Electromedical Technologies, Inc 10-Q for FY2024 Q3
Electromedical Technologies, Inc (EMED)
About this 10-Q
Electromedical Technologies, Inc filed this 10-Q on November 19, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $42.53K
- down 86.9% from $323.61K a year earlier
- Net loss
- $724.64K
- compared with a net loss of $376.72K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______ to ______.
Commission File Number
(Exact name of registrant as specified in its charter)
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5047 |
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(Address of principal executive offices) |
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(Registrant’s telephone number, including area code)
Securities Registered pursuant to Section 12(g) of the Act
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Title of Each Class |
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Name of each Exchange on which Registered |
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None |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation ST (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐
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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b‑2 of the Securities Exchange Act of 1934 (17 CFR §240.12b‑2). ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes
On November 19, 2024,
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION |
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Item 1. |
UNAUDITED FINANCIAL STATEMENTS: |
3 |
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BALANCE SHEETS AS OF September 30, 2024 AND DECEMBER 31, 2023 |
3 |
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STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 |
4 |
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STATEMENTS OF STOCKHOLDERS’ DEFICIT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 |
5 |
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STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 |
7 |
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NOTES TO THE UNAUDITED FINANCIAL STATEMENTS |
8 |
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Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
18 |
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Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
23 |
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Item 4. |
CONTROLS AND PROCEDURES |
23 |
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PART II. OTHER INFORMATION |
25 |
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Item 1. |
LEGAL PROCEEDINGS |
25 |
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Item 1A. |
RISK FACTORS |
25 |
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Item 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
25 |
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Item 3. |
DEFAULTS UPON SENIOR SECURITIES |
44 |
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Item 4. |
MINE SAFETY DISCLOSURE |
44 |
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Item 5. |
OTHER INFORMATION |
44 |
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Item 6. |
EXHIBITS |
44 |
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SIGNATURES |
46 |
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ITEM 1. FINANCIAL STATEMENTS
ELECTROMEDICAL TECHNOLOGIES, INC.
BALANCE SHEETS
(UNAUDITED)
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September 30, 2024 |
December 31, 2023 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
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Accounts receivable |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Right of use asset |
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Property and equipment, net |
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Total assets |
$ | $ | ||||||
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current liabilities: |
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Accounts payable |
$ | $ | ||||||
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Credit cards payable |
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Accrued expenses and other current liabilities |
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Customer deposits |
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Convertible promissory notes, net of discount of $ |
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Lease liability, current portion |
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Derivative liabilities- convertible promissory notes |
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Total current liabilities |
$ | |||||||
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Long-term liabilities: |
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Government debt, net of current portion |
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Lease liability, net of current portion |
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Other liabilities |
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Total liabilities |
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Commitments and contingencies (Note 10) |
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Stockholders’ deficit |
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Series A Preferred Stock, $ par value, |
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Series B Preferred Stock, $ par value, |
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Common stock, $ par value, |
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Additional paid-in-capital |
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Accumulated deficit |
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Total stockholders’ deficit |
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Total liabilities and stockholders’ deficit |
$ | $ | ||||||
The accompanying notes are an integral part of these financial statements
ELECTROMEDICAL TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
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THREE MONTHS ENDED SEPTEMBER 30, |
NINE MONTHS ENDED SEPTEMBER 30, |
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2024 |
2023 |
2024 |
2023 |
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Net sales |
$ | $ | $ | |||||||||||||
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Loss from operations |
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Other income (expense) |
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Interest expense |
( |
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Gain on sale of fixed asset |
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Change in fair value of derivative liabilities |
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Gain (loss) on derivative liabilities |
( |
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Other income (expense) |
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Total other income (expense) |
( |
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Net loss |
$ | ( |
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Deemed dividend related to warrant resets |
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Net loss attributable to common stockholders |
$ | ( |
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Weighted average shares outstanding – basic and diluted |
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Weighted average loss per share – basic and diluted |
$ | ( |
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The accompanying notes are an integral part of these financial statements
ELECTROMEDICAL TECHNOLOGIES, INC.
STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024
(UNAUDITED)
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Series A Preferred Stock |
Series B Preferred Stock |
Common Stock |
Paid in |
Accumulated |
Stockholders’ |
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Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Capital |
Deficit |
Deficit |
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Balance, December 31, 2023 |
$ | $ | $ | $ | $ | ( |
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Conversion of convertible promissory notes, accrued interest and derivative liabilities |
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Net loss |
— | — | — | ( |
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Balance, March 31, 2024 |
$ | $ | $ | $ | $ | ( |
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Conversion of convertible promissory notes, accrued interest and derivative liabilities |
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Net income |
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Balance, June 30, 2024 |
$ | $ | $ | $ | $ | ( |
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Conversion of convertible promissory notes |
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Shares issued for consulting services |
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Net loss |
— | — | — | ( |
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Balance, September 30, 2024 |
$ | $ | $ | $ | $ | ( |
) | $ | ( |
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The accompanying notes are an integral part of these financial statements
ELECTROMEDICAL TECHNOLOGIES, INC.
STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023
(UNAUDITED)
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Series A Preferred Stock |
Series B Preferred Stock |
Common Stock |
Paid in |
Accumulated |
Stockholders’ |
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Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Capital |
Deficit |
Deficit |
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Balance, December 31, 2022 |
$ | $ | $ | $ | $ | ( |
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Shares issued for consulting services |
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Share issued as CEO compensation |
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Shares issued in conjunction with settlement reset |
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Cashless warrant exercises |
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Trigger warrants issued |
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Conversion of convertible promissory note |
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Settlement of stock -based compensation liabilities |
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Net loss |
— | — | — | ( |
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Balance, March 31, 2023 |
$ | $ | $ | $ | $ | ( |
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Conversion of convertible promissory notes |
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Conversion true-up |
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Warrant reset |
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Net loss |
— | — | — | ( |
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Balance, June 30, 2023 |
$ | $ | $ | $ | $ | ( |
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Conversion of convertible promissory notes payable |
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Valuation of trigger warrants |
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Net loss |
— | — | — | ( |
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Balance, September 30, 2023 |
$ | $ | $ | $ | $ | ( |
) | $ | ( |
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ELECTROMEDICAL TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
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2024 |
2023 |
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Cash flows from operating activities: |
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Net loss |
$ | ( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation expense |
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Depreciation and amortization |
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Amortization of right of use asset |
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Amortization of debt discount and warrant expense |
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Change in fair value of derivative liabilities |
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Loss on derivatives |
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Gain on sale of fixed assets |
( |
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Other |
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Change in operating assets and liabilities: |
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Accounts receivable |
( |
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Inventories |
( |
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Prepaid expenses and other current assets |
( |
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Accounts payable |
( |
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Credit cards payable |
( |
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Accrued expenses and other current liabilities |
( |
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Customer deposits |
( |
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Lease liability |
( |
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Net cash used in operating activities |
( |
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Cash flows from investing activities: |
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Purchase of property and equipment |
( |
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Sale of property and equipment |
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Net cash provided by investing activities |
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Cash flows from financing activities: |
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Repayments on bank debt |
( |
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Issuance of convertible promissory notes |
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Repayments on convertible promissory notes |
( |
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Net cash provided by (used in) provided by financing activities |
( |
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Net decrease in cash and cash equivalents |
( |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
$ | $ | ||||||
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Supplemental disclosures of cash flow information: |
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Cash paid during the period for: |
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Interest |
$ | $ | ||||||
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Income taxes |
$ | $ | ||||||
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Non-cash investing and financing activities: |
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Settlement of stock-based compensation liabilities |
$ | $ | ||||||
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Conversion of convertible promissory notes, derivatives and accrued interest into shares of common stock |
$ | $ | ||||||
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Right of use asset and lease liability |
$ | $ | ||||||
The accompanying notes are an integral part of these financial statements
ELECTROMEDICAL TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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NOTE 1. |
ORGANIZATION AND NATURE OF BUSINESS |
ElectroMedical Technologies, LLC (“the Company”), was formed in November 2010 as an Arizona limited liability company. In August 2017, the Company converted to a Delaware C Corporation under Electromedical Technologies, Inc. The Company is a bioelectronic engineering company with medical device certifications in the United States (FDA) and Mexico (Cofepris). The Company engineers simple-to-use portable bioelectronics devices, which provide fast and long -lasting pain relief across a broad range of ailments.
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NOTE 2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Accounting Method
The accompanying unaudited financial statements of Electromedical Technologies, Inc. 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 Rule 8-03 of Regulation S-X. Certain information and disclosures normally included in the annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation, have been included. We have reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation. These interim financial statements should be read in conjunction with the audited annual financial statements of the Company as of and for the year ended December 31, 2023. The results of operations for the nine months ended September 30, 2024, are not necessarily indicative of the results that may be expected for the full year.
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 certain assets and liabilities, certain disclosures at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates affecting the financial statements have been prepared on the basis of the most current and best available information. However, actual results from the resolution of such estimates and assumptions may vary from those used in the preparation of the financial statements.
