UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For
the fiscal year ended December 31, 2019
or
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission
File Number 000-53276
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Nevada |
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20-2675800 |
(State
or other jurisdiction of
Incorporation) |
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(IRS
Employer
Identification Number) |
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175
Joerschke Drive, Ste. A
Grass Valley, CA 95945
(Address
of principal executive offices)
|
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| |
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(530)
205-3437
(Registrant’s Telephone Number) |
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes
o
No
x
Indicate
by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes
o No x
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for
the past 90 days.
Yes
x No o
Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was
required to submit and post such files).
Yes
x No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.
x
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
|
|
|
|
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| Large
accelerated filer |
o |
Accelerated
filer |
o |
| Non-accelerated
filer |
o (Do
not check if a smaller reporting company) |
Smaller
reporting company |
x |
|
Emerging
growth company |
o{ |
|
|
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. o
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes
o No x
On
June 28, 2019, the last business day of the registrants most
recently completed second quarter, the aggregate market value of
the Common Stock held by non-affiliates of the registrant was $762,
based upon the closing price on that date of the Common Stock of
the registrant of $0.011. For purposes of this response, the
registrant has assumed that its directors, executive officers, and
beneficial owners of 5% or more of its Common Stock are deemed
affiliates of the registrant.
Indicate
the number of shares outstanding of each of the registrant’s
classes of common stock as of the latest practicable
date.
As of
May 11, 2020, there were 216,307,720 shares of the registrant’s
$0.00001 par value common stock issued and
outstanding.
Documents
incorporated by reference: None
TABLE
OF CONTENTS
FORWARD-LOOKING
STATEMENTS
This
annual report contains forward-looking statements. These statements
relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by
terminology such as “may”, “should”, “expects”, “plans”,
“anticipates”, “believes”, “estimates”, “predicts”, “potential” or
“continue” or the negative of these terms or other comparable
terminology. These statements are only predictions and involve
known and unknown risks, uncertainties and other factors, including
the risks in the section entitled “Risk Factors”, that may cause
our or our industry’s actual results, levels of activity,
performance or achievements to be materially different from any
future results, levels of activity, performance or achievements
expressed or implied by these forward-looking
statements.
Although
we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results,
levels of activity, performance, or achievements. Except as
required by applicable law, including the securities laws of the
United States, we do not intend to update any of the
forward-looking statements to conform these statements to actual
results.
Our
financial statements are stated in United States Dollars (US$) and
are prepared in accordance with United States Generally Accepted
Accounting Principles.
In
this annual report, unless otherwise specified, all dollar amounts
are expressed in United States dollars and all references to
“common shares” refer to the common shares in our capital
stock.
As
used in this annual report, the terms “Simlatus”, “we”, “us”, “our”
and “our company” refer to Simlatus Corporation, unless otherwise
indicated.
PART I
ITEM 1. BUSINESS
General
Overview
The
company operates with multiple revenue streams from the
Cannabis/Hemp CBD Industry, Major Broadcast Studio Industry, and
the Internet Provider Industry. The company acquired Proscere
Bioscience in the first quarter of 2019. Proscere Bioscience
manufactures a commercial, industry standard combination cold-
water/alcohol CBD extraction system for medical grade CBD
utilization in conjunction with their aeroponic, commercial grade,
climate-controlled grow containers for government food-safety
programs and commercial and medical grade CBD.
Satel
Group merged with Simlatus Corporation (“SIML” or “Company”) on
November 13, 2018 and is the premier provider of DirecTV to
high-rise apartments, condominiums and large commercial office
buildings in the San Francisco metropolitan area and is now
expanding both their DirecTV and Internet services across the Bay
Area. Simlatus continues to manufacture its own proprietary systems
for major broadcast studios, such as Warner Bros., Fox News, CBS,
and DirecTV. Its video technology supports the major system used
for underwater oil exploration in the world.
Simlatus
has been selling audio-video system technology for approximately 20
years, manufactures its own product line of commercial audio and
video systems that offers advanced applications utilized in the
commercial and government broadcast industry and other industries
where such applications are required. The Company products are sold
through a global network of established broadcast audio/video
equipment distributors, many of whom have been selling Simlatus
products for many years.
Simlatus
Corporation was initially incorporated in the State of Nevada under
the name Sunberta Resources Inc. on November 15, 2006, as a mining
and exploration of mineral claims business. On November 18, 2009,
the Company changed its name to Grid Petroleum Corp. and continued
with the mining and exploration of mineral claims in Alberta,
Canada, Vancouver Island, British Columbia, England, and the United
States.
On
March 9, 2016, Grid Petroleum Corp. entered into an Asset Purchase
Agreement (the “Asset Purchase Agreement”) with RJM and Associates,
LLC, a California limited liability company (“RJM”) whereby RJM’s
owners became the directors of the Company and were to be issued
$6,250,000 worth of the Company’s stock; $5,000,000 of Restricted
Common Stock 90 days from the date of this agreement and $1,250,000
of Preferred Series-A Shares of the Company’s Preferred Stock. On
the same date the entire management team of RJM became the entire
management team of Grid Petroleum Corp.
The
Company’s transaction with RJM has been treated as a reverse
recapitalization of the Company, with the Company (the legal
acquirer of RJM) considered the accounting acquiree, and RJM, whose
management took control of the Company (the legal acquiree of the
Company) considered the accounting acquirer. The Company did not
recognize goodwill or any intangible assets in connection with the
transaction. All costs related to the transaction are being charged
to operations as incurred. The $6,250,000 worth of shares
of Company stock, to be
issued in conjunction with the transaction, was presented as a
liability until such time that the shares were issued, and the
liability reduced. The historical financial statements include the
operations of the accounting acquirer for all periods
presented.
On
March 25, 2016, the Company approved a name change to Simlatus
Corporation, stock symbol SIML, which was executed on April 4,
2016. The new name change better describes the Company’s new business and
revenues from selling commercial broadcast equipment on a global
basis. Simlatus Corporation develops, manufactures, markets, and
owns proprietary advanced broadcast equipment and software. These
systems have been sold worldwide over the past 20 years to some
of the most recognized,
major broadcast companies in the Television Industry.
The
Company currently sells approximately 55 different commercial
audio/video products and is preparing to market its newest
audio/video product referred to as SyncPal™. In addition to the
Company’s traditional line of audio/video products,
it has commenced the
research & development of its Immersive Broadcast System,
referred to as the Simlatus-IBS™. The Simlatus-IBS™ will include
commercial augmented reality and virtual reality applications for
studio engineers. These applications, both hardware and software,
will allow the customer to control and manage the studio
audio/video systems from anywhere in the world. These products are
being developed to serve a market segment that is presently being
strongly embraced by consumers and is forecasted, by some of the
most widely recognized tech companies in the world, as becoming a
multi-billion-dollar market in the very near future. The Market
Analysis and IP Portfolio will include new patents specifically
developed for these products and owned by the Company.
Satel
Group Inc., a Nevada Corporation, merged with Simlatus Corporation
on November 13, 2018. Satel Group, Inc., (the “Company” or “Satel”)
was incorporated in the State of Nevada on August 15, 2016. The
Company was originally formed as Satel, LLC on February 26, 2003 as
a California limited liability company. Satel, LLC converted to a
California Corporation, Satel, Inc., by Articles of Incorporation
with a Statement of Conversion signed by Richard Hylen as managing
member of Satel LLC, dated December 20, 2013, and filed with the
California Secretary of State on December 23, 2013. On September
25, 2016 Satel Group, Inc. purchased all of the assets of Satel,
Inc., and therefore this Company was organized and continues to
operate with the same management while engaged in providing their
existing High Speed Internet and DirecTV™ services to upscale,
high-rise commercial buildings including large office complexes,
apartments and condominiums in the City of San Francisco and
throughout the Bay Area.
MERGER
TRANSACTION
On
November 13, 2018, the Company and Satel Group Inc., a Nevada
corporation, entered into an Agreement and Plan of Merger (the
“Merger Agreement”) and completed a merger, whereby Satel Group
merged with and into Simlatus, with Satel Group remaining as the
surviving entity (the “Merger”). Upon the consummation of the
Merger, the shares of the common stock of Satel Group extinguished
and the stockholders of the Company were issued an aggregate of
1,086,592 of the Preferred Series A stock at a price of $1.79 per
share and convertible pursuant the conversion rights as specified
in the Articles of Incorporation for SIML. As a result of the
Merger, the Company acquired the business of Satel Group and will
continue the Simlatus business.
The
Company’s transaction with Satel Group has been treated as a
reverse recapitalization of the Company, with the Company (the
legal acquirer of Satel) considered the accounting acquiree, and
Satel, whose management took control of the Company (the legal
acquiree of the Company) considered the accounting acquirer. The
Company did not recognize goodwill or any intangible assets in
connection with the transaction. All costs related to the
transaction are being charged to operations as incurred. The
historical financial statements include the operations of the
accounting acquirer for all periods presented.
Satel’s
business model includes long term contractual relationships with
building owners and management companies and our licensing
agreement with DirecTV™ and with other Service Operators to provide
DirecTV entertainment services and dedicated high-speed Internet at
competitive pricing compared to the local, legacy Cable TV and
Telephone Companies. In addition to competitive pricing, the
Company provides meaningful benefits to building owners/managers
including all of the necessary equipment and labor to install a
building’s internal wiring systems and Internet network. This
equipment and labor is provided at no additional cost by Satel.
Additional benefits include no up-front or reoccurring costs for
the building owner to have the network and its equipment
maintained. The company at times, may utilize the already existing
network within a building, including coaxial cable, Ethernet, or
telephone infrastructure to deploy Satel’s services as a part of
the contract, when no additional wiring or addition cost of
re-wiring is required.
The
Company has been providing satellite delivered television
entertainment services since 2003 and is recognized as the largest
DirecTV system operator to high-rise apartments, condominiums, and
commercial office buildings in the City of San Francisco. San
Francisco is recognized to be among the credible candidates to
become the economic capital of the 21st century. It is the main
urban center of a region, home to many of the leading corporations
of the digital age and has become an unparalleled hub of
innovation, invention, and entrepreneurship.
In
earlier decades, when suburban living was in vogue and the Bay
area’s center of economic gravity was shifting southward toward the
Silicon Valley and San Jose, San Francisco’s slow growth seemed
natural enough. But
now, more and more of the smart, ambitious, tech savvy young people
who power the region’s economy would rather live in the City than
in the tract homes and
garden apartments of the Silicon Valley. Satel has been targeting
this younger, vibrant, tech savvy customer demographic, both
individually and commercially.
Now,
many of Silicon
Valley’s work force would rather commute south from San Francisco
to the office campuses of Apple, Facebook, Alphabet/Google, and
other tech giants instead of living on the Peninsular. And, newer
tech companies (or tech-enabled companies) have increasingly been
locating in San Francisco proper to recruit and embrace the talent
they need. The result is a City that feels like it’s
again on the verge of the kind of economic leap forward that most
places on the earth can only dream of happening. Economists have
learned much in recent years about the advantages of agglomeration.
Put lots of highly skilled, highly productive, highly innovative
people together in the
same place and the economic gains are huge. The Bay area has been
such a place for some time now. What’s new is San Francisco’s
opportunity to regain its role as the region’s economic epicenter,
in turn driving even more economic growth in the area and -- by
extension -- the U.S. Indeed, San Francisco is growing for it has added about 50,000 people
since 2010, and 8,900 new high-rise housing units were under
construction as of last fall. Big new apartment and
condominium complexes are transforming the once sparsely populated
areas south of
downtown. These complexes are part of the enhanced target market
for Satel and are being wired by the Company.
Competition
and Marketing
Simlatus
has performed an in-depth investigation and analysis of our
competition as one of the most important components of our
comprehensive market analysis. This allows us to assess our
competitor’s strengths and weaknesses and implement effective
strategies in pricing and products being offered to improve our
competitive advantage. The Company has identified our competition
to determine and weigh our attributes, assess our strengths and
weaknesses, and implement strategies to strengthen our competitive
position within our market segments. A key factor contributing to
market growth is the adoption of HDTV entertainment distribution
via the Internet. The Company has begun to focus new product
development in digital and analog/digital conversion solutions to
better satisfy changing market demand. Immersive technologies with
augmented reality and virtual reality await the near future for the
Broadcasting Industry. Simlatus has access to top professionals in
Immersive Technology and is now designing their new Immersive
Broadcast Studio (IBS).
The
global broadcast studio switcher market is expected to reach $2B by 2020,
as compared to the global broadcast switcher market in 2013 of
$1.28B. The CAGR growth of 6.7% will occur from 2014 to 2020,
whereas augmented reality devices which combine virtual objects
with the real world through high-tech goggles and glasses, are
forecast to become a $120 billion business by 2020. New media
channels and automation will substantially drive market growth over
the next 5 years, and Simlatus has initiated its B2B and B4B
platform with its domestic and international distribution team to
capture our share of this market.
We have
determined that a business marketing a product similar to, or as a
substitute for, our own product in the same geographic area is a
direct competitor. Firms offering dissimilar or substitute products
in relation to our products or services are considered indirect
competitors. Indirect competition would exist between the
manufacturing of commercial broadcast equipment selling to the same
customers. To achieve and maintain a competitive advantage in
reaching and selling to our target market, our management has gained a thorough
knowledge of our
competition. An in-depth competitive analysis has provided the
company with understanding of how our existing and potential
customers rate the competition, a positive identification of our
competitor’s strengths and weaknesses, and a mechanism to develop
effective competitive strategies in our target market.
Our
competitors are a part of a concentrated market where only a
handful of competitors exist. We have identified approximately 22
competitors in the Broadcast studio industry. Our top 3 competitors
are Ensemble Designs, Inc., Thomson Video Networks, Inc., and
Ericcson A.B. The Company currently manufacturers a product for
Ensemble Designs, Inc., one of our competitors.
Our
Company is able to compete based upon the price point and quality
that we provide to our end-user. We have 25 distributors providing
global sales of all of our 55 products. Simlatus offers a wide
range of broadcast products including switchers, controllers,
protection switches, HD and Analog Routers, Audio Distribution and
our SoundPal family of audio/video signaling products. Our newest
product being SyncPal.
Our
competitors are profitable, and the industry is expanding into
augmented/virtual audio-video products. The attributes that the
majority of customers
request is pricing and support. Simlatus and all of our competition
provide warranty and repair services for all products. Our
customers include Fox News, DirecTV, Warner Bros., and a variety of
government-based buyers for military and government broadcast
facilities.
We
provide an informative website for all of our products, company
information and distribution. We provide various testimonial
statements from major customers. Further, we advertise in trade
journals and through our distribution websites. Each of our
products includes a complete manual and specifications data
sheet.
Our
sales staff has more access to competitive information than anyone
else in our organization. Customers often show our salespeople sales
literature, contracts, price quotes, and other information from
competitors. It is our responsibility to engage with potential
customers to discuss problems they have with a competitor’s
product. Customers will also reveal our competition’s product
benefits, strengths, and customer service programs. We instruct our sales force to ask
for copies of any competitive literature if and when that’s
possible. All sales staff maintains a record of all competitive
information they discover and devote a regular portion of each
sales meeting to a discussion of the competition. Our employees
working in other areas of the company also become exposed
to competitive information and share that with our sales
team.
In
regard to our Trade Associations, Simlatus compiles and has access
to published industry statistics and reports regarding industry
news and leaders through trade association magazines and
newsletters. Most trade associations also sponsor trade shows and
other professional meetings. This is an opportunity for our company
to experience first-hand what our competition is producing. It also
provides the opportunity to discover new players who may soon
become our competition.
We interview
our customers, suppliers, and industry experts about our
competition’s product and service periodically. Once we’ve gathered
all of the competitive
data, we analyze the data to determine product information, market
share, marketing strategies, and to identify our competition’s
strengths and weaknesses. We rely on our sales staff and customer
feedback what product features and benefits are most important to
our customers and potential customers. A products or services
competitive position is largely determined by how well it is differentiated from our
competition and by its price.
Our
products have been sold for approximately 20 years and our sales
strategy provides the company an advantage with our existing
dealers & customers, existing product line, existing broadcast
users, our manufacturing processes, experienced personnel,
professional management, and quality product reputation. Simlatus
is positioned with
current sales of their
commercial broadcasting support systems and is now structuring the
R&D
virtual/augmented reality products to develop a strategic
technology roadmap which will enable the company to expand into
high-growth digital television and over-the-top (OTT) markets.
These products are being developed for Simlatus’ existing consumers
and newer markets. Further, Simlatus understands market trends,
including worldwide movement towards high speed, IP software
solutions. Simlatus will continue to focus on driving adoption of
upgraded technology and the company’s R&D focus will be on
programs to out-pace competition.
In
regard to Satel Group Inc., the global Internet audience continues
to grow steadily, with the worldwide base of broadband Internet
users (including fixed and wireless) in the 3.2 billion range as
2016 began. This vast base of high-speed Internet users encourages
businesses to innovate in order to offer an ever-evolving array of
online services. Sectors that are growing very rapidly online
include the sale of entertainment products, event tickets, travel,
apparel, and consumer electronics.
The
most powerful trends on the Internet include access via wireless
devices, the migration of entertainment to the web and cloud-based
software-as-a-service. Today, consumers are more focused than ever
on finding the best prices, as consumer attitudes and shopping
habits changed dramatically as a result of the 2007-09 recession.
Consequently, e-commerce firms that offer high value at low prices
are well-positioned to prosper.
Telecommunication,
or telecom, companies provide fixed and mobile voice, text, and
data transmission to consumers, small businesses, enterprises, and
government entities. Traditionally, telecom companies drove revenue
mainly by providing voice calling, text messaging, and Internet
connectivity through wire line or landline connections by offered
its services to both consumers and businesses. Now, the business is
driven wireless along with wired internet, data, and business
solutions. In wire line, telecom companies sell voice and data
services to customers via traditional landline phones and VoIP
(Voice over Internet Protocol). For the Internet, they give
solutions ranging from basic connectivity over the usual DSL
(digital subscriber line) to high-speed connections. In home
entertainment, they provide television services through IPTV
(Internet Protocol television). They also sell advanced services in
video conferencing, high bandwidth dedicated lines, and secured
communication systems to their larger customers.
Although
telecom companies provide voice and data services to consumers and
businesses, the nature of these services differs significantly
between the two customer segments. While residential customers
mainly use wireless services, businesses use wire line to get
high-capacity broadband and advanced communications services. Also,
telecom companies rent their facilities or networks—providing
wholesale data and communication access—to other carriers of
communication services.
Key
companies in the US include AT&T (T), Verizon (VZ), and Sprint
(S) which are the large integrated, publicly trade telecom
companies that provide wireless and wire line services, while
T-Mobile (TMUS) is a listed national wireless operator. Wire line
players—like CenturyLink (CTL), Frontier Communications (FTR), and
Windstream Holdings (WIN)—are some of the other key regional
telecom companies in the US. A wire line network includes
interlinked connection and redistribution systems that supports
information—like voice and data—to travel electronically.
Traditional, local, and long distance telephone systems that
supported voice calls, messaging, and fax were the primary wire
line services that transmitted services over a network of copper
wires and switches. The wires and switches connected calls between
users mostly using a copper infrastructure connecting traditional
landlines and pay phones. Now, with the backbone of the network
being fiber optics, they support a broadband network capable of
delivering VoIP (Voice over Internet Protocol), Internet, TV
services, and managed private communications. Broadband
infrastructure is recognized as a critical resource for economic
development. Most countries, across the globe have strategic plans
in place—like the National Broadband Plan—to expand and develop
their Broadband network to support a broad range of enhanced
communications and entertainment services.
Since
inception in 2003, Satel operations have primarily consisted of
providing DirecTV services to high-rise apartments, condominiums
and to business in commercial buildings by investing in the
equipment and employing the trained personnel required to maintain
those services in the City of San Francisco. In 2014, Satel
began expanding their services to provide Internet services in the
same high-rise buildings in which they already provide DirecTV. Our
business model now incorporates three-phases that detail the steps
we intend to take to expand our services by launching and marketing
an expanded mix of
products.
Phase
1: Upgrading as necessary and or installing an enhanced coaxial and
wireless internet network in buildings already under contract with
Satel to provide existing customers access, through proprietary
systems either manufactured or distributed by Simlatus local, off
air television programming at a minimum monthly charge, while
supporting faster internet speeds at less cost to the customer to
attract new residential and commercial customers.
Phase
2: Enhancing our website to include point of sale transactions,
allow subscribers to manage their accounts and purchase additional
services online.
Phase
3: Continue to obtain long term contracts to provide services in
both existing and new high rise complexes throughout the Bay Area
to grow our customer base and support the increase in customer
usage volume with the enhanced wireless internet network and
website.
Currently
the company provides services to approximately 18,108 high rise
condominium and apartment dwellings located in 170 buildings that
have been wired by Satel to receive satellite delivered television
entertainment through the company’s licensing agreement with
DirecTV. There are approximately 1,354 subscribers to the DirecTV
service with the average monthly fee charged by DirecTV for each
account being approximately $114. Satel receives monthly, 18% of
the recurring monthly fee from DirecTV in accordance with the terms
of the licensing agreement.
In
addition to the 18% commission fee, Satel receives an installation
fee from DirecTV on each new customer and a monthly service fee of
$9.95 from approximately 70% of the total number of customer
accounts pursuant to the customer contract between Satel and the
customer.
In
summary, from the current 1,354 subscribers, Satel’s recurring
average monthly revenue is based on receiving $30.12 per customer
resulting in monthly revenues of approximately $40,108. Additional
monthly recurring revenue is generated from approximately 5,400
subscribers at the rate of $20.52 per month. Lastly, the company
offers two types of entertainment packages which allow the customer
to choose any of the
various program offered by DirecTV specifically for commercial
buildings, resulting in additional monthly revenues of
approximately $11,200.
Satel
has to date been offering limited Internet services to many of the
complexes in which they also provide DirecTV services which result
in additional average monthly revenues of approximately $8,783 per
month.
Satel’s
current revenue from the combination of individual DirecTV subscribers,
DirecTV services from commercial office buildings plus Internet
subscribers and contracted upgrades of commercial entertainment systems
averages to be approximately $70,000 per month.
One
customer contract includes a monthly service fee while the other
contract requires no fee. Both contracts include the DirecTV MDU
Equipment Lease Agreement, which is required by DirecTV for each
new customer, along with options for “No Commitment”, “One Year
Commitment”, or “Two Year Commitment”. The Satel “No Fee” customers
are properties we acquired from other companies that were not
paying a monthly fee to Satel. The Satel Fee’ customers are in
properties we acquired directly with long term contracts that pay a
monthly fee to Satel. The Satel Terms and Conditions’ provide for a
disclosure of rates and charges, a warranty that covers equipment
use, repair and replacement, and miscellaneous provisions that
provides disclosure regarding jurisdiction laws and rights for the
customer. The DirecTV MDU Equipment Lease Agreement provides
additions customer rights and warranties.
The
company’s internet service is less expensive than AT&T, Google,
and Comcast, which currently offer “Gigabit” as their top Internet
service, while most customers buy a much slower and less expensive
service under a 100 MB. Satel’s application of HPNA technology
using coaxial cable to deliver Internet, provides download speeds
of 200Mb-500Mb, with unlimited downloads for a cost less than those
fees charged by other carriers for the same speeds. The company
believes that there is a good and marketable monthly Internet
service in the $40-$45 range. Satel can also combine local, off air
channels, whereas the other OTT providers do not.
We
will continue to market our product to new building owners and
management companies using our direct B2B campaign as well as to
contact those architects, engineering firms and other decision
makers involved with new high rise construction in the Bay Area.
Our CEO, Richard Hylen, has established long-term relationships
with owners, builders, management companies, managers, and other
service providers to introduce our product and create our initial
sales contact. Our CEO has extensive experience in marketing both
entertainment and Internet services and believes that the marketing
of our products directly to consumers would not have the same
potential for increased sales that it would have without the
ongoing support of established building managers.
Employees
As of
the date of this filing, Simlatus Corporation has 3 employees, 14
contracting engineers, 17 suppliers, 34 distributors, in addition
to the needed legal and accounting support of a public
company.
Satel
Group Inc. has 6 employees, 1 consultant, and 10 suppliers, in
addition to legal and accounting support.
ITEM 1A. RISK FACTORS
The
Company is a smaller reporting company as defined by Rule 12b-2 of
the Securities Exchange Act of 1934 and is not required to provide
the information under this item.
