Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You
should read the following discussion and analysis of our financial condition and results of operations together with our consolidated
financial statements and related notes included elsewhere in this filing. This discussion and other parts of this filing contain
forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations, intentions,
and beliefs. Our actual results may differ materially from those discussed in these forward-looking statements as a result of
various factors, including those set forth under “Risk Factors” and in other parts of this filing, and you should
not place undue certain on these forward-looking statements, which apply only as of the date of this filing. See “Disclosure
Regarding Forward-Looking Statements”.
We
are an emerging growth company as defined in Section 2(a) (19) of the Securities Act. Pursuant to Section 107 of the Jumpstart
Our Business Startups Act, we may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities
Act for complying with new or revised accounting standards, meaning that we can delay the adoption of certain accounting standards
until those standards would otherwise apply to private companies. We have chosen to take advantage of the extended transition
period for complying with new or revised accounting standards applicable to public companies to delay adoption of such standards
until such standards are made applicable to private companies. Accordingly, our consolidated financial statements may not be comparable
to the financial statements of public companies that comply with such new or revised accounting standards.
OVERVIEW:
Historical
Development
Sigyn
Therapeutics, Inc. (“Sigyn” or the “Company”) was established on October 29, 2019 in the State of Delaware.
We are a development-stage therapeutic technology company that is headquartered in San Diego, California USA. Our primary focus
is directed toward a significant unmet need in global health: the treatment of acute life-threatening inflammatory conditions
that are precipitated by Cytokine Storm Syndrome (“The Cytokine Storm” or “Cytokine Release Syndrome”)
and not addressed with approved drug therapies. Cytokine Storm Syndrome is a dysregulated immune response that can be induced
by a wide range of infectious and non-infectious conditions. A hallmark of the Cytokine Storm is an over-production of inflammatory
cytokines, which can destroy tissue, trigger multiple-organ failure and cause death.
On
October 19, 2020, Reign Resources Corporation, a Delaware corporation (the “Registrant”) completed a Share Exchange
Agreement (the “Agreement”) with our organization (Sigyn Therapeutics) that resulted in the registrant acquiring 100%
of our issued and outstanding shares of common stock in exchange for 75% of the fully paid and nonassessable shares of the Registrant’s
common stock outstanding (the “Acquisition”). In conjunction with the transaction, the Registrant changed its name
to Sigyn Therapeutics, Inc. pursuant to an amendment to its articles of incorporation that was filed with the State of Delaware.
Subsequently, the Registrant’s trading symbol was changed to SIGY. The Acquisition
was treated as a “tax-free exchange” under Section 368 of the Internal Revenue Code of 1986 and resulted in the
Sigyn corporate entity (established on October 29, 2019) to become a wholly owned subsidiary of the Registrant. Among the conditions
for closing the acquisition, the Registrant extinguished all previously reported liabilities, its preferred class of shares, and
all stock purchase options. As a result, the reported liabilities totaling $3,429,516 converted into a total of 7,907,351 common
shares. Additionally, assets held on the books of Reign Resources Corporation, such as
Gem inventory, was kept in the Company and therefore recorded as assets on the Share Exchange date. The Registrant’s
Board of Directors appointed James A. Joyce and Craig P. Roberts to serve as members of the Registrant’s Board of Directors
upon closing of the Acquisition.
As
of April 5, 2021, we have a total 35,248,513 shares issued and outstanding, of which 9,561,513 shares are held by non-affiliate
shareholders.
About
Sigyn Therapy
Sigyn
Therapy is a novel blood purification technology designed to mitigate cytokine storm syndrome through the broad-spectrum depletion
of inflammatory targets from the bloodstream. Sigyn Therapy’s mechanism of action allows for it to be implemented on the
established infrastructure of dialysis and CRRT machines that are already located in hospitals and clinics worldwide. Cytokine
Storm Syndrome is a hallmark of sepsis, which is the most common cause of in-hospital deaths and claims more lives each year than
all forms of cancer combined. Virus induced cytokine storm (VICS) is associated with high mortality and is a leading cause of
SARS-CoV-2 (COVID-19) deaths. Other therapeutic opportunities include but are not limited to bacteria induced cytokine storm (BICS),
acute respiratory distress syndrome (ARDS) and acute forms of liver failure such as Hepatic Encephalopathy, which is associated
with elevated levels of toxins and inflammatory cytokines in the bloodstream.
Recent
Developments
On
December 1, 2020, we reported the results of an in vitro study that validated the ability of Sigyn Therapy to simultaneously
deplete a broad-spectrum of critical inflammatory targets from human blood plasma. In the study, Sigyn Therapy reduced the presence
of endotoxin and relevant pro-inflammatory cytokines, which included Interleukin-1 beta (IL-1b), Interleukin-6 (IL-6) and Tumor
Necrosis Factor alpha (TNF-a). Endotoxin (lipopolysaccharide or LPS) is a well-known inflammatory trigger implicated in the pathogenesis
of sepsis and septic shock resulting from gram-negative bacterial infections. The dysregulated over-production of IL-1b, IL-6
and TNF-a is known to induce organ failure and cause death. An objective of the study was to rebalance elevated cytokine levels
and optimize the elimination of endotoxin from human blood plasma. The study was conducted in triplicate over four-hour time periods
with a pediatric version of Sigyn Therapy. Average reduction of endotoxin load peaked at 83% during the studies. The average reduction
of IL-1b was 69%, IL-6 reduction was 59% and TNF-a reduction was 57% during the four-hour studies. We plan to incorporate this
data into an Investigational Device Exemption (IDE) that we expect to submit to the United States Food and Drug Administration
(FDA) prior to the end of the 2021 calendar year. Our IDE submission will request permission to initiate U.S. human feasibility
studies with a primary objective to demonstrate that Sigyn Therapy can be safely administered to subjects diagnosed with a Cytokine
Storm Syndrome related condition. There is no assurance that FDA will approve our IDE submission to permit human studies.
We
are also evaluating the ability of Sigyn Therapy to address CytoVesicles that transport inflammatory cytokine cargos throughout
the bloodstream. Based on recent peer-reviewed publications and emerging scientific evidence, we believe the simultaneous clearance
of circulating CytoVesicles, endotoxin and inflammatory cytokines may overcome the limitations of previous drug and medical device
candidates to treat sepsis and other life-threatening inflammatory conditions.
On
January 6, 2021, we disclosed the results of an in vitro pilot study that modeled the ability of the adsorbent components
we incorporate within Sigyn Therapy to address CytoVesicles. CytoVesicles (extracellular vesicles that transport inflammatory
cytokine cargos) participate in concert with freely circulating cytokines to further escalate the Cytokine Storm. CytoVesicles
have previously been elusive targets for extracorporeal blood purification therapies as they can be 20-50 times larger than cytokines
themselves. In our in vitro pilot study, 104 nanometer liposomes were utilized as a model system to assess the ability
of Sigyn Therapy’s adsorbent components to deplete CytoVesicles from human blood plasma. After a two-hour interaction with
our cocktail of adsorbent components, liposome concentrations in human blood plasma were reduced ~90%. Previously published studies
have validated liposomes as a model for the isolation of extracellular vesicles from blood based on the similarity of their size
and structural characteristics. There is no assurance that any in vitro study outcome of Sigyn Therapy or its components
will translate into similar performance outcomes in human studies.
We
began our planned principal operations, and accordingly, we have prepared our consolidated financial statements in accordance
with accounting principles generally accepted in the United States of America (“GAAP”).
