EDGAR 10-K Filing

Company CIK: 1559157
Filing Year: 2021
Filename: 1559157_10-K_2021_0001493152-21-008942.json

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ITEM 1. BUSINESS
Item 1. Business
Summary
Sunstock, Inc. (“Sunstock” or “the Company”) was incorporated on July 23, 2012, as Sandgate Acquisition Corporation, under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. In July 2013, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing new officers and directors and accepting the resignations of its then existing officers and directors. In connection with the change of control, the shareholders of the Company and its board of directors unanimously approved the change of the Company’s name from Sandgate Acquisition Corporation to Sunstock, Inc. On July 18, 2013, Jason Chang and Dr. Ramnik S Clair were named as directors of the Company.
On October 30, 2013, the Company entered into a Purchase Agreement with Dollar Store Services, Inc. to develop, design and build out a retail store which the Company opened in February 2014. The Company opened its second retail store in May 2014. On August 21, 2014 the first store was forced to close due to below code electrical wiring the landlord had provided. Perishable inventory at this store was relocated to the second store as nonperishables were moved into storage along with fixed assets. The Company’s second store was relocated in December of 2015 under lease running through June 2017 and operated on a month to month lease from then until the store was closed in September 2018. The Company currently operates no variety retail stores.
On October 22, 2018, the Company acquired all assets and liabilities of Mom’s Silver Shop, Inc. (the “Retail Store”) of Sacramento, California. Included in the assets acquired was approximately $60,000 in precious metals inventory and approximately $13,000 in net fixtures. Also included were any licenses and permits, customer lists, logo, trade names, signs, and websites. Financing of the purchase was by $20,056 cash, $33,000 unsecured note payable with principal payments of $1,000 per week for 33 weeks starting January 1, 2019 with 4.5% annual interest accrued on the unpaid balance (total accrued interest due August 27, 2019), and the assumption of liabilities and lease obligations. The Retail Store specializes in buying and selling gold, silver, and rare coins, and is one of the leading precious metals retailers in the greater Sacramento metropolitan area.
The Company’s business plan includes the buying, selling and distribution of precious metals, primarily gold. The Company pursues a “ground to coin” strategy, whereby it acquires mining assets as well as rights to purchase mining production and sells these metals primarily through retail channels including their own branded coins. The company emphasizes investment in enduring assets that we believe may provide ‘resource to retail’ conversion upside. Our goal is to provide our shareholders with an exceptional opportunity to capture value in the precious metals sector without incurring many of the costs and risks associated with actual mining operations.
The Company’s independent registered public accounting firm has issued a report stating there is substantial doubt about the Company’s ability to continue as a going concern.
The Business: Precious Metals and Coins - Sunstock
Silver and other precious metals, may be used as an investment. A traditional way of investing in silver is by buying actual bullion bars. In some countries, like Switzerland and Liechtenstein, bullion bars can be bought or sold over the counter at major banks. Another means of buying and trading silver is through silver coins. Silver coins include the one ounce 99.99% pure Canadian Silver Maple Leaf and the one ounce 99.93% pure American Silver Eagle. Likewise, an increasing popular method of trading in silver and precious metals is through exchange-traded products, such as exchange-traded funds, exchange-traded notes and closed-end funds that aim to track the price of silver. Silver exchange-traded products are traded on the major stock exchanges including the London and New York Stock Exchanges.
Investors typically look to precious metals as a safe and reliable store of value and as a way to protect their assets from the influence of inflation, devaluation, and potential bond and equity market crashes. They act as safe haven investments, particularly in times of elevated political and economic uncertainty. The flow of investment capital into commodity-related sectors has increased more than tenfold over the past decade. Stable precious metal prices compared to increasing stock market volatility have elevated investments in precious metals to a standalone asset class, forming part of almost all diversified asset portfolios.
