EDGAR 10-K Filing

Company CIK: 1381871
Filing Year: 2022
Filename: 1381871_10-K_2022_0001213900-22-021280.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
Overview
Cruzani, Inc. (“Cruzani” or the “Company”) was most recently a franchise development company that builds and represents popular franchise concepts, and other related businesses, throughout the United States as well as international markets. The Company is currently evaluating various new business models. The Company was originally formed as a limited liability company on February 5, 1999 under the name The Powerhouse, L.L.C. pursuant to the laws of the State of Oklahoma. On November 9, 2006, Powerhouse Productions, L.L.C. filed Articles of Conversion changing the entity from a limited liability company to a corporation under the name Harcom Productions, Inc. On January 25, 2010, Articles of Merger were filed with the State of Oklahoma merging U.S. Highland, Inc., an Oklahoma corporation into Harcom Productions, Inc. and the name of the corporation was changed to US Highland, Inc. US Highland, Inc. was a recreational power sports Original Equipment Manufacturer (“OEM”), developing motorcycles, quads, single cylinder engines, and v-twin engines under its own brand and for other OEMs. During 2017, the Company exited the recreational power sports OEM and leisure activity vehicles markets.
On June 29, 2018, the Company filed Amended and Restated Articles of Incorporation with the State of Nevada to change its name to Cruzani, Inc. The name change is subject to approval by the Financial Industry Regulatory Authority (known as “FINRA”).
On June 30, 2018, Supreme Sweets Acquisition Corp. (n/k/a Oventa, Inc.), a subsidiary of the Company, and the Company (collectively, the “Company”) entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Supreme Sweets Inc. and 2498411 Ontario, Inc., as sellers (collectively, the “Seller”), pursuant to which in exchange for CAD $200,000 and a twenty percent (20%) interest in Oventa, Inc., the Company agreed to acquire the trade secret assets of Seller upon the terms and subject to the conditions set forth in the Asset Purchase Agreement. A second closing occurred on July 31, 2018, pursuant to which the Company acquired the furniture, fixtures and equipment of Seller in exchange for CAD $100,000. Seller is engaged in the business of preparing delicious snacks, pastries and baked goods with high quality ingredients for exceptional taste, including low calorie and gluten-free alternatives. The Asset Purchase Agreement included a provision, pursuant to which the Company could unwind the transaction if certain milestones were not achieved. The milestones contemplated in the Asset Purchase Agreement were not met, and accordingly, effective on December 31, 2018, by written notice to the Seller, the Company unwound the transaction. The capital injected into Oventa, Inc., however, has been secured pursuant to financing statements filed on behalf of the Company, and the Company expects to receive a return of its injected capital during the calendar year 2019. Subsequent to the December 31 notification, the parties searched for a resolution in an effort to salvage the transaction. In early February, however, it was determined that there wasn’t an acceptable path forward. At that time, the company filed a Form 8-K regarding the matter.
On September 27, 2018, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Sandrea Gibson, as seller (the “Seller”), and Recipe Food Co., as the target (the “Target”), pursuant to which in exchange for up to CAD $237,000, the Company agreed to acquire 80% of the issued and outstanding stock of the Target from the Seller upon the terms and subject to the conditions set forth in the Stock Purchase Agreement. Seller is engaged in the business of preparing and serving delicious, healthy meals on a counter-service basis with high quality ingredients, including low calorie alternatives. Difficulties integrating the Target into the Company group, forced the Company to cease injecting additional capital into the Target. The Target is currently on the market for disposition to a third-party buyer on an arms-length basis.
On July 8, 2019, Mr. Dickson entered into a Securities Purchase Agreement (“Purchase Agreement”) with Conrad Huss to sell 5,000,000 shares of Series C Preferred and 5,000 shares of Series B preferred Stock held by Mr. Dickson. As a result, Mr. Huss acquired the right to vote 99.06 % of the voting control of the Company. The Series B Preferred Stock is also convertible into common stock which, in the aggregate, would represent up to .01% of the outstanding common stock after the conversion. The Series B Preferred Stock is also convertible into common stock which, in the aggregate, would represent up to 99.05% of the outstanding common stock after the conversion.
On July 8, 2019, Everett Dickson, who had been the sole officer of the Company, resigned as an officer of the Company, and Conrad Huss was appointed the Interim President and Chief Executive Officer of the Company. Mr. Huss is the sole beneficial owner of 5,000,000 and 5,000 shares of Series B and C Preferred Stocks, respectively. Mr. Dickson also resigned as a director of the Company, effective on July 8th, 2019. Mr. Dickson’s resignation was not the result of any disagreement with the management of the Company.
Our Business
Cruzani, Inc. (“Cruzani” or the “Company”) is currently reassessing its business model. As such, the Company wrote off its existing assets and cash is now our only asset. We are currently evaluating various options to go forward.
Facilities
The Company currently has no ownership or leases of property. The Company’s business mailing address is 211 Greenwood Avenue, 2-2, Unit 129, Bethel CT 06801
Employees
Cruzani, Inc. does not have any employees other than our chief executive officer. There are no collective-bargaining agreements with our employees, and we have not experienced work interruptions or strikes. We believe our relationship with our employees is good. Our Chief Executive currently has an employment contract.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
In addition to other information in this Annual Report on Form 10-K and in other filings we make with the Securities and Exchange Commission, the following risk factors should be carefully considered in evaluating our business as they may have a significant impact on our business, operating results and financial condition. If any of the following risks actually occurs, our business, financial condition, results of operations and future prospects could be materially and adversely affected. Because of the following factors, as well as other variables affecting our operating results, past financial performance should not be considered as a reliable indicator of future performance and investors should not use historical trends to anticipate results or trends in future periods.
Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could harm our business, financial condition, operating results, and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.
Risks Related to Our Business
We are currently evaluating a wide variety of businesses to enter into. We may not find one which is profitable.
We are currently evaluating various acquisition targets. Some of these propositions may be accepted by the Company, and if implemented, may not come to fruition. As a result, the Company may suffer tremendous losses.
Our existing financial resources are insufficient to meet our ongoing operating expenses.
We have no sources of income at this time and insufficient assets to meet our ongoing operating expenses. In the short term, unless we are able to raise additional debt and, or, equity we shall be unable to meet our ongoing operating expenses. On a longer-term basis, we intend to merge with another entity with experienced management and opportunities for growth in return for shares of our common stock to create value for our shareholders. There can be no assurance that these events will be successfully completed.
A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, may materially and adversely impact our business, our operations and our financial results.
In recent months, a new strain of coronavirus (COVID-19) has spread to many countries in the world and the outbreak has been declared a pandemic by the World Health Organization. The U.S. Secretary of Health and Human Services has also declared a public health emergency in the U.S. in response to the outbreak. Considerable uncertainty still surrounds the COVID-19 virus and its potential effects, and the extent of and effectiveness of responses taken on international, national and local levels. Measures taken to limit the impact of COVID-19, including shelter-in-place orders, social distancing measures, travel bans and restrictions, and business and government shutdowns have already resulted in significant negative economic impacts on a global basis.
As the coronavirus pandemic continues to rapidly evolve, we cannot at this time accurately predict the effects of these conditions on our efforts to evaluate opportunities and enter into new business lines. Uncertainties remain as to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length and scope of the travel restrictions and business closures imposed by the governments of impacted countries. The continued outbreak of COVID-19, or another infectious disease with similar characteristics, may lead to the implementation of further responses, including additional travel restrictions, government-imposed quarantines or stay-at-home orders, and other public health safety measures, which may result in further disruptions to our business and operations.
Unfavorable conditions in the global economy or reduced access to lending markets could harm our business.
Our results of operations may vary based on the impact of changes in our industry or the global economy on us or our potential customers in whatever business we choose to operate in. Current or future economic uncertainties or downturns could adversely affect our business and results of operations. Negative conditions in the general economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, political turmoil, natural catastrophes, warfare, such as that which has currently impacted the Ukraine, public health issues, such as the recent outbreak of coronavirus (COVID-19), and terrorist attacks on the United States, Europe, the Asia Pacific region, or elsewhere, could cause a decrease in business investments or decrease access to financing which would harm our business.
Because insiders control our activities, that may cause us to act in a manner that is most beneficial to them and not to outside shareholders which could cause us not to take actions that outside investors might view favorably.
We have a super-voting preferred stock outstanding which gives great control over our operations to a select group of individuals.
As a result, they effectively control all matters requiring director and stockholder approval, including the election of directors, the approval of significant corporate transactions, such as mergers and related party transaction. These insiders also have the ability to delay or perhaps even block, by their ownership of our stock, an unsolicited tender offer. This concentration of ownership could have the effect of delaying, deterring or preventing a change in control of our company that you might view favorably.
We may depend upon outside advisors, who may not be available on reasonable terms and as needed.
To supplement the business experience of our officers and directors, we may be required to employ accountants, technical experts, appraisers, attorneys, or other consultants or advisors. Our Board without any input from stockholders will make the selection of any such advisors. Furthermore, it is anticipated that such persons may be engaged on an “as needed” basis without a continuing fiduciary or other obligation to us. In the event we consider it necessary to hire outside advisors, we may elect to hire persons who are affiliates, if they are able to provide the required services.
We may experience difficulties in integrating acquired businesses
Integration of brands and related operations with our existing business and financial accounting and reporting systems. The difficulties of integration include:
● coordinating and consolidating geographically separated systems and facilities;
● integrating the management and personnel of the acquired brands, maintaining employee morale and retaining key employees;
● implementing our management information systems and financial accounting and reporting systems;
● establishing and maintaining effective internal control over financial reporting; and
● implementing operational procedures and disciplines to control costs and increase profitability.
The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of our business and that of our acquired franchise concepts, and the loss of key personnel. The diversion of management’s attention and any delays or difficulties encountered in connection with the acquisition and the integration of these operations could have an adverse effect on our business, results of operations and financial condition after the acquisition.
Achieving the anticipated benefits of these acquisitions will depend in part upon whether we can integrate them in an efficient and effective manner. We may not accomplish this integration process smoothly or successfully. If management is unable to successfully integrate the acquired brands, the anticipated benefits of the acquisition may not be realized.
We depend on key executive management.
We depend on the leadership and experience of our relatively small number of key executive management personnel, and in particular key executive management, particularly our Chief Executive Officer, Conrad Huss. The loss of the services of any of our executive management members could have a material adverse effect on our business and prospects, as we may not be able to find suitable individuals to replace such personnel on a timely basis or without incurring increased costs, or at all. We do not maintain key man life insurance policies on any of our executive officers. We believe that our future success will depend on our continued ability to attract and retain highly skilled and qualified personnel. There is a high level of competition for experienced, successful personnel in our industry. Our inability to meet our executive staffing requirements in the future could impair our growth and harm our business.
We could be party to litigation that could adversely affect us by increasing our expenses, diverting management attention or subjecting us to significant monetary damages and other remedies.
