
SUPPLEMENTAL INFORMATION
Cash paid for income taxes	0	0
Cash paid for Interest	0	0
Disclosure of Non-Cash Investment and Finance Activities:
Elimination of convertible notes by offset against Notes Receivable, Related Party and Related Party Receivables	739,110	0
Elimination of Related Party Receivables and Payables offset	$ 360,824	$ 0

XML

ORGANIZATION AND BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

ORGANIZATION AND BASIS OF PRESENTATION

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Teo Foods Inc. (“TEO Foods” or the “Company”) was incorporated in the state of Nevada on December 27, 2012. On December 29, 2017, the Company filed an amendment to its articles of incorporation increasing its authorized capital to a total of 500,000,000 shares consisting of 490,000,000 shares designated as Common Stock, par value $0.001 per share, and 10,000,000 shares designated as Preferred Stock, par value $0.001 per share.

The Company’s principal activity is to produce and sell food packaged products for retail sale in the frozen, refrigerated and shelf stable categories. The Company has a license to use the TEO name and logo on food products it sells and to apply the TEO pasteurization/sterilization processes to its products for improved shelf life and safety.

On January 31, 2019, the Company executed the Stock Purchase Agreement with NERYS USA Inc. (“Nerys USA”). The Company issued the closing payments as described in Note 4. Pursuant to the terms of the purchase agreement, Commercial Targa S.A. de C.V. (“Targa”) became a wholly owned subsidiary of the Company.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to form 10-Q and Article 8 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2109 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. Notes to the unaudited financial statements that would substantially duplicate the disclosure contained in the audited financial statements for the fiscal year ending December 31, 2018 have been omitted. These interim financial statements are condensed and should be read in conjunction with audited financial statements and the footnotes thereto for the fiscal year ended December 31, 2018 included in the Company’s 10-K as filed with the Securities and Exchange commission on April 16, 2019

All amounts referred to in the notes to the financial statements are in United States Dollars ($) unless stated otherwise.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with a maturity date of three months or less, when purchased, to be cash equivalents.

Foreign Currency Translation

The Company subsidiary’s primary functional currency is the Mexican peso, but it’s reporting currency is the U.S. dollar. The balance sheet accounts are translated at exchange rates in effect at the end of the period and income statement accounts are translated at average exchange rates for the period. Translation gains and losses are included as a separate component of stockholders’ deficit.

Accounts Receivable

Accounts receivable are reported at the customers’ outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. The allowance for doubtful accounts at June 30, 2019 and December 31, 2018 was approximately, $44,000 and $43,000, respectively.

Inventory and Cost of Sales

Inventories are stated at the lower of cost or realizable value, using the average cost method. When an impairment indicator suggests that the carrying amounts of inventories might not be recoverable, the Company reviews such carrying amounts and estimates the net realizable value based on the most reliable evidence available at that time. An impairment loss is recorded if the net realizable value is less than the carrying value. Impairment indicators considered for these purposes are, among others, obsolescence, decrease in market prices, damage and a firm commitment to sell.

Property and Equipment

Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income.

Long-Lived Assets

The Company accounts for its long-lived assets in accordance with Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment. ASC 360 requires that long-lived assets be reviewed for impairment at least annually, or whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.

Beneficial Conversion Feature of Convertible Notes Payable

The Company considers whether a beneficial conversion feature ("BCF") exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note. The BCF of a convertible note is a reduction of the carrying amount of the convertible note, as a debt discount, and is credited to additional paid-in-capital. Such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense.

A contingent beneficial conversion feature in a convertible note payable with conversion terms that change upon the occurrence of a future event (ex: fair value of the underlying stock declines after the note issuance date) is recognized when the contingency is resolved.

Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the company expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount:

i. Identification of the promised goods in the contract;

ii. Determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract;

iii. Measurement of the transaction price, including the constraint of variable consideration;

iv. Allocation of the transaction price of the performance obligations; and

v. Recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606, Revenue Recognition, at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligations when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time typically upon delivery.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received in the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has categorized all investments recorded at fair value based upon the level of judgment associated with the inputs used to measure their fair value.