ITEM 1B. UNRESOLVED STAFF
COMMENTS
None.
ITEM 2. PROPERTIES
Simlatus
has executive offices at 175 Joerschke Drive, Suite A, Grass
Valley, CA 95945. The office is a ground floor space of 2,000 sq.
ft. with a large inventory room FCC Compliant, manufacturing and
assembly of products, 4 executive offices, packaging and shipping
facility, and conference room. Additional space may be required as
the Company expands its operations. Management does not foresee any
significant difficulties in obtaining any required additional
space. The Company currently does not own any real
property.
Satel
Group maintains offices and equipment at 330 Townsend Street, Suite
135, San Francisco, California 94107. The office is ground floor
space of 1,000 sq. ft. with a large equipment repair room, 2
executive offices, Inventory Room and Reception area. Additional
space may be required as the Company expands its operations.
Management does not foresee any significant difficulties in
obtaining any required additional space. The Company currently does
not own any real property.
ITEM 3. LEGAL
PROCEEDINGS
We
know of no material, existing or pending legal proceedings against
our company, nor are we involved as a plaintiff in any material
proceeding or pending litigation. There are no proceedings in which
our director, officer, or any affiliates, or any registered or
beneficial shareholder, is an adverse party or has a material
interest adverse to our interest.
ITEM 4. MINE SAFETY
DISCLOSURE
None.
PART II
ITEM 5. MARKET FOR THE COMPANY’S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Common
Stock
Our
common stock is currently quoted on the OTC Markets. Our common
stock has been quoted on the OTC Markets since October 17, 2007
trading under the symbol “SBRT”. On January 15, 2008, our symbol
was changed to “SBTR” and on December 15, 2009, our symbol was
changed to “GRPR” to reflect our Company’s name change. On April
21, 2016, our symbol was changed to “SIML” to reflect our Company’s
name change to Simlatus Corporation. Because we are quoted on the
OTC Markets, our securities may be less liquid, receive less
coverage by security analysts and news media, and generate lower
prices than might otherwise be obtained if they were listed on a
national securities exchange.
The
following table sets forth, for the periods indicated over the last
two years, the high and low closing bid quotations, as reported by
the OTC Markets, and represents prices between dealers, does not
include retail markups, markdowns or commissions, and may not
represent actual transactions:
| |
|
For the Year Ended December 31 |
|
| |
|
2019 |
|
|
2018 |
|
| |
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
| First
Quarter |
|
|
0.0240 |
|
|
|
0.0041 |
|
|
|
0.0001 |
|
|
|
0.0001 |
|
| Second Quarter |
|
|
0.0690 |
|
|
|
0.0063 |
|
|
|
0.0001 |
|
|
|
0.0001 |
|
| Third Quarter |
|
|
0.0122 |
|
|
|
0.0017 |
|
|
|
0.0001 |
|
|
|
0.0001 |
|
| Fourth Quarter |
|
|
0.0017 |
|
|
|
0.0001 |
|
|
|
0.1099 |
|
|
|
0.0080 |
|
Record
Holders
As of
December 31, 2019, there were 4,524,351 shares of the registrant’s
$0.00001 par value common stock issued and outstanding, which were
held by 28 shareholders of record.
Dividends
We
have not paid dividends on our common stock, and do not anticipate
paying dividends on our common stock in the foreseeable
future.
Securities
authorized for issuance under equity compensation
plans
We
have no compensation plans under which our equity securities are
authorized for issuance.
Performance
graph
We
are a smaller reporting company as defined by Rule 12b-2 of the
Exchange Act and are not required to provide the information
required under this item.
Recent
Sales of Unregistered Securities
During
the year ended December 31, 2019, 712,360 shares of Series A
preferred stock were converted to 2,150,330 common shares in
accordance with the conversion terms.
During
the year ended December 31, 2019, 10,167 shares of Series C
preferred stock were converted to 28,015 common shares in
accordance with the conversion terms.
During
the year ended December 31, 2019, warrant holders exercised the
warrants and the Company issued 118,280 shares of common stock
through a cashless exercise of the warrants in accordance with the
conversion terms.
During
the year ended December 31, 2019, the holders of convertible
notes converted a total of $866,299 of principal and interest, and
$16,500 in note fees, into 2,119,224 shares of common stock in
accordance with the conversion terms. The issuances resulted in a
loss on conversion of $86,719 and settled $1,784,469 worth of
derivative liabilities which was recorded to additional paid in
capital.
Recent
issuances of unregistered securities subsequent to our fiscal year
ended of December 31, 2019
On
March 27, 2020, 3,476 shares of common stock were issued due to
rounding in conjunction with the reverse stock split.
On
April 16, 2020, the holder of a convertible note converted a total
of $1,600 of principal into 219,178 shares of our common
stock.
On
April 20, 2020, 4,036 shares of Preferred Series A stock was
converted in to 225,768 shares of common stock.
On
April 22, 2020, the holder of a convertible note converted a total
of $1,600 of principal into 219,178 shares of our common
stock.
On
April 28, 2020, the holder of a convertible note converted a total
of $1,500 of principal into 254,237 shares of our common
stock.
On
April 30, 2020, 2.445 shares of Preferred Series A stock was
converted in to 271,764 shares of common stock.
On
April 30, 2020, 108,659 shares of Preferred Series A stock was
converted in to 194,499,000 shares of common stock.
On
May 1, 2020, the holder of a convertible note converted a total of
$1,100 of principal into 250,000 shares of our common
stock.
On
May 4, 2020, 13,966 shares of Preferred Series A stock was
converted in to 4,999,800 shares of common stock.
On
May 5, 2020, the holder of a convertible note converted a total of
$12,500 of principal into 3,955,696 shares of our common
stock.
On
May 6, 2020, the holder of a convertible note converted a total of
$12,000 of principal into 2,727,272 shares of our common
stock.
On
May 6, 2020, the holder of a convertible note converted a total of
$20,000 of principal and $790 in accrued interest into 4,158,000
shares of our common stock.
Issuer
Repurchases of Equity Securities
None.
ITEM 6. SELECTED FINANCIAL
DATA
We
are a smaller reporting company as defined by Rule 12b-2 of the
Securities Exchange Act of 1934 and are not required to provide the
information under this item.
ITEM 7. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This
Annual Report on Form 10-K contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”) and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). These
forward-looking statements are not historical facts but rather are
based on current expectations, estimates and projections. We may
use words such as “anticipate,” “expect,” “intend,” “plan,”
“believe,” “foresee,” “estimate” and variations of these words and
similar expressions to identify forward-looking statements. These
statements are not guarantees of future performance and are subject
to certain risks, uncertainties and other factors, some of which
are beyond our control, are difficult to predict and could cause
actual results to differ materially from those expressed or
forecasted. You should read this report completely and with the
understanding that actual future results may be materially
different from what we expect. The forward-looking statements
included in this report are made as of the date of this report and
should be evaluated with consideration of any changes occurring
after the date of this Report. We will not update forward-looking
statements even though our situation may change in the future and
we assume no obligation to update any forward-looking statements,
whether as a result of new information, future events or
otherwise.
Merger
Transaction
On
November 13, 2018, the Company, and Satel Group Inc., a Nevada
corporation, entered into an Agreement and Plan of Merger (the
“Merger Agreement”) and completed a merger, whereby Satel Group
merged with and into Simlatus, with Satel Group remaining as the
surviving entity (the “Merger”). Under U.S. generally accepted
accounting principles, the merger is treated as a “reverse merger”
under the purchase method of accounting, with Satel as the
accounting acquirer. Accordingly, Satel’s historical financial
results of operations replace Simlatus Corp’s historical financial
results of operations for all periods prior to the Merger and, for
all periods following the Merger, the financial results of
operations of the combined company will be included in the
Company’s financial statements.
Results
for the Year Ended December 31, 2019 Compared to the Year Ended
December 31, 2018
Revenues:
The
Company’s revenues were $477,357 for the year ended December 31,
2019 compared to $616,152 for the year ended December 31, 2018. The
company has a strong relationship with DirecTV and has focused its
efforts on expanding services outside of the San Francisco
metropolitan area. For the years ended December 31, 2019 and 2018,
the Company had one major customer who represented approximately
53% and 46% of total revenue, respectively. The decrease in revenue
is due to a decrease in customer sales. In addition, Richard Hylen
has been focused on expansion in 2019, and local customer base
retention has declined. Satel has strong relationships with
commercial and residential building owners and management, and as a
public company with the adequate funding, Satel can expand its
services and anticipates increasing revenues over the next 24
months. Satel recognizes the customer needs, and the importance of
competitive pricing and services. The company believes that it can
invest its capital into faster internet, bundling of various
internet based services, and expanding its customer base into the
entire Bay Area as described in the marketing disclosure as a part
of this Form 10-K.
Cost of Sales:
The
Company’s cost of materials was $5,957 for the year ended December
31, 2019, compared to $1,492 for the year ended December 31,
2018.
Operating Expenses:
Operating
expenses consisted primarily of consulting fees, professional fees,
salaries and wages, office expenses and fees associated with
preparing reports and SEC filings relating to being a public
company. Operating expenses for the years ended December 31, 2019
and December 31, 2018 were $4,431,039 and $749,799, respectively.
The increase was primarily attributable to share based compensation
and increased wages due to the merger transaction.
Other Income (Expense):
Other
income (expense) for the years ended December 31, 2019 and December
31, 2018 was $(6,852,777) and $7,172,229, respectively. Other
income (expense) consisted of derivative valuation gains and
losses, gains or losses on settlement of debt and conversion of
debt, and interest expense. The gain or loss on derivative
valuation is directly attributable to the change in fair value of
the derivative liability. Interest expense is primarily
attributable to interest and penalties on outstanding notes
payable, the initial interest expense associated with the valuation
of derivative instruments at issuance, and the accretion of the
convertible debentures over their respective terms. The decrease in
other income primarily resulted from the fluctuation of the
Company’s stock price which impacted the valuation of the
derivative liabilities.
Net Income (Loss):
Net
income (loss) for the year ended December 31, 2019, was
$(10,812,416) compared to $7,037,090 for the year ended December
31, 2018. The decrease in net income can be explained by the
decrease in revenue and changes in the gain in the fair value of
derivative liabilities and share based compensation.
Impact
of Inflation
We
believe that the rate of inflation has had a negligible effect on
our operations.
Liquidity
and Capital Resources
|
|
|
December 31,
2019 |
|
|
December 31,
2018 |
|
| Current Assets |
|
$ |
40,929 |
|
|
$ |
35,332 |
|
| Current Liabilities |
|
|
6,013,494 |
|
|
|
8,476,605 |
|
| Working Capital (Deficit) |
|
$ |
(5,972,565 |
) |
|
$ |
(8,441,273 |
) |
The
overall working capital (deficit) decreased from $(8,441,273) at
December 31, 2018 to $(5,972,565) at December 31, 2019 due to a
reduction in convertible debt and the change in value of derivative
liabilities.
| |
|
December 31, |
|
|
December 31, |
|
| |
|
2019 |
|
|
2018 |
|
| Cash Flows (used in)
provided by Operating Activities |
|
$ |
(673,486 |
) |
|
$ |
7,225 |
|
| Cash Flows provided by Investing
Activities |
|
|
— |
|
|
|
1,576 |
|
| Cash Flows (used for) provided by
Financing Activities |
|
|
692,999 |
|
|
|
(13,500 |
) |
| Net Increase (decrease) in Cash During
Period |
|
$ |
19,513 |
|
|
$ |
(4,699 |
) |
During
the years ended December 31, 2019 cash (used in) provided by
operating activities was $(673,486) compared to $7,225 for the year
ended December 31, 2018. The increase in the cash used in operating
activities is primarily attributed to the initial derivative
liability loss.
During
the year ended December 31, 2019 cash provided by investing
activities was $0 compared to $1,576 for the year ended December
31, 2018, due to the effect of the merger.
During
the year ended December 31, 2019, cash (used for) provided by
financing activities was $692,999 compared to $(13,500), for the
year ended December 31, 2018. The increase in cash provided by
financing activity primarily resulted from an increase in notes
payable during the year ended December 31, 2019.
As of
December 31, 2019, the Company had a cash balance and current asset
total of $25,495 and $40,929 respectively, compared with $5,982 and
$35,332 of cash and current assets, respectively, as of December
31, 2018. The increase in assets was due to an increase in cash on
hand.
As of
December 31, 2019, the Company had total liabilities of $6,013,494
compared with $8,537,605 as of December 31, 2018. The decrease in
total liabilities was primarily attributed to a reduction in
related party liabilities, derivatives, and notes payable that were
converted and settled.
Going
Concern
The
ability of the Company to continue as a going concern is dependent
on the Company’s ability to raise additional capital and implement
its business plan. Since its inception, the Company has been funded
by related parties through capital investment and borrowing
funds.
As of
December 31, 2019, we have not attained profitable operations and
are dependent upon obtaining financing to pursue any extensive
acquisitions and activities. For these reasons, our auditors stated
in their report on our December 31, 2019 audited financial
statements that they have substantial doubt that we will be able to
continue as a going concern.
Future
Financings
We
will continue to rely on equity sales of our common shares in order
to continue to fund our business operations. Issuances of
additional shares will result in dilution to existing stockholders.
There is no assurance that we will achieve any additional sales of
the equity securities or arrange for debt or other financing to
fund planned acquisitions and exploration activities.
Off-Balance
Sheet Arrangements
We
have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or
capital resources that are material to stockholders.
Critical
Accounting Policies
Our
financial statements and accompanying notes have been prepared in
accordance with United States generally accepted accounting
principles applied on a consistent basis. The preparation of
financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods.
We
regularly evaluate the accounting policies and estimates that we
use to prepare our financial statements. A complete summary of
these policies is included in the notes to our financial
statements. In general, management’s estimates are based on
historical experience, on information from third party
professionals, and on various other assumptions that are believed
to be reasonable under the facts and circumstances. Actual results
could differ from those estimates made by management.
Significant
Accounting Policies
Our
discussion and analysis of our results of operations and liquidity
and capital resources are based on our financial statements, which
have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues
and expenses, and disclosure of contingent assets and liabilities.
On an ongoing basis, we evaluate our estimates and judgments,
including those related to revenue recognition, allowance for
doubtful accounts, warranty liabilities, share-based payments,
income taxes and litigation. We base our estimates on historical
and anticipated results and trends and on various other assumptions
that we believe are reasonable under the circumstances, including
assumptions as to future events. These estimates form the basis for
making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. By
their nature, estimates are subject to an inherent degree of
uncertainty. Actual results that differ from our estimates could
have a significant adverse effect on our operating results and
financial position. We believe that the significant accounting
policies and assumptions as detailed in Note 1 to the financial
statements contained herein may involve a higher degree of judgment
and complexity than others.
Contractual
Obligations
We
are a smaller reporting company as defined by Rule 12b-2 of the
Securities Exchange Act of 1934 and are not required to provide the
information under this item.
ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The
Company does not hold any assets or liabilities requiring
disclosure under this item.
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
SIMLATUS
CORPORATION
FINANCIAL
STATEMENTS
Table
of Contents
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To
the Board of Directors and
Stockholders
of Simlatus Corporation
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of
Simlatus Corporation and subsidiaries (the Company) as of December
31, 2019 and 2018, and the related statements of operations,
stockholders’ equity (deficit), and cash flows for each of the
years in the two-year period ended December 31, 2019, and the
related notes (collectively referred to as the financial
statements). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the
Company as of December 31, 2019 and 2018, and the results of its
operations and its cash flows for each of the years in the two-year
period ended December 31, 2019, in conformity with accounting
principles generally accepted in the United States of
America.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting.
As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the
purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly,
we express no such opinion.
Our
audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note
2 to the financial statements, the Company suffered a net loss from
operations and has a net capital deficiency, which raises
substantial doubt about its ability to continue as a going concern.
Management’s plans regarding those matters are described in Note 2.
The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
We
have served as the Company’s auditor since 2018.
Houston,
TX
June
2, 2020
|
SIMLATUS CORP. |
|
CONSOLIDATED BALANCE SHEETS |
|
|
|
December 31, |
|
|
|
|
2019 |
|
|
2018 |
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
25,495 |
|
|
$ |
5,982 |
|
|
Accounts receivable |
|
|
7,741 |
|
|
|
29,350 |
|
|
Inventory, net |
|
|
425 |
|
|
|
— |
|
|
Prepaid expenses |
|
|
7,268 |
|
|
|
— |
|
|
Total current assets |
|
|
40,929 |
|
|
|
35,332 |
|
| |
|
|
|
|
|
|
|
|
|
Right-of-use asset |
|
|
— |
|
|
|
— |
|
|
Security deposit |
|
|
5,162 |
|
|
|
5,162 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
46,091 |
|
|
$ |
40,494 |
|
| |
|
|
|
|
|
|
|
|
|
LIABILITIES, CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
401,121 |
|
|
$ |
307,410 |
|
|
Accounts payable - related parties |
|
|
31,269 |
|
|
|
31,269 |
|
|
Accrued wages |
|
|
1,184,455 |
|
|
|
1,058,808 |
|
|
Accrued expenses |
|
|
38,617 |
|
|
|
41,313 |
|
|
Accrued interest |
|
|
374,439 |
|
|
|
651,619 |
|
|
Convertible notes payable in default |
|
|
96,647 |
|
|
|
812,437 |
|
|
Convertible notes payable, net of discount |
|
|
609,888 |
|
|
|
235,516 |
|
|
Deferred revenue |
|
|
629 |
|
|
|
— |
|
|
Derivative liabilities |
|
|
3,168,799 |
|
|
|
4,888,497 |
|
|
Promissory notes |
|
|
16,500 |
|
|
|
297,669 |
|
|
Related party liabilities |
|
|
91,130 |
|
|
|
152,067 |
|
|
Total Current liabilities |
|
|
6,013,494 |
|
|
|
8,476,605 |
|
| |
|
|
|
|
|
|
|
|
| Long
term notes payable |
|
|
— |
|
|
|
61,000 |
|
| |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
6,013,494 |
|
|
|
8,537,605 |
|
| |
|
|
|
|
|
|
|
|
|
Series A convertible preferred stock: 10,000,000 shares authorized,
par value $0.001 |
|
|
10,713,594 |
|
|
|
9,066,223 |
|
| 5,985,248
shares issued and outstanding at December 31, 2019 |
|
|
|
|
|
|
|
|
| 5,064,929
shares issued and outstanding at December 31, 2018 |
|
|
|
|
|
|
|
|
|
Series C convertible preferred stock, 45,750 shares authorized, par
value $0.0001 |
|
|
355,830 |
|
|
|
— |
|
|
35,583 shares issued and outstanding at December, 2019 |
|
|
|
|
|
|
|
|
| 0 shares
issued and outstanding at December 31, 2018 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit): |
|
|
|
|
|
|
|
|
|
Series B preferred stock: 10,000,000 shares authorized, par value
$0.001 |
|
|
1 |
|
|
|
1 |
|
| 500 shares
issued and outstanding at December 31, 2019 |
|
|
|
|
|
|
|
|
| 500 shares
issued and outstanding at December 31, 2018 |
|
|
|
|
|
|
|
|
| Common
stock, $0.00001 par value 10,000,000,000 authorized |
|
|
45 |
|
|
|
1 |
|
| 4,524,351
shares issued and outstanding at December 31, 2019 (1) |
|
|
|
|
|
|
|
|
| 108,078
shares issued and outstanding at December 31, 2018 (1) |
|
|
|
|
|
|
|
|
|
Additional paid in capital |
|
|
(12,857,352 |
) |
|
|
(24,198,066 |
) |
|
Accumulated earnings (deficit) |
|
|
(4,179,521 |
) |
|
|
6,634,730 |
|
|
Total stockholders’ equity (deficit) |
|
|
(17,036,827 |
) |
|
|
(17,563,334 |
) |
|
Total liabilities and stockholders’ equity (deficit) |
|
$ |
46,091 |
|
|
$ |
40,494 |
|
|
(1) |
All common share amounts and per
share amounts in the financial statements reflect the one-for-one
thousand reverse stock split that was made effective on December
18, 2019. See Note 12. |
The accompanying notes are an integral part of these financial
statements
|
SIMLATUS CORP. |
|
CONSOLIDATED STATEMENT OF
OPERATIONS |
| |
|
Years ended |
|
| |
|
December 31, |
|
| |
|
2019 |
|
|
2018 |
|
|
Sales |
|
$ |
477,357 |
|
|
$ |
616,152 |
|
|
Cost of materials |
|
|
5,957 |
|
|
|
1,492 |
|
|
Gross profit |
|
|
471,400 |
|
|
|
614,660 |
|
| |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
G&A expenses |
|
|
3,785,517 |
|
|
|
422,279 |
|
|
Professional fees |
|
|
34,754 |
|
|
|
2,278 |
|
|
Salaries and wages |
|
|
610,768 |
|
|
|
325,242 |
|
|
Total operating expenses |
|
|
4,431,039 |
|
|
|
749,799 |
|
|
|
|
|
|
|
|
|
|
|
| Loss
from operations |
|
|
(3,959,639 |
) |
|
|
(135,139 |
) |
| |
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
| Gain
on settlement of debt |
|
|
783,208 |
|
|
|
— |
|
| Loss
on conversion of debt |
|
|
(260,991 |
) |
|
|
— |
|
|
Derivative expense |
|
|
(5,942,525 |
) |
|
|
7,251,108 |
|
|
Interest expense |
|
|
(1,432,469 |
) |
|
|
(78,879 |
) |
|
Total other income (expense) |
|
|
(6,852,777 |
) |
|
|
7,172,229 |
|
| |
|
|
|
|
|
|
|
|
| Net
loss before income taxes |
|
|
(10,812,416 |
) |
|
|
7,037,090 |
|
|
Income tax expense |
|
|
— |
|
|
|
— |
|
|
Net profit (loss) |
|
$ |
(10,812,416 |
) |
|
$ |
7,037,090 |
|
| |
|
|
|
|
|
|
|
|
| Per share
information |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, basic
(1) |
|
|
793,784 |
|
|
|
18,589 |
|
|
Net income (loss) per common share, basic |
|
$ |
(13.62 |
) |
|
$ |
378.56 |
|
| |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, diluted
(1) |
|
|
793,784 |
|
|
|
1,783,657 |
|
|
Net income (loss) per common share, diluted |
|
$ |
(13.62 |
) |
|
$ |
3.95 |
|
|
(1) |
All common share amounts and per
share amounts in the financial statements reflect the one-for-one
thousand reverse stock split that was made effective on December
18, 2019. See Note 12. |
The accompanying notes are an integral part of these financial
statements
|
SIMLATUS CORP. |
|
CONSOLIDATED STATEMENT OF STOCKHOLDERS’
EQUITY (DEFICIT) |
| FOR
THE YEARS ENDED DECEMBER 31, 2019 AND 2018 |
|
|
|
Convertible Preferred Stock |
|
|
Preferred Stock |
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Accumulated |
|
|
Total |
|
|
|
|
Series A |
|
|
Series C |
|
|
Series B |
|
|
Common Stock (1) |
|
|
Capital |
|
|
Paid-In |
|
|
Earnings |
|
|
Shareholders’ |
|
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Stock |
|
|
Capital |
|
|
(Deficit) |
|
|
Equity (Deficit) |
|
|
Balances for December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
14,000 |
|
|
$ |
13,414 |
|
|
$ |
(402,360 |
) |
|
$ |
(374,946 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of debt to common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,792 |
|
|
|
— |
|
|
|
— |
|
|
|
10,448 |
|
|
|
— |
|
|
|
10,448 |
|
|
Derivative settlements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
115,941 |
|
|
|
— |
|
|
|
115,941 |
|
|
Effect of reverse merger |
|
|
5,064,929 |
|
|
|
9,066,223 |
|
|
|
— |
|
|
|
— |
|
|
|
500 |
|
|
|
1 |
|
|
|
105,286 |
|
|
|
1 |
|
|
|
(14,000 |
) |
|
|
(24,340,851 |
) |
|
|
— |
|
|
|
(24,354,849 |
) |
|
Imputed interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,982 |
|
|
|
— |
|
|
|
2,982 |
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,037,090 |
|
|
|
7,037,090 |
|
|
Balances for December 31, 2018 |
|
|
5,064,929 |
|
|
$ |
9,066,223 |
|
|
|
— |
|
|
$ |
— |
|
|
|
500 |
|
|
$ |
1 |
|
|
|
108,078 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
$ |
(24,198,066 |
) |
|
$ |
6,634,730 |
|
|
$ |
(17,563,334 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of debt to common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,119,224 |
|
|
|
21 |
|
|
|
— |
|
|
|
969,497 |
|
|
|
— |
|
|
|
969,518 |
|
| Cashless
warrant exercise |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
118,280 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Warrant shares exchanged for convertible preferred stock |
|
|
— |
|
|
|
— |
|
|
|
45,750 |
|
|
|
457,500 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,372,501 |
|
|
|
— |
|
|
|
1,372,501 |
|
|
Convertible preferred stock issued for services |
|
|
1,675,978 |
|
|
|
3,000,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Convertible preferred stock converted to common stock |
|
|
(712,360 |
) |
|
|
(1,275,124 |
) |
|
|
(10,167 |
) |
|
|
(101,670 |
) |
|
|
— |
|
|
|
— |
|
|
|
2,178,345 |
|
|
|
23 |
|
|
|
— |
|
|
|
1,551,045 |
|
|
|
— |
|
|
|
1,551,068 |
|
|
Convertible preferred stock repurchased and retired |
|
|
(43,299 |
) |
|
|
(77,505 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Contributed capital |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
362,261 |
|
|
|
— |
|
|
|
362,261 |
|
|
Imputed interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14,670 |
|
|
|
— |
|
|
|
14,670 |
|
|
Lease standard adoption |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,835 |
) |
|
|
(1,835 |
) |
|
Derivative settlements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,053,082 |
|
|
|
— |
|
|
|
7,053,082 |
|
|
Common stock issued for derivative settlements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
424 |
|
|
|
— |
|
|
|
— |
|
|
|
24,953 |
|
|
|
— |
|
|
|
24,953 |
|
| Debt
settlement by related party |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,295 |
) |
|
|
— |
|
|
|
(7,295 |
) |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10,812,416 |
) |
|
|
(10,812,416 |
) |
|
Balances for December 31, 2019 |
|
|
5,985,248 |
|
|
$ |
10,713,594 |
|
|
|
35,583 |
|
|
$ |
355,830 |
|
|
|
500 |
|
|
$ |
1 |
|
|
|
4,524,351 |
|
|
$ |
45 |
|
|
$ |
— |
|
|
$ |
(12,857,352 |
) |
|
$ |
(4,179,521 |
) |
|
$ |
(17,036,827 |
) |
|
(1) |
All
common share amounts and per share amounts in the financial
statements reflect the one-for-one thousand reverse stock split
that was made effective on December 18, 2019. See Note
12. |
The accompanying notes are an integral part of these financial
statements
|
SIMLATUS CORP. |
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
| |
|
Years ended |
|
| |
|
December 31, |
|
|
|
|
2019 |
|
|
2018 |
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net profit (loss) |
|
$ |
(10,812,416 |
) |
|
$ |
7,037,090 |
|
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
|
Amortization of convertible debt discount |
|
|
1,006,485 |
|
|
|
18,860 |
|
|
Stock based compensation |
|
|
3,000,000 |
|
|
|
— |
|
|
Imputed interest |
|
|
14,670 |
|
|
|
2,982 |
|
|
Gain on debt settlement |
|
|
(783,208 |
) |
|
|
— |
|
|
Loss on debt conversion |
|
|
260,991 |
|
|
|
— |
|
|
Change in fair value of derivative liability |
|
|
5,942,525 |
|
|
|
(7,251,108 |
) |
|
Decrease (increase) in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
21,609 |
|
|
|
39,672 |
|
|
Inventory |
|
|
(425 |
) |
|
|
1,746 |
|
|
Prepaid expenses |
|
|
(7,268 |
) |
|
|
3,806 |
|
|
Right-of-use asset |
|
|
(1,835 |
) |
|
|
— |
|
|
Accrued interest |
|
|
362,904 |
|
|
|
37,567 |
|
|
Accounts payable |
|
|
266,897 |
|
|
|
54,677 |
|
|
Accrued expenses |
|
|
122,951 |
|
|
|
59,735 |
|
|
Advances from related parties |
|
|
(67,995 |
) |
|
|
2,198 |
|
|
Deferred revenue |
|
|
629 |
|
|
|
— |
|
|
Net cash (used in) provided by operating activities |
|
|
(673,486 |
) |
|
|
7,225 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Effect from reverse merger |
|
|
— |
|
|
|
1,576 |
|
|
Net cash provided by investing activities |
|
|
— |
|
|
|
1,576 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Proceeds from convertible debt |
|
|
1,032,504 |
|
|
|
— |
|
|
Repurchase of preferred series A shares-related party |
|
|
(77,505 |
) |
|
|
— |
|
|
Payments on convertible debt |
|
|
(212,500 |
) |
|
|
— |
|
|
Payments on promissory notes |
|
|
(49,500 |
) |
|
|
(13,500 |
) |
|
Net cash (used in) provided for financing activities |
|
|
692,999 |
|
|
|
(13,500 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash |
|
|
19,513 |
|
|
|
(4,699 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash, beginning of period |
|
|
5,982 |
|
|
|
10,681 |
|
|
Cash, end of period |
|
$ |
25,495 |
|
|
$ |
5,982 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
| Cash
paid for income taxes |
|
$ |
— |
|
|
$ |
— |
|
| Cash
paid for interest |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
Schedule of non-cash investing & financing activities: |
|
|
|
|
|
|
|
|
|
Stock issued for debt conversion |
|
$ |
882,778 |
|
|
$ |
10,448 |
|
|
Discount from derivative |
|
$ |
1,245,813 |
|
|
$ |
— |
|
|
Preferred stock converted to common stock |
|
$ |
1,376,794 |
|
|
$ |
— |
|
|
Contributed capital |
|
$ |
362,261 |
|
|
|
|
|
|
Lease adoption recognition |
|
$ |
77,700 |
|
|
$ |
— |
|
|
Derivative warrants settled with preferred C shares |
|
$ |
1,830,001 |
|
|
$ |
— |
|
|
Common stock issued for derivative settlements |
|
$ |
24,953 |
|
|
|
|
|
|
Derivative settlements |
|
$ |
7,053,082 |
|
|
$ |
115,941 |
|
The
accompanying notes are an integral part of these financial
statements
SIMLATUS
CORP.
