The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
Notes to Condensed
Financial Statements
(Unaudited)
NOTE 1 – BASIS OF PRESENTATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated
interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States
for interim financial statements and do not include all the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. The information furnished reflects all adjustments, consisting
only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not
misleading. The consolidated financial statements as of December 31, 2019 have been audited by an independent registered public
accounting firm. The accounting policies and procedures employed in the preparation of these condensed consolidated financial statements
have been derived from the audited financial statements of the Company for the year ended December 31, 2019, which are contained
in Form 10-K as filed with the Securities and Exchange Commission on June 8, 2020. The consolidated balance sheet as of December
31, 2019 was derived from those financial statements.
Basis of Presentation and Principles
of Consolidation
The consolidated financial statements and
accompanying notes are prepared in accordance with generally accepted accounting principles of the United States of America (“U.S.
GAAP”) and the rules and regulations of the U.S Securities and Exchange Commission for Interim Financial Information. The
condensed consolidated financial statements of the Company include the Company and its wholly owned subsidiaries. All intercompany
transactions and balances have been eliminated. All adjustments (consisting of normal recurring items) necessary to present fairly
the Company’s financial position as of June 30, 2020, and the results of operations for three and six months and cash flows
for the six months ended June 30, 2020 have been included. The results of operations for the three and six months ended June 30,
2020 are not necessarily indicative of the results to be expected for the full year.
Description of Business
DarkPulse,
Inc. ("DPI" or "Company") is a technology-security company incorporated in 1989 as Klever Marketing, Inc. ("Klever").
The Company’s wholly-owned subsidiary, DarkPulse Technologies Inc. ("DPTI"), originally started as a technology
spinout from the University of New Brunswick (the “University”) located in Fredericton, Canada. The Company’s
security and monitoring systems will initially be delivered in applications for border security, pipelines, the oil and gas industry
and mine safety. Current uses of fiber optic distributed sensor technology have been limited to quasi-static, long-term structural
health monitoring due to the time required to obtain the data and its poor precision. The Company’s patented BOTDA
dark-pulse sensor technology allows for the monitoring of highly dynamic environments due to its greater resolution and accuracy.
On April 27, 2018, Klever entered into
an Agreement and Plan of Merger (the “Merger Agreement” or the “Merger”) involving Klever as the surviving
parent corporation and acquiring a privately held New Brunswick corporation known as DarkPulse Technologies Inc. as its wholly
owned subsidiary. On July 18, 2018, the parties closed the Merger Agreement, as amended on July 7, 2018, and the name of the Company
was subsequently changed to DarkPulse, Inc. With the change of control of the Company, the Merger was accounted for as a recapitalization
in a manner similar to a reverse acquisition.
On July 20, 2018, the Company filed a Certificate
of Amendment to its Certificate of Incorporation with the State of Delaware, changing the name of the Company to DarkPulse, Inc.
The Company filed a corporate action notification with the Financial Industry Regulatory Authority (FINRA), and the Company's ticker
symbol was changed to DPLS.
Going Concern Uncertainty
As shown in the accompanying financial
statements, during the six months ended June 30, 2020, the Company did not generate any revenues and reported a net loss of $214,539.
As of June 30, 2020, the Company’s current liabilities exceeded its current assets by $3,392,709. As of June 30, 2020, the
Company had $1,419 of cash.
The Company will require additional funding
during the next six months to finance the growth of its operations and achieve its strategic objectives. These factors, as well
as the uncertain conditions that the Company faces relative to capital raising activities, create substantial doubt as to the Company’s
ability to continue as a going concern. The Company is seeking to raise additional capital principally through private placement
offerings and is targeting strategic partners in an effort to finalize the development of its products and begin generating revenues.
The ability of the Company to continue as a going concern is dependent upon the success of future capital offerings or alternative
financing arrangements and expansion of its operations. The accompanying financial statements do not include any adjustments that
might be necessary should the Company be unable to continue as a going concern. Management is actively pursuing additional sources
of financing sufficient to generate enough cash flow to fund its operations. However, management cannot make any assurances that
such financing will be secured.
Use of Estimates
In preparing the consolidated financial
statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities
as of the date of the statements of financial condition, and revenues and expenses for the years then ended. Actual results may
differ significantly from those estimates. Significant estimates made by management include, but are not limited to, the assumptions
used to calculate stock-based compensation, derivative liabilities, preferred deemed dividend and common stock issued for services.