Hierarchical levels, directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

● Level 1: Quoted prices in active markets for identical assets or liabilities that the organization has the ability to access at the reporting date.

● Level 2: Inputs other than quoted prices included in Level 1, which are either observable or that can be derived from or corroborated by observable data as of the reporting date.

● Level 3: Inputs include those that are significant to the fair value of the asset or liability and are generally less observable from objective resources and reflect the reporting entity's assumptions about the assumptions market participants would use in pricing the asset or liability.

The Company's financial instruments consist of advances from related party, notes payable, convertible notes payable and license fee payable. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of the respective instruments.

Loss Per Share of Common Stock

Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period.  The calculation of diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.  Securities with anti-dilutive effects on net earnings (loss) per share are excluded. As of June 30, 2019, preferred shares convertible to 90,229,000 common shares were included in the diluted weighted average shares; however, notes convertible into common shares were excluded from the calculation of loss per common share as the notes are anti-dilutive. As of December 31, 2018, preferred shares convertible to 90,229,000 common shares and notes convertible into a maximum of 1,600,000 common shares were excluded from the calculation of loss per common share as the notes are anti-dilutive.

Accounting Pronouncements Recently Adopted and Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-2), which establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.  ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and did not have a significant impact on the Company’s financial statements or disclosures.

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GOING CONCERN

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GOING CONCERN

NOTE 3 – GOING CONCERN

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has suffered recurring losses from operations and has insufficient working capital as of June 30, 2019 to develop its business plan and meet its obligation of the next 12 months. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders, the Company's ability to obtain necessary equity or debt financing to continue operations, and ultimately the Company's ability to generate profit from sales of packaged food products. These financial statements do not include any adjustments to classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company plans to obtain funds for operations through continued financial support from its stockholders, debt and private offerings of its equity.

XML

STOCK PURCHASE AGREEMENT

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

STOCK PURCHASE AGREEMENT

NOTE 4 – STOCK PURCHASE AGREEMENT

On July 30, 2018, the Company entered into a Stock Purchase Agreement with Nerys USA to purchase all of the issued and outstanding equity of Targa.

On January 31, 2019, TEO Foods Inc. acquired 100% of the equity interest of Targa, a private entity, in exchange for $160,000 in cash, $220,000 and $552,000 secured convertible notes payable and 11,250,000 common shares. The acquisition was effective as of January 1, 2019. In addition, an earn-out provision was added which, if certain conditions are met, would require an additional secured convertible promissory note of $310,000 and the issuance of an additional 3,750,000 common shares.

In May of 2019, the purchase agreement was amended resulting in the earn-out provision being eliminated, the $220,000 (which had a principal balance remaining of $170,000) and $552,000 secured convertible notes payable, plus accrued interest, issued as part of the purchase price being assigned to Targa in exchange for an equal reduction of amounts owed to Targa by Nerys USA. In addition, Nerys USA assumed and settled an account payable balance due from Targa against amounts Targa owed to Nerys USA.

The assignment of the Nerys notes to Targa resulted in a $722,000 reduction in the convertible notes payable and reduction in liabilities for the accrued interest due transferred of $17,110. This also resulted in an equal reduction of $739,110 of Related Party Receivable and Notes Receivable due to Targa from Nerys USA. In addition, $360,824 of Related Party Payables to Nerys USA were offset against Related Party Receivables from Nerys USA to Targa.

Due to the state of operations of Targa, along with the economic impact of U.S. tariffs, the Company acquired Targa for less than the estimated fair value of its net assets. In accordance with ASC 805, Business Combinations, the Company has initially measured Targa’s identifiable assets acquired at $3,405,052 and the identifiable liabilities at $1,125,835, resulting in a net value of $2,279,217. The expected purchase price is $2,057,000, which resulted in an initial estimated bargain purchase gain of $222,217. The Company has reviewed its procedures used to identify and measure the assets acquired, the liabilities assumed and the consideration transferred and concluded that the procedures followed and the resulting measurements, subject to the conditions below, were appropriate. The Company also performed a review and determined that the business combination did not include any transactions that should be accounted for separately from the business combination.