Going Concern
Since inception, the Company has incurred approximately $
As a result, there is significant uncertainty whether the entity will continue as a going concern and, therefore, whether it will realize its assets and settle its liabilities and commitments in the normal course of business and at the amounts stated in the financial statements.
Accordingly, no adjustments have been made to the financial statements relating to the recoverability and classification of the asset carrying amounts or the amount and classification of liabilities that might be necessary should the entity not continue as a going concern. At this time, management is of the opinion that no asset is likely to be realized for an amount less than the amount at which it is recorded in the financial statements as at September 30, 2024.
Revenue Recognition
Revenues are recognized in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, when performance obligations are satisfied through the transfer of promised goods to the Company’s customers. Control transfers upon shipment of product and when the title has been passed to the customers. This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance. Revenue is recorded net of sales taxes collected from customers on behalf of taxing authorities, allowance for estimated returns, chargebacks, and markdowns based upon management’s estimates and the Company’s historical experience. The Company’s liability for sales return refunds is recognized within other current liabilities, and an asset for the value of inventory which is expected to be returned is recognized within other current assets on the balance sheets. The Company generally allows a
Certain larger customers pay in advance for future shipments. These advance payments totaled $
At the completion of the initial -year warranty, the Company sells extended warranties for periods ranging from to years. Revenue is recognized on a straight-line basis over the term of the contract. At September 30, 2024 and December 31, 2023, deferred revenue of $
Financial Instruments and Concentrations of Business and Credit Risk
The Company maintains cash balances that can, at times, exceed amounts insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in these accounts and believes it is not exposed to any significant credit risk.
The Company’s accounts receivable, which are unsecured, expose the Company to credit risks such as collectability and business risks such as customer concentrations. The Company mitigates credit risk by investigating the creditworthiness of all customers prior to establishing relationships with them, performing periodic review of the credit activities of those customers during the course of the business relationship, regularly analyzing the collectability of accounts receivables, and recording allowances for doubtful accounts when these receivables become uncollectible. The Company mitigates business risks by attempting to diversify its customer base.
Significant customer sales as a percentage of total sales are as follows:
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THREE MONTHS ENDED SEPTEMBER 30, |
NINE MONTHS ENDED SEPTEMBER 30, |
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2024 |
2023 |
2024 |
2023 |
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Customer A |
% | % | % | % | ||||||||||||
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Customer B |
% | % | ||||||||||||||
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Customer C |
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Customer E |
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Amounts due these customers totaled $
The Company’s supplier concentrations expose the Company to business risks, which the Company mitigates by attempting to diversify its supply chain. Significant supplier purchases as a percentage of total inventory purchases are as follows:
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THREE MONTHS ENDED SEPTEMBER 30, |
NINE MONTHS ENDED SEPTEMBER 30, |
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2024 |
2023 |
2024 |
2023 |
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Supplier A |
% | % | % | |||||||||||||
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Supplier B |
% | % | ||||||||||||||
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Supplier D |
% | |||||||||||||||
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Supplier E |
% | |||||||||||||||
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Supplier F |
% | % | % | |||||||||||||
There were amounts outstanding due these suppliers at September 30, 2024 and December 31, 2023. The loss of key vendors may have a significant impact on the operations and cash flows of the Company.
The estimated fair value of financial instruments has been determined using available market information and appropriate valuation methodologies. However, considerable judgment is often required to interpret market data used to develop the estimates of fair value. Accordingly, the estimates presented may not be indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts.
Disclosure of Fair Value
The disclosure requirements within Accounting Standards Codification (ASC) Topic 820-10, Fair Value Measurement, require disclosure of estimated fair values of certain financial instruments. For financial instruments recognized at fair value in the Company’s statements of operations, the disclosure requirements of ASC Topic 820-10 also apply. The methods and assumptions are set forth below:
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Cash and cash equivalents are carried at cost, which approximates fair value. |
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The carrying amounts of receivables approximate fair value due to their short-term maturities. |
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The carrying amounts of payables approximate fair value due to their short-term maturities. |
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Derivative liabilities are adjusted to fair value utilizing the Lattice method |
Asset and liabilities measured and reported at fair value are classified and disclosed in one of the following categories based on inputs:
Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability
Level 3 — Pricing inputs include significant unobservable inputs used in determining the fair value of investments. The types of investments, which would generally be included in this category include equity securities issued by private entities.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.
The Company’s convertible promissory notes contain variable conversion provisions upon default, Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion options and shares to be issued were recorded as derivative liabilities on the default dates.
The following table presents changes during the nine months ended September 30, 2024 in Level 3 liabilities measured at fair value on a recurring basis:
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Fair value- December 31, 2023 |
$ | |||
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Derivative liabilities in conjunction with settlement of convertible promissory notes |
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Conversion of convertible promissory notes |
( |
) | ||
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Change in fair value of derivative liabilities |
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Fair value- September 30, 2024 |
$ |
The levels of the fair value hierarchy into which the Company’s assets and liabilities fall as of September 30, 2024, are as follows:
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Level 1 |
Level 2 |
Level 3 |
Total |
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Liabilities |
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Derivative liabilities – convertible promissory notes |
$ | $ | $ | $ | ||||||||||||
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Total fair value |
$ | $ | $ | $ | ||||||||||||
Inventories
Inventories are stated at the lower of cost or market. Cost is determined based on the first-in, first-out cost flow assumption (“FIFO”) while market is determined based upon the estimated net realizable value less an allowance for selling and distribution expenses and a normal gross profit. The Company evaluates the need for inventory reserves associated with obsolete, slow moving, and non-sellable inventory by reviewing estimated net realizable values on a periodic basis. As of September 30, 2024 and December 31, 2023, the Company believes there are no excess and obsolete inventories and accordingly, did record an inventory reserve. Inventories consist of purchased finished goods.
Sales Taxes
Sales taxes for the three-month periods ended September 30, 2024 and 2023, were recorded on a net basis. Included in accrued expenses at both September 30, 2024 and December 31, 2023 is approximately $
Warranty
The Company warrants the sale of most of its products and records an accrual for estimated future claims. The standard warranty is typically for a period of years. Such accruals are based upon historical experience and management’s estimate of the level of future claims. The Company recorded a liability as of September 30, 2024 and December 31, 2023 of $
Lease Commitment
The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. Lease expense for variable lease components are recognized when the obligation is probable. Operating lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s lease, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments.
The lease term for the Company’s lease includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. The Option for the lease renewal has been excluded from the lease term (and lease liability) for the Company’s lease as the reasonably certain threshold is not met.
Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain.
Variable lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the Company’s statement of operations in the same line as expense arising from fixed lease payments. As of September 30, 2024, management determined that there were variable lease costs.
Net earnings (loss) per Share
Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the actual weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net loss per share if their inclusion would be anti-dilutive.
Conversion of outstanding warrants, certain accrued liabilities and convertible promissory notes at September 30, 2024 may result in an estimated
COVID‑19
On January 30, 2020, the World Health Organization declared the COVID‑19 outbreak a “Public Health Emergency of International Concern” and on March 11, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the COVID‑19 include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. COVID‑19, and actions taken to mitigate it, have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. While it is unknown how long these conditions will last and what the complete financial effect will be to the company, COVID‑19 has had an adverse effect on our business, including our supply chains and distribution systems. While we are taking diligent steps to mitigate disruptions to our supply chain, we are unable to predict the extent or nature of these impacts at this time to our future financial condition and results of operations.
Recently Issued Accounting Pronouncements
Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.