We may become involved in legal proceedings involving consumer, employment, real estate related, tort, intellectual property, breach of contract, securities, derivative and other litigation. Plaintiffs in these types of lawsuits often seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating to such lawsuits may not be accurately estimated. Regardless of whether any such claims have merit, or whether we are ultimately held liable or settle, such litigation may be expensive to defend and may divert resources and management attention away from our operations and negatively impact reported earnings. With respect to insured claims, a judgment for monetary damages in excess of any insurance coverage could adversely affect our financial condition or results of operations. Any adverse publicity resulting from these allegations may also adversely affect our reputation, which in turn could adversely affect our results of operations.
In addition, the restaurant industry around the world has been subject to claims that relate to the nutritional content of food products, as well as claims that the menus and practices of franchise concepts have led to customer health issues, including weight gain and other adverse effects. These concerns could lead to an increase in the regulation of the content or marketing of our products. We may also be subject to such claims in the future and, even if we are not, publicity about these matters (particularly directed at the quick service and fast casual segments of the retail food industry) may harm our reputation and adversely affect our business, financial condition and results of operations.
Risks Related to Our Common Stock
Our common stock is thinly traded, and there is no guarantee of the prices at which the shares will trade.
Trading of our common stock is conducted on the OTC Marketplace operated by the OTC Markets Group, Inc., or “OTC,” under the ticker symbol “CZNI.” Not being listed for trading on an established securities exchange has an adverse effect on the liquidity of our common stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts’ and the media’s coverage of the Company. This may result in lower prices for your common stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for our common stock. Historically, our common stock has been thinly traded, and there is no guarantee of the prices at which the shares will trade, or of the ability of stockholders to sell their shares without having an adverse effect on market prices.
We have never paid dividends on our common stock and we do not anticipate paying any dividends in the foreseeable future.
We have not paid dividends on our common stock to date, and we may not be in a position to pay dividends in the foreseeable future. Our ability to pay dividends depends on our ability to successfully develop our franchise concept business and generate revenue from future operations. Further, our initial earnings, if any, will likely be retained to finance our growth. Any future dividends will depend upon our earnings, our then-existing financial requirements and other factors and will be at the discretion of our Board of Directors.
Because our common stock is a “penny stock,” it may be difficult to sell shares of our common stock at times and prices that are acceptable.
Our common stock is a “penny stock.” Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk disclosure document prepared by the SEC. This document provides information about penny stocks and the nature and level of risks involved in investing in the penny stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser’s written agreement to the purchase. The penny stock rules may make it difficult for you to sell your shares of our common stock. Because of these rules, many brokers choose not to participate in penny stock transactions and there is less trading in penny stocks. Accordingly, you may not always be able to resell shares of our common stock publicly at times and prices that you feel are appropriate.
In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common shares, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
Our management concluded that our internal control over financial reporting was not effective as of December 31, 2021. Compliance with public company regulatory requirements, including those relating to our internal control over financial reporting, have and will likely continue to result in significant expenses and, if we are unable to maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may be negatively affected.
As a public reporting company, we are subject to the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, as well as to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and other federal securities laws. As a result, we incur significant legal, accounting, and other expenses, including costs associated with our public company reporting requirements and corporate governance requirements. As an example of public reporting company requirements, we evaluate the effectiveness of disclosure controls and procedures and of our internal control over financing reporting in order to allow management to report on such controls.
Our management concluded that our internal control over financial reporting was not effective as of December 31, 2019 due to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud.
If significant deficiencies or other material weaknesses are identified in our internal control over financial reporting that we cannot remediate in a timely manner, investors and others may lose confidence in the reliability of our financial statements and the trading price of our common stock and ability to obtain any necessary equity or debt financing could suffer. This would likely have an adverse effect on the trading price of our common stock and our ability to secure any necessary additional equity or debt financing.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
This information is not required for smaller reporting companies.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
The Company currently has no ownership or leases of property. The Company’s business mailing address is 208 E. 51st. street, #208, New York, NY 10022

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
On February 13, 2017, Baum Glass & Jayne PLLC (“Plaintiff”) obtained a default judgment against the Company in the amount of $27,083.74. Plaintiff has not attempted enforced collection. The amount was included in accounts payable as of December 31, 2021 and 2020. The management is having discussions with respect to the timing and structure of the settlement.
On June 20, 2018, GW Holdings Group, Inc. (“GW”) filed a lawsuit against the Company, in which GW alleges that the Company breached two Stock Purchase Agreements that GW entered into with the Company. On February 16, 2021, the Company received notice that a default judgment had been entered against it in the Southern District of New York. The total amount of the judgment was for $348,548. Currently, GW has converted its entire position and there is no outstanding indebtedness.
On September 21, 2018, Pro Drive Outboards, LLC (“Pro-Drive”) filed a lawsuit against the Company, in which Pro-Drive alleges that the Company breached a contract that Pro-Drive entered into with the Company. Pro-Drive is seeking damages in excess of $500,000. The Company has filed an answer, including the defenses of defective service of process and statute of limitations, and the case is currently pending. Because this case has not progressed beyond a motion to dismiss, and any pending outcome is currently unknown the Company has not accrued any amount related to this lawsuit. Management does not view this as being a potential liability. This claim relates to events in the 2010-2012 time line, discussions with management at that time, indicates there is no basis for their claims.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our common stock trades on the OTC Marketplace operated by the OTC Markets Group, Inc., or “OTC,” under the ticker symbol “CZNI.”
Our shares are subject to Section 15(g) and Rule 15g-9 of the Securities and Exchange Act, commonly referred to as the “penny stock” rule. The rule defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. These rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock and may affect the ability of shareholders to sell their shares. Broker-dealers who sell penny stocks to persons other than established customers and accredited investors must make a special suitability determination for the purchase of the security. Accredited investors, in general, include individuals with assets in excess of $1,000,000 (not including their personal residence) or annual income exceeding $200,000 or $300,000 together with their spouse, and certain institutional investors. The rules require the broker-dealer to receive the purchaser’s written consent to the transaction prior to the purchase and require the broker-dealer to deliver a risk disclosure document relating to the penny stock prior to the first transaction. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security. Finally, monthly statements must be sent to customers disclosing recent price information for the penny stocks.
Registered Holders
As of the date of this report, there were 114 record holders of our common stock and 8,490,963,483 shares were in the public float
Dividends
Holders of the Company’s common stock are entitled to receive such dividends as may be declared by our Board of Directors. No dividends on the Company’s common stock have ever been paid, and the Company does not anticipate that dividends will be paid on its common stock in the foreseeable future.
Securities Authorized for issuance under equity compensation plans.
No securities are authorized for issuance by the Company under equity compensation plans.
Unregistered Sales of Equity Securities and Use of Proceeds
During the year ended December 31, 2021, we issued securities that were not registered under the Securities Act, and were not previously disclosed in a Current Report on Form 8-K as listed below. Except where noted, all of the securities discussed in this Item 5 were issued in reliance on the exemption under Section 4(a)(2) of the Securities Act.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. RESERVED
NONE

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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
The following discussion and analysis of the results of operations and financial condition for the years ended December 31, 2021 and 2020 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements that are included elsewhere in this Annual Report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. See “Forward-Looking Statements.”
Compensation Expense
Compensation expense for the twelve months ended December 31, 2021 and 2020 was $120,000. This is for the base salary of our Chief Executive, Conrad R. Huss
Consulting Expense
Consulting expenses were $300,000 for the year ended December 31, 2021 compared to $225,000 for the year ended December 31, 2020. The $75,000 increase was due to the fact that the consulting contract was outstanding for the entire twelve months while it was outstanding only for nine months during 2020.
On November 1, 2021, the Company signed a new consulting agreement with Frondeur Partners, LLC, a Nevada entity, to provide consulting services for a term lasting one year for a fee of $25,000 per month. The contract will renew automatically each year unless either party decides to terminate. Services to be provided include:
a) Preparation of financial statements
b) Preparation of SEC Reporting
- Quarterly reporting
- Annual reporting
- Form 8-Ks
c) Interaction with firm’s auditors
d) Evaluation of merger partners
- Financial modelling
- Transaction negotiation
e) Any other needed financial service
General and Administrative Expenses
General and Administrative expenses were $43,769 for the year ended December 31, 2021 compared to $272,324 for the year ended December 31, 2020. The decrease was principally due to a Debt reconciliation was $257,324. Upon reconciling the balances of amounts owed to Oasis Capital, LLC, it was determined that the balance was understated by $257,324. This correction was made in the fourth quarter of 2020.
Professional Fees
Professional fees for the year ended December 31, 2021 were $39,000 compared to $48,325 for the year ended December 31, 2020. Professional fees consist mostly of legal, accounting and audit fees.
Other Income (Expense)
Other Income (expense) for the year ended December 31 2021 was ($1,050,379) compared to ($1,775,704) for the year ended December 31, 2020. The break-out of Other Income (Expense) is as follows;
Difference
Interest expense $ (1,038,632 ) $ (611,789 ) $ (426,853 )
Change in fair value of derivative liabilities (741,027 ) (1,837,933 ) 1,096,906
Loss on debt litigation (See Note 11) (266,412 ) - (266,412 )
Debt reconciliation - (257,324 ) 257,324
Gain on new methodology for accounting for debt conversion features 995,692 - 995,692
Gain on extinguishment of debt and accrued interest - 931,342 (931.342 )
Total $ (1,050,379 ) $ (1,775,704 ) $ 725,325
Interest expense was greater by $426,853 in 2021 due to increased debt levels and interest expense arising from the write-off of the third-party debt and lower amortization of debt discount.
Change in fair value of derivative liabilities was approximately $1.1 million improved as convertible debt instruments are now recorded as put premium on stock settled debt.
Net Loss
The Company had a net loss of ($1,553,148) for the year ended December 31, 2021, as compared to ($2,184,029) for the year ended December 31, 2020. Of the loss in 2021, approximately ($500,000) was due to operations and the remainder was due primarily to interest expenses, derivative expenses on convertible debt, partially offset by the gain on new methodology for accounting for debt conversion features
Liquidity and Capital Resources
For the year ended December 31, 2021, we used $65,289 in operating activities compared to $37,600 used in the prior year.
For the year ended December 31, 2021, we generated $71,000 through financing activities compared to $37,600 in the year ended December 31, 2020. The increase in funds was due greater funds from financings as the Company evaluates its operating options.
The Company currently owes $254,400 on notes payable, all of which are in default, and $857,483 for outstanding convertible notes. The majority of the notes payable are in default.
Going Concern
The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going-concern basis. The going concern basis assumes that assets are realized, and liabilities are extinguished in the ordinary course of business at amounts disclosed in the consolidated financial statements. The Company has incurred recurring losses from operation and does not currently have revenue generating operations. The Company has an accumulated deficit of approximately $83 million, and a net loss for the year ended December 31, 2021 of $1.5 million. Of the loss, approximately $500,000 was due to operations and the remainder was due primarily to interest expense, the write-off of receivables and the loss on the issuance of preferred stock, partially offset by the gain on extinguishment of debt. The Company’s ability to continue as a going concern depends upon its ability to obtain adequate funding to support its operations through continuing investments of debt and/or equity by qualified investors/creditors, internally generated working capital and monetization of intellectual property assets. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management is currently pursuing a business strategy which includes raising the necessary funds to finance the Company’s development and marketing efforts.
