NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION AND ORGANIZATION

Liberated Solutions, Inc. (the “Company”) was incorporated in Nevada on September 14, 2010 under the name Mega World Food Holdings Company.

On January 19, 2013, pursuant to a Common Stock Purchase Agreement, dated January 7, 2013, Perpetual Wind Power Corporation acquired 24,500,000 non-registered shares (representing 98% of the outstanding shares) of the Company. Thereafter, the Company acquired from Perpetual Wind Power Corporation its patented wind and solar powered turbine technology for 2,500,000 newly issued shares of the Company which were distributed in a dividend to its shareholders and Perpetual Wind Power Corporation returned to treasury its 24,500,000 shares it had acquired. As a result of this transaction, the Company had on January 19, 2013, 3,000,000 shares issued and outstanding. On February 14, 2013, the Company changed its name from Mega World Food Holding Company to Liberated Energy, Inc. and effected a 24-for-1 stock split, pursuant to which the Company’s outstanding shares increased from 3,000,000 to 72,000,000.

On January 19, 2013, the Company disposed of its wholly owned subsidiary, Mega World Food Limited (HK). Mega World Food Limited (HK) was incorporated on September 24, 2010. From inception, Mega World Food Limited (HK) only incurred setting up, formation or organization activities. Upon disposal, the Company ceased these operations and accordingly, the Company’s financial statements have been prepared with the net assets, results of operations, and cash flows of this business displayed separately as “discontinued operations.”

On February 4, 2015, the Company increased its authorized preferred shares from 10,000,000 to 100,000,000 and authorized common shares from 250,000,000 to 900,000,000.

On July 6, 2016, the Company effected a 1-for-3,500 reverse split of the Company’s common stock.

On September 14, 2016, the Company entered into an agreement with Ron Knori, owner of EcoCab Portland, LLC (“EcoCab”), pursuant to which the Company would acquire all outstanding EcoCab membership interest for a 20% non-dilutive interest of the outstanding shares of the Company with the first closing of the agreement. As of September 30, 2019, the transaction had not closed, and there can be no assurance that the transaction will ever close. The Company is contemplating rescinding the agreement and initiating suit against Mr. Knori.

On January 27, 2017, the Company decreased its authorized shares of common stock from 10,000,000,000 to 2,000,000,000 and changed its name from Liberated Energy, Inc to The Go Eco Group.

On March 6, 2017, the Company terminated the agreements with Mr. Knori and EcoCab based upon breach of contract, fraud, fraudulent inducement, fraud in the factum, negligent misrepresentation, misrepresentation, contractual interference, breach of fiduciary duty, negligence, and conversion, all of which the Company alleges were perpetrated by Mr. Knori individually and in his capacity as manager of EcoCab.

On December 26, 2018, the Company increased its authorized shares of common stock to 6,000,000,000 from 2,000,000,000.

On August 22, 2019, the Company entered into an Exchange Agreement with Clifford Rhee, a shareholder of Ngen Technologies USA Corp, (“Ngen”), Edward Carter, a shareholder of Ngen, Peter Zimeri, a shareholder of Ngen (collectively with Messrs. Rhee and Carter, the “Shareholders”), and Brian Conway, the former CEO of the Company, pursuant to which the parties agreed that Ngen would become a wholly owned subsidiary of the Company.

The closing of the transactions required that the Company redeem from Mr. Conway 250,000 shares of Series X preferred stock, in return for $25,000 cash payment to Mr. Conway, to be paid immediately following the contribution of such amount to the Company by Ngen and (ii) the issuance to Mr. Conway of a number of shares of Company common stock constituting 2% of the issued and outstanding shares of Company common stock as of the date of the closing.

The Company acquired from the Shareholders all of the common stock of Ngen in exchange for the issuance to the Shareholders of 250,000 shares of Series X preferred stock of the Company, apportioned as follows:

Ngen was incorporated in Texas on January 19, 2015 as “Ngen Technologies, Inc”. On January 27, 2015, it changed its name to “Ngen Technologies USA Corp”. Its wholly owned subsidiary, Ngen Technologies Korea Ltd (“Ngen Korea”), was formed on July 3, 2015 in Seoul, Korea as a wholly owned subsidiary of Ngen.