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December
31, 2019
1.
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Organization
and Description of Business
Satel
Group merged with Simlatus Corporation (“SIML” or “Company”) on
November 13, 2018 and is the premier provider of DirecTV to
high-rise apartments, condominiums and large commercial office
buildings in the San Francisco metropolitan area and is now
expanding both their DirecTV and Internet services across the Bay
Area. Simlatus continues to manufacture its own proprietary systems
for major broadcast studios, such as Warner Bros., Fox News, CBS,
and DirecTV. Its video technology supports the major system used
for underwater oil exploration in the world. For the years ended
December 31, 2019 and 2018, the Company had one major customer who
represented approximately 53% and 46% of total revenue,
respectively.
Simlatus
Corporation was initially incorporated in the State of Nevada under
the name Sunberta Resources Inc. on November 15, 2006, as a mining
and exploration of mineral claims business. On November 18, 2009,
the Company changed its name to Grid Petroleum Corp. and continued
with the mining and exploration of mineral claims in Alberta,
Canada, Vancouver Island, British Columbia, England, and the United
States.
On
March 9, 2016, Grid Petroleum Corp. entered into an Asset Purchase
Agreement (the “Asset Purchase Agreement”) with RJM and Associates,
LLC, a California limited liability company (“RJM”) whereby RJM’s
owners became the directors of the Company and were to be issued
$6,250,000 worth of the Company’s stock; $5,000,000 of Restricted
Common Stock 90 days from the date of this agreement and $1,250,000
of Preferred Series-A Shares of the Company’s Preferred Stock. On
the same date the entire management team of RJM became the entire
management team of Grid Petroleum Corp.
The
Company’s transaction with RJM has been treated as a reverse
recapitalization of the Company, with the Company (the legal
acquirer of RJM) considered the accounting acquiree, and RJM, whose
management took control of the Company (the legal acquiree of the
Company) considered the accounting acquirer. The Company did not
recognize goodwill or any intangible assets in connection with the
transaction. All costs related to the transaction are being charged
to operations as incurred. The $6,250,000 worth of shares of
Company stock, to be issued in conjunction with the transaction,
was presented as a liability until such time that the shares were
issued, and the liability reduced. The historical financial
statements include the operations of the accounting acquirer for
all periods presented.
On
March 25, 2016, the Company approved a name change to Simlatus
Corporation, stock symbol SIML, which was executed on April 4,
2016. The new name change better describes the Company’s new
business and revenues from selling commercial broadcast equipment
on a global basis. Simlatus Corporation develops, manufactures,
markets, and owns proprietary advanced broadcast equipment and
software. These systems have been sold worldwide over the past 20
years to some of the most recognized, major broadcast companies in
the Television Industry.
Satel
Group Inc., a Nevada Corporation, merged with Simlatus Corporation
on November 13, 2018. Satel Group, Inc., (the “Company” or “Satel”)
was incorporated in the State of Nevada on August 15, 2016. The
Company was originally formed as Satel, LLC on February 26, 2003 as
a California limited liability company. Satel, LLC converted to a
California Corporation, Satel, Inc., by Articles of Incorporation
with a Statement of Conversion signed by Richard Hylen as managing
member of Satel LLC, dated December 20, 2013, and filed with the
California Secretary of State on December 23, 2013. On September
25, 2016 Satel Group, Inc. purchased all of the assets of Satel,
Inc., and therefore this Company was organized and continues to
operate with the same management while engaged in providing their
existing High Speed Internet and DirecTV™ services to upscale,
high-rise commercial buildings including large office complexes,
apartments and condominiums in the City of San Francisco and
throughout the Bay Area.
Financial Statement Presentation
The audited financial statements of the Company have been prepared
in accordance with accounting principles generally accepted in the
United States of America (“U.S. GAAP”).
Reclassification
Certain
prior period amounts have been reclassified to conform to current
period presentation.
Fiscal
Year End
In
conjunction with the closing of the Asset Purchase Agreement dated
November 13, 2018, the Company changed its fiscal year from March
31 to a calendar year end of December 31 to coincide with the
fiscal year end of Satel Group Inc.
Use
of Estimates
The
preparation of the Company’s financial statements in conformity
with generally accepted accounting principles of United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period.
Management
makes its best estimate of the ultimate outcome for these items
based on historical trends and other information available when the
financial statements are prepared. Actual results could differ from
those estimates.
Cash
Equivalents
The
Company considers all highly liquid investments with maturities of
90 days or less from the date of purchase to be cash
equivalents.
Leases
In
February 2016, the FASB issued ASU 2016-02, “Leases” Topic
842, which amends the guidance in former ASC Topic
840, Leases. The new standard increases transparency and
comparability most significantly by requiring the recognition by
lessees of right-of-use (“ROU”) assets and lease liabilities on the
balance sheet for all leases longer than 12 months. Under the
standard, disclosures are required to meet the objective of
enabling users of financial statements to assess the amount,
timing, and uncertainty of cash flows arising from leases. For
lessees, leases will be classified as finance or operating, with
classification affecting the pattern and classification of expense
recognition in the income statement.
Revenue
Recognition and Related Allowances
The
Company’s revenues are derived primarily by broadcast products. On
January 1, 2018, we adopted Accounting Standards Update No.
2014-09, Revenue from Contracts with Customers (Topic 606), which
supersedes the revenue recognition requirements in Accounting
Standards Codification (ASC) Topic 605, Revenue Recognition (Topic
605). Results for reporting periods beginning after January 1, 2018
are presented under Topic 606. The impact of adopting the new
revenue standard was not material to our financial statements and
there was no adjustment to beginning retained earnings on January
1, 2018.
Under
Topic 606, revenue is recognized when control of the promised goods
or services is transferred to our customers, in an amount that
reflects the consideration we expect to be entitled to in exchange
for those goods or services.
We
determine revenue recognition through the following
steps:
|
|
● |
identification
of the contract, or contracts, with a customer; |
|
|
|
|
|
|
● |
identification
of the performance obligations in the contract; |
|
|
|
|
|
|
● |
determination
of the transaction price; |
|
|
|
|
|
|
● |
allocation
of the transaction price to the performance obligations in the
contract; and |
|
|
|
|
|
|
● |
recognition
of revenue when, or as, we satisfy a performance
obligation. |
Accounts
Receivable and Allowance for Doubtful Accounts
Accounts receivable are stated at the amount that management
expects to collect from outstanding balances. Bad debts and
allowances are provided based on historical experience and
management’s evaluation of outstanding accounts receivable.
Management evaluates past due or delinquency of accounts receivable
based on the open invoices aged on due date basis. The allowance
for doubtful accounts at December 31, 2019 and December 31,
2018 is $0.
Accounts
Payable and Accrued Expenses
Accounts
payable and accrued expenses are carried at amortized cost and
represent liabilities for goods and services provided to the
Company prior to the end of the fiscal year that are unpaid and
arise when the Company becomes obliged to make future payments in
respect of the purchase of these goods and services.
Loss
Per Share
Basic
loss per share of common stock is computed by dividing the net loss
by the weighted average number of common shares outstanding during
the period after giving retroactive effect to the reverse stock
split affected on December 18, 2019 (see Note 12).
Inventories
Inventories
are stated at the lower of cost, computed using the first-in,
first-out method and net realizable value. Any adjustments to
reduce the cost of inventories to their net realizable value are
recognized in earnings in the current period.
Fair
Value of Financial Instruments
Fair
value is defined as the price that would be received upon sale of
an asset or paid upon transfer of a liability in an orderly
transaction between market participants at the measurement date and
in the principal or most advantageous market for that asset or
liability. The fair value should be calculated based on assumptions
that market participants would use in pricing the asset or
liability, not on assumptions specific to the entity. In addition,
the fair value of liabilities should include consideration of
non-performance risk including our own credit risk.
In
addition to defining fair value, the standard expands the
disclosure requirements around fair value and establishes a fair
value hierarchy for valuation inputs is expanded. The hierarchy
prioritizes the inputs into three levels based on the extent to
which inputs used in measuring fair value are observable in the
market. Each fair value measurement is reported in one of the three
levels and which is determined by the lowest level input that is
significant to the fair value measurement in its
entirety.
These
levels are:
Level
1 - inputs are based upon unadjusted quoted prices for identical
instruments traded in active markets.
Level
2 - inputs are based upon quoted prices for similar instruments in
active markets, quoted prices for identical or similar instruments
in markets that are not active, and model-based valuation
techniques for which all significant assumptions are observable in
the market or can be corroborated by observable market data for
substantially the full term of the assets or
liabilities.
Level
3 - inputs are generally unobservable and typically reflect
management’s estimates of assumptions that market participants
would use in pricing the asset or liability. The fair values are
therefore determined using model-based techniques that include
option pricing models, discounted cash flow models, and similar
techniques.
The
following table represents the Company’s financial instruments that
are measured at fair value on a recurring basis as of December 31,
2019 and December 31, 2018 for each fair value hierarchy
level:
|
December
31, 2019 |
|
Derivative
Liabilities |
|
|
Total |
|
|
Level
I |
|
$ |
— |
|
|
$ |
— |
|
|
Level
II |
|
$ |
— |
|
|
$ |
— |
|
|
Level
III |
|
$ |
3,168,799 |
|
|
$ |
3,168,799 |
|
| |
|
|
|
|
|
|
|
|
|
December
31, 2018 |
|
Derivative
Liabilities |
|
|
Total |
|
|
Level
I |
|
$ |
— |
|
|
$ |
— |
|
|
Level
II |
|
$ |
— |
|
|
$ |
— |
|
|
Level
III |
|
$ |
4,888,497 |
|
|
$ |
4,888,497 |
|
In
management’s opinion, the fair value of convertible notes payable
and advances payable is approximate to carrying value as the
interest rates and other features of these instruments approximate
those obtainable for similar instruments in the current market.
Unless otherwise noted, it is management’s opinion that the Company
is not exposed to significant interest, exchange or credit risks
arising from these financial instruments. As of December 31, 2019
and December 31, 2018, the balances reported for cash, accounts
receivable, prepaid expenses, accounts payable, and accrued
liabilities, approximate the fair value because of their short
maturities.
Income
Taxes
The
Company records deferred taxes in accordance with FASB ASC No. 740,
Income Taxes. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
temporary differences between the financial statement carrying
amounts of existing assets and liabilities and loss carryforwards
and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect of a change in tax
rules on deferred tax assets and liabilities is recognized in
operations in the year of change. A valuation allowance is recorded
when it is “more likely-than-not” that a deferred tax asset will
not be realized.
As of
the date of this filing, the Company is not current in filing their
tax returns. The last return filed by the Company was December 31,
2017, and the Company has not accrued any potential penalties or
interest from that period forward. The Company will need to file
returns for the year ending December 31, 2018 and 2019, which are
still open for examination.
Recent
Accounting Pronouncements
In
May 2014, the FASB issued ASU No. 2014-09, Revenue from
Contracts with Customers (Topic 606), which replaces existing
revenue recognition guidance. The updated guidance requires
companies to recognize revenue in a way that depicts the transfer
of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. In addition, the
new standard requires that reporting companies disclose the nature,
amount, timing and uncertainty of revenue and cash flows arising
from contracts with customers. The Company adopted the standard on
January 1, 2018, using a modified retrospective approach, with the
cumulative effect of initially applying the standard recognized in
retained earnings at the date of adoption.
2.
GOING CONCERN
The
accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As of December 31, 2019,
the Company has a shareholders’ deficit of $17,036,827 since its
inception, working capital deficit of $5,972,565, negative cash
flows from operations, and has limited business operations, which
raises substantial doubt about the Company’s ability to continue as
going concern. The ability of the Company to meet its commitments
as they become payable is dependent on the ability of the Company
to obtain necessary financing or achieving a profitable level of
operations. There is no assurance the Company will be successful in
achieving these goals.
The
Company does not have sufficient cash to fund its desired research
and development objectives for its augmented/virtual reality
product development for the next 12 months. The Company has
arranged financing and intends to utilize the cash received to fund
the research and development project. This financing may be
insufficient to fund expenditures or other cash requirements
required to complete the product design for the augmented/virtual
reality markets. There can be no assurance the Company will be
successful in completing any new product development. The Company
plans to seek additional financing if necessary, in private or
public equity offering(s) to secure future funding for operations.
There can be no assurance the Company will be successful in raising
additional funding. If the Company is not able to secure additional
funding, the implementation of the Company’s business plan will be
impaired. There can be no assurance that such additional financing
will be available to the Company on acceptable terms or at
all.
These
financial statements do not give effect to adjustments to the
amounts and classification to assets and liabilities that would be
necessary should the Company be unable to continue as a going
concern.
3.
MERGER TRANSACTION
On
November 13, 2018, the Company, and Satel Group Inc., a Nevada
corporation, entered into an Agreement and Plan of Merger (the
“Merger Agreement”) and completed a merger, whereby Satel Group
merged with and into Simlatus, with Satel Group remaining as the
surviving entity (the “Merger”). Upon the consummation of the
Merger, the shares of the common stock of Satel Group extinguished
and the stockholders of the Company were issued an aggregate of
1,086,592 of the Preferred Series A stock at a price of $1.79 per
share and convertible pursuant the conversion rights as specified
in the Articles of Incorporation for SIML. As a result of the
Merger, the Company acquired the business of Satel Group and will
continue the Simlatus business.
Because
the prior owners of Satel Group, Inc.’s outstanding common stock
owned more than 50% of the combined voting interest in the Company,
on a fully-diluted basis, immediately following the merger, the
Merger is treated as a “reverse merger” under the purchase method
of accounting, with Satel Group, Inc. as the accounting acquirer.
Accordingly, Satel Group, Inc’s historical results of operations
replace Simlatus’ historical results of operations for all periods
prior to the Merger and, for all periods following the Merger, the
results of operations of the combined company will be included in
the Company’s consolidated financial statements.
4.
LEASES
The
Company adopted the new lease guidance effective January 1, 2019
using the modified retrospective transition approach, applying
the new standard to all of its leases existing at the date of
initial application which is the effective date of
adoption. Consequently, financial information will not be
updated, and the disclosures required under the new standard will
not be provided for dates and periods before January 1,
2019. We elected the package of practical expedients which
permits us to not reassess (1) whether any expired or existing
contracts are or contain leases, (2) the lease classification for
any expired or existing leases, and (3) any initial direct costs
for any existing leases as of the effective date. We did not elect
the hindsight practical expedient which permits entities to use
hindsight in determining the lease term and assessing impairment.
The adoption of the lease standard did not change our previously
reported consolidated statements of operations and did not result
in a cumulative catch-up adjustment to opening equity. The
adoption of the new guidance resulted in the recognition of ROU
assets of $75,865 and lease liabilities of $77,700.
The difference between the ROU assets and the lease liabilities is
primarily due to unamortized initial direct costs, lease
incentives and deferred rent related to the Company’s operating
leases at December 31, 2018.
The
interest rate implicit in lease contracts is typically not readily
determinable. As such, the Company utilizes its incremental
borrowing rate, which is the rate incurred to borrow on a
collateralized basis over a similar term an amount equal to the
lease payments in a similar economic environment. In calculating
the present value of the lease payments, the Company elected to
utilize its incremental borrowing rate based on the remaining lease
terms as of the January 1, 2019 adoption date.
Operating
lease ROU assets and operating lease liabilities are recognized
based on the present value of the future minimum lease payments
over the lease term at the commencement date. The operating lease
ROU asset also includes any lease payments made and excludes lease
incentives and initial direct costs incurred, if any. Our lease
terms may include options to extend or terminate the lease when it
is reasonably certain that we will exercise that option. Our leases
have remaining lease terms of month-to-month and less than 1 year,
one of which includes an option to extend the lease term for a
year.
The
Company has elected the practical expedient to combine
lease and non-lease components as a single component. The lease
expense is recognized over the expected term on a straight-line
basis. Operating leases are recognized on the balance sheet as
right-of-use assets, current operating lease liabilities and
non-current operating lease liabilities.
The
new standard also provides practical expedients and certain
exemptions for an entity’s ongoing accounting. We have elected the
short-term lease recognition exemption for all leases that qualify.
This means, for those leases where the initial lease term is one
year or less or for which the ROU asset at inception is deemed
immaterial, we will not recognize ROU assets or lease liabilities.
Those leases are expensed on a straight-line basis over the term of
the lease.
Operating
Leases
On
February 1, 2017, Simlatus Corp. entered into a standard office
lease for approximately 1,700 square feet of office space at 175
Joerschke Drive, Suite A, Grass Valley, CA 95945. The lease has a
term of 1 year, from February 1, 2017 through January 31, 2018,
with a monthly rent of $1,400. On February 1, 2018, the Company
entered into a month-to-month lease with a monthly rent of
$1,400.
On
January 31, 2018, Satel Group, Inc. entered into a standard office
lease for approximately 1,006 square feet of office space at 330
Townsend Street, Suite 135, San Francisco, CA 94107. The lease has
a term of 2 years, from December 1, 2018 through November 30, 2019,
with a monthly rent of $5,781 and applicable common area
maintenance expenses. On December 1, 2019, the Company entered into
a month-to-month lease with a monthly rent of $5,781. As of the
date of this filing, the Company anticipates it will enter into a
new operating agreement in the third quarter of 2020.
ROU
assets and lease liabilities related to our operating leases are as
follows:
| |
|
December 31,
2019 |
|
| Right-of-use assets |
|
$ |
— |
|
| Current lease liabilities |
|
|
— |
|
| Non-current lease liabilities |
|
|
— |
|
Supplemental
cash flow information and non-cash activity related to our
operating leases are as follows:
| |
|
Year ended |
|
| |
|
December 31, 2019 |
|
| Operating cash flow information: |
|
|
|
|
| Cash paid for amounts
included in the measurement of lease liabilities |
|
|
(1,835 |
) |
| Non-cash activity: |
|
|
|
|
| Right-of-use assets obtained in
exchange for lease obligations |
|
|
77,700 |
|
5.