The following unaudited pro forma financial results reflects the historical operating results of the Company, including the unaudited pro forma results of Targa for the six months ended June 30, 2018, as if this business combination had occurred as of January 1, 2018. The pro forma financial information set forth below reflects adjustments to the historical data of the Company to give effect to the Targa acquisition and the related equity issuances as if each had occurred on January 1, 2018. The pro forma information presented below does not purport to represent what the actual results of operations would have been for the period indicated, nor does it purport to represent the Company’s future results of operations.

	2018
Net Revenue	$	3,859,231
Net Loss	$	463,817
Net Loss per Common Share – Basic & Diluted	$	.029
Weighted Average Number of Shares of Common Stock Outstanding – Basic & Diluted		16,216,475

The calculations of pro forma net revenue and pro forma net loss give effect to the Targa business combination for the six months ended June 30, 2018 based on the historical net revenue and net income (loss), as applicable, of Targa. The operations for the six months ended June 30, 2019 are included in the accompanying statement of operations and comprehensive income. It does not give account to all purchase accounting adjustments as the purchase accounting has not been finalized. The Company has begun to assess the fair value of the various net assets acquired but has not yet completed this assessment. The Company is also in the process of identifying other intangible assets, such as customer relationships and know-how that may need to be recognized. Once identified, these other intangible assets, if any, will be recorded at their fair values. The Company is working to finalize the allocations as quickly as possible and anticipates that the allocation will not be final for approximately six months. Any adjustments necessary may be material to the consolidated balance sheet, but should not have a material impact to the June 30, 2019 reported operating results or cash flows.

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ROYALTY AND LICENSE AGREEMENT

6 Months Ended

Jun. 30, 2019

Research and Development [Abstract]

ROYALTY AND LICENSE AGREEMENT

NOTE 5 – ROYALTY AND LICENSE AGREEMENT

On September 30, 2017, the Company entered into a Master Agreement with TEO Inc. ("TEO"). TEO is the founder and majority controlling shareholder of the Company. The Master Agreement provides the Company a license to use the TEO name and logo on food products it sells and to apply TEO's pasteurization/sterilization processes to its products for improved shelf life and safety. Additional provisions provide the Company production rights to TEO's pasteurizer/sterilizer and rights to lease its own system when certain sales/production increase. Pursuant to the master agreement, the Company agreed to pay an initial $1 million fee in installments with $100,000 due on June 30, 2018, $300,000 due on December 31, 2018 and the remaining $600,000 due in 12 equal monthly payments with the first payment due on January 31, 2019. TEO Inc. has agreed to maintain the license through December 31, 2019 and accrue and accept payments due as funds are available. As of June 30, 2019, the Company has paid $233,000 toward the license. Commencing January 1, 2020, a use/royalty and service fee of 5.5% of the Company's gross revenue for food sales processed using TEO's intellectual property is payable quarterly.  The ongoing licensing is maintained by meeting minimum annual use/royalty and service fees. The Company may pay for the difference between the actual use and the minimum to maintain the license. The annual minimum is listed as follows:

Year	Minimum Service Fee
2020	$   500,000
2021	750,000
2022	1,000,000
Thereafter	Increase 10% per year

As of June 30, 2019, and December 31, 2018, the outstanding balance of the license fee payable was $767,000 and $875,000, respectively

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NOTES PAYABLES

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

NOTES PAYABLES

NOTE 6 – NOTES PAYABLES

Notes Payable

On July 31, 2018, the Company issued a note for $100,000 in principal bearing interest at 8% maturing on October 31, 2018. This note was subsequently amended to extend the maturity date to December 31, 2019. As of June 30, 2019 and December 31, 2018, the outstanding principal balance of the note was $100,000.