There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or available from external sources such as debt or equity financings, or other potential sources. The inability to generate cash flow from operations or to raise capital from external sources will force the Company to substantially curtail and cease operations, therefore, having a material adverse effect on its business. Furthermore, there can be no assurance that any funds, if available, will possess attractive terms or not have a significant dilutive effect on the Company’s existing stockholders.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are not required to provide the information required by this Item because we are a smaller reporting company.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Operations for the Twelve Months Ended December 31, 2021 and 2020
Consolidated Statements of Stockholders’ Deficit for the Twelve Months Ended December 31, 2021 and 2020
Consolidated Statements of Cash Flows for the Twelve months Ended December 31, 2021 and 2020
Notes to the Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Cruzani, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Cruzani, Inc. as of December 31, 2021 and 2020, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. 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 audit 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 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 audit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audit 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 audit provides a reasonable basis for our opinion.
Critical Audit Matter
Critical audit matters are matters arising from the current-period audit of the 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 financial statements and (2) involved our especially challenging, subjective, or complex judgments.
We determined that there are no critical audit matters.
/S/ BF Borgers CPA PC
We have served as the Company’s auditor since
Lakewood, CO
April 22, 2022
PCAOB ID 5041.
Cruzani, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Audited)
December 31,
December 31,
ASSETS
Cash and cash equivalents
$ 5,711
$ -
Total Assets
$ 5,711
$ -
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable
$ 326,400
$ 326,400
Accrued liabilities
1,142,563
1,150,820
Accrued officer compensation
412,000
292,000
Convertible Notes, net of discounts of $69,993 and $77,004, respectively
609,600
1,391,432
Derivative liabilities
-
2,140,159
Put premium on stock settled debt
226,314
-
Loans payable
254,500
254,500
Total Current Liabilities
2,971,377
5,555,311
Total Liabilities
2,971,377
5,555,311
Commitments and Contingencies (Note 12)
-
-
STOCKHOLDERS’ DEFICIT:
Series A Preferred stock, 3,500,000 shares authorized, par value $0.01; 3,381,520 shares issued and outstanding
33,815
33,815
Series B Preferred stock, 10,000 shares authorized, par value $0.01; 5,000 shares issued and outstanding
Series C Preferred stock, 10,000,000 shares authorized, par value $0.01; 5,000,000 shares issued and outstanding
50,000
50,000
Series D Preferred stock, 125,000 shares authorized, par value $0.0001; 125,000 shares issued and outstanding
Series E Preferred stock, 500,000 shares authorized, par value $0.01; - and 34,985 shares issued and outstanding; respectively
-
34,985
Series E Preferred stock to be issued
166,331
166,331
Common stock 3,000,000,000 shares authorized, $0.00001 par value; 7,966,206,521 and 1,339,044,282 shares issued and outstanding, respectively at December 31, 2021 and December 31, 2020
79,662
13,390
Treasury stock, at cost - 2,917 shares
(773,500 )
(773,500 )
Additional paid in capital
80,790,803
76,679,297
Accumulated deficit
(83,312,839 )
(81,759,691 )
Total Stockholders’ Deficit
(2,965,665 )
(5,555,311 )
Total Liabilities and Stockholders’ Deficit
$ 5,711
$ -
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Cruzani, Inc. and Subsidiaries
Consolidated Statements of Operations
(Audited)
For the
Twelve Months Ended
December 31,
Operating Expenses:
Compensation expense
$ 120,000
$ 120,000
Consulting expense
300,000
225,000
General and administrative
43,769
272,324
Professional fees
39,000
48,325
Total operating expenses
502,769
665,649
Loss from operations
(502,769 )
(665,649 )
Other Income (Expense):
Interest expense
(1,038,632 )
(611,789 )
Change in fair value of derivatives
(741,027 )
(1,837,933 )
Loss on debt litigation
(266,412 )
Gain on new methodology for accounting for debt conversion features
995,692
Gain on extinguishment of debt and accrued interest
-
931,342
Total other income (expense)
(1,050,379 )
(1,518,380 )
Loss before provision for income taxes
(1,553,148 )
(2,184,029 )
Provision for income taxes
-
-
Net Loss
$ (1,553,148 )
$ (2,184,029 )
Basic loss per share
$ (0.01 )
$ (0.01 )
Basic weighted average shares outstanding
4,811,860,024
488,903,229
The accompanying notes are an integral part of these consolidated financial statements.
Cruzani, Inc. and Subsidiaries
Consolidated Statement of Changes in Stockholders’ Deficit
For the Twelve Months Ended December 31, 2021
(Unaudited)
Series A
Series B
Series C
Series D
Series E
Series E
Preferred Stock
Additional
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
to be issued
Common Stock
Paid-In
Treasury
Accumulated
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Stock
Deficit
Total
Balance December 31, 2020
3,381,520
$ 33,815
5,000
$
5,000,000
$ 50,000
125,000
$
34,985
$ 34,985
-
$ 166,331
1,339,044,281
$ 13,390
$ 76,679,297
$ (773,500 )
$ (81,759,691 )
$ (5,555,310 )
Shares issued for extinguishment of convertible debt
-
-
-
-
-
-
-
-
1,042,231,035
10,422
1,092,823
-
-
1,103,246
Shares issued for extinguishment of Convertible Preferred stock
(20,370 )
(20,370 )
49,871,795
19,871
-
-
-
Net loss
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,195,836 )
(1,195,836 )
Balance March 31, 2021
3,381,520
$ 33,815
5,000
$
5,000,000
$ 50,000
125,000
$
14,615
$ 14,615
-
$ 166,331
2,431,147,111
$ 24,311
$ 77,791,992
$ (773,500 )
$ (82,955,527 )
$ (5,647,901 )
Shares issued for extinguishment of convertible debt
-
-
-
-
-
-
-
-
1,231,213,640
12,312
1,163,128
-
-
1,175,440
Shares issued for extinguishment of Convertible Preferred stock
(14,615 )
(14,615 )
39,371,795
15,246
-
-
1,025
Net loss
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
722,486
722,486
Balance, June 30, 2021
3,381,520
$ 33,815
5,000
$
5,000,000
$ 50,000
125,000
$
-
-
-
$ 166,331
3,701,732,545
$ 37,017
$ 78,970,365
$ (773,500 )
$ (82,233,040 )
$ (3,748,949 )
Shares issued for extinguishment of convertible debt
-
-
-
-
-
-
-
-
-
-
-
-
2,204,397,685
22,044
1,231,302
-
-
1,253,346
Net loss
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(493,643 )
(493,643 )
Balance September 30, 2021
3,381,520
$ 33,815
5,000
$
5,000,000
$ 50,000
125,000
$
-
$ -
-
$ 166,331
5,906,130,230
$ 59,061
$ 80,201,668
$ (773,500 )
$ (82,726,684 )
$ (2,989,247 )
Shares issued for extinguishment of convertible debt
-
-
-
-
-
-
-
-
-
-
-
-
2,060,076,291
20,601
589,135
-
-
609,736
Net loss
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(586,155 )
(586,155 )
Balance December 31, 2021
3,381,520
$ 33,815
5,000
$
5,000,000
$ 50,000
125,000
$
-
$ -
-
$ 166,331
7,966,206,521
$ 79,662
$ 80,790,803
$ (773,500 )
$ (83,312,839 )
$ (2,965,666 )
Cruzani, Inc. and Subsidiaries
Consolidated Statement of Changes in Stockholders’ Deficit
For the Twelve months Ended December 31, 2020
(Unaudited)
Series A
Series B
Series C
Series D
Series E
Series E
Preferred Stock
Additional
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
to be issued
Common Stock
Paid-In
Treasury
Accumulated
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Stock
Deficit
Total
Balance December 31, 2019
3,381,520
$ 33,815
5,000
$
5,000,000
$ 50,000
125,000
$
34,985
$ 34,985
$ 166,331
297,041,945
$ 2,970
$ 75,958,049
$ (773,500 )
$ (79,575,663 )
$ (4,102,950 )
Net loss
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(130,188 )
(130,188 )
Balance March 31, 2020
3,381,520
33,815
5,000
5,000,000
50,000
125,000
34,985
34,985
-
166,331
297,041,945
2,970
75,958,049
(773,500 )
(79,705,850 )
(4,233,138 )
Shares issued for extinguishment of convertible debt
-
-
-
-
-
-
-
-
73,343,869
31,998
-
-
32,731
Net loss
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(332,448 )
(332,448 )
Balance, June 30, 2020
3,381,520
$ 33,815
5,000
$
5,000,000
$ 50,000
125,000
$
34,985
$ 34,985
-
$ 166,331
370,385,814
$ 3,704
$ 75,990,047
$ (773,500 )
$ (80,038,298 )
$ (4,532,854 )
Shares issued for extinguishment of debt and accrued interest
-
-
-
-
-
-
-
-
-
-
-
-
205,217,291
2,052
148,119
-
-
150,172
Net loss
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(343,357 )
(343,357 )
Balance September 30, 2020
3,381,520
$ 33,815
5,000
$
5,000,000
$ 50,000
125,000
$
34,985
$ 34,985
-
$ 166,331
575,603,105
$ 5,756
$ 76,138,167
$ (773,500 )
$ (80,381,656 )
$ (4,726,040 )
Shares issued for extinguishment of debt and accrued interest
-
-
-
-
-
-
-
-
-
-
-
-
763,441,176
7,634
541,130
-
-
548,764
Net loss
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,378,035 )
(1,378,035 )
Balance December 31, 2020
3,381,520
$ 33,815
5,000
$
5,000,000
$ 50,000
125,000
$
34,985
$ 34,985
-
$ 166,331
1,339,044,282
$ 13,390
$ 76,679,297
$ (773,500 )
$ (81,759,691 )
$ (5,555,311 )
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Cruzani, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Audited)
For the
Years Ended
December 31,
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss
$ (1,553,148 )
$ (2,184,029 )
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivatives
741,027
1,837,933
Loss on debt litigation
266,412
-
Gain on new methodology for accounting for debt conversion features
(995,692 )
-
Elimination of debt discount
70,789
-
Interest expense from incursion of put premium on newly issued debt
75,286
-
Fees on extinguishment of debt
17,480
15,225
Original issue discount charged to interest expense
1,000
-
Reconciliation of debt balances
(4,000 )
257,824
Issuance of non-cash consulting notes
300,000
225,000
Debt discount amortization
100,358
131,143
Gain on extinguishment of debt and accrued interest
(931,342 )
(931,342 )
Changes in Operating Assets and Liabilities:
Other assets
-
-
Accounts payable
-
10,000
Accrued interest
795,199
480,647
Accrued officer compensation
120,000
120,000
Net Cash Used in Operating Activities
(65,289 )
(37,600 )
CASH FLOWS FROM INVESTING ACTIVITIES:
-
-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible debt
71,000
37,600
Proceeds from loans
-
-
Preferred stock sold for cash
-
-
Net Cash Provided by Financing Activities
71,000
37,600
Net Increase (Decrease) in Cash
-
-
Cash at Beginning of Year
5,711
-
Cash at End of Year
$ 5,711
$ -
Cash paid during the period for:
Interest
$ -
$ -
Income taxes
$ -
$ -
Supplemental disclosure of non-cash activity:
Common stock issued for conversion of debt and accrued interest
$ 359,596
$ 155,432
The accompanying notes are an integral part of these consolidated financial statements.
