EDGAR 10-K Filing

Company CIK: 1399306
Filing Year: 2021
Filename: 1399306_10-K_2021_0001399306-21-000016.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
General Overview
Satel Group merged with Simlatus Corporation (“SIML” or “Company”) on November 13, 2018 and is the premier provider of DirecTV to high-rise apartments, condominiums and large commercial office buildings in the San Francisco metropolitan area and is now expanding both their DirecTV and Internet services across the Bay Area. Simlatus continues to manufacture its own proprietary systems for major broadcast studios, such as Warner Bros., Fox News, CBS, and DirecTV. Its video technology supports the major system used for underwater oil exploration in the world.
Simlatus has been selling audio-video system technology for approximately 20 years, manufactures its own product line of commercial audio and video systems that offers advanced applications utilized in the commercial and government broadcast industry and other industries where such applications are required. The Company products are sold through a global network of established broadcast audio/video equipment distributors, many of whom have been selling Simlatus products for many years.
Simlatus Corporation was initially incorporated in the State of Nevada under the name Sunberta Resources Inc. on November 15, 2006, as a mining and exploration of mineral claims business. On November 18, 2009, the Company changed its name to Grid Petroleum Corp. and continued with the mining and exploration of mineral claims in Alberta, Canada, Vancouver Island, British Columbia, England, and the United States.
On March 9, 2016, Grid Petroleum Corp. entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with RJM and Associates, LLC, a California limited liability company (“RJM”) whereby RJM‟s owners became the directors of the Company and were to be issued $6,250,000 worth of the Company’s stock; $5,000,000 of Restricted Common Stock 90 days from the date of this agreement and $1,250,000 of Preferred Series-A Shares of the Company’s Preferred Stock. On the same date the entire management team of RJM became the entire management team of Grid Petroleum Corp.
The Company’s transaction with RJM has been treated as a reverse recapitalization of the Company, with the Company (the legal acquirer of RJM) considered the accounting acquiree, and RJM, whose management took control of the Company (the legal acquiree of the Company) considered the accounting acquirer. The Company did not recognize goodwill or any intangible assets in connection with the transaction. All costs related to the transaction are being charged to operations as incurred. The $6,250,000 worth of shares of Company stock, to be issued in conjunction with the transaction, was presented as a liability until such time that the shares were issued, and the liability reduced. The historical financial statements include the operations of the accounting acquirer for all periods presented.
On March 25, 2016, the Company approved a name change to Simlatus Corporation, stock symbol SIML, which was executed on April 4, 2016. The new name change better describes the Company’s new business and revenues from selling commercial broadcast equipment on a global basis. Simlatus Corporation develops, manufactures, markets, and owns proprietary advanced broadcast equipment and software. These systems have been sold worldwide over the past 20 years to some of the most recognized, major broadcast companies in the Television Industry.
The Company currently sells approximately 55 different commercial audio/video products and is preparing to market its newest audio/video product referred to as SyncPal™. In addition to the Company’s traditional line of audio/video products, it has commenced the research & development of its Immersive Broadcast System, referred to as the Simlatus-IBS™. The Simlatus-IBS™ will include commercial augmented reality and virtual reality applications for studio engineers. These applications, both hardware and software, will allow the customer to control and manage the studio audio/video systems from anywhere in the world. These products are being developed to serve a market segment that is presently being strongly embraced by consumers and is forecasted, by some of the most widely recognized tech companies in the world, as becoming a multi-billion-dollar market in the near future. The Market Analysis and IP Portfolio will include new patents specifically developed for these products and owned by the Company.
Satel Group Inc., a Nevada Corporation, merged with Simlatus Corporation on November 13, 2018. Satel Group, Inc., (the “Company” or “Satel”) was incorporated in the State of Nevada on August 15, 2016. The Company was originally formed as Satel, LLC on February 26, 2003 as a California limited liability company. Satel, LLC converted to a California Corporation, Satel, Inc., by Articles of Incorporation with a Statement of Conversion signed by Richard Hylen as managing member of Satel LLC, dated December 20, 2013, and filed with the California Secretary of State on December 23, 2013. On September 25, 2016 Satel Group, Inc. purchased all of the assets of Satel, Inc., and therefore this Company was organized and continues to operate with the same management while engaged in providing their existing High Speed Internet and DirecTV™ services to upscale, high-rise commercial buildings including large office complexes, apartments, and condominiums in the City of San Francisco and throughout the Bay Area.
Competition and Marketing
Simlatus has performed an in-depth investigation and analysis of our competition as one of the most important components of our comprehensive market analysis. This allows us to assess our competitor’s strengths and weaknesses and implement effective strategies in pricing and products being offered to improve our competitive advantage. The Company has identified our competition to determine and weigh our attributes, assess our strengths and weaknesses, and implement strategies to strengthen our competitive position within our market segments. A key factor contributing to market growth is the adoption of HDTV entertainment distribution via the Internet. The Company has begun to focus new product development in digital and analog/digital conversion solutions to better satisfy changing market demand. Immersive technologies with augmented reality and virtual reality await the near future for the Broadcasting Industry. Simlatus has access to top professionals in Immersive Technology and is now designing their new Immersive Broadcast Studio (IBS).
We have determined that a business marketing a product similar to, or as a substitute for, our own product in the same geographic area is a direct competitor. Firms offering dissimilar or substitute products in relation to our products or services are considered indirect competitors. Indirect competition would exist between the manufacturing of commercial broadcast equipment selling to the same customers. To achieve and maintain a competitive advantage in reaching and selling to our target market, our management has gained a thorough knowledge of our competition. An in-depth competitive analysis has provided the company with understanding of how our existing and potential customers rate the competition, a positive identification of our competitor’s strengths and weaknesses, and a mechanism to develop effective competitive strategies in our target market.
Our competitors are a part of a concentrated market where only a handful of competitors exist. We have identified approximately 22 competitors in the Broadcast studio industry. Our top 3 competitors are Ensemble Designs, Inc., Thomson Video Networks, Inc., and Ericcson A.B. The Company currently manufacturers a product for Ensemble Designs, Inc., one of our competitors.
Our Company is able to compete based upon the price point and quality that we provide to our end-user. We have 25 distributors providing global sales of all of our 55 products. Simlatus offers a wide range of broadcast products including switchers, controllers, protection switches, HD and Analog Routers, Audio Distribution and our SoundPal family of audio/video signaling products. Our newest product being SyncPal.
Our competitors are profitable, and the industry is expanding into augmented/virtual audio-video products. The attributes that the majority of customers request is pricing and support. Simlatus and all of our competition provide warranty and repair services for all products. Our customers include Fox News, DirecTV, Warner Bros., and a variety of government-based buyers for military and government broadcast facilities.
We provide an informative website for all of our products, company information and distribution. We provide various testimonial statements from major customers. Further, we advertise in trade journals and through our distribution websites. Each of our products includes a complete manual and specifications data sheet.
Our sales staff has more access to competitive information than anyone else in our organization. Customers often show our salespeople sales literature, contracts, price quotes, and other information from competitors. It is our responsibility to engage with potential customers to discuss problems they have with a competitor’s product. Customers will also reveal our competition’s product benefits, strengths, and customer service programs. We instruct our sales force to ask for copies of any competitive literature if and when that is possible. All sales staff maintains a record of all competitive information they discover and devote a regular portion of each sales meeting to a discussion of the competition. Our employees working in other areas of the company also become exposed to competitive information and share that with our sales team.
In regard to our Trade Associations, Simlatus compiles and has access to published industry statistics and reports regarding industry news and leaders through trade association magazines and newsletters. Most trade associations also sponsor trade shows and other professional meetings. This is an opportunity for our company to experience first-hand what our competition is producing. It also provides the opportunity to discover new players who may soon become our competition.
We interview our customers, suppliers, and industry experts about our competition’s product and service periodically. Once we’ve gathered all of the competitive data, we analyze the data to determine product information, market share, marketing strategies, and to identify our competition’s strengths and weaknesses. We rely on our sales staff and customer feedback what product features and benefits are most important to our customers and potential customers. A products or services competitive position is largely determined by how well it is differentiated from our competition and by its price.
Our products have been sold for approximately 20 years and our sales strategy provides the company an advantage with our existing dealers & customers, existing product line, existing broadcast users, our manufacturing processes, experienced personnel, professional management, and quality product reputation. Simlatus is positioned with current sales of their commercial broadcasting support systems and is now structuring the R&D virtual/augmented reality products to develop a strategic technology roadmap which will enable the company to expand into high-growth digital television and over-the-top (OTT) markets. These products are being developed for Simlatus‟ existing consumers and newer markets. Further, Simlatus understands market trends, including worldwide movement towards high speed, IP software solutions. Simlatus will continue to focus on driving adoption of upgraded technology and the company’s R&D focus will be on programs to out-pace competition.
In regard to Satel Group Inc., the global Internet audience continues to grow steadily, with the worldwide base of broadband Internet users (including fixed and wireless) in the 3.2 billion range as 2016 began. This vast base of high-speed Internet users encourages businesses to innovate in order to offer an ever-evolving array of online services. Sectors that are growing very rapidly online include the sale of entertainment products, event tickets, travel, apparel, and consumer electronics.
The most powerful trends on the Internet include access via wireless devices, the migration of entertainment to the web and cloud-based software-as-a-service. Today, consumers are more focused than ever on finding the best prices, as consumer attitudes and shopping habits changed dramatically as a result of the 2007-09 recession. Consequently, e-commerce firms that offer high value at low prices are well-positioned to prosper.
Telecommunication, or telecom, companies provide fixed and mobile voice, text, and data transmission to consumers, small businesses, enterprises, and government entities. Traditionally, telecom companies drove revenue mainly by providing voice calling, text messaging, and Internet connectivity through wire line or landline connections by offered its services to both consumers and businesses. Now, the business is driven wireless along with wired internet, data, and business solutions. In wire line, telecom companies sell voice and data services to customers via traditional landline phones and VoIP (Voice over Internet Protocol). For the Internet, they give solutions ranging from basic connectivity over the usual DSL (digital subscriber line) to high-speed connections. In home entertainment, they provide television services through IPTV (Internet Protocol television). They also sell advanced services in video conferencing, high bandwidth dedicated lines, and secured communication systems to their larger customers.
Although telecom companies provide voice and data services to consumers and businesses, the nature of these services differs significantly between the two customer segments. While residential customers mainly use wireless services, businesses use wire line to get high-capacity broadband and advanced communications services. Also, telecom companies rent their facilities or networks-providing wholesale data and communication access-to other carriers of communication services.
Key companies in the US include AT&T (T), Verizon (VZ), and Sprint (S) which are the large integrated, publicly trade telecom companies that provide wireless and wire line services, while T-Mobile (TMUS) is a listed national wireless operator. Wire line players-like CenturyLink (CTL), Frontier Communications (FTR), and Windstream Holdings (WIN)-are some of the other key regional telecom companies in the US. A wire line network includes interlinked connection and redistribution systems that supports information-like voice and data-to travel electronically. Traditional, local, and long distance telephone systems that supported voice calls, messaging, and fax were the primary wire line services that transmitted services over a network of copper wires and switches. The wires and switches connected calls between users mostly using a copper infrastructure connecting traditional landlines and pay phones. Now, with the backbone of the network being fiber optics, they support a broadband network capable of delivering VoIP (Voice over Internet Protocol), Internet, TV services, and managed private communications. Broadband infrastructure is recognized as a critical resource for economic development. Most countries, across the globe have strategic plans in place-like the National Broadband Plan-to expand and develop their Broadband network to support a broad range of enhanced communications and entertainment services.
Since inception in 2003, Satel operations have primarily consisted of providing DirecTV services to high-rise apartments, condominiums and to business in commercial buildings by investing in the equipment and employing the trained personnel required to maintain those services in the City of San Francisco. In 2014, Satel began expanding their services to provide Internet services in the same high-rise buildings in which they already provide DirecTV. Our business model now incorporates three-phases that detail the steps we intend to take to expand our services by launching and marketing an expanded mix of products.
Phase 1: Upgrading as necessary and or installing an enhanced coaxial and wireless internet network in buildings already under contract with Satel to provide existing customers access, through proprietary systems either manufactured or distributed by Simlatus local, off air television programming at a minimum monthly charge, while supporting faster internet speeds at less cost to the customer to attract new residential and commercial customers.
Phase 2: Enhancing our website to include point of sale transactions, allow subscribers to manage their accounts and purchase additional services online.
Phase 3: Continue to obtain long term contracts to provide services in both existing and new high rise complexes throughout the Bay Area to grow our customer base and support the increase in customer usage volume with the enhanced wireless internet network and website.
Currently the company provides services to approximately 18,108 high rise condominium and apartment dwellings located in 170 buildings that have been wired by Satel to receive satellite delivered television entertainment through the company’s licensing agreement with DirecTV.
Satel’s current revenue is from the combination of individual DirecTV subscribers, DirecTV services from commercial office buildings plus Internet subscribers and contracted upgrades of commercial entertainment systems.
One customer contract includes a monthly service fee while the other contract requires no fee. Both contracts include the DirecTV MDU Equipment Lease Agreement, which is required by DirecTV for each new customer, along with options for “No Commitment‟, “One Year Commitment‟, or “Two Year Commitment‟. The Satel “No Fee‟ customers are properties we acquired from other companies that were not paying a monthly fee to Satel. The Satel “Fee‟ customers are in properties we acquired directly with long term contracts that pay a monthly fee to Satel. The “Satel Terms and Conditions‟ provide for a disclosure of rates and charges, a warranty that covers equipment use, repair and replacement, and miscellaneous provisions that provides disclosure regarding jurisdiction laws and rights for the customer. The DirecTV MDU Equipment Lease Agreement provides additions customer rights and warranties.
The company’s internet service is less expensive than AT&T, Google, and Comcast, which currently offer “Gigabit‟ as their top Internet service, while most customers buy a much slower and less expensive service under a 100 MB. Satel’s application of HPNA technology using coaxial cable to deliver Internet, provides download speeds of 200Mb-500Mb, with unlimited downloads for a cost less than those fees charged by other carriers for the same speeds. The company believes that there is a good and marketable monthly Internet service in the $40-$45 range. Satel can also combine local, off air channels, whereas the other OTT providers do not.
We will continue to market our product to new building owners and management companies using our direct B2B campaign as well as to contact those architects, engineering firms and other decision makers involved with new high rise construction in the Bay Area. Our CEO, Richard Hylen, has established long-term relationships with owners, builders, management companies, managers, and other service providers to introduce our product and create our initial sales contact. Our CEO has extensive experience in marketing both entertainment and Internet services and believes that the marketing of our products directly to consumers would not have the same potential for increased sales that it would have without the ongoing support of established building managers.
Employees
As of the date of this filing, Simlatus Corporation has 3 employees, 14 contracting engineers, 17 suppliers, 34 distributors, in addition to the needed legal and accounting support of a public company.
Satel Group Inc. has 6 employees, 1 consultant, and 10 suppliers, in addition to legal and accounting support.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

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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
Simlatus has executive offices at 175 Joerschke Drive, Suite A, Grass Valley, CA 95945. The office is a ground floor space of 2,000 sq. ft. with a large inventory room FCC Compliant, manufacturing and assembly of products, 4 executive offices, packaging and shipping facility, and conference room. Additional space may be required as the Company expands its operations. Management does not foresee any significant difficulties in obtaining any required additional space. The Company currently does not own any real property.
Satel Group maintains offices and equipment at 330 Townsend Street, Suite 135, San Francisco, California 94107. The office is ground floor space of 1,000 sq. ft. with a large equipment repair room, 2 executive offices, Inventory Room and Reception area. Additional space may be required as the Company expands its operations. Management does not foresee any significant difficulties in obtaining any required additional space. The Company currently does not own any real property.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer, or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURE
None.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR THE COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Common Stock
Our common stock is currently quoted on the OTC Markets. Our common stock has been quoted on the OTC Markets since October 17, 2007 trading under the symbol “SBRT”. On January 15, 2008, our symbol was changed to “SBTR” and on December 15, 2009, our symbol was changed to “GRPR” to reflect our Company’s name change. On April 21, 2016, our symbol was changed to “SIML” to reflect our Company’s name change to Simlatus Corporation. Because we are quoted on the OTC Markets, our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange.
