Item
1. FINANCIAL STATEMENTS
SUN
PACIFIC HOLDING CORP
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
June 30, 2019
|
|
|
December 31, 2018
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
112,385
|
|
|
$
|
4,851
|
|
Cash held in escrow
|
|
|
953,297
|
|
|
|
-
|
|
Cash held in escrow for interest
|
|
|
706,933
|
|
|
|
-
|
|
Accounts receivable, net of allowance for uncollectable accounts of $145,155
|
|
|
98,699
|
|
|
|
77,137
|
|
Other current assets
|
|
|
-
|
|
|
|
7,234
|
|
Total current assets
|
|
|
1,871,314
|
|
|
|
89,222
|
|
|
|
|
|
|
|
|
|
|
Property and Equipment, Net
|
|
|
1,827,913
|
|
|
|
204,951
|
|
Right-of-use Asset
|
|
|
1,306,454
|
|
|
|
-
|
|
Deposits
|
|
|
1,715,868
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
6,721,549
|
|
|
$
|
294,173
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
229,497
|
|
|
$
|
245,125
|
|
Accounts payable, related party
|
|
|
76,512
|
|
|
|
91,512
|
|
Accrued compensation to officer
|
|
|
687,364
|
|
|
|
631,166
|
|
Accrued expenses
|
|
|
520,005
|
|
|
|
203,670
|
|
Accrued expenses, related party
|
|
|
39,123
|
|
|
|
31,745
|
|
Dividends payable, related party
|
|
|
23,270
|
|
|
|
18,913
|
|
Advances from related parties
|
|
|
612,024
|
|
|
|
612,023
|
|
Project financing obligation
|
|
|
260,000
|
|
|
|
260,000
|
|
Vehicle installment notes payable, current portion
|
|
|
21,631
|
|
|
|
28,943
|
|
Convertible notes payable, net of discounts
|
|
|
376,926
|
|
|
|
423,454
|
|
Convertible notes payable, related party, net of discounts
|
|
|
408,974
|
|
|
|
408,974
|
|
Note payable, net of discounts
|
|
|
5,866,636
|
|
|
|
-
|
|
Lease liability, current portion
|
|
|
79,903
|
|
|
|
-
|
|
Total current liabilities
|
|
|
9,201,865
|
|
|
|
2,955,525
|
|
|
|
|
|
|
|
|
|
|
Long Term Liabilities:
|
|
|
|
|
|
|
|
|
Lease liability, net of current portion
|
|
|
1,234,602
|
|
|
|
-
|
|
Vehicle installment notes payable, net of current portion
|
|
|
20,867
|
|
|
|
31,724
|
|
Total long-term liabilities
|
|
|
1,255,469
|
|
|
|
31,724
|
|
Total liabilities
|
|
|
10,457,334
|
|
|
|
2,987,249
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (see Note 7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit:
|
|
|
|
|
|
|
|
|
Preferred stock $0.0001 par value, 20,000,000 million shares authorized:
|
|
|
|
|
|
|
|
|
Series A preferred stock: 12,000,000 shares designated; 12,000,000 shares issued and outstanding
|
|
|
1,200
|
|
|
|
1,200
|
|
Series B preferred stock: 1,000,000 shares designated; -0- shares issued and outstanding, respectively
|
|
|
-
|
|
|
|
-
|
|
Series C preferred stock: 500,000 shares designated; -0- shares issued and outstanding, respectively
|
|
|
-
|
|
|
|
-
|
|
Common stock $0.0001 par value, 500,000,000 shares authorized; 277,844,481 and 66,901,354 shares issued and outstanding, respectively
|
|
|
27,784
|
|
|
|
6,690
|
|
Additional paid in capital
|
|
|
4,161,579
|
|
|
|
3,948,051
|
|
Accumulated deficit
|
|
|
(7,500,440
|
)
|
|
|
(6,649,017
|
)
|
Total deficit
|
|
|
(3,309,877
|
)
|
|
|
(2,693,076
|
)
|
Non-controlling interest in subsidiary
|
|
|
(425,909
|
)
|
|
|
-
|
|
Total stockholders’ deficit
|
|
|
(3,735,785
|
)
|
|
|
(2,693,076
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit
|
|
$
|
6,721,549
|
|
|
$
|
294,173
|
|
The
accompanying footnotes are an integral part of these condensed consolidated financial statements.
SUN
PACIFIC HOLDING CORP.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE
AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(Unaudited)
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
101,923
|
|
|
$
|
145,339
|
|
|
$
|
210,288
|
|
|
$
|
266,079
|
|
Cost of Revenues
|
|
|
41,422
|
|
|
|
93,094
|
|
|
|
128,415
|
|
|
|
180,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
60,501
|
|
|
|
52,245
|
|
|
|
81,873
|
|
|
|
85,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages and compensation
|
|
|
81,649
|
|
|
|
38,201
|
|
|
|
115,137
|
|
|
|
220,988
|
|
Professional fees
|
|
|
248,319
|
|
|
|
263,635
|
|
|
|
341,621
|
|
|
|
414,882
|
|
General and administrative
|
|
|
148,182
|
|
|
|
274,762
|
|
|
|
296,080
|
|
|
|
335,317
|
|
Total operating expenses
|
|
|
478,150
|
|
|
|
576,598
|
|
|
|
752,838
|
|
|
|
971,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(417,649
|
)
|
|
|
(524,353
|
)
|
|
|
(670,965
|
)
|
|
|
(885,211
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend expense - preferred stock
|
|
|
-
|
|
|
|
(3,125
|
)
|
|
|
-
|
|
|
|
(6,250
|
)
|
Interest expense
|
|
|
(288,975
|
)
|
|
|
(106,559
|
)
|
|
|
(606,366
|
)
|
|
|
(110,388
|
)
|
Total other expense
|
|
|
(288,975
|
)
|
|
|
(109,684
|
)
|
|
|
(606,366
|
)
|
|
|
(116,638
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(706,624
|
)
|
|
$
|
(634,037
|
)
|
|
$
|
(1,277,331
|
)
|
|
$
|
(1,001,849
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to non-controlling interest
|
|
|
250,165
|
|
|
|
-
|
|
|
|
425,909
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common stockholders
|
|
$
|
(456,460
|
)
|
|
$
|
(634,037
|
)
|
|
$
|
(851,423
|
)
|
|
$
|
(1,001,849
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Per Common Share - Basic
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding - Basic
|
|
|
178,912,854
|
|
|
|
62,663,833
|
|
|
|
132,454,826
|
|
|
|
61,786,546
|
|
The
accompanying footnotes are an integral part of these condensed consolidated financial statements.
SUN
PACIFIC HOLDING CORP.
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
SIX
MONTHS ENDED JUNE 30, 2019 AND 2018
(Unaudited)
|
|
Series
A Preferred Stock
|
|
|
Series
C Preferred Stock
|
|
|
Common
Stock
|
|
|
Additional
Paid
In
|
|
|
Accumulated
|
|
|
Non
- controlling
|
|
|
Total
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Interest
|
|
|
Deficit
|
|
Six
Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances
at December 31, 2017
|
|
|
12,000,000
|
|
|
$
|
1,200
|
|
|
|
275,000
|
|
|
$
|
28
|
|
|
|
60,833,030
|
|
|
$
|
6,083
|
|
|
$
|
3,168,626
|
|
|
$
|
(4,873,536
|
)
|
|
$
|
-
|
|
|
$
|
(1,697,599
|
)
|
Issuance
of common stock for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
10
|
|
|
|
59,990
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
Issuance
of common stock warrants for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
130,641
|
|
|
|
-
|
|
|
|
-
|
|
|
|
130,641
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(367,811
|
)
|
|
|
-
|
|
|
|
(367,811
|
)
|
Balances
at March 31, 2018
|
|
|
12,000,000
|
|
|
|
1,200
|
|
|
|
275,000
|
|
|
|
28
|
|
|
|
60,933,030
|
|
|
|
6,093
|
|
|
|
3,359,257
|
|
|
|
(5,241,347
|
)
|
|
|
-
|
|
|
|
(1,874,769
|
)
|
Issuance
of common stock for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,130,000
|
|
|
|
113
|
|
|
|
112,887
|
|
|
|
-
|
|
|
|
-
|
|
|
|
113,000
|
|
Issuance
of common stock in settlement of accounts payable
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
668,324
|
|
|
|
67
|
|
|
|
84,118
|
|
|
|
-
|
|
|
|
-
|
|
|
|
84,185
|
|
Issuance
of common stock warrants with convertible debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
280,019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
280,019
|
|
Beneficial
conversion feature on convertible debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
69,981
|
|
|
|
-
|
|
|
|
-
|
|
|
|
69,981
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(634,037
|
)
|
|
|
-
|
|
|
|
(634,037
|
)
|
Balances
at June 30, 2018
|
|
|
12,000,000
|
|
|
$
|
1,200
|
|
|
|
275,000
|
|
|
$
|
28
|
|
|
|
62,731,354
|
|
|
$
|
6,273
|
|
|
$
|
3,906,262
|
|
|
$
|
(5,875,384
|
)
|
|
$
|
-
|
|
|
$
|
(1,961,621
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances
at December 31, 2018
|
|
|
12,000,000
|
|
|
$
|
1,200
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
66,901,354
|
|
|
$
|
6,690
|
|
|
$
|
3,948,051
|
|
|
$
|
(6,649,017
|
)
|
|
$
|
-
|
|
|
$
|
(2,693,076
|
)
|
Issuance
of common stock for conversion of convertible debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
53,140,000
|
|
|
|
5,314
|
|
|
|
89,299
|
|
|
|
-
|
|
|
|
-
|
|
|
|
94,613
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(394,963
|
)
|
|
|
(175,744
|
)
|
|
|
(570,707
|
)
|
Balances
at March 31, 2019
|
|
|
12,000,000
|
|
|
|
1,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
120,041,354
|
|
|
|
12,004
|
|
|
|
4,037,350
|
|
|
|
(7,043,980
|
)
|
|
|
(175,744
|
)
|
|
|
(3,169,170
|
)
|
Issuance
of common stock for conversion of convertible debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
157,803,127
|
|
|
|
15,780
|
|
|
|
124,229
|
|
|
|
-
|
|
|
|
-
|
|
|
|
140,009
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(456,460
|
)
|
|
|
(250,165
|
)
|
|
|
(706,624
|
)
|
Balances
at June 30, 2019
|
|
|
12,000,000
|
|
|
$
|
1,200
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
277,844,481
|
|
|
$
|
27,784
|
|
|
$
|
4,161,579
|
|
|
$
|
(7,500,440
|
)
|
|
$
|
(425,909
|
)
|
|
$
|
(3,735,785
|
)
|
The
accompanying footnotes are an integral part of these condensed consolidated financial statements.
