ITEM 1. FINANCIAL STATEMENTS
REMSLEEP HOLDINGS, INC.
|
REMSLEEP HOLDINGS, INC.
CONDENSED BALANCE SHEETS
|
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September 30,
2021
|
|
|
December 31,
2020
|
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|
ASSETS
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
2,363,944
|
|
|
$
|
114,227
|
|
|
Inventory
|
|
|
19,086
|
|
|
|
11,064
|
|
|
Total current assets
|
|
|
2,383,030
|
|
|
|
125,291
|
|
|
|
|
|
|
|
|
|
|
|
|
Other asset
|
|
|
10,000
|
|
|
|
10,000
|
|
|
Property and equipment, net
|
|
|
92,607
|
|
|
|
95,371
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
2,485,637
|
|
|
$
|
230,662
|
|
|
|
|
|
|
|
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|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
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Current Liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
17,051
|
|
|
$
|
20,235
|
|
|
Accrued compensation
|
|
|
47,000
|
|
|
|
35,000
|
|
|
Accrued interest
|
|
|
40,434
|
|
|
|
23,013
|
|
|
Accrued interest – related party
|
|
|
61,859
|
|
|
|
44,921
|
|
|
Convertible Notes, net of discount of $373,694 and $157,233, respectively
|
|
|
120,831
|
|
|
|
44,867
|
|
|
Derivative Liability
|
|
|
607,806
|
|
|
|
700,719
|
|
|
Loan payable – related party
|
|
|
179,191
|
|
|
|
179,191
|
|
|
Loans payable
|
|
|
48,443
|
|
|
|
53,212
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
1,122,615
|
|
|
|
1,101,158
|
|
|
|
|
|
|
|
|
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Commitments and Contingencies
|
|
|
-
|
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|
-
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STOCKHOLDERS’ EQUITY (DEFICIT):
|
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Series A preferred stock, $0.001 par value, 5,000,000 shares authorized, 4,000,000 and issued and outstanding
|
|
|
126,000
|
|
|
|
126,000
|
|
|
Series B preferred stock, $0.001 par value, 5,000,000 shares authorized, 500,000 shares issued
|
|
|
500
|
|
|
|
500
|
|
|
Series C preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued
|
|
|
-
|
|
|
|
-
|
|
|
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 944,402,837 and 368,063,606 shares issued and outstanding, respectively
|
|
|
944,400
|
|
|
|
368,061
|
|
|
Additional paid in capital
|
|
|
10,525,384
|
|
|
|
5,200,885
|
|
|
Accumulated Deficit
|
|
|
(10,233,262
|
)
|
|
|
(6,565,942
|
)
|
|
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
1,363,022
|
|
|
|
(870,496
|
)
|
|
|
|
|
|
|
|
|
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
$
|
2,485,637
|
|
|
$
|
230,662
|
|
The accompanying notes are an integral part
of these unaudited condensed financial statements.
|
REMSLEEP HOLDINGS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
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For the Three Months Ended
September 30,
|
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For the Nine Months Ended
September 30,
|
|
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|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
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Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees
|
|
$
|
7,500
|
|
|
$
|
6,000
|
|
|
$
|
59,643
|
|
|
$
|
27,725
|
|
|
Compensation expense – related party
|
|
|
21,000
|
|
|
|
21,000
|
|
|
|
63,000
|
|
|
|
63,000
|
|
|
Development expense
|
|
|
16,666
|
|
|
|
962
|
|
|
|
95,608
|
|
|
|
47,901
|
|
|
General and administrative
|
|
|
36,697
|
|
|
|
30,145
|
|
|
|
92,962
|
|
|
|
113,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
81,863
|
|
|
|
58,107
|
|
|
|
311,213
|
|
|
|
251,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(81,863
|
)
|
|
|
(58,107
|
)
|
|
|
(311,213
|
)
|
|
|
(251,974
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(240,797
|
)
|
|
|
(146,339
|
)
|
|
|
(646,382
|
)
|
|
|
(450,199
|
)
|
|
Default penalty of convertible note
|
|
|
-
|
|
|
|
-
|
|
|
|
(162,798
|
)
|
|
|
-
|
|
|
Loss on issuance of convertible debt
|
|
|
(70,675
|
)
|
|
|
(86,374
|
)
|
|
|
(612,844
|
)
|
|
|
(302,696
|
)
|
|
Early payment penalty
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(49,162
|
)
|
|
Change in fair value of derivative
|
|
|
(438,824
|
)
|
|
|
19,346
|
|
|
|
(1,934,083
|
)
|
|
|
547,868
|
|
|
Total other expense
|
|
|
(750,296
|
)
|
|
|
(213,367
|
)
|
|
|
(3,356,107
|
)
|
|
|
(254,189
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(832,159
|
)
|
|
|
(271,474
|
)
|
|
|
(3,667,320
|
)
|
|
|
(506,163
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(832,159
|
)
|
|
$
|
(271,474
|
)
|
|
$
|
(3,667,320
|
)
|
|
$
|
(506,163
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic and diluted
|
|
|
691,368,096
|
|
|
|
226,189,484
|
|
|
|
569,840,600
|
|
|
|
186,400,755
|
|
The accompanying notes are an integral part
of these unaudited condensed financial statements.