At the present time, the Company does not anticipate or foresee a material effect on this line of its business from existing or probable governmental regulations except as follows. The recent COVID-19 pandemic has resulted in many governments around the world enacting various social distancing orders and directives, which have resulted in decreased foot traffic to many business, as well as accommodative fiscal and monetary measures that have been viewed as inflationary by some markets, which has resulted in increased demand for physical precious metals bullion and coins. This recent increased demand has occurred at the same time in supply constraints from mints and refiners as a result of the COVID-19 pandemic. As a result, premiums on precious metal bullion and coins available for immediate delivery have recently increased, affecting both our revenues and our ability to resupply our inventories of our precious metals. We expect price, demand and supply volatility to continue as a result of the COVID-19 pandemic and the actions governments are taking to address it.
Services and Products
The Company has established positions in precious metals. As of December 31, 2020, the Company held 11,200 ounces of silver and 204 ounces of gold.
Competition
The Company’s Retail Store has a number of small coin shop competitors in the Sacramento, California area, as well as online precious metals dealer competitors such as monex.com and apmex.com.
Sales and Marketing Strategy
The Company’s goal is to achieve vertical integration within the precious metal industry. To achieve this goal, the Company is investigating the acquisition of mineral rights and assets to complement its already established precious metal business. We intend to first focus on projects that already own significant amounts of unrefined - but already mined - gold ore and other precious metals.
Revenues and Losses
The Company had limited revenues prior to the acquisition of the Retail Store, and has not realized any operating profits as of yet.
The Company recorded revenues of $10,072,770 and $6,148,441 during the years ended December 31, 2020 and 2019, respectively.
The Company has had net losses from inception through the year ended December 31, 2019. The Company had a net loss of $10,125,066 for the year ended December 31, 2019. The Company had a net income of $2,677,844 for the year ended December 31, 2020, due to $4,087,280 in net other income derived mainly from the settlement of $776,315 of debt and $3,240,220 reduction of derivative liability. The Company does not expect to enter into such debt agreements in the future nor realize such income in the future.
THE COMPANY
Employees
Currently, the Company has three employees and two consultants. The employees are at the Retail Store. Our employees are not represented by a labor union or by a collective bargaining agreement.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
Not Applicable.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
None.

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ITEM 2. PROPERTIES
Item 2. Properties
The Company currently uses the residence of the Company’s CEO for its corporate office at no charge.
The Company entered into a lease agreement in October 2018 for 1,088 square feet of retail shop space for the Retail Store. The lease requires combined monthly payments of base rent and triple net of $1,866 per month for sixty months.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
On August 21, 2020, Boustead Securities, LLC (“Boustead”) filed suit against Sunstock, Inc. (“Sunstock”) in the County of Orange, California. Boustead is an investment banking firm engaged by Sunstock on September 19, 2019 to raise equity. Boustead maintains that Sunstock owes it 87,179,487 shares of Preferred Stock Warrants and 9,230,769 shares of Common Stock Warrants. Boustead is also seeking general damages, interest, and costs of the suit. Sunstock believes that Boustead has not fulfilled its obligations in raising equity and plans to vigorously contest the suit. Sunstock has hired an arbitrator and is currently in negotiations with Boustead.
In December 2020, a former employee of Sunstock filed a claim with the California Labor Commission regarding claimed back pay owed. A preliminary hearing was held on January 4, 2021 and the Company is currently awaiting the next step.

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

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
On December 9, 2015 the Company began light trading on the NASDAQ bulletin board under the symbol “SSOK”.
The Company’s shares currently trade on the OTC Link alternative trading system operated by OTC Markets Group, Inc. under the symbol “SSOK.” The following table sets forth the high and low bid prices of our common stock (USD) for the last two fiscal years as reported by the OTCMarkets.com and represents inter dealer quotations, without retail markup, markdown or commission and may not be reflective of actual transactions.