Cruzani, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2021 and 2020
NOTE 1 - BACKGROUND
Organization
Cruzani, Inc. (“Cruzani” or the “Company”) is currently evaluating strategic options. We have divested ourselves of our current assets and are currently performing due diligence on a wide variety of alternatives. Most recently, we were a franchise development company that builds and represents popular franchise concepts, and other related businesses, throughout the United States as well as international markets. The Company was originally formed as a limited liability company on February 5, 1999 under the name The Powerhouse, L.L.C. pursuant to the laws of the State of Oklahoma. On November 9, 2006, Powerhouse Productions, L.L.C. filed Articles of Conversion changing the entity from a limited liability company to a corporation under the name Harcom Productions, Inc. On January 25, 2010, Articles of Merger were filed with the State of Oklahoma merging U.S. Highland, Inc., an Oklahoma corporation into Harcom Productions, Inc. and the name of the corporation was changed to US Highland, Inc. US Highland, Inc. was a recreational power sports Original Equipment Manufacturer (“OEM”), developing motorcycles, quads, single cylinder engines, and v-twin engines under its own brand and for other OEMs. During 2017, the Company exited the recreational power sports OEM and leisure activity vehicles markets.
On June 29, 2018, the Company filed Amended and Restated Articles of Incorporation with the State of Nevada to change its name to Cruzani, Inc. The name change is subject to approval by the Financial Industry Regulatory Authority (known as “FINRA”).
On June 30, 2018, Supreme Sweets Acquisition Corp. (n/k/a Oventa, Inc.), a subsidiary of the Company, and the Company (collectively, the “Company”) entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Supreme Sweets Inc. and 2498411 Ontario, Inc., as sellers (collectively, the “Seller”), pursuant to which in exchange for CAD $200,000 and a twenty percent (20%) interest in Oventa, Inc., the Company agreed to acquire the trade secret assets of Seller upon the terms and subject to the conditions set forth in the Asset Purchase Agreement. A second closing occurred on July 31, 2018, pursuant to which the Company acquired the furniture, fixtures and equipment of Seller in exchange for CAD $100,000. Seller is engaged in the business of preparing delicious snacks, pastries and baked goods with high quality ingredients for exceptional taste, including low calorie and gluten-free alternatives. The Asset Purchase Agreement included a provision, pursuant to which the Company could unwind the transaction if certain milestones were not achieved. The milestones contemplated in the Asset Purchase Agreement were not met, and accordingly, on December 31, 2018, by written notice to the Seller, the Company unwound the transaction. The capital injected into Oventa, Inc., however, has been secured pursuant to financing statements filed on behalf of the Company, and the Company expects to receive a return of its injected capital of approximately US $339,813 during the calendar year 2019. Collectability is based on claims filed for cash that was paid.
On September 27, 2018, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Sandrea Gibson, as seller (the “Seller”), and Recipe Food Co., as the target (the “Target”), pursuant to which in exchange for up to CAD $237,000, the Company agreed to acquire 80% of the issued and outstanding stock of the Target from the Seller upon the terms and subject to the conditions set forth in the Stock Purchase Agreement. Seller is engaged in the business of preparing and serving delicious, healthy meals on a counter-service basis with high quality ingredients, including low calorie alternatives. Difficulties integrating the Target into the Company group, which forced the Company to cease injecting additional capital into the Target. The Target is currently on the market for disposition to a third-party buyer on an arms-length basis, which the Company can undertake due to its supermajority ownership.
On July 8, 2019, Mr. Dickson entered into a Securities Purchase Agreement (“Purchase Agreement”) with Conrad Huss to sell 5,000,000 shares of Series C Preferred and 5,000 shares of Series B preferred Stock held by Mr. Dickson. As a result, Mr. Huss acquired the right to vote 99.06 % of the voting control of the Company. The Series B Preferred Stock is also convertible into common stock which, in the aggregate, would represent up to .01% of the outstanding common stock after the conversion. The Series B Preferred Stock is also convertible into common stock which, in the aggregate, would represent up to 99.05% of the outstanding common stock after the conversion.
On July 8, 2019, Everett Dickson, who had been the sole officer of the Company, resigned as an officer of the Company, and Conrad Huss was appointed the Interim President and Chief Executive Officer of the Company. Mr. Huss is the sole beneficial owner of 5,000,000 and 5,000 shares of Series B and C Preferred Stocks, respectively. Mr. Dickson also resigned as a director of the Company, effective on July 8th, 2019. Mr. Dickson’s resignation was not the result of any disagreement with the management of the Company
In June 2021, the Company reincorporated in the state of Wyoming.
Business
Cruzani, Inc. is currently evaluating various strategic options to engage in.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These unaudited consolidated condensed financial statements should be read in conjunction with the audited financial statements and footnotes for the year ended December 31, 2020 included on the Company’s Form 10-K.
In the opinion of management, all adjustments necessary to present fairly the financial position as of December 31, 2021 and the results of operations and cash flows presented herein have been included in the financial statements. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results of operations for the full year.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.
Reclassifications
Certain reclassifications have been made to the prior year financial information to conform to the presentation used in the financial statements for the twelve months ended December 31, 2021. There is no effect on the accumulated deficit as the result of these reclassifications.
Principles of Consolidation
The accompanying unaudited interim consolidated condensed financial statements include the accounts of the Company. All financial information has been prepared in conformity with accounting principles generally accepted in the United States of America. All significant intercompany transactions and balances have been eliminated.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.
The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at December 31, 2021 and December 31, 2020.
Convertible Notes with Fixed Rate Conversion Options
The Company may enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding principal and accrued interest may be converted by the holder, into common shares at a fixed discount to the market price of the common stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. The Company records the convertible note liability at its fixed monetary amount by measuring and recording a premium, as applicable, on the note date with a charge to interest expense in accordance with ASC 480 - “Distinguishing Liabilities from Equity”.
Recently issued accounting pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 - GOING CONCERN
The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going-concern basis. The going concern basis assumes that assets are realized, and liabilities are extinguished in the ordinary course of business at amounts disclosed in the consolidated financial statements. The Company has incurred recurring losses from operation and does not currently have revenue generating operations. The Company has an accumulated deficit of $83,312,839, and a net loss for the year ended December 31, 2021 of ($1,553,148). However, the Company only used approximately $65,000 to conduct its operations as detailed in the Statement of Cash flows. The Company’s ability to continue as a going concern depends upon its ability to obtain adequate funding to support its operations through continuing investments of debt and/or equity by qualified investors/creditors, internally generated working capital and monetization of intellectual property assets. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management is currently pursuing a business strategy which includes raising the necessary funds to finance the Company’s development and marketing efforts.
NOTE 4 - LOANS PAYABLE
The loan payable balances are as follows:
Rate
December 31,
December 31,
Loan 1
1%
$ 27,000
$ 27,000
Loan 2
1%
3,000
3,000
Loan 3
8%
64,000
39,000
Loan 4
8%
160,500
155,400
Total
$ 254,500
$ 224,400
Above notes are past due as of the issuance of these financial statements.
NOTE 5 - NOTES PAYABLE
The following table summarizes the convertible notes as of December 31, 2021 and December 31, 2020:
Date
Interest
Maturity
December 31,
December 31,
Creditor
Issued
Rate
Date
Travel Data Solutions, Inc.
18-Nov-17
%
30-Nov-19
$ 100,000
$ 100,000
(1) GW Holdings Group
(1)
(1
)
(1)
-
60,750
Travel Data Solutions, Inc.
18-Jan-19
%
31-Jan-20
25,000
25,000
Oasis Capital, LLC
(2)
(2
)
(2)
-
1,020,086
Trillium Partners, LP
(3)
(3
)
(3)
-
-
Livingston Asset Management, LLC
1-Apr-20
%
31-Dec-20
-
25,000
Livingston Asset Management, LLC
1-May-20
%
31-Jan-21
-
25,000
Livingston Asset Management, LLC
20-May-20
%
20-Feb-21
10,000
10,000
Livingston Asset Management, LLC
1-Jun-20
%
10-Mar-21
-
25,000
Livingston Asset Management, LLC
11-Jun-20
%
01-Feb-21
1,100
1,100
Livingston Asset Management, LLC
1-Jul-20
%
31-Mar-21
-
25,000
Livingston Asset Management, LLC
20-Jul-20
%
20-Apr-21
4,500
4,500
Livingston Asset Management, LLC
1-Aug-20
%
30-Apr-21
-
25,000
Livingston Asset Management, LLC
14-Aug-20
%
14-May-21
9,500
9,500
Livingston Asset Management, LLC
24-Aug-20
%
24-May-21
12,500
12,500
Livingston Asset Management, LLC
1-Sep-20
%
30-Jun-21
-
25,000
Livingston Asset Management, LLC
1-Oct-20
%
31-Jul-21
25,000
25,000
Livingston Asset Management, LLC
1-Nov-20
%
30-Aug-21
25,000
25,000
Livingston Asset Management, LLC
1-Dec-20
%
30-Sep-21
25,000
25,000
Livingston Asset Management, LLC
1-Jan-21
%
31-Oct-21
25,000
-
Livingston Asset Management, LLC
1-Feb-21
%
30-Nov-21
25,000
-
Livingston Asset Management, LLC
1-Mar-21
%
31-Dec-21
25,000
-
Trillium Partners, LP
24-Mar-21
%
31-Dec-21
17,000
-
Livingston Asset Management, LLC
1-Apr-21
%
31-Jan-22
25,000
-
Livingston Asset Management, LLC
1-May-21
%
28-Feb-22
25,000
-
Trillium Partners, LP
25-May-21
%
25-May-22
22,000
-
Livingston Asset Management, LLC
1-Jun-21
%
31-Mar-22
25,000
-
Livingston Asset Management LLC
1-Jul-21
%
30-Apr-22
25,000
-
Trillium Partners, LP
6-Jul-21
%
06-Jul-22
22,000
-
Livingston Asset Management LLC
1-Aug-21
%
31-May-22
25,000
-
Livingston Asset Management LLC
1-Sep-21
%
30-Jun-22
25,000
-
Livingston Asset Management LLC
1-Oct-21
%
31-Jul-22
25,000
-
Frondeur Partners LLC
1-Nov-21
%
31-Aug-22
25,000
-
Oscaleta Partners, LLC
17-Nov-21
%
22-Jul-22
11,000
-
Frondeur Partners LLC
1-Dec-21
%
30-Sep-22
25,000
-
$ 609,600
$ 1,468,436
Less: discount
-
(77,004 )
Convertible notes payable-net
$ 609,600
$ 1,391,432
(1) GW Holdings Group
Balance after settlement (See Footnote 12)
$ 348,548
Less; Conversions during year
(348,548 )
Balance at December 31, 2021
$ -
(2) Oasis Capital, LLC (See Note Six below)
Balance at Decembe 31, 2020
$ 1,020,086
Conversions
(370,086 )
Total sold to Trillium Partners LP
(650,000 )
Remaining balance at December 31, 2021
$ -
(3) Trillium Partners, LP
Debt purchased from Oasis Capital, LLC during 2021
$ 650,000
Conversions
(650,000 )
Balance at December 31, 2021
$ -
NOTE 6 - CONTINGENCY ARISING INDEBTEDNESS OWED TO OASIS CAPITAL, LLC
A contingency arises when there is a situation for which the outcome is uncertain, and which should be resolved in the future, Generally Accepted Accounting Principles require recognition of only those losses that are probable and for which a loss amount can be reasonably estimated.
