ITEM
1. FINANCIAL STATEMENTS
REMSLEEP
HOLDINGS, INC.
REMSLEEP
HOLDINGS, INC.
CONDENSED BALANCE SHEETS
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
101,687
|
|
|
$
|
16,640
|
|
Prepaid expenses
|
|
|
11,895
|
|
|
|
2,000
|
|
Total current assets
|
|
|
113,582
|
|
|
|
18,640
|
|
|
|
|
|
|
|
|
|
|
Other asset
|
|
|
10,000
|
|
|
|
-
|
|
Property and equipment, net
|
|
|
73,692
|
|
|
|
38,436
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
197,274
|
|
|
$
|
57,076
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
240,607
|
|
|
$
|
240,399
|
|
Accrued compensation
|
|
|
15,300
|
|
|
|
-
|
|
Accrued interest
|
|
|
29,500
|
|
|
|
18,508
|
|
Accrued interest – related party
|
|
|
16,753
|
|
|
|
-
|
|
Convertible Notes, net of discount of $127,595 and $33,759
|
|
|
122,658
|
|
|
|
43,241
|
|
Derivative Liability
|
|
|
435,129
|
|
|
|
96,110
|
|
Loan payable – related party
|
|
|
179,191
|
|
|
|
179,191
|
|
Loans payable
|
|
|
57,362
|
|
|
|
59,712
|
|
Total Current Liabilities
|
|
|
1,096,500
|
|
|
|
637,161
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
1,096,500
|
|
|
|
637,161
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A preferred stock, $0.001 par value, 5,000,000 shares authorized, 4,000,000 and 3,500,000 issued and outstanding, respectively
|
|
|
125,000
|
|
|
|
105,000
|
|
Series B preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued
|
|
|
-
|
|
|
|
-
|
|
Series C preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued
|
|
|
-
|
|
|
|
-
|
|
Common stock, $.001 par value, 1,000,000,000 shares authorized, 73,139,165 and 4,315,894 shares issued and outstanding, respectively
|
|
|
73,139
|
|
|
|
4,316
|
|
Common stock to be issued
|
|
|
-
|
|
|
|
228,604
|
|
Additional paid in capital
|
|
|
3,420,293
|
|
|
|
584,017
|
|
Accumulated Deficit
|
|
|
(4,517,658
|
)
|
|
|
(1,502,022
|
)
|
TOTAL STOCKHOLDERS’ DEFICIT
|
|
|
(899,226
|
)
|
|
|
(580,085
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
$
|
197,274
|
|
|
$
|
57,076
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
REMSLEEP
HOLDINGS, INC.
CONDENSED
STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
|
For the Three Months Ended
September 30,
|
|
|
For the Nine Months Ended
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees
|
|
$
|
10,250
|
|
|
$
|
5,650
|
|
|
$
|
35,650
|
|
|
$
|
41,750
|
|
Consulting
|
|
|
37,000
|
|
|
|
220,000
|
|
|
|
54,720
|
|
|
|
603,799
|
|
Compensation – related party
|
|
|
21,000
|
|
|
|
9,000
|
|
|
|
2,083,000
|
|
|
|
27,000
|
|
General and administrative
|
|
|
44,190
|
|
|
|
8,289
|
|
|
|
78,318
|
|
|
|
21,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
112,440
|
|
|
|
242,939
|
|
|
|
2,251,688
|
|
|
|
694,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(112,440
|
)
|
|
|
(242,939
|
)
|
|
|
(2,251,688
|
)
|
|
|
(694,539
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(15,179
|
)
|
|
|
(2,130
|
)
|
|
|
(37,344
|
)
|
|
|
(3,369
|
)
|
Discount amortization
|
|
|
(114,358
|
)
|
|
|
(14,936
|
)
|
|
|
(216,417
|
)
|
|
|
(14,936
|
)
|
Loss on issuance of convertible debt
|
|
|
-
|
|
|
|
(47,020
|
)
|
|
|
(1,051,207
|
)
|
|
|
(47,020
|
)
|
Change in fair value
|
|
|
164,829
|
|
|
|
(41,894
|
)
|
|
|
541,020
|
|
|
|
(58,789
|
)
|
Total other expense
|
|
|
35,292
|
|
|
|
(105,980
|
)
|
|
|
(763,948
|
)
|
|
|
(124,114
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(77,148
|
)
|
|
|
(348,919
|
)
|
|
|
(3,015,636
|
)
|
|
|
(818,653
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(77,148
|
)
|
|
$
|
(348,919
|
)
|
|
$
|
(3,015,636
|
)
|
|
$
|
(818,653
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and fully diluted net loss per share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic and diluted
|
|
|
68,378,850
|
|
|
|
5,970,460
|
|
|
|
31,734,718
|
|
|
|
5,144,683
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
REMSLEEP HOLDINGS, INC.