On December 10, 2018, the Company issued a note for $34,000 in principal bearing interest at 8% maturing on June 10, 2019. This note was subsequently amended to extend the maturity date to December 31, 2019. As of June 30, 2019 and December 31, 2018, the outstanding principal balance of the note was $34,000.

Convertible Note Payable

On June 28, 2018, the Company issued a note for $100,000. The note is for a two-year term and bears an 8% interest rate, due at maturity. The note is convertible into common shares at a 20% discount to the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share.

On November 20, 2018 the Company issued a note for $220,000. The note was for a two-year term and bore an 8% interest rate, due at maturity. The note was convertible into common shares at a 20% discount to the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share. In February of 2019, the Company made a payment on the principal of $50,000 and in May of 2019, the note was settled (see Note 4).

On January 31, 2019 the Company issued a note for $552,000. The note was for a two-year term and bore an 8% interest rate, due at maturity. The note was convertible into common shares at a 20% discount to the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share. In May of 2019, the note was settled (see Note 4).

On February 4, 2019, the Company entered into a purchase agreement with one investor for the purchase of up to an aggregate of $350,000 in convertible notes payable in three payments commencing with the first in the amount of $120,000 on February 4, 2019, the second on April 1, 2019 in the amount of $110,000 and the third on June 1, 2019 in the amount of $120,000. The investor did not make the second purchase on April 1, 2019 or the third purchase on June 1, 2019. The purchase provisions of the agreement have expired with only the first purchase executed. The $120,000 note purchased in February can be converted to common stock at $0.20 per share or the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share and converts automatically upon certain conditions. The note bears no interest until June 30, 2019 and then bears 8% interest, if not converted to common stock.

As of June 30, 2019, there is not a quoted bid price available as the Company’s shares are not listed on any exchanges. As the minimum conversion rate at the time of issuance is greater than or equal to the current stock value based on other similar transactions, these notes are not deemed to have an embedded derivative associated with them.

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EQUITY

6 Months Ended

Jun. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

EQUITY

NOTE 7 – EQUITY

Preferred Stock

Each share of Class A Preferred Stock may be converted by the holder upon request of the holder into 10 shares of common stock. Each holder is entitled to 100 votes for each share of Class A Preferred Stock held on the record date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company (and written actions of stockholders in lieu of meetings) with respect to any and all matters presented to the stockholders of the Company for their action or consideration. The holders are entitled to dividends, if any, as declared by the Company and participate pari passu with the common stock of the Company at the conversion rate.

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INCOME TAXES

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 8 - INCOME TAXES

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate is 21%.

The provision for Federal income tax consists of the following June 30, 2019 and December 31, 2018:

Federal income tax benefit attributable to:	June 30, 2019			December 31, 2018
Current Operations	$	4,196		$	4,346
Less: valuation allowance		(4,196	)		(4,346	)
Net provision for Federal income taxes	$	-		$	-

The cumulative tax effect at the expected rate of 21% of significant items comprising our net deferred tax amount is as follows:

Deferred tax asset attributable to:	June 30, 2019			December 31, 2018
Net operating loss carryover	$	9,450		$	5,254
Less: valuation allowance		(9,450	)		(5,254	)
Net deferred tax asset	$	-		$	-

As of June 30, 2019, the Company has recorded an estimated tax liability of $26,230 related to the bargain purchase gain; however, the Company is still evaluating the purchase accounting, so this estimate may change.

At June 30, 2019, the Company had net operating loss carry forwards of approximately $45,000 that may be offset against future taxable income. No tax benefit has been reported in the June 30, 2019 or December 31, 2018 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act (the “Tax Act”). The Tax Act establishes new tax laws that affects 2018 and future years, including a reduction in the U.S. federal corporate income tax rate to 21% effective January 1, 2018. For certain deferred tax assets and deferred tax liabilities.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.