ACCURED EXPENSES
As of
December 31, 2019 and December 31, 2018, accrued expenses were
comprised of the following:
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
2019 |
|
|
2018 |
|
| Accrued
expenses |
|
|
|
|
|
|
|
|
|
Credit cards |
|
$ |
8,282 |
|
|
$ |
18,122 |
|
| Customer
deposits |
|
|
18,307 |
|
|
|
18,497 |
|
| Employee
liabilities |
|
|
7,612 |
|
|
|
— |
|
| Sales tax
payable |
|
|
1,416 |
|
|
|
1,694 |
|
|
Short-term loan |
|
|
3,000 |
|
|
|
3,000 |
|
| Total accrued
expenses |
|
$ |
38,617 |
|
|
$ |
41,313 |
|
| |
|
|
|
|
|
|
|
|
| Accrued
interest |
|
|
|
|
|
|
|
|
| Interest on
notes payable |
|
$ |
111,326 |
|
|
$ |
585,198 |
|
| Interest on
promissory notes |
|
|
— |
|
|
|
66,421 |
|
|
Interest on accrued wages |
|
|
263,113 |
|
|
|
— |
|
| Total accrued
interest |
|
$ |
374,439 |
|
|
$ |
651,619 |
|
| |
|
|
|
|
|
|
|
|
| Accrued wages |
|
$ |
1,184,455 |
|
|
$ |
1,058,808 |
|
6.
CONVERTIBLE NOTES PAYABLE
As of
December 31, 2019 and December 31, 2018, notes payable were
comprised of the following:
| |
|
Original |
|
Due |
|
Interest |
|
Conversion |
|
December 31, |
|
|
December 31, |
|
|
|
|
Note Date |
|
Date |
|
Rate |
|
Rate |
|
2019 |
|
|
2018 |
|
|
Armada Investment #2 |
|
5/30/2019 |
|
2/29/2020 |
|
8% |
|
Variable |
|
$ |
27,500 |
|
|
$ |
— |
|
| Armada Investment
#3 |
|
7/22/2019 |
|
7/22/2020 |
|
8% |
|
Variable |
|
|
37,950 |
|
|
|
— |
|
| Armada Investment
#4 |
|
12/6/2019 |
|
12/6/2020 |
|
8% |
|
Variable |
|
|
18,150 |
|
|
|
— |
|
| Auctus Fund #1 |
|
12/16/2016 |
|
9/16/2017 |
|
24% |
|
Variable |
|
|
— |
|
|
|
46,750 |
|
| Auctus Fund #2 |
|
8/9/2017 |
|
5/9/2018 |
|
24% |
|
Variable |
|
|
— |
|
|
|
46,750 |
|
| BHP Capital NY
#3 |
|
3/26/2019 |
|
3/26/2020 |
|
8% |
|
Variable |
|
|
28,600 |
|
|
|
— |
|
| BHP Capital NY
#4 |
|
4/9/2019 |
|
1/9/2020 |
|
8% |
|
Variable |
|
|
46,000 |
|
|
|
— |
|
| BHP Capital NY
#6 |
|
5/30/2019 |
|
2/29/2020 |
|
8% |
|
Variable |
|
|
27,500 |
|
|
|
— |
|
| BHP Capital NY
#7 |
|
7/22/2019 |
|
7/22/2020 |
|
8% |
|
Variable |
|
|
37,950 |
|
|
|
— |
|
| BHP Capital NY
#8 |
|
8/7/2019 |
|
8/7/2020 |
|
8% |
|
Variable |
|
|
33,000 |
|
|
|
— |
|
| BHP Capital NY
#9 |
|
12/20/2019 |
|
12/20/2020 |
|
12% |
|
Variable |
|
|
19,000 |
|
|
|
— |
|
| Blackbridge
Capital #2* |
|
5/3/2016 |
|
5/3/2017 |
|
5% |
|
Variable |
|
|
80,400 |
|
|
|
80,400 |
|
| Coventry #3 |
|
5/31/2019 |
|
5/31/2020 |
|
10% |
|
Variable |
|
|
38,691 |
|
|
|
— |
|
| EMA
Financial |
|
11/9/2016 |
|
11/9/2017 |
|
24% |
|
Variable |
|
|
— |
|
|
|
468,729 |
|
| Emunah Funding
#1 |
|
10/18/2017 |
|
10/18/2018 |
|
22% |
|
Variable |
|
|
— |
|
|
|
110,000 |
|
| Emunah Funding
#2 |
|
10/18/2017 |
|
10/18/2018 |
|
0% |
|
Variable |
|
|
— |
|
|
|
20,000 |
|
| Emunah Funding
#3 |
|
10/18/2017 |
|
10/18/2018 |
|
0% |
|
Variable |
|
|
— |
|
|
|
30,000 |
|
| Emunah Funding
#4* |
|
10/20/2018 |
|
7/20/2019 |
|
24% |
|
Variable |
|
|
2,990 |
|
|
|
10,240 |
|
| Emunah Funding
#5 |
|
5/15/2018 |
|
5/15/2019 |
|
10% |
|
Variable |
|
|
— |
|
|
|
37,778 |
|
| Emunah Funding
#6 |
|
10/31/2018 |
|
10/31/2019 |
|
10% |
|
Variable |
|
|
— |
|
|
|
27,778 |
|
| Emunah Funding
#8 |
|
1/31/2019 |
|
1/31/2020 |
|
8% |
|
Variable |
|
|
33,652 |
|
|
|
— |
|
| Fourth Man
#1 |
|
7/3/2018 |
|
7/3/2019 |
|
10% |
|
Variable |
|
|
— |
|
|
|
44,770 |
|
| Fourth Man
#2* |
|
10/26/2018 |
|
7/20/2019 |
|
8% |
|
Variable |
|
|
8,257 |
|
|
|
40,000 |
|
| Fourth Man
#4 |
|
4/23/2019 |
|
4/23/2020 |
|
10% |
|
Variable |
|
|
16,865 |
|
|
|
— |
|
| Fourth Man
#5 |
|
7/22/2019 |
|
7/22/2020 |
|
8% |
|
Variable |
|
|
37,950 |
|
|
|
— |
|
| Fourth Man
#6 |
|
8/12/2019 |
|
8/12/2020 |
|
8% |
|
Variable |
|
|
17,600 |
|
|
|
— |
|
| Fourth Man
#7 |
|
10/9/2019 |
|
10/8/2020 |
|
8% |
|
Variable |
|
|
27,500 |
|
|
|
— |
|
| Fourth Man
#8 |
|
12/10/2019 |
|
9/10/2020 |
|
12% |
|
Variable |
|
|
16,500 |
|
|
|
— |
|
| James Powell |
|
9/7/2015 |
|
Demand |
|
8% |
|
Variable |
|
|
150,875 |
|
|
|
150,875 |
|
| Jefferson St
Capital #2* |
|
3/5/2019 |
|
10/18/2019 |
|
0% |
|
Variable |
|
|
5,000 |
|
|
|
— |
|
| Jefferson St
Capital #3 |
|
4/9/2019 |
|
1/9/2020 |
|
8% |
|
Variable |
|
|
44,400 |
|
|
|
— |
|
| Jefferson St
Capital #5 |
|
5/30/2019 |
|
2/29/2020 |
|
8% |
|
Variable |
|
|
27,500 |
|
|
|
— |
|
| Jefferson St
Capital #6 |
|
6/21/2019 |
|
3/21/2020 |
|
8% |
|
Variable |
|
|
27,500 |
|
|
|
— |
|
| Jefferson St
Capital #7 |
|
8/20/2019 |
|
5/20/2020 |
|
8% |
|
Variable |
|
|
38,500 |
|
|
|
— |
|
| Jefferson St
Capital #8 |
|
12/20/2019 |
|
12/20/2020 |
|
12% |
|
Variable |
|
|
19,000 |
|
|
|
— |
|
| Optempus Invest
#1 |
|
9/4/2019 |
|
4/4/2020 |
|
6% |
|
Variable |
|
|
25,000 |
|
|
|
— |
|
| Optempus Invest
#2 |
|
9/13/2019 |
|
4/13/2020 |
|
6% |
|
Variable |
|
|
20,000 |
|
|
|
— |
|
| Optempus Invest
#3 |
|
10/15/2019 |
|
6/15/2020 |
|
6% |
|
Variable |
|
|
25,000 |
|
|
|
— |
|
| Power Up Lending
#1 |
|
3/14/2019 |
|
3/14/2020 |
|
10% |
|
Variable |
|
|
6,500 |
|
|
|
— |
|
| Power Up Lending
#2 |
|
5/13/2019 |
|
5/13/2020 |
|
10% |
|
Variable |
|
|
103,000 |
|
|
|
— |
|
| Power
Up Lending #3 |
|
6/20/2019 |
|
6/20/2020 |
|
10% |
|
Variable |
|
|
53,000 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
1,101,330 |
|
|
|
1,114,070 |
|
|
Less debt discount |
|
|
|
|
|
|
(394,795 |
) |
|
|
(66,117 |
) |
|
Notes payable, net of discount |
|
|
|
|
|
$ |
706,535 |
|
|
$ |
1,047,953 |
|
|
* |
As of
December 31, 2019, the balance of notes payable that are in default
is $96,647. |
Armada
Investment Fund LLC
On
February 22, 2019, the Company issued a convertible note to Armada
Investment Fund LLC for $47,250, which includes $5,000 to settle
outstanding accounts payable, transaction fee interest of $4,250,
and cash consideration of $38,000. The note bears interest of 8%
(increases to 18% per annum upon an event of default), matures on
November 22, 2019, and is convertible into common stock at 65% of
the lowest trading price of the 15 trading day period ending on the
latest complete day prior to the date of conversion. The Company
recorded a debt discount from the derivative equal to $47,250 due
to this conversion feature, and $47,250 has been amortized to the
statement of operations. Pursuant to the default terms of the note,
the Company entered a late filing penalty of $15,000. During the
year ended December 31, 2019, the Company issued 111,188 common
shares upon the conversion of principal in the amount of $62,250,
accrued interest of $6,145 and conversion fees of $2,000. As of
December 31, 2019, the note has been fully satisfied.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
May 30, 2019, the Company issued a convertible note to Armada
Investment Fund LLC for $27,500, which includes $16,667 paid Auctus
Fund pursuant to a settlement agreement, $5,000 to settle
outstanding accounts payable, transaction fee interest of $3,000,
and cash consideration of $2.833. The note bears interest of 8%
(increases to 18% per annum upon an event of default), matures on
February 29, 2020, and is convertible into common stock at 65% of
the lowest trading price of the 15 trading day period ending on the
latest complete day prior to the date of conversion. The Company
recorded a debt discount from the derivative equal to $27,500 due
to this conversion feature, and $21,500 has been amortized to the
statement of operations. The debt discount and transaction fee
interest had a balance at December 31, 2019 of $6,000. As of
December 31, 2019, the note had a principal balance of $27,500 and
accrued interest of $1,296.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
July 22, 2019, the Company received funding pursuant to a
convertible note issued to Armada Investment Fund LLC for $37,950,
of which $33,500 was received in cash and $4,450 was recorded as
transaction fees. The note bears interest of 8% (increases to 24%
per annum upon an event of default), matures on July 22, 2020, and
is convertible into common stock at 65% of the lowest trading price
of the 20 trading day period ending on the latest complete day
prior to the date of conversion. The Company recorded a debt
discount from the derivative equal to $37,950 due to this
conversion feature, and $16,798 has been amortized to the statement
of operations. The debt discount and transaction fee interest had a
balance at December 31, 2019 of $21,152. As of December 31, 2019,
the note had a principal balance of $37,950 and accrued interest of
$1,347.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
December 6, 2019, the Company received funding pursuant to a
convertible note issued to Armada Investment Fund LLC for $18,150,
which includes $15,000 to settle outstanding accounts payable and
$3,150 in transaction fees. The note bears interest of 8%
(increases to 24% per annum upon an event of default), matures on
December 6, 2020, and is convertible into common stock at 65% of
the lowest trading price of the 20 trading day period ending on the
latest complete day prior to the date of conversion. The Company
recorded a debt discount from the derivative equal to $18,150 due
to this conversion feature, and $1,240 has been amortized to the
statement of operations. The debt discount and transaction fee
interest had a balance at December 31, 2019 of $16,910. As of
December 31, 2019, the note had a principal balance of $18,150 and
accrued interest of $99.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
Auctus
Fund LLC
On
December 16, 2016, the Company issued a convertible note to Auctus
Fund LLC for $46,750, of which $40,000 was received in cash and
$6,750 was recorded as transaction fees. The note bears interest at
10% (increases to 24% per annum upon an event of default), matured
on September 16, 2017, and is convertible into the lower of 1) 54%
multiplied by the average of the two lowest trading prices during
the 25 day trading period on the trading day prior to the date of
the note, and 2) 54% multiplied by the average of the two lowest
trading prices during the 25 day trading period on the trading day
prior to the conversion date. The Company recorded a debt discount
from the derivative equal to $46,750 due to this conversion
feature, which has been amortized to the statement of operations.
Pursuant to the default terms of the note, the Company entered a
penalty of $191,562. During the year ended December 31, 2019, the
Company recorded payments of $68,750 and issued 3,200 common shares
upon the conversion of interest in the amount of $5,480 and fees of
$500.
On
August 9, 2017, the Company issued a convertible note to Auctus
Fund LLC for $46,750, of which $40,000 was received in cash and
$6,750 was recorded as transaction fees. The note bears interest at
10% (increases to 24% per annum upon an event of default), matured
on August 22, 2017, and is convertible into the lower of 1) 54%
multiplied by the average of the two lowest trading prices during
the 25 day trading period on the trading day prior to the date of
the note, and 2) 54% multiplied by the average of the two lowest
trading prices during the 25 day trading period on the trading day
prior to the conversion date. The Company recorded a debt discount
from the derivative equal to $46,750 due to this conversion
feature, which has been amortized to the statement of operations.
Pursuant to the default terms of the note, the Company entered a
penalty of $210,097. During the year ended December 31, 2019, the
Company recorded payments of $68,750.
On
March 14, 2019, the Company entered into a Settlement
Agreement with Auctus Fund, LLC. Both Parties agreed to settle the
outstanding debt pursuant under the terms of a Securities Purchase
Agreement (the “Debt”), in its entirety. The Agreement was entered
into on March 14, 2019, by and among Simlatus Corp a Nevada
corporation doing business in California (the “Debtor”) and Auctus
Fund, LLC a limited liability company, (the “Creditor”) with
respect to the Securities Purchase Agreement entered into two
convertible notes between the Debtor and the Creditor on or about
December 16, 2016 and August 9, 2017, (the “Purchase Agreement”)
pursuant to which the Debtor issued a Convertible Note each in the
original principal amount of $46,750, respectively (collectively,
the “Notes”) to the Creditor on that same date. Once the following
conditions are timely satisfied, the Notes shall be satisfied in
full: (i) Debtor shall pay $50,000 via wire transfer to the
Creditor on March 15, 2019, (ii) Debtor shall issue 3,000
unrestricted shares of the Debtor’s common stock (the “Shares”) to
the Creditor on March 15, 2019, pursuant to a partial conversion of
one of the Notes by the Creditor in accordance with the original
terms of the Notes, and (iii) Debtor shall pay $50,000 via wire
transfer to the Creditor within 60 calendar days after the date of
this Agreement, and (iv) Debtor shall pay $75,000 via wire transfer
to the Creditor within 120 calendar days after the date of this
Agreement. Auctus’ sale of the Shares shall be limited as follows:
beginning on the Execution Date and ending on June 14, 2019, such
sales of the Shares shall be limited to the greater of (i) 20% of
the daily dollar volume of the Company’s common stock during each
respective trading day or (ii) a gross dollar amount of $7,500
during each respective trading day.
On
July 26, 2019, an Amendment to the Settlement Agreement was
executed due to the Company’s failure to make the $75,000 final
payment due on July 12, 2019. Pursuant to the terms of the
Amendment, the Company made a cash payment of $37,500 via wire
transfer to Auctus Fund on July 29, 2019 and issued 7,353 shares of
its common stock valued at $37,500, as per the conversion price
stated in the agreement. Upon the receipt of the cash payment and
the shares as provided in the Amendment, all amounts owed to Auctus
Fund under the notes, are considered paid in full without any
additional claims, penalties or default fees; and the Parties
released each other from any further claim or liability under the
notes. The Company recorded a gain on the settlement of debt of
$350,490 to the statement of operations.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
BHP
Capital NY, Inc.
On
February 22, 2019, the Company issued a convertible note to BHP
Capital NY, Inc. for $47,250, which includes $5,000 to settle
outstanding accounts payable, transaction fee interest of $4,250,
and cash consideration of $38,000. The note bears interest of 8%
(increases to 18% per annum upon an event of default), matures on
November 22, 2019, and is convertible into common stock at 65% of
the lowest trading price of the 15 trading day period ending on the
latest complete day prior to the date of conversion. The Company
recorded a debt discount from the derivative equal to $47,250 due
to this conversion feature, and $47,250 has been amortized to the
statement of operations. Pursuant to the default terms of the note,
the Company entered a late filing penalty of $15,693. During the
year ended December 31, 2019, the Company issued 170,416 common
shares upon the conversion of principal in the amount of $62,943,
accrued interest of $4,007, and conversion fees of $3,000. As of
December 31, 2019, the note has been fully satisfied.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
March 5, 2019, the Company accepted and agreed to a Debt Purchase
Agreement, whereby BHP Capital NY, Inc. acquired $20,000 of debt
from an Emunah Funding LLC convertible note in exchange for
$31,000, and the Company recorded a loss on settlement of debt of
$11,000. The note bears no interest, matures on October 18, 2019,
and is convertible into common stock at 57.5% of the lowest trading
price of the 20 trading days ending on the latest complete day
prior to the date of conversion. The Company recorded a debt
discount from the derivative equal to $31,000 due to this
conversion feature, which has been amortized to the statement of
operations. On April 15, 2019, a late filing penalty of $6,450 was
assessed pursuant to the note terms. During the year ended December
31, 2019, the Company issued 15,189 common shares upon the
conversion of principal in the amount of $37,450, interest of $967
and conversion fees of $1,500. As of December 31, 2019, the note
has been fully satisfied.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
March 26, 2019, the Company received funding pursuant to
convertible note issued to BHP Capital NY for $28,600, of which
$25,000 was received in cash and $3,600 was recorded as transaction
fees. The note bears interest of 8% (increases to 24% per annum
upon an event of default), matures on March 26, 2019, and is
convertible into common stock at 58% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of conversion. The Company recorded a debt discount
from the derivative equal to $28,600 due to this conversion
feature, and $21,880 has been amortized to the statement of
operations. The debt discount and transaction fee interest had a
balance at December 31, 2019 of $6,720. As of December 31, 2019,
the note had a principal balance of $28,600 and accrued interest of
$1,755.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
April 9, 2019, the Company issued a convertible note to BHP Capital
NY, Inc. for $55,000, which includes transaction fee interest of
$6,500, and cash consideration of $48,500. The note bears interest
of 8% (increases to 18% per annum upon an event of default),
matures on January 9, 2020, and is convertible into common stock at
65% of the lowest trading price of the 15 trading day period ending
on the latest complete day prior to the date of conversion. The
Company recorded a debt discount from the derivative equal to
$55,000 due to this conversion feature, and $53,200 has been
amortized to the statement of operations. The debt discount and
transaction fee interest had a balance at December 31, 2019 of
$1,800. During the year ended December 31, 2019, the Company issued
76,100 common shares upon the conversion of principal in the amount
of $9,000, accrued interest of $1,915, and conversion fees of $500.
As of December 31, 2019, the note had a principal balance of
$46,000 and accrued interest of $1,155.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
April 23, 2019, the Company accepted and agreed to a Debt Purchase
Agreement, whereby BHP Capital NY, Inc. acquired $29,102 of debt
from an Emunah Funding LLC convertible note in exchange for
$33,333, and the Company recorded a loss on settlement of debt of
$4,231. The note bears interest of 10% (increases to 24% per annum
upon an event of default), matures on April 23, 2020, and is
convertible into common stock at 57.5% of the lowest trading price
of the 20 trading day period ending on the latest complete day
prior to the date of conversion. The Company recorded a debt
discount from the derivative equal to $33,333 due to this
conversion feature, and $33,333 has been amortized to the statement
of operations. On April 26, 2019, a late filing penalty of $6,667
was assessed pursuant to the note terms. During the year ended
December 31, 2019, the Company issued 15,314 common shares upon the
conversion of principal in the amount of $40,000 and interest of
$2,541. As of December 31, 2019, the note has been fully
satisfied.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
May 30, 2019, the Company issued a convertible note to BHP Capital
NY for $27,500, which includes $16,667 paid Auctus Fund pursuant to
a settlement agreement, $5,000 to settle outstanding accounts
payable, transaction fee interest of $3,000, and cash consideration
of $2.833. The note bears interest of 8% (increases to 18% per
annum upon an event of default), matures on February 29, 2020, and
is convertible into common stock at 65% of the lowest trading price
of the 15 trading day period ending on the latest complete day
prior to the date of conversion. The Company recorded a debt
discount from the derivative equal to $27,500 due to this
conversion feature, and $21,500 has been amortized to the statement
of operations. The debt discount and transaction fee interest had a
balance at December 31, 2019 of $6,000. As of December 31, 2019,
the note had a principal balance of $27,500 and accrued interest of
$1,296.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
July 22, 2019, the Company received funding pursuant to a
convertible note issued to BHP Capital NY for $37,950, of which
$33,500 was received in cash and $4,450 was recorded as transaction
fees. The note bears interest of 8% (increases to 24% per annum
upon an event of default), matures on July 22, 2020, and is
convertible into common stock at 65% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of conversion. The Company recorded a debt discount
from the derivative equal to $37,950 due to this conversion
feature, and $16,798 has been amortized to the statement of
operations. The debt discount and transaction fee interest had a
balance at December 31, 2019 of $21,152. As of December 31, 2019,
the note had a principal balance of $37,950 and accrued interest of
$1,347.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
August 7, 2019, the Company received funding pursuant to a
convertible note issued to BHP Capital NY for $33,000 of which
$29,000 was received in cash and $4,000 was recorded as transaction
fees. The note bears interest of 8% (increases to 24% per annum
upon an event of default), matures on August 7, 2020, and is
convertible into common stock at 65% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of conversion. The Company recorded a debt discount
from the derivative equal to $33,000 due to this conversion
feature, and $13,164 has been amortized to the statement of
operations. The debt discount and transaction fee interest had a
balance at December 31, 2019 of $19,836. As of December 31, 2019,
the note had a principal balance of $33,000 and accrued interest of
$1,056.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
December 20, 2019, the Company received funding pursuant to a
convertible note issued to BHP Capital NY for $19,000 of which
$15,000 was received in cash and $4,000 was recorded as transaction
fees. The note bears interest of 12% (increases to 22% per annum
upon an event of default), matures on December 20, 2020, and is
convertible into the lower of 1) 55% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of the note, and 2) 55% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of conversion. The Company recorded a debt discount
from the derivative equal to $19,000 due to this conversion
feature, and $571 has been amortized to the statement of
operations. The debt discount and transaction fee interest had a
balance at December 31, 2019 of $18,429. As of December 31, 2019,
the note had a principal balance of $19,000 and accrued interest of
$69.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
Blackbridge
Capital
On
May 3, 2016, the Company accepted and agreed to a Debt Purchase
Agreement, whereby Blackbridge Capital acquired $100,000 in
principal of a Direct Capital Group, Inc. convertible note in
exchange for $100,000. The note bears interest at 5% per annum,
matured on May 3, 2017, and is convertible into common stock at 50%
of the lowest market price of the 20 trading days prior to the date
of conversion. The Company recorded a debt discount from the
derivative equal to $100,000 due to this conversion feature, which
has been amortized to the statement of operations. The note has
converted $19,600 of principal into 267 shares of common stock. As
of December 31, 2019, the note had a principal balance of $80,400
and accrued interest of $14,752. This note is currently in
default.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
Coventry
Enterprises, LLC
On
May 31, 2019, the Company issued a convertible note to Coventry
Enterprises for $50,000, of which $47,500 was received in cash and
$2,500 was recorded as transaction fees. The note bears interest at
10% (increases to 24% per annum upon an event of default), matures
on March 31, 2020, and is convertible into 61% multiplied by the
lowest trading price during the 20-day trading period including the
conversion date. The Company recorded a debt discount from the
derivative equal to $50,000 due to this conversion feature, and
$29,234 has been amortized to the statement of operations. The debt
discount and transaction fee interest had a balance at December 31,
2019 of $20,766. During the year ended December 31, 2019, the
Company issued 425,000 common shares upon the conversion of
principal in the amount of $11,309 and accrued interest of $2,818.