CONDENSED STATEMENT OF STOCKHOLDERS’
EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2018
(UNAUDITED)
|
|
|
Series A
Preferred
Shares
|
|
|
Series A
Preferred
Stock
Amount
|
|
|
Common
Shares
|
|
|
Common
Stock
Amount
|
|
|
Common
stock to
be issued
|
|
|
Additional
Paid-in
Capital
|
|
|
Accumulated Deficit
|
|
|
Total
|
|
Balance, December 31, 2017
|
|
|
3,500,000
|
|
|
$
|
105,000
|
|
|
|
3,610,751
|
|
|
$
|
3,611
|
|
|
$
|
58,225
|
|
|
$
|
424,938
|
|
|
$
|
(1,089,320
|
)
|
|
$
|
(497,546
|
)
|
Common stock sold for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
327,143
|
|
|
|
327
|
|
|
|
-
|
|
|
|
77,173
|
|
|
|
-
|
|
|
|
77,500
|
|
Common stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
210,963
|
|
|
|
-
|
|
|
|
-
|
|
|
|
210,963
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(162,121
|
)
|
|
|
(162,121
|
)
|
Balance, March 31, 2018
|
|
|
3,500,000
|
|
|
|
105,000
|
|
|
|
3,937,894
|
|
|
|
3,938
|
|
|
|
269,188
|
|
|
|
502,111
|
|
|
|
(1,251,441
|
)
|
|
|
(371,204
|
)
|
Common stock issued
|
|
|
-
|
|
|
|
-
|
|
|
|
178,000
|
|
|
|
178
|
|
|
|
(40,584
|
)
|
|
|
40,406
|
|
|
|
-
|
|
|
|
-
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(307,613
|
)
|
|
|
(307,613
|
)
|
Balance, June 30, 2018
|
|
|
3,500,000
|
|
|
|
105,000
|
|
|
|
4,115,894
|
|
|
|
4,116
|
|
|
|
228,604
|
|
|
|
542,517
|
|
|
|
(1,559,054
|
)
|
|
|
(678,817
|
)
|
Common stock sold for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
150,000
|
|
|
|
150
|
|
|
|
-
|
|
|
|
12,350
|
|
|
|
-
|
|
|
|
12,500
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(348,919
|
)
|
|
|
(348,919
|
)
|
Balance, September 30,
2018
|
|
|
3,500,000
|
|
|
$
|
105,000
|
|
|
|
4,265,894
|
|
|
$
|
4,266
|
|
|
$
|
228,604
|
|
|
$
|
554,867
|
|
|
$
|
(1,907,973
|
)
|
|
$
|
(1,015,236
|
)
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
REMSLEEP HOLDINGS, INC.
CONDENSED STATEMENT OF STOCKHOLDERS’
EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2019
(UNAUDITED)
|
|
|
Series A
Preferred
Shares
|
|
|
Series A
Preferred
Stock
Amount
|
|
|
Common
Shares
|
|
|
Common
Stock
Amount
|
|
|
Common
stock
to
be issued
|
|
|
Additional
Paid-in
Capital
|
|
|
Accumulated Deficit
|
|
|
Total
|
|
Balance, December 31, 2018
|
|
|
3,500,000
|
|
|
$
|
105,000
|
|
|
|
4,315,894
|
|
|
$
|
4,316
|
|
|
$
|
228,604
|
|
|
$
|
584,017
|
|
|
$
|
(1,502,022
|
)
|
|
$
|
(580,085
|
)
|
Common stock issued for conversion
of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
1,523,291
|
|
|
|
1,523
|
|
|
|
-
|
|
|
|
49,604
|
|
|
|
-
|
|
|
|
51,127
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(591,732
|
)
|
|
|
(591,732
|
)
|
Balance, March 31, 2019
|
|
|
3,500,000
|
|
|
|
105,000
|
|
|
|
5,839,185
|
|
|
|
5,839
|
|
|
|
228,604
|
|
|
|
633,621
|
|
|
|
(2,093,754
|
)
|
|
|
(1,120,690
|
)
|
Common stock issued for services
– related party
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
1,950,000
|
|
|
|
-
|
|
|
|
2,000,000
|
|
Preferred stock issued for
services - related party
|
|
|
500,000
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
Common stock issued for services
|
|
|
|
|
|
|
|
|
|
|
1,309,260
|
|
|
|
1,309
|
|
|
|
(228,604
|
)
|
|
|
244,615
|
|
|
|
-
|
|
|
|
17,320
|
|
Common stock issued for conversion
of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
8,881,974
|
|
|
|
8,882
|
|
|
|
-
|
|
|
|
307,768
|
|
|
|
-
|
|
|
|
316,650
|
|
Warrants issued with convertible
debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
41,853
|
|
|
|
-
|
|
|
|
41,853
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,346,756
|
)
|
|
|
(2,346,756
|
)
|
Balance, June 30, 2019
|
|
|
4,000,000
|
|
|
|
125,000
|
|
|
|
66,030,419
|
|
|
|
66,030
|
|
|
|
-
|
|
|
|
3,177,857
|
|
|
|
(4,440,510
|
)
|
|
|
(1,071,623
|
)
|
Common stock issued for conversion
of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
6,108,746
|
|
|
|
6,109
|
|
|
|
-
|
|
|
|
206,436
|
|
|
|
-
|
|
|
|
212,545
|
|
Common stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000,000
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
36,000
|
|
|
|
-
|
|
|
|
37,000
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(77,148
|
)
|
|
|
(77,148
|
)
|
Balance, September 30,
2019
|
|
|
4,000,000
|
|
|
$
|
125,000
|
|
|
|
73,139,165
|
|
|
$
|
73,139
|
|
|
$
|
-
|
|
|
$
|
3,420,293
|
|
|
$
|
(4,517,658
|
)
|
|
$
|
(899,226
|
)
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
REMSLEEP
HOLDINGS, INC.