|
NOTE 3. |
PROPERTY AND EQUIPMENT |
Property and equipment consisted of the following as of:
|
September 30, |
December 31, |
|||||||
|
2024 |
2023 |
|||||||
|
Building |
$ | $ | ||||||
|
Tooling |
||||||||
|
Furniture and equipment |
||||||||
|
Less: accumulated depreciation and amortization |
( |
) | ( |
) | ||||
| $ | $ | |||||||
On March 15, 2023, the Company entered into an agreement to sell the building of its principal offices at a purchase price of $
Depreciation and amortization expense related to property and equipment was $
|
NOTE 4. |
NOTES PAYABLE |
Convertible Promissory Notes
The aggregate of convertible promissory notes is as follows:
|
September 30, |
December 31, |
|||||||
|
Convertible promissory notes |
2024 |
2023 |
||||||
|
Principal balance |
$ | $ | ||||||
|
Debt discount balance |
( |
) | ||||||
|
Net Notes balance |
$ | $ | ||||||
The Net Notes balance at September 30, 2024 is comprised of the following:
|
Principal |
Debt Discount |
Net |
||||||||||
|
Pre 2020 |
$ | $ | $ | |||||||||
|
October 2021 |
||||||||||||
|
February 2022 |
||||||||||||
|
March 2022 |
||||||||||||
|
August 2022 |
||||||||||||
|
September 2022 |
||||||||||||
|
March 2024 |
( |
) | ||||||||||
| $ | $ | ( |
) | $ | ||||||||
The Net Notes balance at December 31, 2023 is comprised of the following:
|
Principal |
Debt Discount |
Net |
||||||||||
|
Pre 2020 |
$ | $ | $ | |||||||||
|
October 2021 |
||||||||||||
|
February 2022 |
||||||||||||
|
March 2022 |
||||||||||||
|
August 2022 |
||||||||||||
|
September 2022 |
||||||||||||
| $ | $ | $ | ||||||||||
In March and April 2024, the Company entered into settlement agreements with two of its lenders for amounts in default under the October 2021, February 2022, March 2022 and September 2022 convertible promissory notes. The settlement agreements have been accounted for as debt modifications. (See Note 6). Principal of $
|
● |
Certain outstanding warrants are to be cancelled without consideration. |
|
● |
The maturity date has been extended to |
|
● |
Interest rate is capped at |
|
● |
Default penalties accrued up to the settlement date are no longer due and from the effective date forward are amended to |
|
● |
All payments will be applied first to outstanding principal and will include the note holders’ pro-rata share of $ |
|
● |
Conversions of outstanding principal are limited to $ |
As of September 30, 2024, and separately, the Company is in default of a matured convertible promissory note, issued to a lender on August 8, 2022, with principal and interest due in the amounts of $
In March 2024, the Company borrowed $
|
NOTE 5. |
LONG-TERM DEBT |
Government Debt
In June 2020, the Company received a $
|
NOTE 6. |
DERIVATIVE LIABILITIES |
The Company’s convertible promissory notes contain variable conversion provisions upon default. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion options and shares to be issued were recorded as derivative liabilities on the default dates. In March and April 2024, the Company entered into settlement agreements with two of its lenders for amounts in default under the October 2021, February 2022, March 2022 and September 2022 convertible promissory notes. The settlement agreements resulted in a net increase in derivative liabilities totaling $
Based on the various convertible promissory notes described in Note 4, the fair value of applicable derivative liabilities on notes and the change in fair value of derivative liabilities are as follows for the nine months ended September 30, 2024:
|
Fair value- December 31, 2023 |
$ | |||
|
Derivative liabilities in conjunction with settlement of convertible promissory notes |
||||
|
Conversion of convertible promissory notes |
( |
) | ||
|
Change in fair value of derivative liabilities |
||||
|
Fair value- September 30, 2024 |
$ |
The fair value of the derivative liabilities – convertible promissory notes is estimated using a Lattice pricing model with the following assumptions:
|
Market value of common stock |
$ | - | ||||
|
Expected volatility |
- | % | ||||
|
Expected term (in years) |
- | |||||
|
Risk-free interest rate |
- | % |
|
NOTE 7. |
RELATED PARTY TRANSACTIONS |
In January 2023, the Company issued share of Series B Preferred stock to the Company’s CEO. Compensation expense of $
bonus was earned by the Company’s CEO for the nine months ended September 30, 2024. The remaining $
Effective July 15, 2023, the Company’s board of directors executed a resolution whereby the CEO’s salary shall be reduced from $
In February 2023, the Company entered into a one-year consulting agreement under the Company’s Employee and Consultant Stock Ownership Plan, with an advisor and director in exchange for compensation of
Compensation totaling $
|
NOTE 8. |
STOCKHOLDERS’ DEFICIT |
On August 6, the Company’s board of directors approved a resolution to amend the Company’s Certificate of Incorporation to increase the Company’s authorized common shares from
During the nine months ended September 30, 2024, holders of convertible promissory notes converted $
During the nine months ended September 30, 2024, the Company issued
|
NOTE 9. |
STOCK OPTIONS AND WARRANTS |
Stock Options
In 2017, the Company’s Board of Directors approved the 2017 Employee and Consultant Stock Ownership Plan, (the “Plan”). The Plan provides that the Board of Directors may grant stock units, incentive stock options and non-statutory stock options to officers, key employees and certain consultants and advisors to the Company up to a maximum of
options were granted during the nine months ended September 30, 2024.
Warrants
As of September 30, 2024,
The following table summarizes the information with respect to outstanding warrants to purchase common stock of the Company, all of which were exercisable at September 30, 2024:
| Date Issued | Exercise Price | Number Outstanding | Expiration Date | ||||||
|
May 1, 2020 |
$ |
|
|||||||
|
October 1, 2021 |
$ |
|
|||||||
|
October 17, 2021 |
$ |
|
|||||||
|
August 10, 2022 |
$ |
|
|||||||
|
September 29, 2022 |
$ |
|
|||||||
|
February 11, 2023 |
$ |
|
|||||||
The following table summarizes the information with respect to outstanding warrants to purchase common stock of the Company, all of which were exercisable at December 31, 2023:
| Date Issued | Exercise Price | Number Outstanding | Expiration Date | ||||||
|
December 1, 2018 |
$ |
December 1, 2023 |
|||||||
|
May 1, 2020 |
$ |
May 1, 2025 |
|||||||
|
October 1, 2021 |
$ |
October 1, 2026 |
|||||||
|
October 17, 2021 |
$ |
October 17, 2024 |
|||||||
|
August 10, 2022 |
$ |
August 10, 2027 |
|||||||
|
September 29, 2022 |
$ |
September 29,2027 |
|||||||
|
February 11, 2023 |
$ |
February 11, 2028 |
|||||||
|
March 10, 2023 |
$ |
March 10, 2028 |
|||||||
|
September 15, 2023 |
$ |
September 15, 2026 |
|||||||
|
NOTE 10. |
COMMITMENTS AND CONTINGENCIES |
Commitments
The Company has entered into a product development agreement with remaining payments totaling approximately $
In September 2023, the Company entered into an operating lease for its office location. The lease provides for a base rent of $
The following outlines the maturities of our operating lease liabilities for the periods ending June 30,
|
2025 |
$ | |||
|
2026 |
$ | |||
|
2027 |
$ | |||
|
Total lease payments |
$ | |||
|
Less imputed interest |
$ | ( |
) | |
|
Total |
$ |
Contingencies
The Company is subject to various loss contingencies and assessments arising in the normal course of the business, some of which relate to litigation, claims, property taxes, and sales and use tax or goods and services tax assessments. The Company considers the likelihood of the loss or the incurrence of a liability, as well as its ability to reasonably estimate the amount of loss in determining loss contingencies and assessments. An estimated loss contingency or assessment is accrued when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Management regularly evaluates current information available to them to determine whether such accruals should be adjusted. Currently, there are pending court actions, or arbitration claims filed against the company that may reasonably be determined, as of the date of this filing, to exceed $
As of September 30, 2024, the Company is in default of a matured convertible promissory note, issued to a lender on August 8, 2022, with principal and interest due in the amounts of $
|
NOTE 11. |
SUBSEQUENT EVENTS |
The Company has evaluated subsequent events that have occurred through the date of this filing and determined that there were no subsequent events or transactions that required recognition or disclosure in the financial statements, except as disclosed below.
As of November 19, 2024, holders of convertible promissory notes converted $
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The statements contained in this report that are not statements of historical fact, including without limitation, statements containing the words “believes,” “expects,” “anticipates” and similar words, constitute forward-looking statements that are subject to a number of risks and uncertainties. From time to time, we may make other forward-looking statements. Investors are cautioned that such forward-looking statements are subject to an inherent risk that actual results may materially differ as a result of many factors, including the risks discussed from time to time in this report, including the risks described under “Risk Factors” in any filings we have made with the SEC.
Our 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 financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, certain disclosures at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates affecting the financial statements have been prepared on the basis of the most current and best available information. However, actual results from the resolution of such estimates and assumptions may vary from those used in the preparation of the financial statements.
Background
The Company was formed in Nevada on August 30, 2002 as IntelSource Group, Inc. and began operations in 2003. In 2007, IntelSource Group, Inc. merged with ElectroMedical Technologies, LLC. The Company began acting as Electro Medical Technologies, LLC, an Arizona limited liability company on November 9, 2010, after the merger with ElectroMedical Technologies, LLC, a Nevada Company. The Company converted to a corporation in the State of Delaware on August 23, 2017.
Electromedical Technologies is a bioelectronics manufacturing and marketing company. We offer U.S. Food and Drug Administration (FDA) cleared medical devices for pain management.
Bioelectronics is a developing field of “electronic” medicine, which uses electrical impulses over the body’s neural circuitry to try to alleviate pain, without drugs. The human body is controlled by electrical signals sent through the nervous system, which can become distorted after accidents or as a result of disease. The field of bioelectronic medicine aims to safely correct irregularities in the nervous system by modifying the electrical language of the body related to pain relief.
Our mission is to improve global wellness for people suffering from various painful conditions by relieving chronic and acute pain using energy, frequency and vibration as an alternative to pharmaceuticals; and one day, read and modifies electrical signals passing along nerves in the body, to restore long-term health.
Additionally, we have a corporate goal to offer the public effective alternatives to addictive pain -relieving drugs, such as opioids. According to the Society of Actuaries, opioid overdose deaths are now the single largest factor slowing the growth in U.S. life expectancy and has led to stagnation or decreases in life expectancy three years in a row for the first time since 1915–1918, when the country was facing World War I and the Spanish flu pandemic. The U.S. Centers of Disease Control and Prevention (CDC) has reported that, from 1999 through 2017, nearly 400,000 have died from overdoses from prescription or illicit opioids. It is our aim to offer effective alternatives to pain management.