As a result of the consummation of the Exchange Agreement, Ngen became our wholly owned subsidiary and the business of Ngen became the business of the Company going forward.

Basis of Presentation

The accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information required to be included in a complete set of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2019. The accompanying unaudited financial statements should be read in conjunction with the financial statements and related notes included in the Company’s 2018 Annual Report filed with the SEC for the fiscal year ended September 30, 2018.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of Ngen and its wholly owned subsidiary, Ngen Korea. All intercompany accounts, transactions, and profits have been eliminated upon consolidation. The accompanying consolidated financial statements and the notes hereto are reported in U.S. Dollars.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP 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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include, but are not limited to, the estimated useful lives of property and equipment, patent and trademark, the ultimate collection of accounts receivable and accrued expenses. Actual results could materially differ from those estimates.

Foreign Currency Transaction and Translation

Ngen Korea’s financial position and results of operations are determined using the local currency, Korean Won (“KRW”), as the functional currency. As a result, assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rates prevailing at the balance sheet date. The results of operations are translated from KWR to U.S. Dollars at the weighted average rate of exchange during the reporting period. The registered equity capital denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. All translation adjustments resulting from the translation of the financial statements into the reporting currency, U.S. Dollar, are dealt with as a component of accumulated other comprehensive income.

Restatement of Financial Information

The Company has restated the financial information for the three and nine months ended September 30, 2019 and 2018 to reflect the reverse merger of Ngen into the Company and the change of the fiscal year end from September 30 to December 31. Due to the restatement, the financial information is unaudited for the periods ended September 30, 2019 and 2018 along with the years ended December 31, 2018 and 2017.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, the price is fixed or determinable, and collectability is reasonably assured, and delivery has occurred, or services have been rendered. The Company offers N/30 and N/45 days terms with all of its customers. The Company also offers 2% discount for N/10 days payment terms. The Company does not provide for return unless the products are damaged. The Company did not have any material returns historically.

The Company includes shipping and handling costs in cost of sales. Amounts billed for shipping and handling are included with revenues in the statement of operation.

The Company recognizes an allowance for estimated future sales returns in the period revenue is recorded, based on pending returns and historical return data, among other factors. Management did not believe any allowance for sales returns was required at September 30, 2019 and 2018.

Research and Development

Research and development costs related to both future and present products are expensed as incurred. During the three and nine months ended September 30, 2019 and 2018, research and development expenditures totaled $104,755 and $355,481 in 2019 and $181,953 and $497,421 in 2018, respectively.

Cash and Cash Equivalents

The Company considers all deposits with financial institutions and all highly liquid investments with original maturities of three months or less to be cash equivalents. There were no cash equivalents at September 30, 2019 and 2018.

Accounts Receivable

Accounts receivable are carried at original invoice amount less the allowance for doubtful accounts based on a review of all outstanding amounts at year end. Management determines the allowance for doubtful accounts based on a combination of write-off history, aging analysis, and any specific known troubled accounts. Trade receivables are written off when deemed uncollectible.

Inventories

Inventories primarily consist of finished goods and are stated at actual cost which is same as the lower of cost (first-in-first-out) or market. The Company maintains an allowance for potentially excess and obsolete inventories and inventories that are carried at costs that are higher than their estimated net realizable values.

Investments

Ngen provided an investment to a privately held company, Emotek, in April 2017 and received 2,500,000 shares of Emotek common stock, which represented 50% equity of Emotek on a fully nondilutive basis. Emotek is a joint venture between Ngen and Egismos Technologies. Egismos Technologies’ mission is primarily to develop tumor detection scanner which will be handheld and used for home use. The Company applies the equity method for investments in affiliate, which a privately-held company where quoted market prices are not available, in which it has the ability to exercise significant influence over operating and financial policies of the affiliate. Significant influence is generally defined as 20% to 50% ownership in the voting stock of an investee. Under the equity method, the Company initially records the investment at cost and then adjusts the carrying value of the investment to recognize the proportional share of the equity-accounted affiliate’s net income (loss) including changes in capital of the affiliate.