High Low
Year ended December 31, 2020:
First Quarter $ 0.0235 $ 0.00085
Second Quarter 0.0058 0.0012
Third Quarter 0.0038 0.0011
Fourth Quarter 0.003 0.0008
Year ended December 31, 2019:
First Quarter $ 0.055 $ 0.004
Second Quarter 0.013 0.0001
Third Quarter 0.013 0.0021
Fourth Quarter 0.010 0.0016
As of December 31, 2020, there are 2,939,677,703 shares of common stock outstanding of which 1,256,124,397 shares are owned by officers and directors of the Company. There are approximately 80 holders of our common stock.
The future sale of the Company’s presently outstanding “unregistered” and “restricted” common stock by present members of management and persons who own more than five percent of the Company’s outstanding voting securities may have an adverse effect on any “established trading market” that may develop in the shares of the Company’s common stock.
In general, securities may be sold pursuant to Rule 144 after being fully-paid and held for more than 6 months. While affiliates of the Company are subject to certain limits in the amount of restricted securities, they can sell under Rule 144, there are no such limitations on sales by persons who are not affiliates of the Company. In the event non-affiliated holders elect to sell such shares in the public market, there is likely to be a negative effect on the market price of the Company’s securities. There is no dividend policy currently in place.
Recent Sales of Unregistered Securities.
During the quarter ended December 31, 2020, we have issued the following securities which were not registered under the Securities Act and not previously disclosed in the Company’s Quarterly Reports on Form 10-Q or Current Reports on Form 8-K:
Shares issued for conversion of Series A convertible preferred shares:
On October 16, 2020, the Company issued 130,000,000 shares of common stock in exchange for 130,000,000 shares of Series A convertible preferred stock.
On December 8, 2020, the Company issued 75,000,000 shares of common stock in exchange for 75,000,000 shares of Series A convertible preferred stock.
Shares issued to investors for cash:
On December 29, 2020, the Company sold 20,000,000 shares of common stock at $0.001 per share for $2,000 to an accredited investor.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Selected Financial Data.
There is no selected financial data required to be filed for a smaller reporting company.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
You should read the following discussion and analysis in conjunction with our Consolidated Financial Statements and related Notes thereto included in Part II, Item 8 of this Report before deciding to purchase, hold or sell our common stock.
Sunstock, Inc. (“Sunstock” or “the Company”) was incorporated on July 23, 2012, as Sandgate Acquisition Corporation, under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.
On July 18, 2013, the Company changed its’ name from Sandgate Acquisition Corporation to Sunstock, Inc. On the same date, Jason Chang and Dr. Ramnik S Clair were named as directors of the Company.
On October 30, 2013, the Company entered into a Purchase Agreement with Dollar Store Services, Inc. to develop, design and build out a retail store which the Company opened in February 2014. The Company opened its second retail store in May 2014. On August 21, 2014 the first store was forced to close due to below code electrical wiring the landlord had provided. Perishable inventory at this store was relocated to the second store as nonperishables were moved into storage along with fixed assets. The Company’s second store was relocated in December of 2015 under lease running through June 2017 and operated on a month to month lease from then until the store was closed in September 2018. The Company currently operates no variety retail stores.
On October 22, 2018, the Company acquired all assets and liabilities of the Retail Store of Sacramento, California. Included in the assets acquired was approximately $60,000 in precious metals inventory and approximately $13,000 in net fixtures. Also included were any licenses and permits, customer lists, logo, trade names, signs, and websites. Financing of the purchase was by $20,056 cash, $33,000 unsecured note payable with principal payments of $1,000 per week for 33 weeks starting January 1, 2019 with 4.5% annual interest accrued on the unpaid balance (total accrued interest due August 27, 2019), and the assumption of liabilities and lease obligations. The Retail Store specializes in buying and selling gold, silver, and rare coins, and is one of the leading precious metals retailers in the greater Sacramento metropolitan area.
Critical Accounting Policies
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires making estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition
The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance.
The Company’s principal activities from which it generates revenue are product sales. Revenue is measured based on considerations specified in a contract with a customer. A contract exists when it becomes a legally enforceable agreement with a customer. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid at time of sale via credit card, check, or cash when products are sold direct to consumers.