As of December 31, 2019, the note had a principal balance of
$38,691 and accrued interest of $86.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
EMA
Financial, LLC
On
November 9, 2016, the Company issued a convertible note to EMA
Financial, LLC for $35,000, of which $30,000 was received in cash
and $5,000 was recorded as transaction fees. The note bears
interest at 10% (increases to 24% per annum upon an event of
default), matured on November 9, 2017, and is convertible into the
lower of 1) the closing market price on the trading day immediately
preceding the closing date of the note, and 2) 50% of the lowest
trading price during the 25 trading days prior to the conversion
date. The Company recorded a debt discount from the derivative
equal to $35,000 due to this conversion feature, which has been
amortized to the statement of operations. Pursuant to the default
terms of the note, the Company entered a penalty of $446,915 in
principal and $23,143 in interest. Prior to the period ended
December 31, 2019, the note has converted $13,186 in principal into
982 shares of common stock. During the year ended December 31,
2019, the Company issued 379 common shares upon the conversion of
principal in the amount of $266.
On
April 3, 2019, the Company entered into a Settlement Agreement with
EMA Financial, LLC. Pursuant to the terms of the Agreement, EMA
agrees to settle the note to the Company and release the Company
from any of its obligations there-under in exchange for Company’s
strict compliance with the following terms: (a) a cash payment by
the Company to EMA of $50,000 to be paid to EMA on or before April
4, 2019; (b) Company’s cash payment to EMA of $75,000 to be paid to
EMA on or before, but in no event later than end of day July 23,
2019, and (c) the issuance of 3,000 shares pursuant a conversion
notice. In April 2019, the Company made a cash payment to EMA in
the amount of $50,000 and issued 3,000 shares on common
stock.
On
July 26, 2019, an Amendment to the Settlement Agreement was
executed due to the Company’s failure to make the $75,000 final
payment due on July 23, 2019. Pursuant to the terms of the
Amendment, the Company made a cash payment of $37,500 to EMA
Financial on July 24, 2019 and issued 7,353 shares of its common
stock valued at $37,500, as per the conversion price stated in the
agreement. Upon the receipt of the cash payment and the shares as
provided in the Amendment, all amounts owed to EMA Financial under
the note, are considered paid in full without any additional
claims, penalties or default fees; and the Parties released each
other from any further claim or liability under the note. The
Company recorded a gain on the settlement of debt of $460,339 to
the statement of operations.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
Emunah
Funding LLC
On
October 18, 2017, the Company issued a convertible note to Emunah
Funding LLC in consideration of liquidated damages in the amount of
$110,000. The note bears no interest (22% per annum upon an event
of default), matured on October 18, 2018, and is convertible into
common stock at 57.5% of the lowest trading price of the 20 trading
day period ending on the latest complete day prior to the date of
conversion. The Company recorded a debt discount from the
derivative equal to $110,000 due to this conversion feature, which
has been amortized to the statement of operations. During the year
ended December 31, 2019, the Company issued 43,799 common shares
upon the conversion of principal in the amount of $110,000,
interest of $17,922 and conversion fees of $1,500. As of December
31, 2019, the note has been fully satisfied.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
October 18, 2017, the Company accepted and agreed to a Debt
Purchase Agreement, whereby Emunah Funding LLC acquired $20,000 of
debt from a Tri-Bridge Ventures LLC convertible note in exchange
for $25,000. The note bears no interest, matured on October 18,
2018, and is convertible into common stock at 57.5% of the lowest
trading price of the 20 trading day period ending on the latest
complete day prior to the date of conversion. The Company recorded
a debt discount from the derivative equal to $25,000 due to this
conversion feature, which was amortized to the statement of
operations. The note has converted $5,000 of principal into 72
shares of common stock. On March 5, 2019, the principal amount of
$20,000 was reassigned to BHP Capital NY, Inc. for $31,000 and
$11,000 was recorded as a loss on settlement of debt.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
October 18, 2017, the Company accepted and agreed to a Debt
Purchase Agreement, whereby Emunah Funding LLC acquired $35,817 of
debt from a Tri-Bridge Ventures LLC convertible note in exchange
for $30,000. The note bears no interest, matures on October 18,
2018, and is convertible into common stock at 57.5% of the lowest
trading price of the 20 trading day period ending on the latest
complete day prior to the date of conversion. The Company recorded
a debt discount from the derivative equal to $30,000 due to this
conversion feature, which has been amortized to the statement of
operations. On March 5, 2019, the principal amount of $30,000 was
reassigned to Jefferson Street Capital LLC for $29,000 and $1,000
was recorded as a gain on settlement of debt.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
October 20, 2017, the Company issued a convertible note to Emunah
Funding LLC for $33,840, which includes $26,741 to settle
outstanding accounts payable, transaction costs of $4,065, OID
interest of $2,840, and cash consideration of $194. On November 6,
2017, the Company issued an Allonge to the convertible debt in the
amount of $9,720. The Company received $7,960 in cash and recorded
transaction fees of $1,000 and OID interest of $760. On November
30, 2017, the Company issued an Allonge to the convertible debt in
the amount of $6,480. The Company received $5,000 in cash and
recorded transaction fees of $1,000 and OID interest of $480. On
January 11, 2018, the Company issued an Allonge to the convertible
debt in the amount of $5,400. The Company received $5,000 in cash
and recorded OID interest of $480. The note bears interest of 8%
(increases to 24% per annum upon an event of default), matured on
July 20, 2018, and is convertible into common stock at 57.5% of the
lowest trading price of the 20 trading day period ending on the
latest complete day prior to the date of conversion. The Company
recorded a debt discount from the derivative equal to $55,440 due
to this conversion feature, which has been amortized to the
statement of operations. On October 26, 2018, the principal amount
of $40,000 was reassigned to Fourth Man, LLC. Pursuant to the
default terms of the note, the Company entered a late filing
penalty of $1,000. Prior to the period ended December 31, 2019, the
note has converted $5,200 of principal and $4,815 of interest into
2,504 shares of common stock. During the year ended December 31,
2019, the Company issued 4,641 common shares upon the conversion of
principal in the amount of $8,250 and interest of $103. As of
December 31, 2019, the note had a principal balance of $2,990 and
accrued interest of $360. This note is currently in
default.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
May 15, 2018, the Company issued a convertible note to Emunah
Funding LLC for $37,778, which includes $26,000 to settle the
convertible note with Asher Enterprises, $8,000 to settle
outstanding accounts payable, and OID interest of $3,778. The note
bears interest of 10% (increases to 24% per annum upon an event of
default), matures on May 15, 2019, and is convertible into common
stock at 60% of the lowest trading price of the 20 trading day
period ending on the latest complete day prior to the date of
conversion. The Company recorded a debt discount from the
derivative equal to $26,964 due to this conversion feature, and
$26,964 has been amortized to the statement of operations. During
the year ending December 31, 2019, the Company entered into a
Forbearance Agreement with Emunah Funding , whereby cash payments
totaling $50,000 were made by the Company to satisfy the
outstanding principal amount of $37,778 and accrued interest of
$3,952, and a loss on settlement of debt of $8,270 was recorded to
the statement of operations.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
October 31, 2018, the Company issued a convertible note to Emunah
Funding LLC for $27,778, of which $24,000 was received in cash and
$3,778 was recorded as transaction fees. The note bears interest of
10% (increases to 24% per annum upon an event of default), matures
on October 31, 2019, and is convertible into common stock at 60% of
the lowest trading price of the 20 trading day period ending on the
latest complete day prior to the date of conversion. The Company
recorded a debt discount from the derivative equal to $27,778 due
to this conversion feature, and $27,778 has been amortized to the
statement of operations. On April 23, 2019, the principal amount of
$27,778 and interest of $1,324 was reassigned to BHP Capital NY for
$33,333, and $4,321 was recorded as a loss on settlement of
debt.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
January 2, 2019, the Company received funding pursuant to
convertible note issued to Emunah Funding LLC for $29,150, of which
$25,000 was received in cash and $4,150 was recorded as transaction
fees. The note bears interest of 8% (increases to 24% per annum
upon an event of default), matures on December 31, 2019, and is
convertible into common stock at 50% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of conversion. The Company recorded a debt discount
from the derivative equal to $29,150 due to this conversion
feature, and $29,150 has been amortized to the statement of
operations. On April 23, 2019, the principal amount of $29,150 and
interest of $709 was reassigned to Jefferson Street Capital for
$34,980 and $5,121 was recorded as a loss on settlement of
debt.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
January 31, 2019, the Company received funding pursuant to
convertible note issued to Emunah Funding LLC for $33,000, which
includes $5,000 to settle outstanding accounts payable, $4,500 in
transaction fees and cash consideration of $23,500. The note bears
interest of 8% (increases to 24% per annum upon an event of
default), matures on January 31, 2020, and is convertible into
common stock at 50% of the lowest trading price of the 20 trading
day period ending on the latest complete day prior to the date of
conversion. The Company recorded a debt discount from the
derivative equal to $33,000 due to this conversion feature, and
$30,198 has been amortized to the statement of operations. The debt
discount and transaction fee interest had a balance at December 31,
2019 of $2,082. Pursuant to the default terms of the note, the
Company entered a late filing penalties of $50,652. During the year
ended December 31, 2019, the Company made cash payments of $50,000.
As of December 31, 2019, the note had a principal balance of
$33,652 and accrued interest of $2,552.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
March 26, 2019, the Company received funding pursuant to
convertible note issued to Emunah Funding LLC for $28,600, of which
$25,000 was received in cash $3,600 was recorded as transaction
fees. The note bears interest of 8% (increases to 24% per annum
upon an event of default), matures on March 26, 2019, and is
convertible into common stock at 58% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of conversion. The Company recorded a debt discount
from the derivative equal to $28,600 due to this conversion
feature, and $28,600 has been amortized to the statement of
operations. Pursuant to the default terms of the note, the Company
entered a late filing penalty of $5,720. During the year ended
December 31, 2019, the Company issued 154,114 common shares upon
the conversion of principal in the amount of $35,430, accrued
interest of $4,471, and conversion fees of $2,000. As of December
31, 2019, the note has been fully satisfied.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
Fourth
Man LLC
On
July 3, 2018, the Company issued a convertible note to Fourth Man
LLC for $24,200, which includes $20,762 to settle outstanding
accounts payable, OID interest of $2,200, and cash consideration of
$1,238. On July 17, 2018, the Company issued an Allonge to the
convertible debt in the amount of $8,470, which includes $7,700 to
settle outstanding accounts payable and OID interest of $700. On
August 22, 2018, the Company issued an Allonge to the convertible
debt in the amount of $7,700, which includes $7,000 to settle
outstanding accounts payable and OID interest of $700. On October
3, 2018, the Company issued an Allonge to the convertible debt in
the amount of $4,000, which includes $4,000 to settle outstanding
accounts payable and OID interest of $400. The note bears interest
of 10% (increases to 24% per annum upon an event of default),
matures on July 3, 2019, and is convertible into common stock at
60% of the lowest trading price of the 20 trading day period ending
on the latest complete day prior to the date of conversion. The
Company recorded a debt discount from the derivative equal to
$44,770 due to this conversion feature, which has been amortized to
the statement of operations. During the year ended December 31,
2019, the Company issued 9,440 common shares upon the conversion of
principal in the amount of $44,770 and interest of $3,374. As of
December 31, 2019, the note has been fully satisfied.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
October 26, 2018, the Company accepted and agreed to a Debt
Purchase Agreement, whereby Fourth Man LLC acquired $40,000 of debt
from an Emunah Funding LLC convertible note in exchange for
$40,000. The note bears interest of 24%, matures on July 20, 2019,
and is convertible into common stock at 50% of the lowest trading
price of the 20 trading day period ending on the latest complete
day prior to the date of conversion. The Company recorded a debt
discount from the derivative equal to $16,591 due to this
conversion feature, which has been amortized to the statement of
operations. During the year ended December 31, 2019, the Company
issued 22,299 common shares upon the conversion of principal in the
amount of $31,743. As of December 31, 2019, the note had a
principal balance of $8,257 and accrued interest of $2,218. This
note is currently in default.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
February 22, 2019, the Company issued a convertible note to Fourth
Man LLC for $47,250, which includes $5,000 to settle outstanding
accounts payable, transaction fee interest of $4,250, and cash
consideration of $38,000. The note bears interest of 8% (increases
to 18% per annum upon an event of default), matures on November 22,
2019, and is convertible into common stock at 65% of the lowest
trading price of the 15 trading day period ending on the latest
complete day prior to the date of conversion. The Company recorded
a debt discount from the derivative equal to $47,250 due to this
conversion feature, and $47,250 has been amortized to the statement
of operations. During the year ended December 31, 2019, the Company
issued 188,974 common shares upon the conversion of principal in
the amount of $47,250, accrued interest of $2,597, and conversion
fees of $1,500. As of December 31, 2019, the note has been fully
satisfied.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
April 23, 2019, the Company issued a convertible note to Fourth Man
LLC for $26,400, which includes $24,000 to settle outstanding
accounts payable, and transaction fee interest of $2,400. The note
bears interest of 10%, matures on April 23, 2020, and is
convertible into common stock at 60% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of conversion. The Company recorded a debt discount
from the derivative equal to $26,400 due to this conversion
feature, and $18,177 has been amortized to the statement of
operations. The debt discount and transaction fee interest had a
balance at December 31, 2019 of $8,223. During the year ended
December 31, 2019, the Company issued 165,531 common shares upon
the conversion of principal in the amount of $9,535. As of December
31, 2019, the note had a principal balance of $16,865 and accrued
interest of $1,582.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
July 22, 2019, the Company received funding pursuant to a
convertible note issued to Fourth Man LLC for $37,950, of which
$33,500 was received in cash and $4,450 was recorded as transaction
fees. The note bears interest of 8% (increases to 24% per annum
upon an event of default), matures on July 22, 2020, and is
convertible into common stock at 65% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of conversion. The Company recorded a debt discount
from the derivative equal to $37,950 due to this conversion
feature, and $16,798 has been amortized to the statement of
operations. The debt discount and transaction fee interest had a
balance at December 31, 2019 of $21,152. As of December 31, 2019,
the note had a principal balance of $37,950 and accrued interest of
$1,348.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
August 12, 2019, the Company received funding pursuant to a
convertible note issued to Fourth Man LLC for $17,600, of which
$15,000 was received in cash and $2,600 was recorded as transaction
fees. The note bears interest of 8% (increases to 24% per annum
upon an event of default), matures on August 12, 2020, and is
convertible into common stock at 65% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of conversion. The Company recorded a debt discount
from the derivative equal to $17,600 due to this conversion
feature, and $6,780 has been amortized to the statement of
operations. The debt discount and transaction fee interest had a
balance at December 31, 2019 of $10,820. As of December 31, 2019,
the note had a principal balance of $17,600 and accrued interest of
$544.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
October 9, 2019, the Company received funding pursuant to a
convertible note issued to Fourth Man LLC for $27,500, of which
$25,000 was received in cash and $2,500 was recorded as transaction
fees. The note bears interest of 8% (increases to 24% per annum
upon an event of default), matures on October 19, 2020, and is
convertible into common stock at 60% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of conversion. The Company recorded a debt discount
from the derivative equal to $27,500 due to this conversion
feature, and $6,236 has been amortized to the statement of
operations. The debt discount and transaction fee interest had a
balance at December 31, 2019 of $21,264. As of December 31, 2019,
the note had a principal balance of $27,500 and accrued interest of
$500.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
December 10, 2019, the Company received funding pursuant to a
convertible note issued to Fourth Man LLC for $16,500 of which
$15,000 was received in cash and $1,500 was recorded as transaction
fees. The note bears interest of 12% (increases to 24% per annum
upon an event of default), matures on September 10, 2020, and is
convertible into the lower of 1) 50% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of the note, and 2) 50% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of conversion. The Company recorded a debt discount
from the derivative equal to $16,500 due to this conversion
feature, and $1,260 has been amortized to the statement of
operations. The debt discount and transaction fee interest had a
balance at December 31, 2019 of $15,240. As of December 31, 2019,
the note had a principal balance of $16,500 and accrued interest of
$114.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
James
Powell
On
September 7, 2015, the Company issued a convertible note with the
Company’s former President, James Powell for non-cash consideration
for accrued fees of $150,875. The note bears interest at 8%, is due
on demand, and is convertible into convertible into common stock at
50% of the lowest trading price for the 15 days prior to the date
of conversion. As of December 31, 2019, the note had a principal
balance of $150,875 and accrued interest of $52,120.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
Jefferson
Street Capital LLC
On
February 22, 2019, the Company issued a convertible note to
Jefferson Street Capital LLC for $47,250, which includes $5,000 to
settle outstanding accounts payable, transaction fee interest of
$4,250, and cash consideration of $38,000. The note bears interest
of 8% (increases to 18% per annum upon an event of default),
matures on November 22, 2019, and is convertible into common stock
at 65% of the lowest trading price of the 15 trading day period
ending on the latest complete day prior to the date of conversion.
The Company recorded a debt discount from the derivative equal to
$47,250 due to this conversion feature, and $47,250 has been
amortized to the statement of operations. During the year ended
December 31, 2019, the Company issued 149,771 common shares upon
the conversion of principal in the amount of $47,250, accrued
interest of $2,100, and conversion fees of $2,500. As of December
31, 2019, the note has been fully satisfied.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
March 5, 2019, the Company accepted and agreed to a Debt Purchase
Agreement, whereby Jefferson Street Capital LLC acquired $30,000 of
debt from an Emunah Funding LLC convertible note in exchange for
$29,000, and the Company recorded a gain on settlement of debt of
$1,000. The note bears no interest, matures on October 18, 2019,
and is convertible into common stock at 57.5% of the lowest trading
price of the 20 trading days ending on the latest complete day
prior to the date of conversion. The Company recorded a debt
discount from the derivative equal to $29,000 due to this
conversion feature, which has been amortized to the statement of
operations. During the year ended December 31, 2019, the Company
issued 10,691 common shares upon the conversion of principal in the
amount of $24,000 and $1,000 in conversion fees. As of December 31,
2019, the note had a principal balance of $5,000. This note is
currently in default.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
April 9, 2019, the Company issued a convertible note to Jefferson
Street Capital LLC for $55,000, which includes transaction fee
interest of $6,500, and cash consideration of $48,500. The note
bears interest of 8% (increases to 18% per annum upon an event of
default), matures on January 9, 2020, and is convertible into
common stock at 65% of the lowest trading price of the 15 trading
day period ending on the latest complete day prior to the date of
conversion. The Company recorded a debt discount from the
derivative equal to $55,000 due to this conversion feature, and
$53,200 has been amortized to the statement of operations. The debt
discount and transaction fee interest had a balance at December 31,
2019 of $1,800. During the year ended December 31, 2019, the
Company issued 74,000 common shares upon the conversion of
principal in the amount of $10,600 and $500 in conversion fees. As
of December 31, 2019, the note had a principal balance of $44,400
and accrued interest of $3,251.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
April 23, 2019, the Company accepted and agreed to a Debt Purchase
Agreement, whereby Jefferson Street Capital LLC acquired $29,859 of
debt from an Emunah Funding LLC convertible note in exchange for
$34,980, and the Company recorded a loss on settlement of debt of
$5,121. The note bears interest of 10% (increases to 24% per annum
upon an event of default), matures on April 23, 2020, and is
convertible into common stock at 50% of the lowest trading price of
the 20 trading day period ending on the latest complete day prior
to the date of conversion. The Company recorded a debt discount
from the derivative equal to $34,980 due to this conversion
feature, and $34,980 has been amortized to the statement of
operations. During the year ended December 31, 2019, the Company
issued 13,992 common shares upon the conversion of principal in the
amount of $34,980. As of December 31, 2019, the note has been fully
satisfied.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
May 30, 2019, the Company issued a convertible note to Jefferson
Street Capital LLC for $27,500, which includes $16,667 paid Auctus
Fund pursuant to a settlement agreement, $5,000 to settle
outstanding accounts payable, transaction fee interest of $3,000,
and cash consideration of $2.833. The note bears interest of 8%
(increases to 18% per annum upon an event of default), matures on
February 29, 2020, and is convertible into common stock at 65% of
the lowest trading price of the 15 trading day period ending on the
latest complete day prior to the date of conversion. The Company
recorded a debt discount from the derivative equal to $27,500 due
to this conversion feature, and $21,500 has been amortized to the
statement of operations. The debt discount and transaction fee
interest had a balance at December 31, 2019 of $6,000. As of
December 31, 2019, the note had a principal balance of $27,500 and
accrued interest of $1,320.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
June 21, 2019, the Company issued a convertible note to Jefferson
Street Capital LLC for $27,500, which includes transaction fee
interest of $4,000, and cash consideration of $23,500. The note
bears interest of 8% (increases to 18% per annum upon an event of
default), matures on March 21, 2020, and is convertible into common
stock at 65% of the lowest trading price of the 15 trading day
period ending on the latest complete day prior to the date of
conversion. The Company recorded a debt discount from the
derivative equal to $27,500 due to this conversion feature, and
$17,049 has been amortized to the statement of operations. The debt
discount and transaction fee interest had a balance at December 31,
2019 of $10,451. As of December 31, 2019, the note had a principal
balance of $27,500 and accrued interest of $1,179.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
August 20, 2019, the Company issued a convertible note to Jefferson
Street Capital LLC for $38,500, of which $32,000 was received in
cash and $6,500 was recorded as transaction fees. The note bears
interest at 10% (increases to 18% per annum upon an event of
default), matures on May 20, 2020, and is convertible into the
lower of 1) 65% of the lowest trading price of the 15 trading day
period ending on the latest complete day prior to the date of the
note, and 2) 65% of the lowest trading price of the 15 trading day
period ending on the latest complete day prior to the date of
conversion. The Company recorded a debt discount from the
derivative equal to $38,500 due to this conversion feature, and
$15,439 has been amortized to the statement of operations. The debt
discount and transaction fee interest had a balance at December 31,
2019 of $23,061. As of December 31, 2019, the note had a principal
balance of $38,500 and accrued interest of $1,138.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
December 20, 2019, the Company issued a convertible note to
Jefferson Street Capital LLC for $19,000, of which $15,000 was
received in cash and $4,000 was recorded as transaction fees. The
note bears interest of 12% (increases to 22% per annum upon an
event of default), matures on December 20, 2020, and is convertible
into the lower of 1) 55% of the lowest trading price of the 20
trading day period ending on the latest complete day prior to the
date of the note, and 2) 55% of the lowest trading price of the 20
trading day period ending on the latest complete day prior to the
date of conversion. The Company recorded a debt discount from the
derivative equal to $19,000 due to this conversion feature, and
$571 has been amortized to the statement of operations. The debt
discount and transaction fee interest had a balance at December 31,
2019 of $18,429. As of December 31, 2019, the note had a principal
balance of $19,000 and accrued interest of $70.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
Optempus
Investments, LLC
On
September 4, 2019, the Company received $25,000 cash from the
issuance of a convertible promissory note with Optempus
Investments, LLC in the amount of $25,000. The note bears interest
at 6% (increases to 24% per annum upon an event of default),
matures on April 4, 2020, and is convertible into the lower of 1)
70% of the lowest trading price of the 30 trading day period ending
on the latest complete day prior to the date of the note, and 2)
70% of the lowest trading price of the 30 trading day period ending
on the latest complete day prior to the date of conversion. The
Company recorded a debt discount from the derivative equal to
$25,000 due to this conversion feature, and $13,850 has been
amortized to the statement of operations. The debt discount had a
balance at December 31, 2019 of $11,150. As of December 31, 2019,
the note had a principal balance of $25,000 and accrued interest of
$485.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
September 13, 2019, the Company received $20,000 cash from the
issuance of a convertible promissory note with Optempus
Investments, LLC in the amount of $20,000. The note bears interest
at 6% (increases to 24% per annum upon an event of default),
matures on April 13, 2020, and is convertible into the lower of 1)
70% of the lowest trading price of the 30 trading day period ending
on the latest complete day prior to the date of the note, and 2)
70% of the lowest trading price of the 30 trading day period ending
on the latest complete day prior to the date of conversion. The
Company recorded a debt discount from the derivative equal to
$20,000 due to this conversion feature, and $8,851 has been
amortized to the statement of operations. The debt discount had a
balance at December 31, 2019 of $11,149. As of December 31, 2019,
the note had a principal balance of $20,000 and accrued interest of
$358.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
October 15, 2019, the Company received $25,000 cash from the
issuance of a convertible promissory note with Optempus
Investments, LLC in the amount of $25,000. The note bears interest
at 6%, matures on June 15, 2020, and is convertible into 70% of the
lowest trading price of the 20 trading day period ending on the
latest complete day prior to the date of conversion. The Company
recorded a debt discount from the derivative equal to $25,000 due
to this conversion feature, and $7,889 has been amortized to the
statement of operations. The debt discount had a balance at
December 31, 2019 of $17,111. As of December 31, 2019, the note had
a principal balance of $25,000 and accrued interest of
$316.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
Power
Up Lending Group Ltd.