SUN
PACIFIC HOLDING CORP.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX
MONTHS ENDED JUNE 30, 2019 AND 2018
(Unaudited)
|
|
2019
|
|
|
2018
|
|
Cash flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,277,331
|
)
|
|
$
|
(1,001,849
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
32,552
|
|
|
|
78,602
|
|
Amortization of debt discount - interest expense
|
|
|
269,472
|
|
|
|
83,748
|
|
Conversion fees settled with common stock
|
|
|
16,639
|
|
|
|
-
|
|
Warrants issued for services
|
|
|
-
|
|
|
|
130,641
|
|
Common stock issued for services
|
|
|
-
|
|
|
|
84,184
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(21,562
|
)
|
|
|
36,495
|
|
Deposits and other assets
|
|
|
(1,708,634
|
)
|
|
|
(15,122
|
)
|
Accounts payable
|
|
|
(15,629
|
)
|
|
|
15,864
|
|
Accounts payable, related party
|
|
|
(15,000
|
)
|
|
|
-
|
|
Accrued compensation to officer
|
|
|
56,198
|
|
|
|
74,988
|
|
Accrued expenses
|
|
|
330,553
|
|
|
|
47,375
|
|
Accrued expenses, related party
|
|
|
7,378
|
|
|
|
-
|
|
Dividends payable, related party
|
|
|
4,357
|
|
|
|
6,250
|
|
Right-to-use asset and obligation
|
|
|
8,051
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(2,312,956
|
)
|
|
|
(458,824
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(1,655,514
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(1,655,514
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from notes payable released from escrow.
|
|
|
5,753,625
|
|
|
|
-
|
|
Repayment of advances from related parties
|
|
|
-
|
|
|
|
(219
|
)
|
Proceeds from issuance of common stock
|
|
|
-
|
|
|
|
173,001
|
|
Proceeds from financing obligation
|
|
|
-
|
|
|
|
260,000
|
|
Proceeds from convertible notes payable, net of issuance costs
|
|
|
-
|
|
|
|
281,660
|
|
Repayment of vehicle installment notes payable
|
|
|
(18,169
|
)
|
|
|
(11,434
|
)
|
Net cash provided by financing activities
|
|
|
5,735,456
|
|
|
|
703,008
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash
|
|
|
1,766,986
|
|
|
|
244,184
|
|
Cash and restricted cash at beginning of period
|
|
|
4,851
|
|
|
|
55,740
|
|
Cash and restricted cash at end of period
|
|
$
|
1,771,837
|
|
|
$
|
299,924
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
-
|
|
|
$
|
-
|
|
Taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
|
|
|
|
|
|
|
|
|
Discount from note payable
|
|
$
|
271,375
|
|
|
$
|
-
|
|
Issuance of common stock for conversion of
|
|
|
|
|
|
|
|
|
convertible debt
|
|
$
|
217,983
|
|
|
$
|
-
|
|
Right of use asset and operating lease liability
|
|
$
|
1,338,686
|
|
|
$
|
-
|
|
Convertible debt discounts for beneficial conversion features
|
|
$
|
-
|
|
|
$
|
69,981
|
|
Convertible debt discounts for detachable warrants
|
|
$
|
-
|
|
|
$
|
280,019
|
|
Settlement of convertible debt through AP
|
|
$
|
-
|
|
|
$
|
5,032
|
|
Issuance costs related to convertible debt
|
|
$
|
-
|
|
|
$
|
68,340
|
|
The
accompanying footnotes are an integral part of these condensed consolidated financial statements.
SUN
PACIFIC HOLDING CORP.
NOTES
TO CONDENSED CONSOLIDATED FINACNIAL STATEMENTS
THREE
AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(Unaudited)
NOTE
1 - DESCRIPTION OF THE BUSINESS
Organization
The
Company was incorporated under the laws of the State of New Jersey on July 28, 2009, as Sun Pacific Power Corporation and together
with its subsidiaries, are referred to as the “Company”. On August 24, 2017, the Company entered into an Acquisition
Agreement with EXOlifestyle, Inc. whereby the Company became a wholly owned subsidiary of EXOlifestyle, Inc. The acquisition was
accounted for as a reverse merger, resulting in the Company being considered the accounting acquirer. Accordingly, the accompanying
condensed consolidated financial statements included the accounts of EXOlifestyle, Inc. since August 24, 2017.
On
October 3, 2017, pursuant to the written consent of the majority of the shareholders in lieu of a meeting, Sun Pacific Holding
Corp., f/k/a EXOlifestyle, Inc. (the “Company”) filed a Certificate of Amendment with the state of Nevada to change
the name of the Company from EXOlifestyle, Inc. to Sun Pacific Holding Corp. On October 3, 2017, the Company’s board of
directors declared a 1 for 50 reverse stock split. All share amounts for all periods presented have been restated to reflect the
reverse stock split.
Currently,
the Company has six (6) subsidiary holdings. Sun Pacific Power Corp which was the initial company that specialized in solar, electrical
and general construction, Bella Electric, LLC that in conjunction with the Company operates our electrical contracting work. Bella
Electric, LLC is a Pennsylvania limited liability company. The Company also formed Sun Pacific Security Corp., a New Jersey corporation.
Currently the Company has not begun operations in the security sector but is reviewing plans to provide residential and commercial
security solutions, including installation and monitoring. The Company also formed National Mechanical Group Corp, a New Jersey
corporation focused on plumbing operations in the New Jersey and Pennsylvania areas. The Company also formed Street Smart Outdoor
Corp, a Wyoming corporation that acts as a holding company for the Company’s state specific operations in unique advertising
through solar bus stops, solar trashcans and “street kiosks.” MedRecycler, LLC, is a wholly owned subsidiary duly
formed in the state of Nevada. MedRecycler, LLC was created in 2018 to act as a holding company for potential waste to energy
projects. MedRecycler, LLC, currently owns 51% of MedRecycler RI, Inc. a Rhode Island Corporation. MedRecycler RI, Inc. was created
for the Medical Waste to Energy facility that the Company is attempting to finance and operate in West Warrick, Rhode Island.
Description
of business
Utilizing
managements history and contacts in general contracting, coupled with our subject matter expertise and intellectual property (“IP”)
knowledge of solar panels and other environmentally friendly technologies, Sun Pacific Holding (“the Company”) is
focused on building a “Next Generation” green energy company. The Company offers competitively priced “Next
Generation” solar panel and lighting products by working closely with design, engineering, integration and installation
firms in order to deliver turnkey solar and other energy efficient solutions. The Company provides
solar
bus stops, solar trashcans and “street kiosks” that utilize our unique advertising offerings that provide State and
local municipalities with costs efficient solutions.
The Company
provides general,
electrical, and plumbing contracting services to a range of both public and commercials customers in support of our goals of expanding
our green energy market reach. In conjunction with these general contracting services and as part of our effort to expand our
green energy marketplace, we have recently started the process to develop and build out a Waste to Energy plant in the state of
Rhode Island and we are also exploring partnerships that will allow the Company to develop additional green energy projects such
as solar farms and or other green projects that can utilize the Company’s expertise.
The
Company has been unable to produce positive cashflows since inception resulting in the Company relying heavily upon convertible
promissory notes and equity financing. As a result, the Company’s shareholders have suffered from highly dilutive financings.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The
accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally
accepted accounting principles of the United States of America (“GAAP”) and the interim reporting rules of the Securities
and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes
thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all
adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the
financial position and the results of operations for the interim periods presented have been reflected herein. The results of
operations for interim periods are not necessarily indicative of the results to be expected for the full year.