A performance obligation is a promise in a contract to transfer a distinct product to the customer, which for the Company is transfer of a product to customers. Performance obligations promised in a contract are identified based on the goods that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the goods is separately identifiable from other promises in the contract. The Company has concluded the sale of product and related shipping and handling are accounted for as the single performance obligation.
The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which the Company will be entitled to receive in exchange for transferring goods to the customer. We do not issue refunds.
The Company recognizes revenue when it satisfies a performance obligation in a contract by transferring control over a product to a customer when product is shipped based on fulfillment by the Company or when a point of sale transaction is completed. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of product sales. The Company does not accept returns.
Stock-Based Compensation:
All share-based payments are recognized in the consolidated financial statements based upon their fair values.
The Company recognizes stock-based compensation expense in accordance with the provisions of ASC 718, Compensation - Stock Compensation (“ASC 718”). ASC 718 requires the measurement and recognition of compensation expense for all stock-based awards made to employees, directors and non-employees based on the grant date fair value of the awards. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is primarily recognized over the term of the consulting agreement. In accordance with FASB guidance, an asset acquired in exchange for the issuance of fully vested, non-forfeitable equity instruments should not be presented or classified as an offset to equity on the grantor’s balance sheet once the equity instrument is granted for accounting purposes.
Year-End Analysis Results of Operations
Comparison of the Years Ended December 31, 2020 and 2019
For the year ended December 31, 2020, revenues were $10,072,770, an increase of $3,924,329 from $6,148,441 for 2019. The increase in revenue was primarily due to discounts to large purchasers of coins and more people considering coins a safe haven in 2020 due to Covid-19 and political uncertainty.
For the year ended December 31, 2020, cost of goods sold were $9,843,157, an increase of $3,901,418 from $5,941,739 for 2019 due to the increase in revenue.
For the year ended December 31, 2020, gross profit was $229,613 (2.3%), an increase of $22,911 from a gross profit of $206,702 (3.4%) for 2019.
For the year ended December 31, 2020, operating expenses were $1,638,250, a decrease of $7,125,808 from $8,764,057 for 2019. Stock based compensation was $974,600 for 2020, a decrease of $6,860,550 from $7,835,150 in 2019. $5,865,950 was for employee stock based compensation and $894,600 was for consultant stock based compensation in 2019. Stock based compensation is based on the discretion of the CEO.
For the year ended December 31, 2020, the net income was $2,677,844, an increase of $12,802,910 from a loss of $10,125,066 for 2019. The net income for 2020 was due to $4,087,280 in net other income derived mainly from the settlement of $776,315 of debt and $3,240,220 reduction of derivative liability. The Company does not expect to enter into such debt agreements in the future, nor realize such income in the future. The accumulated deficit at December 31, 2020 was $60,207,492.
Liquidity and Capital Resources
As of December 31, 2020, the Company had $47,055 in cash, $219 in accounts receivable, $1,015,599 in inventories and $13,456 in prepaid expenses. During the year ended December 31, 2020, the Company used net cash of $414,280 in operations. During the year ended December 31, 2020, $307,700 in net cash was provided by financing activities as follows: the Company raised $25,000 in cash from a convertible note payable, $5,100 from shareholder receivable, $42,500 from the issuance of common stock, $400,000 from the issuance of preferred stock, $150,000 from an SBA loan, $359,838 in notes payable from related parties, and paid $110,000 on notes payable from related parties and $564,738 on convertible notes payable.
The Company has not posted operating income since inception. It has an accumulated deficit of $60,207,491 as of December 31, 2020. Therefore, there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or obtain additional financing from its stockholders and/or third parties.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
The financial statements for the years ended December 31, 2020 and 2019 are attached hereto.

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

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Management must evaluate its internal controls over financial reporting, as required by Sarbanes-Oxley Act, Section 404 (a). The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles or GAAP.
As of December 31, 2020, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in the 2013 Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of the Company’s internal controls over financial reporting that adversely affected its internal controls and that may be considered to be material weaknesses.