ASC 740, Income Taxes, provides guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. ASC 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than- not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of March 31, 2019, the Company had no accrued interest or penalties related to uncertain tax positions.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 9 - RELATED PARTY TRANSACTIONS

The Company has various related party receivables and payables derived from normal operating activities. These balances are non-interest bearing and are periodically settled as cash flow permits.

In addition, at June 30, 2019 and December 31, 2018, the Company had revolving receivables from related parties of $272,319 and $0, respectively.

As of June 30, 2019, and December 31, 2018, the Company had notes receivable from related parties of $150,499 and $0, respectively.

Preferred Share Issuance and Conversion

On March 31, 2018, the Company issued 9,771,000 common shares to TEO Inc. for the conversion of 977,100 Class A Preferred Stock. TEO Inc. directed that the common shares resulting from the conversion be issued to the shareholders of TEO Inc. The common shares were issued to 31 shareholders with 78% of the shares controlled by the Company’s sole officer and director.

Master License Agreement

On September 30, 2017, the Company entered into a Master Agreement with TEO, the founder and majority controlling shareholder of the Company. See Note 5.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Neither the Company nor its assets are subject to any legal action other than those that arise in the normal course of business.

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CONCENTRATIONS

6 Months Ended

Jun. 30, 2019

Risks and Uncertainties [Abstract]

CONCENTRATIONS

NOTE 11 – CONCENTRATIONS

Cash Deposit

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At June 30, 2019 no cash balances exceeded the federally insured limit.

Co-Pack Agreement

On April 20, 2018, the Company entered into a co-packing agreement with Targa. Targa is located in Tijuana, Mexico and produces and sells its own brands of products in Mexico which includes the NERYS line of imported California cheese products, frozen pizzas, various pasta meals and other products sold in major stores such as Wal-Mart, 7-Eleven, Soriana, OXXO and others.

Targa is currently the Company's only vendor contracted to produce its products. The Company acquired Targa in January of 2019. See Note 4.

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TAX RECEIVABLES

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

TAX RECEIVABLES

NOTE 12 – TAX RECEIVABLES

Tax Receivables which are credits from the Mexican taxing authority. The Company has accumulated IVA tax payments that exceeded its IVA tax liabilities over the past several years. The Company has begun to apply for refunds of these accumulated overpayments and expect to obtain these refunds during 2019.

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INVENTORY

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

INVENTORY

NOTE 13 – INVENTORY

At June 30, 2019, inventory consisted of approximately $351,000 of raw materials and finished goods in a warehouse in Tijuana, Mexico. The Company has an allowance of approximately $8,000 for shrinkage as of June 30, 2019.

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FIXED ASSETS

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

FIXED ASSETS

NOTE 14 – FIXED ASSETS

At June 30, 2019, fixed assets consisted of approximately $10,000 of furniture and equipment, $169,000 of machinery, $4,000 of computers and $15,000 of vehicles. Accumulated depreciation was approximately $130,000 as of June 30, 2019 and net fixed assets were approximately $68,000. Depreciation expense for the six months ended June 30, 2019 and 2018 was $8,929 and $0, respectively. The estimated useful lives range from 3 to 10 years.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 15 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events for recognition and disclosure through August 19, 2019 which is the date the financial statements were available to be issued. No other matters were identified affecting the accompanying financial statements and related disclosures.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to form 10-Q and Article 8 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2109 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. Notes to the unaudited financial statements that would substantially duplicate the disclosure contained in the audited financial statements for the fiscal year ending December 31, 2018 have been omitted. These interim financial statements are condensed and should be read in conjunction with audited financial statements and the footnotes thereto for the fiscal year ended December 31, 2018 included in the Company’s 10-K as filed with the Securities and Exchange commission on April 16, 2019

All amounts referred to in the notes to the financial statements are in United States Dollars ($) unless stated otherwise.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with a maturity date of three months or less, when purchased, to be cash equivalents.

Foreign Currency Translation

Foreign Currency Translation

The Company subsidiary’s primary functional currency is the Mexican peso, but it’s reporting currency is the U.S. dollar. The balance sheet accounts are translated at exchange rates in effect at the end of the period and income statement accounts are translated at average exchange rates for the period. Translation gains and losses are included as a separate component of stockholders’ deficit.