|
REMSLEEP HOLDINGS, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
(DEFICIT)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2020 AND 2021
(UNAUDITED)
|
|
|
|
Series A Preferred Stock
|
|
|
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance, December 31, 2019
|
|
|
4,000,000
|
|
|
$
|
125,000
|
|
|
|
116,269,466
|
|
|
$
|
116,268
|
|
|
$
|
4,139,395
|
|
|
$
|
(5,390,490
|
)
|
|
$
|
(1,009,827
|
)
|
|
Common stock issued for conversion of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
19,741,098
|
|
|
|
19,741
|
|
|
|
278,991
|
|
|
|
-
|
|
|
|
298,732
|
|
|
Warrants converted to common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
36,769,439
|
|
|
|
36,769
|
|
|
|
(36,769
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Warrant down round protection
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,349
|
|
|
|
(3,349
|
)
|
|
|
-
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(273,522
|
)
|
|
|
(273,522
|
)
|
|
Balance, March 31, 2020
|
|
|
4,000,000
|
|
|
|
125,000
|
|
|
|
172,780,003
|
|
|
|
172,778
|
|
|
|
4,384,966
|
|
|
|
(5,667,361
|
)
|
|
|
(984,617
|
)
|
|
Common stock issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
15,000,000
|
|
|
|
15,000
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
75,000
|
|
|
Warrants converted to common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
1,120,942
|
|
|
|
1,121
|
|
|
|
(1,121
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
38,833
|
|
|
|
38,833
|
|
|
Balance, June 30, 2020
|
|
|
4,000,000
|
|
|
|
125,000
|
|
|
|
188,900,945
|
|
|
|
188,899
|
|
|
|
4,443,845
|
|
|
|
(5,628,528
|
)
|
|
|
(870,784
|
)
|
|
Common stock issued for conversion of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
67,639,262
|
|
|
|
67,639
|
|
|
|
361,555
|
|
|
|
-
|
|
|
|
429,194
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(271,474
|
)
|
|
|
(271,474
|
)
|
|
Balance, September 30, 2020
|
|
|
4,000,000
|
|
|
$
|
125,000
|
|
|
|
256,540,207
|
|
|
$
|
256,538
|
|
|
$
|
4,805,400
|
|
|
$
|
(5,900,002
|
)
|
|
$
|
(713,064
|
)
|
|
REMSLEEP HOLDINGS, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
(DEFICIT)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2020 AND 2021
(UNAUDITED)
|
|
|
|
Series A
Preferred Stock
|
|
|
Series B
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance, December 31, 2020
|
|
|
5,000,000
|
|
|
$
|
126,000
|
|
|
|
500,000
|
|
|
$
|
500
|
|
|
|
368,063,606
|
|
|
$
|
368,061
|
|
|
$
|
5,200,885
|
|
|
$
|
(6,565,942
|
)
|
|
$
|
(870,496
|
)
|
|
Common stock issued for conversion of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
74,985,965
|
|
|
|
74,986
|
|
|
|
467,990
|
|
|
|
-
|
|
|
|
542,976
|
|
|
Warrants issued with convertible debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75,070
|
|
|
|
-
|
|
|
|
75,070
|
|
|
Net Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(471,466
|
)
|
|
|
(471,466
|
)
|
|
Balance, March 31, 2021
|
|
|
5,000,000
|
|
|
|
126,000
|
|
|
|
500,000
|
|
|
|
500
|
|
|
|
443,049,571
|
|
|
|
443,047
|
|
|
|
5,743,945
|
|
|
|
(7,037,408
|
)
|
|
|
(723,916
|
)
|
|
Common stock issued for conversion of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
87,252,322
|
|
|
|
87,252
|
|
|
|
2,114,742
|
|
|
|
-
|
|
|
|
2,201,994
|
|
|
Common stock issued for conversion of warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
43,478,695
|
|
|
|
43,479
|
|
|
|
(43,479
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Common stock issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,800,000
|
|
|
|
12,800
|
|
|
|
83,200
|
|
|
|
-
|
|
|
|
96,000
|
|
|
Warrants issued with convertible debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
106,722
|
|
|
|
-
|
|
|
|
106,722
|
|
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
30,000
|
|
|
Net Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,363,695
|
)
|
|
|
(2,363,695
|
)
|
|
Balance, June 30, 2021
|
|
|
5,000,000
|
|
|
|
126,000
|
|
|
|
500,000
|
|
|
|
500
|
|
|
|
586,580,588
|
|
|
|
586,578
|
|
|
|
8,035,130
|
|
|
|
(9,401,103
|
)
|
|
|
(652,895
|
)
|
|
Common stock issued for conversion of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
97,822,249
|
|
|
|
97,822
|
|
|
|
800,254
|
|
|
|
-
|
|
|
|
898,076
|
|
|
Common stock issued cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
260,000,000
|
|
|
|
260,000
|
|
|
|
1,690,000
|
|
|
|
-
|
|
|
|
1,950,000
|
|
|
Net Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(832,159
|
)
|
|
|
(832,159
|
)
|
|
Balance, September 30, 2021
|
|
|
5,000,000
|
|
|
$
|
126,000
|
|
|
|
500,000
|
|
|
$
|
500
|
|
|
|
944,402,837
|
|
|
$
|
944,400
|
|
|
$
|
10,525,384
|
|
|
$
|
(10,233,262
|
)
|
|
$
|
1,363,022
|
|
The accompanying notes are an integral part
of these unaudited condensed financial statements.