Use
of estimates in the preparation of financial statements
Preparation
of financial statements in conformity with accounting principles generally accepted in the United States requires management to
make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. Actual results
could differ from those estimates. Significant estimates include the allowance for doubtful accounts and impairment assessments
related to long-lived assets.
Consolidation
The
consolidated financial statements include the accounts of the Company and its wholly owned, and less-than-wholly owned subsidiaries
of which the Company holds a controlling interest. All significant intercompany balances and transactions have been eliminated.
Amounts attributable to minority interests in the Company’s less-than-wholly owned subsidiary are presented as non-controlling
interest on the accompanying condensed consolidated balance sheets and statements of operations.
Cash
and cash equivalents
For purposes of the consolidated statements
of cash flows, cash includes demand deposits and short-term liquid investments with original maturities of three months or less
when purchased. As of June 30, 2019, the Federal Deposit Insurance Corporation (FDIC) provided insurance coverage of up to $250,000,
per depositor, per institution. At June 30, 2019, none of the Company’s cash balances were in excess of federally insured
limits with the exception of $1,660,230 of cash balances held in escrow at UMB Bank, NA under a project fund that the Company’s
subsidiary, MedRecycler-RI, Inc. is drawing balances against for the development of its Medical Waste to Energy project in
Rhode Island. Any and all withdrawals are strictly controlled by the lending institution, and use of proceeds must be approved
prior to release of funds.
Accounts
Receivable
In
the normal course of business, we decide to extend credit to certain customers without requiring collateral or other security
interests. Management reviews its accounts receivable at each reporting period to provide for an allowance against accounts receivable
for an amount that could become uncollectible. This review process may involve the identification of payment problems with specific
customers. Periodically we estimate this allowance based on the aging of the accounts receivable, historical collection experience,
and other relevant factors, such as changes in the economy and the imposition of regulatory requirements that can have an impact
on the industry. These factors continuously change and can have an impact on collections and our estimation process. The Company’s
allowance for doubtful accounts totaled $145,055 as of June 30, 2019 and December 31, 2018.
Leases
In
February 2016, the FASB issued ASU No. 2016-02 (Topic 842). Topic 842 amends several aspects of lease accounting, including requiring
lessees to recognize leases with a term greater than one year as a right-of-use asset and corresponding liability, measured at
the present value of the lease payments. In July 2018, the FASB issued supplemental adoption guidance and clarification to Topic
842 within ASU 2018-10 “Codification Improvements to Topic 842, Leases” and ASU 2018-11 “Leases (Topic 842):
Targeted Improvements.” The new guidance aims to increase transparency and comparability among organizations by requiring
lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about
leasing arrangements. A modified retrospective application is required with an option to not restate comparative periods in the
period of adoption.
The
Company, effective January 1, 2019 has adopted the provisions of the new standard. The Company has operating leases for warehouses
and offices. Management evaluates each lease independently to determine the purpose, necessity to its future operations in addition
to other appropriate facts and circumstances.
We
adopted Topic 842 using a modified retrospective approach for all existing leases at January 1, 2019. The adoption of Topic 842
impacted our balance sheet by the recognition of the operating lease right-of-use assets and the liability for operating leases.
Accordingly, upon adoption, leases that were classified as operating leases under the previous guidance were classified as operating
leases under Topic 842. The lease liability is based on the present value of the remaining lease payments, discounted using a
market based incremental borrowing rate as the effective date of January 1, 2019 using current estimates as to lease term including
estimated renewals for each operating lease. As of January 1, 2019, the Company recorded an adjustment of approximately $1,339,000
to operating lease right-of-use assets (“ROU”) and the related lease liability (Note 7).
Deposits
During
the six months ended June 30, 2019, the Company made deposits of approximately $1,700,000 pursuant to a purchase of equipment
costing approximately $7,200,000, currently expected to be delivered in August 2019 for assembly onsite at MedRecycler-RI, Inc.’s
West Warwick, Rhode Island facility.
Contingencies
Certain
conditions may exist as of the date financial statements are issued, which may result in a loss, but which will only be resolved
when one or more future events occur or do not occur. We assess such contingent liabilities, and such assessment inherently involves
an exercise of judgment. In assessing loss contingencies related to pending legal proceedings that are pending against us or unasserted
claims that may result in such proceedings, we evaluate the perceived merits of any legal proceedings or unasserted claims as
well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency
indicates that it is probable that a liability has been incurred and the amount of the liability can be estimated, then the estimated
liability would be accrued in our consolidated financial statements. If the assessment indicates that a potentially material loss
contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent
liability, together with an estimate of the range of possible loss if determinable would be disclosed.
Fair
value of financial instruments
The
carrying amounts of the Company’s accounts payable, accrued expenses, and shareholder advances approximate fair value due
to their short-term nature. The Company’s long-term debt approximates fair value based on prevailing market rates.
Property
and equipment
Property
and equipment are stated at cost. Additions and improvements that significantly add to the productive capacity or extend the life
of an asset are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line
method over three to five years for vehicles and five to ten years for equipment. Leasehold improvements are amortized over the
lesser of the estimated remaining useful life of the asset or the remaining lease term.
Impairment
of long-lived assets
The
Company periodically reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be realizable. An impairment loss would be recognized when estimated future cash flows
expected to result from the use of the asset and its eventual disposition is less than its carrying amount. At June 30, 2019 and
December 31, 2018, the Company has not identified any such impairment losses.
Income
taxes
Under
ASC Topic 740, “Income Taxes”, the Company is required to account for its income taxes through the establishment of
a deferred tax asset or liability for the recognition of future deductible or taxable amounts and operating loss and tax credit
carry forwards. Deferred tax expense or benefit is recognized as a result of timing differences between the recognition of assets
and liabilities for book and tax purposes during the year.
Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Deferred tax assets are recognized for deductible temporary differences
and operating losses, and tax credit carry forwards. A valuation allowance is established to reduce that deferred tax asset if
it is “more likely than not” that the related tax benefits will not be realized.
Revenue
recognition
100%
of the Company’s revenue for the Three and Six months ended June 30, 2019 is recognized based on the Company’s satisfaction
of distinct performance obligations identified in each agreement, generally at a point in time as defined by Topic 606, as amended.
In
May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts
with Customers. This standard replaced most existing revenue recognition guidance and is codified in FASB ASC Topic 606. Effective
January 1, 2018, the Company adopted ASU No. 2014-09 using the modified retrospective method. Under the new guidance, the Company
recognizes revenue from contracts based on the Company’s satisfaction of distinct performance obligations identified in
each agreement. The adoption of the guidance under ASU No. 2014-09 did not result in a material impact on the Company’s
consolidated revenues, results of operations, or financial position. As part of the implementation of ASC 606 the Company must
present disaggregation of revenues from contracts with customers into categories that depict how the nature, timing, and uncertainty
of revenue and cash flows are affected by economic factors. Quantitative disclosures on the disaggregation of revenue are as follows:
|
|
Six Months Ended
|
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
Outdoor Advertising Shelter Revenues
|
|
$
|
108,218
|
|
|
$
|
132,094
|
|
Contracting Service Revenues
|
|
|
102,070
|
|
|
|
133,985
|
|
|
|
$
|
210,288
|
|
|
$
|
266,079
|
|
Earnings
Per Share
Under
ASC 260, “Earnings Per Share” (“EPS”), the Company provides for the calculation of basic and diluted earnings
per share. Basic EPS includes no dilution and is computed by dividing income or loss available to common shareholders by the weighted
average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could
share in the earnings or losses of the entity. For the three months ended June 30, 2019 and 2018, basic and diluted loss per share
are the same as the calculation of diluted per share amounts would result in an anti-dilutive calculation. For the three and
six months ended June 30, 2019 and 2018, the following potential shares have been excluded from the calculation of diluted
loss per share because their impact was anti-dilutive:
|
|
2019
|
|
|
2018
|
|
Convertible Debt
|
|
|
292,527,000
|
|
|
|
37,557,004
|
|
Convertible Debt Subject to Forbearance Agreement
|
|
|
8,179,480
|
|
|
|
-
|
|
Warrants
|
|
|
309,031,237
|
|
|
|
7,724,727
|
|
|
|
|
609,737,717
|
|
|
|
45,281,731
|
|
Recent
Accounting Pronouncements.
Management
does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material
effect on the accompanying condensed consolidated financial statements.
NOTE
3 - GOING CONCERN
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America, assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction
of liabilities in the normal course of business. For the six months ended June 30, 2019 and 2018, the Company incurred losses
of $1,277,331 and $1,001,849, respectively, and used $596,091 and $458,824, respectively, of cash in operations. The Company has
a working capital deficit of $7,330,551 as of June 30, 2019. These circumstances raise substantial doubt about the Company’s
ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability
to raise the additional capital to meet short and long-term operating requirements. Management is continuing to pursue external
financing alternatives to improve the Company’s working capital position however additional financing may not be available
upon acceptable terms, or at all. If the Company is unable to obtain the necessary capital, the Company may have to cease operations.