The following table sets forth, for the periods indicated over the last two years, the high and low closing bid quotations, as reported by the OTC Markets, and represents prices between dealers, does not include retail markups, markdowns, or commissions, and may not represent actual transactions:
For the Year Ended December 31
High Low High Low
First Quarter 0.0010 0.0010 0.0240 0.0041
Second Quarter 0.0320 0.0007 0.0690 0.0063
Third Quarter 0.0010 0.0002 0.0122 0.0017
Fourth Quarter 0.0007 0.0001 0.0017 0.0001
Record Holders
As of December 31, 2020, there were 4,896,736,884 shares of the registrant’s $0.00001 par value common stock issued and outstanding, which were held by 28 shareholders of record.
Dividends
We have not paid dividends on our common stock, and do not anticipate paying dividends on our common stock in the foreseeable future.
Securities authorized for issuance under equity compensation plans
We have no compensation plans under which our equity securities are authorized for issuance.
Performance graph
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Recent Sales of Unregistered Securities
During the year ended December 31, 2020, 283,510 shares of Series A preferred stock were converted to 1,217,871,970 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $191,339.
During the year ended December 31, 2020, 534,019 shares of Series A preferred stock were issued to settle debt of $955,884 in accordance with conversion terms. The issuances resulted in a loss on conversion of $10.
During the year ended December 31, 2020, the holders of convertible notes converted a total of $1,005,663 of principal and interest into 3,674,337,987 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $72,051 and settled $4,976,556 worth of derivative liabilities which was recorded to additional paid in capital.
Recent issuances of unregistered securities subsequent to our fiscal year ended of December 31, 2020
On January 5, 2021, the holder of a convertible note converted a total of $13,000 of principal into 144,444,444 shares of our common stock.
On January 7, 2021, the holder of a convertible note converted a total of $10,750 of principal and fees into 107,500,000 shares of our common stock.
On January 7, 2021, 80,450 shares of Preferred Series A stock was converted in to 240,009,167 shares of common stock.
On January 11, 2021, the holder of a convertible note converted a total of $2,250 of principal and interest into 15,000,000 shares of our common stock.
On January 11, 2021, the holder of a convertible note converted a total of $15,000 of principal into 100,000,000 shares of our common stock.
On January 11, 2021, 19,550 shares of Preferred Series A stock was converted in to 58,324,167 shares of common stock.
On January 12, 2021, the holder of a convertible note converted a total of $11,627 of principal, interest, and fees into 105,697,273 shares of our common stock.
On January 13, 2021, 60,000 shares of Preferred Series A stock was converted in to 268,500,000 shares of common stock.
On January 14, 2021, the holder of a convertible note converted a total of $19,650 of principal and interest into 109,166,667 shares of our common stock.
On January 15, 2021, the holder of a convertible note converted a total of $6,300 of interest into 63,000,000 shares of our common stock.
On January 20, 2021, the holder of a convertible note converted a total of $36,200 of principal, interest, and fees into 301,666,667 shares of our common stock.
On January 22, 2021, the holder of a convertible note converted a total of $3,300 of interest into 33,000,000 shares of our common stock.
On January 22, 2021, 40,000 shares of Preferred Series A stock was converted in to 79,555,556 shares of common stock.
On January 26, 2021, the holder of a convertible note converted a total of $29,088 of principal, interest, and fees into 242,397,433 shares of our common stock.
On January 28, 2021, 100,000 shares of Preferred Series A stock was converted in to 162,727,273 shares of common stock.
On February 1, 2021, 100,000 shares of Preferred Series A stock was converted in to 198,888,889 shares of common stock.
On February 2, 2021, 100,000 shares of Preferred Series A stock was converted in to 179,000,000 shares of common stock.
On February 8, 2021, the holder of a convertible note converted a total of $7,505 of principal and interest into 50,035,712 shares of our common stock.
On February 8, 2021, the holder of a convertible note converted a total of $9,494 of principal, interest, and fees into 52,746,722 shares of our common stock.
On February 9, 2021, the holder of a convertible note converted a total of $7,569 of principal and interest into 50,457,178 shares of our common stock.
On February 10, 2021, 100,000 shares of Preferred Series A stock was converted in to 89,500,000 shares of common stock.
On February 10, 2021, 100,000 shares of Preferred Series A stock was converted in to 49,722,223 shares of common stock.
On February 11, 2021, the holder of a convertible note converted a total of $34,313 of principal, interest, and fees into 142,971,542 shares of our common stock.
On February 16, 2021, the holder of a convertible note converted a total of $20,797 of principal and interest into 103,986,324 shares of our common stock.
On February 23, 2021, 100,000 shares of Preferred Series A stock was converted in to 55,937,500 shares of common stock.
On February 25, 2021, 100,000 shares of Preferred Series A stock was converted in to 137,692,308 shares of common stock.
On February 26, 2021, 150,000 shares of Preferred Series A stock was converted in to 116,739,131 shares of common stock.
On March 4, 2021, 200,000 shares of Preferred Series A stock was converted in to 275,384,615 shares of common stock.
On March 8, 2021, the holder of a convertible note converted a total of $21,602 of principal, interest, and fees into 19,549,294 shares of our common stock.
On March 9, 2021, 100,000 shares of Preferred Series A stock was converted in to 105,294,118 shares of common stock.
Issuer Repurchases of Equity Securities
None.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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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
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. You should read this report completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Results for the Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019
Revenues:
The Company’s revenues were $342,283 for the year ended December 31, 2020 compared to $477,357 for the year ended December 31, 2019. The company has a strong relationship with DirecTV and has focused its efforts on expanding services outside of the San Francisco metropolitan area. For the years ended December 31, 2020 and 2019, the Company had one major customer who represented approximately 55% and 53% of total revenue, respectively. The decrease in revenue is due to a decrease in customer sales. In addition, Richard Hylen has been focused on expansion in 2020, and local customer base retention has declined. Satel has strong relationships with commercial and residential building owners and management, and as a public company with the adequate funding, Satel can expand its services and anticipates increasing revenues over the next 24 months. Satel recognizes the customer needs, and the importance of competitive pricing and services. The company believes that it can invest its capital into faster internet, bundling of various internet based services, and expanding its customer base into the entire Bay Area as described in the marketing disclosure as a part of this Form 10-K.
Cost of Sales:
The Company’s cost of materials was $7,821 for the year ended December 31, 2020, compared to $5,957 for the year ended December 31, 2019. The increase is related to a slight increase in audio/video product sales in 2020.
Operating Expenses:
Operating expenses consisted primarily of consulting fees, professional fees, salaries and wages, office expenses and fees associated with preparing reports and SEC filings relating to being a public company. Operating expenses for the years ended December 31, 2020 and December 31, 2019 were $1,097,216 and $4,431,039, respectively. The decrease was primarily attributable to share based compensation and higher wages paid during the year ended December31, 2019.
Other Income (Expense):
Other income (expense) for the years ended December 31, 2020 and December 31, 2019 was $(10,695,568) and $(6,852,777), respectively. Other income (expense) consisted of derivative valuation gains and losses, gains or losses on settlement of debt and conversion of debt, and interest expense. The gain or loss on derivative valuation is directly attributable to the change in fair value of the derivative liability. Interest expense is primarily attributable to interest and penalties on outstanding notes payable, the initial interest expense associated with the valuation of derivative instruments at issuance, and the accretion of the convertible debentures over their respective terms. The increase in other income primarily resulted from the fluctuation of the Company’s stock price which impacted the valuation of the derivative liabilities.
Net Loss:
Net loss for the year ended December 31, 2020, was $11,458,322 compared to $10,812,416 for the year ended December 31, 2019. The increase in net loss can be explained by the decrease in revenue and changes in the gain in the fair value of derivative liabilities and share based compensation.
Impact of Inflation
We believe that the rate of inflation has had a negligible effect on our operations.
Liquidity and Capital Resources
December 31, December 31,
Current Assets $ 154,551 $ 40,929
Current Liabilities 9,588,260 6,013,494
Working Capital (Deficit) $ (9,433,709 ) $ (5,972,565 )
The overall working capital (deficit) increased from $(5,972,565) at December 31, 2019 to $(9,433,709) at December 31, 2020 due to an increase in convertible debt and the change in value of derivative liabilities.
December 31, December 31,
Cash Flows (used in) provided by Operating Activities $ (151,660 ) $ (673,486 )
Cash Flows provided by Investing Activities - -
Cash Flows (used for) provided by Financing Activities 261,020 692,999
Net Increase (decrease) in Cash During Period $ 109,360 $ 19,513
During the year ended December 31, 2020 cash (used in) provided by operating activities was $(151,660) compared to $(673,486) for the year ended December 31, 2019. The decrease in the cash used in operating activities is primarily attributed to the change in fair value of derivative liabilities.
During the year ended December 31, 2020 cash provided by investing activities was $0 compared to $0 for the nine months ended December 31, 2019.
During the year ended December 31, 2020, cash (used for) provided by financing activities was $261,020 compared to $692,999, for the year ended December 31, 2019. The decrease in cash provided by financing activity primarily resulted from a decrease in proceeds from notes payable during the year ended December 31, 2020.
As of December 31, 2020, the Company had a cash balance and current asset total of $134,855 and $154,551 respectively, compared with $24,495 and $40,929 of cash and current assets, respectively, as of December 31, 2019. The increase in assets was due to an increase in cash on hand.
As of December 31, 2020, the Company had total liabilities of $9,615,450 compared with $6,013,494 as of December 31, 2019. The increase in total liabilities was primarily attributed to an increase in accounts payable, derivative liabilities and related party liabilities.
Going Concern
The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. Since its inception, the Company has been funded by related parties through capital investment and borrowing funds.
As of December 31, 2020, we have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our December 31, 2020 audited financial statements that they have substantial doubt that we will be able to continue as a going concern.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Significant Accounting Policies
Our discussion and analysis of our results of operations and liquidity and capital resources are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, allowance for doubtful accounts, warranty liabilities, share-based payments, income taxes and litigation. We base our estimates on historical and anticipated results and trends and on various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results that differ from our estimates could have a significant adverse effect on our operating results and financial position. We believe that the significant accounting policies and assumptions as detailed in Note 1 to the financial statements contained herein may involve a higher degree of judgment and complexity than others.
Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not hold any assets or liabilities requiring disclosure under this item.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
SIMLATUS CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets at December 31, 2020 and December 31, 2019
Consolidated Statements of Operations for the years ended December 31, 2020 and 2019
Consolidated Statements of Shareholders’ Deficit for the years ended December 31, 2020 and 2019
Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019
Notes to the Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Simlatus Corp. and subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Simlatus Corp. and subsidiaries (the Company) as of December 31, 2020 and 2019, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Derivative Liabilities
As discussed in Note 7, the Company borrows funds through the use of convertible notes payable that contain a conversion price that fluctuates with the stock price. Due to the fluctuation of the conversion price, the embedded conversion feature requires bifurcation from the host contract and is recorded as a liability subject to market adjustments as of each reporting period. Significant judgment is exercised by the Company in determining derivative liability values for these convertible note agreements, including the use of a specialist engaged by management.
We evaluated management’s conclusions regarding their derivative liability and reviewed support for the significant inputs used in the valuation model, as well as assessing the model for reasonableness.
Convertible Preferred Stock
As discussed in Note 9, the Company has issued and outstanding certain Preferred Shares that contain a fixed value and convertible into common stock at the closing market price on the date of conversion. Auditing management’s evaluation of the convertible preferred shares involves significant judgements and estimates in determining the proper classification of the preferred shares that include both debt and equity qualities. To evaluate the appropriateness and accuracy of the classification of the convertible preferred shares, we evaluated management’s assessment of the debt and equity like characteristics.
We evaluated management’s appropriateness and accuracy of the classification of the convertible preferred shares and evaluated management’s assessment of the debt and equity like characteristics.
/s/ M&K CPAS, PLLC
We have served as the Company’s auditor since 2018.
Houston, Texas
March 31, 2021
SIMLATUS CORP.
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
ASSETS
Current Assets
Cash $ 134,855 $ 25,495
Accounts receivable 5,563 7,741
Inventory, net 4,133
Prepaid expenses - 7,268
Other current assets 10,000 -
Total current assets 154,551 40,929
Financing lease assets - related party 31,178 -
Security deposit 5,162 5,162
Total assets $ 190,891 $ 46,091
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable $ 522,418 $ 401,121
Accounts payable - related party - 31,269
Accrued wages 321,530 1,184,455
Accrued expenses 29,416 38,617
Accrued interest 148,233 374,439
Convertible notes payable in default 203,167 96,647
Convertible notes payable, net of discount 29,771 609,888
Current financing lease liabilities - related party 3,988 -
Deferred revenue -
Derivative liabilities 7,996,994 3,168,799
Loans payable 87,420 16,500
Related party liabilities 245,323 91,130
Total Current liabilities 9,588,260 6,013,494
Non-current financing lease liabilities - related party 27,190 -
Total liabilities 9,615,450 6,013,494
Series A convertible preferred stock: 10,000,000 shares authorized, par value $0.001 11,162,005 10,713,594
6,235,757 shares issued and outstanding at December 31, 2020
5,985,248 shares issued and outstanding at December 31, 2019
Series C convertible preferred stock, 45,750 shares authorized, par value $0.0001 355,830 355,830
35,583 shares issued and outstanding at December 31, 2020
35,583 shares issued and outstanding at December, 2019
Convertible preferred stock payable 754,249 -
Stockholders’ deficit:
Series B preferred stock: 10,000,000 shares authorized, par value $0.001
500 shares issued and outstanding at December 31, 2020
500 shares issued and outstanding at December 31, 2019
Common stock, $0.00001 par value 10,000,000,000 authorized 48,967
4,896,736,884 shares issued and outstanding at December 31, 2020 (1)
4,524,351 shares issued and outstanding at December 31, 2019 (1)
Additional paid in capital (6,107,768 ) (12,857,352 )
Accumulated deficit (15,637,843 ) (4,179,521 )
Total stockholders’ deficit (21,696,643 ) (17,036,827 )
Total liabilities and stockholders’ deficit $ 190,891 $ 46,091
(1) All common share amounts and per share amounts in the financial statements reflect the one-for-one thousand reverse stock split that was made effective on December 18, 2019. See Note 12.
The accompanying notes are an integral part of these financial statements
SIMLATUS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended
December 31,
Sales $ 342,283 $ 477,357
Cost of materials 7,821 5,957
Gross profit 334,462 471,400
Operating expenses:
G&A expenses 433,998 3,785,517
Professional fees 77,287 34,754
Salaries and wages 585,931 610,768
Total operating expenses 1,097,216 4,431,039
Loss from operations (762,754 ) (3,959,639 )
Other income (expense):
Debt forgiveness 118,548 -
Gain on settlement of debt - 783,208
Loss on conversion of debt (72,051 ) (86,718 )
Loss on conversion of debt of preferred shares (191,349 ) (174,273 )
Derivative expense (9,404,359 ) (5,942,525 )
Interest expense (1,146,357 ) (1,432,469 )
Total other income (expense) (10,695,568 ) (6,852,777 )
Net loss before income taxes (11,458,322 ) (10,812,416 )
Income tax expense - -
Net profit (loss) $ (11,458,322 ) $ (10,812,416 )
Per share information
Weighted average number of common shares outstanding, basic (1) 1,422,458,791 793,784
Net income (loss) per common share, basic $ (0.008 ) $ (13.62 )
Weighted average number of common shares outstanding, diluted (1) 1,422,458,791 793,784
Net income (loss) per common share, diluted $ (0.008 ) $ (13.62 )
(1) All common share amounts and per share amounts in the financial statements reflect the one-for-one thousand reverse stock split that was made effective on December 18, 2019. See Note 12.