REMSLEEP HOLDINGS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
For the Nine Months Ended
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,667,320
|
)
|
|
$
|
(506,163
|
)
|
|
Adjustments to reconcile net loss to net cash used in operations:
|
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
41,208
|
|
|
|
36,263
|
|
|
Change in fair value of derivative
|
|
|
1,934,083
|
|
|
|
(547,868
|
)
|
|
Discount amortization
|
|
|
559,732
|
|
|
|
411,863
|
|
|
Loss on issuance of convertible debt
|
|
|
612,844
|
|
|
|
302,696
|
|
|
Default penalty of convertible note
|
|
|
162,798
|
|
|
|
-
|
|
|
Changes in Operating Assets and Liabilities
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
|
|
|
|
7,909
|
|
|
Inventory
|
|
|
(8,022
|
)
|
|
|
(2,214
|
)
|
|
Accounts payable
|
|
|
(3,184
|
)
|
|
|
(16,144
|
)
|
|
Accrued officer compensation
|
|
|
12,000
|
|
|
|
11,000
|
|
|
Accrued interest
|
|
|
69,554
|
|
|
|
12,021
|
|
|
Accrued interest – related party
|
|
|
16,938
|
|
|
|
16,876
|
|
|
Net cash used in operating activities
|
|
|
(269,369
|
)
|
|
|
(273,761
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
(38,444
|
)
|
|
|
(36,485
|
)
|
|
Net Cash used in investing activities
|
|
|
(38,444
|
)
|
|
|
(36,485
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
Repayment of loans
|
|
|
(4,770
|
)
|
|
|
(2,490
|
)
|
|
Proceeds from convertible notes payable
|
|
|
516,300
|
|
|
|
380,000
|
|
|
Repayment of convertible notes payable
|
|
|
-
|
|
|
|
(165,000
|
)
|
|
Common stock sold for cash
|
|
|
2,046,000
|
|
|
|
75,000
|
|
|
Net cash provided by financing activities
|
|
|
2,557,530
|
|
|
|
287,510
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
2,249,717
|
|
|
|
(22,736
|
)
|
|
Cash at beginning of the period
|
|
|
114,227
|
|
|
|
119,574
|
|
|
Cash at end of the period
|
|
$
|
2,363,944
|
|
|
$
|
96,838
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
Interest paid in cash
|
|
$
|
306
|
|
|
$
|
453
|
|
|
Taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Supplemental non-cash disclosure:
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of debt
|
|
$
|
517,724
|
|
|
$
|
291,120
|
|
|
Accrued interest assigned to principal of assigned note
|
|
$
|
-
|
|
|
$
|
4,183
|
|
The accompanying notes are an integral part
of these unaudited condensed financial statements.
REMSLEEP HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 2021
(Unaudited)
NOTE 1 - BACKGROUND
Business Activity
REMSleep Holdings, Inc., (the “Company”)
was incorporated in the State of Nevada on June 6, 2007. On January 5, 2015 the name of the Company was changed to REMSleep Holdings,
Inc. and the business model was changed to reflect the new direction of the Company; to develop and distribute products to help people
affected by sleep apnea. On May 30, 2015 REMSleep LLC was formally merged into REMSleep Holdings, Inc.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These unaudited condensed financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”)
and the rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements and the notes
attached hereto should be read in conjunction with the financial statements and notes included in the Company’s 10-K for its fiscal
year ended December 31, 2020. In the opinion of the Company, all adjustments, including normal recurring adjustments necessary to present
fairly the financial position of the Company, as of September 30, 2021 and the results of its operations and cash flows for the three
months then ended have been included. The results of operations for the interim period are not necessarily indicative of the results for
the full year ending December 31, 2021.
Use of Estimates
The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to the prior period financial
information to conform to the presentation used in the financial statements for the three and nine months ended September 30, 2021.
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of
the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of
the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.
Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States
of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value
measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation
techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of
fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
|
Level 1:
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
|
|
|
|
|
Level 2:
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
|
|
|
|
|
Level 3:
|
Pricing inputs that are generally unobservable inputs and not corroborated by market data.
|
The carrying amount of the Company’s financial
assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity
of those instruments. The Company’s notes payable approximates the fair value of such instruments as the notes bear interest
rates that are consistent with current market rates.
The following table classifies the Company’s liabilities measured
at fair value on a recurring basis into the fair value hierarchy as of September 30, 2021 and December 31, 2020:
September 30, 2021:
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total Loss
|
|
|
Derivative
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
607,806
|
|
|
$
|
(1,934,083
|
)
|
|
Total
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
607,806
|
|
|
$
|
(1,934,083
|
)
|
December 31, 2020:
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total Gains
|
|
|
Derivative
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
700,719
|
|
|
$
|
79,677
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
700,719
|
|
|
$
|
79,677
|
|
Basic and Diluted Earnings Per Share
Net income (loss) per common share is computed
pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed
by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income
(loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially
outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding
common shares assumes that the Company incorporated as of the beginning of the first period presented.
As of September 30, 2021, the Company had 34,158,048
of potentially dilutive shares of common stock from convertible debt, 217,474,026 potentially dilutive shares of common stock warrants
and 55,000,000 potentially dilutive shares of common stock from Series A and B preferred stock.
As of September 30, 2020, the Company had 106,543,000
of potentially dilutive shares of common stock from convertible debt and 15,974,026 potentially dilutive shares of common stock warrants.
The Company’s diluted loss per share is
the same as the basic loss per share for all periods, as the inclusion of any potential shares would have had an anti-dilutive effect
due to the Company generating a loss in those periods.
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued ASU
2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU
2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible
instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and
Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer
are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception
evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope
and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share
(EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that
meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies
as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all
other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those
fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods
within those fiscal years. The Company is currently evaluation the impact this ASU will have on its financial statements.
The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise
disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have
a material impact on its financial position or results of operations.
NOTE 3 - GOING CONCERN
The accompanying unaudited financial statements
have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company has an accumulated deficit of $10,233,262 at September 30, 2021, had a net loss of $3,356,107 (approximately
$3,356,000 was non-cash other expense) and net cash used in operating activities of $269,369 for the nine months ended September 30, 2021.
The Company’s ability to raise additional capital through the future issuances of common stock and/or debt financing is unknown.