The following details the nature of the contingency with Oasis Capital LLC (“Oasis”). In the normal course of its business, Oasis files notices to convert (“conversion notices”) a portion of its outstanding ownership of the Company’s indebtedness into shares of common stock. As a customary procedure for the annual audit for the period ended December 31, 2020, the Company’s auditors confirmed its outstanding balance of the indebtedness and related accrued interest. During the year ended December 31, 2021, Oasis submitted conversions which stated that the outstanding indebtedness was far greater than that which was on the Company’s books. The total amount of the increased indebtedness was approximately $1.2 million. After investigation, the Company determined that the difference related to liquidated damages that the Company does not believe that it owes.
Since the Company believes that the loss is not probable and no litigation has been pursued at this time, there has been no recognition of this liability on the books and records of the Company.
NOTE 7 - PUT PREMIUM ON STOCK SETTLED DEBT
At the end of the quarter ended September 30, 2021, the Company decided to adopt ASC 480- “Distinguishing Liabilities from Equity.” When the enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding principal and accrued interest may be converted by the holder, into common shares at a fixed discount to the market price of the common stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. The Company records the convertible note liability at its fixed monetary amount by measuring and recording a premium, as applicable, on the note date with a charge to interest expense.
In previous quarters, the Company had recorded such items as derivative liabilities (See Note 8). Thusly, there was a charge to put premium on stock settled debt and a decrease to derivative liability. On a going-forward basis, all put premiums will be charged to interest expense.
Put premium by individual debt instrument follows below:
Date
Maturity
Discount
Put premum on stock settled
Creditor
Issued
Date
30-Jun-21
Percentage
debt
Travel Data Solutions, Inc.
18-Nov-17
30-Nov-19
$ 100,000
-
$ -
GW Holdings Group
Various
Various
-
%
-
Travel Data Solutions, Inc.
18-Jan-19
31-Jan-20
25,000
-
-
Oasis Capital, LLC
Various
Various
%
-
Trillium Partners LP
-
Livingston Asset Management, LLC
20-May-20
20-Feb-21
10,000
%
10,000
Livingston Asset Management, LLC
11-Jun-20
01-Feb-21
1,100
%
1,100
Livingston Asset Management, LLC
20-Jul-20
20-Apr-21
4,500
%
4,500
Livingston Asset Management, LLC
14-Aug-20
14-May-21
9,500
%
9,500
Livingston Asset Management, LLC
24-Aug-20
24-May-21
12,500
%
12,500
Livingston Asset Management, LLC
1-Oct-20
31-Jul-21
25,000
%
10,714
Livingston Asset Management, LLC
1-Nov-20
30-Aug-21
25,000
%
10,714
Livingston Asset Management, LLC
1-Dec-20
30-Sep-21
25,000
%
10,714
Livingston Asset Management, LLC
1-Jan-21
31-Oct-21
25,000
%
10,714
Livingston Asset Management, LLC
1-Feb-21
30-Nov-21
25,000
%
10,714
Livingston Asset Management, LLC
1-Mar-21
31-Dec-21
25,000
%
10,714
Trillium Partners, LP
24-Mar-21
31-Dec-21
17,000
%
17,000
Livingston Asset Management, LLC
1-Apr-21
31-Jan-22
25,000
%
10,714
Livingston Asset Management, LLC
1-May-21
28-Feb-22
25,000
%
10,714
Trillium Partners, LP
25-May-21
25-May-22
22,000
%
-
Livingston Asset Management, LLC
1-Jun-21
31-Mar-22
25,000
%
10,714
Livingston Asset Management LLC
01-Jul-21
30-Apr-22
25,000
%
10,714
Trillium Partners, LP
06-Jul-21
06-Jul-22
22,000
%
-
Livingston Asset Management LLC
01-Aug-21
31-May-22
25,000
%
10,714
Livingston Asset Management LLC
01-Sep-21
30-Jun-22
25,000
%
10,714
Livingston Asset Management LLC
01-Oct-21
31-Jul-22
25,000
%
10,714
Frondeur Partners LLC
01-Nov-21
31-Aug-22
25,000
%
10,714
Oscaleta Partners, LLC
17-Nov-21
22-Jul-22
11,000
%
11,000
Frondeur Partners LLC
01-Dec-21
30-Sep-22
25,000
%
10,714
Put premium on stock settled debt
$ 609,600
$ 226,314
NOTE 8 - DERIVATIVE LIABILITIES
The embedded conversion options of the Company’s convertible debentures summarized in Note 5, and its convertible preferred Series E stock. contain conversion features that qualify for embedded derivative classification. The fair value of these liabilities is re-measured at the end of every reporting period and the change in fair value is reported in the statement of operations as a gain or loss on derivative financial instruments. Commencing with the third quarter of 2021, the Company changed its accounting treatment for such securities by recording the derivative feature as a put premium on stock settled debt. See Note 7 above for further discussion.
The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities:
Derivative liability at March 31, 2021
$ 2,246,072
Less; conversions
(642,794 )
Add: new debt issuances
49,143
Transfer to put premium
(1,652,421 )
Derivative liability at December 31, 2021
$ -
The Company uses Level 3 inputs for its valuation methodology for its conversion option liabilities as their fair values were determined by using the Binomial option pricing model based on various assumptions. The model incorporates the price of a share of the Company’s common stock (as quoted on the Over the Counter Bulletin Board), volatility, risk free rate, dividend rate and estimated life. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As, required, these are classified based on the lowest level of input that is significant to the fair value measurement.
The following table shows the assumptions used in the calculations of its derivatives:
Expected
Volatility
Risk-free
Interest Rate
Expected
Dividend Yield
Expected Life
(in years)
At December 31, 2020
251.93 %
.62 %
%
0.25 - 0.75
NOTE 9 - COMMON STOCK
Reincorporation in State of Wyoming
On June 21, 2021, the Company received approval from the State of Wyoming to reincorporate in that state and increase its authorized share count to 10,000,000,000. In March 2022, the Company received permission to increase its authorized shares outstanding to 20,000,000,000.
As of December 31, 2021, there were 7,966,206,521 shares of common stock outstanding. Assuming full dilution of all preferred stock and convertible debt, the total shares outstanding at December 31, 2021 would have been 11,834,593,150 as follows (excluding warrants which would have minimal impact):
Common stock outstanding 7,966,206,521
Full conversion of preferred stock 2,053,815,200
Full conversion of convertible debt 1,814,571,429
Total 11,834,593,150
During the year ended December 31, 2021, the Company issued 6,437,918,650 shares of common stock for the extinguishment of $1,844,127 of convertible debt, $432,578 of accrued interest and $16,455 in fees as follows:
Creditor
Date
Shares
Principal
Accrued interest
Fees
Total
Oasis Capital LLC
14-Jan-21
132,565,384
$ 29,827
$ -
$ -
$ 29,827
Oasis Capital LLC
27-Jan-21
98,310,546
22,120
-
22,220
Oasis Capital LLC
10-Feb-21
155,422,101
41,964
-
-
41,964
GW Holdings Group LLC
02-Mar-21
20,203,797
10,000
-
-
10,000
Oasis Capital, LLC
08-Mar-21
175,494,746
71,075
-
-
71,075
GW Holdings Group LLC
09-Mar-21
3,818,181
2,520
-
-
2,520
Trillium Partners LLC
10-Mar-21
86,508,841
-
37,039
1,025
38,064
Trillium Partners LLC
12-Mar-21
86,900,826
42,000
9,550
1,025
52,575
Trillium Partners LLC
19-Mar-21
89,695,455
58,000
1,025
59,199
Oasis Capital LLC
19-Mar-21
193,311,158
95,689
-
-
95,689
Oasis Capital LLC
06-Apr-21
203,298,776
91,484
-
-
91,484
Trillium Partners LLC
12-Apr-21
92,267,673
25,000
24,722
1,025
50,747
Oasis Capital LLC
26-Apr-21
50,000,000
20,250
-
-
20,250
Oasis Capital LLC
04-May-21
50,000,000
20,250
-
-
20,250
Trillium Partners LLC
29-Apr-21
53,055,556
25,000
1,025
26,263
Trillium Partners LLC
05-May-21
80,857,455
-
38,994
1,030
40,024
Oasis Capital LLC
22-Jun-21
296,999,838
106,919
-
-
106,919
Trillium Partners LLC
22-Jun-21
229,656,566
100,000
12,650
1,030
113,680
GW Holdings Group Inc
30-Jun-21
175,077,777
63,028
-
-
63,028
GW Holdings Group Inc
02-Jul-21
61,666,666
22,200
-
-
22,200
Trillium Partners LP
06-Jul-21
348,195,964
86,000
104,478
1,030
191,508
Trillium Partners LP
13-Jul-21
209,870,909
114,000
1,030
115,429
GW Holdings Group Inc
14-Jul-21
85,555,555
30,800
-
-
30,800
GW Holdings Group Inc
19-Jul-21
187,500,000
60,000
-
-
60,000
GW Holdings Group Inc
27-Jul-21
125,000,000
40,000
-
-
40,000
Trillium Partners LP
02-Aug-21
349,108,591
45,500
107,078
1,030
153,608
GW Holdings Group Inc
02-Aug-21
187,500,000
60,000
-
-
60,000
Oasis Capital, LLC
02-Aug-21
150,000,000
47,250
-
-
47,250
GW Holdings Group Inc
02-Aug-21
100,000,000
20,000
-
-
20,000
Oasis Capital, LLC
03-Sep-21
150,000,000
33,750
-
-
33,750
Oasis Capital, LLC
21-Sep-21
150,000,000
33,750
-
-
33,750
Oasis Capital, LLC
01-Oct-21
150,000,000
33,750
-
-
33,750
GW Holdings Group Inc
05-Oct-21
100,000,000
20,000
-
-
20,000
Oasis Capital, LLC
13-Oct-21
150,000,000
33,750
-
-
33,750
Livingston Asset Management LLC
19-Oct-21
87,643,429
25,000
4,645
1,030
30,675
Oasis Capital, LLC
22-Oct-21
150,000,000
33,750
-
-
33,750
Livingston Asset Management LLC
26-Oct-21
88,715,857
25,000
5,021
1,030
31,051
Livingston Asset Management LLC
26-Oct-21
87,021,143
25,000
4,427
1,030
30,457
Livingston Asset Management LLC
27-Oct-21
85,995,686
25,000
4,068
1,030
30,098
Livingston Asset Management LLC
27-Oct-21
84,903,714
25,000
3,686
1,030
29,716
Livingston Asset Management LLC
27-Oct-21
83,827,371
25,000
3,310
1,030
29,340
Oasis Capital, LLC
28-Oct-21
200,000,000
-
45,000
-
45,000
Trillium Partners LP
01-Nov-21
591,969,091
154,500
-
-
154,500
Oasis Capital, LLC
19-Nov-21
200,000,000
-
27,000
-
27,000
Total
6,437,918,650
$ 1,844,127
$ 432,578
$ 16,455
$ 2,293,160
NOTE 10 - WARRANTS
In connection with the issuance of the convertible note (the “Note”) with L2 Capital, LLC (“L2”) and funding of the initial tranche of $50,000 on the Note, the Company also issued a common stock purchase warrant to purchase up to 381,905 shares of the Company’s common stock pursuant to the terms therein as a commitment fee. At the time that each subsequent tranche under the Note is funded by L2 in cash, then on such funding date, the warrant shares shall immediately and automatically be increased by the quotient of 100% of the face value of the respective tranche and 110% of the VWAP of the common stock on the Trading Day (as defined in the Note) immediately prior to the funding date of the respective tranche. As of December 31, 2021, the Company had received multiple tranches for which it issued warrants to purchase shares of the Company’s common stock.