Results of Operations
Overview and Financial Condition
Going Concern
Since inception, the Company has incurred approximately $25.0 million of accumulated net losses. In addition, during the nine months ended September 30, 2024, the Company used $49,434 in operations and had a working capital deficit of $3,787,034. These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company expects to obtain funding through additional debt and equity placement offerings until it consistently achieves positive cash flows from operations. If the Company is unable to obtain additional funding, it may not be able to meet all of its obligations as they come due for the next twelve months. The continuing viability of the entity and its ability to continue as a going concern is dependent upon the entity being successful in its continuing efforts in growing its revenue base and/or accessing additional sources of capital, and/or selling assets.
As a result, there is significant uncertainty whether the entity will continue as a going concern and, therefore, whether it will realize its assets and settle its liabilities and commitments in the normal course of business and at the amounts stated in the financial statements.
Accordingly, no adjustments have been made to the financial statements relating to the recoverability and classification of the asset carrying amounts or the amount and classification of liabilities that might be necessary should the entity not continue as a going concern. At this time, management is of the opinion that no asset is likely to be realized for an amount less than the amount at which it is recorded in the financial statements as at September 30, 2024.
While priority is on generating cash from operations through the sale of the Company’s products, management is also seeking to raise additional working capital through various financing sources, including the sale of the Company’s equity and/or debt securities, which may not be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable to continue our business as desired and our operating results will be adversely affected. In addition, any financing arrangement may have potentially adverse effects on us and/or our shareholders. Debt financing (if available and undertaken) will increase expenses, must be repaid regardless of operating results and may involve restrictions limiting our operating flexibility. If we issue equity securities to raise additional funds, the percentage ownership of our existing shareholders will be reduced and the new equity securities may have rights, preferences or privileges senior to those of the current holders of our shares of Common Stock.
The following table sets forth the unaudited results of our operations for the three months ended September 30,
|
2024 |
2023 |
|||||||
|
Net Sales |
$ | 42,526 | $ | 323,613 | ||||
|
Cost of goods sold |
11,881 | 72,437 | ||||||
|
Gross profit |
30,645 | 251,176 | ||||||
|
Operating Expenses |
411,683 | 490,205 | ||||||
|
Loss from operations |
(381,038 | ) | (239,029 | ) | ||||
|
Other income (expense) |
(343,605 | ) | (137,691 | ) | ||||
|
Net income (loss) |
$ | (724,643 | ) | $ | (376,720 | ) | ||
Operating Results
July 1, 2024 through September 30, 2024 Compared to July 1, 2023 through September 30, 2023
Our sales totaled $42,526 for the three months ended September 30, 2024 and $323,613 for the three months ended September 30, 2023, a decrease of $281,087 or 87%. The decrease is primarily related to a decrease in units sold. Unit sales have decreased as the Company winds down the sale of its current product leading up to the introduction of the new Wellness Pro Infinity. In June 2024, the Company initiated its exchange program, allowing current customers to submit deposits for the new Wellness Pro Infinity. Deposits totaling $764,125 have been collected as of September 30, 2024 for the new product.
Cost of sales and gross margins for the three months ended September 30, 2024, and for the three months ended September 30, 2023 were $11,881 and 72% and $72,437 and 78%, respectively. Our cost of sales consists of the cost of materials and distribution expenses. Cost of sales and gross margins are affected by product mix as well as the mix in the level of sales between commissioned agents and distributors.
The following table sets forth the operating expenses for the three months ended September 30:
|
2024 |
2023 |
Change |
||||||||||
|
Marketing |
$ | 350 | $ | 825 | $ | (475 | ) | |||||
|
Commissions |
- | 31,300 | (31,300 | ) | ||||||||
|
Payroll related |
211,690 | 226,142 | (6,951 | ) | ||||||||
|
Consulting and professional fees |
135,401 | 115,535 | 19,866 | |||||||||
|
Other operating expenses |
64,242 | 116,403 | (59,662 | ) | ||||||||
| $ | 411,683 | $ | 490,205 | $ | (78,522 | ) | ||||||
Selling, general and administrative expenses consist primarily of payroll related expenses, commissions, consulting and professional fees, sales and marketing, research and development and other operating expenses. Selling, general and administrative expenses totaled $411,683 for the three months ended September 30, 2024 and $490,205 for the three months ended September 30, 2023, a decrease of $78,522 or about 16%. The change is primarily due to decreases in other operating expenses of $59,662, commissions of $31,300, and payroll related expenses of $6,951, partially offset by an increase in consulting and professional fees of $19,866.
The decrease in other operating expenses consists primarily of approximately $21,000 in rent as a result of the more favorable September 2023 lease, and $27,000 related to insurance. The decrease in commissions reflects the decrease in sales and that sales were to distributors.
The decrease in payroll related expenses is primarily due to a reduced headcount.
The increase in consulting and professional fees is primarily related to increased legal fees and public company costs offset by reduced accounting fees.
Other expense increased by $205,914 primarily due to reduction in accrued penalties of $53,251 for convertible notes payable in default, a decrease in interest expense of $107,207 and an increase in the losses associated with derivative liabilities of $366,642. Accrued penalties were removed in conjunction with the settlement of certain convertible notes payable. The decrease in interest expense is primarily related to the valuation of a trigger warrant in the 2023. period. All debt discount for notes issued prior to Jan 1,2024 has been fully amortized in 2023.
As a result of the foregoing, we recorded a net loss of $724,643 for the three months ended September 30, 2024, compared to a net loss of $376,720 for the three months ended September 30, 2023. The decrease in net loss is primarily attributed to the increased loss from operations and the increase in other expense.
The following table sets forth the unaudited results of our operations for the nine months ended September 30:
|
2024 |
2023 |
|||||||
|
Net Sales |
$ | 570,415 | $ | 997,213 | ||||
|
Cost of goods sold: |
149,128 | 222,652 | ||||||
|
Gross profit |
421,287 | 774,561 | ||||||
|
Operating Expenses |
1,209,048 | 2,616,531 | ||||||
|
Loss from operations |
(787,759 | ) | (1,841,970 | ) | ||||
|
Other expense |
(541,922 | ) | (450,619 | ) | ||||
|
Net Loss |
$ | (1,329,681 | ) | $ | (2,292,589 | ) | ||
January 1, 2024 through September 30, 2024 Compared to January 1, 2023 through September 30, 2023
Our sales totaled $570,415 for the nine months ended September 30, 2024 and $997,213 for the nine months ended September 30, 2023, a decrease of $426,798 or 43%. The decrease is primarily related to a decrease in units sold as well as a reduction in average selling price. Unit sales have decreased as the Company winds down the sale of its current product leading up to the introduction of the new Wellness Pro Infinity. In June 2024, the Company initiated its exchange program, allowing current customers to submit deposits for the new Wellness Pro Infinity. Deposits totaling $764,125 have been collected as of September 30, 2024 for the new product.
Cost of sales and gross margins for the nine months ended September 30, 2024 and for the nine months ended September 30, 2023 were $149,128 and 74% and $222,652 and 78% respectively. Our cost of sales consists of the cost of materials and distribution expenses. Cost of sales and gross margins are affected by product mix as well as the mix in the level of sales between commissioned agents and distributors.
The following table sets forth the operating expenses for the nine months ended September 30:
|
2024 |
2023 |
Change |
||||||||||
|
Marketing |
$ | 5,236 | $ | 26,700 | $ | (21,464 | ) | |||||
|
Commissions |
32,800 | 114,400 | (81,600 | ) | ||||||||
|
Payroll related |
636,628 | 1,135,130 | (491,001 | ) | ||||||||
|
Consulting and professional fees |
312,148 | 687,931 | (375,783 | ) | ||||||||
|
Research and development |
- | 289,934 | (289,934 | ) | ||||||||
|
Other operating expenses |
222,234 | 362,436 | (147,703 | ) | ||||||||
| $ | 1,209,046 | $ | 2,616,531 | $ | (1,407,485 | ) | ||||||
The following table sets forth the stock- based compensation expense included in the above operating expenses for nine months ended September 30:
|
2024 |
2023 |
Change |
||||||||||
|
Payroll related |
— | 400,000 | (400,000 | ) | ||||||||
|
Consulting and professional fees |
10,000 | 315,000 | (305,000 | ) | ||||||||
| $ | 10,000 | $ | 715,000 | $ | (705,000 | ) | ||||||
Selling, general and administrative expenses consist primarily of payroll related expenses, commissions, consulting and professional fees, sales and marketing, research and development and other operating expenses. Selling, general and administrative expenses totaled $1,209,046 for the nine months ended September 30, 2024 and $2,126,326 for the nine months ended September 30, 2023, a decrease of $1,407,485 or about 54%.
The change is primarily due to a $491,001 decrease in payroll related costs of, which $400,000 is stock-based compensation, a $375,783 decrease in consulting and professional fees, of which $305,000 is stock-based compensation, decreased research and development costs of $289,934, decreased commissions of $81,600 and decreased other operating costs of $147,703.
Stock-based compensation expense for the nine months ended September 30, 2023, includes $315,000 related to a consulting agreement with an advisor and director and $400,000 related to the issuance of a share of Series B Preferred stock to the Company’s CEO.