Cash and Cash Equivalents
The Company considers all highly liquid
investments with a maturity of three months or less when acquired to be cash equivalents. The Company places its cash with a high
credit quality financial institution. The Company’s account at this institution is insured by the Federal Deposit Insurance
Corporation (“FDIC”) up to $250,000. To reduce its risk associated with the failure of such financial institution,
the Company evaluates at least annually the rating of the financial institution in which it holds deposits.
Intangible Assets
The Company reviews intangibles held and
used for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. In evaluating the fair value and future benefits of its intangible assets, management performs an analysis of the
anticipated undiscounted future net cash flow of the individual assets over the remaining amortization period. The Company recognizes
an impairment loss if the carrying value of the asset exceeds the expected future cash flows.
Foreign Currency Translation
The company translates monetary assets
and liabilities (any item paid for or settled in foreign currency) into the United States Dollar at exchange rates prevailing on
the balance sheet date. Non-monetary assets and liabilities are translated at the historical rate in effect when the transaction
occurred. Revenues and expenses are translated at the spot rate on the date the transaction occurred. Exchange gains and losses
from the translation of monetary items are included in unrealized gain/loss on Foreign Exchange as Other Comprehensive Loss.
The following table discloses the dates
and exchange rates used for converting Canadian Dollar amounts to U.S. Dollar amounts disclosed in the balance sheet and the statement
of operations.
The spot exchange rate between the Canadian
Dollar and the U.S. Dollar on, December 31, 2019 closing rate at 1.2988 US$: CAD, average rate at 1.3234 US$: CAD and for the three
months ended June 30, 2020 closing rate at 1.3617 US$: CAD, average rate at 1.3868 US$.
Income Taxes
The Company accounts for income taxes in
accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes. Under
this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial
statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and
benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers
tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning
strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the
carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax
assets based on the "more likely than not" criteria of ASC 740.
ASC 740-10 requires that the Company recognize
the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than
not sustain the position following an audit. For tax positions meeting the "more-likely-than-not" threshold, the amount
recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon
ultimate settlement with the relevant tax authority.
Accounting for Derivatives
The Company evaluates all of its financial
instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative
financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value
and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based
derivative financial instruments, the Company uses a probability weighted average series Binomial lattice formula pricing models
to value the derivative instruments at inception and on subsequent valuation dates.
The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash
settlement of the derivative instrument could be required within 12 months of the balance sheet date.
Fair Value of Financial Instruments
The carrying amounts of the Company's financial
assets and liabilities, such as cash, prepaid expenses, and accruals approximate their fair values because of the short maturity
of these instruments. The Company believes the carrying value of its secured debenture payable approximates fair value because
the terms were negotiated at arm’s length.
Recent Accounting Pronouncements
There were no new accounting pronouncements
issued or proposed by the Financial Accounting Standards Board during the three months ended June 30, 2020, and through the date
of filing of this report that the Company believes has had or will have a material impact on its financial position or results
of operations, including the recognition of revenue, cash flow, the merger that was consummated on July 18, 2018. The Company has
no lease obligations.
Income (Loss) Per Common Share
Basic net income (loss) per share of common
stock is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period.
Diluted net income (loss) per share of common stock is computed by dividing net income (loss) by the sum of the weighted average
number of common shares outstanding and the dilutive potential common share equivalents outstanding. Potential dilutive common
share equivalents consist of shares issuable upon exercise of outstanding convertible preferred stock and stock options.
For the three and six months ended June
30, 2020, there were no stock options nor convertible preferred stock outstanding. For the three and six months ended June 30,
2020, common stock equivalents related to convertible preferred stock and convertible debt have not been included in the calculation
of diluted loss per common share because they are anti-dilutive. Therefore, basic loss per common share is the same as diluted
loss per common share. There are 1,372,115,030 common shares reserved for the potential conversion of the Company's convertible
debt.
NOTE 2 - DEBENTURE
DPTI issued a convertible debenture to
the University in exchange for the patents (the “Patents”) assigned to the Company, in the amount of CAD$1,500,000,
or USD$1,491,923 on December 16, 2010, the date of the convertible debenture. On April 24, 2017 DPTI issued a replacement secured
term convertible debenture (the “Debenture”) in the same CAD$1,500,000 amount as the original convertible debenture.