These warrants have a variable exercise price per the above and expire in five years. The aggregate fair value of the warrants, which was allocated against the debt proceeds totaled $280,438 based on the Black Scholes Merton pricing model using the following estimates: exercise price ranging from $0.001 - 0.0071, 2.80% - 2.94% risk free rate, 252.42 - 258.24% volatility and expected life of the warrants of 5 years. The fair value was credited to additional paid in capital and debited to debt discount to be amortized over the term of the loan.
A summary of the status of the Company’s outstanding stock warrants and changes during the periods is presented below:
Shares
available to
purchase with
warrants
Weighted
Average
Price
Weighted
Average
Fair Value
Outstanding, December 31, 2019
22,669,092
$ .0011
$ .0014
Issued
-
$ -
$ -
Exercised
-
$ -
$ -
Forfeited
-
$ -
$ -
Expired
-
$ -
$ -
Outstanding, December 31, 2019
22,669,092
$ 0.0011
$ 0.0014
Issued
-
$ -
$ -
Exercised
-
$ -
$ -
Forfeited
-
$ -
$ -
Expired
-
$ -
$ -
Outstanding, December 31, 2020
22,669,092
$ 0.0011
$ 0.0014
Exercisable, December 31, 2020
22,669,092
$ 0.0011
$ 0.0014
The Company uses Level 3 inputs for its valuation methodology for its conversion option liabilities as their fair values were determined by using the Binomial option pricing model based on various assumptions. The model incorporates the price of a share of the Company’s common stock (as quoted on the Over the Counter Bulletin Board), volatility, risk free rate, dividend rate and estimated life. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As, required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations:
Range of Exercise Prices
Number Outstanding
12/31/2021
Weighted Average
Remaining Contractual Life
Weighted Average
Exercise Price
$ 0.001 - 0.0071
22,669,092
1.69 years
$ 0.0011
NOTE 11 - PREFERRED STOCK
Series A Convertible Preferred Stock, has a par value of $0.01, may be converted at the holder’s election into shares of common stock at the conversion rate of ten shares of common stock for one share of Series A Preferred Stock. Each share is entitled to 10 votes, voting with the common stock as a single class, has liquidation rights of $2.00 per share and is not entitled to receive dividends. As of December 31, 2021, and December 31, 2020, there are 3,381,520 and 3,381,520 shares of Series A preferred stock outstanding, respectively.
Series B Convertible Preferred Stock, has a par value of $0.01, may be converted at the holder’s election into shares of common stock at the conversion rate of 4,000 shares of common stock for one share of Series B Preferred Stock. Each share is entitled to 4,000 votes, voting with the common stock as a single class, has liquidation rights of $0.01 per share and is not entitled to receive dividends. As of December 31, 2021, and December 31, 2020, there are 5,000 and 5,000 shares of Series B preferred stock outstanding, respectively.
Series C Convertible Preferred Stock, has a par value of $0.01, may be converted at the holder’s election into shares of common stock at the conversion rate of 400 shares of common stock for one share of Series C Preferred Stock. Each share is entitled to 400 votes, voting with the common stock as a single class, has liquidation rights of $0.01 per share and is entitled to receive four hundred times the dividends declared and paid with respect to each share of Common Stock. As of December 30, 2021, and December 31, 2020, there are 5,000,000 and 5,000,000 shares of Series C preferred stock outstanding, respectively.
Series D Convertible Preferred Stock, has a par value of $0.0001, may be converted at a ratio of the Stated Value plus dividends accrued but unpaid divided by the fixed conversion price of $0.0015, which conversion price is subject to adjustment. Series D is non-voting, has liquidation rights to be paid in cash, before any payment to common or junior stock, 140% of the Stated Value ($2.00) per share plus any dividends accrued but unpaid thereon and is entitled to 8% cumulative dividends. As of December 30, 2021, and December 31, 2020, there are 125,000 and 125,000 shares of Series D preferred stock outstanding, respectively.
Series E Convertible Preferred Stock, has a par value of $0.001, and a stated value of $1.00 per share, subject to adjustment. The shares of Series E Convertible Preferred Stock can convert at a conversion price that is equal to the amount that is 61% of the lowest trading price of the Company’s common stock during the 20 trading days immediately preceding such conversion. The shares of Series E Convertible Preferred Stock are subject to redemption by the Company at its option from the date of issuance until the date that is 180 days therefrom, subject to premium that ranges from 120% to 145%, increasing by 5% during each 30-day period following issuance. Series E carries a 12% cumulative dividend, which will increase to 22% upon an event of default, is non-voting, and has liquidation rights to be paid in cash, before any payment to common or junior stock.
On July 1, 2018, the Company entered into a Stock Purchase Agreement with Device Corp. (“Device”) whereby Device will purchase up to $250,000 Series E preferred stock for $1 per share. As of December 31, 2021, the Company has received $166,331 for the purchase of the Series E. Originally, these purchases were recorded as debt because the Preferred shares were not issued. As of the Balance sheet date and the date of this report, these shares have not been issued to the Purchaser.
On January 15, 2019, the Company entered into a Stock Purchase Agreement with Geneva Roth Remark Holdings, Inc. (“Geneva”) whereby Geneva will purchase 53,000 shares of Series E preferred stock for $53,000.During th4e first quarter of Fiscal 2021, Geneva sold their position to Trillium Partners, LP (“Trillium”) On March 25, 2021, Trillium converted 20,370 shares of Series E preferred stock into 49,871,795 shares of common stock. As of December 31, 2021, and December 31, 2020, there are -0-and 34,985 shares of Series E preferred stock outstanding, respectively.
As of December 30, 2021, all classes of convertible preferred stock were convertible into 2,053,815,200 shares of common stock.
NOTE 12 - RELATED PARTY TRANSACTIONS
On July 8, 2019, the Company executed an employment agreement with Conrad Huss, the new CEO. The agreement provides for a salary of $10,000 per month. As of December 31, 2021, $412,000 has been credited to accrued compensation.
NOTE 13 - LOSS ON DEBT LITIGATION
On February 16, 2021, the Company received notice that a default judgment had been entered against it in the Southern District of New York. The total amount of the judgment was for $348,548. The Company incurred a loss on the settlement as follows:
Accrued
Date of Note
Note
Interest
Total
17-May-16
$ 24,000
$ 11,106
$ 35,106
16-Mar-18
36,750
10,280
47,030
$ 60,750
$ 21,386
$ 82,136
Total settlement amount
$ 348,548
Balance
$ 82,136
$ 266,412
NOTE 14 - GAIN ON NEW METHODOLOGY FOR ACCOUNTING FOR DEBT CONVERSION FEATURES
The Company changed its accounting for the methodology for debt conversion features as stated in Note 6- Put premium on stock settled debt. An one-time gain of $995,692 was recorded in regards to the transition.
NOTE 15 - WRITE-OFF OF THIRD-PARTY NOTE
On July 25, 2013, the Company entered into a convertible promissory note (“Note”), in the amount of $500,000 and warrants to purchase 12,500,000 shares of company common stock, of which 10,000,000 of those warrants were exercisable at $0.05 per share and 2,500,000 of the warrants were exercisable at $0.10 per share. The Note has an interest rate of 8% per annum and a maturity date of July 31, 2014.
On July 25, 2013, the Company entered into a convertible promissory note (“Note”), in the amount of $500,000 and warrants to purchase 10,197,916 shares of company common stock, of which 8,158,333 of those warrants were exercisable at $0.05 per share and 2,039,583 of the warrants were exercisable at $0.10 per share. The Note has an interest rate of 8% per annum and a maturity date of July 31, 2014.
The Company has continued filing reports with the SEC and will be current with the SEC again in the near future, as well as having maintained its active status with the Nevada Secretary of State, since that time. We are currently in contact with the current management of the Company who have provided us with documentation as to the above noted amounts.
The Company has stated and records and filings show that the Notes were due and payable as of July 31, 2014 at the latest, and that no payments have been made and that no statements that the Company has renewed the note have been agreed to.
The New York Statute of Limitations provides, in relevant part:
Section 213: Actions to be commenced within six years: where not otherwise provided for; on contract; on sealed instrument; on bond or note, and mortgage upon real property; by state based on misappropriation of public property; based on mistake; by corporation against director, officer or stockholder; based on fraud. The following actions must be commenced within six years.
Section 213(2). an action upon a contractual obligation or liability, express or implied, except as provided in section two hundred thirteen-a of this article or article 2 of the uniform commercial code or article 36-B of the general business law;
Based on the New York Statute of Limitations, it is our view that the above referenced Note is no longer enforceable obligations under New York law as it became past due no later than July 31, 2014, more than six (6) years ago.
[CPLR 213(2)]
Nevada
Nevada also has a five (5) year statute of limitations for written contracts. Nevada Statutes Title VIII Section 95.11(2)(b). Wherein it states in pertinent part: “A legal or equitable action on a contract, obligation, or liability founded on a written instrument” As such the Note being due as of July 31, 2014, would also be time-barred under Nevada Law.
Conclusion
Based on the New York and Nevada Statute of Limitations, it is our view that the above referenced Note is no longer an enforceable obligation under New York or Nevada law as it became past due no later than July 31, 2014, more than six (6) years ago.
The balance of the Note was $500,000 and accrued interest was $431,342. Therefore, the total gain was $931,342.
NOTE 16 - COMMITMENTS AND CONTINGENCIES
During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with FASB ASC 450-20-50, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals.
On September 21, 2018, Pro Drive Outboards, LLC (“Pro-Drive”) filed a lawsuit against the Company, in which Pro-Drive alleges that the Company breached a contract that Pro-Drive entered into with the Company. Pro-Drive is seeking damages in excess of $500,000. The Company has filed an answer, including the defenses of defective service of process and statute of limitations and a motion to dismiss. The judge granted a motion to dismiss, and the plaintiff’s deadline to appeal has passed, thus concluding the matter. contingent liabilities that should be reflected in the financial statements.