The non -stock based compensation decrease in payroll related costs consists primarily of reduced employee headcount and no CEO bonus earned in the 2024 period.
The nonstock-based compensation decrease in consulting and professional fees includes, $30,000 related to the resignation of one of the Company’s directors as of July 1, 2023, as well as reduced legal, accounting and other public company related expenses.
The decrease in research and development costs relates to payments made under its product development agreement as new milestones were met in the 2023 period and not in the 2024 period. The decrease in other operating expenses consists primarily of $46,000 in reduced travel, $30,000 related to insurance, $18,000 related to outside services, $10,000 in fees related to convertible note payable conversions and $42,000 related to rent following the 2023 sale of the building. The decrease in commissions reflects the reduction in sales including a larger percentage sold to distributors.
Other expense increased by $91,303 primarily due to a change in accrued penalties of $726,951 for convertible notes payable in default, and a decrease in interest expense of $662,274, partially offset by and an increase in losses associated with derivative liabilities of $286,852, and by the $1,193,676 gain from the 2023 sale of the building. Accrued penalties were removed in conjunction with the settlement of certain convertible notes payable. The decrease in interest expense is primarily due to $370,000 of additional amortized debt discount and $263,476 related to the valuation of certain trigger warrants for matured convertible notes payable in the 2023 period. All debt discount for notes issued prior to Jan 1,2024 has been fully amortized in 2023.
As a result of the foregoing, we recorded a net loss of $1,329,681 for the nine months ended September 30, 2024, compared to a net loss of $2,292,589 for the nine months ended September 30, 2023. The decrease in net loss is primarily attributed to a decreased loss from operations.
COVID-19 may impact our business.
On January 30, 2020, the World Health Organization declared the COVID-19 outbreak a “Public Health Emergency of International Concern” and on March 11, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the COVID-19 include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. COVID-19, and actions taken to mitigate it, have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical areas in which we operate. While it is unknown how long these conditions will last and what the complete financial effect will be to the Company, COVID-19 may have an adverse effect on our business. While we are taking diligent steps to mitigate any possible disruptions to our business, we are unable to predict the extent or nature of these impacts, at this time, to our future financial condition and results of operations.
Liquidity and Capital Resources
During the nine months ended September 30,2024 our cash and cash equivalents decreased by $52,895 reflecting cash used in operations of $80,263 and provided by financing activities of $27,638. At September 30, 2024, the Company had a working capital deficit of $3,787,034 and cash on hand of $34,809. During the nine months ended September 30, 2023 our cash and cash equivalents decreased by $229,948 reflecting cash used in operations of $1,366,445 and cash used in financing activities of $608,386, offset by cash provided from the sale of the Company’s building of $1,894,588. At September 30, 2023, the Company had a working capital deficit of $2,237,432 and cash on hand of $138,477.
Operating Activities
Cash flows used in operating activities totaled $80,263 for the nine months ended September 30, 2024 as compared to cash flows used of $1,366,445 or the nine months ended September 30, 2023. The change in cash flows used in operating activities is primarily the result of a a decrease in the loss from operations, an increase in customer deposits and a decrease in accrued liabilities.
Investing Activities
Cash provided by investing activities for the nine months ended September 30, 2023 totaled $1,744,883 related to $1,894,588 of gross proceeds from the sale of the Company’s building before payment of the outstanding long-term bank debt secured by the building. Investing activities for the nine months ended September 30, 2023 also included capital expenditures totaling $149,705 for production tooling. There were no investing activities in the 2024 period.
Financing Activities
Cash flows provided by financing activities totaled $27,638 for the nine months ended September 30, 2024 as compared to cash flows used in financing activities of $608,386 for the nine months ended September 30, 2023. The cash flows provided in the 2024 period relate to the net proceeds from a convertible debt financing. The cash flows used in the 2023 period are primarily the result of the $522,401 repayment of the long- term bank debt related to the building as part of the March 2023 sale and convertible notes payable payments totaling $85,985.
In March and April 2024, the Company entered into settlement agreements with two of its lenders for amounts in default under the October 2021, February 2022, March 2022 and September 2022 convertible promissory notes. The settlement agreements have been accounted for as debt modifications. (See Note 6). Principal of $1.238,101 and accrued interest of $165,734 are covered by the agreements and subject to the following settlement terms:
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Certain outstanding warrants are to be cancelled without consideration. |
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The maturity date has been extended to September 25, 2025. |
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Interest rate is capped at 12% per annum. |
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Default penalties accrued up to the settlement date are no longer due and from the effective date forward are amended to 115% from 125%. Default penalties totaling approximately $3,000 and $337,000 have been reversed and recorded as other income in the Company’s statement of operations for the three months and nine months ended September 30, 2024, respectively. |
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All payments will be applied first to outstanding principal and will include the note holders’ pro-rata share of $400 - $600 per unit, from futures sales of the Company’s Wellness ProPlus Infinity units. |
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Conversions of outstanding principal are limited to $30,000 per calendar month through December 31, 2024, and may be waived under certain conditions and after such date. |
As of September 30, 2024, and separately, the Company is in default of a matured convertible promissory note, issued to a lender on August 8, 2022, with principal and interest due in the amounts of $93,000 and $51,099, respectively. The convertible note included a cross-default and a cross-default provision which required the Company to remit payment of principal, accrued interest, default interest, and legal fees, multiplied by 150%. The amount of approximately $72,000 in default penalties has been accrued and is recorded in the Company’s balance sheet as of September 30, 2024, for this lender. The Company is in negotiations with the lender to reform the note in default.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Management is responsible for establishing and maintaining adequate disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely and reliable financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America.
As of the period ended September 30, 2024 our principal executive officer and principal financial officer completed an assessment of the effectiveness of our disclosure controls and procedures, to determine the existence of any material weaknesses or significant deficiencies. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant’s financial reporting.
Based on this evaluation, the Company’s management concluded its internal controls over financial reporting were not effective as of September 30, 2024. The ineffectiveness of the Company’s internal control over financial reporting was due to the following identified material weaknesses and significant deficiencies:
Material Weakness
Management identified the following material weaknesses:
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we do not have an Audit Committee – While not being legally obligated to have an Audit Committee, it is the management’s view that such a committee, including a financial expert board member, is an utmost important entity level control of the Company’s financial statements. Currently the Board of Directors acts in the capacity of the Audit Committee and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities. |
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we have not performed a risk assessment and mapped our processes to control objectives. |
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we have not implemented comprehensive entity-level internal controls. |
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we have not implemented adequate system and manual controls; and |
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we do not have sufficient segregation of duties. |
Changes in Internal Control over Financial Reporting.
Our management will continue to monitor and evaluate the designation, implementation and effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary. There were no changes in such controls during the nine months ended September 30, 2024.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are presently no material pending legal proceedings filed to which the Company, any executive officer, or any owner of record or beneficially of more than five percent of any class of voting securities is a party or as to which any of its property is subject.
There are unasserted claims between the Company and one of the Company’s lenders that could possibly exceed $5,000. As of the date of this filing, the lender notified the Company that, because of the respective defaults or cross defaults of matured notes resulting from the sale of its real property, the default amounts under the note, including the payment of principal, accrued interest, default interest, and legal fees, multiplied by 150% is being sought. During the nine months ended September 30, 2024, the note holder has applied default conversion rates to outstanding principal, interest, and default amounts under the notes. The Company has accrued all default interest under the note. The Company is in negotiations with the lender to reform the note in default. With respect to the unasserted claims by and between the Company and the noteholder, the ongoing negotiations of the parties are informal, private, confidential, and, as of the date of this filing, are incomplete and unresolved. Thus, it is difficult as of the date of this filing to establish whether or not any legal actions arising from these unasserted claims are “probable,” “reasonably possible,” or “remote,” or what remedies may be sought in any action, and whether or not those remedies are material under FAS 5. No note holder has communicated to the Company that legal action exists or is imminent. No court has jurisdiction over the matters because, as of the date of this filing, no lender has filed an action in any court of competent jurisdiction or any arbitration proceeding.
Based on the information presently available, including discussion with outside counsel and other consultants, management believes, as of the date of this filing, that resolution of any other matters will not have a material adverse effect on its business, results of operations, financial condition, or cash flows.