Accounts Receivable

Accounts Receivable

Accounts receivable are reported at the customers’ outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. The allowance for doubtful accounts at June 30, 2019 and December 31, 2018 was approximately, $44,000 and $43,000, respectively.

Inventory and Cost of Sales

Inventory and Cost of Sales

Inventories are stated at the lower of cost or realizable value, using the average cost method. When an impairment indicator suggests that the carrying amounts of inventories might not be recoverable, the Company reviews such carrying amounts and estimates the net realizable value based on the most reliable evidence available at that time. An impairment loss is recorded if the net realizable value is less than the carrying value. Impairment indicators considered for these purposes are, among others, obsolescence, decrease in market prices, damage and a firm commitment to sell.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income.

Long-Lived Assets

Long-Lived Assets

The Company accounts for its long-lived assets in accordance with Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment. ASC 360 requires that long-lived assets be reviewed for impairment at least annually, or whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.

Beneficial Conversion Feature of Convertible Notes Payable

Beneficial Conversion Feature of Convertible Notes Payable

The Company considers whether a beneficial conversion feature ("BCF") exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note. The BCF of a convertible note is a reduction of the carrying amount of the convertible note, as a debt discount, and is credited to additional paid-in-capital. Such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense.

A contingent beneficial conversion feature in a convertible note payable with conversion terms that change upon the occurrence of a future event (ex: fair value of the underlying stock declines after the note issuance date) is recognized when the contingency is resolved.

Revenue Recognition

Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the company expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount:

i. Identification of the promised goods in the contract;

ii. Determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract;

iii. Measurement of the transaction price, including the constraint of variable consideration;

iv. Allocation of the transaction price of the performance obligations; and

v. Recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606, Revenue Recognition, at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligations when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time typically upon delivery.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair value is defined as the price that would be received in the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has categorized all investments recorded at fair value based upon the level of judgment associated with the inputs used to measure their fair value.

Hierarchical levels, directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

● Level 1: Quoted prices in active markets for identical assets or liabilities that the organization has the ability to access at the reporting date.

● Level 2: Inputs other than quoted prices included in Level 1, which are either observable or that can be derived from or corroborated by observable data as of the reporting date.

● Level 3: Inputs include those that are significant to the fair value of the asset or liability and are generally less observable from objective resources and reflect the reporting entity's assumptions about the assumptions market participants would use in pricing the asset or liability.

The Company's financial instruments consist of advances from related party, notes payable, convertible notes payable and license fee payable. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of the respective instruments.

Loss Per Share of Common Stock

Loss Per Share of Common Stock

Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period.  The calculation of diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.  Securities with anti-dilutive effects on net earnings (loss) per share are excluded. As of June 30, 2019, preferred shares convertible to 90,229,000 common shares were included in the diluted weighted average shares; however, notes convertible into common shares were excluded from the calculation of loss per common share as the notes are anti-dilutive. As of December 31, 2018, preferred shares convertible to 90,229,000 common shares and notes convertible into a maximum of 1,600,000 common shares were excluded from the calculation of loss per common share as the notes are anti-dilutive.

Accounting Pronouncements Recently Adopted and Recent Accounting Pronouncements

Accounting Pronouncements Recently Adopted and Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-2), which establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.  ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and did not have a significant impact on the Company’s financial statements or disclosures.

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STOCK PURCHASE AGREEMENT (Tables)

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Pro forma information

The pro forma information presented below does not purport to represent what the actual results of operations would have been for the period indicated, nor does it purport to represent the Company’s future results of operations.