The accompanying notes are an integral part of these financial statements
SIMLATUS CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
Convertible Preferred Stock Preferred Stock
Additional Accumulated Total
Series A Series C Shares Series B Common Stock (1) Paid-In Earnings Shareholders’
Shares Amount Shares Amount Payable Shares Amount Shares Amount Capital (Deficit) Equity (Deficit)
Balances for December 31, 2018 5,064,929 $ 9,066,223 - $ - $ - $ 1 108,078 $ 1 $ (24,198,066 ) $ 6,634,730 $ (17,563,334 )
Conversion of debt to common stock - - - - - - - 2,119,224 969,497 - 969,518
Cashless warrant exercise - - - - - - - 118,280 - - - -
Warrant shares exchanged for convertible preferred stock - - 45,750 457,500 - - - - - 1,372,501 - 1,372,501
Convertible preferred stock issued for services 1,675,978 3,000,000 - - - - - - - - - -
Convertible preferred stock converted to common stock (712,360 ) (1,275,124 ) (10,167 ) (101,670 ) - - - 2,178,345 1,551,045 - 1,551,068
Convertible preferred stock repurchased and retired (43,299 ) (77,505 ) - - - - - - - - - -
Contributed capital - - - - - - - - - 362,261 - 362,261
Imputed interest - - - - - - - - - 14,670 - 14,670
Lease standard adoption - - - - - - - - - - (1,835 ) (1,835 )
Derivative settlements - - - - - - - - - 7,053,082 - 7,053,082
Common stock issued for derivative settlements - - - - - - - - 24,953 - 24,953
Debt settlement by related party - - - - - - - - - (7,295 ) - (7,295 )
Net loss - - - - - - - - - - (10,812,416 ) (10,812,416 )
Balances for December 31, 2019 5,985,248 $ 10,713,594 35,583 $ 355,830 $ - $ 1 4,524,351 $ 45 $ (12,857,352 ) $ (4,179,521 ) $ (17,036,827 )
Common shares issued due to reverse stock split rounding - - - - - - - 3,476 - - - -
Conversion of debt to common stock - - - - - - - 3,674,337,087 36,744 1,040,971 - 1,077,715
Convertible preferred stock converted to common stock (283,510 ) (507,483 ) - - - - - 1,217,871,970 12,178 686,652 - 698,830
Convertible preferred stock issued to settle note payable 118,466 212,055 - - - - - - - - - -
Convertible preferred stock issued to settle accrued liabilities 415,553 743,839 - - - - - - - - - -
Related party debt settled to additional paid in capital - - - - - - - - - 31,269 - 31,269
Convertible preferred shares to be issued to settle debt - - - - 754,249
-
-
Imputed interest - - - - - - - - - 14,136 - 14,136
Derivative settlements - - - - - - - - - 4,976,556 - 4,976,556
Net loss - - - - - - - - - - (11,458,322 ) (11,458,322 )
Balances for December 31, 2020 6,235,757 $ 11,162,005 35,583 $ 355,830 $ 754,249 $ 1 4,896,736,884 $ 48,967 $ (6,107,768 ) $ (15,637,843 ) $ (21,696,643 )
(1) All common share amounts and per share amounts in the financial statements reflect the one-for-one thousand reverse stock split that was made effective on December 18, 2019. See Note 12.
The accompanying notes are an integral part of these financial statements
SIMLATUS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended
December 31,
Cash flows from operating activities:
Net profit (loss) $ (11,458,322 ) $ (10,812,416 )
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of convertible debt discount 705,157 1,006,485
Stock based compensation - 3,000,000
Imputed interest 14,136 14,670
Debt forgiveness (118,548 ) -
Gain on debt settlement - (783,208 )
Loss on conversion of debt 72,051 86,718
Loss on conversion of preferred shares to common stock 191,349 174,273
Change in fair value of derivative liability 9,404,359 5,942,525
Penalties on notes payable 197,939 -
Decrease (increase) in operating assets and liabilities:
Accounts receivable 2,178 21,609
Inventory (3,708 ) (425 )
Other current assets (10,000 ) -
Prepaid expenses 7,268 (7,268 )
Right-of-use asset - (1,835 )
Accrued interest (71,942 ) 362,904
Accounts payable 168,166 266,897
Accrued expenses 625,962 122,951
Advances from related parties 122,924 (67,995 )
Deferred revenue (629 )
Net cash (used in) provided by operating activities (151,660 ) (673,486 )
Cash flows from investing activities:
Cash paid for fixed assets - -
Net cash provided by investing activities - -
Cash flows from financing activities:
Proceeds from convertible debt 190,100 1,032,504
Proceeds from loans payable 72,920 -
Repurchase of preferred series A shares - related party - (77,505 )
Payments on convertible debt - (212,500 )
Payments on promissory notes (2,000 ) (49,500 )
Net cash (used in) provided for financing activities 261,020 692,999
Net increase (decrease) in cash 109,360 19,513
Cash, beginning of period 25,495 5,982
Cash, end of period $ 134,855 $ 25,495
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ - $ -
Cash paid for interest $ - $ -
Schedule of non-cash investing & financing activities:
Stock issued for debt conversion $ 1,005,664 $ 882,778
Settlement of debt by related party $ 507,481 $ -
Discount from derivative $ 400,393 $ 1,245,813
Preferred stock converted to common stock $ 698,830 $ 1,376,794
Conversion of debt in to preferred shares $ 212,055 $ -
Conversion of accrued liabilities into preferred shares $ 743,839 $ -
Conversion of accrued liabilities into preferred shares payable $ 754,249 $ -
Contributed capital $ - $ 362,261
Debt exchanged for payment of accounts payable $ 15,600 $ -
Lease adoption recognition $ 31,178 $ 77,700
Common stock issued for derivative settlements $ - $ 24,953
Derivative warrants settled with preferred C shares $ - $ 1,830,001
Derivative settlements $ 4,976,556 $ 7,053,082
The accompanying notes are an integral part of these financial statements
SIMLATUS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2020
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Description of Business
Satel Group merged with Simlatus Corporation (“SIML” or “Company”) on November 13, 2018 and is the premier provider of DirecTV to high-rise apartments, condominiums and large commercial office buildings in the San Francisco metropolitan area and is now expanding both their DirecTV and Internet services across the Bay Area. Simlatus continues to manufacture its own proprietary systems for major broadcast studios, such as Warner Bros., Fox News, CBS, and DirecTV. Its video technology supports the major system used for underwater oil exploration in the world. For the years ended December 31, 2020 and 2019, the Company had one major customer who represented approximately 55% and 53% of total revenue, respectively.
Simlatus Corporation was initially incorporated in the State of Nevada under the name Sunberta Resources Inc. on November 15, 2006, as a mining and exploration of mineral claims business. On November 18, 2009, the Company changed its name to Grid Petroleum Corp. and continued with the mining and exploration of mineral claims in Alberta, Canada, Vancouver Island, British Columbia, England, and the United States.
On March 9, 2016, Grid Petroleum Corp. entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with RJM and Associates, LLC, a California limited liability company (“RJM”) whereby RJM‟s owners became the directors of the Company and were to be issued $6,250,000 worth of the Company’s stock; $5,000,000 of Restricted Common Stock 90 days from the date of this agreement and $1,250,000 of Preferred Series-A Shares of the Company’s Preferred Stock. On the same date the entire management team of RJM became the entire management team of Grid Petroleum Corp.
The Company’s transaction with RJM has been treated as a reverse recapitalization of the Company, with the Company (the legal acquirer of RJM) considered the accounting acquiree, and RJM, whose management took control of the Company (the legal acquiree of the Company) considered the accounting acquirer. The Company did not recognize goodwill or any intangible assets in connection with the transaction. All costs related to the transaction are being charged to operations as incurred. The $6,250,000 worth of shares of Company stock, to be issued in conjunction with the transaction, was presented as a liability until such time that the shares were issued, and the liability reduced. The historical financial statements include the operations of the accounting acquirer for all periods presented.
On March 25, 2016, the Company approved a name change to Simlatus Corporation, stock symbol SIML, which was executed on April 4, 2016. The new name change better describes the Company’s new business and revenues from selling commercial broadcast equipment on a global basis. Simlatus Corporation develops, manufactures, markets, and owns proprietary advanced broadcast equipment and software. These systems have been sold worldwide over the past 20 years to some of the most recognized, major broadcast companies in the Television Industry.
Satel Group Inc., a Nevada Corporation, merged with Simlatus Corporation on November 13, 2018. Satel Group, Inc., (the “Company” or “Satel”) was incorporated in the State of Nevada on August 15, 2016. The Company was originally formed as Satel, LLC on February 26, 2003 as a California limited liability company. Satel, LLC converted to a California Corporation, Satel, Inc., by Articles of Incorporation with a Statement of Conversion signed by Richard Hylen as managing member of Satel LLC, dated December 20, 2013, and filed with the California Secretary of State on December 23, 2013. On September 25, 2016 Satel Group, Inc. purchased all of the assets of Satel, Inc., and therefore this Company was organized and continues to operate with the same management while engaged in providing their existing High Speed Internet and DirecTV™ services to upscale, high-rise commercial buildings including large office complexes, apartments, and condominiums in the City of San Francisco and throughout the Bay Area.
Financial Statement Presentation
The audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Reclassification
Certain prior period amounts have been reclassified to conform to current period presentation.
Fiscal Year End
The Company has selected December 31 as its fiscal year end.
Use of Estimates
The preparation of the Company’s financial statements in conformity with generally accepted accounting principles of United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents.
Leases
In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.
Revenue Recognition and Related Allowances
The Company’s main revenue stream is from selling DirecTV services to corporate and residential customers. During the year ended December 31, 2020, 55% of the Company’s revenue was from commissions, 19% was from corporate service subscribers, 13% was from residential service subscribers, and 6% was from installations and equipment. In addition, the Company’s sales for audio/video systems represented 7% of revenues.
On January 1, 2018, we adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition (Topic 605). Results for reporting periods beginning after January 1, 2018 are presented under Topic 606. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on January 1, 2018.
Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
We determine revenue recognition through the following steps:
● identification of the contract, or contracts, with a customer;
● identification of the performance obligations in the contract;
● determination of the transaction price;
● allocation of the transaction price to the performance obligations in the contract; and
● recognition of revenue when, or as, we satisfy a performance obligation.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are stated at the amount that management expects to collect from outstanding balances. Bad debts and allowances are provided based on historical experience and management’s evaluation of outstanding accounts receivable. Management evaluates past due or delinquency of accounts receivable based on the open invoices aged on due date basis. The allowance for doubtful accounts at December 31, 2020 and December 31, 2019 is $0.
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses are carried at amortized cost and represent liabilities for goods and services provided to the Company prior to the end of the fiscal year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services.
Loss Per Share
Basic loss per share of common stock is computed by dividing the net loss by the weighted average number of common shares outstanding during the period after giving retroactive effect to the reverse stock split affected on December 18, 2019 (see Note 10).
Inventories
Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.
In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels and which is determined by the lowest level input that is significant to the fair value measurement in its entirety.
These levels are:
Level 1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2 - inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2020 and December 31, 2019 for each fair value hierarchy level:
December 31, 2020 Derivative Liabilities Total
Level I $ - $ -
Level II $ - $ -
Level III $ 7,996,994 $ 7,996,994
December 31, 2019 Derivative Liabilities Total
Level I $ - $ -
Level II $ - $ -
Level III $ 3,168,799 $ 3,168,799
In management’s opinion, the fair value of convertible notes payable and advances payable is approximate to carrying value as the interest rates and other features of these instruments approximate those obtainable for similar instruments in the current market. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments. As of December 31, 2020 and December 31, 2019, the balances reported for cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities, approximate the fair value because of their short maturities.
Income Taxes
The Company records deferred taxes in accordance with FASB ASC No. 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and loss carryforwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
As of the date of this filing, the Company is not current in filing their tax returns. The last return filed by the Company was December 31, 2017, and the Company has not accrued any potential penalties or interest from that period forward. The Company will need to file returns for the year ending December 31, 2019 and 2018, which are still open for examination.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The guidance requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires the consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact of the new standard.
2. GOING CONCERN
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of December 31, 2020, the Company has a shareholders’ deficit of $21,696,643 since its inception, working capital deficit of $9,433,709, negative cash flows from operations, and has limited business operations, which raises substantial doubt about the Company’s ability to continue as going concern. The ability of the Company to meet its commitments as they become payable is dependent on the ability of the Company to obtain necessary financing or achieving a profitable level of operations. There is no assurance the Company will be successful in achieving these goals.
The Company does not have sufficient cash to fund its desired research and development objectives for its augmented/virtual reality product development for the next 12 months. The Company has arranged financing and intends to utilize the cash received to fund the research and development project. This financing may be insufficient to fund expenditures or other cash requirements required to complete the product design for the augmented/virtual reality markets. There can be no assurance the Company will be successful in completing any new product development. The Company plans to seek additional financing if necessary, in private or public equity offering(s) to secure future funding for operations. There can be no assurance the Company will be successful in raising additional funding. If the Company is not able to secure additional funding, the implementation of the Company’s business plan will be impaired. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.
These financial statements do not give effect to adjustments to the amounts and classification to assets and liabilities that would be necessary should the Company be unable to continue as a going concern.
3. ACCRUED EXPENSES
As of December 31, 2020 and December 31, 2019, accrued expenses were comprised of the following:
December 31, December 31,
Accrued expenses
Credit cards $ 407 $ 8,282
Customer deposits 18,307 18,307
Employee liabilities 7,612 7,612
Sales tax payable 1,416
Short-term loans 3,000 3,000
Total accrued expenses $ 29,416 $ 38,617
Accrued interest
Interest on notes payable $ 44,855 $ 111,326
Interest on short-term loans 5,826 -
Interest on accrued wages 97,552 263,113
Total accrued interest $ 148,233 $ 374,439
Accrued wages $ 321,530 $ 1,184,455
4. CONVERTIBLE NOTES PAYABLE
As of December 31, 2020 and December 31, 2019, notes payable were comprised of the following:
Original Due Interest Conversion December 31, December 31,
Note Date Date Rate Rate
Armada Investment #2 5/30/2019 2/29/2020 18% Variable $ - $ 27,500
Armada Investment #3 7/22/2019 7/22/2020 8% Variable - 37,950
Armada Investment #4 12/6/2019 12/6/2020 8% Variable - 18,150
BHP Capital NY #3 3/26/2019 3/26/2020 24% Variable - 28,600
BHP Capital NY #4 4/9/2019 1/9/2020 18% Variable - 46,000
BHP Capital NY #6* 5/30/2019 2/29/2020 18% Variable 27,500 27,500
BHP Capital NY #7* 7/22/2019 7/22/2020 8% Variable 37,950 37,950
BHP Capital NY #8* 8/7/2019 8/7/2020 8% Variable - 33,000
BHP Capital NY #9 12/20/2019 12/20/2020 12% Variable 11,075 19,000
Blackbridge Capital #2* 5/3/2016 5/3/2017 5% Variable - 80,400
Coventry #3 5/31/2019 5/31/2020 24% Variable - 38,691
Emunah Funding #4* 10/20/2018 7/20/2019 24% Variable 2,990 2,990
Emunah Funding #8* 1/31/2019 1/31/2020 24% Variable 33,652 33,652
Fourth Man #2 10/26/2018 7/20/2019 24% Variable - 8,257
Fourth Man #4 4/23/2019 4/23/2020 10% Variable - 16,865
Fourth Man #5 7/22/2019 7/22/2020 8% Variable - 37,950
Fourth Man #6 8/12/2019 8/12/2020 8% Variable - 17,600
Fourth Man #7 10/9/2019 10/8/2020 8% Variable - 27,500
Fourth Man #8 12/10/2019 9/10/2020 12% Variable - 16,500
Fourth Man #9 8/3/2020 8/3/2021 8% Variable 27,500
Fourth Man #10 12/15/2020 12/15/2021 8% Variable 33,000 -
James Powell 9/7/2015 Demand 8% Variable - 150,875
Jefferson St Capital #2* 3/5/2019 10/18/2019 0% Variable 5,000 5,000
Jefferson St Capital #3 4/9/2019 1/9/2020 8% Variable - 44,400
Jefferson St Capital #5 5/30/2019 2/29/2020 18% Variable - 27,500
Jefferson St Capital #6* 6/21/2019 3/21/2020 18% Variable 27,500 27,500
Jefferson St Capital #7* 8/20/2019 5/20/2020 18% Variable 38,500 38,500
Jefferson St Capital #8* 12/20/2019 12/20/2020 12% Variable 19,000 19,000
Optempus Invest #1 9/4/2019 4/4/2020 6% Variable - 25,000
Optempus Invest #2 9/13/2019 4/13/2020 6% Variable - 20,000
Optempus Invest #3 10/15/2019 6/15/2020 6% Variable - 25,000
Optempus Invest #4 11/2/2020 11/2/2021 10% Variable 20,000 -
Optempus Invest #5 11/5/2020 11/5/2021 10% Variable 20,000 -
Optempus Invest #6 12/31/2020 12/31/2021 6% Variable 20,000 -
Power Up Lending #1* 3/14/2019 3/14/2020 22% Variable - 6,500
Power Up Lending #2 5/13/2019 5/13/2020 10% Variable - 103,000
Power Up Lending #3 6/20/2019 6/20/2020 10% Variable - 53,000
Power Up Lending #4 5/18/2020 5/18/2021 10% Variable - -
Power Up Lending #5 6/15/2020 6/15/2021 10% Variable 13,100 -
Power Up Lending #6 6/24/2020 6/24/2021 10% Variable 33,000 -
369,767 1,101,330
Less debt discount
(136,829 ) (394,795 )
Notes payable, net of discount
$ 232,938 $ 706,535
* As of December 31, 2020, the balance of notes payable that are in default is $203,167.