Property and Equipment

Property and equipment consist of leasehold improvements, furniture and fixtures, machinery and equipment are stated at cost. Property and equipment are recorded at cost. Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the assets, generally 5-7 years. Leasehold improvements are depreciated over the shorter of the useful life of the improvement or the lease term, including renewal periods that are reasonably assured.

Impairment of Long-lived Assets

In accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 360, “Property, Plant, and Equipment,” the Company reviews for impairment of long-lived assets and certain identifiable intangibles whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. The Company considers the carrying value of assets may not be recoverable based upon our review of the following events or changes in circumstances: the asset’s ability to continue to generate income from operations and positive cash flow in future periods; loss of legal ownership or title to the assets; significant changes in our strategic business objectives and utilization of the asset; or significant negative industry or economic trends. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset are less than its carrying amount.

Fair Value of Financial Instruments

The Company records its financial assets and liabilities at fair value, which is defined under the applicable accounting standards as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measure date. The Company uses valuation techniques to measure fair value, maximizing the use of observable outputs and minimizing the use of unobservable inputs.

The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs include management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.

As of September 30, 2019 and 2018, the Company believes that the carrying value of cash, account receivables, accounts payable, accrued expenses, and other current assets and liabilities approximate fair value due to the short maturity of theses financial instruments. The consolidated financial statements do not include any financial instruments at fair value on a recurring or non-recurring basis.

The Company also has financial instruments classified within the fair value hierarchy, which consists of the following:

● Investments in privately-held companies, where quoted market prices are not available, accounted for as available-for-sale securities, classified as Level 3 within the fair value hierarchy, and are recorded as an asset on the consolidated balance sheet.

Income Taxes

The Company utilizes ASC 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes primarily relate to the recognition of debt costs and stock based compensation expense. The adoption of ASC 740-10 did not have a material impact on the Company’s results of operations or financial condition.

Segment Reporting

FASB ASC 280, Segment Reporting, requires public companies to report financial and descriptive information about their reportable operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available and that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief executive officer has been identified as the chief decision maker.

As part of the revenue recognition reporting, the Company reports revenue by geographic area. The Company sells its products on a worldwide basis. During the nine month periods ended September 30, 2019 and 2018, the Company’s revenue resulted in the following amounts geographically:

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable and other receivables arising from its normal business activities. The Company has a diversified customer base. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectable accounts and, as a consequence, believes that its accounts receivable related credit risk exposure beyond such allowance is limited.

NOTE 3- EQUITY

Common Stock

During the nine months ended September 30, 2018, the Company issued 543,089,675 shares of common stock with a value of $898,750 for convertible debt and accrued interest.

During the nine months ended September 30, 2018, the Company issued 34,220,000 shares of common stock with a value of $352,604 for services.

During the nine months ended September 30, 2018, the Company issued 34,967,557 shares of common stock with a value of $40,074 for the conversion of cashless warrants.

During the nine months ended September 30, 2019, the Company issued 2,047,694,285 shares of common stock with a value of $120,515 for convertible debt and accrued interest.

During the nine months ended September 30, 2019, the Company retired 151,674,800 shares of common stock at par valued at $151,675.

On September 16, 2019, the Company issued 69,614,937 shares of common stock (representing 2% of the outstanding shares) to a former officer and director as part of the Exchange Agreement.

Preferred Stock

On February 2, 2015, the Company issued 10,000,000 shares of Series A preferred stock to an officer and director of the Company. Each share of Series A preferred stock has 10,000 votes for all shareholder matters compared to 1 vote for each share of common stock.

On August 15, 2017, the Company’s Board of Directors adopted a resolution authorizing 10,000,000 shares of Series B, no-par value, preferred stock. The Company has not amended its articles of incorporation to reflect this resolution and none of the Series B preferred shares have been issued.