Material Weaknesses:
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.
The material weaknesses identified are:
1. The Company does not have accounting personnel that have adequate technical accounting skills to identify terms in agreements that would have material accounting implications on the Company’s consolidated financial statements in accordance with US GAAP, such as permanent vs. temporary equity treatment of the Company’s preferred stock in accordance with ASC 480.
2. The Company does not obtain and retain supporting documentation over the precious metal trade dates and quantities traded and does not properly record the realized gain/loss on the trade according to the fair market value of the items traded on a given date.
3. The Company has an inadequate number of personnel that could accurately and timely record and report the Company’s consolidated financial statements in accordance with US GAAP.
4. The Company does not perform formal risk assessments over financial reporting and does not evaluate its internal control processes.
Notwithstanding the existence of these material weaknesses in internal control over financial reporting, we believe that the financial statements in this Annual Report on Form 10-K fairly present, in all material respects, our financial condition in conformity with U.S. generally accepted accounting principles (GAAP). Further, we do not believe the material weaknesses identified had an impact on prior financial statements.
Remediation:
As part of our ongoing remedial efforts, we have and will continue to, among other things:
1. Expand our accounting policy and controls organization by hiring qualified accounting and finance personnel;
2. Increase our efforts to educate both our existing and expanded accounting policy and control organization on the application of the internal control structure;
3. Emphasize with management the importance of our internal control structure;
4. Seek outside consulting services where our existing accounting policy and control organization believes the complexity of the existing exceeds our internal capabilities.
5. Plan to implement improved accounting systems.
We believe that the foregoing actions will improve our internal control over financial reporting, as well as our disclosure controls and procedures. When funds permit, we intend to perform such procedures and commit such resources as necessary to continue to allow us to overcome or mitigate these material weaknesses such that we can make timely and accurate quarterly and annual financial filings until such time as those material weaknesses are fully addressed and remediated.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company’s internal controls over financial reporting during its fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other information
Not applicable.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers, and Corporate Governance
The Directors and Officers of the Company are as follows:
Name
Age
Positions and Offices Held
Jason C. Chang
President, Secretary, Director
Dr. Ramnik S. Clair
Vice President, Director
Management of Sunstock
The Company has three employees and two consultants. Jason C. Chang and Dr. Ramnik S. Clair are the officers and directors of the Company and shareholders. Mr. Chang, as president, and Mr. Clair as senior vice president, have allocated time to the activities of the Company with minimal cash compensation.
There are no agreements or understandings for the officer or director to resign at the request of another person and the above- named officer and director is not acting on behalf of nor will act at the direction of any other person.
Set forth below are the names of the directors and officers of the Company, all positions and offices with the Company held, the period during which they have served as such, and the business experience during at least the last five years:
Jason C. Chang, serves as a director, Chief Executive Officer and President of Sunstock. Mr. Chang began his career in the hospitality industry as a child and continuing as an adult working in the family business operating several hotels throughout California. Mr. Chang has now had over 20 years of hospitality management experience. In addition, as an entrepreneur, Mr. Chang has helped fund numerous startup companies, primarily related to the technology sector.
Dr. Ramnik Clair serves as a director and Senior Vice President of Sunstock. Dr. Clair received his medical degree in India and immigrated to the United States in 1983. He completed his medical residency in New York and has subsequently served in his medical practice as a solo practitioner. Dr. Clair intends to assist the Company in building long term relationships with its client base.
Conflicts of Interest
Messrs. Chang and Clair are not directors of, or sole beneficial shareholders of any other companies which have filed registration statements on Form 10 for the registration of their common stock pursuant to the Securities Exchange Act.
There are no binding guidelines or procedures for resolving potential conflicts of interest. Failure by management to resolve conflicts of interest in favor of the Company could result in liability of management to the Company. However, any attempt by shareholders to enforce a liability of management to the Company would most likely be prohibitively expensive and time consuming.