CONDENSED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
For the Nine Months Ended
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,015,636
|
)
|
|
$
|
(818,653
|
)
|
Adjustments to reconcile net loss to net cash used in operations:
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
9,075
|
|
|
|
1,723
|
|
Stock compensation expense
|
|
|
54,320
|
|
|
|
603,499
|
|
Stock compensation expense – related party
|
|
|
2,020,000
|
|
|
|
-
|
|
Change in fair value of derivative
|
|
|
(541,020
|
)
|
|
|
58,789
|
|
Discount amortization
|
|
|
216,417
|
|
|
|
14,936
|
|
Loss on issuance of convertible debt
|
|
|
1,051,207
|
|
|
|
47,020
|
|
Changes in Operating Assets and Liabilities
|
|
|
|
|
|
|
|
|
Prepaids
|
|
|
2,910
|
|
|
|
(2,200
|
)
|
Accounts Payable
|
|
|
209
|
|
|
|
4,520
|
|
Accrued compensation – related party
|
|
|
15,300
|
|
|
|
(2,500
|
)
|
Accrued interest
|
|
|
20,193
|
|
|
|
-
|
|
Accrued interest – related party
|
|
|
16,753
|
|
|
|
3,370
|
|
Net cash used in operating activities
|
|
|
(150,272
|
)
|
|
|
(89,496
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
(44,331
|
)
|
|
|
(25,563
|
)
|
Other asset
|
|
|
(10,000
|
)
|
|
|
-
|
|
Net Cash used in investing activities
|
|
|
(54,331
|
)
|
|
|
(25,563
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Repayment of loans – related party
|
|
|
-
|
|
|
|
(3,000
|
)
|
Repayment of loans
|
|
|
(2,350
|
)
|
|
|
(5,000
|
)
|
Proceeds from convertible notes payable
|
|
|
292,000
|
|
|
|
72,000
|
|
Proceeds from sale of common stock
|
|
|
-
|
|
|
|
90,000
|
|
Net cash provided by financing activities
|
|
|
289,650
|
|
|
|
154,000
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
85,047
|
|
|
|
38,941
|
|
Cash at beginning of the period
|
|
|
16,640
|
|
|
|
2,014
|
|
Cash at end of the period
|
|
$
|
101,687
|
|
|
$
|
40,955
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
Interest paid in cash
|
|
$
|
-
|
|
|
$
|
-
|
|
Taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
Supplemental non-cash disclosure:
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of note payable principal and accrued interest
|
|
$
|
146,202
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
REMSLEEP
HOLDINGS, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
September
30, 2019
(Unaudited)
NOTE
1 - BACKGROUND
Business
Activity
REMSleep
Holdings, Inc.,(the “Company”) was incorporated in the State of Nevada on June 6, 2007. On January 5, 2015 the name
of the Company was changed to REMSleep Holdings, Inc. and the business model was changed to reflect the new direction of the Company
– to develop and distribute products to help people affected by sleep apnea. Effective January 1, 2015, we completed an
exchange agreement to purchase 100% of the outstanding interests of REMSleep LLC in exchange for 50,000,000 common shares of REMSleep
Holdings, Inc.’s stock, at which time REMSleep LLC became our wholly-owned subsidiary and adopted their business of developing
and distributing our sleep apnea products. On January 5, 2015, we changed our name to REMSleep Holdings, Inc. to reflect our new
business model.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
These
unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).
These financial statements and the notes attached hereto should be read in conjunction with the financial statements and notes
included in the Company’s 10-K for its fiscal year ended December 31, 2018. In the opinion of the Company, all adjustments,
including normal recurring adjustments necessary to present fairly the financial position of the Company, as of September 30,
2019 and the results of its operations and cash flows for the three months, then ended have been included. The results of operations
for the interim period are not necessarily indicative of the results for the full year ending December 31, 2019.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could
differ from those estimates.
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
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 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 as the notes bear interest rates that are consistent with current market rates.
The
following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy
as of September 30, 2019:
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total Gains and (Losses)
|
|
Derivative
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
435,129
|
|
|
$
|
541,020
|
|
December
31, 2018:
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total Gains and (Losses)
|
|
Derivative
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
96,110
|
|
|
$
|
(23,985
|
)
|
Recently
Adopted Accounting Pronouncements
In
February 2016, the FASB issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842). This ASU requires
that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement
of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right
to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an
accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. This new guidance
is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting
periods, and early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the
beginning of the earliest period presented using a modified retrospective approach. The Company has elected to not recognize lease
assets and liabilities for leases with a term less than twelve months.