On September 16, 2019, the Company transferred 250,000 shares of Series X preferred stock to three shareholders in exchange for $25,000 paid by the three shareholders to the former officer and the issuance of 2% of the outstanding common shares to a former officer and director by the Company.

NOTE 4- WARRANTS

The Company has assumed the following warrant agreements with Carebourn, L.P., Carebourn, LLC, and More Capital, LLC:

Warrant Agreement dated June 28, 2019 with Carebourn, LLC, pursuant to which Ngen granted to Carebourn, LLC the right to purchase 306,346,979 shares of its common stock at a price of $0.0002 per share, subject to adjustment. The warrant was issued in connection with a Note Purchase Agreement dated as of June 28, 2019. Upon assumption of this warrant by Ngen, the terms of the warrant were amended so that the number of shares of Ngen common stock which may be acquired pursuant to the warrant are 900,000 at a price of $0.0681 per share.

Warrant Agreement dated July 8, 2019 with Carebourn, L.P., pursuant to which Ngen granted to Carebourn, L.P. the right to purchase 248,141,053 shares of its common stock at a price of $0.0002 per share, subject to adjustment. The warrant was issued in connection with a Note Purchase Agreement dated as of July 8, 2019 .Upon assumption of this warrant by Ngen, the terms of the warrant were amended so that the number of shares of Ngen common stock which may be acquired pursuant to the warrant are 729,000 at a price of $0.0681 per share.

Warrant Agreement dated July 24, 2019 with More Capital, LLC pursuant to which Ngen granted to More Capital, LLC the right to purchase 58,205,926 shares of its common stock at a price of $0.0002 per share, subject to adjustment. The warrant was issued in connection with a Note Purchase Agreement dated as of July 5, 2019. Upon assumption of this warrant by Ngen, the terms of the warrant were amended so that the number of shares of Ngen common stock which may be acquired pursuant to the warrant are 171,000 at a price of $0.0681 per share.

On August 13, 2019, Ngen entered into a Warrant Agreement with Carebourn, L.P., pursuant to which Ngen granted to Carebourn, L.P. the right to purchase 900,000 shares of its common stock at a price of $0.0681 per share, subject to adjustment. The warrant was issued in connection with a Note Purchase Agreement dated as of July 29, 2019.

NOTE 5– CONVERTIBLE DEBT

LG Capital Funding

On July 13, 2015, the Company issued a Convertible Note to LG Capital Funding, LLC (“LG Capital”), to replace the $41,400 convertible note issued to Eastmore Capital. The note matured on July 13, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company’s common stock for the 15 days prior to the conversion.

On August 11, 2015, the Company issued a Convertible Note to LG Capital for the principal amount of $27,500 with an interest rate of 8% per annum. The note matured on August 11, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company’s common stock for the 15 days prior to the conversion. Per the Company, the note was not funded but the Company has accrued the note and interest, totaling $31,843. LG Capital has filed a lawsuit against the Company in connection with this note and other outstanding notes. See Note 7, Litigation.

On September 8, 2015, the Company issued a Convertible Note to LG Capital for the principal amount of $27,000 with an interest rate of 8% per annum. The note matured on September 8, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company’s common stock for the 15 days prior to the conversion.

On March 14, 2016, the Company issued a Convertible Note to LG Capital for the principal amount of $18,000 with an interest rate of 12% per annum. The note matured on March 14, 2017. The note is convertible by the holder at a discount of 45% of the lowest trading price of the Company’s common stock for the 20 days prior to the conversion.

On May 26, 2016, the Company issued a Convertible Note to LG Capital for the principal amount of $17,000 with an interest rate of 12% per annum. The note matured on March 14, 2017. The note is convertible by the holder at a discount of 50% of the lowest trading price of the Company’s common stock for the 20 days prior to the conversion. Net proceeds to the Company are $15,000 after deduction of legal fees of $2,000.