The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition,
ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. These conditions and the
ability to successfully resolve these factors over the next twelve months raise substantial doubt about the Company’s ability to
continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of
these aforementioned uncertainties.
The Company is in the final stages of product
development and plans to begin selling its product in Q1 of 2022. The Company will continue to finance its operations through debt and/or
equity financing as needed.
The industry in which we operate depends heavily
upon our ability to obtain raw material and manufacture our product as well as the overall level of consumer and business spending. A
sustained deterioration in general economic conditions (including distress in financial markets, turmoil in specific economies around
the world, public health crises, and additional government intervention), particularly in the United States, may have a negative financial
impact to our Company. Adverse conditions as a result of the global COVID-19 outbreak, will and may continue to impact our manufacturing
processes and ultimately our ability to sell our product.
NOTE 4 - PROPERTY & EQUIPMENT
Long lived assets, including property and equipment
and certain intangible assets to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows
of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset.
Long-lived assets and certain identifiable intangibles to be disposed of are reported at the lower of carrying amount or fair value less
cost to sell.
Property and Equipment and intangible assets are
first recorded at cost. Depreciation and/or amortization is computed using the straight-line method over the estimated useful lives of
the various classes of assets as follows between three and five years.
Maintenance and repair expenses, as incurred,
are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable
to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.
Assets stated at cost, less accumulated depreciation consisted of the
following:
|
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
|
Furniture/fixtures
|
|
$
|
14,904
|
|
|
$
|
14,904
|
|
|
Office equipment
|
|
|
10,375
|
|
|
|
7,136
|
|
|
Automobile
|
|
|
17,189
|
|
|
|
17,189
|
|
|
Tooling/Molds
|
|
|
176,990
|
|
|
|
141,785
|
|
|
Less: accumulated depreciation
|
|
|
(126,851
|
)
|
|
|
(85,643
|
)
|
|
Fixed assets, net
|
|
$
|
92,607
|
|
|
$
|
95,371
|
|
Depreciation expense
Depreciation expense for the nine months ended
September 30, 2021 and 2020 was $41,208 and $36,263, respectively.
NOTE 5 - LOANS PAYABLE
On October 24, 2017, the Company was notified
that a petition had been filed in the Iowa District Court for Polk County by a Mr. John M. Wesson for failure to repay a loan. Mr. Wesson
had loaned the Company $30,000 and $20,000 on October 24, 2012 and June 12, 2013, respectively. The loans were to accrue interest at 5%.
On April 26, 2018, the Company agreed to repay the loan in full including accrued interest and $5,000 for legal fees. As of September
30, 2021, there is $45,000 and $21,018 of principal and interest due on this loan. As of December 31, 2020, there is $45,000 and $19,355
of principal and interest due on this loan.
On March 23, 2018, the Company purchased an automobile.
The purchase price was $16,963.46. The interest rate on the loan is 5.8% and matures on April 7, 2023. Payments on the loan, consisting
of principal and interest, are $327 per month. As of September 30, 2021 and December 31, 2020 there is $3,443 and $8,212, respectively,
due on this loan.
NOTE 6 - CONVERTIBLE NOTES
The following table summarizes the convertible
notes and related activity as of September 30, 2021:
|
Note Holder
|
|
Date
|
|
Maturity Date
|
|
Interest
|
|
|
Balance
December 31,
2020
|
|
|
Additions
|
|
|
Conversions/
Repayments
|
|
|
Balance
September 30,
2021
|
|
|
Diamond Investments II LLC
|
|
8/28/2020
|
|
8/28/2021
|
|
|
8
|
%
|
|
|
110,250
|
|
|
|
-
|
|
|
|
(110,250
|
)
|
|
|
-
|
|
|
Power Up Lending Group LTD
|
|
12/18/2020
|
|
12/18/2021
|
|
|
10
|
%
|
|
|
91,850
|
|
|
|
-
|
|
|
|
(91,850
|
)
|
|
|
-
|
|
|
Granite Global Investments Ltd
|
|
10/26/2020
|
|
11/6/2021
|
|
|
24.5
|
%
|
|
|
-
|
|
|
|
162,798
|
|
|
|
(162,798
|
)
|
|
|
-
|
|
|
Granite Global Investments Ltd
|
|
1/6/2021
|
|
1/6/2022
|
|
|
12
|
%
|
|
|
-
|
|
|
|
31,000
|
|
|
|
(31,000
|
)
|
|
|
-
|
|
|
Granite Global Investments Ltd
|
|
1/30/2021
|
|
1/30/2022
|
|
|
12
|
%
|
|
|
-
|
|
|
|
36,000
|
|
|
|
-
|
|
|
|
36,000
|
|
|
Power Up Lending Group LTD
|
|
2/22/2021
|
|
2/22/2022
|
|
|
10
|
%
|
|
|
-
|
|
|
|
84,150
|
|
|
|
(84,150
|
)
|
|
|
-
|
|
|
Granite Global Investments Ltd
|
|
4/7/2021
|
|
4/7/2022
|
|
|
10
|
%
|
|
|
-
|
|
|
|
36,500
|
|
|
|
-
|
|
|
|
36,500
|
|
|
Granite Global Investments Ltd
|
|
4/7/2021
|
|
4/7/2022
|
|
|
10
|
%
|
|
|
-
|
|
|
|
91,850
|
|
|
|
-
|
|
|
|
91,850
|
|
|
Granite Global Investments Ltd
|
|
4/9/2021
|
|
4/9/2022
|
|
|
10
|
%
|
|
|
-
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