ITEM 1A. RISK FACTORS
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In February and March 2017, the Company executed a promotion whereby distributors who made purchases during the promotional period would receive credits towards either future purchases of product through September 1, 2017 or shares of stock. Credits totaling $173,955 were earned by such distributors of which $1,010 had been applied against purchases of product. The remaining credit of $172,945 would be satisfied in shares of the Company’s common stock. As of and for the year ended December 31, 2017, an accrual for $170,930 of the amount of the net credits has been recorded as marketing expense in the statement of operations as well as within accrued liabilities on the accompanying balance sheet. The Company recorded the amount as marketing expense as the promotion was provided directly to distributors rather than to end users. In 2018, the Company issued 243,584 common shares to 25 unaffiliated shareholders earned in the 2017 promotional program. The issuances were made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. The distributors were “accredited investors” and/or “sophisticated investors” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning their qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to the distributors full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. The distributors acquired the restricted common stock for their own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On December 31, 2017, the Company issued 15,000,000 common shares to Matthew Wolfson (“Wolfson”) for services valued at $697,984. Two million were registered in the Company’s S-1 made effective August 6, 2020. The issuance to Wolfson was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Wolfson was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning his qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Wolfson full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Wolfson acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On September 19, 2018, the Company issued 5,000 common shares to Body Tone, a sole proprietorship (“Body Tone”) for $5,000. The issuance to Body Tone was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Body Tone was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Body Tone full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Body Tone acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On October 31, 2018, the Company issued 100,000 common shares to Gene Taubman (“Taubman”) for $100,000. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to Taubman was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Taubman was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning his qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Taubman full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Taubman acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On November 29, 2018, the Company issued 247,565 common shares to EBI (“EBI”) as a settlement for debt valued at 175,771. The issuance to EBI was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. EBI was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to EBI full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. EBI acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On January 24, 2019, the Company issued 28,169 common shares to Robert L. Hymers, III (“Hymers”) for $20,000. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to Hymers was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Hymers was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning his qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Hymers full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Hymers acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On February 7, 2019, the Company issued 20,000 common shares to Chester W. Hedderman (“Hedderman”) for $20,000. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to Hedderman was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Hedderman was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning his qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Hedderman full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Hedderman acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On February 12, 2019, the Company sold 150,000 common shares to Robert L. Hymers, III (“Hymers”) for services valued at $106,500. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to Hymers was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Hymers was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning his qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Hymers full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Hymers acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On February 28, 2019, the Company sold 21,126 common shares to Robert L. Hymers, III (“Hymers”) for 15,000. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020.The issuance to Hymers was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Hymers was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning his qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Hymers full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Hymers acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On March 27, 2019, the Company sold 35,211 common shares to James Hancock (“Hancock”) for $25,000. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to Hancock was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Hancock was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning his qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Hancock full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Hancock acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On June 28, 2019, the Company sold 43,461 common shares to Robert L. Hymers, III (“Hymers”) for services valued at $30,857. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to Hymers was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Hymers was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning his qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Hymers full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Hymers acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On July 1, 2019, the Company sold 42,253 common shares to Robert L. Hymers, III (“Hymers”) for $30,000. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020.The issuance to Hymers was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Hymers was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning his qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Hymers full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Hymers acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On July 1, 2019, the Company sold 10,000 shares to PYP Enterprises (“PYP”) for services valued at $7,100. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to PYP was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. PYP was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to PYP full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. PYP acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On July 1, 2019, the Company sold 10,000 common shares to Brenda Andrews (“Andrews”) for services valued at $7,100. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to Andrews was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Andrews was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning her qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Andrews full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Andrews acquired the restricted common stock for her own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On October 11, 2019, the Company sold 64,215 common shares to Nikolai Ogorodikov (“Ogorodikov”) for conversion of a note and accrued interest. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to Ogorodikov was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Ogorodikov was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning his qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Ogorodikov full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Ogorodikov acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On October 24, 2019, the Company sold 39,363 common shares to Ben and Carol Howden (“Howden”) for conversion of a note and accrued interest. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to Howden was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Howden was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning their qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Howden full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Howden acquired the restricted common stock for their own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On October 30, 2019, the Company sold 28,169 common shares to Eyelyn Easson (“Easson”) for settlement of a liability. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to Easson was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Easson was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning her qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Easson full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Easson acquired the restricted common stock for her own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On November 1, 2019, the Company sold 1,000,000 common shares to Donald Steinberg (“Steinberg”) for conversion of KISS note. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to Steinberg was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Steinberg was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning his qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Steinberg full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Steinberg acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On January 23, 2020, the Company sold 10,355 common shares to Tim Manning (“Manning”) settlement of a liability. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to Manning was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Manning was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning his qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Manning full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Manning acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On February 11, 2020, the Company sold 200,000 common shares to Robert L. Hymers, III (“Hymers”) for services valued at $102,000. These shares were registered in the Company’s S-1 registration statement made effective August 6, 2020. The issuance to Hymers was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Hymers was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning his qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Hymers full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Hymers acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On February 27, 2020, the Company sold 400,000 common shares to RedStone Consultants (“RedStone”) for services valued at $188,000. The issuance to RedStone was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. RedStone was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to RedStone full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. RedStone acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On June 4, 2020, the Company sold 100,000 common shares to Vista Capital (“Vista”) as original issue discount on debt valued at $51,000. The issuance to Vista was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Vista was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Vista full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Vista acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On June 15, 2020, the Company sold 142,857 common shares to Pro Active Capital (“Pro Active”) for $50,000. The issuance to Pro Active was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Pro Active was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Pro Active full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Pro Active acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On November 3, 2020, the Company sold 65,000 common shares to PCG Advisory for services valued at $55,900. The issuance to PCG was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. PCG was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to PCG full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. PCG acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On December 14, 2020 Vista Capital Investments, LLC converted is promissory note of unpaid principal and accrued interest $118,800 in 339,429 shares of common stock. The issuance to Vista was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Vista was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Vista full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Vista acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On February 18, 2021, Redstart Holdings Corp. converted $30,000 of unpaid principal into 112,824 common shares from a convertible note. The issuance to Redstart was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Redstart was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Redstart full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Redstart acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On February 22, 2021, Redstart Holdings Corp. converted $35,000 of unpaid principal into 145,833 common shares from a convertible note. The issuance to Redstart was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Redstart was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Redstart full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Redstart acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On March 9, 2021, Redstart Holdings Corp. converted $15,000 of unpaid principal into 88,600 common shares from a convertible note dated August 11, 2020. The issuance to Redstart was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Redstart was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Redstart full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Redstart acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On March 10, 2021, Redstart Holdings Corp. converted $23,000 of unpaid principal and $5,150 of accrued and unpaid interest into 171,856 common shares from a convertible note dated August 11, 2020. The issuance to Redstart was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Redstart was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Redstart full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Redstart acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On March 15, 2021, Redstart Holdings Corp. converted $25,000 of unpaid principal into 152,625 common shares from a convertible note dated September 8, 2020. The issuance to Redstart was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Redstart was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Redstart full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Redstart acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On March 18, 2021, Redstart Holdings Corp. converted $53,000 of unpaid principal and $3,900 of accrued and unpaid interest into 347,375 common shares from a convertible note dated September 8, 2020. The issuance to Redstart was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Redstart was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Redstart full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Redstart acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On April 1, 2021, JSJ Investments, Inc. converted $30,000 of unpaid principal into 238,095 common shares from a convertible note. The issuance to JSJ was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. JSJ was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to JSJ full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. JSJ acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On April 8, 2021, JSJ Investments, Inc. converted $40,000 of unpaid principal into 361,572 common shares from a convertible note. The issuance to JSJ was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. JSJ was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to JSJ full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. JSJ acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On April 28, 2021, JSJ Investments, Inc. converted $38,000 of unpaid principal and $5,795.07 in accrued interest into 639,539 common shares from a convertible note dated September 28, 2020. The issuance to JSJ was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. JSJ was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to JSJ full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. JSJ acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On April 28, 2021, Redstart Holdings Corp. converted $30,000 of unpaid principal into 373,134 common shares from a convertible note dated October 22, 2020. The issuance to Redstart was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Redstart was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Redstart full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Redstart acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On May 6, 2021, Redstart Holdings Corp. converted $20,000 of unpaid principal into 385,356 common shares from a convertible note dated October 22, 2020. The issuance to Redstart was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Redstart was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Redstart full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Redstart acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On May 7, 2021, Redstart Holdings Corp. converted $35,000 of unpaid principal into 674,374 common shares from a convertible note dated October 22, 2020. The issuance to Redstart was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Redstart was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Redstart full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Redstart acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On May 12, 2021, Redstart Holdings Corp. converted $25,000 of unpaid principal into 520,833 common shares from a convertible note dated October 22, 2020. The issuance to Redstart was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Redstart was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Redstart full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Redstart acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On May 17, 2021, Redstart Holdings Corp. converted $18,000 of unpaid principal and $6,400 of interest into 602,469 common shares from a convertible note dated October 22, 2020. The issuance to Redstart was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Redstart was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Redstart full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Redstart acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On May 25, 2021, YA II PN, Ltd, converted $60,000 of unpaid principal and $1,301.37 of interest into 1,802,981 