We
have reviewed other recently issued accounting pronouncements and plan to adopt those that are applicable to us. We do not expect
the adoption of any other pronouncements to have an impact on our results of operations or financial position.
NOTE
3 - GOING CONCERN
The
accompanying unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of $4,517,678
at September 30, 2019, had a net loss of $3,015,636 for the nine months ended September 30, 2019, ($2,807,233 of which was non-cash
expense for stock issued for services and issuance and fair valuation of convertible debt derivatives) and net cash used in operating
activities of $160,272 for the nine months ended September 30, 2019. The Company’s ability to raise additional capital through
the future issuances of common stock and/or debt financing is unknown. The obtainment of additional financing, the successful
development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable
operations are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these
factors over the next twelve months raise substantial doubt about the Company’s ability to continue as a going concern.
The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned
uncertainties.
NOTE
4 - PROPERTY & EQUIPMENT
Long
lived assets, including property and equipment and certain intangible assets to be held and used by the Company are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.
Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values. Measurement
of an impairment loss is based on the fair value of the asset. Long-lived assets and certain identifiable intangibles to be disposed
of are reported at the lower of carrying amount or fair value less cost to sell.
Property
and Equipment and intangible assets are first recorded at cost. Depreciation and/or amortization is computed using the straight-line
method over the estimated useful lives of the various classes of assets as follows between three and five years.
Maintenance
and repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts.
Cost and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain
or loss on the disposition included as income.
Assets
stated at cost, less accumulated depreciation consisted of the following:
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
Equipment
|
|
$
|
14,904
|
|
|
$
|
14,904
|
|
Office equipment
|
|
|
4,774
|
|
|
|
2,458
|
|
Automobile
|
|
|
16,963
|
|
|
|
16,963
|
|
Tooling / Molds
|
|
|
65,120
|
|
|
|
23,105
|
|
Less: accumulated depreciation
|
|
|
(28,069
|
)
|
|
|
(18,994
|
)
|
Fixed assets, net
|
|
$
|
73,692
|
|
|
$
|
38,436
|
|
Depreciation
expense
Depreciation
expense for the nine months ended September 30, 2019 and 2018 was $9,075 and $1,723, respectively. Depreciation
expense for the three months ended September 30, 2019 and 2018 was $6,271 and $691, respectively.
NOTE
5 - LOANS PAYABLE
On
October 24, 2017, the Company was notified that a petition had been filed in the Iowa District Court for Polk County by a Mr.
John M. Wesson for failure to repay a loan. Mr. Wesson had loaned the Company $30,000 and $20,000 on October 24, 2012 and June
12, 2013, respectively. The loans were to accrue interest at 5%. While the Company was under previous management the loans were
removed from the books in Q1 of 2015. On April 26, 2018, the Company agreed to repay the loan in full including accrued interest
and $5,000 for legal fees. The $50,000 plus $7,341 was booked to retained earnings in 2016 as a correction of an error. As of
September 30, 2019, there is $45,000 and $16,731 of principal and interest due on this loan. As of December 31, 2018, there is
$45,000 and $14,841 of principal and interest due on this loan.
On
March 23, 2018, the Company purchased an automobile. The purchase price was $16,963 The interest rate on the loan is 5.8% and
matures on April 7, 2023. Payments on the loan, consisting of principal and interest, are $327 per month. As of September 30,
2019, the balance on this loan is $12,362.
NOTE
6 - CONVERTIBLE NOTES
The
following table summarizes the convertible notes and related activity as of September 30, 2019:
Note Holder
|
|
Date
|
|
Maturity Date
|
|
Interest
|
|
|
Balance
December 31,
2018
|
|
|
Additions
|
|
|
Conversions
|
|
|
Balance
September 30,
2019
|
|
PowerUp Lending Group LTD
|
|
7/9/18
|
|
7/9/19
|
|
|
12
|
%
|
|
$
|
45,000
|
|
|
$
|
-
|
|
|
$
|
(45,000
|
)
|
|
$
|
-
|
|
LG Capital Funding LLC
|
|
8/30/18
|
|
8/30/2019
|
|
|
10
|
%
|
|
|
32,000
|
|
|
|
-
|
|
|
|
(32,000
|
)
|
|
|
-
|
|
ONE44 Capital LLC
|
|
1/23/2019
|
|
1/23/2020
|
|
|
12
|
%
|
|
|
-
|
|
|
|
100,000
|
|
|
|
(60,000
|
)
|
|
|
40,000
|
|
Odyssey Capital Funding, LLC
|
|
5/3/2019
|
|
5/3/2020
|
|
|
12
|
%
|
|
|
-
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
100,000
|
|
Armada Investment Fund LLC
|
|
5/30/2019
|
|
2/29/2020
|
|
|
12
|
%
|
|
|
-
|
|
|
|
36,750
|
|
|
|
-
|
|
|
|
36,750
|
|
BHP Capital NY Inc.