NOTE
4 – PROPERTY AND EQUIPMENT, NET
Property
and equipment consisted of the following as of June 30, 2019 and December 31, 2018:
|
|
2019
|
|
|
2018
|
|
MedRecycler-RI, Inc. Plant and Equipment
|
|
$
|
1,655,514
|
|
|
$
|
-
|
|
Furniture and equipment
|
|
|
271,817
|
|
|
|
271,817
|
|
Vehicles
|
|
|
189,012
|
|
|
|
189,012
|
|
Leasehold Improvements
|
|
|
66,077
|
|
|
|
66,077
|
|
Less: Accumulated Depreciation
|
|
|
(354,507
|
)
|
|
|
(321,955
|
)
|
Property and equipment, net
|
|
$
|
1,827,913
|
|
|
$
|
204,951
|
|
Depreciation
expenses totaled $32,552 and $78,602 for the six months ended June 30, 2019 and 2018, respectively.
NOTE
5 - BORROWINGS
Vehicle
installment notes payable
The
Company’s vehicle installment notes payable consist of several installment notes for various vehicles used in the Company’s
operations. At June 30, 2019, the notes have annual interest rates between 3.49% and 4.07% and require monthly minimum payments
of principal and interest ranging from $370 to $434. The Company’s installment notes are collateralized by the vehicles
purchased with the respective installment notes. The notes mature from November 2020 to August 2021. As of June 30, 2019, and
December 31, 2018, the balance of the notes totaled $42,498 and $60,667, respectively.
Convertible
notes payable.
On
August 24, 2016, the Company issued two two-year unsecured convertible notes payable totaling $200,000 pursuant to a private placement
memorandum. The notes matured on August 24, 2018 and have an annual interest rate of 12.5%. At the election of the holder, upon
the occurrence of certain events, the notes can be converted into common stock of the Company at a conversion price per share
equal to 50% of the average bid price for the 30 consecutive business days prior to conversion. The conversion feature was contingent
upon i) the successful filing of a registration statement to become publicly traded, and ii) the company stock has become publicly
quoted on the OTC Markets and iii) the conversion price is above $0.10. In connection with the notes, the predecessor Company
issued a total of 200,000 shares of Series B preferred stock, which was canceled upon the reverse merger. In August 2018, the
holders of the notes agreed to extend the maturity date of the notes to December 31, 2018, in exchange for warrants to acquire
600,000 shares of common stock for an exercise price of $0.31 per share, exercisable over three years. The Company estimated the
fair value of the warrants, totaling $16,401, using the Black Scholes Method and recorded an additional discount against the note
that was amortized over the extend term of the notes. As of June 30, 2019 and December 31, 2018, the balance of the notes totaled
$196,850, and no unamortized discounts remained.
In
April 2018, the Company issued convertible notes with an aggregate principal balance of $350,000, for net proceeds after issuance
costs which were recorded as a discount against the debt to be amortized into interest expense through the maturity of the notes,
of $281,660. The notes mature in April 2019, accrue interest at an annual rate of 10% and are convertible into common stock at
a conversion rate equal to the greater of $0.05 and 60% times the lowest trading price of the Company’s common stock
during the 18 trading days prior to conversion. In the event of default, if the trading price of the Company’s common
stock falls below $0.07, the floor moves to $0.01 and if the price of the Company’s common stock falls to below $0.03, the
floor moves to $0.0001. Because the conversion feature is indexed to the Company’s stock, and there is an explicit cap
to the total number of shares issuable upon conversion, the Company determine that the embedded conversion option did not require
bifurcation and liability presentation. The investors in the notes also received warrants to acquire an aggregate of 6,349,457
shares of common stock for an exercise price of $0.11 per share, exercisable for 2 years. The Company estimated the fair value
of the warrants using the Black Scholes model and the following assumptions: volatility – 261.8% to 268.7%; expected term
– 2.0 years; dividend rate – 0.0%; risk free rate – 2.49%, and allocated $173,355 of the proceeds to the warrants,
which was recorded as a discount against the debt to be amortized into interest expense through the maturity of the notes. Based
on the allocation of proceeds to the debt, the Company determined there was a beneficial conversion feature totaling $176,645,
which was recorded as a discount against the debt to be amortized into interest expense through the maturity of the notes. During
the six months ended June 30, 2019, holder of the notes elected to convert principal, interest, and conversion fees totaling $234,622
into 210,943,127 shares of common stock. During the six months ended June 30, 2019, the Company amortized $156,461 of the
discounts. As of June 30, 2019, the notes are carried at $180,076, and no unamortized discounts remain. On July 8, 2019 the
Company entered into a settlement agreement with Auctus Fund, LLC, settling all amounts owed pursuant to that convertible promissory
note entered into on April 30, 2018 for $150,000. See Note 9.
Convertible
notes payable, related party
On
October 23, 2015, a total of $332,474 in advances from a related party was converted into two one-year unsecured convertible notes
payable to Nicholas Campanella, Chief Executive Officer of the Company (Note 8). The notes have an annual interest rate of 6%
and are currently past due. At the election of the holder, the notes can be converted into common stock of the Company at a conversion
price per share equal to 20% of the average bid price for the three consecutive business days prior to conversion. The notes
are subject to a forbearance agreement, pursuant to which the holder cannot convert the note until such time as the Company has
sufficient authorized and unissued common stock available. See Note 8. As of June 30, 2019 and December 31, 2018, the balances
of the notes totaled $332,474. As of June 30, 2019, there was $34,890 of accrued interest on these advances, included in accounts
payable and accrued expenses on the accompanying condensed consolidated balance sheet.
On
August 24, 2016, a total of $76,500 in advances from a related party was converted into a two-year unsecured convertible note
payable to Nicholas Campanella, Chief Executive Officer of the Company (Note 8), pursuant to a private placement memorandum. The
note matured on August 24, 2018, has an annual interest rate of 12.5% and is past due. At the election of the holder, upon the
occurrence of certain events, the note can be converted into common stock of the Company at a conversion price per share equal
to 50% of the average bid price for the 30 consecutive business days prior to conversion. The notes are subject to a forbearance
agreement, pursuant to which the holder cannot convert the note until such time as the Company has sufficient authorized and unissued
common stock available. See Note 8. The conversion feature is contingent upon i) the successful filing of a registration statement
to become publicly traded, and ii) the company stock has become publicly quoted on the OTC Markets and iii) the conversion price
is above $0.10. In connection with this note, the Company issued 75,000 shares of Series B preferred stock. As of June 30, 2019,
and December 31, 2018, the balance of the notes was $76,500.
Project
Financing Obligation
In
June 2018, the Company received proceeds of $260,000 pursuant to a partnership agreement and related partnership contribution
agreements with third party investors, pursuant which investors have agreed to provide financing for no less than (10) ten new
bus shelters being installed annually. Each investment in the partnership grants the investor the right to preferential distributions
of profits related to the Company’s contract with Rhode Island. The investors receive 100% of the profits from the Rhode
Island contract to install 20 bus shelters until 100% of the initial investments are returned. Thereafter, the investors receive
20% of the remaining profits from Rhode Island contract. As of June 30, 2019, no profits have been earned on the Rhode Island
contract, no repayments have occurred, and the total amount of investments received totaling $260,000 is reflected on the accompanying
condensed consolidated balance sheet as a Project Financing Obligation. During the 2
nd
quarter of 2019, the Company
received from the manufacturer the respective Bus Shelters and presently they are in the process of being assembled and installed
accordingly.
Line
of credit, related party
On
October 23, 2015, the Company entered into a line of credit agreement with Nicholas Campanella, Chief Executive officer of the
Company, for a total value of $250,000. The line of credit does not bear an interest rate and is payable on demand. As of June
30, 2019, and December 31, 2018, the balance of the debt to related party was $163,157 and is include in advances from related
parties on the accompanying condensed consolidated balance sheets.
Indenture
of Trust
In
January 2019, MedRecycler, LLC, a 51%-owned subsidiary of Sun Pacific Holding organized in the state of Rhode Island for the development
of waste to energy projects in the state of Rhode Island. Currently, MedRecycler-RI, Inc. has entered into an Indenture of Trust
in the amount of $6,025,000.00 as bridge financing for a project in West Warwick, Rhode Island. The proceeds from the indenture
are held in escrow to be used to (i) to provide for the financing of certain waste to energy facility and related improvements
(the “Improvements”); (ii) to provide for the financing or refinancing of certain equipment to be used in connection
with the Improvements (the “Equipment” and together with the Improvements, the “Project”); (iii) to provide
for the financing of capitalized interest; and (iv) to pay certain costs incurred in connection with the Project. The principal
balance of the indenture accrues interest at an annual rate of 12%, payable semi-annually, and matures on January 29, 2020. The
Company incurred debt issuance costs of $271,375, which were recorded as a discount against the indenture to be amortized into
interest expense through the maturity of the indenture. For the six months ended June 30, 2019, the Company amortized $113,011
of the discount, and as of June 30, 2019, the indenture is carried at $5,866,636, net of unamortized discount of $158,364.