On
March 14, 2019, the Company issued a convertible note to Power Up
Lending Group Ltd. for $73,000, of which $70,000 was received in
cash and $3,000 was recorded as transaction fees. The note bears
interest at 10% (increases to 22% per annum upon an event of
default), matures on March 14, 2020, and is convertible into 61%
multiplied by the average of the two lowest trading prices during
the 20 day trading period on the trading day prior to the
conversion date. The Company recorded a debt discount from the
derivative equal to $73,000 due to this conversion feature, and
$58,240 has been amortized to the statement of operations. The debt
discount and transaction fee interest had a balance at December 31,
2019 of $14,760. Pursuant to the default terms of the note, the
Company entered a late filing penalty of $36,500. During the year
ended December 31, 2019, the Company issued 445,833 common shares
upon the conversion of principal in the amount of $103,000. As of
December 31, 2019, the note had a principal balance of $6,500 and
accrued interest of $8,248.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
May 13, 2019, the Company issued a convertible note to Power Up
Lending Group Ltd. for $103,000, of which $100,000 was received in
cash and $3,000 was recorded as transaction fees. The note bears
interest at 10% (increases to 22% per annum upon an event of
default), matures on May 13, 2020, and is convertible into 61%
multiplied by the average of the two lowest trading prices during
the 20 day trading period on the trading day prior to the
conversion date. The Company recorded a debt discount from the
derivative equal to $103,000 due to this conversion feature, and
$65,290 has been amortized to the statement of operations. The debt
discount and transaction fee interest had a balance at December 31,
2019 of $37,710. As of December 31, 2019, the note had a principal
balance of $103,000 and accrued interest of $6,547.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
On
June 20, 2019, the Company issued a convertible note to Power Up
Lending Group Ltd. for $53,000, of which $50,000 was received in
cash and $3,000 was recorded as transaction fees. The note bears
interest at 10% (increases to 22% per annum upon an event of
default), matures on May 13, 2020, and is convertible into 61%
multiplied by the average of the two lowest trading prices during
the 20 day trading period on the trading day prior to the
conversion date. The Company recorded a debt discount from the
derivative equal to $53,000 due to this conversion feature, and
$28,092 has been amortized to the statement of operations. The debt
discount and transaction fee interest had a balance at December 31,
2019 of $24,908. As of December 31, 2019, the note had a principal
balance of $53,000 and accrued interest of $2,817.
The
Company evaluated the convertible note and determined that the
shares issuable pursuant to the conversion option were
indeterminate due to the lack on conversion price floor and, as
such, does constitute a derivative liability as the Company has
insufficient authorized shares.
Convertible
Note Conversions
During
the year ended December 31, 2019, the Company issued the following
shares of common stock upon the conversions of portions of the
Convertible Notes:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Split |
|
|
Post-Split |
|
|
| |
|
Principal |
|
|
Interest |
|
|
Total |
|
|
Conversion |
|
|
Shares |
|
|
Shares |
|
|
|
Date |
|
Conversion |
|
|
Conversion |
|
|
Conversion |
|
|
Price |
|
|
Issued |
|
|
Issued |
|
Issued to |
| 1/7/2019 |
|
$ |
— |
|
|
$ |
580 |
|
|
$ |
580 |
|
|
$ |
0.0029 |
|
|
|
200,000 |
|
|
200 |
|
Auctus |
| 1/16/2019 |
|
|
6,000 |
|
|
|
— |
|
|
|
6,000 |
|
|
|
0.0040 |
|
|
|
1,500,000 |
|
|
1,500 |
|
Fourth Man |
| 2/11/2019 |
|
|
8,250 |
|
|
|
103 |
|
|
|
8,353 |
|
|
|
0.0018 |
|
|
|
4,640,816 |
|
|
4,641 |
|
Emunah |
| 2/14/2019 |
|
|
10,000 |
|
|
|
— |
|
|
|
10,000 |
|
|
|
0.0018 |
|
|
|
5,714,286 |
|
|
5,714 |
|
Fourth Man |
| 2/19/2019 |
|
|
266 |
|
|
|
— |
|
|
|
266 |
|
|
|
0.0007 |
|
|
|
379,496 |
|
|
379 |
|
EMA |
| 3/12/2019 |
|
|
11,839 |
|
|
|
— |
|
|
|
11,839 |
|
|
|
0.0020 |
|
|
|
6,169,500 |
|
|
6,170 |
|
Jefferson St |
| 3/14/2019 |
|
|
9,500 |
|
|
|
— |
|
|
|
9,500 |
|
|
|
0.0020 |
|
|
|
4,968,944 |
|
|
4,969 |
|
BHP Capital |
| 3/21/2019 |
|
|
— |
|
|
|
4,900 |
|
|
|
4,900 |
|
|
|
0.0018 |
|
|
|
3,000,000 |
|
|
3,000 |
|
Auctus |
| 4/1/2019 |
|
|
12,161 |
|
|
|
— |
|
|
|
12,161 |
|
|
|
0.0028 |
|
|
|
4,521,786 |
|
|
4,522 |
|
Jefferson St |
| 4/2/2019 |
|
|
3,000 |
|
|
|
— |
|
|
|
3,000 |
|
|
|
0.0010 |
|
|
|
3,000,000 |
|
|
3,000 |
|
EMA |
| 4/3/2019 |
|
|
— |
|
|
|
4,942 |
|
|
|
4,942 |
|
|
|
0.0030 |
|
|
|
1,647,333 |
|
|
1,647 |
|
Coventry |
| 4/18/2019 |
|
|
5,355 |
|
|
|
— |
|
|
|
5,355 |
|
|
|
0.0026 |
|
|
|
2,100,000 |
|
|
2,100 |
|
Fourth Man |
| 4/22/2019 |
|
|
13,500 |
|
|
|
— |
|
|
|
13,500 |
|
|
|
0.0029 |
|
|
|
4,869,565 |
|
|
4,870 |
|
BHP Capital |
| 6/10/2019 |
|
|
12,600 |
|
|
|
15,382 |
|
|
|
27,982 |
|
|
|
0.0035 |
|
|
|
8,074,250 |
|
|
8,074 |
|
Emunah |
| 7/1/2019 |
|
|
14,450 |
|
|
|
967 |
|
|
|
15,417 |
|
|
|
0.0030 |
|
|
|
5,350,323 |
|
|
5,350 |
|
BHP Capital |
| 7/2/2019 |
|
|
20,598 |
|
|
|
— |
|
|
|
20,598 |
|
|
|
0.0025 |
|
|
|
8,239,216 |
|
|
8,239 |
|
Jefferson St |
| 7/2/2019 |
|
|
29,120 |
|
|
|
1,292 |
|
|
|
30,412 |
|
|
|
0.0036 |
|
|
|
8,556,828 |
|
|
8,557 |
|
Emunah |
| 7/2/2019 |
|
|
24,200 |
|
|
|
1,924 |
|
|
|
26,124 |
|
|
|
0.0051 |
|
|
|
5,122,318 |
|
|
5,122 |
|
Fourth Man |
| 7/11/2019 |
|
|
20,570 |
|
|
|
1,450 |
|
|
|
22,020 |
|
|
|
0.0051 |
|
|
|
4,317,652 |
|
|
4,318 |
|
Fourth Man |
| 7/18/2019 |
|
|
17,000 |
|
|
|
— |
|
|
|
17,000 |
|
|
|
0.0025 |
|
|
|
6,800,000 |
|
|
6,800 |
|
BHP Capital |
| 7/22/2019 |
|
|
14,382 |
|
|
|
— |
|
|
|
14,382 |
|
|
|
0.0025 |
|
|
|
5,752,784 |
|
|
5,753 |
|
Jefferson St |
| 7/22/2019 |
|
|
32,280 |
|
|
|
823 |
|
|
|
33,103 |
|
|
|
0.0032 |
|
|
|
10,542,153 |
|
|
10,542 |
|
Emunah |
| 7/24/2019 |
|
|
— |
|
|
|
37,500 |
|
|
|
37,500 |
|
|
|
0.0051 |
|
|
|
7,352,941 |
|
|
7,353 |
|
Auctus |
| 7/24/2019 |
|
|
37,500 |
|
|
|
— |
|
|
|
37,500 |
|
|
|
0.0051 |
|
|
|
7,352,941 |
|
|
7,353 |
|
EMA |
| 8/6/2019 |
|
|
25,000 |
|
|
|
325 |
|
|
|
25,325 |
|
|
|
0.0025 |
|
|
|
10,127,639 |
|
|
10,128 |
|
Emunah |
| 8/6/2019 |
|
|
23,000 |
|
|
|
2,541 |
|
|
|
25,541 |
|
|
|
0.0030 |
|
|
|
8,513,830 |
|
|
8,514 |
|
BHP Capital |
| 8/21/2019 |
|
|
11,000 |
|
|
|
99 |
|
|
|
11,099 |
|
|
|
0.0018 |
|
|
|
6,498,292 |
|
|
6,498 |
|
Emunah |
| 9/9/2019 |
|
|
10,000 |
|
|
|
— |
|
|
|
10,000 |
|
|
|
0.0010 |
|
|
|
10,758,197 |
|
|
10,758 |
|
BHP Capital |
| 9/10/2019 |
|
|
12,000 |
|
|
|
— |
|
|
|
12,000 |
|
|
|
0.0010 |
|
|
|
13,020,833 |
|
|
13,021 |
|
Jefferson St |
| 9/13/2019 |
|
|
10,388 |
|
|
|
— |
|
|
|
10,388 |
|
|
|
0.0008 |
|
|
|
12,985,000 |
|
|
12,985 |
|
Fourth Man |
| 9/16/2019 |
|
|
15,000 |
|
|
|
— |
|
|
|
15,000 |
|
|
|
0.0012 |
|
|
|
12,500,000 |
|
|
12,500 |
|
Power Up |
| 9/17/2019 |
|
|
20,000 |
|
|
|
— |
|
|
|
20,000 |
|
|
|
0.0012 |
|
|
|
16,666,667 |
|
|
16,667 |
|
Power Up |
| 9/18/2019 |
|
|
20,000 |
|
|
|
— |
|
|
|
20,000 |
|
|
|
0.0012 |
|
|
|
16,666,667 |
|
|
16,667 |
|
Power Up |
| 9/19/2019 |
|
|
12,000 |
|
|
|
— |
|
|
|
12,000 |
|
|
|
0.0010 |
|
|
|
12,807,377 |
|
|
12,807 |
|
BHP Capital |
| 9/20/2019 |
|
|
20,000 |
|
|
|
— |
|
|
|
20,000 |
|
|
|
0.0012 |
|
|
|
16,666,667 |
|
|
16,667 |
|
Power Up |
| 10/2/2019 |
|
|
14,000 |
|
|
|
6,063 |
|
|
|
20,063 |
|
|
|
0.2755 |
|
|
|
27,417,833 |
|
|
27,418 |
|
Armada |
| 10/3/2019 |
|
|
19,000 |
|
|
|
48 |
|
|
|
19,048 |
|
|
|
0.0006 |
|
|
|
30,074,231 |
|
|
30,074 |
|
Armada |
| 10/4/2019 |
|
|
16,750 |
|
|
|
15 |
|
|
|
16,765 |
|
|
|
0.0006 |
|
|
|
30,025,435 |
|
|
30,025 |
|
Armada |
| 10/4/2019 |
|
|
15,000 |
|
|
|
— |
|
|
|
15,000 |
|
|
|
0.0007 |
|
|
|
23,099,851 |
|
|
23,100 |
|
BHP Capital |
| 10/7/2019 |
|
|
12,500 |
|
|
|
19 |
|
|
|
12,519 |
|
|
|
0.0005 |
|
|
|
23,670,455 |
|
|
23,670 |
|
Armada |
| 10/7/2019 |
|
|
13,000 |
|
|
|
— |
|
|
|
13,000 |
|
|
|
0.0006 |
|
|
|
22,500,000 |
|
|
22,500 |
|
Jefferson St |
| 10/8/2019 |
|
|
9,300 |
|
|
|
— |
|
|
|
9,300 |
|
|
|
0.0004 |
|
|
|
28,000,000 |
|
|
28,000 |
|
BHP Capital |
| 10/8/2019 |
|
|
9,000 |
|
|
|
4,385 |
|
|
|
13,385 |
|
|
|
0.0003 |
|
|
|
39,672,381 |
|
|
39,672 |
|
Emunah |
| 10/10/2019 |
|
|
17,652 |
|
|
|
— |
|
|
|
17,652 |
|
|
|
0.0004 |
|
|
|
39,894,505 |
|
|
39,895 |
|
Fourth Man |
| 10/10/2019 |
|
|
8,500 |
|
|
|
— |
|
|
|
8,500 |
|
|
|
0.0003 |
|
|
|
30,000,000 |
|
|
30,000 |
|
Jefferson St |
| 10/10/2019 |
|
|
11,520 |
|
|
|
34 |
|
|
|
11,554 |
|
|
|
0.0003 |
|
|
|
40,179,200 |
|
|
40,179 |
|
Emunah |
| 10/11/2019 |
|
|
12,000 |
|
|
|
— |
|
|
|
12,000 |
|
|
|
0.0003 |
|
|
|
50,000,000 |
|
|
50,000 |
|
BHP Capital |
| 10/14/2019 |
|
|
8,841 |
|
|
|
— |
|
|
|
8,841 |
|
|
|
0.0002 |
|
|
|
46,703,150 |
|
|
46,703 |
|
Jefferson St |
| 10/15/2019 |
|
|
9,000 |
|
|
|
46 |
|
|
|
9,046 |
|
|
|
0.0002 |
|
|
|
47,730,000 |
|
|
47,730 |
|
Emunah |
| 10/17/2019 |
|
|
4,643 |
|
|
|
4,007 |
|
|
|
8,650 |
|
|
|
0.0002 |
|
|
|
45,750,600 |
|
|
45,751 |
|
BHP Capital |
| 10/17/2019 |
|
|
4,909 |
|
|
|
2,100 |
|
|
|
7,009 |
|
|
|
0.0002 |
|
|
|
37,546,850 |
|
|
37,547 |
|
Jefferson St |
| 10/17/2019 |
|
|
4,800 |
|
|
|
6 |
|
|
|
4,806 |
|
|
|
0.0002 |
|
|
|
26,532,000 |
|
|
26,532 |
|
Emunah |
| 10/22/2019 |
|
|
16,000 |
|
|
|
— |
|
|
|
16,000 |
|
|
|
0.0003 |
|
|
|
63,461,538 |
|
|
63,462 |
|
Fourth Man |
| 10/23/2019 |
|
|
10,600 |
|
|
|
— |
|
|
|
10,600 |
|
|
|
0.0002 |
|
|
|
74,000,000 |
|
|
74,000 |
|
Jefferson St |
| 10/23/2019 |
|
|
9,000 |
|
|
|
1,915 |
|
|
|
10,915 |
|
|
|
0.0002 |
|
|
|
76,100,133 |
|
|
76,100 |
|
BHP Capital |
| 11/4/2019 |
|
|
13,598 |
|
|
|
2,597 |
|
|
|
16,195 |
|
|
|
0.0002 |
|
|
|
85,617,815 |
|
|
85,618 |
|
Fourth Man |
| 11/21/2019 |
|
|
10,000 |
|
|
|
— |
|
|
|
10,000 |
|
|
|
0.0001 |
|
|
|
83,333,333 |
|
|
83,333 |
|
Power Up |
| 11/26/2019 |
|
|
6,000 |
|
|
|
— |
|
|
|
6,000 |
|
|
|
0.0001 |
|
|
|
100,000,000 |
|
|
100,000 |
|
Power Up |
| 12/2/2019 |
|
|
6,000 |
|
|
|
— |
|
|
|
6,000 |
|
|
|
0.0001 |
|
|
|
100,000,000 |
|
|
100,000 |
|
Power Up |
| 12/2/2019 |
|
|
3,872 |
|
|
|
2,569 |
|
|
|
6,441 |
|
|
|
0.0001 |
|
|
|
110,000,000 |
|
|
110,000 |
|
Coventry |
| 12/4/2019 |
|
|
6,000 |
|
|
|
— |
|
|
|
6,000 |
|
|
|
0.0001 |
|
|
|
100,000,000 |
|
|
100,000 |
|
Power Up |
| 12/4/2019 |
|
|
9,535 |
|
|
|
— |
|
|
|
9,535 |
|
|
|
0.0001 |
|
|
|
165,530,500 |
|
|
165,531 |
|
Fourth Man |
| 12/5/2019 |
|
|
4,026 |
|
|
|
— |
|
|
|
4,026 |
|
|
|
0.00002 |
|
|
|
165,000,000 |
|
|
165,000 |
|
Coventry |
| 12/23/2019 |
|
|
3,411 |
|
|
|
249 |
|
|
|
3,660 |
|
|
|
0.00002 |
|
|
|
150,000,000 |
|
|
150,000 |
|
Coventry |
| Total conversions |
|
|
769,416 |
|
|
|
96,883 |
|
|
|
866,299 |
|
|
|
|
|
|
|
2,119,224,111 |
|
|
2,119,224 |
|
|
| Loss on conversion |
|
|
— |
|
|
|
— |
|
|
|
86,719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Conversion
fees |
|
|
— |
|
|
|
— |
|
|
|
16,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$ |
769,416 |
|
|
$ |
96,883 |
|
|
$ |
969,518 |
|
|
|
|
|
|
|
2,119,224,111 |
|
|
2,119,224 |
|
|
7.
PROMISSORY NOTES PAYABLE
On
December 1, 2014, Satel Group Inc. entered into a Promissory Note
with Xillient, LLC in the amount of $434,669 pursuant to the Asset
Purchase Agreements dated June 3, 2013 and November 24, 2014, to
acquire certain Direct-TV assets. The note bears interest of 5% per
annum and is due on December 31, 2019. During the year months ended
December 31, 2019, the company recorded payments of $5,000 and
accrued interest of $3,171.
On
March 19, 2019, Richard Hylen entered into a Debt Settlement
Agreement with Xillient, LLC to settle $362,261 in outstanding debt
owed to Xillient, LLC for $200,000. Mr. Hylen transferred 111,732
of his Preferred Series A that are valued at $1.79 per share. The
liability amount of $362,261 was reclassed to additional paid in
capital due to the contributed capital by a related
party.
On
October 1, 2017, Direct Capital Group, Inc. agreed to cancel two
convertible notes in the principal amounts of $25,000 and $36,000,
and $6,304 in accrued interest, in exchange for a Promissory Note
in the amount of $61,000. The note bears no interest and is due on
or before October 1, 2020. During the year ended December 31, 2019,
the Company recorded payments of $44,500.
As of
December 31, 2019 and December 31, 2018, the principal balance owed
was $16,500 and $61,000, respectively.
8.
DERIVATIVE LIABILITIES
During
the year ended December 31, 2019, the Company valued the embedded
conversion feature of the convertible notes, warrants, certain
accounts payable and certain related party liabilities. The fair
value was calculated at December 31, 2019 based on the lattice
model.
The
following table represents the Company’s derivative liability
activity for the embedded conversion features for the year ended
December 31, 2019:
| |
|
Notes |
|
|
Warrants |
|
|
Stock Payable |
|
|
Total |
|
| Balance, beginning of period |
|
$ |
3,121,517 |
|
|
$ |
95,868 |
|
|
$ |
1,671,112 |
|
|
$ |
4,888,497 |
|
| Initial recognition of derivative
liability |
|
|
5,824,015 |
|
|
|
248,127 |
|
|
|
39,763 |
|
|
|
6,111,905 |
|
| Derivative settlements |
|
|
(6,676,243 |
) |
|
|
(1,962,888 |
) |
|
|
(268,905 |
) |
|
|
(8,908,036 |
) |
| Loss (gain) on
derivative liability valuation |
|
|
(637,899 |
) |
|
|
1,622,697 |
|
|
|
91,635 |
|
|
|
1,076,433 |
|
| Balance, end of period |
|
$ |
1,631,390 |
|
|
$ |
3,804 |
|
|
$ |
1,533,605 |
|
|
$ |
3,168,799 |
|
Convertible
Notes
The
fair value at the commitment date for the convertible notes and the
revaluation dates for the Company’s derivative liabilities were
based upon the following management assumptions as of December 31,
2019:
| |
|
Valuation data |
| Expected dividends |
|
0% |
| Expected volatility |
|
279.21%-491.40% |
| Expected term |
|
.02 - 1 year |
| Risk free interest |
|
1.48%-1.60% |
Warrants
On
January 2, 2019, the Company executed a Common Stock Purchase
Warrant for 1,821,875 shares (1,821 post-split). The purchase price
of one share of Common Stock under this Warrant shall be equal to
the Exercise Price of $0.016 per share and expire on December 31,
2023.
On
January 31, 2019, the Company executed a Common Stock Purchase
Warrant for 2,200,000 shares (2,200 post-split). The purchase price
of one share of Common Stock under this Warrant shall be equal to
the Exercise Price of $0.016 per share and expire on January 30,
2024.
On
March 26, 2019, the Company executed a Common Stock Purchase
Warrant for 1,643,678 shares (1,643 post-split). The purchase price
of one share of Common Stock under this Warrant shall be equal to
the Exercise Price of $0.017 per share and expire on March 25,
2024.
On
March 26, 2019, the Company executed a Common Stock Purchase
Warrant for 1,643,678 shares (1,643 post-split). The purchase price
of one share of Common Stock under this Warrant shall be equal to
the Exercise Price of $0.017 per share and expire on March 25,
2024.
On
April 9, 2019, the Company executed a Common Stock Purchase Warrant
for 550,000 shares (550 post-split). The purchase price of one
share of Common Stock under this Warrant shall be equal to the
Exercise Price of $0.10 per share and expire on April 8,
2024.
On
April 9, 2019, the Company executed a Common Stock Purchase Warrant
for 550,000 shares (550 post-split). The purchase price of one
share of Common Stock under this Warrant shall be equal to the
Exercise Price of $0.10 per share and expire on April 8,
2024.
On
April 23, 2019, the Company executed a Common Stock Purchase
Warrant for 105,000 shares (105 post-split). The purchase price of
one share of Common Stock under this Warrant shall be equal to the
Exercise Price of $0.25 per share and expire on April 22,
2024.
On
May 30, 2019, the Company executed a Common Stock Purchase Warrant
for 625,000 shares (625 post-split). The purchase price of one
share of Common Stock under this Warrant shall be equal to the
Exercise Price of $0.040 per share and expire on May 29,
2024.
On
May 30, 2019, the Company executed a Common Stock Purchase Warrant
for 625,000 shares (625 post-split). The purchase price of one
share of Common Stock under this Warrant shall be equal to the
Exercise Price of $0.040 per share and expire on May 29,
2024.
On
May 30, 2019, the Company executed a Common Stock Purchase Warrant
for 625,000 shares (625 post-split). The purchase price of one
share of Common Stock under this Warrant shall be equal to the
Exercise Price of $0.040 per share and expire on May 29,
2024.
On
June 13, 2019, the Company entered into a Securities
Exchange Agreement with Fourth Man Fund, LLC. Both parties agreed
to exchange the Warrants pursuant under the terms of a Securities
Exchange Agreement, in its entirety. The Agreement is for warrants
dated July 3, 2018, July 17, 2018, October 3, 2018, and August 22,
2018, representing 89,540 shares of common stock, exchanged for
10,167 shares of Preferred Series C stock at $10 per share. The
exchange extinguished $734,381 worth of derivative
liabilities.
On
June 13, 2019, the Company entered into a Securities
Exchange Agreement with Emunah Funding, LLC. Both parties agreed to
exchange the Warrants pursuant under the terms of a Securities
Exchange Agreement, in its entirety. The Agreement is for warrants
dated October 20, 2017, November 6, 2017, November 30, 2017,
January 11, 2018, May 15, 2018, and October 31, 2018, representing
129,952 shares of common stock, exchanged for 35,583 shares of
Preferred Series C stock at $10 per share. The exchange
extinguished $1,095,620 worth of derivative liabilities.