|
|
5/30/2019
|
|
2/29/2020
|
|
|
12
|
%
|
|
|
-
|
|
|
|
36,750
|
|
|
|
-
|
|
|
|
36,750
|
|
Jefferson Street Capital LLC
|
|
5/30/2019
|
|
2/29/2020
|
|
|
12
|
%
|
|
|
-
|
|
|
|
36,750
|
|
|
|
-
|
|
|
|
36,750
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
77,000
|
|
|
$
|
310,250
|
|
|
$
|
(137,000
|
)
|
|
$
|
250,250
|
|
|
|
|
|
Less debt discount
|
|
|
|
(33,759
|
)
|
|
|
|
|
|
|
|
|
|
|
(127,592
|
)
|
|
|
|
|
|
|
|
|
|
|
$
|
43,241
|
|
|
|
|
|
|
|
|
|
|
$
|
122,658
|
|
A
summary of the activity of the derivative liability for the notes above is as follows:
Balance at December 31, 2017
|
|
$
|
-
|
|
Increase to derivative due to new issuances
|
|
|
89,020
|
|
Derivative loss due to mark to market adjustment
|
|
|
7,090
|
|
Balance at December 31, 2018
|
|
|
96,110
|
|
Increase to derivative due to new issuances
|
|
|
1,314,354
|
|
Decrease to derivative due to conversion
|
|
|
(434,315
|
)
|
Derivative loss due to mark to market adjustment
|
|
|
(541,020
|
)
|
Balance at September 30, 2019
|
|
$
|
435,129
|
|
A
summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s
derivative liability that are categorized within Level 3 of the fair value hierarchy for the nine months ended September 30, 2019
is as follows:
Inputs
|
|
September
30,
2019
|
|
|
Initial
Valuation
|
|
Stock
price
|
|
$
|
.017
|
|
|
$
|
.55
- .0248
|
|
Conversion
price
|
|
$
|
.0083
|
|
|
$
|
.244
- .0055
|
|
Volatility
(annual)
|
|
|
217.34
– 403.12
|
%
|
|
|
261.04%
- 410.61
|
%
|
Risk-free
rate
|
|
|
1.83%
- 1.88
|
%
|
|
|
2.34%
- 2.58
|
%
|
Dividend
rate
|
|
|
-
|
|
|
|
-
|
|
Years
to maturity
|
|
|
.32
- .59
|
|
|
|
.75
- 1
|
|
A
summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s
derivative liability that are categorized within Level 3 of the fair value hierarchy at the time of conversion is as follows:
Inputs
|
|
|
|
Stock
price (1)
|
|
$
|
.013
- .051
|
|
Conversion
price (2)
|
|
$
|
.001
- .026
|
|
Volatility
(annual)
|
|
|
402.56
– 558.68
|
|
Risk-free
rate
|
|
|
2.22%
- 2.39
|
|
Dividend
rate
|
|
|
-
|
|
Years
to maturity
|
|
|
.25
- .63
|
|
|
(1)
|
Company
used the average of the stock prices of the dates of conversion.
|
|
(2)
|
Company
used the average of the stock prices applicable to the conversion terms.
|
The
development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the
responsibility of the Company’s management
NOTE
7 - RELATED PARTY TRANSACTIONS
The
Company has received support from parties related through common ownership and directorship. These loans are unsecured, and due
on demand. As of September 30, 2019 and December 31, 2018, the balance due on these loans is $179,191 and $179,191, respectively.
Beginning on January 1, 2019, the balance due accrues interest at 12.5%. As of September 30, 2019, total accrued interest is $16,753.
The
Company executed an employment agreement with its CEO, Tom Wood, on January 1, 2018. Per the terms of the agreement Mr. Wood was
to be compensated $3,000 per month. The agreement expired on January 2, 2019. The Company executed a new employment agreement
with Mr. Wood on April 1, 2019. Per the terms of the agreement Mr. Wood is to be compensated $4,000 per month. The agreement expires
on April 1, 2020.
The
Company executed an employment agreement with its Chairman, Russell Bird, on January 1, 2019. Per the terms of the agreement Mr.
Bird is to be compensated $3,000 per month.
On
June 14, 2019, the Company granted 25,000,000 shares of common stock each to Mr. Wood and Mr. Bird for services rendered to the
Company. The shares were valued at $0.04 per shares, the closing stock price on the date of grant, for total non-cash compensation
expense of $2,000,000.
On
June 14, 2019, the Company granted 500,000 shares of Series A preferred stock to Mr. Bird for services rendered to the Company.
The shares were valued at $0.04, the closing stock price of the Company’s common shares on the date of grant, for total
non-cash compensation expense of $20,000. The closing price for common stock was deemed an acceptable method for valuation as
one share of Series A preferred stock is convertible into one share of common stock.