100,000
|
|
|
Granite Global Investments Ltd
|
|
5/3/2021
|
|
5/3/2022
|
|
|
10
|
%
|
|
|
-
|
|
|
|
53,625
|
|
|
|
-
|
|
|
|
53,625
|
|
|
Power Up Lending Group LTD
|
|
7/22/2021
|
|
7/22/2022
|
|
|
10
|
%
|
|
|
-
|
|
|
|
58,850
|
|
|
|
-
|
|
|
|
58,850
|
|
|
Power Up Lending Group LTD
|
|
8/26/2021
|
|
8/26/2022
|
|
|
10
|
%
|
|
|
-
|
|
|
|
58,850
|
|
|
|
-
|
|
|
|
58,850
|
|
|
Power Up Lending Group LTD
|
|
9/22/2021
|
|
9/22/2022
|
|
|
10
|
%
|
|
|
-
|
|
|
|
58,850
|
|
|
|
-
|
|
|
|
58,850
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
202,100
|
|
|
$
|
772,473
|
|
|
$
|
(480,048
|
)
|
|
$
|
494,525
|
|
|
|
|
|
|
Less debt discount
|
|
|
|
(157,233
|
)
|
|
|
|
|
|
|
|
|
|
|
(373,694
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
44,867
|
|
|
|
|
|
|
|
|
|
|
$
|
120,831
|
|
A summary of the activity of the derivative liability
for the notes above is as follows:
|
Balance at December 31, 2019
|
|
$
|
626,831
|
|
|
Increase to derivative due to new issuances
|
|
|
808,643
|
|
|
Decrease to derivative due to conversion/repayments
|
|
|
(897,519
|
)
|
|
Derivative loss due to mark to market adjustment
|
|
|
162,764
|
|
|
Balance at December 31, 2020
|
|
|
700,719
|
|
|
Increase to derivative due to new issuances
|
|
|
907,554
|
|
|
Decrease to derivative due to conversion/repayments
|
|
|
(2,934,550
|
)
|
|
Derivative loss due to mark to market adjustment
|
|
|
1,934,083
|
|
|
Balance at September 30, 2021
|
|
$
|
607,806
|
|
A summary of quantitative information about significant
unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of
the fair value hierarchy as of September 30, 2021 is as follows:
|
Inputs
|
|
September 30,
2021
|
|
|
Initial
Valuation
|
|
|
Stock price
|
|
$
|
.0022
|
|
|
$
|
.0018 - .0138
|
|
|
Conversion price
|
|
$
|
.0094
|
|
|
$
|
.002
- .0098
|
|
|
Volatility (annual)
|
|
|
234.92 – 246.30
|
%
|
|
|
203.69% - 246.30
|
%
|
|
Risk-free rate
|
|
|
.05% - .09
|
%
|
|
|
.07% - .09
|
%
|
|
Dividend rate
|
|
|
-
|
|
|
|
-
|
|
|
Years to maturity
|
|
|
.52 – .98
|
|
|
|
.83 - 1
|
|
A summary of quantitative information about significant
unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of
the fair value hierarchy at the time of conversion is as follows:
|
Inputs
|
|
|
|
|
|
Stock price
|
|
$
|
.092 - .0209
|
|
|
Conversion price
|
|
$
|
.003
- .0083
|
|
|
Volatility (annual)
|
|
|
259.05% – 293.57
|
%
|
|
Risk-free rate
|
|
|
.05% - .06
|
%
|
|
Dividend rate
|
|
|
-
|
|
|
Years to maturity
|
|
|
.31
- .50
|
|
The development and determination of the unobservable
inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management.
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company has received support from parties
related through common ownership and directorship. These loans are unsecured, and due on demand. As of September 30, 2021 and December
31, 2020, the balance due on these loans is $179,191 and $179,191, respectively. Beginning on January 1, 2019, the balance due accrues
interest at 12.5%. As of September 30, 2021, total accrued interest is $61,859.
The Company executed a new employment agreement
with Mr. Wood on April 1, 2019. Per the terms of the agreement Mr. Wood is to be compensated $4,000 per month. The agreement expired on
April 1, 2020 and has been renewed for two more years. As of September 30, 2021 and December 31, 2020, there is $2,000 and $2,000 of accrued
compensation, respectively, due to Mr. Wood.
The Company executed an employment agreement with
its Chairman, Russell Bird, on January 1, 2019. Per the terms of the agreement, which is effective for one year, Mr. Bird is to be compensated
$3,000 per month. As of September 30, 2021 and December 31, 2020, there is $45,000 and $33,000 of accrued compensation, respectively,
due to Mr. Bird. Mr. Bird’s employment agreement has been renewed in 2020 for two more years.
NOTE 8 - COMMON STOCK
During the nine
months ended September 30, 2021, Diamond Investments converted $110,250 of principal and $5,059 of interest, into 29,954,167 shares
of common stock.
During the nine
months ended September 30, 2021, Granite Global Value converted $210,962 of principal and interest into 205,438,930 shares of common
stock.
During the nine
months ended September 30, 2021, Power Up Lending Group LTD converted $180,175 of principal and interest into 24,667,439 shares
of common stock.
During the nine
months ended September 30, 2021, the Company issued 43,478,695 shares of common stock for the conversion of warrants.
During the nine
months ended September 30, 2021, the Company sold 272,800,000 shares of common stock for total cash proceeds of $2,046,000. The
shares were sold pursuant to its Tier 2 of Regulation A Offering Statement.
NOTE 9 - PREFERRED STOCK
The Company is currently authorized to issue 5,000,000
shares of Series A Preferred Stock, par value $0.001 per share value with 1:25 voting rights. The Series A Preferred Stock ranks equal
to the common stock on liquidation, pays no dividend and is convertible to common stock for one share of common for one share of Series
A Preferred Stock.