The
Company’s estimated future maturities of the Company’s debt, as of June 30, 2019, are as follows:
Twelve Months Ending June 30,
|
|
Amount
|
|
2019
|
|
$
|
6,994,162
|
|
2020
|
|
|
16,874
|
|
2021
|
|
|
3,993
|
|
Thereafter
|
|
|
-
|
|
|
|
$
|
7,015,029
|
|
NOTE
6 - PREFERRED STOCK AND COMMON STOCK
Preferred
stock
The
Company is authorized to issue 20,000,000 shares of $0.0001 par value preferred stock as of June 30, 2019. As of June 30, 2019,
the Company has designated 12,000,000 shares of Series A Preferred Stock, 1,000,000 shares of Series B Convertible Preferred Stock,
and 500,000 shares of Series C Convertible Stock.
Each
share of Series A Preferred Stock is entitled to 125 votes on all matters submitted to a vote to the stockholders of the Company,
and does not have conversion, dividend or distribution upon liquidation rights. As of June 30, 2019, there were 12,000,000 shares
of Series A preferred stock outstanding, and are held by Nicholas Campanella, CEO of the Company. See Note 8.
Common
stock
During
the six months ended June 30, 2019, the Company issued 210,943,127 shares of common stock upon the conversion of convertible
debt principal, interest and conversion fees totaling $234,622.
NOTE
7 - COMMITMENTS AND CONTINGENCIES
Employment
agreement
On
December 20, 2014, the Company entered into a five-year employment agreement with Nicholas Campanella, Chief Executive Officer.
Under the terms of the agreement, the Company is required to pay a base compensation of $180,000 annually, subject to increases
in cost of living and performance bonuses as awarded by the Board of Directors. After 5 years, the agreement is automatically
renewed for an additional two years unless terminated by either party. As part of the agreement Mr. Campanella opted to defer,
with no interest, the receipt of compensation under the agreement until the Company has the funds to pay its obligation. At June
30, 2019 and December 31, 2018, the Company had accrued compensation of $687,364 and $631,166, respectively, and recorded the
related expenses in ‘general and administrative’ on the accompanying condensed consolidated statements of operations.
Leases
During
March 2017, the Company entered into a five-year lease agreement. Under the terms of the agreement, the Company is obligated to
pay monthly rent payments starting at $3,556 and escalating over the life of the lease.
The
Company entered into a lease in February 2019 for the rental of a 48,167 square foot space in Rhode Island to be used for the
Company’s MedRecycler operations. The lease has a term of 123 months commencing on March 1, 2019, requiring annual rental
payments totaling $144,501 for the first year, increasing annually to $258,930 in the final year. The lease also requires the
Company to pay a portion of the building’s common area maintenance. The Company recorded a right-to-use asset and corresponding
obligation equal to the present value of the required lease payments using a discount rate of 12% based on the Company’s
incremental borrowing rate.
The
following is a schedule showing the future minimum lease payments under leases for the next five years and the present value of
the minimum lease payments as of June 30, 2019.
Remainder of 2019
|
|
$
|
118,749
|
|
2020
|
|
|
243,249
|
|
2021
|
|
|
250,317
|
|
2022
|
|
|
217,361
|
|
2023
|
|
|
215,797
|
|
Thereafter
|
|
|
1,286,696
|
|
Total minimum lease payments
|
|
|
2,332,169
|
|
Less: Amount representing interest
|
|
|
(1,017,664
|
)
|
Present value of minimum lease payments
|
|
$
|
1,314,505
|
|
For
the six months ended June 30, 2019, lease expense was approximately $34,881 inclusive of short-term leases.
The
related lease balance included in the condensed consolidated balance sheet as of June 30, 2019 were as follows:
Assets:
|
|
|
|
|
|
|
|
Operating lease right-of use asset
|
|
$
|
1,306,454
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Lease liability – current portion
|
|
$
|
79,903
|
|
|
|
|
|
|
Lease liability – long-term portion
|
|
|
1,234,602
|
|
|
|
|
|
|
Total operating lease liabilities
|
|
$
|
1,314,505
|
|
NOTE
8 - RELATED PARTY TRANSACTIONS
For
purposes of these consolidated financial statements, Summit Trading Limited, Zimmerman LLC, the Campanella family, Jody Samuels,
Frank Capria, and Triplet Square LLC are considered related parties due to their beneficial ownership (shareholdings or voting
rights) in excess of 5%, or their affiliate status, during the years ended December 31, 2018 and 2017. During the years ended
December 31, 2018 and 2017, the affiliates made non-interest-bearing advances of $23,506 and $321,127, respectively. The balance
of these advances, which are due on demand and include the Line of Credit (See Note 5), totaled $612,023 and $588,517 as of June
30, 2019 and December 31, 2018, respectively. Included in accounts payable related parties as of June 30, 2019 and December 31,
2018, are expenses incurred with these affiliates totaling $76,512 and $91,512, respectively.
In
January 11, 2019, the Company entered into that certain Forbearance Agreement between the Company and Nicholas Campanella. Mr.
Campanella is owed approximately $648,400 in principal and interest on loans and lines of credit issued by the Company. Those
debt obligations are currently in default. As consideration for the forbearance of those debts, the Company has agreed to provide
a pledge of 100% membership interest in MedRecycler, LLC, and wholly owned subsidiary of the Company organized in the state of
Nevada which holds 51,000 shares of MedRecycler-RI, Inc. as security against the moneys owed. The amounts owed to Mr. Campanella
date back nearly five years and represent cash payments made by Mr. Campanella to Sun Pacific Power Corp. On April 3, 2019, Mr.
Campanella agreed to extend the forbearance until December 31, 2020.
In
order to secure financing for the MedRecycler-RI, Inc. West Warrick, Rhode Island waste to energy facility, Mr. Campanella agreed
that upon initial financing of the project, he shall pledge substantially all of his holdings in the Company, assign his pledges
in MedRecycler, LLC, and certain properties held by Mr. Campanella, personally, in order to collateralize the debt obligations.
As consideration for his inducement, the Board of Directors has deemed it fair consideration to issue Mr. Campanella 39,000 shares
of MedRecycler-RI, Inc. In addition, MedRecycler-RI, Inc. has engaged the services of Marmac Capital Advisors, LLC and Eilers
Law Group, P.A. to oversee, negotiate and to facility the financing and capital structure MedRecycler-RI, Inc. As neither party
has received compensation for their services for the Company or MedRecycler-RI, Inc. since August of 2018, the Board of Directors
has deemed it fair consideration to issue Marmac Capital Advisors, LLC and Eilers Law Group, P.A. 8,000 and 2,000 shares of MedRecycler-RI,
Inc., respectively. As a result, the Company shall maintain 51% of the ownership of MedRecycler-RI, Inc. through its MedRecycler,
LLC holdings.
On
February 7, 2019, pursuant to an Indenture of Trust entered into by our subsidiary, MedRecycler-RI, Inc., a Rhode Island corporation
and UMB Bank, N.A., a national banking association (“UMB”) (the “Indenture”), Sun Pacific Holding Corp.
(the “Company”) entered into that certain Guarantee of Payment and Performance with UMB acting as Trustee, whereby
the Company agreed to guarantee any and all payments and/or other obligations owed by MedRecycler-RI, Inc. pursuant to the Indenture.
In
order to secure the financing described herein, Mr. Campanella, Marmac Capital Advisors, LLC and Eilers Law Group, P.A. have further
agreed to pledge, upon funding, 100% of their ownership in MedRecycler-RI, Inc. as well as Mr. Campanella’s assignment of
his pledge from the Company of 100% of the membership interests of MedRecycler, LLC. As a result, 100% of MedRecycler-RI, Inc.
will be pledged, upon funding, to the lending party as security for the note and/or bond.
On
May 20, 2019, Nicholas Campanella agreed to forbear any of his rights to convert any portion of his related party debt into common
stock until such time that the Company had sufficient authorized shares to honor full conversion of all principal and accrued
interest into common stock of the Company.
NOTE
9- SUBSEQUENT EVENTS
From about July 1, 2019, through August
19, 2019 the Company issued 131,600,000 shares of common stock pursuant to the conversion of a certain convertible
debentures, including accrued interest and conversion fees totaling $52,398.
On
June 21, 2019, the Company issued a six month ten percent interest promissory note in the amount of $200,000.00. The note was
funded July 8, 2019. Per the terms of the note, the lender was issued 2,000,000 shares of restricted common stock as an inducement.
On
July 8, 2019, the Company entered into a settlement agreement with Auctus Fund, LLC settling all amounts owed pursuant to that
convertible promissory note entered into on April 30, 2018 for $150,000.00.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The
discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have
prepared in accordance with accounting principles generally accepted in the United States of America. This discussion should be
read in conjunction with the other sections of this Form 10-Q, including “Risk Factors,” and the Financial Statements.
The various sections of this discussion contain a number of forward-looking statements, all of which are based on our current
expectations and could be affected by the uncertainties and risk factors described throughout this Annual Report on Form 10-K.