Armada Investment Fund LLC
On May 30, 2019, the Company issued a convertible note to Armada Investment Fund LLC for $27,500, which includes $16,667 paid Auctus Fund pursuant to a settlement agreement, $5,000 to settle outstanding accounts payable, transaction fee interest of $3,000, and cash consideration of $2,833. The note bears interest of 8% (increases to 18% per annum upon an event of default), matures on February 29, 2020, and is convertible into common stock at 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, and $27,500 has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 75,300,469 common shares upon the conversion of principal in the amount of $27,500, accrued interest of $2,415, and conversion fees of $1,500. As of September 30, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On July 22, 2019, the Company received funding pursuant to a convertible note issued to Armada Investment Fund LLC for $37,950, of which $33,500 was received in cash and $4,450 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on July 22, 2020, and is convertible into common stock at 65% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $37,950 due to this conversion feature, and $37,950 has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 55,597,416 common shares upon the conversion of principal in the amount of $37,500, accrued interest of $2,719, and conversion fees of $3,600. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On December 6, 2019, the Company received funding pursuant to a convertible note issued to Armada Investment Fund LLC for $18,150, which includes $15,000 to settle outstanding accounts payable and $3,150 in transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on December 6, 2020, and is convertible into common stock at 65% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $18,150 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 56,783,986 common shares upon the conversion of principal in the amount of $18,150, accrued interest of $842, and conversion fees of $2,400. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
BHP Capital NY, Inc.
On March 26, 2019, the Company received funding pursuant to convertible note issued to BHP Capital NY for $28,600, of which $25,000 was received in cash and $3,600 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on March 26, 2019, and is convertible into common stock at 58% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $28,600 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 87,276,122 common shares upon the conversion of principal in the amount of $28,600, accrued interest of $2,897 and conversion fees of $1,500. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On April 9, 2019, the Company issued a convertible note to BHP Capital NY, Inc. for $55,000, which includes transaction fee interest of $6,500, and cash consideration of $48,500. The note bears interest of 8% (increases to 18% per annum upon an event of default), matures on January 9, 2020, and is convertible into common stock at 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $55,000 due to this conversion feature, and $55,000 has been amortized to the statement of operations. During the year ended December 31, 2019, the Company issued 76,100 common shares upon the conversion of principal in the amount of $9,000, accrued interest of $1,915, and conversion fees of $500. During the year ended December 31, 2020, the Company issued 197,220,250 common shares upon the conversion of principal in the amount of $46,000, accrued interest of $2,651, and conversion fees of $1,500. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On May 30, 2019, the Company issued a convertible note to BHP Capital NY for $27,500, which includes $16,667 paid Auctus Fund pursuant to a settlement agreement, $5,000 to settle outstanding accounts payable, transaction fee interest of $3,000, and cash consideration of $2,833. The note bears interest of 8% (increases to 18% per annum upon an event of default), matures on February 29, 2020, and is convertible into common stock at 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, which has been amortized to the statement of operations. As of December 31, 2020, the note had a principal balance of $27,500 and accrued interest of $5,806. This note is currently in default.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On July 22, 2019, the Company received funding pursuant to a convertible note issued to BHP Capital NY for $37,950, of which $33,500 was received in cash and $4,450 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on July 22, 2020, and is convertible into common stock at 65% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $37,950 due to this conversion feature, which has been amortized to the statement of operations. As of December 31, 2020, the note had a principal balance of $37,950 and accrued interest of $7,087.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On August 7, 2019, the Company received funding pursuant to a convertible note issued to BHP Capital NY for $33,000 of which $29,000 was received in cash and $4,000 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on August 7, 2020, and is convertible into common stock at 65% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 569,243,419 common shares upon the conversion of principal in the amount of $33,000, interest of $3,667 and conversion fees of $4,000. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On December 20, 2019, the Company received funding pursuant to a convertible note issued to BHP Capital NY for $19,000 of which $15,000 was received in cash and $4,000 was recorded as transaction fees. The note bears interest of 12% (increases to 22% per annum upon an event of default), matures on December 20, 2020, and is convertible into the lower of 1) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of the note, and 2) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $19,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 196,361,455 common shares upon the conversion of principal in the amount of $7,925, interest of $2,375 and conversion fees of $500. As of December 31, 2020, the note had a principal balance of $11,075 and accrued interest of $29.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Blackbridge Capital
On May 3, 2016, the Company accepted and agreed to a Debt Purchase Agreement, whereby Blackbridge Capital acquired $100,000 of principal of a Direct Capital Group, Inc. convertible note in exchange for $100,000. The note bears interest at 5% per annum, matured on May 3, 2017, and is convertible into common stock at 50% of the lowest market price of the 20 trading days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $100,000 due to this conversion feature, which has been amortized to the statement of operations. The note has converted $19,600 of principal into 267 shares of common stock. On December 2, 2020, a Debt Settlement Agreement was executed, whereby the Company, Blackbridge Capital and Direct Capital agreed to retire the Debt Purchase Agreement and $80,400 in principal and $17,770 in accrued interest was recorded as debt forgiveness on the statement of operations.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Coventry Enterprises, LLC
On May 31, 2019, the Company issued a convertible note to Coventry Enterprises for $50,000, of which $47,500 was received in cash and $2,500 was recorded as transaction fees. The note bears interest at 10% (increases to 24% per annum upon an event of default), matures on May 31, 2020, and is convertible into common stock at 61% multiplied by the lowest trading price during the 20-day trading period including the conversion date. During the three month period ended March 31, 2020, the Company recorded a default penalty of $38,691. The Company recorded a debt discount from the derivative equal to $101,925 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2019, the Company issued 425,000 common shares upon the conversion of principal in the amount of $11,309 and accrued interest of $2,818. During the year ended December 31, 2020, the Company issued 129,270,950 common shares upon the conversion of principal in the amount of $77,382, accrued interest of $8,809, and conversion fees of $3,105. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On February 4, 2020, the Company issued a convertible note to Coventry Enterprises for $40,000, of which $37,500 was received in cash and $2,500 was recorded as transaction fees. The note bears interest at 10% (increases to 24% per annum upon an event of default), matures on February 4, 2021, and is convertible into common stock at 60% multiplied by the lowest trading price during the 20-day trading period prior to the conversion date. The Company recorded a debt discount from the derivative equal to $40,000 due to this conversion feature, which been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 554,094,166 common shares upon the conversion of principal in the amount of $40,000, accrued interest of $2,366, and conversion fees of $1,380. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Emunah Funding LLC
On October 20, 2017, the Company issued a convertible note to Emunah Funding LLC for $33,840, which includes $26,741 to settle outstanding accounts payable, transaction costs of $4,065, OID interest of $2,840, and cash consideration of $194. On November 6, 2017, the Company issued an Allonge to the convertible debt in the amount of $9,720. The Company received $7,960 in cash and recorded transaction fees of $1,000 and OID interest of $760. On November 30, 2017, the Company issued an Allonge to the convertible debt in the amount of $6,480. The Company received $5,000 in cash and recorded transaction fees of $1,000 and OID interest of $480. On January 11, 2018, the Company issued an Allonge to the convertible debt in the amount of $5,400. The Company received $5,000 in cash and recorded OID interest of $480. The note bears interest of 8% (increases to 24% per annum upon an event of default), matured on July 20, 2018, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $55,440 due to this conversion feature, which has been amortized to the statement of operations. On October 26, 2018, the principal amount of $40,000 was reassigned to Fourth Man, LLC. Pursuant to the default terms of the note, the Company entered a late filing penalty of $1,000. Prior to the period ended December 31, 2020, the note has converted $13,450 of principal and $4,918 of interest into 7,145 shares of common stock. As of December 31, 2020, the note had a principal balance of $2,990 and accrued interest of $1,079. This note is currently in default.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On January 31, 2019, the Company received funding pursuant to convertible note issued to Emunah Funding LLC for $33,000, which includes $5,000 to settle outstanding accounts payable, $4,500 in transaction fees and cash consideration of $23,500. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on January 31, 2020, and is convertible into common stock at 50% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, and $33,000 has been amortized to the statement of operations. Pursuant to the default terms of the note, the Company entered late filing penalties of $50,652. During the year ended December 31, 2020, the Company made cash payments of $50,000. As of December 31, 2020, the note had a principal balance of $33,652 and accrued interest of $10,842.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Fourth Man LLC
On October 26, 2018, the Company accepted and agreed to a Debt Purchase Agreement, whereby Fourth Man LLC acquired $40,000 of debt from an Emunah Funding LLC convertible note in exchange for $40,000. The note bears interest of 24%, matures on July 20, 2019, and is convertible into common stock at 50% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $16,591 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2019, the Company issued 22,299 common shares upon the conversion of principal in the amount of $31,743. During the year ended December 31, 2020, the Company issued 69,046,532 common shares upon the conversion of principal in the amount of $8,257 and accrued interest of $2,100. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On April 23, 2019, the Company issued a convertible note to Fourth Man LLC for $26,400, which includes $24,000 to settle outstanding accounts payable, and transaction fee interest of $2,400. The note bears interest of 10%, matures on April 23, 2020, and is convertible into common stock at 60% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $26,400 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2019, the Company issued 165,531 common shares upon the conversion of principal in the amount of $9,535. During the year ended December 31, 2020, the Company issued 65,759,708 common shares upon the conversion of principal in the amount of $16,865 and accrued interest of $2,862. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On July 22, 2019, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $37,950, of which $33,500 was received in cash and $4,450 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on July 22, 2020, and is convertible into common stock at 65% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $37,950 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 89,447,039 common shares upon the conversion of principal in the amount of $37,950, accrued interest of $2,837 and conversion fees of $3,600. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On August 12, 2019, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $17,600, of which $15,000 was received in cash and $2,600 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on August 12, 2020, and is convertible into common stock at 65% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $17,600 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 47,812,803 common shares upon the conversion of principal in the amount of $17,600, accrued interest of $1,281, and conversion fees of $1,200. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On October 9, 2019, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $27,500, of which $25,000 was received in cash and $2,500 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on October 19, 2020, and is convertible into common stock at 60% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 30,896,663 common shares upon the conversion of principal in the amount of $27,500, accrued interest of $1,477, and conversion fees of $2,400. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On December 10, 2019, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $16,500 of which $15,000 was received in cash and $1,500 was recorded as transaction fees. The note bears interest of 12% (increases to 24% per annum upon an event of default), matures on September 10, 2020, and is convertible into the lower of 1) 50% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of the note, and 2) 50% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $16,500 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 15,008,658 common shares upon the conversion of principal in the amount of $16,500, accrued interest of $1,010 and conversion fees of $500. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On August 3, 2020, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $27,500 of which $25,000 was received in cash and $2,500 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on August 3, 2021, and is convertible into common stock at 60% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, and $11,301 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2020 of $16,199. As of December 31, 2020, the note had a principal balance of $27,500 and accrued interest of $904.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On December 15, 2020, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $33,000 of which $27,600 was received in cash and $5,400 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on August 3, 2021, and is convertible into common stock at 60% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, and $1,447 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2020 of $31,553. As of December 31, 2020, the note had a principal balance of $33,000 and accrued interest of $116.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
GPL Ventures LLC
On April 29, 2020, the Company accepted and agreed to an Assignment Agreement, whereby GPL Ventures acquired $25,000 of principal and $958 in accrued interest from one note with Optempus Investments, LLC. The note bears interest at 10%, matured on April 4, 2020, and is convertible into 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. During the year ended December 31, 2020, the Company issued 21,631,275 common shares upon the conversion of principal in the amount of $25,958. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On May 20, 2020, the Company accepted and agreed to an Assignment Agreement, whereby GPL Ventures acquired $45,000 of principal, $2,664 in debt discounts, and $2,290 in accrued interest from two notes with Optempus Investments, LLC. The note bears interest at 10%, matures on June 15, 2020, and is convertible into 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. During the year ended December 31, 2020, the Company issued 174,297,500 common shares upon the conversion of principal in the amount of $47,290, and the debt discount of $2,664 has been amortized to the statement of operations. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
James Powell
On September 7, 2015, the Company issued a convertible note with the Company’s former President, James Powell for non-cash consideration for accrued fees of $150,875. The note bears interest at 8%, is due on demand, and is convertible into convertible into common stock at 50% of the lowest trading price for the 15 days prior to the date of conversion. On November 27, 2020, 118,466 shares of Series A preferred stock were issued to settle the principal amount of $150,875 and interest of $61,180 in accordance with conversion terms. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Jefferson Street Capital LLC
On March 5, 2019, the Company accepted and agreed to a Debt Purchase Agreement, whereby Jefferson Street Capital LLC acquired $30,000 of debt from an Emunah Funding LLC convertible note in exchange for $29,000, and the Company recorded a gain on settlement of debt of $1,000. The note bears no interest, matures on October 18, 2019, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading days ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $29,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2019, the Company issued 10,691 common shares upon the conversion of principal in the amount of $24,000 and $1,000 in conversion fees. As of December 31, 2020, the note had a principal balance of $5,000. This note is currently in default.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On April 9, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $55,000, which includes transaction fee interest of $6,500, and cash consideration of $48,500. The note bears interest of 8% (increases to 18% per annum upon an event of default), matures on January 9, 2020, and is convertible into common stock at 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $55,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2019, the Company issued 74,000 common shares upon the conversion of principal in the amount of $10,600 and $500 in conversion fees. During the year ended December 31, 2020, the Company issued 33,860,373 common shares upon the conversion of principal in the amount of $44,400, accrued interest of $2,200 and conversion fees of $1,500. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On May 30, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $27,500, which includes $16,667 paid Auctus Fund pursuant to a settlement agreement, $5,000 to settle outstanding accounts payable, transaction fee interest of $3,000, and cash consideration of $2.833. The note bears interest of 8% (increases to 18% per annum upon an event of default), matures on February 29, 2020, and is convertible into common stock at 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 56,783,115 common shares upon the conversion of principal in the amount of $27,500, accrued interest of $2,377 and conversion fees of $2,250. As of December 31, 2020, the note had been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On June 21, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $27,500, which includes transaction fee interest of $4,000, and cash consideration of $23,500. The note bears interest of 8% (increases to 18% per annum upon an event of default), matures on March 21, 2020, and is convertible into common stock at 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, which has been amortized to the statement of operations. As of December 31, 2020, the note had a principal balance of $27,500 and accrued interest of $5,533. This note is currently in default.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On August 20, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $38,500, of which $32,000 was received in cash and $6,500 was recorded as transaction fees. The note bears interest at 10% (increases to 18% per annum upon an event of default), matures on May 20, 2020, and is convertible into the lower of 1) 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of the note, and 2) 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $38,500 due to this conversion feature, which has been amortized to the statement of operations. As of December 31, 2020, the note had a principal balance of $38,500 and accrued interest of $6,600. This note is currently in default.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On December 20, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $19,000, of which $15,000 was received in cash and $4,000 was recorded as transaction fees. The note bears interest of 12% (increases to 22% per annum upon an event of default), matures on December 20, 2020, and is convertible into the lower of 1) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of the note, and 2) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $19,000 due to this conversion feature, which has been amortized to the statement of operations. As of December 31, 2020, the note had a principal balance of $19,000 and accrued interest of $2,329.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Optempus Investments, LLC
On September 4, 2019, the Company received $25,000 cash from the issuance of a convertible promissory note with Optempus Investments, LLC in the amount of $25,000. The note bears interest at 6% (increases to 24% per annum upon an event of default), matures on April 4, 2020, and is convertible into the lower of 1) 70% of the lowest trading price of the 30 trading day period ending on the latest complete day prior to the date of the note, and 2) 70% of the lowest trading price of the 30 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $25,000 due to this conversion feature, which has been amortized to the statement of operations. On April 29, 2020, the principal amount of $25,000, and interest of $958 was reassigned to GPL Ventures LLC. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On September 13, 2019, the Company received $20,000 cash from the issuance of a convertible promissory note with Optempus Investments, LLC in the amount of $20,000. The note bears interest at 6% (increases to 24% per annum upon an event of default), matures on April 13, 2020, and is convertible into the lower of 1) 70% of the lowest trading price of the 30 trading day period ending on the latest complete day prior to the date of the note, and 2) 70% of the lowest trading price of the 30 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, which has been amortized to the statement of operations. On May 20, 2020, the principal amount of $20,000, and interest of $1,395 was reassigned to GPL Ventures LLC. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On October 15, 2019, the Company received $25,000 cash from the issuance of a convertible promissory note with Optempus Investments, LLC in the amount of $25,000. The note bears interest at 6%, matures on June 15, 2020, and is convertible into 70% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $25,000 due to this conversion feature, and $22,336 has been amortized to the statement of operations. On May 20, 2020, the principal amount of $25,000, debt discount of $2,664 and interest of $896 was reassigned to GPL Ventures LLC. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On November 2, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000, of which $10,000 was received in cash and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 2, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, and $3,233 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2020 of $16,767. As of December 31, 2020, the note had a principal balance of $20,000 and accrued interest of $323.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On November 5, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000, of which $10,000 was received in cash and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 5, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, and $3,068 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2020 of $16,932. As of December 31, 2020, the note had a principal balance of $20,000 and accrued interest of $307.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On December 31, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000. The Company received a cash payment of $10,000 on January 8, 2021, and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on December 31, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature. The debt discount and transaction fee interest had a balance at December 31, 2020 of $20,000. As of December 31, 2020, the note had a principal balance of $20,000 and the $10,000 cash payment was recorded to other current assets on the balance sheet.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Power Up Lending Group Ltd.