On February 13, 2017, Baum Glass & Jayne PLLC (“Plaintiff”) obtained a default judgment against the Company in the amount of $27,083.74. Plaintiff has not attempted enforced collection. The amount was included in accounts payable as of December 30, 2021 and December 31, 2020.
NOTE 17 - INCOME TAX
In accordance with ASC 740, we are required to recognize the impact of an uncertain tax position in the consolidated financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. An uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained upon examination by the tax authorities. We had no unrecognized tax benefits from uncertain tax positions as of December 31, 2020 and 2019. It is also our policy, in accordance with authoritative guidance, to recognize interest and penalties related to income tax matters in interest and other expense in our Statements of Operations.
Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. As a result of our cumulative losses, management has concluded that a full valuation allowance against our net deferred tax assets is appropriate.
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of 21% is being used from 2018 due to the new tax law recently enacted.
The provision for income taxes on our loss from continuing operations for the fiscal years ended December 31, 2021 and 2020 are as follows:
Book net income
$ (1,553,148 )
$ (2,184,029 )
Less:
Change in Fair value of derivatives
741,027
1,837,933
Amortization of discount on convertible debt
100,358
100,358
Gain on transfer of methodology to put premium
(995,692 )
-
Interest expense for incursion of put premium to stock settled debt
75,286
-
Taxable net income
$ (1,632,169 )
$ (245,738 )
Change in Valuation allowance
426,567
64,224
Income tax expense based on taxable net income
(426,567 )
(64,224 )
Income tax expense
-
-
Note: The marginal tax rate is calculated as follows:
Statutory rate
Federal income tax rate
21.0 %
21.0 %
Incremental New York State rate
6.5 %
6.5 %
Impact of Federal rate on New York State rate
-1.4 %
-1.4 %
Marginal income tax rate
26.1 %
26.1 %
NOTE 18 - COVID-19
The Company, like all enterprises, is currently dealing with the impact of COVID-19 on future prospects. Recent events such as the vaccinations mitigate, but do not eliminate, the possible adverse consequences to the domestic and international economies. Recent increases in the Delta Variant of COVID-19 have resulted in greater infections and its ultimate impact cannot be ascertained
NOTE 19 - IMPACT OF CLIMATE CHANGE
The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related financial information. The TCFD requires that the impact of climate change upon risk assessment, capital allocation and strategic planning be discussed.
At this time, the impact cannot be determined.
NOTE 20 - SUBSEQUENT EVENTS
Extinguishment of debt
Subsequent to December 31, 2021, the Company extinguished $67,000 of debt principal plus $11,873 of accrued interest and incurred $9,885 in fees for the issuance of 526,589,733 shares as follows:
Creditor
Date
Shares
Principal
Accrued interest
Fees
Total
Livingston Asset Management LLC
07-Mar-22
154,190,143
$ 25,000
$ 4,085
$ 3,295
$ 32,380
Livingston Asset Management LLC
07-Mar-22
152,370,190
25,000
3,703
3,295
31,998
Trillium Partenrs, LP
07-Mar-22
220,029,400
17,000
4,085
3,295
24,380
526,589,733
$ 67,000
$ 11,873
$ 9,885
$ 88,758
Subsequent to December 31, 2021 the Company issued $75,000 of convertible debt as follows:
Date
Interest
Maturity
Creditor
Issued
Rate
Date
Amount
Frondeur Partners LLC
1-Jan-22
%
01-Oct-22
$ 25,000
Frondeur Partners LLC
01-Feb-22
%
01-Nov-22
25,000
Frondeur Partners LLC
01-Mar-22
%
01-Dec-22
25,000
Frondeur Partners LLC
01-Apr-22
%
01-Jan-23
25,000
$ 100,000

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On February 14, 2020, Cruzani, Inc. (the “Registrant”) dismissed Fruci & Associates II, PLLC (“Fruci & Associates II, PLLC”) as Independent Registered Public Accountants. On February 14, 2020, the Board of Directors of the Company authorized the dismissal.
During the fiscal year ended December 31, 2018 and through Fruci & Associates II, PLLC’s dismissal on February 14, 2020, there were (1) no disagreements with Fruci & Associates II, PLLC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Fruci & Associates II, PLLC would have caused Fruci & Associates II, PLLC to make reference to the subject matter of the disagreements in connection with its reports, and (2) no events of the type listed in paragraphs (A) through (D) of Item 304(a)(1)(v) of Regulation S-K.
We furnished Fruci & Associates II, PLLC with a copy of this disclosure on February 14, 2020, providing Fruci & Associates II, PLLC with the opportunity to furnish the Company with a letter addressed to the SEC stating whether it agrees with the statements made by us herein in response to Item 304(a) of Regulation S-K and, if not, stating the respect in which it does not agree. A copy of Fruci & Associates II, PLLC’s letter to the SEC is filed as Exhibit 16.1 on the Company’s form 8-K filed with the Securities and Exchange Commission on February 18, 2020.
Furthermore, on February 13, 2020, the Registrant engaged BF Borgers CPA PC as its new independent registered public accounting firm beginning with the period ended June 30, 2019. The change in the Registrant’s independent registered public accounting firm was approved by the board of directors. During the most recent fiscal year and through the date of this Current Report, neither the Registrant nor anyone on its behalf consulted with BF Borgers CPA PC regarding any of the following:
(i) The application of accounting principles to a specific transaction, either completed or proposed;
(ii) The type of audit opinion that might be rendered on the Registrant’s financial statements, and none of the following was provided to the Registrant:
(a) a written report; or
(b) oral advice that BF Borgers CPA PC concluded was an important factor considered by the Registrant in reaching a decision as to an accounting, auditing or financial reporting issue; or
(iii) Any matter that was subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event, as described in Item 304(a)(1)(v) of Regulation S-K.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
As required by the SEC Rules 13a-15(b) and 15d-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.
To address these material weaknesses, management engaged financial consultants, performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.
Management’s Annual Report on Internal Control Over Financial Reporting.
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”) for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but 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.
Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018. The framework used by management in making that assessment was the criteria set forth in the document entitled “2013 Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, management concluded that, during the period covered by this report, such internal controls and procedures were not effective as of December 31, 2018 and that material weaknesses in ICFR existed as more fully described below.
A material weakness is a deficiency, or a combination of deficiencies, within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard AS 2201, 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. Management has identified the following material weaknesses which have caused management to conclude that as of December 31, 2018 our internal controls over financial reporting were not effective at the reasonable assurance level:
1. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the year ended December 31, 2018. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
2. We do not have sufficient resources in our accounting function, which restricts the Company’s ability to gather, analyze and properly review information related to financial reporting in a timely manner. As a result, as of the date of filing, we have not completed our ASC 606 implementation process and, thus, cannot disclose the quantitative impact of adoption on our financial statements. In addition, due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
3. We have inadequate controls to ensure that information necessary to properly record transactions is adequately communicated on a timely basis from non-financial personnel to those responsible for financial reporting. Management evaluated the impact of the lack of timely communication between non-financial personnel and financial personnel on our assessment of our reporting controls and procedures and has concluded that the control deficiency represented a material weakness.
4. Certain control procedures were unable to be verified due to performance not being sufficiently documented. As an example, some procedures requiring review of certain reports could not be verified due to there being no written documentation of such review. Management evaluated the impact of its failure to maintain proper documentation of the review process on its assessment of its reporting controls and procedures and has concluded deficiencies represented a material weakness.
We intend to continue to address these weaknesses as resources permit.
Notwithstanding the assessment that our ICFR was not effective and that there are material weaknesses as identified herein, we believe that our consolidated financial statements contained in this Annual Report fairly present our financial position, results of operations and cash flows for the years covered thereby in all material respects.
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 as we are a smaller reporting company and are not required to provide the report.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except the implementation of the controls identified above.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
None.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Our current directors and executive officers and their ages as of March 31, 2019 are listed below. The number of directors is determined by the Board. All directors hold office until the next annual meeting of the board or until their successors have been duly elected and qualified. Officers are elected by the Board and their terms of office are, except to the extent governed by employment contract, at the discretion of the Board.
Name
Age
Position
Director Since
Conrad R Huss
President and Chief Executive Officer
June, 2019
Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified. Directors are elected by a plurality of the votes cast at the annual meeting of stockholders and hold office until the expiration of the term for which he or she was elected and until a successor has been elected and qualified.
A majority of the authorized number of directors constitutes a quorum of the Board of Directors for the transaction of business. The directors must be present at the meeting to constitute a quorum. However, any action required or permitted to be taken by the Board of Directors may be taken without a meeting if all members of the Board of Directors individually or collectively consent in writing to the action.
Executive officers are appointed by, and serve at the pleasure of, the Board of Directors of the Company, subject to any contractual arrangements.
Conrad R Huss, President and Chief Executive
Mr. Huss, 71, serves as the sole officer and director of the Company. Mr. Huss is a financial professional with over 25 years of investment banking and operating experience. Most recently, he was with Ocean Cross Capital Markets, as Senior Managing Director from 2011 to 2013. Previously, Mr. Huss served as the Senior Managing Director at Southridge Investment Group from 2006 to 2011. We believe Mr. Huss is qualified to serve as a director of the Company due to his financial and operational experience.
Director Independence
We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the Board of Directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors.”
Family Relationships
There are no familial relationships among any of our directors or officers.
Involvement in Certain Legal Proceedings
None of our directors or executive officers has been involved in any of the following events during the past ten years:
● any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
● any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
● being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; or
● being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
Audit Committee
We currently do not have a separately standing Audit Committee due to our limited size. Our Board performs the functions that would otherwise be performed by an Audit Committee.
Compensation Committee
The Company does not have a Compensation Committee due to our limited size and our Board performs the functions that would otherwise be performed by a Compensation Committee. Our Board intends to form a Compensation Committee when needed.
Other Committees
We do not currently have a separately-designated standing nominating committee. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations. The entire Board of Directors performs all functions that would otherwise be performed by committees. Given the present size of our Board, it is not practical for us to have committees other than those described above, or to have more than two directors on such committees. If we are able to grow our business and increase our operations, we intend to expand the size of our board and our committees and allocate responsibilities accordingly.
Potential Conflicts of Interest
Because we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. The Board of Directors has not established an audit committee and does not have a financial expert, nor has the Board established a nominating committee. The Board is of the opinion that such committees are not necessary since the Company has only five directors, and to date, such directors have been performing the functions of such committees. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executive officers or directors.
Significant Employees
We do not have any significant employees other than our current executive officers and directors named in this Report.
Code of Ethics
We have not yet adopted a code of business conduct and ethics. We intend to do so in the near future and to post it on our website at www.cruzani.com.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and directors, and persons who own more than ten percent (10%) of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission (“SEC”). Officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on our review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the reports required to be filed with respect to transactions in our common stock during the fiscal year ended December 31, 2018, were timely.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation
The following information concerns the total compensation paid or accrued by the Company during the last two fiscal years indicated to (i) all individuals that served as the Company’s principal executive officer or acted in a similar capacity for the Company at any time during the fiscal years ended December 31, 2019 and 2018; (ii) the two most highly compensated executive officers who were serving as executive officers of the Company at the end of the fiscal years ended December 31, 2020 and 2019 whose total compensation exceeded $100,000; and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to clause (ii) above but for the fact that the individual was not serving as an executive officer of the Company at the end of the fiscal year ended December 31, 2020.