The interest rate is the Bank of Canada Prime overnight rate plus 1% per annum. The Debenture had an initial required payment of
CAD $42,000 (USD$33,385) due on April 24, 2018 for reimbursement to the University for its research and development costs, and
this has been paid. Interest-only maintenance payments are due annually starting after April 24, 2018. Payment of the principal
begins on the earlier of (a) three years following two consecutive quarters of positive earnings before interest, taxes, depreciation
and amortization, (b) six years from April 24, 2017, or (c) in the event DPTI fails to raise defined capital amounts or secure
defined contract amounts by April 24 in the years 2018, 2019, and 2020. The principal repayment amounts will be due quarterly over
a six year period in the amount of CAD$62,500. Based on the exchange rate between the Canadian Dollar and the U.S. Dollar on June
30, 2020, the quarterly principal repayment amounts will be USD$44,271. On May 1, 2020, the Company received an extension for this
payment until July 23, 2020. Additionally on July 16, 2020, the Company received a further four month extension until November
2020. The Debenture is secured by the Patents assigned by the University to DPTI by an Assignment Agreement on December 16, 2010.
DPTI has pledged the Patents and granted a lien on them pursuant to an escrow agreement dated April 24, 2017, between DPTI and
the University.
The Debenture was initially recorded at
USD$1,491,923 equivalent to CAD$1,500,000 as of December 16, 2010, the date of the original convertible debenture. The liability
is being adjusted quarterly based on the current exchange value of the Canadian dollar to the US dollar at the end of each quarter.
The adjustment is recorded as unrealized gain or loss in the change of the value of the two currencies during the quarter. The
amounts recorded as an unrealized gain (loss) for the three months ended June 30, 2020 and 2019, were ($39,047) and ($21,343) respectively.
These amounts are included in Accumulated Other Comprehensive Loss in the Equity section of the consolidated balance sheet, and
as Unrealized Loss on Foreign Exchange on the consolidated statement of comprehensive loss. The Debenture also includes a provision
requiring DPTI to pay the University a two percent (2%) royalty on sales of any and all products or services which incorporate
the Patents for a period of five (5) years from April 24, 2018.
For the three months ended June 30, 2020,
and 2019, the Company recorded interest expense of $12,255 and $12,745, respectively.
As of June 30, 2020, the Debenture liability
totaled $1,101,549, all of which was long term.
Future minimum required payments over
the next five years and thereafter are as follows:
Period ending June 30,
|
|
|
2021
|
|
$
|
–
|
|
2022
|
|
|
–
|
|
2023
|
|
|
–
|
|
2024
|
|
|
–
|
|
2025 and after
|
|
|
1,062,503
|
|
Total
|
|
$
|
1,062,503
|
|
NOTE 3 – CONVERTIBLE DEBT SECURITIES
The Company uses the Black-Scholes Model
to calculate the derivative value of its convertible debt. The valuation result generated by this pricing model is necessarily
driven by the value of the underlying common stock incorporated into the model. The values of the common stock used were based
on the price at the date of issue of the debt security as of June 30, 2020. Management determined the expected volatility between
462.34-541.37%, a risk free rate of interest between 0.16-0.18%, and contractual lives of the debt varying from six months to two
years. The table below details the Company's nine outstanding convertible notes, with totals for the face amount, amortization
of discount, initial loss, change in the fair market value, and the derivative liability.
|
|
Face
|
|
|
Debt
|
|
|
Initial
|
|
|
Q2 change
|
|
|
Derivative Balance
|
|
|
|
Amount
|
|
|
Discount
|
|
|
Loss
|
|
|
in FMV
|
|
|
6/30/2020
|
|
|
|
$
|
90,228
|
|
|
$
|
–
|
|
|
$
|
58,959
|
|
|
$
|
(37,418
|
)
|
|
$
|
81,334
|
|
|
|
|
162,150
|
|
|
|
–
|
|
|
|
74,429
|
|
|
|
(58,212
|
)
|
|
|
158,262
|
|
|
|
|
72,488
|
|
|
|
–
|
|
|
|
11,381
|
|
|
|
(496
|
)
|
|
|
114,904
|
|
|
|
|
208,436
|
|
|
|
–
|
|
|
|
–
|
|
|
|
76,935
|
|
|
|
292,335
|
|
|
|
|
76,657
|
|
|
|
–
|
|
|
|
8,904
|
|
|
|
28,056
|
|
|
|
107,529
|
|
|
|
|
65,372
|
|
|
|
–
|
|
|
|
5,651
|
|
|
|
26,511
|
|
|
|
116,961
|
|
|
|
|
53,864
|
|
|
|
–
|
|
|
|
28,566
|
|
|
|
(939
|
)
|
|
|
71,162
|
|
|
|
|
25,468
|
|
|
|
–
|
|
|
|
16,558
|
|
|
|
(444
|
)
|
|
|
33,647
|
|
|
|
|
29,250
|
|
|
|
93
|
|
|
|
–
|
|
|
|
(12,490
|
)
|
|
|
11,817
|
|
|
|
|
49,726
|
|
|
|
502
|
|
|
|
–
|
|
|
|
(21,234
|
)
|
|
|
20,089
|
|
|
|
|
41,774
|
|
|
|
422
|
|
|
|
–
|
|
|
|
(17,838
|
)
|
|
|
16,877
|
|
|
|
|
29,250
|
|
|
|
296
|
|
|
|
–
|
|
|
|
(12,490
|
)
|
|
|
11,817
|
|
|
|
|
40,000
|
|
|
|
–
|
|
|
|
10,605
|
|
|
|
(728
|
)
|
|
|
52,767
|
|
|
|
|
128,000
|
|
|
|
–
|
|
|
|
17,676
|
|
|
|
42,292
|
|
|
|
142,833
|
|
Subtotal
|
|
|
1,072,663
|
|
|
|
1,313
|
|
|
|
232,729
|
|
|
|
11,544
|
|
|
|
1,232,334
|
|
Transaction expense
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
1,072,663
|
|
|
|
1,313
|
|
|
|
232,729
|
|
|
|
11,544
|
|
|
|
1,232,344
|
|
During the three months ended June 30,
2020, a total of $15,200 in principal and no interest was converted into 217,142,858 shares of the Company’s common stock.