On September 15, 2017, LG Capital, LLC filed a lawsuit against the Company. The filing alleges that the Company has defaulted on several unpaid loans from LG Capital to the Company with the total claim against the Company of $297,160. The Company negotiated in good faith with LG Capital to settle the debt but to no avail. After reviewing the claim filed by LG Capital, it is the opinion of Company management that the Company’s outstanding liability to LG Capital has been fully recognized and accounted for in the financial statements of the Company. (See Note 7 – Litigation)

Carebourn Capital

On September 7, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal amount of $197,363,70 less legal fees of $8,000 with an interest rate of 12% per annum. The note was scheduled to mature on September 7, 2017 but was extended in 2018 at a principal amount of $172,671. The note is convertible by the holder at a discount of 50% of the average of the lowest three trading prices of the Company’s common stock for the 20 days prior to the conversion.

On October 3, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal amount of $237,475 less an original discount of $30,975 plus transaction fees of $6,500 for a net advanced of $200,000. The note bears an interest rate of 12% per annum. The note was scheduled to mature on October 3, 2017. The note is convertible by the holder at a discount of 45% of the average of the lowest three trading prices of the Company’s common stock for the 20 days prior to the conversion. On September 15, 2016, $85,000 was returned to Carebourn, reducing the principal balance to $115,114 as of that date, however, the note was extended on April 17, 2018 at a principal amount of $230,790. An additional 10% discount applies if the common stock is only eligible for X clearing deposit.

On December 13, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal amount of $98,325 less an original discount of $12,825 for a net advanced of $80,000. The note bears an interest rate of 12% per annum. The note matured on December 13, 2018. The note is convertible by the holder at a discount of 45% of the average of the lowest three trading prices of the Company’s common stock for the 15 days prior to the conversion. The note was extended on April 17, 2018 at a principal amount of $116,888. Additional discounts of up to 15% apply if the common stock is not deliverable via DWAC and if only eligible for X clearing deposit.

Due to the default status of the Carebourn Capital notes payable, interest was accrued at an annual interest rate of 22%. The total principal balance owed on the notes at September 30, 2019 is $304,935 plus accrued interest of $13,623.

Power Up Lending

On January 4, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $35,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matured on October 15, 2018. The note is convertible by the holder at a discount of 50% of the average of the lowest three trading prices of the Company’s common stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.

On February 15, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $38,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matured on November 30, 2018. The note is convertible by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s common stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.

On March 9, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $53,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matured on December 30, 2018. The note is convertible by the holder at a discount of 42% of the lowest three trading prices of the Company’s common stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.

On March 22, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $38,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matured on December 30, 2018. The note is convertible by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s common stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.

On May 14, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $53,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matured on February 28, 2019. The note is convertible by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s common stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.

On November 19, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $25,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matured on August 30, 2019. The note is convertible by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s common stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.

As of September 30, 2019, the Company owed Power Up lending $7,820 in principal and $11,167 of accrued interest.

Crown Bridge Partners

On August 21, 2017, the Company issued a Convertible Note to Crown Bridge Partners (“Crown Bridge”) for a principal amount of $40,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matured on August 21, 2018. The note is convertible by the holder at a discount of 45% of the lowest one trading price of the Company’s common stock for the 20 days prior to the conversion.

On January 5, 2018 the Company issued a Convertible Note to Crown Bridge for a principal amount of $20,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matured on January 5, 2019. The note is convertible by the holder at a discount of 45% of the lowest one trading price of the Company’s common stock for the 20 days prior to the conversion.

On February 16, 2018, the Company issued a Convertible Note to Crown Bridge for a principal amount of $20,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matured on February 16, 2019. The note is convertible by the holder at a discount of 45% of the lowest one trading price of the Company’s common stock for the 20 days prior to the conversion.

On April 2, 2018, the Company issued a Convertible Note to Crown Bridge for a principal amount of $40,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matured on April 2, 2019. The note is convertible by the holder at a discount of 45% of the lowest one trading price of the Company’s common stock for the 20 days prior to the conversion.