Conrad R Huss, the Company’s principal executive officer and sole officer of the Company, received $60,000 and $0, respectively, for compensation during the fiscal years ended December 31, 2019 and 2018.
Mr. Huss replaced Everett M. Dickson as Chief Executive Officer in 2019. Everett M. Dickson was the Company’s principal executive officer and sole officer of the Company throughout all of 2018 and portions of 2019. He, received $52,000 and $120,000, respectively, for compensation during the fiscal years ended December 31, 2019 and 2018. Mr. Dickson also received 5,000,000 shares of its Series C Preferred stock for services rendered in 2018. The stock was valued based on the services performed for total non-cash expense of $120,000.
Director Compensation
The Company’s directors, including the Chairman of the Board, do not receive compensation for their services as such. The Registrant reimburses the directors for their reasonable out-of-pocket expenses for attending meetings of the Board of Directors.
Long-Term Incentive Plans
As of December 31, 2020, the Company had no group life, health, hospitalization, or medical reimbursement or relocation plans in effect. Further, the Company had no pension plans or plans or agreements which provide compensation on the event of termination of employment or corporate change in control.
Securities Authorized for Issuance under Equity Compensation Plans
We have not adopted any equity compensation plans.
Changes in Control
We are not aware of any arrangements, including any pledge by any person of our securities, the operation of which may result in a change in control of the Company. Effective December 31, 2017, however, pursuant to our Articles of Incorporation, our Board has been granted the authority, without further stockholder approval, to provide for the issuance of up to 3,550,000 shares of our preferred stock in one or more series and to determine the dividend rights, conversion rights, voting rights, rights in terms of redemption, liquidation preferences, the number of shares constituting any such series and the designation of such series. Our Board has the power to afford preferences, powers and rights (including voting rights) to the holders of any preferred stock preferences, such rights and preferences being senior to the rights of holders of common stock. As of December 31, 2018, 865,000 shares of “blank check” preferred stock remain available for designation and issuance. Although we have no present intention to issue any additional shares of preferred stock, the issuance of shares of preferred stock, or the issuance of rights to purchase such shares, may have the effect of delaying, deferring or preventing a change in control of our Company.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following tables set forth certain information regarding our shares of Common Stock beneficially owned as of December 31, 2019, for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding shares of Common Stock, (ii) each named executive officer and director, and (iii) all executive officers and directors as a group. A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants. Unless otherwise indicated, voting and investment power relating to the shares shown in the tables for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.
For purposes of these tables, a person or group of persons is deemed to have “beneficial ownership” of any shares of Common Stock that such person has the right to acquire within 60 days of March 31, 2019. For purposes of computing the percentage of outstanding shares of our Common Stock held by each person or group of persons, any shares that such person or persons has the right to acquire within 60 days of March 31, 2019 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Cruzani, Inc., 208 E. 51 Street, Suite 208, NYC, NY 10022
Common Stock
Series A
Preferred Stock
Series B
Preferred Stock
Series C
Preferred Stock
Name and Address of Beneficial Owner(1)
Amount
Percent of
Class
Amount
Percent of
Class
Amount
Percent of
Class
Amount
Percent of
Class
Officers & Directors:
Conrad R Huss
Chief Executive Officer, Interim Chief Financial Officer and Sole Director(2)
-
-
-
-
-
-
5,000,000
50.0 %
All Directors and Officers as a group (1 person)
-
-
-
-
-
-
5,000,000
50.0 %
5% Stockholders:
* Less than 1%
Series D
Preferred Stock
Series E
Preferred Stock
Name and Address of Beneficial Owner(1)
Amount
Percent of
Class
Amount
Percent of
Class
5% Stockholders:
L2 Capital, LLC
8900 State Line Rd.,
Suite 410 Leawood, Kansas
125,000
100.0 %
-
-
(1) Applicable percentages are based on 297,041,945 shares of our common stock and calculated as required by rules promulgated by the SEC.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Under Item 404 of Regulation S-K, we are required to describe any transaction, since the beginning of December 31, 2015, or any currently proposed transaction, in which the Company was or is to be a participant and in which any related person has or will have a direct or indirect material interest involving the lesser of $120,000 or one percent (1%) of the average of the Company’s total assets as of the end of last two completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company’s Common Stock, or an immediate family member of any of those persons.
Conrad R Huss has an Employment agreement which pays him $120,000 annually. To date, his entire salary has been accrued.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
BF Borgers CPA PC served as our independent registered public accountants for the year ended December 31, 2019.
Audit Fees
For the Company’s fiscal years ended December 31, 2021 we were billed approximately $25,000 for professional services rendered by our independent auditors for the audit and review of our financial statements.
Audit Related Fees
There were no fees for audit related services rendered by our independent auditors or the years ended December 31, 2021 and 2020.
Tax Fees
There were no fees for professional services rendered by our independent auditors for tax compliance, tax advice, and tax planning for the year ended December 31, 2021
All Other Fees
There were no other fees for services rendered by our independent auditors for the year ended December 31, 2020.
Pre-Approval Policies
a. Audit Services
There is no Audit Committee. the Board of Directors will approve that all audit services to be performed by the primary external auditor will be performed pursuant to a written engagement letter which outlines the scope and nature of the services and the fees to be paid for such services, and review the annual audit engagement terms and related fees to see if any change in terms, conditions and fees needed resulting from changes in audit scope.
In addition to the annual audit services engagement, the Board of Directors may grant pre-approval for other audit services, which are those services that only the independent auditor can reasonably provide. The Audit Committee has pre-approved the audit services listed in Appendix A. All other audit services not listed in Appendix A must be separately pre-approved by the Audit Committee.
b. Audit-Related Services
Audit-related services, including internal control-related services, are assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and/or the Company’s internal control over financial reporting and that are traditionally performed by the independent auditor. The Board of Directors believes that the provision of the audit-related services does not impair the independence of the auditor and is consistent with the SEC’s rules on auditor’s independence. The Board of Directors has pre-approved the audit-related services.
c. Non-audit services
The Audit Committee may grant preapproval for those permissible non-audit services classified as all other services that it believes would not impair the independence of the auditor and that are consistent with SEC’s rules on auditor independence, including those that are routine and recurring services.
All requests for non-audit services to be provided by the independent director that are not included in the pre-approval policy will be approved by the Board of Directors and include a detailed description of the services.
A list of the Securities and Exchange Commission’s (“SEC”) prohibited non-audit services is attached to this Preapproval Policy as Exhibit 1. The Company will not engage its independent auditor for such services. The rules of the SEC and the Public Company Accounting Oversight Board (“PCAOB”) should be consulted to determine whether there are possible exceptions of the prohibitions.
d. Delegation of Authority
As provided in the Act, the Board of Directors may delegate pre-approval authority to one or more of its members. The Chairman of the Board of Directors is authorized to give specific pre-approval to any audit or non-audit services to be provided by the independent auditor. The Board of Directors does not delegate to management its responsibilities to pre-approve services performed by the independent auditor. All pre-approval decisions must be reported to the Board of Directors at its next scheduled meeting for informational purpose only.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
Exhibit Number
Title of Document
Location
2.1
Asset Purchase Agreement, dated as of June 30, 2018, by and among Supreme Sweets Acquisition Corp. and US Highland, Inc., collectively as buyer, and Supreme Sweets, Inc. and 2498411 Ontario, Inc., collectively as seller
(incorporated herein by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed with the Commission on July 11, 2018)
3.1
Amended and Restated Articles of Incorporation
Incorporated by reference from the current report on Form 8-K filed July 11, 2018.
3.2
By-laws
Incorporated by reference from Form SB-2 filed on December 27, 2006.
3.3
Series A Preferred Stock Designation
Incorporated by reference from Exhibit 3.1 to the current report on Form 8-K filed October 9, 2015.
3.4
Series B Preferred Stock Designation
Incorporated by reference from Exhibit 3.1 to the current report on Form 8-K filed November 23, 2015.
3.5
Series C Preferred Stock Designation
Incorporated herein by reference from the Registration Statement on Form S-1 filed September 20, 2018
3.6
Series D Preferred Stock Designation
Incorporated herein by reference from the Registration Statement on Form S-1 filed September 20, 2018
3.7
Series E Preferred Stock Designation
Incorporated herein by reference to Exhibit 3.5 of the Company’s Quarterly Report on Form 10-Q filed November 15, 2018
3.8
Amendment to Articles of Incorporation of the Company
Incorporated herein by reference to Exhibit 3.4 of the Company’s Quarterly Report on Form 10-Q filed November 15, 2018
4.1
Registration Rights Agreement, dated as of July 23, 2018, by and between Cruzani, Inc. and L2 Capital, LLC.
Incorporated herein by reference to Exhibit 4.8 of the Company’s Current Report on Form 8-K filed with the Commission on August 6, 2018
10.1
Stock Purchase Agreement, dated as of March 8, 2018, by and among the Company as buyer, TruFood Provisions Co., as the target, and Device Corp., as seller.
Incorporated by reference from the current report on Form 8-K filed March 14, 2018.
10.2
Equity Purchase Agreement, dated March 20, 2018
Incorporated by reference from the current report on Form 8-K filed March 22, 2018.
10.3
Form of Promissory Note by and between the Company and holder, dated May 10, 2018
Incorporated by reference from the current report on Form 8-K filed May 29, 2018.
10.4
Form of Stock Purchase Agreement by and between the Company and holder, dated May 10, 2018
Incorporated by reference from the current report on Form 8-K filed May 29, 2018.
10.5
Form of Warrant Agreement by and between the Company and Holder, dated May 10, 2018
Incorporated by reference from the current report on Form 8-K filed May 29, 2018.
10.6
Asset Purchase Agreement, dated as of June 30, 2018, by and among Supreme Sweets Acquisition Corp. and the Company, collectively as buyer, and Supreme Sweets, Inc. and 2498411 Ontario, Inc., collectively as seller
Incorporated by reference from the current report on Form 8-K filed July 11, 2018.
10.7
Registration Rights Agreement, dated as of July 23, 2018, by and between the Company and L2 Capital, LLC
Incorporated by reference from the current report on Form 8-K filed August 6, 2018.
10.8
Equity Purchase Agreement, dated as of July 23, 2018, by and between the Company and L2 Capital, LLC
Incorporated by reference from the current report on Form 8-K filed August 6, 2018.
21.1
Schedule of Subsidiaries
Incorporated herein by reference from the Registration Statement on Form S-1 filed September 20, 2018
31*
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32*
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350.
101.INS*
Inline XBRL Instance Document.**
**
101.SCH*
Inline XBRL Taxonomy Extension Schema Document.**
**
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document.**
**
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document.**
**
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document.**
**
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document.**
**
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).**
**
† To be filed by amendment.
* Filed herewith.
** In accordance with Rule 406T of Regulation S-T, this information is deemed not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.