On March 14, 2019, the Company issued a convertible note to Power Up Lending Group Ltd. for $73,000, of which $70,000 was received in cash and $3,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on March 14, 2020, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $73,000 due to this conversion feature, which has been amortized to the statement of operations. Pursuant to the default terms of the note, the Company entered a late filing penalty of $36,500. During the year ended December 31, 2019, the Company issued 445,833 common shares upon the conversion of principal in the amount of $103,000. During the year ended December 31, 2020, Power Up forgave the remaining debt and the principal amount of $6,500 was reclassed to the statement of operations.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On May 13, 2019, the Company issued a convertible note to Power Up Lending Group Ltd. for $103,000, of which $100,000 was received in cash and $3,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on May 13, 2020, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $103,000 due to this conversion feature, and $65,290 has been amortized to the statement of operations. During the year ended December 31, 2020, the Company entered a default penalty of $103,000. On March 5, the principal amount of $206,000, debt discount and transaction fee interest of $37,710 and interest of $14,115 was reassigned to Redstart Holdings Corp. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On June 20, 2019, the Company issued a convertible note to Power Up Lending Group Ltd. for $53,000, of which $50,000 was received in cash and $3,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on June 20, 2020, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $53,000 due to this conversion feature, and $28,092 has been amortized to the statement of operations. During the year ended December 31, 2020, the Company entered a default penalty of $53,000. On March 5, 2020, the principal amount of $106,000, debt discount and transaction fee interest of $24,908 and interest of $6,769 was reassigned to Redstart Holdings Corp. As of December 31, 2020, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On May 18, 2020, the Company issued a convertible note to Power Up Lending Group Ltd. for $16,000, of which $15,600 was paid to settle accounts payable, and $400 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on May 18, 2021, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $16,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 278,333,333 common shares upon the conversion of principal in the amount of $16,000 and accrued interest of $700. As of December 31, 2020, the note has an accrued interest balance of $100.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On June 15, 2020, the Company issued a convertible note to Power Up Lending Group Ltd. for $43,000, of which $40,000 was received in cash, and $3,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on June 15, 2021, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $43,000 due to this conversion feature, and $23,444 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2020 of $19,556. During the year ended December 31, 2020, the Company issued 498,333,333 common shares upon the conversion of principal in the amount of $29,900. As of December 31, 2020, the note had a principal balance of $13,100 and accrued interest of $2,150.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On June 24, 2020, the Company issued a convertible note to Power Up Lending Group Ltd. for $33,000, of which $30,000 was received in cash, and $3,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on June 24, 2021, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, and $17,178 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2020 of $15,822. As of December 31, 2020, the note had a principal balance of $33,000 and accrued interest of $1,650.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Redstart Holdings Corp.
On March 5, 2020, the Company accepted and agreed to an Assignment Agreement, whereby Redstart Holdings Corp. acquired $156,000 of principal, $156,000 in penalties, $62,618 in debt discount and financing costs, and $20,884 in accrued interest from two notes with Power Up Lending Group Ltd. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on June 20, 2020, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded an additional debt discount from the derivative equal to the amount of $156,000 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended December 31, 2020, the Company issued 371,978,522 common shares upon the conversion of principal in the amount of $312,000 and accrued interest of $15,654. The remaining interest of $13,878 has been forgiven by the note holder and was reclassed to the statement of operations.
Convertible Note Conversions
During the year ended December 31, 2020, the Company issued the following shares of common stock upon the conversions of portions of the Convertible Notes:
Principal Interest Total Conversion Shares
Date Conversion Conversion Conversion Price Issued Issued to
4/16/2020 1,600 - $ 1,600 0.0073 219,178 Redstart Holdings
4/22/2020 1,600 - 1,600 0.0073 219,178 Redstart Holdings
4/28/2020 1,500 - 1,500 0.0059 254,237 Redstart Holdings
5/1/2020 1,100 - 1,100 0.0044 250,000 Redstart Holdings
5/5/2020 12,500 - 12,500 0.0032 3,955,696 GPL Ventures
5/6/2020 12,000 - 12,000 0.0044 2,727,272 Redstart Holdings
5/14/2020 - - - 0.0000 6,460,971 GPL Ventures
5/19/2020 13,458 - 13,458 0.0012 11,214,608 GPL Ventures
5/20/2020 12,744 7,386 20,130 0.0018 11,000,000 Coventry
6/3/2020 22,600 - 22,600 0.0021 10,761,905 Redstart Holdings
6/5/2020 34,650 - 34,650 0.0017 21,000,000 GPL Ventures
6/5/2020 18,000 - 18,000 0.0021 8,624,708 Jefferson St Cap
6/5/2020 21,500 - 21,500 0.0020 10,750,000 Redstart Holdings
6/8/2020 19,192 20,130 0.0018 11,000,000 Coventry
6/8/2020 22,800 - 22,800 0.0018 13,333,333 Fourth Man
6/8/2020 21,500 - 21,500 0.0020 10,750,000 Redstart Holdings
6/9/2020 21,500 - 21,500 0.0020 10,750,000 Redstart Holdings
6/9/2020 21,500 - 21,500 0.0020 10,750,000 Redstart Holdings
6/10/2020 16,500 1,010 17,510 0.0012 15,008,658 Fourth Man
6/11/2020 14,500 - 14,500 0.0019 7,957,559 Jefferson St Cap
6/11/2020 18,300 - 18,300 0.0017 10,764,706 Redstart Holdings
6/12/2020 18,950 2,687 21,637 0.0012 19,518,506 Armada
6/12/2020 8,800 - 8,800 0.0009 10,000,000 GPL Ventures
6/12/2020 14,000 - 14,000 0.0013 10,769,231 Redstart Holdings
6/15/2020 11,800 - 11,800 0.0011 10,727,273 Redstart Holdings
6/16/2020 13,575 - 13,575 0.0006 23,452,381 Fourth Man
6/16/2020 - - - 0.0000 42,000,000 GPL Ventures
6/16/2020 11,900 2,200 14,100 0.0008 17,278,106 Jefferson St Cap
6/16/2020 10,700 - 10,700 0.0010 10,700,000 Redstart Holdings
6/17/2020 10,000 10,021 0.0007 16,440,765 Armada
6/17/2020 15,740 16,013 0.0006 25,000,000 Coventry
6/17/2020 9,100 - 9,100 0.0009 10,705,882 Redstart Holdings
6/17/2020 9,100 - 9,100 0.0009 10,705,882 Redstart Holdings
6/19/2020 13,950 - 13,950 0.0005 31,562,500 Fourth Man
6/19/2020 6,600 5,150 11,750 0.0007 17,537,313 Redstart Holdings
6/22/2020 12,250 - 12,250 0.0007 20,000,000 Jefferson St Cap
6/22/2020 12,200 - 12,200 0.0006 20,000,000 Redstart Holdings
6/23/2020 9,000 9,012 0.0005 19,638,145 Armada
6/24/2020 7,500 - 7,500 0.0004 19,704,433 BHP Capital
6/24/2020 14,806 14,945 0.0004 35,000,000 Coventry
6/24/2020 10,425 2,837 13,262 0.0004 34,432,158 Fourth Man
6/24/2020 10,400 - 10,400 0.0005 20,000,000 Redstart Holdings
6/25/2020 10,400 - 10,400 0.0005 20,000,000 Redstart Holdings
6/26/2020 4,700 1,477 6,177 0.0004 17,563,330 Fourth Man
6/26/2020 10,400 - 10,400 0.0005 20,000,000 Redstart Holdings
6/29/2020 9,000 9,819 0.0005 24,218,648 Armada
6/29/2020 18,100 - 18,100 0.0004 45,812,808 BHP Capital
6/29/2020 10,345 10,395 0.0004 30,000,000 Coventry
6/29/2020 11,250 - 11,250 0.0005 23,076,923 Jefferson St Cap
6/29/2020 10,400 - 10,400 0.0005 20,000,000 Redstart Holdings
6/30/2020 15,700 - 15,700 0.0005 30,192,308 Redstart Holdings
7/1/2020 23,100 - 23,100 0.0005 50,217,391 Redstart Holdings
7/1/2020 13,000 2,396 15,396 0.0005 35,484,737 Armada
7/1/2020 3,000 2,897 5,897 0.0003 21,758,881 BHP Capital
7/2/2020 17,600 1,281 18,881 0.0004 47,812,803 Fourth Man
7/2/2020 13,400 9,700 23,100 0.0005 50,217,391 Redstart Holdings
7/6/2020 4,000 2,377 6,377 0.0005 13,706,192 Jefferson St Cap
7/7/2020 - 0.0004 2,009,375 Redstart Holdings
7/7/2020 14,500 14,519 0.0004 39,815,732 Armada
7/7/2020 4,553 4,578 0.0003 17,270,950 Coventry
7/8/2020 22,500 2,601 25,101 0.0004 71,324,065 BHP Capital
7/9/2020 16,865 2,862 19,728 0.0003 65,759,708 Fourth Man
7/10/2020 9,150 9,172 0.0003 32,565,338 Armada
7/16/2020 17,000 17,041 0.0002 89,954,923 BHP Capital
7/16/2020 8,257 2,100 10,357 0.0002 69,046,532 Fourth Man
7/22/2020 6,500 6,509 0.0002 35,941,262 BHP Capital
8/4/2020 19,000 2,000 21,000 0.0001 175,000,000 Coventry
8/11/2020 10,000 - 10,000 0.0001 112,820,513 BHP Capital
8/25/2020 7,678 7,800 0.0001 130,000,000 Coventry
10/26/2020 7,151 7,380 0.00006 134,500,000 Coventry
11/3/2020 6,172 6,186 0.00006 114,594,166 Coventry
11/27/2020 5,000 3,593 8,593 0.00007 147,793,846 BHP Capital
12/2/2020 8,900 - 8,900 0.00006 148,333,333 Power Up
12/4/2020 7,100 7,800 0.00006 130,000,000 Power Up
12/7/2020 3,840 4,052 0.00004 101,297,500 GPL Ventures
12/8/2020 8,500 - 8,500 0.00007 146,153,846 BHP Capital
12/17/2020 9,500 9,561 0.00007 162,475,214 BHP Capital
12/22/2020 10,200 - 10,200 0.00006 170,000,000 Power Up
12/24/2020 10,400 - 10,400 0.00006 173,333,333 Power Up
12/29/2020 7,925 2,375 10,300 0.00006 196,361,455 BHP Capital
12/30/2020 9,300 - 9,300 0.00006 155,000,000 Power Up
Total conversions 944,227 61,437 1,005,664
3,674,337,087
Loss on conversion - - 41,116
Conversion fees - - 30,935
$ 944,227 $ 61,437 $ 1,077,715
3,674,337,087
5. LEASES
The Company adopted the new lease guidance effective January 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated, and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity.
The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In calculating the present value of the lease payments, the Company elected to utilize its incremental borrowing rate based on the remaining lease terms as of the January 1, 2019 adoption date.
Operating Leases
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Our leases have remaining lease terms of month-to-month and less than 1 year, one of which includes an option to extend the lease term for a year.
The Company has elected the practical expedient to combine lease and non-lease components as a single component. The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, current operating lease liabilities and non-current operating lease liabilities.
The new standard also provides practical expedients and certain exemptions for an entity’s ongoing accounting. We have elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases where the initial lease term is one year or less or for which the ROU asset at inception is deemed immaterial, we will not recognize ROU assets or lease liabilities. Those leases are expensed on a straight-line basis over the term of the lease. As of December 31, 2020, the Company did not have any operating leases.
Financing Leases
On December 22, 2020, the Company entered into a vehicle lease in the amount of $19,314. The lease has a term of 6 years, from February 5, 2021 January 5, 2027, with a monthly payment of $268.
On December 22, 2020, the Company entered into a vehicle lease in the amount of $18,689. The lease has a term of 6 years, from February 5, 2021 January 5, 2027, with a monthly payment of $260.
The Company evaluated the leases in accordance with ASC 842 and determined that it’s leases meet the definition of a finance lease.
Financing lease assets and liabilities related to our operating leases are as follows:
December 31, 2020
Financing lease assets $ 31,178
Current financing lease liabilities 3,988
Non-current financing lease liabilities 27,190
Supplemental cash flow information and non-cash activity related to our operating leases are as follows:
Year ended
December 31, 2020
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities -
Non-cash activity:
Financing lease assets obtained in exchange for lease obligations $ 31,178
The following is a schedule, by years, of future minimum lease payments required under the finance leases:
Years Ending
December 31, Finance Leases
$ 5,806
6,334
6,334
6,334
6,334
Thereafter 6,862
Total 38,003
Less imputed Interest 6,825
Total liability $ 31,178
Other information related to leases is as follows:
Lease Type Weighted Average Remaining
Term Weighted Average Interest Rate
Finance Leases 6 years 7%
6. LOANS PAYABLE
On October 1, 2017, Direct Capital Group, Inc. agreed to cancel two convertible notes in the principal amounts of $25,000 and $36,000, and $6,304 in accrued interest, in exchange for a Promissory Note in the amount of $61,000. The note bears no interest and is due on or before October 1, 2020. During the year ended December 31, 2020, the Company recorded payments of $2,000.
As of December 31, 2020 and December 31, 2019, the principal balance owed to Direct Capital Group was $14,500 and $16,500, respectively.
On May 3, 2020, the Company, was granted a loan (the “Loan”) from Bank of America. in the amount of $72,920, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020.
The Loan, which was in the form of a Note dated May 3, 2020 issued by the Borrower, matures on May 3, 2022, and bears interest at a rate of 1% per annum, payable monthly commencing on November 3, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.
During the year ended December 31, 2020, the Company recorded accrued interest of $5,826 on the PPP loan.
7. DERIVATIVE LIABILITIES
During the year ended December 31, 2020, the Company valued the embedded conversion feature of the convertible notes, warrants, certain accounts payable and certain related party liabilities. The fair value was calculated at December 31, 2020 based on the lattice model.