The Company is currently authorized to issue 5,000,000
shares of Series B Preferred Stock, par value $0.001 per share. Each share of Series B Preferred Stock has a 1:100 voting right and is
convertible into 100 shares of common stock. No dividends will be paid and in the event of liquidation all shares of Series B will automatically
convert into common stock. There are 500,000 shares of Series B Preferred Stock issued and outstanding.
The Company is currently authorized to issue 5,000,000
shares of Series C Preferred Stock, par value $0.001 per share value. Each share of Series C Preferred Stock has a 1:50 voting right and
is convertible into 50 shares of common stock. No dividends will be paid and in the event of liquidation all shares of Series C will automatically
convert into common stock. There are no shares of Series C Preferred Stock issued and outstanding.
NOTE 10 - WARRANTS
On January 6, 2021, the Company issued 35,000,000
warrants to Granite Global Investments Ltd in conjunction with convertible debt. The warrants are exercisable for 5 years at $.006 per
share. The warrants were evaluated for purposes of classification between liability and equity. The warrants do not contain features that
would require a liability classification and are therefore considered equity.
Using the fair value calculation, the relative
fair value between the debt issued and the warrants was calculated to determine the warrants recorded equity amount of $24,440, accounted
for in additional paid in capital.
The Black Scholes pricing model was used to estimate
the fair value of the Warrants issued with the following inputs:
|
Warrants
|
|
|
35,000,000
|
|
|
Share price
|
|
$
|
0.0033
|
|
|
Exercise Price
|
|
$
|
0.006
|
|
|
Term
|
|
|
5 years
|
|
|
Volatility
|
|
|
353
|
%
|
|
Risk Free Interest Rate
|
|
|
.43
|
%
|
|
Dividend rate
|
|
|
-
|
|
On January 30, 2021, the Company issued 120,000,000
warrants to Granite Global Investments Ltd in conjunction with convertible debt. The warrants are exercisable for 5 years at $.0003 per
share. The warrants were evaluated for purposes of classification between liability and equity. The warrants do not contain features that
would require a liability classification and are therefore considered equity.
Using the fair value calculation, the relative
fair value between the debt issued and the warrants was calculated to determine the warrants recorded equity amount of $33,652, accounted
for in additional paid in capital.
The Black Scholes pricing model was used to estimate
the fair value of the Warrants issued with the following inputs:
|
Warrants
|
|
|
120,000,000
|
|
|
Share price
|
|
$
|
0.0043
|
|
|
Exercise Price
|
|
$
|
0.0003
|
|
|
Term
|
|
|
5 years
|
|
|
Volatility
|
|
|
352
|
%
|
|
Risk Free Interest Rate
|
|
|
0.45
|
%
|
|
Dividend rate
|
|
|
-
|
|
On April 7, 2021, the Company issued 36,500,000
warrants to Granite Global Investments Ltd in conjunction with convertible debt. The warrants are exercisable for 5 years at $.006 per
share. The warrants were evaluated for purposes of classification between liability and equity. The warrants do not contain features that
would require a liability classification and are therefore considered equity.
Using the fair value calculation, the relative
fair value between the debt issued and the warrants was calculated to determine the warrants recorded equity amount of $34,505, accounted
for in additional paid in capital.
The Black Scholes pricing model was used to estimate
the fair value of the Warrants issued with the following inputs:
|
Warrants
|
|
|
36,500,000
|
|
|
Share price
|
|
$
|
0.0173
|
|
|
Exercise Price
|
|
$
|
0.006
|
|
|
Term
|
|
|
5 years
|
|
|
Volatility
|
|
|
319
|
%
|
|
Risk Free Interest Rate
|
|
|
0.45
|
%
|
|
Dividend rate
|
|
|
-
|
|
On April 9, 2021, the Company issued 10,000,000
warrants to Granite Global Investments Ltd in conjunction with convertible debt. The warrants are exercisable for 5 years at $.012 per
share. The warrants were evaluated for purposes of classification between liability and equity. The warrants do not contain features that
would require a liability classification and are therefore considered equity.
Using the fair value calculation, the relative
fair value between the debt issued and the warrants was calculated to determine the warrants recorded equity amount of $72,217, accounted
for in additional paid in capital.
The Black Scholes pricing model was used to estimate
the fair value of the Warrants issued with the following inputs:
|
Warrants
|
|
|
10,000,000
|
|
|
Share price
|
|
$
|
0.026
|
|
|
Exercise Price
|
|
$
|
0.012
|
|
|
Term
|
|
|
5 years
|
|
|
Volatility
|
|
|
319
|
%
|
|
Risk Free Interest Rate
|
|
|
0.87
|
%
|
|
Dividend rate
|
|
|
-
|
|
A summary of the status of the Company’s
outstanding stock warrants and changes during the year is presented below:
|
|
|
Number of
Warrants
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contract
Term
|
|
|
Aggregate
Intrinsic
Value
|
|
|
Outstanding at December 31, 2019
|
|
|
3,000,000
|
|
|
$
|
0.07
|
|
|
|
2.59
|
|
|
$
|
-
|
|
|
Granted
|
|
|
63,236,369
|
|
|
$
|
0.00385
|
|
|
|
2.56
|
|
|
$
|
-
|
|
|
Expired
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
Exercised
|
|
|
(50,262,343
|
)
|
|
$
|
0.00385
|
|
|
|
-
|
|
|
$
|
-
|
|
|
Exercisable at December 31, 2020
|
|
|
15,974,026
|
|
|
$
|
0.00385
|
|
|
|
2.06
|
|
|
$
|
-
|
|
|
Granted
|
|
|
201,500,000
|
|
|
$
|
0.0029
|
|
|
|
4.62
|
|
|
$
|
-
|
|
|
Expired
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
Exercised
|
|
|
15,974,026
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
Exercisable at September 30, 2021
|
|
|
201,500,000
|
|
|
$
|
0.0029
|
|
|
|
4.62
|
|
|
$
|
3,848,650
|
|
|
|
Range of Exercise
Prices
|
|
Number Outstanding
9/30/2021
|
|
|
Weighted Average Remaining
Contractual Life
|
|
|
Weighted Average
Exercise Price
|
|
|
$
|
0.0003 - $0.012
|
|
|
201,500,000
|
|
|
|
4.37 years
|
|
|
$
|
0.0029
|
|
The aggregate intrinsic value represents the total
pretax intrinsic value, based on warrants with an exercise price less than the Company’s stock price as of September 30, 2021, which
would have been received by the warrant holder had the warrant holder exercised their warrants as of that date.