Financing
Transactions
Convertible
Promissory Debentures
Osher
– $110,000
On
February 10, 2021, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with
respect to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due February 11, 2022 based on $1.00 for each $0.90909 paid by Osher and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 157,143 shares of the Company’s
Common Stock at an exercise price of $1.20 per share. The aggregate cash subscription amount received by the Company from Osher
for the issuance of the Note and Warrants was $100,000 which was issued at a $10,000 original issue discount from the face value
of the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.70 per share, subject to adjustment as provided therein, such as stock splits
and stock dividends.
Brio
– $110,000
On
February 10, 2021, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with
respect to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due February 11, 2022 based on $1.00 for each $0.90909 paid by Osher and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 157,143 shares of the Company’s
Common Stock at an exercise price of $1.20 per share. The aggregate cash subscription amount received by the Company from Osher
for the issuance of the Note and Warrants was $100,000 which was issued at a $10,000 original issue discount from the face value
of the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.70 per share, subject to adjustment as provided therein, such as stock splits
and stock dividends.
Osher
– $385,000
On
January 28, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Osher
Capital Partners LLC (“Osher”) of (i) $385,000 aggregate principal amount of Original Issue Discount Senior
Convertible Debenture due January 26, 2021, based on $1.00 for each $0.90909 paid by Osher and (ii) five-year Common Stock Purchase
Warrants to purchase up to an aggregate of 80,209 shares of the Company’s Common Stock at an exercise price of $7.00 per
share. The aggregate cash subscription amount received by the Company from Osher for the issuance of the note and warrants was
$350,005 which was issued at a $34,995 original issue discount from the face value of the Note. The
conversion price for the principal in connection with voluntary conversions by a holder of the convertible notes is $0.094 per
share, as amended on October 20, 2020, subject to adjustment as provided therein, such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follows on October 20, 2020:
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The
parties amended the Warrants dated January 28, 2020, for the number of warrant shares from 80,209 warrant shares to 4,113,083
warrant shares at an exercise price of $0.14 per share.
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●
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The
parties amended the Note for the maturity date from June 23, 2021 to October 20, 2021.
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Osher
– $50,000 (as amended on October 20, 2020 to $55,000)
On
June 23, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Osher
Capital Partners LLC (“Osher”) of (i) $50,000 aggregate principal amount of Original Issue Discount Senior
Convertible Debenture (the “Note”) due June 23, 2021, based on $1.00 for each $0.90909 paid by Osher and (ii) five-year
Common Stock Purchase Warrants (“Warrants”) to purchase up to an aggregate of 10,000 shares of the Company’s
Common Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Osher
for the issuance of the Note and Warrants was $50,005 which was issued at a $0 original issue discount from the face value of
the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follows on October 20, 2020:
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The
parties amended the Note for the aggregate principal amount from $50,000 to $55,000. The aggregate cash subscription amount
received by the Company from Osher for the issuance of the Note and Warrants was $50,005 which was issued at an amended $4,995
original issue discount from the face value of the Note.
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●
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The
parties amended the Warrants dated June 23, 2020, for the number of warrant shares from 10,000 warrant shares to 141,020 warrant
shares at an exercise price of $0.59 per share.
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●
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The
parties amended the Note for the maturity date from June 23, 2021 to October 20, 2021.
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Brio
– $50,000 (as amended on October 20, 2020 to $55,000)
On
June 23, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Brio Capital
Maser Fund, Ltd. (“Brio”) of (i) $50,000 aggregate principal amount of Original Issue Discount Senior Convertible
Debenture (the “Note”) due June 23, 2021, based on $1.00 for each $0.90909 paid by Brio and (ii) five-year Common
Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 10,000 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Brio for the
issuance of the Note and Warrants was $50,000 which was issued at a $0 original issue discount from the face value of the Note.
The conversion price for the principal in connection with voluntary conversions by a holder
of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Brio amended the convertible debt agreement as follows on October 20, 2020:
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●
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The
parties amended the Note for the aggregate principal amount from $50,000 to $55,000. The aggregate cash subscription amount
received by the Company from Brio for the issuance of the Note and Warrants was $50,000 which was issued at an amended $5,000
original issue discount from the face value of the Note.
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●
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The
parties amended the Warrants dated June 23, 2020, for the number of warrant shares from 10,000 warrant shares to 141,020 warrant
shares at an exercise price of $0.59 per share.
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●
|
The
parties amended the Note for the maturity date from June 23, 2021 to October 20, 2021.
|
On
December 2, 2020, Brio elected to convert the aggregate principal amount of the Note, $55,000, into 141,020 common shares.
Wetzel
- $25,000 (as amended on October 20, 2020 to $27,500)
On
August 18, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Christopher
Wetzel (“Wetzel”) of (i) $25,000 aggregate principal amount of Original Issue Discount Senior Convertible Debenture
(the “Note”) due August 18, 2021, based on $1.00 for each $0.90909 paid by Wetzel and (ii) five-year Common Stock
Purchase Warrants (“Warrants’) to purchase up to an aggregate of 5,000 shares of the Company’s Common Stock
at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Wetzel for the issuance
of the Note and Warrants was $25,000 which was issued at a $0 original issue discount from the face value of the Note. The
conversion price for the principal in connection with voluntary conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as provided therein, such as stock splits and stock dividends.
The
Company and Wetzel amended the convertible debt agreement as follows on October 20, 2020:
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●
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The
parties amended the Note for the aggregate principal amount from $25,000 to $27,500. The aggregate cash subscription amount
received by the Company from Wetzel for the issuance of the Note and Warrants was $25,000 which was issued at an amended $2,500
original issue discount from the face value of the Note.
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●
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The
parties amended the Warrants dated August 18, 2020, for the number of warrant shares from 5,000 warrant shares to 70,510 warrant
shares at an exercise price of $0.59 per share.
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●
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The
parties amended the Note for the maturity date from August 18, 2021 to October 20, 2021.
|
On
October 28, 2020, Wetzel elected to convert the aggregate principal amount of the Note, $27,500, into 70,510 common shares.
Osher
– $181,500
On
September 17, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Osher
Capital Partners LLC (“Osher”) of (i) $181,500 aggregate principal amount of Original Issue Discount Senior
Convertible Debenture (the “Note”) due September 30, 2021, based on $1.00 for each $0.90909 paid by Osher and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 8,250 shares of the Company’s
Common Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Osher
for the issuance of the Note and Warrants was $165,000 which was issued at a $16,500 original issue discount from the face value
of the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follows on October 20, 2020:
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●
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The
parties amended the Warrants dated September 17, 2020, for the number of warrant shares from 8,250 warrant shares to 465,366
warrant shares at an exercise price of $0.59 per share.
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●
|
The
parties amended the Note for the maturity date from September 30, 2021 to October 20, 2021.
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Brio
– $93,500
On
September 18, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Brio Capital
Maser Fund, Ltd. (“Brio”) of (i) $93,500 aggregate principal amount of Original Issue Discount Senior Convertible
Debenture (the “Note”) due September 30, 2021, based on $1.00 for each $0.90909 paid by Brio and (ii) five-year Common
Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 4,250 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Brio for the
issuance of the Note and Warrants was $85,000 which was issued at a $8,500 original issue discount from the face value of the
Note. The conversion price for the principal in connection with voluntary conversions by
a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Brio amended the convertible debt agreement as follows on October 20, 2020:
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●
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The
parties amended the Warrants dated September 18, 2020, for the number of warrant shares from 4,250 warrant shares to 239,734
warrant shares at an exercise price of $0.59 per share.
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●
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The
parties amended the Note for the maturity date from September 30, 2021 to October 20, 2021.
|
On
December 2, 2020, Brio elected to convert the aggregate principal amount of the Note, $93,500, into 239,734 common shares.