NOTE
8 - COMMON STOCK
During
the nine months September 30, 2019, PowerUp Lending Group LTD converted $45,000 and $2,700 of principal and interest, respectively,
into 5,599,447 shares of common stock.
During
the nine months September 30, 2019, LG Capital Funding LLC converted $32,000 and $2,155 of principal and interest, respectively,
into 4,356,614 shares of common stock.
During
the nine months September 30, 2019, One44 Capital LLC converted $60,000 and $4,346 of principal and interest, respectively, into
6,557,949 shares of common stock.
During
the nine months September 30, 2019, the Company granted 1,000,000 shares of common stock for services. The shares were valued
at $0.037, the closing stock price on the date of grant, for total non-cash expense of $37,000. In addition, 909,261 shares were
issued by the transfer agent for stock granted in a prior period. The stock was debited to common stock to be issued for $228,604.
See
Note 7 for stock issued to related parties.
NOTE
9 - PREFERRED STOCK
The
Company is currently authorized to issue 5,000,000 shares of Series A Preferred Stock, par value $0.001 per share value with 1:25
voting rights. The Series A Preferred Stock ranks equal to the common stock on liquidation, pays no dividend and is convertible
to common stock for one share of common for one share of Series A Preferred Stock.
See
Note 7 for preferred stock issued to a related party.
The
Company is currently authorized to issue 5,000,000 shares of Series B Preferred Stock, par value $0.001 per share. Each share
of Series B Preferred Stock has a 1:100 voting right and is convertible into 100 shares of common stock. No dividends will be
paid and in the event of liquidation all shares of Series B will automatically convert into common stock. There are no shares
of Series B Preferred Stock issued and outstanding.
The
Company is currently authorized to issue 5,000,000 shares of Series C Preferred Stock, par value $0.001 per share value. Each
share of Series C Preferred Stock has a 1:50 voting right and is convertible into 50 shares of common stock. No dividends will
be paid and in the event of liquidation all shares of Series B will automatically convert into common stock. There are no shares
of Series C Preferred Stock issued and outstanding.
NOTE
10 - WARRANTS
On
May 30, 2019, the Company issued 1,500,000 warrants in conjunction with convertible debt. The warrants are exercisable for 3 years
at $0.07 per share. The warrants were evaluated for purposes of classification between liability and equity. The warrants do not
contain features that would require a liability classification and are therefore considered equity. The Black Scholes pricing
model was used to estimate the fair value of the Warrants issued with the following inputs:
Warrants
|
|
|
1,500,000
|
|
Share price
|
|
$
|
0.045
|
|
Exercise Price
|
|
$
|
0.07
|
|
Term
|
|
|
3 years
|
|
Volatility
|
|
|
406
|
%
|
Risk Free Interest Rate
|
|
|
2.0
|
%
|
Dividend rate
|
|
|
-
|
|
Using
the fair value calculation, the relative fair value between the debt issued and the warrants was calculated to determine the warrants
recorded equity amount of $41,853, accounted for in additional paid in capital.
Activity
for the nine months ended September 30, 2019 is as follows:
|
|
Number of
Warrants
|
|
|
Weighted
Average
Exercise Price
|
|
|
Weighted
Average
Remaining
Contract
Term
|
|
Outstanding at December 31, 2018
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
Granted
|
|
|
1,500,000
|
|
|
|
0.07
|
|
|
|
2.65
|
|
Expired
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercisable at September 30, 2019
|
|
|
1,500,000
|
|
|
$
|
0.07
|
|
|
|
2.65
|
|
NOTE
11 - SUBSEQUENT EVENTS
In
accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial
statements were available to be issued and has determined that it does not have any material subsequent events to disclose in
these financial statements other than the following.
Subsequent
to September 30,
2019, One44 Capital LLC converted $40,000 and $3,456, of principal and interest,
respectively, into 7,182,809 shares of common stock.
On October 4, 2019, the Company executed three
separate convertible promissory notes for $55,000 each. Total cash proceeds from the notes, after fees and OID, is $147,000. Each
note matures on July 4, 2020, accrues interest at 12% and is convertible into shares of common stock at 55% of the lowest trading
price in the twenty days prior to conversion. In addition, each note holder received 500,000 warrants. The warrants have an exercise
price of $0.10 and expire in three years.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS.
Forward-looking
Statements
There
are “forward-looking statements” contained in this quarterly report. All statements that express expectations, estimates,
forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking
statements may be made by us or on our behalf. Words such as “expect,” “anticipate,” “intend,”
“plan,” “believe,” “seek,” “estimate,” “project,” “forecast,”
“may,” “should,” and variations of such words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are
difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or
suggested by such forward-looking statements. We undertake no obligation to update or revise any of the forward-looking statements
after the date of this quarterly report to conform forward-looking statements to actual results. Important factors on which such
statements are based are assumptions concerning uncertainties, including but not limited to, uncertainties associated with the
following:
|
●
|
Inadequate
capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans;
|
|
●
|
Our
failure to earn revenues or profits;
|
|
●
|
Inadequate
capital to continue business;
|
|
●
|
Volatility
or decline of our stock price;
|
|
●
|
Potential
fluctuation in quarterly results;
|
|
●
|
Rapid
and significant changes in markets;
|
|
●
|
Litigation
with or legal claims and allegations by outside parties; and
|
|
●
|
Insufficient
revenues to cover operating costs.
|
The
following discussion should be read in conjunction with the financial statements and the notes thereto which are included in this
quarterly report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual
results may differ substantially from those anticipated in any forward-looking statements included in this discussion as a result
of various factors.