The following table represents the Company’s derivative liability activity for the embedded conversion features for the year ended December 31, 2020:
Notes Warrants Stock Payable Total
Balance, beginning of period $ 1,631,390 $ 3,804 $ 1,533,605 $ 3,168,799
Initial recognition of derivative liability 35,173,887 - - 35,173,887
Derivative settlements (4,976,556 ) - - (4,976,556 )
Loss (gain) on derivative liability valuation (27,895,246 ) 23,539 2,502,571 (25,369,136 )
Balance, end of period $ 3,933,475 $ 27,343 $ 4,036,176 $ 7,996,994
Convertible Notes
The fair value at the commitment date for the convertible notes and the revaluation dates for the Company’s derivative liabilities were based upon the following management assumptions as of December 31, 2020:
Valuation date
Expected dividends 0%
Expected volatility 249.88%-775.47%
Expected term .09 - 1 year
Risk free interest .07%-.13%
Warrants
On January 2, 2019, the Company executed a Common Stock Purchase Warrant for 1,821,875 shares (1,821 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.016 per share and expire on December 31, 2023.
On January 31, 2019, the Company executed a Common Stock Purchase Warrant for 2,200,000 shares (2,200 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.016 per share and expire on January 30, 2024.
On March 26, 2019, the Company executed a Common Stock Purchase Warrant for 1,643,678 shares (1,643 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.017 per share and expire on March 25, 2024.
On March 26, 2019, the Company executed a Common Stock Purchase Warrant for 1,643,678 shares (1,643 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.017 per share and expire on March 25, 2024.
On April 9, 2019, the Company executed a Common Stock Purchase Warrant for 550,000 shares (550 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.10 per share and expire on April 8, 2024.
On April 9, 2019, the Company executed a Common Stock Purchase Warrant for 550,000 shares (550 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.10 per share and expire on April 8, 2024.
On April 23, 2019, the Company executed a Common Stock Purchase Warrant for 105,000 shares (105 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.25 per share and expire on April 22, 2024.
On May 30, 2019, the Company executed a Common Stock Purchase Warrant for 625,000 shares (625 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.040 per share and expire on May 29, 2024.
On May 30, 2019, the Company executed a Common Stock Purchase Warrant for 625,000 shares (625 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.040 per share and expire on May 29, 2024.
On May 30, 2019, the Company executed a Common Stock Purchase Warrant for 625,000 shares (625 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.040 per share and expire on May 29, 2024.
On June 13, 2019, the Company entered into a Securities Exchange Agreement with Fourth Man Fund, LLC. Both parties agreed to exchange the Warrants pursuant under the terms of a Securities Exchange Agreement, in its entirety. The Agreement is for warrants dated July 3, 2018, July 17, 2018, October 3, 2018, and August 22, 2018, representing 89,540 shares of common stock, exchanged for 10,167 shares of Preferred Series C stock at $10 per share. The exchange extinguished $734,381 worth of derivative liabilities.
On June 13, 2019, the Company entered into a Securities Exchange Agreement with Emunah Funding, LLC. Both parties agreed to exchange the Warrants pursuant under the terms of a Securities Exchange Agreement, in its entirety. The Agreement is for warrants dated October 20, 2017, November 6, 2017, November 30, 2017, January 11, 2018, May 15, 2018, and October 31, 2018, representing 129,952 shares of common stock, exchanged for 35,583 shares of Preferred Series C stock at $10 per share. The exchange extinguished $1,095,620 worth of derivative liabilities.
On June 21, 2019, the Company executed a Common Stock Purchase Warrant for 1,000,000 shares (1,000 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.025 per share and expire on June 20, 2024.
On July 22, 2019, the Company executed a Common Stock Purchase Warrant for 1,679,204 shares (1,679 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.023 per share and expire on July 22, 2024.
On July 22, 2019, the Company executed a Common Stock Purchase Warrant for 1,679,204 shares (1,679 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.023 per share and expire on July 22, 2024.
On July 22, 2019, the Company executed a Common Stock Purchase Warrant for 1,679,204 shares (1,679 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.023 per share and expire on July 22, 2024.
On August 7, 2019, the Company executed a Common Stock Purchase Warrant for 2,200,000 shares (2,200 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.015 per share and expire on August 7, 2024.
On August 12, 2019, the Company executed a Common Stock Purchase Warrant for 1,173,333 shares (1,173 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.015 per share and expire on August 7, 2024.
On August 20, 2019, the Company executed a Common Stock Purchase Warrant for 3,500,000 shares (3,500 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.01 per share and expire on August 7, 2024.
On October 9, 2019, the Company executed a Common Stock Purchase Warrant for 17,187,500 shares (17,188 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0016 per share and expire on October 9, 2024.
During the year ended December 31, 2019, warrant holders exercised the warrants and the Company issued 118,280 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.
The Company evaluated all outstanding warrants to determine whether these instruments may be tainted. All warrants outstanding were considered tainted. The Company valued the embedded derivatives within the warrants based on the independent report of the valuation specialist.
The fair value at the valuation dates were based upon the following management assumptions:
Valuation date
Expected dividends 0%
Expected volatility 491.11%-519.32%
Expected term 3.01 - 3.77 years
Risk free interest 0.17%
Stock Payable
The payables to be issued in stock are at 100% of the lowest closing market price with a 15 day look back. The fair value at the valuation dates were based upon the following management assumptions:
Valuation date
Expected dividends 0%
Expected volatility 758.23%
Expected term 1 year
Risk free interest 0.10%
8. RELATED PARTY TRANSACTIONS
The Company is periodically advanced noninterest bearing operating funds from related parties. The advances are due on demand and unsecured. During the year ended December 31, 2020, the Company made payments of $28,377 to amounts due to related parties, and $182,570 was advanced to the Company by related parties. As of December 31, 2020 and December 31, 2019, the Company owed related parties $245,323 and $91,130, respectively. During the year ended December 31, 2020, the Company recorded imputed interest of $14,136 to the statement of operations with a corresponding increase to additional paid in capital. During the year ended December 31, 2020, the company’s former president forgave accounts payable of $31,269, which was recorded to additional paid in capital. As of December 31, 2020 and December 31, 2019, the Company recorded accounts payable due to related parties of $0 and $31,269, respectively.
On December 22, 2020, the President, Richard Hylen, and the Company entered into two vehicle leases in the amount of $19,314 and $18,689, respectively. The leases have a term of 6 years, from February 5, 2021 January 5, 2027, with monthly payments of $268 and $260, respectively.
9. CONVERTIBLE PREFERRED STOCK
Series A Convertible Preferred Stock
On January 25, 2011, the Company filed an amendment to its Nevada Certificate of Designation to create Series A Convertible Preferred Stock, with a par value of $0.001 and 10,000,000 shares authorized.
On January 3, 2017, the Company filed an Amendment to Certificate of Designation with the Nevada Secretary of State defining the rights and preferences of the Series A Convertible Preferred shares. Series A Convertible Preferred stock shall be convertible into common shares at the rate of the closing market price on the day of the conversion notice equal to the dollar amount of the value of the Series A Convertible Preferred shares, and holders shall have no voting rights on corporate matters, unless and until they convert their Series A Convertible Preferred shares into Common shares, at which time they will have the same voting rights as all Common Shareholders have; their consent shall not be required for taking any corporate action.
On October 26, 2018, the Company issued 488,827 Series A Convertible Preferred shares at $1.79 per share to Donna Murtaugh, to settle liabilities of $875,000 owed to her pursuant to the Asset Purchase Agreement dated March 9, 2016.
As of November 13, 2018, 3,489,510 shares of Series A Convertible Preferred stock were transferred into the Company in connection with the reverse merger.
On November 13, 2018, the Company granted 1,086,592 Series A Convertible Preferred shares at $1.79 per share to Richard Hylen, valued at $1,945,000, pursuant the Merger Agreement.
On January 9, 2019, the Company entered into an Asset Purchase Agreement Proscere Bioscience Inc., a Florida Corporation. Pursuant to the Asset Purchase Agreement, Proscere Bioscience assigned and transferred all of its right, title, and interest to its fixed assets and “know how” to Simlatus Corporation. These assets and “know how” pursuant to the 5 year Exclusive Distribution & License Agreement dated January 9, 2019 are valued at $3,000,000. As consideration for the assets and “know how” Simlatus Corporation issued 1,675,978 shares of Convertible Preferred Series A stock at a price of $1.79 per share. At that time, Proscere Bioscience became a wholly subsidiary of Simlatus Corporation.
On March 19, 2019, Richard Hylen entered into a Debt Settlement Agreement with Xillient, LLC to settle $362,261 in outstanding debt owed to Xillient, LLC for $200,000. Mr. Hylen transferred 111,732 of his Convertible Preferred Series A that are valued at $1.79 per share. The liability amount of $362,261 was reclassed to additional paid in capital due to the contributed capital by a related party.
On April 10, 2019, the Board of Directors repurchased and returned to treasury 25,140 Convertible Preferred Series A Shares in the name of Optempus Investments, LLC. The company authorized and paid the payment of $45,000 to Optempus Investments, LLC for the repurchase of 25,140 Convertible Preferred Series A at $1.79 per share. This transaction is pursuant with the Asset Purchase Agreement of Proscere Bioscience and the IP of the Cold-Water CBD/HEMP Extraction Systems. The Convertible Preferred Series A Stock is convertible to common stock at market price the day of conversion.
On June 3, 2019, the Board of Directors repurchased and returned to treasury 18,159 Convertible Preferred Series A Shares in the name of Optempus Investments, LLC. The company authorized and paid the payment of $32,505 to Optempus Investments, LLC for the repurchase of 18,159 Convertible Preferred Series A at $1.79 per share. This transaction is pursuant with the Asset Purchase Agreement of Proscere Bioscience and the IP of the Cold-Water CBD/HEMP Extraction Systems. The Convertible Preferred Series A Stock is convertible to common stock at market price the day of conversion.
On June 21, 2019, 43,299 Convertible Preferred Series A shares held in treasury were retired.
During the year ended December 31, 2019, 712,360 shares of Convertible Series A Preferred stock were converted to 2,150,330 common shares in accordance with the conversion terms.
On November 27, 2020, the Company and a note holder agreed to convert the principal and interest balance of $212,054 to 118,466 shares of Convertible Series A Preferred stock.
On December 28, 2020, the Company converted wages and accrued interest owed to Richard Hylen and Mike Schatz to Convertible Series A Preferred stock. The Company issued 97,732 shares at $1.79 per share in exchange of principal and interest of $174,930 owed to Richard Hylen. The Company issued 317,821 shares at $1.79 per share in exchange of principal and interest of $568,899 owed to Mike Schatz.
During the year ended December 31, 2020, 283,510 shares of Convertible Series A Preferred stock were converted to 1,217,871,970 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $191,349, which was recorded to the statement of operations.
The Series A Convertible Preferred Stock has been classified outside of permanent equity and liabilities since it embodies a conditional obligation that the Company may settle by issuing a variable number of equity shares and the monetary value of the obligation is based on a fixed monetary amount known at inception. Each share of the Convertible Series A Preferred Stock has a fixed value of $1.79 per share, has no voting rights, and is convertible into common stock at closing market price on the date of conversion. The Company has recorded $11,162,005, which represents 6,235,757 Series A Preferred Stock at $1.79 per share, issued and outstanding as of December 31, 2020, outside of permanent equity and liabilities.
Series C Convertible Preferred Stock
On June 13, 2019, the Company’s Board of Directors authorized the creation of 45,750 shares of Series C Convertible Preferred Stock with a par value of $0.0001, and on June 13, 2019, a Certificate of Designation was filed with the Nevada Secretary of State. The Convertible Preferred Series C shall have no voting rights as to corporate matters unless, and until, they are converted into common shares, at which time, they will have the same voting rights as all common stock shareholders. Convertible Preferred Series C shares cannot be sold, assigned, hypothecated, or otherwise disposed of, without first obtaining the consent of the majority Convertible Preferred Series C shareholders. Convertible Preferred Series C shares shall have a value of $10.00 USD per share and shall convert into common shares at the rate of the closing market price on the day of conversion notice equal to the dollar amount of the value of the Convertible Preferred Series C share. At no time may the shareholder convert their shares into more than 4.99% of the issued and outstanding.
On June 13, 2019, the Company entered into a Securities Exchange Agreement with Fourth Man Fund, LLC. Both parties agreed to exchange the Warrants pursuant under the terms of a Securities Exchange Agreement, in its entirety. The Agreement is for warrants dated July 3, 2018, July 17, 2018, October 3, 2018, and August 22, 2018, representing 89,540 shares of common stock, exchanged for 10,167 shares of Convertible Preferred Series C stock at $10 per share. The exchange extinguished $734,381 worth of derivative liabilities.
On June 13, 2019, the Company entered into a Securities Exchange Agreement with Emunah Funding, LLC. Both parties agreed to exchange the Warrants pursuant under the terms of a Securities Exchange Agreement, in its entirety. The Agreement is for warrants dated October 20, 2017, November 6, 2017, November 30, 2017, January 11, 2018, May 15, 2018, and October 31, 2018, representing 129,952 shares of common stock, exchanged for 35,583 shares of Convertible Preferred Series C stock at $10 per share. The exchange extinguished $1,095,620 worth of derivative liabilities.
During the year ended December 31, 2019, 10,167 shares of Convertible Series C preferred stock were converted to 28,015 common shares in accordance with the conversion terms.
The Convertible Series C Preferred Stock has been classified outside of permanent equity and liabilities since it embodies a conditional obligation that the Company may settle by issuing a variable number of equity shares and the monetary value of the obligation is based on a fixed monetary amount known at inception. The Company has recorded $355,830 which represents 35,583 Series C Convertible Preferred Stock at $10 per share, issued and outstanding as of December 31, 2020, outside of permanent equity and liabilities.
As of December 31, 2020, 10,000,000 Series A Convertible Preferred shares and 45,750 Series C Convertible Preferred shares were authorized, of which 6,235,757 Series A Convertible Preferred shares were issued and outstanding and 35,583 Series C Convertible Preferred shares were issued and outstanding.
Preferred Stock Payable
On December 28, 2020, the Company received resignation letters from Baron Tennelle, Dusty Vereker, and Robert Stillwaugh. The Company agreed to issue Preferred Series A shares to settle unpaid wages and interest owed to those individuals.
The Company agreed to issue 52,931 Preferred Series A shares to Baron Tennelle in exchange for accrued wages of $90,000 and interest of $4,745. The Company agreed to issue 50,615 Preferred Series A shares to Dusty Vereker in exchange for accrued wages of $86,250 and interest of $4,350. The Company agreed to issue 317,821 Preferred Series A shares to Robert Stillwaugh in exchange for accrued wages of $427,708 and interest of $141,190.
The shares were issued subsequent to December 31, 2020, which have been disclosed in subsequent events (Note 14).
10. PREFERRED STOCK
On January 25, 2011, the Company filed an amendment to its Nevada Certificate of Designation to create Series B Preferred Stock, with a par value of $0.001 and 10,000,000 shares authorized.
On July 1, 2015, the Company’s Board of Directors authorized the creation of shares of Series B Voting Preferred Stock and on July 27, 2015 a Certificate of Designation was filed with the Nevada Secretary of State. The holder of the shares of the Series B Voting Preferred Stock has the right to vote those shares of the Series B Voting Preferred Stock regarding any matter or action that is required to be submitted to the shareholders of the Company for approval. The vote of each share of the Series B Voting Preferred Stock is equal to and counted as 4 times the votes of all of the shares of the Company’s (i) common stock, and (ii) other voting preferred stock issued and outstanding on the date of each and every vote or consent of the shareholders of the Company regarding each and every matter submitted to the shareholders of the Company for approval.
On November 9, 2018, Mike Schatz returned 250 Preferred Series B Control Shares, valued at par value, pursuant to his new employee agreement dated November 1, 2018.
On November 9, 2018, Robert Stillwaugh returned 250 Preferred Series B Control Shares, valued at par value, pursuant to his new employee agreement dated November 1, 2018.
On November 9, 2018, newly appointed President, Richard Hylen was issued 500 Preferred Series B Control Shares, pursuant to his employee agreement dated November 1, 2018.
As of December 31, 2020, 10,000,000 Series B Preferred shares were authorized, of which 500 shares were issued and outstanding.