Eisenberger
- $165,000
On
September 21, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Joseph
Eisenberger (“Eisenberger”) of (i) $165,000 aggregate principal
amount of Original Issue Discount Senior Convertible Debenture (the “Note”) due September 30, 2021, based on $1.00
for each $0.90909 paid by Eisenberger and (ii) five-year Common Stock Purchase Warrants
(“Warrants’) to purchase up to an aggregate of 7,500 shares of the Company’s Common Stock at an exercise price
of $30.00 per share. The aggregate cash subscription amount received by the Company from Eisenberger
for the issuance of the Note and Warrants was $150,000 which was issued at a $15,000 original issue discount from the face
value of the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Eisenberger amended the convertible debt agreement as follows on October 20, 2020:
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●
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The
parties amended the number of shares from the Warrants dated September 21, 2020, for the number of warrant shares from 7,500
warrant shares to 423,060 warrant shares at an exercise price of $0.59 per share.
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●
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The
parties amended the Note for the maturity date from September 30, 2021 to October 20, 2021.
|
On
November 5, 2020, Eisenberger elected to convert the aggregate principal amount of the Note, $165,000, into 423,060 common shares.
DiMaggio
– $27,500 (as amended on October 20, 2020 to $22,000)
On
September 28, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Ross DiMaggio
(“DiMaggio”) of (i) $27,500 aggregate principal amount of Original Issue Discount Senior Convertible Debenture
(the “Note”) due August 28, 2021, based on $1.00 for each $0.90909 paid by DiMaggio and (ii) five-year Common Stock
Purchase Warrants (“Warrants’) to purchase up to an aggregate of 1,000 shares of the Company’s Common Stock
at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from DiMaggio for the
issuance of the Note and Warrants was $20,000 which was issued at a $7,500 original issue discount from the face value of the
Note. The conversion price for the principal in connection with voluntary conversions by
a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and DiMaggio amended the convertible debt agreement as follows on October 20, 2020:
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●
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The
parties amended the Note for the aggregate principal amount from $27,500 to $22,000. The aggregate cash subscription amount
received by the Company from Wetzel for the issuance of the Note and Warrants was $20,000 which was issued at an amended $2,000
original issue discount from the face value of the Note.
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●
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The
parties amended the Warrants dated September 28, 2020, for the number of warrant shares from 1,000 warrant shares to 56,408
warrant shares at an exercise price of $0.59 per share.
|
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●
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The
parties amended the Note for the maturity date from August 18, 2021 to October 20, 2021.
|
On
October 27, 2020, DiMaggio elected to convert the aggregate principal amount of the Note, $22,000, into 56,408 common shares.
Unger
– $33,000
On
September 29, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor David
W. Unger (“Unger”) of (i) $33,000 aggregate principal amount of Original Issue Discount Senior Convertible
Debenture (the “Note”) due August 18, 2021, based on $1.00 for each $0.90909 paid by Unger and (ii) five-year Common
Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 1,500 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Unger for
the issuance of the Note and Warrants was $30,000 which was issued at a $3,000 original issue discount from the face value of
the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Unger amended the convertible debt agreement as follows on October 20, 2020:
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●
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The
parties amended the Warrants dated September 29, 2020, for the number of warrant shares from 1,500 warrant shares to 84,612
warrant shares at an exercise price of $0.59 per share.
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●
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The
parties amended the Note for the maturity date from August 18, 2021 to October 20, 2021.
|
On
October 26, 2020, Unger elected to convert the aggregate principal amount of the Note, $33,000, into 84,612 common shares.
Stock
Transactions
The
transactions through December 31, 2020 represent Sigyn prior to the Share Exchange Agreement dated October 19, 2020 between the
Company and Reign Resources Corporation.
Common
Stock
The
Company issued 500,000 restricted common shares to founder’s, valued at $500 (based on the par value on the date of grant).
The issuance was an isolated transaction not involving a public offering pursuant to Section 4(2) of the Securities Act of 1933.
The
Company has authorized 1,000,000 shares of par value $0.001 common stock, of which 500,000 shares are outstanding at December
31, 2020.
On
January 14, 2021, the Company issued a total of 47,000 shares of its common stock valued at $82,250 (based on the estimated fair
market value of the Company’s common stock on the date of issuance) to a third party, for marketing and to promote brand
awareness.
Limited
Operating History; Need for Additional Capital
There
is limited historical financial information about us on which to base an evaluation of our performance. We cannot guarantee we
will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business
enterprise, including limited capital resources, and possible cost overruns due to increases in the cost of services. To become
profitable and competitive, we must receive additional capital. We have no assurance that future financing will materialize. If
that financing is not available, we may be unable to continue operations.
Overview
of Presentation
The
following Management’s Discussion and Analysis (“MD&A”) or Plan of Operations includes the following sections:
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Results
of Operations
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Liquidity
and Capital Resources
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Capital
Expenditures
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Going
Concern
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Critical
Accounting Policies
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●
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Off-Balance
Sheet Arrangements
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General
and administrative expenses consist primarily of personnel costs and professional fees required to support our operations and
growth.
Depending
on the extent of our future growth, we may experience significant strain on our management, personnel, and information systems.
We will need to implement and improve operational, financial, and management information systems. In addition, we are implementing
new information systems that will provide better record-keeping, customer service and billing. However, there can be no assurance
that our management resources or information systems will be sufficient to manage any future growth in our business, and the failure
to do so could have a material adverse effect on our business, results of operations and financial condition.
Results
of Operations
Year
Ended December 31, 2020 Compared to Date of Formation (October 29, 2019) through December 31, 2019
The
following discussion represents a comparison of our results of operations for the year ended December 31, 2020 and date of formation
(October 29, 2019) through December 31, 2019. The results of operations for the periods shown in our audited consolidated financial
statements are not necessarily indicative of operating results for the entire period. In the opinion of management, the audited
consolidated financial statements recognize all adjustments of a normal recurring nature considered necessary to fairly state
our financial position, results of operations and cash flows for the periods presented.
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Year Ended December 31, 2020
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Date of Formation (October 29, 2019) to December 31, 2019
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Net revenues
|
|
$
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-
|
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$
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-
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Cost of sales
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-
|
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-
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Gross Profit
|
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-
|
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-
|
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Operating expenses
|
|
|
916,434
|
|
|
|
1,550
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Other expense
|
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343,156
|
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-
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Net loss before income taxes and discontinued operations
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$
|
(1,259,590
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)
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$
|
(1,550
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)
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Net
Revenues
For
the year ended December 31, 2020 and date of formation (October 29, 2019) through December 31, 2019, we had no revenues.
Cost
of Sales
For
the year ended December 31, 2020 and date of formation (October 29, 2019) through December 31, 2019, we had no cost of sales.
Operating
expenses
Operating
expenses increased by $914,884, or 5,902.5%, to $916,434 for the year ended December 31, 2020 from $1,550 for date of formation
(October 29, 2019) through December 31, 2019 primarily due to increases in professional fees of $258,806, compensation costs of
$584,486, research and development costs of $27,456, depreciation and amortization costs of $11,300, investor relations costs
of $22,519, marketing costs of $705, rent expenses of $1,509, and general and administration costs of $8,103, as a result of adding
administrative infrastructure for our anticipated business development.
For
the year ended December 31, 2020, we had marketing expenses of $705, research and development costs of $27,456, and general and
administrative expenses of $888,273 primarily due to professional fees of $260,356, compensation costs of $584,486, rent of $1,509,
depreciation and amortization costs of $11,300, investor relations costs of $22,519, and general and administration costs of $8,103,
as a result of adding administrative infrastructure for our anticipated business development.