Code of Ethics. The Company has not at this time adopted a Code of Ethics pursuant to rules described in Regulation S-K. The Company has two persons who are the only shareholders and who serve as the directors and officers. The Company has limited operations and business actually does not receive any revenues or investment capital. The adoption of an Ethical Code at this time would not serve the primary purpose of such a code to provide a manner of conduct as the development, execution and enforcement of such a code would be by the same persons and only persons to whom such code applied. Furthermore, because the Company does not have any activities, there are activities or transactions which would be subject to this code. At the time the Company enters into a business combination or other corporate transaction, the current officers and directors will recommend to any new management that such a code be adopted. The Company does not maintain an Internet website on which to post a code of ethics.
Corporate Governance.
For reasons similar to those described above, the Company does not have a nominating, compensation nor audit committee of the board of directors. At this time, the Company consists of two shareholders who serve as the corporate directors and officers. The Company has no activities, and receives no revenues. At such time that the Company enters into a business combination and/or has additional shareholders and a larger board of directors and commences activities, the Company will propose creating committees of its board of directors, including both a nominating and an audit committee. Because there are only two shareholders of the Company, there is no established process by which shareholders to the Company can nominate members to the Company’s board of directors. Similarly, however, at such time as the Company has more shareholders and an expanded board of directors, the new management of the Company may review and implement, as necessary, procedures for shareholder nomination of members to the Company’s board of directors.
Compliance with Section 16(A) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and regulations of the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a).
Delinquent Section 16(a) Reports
Based solely on our review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the reports required to be filed with respect to transactions in our common stock by each person who, at any time during the 2019 and 2020 fiscal years, was a director, officer, or beneficial owner of more than 10% of our common stock, were timely, except as follows (i) Jason Chang did not timely file a Form 4 upon the following:
his purchase of 50,000,000 shares of Company common stock on January 8, 2019,
his purchase of 15,000,000 shares of Company common stock on January 23, 2019,
his purchase of 20,000,000 shares of Company common stock on January 29, 2019,
his purchase of 10,638,298 shares of Company common stock on February 12, 2019,
his purchase of 20,000,000 shares of Company common stock on February 22, 2019,
his purchase of 5,000,000 shares of Company common stock on February 25, 2019,
his purchase of 10,638,298 shares of Company common stock on February 26, 2019,
his purchase of 3,723,404 shares of Company common stock on February 27, 2019,
his purchase of 1,860,465 shares of Company common stock on February 26, 2019,
his purchase of 11,627,907 shares of Company common stock on March 8, 2019,
his purchase of 23,255,814 shares of Company common stock on March 12, 2019,
his purchase of 23,255,814 shares of Company common stock on March 18, 2019,
his purchase of 27,000,000 shares of Company common stock on July 1, 2019,
his purchase of 50,000,000 shares of Company common stock on August 16, 2019,
his purchase of 30,000,000 shares of Company common stock on September 5, 2019,
his receipt of 164,277,000 shares of Company common stock on October 28, 2019,
his receipt of 22,631,000 shares of Company common stock on December 28, 2019,
his receipt of 24,737,650 shares of Company common stock on January 9, 2020,
his receipt of 80,000,000 shares of Company common stock on February 11, 2020,
and his receipt of 205,000,000 shares of Company common stock on March 25, 2020.
(ii) Dr. Ramnik Clair did not timely file a Form 4 upon his receipt of 30,000,000 shares of Company common stock on October 1, 2019 and his purchase of 36,000,000 shares of Company common stock on February 15, 2020.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
Summary Compensation Table - Fiscal Years Ended December 31, 2020 and 2019
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods. No other executive officers received total annual salary and bonus compensation in excess of $100,000.