11. COMMON STOCK
On June 15, 2016, the Company approved the authorization of a 1 for 1,000 reverse stock split of the Company’s outstanding shares of common stock, which was effective on July 22, 2016. The financial statements have been retroactively adjusted to take this into account for all periods presented.
As of November 13, 2018, 2,918 shares of common stock were transferred into the Company in connection with the reverse merger.
On November 13, 2018, the Company issued 102,368 shares of restricted common stock to Richard Hylen as collateral, pursuant to the Asset Purchase Agreement dated November 13, 2018. The shares are valued at $4,298,450 based on the market price of the Company’s common stock on the date of the agreement.
During the year ended December 31, 2018, the holders of convertible notes converted a total of $10,448 of principal and interest into 2,792 shares of common stock. The issuance extinguished $115,941 worth of derivative liabilities which was recorded to additional paid in capital.
On April 16, 2019, the Company issued 424 common shares at to Hanson & Associates to settle outstanding stock payable liabilities pursuant to a Consulting Agreement dated April 1, 2017. The stock was valued at $24,953 on the date of issuance, which extinguished $24,953 in derivative liabilities.
On June 13, 2019, the Company filed a Certificate of Amendment with the Nevada Secretary of State to increase the number of authorized common shares from 900,000,000 to 975,000,000 with a par value of $0.00001.
On July 23, 2019, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 975,000,000 to 1,500,000,000 shares at par value $0.00001 per share.
On September 16, 2019, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 1,500,000,000 to 5,000,000,000 shares at par value $0.00001 per share.
On October 17, 2019, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 5,000,000,000 to 10,000,000,000 shares at par value $0.00001 per share.
On December 18, 2019, the Company approved the authorization of a 1 for 1,000 reverse stock split of the Company’s outstanding shares of common stock. The financial statements have been retroactively adjusted to take this into account for all periods presented.
During the year ended December 31, 2019, 712,360 shares of Series A preferred stock were converted to 2,161,158 common shares in accordance with the conversion terms.
During the year ended December 31, 2019, 10,167 shares of Series C preferred stock were converted to 28,015 common shares in accordance with the conversion terms.
During the year ended December 31, 2019, warrant holders exercised the warrants and the Company issued 118,280 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.
During the year ended December 31, 2019, the holders of convertible notes converted a total of $866,299 of principal and interest, and $16,500 in note fees, into 2,119,224 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $86,719 and settled $1,784,469 worth of derivative liabilities which was recorded to additional paid in capital.
On March 27, 2020, 3,476 shares of common stock were issued due to rounding in conjunction with the reverse stock split.
On June 5, 2020, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to decrease the number of authorized Common Shares from 10,000,000,000 to 2,000,000,000 shares at par value $0.00001 per share.
On June 11, 2020, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 2,000,000,000 to 5,000,000,000 shares at par value $0.00001 per share.
On August 14, 2020, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 5,000,000,000 to 10,000,000,000 shares at par value $0.00001 per share.
During the year ended December 31, 2020, 283,510 shares of Convertible Series A Preferred stock were converted to 1,217,871,970 common shares, valued at $507,483, in accordance with the conversion terms. The issuances resulted in a loss on conversion of $191,349, which was recorded to the statement of operations.
During the year ended December 31, 2020, the holders of convertible notes converted a total of $1,005,664 of principal and interest, and $30,935 in note fees, into 3,674,337,087 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $41,116 and settled $4,976,556 worth of derivative liabilities which was recorded to additional paid in capital.
As of December 31, 2020, 10,000,000,000 common shares, par value $0.00001, were authorized, of which 4,896,738,884 shares were issued and outstanding.
12. INCOME TAXES
Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
The deferred tax asset and the valuation allowance consist of the following at December 31, 2020:
December 31,
Net operating loss $ 2,972,563
Statutory rate 21 %
Expected tax recovery 624,238
Change in valuation allowance (624,238 )
Income tax provision $ -
Components of deferred tax asset:
Non-capital tax loss carry-forwards 624,238
Less: valuation allowance (624,238 )
Net deferred tax asset $ -
As of the date of this filing, the Company is not current in filing their tax returns. The last return filed by the Company was December 31, 2017, and the Company has not accrued any potential penalties or interest from that period forward. The Company will need to file returns for the year ending December 31, 2018, 2019 and 2020 which are still open for examination.
13. COMMITMENTS AND CONTINGENCIES
On March 29, 2019, the Company and its subsidiary, Proscere Bioscience Inc., entered into an Exclusive Distribution Agreement with Brand House Ventures Inc. allowing the rights to sell the CBD Cold Water Extraction Systems within all of the United States. Mike Mulder is the President of Brand House Ventures Inc., and the company was formed in 2010 as a sole proprietorship, and in 2014 was formed as a California S-Corporation. Today Brand House is a Holding Company for the distribution of a variety of products and technologies.
On March 29, 2019, the Company and its subsidiary, Proscere Bioscience Inc., entered into a Distribution Agreement with United Opportunities, LLC allowing the rights to sell the CBD/HEMP Cold Water Extraction Systems within Canada and Europe. Shawn Illingworth is the Managing Partner of United Opportunities, LLC, and the company was formed in 2017 in overseeing the purchases of multiple cannabis farms in the Humboldt, Adelanto, Needles, Nipton, Cal City, and Searchlight areas of California and Nevada. The company currently cultivates medical grade crops on a grand scale and supply product to all the major manufacturers and extraction companies in the industry. Future plans are to expand the company and distribute internationally through attaining cultivation centers in Canada, Europe, and Australia. United Opportunities is currently opening an office and showroom in Las Vegas, NV which will round out its current operating platforms in New York, Florida, and San Diego, California.
To date, the Company has established distribution relationships in the United States, Canada, and Europe. The company also has purchase orders to fulfill in relationship to the above distribution agreement. Any delays in fulfilling the orders have been caused by manufacturing delays and the COVID-19 delays in working with our suppliers.
On November 1, 2019, the Company renewed an Employment Agreement with Robert Stillwaugh, which appoints him as President of Simlatus, a non-director/officer position, with an annual salary of $45,000, which can be accumulated at 6% interest and converted to restricted common stock at fair market value at the time of conversion. During the year ended December 31, 2020, the Company recorded wages of $45,000 and interest of $43,697 in connection with this agreement. On December 28, 2020, Mr. Stillwaugh resigned from his position and the Company agreed to convert unpaid wages and accrued interest totaling $568,899 into 317,821 shares of Convertible Preferred Series A stock. The shares were issued subsequent to the reporting period and is disclosed in subsequent events (Note 14).
On November 1, 2019, the Company renewed an Employment Agreement with Mike Schatz, which appoints him as the Vice President of Simlatus, a non-director/officer position, with an annual salary of $45,000, which can be accumulated at 6% interest and converted to restricted common stock at fair market value at the time of conversion. During the year ended December 31, 2020, the Company recorded wages of $45,000 and interest of $43,697 in connection with this agreement. On December 28, 2020, the Company converted unpaid wages and accrued interest totaling $568,899 into 317,821 shares of Convertible Preferred Series A stock.
On November 1, 2019, the Company renewed an Employee Agreement with Richard Hylen which appoints him as Chief Executive Officer, Chairman of the Board, and President, Secretary, and Treasurer of the Company. Mr. Hylen will receive an annual salary of $120,000, which can be accumulated at 6% interest and converted to restricted common stock at fair market value at the time of conversion. During the year ended December 31, 2020, the Company recorded wages of $120,000, interest of $6,924 and payments of $34,768, in connection with this agreement. On December 28, 2020, the Company converted unpaid wages and accrued interest totaling $174,940 into 97,732 shares of Convertible Preferred Series A stock.
On January 9, 2020, the Company renewed an Employee Agreement with Baron Tennelle, which appoints him as Director of Simlatus and President of Proscere Bioscience, Inc., a wholly owned subsidiary of Simlatus. He will receive an annual salary of $45,000 paid out quarterly in either cash or stock at the current fair market value of the stock at time of conversion. During the year ended December 31, 2020, the Company recorded wages of $45,000 and interest of $3,725 in connection with this agreement. On December 28, 2020, Mr. Tennelle resigned from his position and the Company agreed to convert unpaid wages and accrued interest totaling $94,745 into 52,931 shares of Convertible Preferred Series A stock. The shares were issued subsequent to the reporting period and is disclosed in subsequent events (Note 14).
On February 19, 2020, the Company renewed an Employee Agreement with Dusty Vereker as a Director of the company, and Vice President of Proscere Bioscience. Her employment contract allows an annual salary of $45,000 to be paid quarterly in either cash or stock. Ms. Vereker’s Director Agreement allows for fees associated with meetings and conferences. During the year ended December 31, 2020, the Company recorded wages of $45,000 and interest of $3,501 in connection with this agreement. On December 28, 2020, Ms. Vereker resigned from her position and the Company agreed to convert unpaid wages and accrued interest totaling $90,600 into 50,615 shares of Convertible Preferred Series A stock. The shares were issued subsequent to the reporting period and is disclosed in subsequent events (Note 14).
14. SUBSEQUENT EVENTS
Employee and Director Agreements
On January 1, 2021, the Company dismissed Richard Hylen as CEO, and appointed Richard Hylen as the Chairman and Secretary of the company, and the President of Satel Group Inc., a wholly owned subsidiary of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $200,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $1.79 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. Pursuant to the agreement, the company issued 500 Preferred Series B shares. Said shares are control shares and have voting rights only. As Director the undersigned is hereby granted $25,000 of Convertible Preferred Series A shares of the company at a price of $1.79 per share. On January 20, 2021, the Company issued 13,966 shares, pursuant with the Certificate of Designation for conversion rights of said shares.
On January 1, 2021, the Company appointed Jef Lewis as a Director and the Chief Executive Officer, President and Treasurer of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $200,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $1.79 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. Pursuant to the agreement, the company issued 500 Preferred Series B shares on January 20, 2021. Said shares are control shares and have voting rights only. As Director the undersigned is hereby granted $25,000 of Convertible Preferred Series A shares of the company at a price of $1.79 per share. On January 20, 2021, the Company issued 13,966 shares, pursuant with the Certificate of Designation for conversion rights of said shares.
Jeffrey Lewis is 47 years old. Founder of BrewBilt Manufacturing LLC, and is the Chairman and CEO of BrewBilt Manufacturing, Inc., a multiple million dollar craft beer brewery manufacturing facility in Northern California, has over 15 years of experience managing engineering, design, and fabrication teams that custom design and fabricate integrated stainless steel distillation and brewing systems for the craft beer beverage industries.
On January 1, 2021, the Company appointed Samuel Berry as a Director and the Chief Operations Officer of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $100,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $1.79 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. The company will issue to the employee $50,000 of Preferred Series A shares at a value of $1.79 per share. As Director the undersigned is hereby granted $25,000 of Preferred Series A shares of the company at a price of $1.79 per share, pursuant with the Certificate of Designation for conversion rights of said shares. On January 20, 2021, the Company issued 41,898 shares of Convertible Preferred Series A shares, pursuant to these agreements.
Samuel Berry is 43 years old and a graduate from Keene State College in New Hampshire with a Bachelor of Science, and a graduate from Florida International University with his Master of Science. Sam is a Director of BrewBilt Manufacturing Inc. and experienced with the operations of a public craft beer manufacturing business. With over 15 years of business experience in management, he will oversee the operations of Simlatus.
On March 1, 2021, the Company appointed Bennett Buchanan as a Director and of the company and pursuant with the Employment Agreement and Director Agreement dated March 3, 2021. Pursuant to the Employment Agreement, Mr. Buchanan will be employed on at-will basis and receive an annual salary of $100,000 payable in monthly installments, with unpaid amounts accruing interest at the rate of 6% per annum. Unpaid salary may be converted by Mr. Buchanan into shares of Convertible Series A Preferred Stock of the Company. On March 4, 2021, the Company issued 13,966 shares of Convertible Series A Preferred Stock pursuant to the Employment Agreement.
Bennett Buchanan is 36 years old and the co-founder and brewer for the award-winning Old Bus Tavern brewpub in San Francisco. He has also honed his skills brewing on a production scale for the Fort Point Beer Company. Bennett holds a Bachelor of Science in Civil Engineering and a Master of Engineering Management from Cornell University.
Convertible Notes
On January 25, 2021, the Company entered in a Convertible Promissory Note with Redstart Holdings Corp in the amount of $63,500. The note is unsecured, bears interest at 10% per annum, and matures on January 25, 2022.
On February 8, 2021, the Company entered in a Convertible Promissory Note with Labrys Fund LP in the amount of $140,000. The note is unsecured, bears interest at 12% per annum, and matures on February 8, 2022.
On March 5, 2021, the Company entered in a Convertible Promissory Note with Fourth Man, LLC in the amount of $140,000. The note is unsecured, bears interest at 12% per annum, and matures on March 5, 2022.
On March 8, 2021, the Company entered in a Convertible Promissory Note with FirstFire Global Opportunities Fund LLC in the amount of $300,000. The note is unsecured, bears interest at 12% per annum, and matures on March 8, 2022. The Company will also issue 35,000,000 commitment shares pursuant to the Securities Purchase Agreement.
Subsequent Issuances
On January 5, 2021, the holder of a convertible note converted a total of $13,000 of principal into 144,444,444 shares of our common stock.
On January 5, 2021, 37,989 shares of Preferred Series A stock was converted in to 113,333,850 shares of common stock.
On January 7, 2021, the holder of a convertible note converted a total of $10,750 of principal and fees into 107,500,000 shares of our common stock.
On January 7, 2021, the Company issued 52,931 Preferred Series A shares to Baron Tennelle in exchange for accrued wages of $90,000 and interest of $4,745.
On January 7, 2021, the Company issued 50,615 Preferred Series A shares to Dusty Vereker in exchange for accrued wages of $86,250 and interest of $4,350.
On January 7, 2021, the Company issued 317,821 Preferred Series A shares to Robert Stillwaugh in exchange for accrued wages of $427,708 and interest of $141,190.
On January 7, 2021, 80,450 shares of Preferred Series A stock was converted in to 240,009,167 shares of common stock.
On January 11, 2021, the holder of a convertible note converted a total of $2,250 of principal and interest into 15,000,000 shares of our common stock.
On January 11, 2021, the holder of a convertible note converted a total of $15,000 of principal into 100,000,000 shares of our common stock.
On January 11, 2021, 19,550 shares of Preferred Series A stock was converted in to 58,324,167 shares of common stock.
On January 12, 2021, the holder of a convertible note converted a total of $11,627 of principal, interest, and fees into 105,697,273 shares of our common stock.
On January 13, 2021, 60,000 shares of Preferred Series A stock was converted in to 268,500,000 shares of common stock.
On January 14, 2021, the holder of a convertible note converted a total of $19,650 of principal and interest into 109,166,667 shares of our common stock.
On January 15, 2021, the holder of a convertible note converted a total of $6,300 of interest into 63,000,000 shares of our common stock.
On January 20, 2021, the holder of a convertible note converted a total of $36,200 of principal, interest, and fees into 301,666,667 shares of our common stock.
On January 22, 2021, the holder of a convertible note converted a total of $3,300 of interest into 33,000,000 shares of our common stock.
On January 22, 2021, 40,000 shares of Preferred Series A stock was converted in to 79,555,556 shares of common stock.
On January 26, 2021, the holder of a convertible note converted a total of $29,088 of principal, interest, and fees into 242,397,433 shares of our common stock.
On January 28, 2021, 100,000 shares of Preferred Series A stock was converted in to 162,727,273 shares of common stock.
On February 1, 2021, 100,000 shares of Preferred Series A stock was converted in to 198,888,889 shares of common stock.
On February 2, 2021, 100,000 shares of Preferred Series A stock was converted in to 179,000,000 shares of common stock.
On February 8, 2021, the holder of a convertible note converted a total of $7,505 of principal and interest into 50,035,712 shares of our common stock.
On February 8, 2021, the holder of a convertible note converted a total of $9,494 of principal, interest, and fees into 52,746,722 shares of our common stock.
On February 9, 2021, the holder of a convertible note converted a total of $7,569 of principal and interest into 50,457,178 shares of our common stock.
On February 10, 2021, 100,000 shares of Preferred Series A stock was converted in to 89,500,000 shares of common stock.
On February 10, 2021, 100,000 shares of Preferred Series A stock was converted in to 49,722,223 shares of common stock.