From
date of formation (October 29, 2019) through December 31, 2019, we had general and administrative expenses of $1,550 primarily
due to professional fees of $1,550, as a result of adding administrative infrastructure for our anticipated business development.
Other
(Income) Expense
Other
expense for the year ended December 31, 2020 totaled $343,156 primarily due to interest expense of $343,156 in conjunction with
accretion of debt discount and original issuance discount, compared to other expense of $0 from date of formation (October 29,
2019) through December 31, 2019.
Net
loss before income taxes
Net
loss before income taxes and discontinued operations for the year ended December 31, 2020 totaled 1,227,483 primarily due to (increases/decreases)
in compensation costs, professional fees, marketing costs, investor relations costs, and general and administration costs compared
to a loss of $1,550 from date of formation (October 29, 2019) through December 31, 2019 primarily due to professional fees.
Assets
and Liabilities
Assets
were $694,082 as of December 31, 2020. Assets consisted primarily of cash of $84,402, inventories of $586,047, equipment of $1,728,
and intangible assets of $21,905. Liabilities were $594,903 as of December 31, 2020. Liabilities consisted primarily accounts
payable of $16,005, accrues payroll and payroll taxes of $59,707, convertible notes of $518,668, net of $97,832 of unamortized
debt discount, and other current liabilities of $523.
Liquidity
and Capital Resources
General
– Overall, we had an increase in cash flows for the year ended December 31, 2020 of $84,402 resulting from cash
used in operating activities of $829,809 and cash used in investing activities of $10,799, offset partially by cash provided by
financing activities of $925,010.
The
following is a summary of our cash flows provided by (used in) operating, investing, and financing activities during the periods
indicated:
|
|
|
Year Ended
December 31, 2020
|
|
|
Date of Formation (October 29, 2019) to December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
$
|
(829,809
|
)
|
|
$
|
-
|
|
|
Investing activities
|
|
|
(10,799
|
)
|
|
|
-
|
|
|
Financing activities
|
|
|
925,010
|
|
|
|
-
|
|
|
|
|
$
|
(84,402
|
)
|
|
$
|
-
|
|
Year
Ended December 31, 2019 Compared to Date of Formation (October 29, 2019) through December 31, 2019
Cash
Flows from Operating Activities – For the year ended December 31, 2020, net cash used in operations was $829,809
compared to net cash used in operations of $0 from date of formation (October 29, 2019) through December 31, 2019. Net cash used
in operations was primarily due to a net loss of $1,259,590 for year ended December 31, 2020 and the changes in operating assets
and liabilities of $75,325, primarily due to the increase in accounts payable of $15,095, accrued payroll and payroll taxes of
$59,707, and other current liabilities of $523. In addition, net cash used in operating activities includes adjustments to reconcile
net profit from depreciation expense of $346, amortization expense of $10,954, accretion of original issuance costs of $67,823,
and accretion of debt discount of $275,333.
Net
cash used in operations was primarily due to a net loss of $1,550 from date of formation (October 29, 2019) through December 31,
2019, offset primarily by expenses paid by founders of $640, and the changes in operating assets and liabilities of $910, primarily
due to the increase in accounts payable of $910.
Cash
Flows from Investing Activities – For the year ended December 31, 2020, net cash used in investing was $10,799 due
to the purchase of intangible assets compared to cash flows from investing activities of $0 from date of formation (October 29,
2019) through December 31, 2019.
Cash
Flows from Financing Activities – For the year ended December 31, 2020, net cash provided by financing was $925,010
due to proceeds from short term convertible notes. From date of formation (October 29, 2019) through December 31, 2019, cash flows
from financing activities was $0.
Financing
– We expect that our current working capital position, together with our expected future cash flows from operations
will be insufficient to fund our operations in the ordinary course of business, anticipated capital expenditures, debt payment
requirements and other contractual obligations for at least the next twelve months. However, this belief is based upon many assumptions
and is subject to numerous risks, and there can be no assurance that we will not require additional funding in the future.
We
have no present agreements or commitments with respect to any material acquisitions of other businesses, products, product rights
or technologies or any other material capital expenditures. However, we will continue to evaluate acquisitions of and/or investments
in products, technologies, capital equipment or improvements or companies that complement our business and may make such acquisitions
and/or investments in the future. Accordingly, we may need to obtain additional sources of capital in the future to finance any
such acquisitions and/or investments. We may not be able to obtain such financing on commercially reasonable terms, if at all.
Due to the ongoing global economic crisis, we believe it may be difficult to obtain additional financing if needed. Even if we
are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or
cause substantial dilution for our shareholders, in the case of equity financing.
Convertible
Promissory Debentures
Osher
– $110,000
On
February 10, 2021, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with
respect to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due February 11, 2022 based on $1.00 for each $0.90909 paid by Osher and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 157,143 shares of the Company’s
Common Stock at an exercise price of $1.20 per share. The aggregate cash subscription amount received by the Company from Osher
for the issuance of the Note and Warrants was $100,000 which was issued at a $10,000 original issue discount from the face value
of the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.70 per share, subject to adjustment as provided therein, such as stock splits
and stock dividends.
Brio
– $110,000
On
February 10, 2021, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with
respect to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due February 11, 2022 based on $1.00 for each $0.90909 paid by Osher and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 157,143 shares of the Company’s
Common Stock at an exercise price of $1.20 per share. The aggregate cash subscription amount received by the Company from Osher
for the issuance of the Note and Warrants was $100,000 which was issued at a $10,000 original issue discount from the face value
of the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.70 per share, subject to adjustment as provided therein, such as stock splits
and stock dividends.
Osher
– $385,000
On
January 28, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Osher
Capital Partners LLC (“Osher”) of (i) $385,000 aggregate principal amount of Original Issue Discount Senior
Convertible Debenture due January 26, 2021, based on $1.00 for each $0.90909 paid by Osher and (ii) five-year Common Stock Purchase
Warrants to purchase up to an aggregate of 80,209 shares of the Company’s Common Stock at an exercise price of $7.00 per
share. The aggregate cash subscription amount received by the Company from Osher for the issuance of the note and warrants was
$350,005 which was issued at a $34,995 original issue discount from the face value of the Note. The
conversion price for the principal in connection with voluntary conversions by a holder of the convertible notes is $0.094 per
share, as amended on October 20, 2020, subject to adjustment as provided therein, such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follows on October 20, 2020:
|
|
●
|
The
parties amended the Warrants dated January 28, 2020, for the number of warrant shares from 80,209 warrant shares to 4,113,083
warrant shares at an exercise price of $0.14 per share.
|
|
|
●
|
The
parties amended the Note for the maturity date from June 23, 2021 to October 20, 2021.
|
Osher
– $50,000 (as amended on October 20, 2020 to $55,000)
On
June 23, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Osher
Capital Partners LLC (“Osher”) of (i) $50,000 aggregate principal amount of Original Issue Discount Senior
Convertible Debenture (the “Note”) due June 23, 2021, based on $1.00 for each $0.90909 paid by Osher and (ii) five-year
Common Stock Purchase Warrants (“Warrants”) to purchase up to an aggregate of 10,000 shares of the Company’s
Common Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Osher
for the issuance of the Note and Warrants was $50,005 which was issued at a $0 original issue discount from the face value of
the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follows on October 20, 2020:
|
|
●
|
The
parties amended the Note for the aggregate principal amount from $50,000 to $55,000. The aggregate cash subscription amount
received by the Company from Osher for the issuance of the Note and Warrants was $50,005 which was issued at an amended $4,995
original issue discount from the face value of the Note.
|
|
|
●
|
The
parties amended the Warrants dated June 23, 2020, for the number of warrant shares from 10,000 warrant shares to 141,020 warrant
shares at an exercise price of $0.59 per share.
|
|
|
●
|
The
parties amended the Note for the maturity date from June 23, 2021 to October 20, 2021.
|
Brio
– $50,000 (as amended on October 20, 2020 to $55,000)
On
June 23, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Brio Capital
Maser Fund, Ltd. (“Brio”) of (i) $50,000 aggregate principal amount of Original Issue Discount Senior Convertible
Debenture (the “Note”) due June 23, 2021, based on $1.00 for each $0.90909 paid by Brio and (ii) five-year Common
Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 10,000 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Brio for the
issuance of the Note and Warrants was $50,000 which was issued at a $0 original issue discount from the face value of the Note.