See “Forward-Looking Statements.” Our actual results may differ materially. The preparation of these financial statements
requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during
the reporting periods. On an ongoing basis, we evaluate estimates and judgments, including those described in greater detail below.
We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
As
used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” except
where the context otherwise requires, the term “we,” “us,” “our,” or “the Company,”
refers to the business of Sun Power Holdings Corp.
Company
History and Overview
Utilizing
managements history in general contracting, coupled with our subject matter expertise and intellectual property (“IP”)
knowledge of solar panels and other leading-edge technologies, Sun Pacific Holding (“the Company”) is focused on building
a “Next Generation” green energy company. The Company offers competitively priced “Next Generation” solar
panel and lighting products by working closely with design, engineering, integration and installation firms in order to deliver
turnkey solar and other energy efficient solutions. We provide
solar
bus stops, solar trashcans and “street kiosks” that utilize our unique advertising offerings that provide State and
local municipalities with costs efficient solutions. We provide general, electrical, and plumbing contracting services to a range
of both public and commercials customers in support of our goals of expanding our green energy market reach. In conjunction with
these general contracting services and as part of our effort to expand our green energy marketplace, we have recently started
the process to develop and build out a Waste to Energy plant in the State of Rhode Island.
Our
green energy solutions can be customized to meet most enterprise and/or government mandated regulations and advanced system requirements.
Our portfolio of products and services allow our clients to select a solution that enables them to establish a viable standard
product offering that focuses on the goals of the client’s entire organization.
Currently,
the Company has six (6) subsidiary holdings. Sun Pacific Power Corp which was the initial company that specialized in solar, electrical
and general construction, Bella Electric, LLC that in conjunction with the Company operates our electrical contracting work. Bella
Electric, LLC is a Pennsylvania limited liability company. The Company also formed Sun Pacific Security Corp., a New Jersey corporation.
Currently the Company has not begun operations in the security sector but is reviewing plans to provide residential and commercial
security solutions, including installation and monitoring. The Company also formed National Mechanical Group Corp, a New Jersey
corporation focused on plumbing operations in the New Jersey and Pennsylvania areas. The Company also formed Street Smart Outdoor
Corp, a Wyoming corporation that acts as a holding company for the Company’s state specific operations in unique advertising
through solar bus stops, solar trashcans and “street kiosks.” MedRecycler, LLC, is a wholly owned subsidiary duly
formed in the state of Nevada. MedRecycler, LLC was created in 2018 to act as a holding company for potential waste to energy
projects. MedRecycler, LLC, currently owns 51% of MedRecycler RI, Inc. a Rhode Island Corporation. MedRecycler RI, Inc. was created
for the Medical Waste to Energy facility that the Company is attempting to finance and operate in West Warrick, Rhode Island.
As
of today, our principal source of revenues is derived from Street Smart Outdoor Corp. operations in the outdoor advertising business
with contracts in place in Rhode Island and Tallahassee, Florida, along with some other minor contracting work. We are currently
in discussions with a nationally known outdoor advertising firm to manage and expand our operations, either through a joint venture,
partnership, and or a management arrangement as a result of the company’s insufficient working capital and as an option
to allow for the expansion of our technologies and or contracts by working with other parties that can bring management expertise
and or other resources that may allow us to further optimize our growth strategies.
Sun
Pacific Power Corp. continues to make bids for construction projects throughout the Northeast region. However, as of today, we
have limited operations in Sun Pacific Power Corp.
Bella
Electric, LLC and Sun Pacific Security Corp. have generally ceased operations, but we maintain the subsidiaries in case we find
opportunities to relaunch our operations.
MedRecycler,
LLC, a wholly owned subsidiary of Sun Pacific Holding Company currently holds fifty one percent (51%) of MedRecycler-RI, Inc.,
a corporation formed in the state of Rhode Island for the development of waste to energy projects in the state of Rhode Island.
Currently, MedRecycler-RI, Inc. has entered into an Indenture of Trust in the amount of $6,025,000.00 as bridge financing for
a project in West Warwick, Rhode Island (the “Rhode Island Project”). The original plan was for a facility in Johnston,
Rhode Island, but through our negotiations, determined that the West Warwick location was more suitable. The Indenture of Trust
has been secured by all equity holdings in MedRecycler-RI, Inc., all personal holdings of equity in the Company held by Nick Campanella,
our CEO and member of the Board of Directors. Mr. Campanella has further pledged personal property located in Manapalan in excess
of $1,000,000. Payment for the Indenture of Trust is further guaranteed by the Company and Street Smart Outdoor Corp. Currently,
MedRecycler-RI, Inc. has entered into a lease agreement in West Warwick, Rhode Island, has taken preliminary steps to order the
equipment and is beginning to engage specialists and staff for building out the Rhode Island Project. In order to secure actual
operations of the Rhode Island Project, we estimate that MedRecycler-RI, Inc. must still secure a minimum of $10,500,000 in long
term financing. MedRecycler-RI, Inc. is currently negotiating with the state of Rhode Island and potential bond financiers to
secure the long-term financing for the Rhode Island Project. Although we anticipate, assuming the long-term financing is secured,
the Rhode Island Project may be fully operation as early as the fourth quarter of 2019, but at this time we are estimating an
early 2020 time frame for the start of operations as a result of delays closing on long-term financing. all operational earnings
will be earmarked for interest, principal repayment, and the fulfillment of other covenants of the long term financing, As we
have not secured long term financing, we can make no statement regarding the long term success of the Rhode Island Project, though,
even in a best case scenario, the Rhode Island Project may not be cash flow positive until fully operational and proceeds fulfill
covenants under the terms of the yet to be finalized debt financing. Through MedRecycler, LLC, the Company owns fifty-one percent
(51%) of MedRecycler-RI, Inc., which was pledged by the Company to Mr. Campanella pursuant to a forbearance agreement related
to debts owed to Mr. Campanella. The remaining forty nine percent (49%) of MedRecycler-RI, Inc. is held by Nicholas Campanella,
personally, Marmac Corporate Advisors, LLC, and Eilers Law Group, P.A., holding thirty nine percent (39%), eight percent (8%),
two percent (2%), respectfully. Mr. Campanella received his ownership as consideration for his personal pledges securing the Indenture
of Trust, Marmac Corporate Advisors, LLC and Eilers Law Group, P.A. received their respective ownership as consideration for efforts
and services performed. One hundred percent (100%) of the ownership of MedRecycler-RI, Inc. has been pledged to bridge financing,
including any pledge rights held by Mr. Campanella in MedRecycler, LLC.
Currently,
the Company has been and is insolvent if you factor in the Company’s debt obligations. Over its history and to augment the
Company’s strategy, it has sought out partnerships and other arrangements with professionals and companies at the operating
subsidiary level to counter its insolvent state, coupled with the Company’s use of debt and equity financings. The Company
continues to look for opportunities that will allow it to partner with others in the form of debt and or equity and other contributions
at the subsidiary level, and where possible attempt to keep control of at least fifty one percent (51%) of those subsidiaries.
While it will also look for the means to correct its insolvent state at the holding company level, given its current negative
economic condition, many parties continue to prefer to work with the Company at an operational subsidiary level. The Company is
currently exploring other equity and or debt opportunities to correct its overall insolvent state. Although we continue operations
through our subsidiary holdings, revenues generated do not fully produce cash flows sufficient to meet our basic capital requirements.
In order to meet our reporting requirements alone, we will have to seek additional capital through debt or equity financing and/or
request deferred payment or other in-kind payments for services. Street Smart Outdoor is undercapitalized making expansion of
our advertising products highly unlikely or difficult to expand without the use of potential partnerships and or commission only
sales representatives. Neither the Company nor Street Smart Outdoor have secured additional financing to support operations. We
are attempting to partner or otherwise develop a capital strategy to allow us to grow the outdoor advertising business that includes
financing outdoor structures with other parties, in which we arrange financing arrangements, and we continue to look for other
professional organizations that we can partner with in expanding our contracts. Our Rhode Island Project currently represents
a liability of over $6,000,000 and has yet to commence. It will require additional financing, we estimate, of not less than $10,500,000
to complete the build out of phase one for the facility and $16,500,000 if you include consolidating the current $6,000,000 short
term indenture. We have plans upon the successful launch of our phase one to double the capacity of the facility, which will require
additional financing. MedRecycler-RI, Inc. has yet to secure any additional financing. Failure to be successful with Rhode Island
Project could lead to bankruptcy of the Company.
In
order to meet certain contractual requirements under promissory notes outstanding and/or in order to recapitalize the common stock
of the Company, the Board may recommend to the shareholders a) a reverse stock split; and/or b) an increase in the number of authorized
shares of common stock. Such an action could have a dilutive effect on existing shareholders. Currently, Nicholas Campanella,
our Chairman and CEO, has super voting rights in the form of his Series A Preferred Stock holdings. Therefore, if the board makes
any such recommendation, such actions will be approved by the shareholders of the Company.
Strategic
Vision
Our
objective is to grow our business profitably as a premier green energy-based provider of both product and services to the public
and private sectors. We are working to deploy our strategy in building upon our general and other contracting expertise in conjunction
with our intellectual property and subject matter expertise in green energy that may allow us to grow a group of profitable business
lines in solar, waste to energy, efficient lighting, and other unique energy related areas.