On
June 21, 2019, the Company executed a Common Stock Purchase Warrant
for 1,000,000 shares (1,000 post-split). The purchase price of one
share of Common Stock under this Warrant shall be equal to the
Exercise Price of $0.025 per share and expire on June 20,
2024.
On
July 22, 2019, the Company executed a Common Stock Purchase Warrant
for 1,679,204 shares (1,679 post-split). The purchase price of one
share of Common Stock under this Warrant shall be equal to the
Exercise Price of $0.023 per share and expire on July 22,
2024.
On
July 22, 2019, the Company executed a Common Stock Purchase Warrant
for 1,679,204 shares (1,679 post-split). The purchase price of one
share of Common Stock under this Warrant shall be equal to the
Exercise Price of $0.023 per share and expire on July 22,
2024.
On
July 22, 2019, the Company executed a Common Stock Purchase Warrant
for 1,679,204 shares (1,679 post-split). The purchase price of one
share of Common Stock under this Warrant shall be equal to the
Exercise Price of $0.023 per share and expire on July 22,
2024.
On
August 7, 2019, the Company executed a Common Stock Purchase
Warrant for 2,200,000 shares (2,200 post-split). The purchase price
of one share of Common Stock under this Warrant shall be equal to
the Exercise Price of $0.015 per share and expire on August 7,
2024.
On
August 12, 2019, the Company executed a Common Stock Purchase
Warrant for 1,173,333 shares (1,173 post-split). The purchase price
of one share of Common Stock under this Warrant shall be equal to
the Exercise Price of $0.015 per share and expire on August 7,
2024.
On
August 20, 2019, the Company executed a Common Stock Purchase
Warrant for 3,500,000 shares (3,500 post-split). The purchase price
of one share of Common Stock under this Warrant shall be equal to
the Exercise Price of $0.01 per share and expire on August 7,
2024.
On
October 9, 2019, the Company executed a Common Stock Purchase
Warrant for 17,187,500 shares (17,188 post-split). The purchase
price of one share of Common Stock under this Warrant shall be
equal to the Exercise Price of $0.0016 per share and expire on
October 9, 2024.
During
the year ended December 31, 2019, warrant holders exercised the
warrants and the Company issued 118,280 shares of common stock
through a cashless exercise of the warrants in accordance with the
conversion terms.
The
Company evaluated all outstanding warrants to determine whether
these instruments may be tainted. All warrants outstanding were
considered tainted. The Company valued the embedded derivatives
within the warrants based on the independent report of the
valuation specialist.
The
fair value at the valuation dates were based upon the following
management assumptions:
| |
|
Valuation data |
| Expected dividends |
|
0% |
| Expected volatility |
|
305.06%-307.47% |
| Expected term |
|
4.01 - 4.78 years |
| Risk free interest |
|
1.66% |
Stock
Payable
The
payables to be issued in stock are at 100% of the lowest closing
market price with a 15 day look back. The fair value at the
valuation dates were based upon the following management
assumptions:
| |
|
Valuation data |
|
Expected dividends |
|
0% |
| Expected volatility |
|
310.99% |
| Expected term |
|
1 year |
| Risk free interest |
|
1.59% |
On
April 16, 2019, the Company issued 424 common shares at to Hanson
& Associates to settle outstanding stock payable liabilities
pursuant to a Consulting Agreement dated April 1, 2017. The stock
was valued at $24,953 on the date of issuance, which extinguished
$24,953 in derivative liabilities.
9.
RELATED PARTY TRANSACTIONS
The
Company is periodically advanced noninterest bearing operating
funds from related parties. The advances are due on demand and
unsecured. During the year ended December 31, 2019, the Company
made payments of $73,450 to amounts due to related parties, and
$12,750 was advanced to the Company by related parties. In
addition, $7,295 in debt was settled by a related party. As of
December 31, 2019 and December 31, 2018, the Company owed related
parties $91,130 and $152,067, respectively. During the year ended
December 31, 2019, the Company recorded imputed interest of $14,670
to the statement of operations with a corresponding increase to
additional paid in capital. As of December 31, 2019 and December
31, 2018, the Company recorded accounts payable due to related
parties of $31,269 and $31,269, respectively.
On
January 9, 2019, the Company issued 1,679,978 shares of Series A
Preferred stock at $1.79 per share, to Optempus Investments, LLC,
valued at $3,000,000, pursuant to the Asset Purchase Agreement with
Proscere Bioscience Inc.
On March 19,
2019, Richard Hylen entered into a Debt Settlement Agreement with
Xillient, LLC to settle $362,261 in outstanding debt owed to
Xillient, LLC for $200,000. Mr. Hylen transferred 111,732 of his
Preferred Series A that are valued at $1.79 per share. The
liability amount of $362,261 was reclassed to additional paid in
capital due to the contributed capital by a related
party.
On
April 10, 2019, the Board of Directors repurchased and returned to
treasury 25,140 Preferred Series A Shares in the name of Optempus
Investments, LLC. The company authorized and paid the payment of
$45,000 to Optempus Investments, LLC for the repurchase of 25,140
Preferred Series A at $1.79 per share. This transaction is pursuant
with the Asset Purchase Agreement of Proscere Bioscience and the IP
of the Cold-Water CBD/HEMP Extraction Systems. The Series A Stock
is convertible to common stock at market price the day of
conversion.
On
June 3, 2019, the Board of Directors repurchased and returned to
treasury 18,159 Preferred Series A Shares in the name of Optempus
Investments, LLC. The company authorized and paid the payment of
$32,505 to Optempus Investments, LLC for the repurchase of 18,159
Preferred Series A at $1.79 per share. This transaction is pursuant
with the Asset Purchase Agreement of Proscere Bioscience and the IP
of the Cold-Water CBD/HEMP Extraction Systems. The Series A Stock
is convertible to common stock at market price the day of
conversion.
10.
CONVERTIBLE PREFERRED STOCK
Series
A Convertible Preferred Stock
On
January 25, 2011, the Company filed an amendment to its Nevada
Certificate of Designation to create Series A Convertible Preferred
Stock, with a par value of $0.001 and 10,000,000 shares
authorized.
On
January 3, 2017, the Company filed an Amendment to Certificate of
Designation with the Nevada Secretary of State defining the rights
and preferences of the Series A Convertible Preferred shares.
Series A Convertible Preferred stock shall be convertible into
common shares at the rate of the closing market price on the day of
the conversion notice equal to the dollar amount of the value of
the Series A Convertible Preferred shares, and holders shall have
no voting rights on corporate matters, unless and until they
convert their Series A Convertible Preferred shares into Common
shares, at which time they will have the same voting rights as all
Common Shareholders have; their consent shall not be required for
taking any corporate action.
On
October 26, 2018, the Company issued 488,827 Series A Convertible
Preferred shares at $1.79 per share to Donna Murtaugh, to settle
liabilities of $875,000 owed to her pursuant to the Asset Purchase
Agreement dated March 9, 2016.
As of
November 13, 2018, 3,489,510 shares of Series A Convertible
Preferred stock were transferred into the Company in connection
with the reverse merger.
On
November 13, 2018, the Company granted 1,086,592 Series A
Convertible Preferred shares at $1.79 per share to Richard Hylen,
valued at $1,945,000, pursuant the Merger Agreement.
On January 9, 2019, the Company entered into an Asset Purchase
Agreement Proscere Bioscience Inc., a Florida Corporation.
Pursuant to the Asset Purchase Agreement, Proscere Bioscience
assigned and transferred all of its right, title, and interest to
its fixed assets and “know how” to Simlatus Corporation.
These assets and “know how” pursuant to the 5 year Exclusive
Distribution & License Agreement dated January 9, 2019 are
valued at $3,000,000. As consideration for the assets and “know
how” Simlatus Corporation issued 1,675,978 shares of Convertible
Preferred Series A stock at a price of $1.79 per share. At that
time, Proscere Bioscience became a wholly subsidiary of Simlatus
Corporation.
On
March 19, 2019, Richard Hylen entered into a Debt Settlement
Agreement with Xillient, LLC to settle $362,261 in outstanding debt
owed to Xillient, LLC for $200,000. Mr. Hylen transferred 111,732
of his Convertible Preferred Series A that are valued at $1.79 per
share. The liability amount of $362,261 was reclassed to additional
paid in capital due to the contributed capital by a related
party.
On
April 10, 2019, the Board of Directors repurchased and returned to
treasury 25,140 Convertible Preferred Series A Shares in the name
of Optempus Investments, LLC. The company authorized and paid the
payment of $45,000 to Optempus Investments, LLC for the repurchase
of 25,140 Convertible Preferred Series A at $1.79 per share. This
transaction is pursuant with the Asset Purchase Agreement of
Proscere Bioscience and the IP of the Cold-Water CBD/HEMP
Extraction Systems. The Convertible Preferred Series A Stock is
convertible to common stock at market price the day of
conversion.
On
June 3, 2019, the Board of Directors repurchased and returned to
treasury 18,159 Convertible Preferred Series A Shares in the name
of Optempus Investments, LLC. The company authorized and paid the
payment of $32,505 to Optempus Investments, LLC for the repurchase
of 18,159 Convertible Preferred Series A at $1.79 per share. This
transaction is pursuant with the Asset Purchase Agreement of
Proscere Bioscience and the IP of the Cold-Water CBD/HEMP
Extraction Systems. The Convertible Preferred Series A Stock is
convertible to common stock at market price the day of
conversion.
On
June 21, 2019, 43,299 Convertible Preferred Series A shares held in
treasury were retired.
During
the year ended December 31, 2019, 712,360 shares of Convertible
Series A Preferred stock were converted to 2,150,330 common shares
in accordance with the conversion terms.
The
Series A Convertible Preferred Stock has been classified as
mezzanine equity since it embodies a conditional obligation that
the Company may settle by issuing a variable number of equity
shares and the monetary value of the obligation is based on a fixed
monetary amount known at inception. Each share of the Convertible
Series A Preferred Stock has a fixed value of $1.79 per share, has
no voting rights, and is convertible into common stock at closing
market price on the date of conversion. The Company has recorded
$10,713,594, which represents 5,985,248 Series A Preferred Stock at
$1.79 per share, issued and outstanding as of December 31, 2019,
outside of permanent equity and liabilities.
Series
C Convertible Preferred Stock
On
June 13, 2019, the Company’s Board of Directors authorized the
creation of 45,750 shares of Series C Convertible Preferred Stock
with a par value of $0.0001, and on June 13, 2019, a Certificate of
Designation was filed with the Nevada Secretary of State. The
Convertible Preferred Series C shall have no voting rights as to
corporate matters unless, and until, they are converted into common
shares, at which time, they will have the same voting rights as all
common stock shareholders. Convertible Preferred Series C shares
cannot be sold, assigned, hypothecated, or otherwise disposed of,
without first obtaining the consent of the majority Convertible
Preferred Series C shareholders. Convertible Preferred Series C
shares shall have a value of $10.00 USD per share and shall convert
into common shares at the rate of the closing market price on the
day of conversion notice equal to the dollar amount of the value of
the Convertible Preferred Series C share. At no time may the
shareholder convert their shares into more than 4.99% of the issued
and outstanding.
On
June 13, 2019, the Company entered into a Securities
Exchange Agreement with Fourth Man Fund, LLC. Both parties agreed
to exchange the Warrants pursuant under the terms of a Securities
Exchange Agreement, in its entirety. The Agreement is for warrants
dated July 3, 2018, July 17, 2018, October 3, 2018, and August 22,
2018, representing 89,540 shares of common stock, exchanged for
10,167 shares of Convertible Preferred Series C stock at $10 per
share. The exchange extinguished $734,381 worth of derivative
liabilities.
On
June 13, 2019, the Company entered into a Securities
Exchange Agreement with Emunah Funding, LLC. Both parties agreed to
exchange the Warrants pursuant under the terms of a Securities
Exchange Agreement, in its entirety. The Agreement is for warrants
dated October 20, 2017, November 6, 2017, November 30, 2017,
January 11, 2018, May 15, 2018, and October 31, 2018, representing
129,952 shares of common stock, exchanged for 35,583 shares of
Convertible Preferred Series C stock at $10 per share. The exchange
extinguished $1,095,620 worth of derivative liabilities.
During
the year ended December 31, 2019, 10,167 shares of Convertible
Series C preferred stock were converted to 28,015 common shares in
accordance with the conversion terms.
The
Convertible Series C Preferred Stock has been classified as
mezzanine equity since it embodies a conditional obligation that
the Company may settle by issuing a variable number of equity
shares and the monetary value of the obligation is based on a fixed
monetary amount known at inception. The Company has recorded
$355,830 which represents 35,583 Series C Convertible Preferred
Stock at $10 per share, issued and outstanding as of December 31,
2019, outside of permanent equity and liabilities.
As of
December 31, 2019, 10,000,000 Series A Convertible Preferred shares
and 45,750 Series C Convertible Preferred shares were authorized,
of which 5,985,248 Series A Convertible Preferred shares were
issued and outstanding and 35,583 Series C Convertible Preferred
shares were issued and outstanding.
11.
PREFERRED STOCK
On
January 25, 2011, the Company filed an amendment to its Nevada
Certificate of Designation to create Series B Preferred Stock, with
a par value of $0.001 and 10,000,000 shares authorized.
On
July 1, 2015, the Company’s Board of Directors authorized the
creation of shares of Series B Voting Preferred Stock and on July
27, 2015 a Certificate of Designation was filed with the Nevada
Secretary of State. The holder of the shares of the Series B Voting
Preferred Stock has the right to vote those shares of the Series B
Voting Preferred Stock regarding any matter or action that is
required to be submitted to the shareholders of the Company for
approval. The vote of each share of the Series B Voting Preferred
Stock is equal to and counted as 4 times the votes of all of the
shares of the Company’s (i) common stock, and (ii) other voting
preferred stock issued and outstanding on the date of each and
every vote or consent of the shareholders of the Company regarding
each and every matter submitted to the shareholders of the Company
for approval.
On
November 9, 2018, Mike Schatz returned 250 Preferred Series B
Control Shares, valued at par value, pursuant to his new employee
agreement dated November 1, 2018.
On
November 9, 2018, Robert Stillwaugh returned 250 Preferred Series B
Control Shares, valued at par value, pursuant to his new employee
agreement dated November 1, 2018.
On
November 9, 2018, newly appointed President, Richard Hylen was
issued 500 Preferred Series B Control Shares, pursuant to his
employee agreement dated November 1, 2018.
As of
December 31, 2019, 10,000,000 Series B Preferred shares were
authorized, of which 500 shares were issued and
outstanding.
12.
COMMON STOCK
On
June 15, 2016, the Company approved the authorization of a 1 for
1,000 reverse stock split of the Company’s outstanding shares of
common stock, which was effective on July 22, 2016. The financial
statements have been retroactively adjusted to take this into
account for all periods presented.
As of
November 13, 2018, 2,918 shares of common stock were transferred
into the Company in connection with the reverse merger.
On
November 13, 2018, the Company issued 102,368 shares of restricted
common stock to Richard Hylen as collateral, pursuant to the Asset
Purchase Agreement dated November 13, 2018. The shares are valued
at $4,298,450 based on the market price of the Company’s common
stock on the date of the agreement.
During
the year ended December 31, 2018, the holders of convertible
notes converted a total of $10,448 of principal and interest into
2,792 shares of common stock. The issuance extinguished $115,941
worth of derivative liabilities which was recorded to additional
paid in capital.
On
April 16, 2019, the Company issued 424 common shares at to Hanson
& Associates to settle outstanding stock payable liabilities
pursuant to a Consulting Agreement dated April 1, 2017. The stock
was valued at $24,953 on the date of issuance, which extinguished
$24,953 in derivative liabilities.
On
June 13, 2019, the Company filed a Certificate of Amendment with
the Nevada Secretary of State to increase the number of authorized
common shares from 900,000,000 to 975,000,000 with a par value of
$0.00001.
On
July 23, 2019, the Company’ Board of Directors and the Majority
Stockholders owning a majority of the Company’s voting securities,
approved a resolution authorizing the Company to amend the Articles
of Incorporation to increase the number of authorized Common Shares
from 975,000,000 to 1,500,000,000 shares at par value $0.00001 per
share.
On
September 16, 2019, the Company’ Board of Directors and the
Majority Stockholders owning a majority of the Company’s voting
securities, approved a resolution authorizing the Company to amend
the Articles of Incorporation to increase the number of authorized
Common Shares from 1,500,000,000 to 5,000,000,000 shares at par
value $0.00001 per share.
On
October 17, 2019, the Company’ Board of Directors and the Majority
Stockholders owning a majority of the Company’s voting securities,
approved a resolution authorizing the Company to amend the Articles
of Incorporation to increase the number of authorized Common Shares
from 5,000,000,000 to 10,000,000,000 shares at par value $0.00001
per share.
On
December 18, 2019, the Company approved the authorization of a 1
for 1,000 reverse stock split of the Company’s outstanding shares
of common stock. The financial statements have been retroactively
adjusted to take this into account for all periods
presented.
During
the year ended December 31, 2019, 712,360 shares of Series A
preferred stock were converted to 2,161,158 common shares in
accordance with the conversion terms.
During
the year ended December 31, 2019, 10,167 shares of Series C
preferred stock were converted to 28,015 common shares in
accordance with the conversion terms.
During
the year ended December 31, 2019, warrant holders exercised the
warrants and the Company issued 118,280 shares of common stock
through a cashless exercise of the warrants in accordance with the
conversion terms.
During
the year ended December 31, 2019, the holders of convertible
notes converted a total of $866,299 of principal and interest, and
$16,500 in note fees, into 2,119,224 shares of common stock in
accordance with the conversion terms. The issuances resulted in a
loss on conversion of $86,719 and settled $1,784,469 worth of
derivative liabilities which was recorded to additional paid in
capital.
As of
December 31, 2019, 10,000,000,000 common shares, par value
$0.00001, were authorized, of which 4,524,351 shares were issued
and outstanding.
13.
INCOME TAXES
Deferred
income taxes are determined using the liability method for the
temporary differences between the financial reporting basis and
income tax basis of the Company’s assets and liabilities. Deferred
income taxes are measured based on the tax rates expected to be in
effect when the temporary differences are included in the Company’s
tax return. Deferred tax assets and liabilities are recognized
based on anticipated future tax consequences attributable to
differences between financial statement carrying amounts of assets
and liabilities and their respective tax bases.
The
deferred tax asset and the valuation allowance consist of the
following at December 31, 2019:
| |
|
2019 |
|
| Net tax loss
carry-forwards |
|
$ |
3,849,143 |
|
| Statutory rate |
|
|
21 |
% |
| Expected tax recovery |
|
|
808,320 |
|
| Change in
valuation allowance |
|
|
(808,320 |
) |
| Income tax provision |
|
$ |
— |
|
| |
|
|
|
|
| Components of deferred tax
asset: |
|
|
|
|
| Non-capital tax loss
carry-forwards |
|
$ |
808,320 |
|
| Less:
valuation allowance |
|
|
(808,320 |
) |
| Net deferred
tax asset |
|
$ |
— |
|
As of
the date of this filing, the Company is not current in filing their
tax returns. The last return filed by the Company was December 31,
2017, and the Company has not accrued any potential penalties or
interest from that period forward. The Company will need to file
returns for the year ending December 31, 2018 and 2019, which are
still open for examination.
14.
COMMITMENTS AND CONTINGENCIES
On
November 1, 2018, the Company executed a revised Employment
Agreement with Robert Stillwaugh, which appoints him as President
of Simlatus, a non-director/officer position, with an annual salary
of $45,000, which can be accumulated at 6% interest and converted
to restricted common stock at fair market value at the time of
conversion. During the year ended December 31, 2019, the Company
recorded wages of $45,000 in connection with this
agreement.
On
November 1, 2018, the Company executed a revised Employment
Agreement with Mike Schatz, which appoints him as the Vice
President of Simlatus, a non-director/officer position, with an
annual salary of $45,000, which can be accumulated at 6% interest
and converted to restricted common stock at fair market value at
the time of conversion. During the year ended December 31, 2019,
the Company recorded wages of $45,000 in connection with this
agreement.
On
November 1, 2018, the Board of Directors appointed Richard N. Hylen
as the new Chief Executive Officer, Chairman of the Board, and
President, Secretary, and Treasurer of the Company. Mr. Hylen will
receive an annual salary of $120,000, which can be accumulated at
6% interest and converted to restricted common stock at fair market
value at the time of conversion. During the year ended December 31,
2019, the Company recorded wages of $120,000 and payments of
$55,078, in connection with this agreement.
On January 9, 2019 Simlatus Corporation entered into an Asset
Purchase Agreement Proscere Bioscience Inc., a Florida Corporation.
Pursuant to the Asset Purchase Agreement, Proscere Bioscience
assigned and transferred all of its right, title, and interest to
its fixed assets and “know how” to Simlatus Corporation. These
assets and “know how” pursuant to the 5 year Exclusive Distribution
& License Agreement dated January 9, 2019 are valued at
$3,000,000. As consideration for the assets and “know how” Simlatus
Corporation issued 1,675,978 shares of Preferred Series A stock at
a price of $1.79 per share. At that time Proscere Bioscience became
a wholly subsidiary of Simlatus Corporation.
Proscere Bioscience brings exclusivity to Simlatus Corporation
sought after technology, innovation, and its “know how” for
Cold-Water CBD Extraction. Other technologies only offer alcohol
based extraction. The is highly flammable, dangerous, and difficult
to permit for operations. Proscere Bioscience technology also
recovers a higher amount of CBD from its Cold-Water Extraction. The
resulting CBD recovered is shown to be a higher value because of
this exclusive technology.
To date, the Company has established distribution relationships in
the United States, Canada, and Europe. The company also has
purchase orders to fulfill (see attached) in relationship to the
above distribution agreement. Any delays in fulfilling the orders
have been caused by manufacturing delays and the COVID-19 delays in
working with our suppliers.
On
January 9, 2019, the Board of Directors appointed Baron
Tennelle as a Director of Simlatus and President of Proscere
Bioscience, Inc., a wholly owned subsidiary of Simlatus, effective
January 9, 2019. He will receive an annual salary of $45,000 paid
out quarterly in either cash or stock at the current fair market
value of the stock at time of conversion. During the year ended
December 31, 2019, the Company recorded wages of $45,000 in
connection with this agreement.
On
February 19, 2019, the Board of Directors appointed Dusty
Vereker as a Director of the company, and Vice President of
Proscere Bioscience. Her employment contract allows an annual
salary of $45,000 to be paid quarterly in either cash or stock. Ms.
Vereker’s Director Agreement allows for fees associated with
meetings and conferences. During the year ended December 31, 2019,
the Company recorded wages of $41,250 in connection with this
agreement.
On
March 29, 2019, the Company and its subsidiary, Proscere Bioscience
Inc., entered into an Exclusive Distribution Agreement with Brand
House Ventures Inc. allowing the rights to sell the CBD Cold Water
Extraction Systems within all of the United States. Mike Mulder is
the President of Brand House Ventures Inc., and the company was
formed in 2010 as a sole proprietorship, and in 2014 was formed as
a California S-Corporation. Today Brand House is a Holding Company
for the distribution of a variety of products and
technologies.
On
March 29, 2019, the Company and its subsidiary, Proscere Bioscience
Inc., entered into a Distribution Agreement with United
Opportunities, LLC allowing the rights to sell the CBD/HEMP Cold
Water Extraction Systems within Canada and Europe. Shawn
Illingworth is the Managing Partner of United Opportunities, LLC,
and the company was formed in 2017 in overseeing the purchases of
multiple cannabis farms in the Humboldt, Adelanto, Needles, Nipton,
Cal City, and Searchlight areas of California and Nevada. The
company currently cultivates medical grade crops on a grand scale
and supply product to all the major manufacturers and extraction
companies in the industry. Future plans are to expand the company
and distribute internationally through attaining cultivation
centers in Canada, Europe and Australia. United Opportunities is
currently opening an office and showroom in Las Vegas, NV which
will round out its current operating platforms in New York,
Florida, and San Diego, California.
15.
SUBSEQUENT EVENTS
Subsequent
Issuances
On
March 27, 2020, 3,476 shares of common stock were issued due to
rounding in conjunction with the reverse stock split.