The conversion price for the principal in connection with voluntary conversions by a holder
of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Brio amended the convertible debt agreement as follows on October 20, 2020:
|
|
●
|
The
parties amended the Note for the aggregate principal amount from $50,000 to $55,000. The aggregate cash subscription amount
received by the Company from Brio for the issuance of the Note and Warrants was $50,000 which was issued at an amended $5,000
original issue discount from the face value of the Note.
|
|
|
●
|
The
parties amended the Warrants dated June 23, 2020, for the number of warrant shares from 10,000 warrant shares to 141,020 warrant
shares at an exercise price of $0.59 per share.
|
|
|
●
|
The
parties amended the Note for the maturity date from June 23, 2021 to October 20, 2021.
|
On
December 2, 2020, Brio elected to convert the aggregate principal amount of the Note, $55,000, into 141,020 common shares.
Wetzel
- $25,000 (as amended on October 20, 2020 to $27,500)
On
August 18, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Christopher
Wetzel (“Wetzel”) of (i) $25,000 aggregate principal amount of Original Issue Discount Senior Convertible Debenture
(the “Note”) due August 18, 2021, based on $1.00 for each $0.90909 paid by Wetzel and (ii) five-year Common Stock
Purchase Warrants (“Warrants’) to purchase up to an aggregate of 5,000 shares of the Company’s Common Stock
at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Wetzel for the issuance
of the Note and Warrants was $25,000 which was issued at a $0 original issue discount from the face value of the Note. The
conversion price for the principal in connection with voluntary conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as provided therein, such as stock splits and stock dividends.
The
Company and Wetzel amended the convertible debt agreement as follows on October 20, 2020:
|
|
●
|
The
parties amended the Note for the aggregate principal amount from $25,000 to $27,500. The aggregate cash subscription amount
received by the Company from Wetzel for the issuance of the Note and Warrants was $25,000 which was issued at an amended $2,500
original issue discount from the face value of the Note.
|
|
|
●
|
The
parties amended the Warrants dated August 18, 2020, for the number of warrant shares from 5,000 warrant shares to 70,510 warrant
shares at an exercise price of $0.59 per share.
|
|
|
●
|
The
parties amended the Note for the maturity date from August 18, 2021 to October 20, 2021.
|
On
October 28, 2020, Wetzel elected to convert the aggregate principal amount of the Note, $27,500, into 70,510 common shares.
Osher
– $181,500
On
September 17, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Osher
Capital Partners LLC (“Osher”) of (i) $181,500 aggregate principal amount of Original Issue Discount Senior
Convertible Debenture (the “Note”) due September 30, 2021, based on $1.00 for each $0.90909 paid by Osher and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 8,250 shares of the Company’s
Common Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Osher
for the issuance of the Note and Warrants was $165,000 which was issued at a $16,500 original issue discount from the face value
of the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follows on October 20, 2020:
|
|
●
|
The
parties amended the Warrants dated September 17, 2020, for the number of warrant shares from 8,250 warrant shares to 465,366
warrant shares at an exercise price of $0.59 per share.
|
|
|
●
|
The
parties amended the Note for the maturity date from September 30, 2021 to October 20, 2021.
|
Brio
– $93,500
On
September 18, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Brio Capital
Maser Fund, Ltd. (“Brio”) of (i) $93,500 aggregate principal amount of Original Issue Discount Senior Convertible
Debenture (the “Note”) due September 30, 2021, based on $1.00 for each $0.90909 paid by Brio and (ii) five-year Common
Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 4,250 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Brio for the
issuance of the Note and Warrants was $85,000 which was issued at a $8,500 original issue discount from the face value of the
Note. The conversion price for the principal in connection with voluntary conversions by
a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Brio amended the convertible debt agreement as follows on October 20, 2020:
|
|
●
|
The
parties amended the Warrants dated September 18, 2020, for the number of warrant shares from 4,250 warrant shares to 239,734
warrant shares at an exercise price of $0.59 per share.
|
|
|
●
|
The
parties amended the Note for the maturity date from September 30, 2021 to October 20, 2021.
|
On
December 2, 2020, Brio elected to convert the aggregate principal amount of the Note, $93,500, into 239,734 common shares.
Eisenberger
- $165,000
On
September 21, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Joseph
Eisenberger (“Eisenberger”) of (i) $165,000 aggregate principal
amount of Original Issue Discount Senior Convertible Debenture (the “Note”) due September 30, 2021, based on $1.00
for each $0.90909 paid by Eisenberger and (ii) five-year Common Stock Purchase Warrants
(“Warrants’) to purchase up to an aggregate of 7,500 shares of the Company’s Common Stock at an exercise price
of $30.00 per share. The aggregate cash subscription amount received by the Company from Eisenberger
for the issuance of the Note and Warrants was $150,000 which was issued at a $15,000 original issue discount from the face
value of the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Eisenberger amended the convertible debt agreement as follows on October 20, 2020:
|
|
●
|
The
parties amended the number of shares from the Warrants dated September 21, 2020, for
the number of warrant shares from 7,500 warrant shares to 423,060 warrant shares at an
exercise price of $0.59 per share.
|
|
|
●
|
The
parties amended the Note for the maturity date from September 30, 2021 to October 20,
2021.
|
On
November 5, 2020, Eisenberger elected to convert the aggregate principal amount of the Note, $165,000, into 423,060 common shares.
DiMaggio
– $27,500 (as amended on October 20, 2020 to $22,000)
On
September 28, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Ross DiMaggio
(“DiMaggio”) of (i) $27,500 aggregate principal amount of Original Issue Discount Senior Convertible Debenture
(the “Note”) due August 28, 2021, based on $1.00 for each $0.90909 paid by DiMaggio and (ii) five-year Common Stock
Purchase Warrants (“Warrants’) to purchase up to an aggregate of 1,000 shares of the Company’s Common Stock
at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from DiMaggio for the
issuance of the Note and Warrants was $20,000 which was issued at a $7,500 original issue discount from the face value of the
Note. The conversion price for the principal in connection with voluntary conversions by
a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and DiMaggio amended the convertible debt agreement as follows on October 20, 2020:
|
|
●
|
The
parties amended the Note for the aggregate principal amount from $27,500 to $22,000. The aggregate cash subscription amount
received by the Company from Wetzel for the issuance of the Note and Warrants was $20,000 which was issued at an amended $2,000
original issue discount from the face value of the Note.
|
|
|
●
|
The
parties amended the Warrants dated September 28, 2020, for the number of warrant shares from 1,000 warrant shares to 56,408
warrant shares at an exercise price of $0.59 per share.
|
|
|
●
|
The
parties amended the Note for the maturity date from August 18, 2021 to October 20, 2021.
|
On
October 27, 2020, DiMaggio elected to convert the aggregate principal amount of the Note, $22,000, into 56,408 common shares.