Overview
We
were incorporated in the State of Nevada on June 6, 2007. On August 26, 2010, we changed our name from Bella Viaggio, Inc. to
Kat Gold Holdings Corp. Effective January 1, 2015, we completed an exchange agreement to purchase 100% of the outstanding
interests of RemSleep LLC in exchange for 50,000,000 shares of common stock of RemSleep Holdings, Inc. at which time RemSleep
LLC became our wholly-owned subsidiary and we adopted their business of developing and distributing sleep apnea products. On January
5, 2015, we changed our name to REMSleep Holdings, Inc. to reflect our new business model.
Our
officers have 35 years of sleep-industry experience, including having been employed at sleep industry companies. Our officers
invented our DeltaWave CPAP interface (the “DeltaWave
Our
officers have 35 years of sleep-industry experience, including having been employed at sleep industry companies. Our officers
invented our DeltaWave CPAP interface (the “DeltaWave”) as an innovative new device to treat patients with sleep apnea.
The patent-pending DeltaWave product is a nasal-pillows type interface that will result in better comfort and, therefore, better
compliance since it was specifically designed with unique airflow characteristics to enable patients with sleep apnea to breathe
normally. A survey that appeared in DME Business found that 89% of patients stated that mask-interface comfort was their primary
concern. The primary issue that we have addressed with the DeltaWave is the “work of breathing” component. We believe
that our DeltaWave is designed to effectively address the stubborn issues that continue to affect a patient’s ability to
comply with treatment, as follows:
|
●
|
Does
not disrupt normal breathing mechanics;
|
|
●
|
Causes
zero work of breathing (WOB);
|
|
●
|
Minimizes
or eliminates drying of the sinuses;
|
|
●
|
Uses
less driving pressure; and
|
|
●
|
Allows
users to feel safe and secure while sleeping.
|
Pending
adequate financing, we plan to conduct clinical trials to test product effectiveness.
On
June 28, 2016, we applied for a patent for a new, innovative sleep apnea product that serves as an interface for the delivery
of CPAP therapy and other respiratory needs. Our goal is to develop sleep products that achieve optimum compliance and comfort
for CPAP patients.
Our
website is located at: http://www.remsleeptech.com. The contents of our website are not incorporated by reference into this report.
Results
of Operations
The
three months ended September 30, 2019 compared to the three months ended September 30, 2018
We
have not generated revenue in the three months ended September 30, 2019 and 2018.
Professional fees were $10,250 compared to
$5,650 for the three months ended September 30, 2019 and 2018, respectively, an increase of $4,600, or 81.4%. Professional fees
consist mostly of accounting, audit and legal fees. The increase in the current period is due to legal expense in connection with
the preparation of an Offering Statement on Form 1-A filed with the Securities and Exchange Commission on October 4, 2019.
Consulting expense was $37,000 compared to
$220,000 for the three months ended September 30, 2019 and 2018, respectively. A majority of the consulting expense is due to the
granting of common stock. In the current period there was a significant decrease in the number of shares issued for consulting
services, thus decreasing the expense.
Compensation expense was $21,000 and $9,000
for the three months ended September 30, 2019 and 2018, respectively, an increase of $12,000. The increase is due to an increase
in monthly salary to our CEO and the addition of director compensation.
General and administrative expense was $44,190
and $8,289 for the three months ended September 30, 2019 and 2018, respectively, an increase of $35,901, or 433%. The
increase in the current period can be largely attributed to an increase in depreciation, development and web design expense.
Total other income for the three months
ended September 30, 2019, was $35,292. Other income includes $114,358 of debt discount amortization and a gain in the change
of fair value of $164,829. These are expenses related to our convertible debt. We also incurred $15,179 of interest expense. In
the prior period we had $14,936 of debt discount amortization, a loss on the issuance of convertible debt of $47,020, a loss in
the change of fair value of $41,894 and $2,130 of interest expense.
Net
Loss
For
the three months ended September 30, 2019, we had a net loss of $77,148 as compared to a net loss of $348,919 for the three months
ended September 30, 2018. Our net loss was lower in the current period primarily due to the expense associated with the other
non-cash expense from the issuance of convertible debt and common stock issued for services.
The
nine months ended September 30, 2019 compared to the nine months ended September 30, 2018
We
have not generated revenue in the nine months ended September 30, 2019 and 2018.
Professional
fees were $35,650 compared to $41,750 for the nine months ended September 30, 2019 and 2018, respectively, a decrease of $6,100,
or 14.6%. Professional fees consist mostly of accounting, audit and legal fees. The decrease was due primarily to lower legal
expense. In the prior year we retained an attorney with a monthly fee of $2,000. We no longer use this attorney’s services
in the current period.