NOTE 11 - SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management
has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined
that it does not have any material subsequent events to disclose in these financial statements other than the following.
Subsequent
to September 30, 2021, the Company sold 16,000,000 shares of common
stock to for total cash proceeds of $145,000. The shares were sold pursuant to its Tier 2 of Regulation A Offering Statement.
Subsequent to September 30, 2021, Power Up converted
$56,063 of principal and interest, into 5,865,132 shares of common stock.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND PLAN OF OPERATIONS.
Forward-looking Statements
There are “forward-looking statements”
contained in this quarterly report. All statements that express expectations, estimates, forecasts or projections are forward-looking
statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf.
Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,”
“estimate,” “project,” “forecast,” “may,” “should,” and variations of such
words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation
to update or revise any of the forward-looking statements after the date of this quarterly report to conform forward-looking statements
to actual results. Important factors on which such statements are based are assumptions concerning uncertainties, including but not limited
to, uncertainties associated with the following:
|
|
●
|
Inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans;
|
|
|
●
|
Our failure to earn revenues or profits;
|
|
|
●
|
Inadequate capital to continue business;
|
|
|
●
|
Volatility or decline of our stock price;
|
|
|
●
|
Potential fluctuation in quarterly results;
|
|
|
●
|
Rapid and significant changes in markets;
|
|
|
●
|
Litigation with or legal claims and allegations by outside parties; and
|
|
|
●
|
Insufficient revenues to cover operating costs.
|
The following discussion should be read in conjunction
with the financial statements and the notes thereto which are included in this quarterly report. This discussion contains forward-looking
statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from those anticipated in any
forward-looking statements included in this discussion as a result of various factors.
Overview
We were incorporated in the State of Nevada on
June 6, 2007. On August 26, 2010, we changed our name from Bella Viaggio, Inc. to Kat Gold Holdings Corp. Effective January 1, 2015,
we completed an exchange agreement to purchase 100% of the outstanding interests of RemSleep LLC in exchange for 50,000,000 shares of
common stock of RemSleep Holdings, Inc. at which time RemSleep LLC became our wholly-owned subsidiary and we adopted their business of
developing and distributing sleep apnea products. On January 5, 2015, we changed our name to REMSleep Holdings, Inc. to reflect our new
business model.
Our officers have 35 years of sleep-industry experience,
including having been employed at sleep industry companies. Our officers invented our DeltaWave CPAP interface (the “DeltaWave”)
as an innovative new device to treat patients with sleep apnea. The patent-pending DeltaWave product is a nasal-pillows type interface
that will result in better comfort and, therefore, better compliance since it was specifically designed with unique airflow characteristics
to enable patients with sleep apnea to breathe normally. A survey that appeared in DME Business found that 89% of patients stated that
mask-interface comfort was their primary concern. The primary issue that we have addressed with the DeltaWave is the “work of breathing”
component. We believe that our DeltaWave is designed to effectively address the stubborn issues that continue to affect a patient’s
ability to comply with treatment, as follows:
|
|
●
|
Does not disrupt normal breathing mechanics;
|
|
|
●
|
Causes zero work of breathing (WOB);
|
|
|
●
|
Minimizes or eliminates drying of the sinuses;
|
|
|
●
|
Uses less driving pressure; and
|
|
|
●
|
Allows users to feel safe and secure while sleeping.
|
Pending adequate financing, we plan to conduct
clinical trials to test product effectiveness.
On June 28, 2016, we applied for a patent for
a new, innovative sleep apnea product that serves as an interface for the delivery of CPAP therapy and other respiratory needs. Our goal
is to develop sleep products that achieve optimum compliance and comfort for CPAP patients.
Our website is located at: http://www.remsleeptech.com.
The contents of our website are not incorporated by reference into this report.
On January 30, 2020, the World Health Organization
declared the COVID-19 (coronavirus) outbreak a "Public Health Emergency of International Concern" and on March 10, 2020, declared
it to be a pandemic. The virus and actions taken to mitigate its spread have had and are expected to continue to have a broad adverse
impact on the economies and financial markets of many countries, including the geographical areas in which the Company operates. The Company
continues to execute its business plan. At the present time, the Company can not predict the full impact of the COVID-19 virus on its
business. Our projections on spending, product development and milestone achievements are likely to be further revised as new information
is obtained.
Results of Operations
The three months ended September 30, 2021 compared to the
three months ended September 30, 2020
We have not generated any revenue to date.
Professional fees were $7,500 compared to $6,000
for the three months ended September 30, 2021 and 2020, respectively, an increase of $1,500, or 25%. Professional fees consist mostly
of accounting, audit and legal fees. The increase is attributed to an increase in accounting and audit fees.
Compensation expense was $21,000 and $21,000 for
the three months ended September 30, 2021 and 2020, respectively.
Development expense was $16,666 and $962 for the
three months ended September 30, 2021 and 2020, respectively, an increase of $15,704. Development expense increased over the prior period
as we work to bring our product to market.