Unger
– $33,000
On
September 29, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor David
W. Unger (“Unger”) of (i) $33,000 aggregate principal amount of Original Issue Discount Senior Convertible
Debenture (the “Note”) due August 18, 2021, based on $1.00 for each $0.90909 paid by Unger and (ii) five-year Common
Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 1,500 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Unger for
the issuance of the Note and Warrants was $30,000 which was issued at a $3,000 original issue discount from the face value of
the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Unger amended the convertible debt agreement as follows on October 20, 2020:
|
|
●
|
The
parties amended the Warrants dated September 29, 2020, for the number of warrant shares from 1,500 warrant shares to 84,612
warrant shares at an exercise price of $0.59 per share.
|
|
|
●
|
The
parties amended the Note for the maturity date from August 18, 2021 to October 20, 2021.
|
On
October 26, 2020, Unger elected to convert the aggregate principal amount of the Note, $33,000, into 84,612 common shares.
Stock
Transactions
The
Company issued 500,000 restricted common shares to founder’s, valued at $500 (based on the par value on the date of grant).
The issuance was an isolated transaction not involving a public offering pursuant to Section 4(2) of the Securities Act of 1933.
The
Company has authorized 1,000,000 shares of par value $0.001 common stock, of which 500,000 shares are outstanding at December
31, 2019.
On
January 14, 2021, the Company issued a total of 47,000 shares of its common stock valued at $82,250 (based on the estimated fair
market value of the Company’s common stock on the date of issuance) to a third party, for marketing and to promote brand
awareness.
Capital
Expenditures
Other
Capital Expenditures
We
expect to purchase approximately $30,000 of equipment in connection with the expansion of our business during the next twelve
months.
Fiscal
year end
Our
fiscal year end is December 31.
Going
Concern
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates,
among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had
an accumulated deficit of approximately $1,261,000 at December 31, 2020, had working capital of approximately $76,000 and a working
capital deficit of $1,000 at December 31, 2020 and 2019, respectively, had a net loss of approximately $1,260,000 for the year
ended December 31, 2020, and net cash used in operating activities of approximately $830,000 for the year ended December 31, 2020,
with no revenue earned since inception, and a lack of operational history. These matters raise substantial doubt about the Company’s
ability to continue as a going concern.
While
the Company is attempting to expand operations and increase revenues, the Company’s cash position may not be significant
enough to support the Company’s daily operations. Management intends to raise additional funds by way of a private offering
or an asset sale transaction. Management believes that the actions presently being taken to further implement its business plan
and generate revenues provide the opportunity for the Company to continue as a going concern. While management believes in the
viability of its strategy to generate revenues and in its ability to raise additional funds or transact an asset sale, there can
be no assurances to that effect or on terms acceptable to the Company. The ability of the Company to continue as a going concern
is dependent upon the Company’s ability to further implement its business plan and generate revenues.
The
consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going
concern.
Critical
Accounting Policies
The
Commission has defined a company’s critical accounting policies as the ones that are most important to the portrayal of
our financial condition and results of operations and which require us to make its most difficult and subjective judgments, often
as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified
the critical accounting policies and judgments addressed below. We also have other key accounting policies that are significant
to understanding our results.
The
following are deemed to be the most significant accounting policies affecting us.
Use
of Estimates
The
preparation of these financial statements in accordance 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 disclosures
of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses
during the reported periods. Actual results may differ from those estimates and such differences may be material to the financial
statements. The more significant estimates and assumptions by management include among others: inventory valuation, common stock
valuation, and the recoverability of intangibles. The current economic environment has increased the degree of uncertainty inherent
in these estimates and assumptions.
Intangible
Assets
Intangible
assets consist primarily of developed technology – website. Our intangible assets are being amortized on a straight-line
basis over a period of three years.
Assignment
of Patent
On
January 8, 2020, James Joyce, the Company’s CEO and Craig Roberts, the Company’s COO, assigned to the Company the
rights to patent 62/881,740 pertaining to the devices, systems and methods for the broad-spectrum reduction of pro-inflammatory
cytokines in blood.
Impairment
of Long-lived Assets
We
periodically evaluate whether the carrying value of property, equipment and intangible assets has been impaired when circumstances
indicate the carrying value of those assets may not be recoverable. The carrying amount is not recoverable if it exceeds the sum
of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is
not recoverable, the impairment loss is measured as the excess of the asset’s carrying value over its fair value. There
are no impairments as of December 31, 2020.
Our
impairment analyses require management to apply judgment in estimating future cash flows as well as asset fair values, including
forecasting useful lives of the assets, assessing the probability of different outcomes, and selecting the discount rate that
reflects the risk inherent in future cash flows. If the carrying value is not recoverable, we assess the fair value of long-lived
assets using commonly accepted techniques, and may use more than one method, including, but not limited to, recent third-party
comparable sales and discounted cash flow models. If actual results are not consistent with our assumptions and estimates, or
our assumptions and estimates change due to new information, we may be exposed to an impairment charge in the future. For the
year ended December 31, 2020 and from inception (October 29, 2019) through December 31, 2019, the Company had not experienced
impairment losses on its long-lived assets. However, there can be no assurances that the demand for the Company’s products
and services will continue, which could result in an impairment of long-lived assets in the future.
Income
Taxes
We
account for income taxes under an asset and liability approach. This process involves calculating the temporary and permanent
differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes. The temporary differences result in deferred tax assets and liabilities, which would be recorded on our balance
sheets in accordance with ASC 740, which established financial accounting and reporting standards for the effect of income taxes.
We must assess the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent we
believe that recovery is not likely, we must establish a valuation allowance. Changes in our valuation allowance in a period are
recorded through the income tax provision on the consolidated Statements of Operations and comprehensive income.
From
the date of our inception we adopted ASC 740-10-30. ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized
in an entity’s financial statements and prescribes a recognition threshold and measurement attributes for financial statement
disclosure of tax positions taken or expected to be taken on a tax return. Under ASC 740-10, the impact of an uncertain income
tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon
audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood
of being sustained. Additionally, ASC 740-10 provides guidance on derecognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition. As a result of the implementation of ASC 740-10, we recognized no material adjustment
in the liability for unrecognized income tax benefits.
Fair
Value of Financial Instruments
The
provisions of accounting guidance, FASB Topic ASC 825 requires all entities to disclose the fair value of financial instruments,
both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value,
and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction
between willing parties. As of December 31, 2020, the fair value of cash, accounts payable, accrued expenses, and notes payable
approximated carrying value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate
with market rates.
Debt
We
issue debt that may have separate warrants, conversion features, or no equity-linked attributes.
Debt
with warrants – When we issue debt with warrants, we treat the warrants as a debt discount, record as a contra-liability
against the debt, and amortize the balance over the life of the underlying debt as amortization of debt discount expense in the
consolidated statements of operations and comprehensive income. When the warrants require equity treatment under ASC 815,
the offset to the contra-liability is recorded as additional paid in capital in our consolidated balance sheet. When we issue
debt with warrants that require liability treatment under ASC 815, such as a clause requiring repricing, the warrants are considered
to be a derivative that is recorded as a liability at fair value. If the initial value of the warrant derivative liability is
higher than the fair value of the associated debt, the excess is recognized immediately as interest expense. The warrant derivative
liability is adjusted to its fair value at the end of each reporting period, with the change being recorded as expense or gain.
If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense
in the consolidated statements of operations and comprehensive income. The debt is treated as conventional debt.