On February 11, 2021, the holder of a convertible note converted a total of $34,313 of principal, interest, and fees into 142,971,542 shares of our common stock.
On February 16, 2021, the holder of a convertible note converted a total of $20,797 of principal and interest into 103,986,324 shares of our common stock.
On February 23, 2021, 100,000 shares of Preferred Series A stock was converted in to 55,937,500 shares of common stock.
On February 25, 2021, 100,000 shares of Preferred Series A stock was converted in to 137,692,308 shares of common stock.
On February 26, 2021, 150,000 shares of Preferred Series A stock was converted in to 116,739,131 shares of common stock.
On March 4, 2021, 200,000 shares of Preferred Series A stock was converted in to 275,384,615 shares of common stock.
On March 8, 2021, the holder of a convertible note converted a total of $21,602 of principal, interest, and fees into 19,549,294 shares of our common stock.
On March 8, 2021, 35,000,000 shares of common stock were issued pursuant to a Securities Purchase Agreement.
On March 9, 2021, 100,000 shares of Preferred Series A stock was converted in to 105,294,118 shares of common stock.
On March 15, 2021, 200,000 shares of Preferred Series A stock was converted in to 179,000,000 shares of common stock.
On March 15, 2021, 200,000 shares of Preferred Series A stock was converted in to 358,000,000 shares of common stock.
On March 17, 2021, 224,720 shares of Preferred Series A stock was converted in to 206,281,435 shares of common stock.
On March 17, 2021, 35,583 shares of Preferred Series C stock was converted in to 100,000,000 shares of common stock.
The Company has evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no additional subsequent events to disclose.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE
There are no changes in or disagreements with accountants on accounting and/or financial disclosure.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES.
Management’s Report on Internal Control over Financial Reporting
This report includes the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 of the Securities Exchange Act of 1934 (the “Exchange Act”). See Exhibits 31.1 and 31.2. This Item 9A includes information concerning the controls and control evaluations referred to in those certifications.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2020. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer concluded that our disclosure controls and procedures were not effective. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated. Our company intends to remediate the material weaknesses as set out below.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020, using the criteria established in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
A material weakness is a deficiency, or 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. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2020, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.
1.
There is a lack of accounting resources - The Company has insufficient resources for data entry, reviews, and/or oversight from a financial expert with the appropriate level of knowledge and experience to accurately capture transactions in accordance with US GAAP and SEC rules and regulations. This lack of resources further results in inadequate segregation of duties. Additionally, the Company lacks an audit committee as well as a financial expert.
2.
The Company lacks processes and procedures to ensure transactional evidence is properly retained - The Company needs to implement processes that ensure they are aware of, and maintain, evidence necessary to substantiate recorded transactions. The Company needs to retain formal executed documents and adequate support, as they are essential to accurate financial reporting.
3. Due to the Company not having formal Control procedures related to the approval of related party transactions.
Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.
As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2020, based on criteria established in “Internal Control - Integrated Framework (2013)” issued by COSO.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of December 31, 2020, that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION.
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.
Identification of Directors and Executive Officers
The following table sets forth the name and age of our directors and executive officer as of December 31, 2020:
Name
Age
Position with the Company
Position Held Since
Richard Hylen
Chief Executive Officer, Chairman of the Board, President, Secretary and Treasurer
November 1, 2018
Baron Tennelle
Director
January 9, 2019
Dusty Vereker
Director
February 19, 2019
The Board of Directors has no nominating, audit, or compensation committee at this time.
Term of Office
Each director is elected by the Board of Directors and serves until his or her successor is elected and qualified, unless he or she resigns or is removed earlier. Each of our officers is elected by the Board of Directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is earlier removed from office or resigns.
Background and Business Experience
The business experience during the past five years of the person presently listed above as an Officer or Director of the Company is as follows:
Richard Hylen: Mr. Hylen is 74 years old. As the Founder of Satel Inc., the Managing Director of Turner Broadcasting Far East LTD, and a Senior Executive of Viacom’s San Francisco cable company, Richard has over 35 years of experience providing video and Internet using the most advanced technologies including: cable, fiber, satellite, wireless and CAT5 not only domestically, but to over 50 countries worldwide. His skill set encompasses successfully negotiating complicated licensing agreements with governmental entities, creating joint venture partnerships, developing strategic distribution relationships, financing, designing, installing, and managing advanced technologies to provide consumers with video and Internet services. Hylen used his extensive corporate management expertise combined with his technical knowledge to create Satel, recognized as one of the nation’s largest providers of DirecTV to high rise buildings in a major metropolitan market.
Baron Tennelle: Mr. Tennelle is 41 years old and attended Mesa College in San Diego, California where he studied mathematics. He attended Blackstone Career Institute in San Diego to study law under a Legal Assistant program regarding real property, torts, personal injury, contracts, and partnerships. His 12 years in business has afforded him the experience in working in management positions for service oriented companies, along with sales and marketing. His recent 4 years have landed him experience as a Data Analyst for Restaurant Revolution Technologies, and a paralegal for Miller Legal LLP. Mr. Tennelle was hired to oversee the business direction and maintain core business objectives and compliance for Proscere Bioscience.
Dusty Vereker: Ms. Vereker is 42 years old and has been a marketing professional for more than a decade. She is a seasoned manager with experience in directing sales for medium to large size corporations, where she earned her credit to increasing revenue. She brings 8 years’ experience in sales and 4 years’ experience in human resources. She is a graduate of Grossmont College, and served as an Administrative Instructor to the US Naval Sea Cadet Corps. Dusty was hired to assist our team in growing sales for Proscere Bioscience and implement an Oversight-Committee for the corporation.
Identification of Significant Employees
We have no significant employees.
Family Relationship
We currently do not have any officers or directors of our Company who are related to each other.
Involvement in Certain Legal Proceedings
During the past ten years no director, executive officer, promoter, or control person of the Company has been involved in the following:
(1) A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
(2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii. Engaging in any type of business practice; or
iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
(4) Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
(5) Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
(6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended, or vacated;
(7) Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended, or vacated, relating to an alleged violation of:
i. Any Federal or State securities or commodities law or regulation; or
ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
(8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity, or organization that has disciplinary authority over its members or persons associated with a member.
Audit Committee and Audit Committee Financial Expert
As of December 31, 2020, the Company did not have an audit committee or an audit committee financial expert (as defined in Item 407 of Regulation S-K) serving on its Board of Directors. All current members of the Board of Directors lack sufficient financial expertise for overseeing financial reporting responsibilities. The Company has not yet employed an audit committee financial expert on its Board due to the inability to attract such a person.
Code of Ethics
As of December 31, 2020, the board of directors had not adopted a code of ethics due to Company’s limited number of executive officers and employees that would be covered by such a code and the Company’s limited financial resources. We anticipate that we will adopt a code of ethics when we increase either the number of our directors and officers or the number of our employees.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5, respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors, and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during the year ending December 31, 2019.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
The table set forth below summarizes the annual and long-term compensation for services in all capacities to us payable to our officer and director for the years ended December 31, 2020 and December 31, 2019. Our Board of Directors may adopt an incentive stock option plan for our executive officers that would result in additional compensation.
Summary Compensation Table
Nonqualified
Non-Equity Deferred
Stock Option Incentive Plan Compensation All Other
Name and
Salary Bonus Awards Awards Compensation Earnings Compensation Total
principal position Year ($) ($) ($) ($) ($) ($) ($) ($)
Richard Hylen, President, 120,000 - - - - - - 120,000
Chief Executive Officer, 120,000 - - - - - - 120,000
Secretary and Treasurer
Baron Tennelle, Director 45,000 - - - - - - 45,000
45,000 - - - - - - 45,000
Dusty Vereker, Director 45,000 - - - - - - 45,000
41,250 - - - - - - 41,250
Narrative Disclosure to Summary Compensation Table
On November 1, 2018, the Board of Directors appointed Richard N. Hylen as the new Chief Executive Officer, Chairman of the Board, and President, Secretary, and Treasurer of the Company. Mr. Hylen will receive an annual salary of $120,000, which can be accumulated at 6% interest and converted to restricted common stock at fair market value at the time of conversion. During the year ended December 31, 2020, the Company recorded wages of $120,000 in connection with this agreement.
On January 9, 2019, the Board of Directors appointed Baron Tennelle as a Director of Simlatus and President of Proscere Bioscience, Inc., a wholly owned subsidiary of Simlatus, effective January 9, 2019. He will receive an annual salary of $45,000 paid out quarterly in either cash or stock at the current fair market value of the stock at time of conversion. During the year ended December 31, 2020, the Company recorded wages of $45,000 in connection with this agreement.
On February 19, 2019, the Board of Directors appointed Dusty Vereker as a Director of the company, and Vice President of Proscere Bioscience. Her employment contract allows an annual salary of $45,000 to be paid quarterly in either cash or stock. Ms. Vereker’s Director Agreement allows for fees associated with meetings and conferences. During the year ended December 31, 2020, the Company recorded wages of $45,000 in connection with this agreement.
Outstanding Equity Awards at Fiscal Year-End
No executive officer received any equity awards, or holds exercisable or exercisable options, as of the year ended December 31, 2020.
Long-Term Incentive Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers.
Compensation Committee
We currently do not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.
Compensation of Directors
Our directors receive no extra compensation for their service on our Board of Directors.

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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.
Security Ownership of Management
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of December 31, 2020, by: (i) each of our directors; (ii) each of our named executive officers; and (iii) each person or group known by us to beneficially own more than 5% of our outstanding shares of common stock. Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own.
Shares
Name and Address
Beneficially Percent
Title of Class of Owner Relationship to Company Owned (1) Owned (1)
Common Stock Richard Hylen President, Chief Executive Officer, Secretary, Treasurer and Chairman 102,368 0.002 %
Total
102,368 0.002 %
1. The number and percentage of shares beneficially owned is determined under 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 the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table.
2. The percentage shown is based on denominator of 4,896,736,884 shares of common stock issued and outstanding for the company as of December 31, 2020.
Changes in Control
There are no present arrangements or pledges of the Company’s securities, which may result in a change in control of the Company.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Related Party Transactions
None of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its Common Stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company.
With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manor:
● Disclosing such transactions in reports where required;
● Disclosing in any and all filings with the SEC, where required;
● Obtaining disinterested directors consent; and
● Obtaining shareholder consent where required.
The Company is periodically advanced noninterest bearing operating funds from related parties. The advances are due on demand and unsecured. During the year ended December 31, 2020, the Company made payments of $28.377 to amounts due to related parties, and $182,570 was advanced to the Company by related parties. As of December 31, 2020 and December 31, 2019, the Company owed related parties $245,323 and $91,130, respectively. During the year ended December 31, 2020, the Company recorded imputed interest of $14,136 to the statement of operations with a corresponding increase to additional paid in capital. During the year ended December 31, 2020, the company’s former president forgave accounts payable of $31,269, which was recorded to additional paid in capital. As of December 31, 2020 and December 31, 2019, the Company recorded accounts payable due to related parties of $0 and $31,269, respectively.
On January 9, 2019, the Company issued 1,679,978 shares of Series A Preferred stock at $1.79 per share, to Optempus Investments, LLC, valued at $3,000,000, pursuant to the Asset Purchase Agreement with Proscere Bioscience Inc.
On March 19, 2019, Richard Hylen entered into a Debt Settlement Agreement with Xillient, LLC to settle $362,261 in outstanding debt owed to Xillient, LLC for $200,000. Mr. Hylen transferred 111,732 of his Preferred Series A that are valued at $1.79 per share. The liability amount of $362,261 was reclassed to additional paid in capital due to the contributed capital by a related party.
On April 10, 2019, the Board of Directors repurchased and returned to treasury 25,140 Preferred Series A Shares in the name of Optempus Investments, LLC. The company authorized and paid the payment of $45,000 to Optempus Investments, LLC for the repurchase of 25,140 Preferred Series A at $1.79 per share. This transaction is pursuant with the Asset Purchase Agreement of Proscere Bioscience and the IP of the Cold-Water CBD/HEMP Extraction Systems. The Series A Stock is convertible to common stock at market price the day of conversion.
On June 3, 2019, the Board of Directors repurchased and returned to treasury 18,159 Preferred Series A Shares in the name of Optempus Investments, LLC. The company authorized and paid the payment of $32,505 to Optempus Investments, LLC for the repurchase of 18,159 Preferred Series A at $1.79 per share. This transaction is pursuant with the Asset Purchase Agreement of Proscere Bioscience and the IP of the Cold-Water CBD/HEMP Extraction Systems. The Series A Stock is convertible to common stock at market price the day of conversion.
On December 22, 2020, Richard Hylen and the Company entered into two vehicle leases in the amount of $19,314 and $18,689, respectively. The leases have a term of 6 years, from February 5, 2021 January 5, 2027, with monthly payments of $268 and $260, respectively.
On December 28, 2020, the Company converted wages and accrued interest owed to Richard Hylen to Convertible Series A Preferred stock. The Company issued 97,732 shares at $1.79 per share in exchange of principal and interest of $174,930 owed to My Hylen.
On December 28, 2020, the Company received resignation letters from Baron Tennelle and Dusty Vereker. The Company agreed to issue Preferred Series A shares to settle unpaid wages and interest owed to those individuals.
The Company agreed to issue 52,931 Preferred Series A shares to Baron Tennelle in exchange for accrued wages of $90,000 and interest of $4,745. The Company agreed to issue 50,615 Preferred Series A shares to Dusty Vereker in exchange for accrued wages of $86,250 and interest of $4,350. The shares were issued subsequent to December 31, 2020, which have been disclosed in subsequent events (Note 14).
Director Independence
For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCBB on which shares of Common Stock are quoted does not have any director independence requirements. The NASDAQ definition of “Independent Officer” means a person other than an Executive Officer or employee of the Company or any other individual having a relationship, which, in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. According to the NASDAQ definition, we have no independent directors.
Review, Approval or Ratification of Transactions with Related Persons
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table shows the fees that were billed for the audit and other services provided by our auditors for the years ended December 31, 2020 and December 31, 2019:
Audit Fees $ 44,600 $ 30,000
Audit-Related Fees - -
Tax Fees - -
All Other Fees - -
Total $ 44,600 $ 30,000
Audit Fees
We incurred approximately $44,600 in fees to our principal independent accountants for professional services rendered in connection with the audit and reviews of our financial statements for the year ended December 31, 2020.
We incurred approximately $30,000 in fees to our principal independent accountants for professional services rendered in connection with the audit and reviews of our financial statements for the year ended December 31, 2019.
Audit-Related Fees
The aggregate fees billed during the years ended December 31, 2020 and 2019 for assurance and related services by our principal independent accountants that are reasonably related to the performance of the audit or review of our financial statements (and are not reported under Item 9(e)(1) of Schedule 14A was $0 and $0, respectively.
Tax Fees
The aggregate fees billed during the years ended December 31, 2020 and 2019 for professional services rendered by our principal accountant tax compliance, tax advice and tax planning were $0 and $0, respectively.
All Other Fees
The aggregate fees billed during the years ended December 31, 2020 and 2019 for products and services provided by our principal independent accountants (other than the services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A) was $0 and $0, respectively.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS.
Exhibit
Number Description of Exhibit Filing
3.1 Articles of Incorporation Filed with the SEC on June 8, 2007 as part of our Registration of Securities on Form SB-2.
3.1a Amended Articles of Incorporation Filed with the SEC on November 11, 2009, on our Current Report on Form 8-K.
3.2 Bylaws Filed with the SEC on June 8, 2007 as part of our Registration of Securities on Form SB-2.
31.01 Certification of Principal Executive Officer Pursuant to Rule 13a-14 Filed herewith.
31.02 Certification of Principal Financial Officer Pursuant to Rule 13a-14 Filed herewith.
32.01 Certification of CEO and CFO Pursuant to Section 906 of the Sarbanes-Oxley Act Filed herewith
101.INS XBRL Instance Document Furnished herewith.
101.SCH XBRL Taxonomy Extension Schema Document Furnished herewith.
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Furnished herewith.
101.LAB XBRL Taxonomy Extension Labels Linkbase Document Furnished herewith.
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Furnished herewith.
101.DEF XBRL Taxonomy Extension Definition Linkbase Document Furnished herewith.
* Filed Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.