Recent
advances in a multitude of different yet converging technologies have significantly improved the ability to integrate energy efficient
products and solutions into infrastructure related projects. These technological advances decrease the requirements needed to
jointly operate a multitude of differing assets, devices, and tools that create new ways to integrate evolving new technologies.
This technological change and convergence in energy efficient devices, integrated communications among devices, and societal needs
to more effectively and environmentally friendly handle the removal of waste, we believe presents a significant opportunity for
us in providing and supporting simple to complex integrated solutions.
Our
challenges continue to be reaching critical mass in our solar shelter business, expanding into other green energy related projects,
completion of the Rhode Island Project and securing operational capital. Except for the bridge financing for the Rhode Island
Project, we do not have any existing financing arrangements in place. While the Company has never been adequately funded from
inception, the Company has attempted to use debt, equity, and other opportunistic in-kind compensation to further the Company’s
strategic vision.
Going
Concern
The
Company has an accumulated deficit of approximately $7,500,440 as of June 30, 2019. The Company’s continuation as a going
concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not
been able to accomplish to date, and/or obtain additional financing from its stockholders and/or other third parties.
In
order to further implement its business plan and satisfy its working capital requirements, the Company will need to raise additional
capital. There is no guarantee that the Company will be able to raise additional equity or debt financing at acceptable terms,
if at all.
There
is no assurance that the Company will ever be profitable. These consolidated financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of
liabilities that may result should the Company be unable to continue as a going concern.
Risk
Factors
Generally,
as a smaller reporting company, we are permitted to omit risk factors. However, we believe the following Risk Factors are material
to our business. These do not encompass all risks related to our operations.
You
should carefully consider the risks described below together with all of the other information included in this annual report
before making an investment decision with regard to our securities. The statements contained in or incorporated herein that are
not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results
to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually
occurs, our business, financial condition or results of operations could be harmed. In that case, you may lose all or part of
your investment. In addition to the other information provided in this prospectus, you should carefully consider the following
risk factors in evaluating our business before purchasing any of our common stock.
Risks
Related to Our Financial Condition
Since
our inception, we have been insolvent and have required debt and equity financing to maintain operations.
Since
our inception, we have failed to create cashflows from revenues sufficient to cover basic costs. As a result, we have relied heavily
on debt and equity financing. Equity financing, in particular, has created a dilutive effect on our common stock, which has hampered
our ability to attract reasonable financing terms. For the foreseeable future, we will continue to rely upon debt and equity financing
to maintain operation of the Company and its subsidiaries.
We
have generated minimal revenues from operations, which makes it difficult for us to evaluate our future business prospects and
make decisions based on those estimates of our future performance.
As
of December 31, 2018, we had generated insufficient revenues. As a consequence, it is difficult, if not impossible, to forecast
our future results based upon our historical data. Our projections are based upon our best estimates on future growth. Because
of the related uncertainties, we may be hindered in our ability to anticipate and timely adapt to increases or decreases in sales,
revenues, or expenses. If we make poor budgetary decisions as a result of unreliable data, we may never become profitable or incur
losses, which may result in a decline in our stock price.
There
is substantial doubt about our ability to continue as a going concern and if we are unable to generate significant revenue or
secure additional financing, we may be unable to implement our business plan and grow our business.
We
are an emerging growth company and are in the process of selling and developing our products. Consequently, we have not generated
enough revenues as of the date of this prospectus. We have an accumulated deficit and have incurred operating losses since our
inception and expect losses to continue during the remainder of fiscal 2019. Our independent registered public accounting firm
has indicated in their report that these conditions raise substantial doubt about our ability to continue as a going concern for
a period of 12 months from the issuance date of this report. The continuation of our business as a going concern is dependent
upon the continued financial support from our stockholders.
There
is uncertainty regarding our ability to grow our business to a greater extent than we can with our existing financial resources,
also described above, without additional financing. We have no agreements, commitments, or understandings to secure additional
financing at this time. Our long-term future growth and success is dependent upon our ability to continue selling our products
and services, generate cash from operating activities and obtain additional financing. There is no assurance that we will be able
to continue selling our products and services, generate sufficient cash from operations, sell additional shares of common stock
or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our ability to grow
our business to a greater extent than we can with our existing financial resources, also described above.
Expenses
required to operate as a public company will reduce funds available to implement our business plan and could negatively affect
our stock price and adversely affect our results of operations, cash flow and financial condition.
Operating
as a public company is more expensive than operating as a private company, including additional funds required to obtain outside
assistance from legal, accounting, investor relations, or other professionals that could be costlier than planned. We may also
be required to hire additional staff to comply with additional SEC reporting requirements. We anticipate that the cost of SEC
reporting will be approximately $100,000 annually. Our failure to comply with reporting requirements and other provisions of securities
laws could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition.
If we fail to meet these requirements, we will be unable to secure a qualification for quotation of our securities on the OTCQB,
or if we have secured a qualification, we may lose the qualification and our securities would no longer trade on the OTCQB. Further,
if we fail to meet these obligations and consequently fail to satisfy our SEC reporting obligations, investors will then own stock
in a company that does not provide the disclosure available in quarterly, annual reports and other required SEC reports that would
be otherwise publicly available leading to increased difficulty in selling their stock due to our becoming a non-reporting issuer.
Our
common stock trades below $0.01 and has been from the OTCQB Tier.
OTC
Markets requires, amongst other things, that in order to qualify for OTCQB listings, an issuer have their common stock trade above
$0.01 per share. If the bid price closes below $0.01 for 30 consecutive days, an issuer will be notified of their bid price deficiency
and has a 90-day cure period, where by the stock’s closing bid price must be greater than $0.01 for 10 consecutive days.
On February 5, 2019, we received notice of our bid price deficiency from OTC Markets, giving us until May 6, 2019 to cure the
bid price deficiency. Unfortunately, we failed to cure, and our common stock was dropped to the OTCPink tier. This could adversely
affect the Company and our ability to raise funds through equity financing as OTCPink listings are generally deemed to have a
greater risk. In addition, our shareholders face the risk that in order to cure the bid price deficiency, the Board of Directors
may recommend a reverse stock split to the shareholders. As Nicholas Campanella has a majority of the voting rights, such recommendation
would likely be affirmed which could result in the risk of greater dilution to the value of our shareholders.
Risks
Related to Our Business
We
rely on our Chief Executive Officer to operate our business. The loss of our Chief Executive Officer could have a material adverse
effect on our business.
Our
operations are highly dependent upon the efforts of our Chief Executive Officer, Nicholas Campanella. The success of our Company
is heavily reliant upon the efforts and resources of Nicholas Campanella. The loss of our Chief Executive Officer would have a
material adverse effect on our business, financial condition, and results of operations, particularly if we are unable to hire
or relocate and integrate suitable replacements on a timely basis or at all. Further, in order to continue to grow our business,
we will need to expand our senior management team. We may be unable to attract or retain these persons. This could hinder our
ability to grow our business and could disrupt our operations or otherwise have a material adverse effect on our business.
We
are unable to attract additional management personnel and members to our Board of Directors.
Due
to our insolvency, we are unable to dedicate any amount of cashflows to executive salaries and/or directors’ and officers’
insurance, therefore we are unable to attract additional executive personnel or Board Members. Until we can secure, at a minimum
directors’ and officers’ insurance, the executive duties shall remain with our Chief Executive Officer.
Threatened
legal action by disgruntled shareholders and former employees may endanger our ability to raise capital for our ongoing projects
through our subsidiary interests and may create additional financial risks.
Recently,
disgruntled shareholders have threatened potential suit against the Company which has complicated our ability to secure financing.
Specifically, our Rhode Island waste to energy project being operated through our subsidiary holding, MedRecycler-RI, Inc. has
been complicated by the disclosure of such threatened legal action and could potentially harmed our negotiating position with
certain authorities that are required to approve the permanent financing for the project. In addition, a former executive of the
Company contacted authorities approving the project, availing their potential legal actions to the negotiation process. These
threated legal actions could require the Company to provide additional security or to seek alternative means of financing the
project altogether that could necessitate a change in the capital structure of the Subsidiary to allow for the placement of permanent
financing. The consequences of these threats could negatively affect the outcome of the project. In addition, defending any threatened
legal action could add additional financial risk to the Company.
Due
to the current debt load of the Company, our credit worthiness may endanger our ability to secure financing.
Given
the financial condition of the Company, securing financing for a project such as our waste to energy project has been a very difficult
task, as has been the case for most fund-raising efforts for the Company. The current debt load and financial performance of the
Company could raise creditworthiness issues in the eyes of potential lenders. The current state of the Company’s credit
could require the Company to evaluate new corporate and capital structures of our subsidiaries in order to shield our subsidiary
interests from the liabilities of the Company. If we fail to present lenders with a credit profile that will meet their standards,
large projects, such as our subsidiary project in MedRecycler-RI, Inc. could fail or require new corporate and or capital restructuring.
Given that the Company is already heavily in debt, such failure to secure financing and complete the project could require the
Company to file for bankruptcy and encumber all of the assets of the Company.