common shares from a convertible note dated May 7, 2021. The issuance to YA II PN, Ltd, was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. YA II PN, Ltd, was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to YA II PN, Ltd, full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. YA II PN, Ltd, acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On June 8, 2021, Jefferson Street Capital, LLC converted $40,000 of unpaid principal and $750 of expense into 1,344,440 common shares from a convertible note dated December 1, 2020. The issuance to Jefferson Street Capital, LLC was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Jefferson Street Capital, LLC was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Jefferson Street Capital, LLC full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Jefferson Street Capital, LLC acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On June 16, 2021, YA II PN, Ltd, converted $65,000 of unpaid principal and, $1,197.26 of interest into 1,946,978 common shares from a convertible note dated May 7, 2021. The issuance to YA II PN, Ltd, was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. YA II PN, Ltd, was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to YA II PN, Ltd, full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. YA II PN, Ltd, acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On June 17, 2021, GS Capital Partners, LLC converted $40,000 in principal and $2,005.48 in interest and $325 of expense into 1,675,591 common shares from a convertible note dated December 11, 2020. The issuance to GS Capital Partners, LLC was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. GS Capital Partners, LLC was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to GS Capital Partners, LLC full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. GS Capital Partners, LLC acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On July 8, 2021, YA II PN, Ltd, converted $85,000 of unpaid principal and, $787.67 of interest into 1,910,638 common shares from a convertible note dated May 7, 2021. The issuance to YA II PN, Ltd, was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. YA II PN, Ltd, was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to YA II PN, Ltd, full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. YA II PN, Ltd, acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On July 9, 2021, Jefferson Street Capital, LLC converted $50,000 of unpaid principal and expenses of $750 into 1,169,354 common shares from a convertible note dated December 1, 2020. The issuance to Jefferson Street Capital, LLC was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Jefferson Street Capital, LLC was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Jefferson Street Capital, LLC full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Jefferson Street Capital, LLC acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On July 15, 2021, GS Capital Partners, LLC converted $40,000 in principal and $2,312.33 in interest and $175 in expense into 1,087,745 common shares from a convertible note dated December 11, 2020. The issuance to GS Capital Partners, LLC was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. GS Capital Partners, LLC was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to GS Capital Partners, LLC full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. GS Capital Partners, LLC acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On July 23, 2021, YA II PN, Ltd, converted $80,000 of unpaid principal and, $4,021.92 of interest into 2,386,985 common shares from a convertible note dated May 7, 2021. The issuance to YA II PN, Ltd, was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. YA II PN, Ltd, was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to YA II PN, Ltd, full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. YA II PN, Ltd, acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On August 9, 2021, GS Capital Partners, LLC converted $30,000 in principal and $1,939.73 in interest and $175 in expense into 1,193,811 common shares from a convertible note dated December 11, 2020. The issuance to GS Capital Partners, LLC was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. GS Capital Partners, LLC was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to GS Capital Partners, LLC full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. GS Capital Partners, LLC acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On February 11, 2022, the Company issued 3,629,725 common shares to Mast Hill Fund, LP from its exercise of a warrant dated October 13, 2021. The issuance to Mast Hill Fund, LP was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Mast Hill Fund, LP was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Mast Hill Fund, LP full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Mast Hill Fund, LP acquired the restricted common stock for its own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On February 17, 2022, the Company issued 7,500,000 common shares to Robert L. Hymers, III, for consulting services. The issuance to Mr. Hymers was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Mr. Hymers was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Mr. Hymers full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Mr. Hymers acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On February 23, 2022, the Company issued 850,000 common shares to Gene Taubman, for consulting services. The issuance to Mr. Taubman was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Mr. Taubman was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Mr. Taubman full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Mr. Taubman acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On February 24, 2022, the Company issued to Robert L. Hymers, III, 7,500,000 common shares for consulting services. The issuance to Mr. Hymers was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. Mr. Hymers was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to Mr. Hymers full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. Mr. Hymers acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On February 24, 2022, the Company issued 2,500,000 common shares to North Equities USA, Ltd., for consulting services. The issuance to North Equities was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and Rule 506 of Regulation D promulgated thereunder, with respect to the issuance of the restricted stock. North Equities was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made available to North Equities full information regarding its business and operations. There was no general solicitation in connection with the offer or sale of the restricted securities. North Equities acquired the restricted common stock for his own account, for investment purposes and not with a view to public resale or distribution thereof within the meaning of the Securities Act. The restricted shares cannot be sold unless pursuant to an effective registration statement by the Company, or by an exemption from registration requirements of Section 5 of the Securities Act—the existence of any such exemption subject to legal review and approval by the Company.
On May 9, 2023, Jefferson Street Capital, LLC converted $20,000 of unpaid principal and $750 in fees into 8,178,487 common shares from a convertible note dated August 8, 2022. The issuance to Jefferson Street relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Jefferson Street was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Jefferson Street. There was no general solicitation concerning the offer or sale of the restricted securities. Jefferson Street acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On May 10, 2023, the Company issued 1,000,000 common shares to Mast Hill Fund, LP, as a reconciliation for the Company’s prior issuances to another convertible note holder at a lower base conversion price. The issuance to Mast Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation concerning the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On May 10, 2023, the Company issued 2,700,000 common shares to Mast Hill Fund, LP, as a reconciliation for the Company’s prior issuances to another convertible note holder at a lower base conversion price. The issuance to Mast Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation concerning the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On May 10, 2023, the Company issued 375,000 common shares to Blue Lake Partners, LLC, as a reconciliation for the Company’s prior issuances to another convertible note holder at a lower base conversion price. The issuance to Blue Lake relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Blue Lake was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Blue Lake. There was no general solicitation concerning the offer or sale of the restricted securities. Blue Lake acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On May 16, 2023, Blue Lake Partners, LLC converted $33,950 of unpaid principal and $1,750 in fees into 15,000,000 common shares from a convertible note dated March 10, 2022. The issuance to Blue Lake relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Blue Lake was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Blue Lake. There was no general solicitation concerning the offer or sale of the restricted securities. Blue Lake acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On May 25, 2023, Mast Hill Fund, LP converted $15,203.81 of unpaid interest and $21,602.19 in default interest, and $1,750 in fees into 16,200,000 common shares from a convertible note dated September 22, 2022. The issuance to Mat Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation concerning the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On June 1, 2023, Jefferson Street Capital, LLC converted $16,500 of unpaid principal and $750 in fees into 16,911,764 common shares from a convertible note dated August 8, 2022. The issuance to Jefferson Street relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Jefferson Street was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Jefferson Street. There was no general solicitation concerning the offer or sale of the restricted securities. Jefferson Street acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On June 12, 2023, Mast Hill Fund, LP converted $33,782.19 of unpaid interest and $7,069.81 in default interest, and $1,750 in fees into 17,900,000 common shares from a convertible note dated September 22, 2022. The issuance to Mat Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation concerning the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On June 16, 2023, Mast Hill Fund, LP converted $36,599.82 of principal, $5,215.88 of unpaid interest and $1,178.30 in default interest, and $1,750 in fees into 18,800,000 common shares from a convertible note dated September 22, 2022. The issuance to Mat Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation concerning the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On June 20, 2023, Jefferson Street Capital, LLC converted $17,000 of unpaid principal and $750 in fees into 17,401,960 common shares from a convertible note dated August 8, 2022. The issuance to Jefferson Street relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Jefferson Street was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Jefferson Street. There was no general solicitation concerning the offer or sale of the restricted securities. Jefferson Street acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On June 22, 2023, Mast Hill Fund, LP converted $45,017.66 of principal, $2,260.34 in default interest, and $1,750 in fees into 20,600,000 common shares from a convertible note dated September 22, 2022. The issuance to Mat Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation concerning the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On July 13, 2023, Blue Lake Partners, LLC converted $1,999.13 of principal, $18,282.87 of accrued interest, and $1,750.00 of fees from a convertible promissory note dated March 10, 2022, into 21,600,000 shares of common stock. The original issuance to Blue Lake relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Blue Lake was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Blue Lake. There was no general solicitation concerning the offer or sale of the restricted securities. Blue Lake acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On July 14, 2023, Jefferson Street Capital, LLC, converted convert $17,000.00 of principal and $750.00 in fees, totaling $17,750.00 from a convertible note issued August 8, 2022, into 17,401,960 shares of Common Stock. The original issuance to Jefferson Street relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Jefferson Street was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Jefferson Street. There was no general solicitation concerning the offer or sale of the restricted securities. Jefferson Street acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On March 26, 2024, Mast Hill Fund, LP converted $23,660.51 of principal into 23,196,579 common shares from a convertible note dated February 11, 2022. The issuance to Mat Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation concerning the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On April 29, 2024, Mast Hill Fund, LP converted $21,221.72 of principal into 20,805,607 common shares from a convertible note dated February 11, 2022. The issuance to Mat Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation concerning the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On May 6, 2024, Mast Hill Fund, LP converted $25,900.13 of principal into 25,392,288 common shares from a convertible note dated October 13, 2021. The issuance to Mat Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder concerning the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” under Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information regarding its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation regarding the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On May 23, 2024, Mast Hill Fund, LP converted $4,099.87 of principal into 4,019,480 common shares from a convertible note dated October 13, 2021. The issuance to Mast Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder concerning the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” under Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information regarding its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation regarding the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On June 3, 2024, Mast Hill Fund, LP converted $27,397.13 of principal into 26,859,935 common shares from a convertible note dated October 13, 2021. The issuance to Mast Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder concerning the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” under Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information regarding its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation regarding the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On June 6, 2024, Mast Hill Fund, LP converted $2,602.87 of principal into 2,551,833 common shares from a convertible note dated October 13, 2021. The issuance to Mast Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder concerning the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” under Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information regarding its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation regarding the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On July 1, 2024, Mast Hill Fund, LP converted $28,894.13 of principal into 28,327,582 common shares from a convertible note dated September 28, 2022. The issuance to Mast Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder concerning the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” under Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information regarding its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation regarding the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On August 2, 2024, Mast Hill Fund, LP converted $30,000.00 of principal into 29,411,764 common shares from a convertible note dated September 28, 2022. The issuance to Mast Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder concerning the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” under Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information regarding its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation regarding the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On August 9, 2024, Jefferson Street Capital, LLC, converted convert $12,500.00 of principal and $750.00 in fees, totaling $13,250.00 from a convertible note issued August 8, 2022, into 26,500,000 shares of Common Stock. The original issuance to Jefferson Street relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder with respect to the issuance of the restricted stock. Jefferson Street was an “accredited investor” and/or “sophisticated investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information concerning its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Jefferson Street. There was no general solicitation concerning the offer or sale of the restricted securities. Jefferson Street acquired the restricted common stock for its own account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On September 3, 2024, Mast Hill Fund, LP converted $30,000.00 of principal into 60,000,000 common shares from a convertible note dated September 28, 2022. The issuance to Mast Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder concerning the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” under Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information regarding its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation regarding the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On September 4, 2024, the Company issued fifteen million shares of restricted common stock to PCG Advisory in consideration for services rendered, pursuant to the Company’s Equity Incentive Plan. The issuance of these shares was conducted in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), which exempts transactions by an issuer not involving any public offering. PCG Advisory acquired these shares for its own account and for investment purposes, without any intent to resell or distribute the shares in the public market, and not with a view to public resale or distribution in violation of the Securities Act. As a recipient of restricted stock, PCG Advisory has acknowledged the transfer restrictions applicable under the Securities Act and has represented to the Company that it is an accredited investor, as defined in Rule 501(a) of Regulation D of the Securities Act, with sufficient sophistication and experience to evaluate the merits and risks of this investment.