The Company also recorded a reduction of $9,900 in a previously recorded default penalty, a decrease from the original $64,000
penalty recorded on October 15, 2019.
As of June 30, 2020 and 2019 respectively,
there was $1,072,663 and $1,094,530 of convertible debt outstanding, net of debt discount of $1,313, and $239,128, As of June 30,
2020 and 2019 respectively, there was derivative liability of $1,232,344 and $563,087 related to convertible debt securities. The
Company recorded interest expense related to the outstanding convertible debt of $22,190 and $70,622 for the three months ended
June 30, 2020 and 2019 respectively.
NOTE 4 - STOCKHOLDERS' DEFICIT
As
of June 30, 2020, there were 1,609,184,970 shares of common stock and 88,235 shares
of preferred stock issued and outstanding.
NOTE 5 - COMMITMENTS & CONTINGENCIES
Potential Royalty Payments
The Company, in consideration of the terms
of the debenture to the University, shall pay to the University a two percent royalty on sales of any and all products or services
which incorporate the Company's Patents for a period of five years from April 24, 2018.
Legal Matters
On March 27, 2019, Thomas A. Cellucci,
et al. v. DarkPulse, Inc. et al. (the “Complaint”) was filed in the United States District Court for the Southern District
of New York by certain of the Company’s former executive officers, one also being a former director, and a non-employee shareholder
(collectively, the “Plaintiffs”), against the Company, its sole officer and director, and others, claiming that the
Plaintiffs brought the action to protect their individual rights as minority shareholders, as improperly-ousted officers (other
than the non-employee shareholder), and as an improperly-ousted director, seeking equitable relief, damages, recovery of unpaid
salaries and other relief. It is the Company's position that the Complaint represents a frivolous harassment lawsuit. The Company
has filed a motion to dismiss all claims made in the Complaint and intends to otherwise defend itself vigorously in this matter.
The Company is also considering filing counterclaims against the Plaintiffs in the action.
From time to time, we may become involved
in litigation relating to claims arising out of our operations in the normal course of business. We are not currently involved
in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any
proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material
adverse effect on our business, financial condition and operating results.
COVID-19
On March 11, 2020, the World Health Organization
announced that infections of the novel Coronavirus (COVID-19) had become pandemic, and on March 13, the U.S. President announced
a National Emergency relating to the disease. There is a possibility of continued widespread infection in the United States and
abroad, with the potential for catastrophic impact. National, state and local authorities have required or recommended social distancing
and imposed or are considering quarantine and isolation measures on large portions of the population, including mandatory business
closures. These measures, while intended to protect human life, are expected to have serious adverse impacts on domestic and foreign
economies of uncertain severity and duration. Some economists are predicting the United States will soon enter a recession. The
sweeping nature of the coronavirus pandemic makes it extremely difficult to predict how the Company’s business and operations
will be affected in the longer run, but we expect that it may materially affect our business, financial condition and results of
operations. The extent to which the coronavirus impacts our results will depend on future developments, which are highly uncertain
and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions
to contain the coronavirus or treat its impact, among others. Moreover, the coronavirus outbreak has begun to have indeterminable
adverse effects on general commercial activity and the world economy, and our business and results of operations could be adversely
affected to the extent that this coronavirus or any other epidemic harms the global economy generally and/or the markets in which
we operate specifically. Any of the foregoing factors, or other cascading effects of the coronavirus pandemic that are not currently
foreseeable, could materially increase our costs, negatively impact our revenues and damage the Company’s results of operations
and its liquidity position, possibly to a significant degree. The duration of any such impacts cannot be predicted.