General and administrative expense (“G&A”)
was $36,697 and $30,145 for the three months ended September 30, 2021 and 2020, respectively, an increase of $6,552, or 21.7%.
The increase is largely due to an increase in edgar fees of $2,723 and other office expense.
Total other expense for the three months ended
September 30, 2021, was $750,296. Other expense includes a loss in the change of fair value of $438,824, a loss on the issuance of convertible
debt of $70,765, and interest expense of $240,797 (includes $213,038 amortization of debt discount). In the prior period we had total
other expense of $213,367 which included $136,922 of debt discount amortization, a loss on the issuance of convertible debt of $86,374,
a gain in the change of fair value of $19,346 and $9,417 of interest expense.
Net Loss
For the three months ended September 30, 2021,
we had a net loss of $832,159 as compared to a loss of $271,474 for the three months ended September 30, 2020. The increase in net loss
can be attributed to our increase in other expense as discussed above.
The nine months ended September 30, 2021 compared to the nine
months ended September 30, 2020
We have not generated any revenue to date.
Professional fees were $59,643 compared to $27,726
for the nine months ended September 30, 2021 and 2020, respectively, an increase of $31,918, or 115.1%. Professional fees consist mostly
of accounting, audit and legal fees. The increase is attributed to an increase in legal and audit fees associated with the filing of our
Reg A.
Compensation expense was $63,000 and $63,000 for
the nine months ended September 30, 2021 and 2020, respectively.
Development expense was $95,608 and $47,901 for
the nine months ended September 30, 2021 and 2020, respectively, an increase of $47,707 or 99.6%. Development expense increased over the
prior period as we work to bring our product to market.
G&A
expense was $92,962 and $113,348 for the nine months ended September 30, 2021 and 2020, respectively, a decrease of $20,386, or
18%. The decrease is largely due to a decrease of $20,390 for investor relation services.
Total other expense for the nine months ended
September 30, 2021, was $3,356,107. Other expense includes a loss in the change of fair value of $1,934,083, a loss on the issuance of
convertible debt of $612,844, a penalty for default on convertible debt of $162,798 and interest expense of $646,382 (includes $559,732
amortization of debt discount). Total other expense for the nine months ended September 30, 2020, was $254,189. Other expense includes
$410,362 of debt discount amortization, a gain in the change of fair value of $547,868, a loss on the issuance of convertible debt of
$302,696, an early payment penalty of $49,162 (expenses related to our convertible debt) and interest expense of $39,837.
Net Loss
For the nine months ended September 30, 2021,
we had a net loss of $3,667,320 as compared to $506,163 for the nine months ended September 30, 2020. The increase in net loss can be
attributed to our increase in other expense as discussed above.
Liquidity and Capital Resources
Cash flow from operations
Cash used in operating activities for the nine
months ended September 30, 2021 was $269,369 as compared to $273,761 of cash used in operating activities for the nine months ended September
30, 2020.
Cash Flows from Investing
Cash used in investing activities for the purchase
of equipment and tooling for the nine months ended September 30, 2021 was $38,444 as compared to $36,485 of cash used in investing activities
for the nine months ended September 30, 2020.
Cash Flows from Financing
For the nine months ended September 30, 2021,
we received $516,300 from the issuance of convertible debt and $2,046,000 from the sale of common stock. We also repaid $4,769 on our
auto loan. For the nine months ended September 30, 2020, we received $380,000 from convertible debt loans and repaid $165,000. We also
received $75,000 from the sale of common stock and repaid $2,490 on our auto loan.
As of September 30, 2021, we owe $494,525 to our convertible note holders.
Going Concern
As of September 30, 2021, there is substantial
doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our proposed business.
We have suffered recurring losses from operations
since our inception. In addition, we have yet to generate an internal cash flow from our business operations or successfully raised the
financing required to develop our proposed business. As a result of these and other factors, our independent auditor has expressed substantial
doubt about our ability to continue as a going concern. Our future success and viability, therefore, are dependent upon our ability to
generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect
upon us and our shareholders.
Management’s plans with regard to these
matters encompass the following actions: (i) obtaining funding from new investors to alleviate our working capital deficiency, and (ii)
implementing a plan to generate sales. Our continued existence is dependent upon our ability to resolve our liquidity problems and increase
profitability in our current business operations. However, the outcome of management’s plans cannot be ascertained with any degree
of certainty. Our financial statements do not include any adjustments that might result from the outcome of these risks and uncertainties.
The industry in which we operate depends heavily
upon our ability to obtain raw material and manufacture our product as well as the overall level of consumer and business spending. A
sustained deterioration in general economic conditions (including distress in financial markets, turmoil in specific economies around
the world, public health crises, and additional government intervention), particularly in the United States, may have a negative financial
impact to our Company. Adverse conditions as a result of the global COVID-19 outbreak, will and may continue to impact our manufacturing
processes and ultimately our ability to sell our product.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that
have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues
or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Critical Accounting Policies
The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Note 2 to the Financial Statements describes
the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited
to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies
are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.
We are subject to various loss contingencies arising
in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability,
as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency
is accrued when management concludes that it is probable that an asset has been impaired, or a liability has been incurred and the amount
of the loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals
should be adjusted.
We recognize deferred tax assets (future tax benefits)
and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis
of assets and liabilities. The deferred tax assets and liabilities represent the expected future tax return consequences of those
differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled. Future
tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not
that this deferred tax asset will be realized.
Recent Accounting Pronouncements
We have reviewed other recently issued accounting
pronouncements and plan to adopt those that are applicable to us. We do not expect the adoption of any other pronouncements to have an
impact on our results of operations or financial position.