On
April 16, 2020, the holder of a convertible note converted a total
of $1,600 of principal into 219,178 shares of our common
stock.
On
April 20, 2020, 4,036 shares of Preferred Series A stock was
converted in to 225,768 shares of common stock.
On
April 22, 2020, the holder of a convertible note converted a total
of $1,600 of principal into 219,178 shares of our common
stock.
On
April 28, 2020, the holder of a convertible note converted a total
of $1,500 of principal into 254,237 shares of our common
stock.
On
April 30, 2020, 2.445 shares of Preferred Series A stock was
converted in to 271,764 shares of common stock.
On
April 30, 2020, 108,659 shares of Preferred Series A stock was
converted in to 194,499,000 shares of common stock.
On
May 1, 2020, the holder of a convertible note converted a total of
$1,100 of principal into 250,000 shares of our common
stock.
On
May 4, 2020, 13,966 shares of Preferred Series A stock was
converted in to 4,999,800 shares of common stock.
On
May 5, 2020, the holder of a convertible note converted a total of
$12,500 of principal into 3,955,696 shares of our common
stock.
On
May 6, 2020, the holder of a convertible note converted a total of
$12,000 of principal into 2,727,272 shares of our common
stock.
On
May 6, 2020, the holder of a convertible note converted a total of
$20,000 of principal and $790 in accrued interest into 4,158,000
shares of our common stock.
Convertible
Notes and Agreements
On
February 4, 2020, the Company entered in a Convertible Promissory
Note with Coventry Enterprises in the amount of $40,000. The note
is unsecured, bears interest at 10% per annum, and matures on
February 4,2021.
On
March 5, 2020, the Company
entered into an Assignment Agreement with Power Up Lending Group
LTD and Redstart Holdings Corp. Pursuant to the Agreement,
Power Up sold,
transferred, and assigned two convertible notes dated May 13, 2019
and June 20,2019 in the amounts of $103,000 and $53,000,
respectively, for a purchase price of $150,000. The convertible notes permit the holder
thereof to convert the obligations thereunder into shares
of common stock of Simlatus at a 39% discount to the market price,
subject to the limitation that the holder may not convert
any Note if as a result of
such conversion it would be the beneficial owner of more than
4.99% of the common stock of
Simlatus.
On
April 29, 2020, the Company
entered into an Assignment Agreement with GPL Ventures LLC
and Optempus Investments, LLC. Pursuant to the Agreement,
Optempus sold, transferred, and assigned a convertible note dated
September 4, 2019 in the amount of $25,000, for a purchase price of
$25,958. The convertible note
bears interest at 10% per annum and matures on April 29,
2021.
The
Company has evaluated subsequent events pursuant to ASC Topic 855
and has determined that there are no additional subsequent events
to disclose.
ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE
There
are no changes in or disagreements with accountants on accounting
and/or financial disclosure.
ITEM 9A. CONTROLS AND
PROCEDURES.
Management’s
Report on Internal Control over Financial Reporting
This
report includes the certifications of our Chief Executive Officer
and Chief Financial Officer required by Rule 13a-14 of the
Securities Exchange Act of 1934 (the “Exchange Act”). See Exhibits
31.1 and 31.2. This Item 9A includes information concerning the
controls and control evaluations referred to in those
certifications.
Disclosure Controls and Procedures
We
maintain disclosure controls and procedures, as defined in Rule
13a-15(e) promulgated under the Securities Exchange Act of 1934
(the “Exchange Act”), that are designed to ensure that information
required to be disclosed by us in the reports that we file or
submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the Securities
and Exchange Commission’s rules and forms and that such information
is accumulated and communicated to our management, including our
Chief Executive Officer and Principal Financial Officer, as
appropriate to allow timely decisions regarding required
disclosure.
We
carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive
Officer and Principal Financial Officer of the effectiveness of the
design and operation of our disclosure controls and procedures as
of December 31, 2019. Based on the evaluation of these disclosure
controls and procedures, and in light of the material weaknesses
found in our internal controls over financial reporting, our Chief
Executive Officer concluded that our disclosure controls and
procedures were not effective. Management anticipates that such
disclosure controls and procedures will not be effective until the
material weaknesses are remediated. Our company intends to
remediate the material weaknesses as set out below.
Management’s Annual Report on Internal Control Over Financial
Reporting
Management
is responsible for establishing and maintaining adequate internal
control over financial reporting, as defined in Exchange Act Rule
13a-15(f). The Company’s internal control over financial reporting
is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with accounting
principles generally accepted in the United States of
America.
Because
of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Under
the supervision and with the participation of management, including
the Chief Executive Officer and Chief Financial Officer, the
Company conducted an evaluation of the effectiveness of the
Company’s internal control over financial reporting as of December
31, 2019, using the criteria established in “Internal Control -
Integrated Framework (2013)” issued by the Committee of
Sponsoring Organizations of the Treadway Commission
(“COSO”).
A
material weakness is a deficiency, or combination of deficiencies,
in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the
Company’s annual or interim financial statements will not be
prevented or detected on a timely basis. In its assessment of the
effectiveness of internal control over financial reporting as of
December 31, 2019, the Company determined that there were control
deficiencies that constituted material weaknesses, as described
below.
|
1. |
There
is a lack of accounting resources – The Company has
insufficient resources for data entry, reviews, and/or oversight
from a financial expert with the appropriate level of knowledge and
experience to accurately capture transactions in accordance with US
GAAP and SEC rules and regulations. This lack of resources further
results in inadequate segregation of duties. Additionally, the
Company lacks an audit committee as well as a financial
expert. |
|
2. |
The
Company lacks processes and procedures to ensure transactional
evidence is properly retained - The Company needs to implement
processes that ensure they are aware of, and maintain, evidence
necessary to substantiate recorded transactions. The Company needs
to retain formal executed documents and adequate support, as they
are essential to accurate financial reporting. |
|
3. |
Due
to the Company not having formal Control procedures related to the
approval of related party transactions. |
Accordingly,
the Company concluded that these control deficiencies resulted in a
reasonable possibility that a material misstatement of the annual
or interim financial statements will not be prevented or detected
on a timely basis by the company’s internal controls.
As a
result of the material weaknesses described above, management has
concluded that the Company did not maintain effective internal
control over financial reporting as of December 31, 2019, based on
criteria established in “Internal Control - Integrated Framework
(2013)” issued by COSO.
This
annual report does not include an attestation report of the
Company’s registered public accounting firm regarding internal
control over financial reporting. Management’s report was not
subject to attestation by the Company’s registered public
accounting firm pursuant to rules of the SEC that permit the
Company to provide only management’s report in this annual
report.
Changes in Internal Control over Financial
Reporting
There
has been no change in our internal control over financial reporting
identified in connection with our evaluation we conducted of the
effectiveness of our internal control over financial reporting as
of December 31, 2019, that occurred during our fourth fiscal
quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial
reporting.
ITEM 9B. OTHER
INFORMATION.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE
OFFICERS.
Identification of Directors and Executive
Officers
The
following table sets forth the name and age of our current
directors and executive officer:
|
Name |
|
Age |
|
Position with the Company |
|
Position Held Since |
|
Richard Hylen |
|
73 |
|
Chief Executive Officer,
Chairman of the Board, President, Secretary and Treasurer |
|
November 1, 2018 |
| Baron Tennelle |
|
40 |
|
Director |
|
January 9, 2019 |
| Dusty Vereker |
|
41 |
|
Director |
|
February 19, 2019 |
The
Board of Directors has no nominating, audit, or compensation
committee at this time.
Term of Office
Each
director is elected by the Board of Directors and serves until his
or her successor is elected and qualified, unless he or she resigns
or is removed earlier. Each of our officers is elected by the Board
of Directors to a term of one (1) year and serves until his or her
successor is duly elected and qualified, or until he or she is
earlier removed from office or resigns.
Background and Business Experience
The
business experience during the past five years of the person
presently listed above as an Officer or Director of the Company is
as follows:
Richard Hylen: Mr. Hylen is 73 years old. As the
Founder of Satel Inc., the Managing Director of Turner Broadcasting
Far East LTD, and a Senior Executive of Viacom’s San Francisco
cable company, Richard has over 35 years of experience providing
video and Internet using the most advanced technologies including:
cable, fiber, satellite, wireless and CAT5 not only domestically,
but to over 50 countries worldwide. His skill set encompasses
successfully negotiating complicated licensing agreements with
governmental entities, creating joint venture partnerships,
developing strategic distribution relationships, financing,
designing, installing, and managing advanced technologies to
provide consumers with video and Internet services. Hylen used his
extensive corporate management expertise combined with his
technical knowledge to create Satel, recognized as one of the
nation’s largest providers of DirecTV to high rise buildings in a
major metropolitan market.
Baron Tennelle: Mr. Tennelle is 40 years old and
attended Mesa College in San Diego, California where he studied
mathematics. He attended Blackstone Career Institute in San Diego
to study law under a Legal Assistant program regarding real
property, torts, personal injury, contracts, and partnerships. His
12 years in business has afforded him the experience in working in
management positions for service oriented companies, along with
sales and marketing. His recent 4 years have landed him experience
as a Data Analyst for Restaurant Revolution Technologies, and a
paralegal for Miller Legal LLP. Mr. Tennelle will oversee the
business direction and maintain core business objectives and
compliance for Proscere Bioscience.
Dusty Vereker: Ms. Vereker is 43 years old and has
been a marketing professional for more than a decade. She is a
seasoned manager with experience in directing sales for medium to
large size corporations, where she earned her credit to increasing
revenue. She brings 8 years’ experience in sales and 4 years’
experience in human resources. She is a graduate of Grossmont
College, and served as an Administrative Instructor to the US Naval
Sea Cadet Corps. Dusty will assist our team in growing sales for
Proscere Bioscience and implement an Oversight-Committee for the
corporation.
Identification of Significant Employees
We
have no significant employees.
Family Relationship
We
currently do not have any officers or directors of our Company who
are related to each other.
Involvement in Certain Legal Proceedings
During
the past ten years no director, executive officer, promoter, or
control person of the Company has been involved in the
following:
|
(1) |
A
petition under the Federal bankruptcy laws or any state insolvency
law which was filed by or against, or a receiver, fiscal agent or
similar officer was appointed by a court for the business or
property of such person, or any partnership in which he was a
general partner at or within two years before the time of such
filing, or any corporation or business association of which he was
an executive officer at or within two years before the time of such
filing; |
|
(2) |
Such
person was convicted in a criminal proceeding or is a named subject
of a pending criminal proceeding (excluding traffic violations and
other minor offenses); |
|
(3) |
Such
person was the subject of any order, judgment, or decree, not
subsequently reversed, suspended, or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him
from, or otherwise limiting, the following activities: |
|
i. |
Acting
as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the Commodity
Futures Trading Commission, or an associated person of any of the
foregoing, or as an investment adviser, underwriter, broker or
dealer in securities, or as an affiliated person, director or
employee of any investment company, bank, savings and loan
association or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity; |
|
ii. |
Engaging
in any type of business practice; or |
|
iii. |
Engaging
in any activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of
Federal or State securities laws or Federal commodities
laws; |
|
(4) |
Such
person was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any Federal or
State authority barring, suspending or otherwise limiting for more
than 60 days the right of such person to engage in any activity
described in paragraph (f)(3)(i) of this section, or to be
associated with persons engaged in any such activity; |
|
(5) |
Such
person was found by a court of competent jurisdiction in a civil
action or by the Commission to have violated any Federal or State
securities law, and the judgment in such civil action or finding by
the Commission has not been subsequently reversed, suspended, or
vacated; |
|
(6) |
Such
person was found by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to have
violated any Federal commodities law, and the judgment in such
civil action or finding by the Commodity Futures Trading Commission
has not been subsequently reversed, suspended or
vacated; |
|
(7) |
Such
person was the subject of, or a party to, any Federal or State
judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended, or vacated, relating to an
alleged violation of: |
|
i. |
Any
Federal or State securities or commodities law or regulation;
or |
|
ii. |
Any
law or regulation respecting financial institutions or insurance
companies including, but not limited to, a temporary or permanent
injunction, order of disgorgement or restitution, civil money
penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order; or |
|
iii. |
Any
law or regulation prohibiting mail or wire fraud or fraud in
connection with any business entity; or |
|
(8) |
Such
person was the subject of, or a party to, any sanction or order,
not subsequently reversed, suspended or vacated, of any
self-regulatory organization (as defined in Section 3(a)(26) of the
Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as
defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.
1(a)(29))), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or
persons associated with a member. |
Audit Committee and Audit Committee Financial
Expert
As of
December 31, 2019, the Company did not have an audit committee or
an audit committee financial expert (as defined in Item 407 of
Regulation S-K) serving on its Board of Directors. All current
members of the Board of Directors lack sufficient financial
expertise for overseeing financial reporting responsibilities. The
Company has not yet employed an audit committee financial expert on
its Board due to the inability to attract such a person.
Code of Ethics
As of
December 31, 2019, the board of directors had not adopted a code of
ethics due to Company’s limited number of executive officers and
employees that would be covered by such a code and the Company’s
limited financial resources. We anticipate that we will adopt a
code of ethics when we increase either the number of our directors
and officers or the number of our employees.
Compliance with Section 16(a) of the Exchange
Act
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires
our executive officers and directors, and persons who beneficially
own more than 10% of a registered class of our equity securities to
file with the Securities and Exchange Commission initial statements
of beneficial ownership, reports of changes in ownership and annual
reports concerning their ownership of our common shares and other
equity securities, on Forms 3, 4 and 5 respectively. Executive
officers, directors and greater than 10% shareholders are required
by the Securities and Exchange Commission regulations to furnish us
with copies of all Section 16(a) reports they file. Based on our
review of the copies of such forms received by us, and to the best
of our knowledge, all executive officers, directors and persons
holding greater than 10% of our issued and outstanding stock have
filed the required reports in a timely manner during the year
ending December 31, 2018.
ITEM 11. EXECUTIVE
COMPENSATION
The
table set forth below summarizes the annual and long-term
compensation for services in all capacities to us payable to our
officer and director for the nine months ended December 31, 2019
and December 31, 2018. Our Board of Directors may adopt an
incentive stock option plan for our executive officers that would
result in additional compensation.
Summary
Compensation Table
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
Deferred |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
Incentive Plan |
|
|
Compensation |
|
|
All
Other |
|
|
|
|
| Name
and |
|
|
|
Salary |
|
|
Bonus |
|
|
Awards |
|
|
Awards |
|
|
Compensation |
|
|
Earnings |
|
|
Compensation |
|
|
Total |
|
|
principal position |
|
Year |
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
| Richard Hylen,
President, |
|
2019 |
|
|
120,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
120,000 |
|
| Chief Executive Officer, |
|
2018 |
|
|
50,871 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
50,871 |
|
| Secretary and Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Baron Tennelle, Director |
|
2019 |
|
|
45,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
45,000 |
|
| |
|
2018 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Dusty Vereker, Director |
|
2019 |
|
|
41,250 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
41,250 |
|
| |
|
2018 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Narrative Disclosure to Summary Compensation
Table
On
November 1, 2018, the Board of Directors appointed Richard N. Hylen
as the new Chief Executive Officer, Chairman of the Board, and
President, Secretary, and Treasurer of the Company. Mr. Hylen will
receive an annual salary of $120,000, which can be accumulated at
6% interest and converted to restricted common stock at fair market
value at the time of conversion. During the year ended December 31,
2019, the Company recorded wages of $120,000 and payments of
$55,078, in connection with this agreement.
On
January 9, 2019, the Board of Directors appointed Baron
Tennelle as a Director of Simlatus and President of Proscere
Bioscience, Inc., a wholly owned subsidiary of Simlatus, effective
January 9, 2019. He will receive an annual salary of $45,000 paid
out quarterly in either cash or stock at the current fair market
value of the stock at time of conversion. During the year ended
December 31, 2019, the Company recorded wages of $45,000 in
connection with this agreement.
On
February 19, 2019, the Board of Directors appointed Dusty
Vereker as a Director of the company, and Vice President of
Proscere Bioscience. Her employment contract allows an annual
salary of $45,000 to be paid quarterly in either cash or stock. Ms.
Vereker’s Director Agreement allows for fees associated with
meetings and conferences. During the year ended December 31, 2019,
the Company recorded wages of $41,250 in connection with this
agreement.
Outstanding Equity Awards at Fiscal Year-End
No
executive officer received any equity awards, or holds exercisable
or exercisable options, as of the year ended December 31,
2019.
Long-Term Incentive Plans
There
are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive
officers.
Compensation Committee
We
currently do not have a compensation committee of the Board of
Directors. The Board of Directors as a whole determines executive
compensation.
Compensation of Directors
Our
directors receive no extra compensation for their service on our
Board of Directors.
ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
Security Ownership of Management
The
following table sets forth certain information concerning the
number of shares of our common stock owned beneficially as of
December 31, 2019, by: (i) each of our directors; (ii) each of our
named executive officers; and (iii) each person or group known by
us to beneficially own more than 5% of our outstanding shares of
common stock. Unless otherwise indicated, the shareholders listed
below possess sole voting and investment power with respect to the
shares they own.
|
|
|
|
|
|
|
Shares |
|
|
|
|
|
|
Name
and Address |
|
|
|
Beneficially |
|
|
Percent |
|
Title
of Class |
|
of
Owner |
|
Relationship
to Company |
|
Owned
(1) |
|
|
Owned
(1) |
|
Common
Stock |
|
Richard
Hylen |
|
President,
Chief Executive Officer, Secretary, Treasurer and
Chairman |
|
|
102,368 |
|
|
2.26% |
| |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
102,368 |
|
|
2.26% |
|
1. |
The
number and percentage of shares beneficially owned is determined
under rules of the SEC and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares as to which
the individual has sole or shared voting power or investment power
and also any shares which the individual has the right to acquire
within 60 days through the exercise of any stock option or other
right. The persons named in the table have sole voting and
investment power with respect to all shares of common stock shown
as beneficially owned by them, subject to community property laws
where applicable and the information contained in the footnotes to
this table. |
|
2. |
The
percentage shown is based on denominator of 4,524,351 shares of
common stock issued and outstanding for the company as of December
31, 2019. |
Changes in Control
There
are no present arrangements or pledges of the Company’s securities,
which may result in a change in control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Related Party Transactions
None
of the directors or executive officers of the Company, nor any
person who owned of record or was known to own beneficially more
than 5% of the Company’s outstanding shares of its Common Stock,
nor any associate or affiliate of such persons or companies, has
any material interest, direct or indirect, in any transaction that
has occurred during the past fiscal year, or in any proposed
transaction, which has materially affected or will affect the
Company.
With
regard to any future related party transaction, we plan to fully
disclose any and all related party transactions in the following
manor:
|
|
● |
Disclosing
such transactions in reports where required; |
|
|
● |
Disclosing
in any and all filings with the SEC, where required; |
|
|
● |
Obtaining
disinterested directors consent; and |
|
|
● |
Obtaining
shareholder consent where required. |
The
Company is periodically advanced noninterest bearing operating
funds from related parties. The advances are due on demand and
unsecured. During the year ended December 31, 2019, the Company
made payments of $73,687 to amounts due to related parties, and
$12,750 was advanced to the Company by related parties. As of
December 31, 2019 and December 31, 2018, the Company owed related
parties $91,130 and $152,067, respectively. During the year ended
December 31, 2019, the Company recorded imputed interest of $14,670
to the statement of operations with a corresponding increase to
additional paid in capital. As of December 31, 2019 and December
31, 2018, the Company recorded accounts payable due to related
parties of $31,629 and $31,629, respectively.
On
January 9, 2019, the Company issued 1,679,978 shares of Series A
Preferred stock at $1.79 per share, to Optempus Investments, LLC,
valued at $3,000,000, pursuant to the Asset Purchase Agreement with
Proscere Bioscience Inc.
On
March 19, 2019, Richard Hylen entered into a Debt Settlement
Agreement with Xillient, LLC to settle $362,261 in outstanding debt
owed to Xillient, LLC for $200,000. Mr. Hylen transferred 111,732
of his Preferred Series A that are valued at $1.79 per share. The
liability amount of $362,261 was reclassed to additional paid in
capital due to the contributed capital by a related
party.
On
April 10, 2019, the Board of Directors repurchased and returned to
treasury 25,140 Preferred Series A Shares in the name of Optempus
Investments, LLC. The company authorized and paid the payment of
$45,000 to Optempus Investments, LLC for the repurchase of 25,140
Preferred Series A at $1.79 per share. This transaction is pursuant
with the Asset Purchase Agreement of Proscere Bioscience and the IP
of the Cold-Water CBD/HEMP Extraction Systems. The Series A Stock
is convertible to common stock at market price the day of
conversion.
On
June 3, 2019, the Board of Directors repurchased and returned to
treasury 18,159 Preferred Series A Shares in the name of Optempus
Investments, LLC. The company authorized and paid the payment of
$32,505 to Optempus Investments, LLC for the repurchase of 18,159
Preferred Series A at $1.79 per share. This transaction is pursuant
with the Asset Purchase Agreement of Proscere Bioscience and the IP
of the Cold-Water CBD/HEMP Extraction Systems. The Series A Stock
is convertible to common stock at market price the day of
conversion.
Director Independence
For
purposes of determining director independence, we have applied the
definitions set out in NASDAQ Rule 5605(a)(2). The OTCBB on which
shares of Common Stock are quoted does not have any director
independence requirements. The NASDAQ definition of “Independent
Officer” means a person other than an Executive Officer or employee
of the Company or any other individual having a relationship,
which, in the opinion of the Company’s Board of Directors, would
interfere with the exercise of independent judgment in carrying out
the responsibilities of a director. According to the NASDAQ
definition, we have no independent directors.
Review, Approval or Ratification of Transactions with Related
Persons
We
are a smaller reporting company as defined by Rule 12b-2 of the
Securities Exchange Act of 1934 and are not required to provide the
information under this item.
ITEM 14. PRINCIPAL ACCOUNTING FEES
AND SERVICES
The
following table shows the fees that were billed for the audit and
other services provided by our auditors for the years ended
December 31, 2019 and December 31, 2018:
| |
|
2019 |
|
|
2018 |
|
| Audit Fees |
|
$ |
30,000 |
|
|
$ |
30,000 |
|
| Audit-Related Fees |
|
|
— |
|
|
|
— |
|
| Tax Fees |
|
|
— |
|
|
|
— |
|
| All Other
Fees |
|
|
— |
|
|
|
— |
|
| Total |
|
$ |
30,000 |
|
|
$ |
30,000 |
|
Audit Fees
We
incurred approximately $30,000 in fees to our principal independent
accountants for professional services rendered in connection with
the audit and reviews of our financial statements for the nine
months ended December 31, 2019.
We
incurred approximately $30,000 in fees to our principal independent
accountants for professional services rendered in connection with
the audit and reviews of our financial statements for the nine
months ended December 31, 2018.
Audit-Related Fees
The
aggregate fees billed during the nine months ended December 31,
2019 and 2018 for assurance and related services by our principal
independent accountants that are reasonably related to the
performance of the audit or review of our financial statements (and
are not reported under Item 9(e)(1) of Schedule 14A was $0 and $0,
respectively.
Tax Fees
The
aggregate fees billed during the nine months ended December 31,
2019 and 2018 for professional services rendered by our principal
accountant tax compliance, tax advice and tax planning were $0 and
$0, respectively.
All Other Fees
The
aggregate fees billed during the nine months ended December 31,
2019 and 2018 for products and services provided by our principal
independent accountants (other than the services reported in Items
9(e)(1) through 9(e)(3) of Schedule 14A) was $0 and $0,
respectively.
PART IV
ITEM 15.
EXHIBITS.
|
* |
Filed
Pursuant to Rule 406T of Regulation S-T, the Interactive Data
Files on Exhibit 101 hereto are deemed not filed or part of a
registration statement or prospectus for purposes of Sections 11 or
12 of the Securities Act of 1933, as amended, are deemed not filed
for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, and otherwise are not subject to liability under
those sections. |
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company caused this report to be signed
on its behalf by the undersigned, thereunto duly
authorized.
|
SIMLATUS
CORPORATION |
|
|
|
|
|
Dated:
June 2, 2020 |
|
|
|
|
|
/s/
Richard Hylen |
|
|
Richard
Hylen |
|
|
President,
Chief Executive Officer and Principal Financial Officer |
|
Simlatus (PK) (USOTC:SIML)
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