	2018
Net Revenue	$	3,859,231
Net Loss	$	463,817
Net Loss per Common Share – Basic & Diluted	$	.029
Weighted Average Number of Shares of Common Stock Outstanding – Basic & Diluted		16,216,475

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ROYALTY AND LICENSE AGREEMENT (Tables)

6 Months Ended

Jun. 30, 2019

Research and Development [Abstract]

The annual minimum use/royalty and service fee

The annual minimum is listed as follows:

Year	Minimum Service Fee
2020	$   500,000
2021	750,000
2022	1,000,000
Thereafter	Increase 10% per year

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INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Provision for income tax

The provision for Federal income tax consists of the following June 30, 2019 and December 31, 2018:

Federal income tax benefit attributable to:	June 30, 2019			December 31, 2018
Current Operations	$	4,196		$	4,346
Less: valuation allowance		(4,196	)		(4,346	)
Net provision for Federal income taxes	$	-		$	-

Deferred tax asset

The cumulative tax effect at the expected rate of 21% of significant items comprising our net deferred tax amount is as follows:

Deferred tax asset attributable to:	June 30, 2019			December 31, 2018
Net operating loss carryover	$	9,450		$	5,254
Less: valuation allowance		(9,450	)		(5,254	)
Net deferred tax asset	$	-		$	-

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ORGANIZATION AND BASIS OF PRESENTATION (Details Narrative) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Authorized capital	$ 500,000,000
Common stock shares, authorized	490,000,000	490,000,000
Common stock, par value	$ 0.001	$ 0.001
Preferred stock shares, authorized	10,000,000	10,000,000
Preferred stock, par value	$ 0.001	$ 0.001

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narartive) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Allowance for doubtful accounts	$ 44,000	$ 43,000
Preferred shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	90,229,000	100,000,000
Convertible Note [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		1,600,000

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STOCK PURCHASE AGREEMENT (Details) - USD ($)	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Net Revenue	$ 1,132,995		$ 0		$ 2,167,409	$ 0
Net Loss	$ (112,525)	$ 98,673	$ (3,670)	$ (274)	$ (13,852)	$ (3,994)
Net Loss per Common Share - Basic & Diluted	$ (0.0104)		$ (0.0004)		$ (0.0007)	$ 0.0000
Weighted Average Number of Shares of Common Stock Outstanding - Basic & Diluted	10,811,123		9,771,000		19,744,120	4,966,475
Stock Purchase Agreement [Member]
Net Revenue						$ 3,859,231
Net Loss						$ 463,817
Net Loss per Common Share - Basic & Diluted						$ 0.029
Weighted Average Number of Shares of Common Stock Outstanding - Basic & Diluted						16,216,475

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STOCK PURCHASE AGREEMENT (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Jan. 31, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Secured convertible promissory notes		$ 220,000		$ 220,000		$ 220,000
Common Share	37,500
Bargain Purchase Gain		$ 0	$ 0	$ 222,217	$ 0
Stock Purchase Agreement [Member]
Cash	$ 160,000
Secured convertible promissory notes	$ 772,000
Common Share	11,250,000
Additional secured convertible promissory note issued	$ 310,000
Additional common shares issued	3,750,000
Identifiable assets acquired	$ 3,405,052
Identifiable liabilities	1,125,835
Net value	2,279,217
Purchase price	2,057,000
Bargain Purchase Gain	$ 222,217

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ROYALTY AND LICENSE AGREEMENT (Details)	6 Months Ended
	Jun. 30, 2019 USD ($)
Research and Development [Abstract]
2020	$ 500,000
2021	750,000
2022	$ 1,000,000
Thereafter	Increase 10% per year

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ROYALTY AND LICENSE AGREEMENT (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Research and Development [Abstract]
License fee	$ 233,000
License fee payable	767,000	$ 875,000
Deemed dividend	$ 1,000,000