The
current ownership has the effect of concentrating voting control with our Chief Executive Officer and his family; this limits
our other stockholders’ and your ability to influence corporate matters.
Nicholas
Campanella currently holds 12,000,000 shares of Series A Preferred Stock. Each share of Series A Preferred Stock is entitled to
125 votes per share. As a result, Nicholas Campanella has 1,500,000,000 voting rights. As a result of this concentration of voting
power, Nicholas Campanella will have significant influence over the management and affairs of the Company and control over matters
requiring stockholder approval, including the election of directors and significant corporate transactions, such as mergers or
other sales of the Company or our assets, for the foreseeable future. This concentration of voting control will limit your ability
to influence corporate matters and could adversely affect the market price of our Common Stock once a market is established.
Our
director and officer, Nicholas Campanella will control and make corporate decisions that may differ from those that might be made
by the other shareholders.
Due
to the controlling amount of their share ownership in our Company, Nicholas Campanella will have a significant influence in determining
the outcome of all corporate transactions, including the power to prevent or cause a change in control. His interests may differ
from the interests of other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.
Our
director and officer, Nicholas Campanella, holds substantial debt that is convertible into common stock, resulting in even greater
control over the Company.
Nicholas
Campanella holds convertible promissory notes in excess of $600,000, making Nicholas Campanella the largest creditor of the Company.
The convertible promissory notes are convertible into common stock at rate of a 50% discount to market. Our current market cap
is lower than $400,000. If Nicholas Campanella were to either convert his promissory notes or foreclose upon the limited assets
of the Company, we would likely have to file for bankruptcy.
Results
of Operations
Three
Months Ended June 30, 2019 compared to Three Months Ended June 30, 2018
Revenues
:
Revenues decreased by approximately $43,416 from $145,339 for the six months ended June 30, 2018 to $101,923 for the six
months ended June 30, 2019 due to delays of our migration away from General Contracting services towards the development
of Green Energy Projects including the sale of Solar powered shelters and other energy related projects that derive income
from advertising sources. The Company has entered into revenue sharing agreements with the City of Tallahassee, the State of
Rhode Island Transportation Authority, and the State of New Jersey, along with others to provide and manage up to
approximately 1,700 Solar powered shelters and other related products for a period of up to Ten (10) years that may include
providing WiFi Signal Boosters and Advertising in conjunction with the shelters and other related other outdoor related
products. Depending upon the timing of installation and advertising revenue generated per shelter and or other
advertising-based product, the Company’s Revenue may increase materially from this green energy offering. The Company
has recently raised capital to build and deploy up to 20 bus shelters in Rhode Island as part of an income sharing
arrangement with an investment group. The Company has recently had 20 bus shelters delivered and is in the process of
assembling and deploying the bus shelters into the marketplace. The Company is also presently in the process of adding up to
60 bus benches in the City of Tallahassee and has engaged two new commissioned sales individuals to assist the company in
increasing its advertising revenues in the City of Tallahassee market place, along with adding improved sales
advertising capabilities in an effort to improve advertising utilization. The Company has also started the process of
developing and building in the State of Rhode Island a Waste to Energy Facility. Depending upon the successful completion of
raising the necessary capital and completing the facility timely, Revenues may also increase materially from this additional
green energy offering. These items along with other revenue generating opportunities under review by the Company may cause
dramatic shifts in the Company’s comparative revenue profile of the products and services that the Company provides in
the future.
Cost
of revenues
: Cost of revenues has comparatively remained the same from June 30, 2018 to June 30, 2019 Upon the successful
launch and completion of the Company’s Waste to Energy facility and the increase in the Company’s bus shelters and
other outdoor advertising producing assets, along with an additional other related construction services, the Company’s
Cost of Revenues may increase.
Operating
Expenses
: Operating expenses decreased by approximately $98,448 from $576,598 for the three months ended June 30, 2018
to $478,150 for the three months ended June 30, 2019 due materially to decreases in wages which were slightly offset by an increase
in general and administrative expenses that were associated with project development costs for the Company’s Medical Waste
to Energy initiative, other development projects associated with green energy development initiatives that the Company is currently
exploring. The Company’s Operating expenses may vary quarter to quarter as a result in upfront development costs for permits,
engineering reviews, and other costs associated with the Company’s new development projects related to its Medical Waste
to Energy projects as well as other projects that it is currently reviewing.
Other
Expenses
: Other Expenses increased by approximately $179,291 from $109,684 for the three months ended June 30, 2018 to $288,975
for the three months ended June 30, 2019 as a result of greater amounts of interest expense as a result of the issuance of convertible
debt and other capital related events. Given the Company’s financing requirements in developing its new business models,
the Company’s other (income) expenses may increase over time as the Company explores the use of additional debt financing.
Net
Loss:
As a result of the above, Net Loss increased approximately $72,587 from $634,037 for the three months ended June 30,
2018 to $706,624 for the three months ended June 30, 2019.
Results
of Operations
Six
Months Ended June 30, 2019 compared to Six Months Ended June 30, 2018
Revenues
:
Revenues decreased by approximately $55,791 from $266,079 for the six months ended June 30, 2018 to $210,288 for the six
months ended June 30, 2019 due to delays of our migration away from General Contracting services towards the development
of Green Energy Projects including the sale of Solar powered shelters and other energy related projects that derive income
from advertising sources. The Company has entered into revenue sharing agreements with the City of Tallahassee, the State of
Rhode Island Transportation Authority, and the State of New Jersey, along with others to provide and manage up to
approximately 1,700 Solar powered shelters and other related products for a period of up to Ten (10) years that may include
providing WiFi Signal Boosters and Advertising in conjunction with the shelters and other related other outdoor related
products. Depending upon the timing of installation and advertising revenue generated per shelter and or other
advertising-based product, the Company’s Revenue may increase materially from this green energy offering. The Company
has recently raised capital to build and deploy up to 20 bus shelters in Rhode Island as part of an income sharing
arrangement with an investment group. The Company has recently had 20 bus shelters delivered and is in the process of
assembling and deploying the bus shelters into the marketplace. The Company is also presently in the process of adding up to
60 bus benches in the City of Tallahassee and has engaged two new commissioned sales individuals to assist the company in
increasing its advertising revenues in the City of Tallahassee market place, along with adding improved sales
advertising capabilities in an effort to improve advertising utilization. The Company has also started the process of
developing and building in the State of Rhode Island a Waste to Energy Facility. Depending upon the successful completion of
raising the necessary capital and completing the facility timely, Revenues may also increase materially from this additional
green energy offering. These items along with other revenue generating opportunities under review by the Company may cause
dramatic shifts in the Company’s comparative revenue profile of the products and services that the Company provides in
the future.
Cost
of revenues
: Cost of revenues has comparatively remained the same from June 30, 2018 to June 30, 2019 Upon the successful
launch and completion of the Company’s Waste to Energy facility and the increase in the Company’s bus shelters and
other outdoor advertising producing assets, along with an additional other related construction services, the Company’s
Cost of Revenues may increase.
Operating
Expenses
: Operating expenses decreased by approximately $218,349 from $971,187 for the six months ended June 30, 2018
to $752,838 for the six months ended June 30, 2019 due materially to decreases in wages which were slightly offset by an increase
in general and administrative expenses that were associated with project development costs for the Company’s Medical Waste
to Energy initiative, other development projects associated with green energy development initiatives that the Company is currently
exploring. The Company’s Operating expenses may vary quarter to quarter as a result in upfront development costs for permits,
engineering reviews, and other costs associated with the Company’s new development projects related to its Medical Waste
to Energy projects as well as other projects that it is currently reviewing.
Other
Expenses
: Other Expenses increased by approximately $489,728 from $116,638 for the six months ended June 30, 2018 to $606,366
for the six months ended June 30, 2019 as a result of greater amounts of interest expense as a result of the issuance of convertible
debt and other capital related events. Given the Company’s financing requirements in developing its new business models,
the Company’s other (income) expenses may increase over time as the Company explores the use of additional debt financing.
Net
Loss:
As a result of the above, Net Loss increased approximately $275,482 from $1,001,849 for the six months ended June 30,
2018 to $1,277,331 for the six months ended June 30, 2019.
Continuing
Operations, Liquidity and Capital Resources
As
of June 30, 2019, we had a working capital deficit of approximately $7,330,551. We intend to seek additional financing for our
working capital, in the form of equity or debt, to provide us with the necessary capital to accomplish our plan of operation.
There can be no assurance that we will be successful in our efforts to raise additional capital.
During
the six months ended June 30, 2019, we used approximately $596,091 in operating activities driven materially from our operating
loss offset by non-cash expenses.
During
the six months ended June 30, 2019, we used approximately $1,655,514 for the purchase of furniture and equipment.
During
the six months ended June 30, 2019, we received approximately $2,359,139 from financing proceeds driven materially from
the proceeds of the bridge financing for the Waste to Energy project.
Off-Balance
Sheet Arrangements
As
of June 30, 2019, we did not have any 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. The term “off-balance sheet arrangement” generally
means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under
which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent
interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for
such assets.