NOTE 6 – INTANGIBLE ASSETS
Intangible Assets - Intrusion Detection
Intellectual Property
The Company relies on patent laws and
restrictions on disclosure to protect its intellectual property rights. As of June 30, 2020, the Company held three U.S. and
foreign patents on its intrusion detection technology, which expire in calendar years 2025 through 2034 (depending on the
payment of maintenance fees).
For the three
months ended June 30, 2020 and 2019, the Company amortized $12,757, respectively. Future amortization of intangible assets is as
follows:
2020
|
|
$
|
25,514
|
|
2021
|
|
|
51,028
|
|
2022
|
|
|
51,028
|
|
2023
|
|
|
51,028
|
|
2024
|
|
|
51,028
|
|
Thereafter
|
|
|
189,878
|
|
|
|
$
|
419,504
|
|
NOTE 7 – RELATED PARTY TRANSACTIONS
The Company follows
subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related
party transactions. Pursuant to Section 850-10-20 the related parties include a) affiliates of the Company; b) Entities for
which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value
Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit
of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal
owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or
can significantly influence the management or operating policies of the other to an extent that one of the transacting parties
might be prevented from fully pursuing its own separate interests; and g) Other parties that can significantly influence the management
or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly
influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate
interests. The financial statements shall include disclosures of material related party transactions, other than compensation
arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions
that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The
disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions
to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such
other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar
amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the
method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the
date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
In May 2018, the JV Entity received $42,000
for an order from Bravetek and the JV Entity then placed a corresponding order with the Company. The Company’s former executive
office is also the CEO of Bravatek. The proceeds were to be used for marketing efforts to generate sales of our intrusion detection
product. The order has been recorded as a prepaid sale and is a current liability as of June 30, 2020.
NOTE 8 – PREFERRED STOCK
In accordance with the
Company’s bylaws, the Company has authorized a total of 2,000,000 shares of preferred stock, par value $0.01 per share,
for all classes. As of June 30, 2020 and December 31, 2019, there were 88,235 total preferred shares issued and outstanding
for all classes.
During the three months ended June 30,
2020, the Company issued no shares of preferred stock.
NOTE 9 – COMMON STOCK
In accordance with the Company’s
bylaws, the Company has authorized a total of 20,000,000,000 shares of common stock, par value $0.01 per share. As of June 30,
2020 and December 31, 2019, there were 1,609,184,970 and 1,392,042,112 common shares issued and outstanding, respectively.
During the three months ended June 30,
2020, the Company issued the following shares of common stock:
On April 29, 2020, the Company issued an
aggregate of 68,571,429 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount
of $4,800.
On May 4, 2020, the Company issued an aggregate
of 72,857,143 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount of $5,100.
On June 9, 2020, the Company issued an
aggregate of 75,714,286 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount
of $5,300.
NOTE 10 – STOCK OPTIONS
The Company’s shareholders
previously approved, by a majority vote, the adoption of the 1998 Stock Incentive Plan (the “Plan”). As amended
on August 11, 2003, the Plan reserves 20,000,000 shares of common stock for issuance upon the exercise of options which may
be granted from time-to-time to officers, directors, certain employees and consultants of the Company or its subsidiaries by
the Board of Directors. The Plan permits the award of both qualified and non-qualified incentive stock options.
During the three months ended June 30,
2020, the Company did not issue any stock options and had no stock options outstanding at June 30, 2020.
NOTE 11 – SUBSEQUENT EVENTS
The Company evaluated events occurring
after the date of the accompanying unaudited condensed consolidated balance sheets through the date the financial statements were
issued and has identified the following subsequent events that it believes require disclosure:
On July 9, 2020, the Company issued an
aggregate of 80,000,000 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount
of $5,600.
On July 16, 2020, the Company issued an
aggregate of 82,857,143 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount
of $5,800.
On July 28, 2020, the Company issued an
aggregate of 82,857,143 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount
of $5,800.
On August 3, 2020, the Company issued an
aggregate of 91,428,571 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount
of $6,400.
On August 6, 2020, the Company issued an
aggregate of 91,428,571 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount
of $6,400.
On August 10, 2020, the Company
issued an aggregate of 91,428,571 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in
the amount of $6,400.