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NOTES PAYABLES (Details Narrative) - USD ($)	1 Months Ended				6 Months Ended
	Feb. 28, 2019	Jan. 31, 2019	Nov. 20, 2018	Jun. 28, 2018	Jun. 30, 2019	Dec. 31, 2018	Jun. 20, 2018
Note payable					$ 134,000	$ 134,000
Convertible Note Payable					$ 220,000	$ 220,000
Convertible notes payable description					On February 4, 2019, the Company entered into a purchase agreement with one investor for the purchase of up to an aggregate of $350,000 in convertible notes payable in three payments commencing with the first in the amount of $120,000 on February 4, 2019, the second on April 1, 2019 in the amount of $110,000 and the third on June 1, 2019 in the amount of $120,000. The investor did not make the second purchase on April 1, 2019 or the third purchase on June 1, 2019. The purchase provisions of the agreement have expired with only the first purchase executed. The $120,000 note purchased in February can be converted to common stock at $0.20 per share or the 30-day average bid price of the Company's common shares, as may be quoted on the OTCQB, OTCQX or listing on a national stock exchange, but at no rate lower than $0.20 per share and converts automatically upon certain conditions. The note bears no interest until June 30, 2019 and then bears 8% interest, if not converted to common stock.
8% Convertible Note Payable [Member]
Interest rate		8.00%	8.00%	8.00%
Convertible Note Payable		$ 552,000	$ 220,000				$ 100,000
Principal payment	$ 50,000
8% Notes Payable [Member]
Principal amount					$ 100,000
Interest rate					8.00%
Maturity date					Oct. 31, 2018
Note payable					$ 100,000
8% Notes Payable [Member]
Principal amount					$ 34,000
Interest rate					8.00%
Maturity date					Dec. 31, 2019
Note payable					$ 34,000

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EQUITY (Details Narrative) - USD ($)	1 Months Ended	6 Months Ended
	Jan. 31, 2019	Jun. 30, 2019
Equity Method Investments and Joint Ventures [Abstract]
Preferred Stock viting rights		Each holder is entitled to 100 votes for each share of Class A Preferred Stock held on the record date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company
Preferred Stock		Each share of Class A Preferred Stock may be converted by the holder upon request of the holder into 10 shares of common stock.
Sale of common stock	$ 7,500
Sale of common stock, Shares	37,500
Share Price	$ 0.20

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INCOME TAXES (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Federal income tax benefit attributable to:
Current Operations	$ 4,196	$ 4,346
Less: valuation allowance	(4,196)	(4,346)
Net provision for Federal income taxes	$ 0	$ 0

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INCOME TAXES (Details 1) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Deferred tax asset attributable to:
Net operating loss carryover	$ 9,450	$ 5,254
Less: valuation allowance	(9,450)	(5,254)
Net deferred tax asset	$ 0	$ 0

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INCOME TAXES (Details Narrative)	6 Months Ended
	Jun. 30, 2019 USD ($)
Income Tax Disclosure [Abstract]
Federal income tax rate	21.00%
Net operating loss carry forwards	$ 45,000
Deferred tax liability	$ 26,230

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	1 Months Ended
	Mar. 31, 2018	Jun. 30, 2019	Dec. 31, 2018
Receivable from related parties		$ 272,319	$ 0
Notes Receivable, related Party		$ 150,499	$ 0
TEO
Preferred Share Issuance and Conversion	977,100
Number of common stock converted	771,000

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CONCENTRATIONS (Details Narrative)	Jun. 30, 2019 USD ($)
Risks and Uncertainties [Abstract]
Federally insured limit	$ 0

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INVENTORY (Details Narrative)	Jun. 30, 2019 USD ($)
Inventory Disclosure [Abstract]
Inventory raw materials and finished goods	$ 351,000
Shrinkage	$ 8,000

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FIXED ASSETS (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Accumulated depreciation	$ 130,000		$ 130,000
Fixed assets Net	132,048		132,048		$ 0
Depreciation expense	5,358	$ 0	$ 8,929	$ 0
Minimum [Member]
Estimated useful live			3 years
Maximum [Member]
Estimated useful live			10 years
Furniture and Fixtures [Member]
Fixed assets gross	10,000		$ 10,000
Machinery [Member]
Fixed assets gross	169,000		169,000
Computer [Member]
Fixed assets gross	4,000		4,000
Vehicles [Member]
Fixed assets gross	$ 15,000		$ 15,000