On October 1, 2024, Mast Hill Fund, LP converted $18,111.86 of principal into 36,223,726 common shares from a convertible note dated September 28, 2022. The issuance to Mast Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder concerning the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” under Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information regarding its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation regarding the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On October 2, 2024, Mast Hill Fund, LP converted $11,888.14 of principal into 23,776,280 common shares from a convertible note dated September 28, 2022. The issuance to Mast Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder concerning the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” under Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information regarding its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation regarding the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
On November 1, 2024, Mast Hill Fund, LP converted $20,604.324 of principal into 41,208,640 common shares from a convertible note dated September 28, 2022. The issuance to Mast Hill relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder concerning the issuance of the restricted stock. Mast Hill was an “accredited investor” and/or “sophisticated investor” under Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties, and information regarding its qualifications as a “sophisticated investor” and/or “accredited investor.” The Company provided and made full information regarding its business and operations available to Mast Hill. There was no general solicitation regarding the offer or sale of the restricted securities. Mast Hill acquired the restricted common stock for its account, for investment purposes, and not with a view to public resale or distribution thereof within the meaning of the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
ITEM 5. INFORMATION
ITEM 6. EXHIBITS
The following exhibits are included as part of this report:
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Exhibit |
Description of Exhibit |
Location |
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3(i) |
Incorporated by reference from the Company’s Form S-1/A-4 filed on July 20, 2020. |
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3(i) |
Incorporated by reference from the Company’s Form S-1/A-4 filed on July 20, 2020. |
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3(i) |
Incorporated by reference from the Company’s Form S-1/A-4 filed on July 20, 2020. |
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|
3(i) |
Incorporated by reference from the Company’s Form S-1/A-4 filed on July 20, 2020. |
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3(i) |
Incorporated by reference from the Company’s Form 8-K filed December 3, 2020. |
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3(i) |
Incorporated by reference from the Company’s 8-K filed October 14, 2021. |
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3(i) |
Incorporated by reference from the Company’s 8-K filed September 19, 2022. |
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3(i) |
Incorporated by reference from the Company’s 8-K filed January 26, 2023. |
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| 3(i) | Amendment to Certificate of Incorporation filed with the Delaware Secretary of State on August 8, 2024, increasing the authorized common shares to 5 billion, one million and one shares. | Incorporated by reference from the Company’s 8-K filed August 9, 2024. |
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3(ii) |
Incorporated by reference from the Company’s Form S-1/A-4 filed on July 20, 2020. |
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4(vi) |
Incorporated by reference from the Company’s Form 8a-12g filed August 5, 2020. |
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10.1 |
October 14, 2021, Securities Purchase Agreement, Convertible Promissory Note, Common Stock Purchase Warrant, Mast Hill Fund, LP. |
Incorporated by reference from the Company’s Form 8-K filed October 21, 2021. |
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10.2 |
November 10, 2021, Common Stock Purchase Agreement, White Lion Capital, LLC |
Incorporated by reference from the Company’s Form 10-Q filed November 15, 2021. |
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10.3 |
November 10, 2021, Registration Rights Agreement, White Lion Capital, LLC |
Incorporated by reference from the Company’s Form 10-Q filed November 15, 2021. |
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10.4 |
Incorporated by reference from the Company’s Form 10-K filed March 31, 2023 |
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10.5 |
Incorporated by reference from the Company’s Form 10-K filed March 31, 2023 |
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10.6 |
February 11, 2022, Securities Purchase Agreement, Mast Hill Fund, LP |
Incorporated by reference from the Company’s Form 10-K filed March 31, 2023. |
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10.7 |
Incorporated by reference from the Company’s Form 10-K filed March 31, 2023 |
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10.8 |
Incorporated by reference from the Company’s Form 10-K filed March 31, 2023. |
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10.9 |
March 3, 2022, Stock Purchase Agreement, Blue Lake Partners, LLP |
Incorporated by reference from the Company’s Form 10-K filed March 31, 2023 |
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10.10 |
Incorporated by reference from the Company’s Form 10-K filed March 31, 2023 |
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10.11 |
Incorporated by reference from the Company’s Form 10-K filed March 31, 2023 |
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10.12 |
Incorporated by reference from the Company’s Form 10-K filed March 31, 2023 |
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10.13 |
June 21, 2022, Settlement Agreement, JR-HD Enterprises III, LLC |
Incorporated by reference from the Company’s Form 10-K filed March 31, 2023 |
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10.14 |
March 25, 2024 Mutual Settlement and Release Agreement, Mast Hill Fund LP |
Incorporated by reference from the Company’s Form 10-K filed May 1, 2024 |
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10.15 |
April 3, 2024 Mutual Settlement and Release Agreement, Blue Lake Partners, LLC |
Incorporated by reference from the Company’s Form 10-K filed May 1, 2024 |
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|
31.1 |
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a). |
Filed herewith. |
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31.2 |
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a). |
Filed herewith. |
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|
32.1 |
Filed herewith. |
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32.2 |
Filed herewith. |
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101.1NS |
Inline XBRL Instance Document |
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101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
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101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF |
Inline XBRL Taxonomy Extension Definitions Linkbase Document |
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101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
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|
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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|
104 |
Cover Page Interactive Data File (formatted as Inline XBRL as contained in Exhibit 101) |
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.
Dated: November 19, 2024
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ELECTROMEDICAL TECHNOLOGIES INC. |
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By: |
/s/ Matthew Wolfson |
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Matthew Wolfson |
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President & Chief Executive Officer |
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|
(Principal Executive Officer) |
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By: |
/s/ Matthew Wolfson |
|
|
Matthew Wolfson |
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|
Chief Financial Officer |
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|
(Principal Financial and Accounting Officer) |
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Exhibit 31.1
I, Matthew Wolfson, certify that:
1. I have reviewed this annual report on Form 10-Q for the quarter ended September 30, 2024, of Electromedical Technologies, 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. As the registrant’s certifying officer, I am 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, including its consolidated subsidiaries, is made known to me by others within those entities, 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 the 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. As the registrant’s certifying officer, I have disclosed, based on my 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.
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By: |
/s/ Matthew Wolfson |
|
|
Matthew Wolfson |
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Date: November 19, 2024 |
Principal Executive Officer |
Exhibit 31.2
I, Matthew Wolfson, certify that:
1. I have reviewed this annual report on Form 10-Q for the quarter ended September 30, 2024, for Electromedical Technologies, 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. As the registrant’s other certifying officer, I am 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, including its consolidated subsidiaries, is made known to us by others within those entities, 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 the 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. As the registrant’s certifying officer, I have disclosed, based on my 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.
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By: |
/s/ Matthew Wolfson |
|
|
Matthew Wolfson |
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|
Date: November 19, 2024 |
Principal Financial Officer |
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
In connection with the Annual Report on Form 10-Q of Electromedical Technologies, Inc. (the “Company”) for the quarter ending September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Matthew Wolfson, Chief Executive Officer and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 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: November 19, 2024 |
By: |
/s/ Matthew Wolfson |
|
Matthew Wolfson |
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|
Chief Executive Officer, Chief Financial Officer |
This certification accompanies each Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.