Name and Principal Position Year Salary Bonus Stock Awards Option Awards Non-Equity Incentive Plan Compensation Earnings Non-Equity Deferred Compensation Earnings All Other Compensation Total
Jason Chang, $ - $ - $ 208,000 (2) $ - $ - $ - $ 182,032 (3) $ 390,032
CEO, President & CFO (1) $ - $ - $ - $ - $ - $ - $ 5,144,223 (4) $ 5,144,223
Dr. Ramnik Clair $ - $ - $ - $ - $ - $ - $ 421,200 (6) $ 421,200
SVP (5) $ - $ - $ 297,000 (7) $ - $ - $ - $ - $ 297,000
Narrative to Summary Compensation Table
1. On July 18, 2013, Mr. Chang was appointed as a director, and Chief Executive Officer and President of the Company.
2. During the year ended December 31, 2020, the Company issued 80,000,000 shares of common stock to our chief executive officer below market value for services. $208,000 was recorded as stock-based compensation.
3.
During the year ended December 31, 2020, the Company issued 205,000,000 shares of common stock to our chief executive officer in settlement of $207,468 of notes payable related party and accrued interest.
4. During the year ended December 31, 2019, the Company’s chief executive officer purchased 302,000,000 shares of common stock below market price. $4,798,150 in stock-based compensation expense was recorded. Additionally, the Company issued 186,908,000 shares of common stock in settlement of $186,908 of notes payable, related party. $346,073 in loss from settlement of debt, related party was recorded.
5. On July 18, 2013, Dr. Clair was appointed as Senior Vice President and Director of the Company
6. During the year ended December 31, 2020, the Company’s SVP and Director purchased 36,000,000 shares of common stock below market price. $421,200 in stock-based compensation expense was recorded.
7.
During the year ended December 31, 2019, the Company issued 30,000,000,000 shares of common stock to our SVP and Director below market value for services. $297,000 was recorded as stock-based compensation.
No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.
The Company currently does not compensate its directors with cash.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information regarding beneficial ownership of our common stock as of April 15, 2021, by (i) each person known by us to be the beneficial owner of more than 5% of our outstanding Common Stock, (ii) each director and each of our named executive officers and (iii) all executive officers and directors as a group.
The number of shares of Common Stock beneficially owned by each person is determined under the rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which such person has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days after the date hereof, through the exercise of any stock option, warrant or other right. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.
Name and Title:
Class of Security
Amount of
beneficial
ownership
Percent of
Class (1)
Executive Officers and Directors:
Jason Chang
Common Stock
2,217,243,897 (2)
55.70 %
Chief Executive Officer, Chief Financial Officer and Director
Dr. Ramnik S. Clair
Common Stock
79,580,500 (3)
2.00 %
All Executive Officers and Directors
Common Stock
2,296,824,397 (2)
57.20 %
(2 persons)
More than 5% Beneficial Owners:
Jonathan Bates
Common Stock
220,000,000 (4)
5.53 %
1. Based on 3,980,347,703 shares of common stock and no shares of Series A convertible Preferred Stock outstanding as of April 15, 2021. All shares of Series A convertible Preferred Stock are convertible at any time at the holder’s election into the greater of (i) 1 share of common stock if the closing bid price of the Company’s is at or above $0.001 per share, or (ii) if the closing bid price of the Company’s common stock is below $0.001 per share, the number of shares of common stock equal to the amount of shares of Series A convertible Preferred Stock multiplied by the conversion ratio of $0.001 divided by the closing bid price. Holders of shares of Series A convertible Preferred Stock are not entitled to any voting rights except as otherwise required by applicable law. For the purposes of the disclosure in this item, the closing bid price utilized was above $0.001 per share.
2. Includes 2,089,981,662 shares held in the name of Jason Chang, 241,700 shares of common stock held by Jason and Chiung Chang jointly, 94,930,535 shares of common stock held by Chiung Ying Chang, the mother of Jason Chang, 31,550,000 shares of common stock held by Chin Chang, the father of Jason Chang, and 540,000 shares of common stock held by Chiung Ying Chang and Chin Chang jointly, the parents of Jason Chang. 400,000,000 shares of Series A Preferred Stock held by Jason Chang as of December 31, 2020 were converted to 400,000,000 shares of common stock on February 16, 2021, and $192,201 in shareholder loans and accrued interest from Jason Chang were converted to 640,670,000 shares of common stock on March 18, 2021.