Convertible
debt – derivative treatment – When we issue debt with a conversion feature, we must first assess whether the conversion
feature meets the requirements to be treated as a derivative, as follows: a) one or more underlyings, typically the price of our
common stock; b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; c)
no initial net investment, which typically excludes the amount borrowed; and d) net settlement provisions, which in the case of
convertible debt generally means the stock received upon conversion can be readily sold for cash. An embedded equity-linked component
that meets the definition of a derivative does not have to be separated from the host instrument if the component qualifies for
the scope exception for certain contracts involving an issuer’s own equity. The scope exception applies if the contract
is both a) indexed to its own stock; and b) classified in shareholders’ equity in its statement of financial position.
If
the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value
of the convertible debt derivative using Monte Carlo Method upon the date of issuance. If the fair value of the convertible debt
derivative is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise,
the fair value of the convertible debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount,
which offsets the carrying amount of the debt. The convertible debt derivative is revalued at the end of each reporting period
and any change in fair value is recorded as a gain or loss in the statements of operations and comprehensive income.
The debt discount is amortized through interest expense over the life of the debt.
Convertible
debt – beneficial conversion feature – If the conversion feature is not treated as a derivative, we assess whether
it is a beneficial conversion feature (“BCF’). A BCF exists if the conversion price of the convertible debt instrument
is less than the stock price on the commitment date. This typically occurs when the conversion price is less than the fair value
of the stock on the date the instrument was issued. The value of a BCF is equal to the intrinsic value of the feature, the difference
between the conversion price and the common stock into which it is convertible, and is recorded as additional paid in capital
and as a debt discount in the consolidated balance sheet. We amortize the balance over the life of the underlying debt as amortization
of debt discount expense in the statements of operations and comprehensive income. If the debt is retired early,
the associated debt discount is then recognized immediately as amortization of debt discount expense in the statements
of operations and comprehensive income.
If
the conversion feature does not qualify for either the derivative treatment or as a BCF, the convertible debt is treated as traditional
debt.
Recent
Accounting Pronouncements
Refer
to Note 3 in the accompanying notes to the consolidated financial statements.
Future
Contractual Obligations and Commitments
Refer
to Note 3 in the accompanying notes to the consolidated financial statements for future contractual obligations and commitments.
Future contractual obligations and commitments are based on the terms of the relevant agreements and appropriate classification
of items under U.S. GAAP as currently in effect. Future events could cause actual payments to differ from these amounts.
We
incur contractual obligations and financial commitments in the normal course of our operations and financing activities. Contractual
obligations include future cash payments required under existing contracts, such as debt and lease agreements. These obligations
may result from both general financing activities and from commercial arrangements that are directly supported by related operating
activities. Details on these obligations are set forth below.
Convertible
Promissory Debentures
Osher
– $110,000
On
February 10, 2021, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with
respect to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due February 11, 2022 based on $1.00 for each $0.90909 paid by Osher and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 157,143 shares of the Company’s
Common Stock at an exercise price of $1.20 per share. The aggregate cash subscription amount received by the Company from Osher
for the issuance of the Note and Warrants was $100,000 which was issued at a $10,000 original issue discount from the face value
of the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.70 per share, subject to adjustment as provided therein, such as stock splits
and stock dividends.
Brio
– $110,000
On
February 10, 2021, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with
respect to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due February 11, 2022 based on $1.00 for each $0.90909 paid by Osher and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 157,143 shares of the Company’s
Common Stock at an exercise price of $1.20 per share. The aggregate cash subscription amount received by the Company from Osher
for the issuance of the Note and Warrants was $100,000 which was issued at a $10,000 original issue discount from the face value
of the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.70 per share, subject to adjustment as provided therein, such as stock splits
and stock dividends.
Osher
– $385,000
On
January 28, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Osher
Capital Partners LLC (“Osher”) of (i) $385,000 aggregate principal amount of Original Issue Discount Senior
Convertible Debenture due January 26, 2021, based on $1.00 for each $0.90909 paid by Osher and (ii) five-year Common Stock Purchase
Warrants to purchase up to an aggregate of 80,209 shares of the Company’s Common Stock at an exercise price of $7.00 per
share. The aggregate cash subscription amount received by the Company from Osher for the issuance of the note and warrants was
$350,005 which was issued at a $34,995 original issue discount from the face value of the Note. The
conversion price for the principal in connection with voluntary conversions by a holder of the convertible notes is $0.094 per
share, as amended on October 20, 2020, subject to adjustment as provided therein, such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follows on October 20, 2020:
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The
parties amended the Warrants dated January 28, 2020, for the number of warrant shares from 80,209 warrant shares to 4,113,083
warrant shares at an exercise price of $0.14 per share.
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The
parties amended the Note for the maturity date from June 23, 2021 to October 20, 2021.
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Osher
– $50,000 (as amended on October 20, 2020 to $55,000)
On
June 23, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Osher
Capital Partners LLC (“Osher”) of (i) $50,000 aggregate principal amount of Original Issue Discount Senior
Convertible Debenture (the “Note”) due June 23, 2021, based on $1.00 for each $0.90909 paid by Osher and (ii) five-year
Common Stock Purchase Warrants (“Warrants”) to purchase up to an aggregate of 10,000 shares of the Company’s
Common Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Osher
for the issuance of the Note and Warrants was $50,005 which was issued at a $0 original issue discount from the face value of
the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follows on October 20, 2020:
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The
parties amended the Note for the aggregate principal amount from $50,000 to $55,000. The aggregate cash subscription amount
received by the Company from Osher for the issuance of the Note and Warrants was $50,005 which was issued at an amended $4,995
original issue discount from the face value of the Note.
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The
parties amended the Warrants dated June 23, 2020, for the number of warrant shares from 10,000 warrant shares to 141,020 warrant
shares at an exercise price of $0.59 per share.
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The
parties amended the Note for the maturity date from June 23, 2021 to October 20, 2021.
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Brio
– $50,000 (as amended on October 20, 2020 to $55,000)
On
June 23, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Brio Capital
Maser Fund, Ltd. (“Brio”) of (i) $50,000 aggregate principal amount of Original Issue Discount Senior Convertible
Debenture (the “Note”) due June 23, 2021, based on $1.00 for each $0.90909 paid by Brio and (ii) five-year Common
Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 10,000 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Brio for the
issuance of the Note and Warrants was $50,000 which was issued at a $0 original issue discount from the face value of the Note.
The conversion price for the principal in connection with voluntary conversions by a holder
of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Brio amended the convertible debt agreement as follows on October 20, 2020:
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The
parties amended the Note for the aggregate principal amount from $50,000 to $55,000. The aggregate cash subscription amount
received by the Company from Brio for the issuance of the Note and Warrants was $50,000 which was issued at an amended $5,000
original issue discount from the face value of the Note.
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The
parties amended the Warrants dated June 23, 2020, for the number of warrant shares from 10,000 warrant shares to 141,020 warrant
shares at an exercise price of $0.59 per share.
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The
parties amended the Note for the maturity date from June 23, 2021 to October 20, 2021.
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On
December 2, 2020, Brio elected to convert the aggregate principal amount of the Note, $55,000, into 141,020 common shares.
Wetzel
- $25,000 (as amended on October 20, 2020 to $27,500)
On
August 18, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Christopher
Wetzel (“Wetzel”) of (i) $25,000 aggregate principal amount of Original Issue Discount Senior Convertible Debenture
(the “Note”) due August 18, 2021, based on $1.00 for each $0.90909 paid by Wetzel and (ii) five-year Common Stock
Purchase Warrants (“Warrants’) to purchase up to an aggregate of 5,000 shares of the Company’s Common Stock
at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Wetzel for the issuance
of the Note and Warrants was $25,000 which was issued at a $0 original issue discount from the face value of the Note. The
conversion price for the principal in connection with voluntary conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as provided therein, such as stock splits and stock dividends.