Consulting
expense was $54,720 compared to $603,799 for the nine months ended September 30, 2019 and 2018, respectively. A majority of the
consulting expense is due to the granting of common stock. In the current period there was a significant decrease in the number
of shares issued for consulting services, thus decreasing the expense.
Compensation
expense was $2,083,000 and $27,000 for the nine months ended September 30, 2019 and 2018, respectively. In the current period
we issued 25,000,000 common shares each to both our Chairman and CEO for services for total non-cash expense of $2,000,000. We
also issued our Chairman 500,000 shares of series A preferred stock for total non-cash compensation expense of $20,000. In addition,
there was an increase in monthly salary to our CEO and the addition of director compensation.
General
and administrative expense was $78,318 and $21,990 for the nine months ended September 30, 2019 and 2018, respectively, an increase
of $56,328, or 256.1%. The increase in the current period can be largely attributed to an
increase in depreciation, development and web design expense.
Total
other expense for the nine months ended September 30, 2019, was $763,948. Other expense includes $216,417 of debt discount amortization,
a $1,051,207 loss on the issuance of convertible debt and a gain in the change of fair value of $541,020. These are all expenses
related to our convertible debt. We also incurred $37,344 of interest expense. In the prior period we had $14,936 of debt discount
amortization, a loss on the issuance of convertible debt of $47,020, a loss in the change of fair value of $58,789 and $3,369
of interest expense.
Net
Loss
For
the nine months ended September 30, 2019, we had a net loss of $3,015,636 as compared to a net loss of $818,653 for the nine months
ended September 30, 2018. Our net loss was higher in the current period primarily due to the expense associated with the other
non-cash expense from the issuance of convertible debt and common stock issued for services.
Liquidity
and Capital Resources
Cash
flow from operations
Cash
used in operating activities for the nine months ended September 30, 2019 was $150,272 as compared to $89,496 cash used in operating
activities for the nine months ended September 30, 2018.
Cash
Flows from Investing
Cash
used in investing activities for the purchase of equipment and tooling for the nine months ended September 30, 2019 was $54,331
as compared to $25,563 of cash used in investing activities for the nine months ended September 30, 2018.
Cash
Flows from Financing
For
the nine months ended September 30, 2019, we received $292,000 from the issuance of convertible debt and repaid $2,350 on our
auto loan. For the nine months ended September 30, 2018, we received $90,000 from the sale of common stock, $72,000 from convertible
debt loans and repaid $8,000 on other loan payables.
As
of September 30, 2019, we owe $250,250 to our convertible debt holders.
Going
Concern
As
of September 30, 2019, there is substantial doubt regarding our ability to continue as a going concern as we have not generated
sufficient cash flow to fund our proposed business.
We
have suffered recurring losses from operations since our inception. In addition, we have yet to generate an internal cash flow
from our business operations or successfully raised the financing required to develop our proposed business. As a result of these
and other factors, our independent auditor has expressed substantial doubt about our ability to continue as a going concern. Our
future success and viability, therefore, are dependent upon our ability to generate capital financing. The failure to generate
sufficient revenues or raise additional capital may have a material and adverse effect upon us and our shareholders.
Management’s
plans with regard to these matters encompass the following actions: (i) obtaining funding from new investors to alleviate our
working capital deficiency, and (ii) implementing a plan to generate sales. Our continued existence is dependent upon our ability
to resolve our liquidity problems and increase profitability in our current business operations. However, the outcome of management’s
plans cannot be ascertained with any degree of certainty. Our financial statements do not include any adjustments that might result
from the outcome of these risks and uncertainties.
Off
Balance Sheet Arrangements
We
have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors.
Critical
Accounting Policies
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Note 2 to the Financial Statements describes the significant accounting policies and methods
used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes. Actual
results could differ materially from those estimates. The following critical accounting policies are impacted significantly by
judgments, assumptions, and estimates used in the preparation of the Financial Statements.
We
are subject to various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss
or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in
determining loss contingencies. An estimated loss contingency is accrued when management concludes that it is probable that
an asset has been impaired, or a liability has been incurred and the amount of the loss can be reasonably estimated. We
regularly evaluate current information available to us to determine whether such accruals should be adjusted.
We
recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences
between the book carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities represent
the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the
assets and liabilities are recovered or settled. Future tax benefits have been fully offset by a 100% valuation allowance
as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.
Recent
Accounting Pronouncements
In
February 2016, the FASB issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842). This ASU requires
that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement
of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right
to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an
accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. This new guidance
is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting
periods, and early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the
beginning of the earliest period presented using a modified retrospective approach. The Company has elected to not recognize lease
assets and liabilities for leases with a term less than twelve months.
We
have reviewed other recently issued accounting pronouncements and plan to adopt those that are applicable to us. We do not expect
the adoption of any other pronouncements to have an impact on our results of operations or financial position.