The above Crown Bridge notes are subject to an additional discounts as follows: (a) 10% discount if the conversion price is equal to or less than $0.025 per share (b) 10% discount if the shares are not deliverable via DWAC (c) 10% discount if the conversion price is equal to or less than $0.01.

As of September 30, 2019, the Company owed Crown Bridge $47,026 in principal and approximately $17,636 in accrued interest.

More Capital

On January 15, 2018, the Company issued a Convertible Note to More Capital, LLC (“More”) for a principal amount of $18,975 with an interest rate of 10% per annum. The note matured on July 15, 2018. The note is convertible by the holder at a discount of 50% of the average of lowest three trading price of the Company’s common stock for the 20 days prior to the conversion.

On February 6, 2019, the Company issued a Convertible Note to More for a principal amount of $97,750, net to the Company of $75,000, with an interest rate of 10% per annum with a penalty interest rate of 22%. The note matured on August 9, 2019. The note is convertible by the holder at a discount of 50% of the average of lowest three trading price of the Company’s common stock for the 20 days prior to the conversion.

As of September 30, 2019, the Company owed More principal of $98,825 plus interest of $8,722.

Redstart Holdings Corp.

On December 20,2018, the Company issued a Convertible Note to Redstart Holdings Corp. (“Redstart”) for a principal amount of $14,000 with an interest rate of 8% per annum with a default rate of 22%. The note matures on October 30, 2019. The note is convertible by the holder at a discount of 48% of the average of lowest three trading price of the Company’s common stock for the 10 days prior to the conversion.

On April 1, 2019, the Company issued a Convertible Note to Redstart for a principal amount of $50,000 with an interest rate of 8% per annum with a default rate of 22%. The note matures on January 30, 2020. The note is convertible by the holder at a discount of 42% of the lowest one day trading price of the Company’s common stock for the 10 days prior to the conversion.

As of September 30, 2018, the Company owes Redstart $64,000 plus interest of $2,184.

On September 16, 2019, the following notes were assigned to the Company as part of the reverse merger with Ngen:

As of September 30, 2019, the Company owes convertible note holders $6,398,545 in principal and $92,377 in interest for a total of $6,490,922.

NOTE 6- FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES

As defined in FASB ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

The three levels of the fair value hierarchy are as follows:

As of September 30, 2019, the Company believes the amounts reported for cash, payables, accrued liabilities and amounts due to related parties approximate their fair values due to the nature or duration of these instruments.

The following table represents the change in the fair value of the derivative liabilities during the nine months ended September, 2019:

The estimated fair value of the derivative liabilities at September 30, 2019 was calculated using the Black Scholes pricing model with the following assumptions:

NOTE 7- LITIGATION

On September 15, 2015, LG Capital, LLC filed a lawsuit against the Company in the County of Kings, in the Supreme Court of the State of New York (index number 516298/2016). The filing alleges that the Company has defaulted on several unpaid loans from LG Capital, LLC to the Company with the total owing and due including principal and interest of $297,160. The Company has not counter claimed but believes that LG Capital, LLC unlawfully attempted to convert some of the loans to common stock of the Company has filed an injunction against the Company’s transfer agent to block LG Capital, LLC from such a conversion. In addition, the Company negotiated in good faith with LG Capital, LLC to settle the debt but to no avail. After reviewing the claim made by LG Capital, LLC, it is the opinion of management that the outstanding liability to LG Capital, LLC has been fully recognized and accounted for in the financial statements of the Company. (See Note 7-Convertible Notes).

On August 28, 2018, the trustee for the bankruptcy of EcoCab Portland, LLC (Case No. 17-31000-tmb7) received a judgment against the Company for $179,496 plus interest at $0.0244% per annum. The judgement was filed in the US Bankruptcy Court for the District of Oregon. The Trustee claims the Company unilaterally repaid its note and is claim preference by the Company over other creditors of the same class for the payments. The Company agreed to settle the claim with a one-time payment of $40,000 which is awaiting a decision by the trustee and confirmation of the bankruptcy court of any settlement.