The
Company and Wetzel amended the convertible debt agreement as follows on October 20, 2020:
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The
parties amended the Note for the aggregate principal amount from $25,000 to $27,500. The aggregate cash subscription amount
received by the Company from Wetzel for the issuance of the Note and Warrants was $25,000 which was issued at an amended $2,500
original issue discount from the face value of the Note.
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The
parties amended the Warrants dated August 18, 2020, for the number of warrant shares from 5,000 warrant shares to 70,510 warrant
shares at an exercise price of $0.59 per share.
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The
parties amended the Note for the maturity date from August 18, 2021 to October 20, 2021.
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On
October 28, 2020, Wetzel elected to convert the aggregate principal amount of the Note, $27,500, into 70,510 common shares.
Osher
– $181,500
On
September 17, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Osher
Capital Partners LLC (“Osher”) of (i) $181,500 aggregate principal amount of Original Issue Discount Senior
Convertible Debenture (the “Note”) due September 30, 2021, based on $1.00 for each $0.90909 paid by Osher and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 8,250 shares of the Company’s
Common Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Osher
for the issuance of the Note and Warrants was $165,000 which was issued at a $16,500 original issue discount from the face value
of the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follows on October 20, 2020:
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The
parties amended the Warrants dated September 17, 2020, for the number of warrant shares from 8,250 warrant shares to 465,366
warrant shares at an exercise price of $0.59 per share.
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The
parties amended the Note for the maturity date from September 30, 2021 to October 20, 2021.
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Brio
– $93,500
On
September 18, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Brio Capital
Maser Fund, Ltd. (“Brio”) of (i) $93,500 aggregate principal amount of Original Issue Discount Senior Convertible
Debenture (the “Note”) due September 30, 2021, based on $1.00 for each $0.90909 paid by Brio and (ii) five-year Common
Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 4,250 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Brio for the
issuance of the Note and Warrants was $85,000 which was issued at a $8,500 original issue discount from the face value of the
Note. The conversion price for the principal in connection with voluntary conversions by
a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Brio amended the convertible debt agreement as follows on October 20, 2020:
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The
parties amended the Warrants dated September 18, 2020, for the number of warrant shares from 4,250 warrant shares to 239,734
warrant shares at an exercise price of $0.59 per share.
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The
parties amended the Note for the maturity date from September 30, 2021 to October 20, 2021.
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On
December 2, 2020, Brio elected to convert the aggregate principal amount of the Note, $93,500, into 239,734 common shares.
Eisenberger
- $165,000
On
September 21, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Joseph
Eisenberger (“Eisenberger”) of (i) $165,000 aggregate principal
amount of Original Issue Discount Senior Convertible Debenture (the “Note”) due September 30, 2021, based on $1.00
for each $0.90909 paid by Eisenberger and (ii) five-year Common Stock Purchase Warrants
(“Warrants’) to purchase up to an aggregate of 7,500 shares of the Company’s Common Stock at an exercise price
of $30.00 per share. The aggregate cash subscription amount received by the Company from Eisenberger
for the issuance of the Note and Warrants was $150,000 which was issued at a $15,000 original issue discount from the face
value of the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Eisenberger amended the convertible debt agreement as follows on October 20, 2020:
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The
parties amended the number of shares from the Warrants dated September 21, 2020, for the number of warrant shares from 7,500
warrant shares to 423,060 warrant shares at an exercise price of $0.59 per share.
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The
parties amended the Note for the maturity date from September 30, 2021 to October 20, 2021.
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On
November 5, 2020, Eisenberger elected to convert the aggregate principal amount of the Note, $165,000, into 423,060 common shares.
DiMaggio
– $27,500 (as amended on October 20, 2020 to $22,000)
On
September 28, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor Ross DiMaggio
(“DiMaggio”) of (i) $27,500 aggregate principal amount of Original Issue Discount Senior Convertible Debenture
(the “Note”) due August 28, 2021, based on $1.00 for each $0.90909 paid by DiMaggio and (ii) five-year Common Stock
Purchase Warrants (“Warrants’) to purchase up to an aggregate of 1,000 shares of the Company’s Common Stock
at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from DiMaggio for the
issuance of the Note and Warrants was $20,000 which was issued at a $7,500 original issue discount from the face value of the
Note. The conversion price for the principal in connection with voluntary conversions by
a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and DiMaggio amended the convertible debt agreement as follows on October 20, 2020:
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The
parties amended the Note for the aggregate principal amount from $27,500 to $22,000. The aggregate cash subscription amount
received by the Company from Wetzel for the issuance of the Note and Warrants was $20,000 which was issued at an amended $2,000
original issue discount from the face value of the Note.
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The
parties amended the Warrants dated September 28, 2020, for the number of warrant shares from 1,000 warrant shares to 56,408
warrant shares at an exercise price of $0.59 per share.
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The
parties amended the Note for the maturity date from August 18, 2021 to October 20, 2021.
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On
October 27, 2020, DiMaggio elected to convert the aggregate principal amount of the Note, $22,000, into 56,408 common shares.
Unger
– $33,000
On
September 29, 2020 (the “Original Issue Date”), the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with respect to the sale and issuance to institutional investor David
W. Unger (“Unger”) of (i) $33,000 aggregate principal amount of Original Issue Discount Senior Convertible
Debenture (the “Note”) due August 18, 2021, based on $1.00 for each $0.90909 paid by Unger and (ii) five-year Common
Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 1,500 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash subscription amount received by the Company from Unger for
the issuance of the Note and Warrants was $30,000 which was issued at a $3,000 original issue discount from the face value of
the Note. The conversion price for the principal in connection with voluntary conversions
by a holder of the convertible notes is $0.39 per share, as amended on October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Unger amended the convertible debt agreement as follows on October 20, 2020:
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The
parties amended the Warrants dated September 29, 2020, for the number of warrant shares from 1,500 warrant shares to 84,612
warrant shares at an exercise price of $0.59 per share.
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The
parties amended the Note for the maturity date from August 18, 2021 to October 20, 2021.
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On
October 26, 2020, Unger elected to convert the aggregate principal amount of the Note, $33,000, into 84,612 common shares.
Employment
Agreement
Mr.
Joyce receives an annual base salary of $455,000, plus bonus compensation not to exceed 50% of salary. Mr. Joyce’s employment
also provides for medical insurance, disability benefits and one year of severance pay if his employment is terminated without
cause or due to a change in control. Additionally, the Company has agreed to maintain a beneficial ownership target of 9% for
Mr. Joyce. Mr. Joyce’s compensation was approved by the Reign Resources Corporation Board of Directors on October 6, 2020
and was among conditions of the Share Exchange Agreement that was completed with Sigyn Therapeutics on October 19, 2020. The Company
incurred compensation expense of $418,842 and $0 and employee benefits of $22,516 and $0 for the year ended December 31, 2020
and from date of formation (October 29, 2019) through December 31, 2019, respectively.
Off-Balance
Sheet Arrangements
As
of December 31, 2020, we have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated
under which it has:
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a
retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit;
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liquidity
or market risk support to such entity for such assets;
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an
obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument; or
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an
obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held
by, and material to us, where such entity provides financing, liquidity, market risk or credit risk support to or engages
in leasing, hedging, or research and development services with us.
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Inflation
We
do not believe that inflation has had a material effect on our results of operations.