3. Includes 66,000,000 shares held in the name of Dr. Clair, 12,560,500 shares of common stock held jointly in the name of Dr. Clair and his wife, and 1,020,000 shares of common stock held by Mrs. Clair.
4. Includes 130,000,000 common shares held in the name of Innovative Digital Investors Emerging Technology, LP (“Innovative”), and 90,000,000 common shares held in the name of BFAM Partners, LLC (“BFAM”).

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions and Director Independence
The parents of Jason C. Chang, the Company’s Chief Executive Officer and a director, purchased a combined total of 90,000,000 shares of the Company’s common stock for $25,000 cash during the year ended December 31, 2019. The shares were purchased below market price, and $975,000 in stock-based compensation expense was recorded.
During the year ended December 31, 2020, the Company recorded compensation to its CEO for the following.
● During the year ended December 31, 2020, the Company’s chief executive officer received 80,000,000 shares of common stock below market value for services. $208,000 was recorded as stock-based compensation in the accompanying statement of operations.
● During the year ended December 31, 2020, the Company’s chief executive officer received 229,737,650 shares of common stock below market value in exchange for $232,206 in notes payable related party and accrued interest. $182,032 in stock issued below market was recorded in loss from settlement of debt with related party.
During the year ended December 31, 2019, the Company recorded compensation to its CEO for the following:
● During the year ended December 31, 2019, the Company’s chief executive officer purchased 302,000,000 shares of the Company’s common stock below market price for $172,850. $4,798,150 was recorded as compensation in the accompanying statement of operations.
● During the year ended December 31, 2019, the Company’s chief executive officer received 186,908,000 shares of common stock below market value in exchange for $186,908 in notes payable related party. $346,073 in stock issued below market was recorded in loss from settlement of debt with related party.
Sunstock is not currently required to maintain an independent director as defined by in Rule 4200 of the Nasdaq Capital Market nor does it anticipate that it will be applying for listing of its securities on an exchange in which an independent directorship is required. It is likely that neither Mr. Chang nor Dr. Clair would not be considered independent directors if it were to do so.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services
Audit Fees
Hall & Company has been the Company’s auditor since 2014. Hall & Company was acquired by Macias Gini & O’Connell LLP (“MGO”) on January 1, 2021. MGO has performed the December 31, 2020 audit.
The aggregate fees billed or expected to be billed for each of the last two years for professional services rendered by the independent registered public accounting firm for the audits of the Company’s annual financial statements and reviews of financial statements included in the Company’s Form 10-K and Form 10-Q reports, consents and services normally provided in connection with statutory and regulatory filings or engagements were as follows:
Fiscal Year Ended Fiscal Year Ended
December 31, 2020 December 31, 2019
Audit Fees
Hall & Company $ - $ 83,615
MGO 83,000 -
$ 83,000 $ 83,615
Audit Related Fees
None.
Tax Fees
None.
All Other Fees
None.
Audit Committee Policies and Procedures
The Company does not currently have an audit committee serving and as a result its board of directors performs the duties of an audit committee. The board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. The Company does not rely on pre- approval policies and procedures.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits, Financial Statement Schedules
(a) Exhibits
3.1
Certificate of Incorporation (incorporated by reference to Registration Statement on Form 10-12G filed on October 10, 2012 (File No.: 000-54830))
3.2
Bylaws (incorporated by reference to Registration Statement on Form 10-12G filed on October 10, 2012 (File No.: 000-54830))
31.1*
Certification of Principal Executive Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of Principal Financial and Accounting Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63
32.2*
Certification of Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63
101.INS**
XBRL Instance Document
101.SCH**
XBRL Taxonomy Extension Schema Document
101.CAL**
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**
XBRL Taxonomy Extension Label Linkbase Document
101.PRE**
XBRL Taxonomy Extension Presentation Linkbase Document
* Filed herewith.
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.